Paytm Q2 Profit Plunges 98% YoY To INR 21 Cr

Fintech major Paytm managed to cling to profitability in Q2 FY26, despite a substantial decline both on a year-on-year (YoY) and a sequential basis. The company’s PAT stood at INR 21 Cr during the quarter under review, down 98% YoY from INR 930 Cr in the year-ago quarter.

Important to note that the company reported a profit in Q2 FY25on account of a one-time gain of INR 1,345 Cr pertaining to sale of its entertainment ticketing business, Paytm Insider, to Eternal in the quarter.

On a sequential basis, the company’s profit declined 83% from INR 123 Cr in Q1 FY26.

The decline in profits come despite a substantial uptick in the company’s top line in the quarter under review. Operating revenue surged 24% YoY and 7% QoQ to INR 2,061 Cr in Q2 FY26.

Including other income of INR 222 Cr, Paytm’s total revenue for the quarter stood at INR 2,283 Cr. Meanwhile, its expenses declined 8% YoY to INR 2,062 Cr.

Besides, the company’s Q2 bottom line was also impacted by an exceptional loss of INR 190 Cr. On September 30, the company recorded an impairment loss of INR 190 Cr against a loan given to its real money gaming joint venture First Games.

“Consequent to the enactment of the Promotion and Regulation of Online Gaming Act, 2025, which prohibits online gaming, the group has recorded an impairment loss against a loan given to the JV of INR 190 Cr during the quarter,” Paytm said.

First Games officially discontinued its real money gaming (RMG) operations on August 26. Consequent to that shutdown, Paytm transferred its 55% stake in First Games from its wholly owned subsidiary Paytm Cloud Technologies to Paytm Services Pvt Ltd (PSPL) for an aggregate amount of INR 140 Cr.

Without this expense, Paytm’s profit before tax would have stood at INR 211 Cr.

Meanwhile, the company’s EBITDA improved to INR 142 Cr against an EBITDA loss of INR 404 Cr in the year-ago quarter and up 97% from INR 72 Cr EBITDA reported in Q1 FY26.

Besides the company’s financial performance, Paytm board also approved an additional investment of INR 2,250 Cr in its payments arm, Paytm Payments Services Limited (PPSL). Important to mention that PPSL received an in-principle authorisation from the RBI to operate as a payment aggregator (PA) in August.

Important to mention that Paytm had received approval from the Centre, the finance ministry, and the department of financial services to invest in PPSL in August 2024.

The investment will be used to strengthen PPSL’s net worth, pay for acquisition of offline merchant payment business, fund working capital needs, and support its continued leadership in the merchant payments business.

The company operates three major business verticals – payment services, financial services and marketing services. Here are some of the key updates from these segments:

Payments Business Sees Strong Growth

Paytm’s payments arm delivered a robust performance in Q2 FY26, with total payments revenue rising 25% YoY to INR 1,223 Cr and net payment revenue up 28% YoY to INR 594 Cr.

Growth was driven by a 27% jump in gross merchandise value (GMV) to INR 5.67 Lakh Cr, improved payment processing margins, and the early festive season.

Merchant subscriptions also climbed by 25 Lakh YoY to 1.37 Cr, aided by refurbished device redeployment and strong adoption of Paytm Soundbox.

The fintech major added that it has been actively picking up devices from inactive merchants and redeploying them to new merchants after refurbishment, resulting in higher active merchants and lower capex.

Financial Services Vertical Accelerates

The revenue from financial services distribution surged 63% YoY to INR 611 Cr in Q2 FY26, fuelled by strong momentum in merchant loan distribution and improved collections.

Over 50% of merchant loans were issued to repeat borrowers, which the company attributed to high merchant stickiness and strong product-market fit.

The platform’s customer base rose to 6.5 Lakh, led by merchant lending and equity broking growth.

Important to note that the company also relaunched its buy-now-pay-later (BNPL) offering, Paytm Postpaid, in September to offer short-term credit to select users.

“The offering is currently being rolled out to a selected base and will be expanded to more consumers in the coming period,” it added.

Degrowth In Marketing Services Biz

In Q2 FY26, Paytm’s marketing services revenue declined 15% YoY to INR 228 Cr as the company said it prioritised gaining “market share”. The company said that it has now “optimised” its consumer app properties to simplify UI/UX (user interface/ user experience) and target upsell offerings to its customers.

“While this has led to a slight dip in marketing services revenue, we are seeing encouraging results reflected in retention rates and gain in consumer market share. Going forward, we expect increase in MTUs (monthly transacting users) and improvement in upsell funnel to be the main drivers of growth,” added Paytm.

Meanwhile, shares of Paytm ended today’s trading session down 0.53% at INR 1,268.25.

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