Paytm, an Indian digital payments company, warned of job losses on Wednesday following news that its net loss expanded in the fourth quarter as it dealt with a recent regulatory clampdown.
The owners of Paytm, One97 Communications, said it hopes to reduce staff yearly spending by $48 million to $60 million, thereby lowering personnel costs.
Once the most valued Indian startup, the firm posted a net loss of $66.1 million in the fourth quarter ending March 2024, up from a loss of $20.11 million a year earlier. Revenue dropped almost 3% to $272.4 million from $280.4 million during the same period.
India’s central bank barred Paytm Payments Bank, the business’s banking partner and sibling company, from operating in March. This abruptly halted Paytm’s banking services, forcing the firm to form new alliances with other banks to maintain many of these services. 
The company said that during the quarter it also paid an impairment charge of $27.2 million related to its investment in Paytm Payments Bank. Paytm estimated that its quarter ending June this year will have sales ranging from $180 million to $192 million.
Though rising payment processing charges, marketing expenditures, employee benefits charges, and software cloud expenses dragged on Paytm’s bottom line, Paytm’s revenue grew 25% to $1.19 billion in the full year ended March from a year before. As a result, the net loss increased from $213 million a year earlier to $170 million.
“Enough data points to suggest that the business is past the bottom in terms of payment volumes and user/merchant traction,” Bernstein analysts wrote in a note to investors. “Though, from a financial metrics perspective, 1QFY25 is likely to be the lowest, since it would represent the complete effect of the reduced steady state (vs. the 2-month impact in 4QFY24).”
Paytm’s payment GMV has plummeted by around 20%, the analysts noted, and the company’s forecasts for its payment processing margin have also dropped, which, taken together, “translates to a near 50% blow to the payment margins. But merchant loan volumes increased in March and April, a strong indication of recovery, he said.
As of March 31, Paytm has around $1.03 billion in the bank. With its shares down almost 1% on Wednesday afternoon to ₹349.20, the business has a market capital value of $2.64 billion. Paytm will go public in 2021 with a $20 billion value.
“It gives me great pleasure to report that we have effectively moved our main payment business from PPBL to another partner bank. Given the strength of our platform around user and merchant interaction, this action de-risks our business model and also creates new prospects for long-term monetisation, said Vijay Shekhar Sharma, founder and CEO of Paytm, in the annual shareholder letter.
With great help from the regulator, NPCI, bank partners, and our dedicated team members, it has been achievable in such a short period of time. He said, “Our government and regulator’s relentless dedication to support innovation and financial inclusion keeps us true to our goal and committed to our long-term sustainable growth possibility.”
