Paytm ramps up marketing spend as AI boosts margins and growth

MUMBAI: Paytm is opening its wallet a little wider today in the hope of filling it even more tomorrow. The fintech major is stepping up investments in marketing, customer acquisition and merchant expansion, betting that stronger user engagement and AI-led efficiencies will help fuel long-term growth without sacrificing profitability.

Speaking after the company’s quarterly results, One97 Communications President and Group Chief Financial Officer Madhur Deora said investments in sales and service, including marketing, rose 27 per cent year-on-year, reflecting Paytm’s continued focus on expanding its ecosystem.

“We’re also investing more in marketing,” Deora said, noting that despite the higher spending, the company’s adjusted EBITDA margin, excluding the Payments Infrastructure Development Fund (PIDF) benefit, expanded from 1 per cent to 8 per cent, a seven-percentage-point improvement.

He said Paytm would continue investing where it sees opportunities while maintaining operational discipline.

The increased marketing push comes as customer engagement on the platform gathers pace. While monthly transacting users (MTUs) grew around 8 per cent year-on-year, consumer gross transaction value (GTV) surged 45 per cent, suggesting users are becoming more active rather than simply more numerous.

According to Deora, the higher engagement is beginning to translate into stronger marketing services revenue and consumer financial services income, although he acknowledged that the company’s travel business remained under pressure during the quarter due to sector-specific challenges.

Founder and Chief Executive Officer Vijay Shekhar Sharma said Paytm would continue investing aggressively in both its consumer and merchant businesses, with artificial intelligence (AI) playing an increasingly important role in keeping costs under control.

“We continue to invest in consumer expansion, merchant expansion and financial services. Powered by AI means our costs are being dramatically optimised,” Sharma said.

He added that Paytm has already deployed AI across its merchant acquisition operations, where internally developed AI agents assist field sales teams in identifying and onboarding small businesses. The company is also exploring opportunities to commercialise some of these AI tools for external customers.

Sharma said the company’s cost base has largely stabilised, with most operating expenses remaining flat or declining sequentially, excluding employee-related sales costs and higher marketing investments.

The comments accompanied another quarter of improving financial performance. Revenue from operations increased 28 per cent year-on-year and 8 per cent sequentially to Rs 2,448 crore. EBITDA jumped 182 per cent from a year earlier and 54 per cent quarter-on-quarter to Rs 203 crore, while profit after tax rose 79 per cent year-on-year to Rs 220 crore.

With marketing spending accelerating and AI helping offset operating costs, Paytm is attempting to strike a balance that many technology companies aspire to spending aggressively to capture growth while ensuring profitability keeps pace.