Paytm Swings To Profit, Posts INR 123 Cr PAT In Q1

Fintech major Paytm turned profitable in the first quarter of FY26, posting a consolidated net profit of INR 122.5 Cr against a net loss of INR 840.1 Cr in the year-ago quarter. The company had reported a net loss of INR 544.6 Cr in the preceding March quarter.

The Vijay Shekhar Sharma-led company’s revenue from operations grew 28% to INR 1,918 Cr during the quarter under review from INR 1,502 Cr in Q1 FY25. It was almost flat compared to INR 1,911 Cr operating revenue in Q4 FY25.

The company attributed the profitability to “AI-led operating leverage, disciplined cost structure” and higher other income. Notably, Paytm’s other income zoomed 47% YoY to INR 241.4 Cr during the quarter due to receipt of interest on tax refund.

Paytm reported an EBITDA profit of INR 72 Cr in Q1 FY26 against an EBITDA loss of INR 792 Cr a year ago and an EBITDA loss of INR 88 Cr in Q4 FY25.

The fintech major’s contribution profit, which it defines as operating revenue minus direct expenses, zoomed 52% YoY and 7% QoQ to INR 1,151 Cr in the June quarter. Meanwhile, contribution margin expanded to 60% from 50% in the year-ago quarter and 56% in the preceding March quarter.

Paytm said the improvement in contribution margin and profit came on the back of increase in net payment revenue, higher share of revenue from distribution of financial services, and reduction in direct expenses.

Where Did Paytm Get Revenue From? 

Payment Services: The company’s payment services vertical recorded a modest 18% growth in revenue to INR 1,044 Cr during the quarter under review from INR 884 Cr a year ago. It was almost flat on a QoQ basis compared to INR 1,046 Cr. 

The segment’s gross merchandise value (GMV) grew 27% YoY to INR 5.39 Lakh Cr. Paytm said that merchant subscriptions reached an all-time high of 1.30 Cr as of June 2025, representing a YoY increase of 21 Lakh. Meanwhile, the average monthly transacting users (MTU) reached 7.4 Cr in Q1 FY26. 

The company said that efforts to enhance operational efficiency, including lower device costs, refurbishment of old devices, and increased sales team productivity, resulted in lower capex despite substantial device growth. These improvements enabled the company to pass on benefits to its most engaged merchants, leading to higher merchant retention. 

Distribution Of Financial Services: The financial services vertical, under which the company  provides loans, equity broking, and insurance services, saw its revenue double to INR 561 Cr during the quarter from INR 280 Cr in Q1 FY25. Sequentially, revenue grew 3% from INR 545 Cr. 

The 100% YoY growth was primarily driven by expansion in merchant loans, trail revenue from the default loss guarantee (DLG) portfolio, along with the improved asset quality.

In Q1 FY 2026, about 5.6 Lakh financial services customers (including consumers and merchants) availed the aforementioned services through Paytm. 

While the customer base has remained range-bound in recent quarters, mainly due to the personal loan credit cycle and a slowdown in equity broking (Paytm Money) caused by capital market regulatory adjustments, the company said it has been focussing on mutual fund distribution and equity broking to drive growth in Paytm Money.

Marketing Services: The revenue of the marketing services segment experienced a decline, dropping 23% to INR 247 Cr from INR 321 Cr in the same period of previous year. Sequentially, it slipped 7% from INR 267 Cr in the previous quarter. 

However, on a like-to-like basis, after adjusting for the sale of the entertainment ticketing business in Q2 FY25, the revenue was down 12% YoY, largely due to a decline in MTUs.

During the quarter under review, the GMV for ticketing, deals, gift vouchers, among others, stood at INR 2,087 Cr. 

The company’s marketing services portfolio includes advertising services, marketing of financial services and sales of gift vouchers and travel tickets. 

Breaking Down The Expenses

Paytm’s total expenses for the quarter under review declined 18% to INR 2,016.1 Cr from INR 2,476.4 Cr in Q1 FY25. On a QoQ basis, expenses fell 6.4% from INR 2,154.9 Cr. 

The decline in the expenses was mostly attributed to the increasing use of AI. “Across the organisation, our workflow is moving towards AI-led systems to become machine first, supervised by humans,” Paytm said.

Marketing & Promotional Expenses: The spending expenses under this head fell 122% to INR 99.8 Cr from INR 221.4 Cr in the same period last year. 

Employee Benefit Expenses: Employee costs reduced 48% to INR 642.6 Cr from INR 952.6 Cr in the year-ago period. 

Payment Processing Charges: The company’s expenses under this head rose 13% to INR 362.5 Cr from INR 321.8 Cr in the same period last year. 

Shares of Paytm ended today’s trading session 3.4% higher at INR 1,052.60 on the BSE.