This sharp turnaround comes after a ₹539.8 crore loss in the three months through March, driven mainly by a one-time exceptional expense of ₹492 crore from accelerated ESOP cost and an additional ₹30 crore in other impairments. Excluding these exceptional items, the adjusted loss had stood at ₹23 crore in Q4FY25.
The Noida-based company’s first-quarter results, announced in an exchange filing after market hours, mark a significant recovery from an ₹840 crore net loss in the June quarter of the previous fiscal year.
Shares of the company settled 3.4% higher at ₹1,052.60 apiece on the BSE on Tuesday.
Read more: What if AI didn’t need the internet? Indian semiconductor startups have an answer
The company also reported a positive Ebitda (earnings before interest, taxes, depreciation, and amortization) of ₹72 crore in the quarter.
“This is the first quarter where we’ve reported pure Ebitda, without adjusting for ESOP costs. Going forward, we’ll remove the ESOP line entirely, and report pure employee expenses,” Vijay Shekhar Sharma, Paytm founder and chief executive officer, said during an earnings call on Tuesday.
Consolidated revenue from operations in Q1FY26 rose 28% year-on-year to ₹1,918 crore, helped by an increase in merchant subscription and growth in financial services revenue, the company added. Meanwhile, sequentially, the revenue remained almost flat.
“Merchant payments, across both small and large online and offline enterprises, will remain a key focus, and we expect a lot of innovation in that area,” said Madhur Deora, president and group chief financial officer. “While wallet and BNPL (buy now, pay later) are not immediate quarterly priorities, we are actively working on them. We will continue to grow our merchant lending business, while personal loan growth will depend on a broader recovery in the market.”
Rahul Jain, director at Dolat Capital, noted that while Paytm has mentioned about focus on these products, no timelines were provided for some new product initiatives. “Growth for now will be led by merchant payments and merchant loans.”
The company also announced a rejig of its board. Deora will step down from the board after the upcoming AGM but will continue in his role as the company’s finance head.
“Operating responsibilities are far more important for now, especially with our future growth line items, they’re all geared towards consistent profitability from the same core businesses, international expansion,” said Sharma. He added that Deora’s focus will, hence, shift towards active business decisions and growth opportunities.
The board also appointed Urvashi Sahai, currently Paytm’s General Counsel, as a Whole-time Director for a five-year term starting 22 July. Independent Director Bimal Julka also resigned, citing a desire to focus on interests in emerging technologies and ease of doing business.
Forward looking plans
Overall, analysts believe the company has shown recovery across financial metrics.
Dolat Capital’s Jain said, “The results were better on all fronts, with strong profitability driven by steady growth, efficient cost management, and improved execution.”
Paytm earns most of its revenue from payments, financial, and marketing services. Payment services revenue (including other operating revenue) rose 23% YoY to ₹1,110 crore. Net payment revenue increased 38% YoY to ₹529 crore due to a rise in payment processing margin and device additions, the company said.
For incremental revenue, while the company had expressed optimism in the last quarter about monetising its UPI services if the government re-introduced the Merchant Discount Rate (MDR), that potential revenue lever for the payments business now appears to be off the table.
Read more: Zomato surges past DMart in market value on Blinkit-fueled share rally
In June, finance minister Nirmala Sitharaman clarified that no MDR will be levied on transactions via the Unified Payments Interface (UPI), putting to rest earlier industry speculation that large merchants might soon be subject to the charge again.
This policy clarity may impact Paytm’s plans to drive incremental revenue through UPI monetisation. “We will see what happens as and when we get informed. We are not basing our business on some distant hope of the future. We are committed to continue to drive profitable business even without it,” said Sharma.
In October last year, National Payments Corporation of India had allowed Paytm to onboard users on its UPI platform through partner banks, after the RBI barred Paytm Payments Bank from onboarding new customers due to compliance concerns.
Revenue from financial services rose to ₹561 crore, up 3% quarter-on-quarter from ₹545 crore.
This revenue also doubled year on year from ₹280 crore, led by merchant loan disbursements and improved collections from the default loss guarantee (DLG) portfolio. However, a shift to non-DLG disbursements by its largest lending partner is expected to slow sequential revenue growth even as disbursements rise.
Under DLG, Paytm gives a guarantee to its lending partners for a portion of the loans it facilitates in case of a default.
The overall financial services customer count increased slightly in the quarter to 560,000.
“There is no significant recovery in terms of personal loans, the mix of merchant and personal loans remains the same as of last quarter,” said Deora.
Read more: Reduce friction: Let regulated stablecoins transform India’s remittance economy
