Decoding Paytm ‘Blockbuster Loss Show’ in FY19

Media and analysts over the years have given a special place to Unicorns – startups which are valued over $1 billion. Often they hog the limelight for their growth, fundraises, branding

and their impact on people and the economy. Vijay Shekhar Sharma led Paytm has a special place even among Unicorns, thanks to its valuations, investors and now, it seems, the sheer size of losses too.

Paytm’s losses make for particularly interesting reading as the company is into its 5th-year post-expansion into the wallets space effectively, and rather than showing any signs of moderation as one would expect, losses have only spiked. In fact, in a template that could be called unique to some Unicorns, every new loss-making expansion has only led to further outreach in ever new areas making the evaluation of the business both complicated and in some ways, opaque for ordinary analysts. 

So, you might be thinking what the story of the losses we are speaking about is? While most of the companies, including Paytm are yet to file their AOC-4 with MCA, the SoftBank-backed firm had shared its annual report with shareholders.

Entrackr has access to the report and we are decoding and simplifying it for you to understand Paytm’s financial performance in FY19. The company reported a net loss of Rs 4,217.20 crore in FY19, a surge of almost 163% as compared to the previous fiscal.

Unlike losses, the operational revenue recorded a mere 5.8% growth to reach Rs 3232.01 crore in FY19. Expenses, on the other hand, witnessed a 59% increase, amounting to Rs 7,730 crore in FY19 as compared to Rs 4,864.5 crore in FY18.

For any firm, not to mention mythical Unicorns, these numbers should ideally be reversed, with growth at a high level and losses dropping sharply. But not for Paytm, it seems. 

So we did a deep dive into just what these losses are made of. As it turns out, there is no place to hide behind the usual culprits like amortisation of goodwill or other such items. These are real expenses that are burying the balance sheet in red.