Paytm Faces Financial Strain Amid Regulatory Clampdown

Paytm, a leading digital payments platform in India, has warned of potential job cuts following a significant increase in net losses. The company’s parent, One 97 Communications, reported a net loss of $66.1 million in the fourth quarter ending March 2024, compared to a loss of $20.11 million in the same quarter last year. This comes in the wake of a regulatory clampdown by India’s central bank, which banned Paytm’s banking partner, Paytm Payments Bank, from conducting banking activity from March. This sudden halt forced Paytm to form new partnerships with other banks to keep many of its services running.

The company expects to cut employee expenses and reduce its annual staff costs by $48 million to $60 million. Despite a 25% increase in revenue to $1.19 billion in the full year ending March, higher payment processing charges, marketing costs, employee benefits charges, and software cloud expenses have weighed on its bottom line. As a result, the net loss widened to $170 million from a loss of $213 million a year earlier.

Paytm’s shares were down about 1% on Wednesday afternoon, giving it a market cap of $2.64 billion. The company went public in 2021 at a valuation of $20 billion. Paytm’s founder and CEO, Vijay Shekhar Sharma, stated in the company’s annual shareholder letter that they have successfully transitioned their core payment business from Paytm Payments Bank to other partner banks. This move de-risks their business model and opens up new opportunities for long-term monetization, given their platform’s strength around customer and merchant engagement.

Read more: techcrunch.com