One97 Communications, the parent company of fintech giant Paytm, reported a consolidated net loss of INR 544.6 crore for the quarter ended March 31, 2025 (Q4 FY25), marginally improved from INR 550.5 crore loss in the same quarter last year. The loss widened significantly from INR 208.5 crore reported in the previous quarter (Q3 FY25), largely due to exceptional items impacting the bottom line.
Revenue Declines 16% Year-on-Year, Slight Sequential Growth
Paytm’s revenue from operations slipped 15.7% year-on-year to INR 1,911.5 crore in Q4 FY25, down from INR 2,267.1 crore in Q4 FY24. However, sequentially, revenue rose 4.6% from INR 1,827.8 crore in Q3 FY25. The company attributed the year-on-year dip primarily to seasonality effects and lower UPI incentives.
Including other income of INR 223.8 crore, total revenue for the quarter stood at INR 2,135.3 crore. For the full fiscal year FY25, Paytm’s operating revenue declined 31% to INR 6,900.4 crore from INR 9,977.8 crore in FY24.
Exceptional Items Inflate Losses, Core Business Nears Breakeven
A significant INR 522.1 crore of exceptional expenses weighed heavily on Paytm’s quarterly results. This included:
INR 492.4 crore non-cash accelerated ESOP expense related to founder Vijay Shekhar Sharma surrendering 2.1 crore ESOPs following a SEBI show-cause notice.
INR 16.9 crore loss on sale of entertainment business to Zomato.
Impairments totaling INR 29.7 crore related to subsidiaries and convertible debentures.
Excluding these exceptional items, Paytm’s net loss was a much narrower INR 23 crore, signaling that the core business is approaching profitability.
Improving Margins and Payment Metrics
Net Payment Margin: Including UPI incentives, net payment margin stood at INR 578 crore; excluding incentives, it was INR 508 crore, up 4% quarter-on-quarter.
Contribution Profit: Rose 12% QoQ to INR 1,071 crore, with a healthy contribution margin of 56%.
EBITDA Before ESOP: Improved by INR 121 crore QoQ to INR 81 crore.
Financial Services Revenue: Increased 9% QoQ to INR 545 crore.
Gross Merchandise Value (GMV): Recorded at INR 5.1 lakh crore.
Monthly Transacting Users (MTUs): Grew to 7.2 crore from 7 crore in the previous quarter.
Merchant Subscribers: Expanded by 8 lakh to 1.24 crore.
UPI Incentives and Regulatory Impact
Paytm earned INR 70 crore in UPI incentives for FY25, down from INR 88 crore in FY24. The Union Cabinet reduced the overall incentive pool for UPI P2M transactions from INR 3,500 crore in FY24 to INR 1,500 crore in FY25, impacting Paytm’s incentive income.
The company expressed optimism about the potential introduction of Merchant Discount Rate (MDR) on UPI for large merchants, which could unlock new monetization opportunities. Paytm plans to update its payment margin guidance once MDR clarity emerges.
Outlook: Path to Profitability and Cost Optimization
Paytm’s ESOP expenses are expected to decline substantially from INR 169 crore in Q4 FY25 to a range of INR 75-100 crore starting Q1 FY26, easing cost pressures. The company’s cash balance remains robust at INR 12,809 crore, providing ample runway for growth and innovation.
Despite the challenging quarter, Paytm’s improving core metrics and narrowing losses indicate progress toward breakeven. The company continues to focus on expanding its financial services vertical and scaling its payments ecosystem amid evolving regulatory dynamics.
Conclusion: Paytm Nears Profitability Despite Exceptional Headwinds
Paytm’s Q4 FY25 results reflect a fintech giant navigating short-term challenges while making steady strides toward profitability. Exceptional items related to ESOPs and impairments inflated losses, but the underlying business showed resilience with improving margins, user growth, and revenue from financial services.
As Paytm adapts to regulatory changes and market seasonality, its strong cash position and strategic initiatives position it well for sustainable growth in India’s competitive digital payments landscape.