Mumbai: Paytm has warned of job cuts and says it will trim non-core assets after reporting its first sales decline on record, reflecting fallout from a regulatory probe that curtailed much of the Indian financial technology (fintech) pioneer’s business.
Once a role model for India’s nascent startup economy, Paytm’s net losses swelled several-fold to 5.5 billion rupees for the three months through March.
The company known as One 97 Communications Ltd reported a 2.6% slide in revenue to 22.7 billion rupees – the first drop since its 2021 stock-market debut.
Its shares slid as much as 2%.
Paytm, founded by then-celebrated Indian entrepreneur Vijay Shekhar Sharma in 2010, is struggling to recover after a finance watchdog in January ordered a key banking affiliate to wind down.
The restrictions dealt a blow to Paytm’s reputation and prompted speculation that customers could defect to rivals such as Walmart Inc’s PhonePe.
Yesterday, Paytm said it was profitable before interest, taxes, depreciation and amortisation, and before taking employee incentives into account.
It warned that revenues should slide further to between 15 billion and 16 billion rupees in the June quarter.
However, it expected “meaningful improvement” thereafter.
To get there, the company intends to streamline the organisation, cut employee costs and “prune” non-core businesses, it said in a statement.
Paytm, which also competes with financial services offered by Amazon.com Inc, Alphabet Inc’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd, is trying to put its regulatory issues behind it.
Its shares have lost half of their value since the government ordered Paytm Payments Bank Ltd (PPBL), which processed transactions for Paytm, to halt its key operations.
The Reserve Bank of India, in late January, had ordered PPBL to stop accepting fresh deposits in its accounts or digital wallets from March due to non-compliance with norms.
The banking affiliate known as PPBL isn’t controlled by Paytm, though it is part of founder and chief executive officer Sharma’s fintech empire.
Sharma has since moved swiftly to steady the ship by forging new partnerships with some of India’s top lenders including Axis Bank Ltd, HDFC Bank Ltd and State Bank of India Ltd.
The alliances will help Paytm power instant money transfers for customers by linking banks with its fintech app.
Paytm previously used its bank affiliate to run its digital wallets and payments traffic.
The firm is also using partner banks for clearing merchant transactions.
Yesterday, Paytm said it lost about four million monthly transacting users during the March quarter. It disbursed 57.76 billion rupees in loans, down sharply from 155.35 billion rupees in the previous three-month period.
“We expect near-term financial impact to our revenue and profitability, due to disruptions faced in our business in the fourth quarter,” Sharma said in a letter to shareholders.
“This includes steady state impact due to pausing of PPBL wallet. We had also paused a few other payments and loan products to our customers during the last quarter, and I am happy to share that many such products have been restarted or in the process of starting soon.” — Bloomberg