Paytm reported its Q3 FY26 earnings, highlighting a focus on core business principles: payment and financial services. They are dominating the merchant ecosystem and building products for consumers, but without throwing money, and rather through technology. Vijay Shekhar Sharma referenced the ‘Make in India’ initiative and said the company is outgrowing competition. The earnings call was scheduled for 45 minutes and emphasized long-term free cash flow generation.
Financial Performance and Strategic Focus
Paytm’s earnings call for the quarter ending December 31, 2025, highlighted the company’s dedication to its core business: payments and financial services. The company emphasized its commitment to building technology-driven products for consumers. A key message was that Paytm aims to lead in consumer acquisition, monetization, and innovation. They are building a long term, free cash generating machine.
PIDF and Merchant Ecosystem
Vijay Shekhar Sharma addressed the Payment Infrastructure Development Fund (PIDF), clarifying that while the industry initially benefited from it, Paytm’s business model isn’t reliant on it. The company aims to offset the impact of PIDF changes through subscription revenues and cross-selling of financial services to merchants.
Growth and Expansion Initiatives
Paytm reported crossing hundreds of crores in monthly disbursement in less than six months with its ‘Buy Now, Pay Later’ (BNPL) service, having crossed one lakh customers. Madhur Deora clarified expectations of crossing hundred crores in disbursement in six months since launch. The company is focused on increasing the average value per customer and plans to bring the wallet back into prominence. Paytm is expanding the online payments business under Vijay Shekhar Sharma, after the permission to do so was given. According to Sharma, ‘the upside is very clear, to get more, more merchants’.
Revenue and Market Outlook
Paytm anticipates a revenue growth exceeding 30% with a 15-20% EBITDA margin over the next two to three years. The company is optimistic about its opportunities in India and sees a robust device growth, with and without PIDF. It has consolidated payments processing margins. Paytm noted a 25% growth on a like-for-like basis, despite some consumer credit cycle effects.
Strategic Initiatives
Paytm is prioritizing high-quality users and is focused on product-led and technology-led solutions. Key initiatives include a new advertising strategy and Al-driven enhancements to optimize costs and productivity. The company also adopted a more conservative revenue recognition policy, particularly regarding inactive merchants.
Key Performance Indicators
Approximately 75-80% of Paytm’s offline GMV comes from merchants with devices installed, with QR code-only merchants being negligible. Paytm aims to reach 250 million customers. The Al funnel converts with 30% efficacy. As per Madhur Deora, the whitelist for loan applicability is in between 40 and 50%.
Device Penetration and Lending
Device penetration on lending within the device merchant base is approximately 7%, showing room for growth. This amounts to just under a million loans per year and an equal number of loans outstanding. They look for merchants on which they can enable credit. If a merchant gets a loan, this subsidizes subscription.
Source: BSE
