Paytm warns of job cuts as losses swell after RBI clampdown

Indian digital funds platform Paytm warned of job cuts on Wednesday after reporting that its internet loss widened within the fourth quarter because it grapples with a latest regulatory clampdown.

One 97 Communications, Paytm’s mother or father, mentioned it expects to chop worker bills and pare down its annual prices on employees by $48 million to $60 million.

The corporate, as soon as probably the most invaluable Indian startup, reported a internet lack of $66.1 million within the fourth quarter ended March 2024, in comparison with a lack of $20.11 million a yr earlier. Income declined about 3% to $272.4 million from $280.4 million in the identical interval.

India’s central financial institution in February banned the corporate’s banking companion and sister firm, Paytm Funds Financial institution, from conducting banking exercise from March. That introduced a sudden halt to Paytm’s slew of banking companies, and the corporate was compelled to ink new partnerships with different banks to maintain lots of these companies working.

Paytm mentioned it additionally took an impairment cost of $27.2 million associated to its funding in Paytm Funds Financial institution within the quarter. Within the quarter ending June this yr, Paytm projected its income to be within the vary of $180 million to $192 million.

Within the full yr ended March, Paytm’s income elevated 25% to $1.19 billion from a yr earlier, although larger cost processing fees, advertising prices, worker advantages fees and software program cloud bills weighed on its backside line. Consequently, internet loss widened to $170 million from a lack of $213 million a yr earlier.

Paytm’s outcomes embody “sufficient knowledge factors to counsel that the enterprise is previous the underside when it comes to cost volumes and person/service provider traction,” Bernstein analysts mentioned in a be aware to purchasers. “Although from a monetary metrics perspective, 1QFY25 is more likely to be the underside, as it will replicate the complete influence of the decrease regular state (vs. 2 months influence in 4QFY24).”

The analysts, nonetheless, cautioned that Paytm’s cost GMV has dropped by about 20% and the corporate’s expectations for its cost processing margin has additionally declined, which collectively “interprets to a close to 50% blow to the cost margins.” They estimated, nonetheless, that Paytm’s service provider lending volumes picked up in March and April — a transparent signal of revival.

Paytm had about $1.03 billion within the financial institution as of March 31. The corporate’s shares have been down about 1% on Wednesday afternoon to ₹349.20, giving it a market cap of $2.64 billion. Paytm went public in 2021 at a valuation of $20 billion.

“I’m pleased to share that we’ve got efficiently transitioned our core cost enterprise from PPBL to different companion banks. This transfer de-risks our enterprise mannequin and in addition opens up new alternatives for long-term monetization, given our platform’s energy round buyer and service provider engagement,” mentioned Paytm’s founder and CEO, Vijay Shekhar Sharma, within the firm’s annual shareholder letter.

“It has been potential in such a brief time period with intensive help from the Regulator, NPCI, Financial institution companions and our dedicated workforce mates. The unwavering dedication of our authorities and regulator to help innovation and monetary inclusion, retains us true to our mission and dedicated to our long-term sustainable progress alternative,” he added.