Paytm Posts Surprise Profit, Shares Dip 7.74%

Paytm profits soar, revenue dips

Fintech company One 97 Communications, which operates Paytm, reported a consolidated profit after tax (PAT) of ₹928.3 crore for Q2 FY2025, compared to a loss of ₹290.5 crore in the same quarter last year, driven by a one-time exceptional gain. The company’s revenue fell 34% year-on-year (YoY) to ₹1,660 crore, down from ₹2,519 crore, largely due to the sale of its entertainment ticketing business to Zomato, which resulted in a one-time gain of ₹1,345 crore.

Sequentially, Paytm’s revenue grew 11%, supported by a 5% quarter-on-quarter (QoQ) rise in gross merchandise value (GMV), better device realization, and a 34% increase in financial services revenue. Paytm’s net payment margin also saw a 21% QoQ improvement, reaching ₹465 crore, attributed to higher payment processing margins and increased GMV. Financial services revenue reached ₹376 crore, up 34%, driven by better asset quality in merchant loans and a higher proportion of these loans.

The company reduced indirect costs by 17% QoQ to ₹1,080 crore, thanks to lower employee and marketing expenses, as well as the absence of certain one-time costs from the previous quarter. Payments revenue grew 9% QoQ to ₹981 crore, with GMV rising to ₹4.5 lakh crore, up 5%. Paytm expects payment processing margins to remain within the 5-6 basis points range for the year. Cost discipline, including employee and marketing expenses, will remain a focus area moving forward.

Following these results, Paytm shares dropped by over 3%, trading at ₹701.55 on the BSE.

On Tuesday, October 22, One 97 Communications, the parent company of Paytm, reported a net profit of ₹928 crore for the quarter ending September 30, 2024 (Q2 FY25), a significant turnaround from the ₹839 crore loss recorded in the previous quarter. In the same quarter last year, Paytm had posted a loss of ₹291.7 crore.

The net profit for Q2 FY25 was primarily driven by a one-time gain of ₹1,345 crore from the sale of its movie ticketing business to Zomato. Without this exceptional gain, Paytm would have reported a net loss of ₹415 crore, which would have been a greater loss than that reported in the same quarter of the previous year.

After the earnings announcement, shares of One 97 Communications dropped by as much as 7.74%, reaching ₹669.65 on the BSE. Revenue from operations was ₹1,659.5 crore, reflecting a 34% year-on-year (YoY) decline from ₹2,518.6 crore in Q2 FY24, though it rose 10.5% sequentially.

In its earnings report, Paytm highlighted its core focus on acquiring consumers and merchants for payments and cross-selling financial services. Starting this quarter, the company disclosed the number of unique financial services customers, which include those using services like equity broking, insurance, and loans (excluding mutual fund distribution, postpaid loans, and some insurance products due to their minimal contribution to revenue).

In Q2 FY25, 6 lakh key financial services customers (consumers and merchants) used Paytm’s platform, slightly up from 5.9 lakh in Q1 FY25. The company sees potential for cross-selling financial services to its highly engaged user base and plans to continue expanding partnerships with financial institutions to broaden its offerings.

During the quarter, Paytm finalized the sale of its entertainment ticketing business to Zomato for ₹2,014 crore, after adjustments, contributing to a one-time gain of ₹1,345 crore and boosting its cash reserves to ₹9,999 crore.

Q2 Results 2024 Live: Notable companies, including Bajaj Finance, Adani Green, Zomato, and One97 Communications (Paytm), are among approximately 67 firms set to report their earnings for the second quarter of fiscal year 2024-25. On October 22, fintech firm Paytm announced a net profit of ₹930 crore for the quarter ending September 30, 2024.

Ultratech Cement received mixed reviews from analysts after reporting a slight miss in standalone operational performance for Q2 FY25, attributed to lower-than-expected volume growth and increased other expenses. While weak demand and pricing pressures have led brokerages to adopt a cautious outlook, they anticipate that infrastructure investments and sustained growth in urban housing will drive growth in the second half of the fiscal year, along with cost efficiency benefits.

On Monday, domestic telecom equipment manufacturer HFCL reported a 4.5% year-on-year increase in consolidated net profit for Q2 FY25, totaling ₹73 crore. However, revenue fell by 1.61% YoY to approximately ₹1,094 crore. Managing Director Mahendra Nahata stated that the company maintained steady performance despite ongoing global softness in demand for optic fiber cables.

Mahindra Logistics Ltd reported a 54% decline in standalone profit after tax (PAT) for the September quarter FY25, amounting to ₹8.5 crore, down from ₹18.6 crore in the same quarter last year. However, revenue rose by 9% to ₹1,236 crore, up from ₹1,136 crore in July-September FY24.

State-owned Union Bank of India reported a 34% increase in net profit, reaching ₹4,720 crore for the second quarter ending September 2024, compared to ₹3,511 crore in the same quarter a year prior. Total income also rose to ₹32,036 crore from ₹28,282 crore in the same period last year, as per a regulatory filing.

Other significant companies expected to announce their September quarter earnings today include ICICI Prudential Life Insurance, Adani Energy Solutions, Varun Beverages, Mahindra & Mahindra Financial, Indus Towers, Coforge, and SRF, alongside Bajaj Finance, Adani Green, Zomato, and One97 Communications (Paytm).