Ladies and gentlemen, good day and welcome to the Affle (India) Limited Q3 FY 2021-22 earnings conference call hosted by DAM Capital Advisors Limited.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Anmol Garg from DAM Capital Advisors Limited.
Thank you, and over to you, sir.
Thank you, Rutuja.
Good morning, everyone.
On behalf of DAM Capital Advisors Limited, we welcome you all to Q3 and nine-month FY 2022 conference call of Affle (India) Limited.
I take this opportunity to welcome the management of Affle (India), represented by Mr. Anuj Khanna Sohum, who is Chairman, MD, and CEO of the company, and Mr. Kapil Bhutani, who is the CFO of the company.
Before we begin the discussion, I would like to remind you all that some of the statements made in today's conference call may be forward-looking in nature and may involve some risk and uncertainties. Kindly refer to the slide 24 of the company's Q3 earning presentation for a detailed disclaimer.
Without any further ado, I'll hand over the call to Mr. Anuj Khanna Sohum for his opening remarks.
Thank you, and over to you, Anuj.
Thank you. Good morning, everyone, and thank you for joining the call today.
I trust all of you are keeping in good health. Entrepreneurial passion, conviction, and commitment are profound catalysts for our Affle 2.0 culture of tech innovations and sustainable, profitable growth.
True to our culture, I'm incredibly proud that in less than two years, our team has achieved more revenue in this one quarter than the full year revenue of FY 2023 reported post our IPO.
In the last nine months, we surpassed the previous full year's cash flow from operations by 35%. Our CPCU business noted a strong momentum, delivering 58.5 billion user conversions during the quarter, an increase of 91.2% year-on-year at an INR 51.8 CPCU rate.
The last two years were strategically crucial for us as we completed our Affle 2.0 strategic foundation anchored on the two Vs, vernacular and verticalization, and two Os, OEMs and operator partnerships. We fortified our consumer platform tech stack, and we invested towards our market and team expansion globally. In this period, the global tech ecosystem experienced extensive shifts.
New privacy norms unfolded. Pandemic struck the economies worldwide. While the consumer adoption of digital and connected devices increased multi-fold, our business continues to be resilient and is in high growth momentum towards our vision of reaching over 10 billion connected devices in this decade ahead.
This quarter also witnessed a robust, broad-based uptake in advertiser spend towards mobile marketing, well supported by the festive season too, increasing across the top industry verticals in India and international markets.
Powered by our ROI-linked CPCU business model and unique position in the industry, we continue to grow as a preferred mobile marketing company across global emerging markets and beyond.
Historically, our India and international contribution, balanced at about 50-50 each, shifted last quarter in favor of international on account of our successful integration of Jampp and our efforts to build local on-ground presence in newer international markets.
The contribution stood at about 69% international and 31% India in this quarter.
I would like to thank all the analysts and investors for attending our first Investors Day held in December 2021, where we unveiled our Affle 2.0 consumer tech platform stack.
Our top eight leaders presented nine sessions with live demos of our tech platform and case studies with delivering customer testimonials that provided clarity on how our Affle 2.0 culture, our strategy, our tech IP, and execution focus are all deeply aligned to leverage upon the tremendous digital shift ongoing globally.
Our tech IP-enabled consumer platform innovations in particular and all our organic as well as inorganic investments in general are performing well, and we continue to establish new market leadership benchmarks in our industry globally.
We had a remarkable start in 2022, with our tech stack recognized as the best technology platform for advertising, and we won several of the top awards at the prestigious India Digital Awards organized by IAMAI. Affle also won the Technology Company of the Year and sixteen other top awards at the fifth edition of MOBEXX Awards organized by Adgully.
These wins came across top and most relevant categories, including Most Outstanding Programmatic Platform, Excellence in Cross-Screen Campaigns, Best Use of Chatbots, In-Store Commerce, and more.
To ensure deeper understanding and appreciation of our consumer platform use cases, we continue to also include case studies in our earnings presentation for past few quarters, showcasing the power of our platform to deliver consumer conversion and drive value for our customers across key verticals and markets.
We are a value-driven organization, and we strive to ensure that our performance is driven by utmost integrity and transparency.
In view of the same, the board has decided to appoint Mr. Bijay Kumar Nath , who is the non-executive independent director of the company, as the non-executive chairman of our board to be effective from April 1, 2020. I will, of course, continue to lead the company as the chief executive officer.
In spirit, we were already prepared to do so in 2020. However, given that we've just gone public listed at that time, hence we did not want to undertake any major changes in leadership structure of the company in 2020.
I believe now is the right time to set forth this change for holistic organization. I now hand over the session to our CFO, Kapil Bhutani, to discuss the financials. Thank you. Over to you, Kapil.
Thank you, Anuj.
Trust all of you are keeping safe and in good health.
Continuing our growth momentum in Q3, the company reported a revenue from operations of INR 339.4 million, a growth of 125.5% year-on-year. Sequentially, our revenue has increased by 23.6%, driven by team efforts and healthy festival spendings by the advertisers. Our EBITDA for this quarter stood at INR 677 million, an increase of 76.4% year-on-year and 29.9% quarter-on-quarter.
If you compare our OpEx on a sequential basis with previous quarter, inventory and data cost has increased by 22.7%, almost in line with growth, revenue growth. Employee expenses has increased by 18.1% on account of appraisal cycle effective from the month of October.
We continue to invest to enhance our team to deepen our access across Indian international market and including the cost of ESOPs, which for the current quarter is INR 13.58 million.
The total ESOPs expense for the current grant is valued at INR 219.53 million for a period of 4 years. Our reported profit after tax for the quarter stood at INR 621 million, a year-on-year increase of 102.6%, and a sequential growth of 30.4%. Our normalized profit after tax, after adjusting gains on fair valuation of our financial instruments, was INR 601 million, an increase of 96% year-on-year and 42.9% quarter-on-quarter.
We remain focused on working capital management and continue to see robust cash flows from operations. Our collections were robust and ratio of cash flow from our operations to profit after tax stood at 106.4%. This shows quality of our customers, robustness of our operations. EPS has been adjusted for stock split for the current quarter as well as comparable period.
As a post-quarter event subsequent to our share purchase agreement dated June 8, 2020, Affle International Pte. Ltd., a wholly-owned subsidiary of Affle (India) Limited, acquired 66.67% shares of Appnext.
We decided to acquire 28.33% of Appnext post-balance sheet event. The liability to acquire these shares were already recognized in our accounts, and accounting of the financials were already being done on an anticipated acquisition method. In June 2020
Hence, the minority interest in our books since June 2020 continues to be at 5% for Appnext business. I draw your attention to note 6A of the consolidated financial results for the same. With this, I end our presentation. Let us please open the floor for questions.
Thank you very much.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, please press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Anmol Garg from DAM Capital. Please go ahead.
Yeah. Hi, Anuj and Kapil.
Congratulations on a very strong performance during the quarter. I had a couple of questions.
Firstly, I wanted to understand that this time while our India business revenue has increased quite a bit, however, we have saw some drop in the PBT during the quarter. What could be the reason for the same? That's my first question.
Secondly, wanted to understand what will be the Jampp contribution during the quarter. Also, how much of the Jampp business has shifted to CPCU model, given that the non-CPCU growth rate during the quarter was higher than CPCU growth rate?
To answer that, will Anuj, do you want to take it or should I take it? The margins for the India business is almost the same as the Q2 for the current year, if you see it. However, if you see year-over-year, there can be a slight differences because of the data inventory cost during the festive season. There are a lot of demand and supply imbalances.
If you see on a quarter-over-quarter basis, our margins are stable. The PBT can be attributed to two reasons, is increase in the cost of the human resource investments. One, can you repeat the second question, sir?
Yeah, sure.
Sure. Kapil, I'll take the second question.
In terms of the Jampp contribution, in this quarter, Jampp's contribution on revenue was approximately a third. In terms of EBITDA performance, we were able to bring Jampp up to the 7%-8% EBITDA in this quarter, which is as per the playbook and the expectation that we have said that we will, within the first year of the acquisition, bring it to single high digit EBITDA performance, and we have achieved that in this quarter. Of course, it's helped a little bit by the festive season and the volumes. You know, over time, we believe in the first year of the acquisition, we should be able to keep this momentum moving in a favorable way. The Jampp contribution, you're right.
I think it's contributing some part of the revenue on the CPCU side already, and some part is still in the non-CPCU. It's a healthy mix as the transition has progressed. Just as a reminder, we signed the term sheet to acquire Jampp only early this year, and we completed the acquisition only on the first of July. The six months have gone since we actually completed it and about nine months since we really kind of put ink on the table to commit towards this transaction. It's a work in progress.
As we continue to grow and transform it over the next subsequent years, we hope to achieve you know, materially higher EBITDA performance on Jampp, and there should therefore be margin upside over time on that business for us.
Sure. Thank you, Anuj. I'll get back in the queue.
Thank you. The next question is from the line of Arun Prasath from Spark Capital. Please go ahead.
Thank you. Thank you for the opportunity. Anuj, my question is on the Vizury. Correct me if I'm wrong, we acquired Vizury mainly for the retargeting purpose. Now the rules of the retargeting game itself is being heavily disrupted because of the privacy-related concerns. We know that Facebook is very heavy on retargeting, and they have given very tepid outlook and we know the performance in the last nine months.
I understand Affle more towards UA campaigns, but if you can visualize and just explain to us what kind of disruption that you are anticipating in the UA campaigns, and how Affle really are ready to take over or mitigate the challenges. That is my first question.
All right. Well, thank you for your insightful question. First of all, Vizury and Engage360 product within Vizury is doing exceptionally well for us. We're extremely happy with the way we are going about it.
The way we work on the Vizury product specifically is deeper integrations with the advertisers and reliant on first-party data. That pretty much eliminates any confusion related to data privacy or concerns because our technology sits deeply inside and integrate with the advertiser, working, you know, as part of their one platform and system, leveraging their data to engage with the consumers. In our parlance, we call it the first-party data, and we are doing exceptionally well there.
There is absolutely no concern that we have at the moment with respect to, you know, privacy or data privacy and, issues pertaining to that. Also, because, you know, Vizury and, our retargeting business is a much smaller part of our overall business, and there is a massive room for consistent growth.
If you look at one of the case studies that we have attached in our earnings presentation, I mean, the last one that's already, attached there, it is, showcasing how we have actually managed to bring a massive success, for one of our customers in the context of iOS and IDFA-related changes. Now, most of us would think that, oh, iOS changes, IDFA changes means that advertising on iOS will be less effective and so on.
If you look at the results of that particular campaign, of course, it's not representative of every campaign, but it shows that we could do 41% higher ROI in SKAdNetwork campaigns, which is on iOS 14 versus Android campaigns for the same product in the same period.
Now, of course, it's not comparable exactly because the users are different, but I mean, hey, I mean, it's a very important benchmark that, look, we are able our tech stack can actually deliver outcomes on iOS as well. We have seen that not only for new user acquisition campaigns, but also in some limited sense on being able to do some retargeting where the advertiser's first-party data is available. That's one sort of quick answer to you on that.
Overall, what we are seeing as a trend is that our company is targeting and our capabilities. In the last two years, we have laid a solid foundation to address whether it's data privacy issues or whether it's iOS 14-related issues. We are looking at this very holistically for the decade ahead and building a platform that will deliver on the momentum of consistent, sustainable growth.
Across our platforms, as I mentioned in my commentary, we are doing well. All our investments and the pieces of those investments, and we are very privileged that every single one of them that we've done is actually performing well. Confidence, therefore, as you would have seen, that increasingly our investment size or size of transaction has gone up. I mean, Jampp just six months ago was our largest transaction.
The reason for that bigger transaction is because we are very convinced that our playbook is working, and we did the smaller transactions, whether it was, you know, about several years ago, the Vizury or the more recent ones, Mediasmart, Appnext, and now Jampp. You know, our confidence is, you know, very high. You know, we've become much better at doing this, and this is clearly working well for us. Thank you.
Arun Prasad. Second part of the questions, second part of the first question could you be more specific than I said that and asked that, you know, what sort of disruption that you are anticipating in the UA campaigns in the future and how Appnext is ready for those challenges?
See, Arun Prasad, I did try to address that by showing you that case study in reference to that. If you finally going to look into that and also the analyst day that we had in, sorry, the investors day that we had in December, we had a full topic on that. That in fact on iOS. This is actually one of our fastest growing business units in the company at the moment. This is an exciting time. What I indicate to you with that is that we are ready for any changes that may happen even further in the ecosystem.
While we have already shown in the last 6-9 months of execution that we have negotiated a lot of bigger changes in transitions in the ecosystem on iOS quite well, both for user acquisition, new user conversions, as well as for repeat user conversions. I think that's quite a specific answer I got. I mean, what else would you like to know?
Okay. All right. Just, you said that Affle today has the overall scheme of the things, retargeting is a very small part. Can you just give a ballpark quantify that, or is it like 10%, 20%? Some ballpark number would be interesting.
I'm not at liberty to reveal that because of the fact that there's competitively sensitive information. What I can tell you is that when we work with our advertisers, for example, an advertiser A, we look at the entire consumer's life cycle, right? So not just getting the first conversion with the consumer, but also getting repeat online conversions from that consumer for the same advertiser, as well as looking for online to offline conversion of that particular user with that same advertiser. We are trying to maximize ROI on that particular consumer.
Now, a lion's share of the budget of the advertisers as a trend actually goes towards new user acquisition, especially in emerging markets, because you would imagine all the advertisers thinking, if they're going to be next 100 million users, we want to get them first.
Once the user is in the bag, you know, they feel that that's like a second priority then to go and maximize the lifetime value. Most of the emerging markets advertisers or even developed market advertisers in emerging verticals are thinking and putting higher budgets on new user acquisition. I mean, for us it is, you know, it is competitively sensitive to reveal the split because our competition would then know how Affle is proposing and pitching to the customer. That's the reason why our board doesn't reveal that at the moment.
Sorry to interrupt you, Mr. Arun. May I request you to please rejoin the queue? We have participants waiting for their turn.
Sure. Okay.
Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.
Hello.
Please go ahead with your question.
Thank you. Congratulations to the team for very spectacular performance. I have just a couple of questions. One from a TV ad spend data perspective, you see India is the only market which continues to grow in this space. Any sense you have in terms of, you know, when this is going to change and, you know, would further add up to the momentum that we already have in? That is question number one. Second is, how should we see the Jampp business to perform in near term?
I know your long-term view is aligned, but do we see more things to be captured in the Jampp business given some of the, you know, tailwind that you highlighted earlier could play out and it reaches a certain size and then you would see a more normalized growth. If you could share your thoughts on both of these.
Thank you for your question. The first one on TV ad spend. Yes, it is quite interesting to note that India is, you know, still having such a huge ad spend on TV and also other, you know, channels. I'm not going to take any expert views on TV advertising, but what I can tell you is that today in digital advertising, as a percentage of total advertising, India stands at about 25 odd %. That means out of every $100 being spent on advertising, only about 25% is going towards digital. My view on it is very clear that the writing is on the wall, that the advertisers have absolutely no choice but to shift at least 50% of their total budgets on digital. It's a matter of.
I mean, they have to do it. I mean, the sooner they do it, the better in terms of digital adoption and transformation. I think therefore, there's a massive runway for growth. Where will this, you know, budget come from? Of course, the total ad pie would grow, but digital grow faster at the expense of the TV ad spends are becoming digital. I mean, almost all of the traditional ad spends, you know, some of them will go in favor of becoming digitized and digital. Of course, you know, I think digital is also getting to TV.
I mean, the TVs are also becoming smart TVs increasingly, connected TV propositions that you already know our company has already launched products and is you know building thought leadership in that space as a first mover in India. I think these are areas that will actually help the advertisers to transition and adopt digitally even faster. That's that.
The second question that you have is about Jampp in the near term. I think the way to look at Jampp, I think what we've done in the last two quarters has already indicated that we are already upselling, cross-selling, transforming you know the opportunity more holistically with Jampp. We are doing really well on the SKAdNetwork network for the iOS, the post-IDFA changes. We're doing really well on that basis.
You know, I think we as a whole group, right? I mean, we've grown quite a bit over the last several years, but we are still having a massive runway for growth, consistent continued growth, because the market in every geography is much larger, and the market itself is growing at a 25%-30% CAGR as an industry across emerging markets.
So there's a you know, a lot of macroeconomic you know, tailwinds helping us to you know, continue this momentum. But there's a massive runway for consistent growth before we start feeling that, oh, the growth will normalize or, you know, we reach a certain point where it is you know, flattening. I don't think we are anywhere close to that at the moment.
I have a lot of expectations in the near term for consistent growth trends as well as, you know, I think I would say near to midterm, you know, in the next 3-5 years, we should continue to see a fairly impressive growth in the entire industry for AdTech.
Sure. You said 30%, if I missed that number, on the ad spend allocation. One follow-up is that any specific reason we accelerated on this Appnext stake purchase? I think what I recollected, it was after third year, but it's happened after two year now. Also valuation upside was very nominal. Was this part of the original contract? Lastly on how the retention thing would sit now for Elad and some other key members.
Wonderful questions. No, no, just let me complete. On the TV ad spend or the digital ad spend, I think the percentages I was saying was approximately 25% of the total ad spend is going to digital. That was. I mean, of course you can look at different reports, say different numbers, but this is my assessment of and reading of the market at the moment.
No, sorry. Sorry to interrupt, but I think I was asking, you were saying 25 can actually go to some number. I think you said 30 or something, I missed that.
Oh, no, 50%. I said minimum 50% should go to digital.
Okay.
The reason why I come up with the number is because in a lot of the markets in the world, digital is already over 50%. Yeah?
Thank you.
By the way, digital for India or emerging markets means primarily mobile. Okay? So this is a very, you know, interesting and privileged industry to be in, because of the, you know, solid growth momentum and runway ahead. Now coming to your question on Appnext. Okay, so on Appnext, we had a clear contract where we had to, you know, buy out up to this percentage of the shares by the third year. So what you'll see in our disclosure is that we have done part payment of that now to, you know, to consolidate our ownership to 95% immediately.
There's still a retention linked, you know, significant part of it, I think, you know, I think those numbers are already disclosed, and maybe, Kapil, you can elaborate, where, it's actually linked to the founders earning that out at the end of the third year, which is Elad, Eran and the team. The non-founding shareholders already been kind of paid off now, and we've consolidated the entire ownership into our hands. The reason to do that now is, first of all, a strong indicator that our acquisition and organic plans have worked out really well, especially Appnext has done fantastically, and therefore we are ready to accelerate that. Also, in fact, it leads to better alignment and, a much stronger retention of, entrepreneurial alignment. Kapil, you may kindly elaborate further.
If you see that, we have the payment for this 28% is the same as being in the liability of the at the time only of the acquisition itself. There is no change in the amount. The amount was pre-decided, and about INR 3 million is being paid now.
Just 5 point some odd million will be paid after another 18 months. This INR 3 million is going out to non-founders' payments so that the alignment of the founders can remain 100% with Affle, right? There is no obligation of the founders to the investors of the original Appnext business, and we have the full alignment of the Appnext founders to Affle.
Our financials were already accounting it at 95% for consolidation purpose on an anticipated acquisition method, and the liability was already approved in the balance sheet. What you will see is that a dip of INR 3 million in the liability side on account of this payment. That's the only change in the financials.
Thank you so much.
Thank you. The next question is from the line of Vikas Misri from Moonshot Ventures. Please go ahead.
Hi. I have a small question that during the Q&A, you said that we have done them as acquisition, but we have a lot of cash lying with us. What we're trying to do with that? I also know that you are very particular about that acquisition must have some capabilities and all that. Please give us a view that what capabilities we are lacking and which direction we're thinking to have an acquisition for that.
Well, thank you for that question. I think it brings back to, you know, what we did earlier with Appnext, and we consolidated our position there. I want to make sure that when we do any acquisition, we must prove beyond doubt to, first of all, our own internal management team and to our board and then to our shareholders that what we did in the acquisition was absolutely spot on, responsible, and we have delivered outcomes as per plan. Now, if you see the track record of the company, we do an acquisition, we deliver on that, we make sure that we've done it right, and we go on to the next one, and so on and so forth.
Yes, there is cash in the bank, but I mean, the cash in the bank is not necessarily a bad thing. You know, I think what's important is that there should be no undue stress that oh, we must do something just because there's cash in the bank. I think we have to make sure that acquisition is taken very seriously.
Our whole process and playbook of long courtship period, analyzing the companies deeply, meeting them not only at the right time when they are at breaking even, but at the right price point for us, and then systematically turning them around to much greater success and alignment. It has to be carefully calibrated. Now, is there anything really missing in Affle that I'm looking for today nervously out there to try and fix? The answer is no.
I think our foundations with our tech stack, our Affle 2.0 consumer platform stack is a rock solid foundation on which we have already delivered great outcomes, and this is a future-ready foundation. It's not a foundation that we are, you know, we've built something great of the past and we're just milking it. No, we've built something that's future ready.
We have launched Connected TV product. We could launch online to offline connect with the consumer. We've launched household sync and, you know, household ID capabilities embedded in the company. Our patents are talking about gestures and, you know, the metaverse world and so on. I mean, this is a company that is forward-looking and future ready, and our platforms are built and our innovation culture is helping us to keep it consistently in that realm.
I'm not necessarily, you know, out there, you know, actively, you know, chasing something to be closed, but at the same time, we are very, very grounded. We're watching what's happening in India, in all our markets, every other startup. We've become quite an aspirational team for any entrepreneur to come and align with. We find, you know, a lot of incoming requests coming from entrepreneurs who want to join the Affle entrepreneurial team.
We are very privileged, and we are very careful, and we are watching closely, we are assessing closely. When the right opportunity comes, we will not be on the back foot, I can assure you of that. We are growth oriented and aggressively growth-oriented company, and we will take the right steps at the right time. I hope, I hope that answers your question. If I...
Of course, we're also investing in the cash to be utilized for increasing the, you know, the overall growth of the company, working capital, organic expansion plans. I think it's all in a good tandem and balance. I hope that answers your question.
Sorry to interrupt. The line of Mr. Vikas has left the queue. We'll move to the next question, which is from the line of Mayank Babla from Dalal & Broacha. Please go ahead.
Hi. Thank you for taking my question. Am I audible?
Yes, you are.
Yes, you are. Yeah.
Congratulations on a great set of numbers, team. Just a few questions, more towards the accounting side. Kapil, sir, if you could tell me what sits in the difference between the consolidated and the standalone revenues right now? Because I think approximately one-third of the revenue is from Jampp. What is the balance in the consolidated?
Balance in consolidated are existing without Jampp international business, which constitutes RevX, Mediasmart, MAAS as well as Appnext. Right? If you see before Q1, the Q1 will have without Jampp, and there was a 50-50 split between India and international, which is now skewed towards international because of the Jampp.
Okay. Sure. Sir, what would be the free cash flow for the quarter?
Free cash flow for the quarter would be in the range of about INR 500 crore.
Sir, last question was to Anuj. Sir, in the case study about BYJU'S, it was mentioned that, you know, that you've done optimization for the lower funnel conversion metrics. Could you expand a little more on that, and throw some light?
I think the business that we're in, our focus is always to align the outcomes in terms of conversion to deliver ROI to the advertisers. When we work in tier two, tier three towns, cities in India and to onboard new customers, you know, our focus always is to optimize high intent users, right? In those cities, getting you know, using all our capabilities of the platform, whether it's you know, vernacular capabilities, ads and contextual placements and so on and so forth, to then optimize for what's called lower funnel conversions. Now what we have shared here is expressly approved by our advertisers, I mean, to the word and to the T.
You know, beyond that, I'm not at liberty to say specifically for that particular advertiser or a particular campaign. I can perhaps answer for you generally what these lower funnel conversion metrics mean. They typically mean that a user who has gone well beyond just the app of the advertiser, well beyond registering into the app to actually subscribing or adding to a shopping cart or, you know, showing a very clear purchase intent, you know, with respect to or even in certain cases, doing the actual transaction.
Okay.
The deeper funnel is like we start from the top. What is the top of the funnel? Somebody seeing an ad, you know. As you filter the funnel down, you can go down to a transaction, the first transaction, the free transaction, online to offline transaction.
Our goal is to consistently drive to maximize ROI for our customers, and that necessarily means that we must optimize for deeper funnel conversions. I hope that answers your question.
Yes, it does. Can I squeeze in just one more, sir, please?
Okay, go ahead.
Yeah. Sir, could you please is it possible for you to give us a split between the converted users for Jampp and our balance of the business and the same for the rate of conversion?
No, I'm not able to give you that at the moment. I mean, all of these, as I just mentioned, these are comparatively sensitive information.
Sure. Sure.
Right? By people, our competitors, most of them are not publicly listed companies, at least the smaller ones, and they're all trying to pick up on these calls and details that we share with our investors for good measure. I think so. Of course, now we are sharing our case studies as well.
I mean, it's almost like giving an invitation to a competitor to pick that information and go and make a competing pitch to get in and say, "Look, I can." I think we have balancing act, and please see that we are very transparent to the extent that we can be. Where we believe we need to necessarily abstract, you know, we do that because it's important for retaining the business advantages.
Otherwise we'll end up telling our CPCU per country, per vertical, per market, and per platform, and I can assure you that will be the, you know, almost an open invitation for competition, you know. Even internally within the company, by the way, I mean, some of this data is done systematically in the platform so that no one person can have a full insight into it.
Perfect. No problem, sir. Thank you so much, and best of luck for the future.
Thank you.
Thank you. The next question is from the line of Pritesh Thakkar from Asian Market Securities. Please go ahead.
Yeah. Congratulations on the set of numbers, and thanks for the opportunity. Just wanted to understand the trend of converted users, as in, last quarter we added around 17 million users, and this quarter also we've around added 10 million users, on a sequential basis. It is higher than the usual trend what we had, previously. Just wanted to understand, is it the shift in the ad dollars from iOS to Android supporting the incremental additions for Apple or some other elements that you want to discuss?
Well, thanks for that question. Yeah, I think the best way to look at, you know, trends when we talk about conversions, I think the historical trends are a great indicator of what's to come in the future. Now, if you look at the last 9 months, we have delivered 138.7 million conversions from converted users, and we have done it at approximately INR 50 CPCU rate. If we were to then analyze the trend further over last 4 financial years and just look at Q3 converted users or conversions, you'll find that the CAGR is 67.2%.
Now, these are statistics and trends that we have already shared, and these are long-term trends. I mean, I'm talking about either 9 months of this financial year or even 4 years of Q3 analysis and trends.
That's an indication that, look, the consumer adoption clearly across markets, and I think you can relate it to your perhaps own individual experience that all of us, especially during the last two years, have gone way more on our screen time on digital and connected devices. That is true across the board globally. This is not a one-off shift. I mean, it's the new sort of normal now.
We expect this kind of adoption to continue to increase for many years as more, you know, younger people start coming on digital devices, as well as people from well beyond Tier 3 cities to rural markets start coming on smart devices. In India alone, I would expect in the next few years to have over 1 billion connected devices.
The number of shoppers in India expected to be close to half a billion shoppers online, like people who are ready to transact, you know, online to be at least half a billion over the next few years. This is a massive digital adoption trend. That's a multi-year, multi-fold digital adoption trend that will continue. This is definitely going to help us to keep the momentum of this kind of a growth.
Sure. It was very helpful. Again, on if you can provide any specific vertical out of ES, GS that we have that is contributing the most to the overall conversion or revenues of this quarter.
Well, thanks for that question. I think the way we have, you know, provided the data so far is, maybe what I can say, instead of choosing one which is contributing more or less, let me tell you there's a very well-balanced, broad-based growth that Affle is delivering. Unlike, let's say many years ago, I mean, 3-4 years ago, we were deeply anchored on e-commerce.
I think now it's much more broad-based. We see each of these verticals becoming, you know, a very strong business unit in the company in years to come. We have deeply anchored ourselves on our two V strategy, verticalization and vernacular.
Both of these 2.0 strategies help us to basically go deeper, much more deeper in each of the verticals and hyperlocal with each of the consumers to deliver the deeper funnel conversions and ROI. I think this is working really well for us. Picking any one vertical out and saying this is the highest, I think wouldn't be as insightful as telling you that this is a very broad-based growth across verticals, across geographies, and there's no real vertical concentration or customer concentration risk at the moment.
We are building our products, people, teams, processes, and data science capabilities very verticalized for each of these markets. You know we're much sharper in our execution in these verticals.
Thanks. Thank you. Again, on the margin front, I have a small question. You indicated there is some appraisal cycle we had this quarter. If you can quantify how much is the impact for this quarter from the raise in?
Just to give you an answer on this. We have about INR 13.5 million costs coming in in INR. That is INR 1.35 crores for the ESOP in this quarter, which has contributed in a slight increase. Secondly, we have increased our manpower by about 6%, rest is on the increasing the salaries of the employee cost spread.
Oh, thank you. Thanks a lot. That's it from my side.
Thank you. Next question is from the line of Sumir Chokshi from Indus Equity Advisors. Please go ahead.
Thank you. I hope I'm audible.
Yes, sir.
Thank you.
You are, sir.
Yeah, I am. Okay. Thank you. My commendations on a fantastic set of numbers to Mr. Anuj Khanna Sohum and the entire team. I have a couple of questions. Now, firstly, we're seeing this whole metaverse theme playing out and the whole world going gung-ho over it. Let's say we look at the potential use cases with brands like, you know, H&M.
They have been going out and setting up digital storefronts. Virtual customers come and interact with them and their products. How would Apple fit in here? Would the customer interactions be able to be virtually measured? I'm, you know, aware of the fact that this is a hypothetical question, given we're so early in the theme, but if you could just share your insight on that.
Well, first of all, thank you for your kind words on our performance. I much appreciate it. Secondly, you know, it's a good question because it's a forward-looking question. This is a question that is, you know, deeply valid given the fact that Apple is anchored on a culture of delivering forward-looking innovations.
This is meaningful. If you look at one of the recent patents that we were granted in the U.S. Patent and Trademark Office, it talks about, you know, textures. At this moment, you know, the human interaction of the machine, especially mobile devices, is either voice-based or it is touch-based, where we are typing some input or by swiping or by tapping something on the keyboard. This is the best format of human technology. Now, as we go into the world of metaverse.
I'm sorry to interrupt you, but Mr. Anuj, your voice is breaking, so we cannot hear you clearly.
Okay. Can you hear me now? I'm not sure.
Sorry, sir, but we cannot hear you.
Can you hear me now? Anuj, your voice is not, it's cracking up. Okay. Can I just talk it through to you again and receive the request?
Let me call Mr. Anuj again. Please give me a moment. Ladies and gentlemen, please stay connected until we connect Mr. Anuj. Ladies and gentlemen, thank you for patiently holding your line. The line of Mr. Anuj is connected back. Thank you. Over to you, sir.
Hi. Thanks. I hope you can all hear me much better now. you know, what I was talking about was how the recent patent that Apple got is actually preparing ourselves for a scenario where the human interaction with the machine or technology would be much more subtle.
It will not be a voice command, or it will not be a type in and tap something, but it could be as simple as very subtle gesture. the gesture could be to your avatar or to your, you know, or to your, you know, digital persona. therefore, it could lead to your digital persona behaving in a certain manner just based on very subtle gestures or your technology assistant. They could be robots, they could be other sort of intelligent devices or connected devices.
There will be new consumer interaction experiences. In order to make sure that our product roadmap, our IT portfolio is ready for the future, Apple has already invested in not only filing for these patents, but actually achieving success in getting those patents granted in the, let's say, most important U.S. patent office. I think this shows that Apple, the company that hopefully a lot of you are or your funds are invested in, is prepared and thinking ahead and is demonstrating that in its actions with tangible kind of outcomes being secured.
Now, to your specific question about what brands like H&M are doing, I think what is absolutely wonderful about the world ahead is that digital-first companies are going more into the physical world and starting to create offline store brands. Of course, those offline storefronts also are very, very digitally, you know, advanced. In Singapore, we have seen that already.
I mean, we've seen offline storefronts that are completely unmanned and, you know, it's just served by robots. I mean, we've also seen some hotels in Singapore where, you know, there's a robot that does room service. I mean, there are things which are already happening in the world where offline industries are becoming more digital, and they're going into, including the world of metaverse. Then we also see digital companies going more and more offline.
What I'm trying to tell you is that don't be looking at it from one angle. See the entire consumer journey as an integrated journey in the physical, virtual, and augmented physical and virtual worlds, which all become one integrated journey. H&M would have to then look at how is the digital store connecting with the way the behavior is on a physical store, mapping of the actual human behavior to the human avatar behavior, authentic avatar versus a fraud avatar of the human.
There'll be all kinds of interesting technologies. I think for us, even our fraud tools, which we, you know, have several patents on, the fundamental essence of that is the ability to know which interaction is a human interaction and which interaction is a machine interaction.
Today, if a machine is doing something on behalf of a human, one must check if that is authentic or if that is a fraud. That ability that our company already has with the patent granted, plus the ability to look at, you know, gestures-based communications as well as other certain forms of communication, you know, I think to that extent, I can tell you we are positioned.
As the world unfolds and the consumer adoption and behaviors change, I think we will have some big advantages in emerging markets, because chances are that some of these things will get adopted in Japan, Korea, Singapore, U.S. or China faster than it gets adopted in India, Indonesia, Vietnam and Africa and LatAm.
We will have some advantage of foresight and better preparation to localize, vernacularize our innovation, while, you know, we don't want to be second to any and we are well prepared and trying to keep ahead. Thanks for that question. This is the best that I could do to answer it.
Absolutely. Thank you so much. That's a great perspective. I'm cognizant of the time, so I'll just ask my last two questions together. You know, we've been over this question of privacy many times before, and I understand Apple is not affected by the changes in the browser privacy norms by Google. You highlighted this during previous calls. Let's say, you know, in the future, Google alters on-device privacy norms via operating system updates. Would this also affect hybrid Android systems? You know, these are utilized by OEMs.
Would the OEMs retain the control over the privacy and user data norms, given they utilize these hybrid systems, which are not purely Android systems?
Secondly, if it's possible, could you break down your connected device numbers in terms of mobile and non-mobile devices, let's say in a percentage term or is it too nascent, you know, to provide this number as the entire spectrum is mostly covered by mobile connected devices? Is there any revenue contribution from these as well? That's all from my side. Thank you.
Well, thanks for the question. Yes, I will first of all reconfirm that Apple is deeply insulated from anything that's happening on the browser or cookies. For whatever it is worth, I think for the entire tech industry, cookies is like a technology more than 20 years ago with HTTP and browser and the internet, and we are looking forward. You know, we are looking forward to new technologies and better, more efficient internet. I think better things will come around. Absolutely no love for the cookies going away, and I think Apple's business has no impact at all.
In terms of what has already happened on iOS, the fact that, you know, the whole industry was super nervous about it and some of the companies are obviously still impacted, and we've seen that from some of the bigger players announcing that they are deeply impacted by iOS changes. For us, Apple was deeply anchored on, you know, emerging markets, which are predominantly Android.
We had very little exposure to iOS. We saw a great opportunity. We saw like when the tide is changing for the incumbents in a way that it's making them nervous, maybe be a new entrant with an innovative platform capability and create a new position for ourselves. We did that really well with Jampp.
I think the Jampp acquisition was timed perfectly for us because we wanted to be firsthand going into the U.S. market, experiencing how to turn this challenge into an opportunity. We did that very well. In at least for the last nine months, I think we've done really well on the IDFA part.
That gives me confidence to say that when Google does something, which by the way, is at least a few years away because of, you know, your own question, the complexities of hybrid OEMs, hybrid models and, you know, who will retain control. I mean, you know, making changes on Google's ecosystem is way more complex versus Google making any change on its browser or Apple making any change on its iOS platform. And because of those companies, they came many years away.
We are no longer even nervous about what changes happen on iOS, let alone having, you know, nervousness about what might happen on Google. I think I just want you to know that being a hands-on entrepreneur in this space and a significant owner within the Apple group, I am not nervous about this particular change. At the same time, we're not ignoring it or taking it lightly.
It's not like, oh, we have solved everything. There will be changes, there will be challenges, but I think that the confidence with which we are solving those challenges has just gone up because of the way we have negotiated and transformed the challenge into an opportunity on IDFA. One step at a time. Let's see. Let's not get overly burdened by what might happen on Google.
I assure you this manual is great, and we'll have many more board meetings calls in between that to address it progressively.
Thank you. You know that last question on the connected device mix, if you could just allude to that.
On connected devices, you know, we look at our perspective is very simple. We are consumer-centric consumer platform. Wherever the consumer goes, whether it is mobile or it is wearable devices or it's Connected TV or the consumer goes offline, we will follow and go to all of those places with the consumer, whether it is the metaverse or whether it is the physical real world. I think our focus is consumer-centric.
Now, within that, how important is it now to, say, segment our revenue by what's on mobile versus what's on other connected devices? I think at the moment, it is very nascent to go into such granularity. But what's important for you to know is that our strategy is clearly consumer-centric.
That is a big differentiation because there are many companies whose strategy is really focused on one part of the consumer journey. You know, they say we only deal with consumer when he's on Facebook or when he is on Google, when he is on offline or when he is on TV. I'm like, "You know, we're saying, 'Hey, hold on a second. We need to look at the consumer holistically.'" That's the only way I believe the business can be done well for the long term.
Understood. Thank you so much, and my best wishes for the future. Good luck.
Thank you.
Thank you.
The next question is from the line of Manish Poddar from Nippon India. Please go ahead.
Hi, Anuj. Thanks for doing the call and really congrats on the results. Just, you know, probably two questions. One is, would you be able to help me with, you know, Jampp revenues in the base quarter? Because I think you mentioned one-third of the revenues this quarter is coming from Jampp. Just what is the... Let's say, if I have to just understand the growth, how is that number, let's say, in the base quarter?
What do you mean by growth? You're talking about Jampp-specific growth?
Yes.
I think I don't have that specific number. What I can tell you or what I'm prepared for is to tell you that our organic growth has been, you know, quite fantastic on a year-on-year basis. You know, I think we've seen from a bottom line perspective, you know, well over 50% of our growth in terms of EBITDA organically is coming from the organic business and 86% of the EBITDA is actually coming from the organic business. Now, Kapil, if you have any specific numbers on Jampp, but I mean, I don't think I have that data immediately on my hand.
You know, what I can tell you qualitatively is I'm super satisfied with the kind of growth momentum that we have jointly unlocked on the Jampp business through upselling and cross-selling the various use case scenarios.
Yes, please. Sorry. Sorry, Kapil.
The Jampp has approximately grown by about 30%+ in this quarter from the previous quarter. If you see that, we had made a commentary that last time it was just about 30% of our turnover. This time it is just about 1% of turnover. You can make it out and it's contributed about, you know, in the range of 30%+ growth in the Jampp business.
Okay. Anuj, just any sense then, let's say, how is the market growing up there? Let's say, any sense on the market share for Jampp in the market which it caters to?
You see, like I said before, I mean, we operate as one connected consumer platform. Our goal is to integrate, you know, and already are doing well integration of Jampp as part of our platform overall. When we look at the growth in Latin American markets, clearly the growth is of the standard of emerging markets. But when we look at developed markets also, including for what Jampp is doing, I mean, I think the aim for the market size is huge. You know, we are having a massive runway for growth. In terms of our execution focus, we focus on key emerging verticals in those markets, which are high growth verticals even in those markets.
I mean, I don't have any specific data point on what is our revenue as a percentage of market share or the total market share at the moment. But, you know, I think it's. I can simply tell you one thing, that every single business unit in our company and every single entrepreneurial leader in our company is at least gunning for 25%-30% growth on CAGR terms.
The reason for that is because the industry average growth rate is, you know, is at least in that realm. It is part of the DNA of Affle that anybody who's doing any part of the business in Affle is clearly gunning for, a, growth above industry average growth. For us, that means 25%-30%.
We are not giving any leeway to one market or the other. Second, it has to be a deeply profitable growth, and everybody has to aim for that, you know, high teens of profitability. So there is a consistent focus on these two elements, and therefore we talk about sustainable, profitable growth as a part of our culture. You know, it's not just about one quarter or one business unit.
Everyone has to be aligned like that. The entire organization, you know, is geared towards that outcome. And I think that should give you an assurance. If you're looking at modeling Jampp separately from us and trying to find a growth rate pattern for that or for any part of our business unit, kindly look at it holistically as one platform which is going to deliver that kind of growth.
There could be one quarter where one platform does better than the other or another one. I mean, those things would average out over time.
Okay. Just one last one. In terms of other income, let's say it is INR 14.5 crore run rate. Is there any one-off in this or this is largely the yield on the cash which is on the books?
If you see for quarter three, it's largely on the yield on the cash. If you see from quarter two, quarter two had the fair value adjustments for our investments. You'll have to eliminate both. It has been given in our presentation, the elimination of the two. If you can refer to the presentation for greater details.
Roughly about, let's say, INR 50-55 crore the run rate for this year, let's say the mark-to-market of, I think, INR 5-7 crore in the last quarter.
Can you repeat the question? I missed.
I'm saying, let's say roughly INR 50 crores of other income on the books, and let's say if you're earning 4.5% yield, that would give you the cash on books.
You can take it that way. Yeah. The yield is about around 3.5% on the cash.
3.5. Okay. Fair enough. Thank you so much.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Anuj Khanna Sohum for closing comments.
Thank you everyone for staying tuned into the call today. I sincerely appreciate the support that the investors have continuously shown and the belief that the investors have shown in the company. Some of the questions were very insightful, forward-looking and also looking at, you know, tech evolution. I think that is something that's super exciting.
We are passionate about our industry, and we are deeply committed, and we have strong conviction and belief that we will deliver superior growth. We are here building Affle to last for the long term. I look forward to more opportunities to answer your questions. Thank you, and stay safe.
Thank you.
Thank you, Arun Prasad.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.