Paytm shares plummet 4% despite massive profit surge in Q3
What's the story
Paytm shares fell 4% to ₹1,117 on the BSE on Friday, even as the fintech firm reported a consolidated net profit of ₹225 crore in Q3 FY26, reversing a ₹208 crore loss a year earlier. On a sequential basis, the profit surged by an astonishing 971% from ₹21 crore in the September quarter. Despite the strong earnings beat, Paytm's share price fell, suggesting investors may be weighing valuation concerns or broader market pressures.
Financial growth
Revenue from operations rises 20% YoY
Paytm's revenue from operations has also seen a significant increase, rising by 20% year-on-year to ₹2,194 crore. This growth is mainly attributed to an increase in payments GMV (Gross Merchandise Value), merchant subscriptions, and higher distribution income from financial services. The company also reported a contribution profit of ₹1,249 crore for the quarter under review.
Profit margins
Contribution margin expands to 57%
Paytm's contribution margin has expanded to 57%, up by 30% year-on-year. This growth is largely due to improved payment processing margins and a higher contribution from financial services distribution. The company also reported an EBITDA of ₹156 crore with an EBITDA margin of 7%. This was achieved despite increased promotional spending for consumer growth and the full impact of the new labor codes.
Business expansion
Segment-wise revenue growth and UPI market share
On a segment basis, Paytm's payments services revenue grew by 21% year-on-year to ₹1,284 crore. Net payment revenue also grew by 25% year-on-year to ₹613 crore. The company's financial services revenue rose by an impressive 34% year-on-year to ₹672 crore. Notably, Paytm has also seen consistent gains in its UPI consumer market share for the third consecutive quarter.
User growth
Merchant device subscriptions and financial services users increase
Paytm's merchant device subscriptions have increased to 1.44 crore, a year-on-year addition of 27 lakh devices. The company is enhancing merchant retention and engagement through AI-led targeting and expanding its sales/service teams. Meanwhile, the number of customers using financial services through the platform has also increased from 5.9 lakh to 7.1 lakh year-on-year, further strengthening Paytm's position in the market.