(Bloomberg) — Paytm’s revenue fell sharply for the second straight quarter, reflecting the Indian fintech company’s struggles to revitalize its bottom line after a regulatory crackdown on some of its most important businesses.
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The stock fell 7.8% on Tuesday after the company reported a 34% drop in sales to 16.6 billion rupees ($197 million). It also reported its first-ever net profit, although much of it came from a Rs 13.5 billion gain from the sale of its events ticketing business to internet peer Zomato Ltd .
A profitable quarter doesn’t help ease Paytm’s long-term challenges. The company is trying to convince users and investors of its prospects following a regulatory attack in early 2024 that caused its stock to collapse. Facing intense competition from companies like Google in digital payments, it is struggling to retain its users while expanding in areas like lending.
Indian regulators have ordered the virtual shutdown of Paytm’s banking arm after years of warnings about unregulated data flows between that unit and the biggest fintech. It disrupted the company’s payment processing and much of its overall business, and forced founder Vijay Shekhar Sharma to forge deeper partnerships with other Indian lenders. The company is still waiting for authorizations from the Indian central bank and a payment organization to stabilize a large part of its activities.
The stock plunged more than 50% in February following the regulator’s actions, but has since recovered much of that value.
Paytm has since downsized and sold its movie and events ticketing business to Zomato Ltd. for $244 million. The sale is part of the company’s strategy to focus more on areas such as payments, cashback and the distribution of financial services such as loans – important activities to expand its merchant base and increase his income.
It also scored a small victory in August by gaining federal approval to invest in its key payment gateway arm. The investment is a step towards obtaining a payments aggregator license, which has been pending before the Reserve Bank of India since 2022, when it also barred the company from adding new merchants in line.
What Bloomberg Intelligence says
“Paytm’s first-ever net profit – since its public listing in November 2021 – of Rs 9.3 billion in the second fiscal quarter ended September is based on a one-time gain of Rs 13.5 billion from the sale of its events activity at Zomato in August. That should help it focus on recovering lost payment activity volume after transacting users fell 12.5% sequentially in the first quarter. Paytm still needs approval from regulators to onboard new customers and online merchants.