One 97 Communications, operating Paytm, achieved a remarkable turnaround in Q4FY26.
The star of the show was EBITDA margin, which improved dramatically from negative 4.7% a year ago to positive 5.8%—a 10.5 percentage point swing.
What drove this transformation? Operating leverage took center stage. Management focused sharply on cost optimization and rationalized marketing spending, which drove efficiency gains across the business. Financial services emerged as a key growth driver, with revenue rising 37% year-on-year to ₹750 crore, while payment services contributed ₹1,265 crore. On the operational front, contribution profit reached ₹1,254 crore with a healthy 55% contribution margin, indicating improved unit economics.
Yet the sequential picture tells a more cautious story.
Profit before tax, excluding exceptional items, dropped 24.8% sequentially to ₹173 crore. Revenue remained largely flat at around ₹2,264 crore compared to the previous quarter.
This moderation reflects several factors. Revenue growth decelerated sequentially, while fixed costs—employee benefits at ₹739 crore representing 32.5% of total costs—became a larger percentage of revenue. Payment processing charges rose 33% year-on-year to ₹692 crore, indicating increasing variable costs with transaction volume growth. The company may have also increased investments in growth initiatives that impacted short-term margins. Despite these sequential headwinds,
PB Fintech delivered the strongest profitability performance among the trio, with net profit rising 54% year-on-year to ₹261 crore in Q4FY26.
Revenue grew 37% year-on-year to ₹2,061 crore, but what stands out is how profit growth significantly outpaced revenue expansion—a hallmark of operating leverage.
The margin story was equally impressive.
This reflected improved efficiency and scale benefits in the core online business, alongside improving unit economics in new initiatives.
Several factors drove this outperformance.
Core online insurance premiums rose 44% year-on-year, while new protection premiums—health and term insurance—surged 67%. This shift toward higher-margin protection products improved the overall business mix. Renewal and trail revenue provided a stable foundation, reaching ₹935 crore on a 12-month rolling basis, up 40% year-on-year. The quarterly core insurance renewal revenue hit an annualized run rate of ₹1,126 crore, growing 63% year-on-year.
Cost discipline played a crucial role. Scale efficiencies in the core online business continued delivering strong margins, while adjusted EBITDA margin for new initiatives improved from negative 9% to negative 4%, with a 5% contribution margin. The UAE business reported its first full-year profit in FY26, demonstrating disciplined international expansion.
Meesho's Q4FY26 performance tells a story of aggressive growth prioritization over near-term profitability. The company narrowed its net loss by 88% year-on-year to ₹166.3 crore, down from ₹1,391.4 crore in the same period last year. Revenue from operations surged 47% year-on-year to ₹3,531.2 crore, outpacing net merchandise value (NMV) growth of 43% to ₹11,371 crore. Order volumes grew 43% year-on-year to 717 million, driven by new user onboarding and deeper engagement from existing cohorts.
The margin picture showed meaningful improvement. Adjusted EBITDA (marketplace) improved by 245 basis points sequentially to negative 1.7% of NMV, while contribution margin recovered sharply to 4.0% of NMV. This 175 basis point sequential improvement in contribution margin reflected logistics cost normalization and AI-led efficiency gains. InvestorPresentations
Specific cost optimization initiatives drove this progress. Logistics costs, which had pressured margins in Q2-Q3 FY26 due to third-party logistics industry consolidation, largely normalized through network optimization, route planning, and increased throughput density. AI-led route planning and address quality systems reduced last-mile misroutes by more than 50%. Growth spends were optimized, with advertisement and sales promotion spend reduced to 2.1% of NMV in Q4 from 2.3% in Q3 via free cash flow threshold-driven optimization. Server and software tools declined to 1.8% of NMV from 2.0%, attributed to operating leverage and commercial benefits from a new cloud contract cycle. InvestorPresentations
However, the cash flow picture reveals the cost of this growth strategy.
The company's philosophy, articulated in shareholder communications, prioritizes long-term platform health over near-term financial optimization.
The three companies represent distinctly different approaches to balancing growth and profitability. PB Fintech demonstrates the most mature capital allocation, achieving strong revenue growth (37%) while expanding margins significantly.
One 97 Communications is transitioning to profitability while maintaining selective growth investments. The company achieved its first full-year profitability but faces sequential margin pressure as it balances market share gains with cost management. Historical cash flow data shows significant investing activities, indicating continued technology and infrastructure investments despite the profitability focus.
Meesho maintains the most aggressive growth-oriented approach.
This investment has a strategic relationship with new user acquisition, as credit access serves as a powerful acquisition and retention tool for price-sensitive consumers in tier-2 and tier-3 cities. The payments business showed rapid revenue growth—from ₹19.95 lakhs in FY24 to ₹1,104.65 lakhs in FY26—but remains loss-making at ₹2,471.67 lakhs in FY26.
Looking ahead, each company faces distinct challenges. Meesho has flagged increased uncertainty in the macroeconomic environment entering FY27. Value-conscious consumers may be particularly sensitive to economic pressure, potentially impacting order frequency and new user acquisition. The company's ability to sustain 43% order growth while further narrowing losses will depend on its resilience to consumer spending weakness and continued logistics cost stability.
PB Fintech faces regulatory headwinds, particularly potential GST changes on insurance commissions.
Health and term insurance, which account for roughly 68% of total commissions, could see commission cuts of 15.3%. Despite these risks, the company's strong profitability momentum and diversified revenue base provide resilience.
The sequential decline in profitability momentum suggests the company may be reaching a point of market share stabilization after an aggressive growth phase.
The divergent profitability trajectories reflect fundamentally different business models and strategic choices. PB Fintech's ability to deliver strong profit growth alongside revenue expansion demonstrates operating leverage and disciplined cost management. One 97 Communications has achieved profitability but faces questions about sustainable growth momentum. Meesho's aggressive growth strategy creates higher risk but potentially higher long-term upside if successfully executed. As these platform companies move into FY27, their distinct approaches to balancing growth and profitability will face their toughest tests yet.
