Fintech major One97 Communications, which operates under the Paytm brand, reported its first-ever consolidated net profit of Rs 122.5 crore in the quarter ended June 2025 (Q1 FY26), helped by cost optimisation and a rise in payment revenues, the company said in a statement on Tuesday.The firm had posted a net loss of Rs 840 crore in the same quarter last year, PTI reported.“EBITDA and PAT turned profitable at Rs 72 crore and Rs 123 crore respectively, demonstrating AI-led operating leverage, disciplined cost structure and higher other income,” Paytm said.The company brought down marketing and promotional expenses by more than half to Rs 99.8 crore from Rs 221.4 crore a year ago. Employee benefit expenses also fell sharply, dropping by about Rs 300 crore to Rs 643 crore from Rs 952.5 crore in the year-ago period.While sales employee costs rose 19% YoY to Rs 266 crore, the company recorded a 28% decline in non-sales employee costs to Rs 346 crore, citing adoption of AI in various processes as a key driver. The average number of sales employees rose 23% YoY to 38,945.Revenue from operations for the quarter grew 28% YoY to Rs 1,917.5 crore, compared to Rs 1,501.6 crore in Q1 FY25, supported by an increase in payment processing margins.Revenue from payment services, including other operating income, rose 23% YoY to Rs 1,110 crore, while net payment revenue jumped 38% YoY to Rs 529 crore due to improved margins and device growth.The company reported a 27% increase in gross merchandise value (GMV), reaching Rs 5.39 lakh crore during the quarter. Merchant subscriptions hit an all-time high of 1.3 crore, up 21 lakh YoY, driven by improved devices and service networks.“To further strengthen tier-1 market position and expand in tier-2 and tier-3 cities, we are investing in expanding our sales network (sales people costs are up 19 per cent YoY),” the company said.The average monthly transacting users (MTU) base touched 7.4 crore in the reported quarter.Revenue from financial services distribution doubled YoY to Rs 561 crore, led by merchant loans, trail revenue from the DLG (Default Loss Guarantee) portfolio, and better asset quality.Paytm also reported a sharp 88% drop in ESOP costs to Rs 30 crore from Rs 247 crore a year ago and Rs 169 crore in the March 2025 quarter. In the previous quarter, CEO Vijay Shekhar Sharma had voluntarily surrendered his ESOPs, leading to a cost adjustment.