One97 Communications (PAYTM) Q2 25/26 earnings summary

Executive summary

• Strong focus on integrating AI across products and services to drive cost efficiencies, new revenue streams, and growth in payments, financial services, and merchant acquisition.

• Merchant ecosystem expansion and omnichannel capabilities remain key growth drivers, supported by aggressive hiring and onboarding of both offline and online merchants.

• Postpaid (BNPL) product relaunched with early traction, leveraging bank partnerships for scalable, data-driven growth.

• Wealth and credit products, especially gold and mutual funds, are seeing strong customer engagement and are central to future monetization strategies.

• Approved unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2025, and appointed a new independent director.

Financial highlights

• Revenue grew 24% YoY to $232 million (INR 2,061 crores consolidated for Q2 FY26), with EBITDA improving to $16 million (7% margin) and a second consecutive quarter of profit after tax.

• Significant improvement in payment processing margins, driven by higher credit instrument usage, EMI products, and disciplined pricing to merchants.

• Contribution profit rose 35% YoY to $136 million (59% margin); consolidated profit before tax for H1 FY26 was INR 156 crores, compared to a loss of INR 1,248 crores in H1 FY25.

• Marketing services revenue declined 25% YoY due to product optimization and asset sales, but is expected to grow after app simplification.

• Net cash outflow from operating activities for H1 FY26 was INR 468 crores (consolidated), compared to an inflow of INR 78 crores in H1 FY25.

Outlook and guidance

• Expectation of continued margin improvement and market share gains, especially in merchant payments and credit card on UPI, with AI-driven innovation to enhance consumer experience and retention.

• International expansion will follow a partner-operated or self-operated model, targeting both emerging and developed markets, with minimal upfront capital investment.

• Additional investment in PPSL aims to fund working capital, acquisition of offline merchant payment business, and maintain leadership in merchant payments.

• PPSL received in-principle authorization from RBI to operate as a Payment Aggregator, with final approval pending post-system audit.

• Postpaid product ramp-up will be gradual and data-driven, prioritizing sustainable growth over rapid scaling.