Startup Originals Team
Paytm’s parent company, One 97 Communications Ltd, has turned a remarkable corner by posting its first-ever quarterly net profit since going public in 2021. For the quarter ending June 30, 2025 (Q1 FY26), the fintech giant reported a consolidated net profit of ₹123 crore-a dramatic shift from the ₹840 crore loss in the same period a year ago.
Robust Revenue Growth Fueled by Lending Business:
In Q1 FY26, Paytm’s operating revenue surged 28% year-over-year, hitting ₹1,918 crore compared to ₹1,502 crore in Q1 FY25. Total revenue, including other income streams, climbed to ₹2,159 crore. This growth was mainly attributed to the company’s expanding lending operations and an overall boost in payment services.
Significant Expense Reduction Drives Profitability:
One of the biggest contributors to Paytm’s turnaround has been disciplined cost control. Total expenses fell by 19% year-over-year to ₹2,016 crore. Key cost reductions included:
- Marketing expenses: Decreased 55% to ₹100 crore
- Employee costs: Down 33% to ₹643 crore
Despite employee benefits remaining the largest cost center, cuts in areas like software and communications led to overall savings. These measures, paired with new operating efficiencies, turned the company’s Ebitda positive at ₹72 crore after losses in the previous two quarters.
Lending and Financial Services Propel Growth:
The company’s financial services arm, especially merchant loans and income from older loan portfolios underwritten with default-loss guarantees (DLGs), generated ₹561 crore in revenue-double last year’s figure. While personal lending faced regulatory headwinds from the Reserve Bank of India, merchant lending remained robust through non-DLG partnerships.
In total, Paytm provided services to 560,000 financial services customers during the quarter, covering loans, equity broking, and insurance. The company also highlighted plans to deepen its focus on mutual fund distribution and equity broking via the Paytm Money platform.
Payment Business Expands with Subscription-Based Devices:
Net payment revenues increased by 38% year-over-year, reaching ₹529 crore. This growth was powered by a larger base of subscription-based merchant devices-which hit a record 13 million units-and improved payment economics.
Although sequential revenue stayed flat, the business benefitted from margin improvements linked to optimized capital expenditures and higher field productivity. The quarter closed with a strong cash balance of ₹12,872 crore, further supporting business momentum.
Embracing Technology for Efficiency:
Paytm credited its operational turnaround not only to strict cost discipline, but also to new automation and AI-driven processes. Leveraging AI has helped cut costs in onboarding, transaction monitoring, and customer support, supporting profitability and scalability.
Paytm’s historic profit-marked by soaring revenues, effective cost management, and renewed growth in lending-signals a new and stable phase for the company. As Paytm continues to innovate and optimize, it stands poised to further solidify its position in India’s fintech sector.
