In a significant financial turnaround, Paytm (One 97 Communications) reported a consolidated net profit of ₹225 crore for the third quarter ended December 31, 2025 (Q3 FY26).
This marks the company’s third consecutive profitable quarter, following years of heavy losses and more recent regulatory hurdles. The results, released on January 29, 2026, highlight a shift toward high-margin financial services and tighter cost controls.
1. Q3 FY26 Financial Snapshot
Paytm’s performance in the December quarter was driven by robust growth in its core payments business and a surge in financial services distribution.
| Metric | Q3 FY25 (Year Ago) | Q3 FY26 (Current) | Change (YoY) |
| Operating Revenue | ₹1,828 Crore | ₹2,194 Crore | ↑ 20% |
| Net Profit / (Loss) | (₹208 Crore) | ₹225 Crore | L-to-P Swing |
| EBITDA | (₹223 Crore) | ₹156 Crore | ↑ ₹379 Crore |
| EBITDA Margin | -12% | 7% | ↑ 1900 bps |
2. Key Drivers of Profitability
The “turnaround” story of Q3 was built on several strategic pillars that improved the company’s unit economics:
- Merchant Subscription Growth: The number of merchants paying for devices like Paytm Soundbox and POS machines reached 1.44 crore, a year-on-year increase of 27 lakh. This provides a steady, recurring revenue base.
- UPI Market Share Gains: For the third straight quarter, Paytm gained market share in the UPI consumer segment. Its consumer UPI GMV grew by 35%, significantly outpacing the industry’s average growth of 16%.
- Financial Services Surge: Revenue from the distribution of financial services (loans, insurance, and wealth products) jumped 34% YoY to ₹672 crore.
- Cost Efficiency: Indirect expenses fell 8% YoY, driven by a reduction in employee stock option (ESOP) costs and more efficient software and cloud spending.
3. Operational and Regulatory Milestones
The quarter was particularly eventful for Paytm’s regulatory standing with the RBI:
- Payment Aggregator License: The company received authorization to operate as a payment aggregator for physical, offline, and cross-border transactions.
- Onboarding Resumption: Following the license approval, Paytm has resumed onboarding new online merchants, a process that was previously restricted.
4. Market Reaction and Brokerage Views
Despite the strong profit, Paytm’s share price faced some volatility immediately following the announcement, dropping nearly 5% to roughly ₹1,112 on January 30. Analysts suggest this was a “sell on news” reaction, as much of the recovery had already been priced in.
- Jefferies: Retained a “Buy” rating with a target of ₹1,450, noting the results were marginally ahead of expectations.
- Bernstein: Described the performance as “reassuring,” highlighting the resilience of the operating momentum.
- Citi: Maintained a “Buy” but lowered its target to ₹1,375, citing the upcoming withdrawal of certain regulatory incentives (like PIDF) as a near-term headwind.
Conclusion: A Stabilized Ecosystem
Paytm ends Q3 FY26 with a formidable cash balance of ₹12,882 crore, providing it with the capital flexibility to pursue international expansion and deeper AI integration. The transition from a “growth-at-all-costs” startup to a “sustainable-profit” fintech major appears complete, though the company must now prove it can maintain this 7% margin as government incentives begin to taper off in late 2026.
