Indian Fintech Paytm's Q3 Adjusted Loss Narrows sequentially as payments business recovers

India’s Paytm reported a narrower sequential third-quarter adjusted loss on Monday as its digital payments business recovered from the winding down of its payments bank unit.

The company posted a loss of 2.04 billion rupees ($23.6 million) before exceptional items and tax for the third quarter ended Dec. 31, compared to a 4.07-billion-rupee loss in the second quarter.

On a net basis, Paytm’s loss was narrower than the 2.2 billion rupees loss in the year-ago quarter.

In the previous quarter, it reported its first-ever profit since listing due to a one-time gain from the sale of its ticketing business to food delivery company Zomato.

Paytm’s revenue from operations rose 10.1% sequentially to 18.28 billion rupees. Its revenue from financial services, which includes its loan business, rose 34% and payment services business jumped 8%.

The Reserve Bank of India had wound down Paytm’s banking unit in January 2024, citing persistent compliance issues, sparking worries about its digital payments business.

Meanwhile, its expenses fell 31% year-on-year and 1% sequentially, mainly due to lower marketing and employee-related costs.

“Paytm’s fundamentals are improving and it seems like the regulatory hurdles are largely behind us,” said Rahul Jain, vice president – research, at Dolat Capital.

“The only pain point for Paytm remains the wallet business, which continues to bear the brunt of the RBI’s embargo on Paytm Payments Bank.”

Paytm said its earnings before interest, taxes, depreciation, and amortization before cost of employee stock options was a negative 410 million rupees, compared to negative 1.86 billion rupees in the previous quarter.

Separately, the company said it increased a default loss guarantee to 3.5 billion rupees from 2.25 billion rupees to its lending partner SMFG India Credit for loans disbursed to merchants.

Paytm shares, which are down over 11% so far in January, rose 0.3% after results, reversing course from an around 3% drop.

($1 = 86.4750 Indian rupees)

(Reporting by Nishit Navin and Sethuraman NR in Bengaluru and Siddhi Nayak in Mumbai; Editing by Savio D’Souza and Varun H K)

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