PhonePe posts Rs 7,115 Cr revenue and Rs 630 Cr adjusted PAT in FY25

IPO-bound PhonePe improved its financial health year-over-year in FY25 with 40% revenue growth and a 13% decline in net losses. However, the financial statements of the Walmart-owned company also included several additional details that Entrackr identified while analyzing its annual report. We will cover those later, let’s first look at its revenue streams.

PhonePe’s revenue from operations rose to Rs 7,115 crore in FY25 from Rs 5,064 crore in FY24, according to the Bengaluru-based firm’s consolidated filings with the Registrar of Companies (RoC).

Income from payment services, which included transaction processing fees (bill payments, digital gold, travel booking, etc.), platform fees (charges for the usage of the application), subscription fees (set-up charges for payment and smart speaker devices), and advertisement fees, accounted for 88.55% of total operating revenue. This stream expanded 31.6% year-on-year to Rs 6,300 crore in FY25.

Insurance and lending, incentives from the RBI, and other income such as stock broking, mutual fund distribution, and marketplace services pushed the total operating revenue to Rs 7,115 crore in FY25.

In addition, the firm recorded Rs 516 crore as gains on financial assets, taking overall income to Rs 7,631 crore in FY25 from Rs 5,722 crore in FY24.

On the expenditure side, employee benefits formed the largest cost center at Rs 4,097 crore in FY25. Of this, Rs 2,358 crore were related to ESOP costs. Entrackr excluded the ESOP-based compensation while assessing the company’s underlying financial health.

Payment processing charges stood as another major cost item at Rs 1,688 crore in FY25. Advertising and sales promotion expenses fell 21.6% to Rs 542 crore. Other costs, including IT, licensing fees, customer support, legal, logistics, and overheads, pushed total expenditure to Rs 9,394 crore in FY25 from Rs 7,754 crore in FY24.

As a result, PhonePe reported a net loss of Rs 1,727 crore in FY25, down from Rs 1,996 crore in FY24. On a comparable basis, excluding ESOP costs, the company would have posted a profit of Rs 630 crore. 

Further excluding other non-cash expenditures like finance and depreciation costs, its adjusted EBITDA excluding ESOPs stood at Rs 1,477 crore in FY25. Entrackr also found that PhonePe’s accumulated net losses reached Rs 14,860 crore by the end of FY25.

PhonePe held a 45.74% share of the digital payments market by volume and 48.26% by value as of August, according to NPCI data. The company also disclosed plans to launch a $1.5 billion IPO at a targeted valuation of $15 billion.

While well known that PhonePe provided the real kicker in the Flipkart acquisition for Walmart back in 2018, what is not appreciated is how the firm has been allowed to bloom under new ownership as well. The payments market has become more well entrenched since 2018, with the failure of WhatsApp to make a dent perhaps the only surprise. Other top apps have each built up a core of loyal users, which explains the lower advertising costs as well. PhonePe, as the numbers bear out, could switch to profit mode  almost on demand now, and that is a very powerful tool as it considers an IPO.

On top of that, a shift towards more flexible pricing seems imminent, making higher profits a real possibility after years. We have no doubt that if it plays out as well as it could, PhonePe will certainly outshine its former parent Flipkart as a prized asset for Walmart in time.