Paytm Achieves 24% Revenue Growth in Q2 FY26 Amidst Regulatory Challenges
Fintech giant One97 Communications Ltd, widely known as Paytm, has reported a remarkable 24% year-on-year increase in operating revenue, reaching ₹2,061 crore for the quarter ending September 2025 (Q2 FY26). This growth is primarily driven by a surge in subscription merchants, heightened gross merchandise value (GMV) of payments, and strong performance in its financial services distribution sector.
Impressive Contribution Profit and EBITDA Figures
The company’s contribution profit saw a 35% year-on-year increase, totaling ₹1,207 crore and resulting in a contribution margin of 59%, a five percentage point rise compared to the previous year. Impressively, the EBITDA for the quarter stood at ₹142 crore, representing 7% of revenue, bolstered by effective cost management and operational efficiencies.
Profit After Tax and Impairment Charges
Before accounting for exceptional items, Paytm’s profit after tax (PAT) was reported at ₹211 crore. However, after applying a one-time impairment charge of ₹190 crore related to a loan issued to its joint venture, First Games Technology Pvt Ltd, the PAT dipped to ₹21 crore. This impairment was a consequence of regulatory changes introduced by the Online Gaming Promotion and Regulation Act 2025, which significantly impacted the gaming segment.
Strong Cash Position
As of September 2025, Paytm maintains a robust cash reserve and equivalents amounting to ₹13,068 crore, excluding blocked funds from customers and merchants, which total approximately ₹3,605 crore. This solid financial standing reflects the company’s resilience in navigating regulatory challenges.
Growth in Payments and Financial Services
Paytm’s payment services revenue, which includes various operating incomes, rose by 25% year-on-year to reach ₹1,223 crore. Net payments revenue climbed 28% to ₹594 crore, supported by improved processing margins and a boost in credit card transactions via UPI. The GMV for the platform surged to ₹5.67 lakh crore, while processing margins remained stable.
Innovative Financial Solutions and Customer Growth
In the financial services sector, Paytm’s distribution revenue soared by 63% year-on-year to ₹611 crore, driven by increased merchant loan disbursement and enhanced collection performance. The number of merchant loan customers rose to 6.5 lakh, with over half of the loans extended to recurring borrowers. Paytm credits its advanced AI-driven predictive models with refining asset quality and aiding lending partners in minimizing delinquencies.
Operational Efficiency and Cost Management
Paytm demonstrated significant cost discipline, with indirect expenses, including ESOP costs, decreasing by 18% year-on-year to ₹1,064 crore. Marketing expenses also fell dramatically by 42% year-on-year to ₹72 crore, reflecting improved user retention and monetization strategies. Additionally, software, cloud, and data center costs saw a reduction of 16% year-on-year, while depreciation and amortization decreased by 23% due to innovative refurbishment strategies for devices.
Future Outlook and Market Positioning
While Paytm experienced a decline in app-based advertisement revenue, the implementation of AI-driven app personalization is expected to enhance user engagement and retention. This evolution in user experience promises to strengthen monetization strategies in the long run. With ongoing expansion in Tier 2 and Tier 3 markets and the relaunch of the Paytm Postpaid UPI overdraft facility, the company is well-positioned for future growth and innovation in the fintech landscape.