Paytm Reports Sharp Profit Decline in Q2 After Gaming Unit Impairment

Paytm Reports Sharp Profit Decline in Q2 After Gaming Unit Impairment

Paytm’s parent company, One97 Communications Ltd, reported a consolidated net profit of Rs 21 crore for the quarter ended September 2025 (Q2 FY26), marking a steep 98% drop compared to Rs 930 crore in the same period last year. This plunge is largely attributed to a one-time impairment charge of Rs 190 crore related to its online gaming joint venture, First Games Technology Pvt Ltd, which was impacted by regulatory changes in the sector.

Despite the profit decline, Paytm’s revenue increased by 24% year-over-year to Rs 2,061 crore, driven by strong growth in financial services and merchant payments. The company’s operating performance showed improvement, with EBITDA nearly doubling to Rs 141 crore and the EBITDA margin expanding to 6.8%, reflecting disciplined cost management.

The impairment charge followed the enactment of the Promotion and Regulation of Online Gaming Act, 2025, which prohibits online gaming for stakes, directly affecting the gaming unit’s operations. As a result, profit before tax dropped from Rs 126 crore in the previous quarter to Rs 30 crore in Q2.

Paytm’s payments revenue rose 25% to Rs 1,223 crore, supported by higher gross merchandise value (GMV) and increased usage of credit cards on UPI and other affordability product offerings like EMI. The distribution of financial services revenue jumped 63% to Rs 611 crore due to robust merchant lending.

The company also expanded its merchant network, with device subscriptions reaching an all-time high of 1.37 crore, adding 25 lakh new subscriptions year-over-year. Cash flow turned positive during the half year, an important milestone for the company focused on operational efficiency.

Going forward, Paytm aims to grow its market share by enhancing product offerings and leveraging AI for innovation while maintaining a disciplined spending approach to sustain profitability.

In summary, while Paytm’s Q2 profit saw a sharp decline due to the gaming unit impairment, steady revenue growth and operational improvements signal the company’s ongoing focus on digital payments and financial services expansion.