News
Paytm flags job cuts, asset sales after India probe
(Bloomberg) — Paytm warned of job cuts and said it would cut non-core assets after reporting its first sales decline on record, reflecting the fallout from a regulatory probe that clamped down on much of the Indian fintech pioneer’s business.
Bloomberg’s Most Read
Once a model for India’s nascent startup economy, Paytm’s net losses widened severalfold to 5.5 billion rupees ($66.1 million) in the three months to March. The company known as One 97 Communications Ltd. reported a 2.6% drop in revenue to 22.7 billion rupees – the first drop since its stock market debut in 2021. Its shares fell as much as 2%.
Paytm, founded by then-celebrated Indian businessman Vijay Shekhar Sharma in 2010, is struggling to recover after a financial watchdog in January ordered the closure of a key banking affiliate. The restrictions were a blow to Paytm’s reputation and sparked speculation that customers might defect to rivals such as Walmart Inc’s PhonePe.
On Wednesday, Paytm said it was profitable before interest, taxes, depreciation and amortization, and before taking into account employee incentives. It warned that revenues are expected to fall further to 15 to 16 billion rupees in the June quarter, but expects a “significant improvement” thereafter. To get there, the company intended to simplify the organization, cut employee costs and “prune” non-essential businesses, it said in a statement.
Paytm, which also competes with financial services offered by Amazon.com Inc., Alphabet Inc.’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd., is trying to put its regulatory issues behind it.
Its shares have lost half their value since the government ordered Paytm Payments Bank Ltd., which processed transactions for Paytm, to halt its main operations, citing non-compliance. The banking affiliate known as PPBL is not controlled by Paytm, although it is part of founder and CEO Sharma’s fintech empire.
Since then, Sharma has moved quickly to steady the ship, establishing new partnerships with some of India’s top lenders, including Axis Bank Ltd., HDFC Bank Ltd. and State Bank of India Ltd. The alliances will help Paytm boost instant money transfers for customers by linking banks with your fintech app. Previously, Paytm used its banking affiliate to manage its digital wallets and payment traffic.
The story continues
The company is also using partner banks to clear commercial transactions.
Read: Paytm’s Sharma says company can overcome setbacks to lead in Asia
What Bloomberg Intelligence says
Paytm is poised for a strong return in sales and margins in fiscal 2026 after a past mired in regulatory issues, driven by a long period and a strong user acquisition funnel from payments. Its share of Indian digital payments, while less dominant than Walmart’s PhonePe and Google Pay, could remain stable, helping it reach its target of 500 million users. Regulatory problems should ease with a new payments license, its bread and butter, with the segment margin set to expand the optimization of the system and its integrated offerings. Loans, insurance and advertising can catalyze sales for the Ant Financial-backed company.
-Nathan Naidu, analyst
Click here for the survey.
On Wednesday, Paytm said it lost around 4 million monthly transacting users during the March quarter. It disbursed 57.76 billion rupees in loans, a sharp drop from 155.35 billion rupees in the previous three-month period.
“We expect short-term financial impact on our revenues and profitability due to the disruptions faced in our business in the fourth quarter,” Sharma said in a letter to shareholders. “This includes the steady state impact due to the PPBL portfolio pause. We also paused some other payments and lending products for our customers during the last quarter and I am pleased to share that many of these products have restarted or are in the process of starting soon.”
–With assistance from Vlad Savov.
(Updates with Paytm earnings report details)
Bloomberg Businessweek Most Read
©2024 Bloomberg LP