(Bloomberg) — One97 Communications Ltd., the entity that operates leading digital payments service Paytm, said losses widened last quarter as the newly-listed company struggled to make money off transactions which slowed during the pandemic.
The company reported a loss of 4.74 billion rupees ($63 million) in the quarter ended September from 4.36 billion rupees in the same period a year ago. It’s the first earnings report since Paytm pulled off India’s biggest IPO just days ago.
Total income rose to 11.3 billion rupees last quarter, from 7.6 billion rupees a year ago. Revenues rose over 60%, while total expenses jumped to nearly 16 billion rupees from 11.7 billion rupees a year ago, the company said.
Investors will scrutinize the numbers for clues as to whether the fintech giant deserves its valuation. Paytm tumbled more than 35% over its first two days of trading, one of the worst initial showings by a major technology company since the dot-com bubble era of the late 1990s.
BlackRock, Canada Pension Bought More Paytm Stock After Rout
Despite the losses, revenues from financial services grew, buoyed by growth in lending. Income from commerce services rose to 838 million rupees — a 69% year-on-year rise — as Covid recoveries spurred a recovery in spending on travel and entertainment. Revenues from cloud services grew to 1.6 billion rupees, up 37% on-year, amid increased advertising.
“We have maintained the growth momentum in our payments services business, expanded our financial services business aggressively and are on our way to pre-Covid volumes for Commerce and Cloud services,” Paytm said in a statement. “Paytm has seen a strong second quarter of FY’22, which is a testimony to the strong two-sided ecosystem of consumers and merchants that we have built.”
Gross merchandise value, or the total value of goods and services sold, grew 107% to 1.9 billion rupees last quarter, and the momentum continued in October, Paytm said. The number of merchants on Paytm’s platform, where it leads over rivals, grew to 23 million in the second quarter of fiscal 2022, up from 18.5 million in the corresponding period in the previous year.
In recent years, competition has grown for Paytm as global technology giants such as Amazon.com Inc., Meta Platforms Inc. and Alphabet Inc. vie with a raft of startups for users.
Paytm’s dismal coming-out party has stood in stark contrast to the spectacular debuts of tech peers such as food delivery startup Zomato Ltd. and beauty retailer FSN E-Commerce Ventures, which owns Nykaa. Its gyrations spurred concerns about the sustainability of an Indian stock-market boom that has lured $17 billion of foreign inflows over the past year and stoked a trading frenzy among individual investors.
Noida-headquartered One97 was founded almost two decades ago by Vijay Shekhar Sharma. The son of a school teacher, he grew up in a town in Aligarh, in central India, and studied engineering in New Delhi, where he taught himself English. He entered digital payments in 2014 and got a massive lift when India canceled high-value currency notes toward the end of 2016.
(Updates with comments from company from fifth paragraph)
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
