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Paytm, the Indian fintech giant, has announced its first-ever net profit for the September quarter, marking a significant milestone since its public listing in November 2021. This achievement was primarily driven by a one-time gain realized through the sale of its entertainment ticketing business to Zomato. While the company celebrated a consolidated net profit of Rs930 crore, a stark contrast to the Rs 292 crore loss recorded in the corresponding quarter of the previous year, the news was tempered by a decline in revenue, disappointing market expectations.
The revenue from operations took a dip, falling to Rs 1,660 crore in the second quarter of Fiscal Year 2025, a significant 34% year-on-year decrease from Rs 2,518.6 crore in the same period last year. This downturn can be attributed to the impact of restrictions imposed by the Reserve Bank of India (RBI) on Paytm’s banking unit. The RBI’s actions were a direct consequence of Paytm’s failure to comply with regulations, leading to a slowdown in the company’s growth trajectory.
Adding to the challenges, Paytm continues to grapple with the RBI’s directive to wind down its payments bank. The company also acknowledged a decline in its monthly transacting user (MTU) base, attributing this to natural churn and the hold on new UPI user additions. The MTU base dipped from 7.8 crore in the first quarter of FY25 to 7.1 crore in the second quarter, representing a 25% year-on-year decline. The revenue from Paytm’s core payments business also suffered, witnessing a 37% year-on-year decrease to Rs 946 crore in the second quarter.
Amidst these challenges, Paytm highlighted a one-time exceptional gain of Rs1,345 crore resulting from the sale of its entertainment ticketing business to Zomato. However, the stock price of Paytm reacted negatively to the news, closing at Rs 687.30 on the BSE on Tuesday, marking a 5.3% decline. The company also reported a 13% quarter-on-quarter decrease in employee costs, surpassing its initial guidance of a 5%-7% decline. Overall indirect costs, excluding employee stock ownership plan (ESOP) costs, experienced a 17% quarter-on-quarter drop to Rs 1,080 crore in the second quarter.
Moving forward, Paytm has emphasized its commitment to cost discipline, stating that it will maintain prudence in marketing spending, potentially increasing it only once it secures approval to onboard new UPI customers. The company’s performance underscores the intricate challenges faced by fintech players in navigating the evolving regulatory landscape and the competitive dynamics within the Indian market.
Source: Paytm posts first quarterly profit on gains from sale of ticketing biz