Walmart-owned fintech giant PhonePe reported a net loss of ₹1,444 crore for the first half of the 2026 fiscal year (H1 FY26), a 20% increase compared to the ₹1,203 crore loss in the same period last year.
The widening loss, revealed in the company’s updated Draft Red Herring Prospectus (DRHP), comes at a critical time as the company prepares for its highly anticipated April 2026 IPO at a targeted valuation of $15 billion.
Financial Performance: H1 FY26 vs. H1 FY25
Despite the rise in net loss, PhonePe demonstrated a robust top-line growth, driven by its expansion into financial services beyond UPI.
| Metric | H1 FY26 (Apr–Sept 2025) | H1 FY25 (Apr–Sept 2024) | Change |
| Operating Revenue | ₹3,918 crore | ₹3,208 crore | +22% |
| Total Expenses | ₹6,069 crore | ₹4,680 crore | +30% |
| Net Loss | (₹1,444 crore) | (₹1,203 crore) | +20% |
| Adjusted EBITDA | ₹253.9 crore (Profit) | — | — |
Key Drivers of the ₹1,444 Cr Loss
1. Surging Operating Expenses
Total expenditure jumped by 30% to ₹6,069 crore. The primary culprits were:
- Employee Benefit Expenses: Rose by 33.5% to ₹2,869 crore as the company scaled its engineering and sales teams for new verticals.
- Payment Processing Charges: Increased by 38% to ₹1,090 crore, reflecting the massive scale of its transaction volumes.
2. Regulatory Revenue Hits
Recent changes in Indian regulations effectively “switched off” high-margin revenue streams that PhonePe relied on in previous years:
- Credit Card Rent Payments: Discontinued in late 2025 following RBI guidelines, removing a significant source of platform fees.
- Real-Money Gaming (RMG): Exited following the Promotion and Regulation of Online Gaming Act, 2025, resulting in a combined revenue hit of approximately ₹1,500 crore.
3. The “Adjusted” Silver Lining
While the bottom line shows a loss, PhonePe reported an Adjusted EBITDA of ₹253.9 crore. This metric excludes non-cash costs like ESOPs (Employee Stock Ownership Plans) and one-time items, suggesting that the core business is moving toward operational self-sufficiency.
Strategic Shift: Beyond UPI Payments
As UPI payments generate low margins, PhonePe is aggressively pivoting toward higher-margin financial services.
- Financial Services Surge: Revenue from lending and insurance distribution doubled to ₹452 crore, now accounting for 11.5% of the total revenue (up from 6.7%).
- Wealth Management: The company’s stockbroking platform, Share.Market, has facilitated over 1.2 million demat accounts.
- Market Dominance: Despite the losses, PhonePe remains the undisputed leader in UPI, commanding a 48% market share by volume as of December 2025.
Upcoming IPO & Valuation
The IPO is structured as a 100% Offer for Sale (OFS) of 5.06 crore shares. Existing backers, including Walmart, Microsoft, and Tiger Global, are seeking partial or full exits.
- Valuation: The listing is expected to value the firm at $15 billion (approx. ₹1.26 lakh crore).
- Listing Date: Targeted for April 2026.
