Shares of One 97 Communications jumped nearly 8% on Thursday after Paytm reported its first full-year net profit since listing, Rs 552 crore for FY26, against a loss of Rs 663 crore a year earlier, up a whopping Rs 1215 cr YoY.
The Q4 numbers told a similar story: net profit was at Rs 183 crore versus a loss of Rs 545 crore in the year-ago quarter.
Just over a year ago, Paytm was at the centre of intense scrutiny after the RBI‘s action against Paytm Payments Bank. The stock had cratered, investor confidence was shaken, and social media was flooded with scepticism about the company’s future. The turnaround since then has been driven by four specific shifts.
Revenue grew 22% while costs were cut 16%
Full-year revenue reached Rs 8,437 crore, up 22% year-on-year. But the bigger story was on the cost side, total indirect expenses fell from Rs 5,184 crore to Rs 4,358 crore, a 16% decline. Employee costs dropped from Rs 3,288 crore to Rs 2,765 crore, partly after founder Vijay Shekhar Sharma voluntarily surrendered his ESOPs in Q4 FY25. Marketing spend was slashed 46%, from Rs 508 crore to Rs 275 crore. Combined, revenue growth of approximately Rs 1,537 crore and cost savings of Rs 826 crore produced a Rs 2,008 crore swing in EBITDA, from negative Rs 1,506 crore to positive Rs 502 crore.
Financial services distribution became the high-margin engine
This segment grew 52% year-on-year to Rs 2,594 crore, adding nearly Rs 891 crore in incremental revenue. Crucially, Paytm doesn’t lend from its own balance sheet; loans are underwritten and booked by partner lenders. Paytm distributes, collects, and earns a fee. Repeat borrowers now account for over 50% of merchant loan disbursements, even as key financial services customers rose 36% to 7.5 lakh.
Payment processing margins expanded structurally
Payment margins moved to above 4 bps, roughly a 33% improvement. The drivers included higher adoption of MDR-bearing instruments like credit cards on UPI and EMI offerings, which generated actual revenue per transaction, unlike standard zero-MDR UPI payments, which meant merchants pay nothing when a customer pays via UPI.
Consumer UPI market share gains fed the flywheel
Paytm’s consumer UPI GTV grew 2.2 times the industry growth rate of 21%. Monthly transacting users rose from 7.2 crore to 7.7 crore, while total transactions surged 38% to 1,822 crore. UPI payments aren’t profitable on their own, but a larger, more engaged user base feeds the lending distribution engine and improves the economics of the Soundbox merchant network, now deployed at 1.51 crore storefronts.
The merchant ecosystem underneath
Registered merchants grew from 4.4 crore to 4.9 crore. Subscription merchants (Soundbox and device users) rose 22% to 1.51 crore. Merchant GMV climbed 27% to ₹6.5 lakh crore. Paytm is increasingly using transaction data, spending patterns, cash flows, and repayment behaviour as financial intelligence to drive lending decisions and deepen merchant engagement, a model that looks structurally different from traditional bank-led distribution.