One 97 Communications Ltd, the parent company of Paytm on Wednesday recorded a net loss of Rs 549.60 crore during the fourth quarter of FY24, posting a 3.2X jump from Q4FY23 when it had posted a loss of Rs 168.40 crore. The company posted revenue from operations at Rs 2267.10 crore, down 2.9 per cent on-year as against Rs 2334.50 crore during the corresponding quarter of previous fiscal year.
“Our Q4 FY 2024 results were impacted by temporary disruption on account of UPI transition, etc. and permanent disruption because of the PPBL embargo. Our contribution margin was 57 per cent including UPI incentives, and 51 per cent excluding UPI incentives. Our EBITDA before ESOP was Rs 103 crore, including UPI incentives and Rs (185) crore excluding UPI incentives,” the company stated in a regulatory filing.
During the quarter, the payments revenue grew by 7 per cent on-year to Rs 1568 core, but was down by 9 per cent sequentially, due to: 1) Disruption of PPBL products; 2) Temporary impact on account of conservative approach taken for certain businesses; and 3) Temporary disruptions in operating metrics (MTU, merchant base, GMV). In Q4 FY24, the company received UPI incentive of Rs 288 crore, versus Rs 182 crore received in Q4 FY23.
Payment processing margin for Q4 FY24, including UPI incentives pertaining to this quarter only, was at the lower end of the guided 7 to 9 bps range. With the increase in share of UPI to 80-85 per cent, the payment processing margin will be in the range of 5-6 bps (including UPI incentive), with quarterly payment processing margin of more than 3 bps as UPI incentive is received in Q4.
Subscription revenue in the quarter was impacted due to: 1) Lower new merchant deployment translated into lower revenue from incentive for deployment and set-up fees, and 2) Lower active merchants during the quarter. Merchant subscription revenue in Q4, Paytm said, was around Rs 90 per device per month and is expected to bottom out at around Rs 80 in Q1 FY 2025, post which it should increase towards Rs 100 by Q4 FY25, it stated.
Paytm’s FY24 performance
For FY2024, Paytm recorded a revenue growth of 25 per cent to Rs 9978 crore, due to GMV growth, device additions, and growth in the financial services distribution business. Net payment margin has gone up 50 per cent to Rs 2,955 crore due to increase in payment processing margin and increase in merchant subscription revenues.
The company received UPI incentives of Rs 288 crore for FY 2024 (recorded in Q4 FY24), as compared to Rs 182 crore in FY23 (recorded in Q4 FY23). The Financial services business reported a 30 per cent revenue increase due to growth in the value of loan distributed on the platform. The Marketing services business reported 14 per cent growth to Rs 1,738 crore, impacted by the lower MTUs in February and March. Contribution profit increased by 42 per cent to Rs 5,538 crore, driven by growth in net payment margin and higher-margin financial services business. On the back of growth and improvement in contribution margin, FY24 EBITDA before ESOP increased to Rs 559 crore (up Rs 734 crore).
In a letter to the shareholders, Vijay Shekhar Sharma, Managing director, Paytm, said, “FY 2024 has been a landmark year for the company as we achieved our first full year of EBITDA before ESOP profitability (since IPO) of Rs 559 crore. We demonstrated strong revenue momentum (up 25 per cent) and continued our disciplined focus on profitability (EBITDA before ESOP margin up by 8 per cent), in spite of regulatory action on our associate entity, Paytm Payment Bank Ltd (PPBL).”
“I am happy to share that we have successfully transitioned our core payment business from PPBL to other partner banks. This move de-risks our business model and also opens up new opportunities for long-term monetization, given our platform’s strength around customer and merchant engagement. It has been possible in such a short period of time with extensive support from the Regulator, NPCI, Bank partners and our committed team mates,” he added.
“We expect near-term financial impact to our revenue and profitability, due to disruptions faced in our business in Q4. 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,” Vijay Shekhar Sharma said.