Paytm increased its marketing and promotional expenses by 59% year-on-year (YoY) to ₹194 crore in the second quarter of FY27, compared with ₹122 crore in the corresponding quarter last year. The higher spending came as the fintech company expanded its consumer payments, merchant services and financial-services distribution businesses, seeking to attract customers and strengthen engagement across its platform.
The increase accompanied stronger financial performance at One 97 Communications, Paytm’s parent company. Operating revenue rose 28% YoY to ₹2,648 crore in the September 2026 quarter, while reported profit after tax climbed to ₹225 crore from ₹21 crore a year earlier. The figures highlight Paytm’s effort to pursue customer and merchant growth while improving profitability, although the long-term returns from the higher marketing investment will depend on customer acquisition, retention and monetisation.
Key Takeaways
- Marketing expenses: Rose 59% YoY to ₹194 crore from ₹122 crore.
- Revenue growth: Operating revenue increased 28% YoY to ₹2,648 crore.
- Profitability: Reported profit after tax reached ₹225 crore, compared with ₹21 crore a year earlier.
- EBITDA: Increased 90% YoY to ₹270 crore, with the EBITDA margin reaching 10%.
- Customer growth: Monthly transacting users increased by one crore year-on-year to 8.5 crore.
- Merchant expansion: Merchants on subscription plans rose by 27 lakh to 1.64 crore.
- Key question: Paytm will need to sustain customer growth and generate sufficient revenue from its higher marketing investment.
Paytm Marketing Expenses Rise as Competition Intensifies
Marketing and promotional expenses increased by ₹72 crore, from ₹122 crore in Q2 FY26 to ₹194 crore in Q2 FY27. The 59% increase was more than twice the pace of Paytm’s 28% operating revenue growth during the quarter.
The spending increase suggests that Paytm continues to invest in customer acquisition, engagement and expansion across its payments ecosystem. Marketing can help a fintech company attract new users, encourage existing customers to transact more frequently and introduce users to additional services.
However, higher expenditure does not automatically translate into better financial performance. The effectiveness of the investment depends on how many customers remain active, how often they use the platform and how much revenue the company earns from their activity.
Paytm’s quarterly results provide some evidence of continued expansion, including growth in monthly transacting users, merchant subscriptions and financial-services distribution. The company has not, however, established that the entire increase in marketing spending directly caused those improvements.
Paytm Q2 FY27 Financial Performance
Paytm reported stronger revenue and profitability in the September quarter, alongside the increase in marketing expenditure.
| Financial metric | Q2 FY26 | Q2 FY27 | YoY change |
|---|---|---|---|
| Operating revenue | ₹2,061 crore | ₹2,648 crore | +28% |
| Marketing and promotional expenses | ₹122 crore | ₹194 crore | +59% |
| Profit after tax | ₹21 crore | ₹225 crore | More than 10 times |
| EBITDA | ₹142 crore | ₹270 crore | +90% |
| EBITDA margin | 7% | 10% | +3 percentage points |
Sources: Business Standard and Indian Television. Revenue and other comparison figures are rounded where appropriate.
Correction, 27 October 2026: The Q2 FY26 operating-revenue comparison has been corrected to ₹2,061 crore, as reported in Paytm’s results release.
The results show that marketing costs grew faster than revenue, but profitability also improved significantly. EBITDA—the earnings measure before interest, taxes, depreciation and amortisation—reached a record ₹270 crore, while its margin expanded to 10%.
Reported profit after tax rose sharply from ₹21 crore to ₹225 crore. This comparison should be interpreted carefully: the year-ago quarter included substantially higher exceptional expenses, so the increase in reported net profit does not represent an equivalent increase in recurring operating performance.
Why Paytm Is Investing More in Marketing
Paytm operates across consumer payments, merchant payment services and financial-services distribution. Marketing and customer acquisition can support growth across all three areas.
1. Expanding its consumer payments business
Paytm reported that its monthly transacting users increased by one crore year-on-year to 8.5 crore. The company also said it gained consumer UPI payment market share for the sixth consecutive quarter.
According to the company’s results, Paytm’s UPI transaction value grew 42% during the quarter, compared with industry growth of 19%. Higher engagement can create opportunities to monetise the user base through payment services and other products.
2. Growing the merchant network
Paytm continues to expand its merchant ecosystem, including businesses using subscription-based payment devices and services.
The number of merchants on subscription plans reached 1.64 crore, an increase of 27 lakh over the previous year. A larger merchant network can support recurring subscription revenue, payment activity and opportunities to distribute financial products.
3. Increasing financial-services revenue
Financial-services distribution is another important growth area. Paytm reported that revenue from this segment rose 49% year-on-year to ₹912 crore, supported by merchant loan distribution, personal loans, Paytm Postpaid and other financial products.
The expansion gives Paytm more opportunities to earn revenue beyond payment transactions. Marketing and customer engagement may help the company connect eligible users and merchants with these services, although lending decisions and credit risk remain important considerations.
Is Higher Marketing Spending Sustainable?
The key issue is whether Paytm can turn additional marketing expenditure into durable customer relationships and profitable revenue.
A 59% increase in marketing costs is substantial relative to 28% revenue growth. If the spending produces customers who transact frequently, use multiple services and remain active over time, it could support future growth. If customer acquisition becomes more expensive or users disengage quickly, the returns could be weaker.
Investors should therefore look beyond the headline spending figure and monitor several indicators:
- Customer acquisition efficiency: How much marketing expenditure is needed to attract an active customer?
- Retention: Do newly acquired customers continue using Paytm after promotional campaigns end?
- Revenue per user: Is engagement translating into greater monetisation?
- Merchant economics: Are additional merchant subscriptions generating enough recurring revenue to justify acquisition and servicing costs?
- Operating margins: Can the company continue improving profitability as marketing expenditure increases?
The quarter’s reported results are encouraging in terms of revenue growth and operating profitability. But one quarter alone cannot establish whether the higher marketing investment will produce sustainable long-term returns.
AI and Cost Efficiency Could Help Offset Spending
Paytm has also highlighted artificial intelligence as a way to improve productivity across its business. According to the company, specialised models and AI agents are being deployed in consumer and merchant journeys, engineering, risk management, collections, fraud prevention and personalisation.
Paytm said AI-led efficiencies helped reduce indirect expenses as a share of revenue to 46% from 52% a year earlier. It has also begun offering its AI platform to enterprise merchants.
These developments may help the company manage customer service, sales and operating costs as it expands. However, the reported reduction in indirect expenses as a share of revenue should not be confused with a direct reduction in marketing expenses. The two measures cover different cost categories.
If AI improves targeting, personalisation and servicing efficiency, Paytm may be able to support customer growth without increasing every operating expense at the same pace. The extent of those benefits will become clearer through subsequent results.
The Bigger Picture
Paytm’s higher marketing expenditure reflects a common challenge for fintech companies: investing to grow a platform while demonstrating that customer acquisition can lead to sustainable revenue and profits. Scale matters, but so does the quality of that growth.
For investors, the important question is not simply whether marketing spending is rising. It is whether each additional rupee helps build a more active customer base, stronger merchant relationships and higher-value financial-services activity. Paytm’s Q2 FY27 results show improving financial performance, but continued monitoring will be necessary to assess the returns from its increased spending.
FAQs
1. How much did Paytm spend on marketing in Q2 FY27?
Paytm’s marketing and promotional expenses reached ₹194 crore in Q2 FY27, up 59% from ₹122 crore in Q2 FY26.
2. Why did Paytm increase its marketing spending?
The spending increase comes as Paytm expands its consumer payments, merchant services and financial-services distribution businesses. The exact contribution of marketing to each growth metric has not been separately established.
3. Did Paytm’s revenue grow in Q2 FY27?
Yes. Operating revenue increased 28% year-on-year to ₹2,648 crore in the September 2026 quarter.
4. Was Paytm profitable in Q2 FY27?
Yes. Paytm reported profit after tax of ₹225 crore, compared with ₹21 crore in the year-ago quarter. EBITDA increased 90% to ₹270 crore.
5. Is higher marketing spending good for Paytm?
It can be beneficial if the spending attracts customers who remain active and generate enough revenue to justify acquisition costs. Investors should track retention, monetisation, customer acquisition efficiency and margins to assess whether the investment is paying off.
Looking Ahead
Paytm’s next quarterly results will help show whether the company can sustain its customer and merchant expansion while managing marketing expenditure. Investors will be watching revenue growth, active-user trends, financial-services distribution and operating margins to determine whether the higher spending is translating into durable business gains.
For now, the 59% increase in marketing expenses signals a stronger investment push alongside improving reported profitability. The longer-term outcome will depend on Paytm’s ability to convert that investment into recurring customer activity, greater monetisation and sustainable earnings growth.
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