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PhonePe IPO: UPI Giant Eyes Higher Margins
3 Feb
Summary
- PhonePe aims to leverage its vast user base for higher-margin financial services.
- The company's revenue grew 40% year-on-year to Rs 7,114.86 crore in FY25.
- Fintech giant is expanding into lending and insurance distribution to boost revenue.
Fintech unicorn PhonePe is preparing for its public listing, with its draft prospectus highlighting its massive scale in UPI payments as a key strength. The company's strategy now focuses on expanding into higher-margin financial services, including loans and insurance, to leverage its extensive user base for deeper engagement and revenue growth.
Founded in 2015, PhonePe has evolved from a pure payments engine to a diversified financial services ecosystem. Its 'growth flywheel' strategy uses its over 650 million registered users to drive transactions, generate data, and cross-sell financial products. This pivot aims to move beyond low-margin payments into a broader financial services business.
As of September 2025, PhonePe commanded 49% of UPI peer-to-peer transaction volumes and had 47.19 million registered merchants. User activity has increased significantly, with transactions per customer rising from 25.5 in FY23 to 38.1 in FY25. The company has also expanded into lending and insurance distribution, now contributing around 10% of total revenue.
Financially, PhonePe's revenue rose 40% year-on-year to Rs 7,114.86 crore in FY25, and adjusted EBITDA more than doubled. However, the company reported a net loss of Rs 1,727 crore in FY25, with expenses increasing. PhonePe attributes operational efficiency partly to its investment in domestic data centres, ensuring data localisation and long-term cost benefits.
