One97 Communications Q1 loss widens to Rs 840 Cr; revenue down 36%

One97 Communications Ltd., the parent company of digital payments platform Paytm, has reported a consolidated loss of Rs 840 crore for the quarter ending June 30, 2024, as it navigates through regulatory sanctions on Paytm Payments Bank.

Operating revenue for the quarter fell by 35.8% YoY to Rs 1,501 crore from Rs 2,338 crore in the same quarter last year.

The company's losses more than doubled, reaching Rs 840 crore in Q1FY25, compared to Rs 358 crore a year ago.

Paytm's total expenses decreased 11.5% to Rs 2,476 crore, brought down by payment processing expenses which fell by 32.5% YoY to Rs 517 crore, down from Rs 766 crore in Q1 FY24. Additionally, employee benefit expenses saw a 13.9% YoY decrease to Rs 952 crore, compared to Rs 1,106 crore in the corresponding quarter of the previous year.

"The company has achieved a 9% reduction quarter on quarter in employee costs, as part of its goal to save Rs 400-500 crore annually," the company said in a regulatory filing.

However, these cost-cutting measures were insufficient to offset the overall financial performance.

Paytm also revealed that its revenue from payments was at Rs 900 crore for the quarter ended June 30, 2024. However, it was impacted by several factors: disruptions related to Paytm Payments Bank (PPBL) products, a conservative approach towards certain business areas, and temporary operational disruptions affecting metrics like Monthly Transacting Users (MTU), merchant base, and Gross Merchandise Value (GMV).

Additionally, it clarified that no UPI incentive was received during the quarter, as it is typically paid in Q4 of the financial year.

Paytm's merchant subscriptions including devices, made a rebound to January levels, it said in an earnings presentation.

"We are focusing on redeploying devices from inactive merchants to new merchants, resulting in a marginal increase in our merchant subscriber base to 1.09 crore," the presentation said.

"We expect net device merchant additions to reach previous run rates by Q3 FY 2025. Additionally, per device subscription revenue has bottomed out and is expected to increase on back of new merchant signups and redeployment from inactive merchants," the presentation added.

Its net payment margin for the quarter stood at Rs 383 crore which includes: Payment Processing Margin and Subscription Revenues.

It also said subscription revenue per device has stabilised and is expected to rise with new signups, reactivations, and redeployments from inactive merchants.

The company’s monthly transacting user base stabilized to around 78 million during the June quarter.

Last quarter, Paytm's financials were affected due to an impairment loss of Rs 227 crore on its investment in Paytm Payments Bank Ltd (PPBL). Paytm had said the full impact of this could only be seen by Q1 FY25.

On January 31, 2024, the RBI clamped down on PPBL, an associate of One97 Communications, limiting it to only customer balance withdrawals. Consequently, One97 Communications ceased major business activities with PPBL, simplified its shareholder agreement, and withdrew its nominee director from PPBL's board.

(This is a developing story, the article will be updated to add more information.)