Paytm Loss Widens as Regulatory Action Continues to Bite

(Bloomberg) -- Paytm’s losses widened and sales slid again in the latest quarter, underscoring the continuing impact of a regulatory order that has dented much of the fintech’s business.

Most Read from Bloomberg

• What Initial Polling Data Show About the Trump-Harris Matchup

• Tesla Slumps as Musk Tethers Its Future to Delayed Robotaxis

• Trump Files Complaint Over Harris Getting Biden’s $96 Million War Chest

• A Six-Second Decision Shows How Harris Snapped Up Delegates

• Singapore Has World’s Most Powerful Passport After Unseating Europeans

The net loss for the fiscal first quarter through June more than doubled to 8.39 billion rupees ($100 million), the company, which is based on the outskirts of New Delhi, said Friday. Analysts expected a loss of 9.33 billion rupees. Revenue shrank 36% to 15 billion rupees.

Its shares fell as much as 4.4% ahead of the earnings, before erasing the losses after the report.

Paytm is trying to revive its business after the Reserve Bank of India earlier this year ordered a near-shutdown of its banking affiliate. Paytm’s charismatic founder Vijay Shekhar Sharma controls the bank, which is separate from the listed fintech that trades as One97 Communications Ltd. Sharma has now forged deeper partnerships with key Indian lenders to steady his payments business, which previously largely rested on Paytm Payments Bank.

Paytm said Friday that employee costs fell 9% quarter-on-quarter, in line with its target to slash staff expenses by 4 billion to 5 billion rupees. It has cut jobs to cope with the lower business volumes since the regulator’s onslaught.

The company’s monthly transacting user base stabilized to around 78 million during the June quarter. The daily average value of payments made to merchants through its app and payment solutions, excluding disrupted products, rose during the period and is almost back to January 2024 levels, it added.

Paytm said it disbursed 50.1 billion rupees in loans, nearly the same as in the previous three-month period.

What Bloomberg Intelligence Says

“Paytm is guiding more downside risks in payment and financial services revenue in the near term, after the shuttering of its bank and a service suspension prior to that leading to merchant and user churn, with consensus seeing a more than 30% decline — both year-over-year and sequentially — in revenue for fiscal 1Q ended June. It plans to raise marketing spending to acquire and reactivate users in its efforts to recover most of the lost business volume in the January-March period.”

- Nathan Naidu, analyst

Click here for the research.

Sharma pioneered fintech in India with Paytm mobile wallets, and then QR codes. His company, once India’s most valuable startup, won the backing of some of the word’s biggest business executives including Alibaba Group Holding Ltd. founder Jack Ma, SoftBank Group Corp. boss Masayoshi Son and Berkshire Hathaway Inc. Chairman Warren Buffett. A disastrous capital markets debut in 2021 was perhaps Sharma’s first public speed bump, one from which Paytm is yet to recover — the stock is still down about 80% from its listing price.

Paytm competes with Amazon.com Inc., Alphabet Inc.’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd. in India’s crowded digital payments space.

(Updates with details from company statement in fifth to seventh paragraph)

Most Read from Bloomberg Businessweek

• The $12,000 Harvard Class Celebrities Are Fighting to Get Into

• Airbnb Hosts Want Guests to Come to Them Directly

• The Real Reason Erewhon Is a Cult Brand

• Elon Musk Goes All In for Trump

• Why Is the US Deficit So Big? Depends on Who You Ask

©2024 Bloomberg L.P.