Paytm’s issues dent Q4 earnings, but hits first EBITDA profitable year in FY 2024

Image courtesy Quartz India

Paytm generated 99.8 billion rupees (US$1.2 billion) in revenue for its 2024 financial year, a 25% growth from the previous period, while also logging its first full year of EBITDA profitability since its 2021 IPO. The Indian fintech giant also cut its loss for the year by 20% compared to FY 2023.

However, recent regulatory woes slowed Paytm’s momentum in Q4. Compared to the December quarter, Q4 revenue fell around 20% to US$272.4 million, while its loss widened almost 2.5x.

“We expect near-term financial impact to our revenue and profitability due to disruptions faced in our business in Q4,” acknowledged Vijay Shekhar Sharma, founder and CEO of Paytm parent One97 Communications, in his letter to shareholders. However, he noted that the company has also “successfully transitioned” its business from Paytm Payment Bank – its embattled affiliate – to other partner banks.

Paytm’s EBITDA landed at US$57.2 million in FY 2024, though this doesn’t take into account its employee stock ownership plan. The company’s revenue from its financial services arm saw a 30% increase to US$245.1 million, largely credited to an increase in loan values distributed.

The firm’s Q4 was burdened by the ban on Paytm Payment Bank. The affiliate bank had also received an inquiry from the Enforcement Directorate, the government entity that probes economic crimes and financial fraud, and Paytm has since terminated intercompany agreements with its affiliate bank.

Meanwhile, Bloomberg reported that Paytm’s shares, whose prices have roughly halved compared to a year ago, had been one of the world’s worst-performing fintech stocks. The company had also made recent shifts to its top management.

Shekhar said in his shareholder letter that the company is working on “significant cost efficiencies, including a leaner organizational structure.” He added that the company expects “tangible results” over the next few quarters from its ongoing AI initiatives.

See also: Asian tech feels the heat as regulators bare teeth