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    Preliminary talks on Zomato acquiring Paytm’s ticketing business confirmed

    Paytm and Zomato have confirmed that Zomato is in talks to acquire Paytm’s entertainment and ticketing business. In a stock exchange filing, Paytm confirmed a previous Economic Times report and stated, “Any discussions currently underway are preliminary and do not involve any binding agreements.”

    Paytm also stated that the acquisition would be in line with its plans to focus on payment and financial services along with digital goods commerce as indicated in its financial results where it emphasized it would be focusing on creating “a leaner organization structure and the pruning of non-core businesses.”

    Concurrently, Zomato has also stated that the potential acquisition intends to strengthen its “going-out business.” The acquisition would be in line with what was told to investors in its earnings call- wherein it said it intended to focus on its four key businesses: Zomato, quick commerce platform Blinkit, B2B platform Hyperpure, and now Going-out.

    Zomato’s ‘Going Out’ Business Expansion:

    In its Q1FY24, earnings call Zomato said that it believed  its “going-out business” which included dining and live events “could be the fourth large business coming out of Zomato.” This was in response to the success of its live event ‘Zomaland’. In the final quarter of FY24, Zomato revealed that ‘going out’ Gross Order Value (GOV) grew 207% YoY and 25% QoQ.

    Recently, a regulatory filing made with the Registrar of Companies (RoC) revealed that Zomato also plans to invest Rs 100 Cr. in Zomato Entertainment Pvt Ltd – its subsidiary responsible for its live events and ticketing businesses.

    Background on Paytm Entertainment:

    Paytm Entertainment first entered the events ticketing space in 2016. The ticketing platform Paytmmovies poses a significant challenge to the dominance of online ticket-booking portal BookMyShow (BMS) in the entertainment ticketing space. In July 2017, Paytm acquired a majority stake in ‘Insider.in’ for Rs 35 crore, an event ticketing platform, and added another Chennai-based online ticketing platform, TicketNew, for $40 million in July 2018.

    On January 31, following the RBI’s ban on PayTM Payments Bank Limited (PPBL) from carrying out a range of activities, including accepting deposits, carrying out fund transfers, and credit transactions, its associate entity Paytm General Insurance Limited (PGIL) withdrew its application for registering as a general insurance company with the Insurance Regulatory and Development Authority of India (IRDAI). Since then, Paytm has been focusing on shifting to far more concentrated business avenues.

    Paytm’s Financial Performance and Regulatory Challenges:

    In the final quarter of FY24, Paytm reported a poor operating revenue dipping to Rs. 2267 crore in March 2024 from a high point in December 2023 of Rs. 2850 crore, a 20% Quarter-on-quarter decrease. Similarly, the contribution profit had a 15% QoQ decline to reach Rs. 1288 crore in March 2024 from Rs. 1520 crore in December 2023.

    The earnings before interest, taxes, depreciation, and amortization (EBITDA) before employee stock ownership plans (ESOPs) also declined from Rs. 219 crore in December 2023 to Rs. 103 crore in March 2024. Monthly Transacting Users (MTU) were also down by 24% in April as compared to January, from 10.4 cr to 8 cr.

    Speaking on the financial impact of these regulatory actions, the Group’s CFO Madhur Deora said, “Last quarter, there were obviously a bunch of moving parts, and some of them affected us earlier in the quarter, and some of them affected us later in the quarter. And we do start to expect meaningful recovery from that in Q2 because we mentioned a number of things are temporary and we can restart.”

    Also Read:

    The post Preliminary talks on Zomato acquiring Paytm’s ticketing business confirmed appeared first on MEDIANAMA.

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