Paytm’s parent One97 Communications Ltd is expected to turn profitable from the ongoing quarter, said its founder and chief executive officer Vijay Shekhar Sharma, after the fintech firm recorded a loss in the quarter ended March.
The company reported a net loss of ₹539.8 crore in the fourth quarter of FY25, narrowing marginally over a year earlier, according to its exchange filing. The Q4 loss was driven by a one-time exceptional charge of ₹492 crore owing to the acceleration of employee stock option (Esop) expense and ₹30 crore towards other impairments. Excluding the exceptional items, the net loss stood at ₹23 crore in the quarter under review.
“This charge is one off, and exceptional in nature. We are at the verge of PAT profitability, if you were to see every other expenditure,” said Sharma in the earnings call on 6 May. “I’m very sure that in the next quarter (Q1 FY26) onwards, if everything goes as we are seeing, it could very well be a PAT profitable quarter.”
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Paytm earns most of its revenue from payment, financial, and marketing services. Paytm’s consolidated revenue from operations in Q4 dropped 16% year-on-year (YoY) to ₹1,911.5 crore from ₹2,267.1 crore. Its revenue rose sequentially.
RBI action hit business
In early 2024, the Reserve Bank of India (RBI) barred Paytm Payments Bank, an associate of Paytm, from onboarding new customers over compliance issues, which impacted the company’s business in the subsequent quarters. The National Payments Corporation of India, in October last year, allowed Paytm to onboard customers onto its UPI app through tie-ups with banks so it can expand its consumer UPI business.
The company said that it is bullish on incremental revenue from further monetization of its UPI services, citing the expectation that the government will allow merchant discount rates (MDR) “soon”. Reports suggest that the government is mulling an MDR on digital payments to large merchants.
MDR is the fee that banks collect from merchants at the point of sale for processing digital payments. For UPI payments, this fee stood at 30 basis points of the transaction value before the government waived it in 2020.
Paytm’s financial services revenue in the quarter increased 9% sequentially to ₹545 crore. The company said that while Paytm continued to see growth in merchant loans, the overall financial services customer count declined in the quarter.
This came on the back of a slow personal loan credit cycle. According to a company statement, the value of personal loans distributed by Paytm in Q4 fell to ₹1,422 crore from ₹1,746 crore a quarter earlier. The company attributed it to “its lending partners continuing with tightened risk policies, which is in line with the industry trends”.
The equity broking business, Paytm Money, also contributed to this loss in customer count due to “capital market regulatory adjustments”, it said.
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“If there is easing of the credit cycle, that will have a positive impact on personal loans. Or if we see a continued growth in credit volumes in India. In the last three or four months, there were some regulatory developments for the industry, which lowered the credit volumes,” said Madhur Deora, president and group chief financial officer. “Within Paytm Money, we think there are a lot of opportunities for us to make more advertising revenue.”
During Q4, merchant loans distribution rose to ₹4,315 crore from ₹3,831 crore in Q3, with a contribution under the default loss-guarantee (DLG) model.
Meanwhile, Paytm said that it is expanding its global footprint with new subsidiaries in the UAE, Saudi Arabia, and Singapore. “Internationalization would mean working with local players rather than launching the consumer Paytm app in newer markets. This will require much less investment into extending services in newer markets,” said Sharma.
The company also expects to double down on AI to replace additional recruitments to clock in incremental revenue. “No sharp reduction in employees, but we are unlikely to recruit to replace exits,” said Sharma.
