One97 Communications, the parent company of Paytm, has announced a significant turnaround in its financial performance, reporting a net profit of Rs 122.5 crore for the quarter ending March 2025. This marks a remarkable shift from a loss of Rs 840 crore during the same period in the previous year. The improvement reflects the company’s strategic focus on sustainable growth and operational efficiency.
In the first quarter of fiscal year 2025 (Q1 FY25), Paytm’s operational revenue surged by 27% year-on-year to reach Rs 1,917.5 crore, up from Rs 1,501.6 crore last year. This revenue increase is attributed to enhanced payment processing margins, an uptick in payment services, and effective cost optimisation strategies. The company also reported an EBITDA (earnings before interest, taxes, depreciation, and amortisation) of Rs 72 crore alongside a profit after tax (PAT) of Rs 123 crore.
Key Factors Behind Profitability
A significant portion of Paytm’s profitability can be traced to its rigorous cost-cutting measures. The company achieved over a 50% reduction in marketing and promotion expenditures, dropping from Rs 221.4 crore to Rs 99.8 crore. Additionally, costs for non-sales employees decreased by 28% year-on-year to Rs 346 crore, whereas expenses for sales personnel surged by 219% year-on-year to Rs 266 crore, reflecting an expanded sales team.
CEO Vijay Shekhar Sharma emphasized that the company has simplified its financial reporting by eliminating adjustments related to employee stock options (ESOPs), thereby increasing transparency for stakeholders.
Paytm’s core payment services continue to engage users and drive transaction volumes throughout India. The company reported a growth in payment services revenue of 23% year-on-year, reaching Rs 1,110 crore, while net payment revenue rose by 38% year-on-year to Rs 529 crore. The gross merchandise value (GMV) also increased by 27% year-on-year, amounting to Rs 5.39 lakh crore, indicating a higher adoption of Paytm’s services among users.
Expanding Market Presence
In addition to its financial growth, Paytm is actively expanding its market reach, particularly in tier-2 and tier-3 cities. The number of monthly transacting users (MTUs) reached 7.4 crore during the reported quarter, highlighting the growing acceptance of its services across the nation. Merchant subscriptions have also seen a significant uptick, climbing to a record 1.3 crore, an increase of 21 lakh year-on-year.
The financial services segment also performed exceptionally well, with revenue doubling year-on-year to Rs 561 crore, driven by an increase in merchant loans and improved asset quality.
In summary, Paytm’s performance in Q1 FY25 showcases its successful transition from a loss-making entity in FY24 to a profitable business in FY25. The company’s emphasis on cost optimisation, growth in payment services, and expanding merchant subscriptions position it well for continued success in India’s competitive fintech landscape.
