One97 Communications (PAYTM) Q1 24/25 earnings summary

Executive summary

• Business performance stabilized with operational resilience, cost control, and a focus on compliance and profitability, aiming for at least one profitable quarter in the current fiscal year, excluding one-time UPI incentives and ESOP costs.

• Q1 FY 2025 revenue and profitability aligned with guidance, with payment operating metrics rebounding to January 2024 levels.

• Consolidated revenue from operations for the quarter ended June 30, 2024, was INR 15,016 million, down from INR 22,671 million in the previous quarter and INR 23,416 million in the same quarter last year.

• Net loss for the quarter was INR 8,401 million, compared to INR 5,505 million in the previous quarter and INR 3,584 million in the same quarter last year.

• Strategic priorities include payments, cross-selling financial services, merchant marketing services, credit distribution, and compliance.

Financial highlights

• Operating revenue for Q1 FY 2025 was $180 million, down 36% year-over-year and 34% quarter-over-quarter.

• Contribution profit was $91 million (margin 50%), down 42% year-over-year and 41% quarter-over-quarter.

• Indirect expenses increased to INR 1,300 crore from INR 1,200 crore last quarter, driven by one-off marketing, migration, and provisioning costs.

• Employee costs declined by about 10% quarter-over-quarter, with further 5%-7% reduction expected.

• One-off expenses in the quarter estimated at INR 80-100 crore, mainly from migration and tightened provisioning for device merchant receivables.

Outlook and guidance

• Revenue and profitability expected to improve due to GMV growth, expanding merchant base, recovery in loan distribution, and ongoing cost optimization.

• Expectation of lower indirect expenses and marketing costs in coming quarters.

• CapEx for the year projected to be meaningfully lower than last year due to redeployment of inactive devices.

• Medium-term EBITDA margin target of high double digits, aiming for 15%-20% by fiscal 2027-2028.

• Management assessed that regulatory actions affecting Paytm Payments Bank Ltd. (PPBL) and ongoing uncertainties may continue to impact business operations.