PhonePe’s recent financial disclosures highlight a transition from a high-growth payment utility toward a diversified financial services ecosystem. The Group’s performance over the last three fiscal years reflects a dual focus on scaling revenue and improving bottom-line metrics through operational efficiency.
Revenue Growth and Segment Diversification
The Group’s revenue from operations grew at a Compound Annual Growth Rate (CAGR) of 56.25%, increasing from ₹29,142.87 million in Fiscal Year 2023 to ₹71,148.58 million in Fiscal Year 2025. This momentum continued into the first half of the following fiscal year, with revenue reaching ₹39,184.69 million for the six months ended September 30, 2025.
A key driver of this growth is the diversification of revenue streams beyond core peer-to-peer transfers:
● Merchant Payments: Contribution to total revenue increased from 14.75% in FY2023 to 27.99% in FY2025, and reached 30.78% for the six months ended September 30, 2025.
● Lending and Insurance Distribution: This segment’s revenue contribution grew from 0.96% in FY2023 to 7.84% in FY2025, rising further to 11.55% for the half-year period ended September 30, 2025.
Profitability and Margin Improvement
PhonePe has reported consistent improvements in its profitability profile. The restated loss of ₹(17,274.10) million in FY2025 represented an improvement of ₹10,686.59 million compared to FY2023. Correspondingly, the Profit/(loss) Margin improved from (90.68)% in FY2023 to (22.64)% in FY2025.
On an adjusted basis, the Group delivered a profitable Adjusted EBIT in Fiscal Year 2025. It also reported positive Adjusted EBITDA and Adjusted profit for both Fiscal Year 2024 and Fiscal Year 2025.
Cash Generation and Capital Allocation
The business model is designed to facilitate free cash generation, which the Group intends to use for reinvestment and expansion into new business lines.
● The Group generated Free cash of ₹1,904.76 million in FY2025.
● For the six-month period ended September 30, 2024, Free cash generation stood at ₹2,501.61 million.
Management follows a disciplined approach to capital allocation, prioritizing a strong balance sheet and liquidity buffers while deploying growth capital selectively based on performance.
Business Model and Infrastructure
PhonePe’s strategy relies on a tech-centric approach to achieve scale and efficiency. By investing early in proprietary data centers, the Group aims to decouple platform costs from transaction volume, ensuring that infrastructure costs do not increase linearly with scale.
The model leverages data intelligence for optimized Customer Acquisition Costs (CAC) and enhanced user retention. This infrastructure supports the rapid launch of "New Platforms," including stock broking, mutual fund distribution, and the Indus Appstore. By operating as a distribution platform for lending and insurance rather than holding loans on its own balance sheet, the Group maintains a capital-light structure while expanding its market footprint.
