Paytm Q4FY25 Loss Narrows Amid 16% Revenue Drop, Share price rises over 5%

Paytm's parent company, One 97 Communications, reported a consolidated net loss of ₹539.8 crore for the March quarter (Q4) of FY25. This marked a narrowing of the loss compared to ₹549.6 crore in the same quarter of the previous fiscal year (Q4 FY24). However, the net loss attributable to owners widened sequentially from ₹208 crore in Q3 FY25.

During the quarter, the company incurred exceptional costs amounting to ₹522 crore. These included a significant one-time, non-cash acceleration of ESOP expense totalling ₹492 crore and an impairment of ₹30 crore due to investment in a certain associate/subsidiary. Excluding these exceptional items, Paytm's loss for Q4 FY25 was ₹23 crore. The company noted that excluding the UPI incentive and exceptional items, the loss was ₹93 crore. One 97 Communications expects ESOP costs to be substantially lower starting from Q1 FY26, estimated in the range of ₹75-100 crore against ₹169 crore in Q4 FY25.

Revenue Performance

Consolidated revenue from operations in Q4 FY25 stood at ₹1,911.5 crore, a decrease of 15.7 percent year-on-year from ₹2,267.1 crore in Q4 FY24. Despite the annual decline, revenue saw a sequential increase of nearly 5 per cent from ₹1,828 crore in Q3 FY25. Operating revenue was reported as ₹1,911 crore.

The operating revenue of ₹1,911 crore included an increase in revenues from the distribution of financial services and ₹70 crore of UPI incentive for FY25. The revenue excluding the UPI incentive grew just 1 percent quarter-on-quarter, attributing this to a high base effect from festive season volumes in Q3. UPI incentive revenue was lower this year due to reduced government payouts.

Operational Metrics and Margins

EBITDA before ESOP cost for the quarter was ₹81 crore, a decline of 21 percent year-on-year from ₹102 crore. However, this represented a significant sequential improvement, increasing by ₹121 crore quarter-on-quarter. The EBITDA margin for the quarter declined by 30 bps year-on-year to 4 percent.

Net payment margin, including the UPI incentive, was ₹578 crore. Excluding the incentive, the net payment margin was ₹508 crore, up 4 percent sequentially. Payment processing margin, excluding UPI incentive, continued to be above three bps, in line with company guidance. Payments services revenue (excluding UPI incentive) was down 3 percent sequentially due to seasonality benefits in Q3, while payment processing cost was lower 9 per cent quarter-on-quarter, resulting in savings of ₹50 crore. Total expenses declined nearly 20 percent to ₹2,154.9 crore from ₹2,691.4 crore in the corresponding period last year. Paytm's merchant subscriber base for devices reached 1.24 crore as of March 2025, with an addition of 8 lakh quarter-on-quarter.

Outlook and Strategy

Looking ahead, Paytm aims to increase high-margin financial services revenue by expanding partnerships and products. Financial services revenue increased to ₹545 crore, up 9 percent sequentially. The company plans to continue strengthening the merchant payment ecosystem through innovations and aggregation of MDR-bearing payment instruments. It also intends to drive Monthly Transacting User (MTU) growth via product innovation and disciplined marketing investments.

Paytm noted its technology-led business model has potential for international expansion, exploring opportunities in select geographies that are expected to show results after three years. The company also anticipates potential policy clarity around merchant discount rates (MDR) on UPI for large merchants, which could present incremental monetisation opportunities.

Market Reaction

Shares of One97 Communications closed 5.90 percent lower at ₹815.30 on the BSE on May 6, the day results were announced. However, shares rallied over 6% on May 7 after the loss narrowing was reported. The company’s share price is currently trading at ₹859.65.

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