PhonePe's numbers show shift toward monetisation, margin improvement
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Financial disclosures filed by PhonePe indicate a marked improvement in revenue scale, profitability metrics, and cash generation over the last three fiscal years, signalling a shift in the company’s financial trajectory amid India’s evolving fintech landscape.
According to the Draft Red Herring Prospectus (DRHP), PhonePe's revenue from operations increased from ₹2,914.28 crore in FY23 to ₹7,114.85 crore in FY25, representing a compound annual growth rate of 56.25%.
Revenue growth during this period was supported by increased monetisation across multiple business segments, including merchant payments, lending and insurance distribution.
The contribution of merchant payments to overall revenue rose from 14.75% in FY23 to 27.99% in FY25, further increasing to 30.78% in the six months ended September 30, 2025.
Lending and insurance distribution services also expanded their share of revenue, growing from 0.96% in FY23 to 7.84% in FY25 and 11.55% in the latest six-month period, indicating gradual diversification beyond core payments.
The scale of losses by the company has also reduced significantly. Restated losses narrowed to ₹1,727.41 crore in FY25, reflecting an improvement of ₹1,068.65 crore compared to FY23. Over the same period, PhonePe's loss margin improved from 90.68% in FY23 to 22.64% in FY25.
The DRHP also highlights improvements in operational profitability. PhonePe reported positive adjusted EBITDA and adjusted profit in FY24 and FY25, and achieved profitability at the adjusted EBIT level in FY25, reflecting tighter cost controls and operating leverage as revenue scaled.
A notable development during this period was the generation of free cash flow. PhonePe reported free cash generation of ₹190.47 crore in FY25 and ₹250.16 crore in the six months ended September 30, 2024, driven primarily by increased cash flows from operating activities. The company stated that its business model prioritises free cash generation to support reinvestment, expansion into new platforms, and balance sheet strength.
The DRHP attributes part of the financial improvement to investments in technology infrastructure, including proprietary data centres, automation initiatives, and data-driven customer acquisition strategies. These measures have helped limit cost escalation as transaction volumes increased, enabling improvements in margins and cash flows.
PhonePe also outlined a disciplined capital allocation approach, with a focus on maintaining liquidity buffers, selectively deploying growth capital, and linking investments to performance outcomes.
The disclosures suggest that the company has made measurable progress toward improving operating efficiency, diversifying revenues, and strengthening cash generation over the last three fiscal years.