PhonePe DRHP Reveals Strong Revenue Growth, Narrowing Losses and Rising Cash Generation Over Three Fiscal Years

New Delhi, February 24: Financial disclosures filed by PhonePe in its Draft Red Herring Prospectus show a marked improvement in revenue growth, profitability metrics and cash generation over the last three fiscal years, underscoring a shift in the company’s financial trajectory within India’s fintech ecosystem.

Revenue from Operations Jumps at 56.25% CAGR​

According to the DRHP, PhonePe’s revenue from operations rose sharply from ₹29,142.87 million in FY23 to ₹71,148.58 million in FY25. This translates into a compound annual growth rate of 56.25 percent over the three-year period.

The expansion in revenue has been driven by stronger monetization across multiple verticals, including merchant payments, lending and insurance distribution. The data indicates that PhonePe has steadily scaled its core and adjacent business segments to enhance topline growth.

Merchant Payments and Lending Gain Share in Revenue Mix​

Merchant payments have emerged as a key contributor to overall revenue. The segment’s share increased from 14.75 percent in FY23 to 27.99 percent in FY25, and further rose to 30.78 percent in the six months ending September 30, 2025.

Lending and insurance distribution services also recorded significant growth. Their combined revenue share expanded from 0.96 percent in FY23 to 7.84 percent in FY25. In the six-month period ending September 30, 2025, the contribution rose further to 11.55 percent, reflecting a gradual diversification beyond core payments.

Losses Narrow, Margins Improve Significantly​

The company reported a substantial reduction in losses during the review period. Restated losses narrowed to ₹17,274.10 million in FY25, marking an improvement of ₹10,686.59 million compared to FY23.

Loss margins also improved materially, declining from negative 90.68 percent in FY23 to negative 22.64 percent in FY25. The figures suggest better cost management and operating leverage as revenue expanded.

Operational Profitability Turns Positive at Adjusted Levels​

The DRHP highlights improvements in operational profitability. PhonePe reported positive adjusted EBITDA and adjusted profit in FY24 and FY25. In FY25, the company achieved profitability at the adjusted EBIT level, indicating tighter cost controls and improved efficiency across operations.

These gains reflect the benefits of scale as revenue growth outpaced cost escalation.

Free Cash Flow Generation Strengthens Balance Sheet​

A notable milestone during this period was the generation of free cash flow. PhonePe reported free cash generation of ₹1,904.76 million in FY25. In the six months ending September 30, 2024, the company generated ₹2,501.61 million in free cash flow.

The improvement was primarily driven by stronger cash flows from operating activities. The company stated that its business model prioritizes free cash generation to support reinvestment, expansion into new platforms and maintaining balance sheet strength.

Technology Investments Support Margin Expansion​

The DRHP attributes part of the financial progress to investments in technology infrastructure, including proprietary data centers, automation initiatives and data-driven customer acquisition strategies.

These initiatives have helped contain cost escalation even as transaction volumes increased, contributing to improved margins and stronger cash flows.

Disciplined Capital Allocation Strategy​

PhonePe outlined a disciplined capital allocation framework focused on maintaining liquidity buffers, selectively deploying growth capital and linking investments to performance outcomes.

The disclosures indicate measurable progress over the last three fiscal years in improving operating efficiency, diversifying revenue streams and strengthening cash generation, positioning the company on a more stable financial footing.