One 97 — Q1 FY27 earnings call

Call held 21 Jul 2026

Management summary

One 97 Communications (Paytm) reported a strong Q1 FY27, marked by significant profitability improvements with adjusted EBITDA margin expanding from 1% to 8%. The company demonstrated accelerated GMV growth of 31% YoY and continued to gain market share in UPI payments. Management highlighted a focus on monetization, particularly in wealth management and AI-driven revenue streams, while maintaining a healthy cash position of INR 13,500 crores despite some pressure on net payment margins and increased marketing spend.

Highlights

  • Adjusted EBITDA margin improved by 7 percentage points, from 1% to 8%.

  • GMV growth accelerated to 31% YoY, up from 23% in Q3 and 27% in Q4.

  • UPI market share is gaining, growing double the market growth.

  • Consumer side GTV grew 45% YoY, with Monthly Transacting Users (MTU) up 8%.

  • The company crossed its January 2024 daily transacting user and daily active user KPIs.

Concerns

  • Net payment margins declined from 8.8 bps last year to 8.4 bps this quarter.

  • Marketing expenses and sales & service cost investment both increased by 27% YoY.

  • The travel business, part of marketing services, experienced 'headwinds' or 'headfire' due to external factors.

Key financials

  1. Adjusted EBITDA Margin 8%
  2. GMV Growth 31% +31%YoY
  3. Net Payment Margin 8.4 bps
  4. Cash on Books ₹13,500 Cr
  5. Consumer Side GTV Growth 45% +45%YoY
  6. Employee Cost Decline (ex-sales) -6.5% -6.5%YoY

What they filed

Q1 FY27: revenue down 32.6%, net profit up 193.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,265 1,492 1,599 1,586 1,681 +33%1,553 +4%1,005 −37%1,069 −33%
EBITDA-421 -208 -81 76 88 +121%84 +140%-15 +81%87 +14%
Net profit821 -205 -581 63 -264 −132%145 +171%119 +120%185 +194%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Cash ₹13,500 Cr Company is a free cash flow generating business and actively looking for organic and potentially inorganic opportunities within its existing perimeter, provided there is the right opportunity and valuation.
    Mr. Madhur Deora: I would just add one thing that compared to when this discussion started a year ago, not only do we have INR 13,500 crores of cash, we are now also adding a significant amount of cash. I love the fact that we are a free cash flow generating business. ... So Manish, while we are adding cash to our balance sheet, we are also very actively looking for within the existing perimeter of what we do, what are good Rol ideas. So we have called out in the past that MTF has been a portion of our fund, a very small percentage of our funds so far which is giving us very good ROI. I love that because it is a good Rol use of our cash and it also furthers our mission as a company in terms of serving our customers better. We are continuously looking for more opportunities within the business, mostly organic, maybe a few inorganic if there is the right opportunity and right valuation.

Guidance & targets

Profitability

  • Adjusted EBITDA Margin Profitability · next 2-3 years · High confidence >15-20%
    Mr. Madhur Deora: So on EBITDA margin when you say that now you have higher visibility on the 15-20% margin number in the next two to three years...

    — Mr. Madhur Deora

  • Profitability Increase Profitability · consequent quarters · High confidence further increase
    Mr. Vijay Shekhar Sharma: Going forward, as you would have seen that we have had a profitability increase I would believe that I think we should be able to increase our profitability further in consequent quarters right away onwards and then obviously the revenue growth will mean larger profit...

    — Mr. Vijay Shekhar Sharma

Business Focus

  • Wealth Business Scaling Business Focus · after that four more quarters · Medium confidence sizable number, will see size
    Mr. Vijay Shekhar Sharma: So Sachin, my intention when I say I'm focusing I probably am trying to discover the perfect product market fit among every other person and in wealth we seem to be reaching that milestone, and after that four more quarters and then you will see size.

    — Mr. Vijay Shekhar Sharma

Revenue

  • AI Revenue Monetization Revenue · couple of quarters later, less than a year · Medium confidence start to see revenue monetization
    Mr. Vijay Shekhar Sharma: I fundamentally believe that moving ahead of the optimization journey, we will start to see our revenue monetization journey of Al. I'm very happy that some of our products have started showing up few lakhs of revenue but it is important to know that we are going to let's say couple of quarters later, I wish less than a year, I'm able to say this line item which will anyways go into commerce cloud the traditional erstwhile marketing cloud business that we used to have it in that line item and that is the personally these two line items that I'm personally focused on.

    — Mr. Vijay Shekhar Sharma

  • Overall Financial Services Revenue Revenue · ongoing · Medium confidence will grow
    Mr. Madhur Deora: So, yes, there's a mix effect point, which may affect us a couple of quarters here and there. But we are confident, overall financial services revenue will grow.

    — Mr. Madhur Deora

Customer Acquisition

  • Merchant Additions Customer Acquisition · a year · High confidence 25 to 30 lakhs additions
    Mr. Madhur Deora: No. So we have said broadly 25 to 30 lakhs additions a year. We're very much within that band and maybe additional investments could make that go even higher. Like I said, the TAM is massive and we have very high conviction on providing payment services to our merchants, especially small merchants, which is what we're talking about here. So that pace should continue.

    — Mr. Madhur Deora

Cost Management

  • Indirect Expenses Growth Cost Management · ongoing · High confidence grow a lot slower than revenue
    Mr. Madhur Deora: There are minor fluctuations that will exist quarter on quarter, but nothing specific to call out. Nothing that is going to change our trend lines in any major way. Like we have said, we do expect to continue to improve EBITDA profitability. With respect to the overall guidance on indirect expenses is that despite investments in sales and marketing, it will grow a lot slower than revenue.

    — Mr. Madhur Deora

Business Growth

  • Postpaid Business Growth Business Growth · ongoing · Medium confidence tracking roughly twice as fast
    Mr. Madhur Deora: The only thing I would add to that is that it took us about 4 and a half, 5 years last time to get to those numbers. Currently, we are tracking roughly twice as fast. I'm not saying that if it took us 5 years last year, it will take us 2 and a half years. I'm not saying that. Currently we are tracking twice as fast as you would expect that we are ramping up this product. This product is ramping up with all users, new users, everyone, just really, really well.

    — Mr. Madhur Deora

  • Consumer Franchise Monetization Business Growth · F27 · Medium confidence very good
    Mr. Vijay Shekhar Sharma: I think it will be very good. I mean, what should I say? We are putting effort in everything. Something or the other will work. There are so many missiles and rockets. Something will work.

    — Mr. Vijay Shekhar Sharma

Customer Growth

  • Financial Services Customers Customer Growth · ongoing · Medium confidence should just linearly grow up
    Mr. Madhur Deora: So, just to clarify, the 7.6 lakh number, we think that, barring any quarterly aberrations, this number should just linearly grow up.

    — Mr. Madhur Deora

What to watch in Q2 FY27

Profitability trajectory

consequent quarters
Current Adjusted EBITDA margin at 8%
Target Further increase in profitability

Why it matters

Management committed to increasing profitability in subsequent quarters, which is key for sustained financial health.

Mr. Vijay Shekhar Sharma: Going forward, as you would have seen that we have had a profitability increase I would believe that I think we should be able to increase our profitability further in consequent quarters right away onwards and then obviously the revenue growth will mean larger profit...

Risks & concerns

  • Potential regulatory actions on digital lending APRs

    medium

    Analyst raised concerns about potential moderation of APRs in merchant lending due to regulatory scrutiny on digital lenders. Management stated they are proactively offering lower APR products.

    Analyst acknowledged

  • Uncertainty regarding UPI monetization policy

    medium

    Analyst inquired about potential government reconsideration of UPI monetization, but management stated they have no clear information and are waiting to watch.

    Analyst not addressed

  • Net payment margin compression

    medium

    Net payment margins declined from 8.8 bps last year to 8.4 bps this quarter, attributed by management to specific plans for low/engaged merchants and tightened revenue recognition.

    Analyst acknowledged

  • Headwinds in travel business affecting marketing services

    low

    The travel business, part of marketing services, faced 'headwinds' or 'headfire' due to external factors like rising ticket prices, impacting expectations for the segment.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
EBITDA margin targets and long-term profitability Direct
Mr. Madhur Deora: Yeah I think at the core of it Manish the reason why we're saying what we're saying is that the revenue growth acceleration and the fact that indirect expenses are growing significantly slower than revenue growth, so that's what's giving us confidence to make both the statements that you pointed out. Which is that we should be able to get to we have higher confidence of getting to that number and perhaps getting to it sooner and we do think that Al structurally not only accelerates operating leverage, it also expands the opportunity for higher margins over time, because you're just able to do more with less...

Analyst sought clarification on the 15-20% EBITDA margin target and long-term potential, which is a key profitability metric.

Asked by Manish Adukia, Goldman Sachs

Cash on books and M&A strategy Direct
Mr. Vijay Shekhar Sharma: 100%. Cash is the spine and strength. I wish that we have INR 40,000 crore cash. ... Mr. Madhur Deora: So Manish, while we are adding cash to our balance sheet, we are also very actively looking for within the existing perimeter of what we do, what are good Rol ideas. So we have called out in the past that MTF has been a portion of our fund, a very small percentage of our funds so far which is giving us very good ROI. I love that because it is a good Rol use of our cash and it also furthers our mission as a company in terms of serving our customers better. We are continuously looking for more opportunities within the business, mostly organic, maybe a few inorganic if there is the right opportunity and right valuation.

Analyst inquired about the company's capital allocation strategy, specifically regarding large cash uses like M&A, and management confirmed active search for opportunities.

Asked by Manish Adukia, Goldman Sachs

Potential UPI monetization by government Evasive
Mr. Vijay Shekhar Sharma: I don't have any clue of actually the number that it could be or not and what kind of line item it will be paid for. So we were trying to model it in-house ourselves based on newspaper and various other whispers in the corridor but we just said there is no materiality to it as a discussion when you don't know what the formula is. So we'll wait and watch.

Analyst asked about a significant potential revenue opportunity (UPI monetization) and its impact, but management stated uncertainty due to lack of official details.

Asked by Sachin Salgaonkar, Bank of America

AI's impact on merchant acquisition, efficiency, and cloud costs Direct
Mr. Vijay Shekhar Sharma: First of all, thank you. Somebody saw what I wish somebody would have seen and asked. I mean, you heard that people are saying token maxing means so much of cost. My whole year's worth of cost came within a quarter, those kinds of situations. We tune our own model, place on our own infrastructure, and then run it. You must have heard this popular, make this phone call for, let's say, collection or revisit or retention and so on. Now, we took a 200 billion parameters model, optimized it to a 4 billion parameters model made for Indian languages, our own model. And then we place it on our own machine. And effectively, now you're talking about low latency, low cost of tokens, which is low interest cost running, run and operated by us.

Analyst probed into the practical applications and financial benefits of AI, particularly in cost reduction and operational efficiency, which management confirmed as a key strategy.

Asked by Vijit Jain, Citi

Decline in net payment margins from 8.8 bps to 8.4 bps Partial
Mr. Madhur Deora: Yeah, so I think we explained it in one of the questions in the back and you're absolutely right. The payment processing margin, as we've discussed in the last few quarters, has been inching upwards gradually, but consistently every quarter. The impact that you're talking about is because of certain plans that we run for low merchants and highly engaged merchants. I should point out that we have mentioned elsewhere that we have tightened our revenue recognition policy on certain businesses a little bit. There was a slight impact of that, but most of it is the answer that we have given in the back of the document.

Analyst questioned the decline in a key profitability metric, and management attributed it to specific plans for low/engaged merchants and tightened revenue recognition policy.

Asked by Vijit Jain, Citi

Consumer franchise monetization outlook for F27 Direct
Mr. Vijay Shekhar Sharma: I think it will be very good. I mean, what should I say? We are putting effort in everything. Something or the other will work. There are so many missiles and rockets. Something will work. ... Mr. Madhur Deora: So, now that these things are starting to turn around, we are seeing significant upside on the consumer side. So, when we look at our LTV to CAC, that has improved meaningfully. And obviously, that is one of the reasons why we're making some investments on the consumer side over and above the product. We're also investing more in marketing.

Analyst sought clarity on the monetization prospects of the consumer business, which management indicated as having significant upside due to improved LTV to CAC and increased investments.

Asked by Vijit Jain, Citi

Regulatory concerns and APR moderation in merchant lending Direct
Mr. Vijay Shekhar Sharma: So second part, I can tell that we already have started and proactively done different lower APR products. And we basically now do EDC devices where the merchant has more choices or more options or the pricing is pretty competitive. So just in case, we do and internally we've gone all stack. We look at merchants as our strategic customer base where we don't see only one kind of product, but multiple buckets of products. So the lower APR is not going to be a surprise. Rather, we will lead the market. If some competition walks into this space, we will just aggressively go and play lower APR business. And wherever the logic will be, just in case. And we are already doing it.

Analyst raised concerns about potential regulatory pressure on digital lending APRs, and management affirmed proactive steps to offer lower APR products and lead the market.

Asked by Jayant Kharote

Discrepancy between GMV growth and net payment revenue growth Direct
Mr. Madhur Deora: I think you've got it right that net payment margin is payment processing margin plus subscription. On subscription, we have mentioned that in a few cases, in a few percentage of cases, we do these waivers for our merchants and also the tighter revenue recognition policy. We do think overall, when we look at our merchant payments business plus the merchant loans, those payback periods are actually improving.

Analyst questioned why strong GMV growth wasn't fully translating to net payment revenue growth, and management explained it was due to waivers for merchants and tighter revenue recognition policies.

Asked by Jayant Kharote

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Detailed narrative

Q1 FY27 Performance Overview and Market Share Gains

One 97 Communications reported a strong Q1 FY27, with the consumer payment business growing at double the market growth rate, indicating significant market share gains in UPI. The company successfully surpassed its January 2024 daily transacting user and daily active user KPIs, signaling a strong recovery from past challenges. Overall Gross Merchandise Value (GMV) growth accelerated to 31% YoY, up from 23% in Q3 and 27% in Q4, driven by broad-based strength across all payment categories.

Profitability and Margin Expansion

The company achieved a notable improvement in profitability, with the adjusted EBITDA margin expanding by 7 percentage points, from 1% to 8% (adjusted for PIDF). Management expressed confidence in further increasing profitability in subsequent quarters, driven by revenue growth and disciplined spending. Indirect expenses are projected to grow significantly slower than revenue, contributing to operating leverage.

Strategic Focus on Wealth Management and AI

Management highlighted wealth management, including equity brokerage and mutual fund distribution, as a key area for future aggression and monetization, expecting it to become a 'sizable number' within four quarters. Artificial Intelligence (AI) is central to the company's strategy, not only for optimizing costs (e.g., 6.5% decline in employee costs ex-sales) but also as a new revenue stream, with monetization expected to start within the next year. AI is being used to build low-latency, low-cost token models for various business functions.

Payment Business Dynamics and Monetization

The payment business saw robust growth, with consumer side GTV increasing by 45% YoY and Monthly Transacting Users (MTU) up 8%. Despite this, net payment margins slightly compressed from 8.8 bps last year to 8.4 bps, attributed to specific plans for low/highly engaged merchants and tightened revenue recognition policies. The company continues to focus on merchant acquisition, targeting 25-30 lakh additions annually, and is actively ramping up its Postpaid product, tracking roughly twice as fast as its previous peak.

Lending Business and Regulatory Landscape

The lending business, particularly personal loans and merchant loans, is performing well with a double-digit number of lending partners. Management noted that the loan book is growing quarter-on-quarter. Addressing analyst concerns about potential regulatory pressure on digital lending APRs, the company stated it is proactively offering lower APR products and aims to lead the market in competitive pricing, especially with EDC devices for merchants.

Capital and Liquidity Position

One 97 maintains a strong liquidity position with INR 13,500 crores in cash on its balance sheet. Management emphasized being a free cash flow generating business and continuously seeking opportunities for growth, both organic and potentially inorganic, provided they align with the right valuation and strategic fit. The company views cash as a 'spine and strength' in the current fintech ecosystem.

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