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Management addressed the impact of PIDF changes, noting an expected drop in contribution margin from 57% to mid-50s. They anticipate offsetting 30-40% of this impact in the current quarter (Q3 FY26) and more over time^⏳, primarily through increased subscription revenues and cross-selling financial services to merchants. The total PIDF impact was approximately ₹80 crores last quarter, which is expected to lead to an EBITDA impact in Q4 before full mitigation.

Paytm reported a 24% GMV growth and 22% revenue growth for the quarter. The payment processing margin remained strong, staying above 4 basis points, and is expected to continue at this level for the next few quarters. The company emphasized its focus on monetizable merchants, with online business expected to generate more upside in payments and financial services, driven by platform fees and EMI/card initiatives. The strategy is to acquire good quality merchants for credit distribution and other products.

The Buy Now, Pay Later (BNPL) product has shown strong traction, crossing one lakh customers and is expected to achieve ₹100 crores in monthly disbursals within six months of launch. Merchant loan penetration stands at approximately 7% of the device merchant base, with potential to reach 20%. The merchant loan business continues to grow, driven by an increase in devices (27 lakhs year-on-year), penetration (1% annually), and average ticket size (15% compounded annually). Paytm Money is also targeted to become a top five player in less than three years.

Paytm aims to acquire approximately 250 million monetizable customers over the next three to four years, focusing on a product-led, technology-led approach rather than marketing spend. The company reiterated its commitment to bringing the wallet back, indicating a potential relaunch. Digital gold sales are seen as a consistent customer retention bet, contributing to customer lock-in on the platform.

The company highlighted continuous cost optimization efforts and a product-led, technology-led approach to growth. Sales employee costs are at an all-time high, indicating strategic investment in sales. Paytm is leveraging AI extensively, with management expressing pride in their AI capabilities for optimizing costs and expanding business lines, claiming to be ahead of major global tech companies in real-world enterprise AI applications.

Paytm has adopted a more conservative revenue recognition policy in recent quarters, particularly regarding inactive merchants. For merchants inactive for more than 30 days, revenue recognition will cease, leading to cleaner reporting and a neutral impact on EBITDA, despite a higher provision for doubtful debt. This change aims for more transparent and accurate financial representation.