- Key Highlights of Q1 FY26 Results
- 3 Reasons Behind Paytm Turning Profitable
- Conclusion
Paytm reported a net profit of ₹122.5 crore in Q1 FY26. In the same quarter last year, the company had rported a loss of ₹840 crore. This marks a return to profitability. Below is a summary of the results and the three key reasons that helped Paytm turn profitable.
Key Highlights of Q1 FY26 Results
- Net profit stood at ₹122.5 crore in Q1 FY26 in comparison to 840 crore losses in the same quarter last year.
- Revenue from operations was ₹1,917.5 crore. In Q1 FY25, it was ₹1,501.6 crore.
- Total expenses came down to ₹2,016.1 crore.
- ₹2,000 crore from IPO funds is still unused. It is kept for future business and partnerships.
3 Reasons Behind Paytm Turning Profitable
1. Growth in Revenue
Paytm earned ₹1,917.5 crore in Q1 FY26. This is a 27.7 percent increase over ₹1,501.6 crore in Q1 FY25. This increase was primarily due to 2 reasons:
- Increase in number of merchant subscriptions for device and services at an all-time high of 1.30 crores.
- Growth in revenue from distribution of financial products. In Q1 FY 2026, distribution of financial services revenue grew 100% YoY to ₹561 crore.
The increase in revenue played a major role in the profit. In service businesses, higher revenue does not always lead to higher expenses. Paytm was able to grow its income without a similar rise in costs.
2. Lower Expenses
Paytm reduced its total expenses by ₹460.3 crore. Expenses were ₹2,016.1 crore in Q1 FY26, down from ₹2,476.4 crore in Q1 FY25.
- Employee benefit expenses fell by ₹309.9 crore (32.6 percent), from ₹952.5 crore to ₹642.6 crore. A major reason was the sharp drop in ESOP costs, which reduced by ₹216.8 crore (87.9 percent), from ₹246.8 crore to ₹30 crore.
- Marketing and promotional expenses decreased by ₹121.6 crore (54.9 percent), from ₹221.4 crore in Q1 FY25 to ₹99.8 crore in Q1 FY26.
This cost reduction helped improve the company’s overall result.
3. Improvement in Key metrics for Paytm business
- Subscription merchants, including devices, grew to 1.30 crore, up 20% year-on-year and 5% quarter-on-quarter. This points to higher device rental income and stronger monetization from existing merchants.
- Merchant transactions increased sharply to 1,303 crore, a 33% rise year-on-year and 10% sequentially. This higher throughput likely boosted payment processing revenues.
- Total transactions on the platform reached 1,464 crore, growing 33% year-on-year and 11% quarter-on-quarter. This reflects broader platform usage and supports overall revenue growth.
- Monthly Transacting Users (MTU) stood at 7.4 crore. While down 6% from last year, the 2% improvement over the previous quarter shows early signs of user engagement stabilizing.
- Key financial services customers declined 4% year-on-year to 5.6 lakh but improved 3% on a sequential basis, indicating some recovery in the financial services business.
Conclusion
Paytm posted a net profit in Q1 FY26 mainly due to a combination of higher revenue and lower expenses. Revenue increased because of growth in merchant subscriptions and financial services distribution. At the same time, the company brought down its costs in key areas such as employee benefits and marketing. Operational indicators like merchant transactions and total platform activity also showed improvement. These factors helped Paytm turn profitable in the quarter.
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