Paytm’s profitability in June quarter driven by sharp cuts in marketing & employee costs

Total consolidated revenue of One 97 Communications (Paytm) increased year-on-year (y-o-y) by 31.7% to Rs 2,158.9 crore in the June quarter. On a quarter-on-quarter (Q-o-Q) basis this increase was of 1.10%. Total expenses, in the quarter, of the company came down y-o-y by 18.58%. It reduced its expenses by cutting down mainly on marketing & promotions and employee compensation. Its marketing & promotion expenses in the June quarter came down y-o-y by 54.9% to Rs 99.8 crore. On a Q-o-Q basis, this was a decline of 34%.

Employee costs down by 48.2% in June quarter

The company’s employee benefit expenses in the June quarter came down y-o-y by 48.2%. On a Q-o-Q basis, the decline in employee costs was of 16.4%. The company turned profitable for the first time in the June quarter. It posted a consolidated profit of Rs 126.5 crore against a loss of Rs 838.6 crore in the corresponding period of the previous year. It posted a loss of Rs 542 crore in the previous quarter. Basic Earnings per share of the company in the quarter was Rs 1.92 per share.

Paytm’s business model

Paytm’s business model is quintessentially a low margin – high volume business model. The main source of revenue for Paytm is the money that it earns from payments processing. On every payment that it processes through its platform, the company earns between 07% – 09% of the payment amount. UPI gives 0.03%- 0.04% of the payment amount to Paytm for processing the payment through its platform.

Besides this, it charges a subscription fee of around Rs 100 per month from merchants for getting payments to them processed through its platform. There is no merchant discount rate (MDR) in UPI payments. So merchants do not have to pay a percentage of their payments every time a payment is processed through Paytm.

The company also makes between 3% – 5% of the loan amount on the loans that are distributed by financial institutions through its platform or app. The company also earns revenues from various services that it offers through its platform such as booking of flight tickets and bus tickets.

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Source: https://paytm.com/document/ir/financial-results/Financial_Results_Q1_FY_2026_Paytm.pdf