India’s leading fintech giant Paytm, under its parent company One 97 Communications Ltd, reported an impressive consolidated net profit of Rs 123 crore for the quarter ended June 30, 2025 (Q1 FY26). This marks a significant milestone, reversing last year’s Rs 840 crore loss in the same period and delivering Paytm’s first-ever core profit since its 2021 IPO.
Robust Revenue Growth and High Contribution Margins
Paytm’s operating revenue surged 28% year-on-year to Rs 1,918 crore, up from Rs 1,502 crore in Q1 FY25. Including other income, total revenue reached Rs 2,159 crore. The company’s contribution profit jumped 52% to Rs 1,151 crore, with contribution margins expanding from 50% last year to an impressive 60% this quarter. This improvement was driven by higher net payment revenue, a growing share from financial services distribution, and stringent cost controls.
Cost Discipline and AI-Driven Efficiency
A major factor behind Paytm’s turnaround was aggressive expense rationalization. Total expenses dropped 19% year-on-year to Rs 2,016 crore. Marketing spend was slashed by 55% to Rs 100 crore, and employee costs fell 33% to Rs 643 crore, despite remaining the largest cost center. Paytm credits part of its success to AI-led automation initiatives that have cut costs in onboarding, transaction monitoring, and customer support, boosting operational leverage and delivering an EBITDA profit of Rs 72 crore this quarter after losses in the previous two quarters.
Strong Momentum in Financial Services and Payments
The financial services vertical doubled its revenue to Rs 561 crore, led by robust growth in merchant loans and stable legacy income from default-loss guarantee portfolios. While personal loan growth moderated due to tighter regulations, Paytm’s merchant loan segment sustained strong momentum through non-DLG partnerships. During Q1 FY26, Paytm served 5.6 lakh financial services customers across loans, equity broking, and insurance, with plans to intensify focus on its Paytm Money platform to accelerate mutual fund distribution and equity broking.
Net payment revenues rose 38% to Rs 529 crore, supported by an expanded base of subscription-based merchant devices and better payment economics. The installed base of such devices reached a record 1.3 crore this quarter, reflecting Paytm’s push toward subscription tools for business management among Indian merchants. The company reiterated its ambition to onboard over 10 crore merchants across India, with an expectation that 40–50% will adopt subscription-based solutions.
Healthy Cash Reserves Fuel Growth Ambitions
Paytm closed the quarter with a strong cash balance of Rs 12,872 crore, providing ample capital flexibility to continue investing in merchant payments, financial services distribution, and AI-driven innovations.
Key Takeaways:
Paytm swung from a Rs 840 crore loss in Q1 FY25 to a Rs 123 crore profit in Q1 FY26, reflecting a landmark operational turnaround.
Operating revenue climbed 28% YoY to Rs 1,918 crore, driven by growth in payments and financial services.
Contribution profit surged 52% with margin improvement to 60%, aided by cost efficiency and revenue mix.
Paytm cut expenses sharply, especially marketing and employee costs, helped by AI automation.
Financial services revenue doubled, with merchant loans leading, while payment revenues increased 38% on a growing subscription base.
Merchant devices reached an all-time high of 1.3 crore, underpinning future subscription revenue growth.
Cash reserves remain strong at Rs 12,872 crore, supporting expansion and innovation.
Paytm’s Q1 FY26 results signal renewed investor confidence and a clear pathway to sustained profitability, showcasing strategic execution, disciplined cost management, and innovation-led growth — a positive indicator for India’s booming digital payments ecosystem and the broader fintech landscape.
This financial performance is especially relevant for Indian businesses and investors keen on the evolving fintech market, offering a hopeful narrative of business resilience and tech-driven transformation in India’s startup ecosystem.