The numbers landed with a thud. Walmart’s international business, Q3 FY26. A sharp drop. The reason? A $700 million charge. Tied to PhonePe.
It’s a story of intersecting ambitions. Walmart, the retail behemoth, backing PhonePe, the digital payments upstart in India. PhonePe, aiming for an IPO. And the inevitable reckoning of employee stock options, or ESOPs.
This isn’t just about dollars and cents. It’s about how the game is played. How a giant like Walmart navigates the fast-moving world of Indian tech. And the price of backing a company on the cusp of something big.
The core of it: ESOPs. Employee Stock Option Plans. A way to reward talent, incentivize performance. But when a company goes public, those options become real, and the value is recognized. For Walmart, this meant a significant hit to its earnings. Specifically, the September quarter.
“The impact is a result of the valuation of PhonePe,” a source familiar with the matter explained, hinting at the complexity of the valuation process. The source declined to be named due to the sensitive nature of the information.
Consider the scale. Walmart first invested in PhonePe in 2018. Since then, PhonePe has grown exponentially, becoming a dominant player in India’s digital payments landscape. The impending IPO is the culmination of that growth. And the ESOPs, a promise made along the way.
The $700 million charge isn’t a loss in the traditional sense. It’s an accounting adjustment, reflecting the increased value of the options. But it still impacts the bottom line. It’s a stark reminder of the financial realities of backing a high-growth startup.
What happens next? PhonePe’s IPO. The final valuation. And, for Walmart, the potential for a significant return on its investment. The market will be watching.
