PhonePe reported an 11% year-on-year increase in consolidated revenue for FY26, with revenue rising to ₹7,920 crore from ₹7,115 crore in FY25. However, the Walmart-backed fintech’s growth slowed significantly as it navigated the impact of discontinued rent payment services, the government’s ban on real money gaming (RMG) transactions, and the absence of UPI subsidy incentives that had supported earnings in previous periods. Despite revenue growth, the company posted a wider net loss as these changes weighed on its financial performance.
The results highlight PhonePe’s ongoing transition from relying heavily on consumer payment volumes toward building higher-margin businesses such as merchant payments, lending, insurance distribution, and wealth management. While regulatory changes affected legacy revenue streams, the company continues to maintain its leadership in India’s Unified Payments Interface (UPI) ecosystem, accounting for more than 45% of all UPI transactions.
FY26 Financial Performance
PhonePe’s consolidated financial results for FY26 were mixed.
Financial Snapshot
| Metric | FY26 | FY25 | Change |
|---|---|---|---|
| Revenue | ₹7,920 crore | ₹7,115 crore | +11% |
| Net Loss | ₹2,792 crore | ₹1,727 crore | +62% |
The company attributed the slower revenue growth and wider losses primarily to:
- Discontinuation of rent payment services.
- Government restrictions on real money gaming (RMG) transactions.
- Non-availability of Payment Infrastructure Development Fund (PIDF) incentives linked to UPI expansion.
Why Revenue Growth Slowed
PhonePe’s earlier revenue included several income streams that are no longer available.
These include:
- Credit card-based rent payments, which were halted following regulatory changes.
- Revenue generated from processing real money gaming transactions.
- Government incentives under the Payment Infrastructure Development Fund (PIDF).
The company had previously estimated that discontinuing RMG payments alone would reduce annual revenue by around ₹150 crore.
Revenue Headwinds
| Factor | Impact |
|---|---|
| Rent payment services halted | Lower transaction-related revenue |
| Ban on real money gaming payments | Reduced payment processing income |
| End of UPI subsidy incentives | Lower government-supported earnings |
Second Half Shows Improvement
Despite the challenges, PhonePe’s performance strengthened during the second half of FY26.
- Second-half revenue reached ₹3,746 crore.
- This exceeded the first-half adjusted operating revenue after excluding discontinued businesses.
- On a normalized basis, excluding discontinued income streams, the company’s operational performance improved over the course of the year.
The figures suggest that PhonePe’s core businesses are beginning to offset the impact of discontinued revenue sources.
Lending Emerges as a Key Growth Driver
One of the strongest contributors to PhonePe’s growth was its lending business.
According to the company:
- Monthly loan disbursements have reached a run rate of approximately ₹2,600 crore.
- This implies an annualized lending volume of roughly ₹30,000 crore.
- Lending has become one of the fastest-growing components of PhonePe’s financial services strategy.
The company has also continued expanding:
- Merchant payment solutions.
- Insurance distribution.
- Mutual fund offerings.
- Wealth management services.
These businesses are expected to contribute a larger share of revenue as PhonePe diversifies beyond payments.
Strong Position in India’s UPI Ecosystem
PhonePe remains India’s largest UPI platform.
Key operational metrics include:
- More than 45% share of the UPI market.
- Around 150 million monthly active users.
- Leadership across consumer and merchant digital payments.
Its scale provides a strong foundation for cross-selling financial products, enabling the company to monetize its large user base beyond transaction fees.
Looking Ahead
PhonePe’s FY26 performance reflects the challenges of adapting to a changing regulatory environment while building a more diversified fintech business. Although revenue grew by 11%, the loss of rent payment income, the ban on real money gaming transactions, and the end of UPI subsidy incentives weighed on both revenue growth and profitability. At the same time, improvements in the second half of the fiscal year indicate that the company’s core operations are gradually adjusting to the new revenue mix.
Looking ahead, PhonePe’s long-term growth is expected to depend increasingly on higher-margin businesses such as merchant services, lending, insurance, and wealth management rather than traditional payment processing. With its dominant UPI market share and a rapidly expanding financial services portfolio, the company is positioning itself for sustained growth as it continues preparations for a potential public listing.
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