Paytm, the Indian financial technology company, reported a decreased sequential adjusted loss for the third quarter on Monday, reflecting a recovery in the digital payments sector following the discontinuation of its payments bank operations.
For the third quarter ending December 31, the company reported a loss of 2.04 billion rupees ($23.6 million) before exceptional items and taxes, an improvement from the 4.07 billion rupee loss recorded in the second quarter.
On a net basis, Paytm's loss was less severe than the 2.2 billion rupee loss reported in the same quarter last year.
In the previous quarter, the company achieved its first profit since going public, attributed to a one-time gain from selling its ticketing business to Zomato, a food delivery service.
Paytm's operational revenue increased by 10.1% sequentially, reaching 18.28 billion rupees. Revenue from financial services, which encompasses its lending operations, surged by 34%, while the payment services segment grew by 8%.
The Reserve Bank of India had shut down Paytm's banking unit in January 2024 due to ongoing compliance issues, raising concerns about the future of its digital payments operations.
Additionally, the company's expenses decreased by 31% year-on-year and 1% sequentially, primarily due to reductions in marketing and employee-related expenditures.
"Paytm's fundamentals are showing improvement, and it appears that the regulatory challenges are mostly resolved," stated Rahul Jain, vice president of research at Dolat Capital.
"The primary challenge for Paytm continues to be its wallet business, which is still affected by the RBI's restrictions on Paytm Payments Bank."
Paytm reported an earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of 410 million rupees, a significant improvement from the negative 1.86 billion rupees in the previous quarter.
A separate announcement detailed an increase in the default loss guarantee for our lending partner, SMFG India Credit, to INR 3.5 billion from INR 2.25 billion, covering merchant loans.
Following the earnings report, Paytm's stock price experienced a 0.3% increase, recovering from an earlier 3% decline, despite a January share price decrease exceeding 11%.