Paytm Achieves Profitability with Rs 122.5 Crore Earnings in Q1
Fintech giant One97 Communications, operating under the Paytm brand, has announced a significant milestone by reporting its first-ever consolidated net profit of ₹122.5 crore for the quarter ending June 2025 (Q1 FY26). This achievement marks a remarkable turnaround from a net loss of ₹840 crore during the same period last year. The company attributes this success to effective cost optimization strategies and an increase in payment revenues, highlighting a positive trend in its financial performance.
Financial Performance Highlights
In its latest financial report, Paytm revealed that both EBITDA and profit after tax (PAT) turned profitable, reaching ₹72 crore and ₹123 crore, respectively. The company credited advancements in artificial intelligence (AI) for enhancing operational efficiency, alongside a disciplined cost structure and increased other income. Notably, Paytm managed to reduce its marketing and promotional expenses by over 50%, dropping from ₹221.4 crore to ₹99.8 crore compared to the previous year. Additionally, employee benefit expenses saw a significant decrease, falling by approximately ₹300 crore to ₹643 crore from ₹952.5 crore in the same quarter last year.
While costs associated with sales employees rose by 19% year-on-year to ₹266 crore, non-sales employee costs experienced a notable decline of 28%, attributed to the adoption of AI across various processes. The average number of sales employees increased by 23% year-on-year, reaching 38,945, reflecting the company’s commitment to expanding its workforce in line with its growth strategy.
Revenue Growth and Market Expansion
Paytm’s revenue from operations for the quarter surged by 28% year-on-year, totaling ₹1,917.5 crore, compared to ₹1,501.6 crore in Q1 FY25. This growth was primarily driven by improved payment processing margins. Revenue from payment services, which includes other operating income, rose by 23% year-on-year to ₹1,110 crore, while net payment revenue saw a remarkable increase of 38% year-on-year, reaching ₹529 crore. This growth is attributed to enhanced margins and an increase in device usage.
The company also reported a 27% rise in gross merchandise value (GMV), which reached ₹5.39 lakh crore during the quarter. Merchant subscriptions hit a record high of 1.3 crore, an increase of 21 lakh year-on-year, driven by improvements in devices and service networks. To further solidify its position in tier-1 markets and expand into tier-2 and tier-3 cities, Paytm is investing in expanding its sales network, with sales personnel costs increasing by 19% year-on-year.
Innovations and Future Prospects
In addition to its impressive financial results, Paytm reported a significant doubling of revenue from financial services distribution, reaching ₹561 crore year-on-year. This growth was fueled by merchant loans, trail revenue from the Default Loss Guarantee (DLG) portfolio, and improved asset quality. The average monthly transacting users (MTU) base also saw an increase, reaching 7.4 crore during the reported quarter.
Furthermore, the company experienced a sharp 88% reduction in employee stock option plan (ESOP) costs, which fell to ₹30 crore from ₹247 crore a year ago. This decrease was influenced by CEO Vijay Shekhar Sharma’s voluntary surrender of his ESOPs, leading to a cost adjustment. As Paytm continues to leverage technology and optimize its operations, it aims to maintain its growth trajectory and enhance its market presence in the competitive fintech landscape.
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