Paytm increases marketing spends 27%

Paytm  increased its sales and marketing investments by 27 per cent year-on-year in the June quarter, even as its adjusted EBITDA margin expanded to 8 per cent from 1 per cent a year ago, signalling greater confidence in investing for customer and merchant acquisition without compromising profitability.

During the company's earnings call, Founder and Chief Executive Officer Vijay Shekhar Sharma said Paytm has moved beyond the recovery phase that followed regulatory disruptions in 2024 and is now focused on expanding its consumer and merchant base. However, he stressed that the company is no longer chasing market share at any cost and will prioritise customers that contribute to long-term monetisation.

"We have crossed our January 2024 numbers in terms of daily active users and daily transacting users. We have cash in our hand and aggression in our mind. We want to aggressively acquire consumers and merchants, but we don't want market share for the heck of it. We want monetisation," Sharma said during the earnings call.

Group Chief Financial Officer Madhur Deora said the increase in sales and marketing investments reflects the company's confidence in scaling the business while maintaining profitability.

"Our sales investments and marketing investments have gone up by 27 per cent year-on-year. At the same time, our adjusted EBITDA margin has improved to 8 per cent because our indirect costs are growing much slower than our revenues," Deora said.

Paytm reported that its consumer payments business continued to gain traction during the quarter. Consumer gross merchandise value (GMV) increased 45 per cent year-on-year, while monthly transacting users (MTUs) grew around 8 per cent, indicating higher engagement from existing users. The company also said it has surpassed the user engagement levels recorded before the regulatory action against Paytm Payments Bank.

According to Sharma, improvements to the app experience and stronger engagement have contributed to higher transaction frequency.

"Our focus is on making the product simpler and more engaging so that customers continue to use Paytm more frequently," he said.

The company also highlighted artificial intelligence as an important driver of operational efficiency. Sharma said AI is being deployed across merchant acquisition, customer support, collections and internal workflows, allowing Paytm to improve productivity while controlling costs.

"We have AI agents helping us decide which merchants should be visited, how we improve collections and how we improve customer service. We are also building our own smaller language models for India, which significantly reduce costs," Sharma said.

Beyond internal operations, the company is also preparing to commercialise some of its AI capabilities.

"We are building AI products that we will first use internally and later sell to outside businesses. This will become a non-payment, non-financial services revenue opportunity for us," Sharma said.

Alongside payments, Paytm said wealth management remains an important growth area. Management highlighted opportunities across stock broking, mutual funds and margin trading facilities as the company looks to increase customer engagement across financial services.

With a stronger balance sheet and improving profitability, management indicated that Paytm intends to continue investing in expanding its consumer and merchant ecosystem while using technology and AI to improve operating efficiency. Sharma summed up the company's current approach by saying that Paytm now has both the financial strength and the confidence to pursue growth, while remaining disciplined on monetisation.