Paytm reports Rs 123 crore net profit in Q1 FY26; revenue rises to Rs 1,918 crore

One 97 Communications Ltd, the parent company of Paytm, reported a consolidated net profit of Rs 123 crore for the quarter ended June 30 (Q1FY26), marking a significant operational turnaround from the Rs 840 crore loss posted in the same period last year. 

The result, driven by a strengthened lending business and disciplined cost controls, signals the company’s first core profit since its 2021 IPO.

Operating revenue rose 28% year-on-year to Rs 1,918 crore, compared with Rs 1,502 crore a year ago and marginally higher than the previous quarter’s Rs 1,911 crore. Including other income, total revenue reached Rs 2,159 crore in Q1 FY26. The company’s contribution profit surged 52% to Rs 1,151 crore, with contribution margin expanding to 60%, up from 50% last year.

The improvement came as Paytm kept a tight rein on expenses, which declined 19% year-on-year to Rs 2,016 crore. Key reductions were recorded in marketing expenses, down 55% to Rs 100 crore, and employee costs, which fell 33% to Rs 643 crore. While employee benefits remained the company’s largest cost center, they were offset by savings across operational verticals, including software and communications.

Paytm also reported an Ebitda of Rs 72 crore in Q1, turning around from Ebitda losses in the prior two quarters. The company credited the improvement to operating leverage and AI-led automation initiatives that have reduced costs across onboarding, transaction monitoring, and customer support.

The company’s financial services vertical, led by merchant loans and trailing income from legacy portfolios underwritten with default-loss guarantees (DLGs), posted revenue of Rs 561 crore, double the figure from a year earlier. While personal loan growth slowed amid tighter regulatory scrutiny by the Reserve Bank of India on unsecured lending, Paytm said its merchant loan segment remained strong through non-DLG partnerships.

During the quarter, Paytm facilitated services for 5.6 lakh financial services customers, encompassing loans, equity broking, and insurance. The company said it intends to deepen focus on its Paytm Money platform, especially in mutual fund distribution and equity broking, to expand its financial services footprint.

Net payment revenues climbed 38% to Rs 529 crore, supported by an expanded base of subscription-based merchant devices and improved payment economics. The installed base of such devices reached a record 1.3 crore in the quarter. Despite the sequential revenue holding steady, the firm cited margin gains from optimised capital expenditure and enhanced field productivity. It closed the quarter with a cash balance of Rs 12,872 crore.