PhonePe loss widens as FY26 revenue climbs before IPO

A ₹7,920 crore revenue number sounds neat until you notice the bigger shadow beside it.

PhonePe, one of India’s best-known fintech names, has reported an 11.5 percent rise in operating revenue for FY26. That means the company added about ₹815 crore in revenue over the previous year.

But the IPO-bound firm also reported a wider consolidated net loss of ₹2,792 crore. For retail investors waiting for the listing, that is the real chai-table question. Is this a payments giant maturing into profit, or a fast-growing fintech still carrying a heavy cost bill?

Revenue rises before IPO push

PhonePe’s consolidated revenue from operations rose to ₹7,920 crore in FY26, based on filings with the Registrar of Companies. In FY25, the number stood lower by ₹815 crore.

That is a decent climb, but not a runaway sprint. For a company with PhonePe’s scale, investors will ask whether growth is now becoming harder in payments.

The company says it has crossed 700 million lifetime registered users. It also says more than 50 million merchants have registered on the platform over time.

Those are huge India numbers. They include the large metros, but also the smaller cities where digital payments changed daily trade. A tea stall, chemist, mechanic, or kirana shop can now accept money without handling cash.

That reach gives PhonePe real muscle. But reach alone does not pay bills. The market will now focus on how much money the company makes from that scale.

Losses widen despite scale

PhonePe posted a normalised operating loss of ₹1,377 crore in FY26. Its total consolidated net loss widened to ₹2,792 crore, compared with ₹1,727 crore in FY25.

That jump matters. A wider loss before an IPO usually makes investors look twice at the numbers.

The company’s FY26 loss included several special items. These included a faster employee stock option charge, a non-cash goodwill impairment, gains from selling part of a stake in an associate, and losses from discontinued operations.

In plain English, not every rupee of loss came from day-to-day business. Some came from accounting decisions, old investments, and business exits.

But the Street rarely ignores such numbers. Public market investors may accept losses when growth is explosive. They become less patient when revenue growth slows or costs stay sticky.

PhonePe will have to explain this clearly during its IPO roadshow. The key question will be simple. How soon can the company turn its giant user base into steady profit?

UPI incentive remains pending

PhonePe also said it has not recorded revenue from the UPI Digital Incentive for FY26. The company expects to reflect that amount in FY27 after the government releases funds to the industry.

This part needs a simple explanation. UPI payments are free for most users and small merchants. That is wonderful for adoption, but it creates a business problem for payment apps.

If users do not pay and small merchants do not pay much, companies need other revenue streams. Government incentives have helped support the payments ecosystem.

So, when incentive money gets delayed, it affects reported revenue. It can make one year look weaker and the next year look stronger.

That also means investors must read PhonePe’s FY26 numbers with care. A missing incentive is not the same as falling user interest. But it still affects the accounts.

For ordinary users, nothing changes immediately. Your UPI payment at a shop still works. The deeper issue is whether India’s free digital payments model can keep funding itself at this scale.

Beyond payments, the real bet

PhonePe is not trying to remain just a payments app. It has secured approvals across payment aggregation, insurance broking, wealth management, and lending.

This is where the real IPO story sits.

Payments bring users in. Financial services can bring revenue. A user who pays electricity bills may later buy insurance, invest in a mutual fund, or take a small loan.

That is the classic fintech ladder. First, get daily usage. Then, offer higher-margin products.

But this is also where regulation becomes tighter. Lending, insurance, and wealth products need more trust and stronger controls than simple payments.

The Reserve Bank of India and other regulators have watched fintech companies more closely in recent years. The message is clear. Growth is welcome, but compliance cannot be casual.

PhonePe’s challenge will be to grow beyond UPI without looking reckless. That balance will decide how public investors value the company.

Walmart backing adds comfort

PhonePe still has strong backing from Walmart, through WM Digital Commerce Holdings Pte Ltd. Walmart holds 73.33 percent in the company.

That matters because IPO investors like deep-pocketed promoters. A strong parent can support expansion, hiring, technology, and compliance costs.

But public investors will also ask harder questions. What is the path to profit? How big can non-payments revenue become? Will the company need more capital after listing?

PhonePe had earlier delayed its IPO plans amid conflict in the Middle East and market volatility. It is now expected to restart the listing process later this year.

That timing will be watched closely. Indian IPO markets can be warm one month and cautious the next. A fintech IPO needs not only a good story, but a good market window.

There is one more wrinkle. PhonePe has said it expects a revenue impact of ₹550 crore to ₹600 crore in the second half of FY26 after stopping rent payments through credit cards on its platform.

That move may reduce some revenue. But it could also clean up the quality of business if those transactions were low-margin or risky.

For retail investors, the PhonePe IPO will not be a simple “payments are booming” story. It will be a test of whether India’s biggest digital habits can become a profitable public company model.

PhonePe has scale, brand recall, and deep backing. It also has losses, delayed incentives, and a business model still moving beyond free payments. When the IPO comes, investors should look past the app on their phone and study the engine underneath.