Key Takeaways from Our Q1FY27 Earnings Call: Driving Accelerated Growth Through Market Share Gains and AI-led Operating Leverage

Q1 FY27 was a quarter of accelerating growth and record profitability for us. We reported our highest ever quarterly EBITDA of ₹203 Cr, up 182% YoY, while revenue grew 28% YoY to ₹2,448 Cr. Growth was broad-based across payments and financial services, spanning both our merchant and consumer businesses, with AI-led operating leverage continuing to expand margins across the platform.

During our recent earnings call, our Founder and CEO Vijay Shekhar Sharma, and President & Group CFO Madhur Deora spoke about the momentum across payments and financial services, growing market share gains, the scaling of our consumer monetisation engines, and the role of AI in driving both efficiency and new revenue opportunities.

Consumer payments momentum and market share gains

Starting our Q1FY27 earnings call, Vijay highlighted strong execution on the consumer side. He said, “Building for consumers has always been close to our hearts. Today, Paytm is growing at 2x the pace of the UPI market, gaining share not just in GMV, but even more strongly in payment volumes. More customers are choosing Paytm, and that momentum keeps us pushing the benchmark higher.”

He added that we have crossed an important milestone. “We’ve surpassed our January 2024 levels on daily traffic, daily active users, and other key KPIs. The past is behind us. Going forward, our focus is clear: aggressive consumer market acquisition and merchant acquisition,” he said. Our customer UPI gross transaction value (GTV) was up 45% YoY to ₹5.9 lakh Cr against 20% industry growth, while MTU expanded by 60 lakh YoY to 8 Cr.

Merchant leadership continues to compound

Our merchant business remained the foundation of our profitability. Merchant GMV growth accelerated to 31% YoY to ₹7.1 lakh Cr, while payment processing margin improved to comfortably above 4 bps. We added 27 lakh net devices YoY, taking Soundbox deployment to 1.57 Cr storefronts across India.

Speaking about our growth, Madhur said, “We’ve seen acceleration across each of our payments businesses, whether large merchants offline, small merchants offline, online payments, and the consumer side. With earlier headwinds behind us, growth has broadened across the payments ecosystem, driving a more balanced and diversified expansion.”

On financial services distribution, Vijay explained how the merchant-led model drives quality growth. “Most of our profits continue to come from the merchant side, while consumer credit has seen a significant ramp-up. The business remains largely merchant-led, with strong asset quality driving growth. We’re also seeing increasing interest from lending partners, with available capital currently 4-6x higher than what we’re disbursing,” he said.

Distribution of Financial Services revenue grew 45% YoY to ₹814 Cr in Q1 FY27, with more than half of merchant loan disbursements going to repeat borrowers. Vijay also flagged wealth, including equity brokerage and mutual fund distribution, as an increasingly meaningful growth driver, adding, “We’ve found product-market fit in MTF. We have the money, equity capital, customers, and the market needs it.”

AI as a multiplier for operating leverage

AI remained central, both as a driver of efficiency and an emerging revenue opportunity. Vijay described how we build and run our own optimised models in-house. “We took a large language model, optimised it for languages, and placed it on our own machines. We removed the cost of the call centre, replaced third-party costs with our own AI, and optimised it. This is magic, and once we’ve done it, we will sell it outside as well,” he said.

This is already reflected in our cost structure. Madhur said, “Revenue growth acceleration and the fact that indirect expenses are growing significantly slower (than revenue growth) are giving us confidence that we should be able to get to that number, and perhaps get to it sooner. AI structurally not only accelerates operating leverage, it expands the opportunity for higher margins over time, because you’re able to do more with less.”

Building for the long term

Our balance sheet continued to strengthen, with ₹13,529 crore in cash providing continued optionality for growth. Vijay pointed to the newer areas we are building alongside our core businesses. “We’re focused on strengthening key growth areas, including Commerce, Cloud and new opportunities that can create long-term value,” he said.

Q1 FY27 reflected accelerating growth, sustained market share gains, and the compounding benefits of AI-led operating leverage across our platform, with merchant payments, consumer monetisation and financial services all contributing to a broad-based expansion. Summing up our conviction in the road ahead, Vijay said, “The reason we are so excited to say we will grow both profit margin and profit is because the customer base, the product-market fit, and the business model have become scalable. From here, it is head down, execute, and we are all good.”