As losses narrowed, Paytm reveals BIG plans to expand in UAE, Saudi Arabia and…, appoints former bureaucrat…

Paytm chief financial officer Madhur Deora indicated that the company may become profitable in the next one or two quarters.

Digital payments giant Paytm, operated by One97 Communications, is set to expand its operations to the United Arab Emirates (UAE), Saudi Arabia, and Singapore. The company plans to invest up to Rs 20 crore in each market to deploy its merchant payments and financial services products, according to a regulatory filing.

Paytm’s expansion strategy includes exploring organic growth, forming strategic partnerships, making investments, and acquiring local licenses to establish a strong presence in these regions. This move aligns with the trend among Indian fintech startups, such as M2P Fintech, CCAvenue, and Pine Labs, which are also making inroads into the Middle East and Southeast Asia.

Paytm On Expansion In Overseas

The company is also looking for international expansion. It has set-up three overseas step-down subsidiaries of Paytm Cloud Technologies in the United Arab Emirates, Kingdom of Saudi Arabia and Singapore.

“We believe that our technology-led merchant payments and financial services distribution business model has the potential for expansion in similar international markets.

“We have developed a portfolio of innovative hardware, software and services stack in India, which can be deployed and monetised internationally. We are exploring various approaches, including organic expansion/local licenses, strategic investment and partnerships,” the filing said.

During the quarter, Paytm’s gross merchandise value (GMV) reached record high to touch the Rs 5 lakh-crore mark.

 Paytm Q3 Consolidated Loss Narrows

Paytm reported a narrowing of its consolidated loss to Rs 208.5 crore in the third quarter ending December 31, 2024, compared to a loss of Rs 221.7 crore in the same period a year ago. The improvement was driven by reduced expenses, particularly in payment processing charges and employee costs.

Revenue from operations declined by 35.8% year-on-year to Rs 1,827.8 crore, down from Rs 2,850.5 crore in the December 2023 quarter. The dip was primarily due to a decline in revenue from payments and financial services (34%), payment services (40%), and marketing services (48%). However, on a quarter-on-quarter basis, revenue grew by 10%, signaling signs of recovery in Paytm’s business performance.

Paytm Strategic Appointments

Paytm has also strengthened its governance by appointing former bureaucrat Bimal Julka to its board. His expertise is expected to play a crucial role in guiding the company’s strategic expansion and operational efficiency.

This dual focus on international growth and operational recovery underscores Paytm’s commitment to solidifying its position as a leading fintech player both in India and globally.

Paytm Q3 Results

Revenue from operations of Paytm declined by 35.8 per cent to Rs 1,827.8 crore during the reported quarter, from Rs 2,850.5 crore in the December 2024 quarter due to a dip in income from payments and financial services (34 per cent), payment services (40 per cent) and marketing services (48 per cent).

The revenue was, however, up 10 per cent on a quarter-on-quarter basis showing a sign of recovery in the company’s business.

The operational loss or the EBITDA before employee stock options of the company narrowed to Rs 41 crore on a quarter-on-quarter (QoQ) basis, from Rs 186 crore, primarily on account of reduction of non-sales employee costs.

“The gap between EBITDA before ESOP and PAT is going down very meaningfully. I think in two or three quarters that gap will be basically zero. So just mathematically, we are going to get very close to we are going to get to PAT profitable when EBITDA before ESOP is profitable may be in the next one or two quarters. That is not the target but that is something we are marching towards,” Deora said.

He said that the company wants to be very efficient as an organization and the work that the company has done during the year should translate into operating leverage..

“While EBITDA breakeven and PAT (profit after tax) are milestones but that is obviously not the goal. The goal is to have double-digit EBITDA margin and then have that translate into a substantial amount of PAT,” Deora said. 

The company has reduced non-sales employee costs, which include our business, technology, operations and support teams, by 11 per cent QoQ and 36 per cent YoY by leveraging artificial intelligence to improve productivity across businesses. 

Vijay Shekhar Sharma is an Indian  entrepreneur, and the founder and CEO of One97 Communications and its consumer brand Paytm.

(With Inputs from PTI)