Walmart-backed fintech giant PhonePe has closed out FY26 (the financial year ended March 2026) with a mixed report card. On one hand, the company’s operating revenue grew 11% to ₹7,920 crore. On the other, its net losses jumped sharply, more than one-and-a-half times higher than the previous year.
For India’s largest UPI player — one that commands over 45% of the country’s UPI transaction volumes — this slowdown in growth and widening of losses raises interesting questions, especially with an IPO reportedly on the horizon. Let’s break down the numbers and what’s really going on behind them.
The Headline Numbers
Here’s a quick snapshot of PhonePe’s FY26 performance compared to the previous year:
| Metric | FY25 | FY26 | Change |
|---|---|---|---|
| Operating Revenue | ₹7,105 crore | ₹7,920 crore | +11% |
| Net Loss | ₹1,727 crore | ₹2,792 crore | +62% |
| Total Expenses | ₹9,117 crore | ₹10,589 crore | +16% |
At first glance, the widening loss looks alarming. But context matters — and PhonePe’s FY26 numbers were shaped by a mix of regulatory shake-ups and deliberate investment choices, not simply a business losing steam.
Why Did Losses Widen So Much?
The consolidated net loss of ₹2,792 crore looks steep, but the company says its normalised operational loss was closer to ₹1,377 crore. The gap between the two figures largely comes down to accounting rather than day-to-day operations — think employee stock ownership plan (ESOP) expenses and losses from newer subsidiaries that are still finding their feet.
The bulk of the actual cash burn traces back to PhonePe’s continued bets on newer business lines: its stock broking arm share.market, e-commerce venture Pincode, the insurance business, and the Indus Appstore. These are classic “invest now, profit later” businesses, and they’re weighing on the bottom line for now.
What’s Driving the Revenue Slowdown
PhonePe’s revenue growth has been decelerating for a few years running — from 74% in FY24, to 40% in FY25, to just 11% in FY26. That’s a steep drop-off, and three regulatory and policy shifts explain most of it:
- Discontinued rent payments: Credit card-based rent payments, once a major revenue contributor (accounting for nearly 23% of revenue in FY24), were halted following RBI guidelines.
- Real money gaming ban: The government’s crackdown on real money gaming (RMG) transactions cut off another revenue stream, though it was a relatively small piece of the pie to begin with.
- Loss of UPI subsidies: The absence of incentives under the Payment Infrastructure Development Fund (PIDF), which had previously supported UPI expansion, also dented growth.
Together, these three factors help explain why a company growing at 40-70% a year suddenly slowed to single digits.
The Bright Spots: Where PhonePe Is Actually Growing
It’s not all bad news. Look past the topline numbers and PhonePe’s newer financial services businesses are scaling fast:
- Lending: Revenue more than doubled, from ₹377.6 crore to ₹945 crore — by far the strongest performer in the portfolio.
- Wealth broking: Also more than doubled, reaching ₹108 crore.
- Insurance: Grew modestly, from ₹180 crore to ₹191 crore.
The one clear laggard is Pincode, PhonePe’s hyperlocal commerce platform, which saw revenue fall to just ₹4.5 crore — roughly half of last year’s figure — after the company pulled the plug on its consumer-facing (B2C) operations in December to refocus on business-to-business (B2B) tools for offline retailers.
This pattern tells a clear story: PhonePe is leaning harder into financial services (lending, wealth, insurance) as its next growth engine, while its core payments business faces margin pressure from regulatory changes.
The IPO Angle
PhonePe has been widely reported to be prepping for a public listing, but in March, the company reportedly pushed back its IPO timeline, citing conflict in West Asia and broader market volatility. Adding to the uncertainty, the company has also seen a string of senior leadership exits recently, including the head of its insurance business and its co-founder and chief product officer.
None of this is necessarily a dealbreaker for an eventual listing, but it does suggest PhonePe is taking a more cautious, wait-and-watch approach before going public.
FAQs
Q: Why did PhonePe’s losses increase in FY26 despite revenue growth? A: Higher expenses (up 16%), continued investment in newer businesses like lending, wealth management, and insurance, plus regulatory changes that hit legacy revenue streams, all contributed to the wider loss.
Q: What caused PhonePe’s revenue growth to slow down so much? A: Three main factors: the discontinuation of credit card rent payments, the ban on real money gaming transactions, and the loss of UPI-related government subsidies.
Q: Which PhonePe business is growing the fastest? A: Its lending arm, which more than doubled its revenue in FY26, followed closely by its wealth broking business.
Q: Is PhonePe still planning an IPO? A: Yes, though the company reportedly deferred its listing plans in March 2026 due to geopolitical and market volatility.
Conclusion
PhonePe’s FY26 results paint the picture of a company in transition. Its legacy UPI-driven revenue streams are being reshaped by regulation, while newer bets in lending, wealth, and insurance are stepping up to fill the gap. The widened losses look concerning on the surface, but a closer look shows much of it is investment-driven rather than a sign of a business in trouble.
Whether this transition pays off will likely become clearer as PhonePe moves closer to its planned public listing — and as its financial services arms mature from growth bets into real profit centers.
