Paytm profit up 10-fold: how a payments app earns when UPI is free
· 5 min read · Tryvest
Paytm's parent made ₹225 crore profit in Q2 FY27. How a payments app earns money when UPI is free, and how to read revenue, EBITDA and margins.
One 97 Communications, the company that runs Paytm, said on Monday, 26 October 2026, that it made a net profit of ₹225 crore in July–September, more than ten times the ₹21 crore it made in the same quarter a year ago. Revenue rose 28% to ₹2,648 crore. That raises a question many UPI users have: if sending money by UPI is free, how does a payments app earn anything at all? Here is what the numbers say, and how to read a set of quarterly results.
What happened
The results cover the second quarter of the 2026-27 financial year, called Q2 FY27. According to the figures filed with the stock exchanges and reported by Entrackr and ANI:
- Revenue from operations was ₹2,648 crore, up 28% from ₹2,061 crore a year earlier.
- Net profit was ₹225 crore, against ₹21 crore a year ago. The company called it its sixth profitable quarter in a row.
- EBITDA rose about 90% to ₹270 crore, which is about 10% of revenue. The company said this was the first time the margin reached double digits.
- Monthly transacting users rose by about 1 crore over the year to 8.5 crore.
- Indirect expenses fell to 46% of revenue from 52% a year ago, which the company credited to using AI in its work.
How a payments app earns money
When you send money to a friend by UPI, nobody pays a fee. Payments to shops through UPI also carry no merchant fee for now; a planned charge on larger shop payments has been put off, as we explained in our post on the UPI merchant fee and who pays it. So the money comes from other places. Paytm's results show three main ones.
1. Payment services
This brought in ₹1,434 crore, up about 25%, and is the biggest part of revenue. It includes fees on card and other payments that do carry a charge, and the monthly subscriptions that shops pay for devices such as payment soundboxes and card machines. Part of this money is paid straight out again to banks and card networks for processing. What is left after those costs is called net payment revenue, which the company put at ₹644 crore, up 21% on a comparable basis.
2. Financial services (distribution)
This line rose 49% to ₹912 crore, the fastest-growing part. "Distribution" means the app connects its users with lenders and other financial firms, and is paid a fee for each loan or product it helps sell. The reports name merchant loans, personal loans, Paytm Postpaid and gold among the products. The company is the shopfront here; the lender is the one that gives the money.
3. Users who come back
Free UPI payments are the way in. The company said the value of UPI payments made through Paytm grew more than twice as fast as the industry. A large, active user base is what makes the paid services above possible to sell.
The idea behind it: reading quarterly results
Every listed company in India publishes results each quarter. A few words do most of the work, and you can learn them in our lesson on reading financial statements.
- Revenue is all the money earned from the business before costs. Net profit is what is left after every cost, interest and tax.
- EBITDA stands for earnings before interest, tax, depreciation and amortisation. It shows how much the core business earns from its day-to-day work. EBITDA margin is EBITDA as a share of revenue: here, roughly ₹270 out of every ₹2,648, or about 10%.
- YoY (year on year) compares a quarter with the same quarter last year. QoQ (quarter on quarter) compares it with the quarter just before. Revenue here was up 28% YoY and about 8% QoQ.
- Other income is money from outside the main business, such as interest earned on cash the company holds. Reports put it at ₹182 crore this quarter, so it was a meaningful part of the profit.
One more idea is worth knowing: the base effect. A tenfold rise sounds huge, but it starts from a small number. Going from ₹21 crore to ₹225 crore is about 10.7 times, while revenue grew a more modest 28%. When profit is small, even a modest change in costs or income can make the percentage jump. That is why it helps to read the rupee amounts and the margin, not only the headline multiple. For more on how profit links to a company's value, see our lesson on market cap, P/E and EPS.
Why it matters for a beginner
UPI is now part of daily life in India, and most people use it for free. These results show the business model behind that: the free service brings people in, and money is made on devices, loans and other products sold to some of them. The same idea explains many apps that look free. It is also a reminder that results are best read in full; earlier this month we used bank results to explain NII, NIM and NPAs, and every sector has a few words like these.
What to keep an eye on
- The UPI merchant fee. NPCI has said it will notify a new start date after Diwali for the fee on select shop payments above ₹2,000.
- Monthly UPI data. NPCI publishes UPI volumes and values at the start of every month.
- The next results. The October–December quarter (Q3 FY27) will be the next set of numbers filed with the exchanges.
- The full filing. The company's results and shareholder letter on the NSE and BSE websites give the complete numbers, including costs not covered here.
Key points
- Paytm's parent reported a Q2 FY27 net profit of ₹225 crore, up from ₹21 crore a year ago, on revenue of ₹2,648 crore, up 28%.
- Free UPI transfers bring users in; the money comes from payment services such as merchant devices (₹1,434 crore) and distributing loans and other products (₹912 crore).
- EBITDA shows what the core business earns; EBITDA margin was about 10% this quarter.
- A tenfold rise from a small base is mostly a base effect; read the rupee amounts and margins too.
Want to practise reading a company's numbers without risking money? Start with our lesson on financial statements, then try the Tryvest simulator.