Paytm's Q4 FY2026 earnings: Back to basics for profitability

Table of Contents

• Introduction

• Business in Numbers

• What’s next for Paytm

• Biz Scaling by Arjun

• Arjun’s Picks

Introduction

In the 8 AM earnings call on May 7, the Paytm CEO emphasised that their business acquires customers using payments and cross-sells them financial services. We know this. We’ve known this for very long. What we did not know was that the company could consistently execute to the satisfaction of the market.

It’s been nine quarters since the Paytm Payments Bank fiasco took over headlines. Against the odds, the company navigated a worsening macro-environment and figured out its first full-year profit. It has numerous growth avenues in sight and under play. It has money in the bank. It is a distant #3 as a UPI app (<10% market share) but this hasn’t stopped them.

Business in Numbers

a) Key takeaways

i) For FY2026, distribution of financial services accounts for 30.75% of operating revenue (up YoY by 607 basis points). In absolute terms, this business line added ₹891 crore topline vis a vis payment services (adding ₹767 crore, with a 55.07% share of operating revenue)

ii) Promotional cashback and incentives grew 50.7% QoQ (from ₹69 crore to ₹104 crore). On a yearly level, this amount rose 72.8% from ₹151 crore in FY2025 to ₹261 crore in FY2026. This augurs well for a scale-up trajectory in FY2027

iii) With a FY2026 EBITDA margin of 5.95%, the management confirmed its belief in achieving a 15-20% EBITDA margin in the next 2.5-3 years. This is an ambitious goal and will take much more than its YoY increase in payment processing margin (from >3bp to >4bp)

iv) Average monthly transacting users (MTUs) rose to 7.7 crore from 7.2 crore users (YoY). The # of key financial services customers (FSC) substantially jumped to 7.5 lakh from 5.5 lakh (YoY). In % terms (Key FSC over MTU), this improved to 0.97% from 0.76%

b) Quarterly and full year results

In Q4 FY 2026, Paytm achieved operating revenue of ₹2,264 crore (up 3.2% QoQ). Payment services at ₹1,265 crore grew 6.1% QoQ while financial services (distribution) at ₹750 crore grew 11.6% QoQ. Marketing services at ₹239 crore stayed relatively unchanged with a mere 0.4% QoQ uptick.

Its merchant GMV rose 5% QoQ to ₹6.5 lakh crore, and jumped 27% on a YoY basis. Paytm closed Q4 with a PAT of ₹183 crore and boosted its cash balance to ₹13,315 crore.

On an FY 2026 basis, Paytm achieved operating revenue of ₹8,437 crore (up 22% YoY) with full year EBITDA coming in at ₹502 crore and PAT at ₹552 crore. Distribution of financial services grew 52.3% and helped cover up the 17.8% YoY deficit in marketing services.

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What’s next for Paytm

a) Lending

Sunlight is said to be the best disinfectant. Paytm might not believe in this adage and refuses to share disbursal data and Paytm Postpaid numbers. This secrecy has not impacted its reputation and certainly not its declared numbers. With gangbusters growth in the financial services (distribution) topline (up 52.3% YoY), there is much more to be accomplished.

I believe that its UPI on credit offering via Paytm Postpaid launched in September 2025 will begin scaling in Q2 and Q3, and its true impact will be realised in festive Q4. Without an obligation to share disbursal numbers and performance vis a vis merchant loans, it can scale meaningfully.

b) Payments

Its core business of payment processing is aided by several tailwinds. In November 2025, the company was allowed to restart onboarding online merchants for payment solutions. Business with online merchants drives higher MDR fees and this also helps the company save on payment processing charges. This flows directly to the bottomline and will enable the company to drive margin expansion in FY2027.

Increased usage of credit cards on UPI has boosted margins with MDR income on UPI transactions. With recent news that the share of RuPay credit cards in new card issuances is nearing 40%, Paytm’s margins will improve further.

c) Big Bets

Beyond its core payments focus and lending acceleration, Paytm has a series of bets in varying stages. Wealth management and broking have significant upside and are focus areas. A number of startups (Stable Money, Dhan et al) have raised significant sums to target this opportunity. Paytm has offered Insurance for many years now but it has yet to make sufficient headway.

A low-hanging fruit is the opportunity to bring back the Paytm Wallet product. The company brand remains strong and this offering would see sizable uptake whenever it is reintroduced.

PS: On the lending side, the CEO and group CFO talked about their reluctance to apply for a NBFC license. I believe that this reluctance will soften and give way in another 12-18 months. As lending gains further prominence, the team should want to eke out additional margin by owning a % of their loan book. Regulatory approval is a future unknown (Mobikwik got approved 🙃) but it must attempt to boost interest income after factoring the risk incumbent in lending via an in-house NBFC entity.

🚨🚨 Biz Scaling by Arjun 🚨🚨

I love building businesses and am open to partnering with a few startups to help them scale. I will enable you and your team to build faster and reach customers wherever they are. You can email me at [email protected] with the subject line: Biz Scaling.

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Investment Disclaimer: I am invested in Paytm. Nothing I wrote above is an endorsement or paid promotion or financial advice. Do your own research.