Paytm once again posts profit in Q3 FY26 as revenue rises 20% to Rs 2,194 crore

Fintech firm Paytm reported a turnaround in profitability and improved operating leverage for the quarter ended December 2025.

For Q3 FY26, Paytm reported revenue from operations of Rs 2,194 crore, which was 20% higher year on year compared with Rs 1,828 crore in the same quarter last year. Revenue was also 6% higher sequentially from Rs 2,061 crore in Q2 FY26. Other income for the quarter stood at Rs 212 crore, taking total revenue to Rs 2,406 crore.

For the nine months ended December 2025, revenue from operations increased 24% to Rs 6,173 crore from Rs 4,989 crore in the corresponding period last year. Payments services revenue rose 21% year on year to Rs 1,284 crore in Q3 FY26, supported by higher payments GMV, growth in merchant subscriptions, and increased usage of affordability-led products such as credit cards and EMIs.

Net payment revenue increased 25% year on year to Rs 613 crore. Revenue from distribution of financial services grew 34% year on year to Rs 672 crore, driven mainly by higher merchant loan distribution. Marketing services revenue declined 11% year on year to Rs 238 crore.

Other operating revenue increased 64% year on year to Rs 92 crore. Payment processing charges increased 18% year on year to Rs 671 crore and remained at 0.11% of GMV. Promotional cashbacks and incentives increased to Rs 69 crore compared with Rs 37 crore in the year-ago quarter.

Other direct expenses declined 22% year on year to Rs 205 crore due to lower collection and default loss guarantee costs. Total direct expenses rose 9% year on year to Rs 945 crore.

Contribution profit increased 30% year on year to Rs 1,249 crore, and contribution margin improved to 57% from 52.5%, an expansion of 447 basis points. Indirect expenses declined 8% year on year to Rs 1,092 crore.

Employee costs fell 5% year on year to Rs 721 crore. Marketing expenses declined 26% year on year to Rs 77 crore. Cloud and data centre costs increased 8% year on year to Rs 166 crore, while other indirect expenses declined 23% year on year to Rs 128 crore. Total expenditure for the quarter stood at Rs 2,175 crore, compared with Rs 2,220 crore in the same quarter last year.

Paytm reported EBITDA of Rs 156 crore in Q3 FY26, compared with an EBITDA loss of Rs 223 crore in Q3 FY25. EBITDA margin improved to 7% from negative 12%.

Profit after tax (PAT) stood at Rs 225 crore, compared with a loss of Rs 208 crore in the year-ago quarter, and increased more than ten times sequentially from Rs 21 crore in Q2 FY26.

For the nine-month period ended December 2025, contribution profit increased 38% year on year to Rs 3,606 crore, with contribution margin improving to 58% from 52%. Indirect expenses declined 20% year on year to Rs 3,236 crore. EBITDA for the nine-month period stood at Rs 370 crore, compared with a loss of Rs 1,418 crore in the corresponding period last year. EBITDA margin improved to 6% from negative 28%.

Operationally, Paytm reported gains in consumer UPI market share for the third consecutive quarter. Consumer UPI GMV grew 35% over the last nine months, compared with industry growth of 16% during the same period. Merchant device subscriptions reached 1.44 crore as of December 2025, with net additions of 27 lakh year on year.

The number of customers using financial services through the Paytm platform increased from 5.9 lakh to 7.1 lakh year on year. During the quarter, Paytm received all three key payment licences from the Reserve Bank of India for online, offline, and cross-border payments through Paytm Payment Services Limited.

The company also resumed onboarding of online merchants after securing the Payment Aggregator licence in the previous quarter. Paytm stated that it has discontinued the use of adjusted metrics and is now reporting all disclosures using GAAP or standard definitions. The company expects indirect costs to grow at a slower pace than revenue over the medium term. Depreciation and amortisation declined 19% year on year to Rs 133 crore in Q3 FY26.

For the full year FY26, depreciation and amortisation is expected to be in the range of Rs 500 crore to Rs 600 crore, which is lower than FY25.

Paytm’s cash balance, including pre-funded amounts in escrow and nodal accounts, stood at Rs 12,882 crore as of December 2025, compared with Rs 12,850 crore a year earlier.

The quarter also saw changes in shareholding. Elevation Capital sold a 1.86% stake in Paytm through a bulk deal valued at Rs 1,556 crore. BNP Paribas sold approximately 1.05 crore shares for around Rs 1,331 crore. Integrated Core Strategies sold 32.55 lakh shares worth about Rs 410 crore.