Paytm founder and CEO Vijay Shekhar Sharma has declared an end to the era of ‘adjusted EBITDA’ reporting at the fintech giant, signalling a new phase of transparent financial disclosures as the company navigates regulatory pressures and focuses on achieving full profitability.
Speaking at Paytm’s recent internal townhall and investor interactions, Sharma said, “No more adjusted anything. We will show plain EBITDA and PAT. The time has come for Paytm to report like any mature company.”
Why Paytm is Dropping Adjusted EBITDA
Adjusted EBITDA has been a widely used metric among tech startups and new-age listed companies to showcase operational profitability by excluding ESOP (employee stock option plan) costs and certain non-cash expenses. However, over recent months, regulators and investors have raised concerns over the widespread reliance on adjusted profitability metrics, demanding greater transparency in earnings disclosures.
Vijay Shekhar Sharma acknowledged this sentiment, stating:
“Investors want clarity, regulators want clarity, and our business today is at a stage where we can report standard EBITDA and net profit metrics without adjustments.”
Paytm’s Financial Snapshot: FY25-Q4
| Financial Metric | Q4 FY25 | Q3 FY25 | QoQ Change (%) | YoY Change (%) |
|---|---|---|---|---|
| Revenue (₹ crore) | 2,485 | 2,409 | +3.1 | +23.2 |
| EBITDA (₹ crore) (unadjusted) | -210 | -167 | -25.7 | N/A |
| EBITDA Margin (%) | -8.4 | -6.9 | N/A | N/A |
| Adjusted EBITDA (₹ crore) | +153 | +219 | -30.1 | +25.6 |
| Net Loss (₹ crore) | -393 | -222 | -77.0 | N/A |
Paytm reported an adjusted EBITDA of ₹153 crore for Q4 FY25, but an unadjusted EBITDA loss of ₹210 crore due to inclusion of ESOP costs. The company’s net loss widened sequentially, primarily driven by operating expenses related to compliance, RBI directives on its Payments Bank operations, and incremental investments in merchant devices and UPI expansion.
What Changes for Paytm’s Investors
The move to stop adjusted EBITDA reporting will align Paytm’s disclosures with global GAAP standards, offering investors:
- Clear visibility into operating profitability including ESOP expenses
- Better comparison with traditional banks and NBFCs
- Realistic assessment of bottom-line profitability timelines
An analyst at a leading domestic brokerage said:
“Paytm’s decision is positive for transparency. Adjusted EBITDA was useful during the cash-burn phase, but with regulatory risks and profitability focus, clean reporting builds investor trust.”
Paytm’s Revised Strategic Focus
Vijay Shekhar Sharma has reiterated that Paytm’s future growth and profitability levers include:
- Merchant Payments Expansion: Increasing adoption of Soundbox devices and QR-based payments among SMEs
- Credit and Lending Partnerships: Scaling postpaid, personal loans, and merchant loans through partners after RBI restrictions are lifted
- UPI Market Share Consolidation: Leveraging NPCI approvals to regain market share lost post Payments Bank restrictions
- Cost Optimisation: Rationalising customer acquisition costs and operational expenses to reduce EBITDA losses
Impact of RBI’s Payments Bank Ban
In January 2025, RBI barred Paytm Payments Bank from onboarding new customers and processing fresh deposits citing compliance and governance issues. This severely impacted Paytm’s wallet, FASTag, and merchant settlement services. The company has since partnered with other banks to continue wallet and UPI operations but at higher processing costs, pressuring EBITDA margins.
Operational Metrics Q4 FY25
| Metric | Q4 FY25 | Q3 FY25 | QoQ Change (%) |
|---|---|---|---|
| Total Transactions (billion) | 2.06 | 2.21 | -6.8 |
| Total Payment GMV (₹ lakh crore) | 4.25 | 4.42 | -3.8 |
| Soundbox Devices (million) | 1.87 | 1.77 | +5.6 |
Market Reaction and Stock Performance
Following Sharma’s comments on dropping adjusted EBITDA, Paytm’s stock closed marginally higher at ₹486 on NSE amid positive analyst commentary on improved governance practices.
However, analysts remain cautious due to:
- Uncertainty around RBI lifting Payments Bank restrictions
- Rising compliance and operational costs
- Slower loan disbursement growth affecting revenue momentum
Regulatory Push for Clean Financial Reporting
SEBI and RBI have been tightening financial reporting norms for fintechs, NBFCs, and listed startups to ensure standardised disclosures. The regulator has repeatedly cautioned against metrics that obscure true profitability, with SEBI chairperson Madhabi Puri Buch recently stating:
“Investors deserve unambiguous and comparable financial disclosures to assess companies’ performance transparently.”
Global Context: Adjusted EBITDA Criticism
Globally, multiple tech giants including Uber and WeWork were criticised for heavy reliance on adjusted EBITDA to portray profitability while incurring large cash losses. Over the past three years, investor pressure has forced companies to provide standardised GAAP metrics alongside adjusted figures to regain market credibility.
Vijay Shekhar Sharma’s Leadership Outlook
Sharma concluded the townhall stating, “Our company has crossed the stage of needing adjusted metrics. We are building Paytm for sustained profitability, compliance-first growth, and long-term market leadership.”
The company’s board and investors have welcomed the shift, with some institutional shareholders urging Paytm to also provide quarterly PAT guidance to enhance earnings visibility in FY26.
Outlook for FY26
Paytm aims to achieve unadjusted EBITDA break-even by H2 FY26 and reduce quarterly net losses significantly by:
- Restructuring wallet and FASTag partnerships for better unit economics
- Expanding merchant loans with minimal balance sheet risk
- Streamlining operations to reduce ESOP and compliance overhead costs
Conclusion
Paytm’s decision to drop adjusted EBITDA reflects a mature pivot towards clean, transparent financial reporting amid a stricter regulatory environment and investor focus on true profitability. Vijay Shekhar Sharma’s leadership will now be tested on execution discipline, regulatory compliance, and restoring market confidence in India’s largest listed fintech.
Disclaimer
This news content is for informational purposes only. It is not intended as investment advice. Readers are advised to consult financial experts before making any business or investment decisions based on this report.
