Paytm warned of job cuts and said it would trim non-core assets after reporting its first recorded sales decline, reflecting the fallout from a regulatory probe that has curtailed much of the Indian fintech pioneer’s business.
Once a role model for India’s fledgling upstart economy, Paytm’s net losses widened several times to Rs. 5.5 billion ($66.1 million) in the three months to March. The company known as One 97 Communications reported a 2.6 percent decline in revenue to Rs. 22.7 billion — the first drop since its debut on the stock market in 2021. Its shares fell as much as 2 percent.
Paytm, which was founded in 2010 by the then celebrated Indian entrepreneur Vijay Shekhar Sharma, has been struggling to recover after the financial watchdog ordered the closure of a key branch of the bank in January. The restrictions have dealt a blow to Paytm’s reputation and fueled speculation that customers may defect to rivals such as Walmart’s PhonePe.
Paytm on Wednesday said it is profitable before interest, tax, depreciation and amortization and before taking into account employee incentives. It warned that revenue should fall further to 15 billion to 16 billion rupees in the June quarter, but expected a “significant improvement” thereafter. To achieve this, the company intended to streamline the organization, reduce employee costs and “prune” non-core jobs, the statement said.
Paytm, which also competes with financial services offered by Amazon.com, Alphabet’s Google and billionaire Mukesh Ambani’s Jio Financial Services, is trying to resolve its regulatory issues.
Its shares have lost half their value since the government ordered Paytm Payments Bank, which processed transactions for Paytm, to halt its key operations, citing non-compliance. The banking company known as PPBL is not controlled by Paytm, although it is part of founder and CEO Sharma’s fintech empire.
Sharma has since moved quickly to steady the ship by forging new partnerships with some of India’s largest lenders including Axis Bank Ltd., HDFC Bank Ltd. and State Bank of India Ltd. The alliances will help Paytm empower instant money transfers for customers by connecting banks with its fintech app. Paytm previously used a subsidiary of its bank to run its digital wallets and payment transactions.
The company also uses partner banks for clearing trade transactions.
Paytm on Wednesday said it lost around 4 million monthly transaction users during the March quarter. It disbursed 57.76 billion rupees in loans, a sharp decline from Rs. 155.35 billion in the previous three-month period.
“We expect a short-term financial impact on our revenues and profitability, due to the disruptions we faced in our operations in the fourth quarter,” Sharma said in a letter to shareholders. “This includes the impact on the stable balance due to pausing the PPBL wallet. We also paused several other payment and credit products to our customers during the last quarter and I am happy to share that many such products have been re-launched or are in the process of re-launching soon.”
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