PhonePe has announced its financial results for the fiscal year 2025, and the numbers highlight an important milestone in its journey. The fintech giant recorded revenue of ₹7,115 crore and an adjusted profit after tax (PAT) of ₹630 crore. This performance marks a significant jump from the previous year, showing strong growth across its payments and financial services businesses.
In this article, we will look at the details of PhonePe’s FY25 results, compare them with its performance in FY24, examine the reasons behind this growth, and understand what these numbers mean for the company’s future, especially as it prepares for a potential IPO.
Strong Growth in Revenue
PhonePe reported ₹7,115 crore in revenue during FY25. This represents a growth rate of about 40 percent compared to FY24 when the company earned around ₹5,064 crore. The revenue growth reflects the continued adoption of PhonePe’s payment platform across India.
More people used UPI, digital wallets, and merchant payments through PhonePe in FY25. Businesses across industries integrated PhonePe as a payment option, and the company expanded its reach into Tier 2 and Tier 3 cities. PhonePe also scaled its services in insurance, mutual funds, and lending. These new verticals added more revenue streams and reduced its dependence on just the payments business.
The steady growth in digital transactions across India contributed to PhonePe’s performance. India crossed record highs in UPI transactions in 2025, and PhonePe captured a large share of that volume.
Adjusted Profitability
Along with revenue growth, PhonePe reported an adjusted profit after tax of ₹630 crore. This number is important because it shows that the company’s business model is now generating profits on an operating level.
The adjusted PAT number excludes certain costs such as employee stock options (ESOPs) and some non-cash charges. When investors remove those items from the calculation, they see that PhonePe’s core business operations are profitable. This is a big improvement compared to FY24, when PhonePe had an adjusted PAT of ₹197 crore.
On a reported basis, PhonePe still recorded a net loss of ₹1,727 crore. This means the company spends heavily on employee compensation, expansion, and long-term investments. However, the gap between losses and adjusted profit has narrowed. The management highlighted that the company also generated free cash flow of around ₹1,200 crore from operations in FY25. This is a very positive sign because it shows PhonePe’s ability to generate actual cash even after accounting for expenses.
Comparison with FY24
To fully understand the growth story, we need to compare FY25 with FY24.
- In FY24, PhonePe reported revenue of about ₹5,064 crore. In FY25, this grew to ₹7,115 crore. That is a growth of more than ₹2,000 crore in just one year.
- In FY24, adjusted PAT was ₹197 crore. In FY25, it jumped to ₹630 crore, showing more than three times growth.
- In FY24, the company reported a loss of ₹1,996 crore. In FY25, this came down to ₹1,727 crore. While still significant, the reduction signals that PhonePe is moving toward breakeven.
- Free cash flow in FY25 stood at ₹1,200 crore, a key milestone that PhonePe did not achieve in FY24.
The year-on-year comparison shows that PhonePe is maturing as a business. It continues to grow fast while improving financial discipline.
Drivers of Growth
Several factors contributed to PhonePe’s strong FY25 performance.
1. UPI Leadership
PhonePe remained a market leader in UPI transactions in India. UPI volumes continued to grow at a rapid pace as more consumers and businesses adopted digital payments. PhonePe processed billions of transactions during FY25, earning revenue from merchant fees and value-added services.
2. Merchant Ecosystem Expansion
PhonePe increased its merchant network across large cities as well as semi-urban and rural areas. Small businesses, shops, and service providers increasingly accepted PhonePe. This expansion drove transaction volumes and ensured consistent revenue streams.
3. Financial Services Diversification
The company grew its financial services portfolio in insurance, wealth management, and lending. By offering insurance policies, investment products, and digital credit, PhonePe captured new revenue sources. This diversification helped reduce risk and ensured growth beyond just payments.
4. Focus on Profitability
Management took deliberate steps to control costs and improve efficiency. The company optimized marketing spending, improved operational systems, and leveraged technology to reduce transaction costs. This focus improved adjusted PAT and pushed the company toward free cash flow positivity.
5. Ecosystem Effect
As more consumers used PhonePe for payments, they also adopted other services offered within the platform. Cross-selling became a strong driver of revenue growth.
Importance of Adjusted PAT
The adjusted PAT figure of ₹630 crore has attracted attention. Investors view adjusted profitability as a sign that the company’s core business model is sound. However, one must note that adjusted PAT excludes ESOP costs and other charges.
Employee stock options are a real cost because they dilute ownership over time. Investors and analysts will closely examine how much of PhonePe’s profitability depends on excluding such costs. Still, the improvement from ₹197 crore to ₹630 crore adjusted PAT in just one year is a strong signal that the business is scaling in the right direction.
Net Losses and Their Impact
PhonePe reported a net loss of ₹1,727 crore in FY25. This figure is still large, but the reduction compared to FY24 is encouraging. Losses remain high because the company invests heavily in talent, expansion, and infrastructure.
Such spending helps the company grow its user base and expand its offerings. Many high-growth technology companies record losses in their early years while investing for scale. PhonePe appears to be following that path.
Free Cash Flow Achievement
One of the most positive highlights of FY25 is that PhonePe generated free cash flow of ₹1,200 crore. Free cash flow shows the cash a business generates after covering operating expenses and capital expenditures.
This metric matters more than accounting profits because it reflects actual money that the company can reinvest or use to reduce debt. Achieving free cash flow positive status strengthens PhonePe’s position ahead of its expected IPO.
Implications for IPO
PhonePe has been preparing for a public listing. The FY25 performance will help build investor confidence. Revenue growth of 40 percent, adjusted PAT of ₹630 crore, and positive free cash flow create a strong narrative.
Investors want to see growth combined with financial discipline. PhonePe’s ability to show both in FY25 makes it one of the most promising IPO candidates in the Indian fintech space.
However, the company will need to address concerns around large reported losses. Investors will closely examine whether those losses reduce over the next few years.
Competitive Landscape
PhonePe operates in a highly competitive fintech environment. Rivals such as Google Pay, Paytm, and Amazon Pay compete for UPI market share. PhonePe has maintained leadership, but competition remains intense.
Regulatory changes can also impact profitability. The Reserve Bank of India continues to shape guidelines around UPI fees and digital lending practices. PhonePe will need to adapt quickly to these changes.
Despite these challenges, PhonePe’s wide consumer base, merchant ecosystem, and diversified services give it a strong competitive advantage.
The Road Ahead
PhonePe’s FY25 performance shows that the company has crossed an important milestone. It proved that it can grow revenue at scale while moving closer to profitability. The next phase will involve reducing net losses further, scaling financial services, and preparing for an IPO.
If the company continues on this path, it can set a benchmark for how Indian fintech firms transition from hypergrowth to sustainable profitability. Investors, regulators, and customers will all watch PhonePe closely in the coming years.
Conclusion
PhonePe’s FY25 results tell a clear story of growth and maturity. With revenue of ₹7,115 crore, adjusted PAT of ₹630 crore, and free cash flow of ₹1,200 crore, the company has shown that its business model works at scale.
Although net losses remain high, the trajectory is improving. PhonePe has strengthened its leadership in UPI payments, expanded into financial services, and built a strong merchant ecosystem.
The company stands at an inflection point. If it continues to balance growth with profitability, PhonePe can emerge as one of India’s most successful fintech firms and a strong candidate for a blockbuster IPO.
Also Read – The Hidden Costs of Starting Up in India