Paytm Q1 results: Firm swings into black, posts net profit of Rs 123 crore, revenue up 28%

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26 Aug, 2025 12:21

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One 97 Communications Ltd, the parent of Paytm, on July 22 reported consolidated net profit of Rs 123 crore in the quarter ended June 30, 2025 as against net loss of Rs 839 crore a year ago, aided by strong lending business and as it kept a tight lid on expenses, especially marketing and employee cost.

The company also reported a positive Ebitda of Rs 72 crore, compared to an Ebitda loss in both Q4FY25 and Q1FY25, as it benefited from operating leverage, lower marketing spends, and improved contribution margins across business lines.

Operating revenue for the quarter stood at Rs 1,918 crore, growing 28 percent year-on-year and marginally up from Rs 1,911 crore in Q4FY25. Total income, which includes other income, rose to Rs 2,159 crore.

Contribution profit increased 52 percent YoY to Rs 1,151 crore, with contribution margin expanding to 60 percent, up from 50 percent a year earlier. Total expenses came in at Rs 2,016 crore, 19 percent lower than Rs 2,476 crore in the year-ago period, aided by tighter control over employee and marketing spends.

Paytm had reported a net profit of Rs 153 crore in the September 2024 quarter (Q2 FY25), but that was primarily due to a one-time gain from the sale of its entertainment ticketing business to Zomato. The Rs 1,345 crore generated from the transaction boosted the quarter’s numbers, though the underlying business was still loss-making.

In comparison, the Rs 123 crore net profit in Q1FY26 reflects an improvement in core operations, aided by cost controls and a lower ESOP charge, and is seen as the company’s first operationally-led profit since its listing.

Payments business holds steady with margin gains

Net payment revenue rose 38 percent YoY to Rs 529 crore, driven by an expanding base of high-quality subscription merchants and better payment processing economics, the company said.

Sequentially, the payments revenue remained largely stable due to increase in payment processing margin and device additions.

The number of subscription-based merchant devices rose to an all-time high of 1.3 crore during the quarter. Paytm said it has been able to reduce capital expenditure by optimising device costs and increasing field sales productivity.

Merchant loans lead growth

The company’s financial services revenue doubled year-on-year to Rs 561 crore, driven primarily by growth in merchant loans, trail income from legacy portfolios backed by Default Loss Guarantee (DLG), and improved collection efficiency. Sequentially, it remained almost stable.

While personal loan disbursals may have softened amid RBI’s tighter stance on unsecured lending and DLG structures, the merchant lending business continued to grow robustly through partnerships, the firm said, majority under non-DLG model.

In Q1FY26, 5.6 Lakh key financial services customers (consumers and merchants) availed loans, equity broking, and insurance, via Paytm. "We have enhanced our focus in Paytm Money, on both mutual funds distribution and equity broking. Looking ahead, we anticipate growth in financial services customers within both loan distribution and Paytm Money," it said.

AI and platform optimisation 

Paytm attributed its profitability in part to the use of AI-led automation across the organisation, spanning onboarding, transaction monitoring, and customer support. The company said it aims to serve over 10 crore merchants in India, with an expectation that 40–50 percent of them will eventually adopt subscription-based digital tools for managing their businesses.

The company ended the quarter with a cash balance of Rs 12,872 crore, "providing capital flexibility to expand merchant payments, distribution of financial services, and AI-led innovations". To be noted, Paytm's cash balance has increased by Rs 4,764 crore in the last 1 year, primarily on account of monetisation of two non-core assets (entertainment ticketing business, and stock acquisition rights in PayPay) for Rs 4,386 crore.

On July 22, Paytm shares on BSE closed 3.5 percent higher at Rs 1,053 apiece.

The fintech firm's earnings in the previous quarters was hurt by weakness in its payments business after Reserve Bank of India's directive to shut down its banking unit in January, 2024.