Paytm Expects Profitability and Revenue Boost Despite Quarterly Loss
Paytm announced on Friday that it expects profitability and revenue improvements starting from the second quarter, driven by better cost management. This news caused a rise in its shares, despite the company reporting its largest quarterly loss since going public in 2021.
| Quarter | Net Loss (in billion rupees) |
|---|---|
| Q2 2021 | 3.57 |
| Q2 2023 | 8.39 |
The digital payments firm, affected by the wind down of its payments banking unit earlier this year, expects improvements in operating metrics such as gross merchandise value and merchant device additions. Employee costs are also expected to decrease from July to September.
Paytm’s shares, which had fallen nearly 3% ahead of the results, turned positive, rising by 2%. Rahul Jain, vice president of Research at Dolat Capital, stated, “Operating metrics such as gross merchandise value and merchant loans are improving. The worst is priced in and we should start seeing better stock performance from now on with these results.”
Financial Performance
Paytm’s consolidated net loss for the quarter ended June 30 widened to 8.39 billion rupees ($100.3 million), compared to a loss of 3.57 billion rupees a year ago. Earlier this year, the Reserve Bank of India wound down Paytm Payments Bank due to persistent compliance issues, which led to a significant drop in Paytm’s stock value.
The restrictions also caused several lending partners to halt loans through Paytm’s platform, resulting in a 1.4% sequential decline in loans for the current quarter. Paytm’s EBITDA before the cost of employee stock options was a negative 5.45 billion rupees for the June quarter, aligning with its earlier estimate of 5 billion to 6 billion rupees.
Revenue and Operational Metrics
Revenue from operations fell by 36% to 15.02 billion rupees in the April-June period, in line with the company’s estimates of 15 billion to 16 billion rupees.