Paytm increased its marketing spend by 27% year-on-year in the first quarter, yet its adjusted EBITDA margin, excluding a one-time infrastructure fund benefit, improved from 1% to 8%. The result signals that AI-driven efficiency can strengthen the return on advertising investments even as spending rises - a data point marketing leaders cannot ignore when balancing growth budgets against profitability demands.
Madhur Deora, President and Group Chief Financial Officer, said the company continues to prioritise growth. "We're also investing more in marketing," he said after announcing the quarterly results. Despite the higher outlay, the core margin widened by seven percentage points. Monthly transacting users grew around 8%, but consumer gross transaction value jumped 45%, pointing to higher activity per user. Deora attributed the momentum to strengthening engagement that is beginning to feed into marketing services revenue and consumer financial services income.
AI-powered efficiency reshapes cost structure
Founder and Chief Executive Officer Vijay Shekhar Sharma made it clear that artificial intelligence is central to the margin story. "Powered by AI means our costs are being dramatically optimised," Sharma said. The company has deployed in-house AI agents that guide field sales executives on merchant acquisition, a real-world example of AI for Marketing cutting acquisition costs. Paytm is now exploring ways to commercialise those tools for third-party customers.
Travel headwinds and financial strength
The travel business remained a weak spot during the quarter, which Deora chalked up to sector-specific headwinds. Still, Paytm's overall financial performance accelerated sharply. Revenue from operations rose 28% year-on-year to ₹2,448 crore. EBITDA climbed 182% to ₹203 crore, and profit after tax increased 79% to ₹220 crore. The company said accelerating revenue growth, expanding margins, and AI-led cost efficiency position it for sustainable long-term profit growth.
Sharma's plan to commercialise AI agents for external customers illustrates how AI for Executives & Strategy can evolve from a cost-saving tool into a new business line. The internal deployment is already reducing operating expenses, with most cost items flattening or declining sequentially - exceptions being employee-related sales costs and marketing investments.
Why this matters for marketers
Paytm's quarter shows that AI-enabled marketing efficiency does more than trim budgets. It creates room to increase spending without eroding margins. For marketing leaders, the takeaway is straightforward: integrating AI into acquisition workflows - whether through smarter ad targeting, agent-assisted sales, or automated optimisation - can deliver measurable ROI improvement while keeping finance stakeholders satisfied. When user engagement rises 45% on a 27% spending bump and margins widen simultaneously, the formula stops being theoretical.
Your membership also unlocks:
