Fintech major Paytm (One 97 Communications Ltd) has announced its Q2 FY26 results, reporting a net profit after tax of ₹21 crore for the quarter ended September 2025, while its operating revenue grew by 24% year-on-year to ₹2,061 crore.
Key Financial Highlights
- Revenue from operations rose to ₹2,061 crore in Q2 FY26 from around ₹1,659 crore in the same quarter last year.
- The net profit (PAT) stood at ₹21 crore after a one-time impairment charge of ₹190 crore related to its gaming joint venture.
- Excluding the one-time ₹190 crore loss, the adjusted PAT would have been around ₹211 crore.
- Payments business: Payment services revenue (including other operating income) grew ~25% YoY to ~₹1,223 crore. Net payment revenue rose ~28% YoY to ~₹594 crore.
- Gross merchandise value (GMV) processed grew ~27% YoY to ₹5.67 lakh crore.
- Financial services distribution revenue surged ~63% YoY to ~₹611 crore.
- EBITDA improved to ~₹142 crore (margin ~7%) from negative in the prior year quarter.
What’s Driving the Growth
- A stronger focus on merchant payments, subscription device growth and reuse of inactive devices helped increase active merchant base to ~1.37 crore, up ~25 lakh YoY.
- Improved monetisation: higher share of financial services (lending/distribution) and better margin in payment processing.
- Cost discipline: Marketing and promotional costs fell, helping operating leverage.
Why Profit Remains Low
- The steep drop in PAT (down 98% YoY) is largely due to the one-time ₹190 crore impairment of a loan to its gaming JV (First Games Technology Pvt Ltd), following regulatory changes affecting online gaming under the new Gaming Act.
- The prior year Q2 profit was inflated by a large one-time gain (~₹1,345 crore) from sale of its ticketing/events business, making the YoY comparison unfavourable. mint
Implications
- The results indicate that Paytm’s core business is growing and improving in efficiency, but exceptional items can materially affect bottom-line.
- The strong performance in payments and financial services supports the company’s pathway to continued profitability.
- For investors and stakeholders, the adjusted PAT of ~₹211 crore (excluding the one-time loss) may be a better indicator of underlying performance.
- The large cash balance (~₹13,068 crore as of Sept 2025) provides flexibility for scaling and strategic investments.
Outlook & What to Watch
- Monitor how Paytm handles regulatory risks (e.g., gaming business, payments regulation) since such exceptional charges can hit PAT.
- Growth in newer verticals (financial services, lending) and reuse/monetisation of merchant devices will be key for margin improvement.
- Sustainable performance will depend on maintaining cost control, improving margins and minimising one-off losses.
- How the company uses its strong cash balance for investment, partnerships or new product launches could impact medium-term growth.
Conclusion
While Paytm’s headline net profit for Q2 FY26 is modest at ₹21 crore, the underlying business shows healthy growth with revenue up 24% and strong momentum in key segments. Excluding the one-time impairment loss, the adjusted profit paints a more positive picture. For the fintech firm, the challenge will be to sustain operational gains and avoid disruptive one-off hits as it scales further.
