Good evening, ladies and gentlemen. I'm Vikram, moderator for this conference today. Welcome to the conference call of Route Mobile Limited, arranged by Concept Investor Relations to discuss its Q4 and FY 2023 results. We have with us today Mr. Rajdipk umar Gupta, Managing Director and Group CEO, Mr. Gautam Badalia, Group Chief Strategy Officer and Chief Investor Relations Officer, and Mr. Suresh Jankar, Chief Financial Officer. At this moment, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, please press star and one on your telephone keypad. Before we begin, I'd like to remind you that some of the statements made in today's earnings call may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to slide number two of the presentation for the detailed disclaimer.
Please note this conference call is being recorded. I now hand the conference over to Mr. Rajdipkumar Gupta. Thank you, and over to you, sir.
Thank you. Good evening, everyone. I want to start by wishing all of you good health and prosperity. As we close out FY 2023, it is my pleasure to share that Route Mobile has reached a significant milestone, achieving an annual run rate of $500 million in revenue. Our ambition does not stop here, as we aspire to become a billion-dollar revenue company over next three to four years through a strategic blend of organic and inorganic growth. Our impressive performance in Q4 FY 2023 has helped us end the year with a high note, with the quarter's revenue being the highest we have ever achieved. For eight consecutive quarter, we have delivered increased revenue and adjusted profit after tax.
Despite geopolitical challenges and other headwinds, I'm delighted to share that we have surpassed most of the guidance we set for FY 2023, whether it's a revenue growth, margin improvement, or payouts ratio to our respected shareholder. Our performance in terms of revenue growth has exceeded expectation with industry-leading growth rate of 78% in FY 2023. Even after accounting for acquisition, our organic revenue have seen a year-on-year growth of 41%. We move on FY 2024, our strong growth momentum give us the confidence to project at least 20% year-on-year growth hence on, with overall reported EBITDA margin expected to be in the range of 12.5%-13%. In light of the robust traction our new product has been gaining, we have established dedicated SBU for each unit, which includes TruSense.
TruSense, this strategic division headquartered in U.K., is dedicated to addressing mobile identity and digital fraud. In era where digital threats such as SIM swap and SIM phishing are increasingly disrupting the digital landscape, TruSense step up to the challenge. Our intent is to offer enterprise and mobile network operators crucial, actionable insight through a sophisticated AI/ ML framework. This will enable them to proactively mitigate the digital fraud. We are pioneering efforts in passwordless authentication, key focus of this vertical, ushering in the new level of security and convenience. Apart from TruSense, we have established dedicated SBU for email and conversational bot framework. For FY 2024, we plan to establish a dedicated SBU for voice and a virtual contact center, and we have already onboarded senior resources to spear at this initiative.
Key highlights from the last quarter includes, we secured three new firewall contracts since Q3 FY 2023, with several other significant deal in pipeline. Additionally, we deployed our first UCaaS solution for Robi Axiata to cater to the needs of enterprise customers, supporting their customer care and marketing operation. I would like to take a moment to acknowledge the contribution of our esteemed colleague, John Owen. After a successful tenure of two year with Route Mobile, John has decided to move on. During his time with us, he played a pivotal role in the integration of two strategic acquisition, Masivian and Mr Messaging. These entity became integral to our value proposition in the CPaaS market space.
In terms of recognition, we are proud to share that Route Mobile was awarded Best Use of Cloud Services by a Telecom Company and the Best Enterprise Cloud Offering in IT sector by ET Ascent Business Leader of the Year Awards 2023. In conclusion, in recognition of our commendable performance of FY 2022, 2023, the Board of Director has put forward a recommendation for a final dividend of INR 2 per share. I will now turn it over to Gautam to take us through the financial. Thank you for your continued faith in our vision and strategy. Here's to plan even more successful FY 2024. Over to you, Gautam.
Thank you. Thank you, Rajdip. Good evening, everyone. Hope you and your family are safe and fine. We have already uploaded our quarterly earnings presentation on our website, as well as on the stock exchange website. Hope you had a chance to go through the presentation. I'll quickly summarize our financial and operating performance during Q4 FY 2023 and for the full year FY 2023 before opening the floor for Q&A. The key takeaways from our financial performance in Q4 FY 2023 has been the stellar revenue growth. We recorded YoY revenue growth of 61% and QoQ revenue growth of 2.3%. Q4 is historically slightly muted to Q3 owing to seasonality and two lesser days in the JFM quarter. Yet we have surpassed our Q3 FY 2023 revenue in Q4 FY 2023.
We believe that we have demonstrated industry-leading growth coupled with expansion of operating margins during the quarter gone by. With such a superlative performance, we believe we are today one of the largest and the most diversified global CPaaS player focused on emerging markets, if not the largest emerging market-focused CPaaS player today. In volume terms, we registered over 107 billion transactions in FY 2023, a growth of over 106% on a YoY basis. In FY 2023, our revenue from termination in India, which is a key focus market for us, including both domestic and international termination into India, stood at $207 million, which translates to INR 1,638 crore value.
Besides India, we believe some of the other key growth focus market for us in FY 2024 will be GCC countries, LATAM, and Indian subcontinent. For the full year FY 2023, our operating revenue increased by 78%, out of which organic revenue grew by around 41%. During the year, we returned more than 50% of our reported PAT through dividends and buyback to our shareholders. One area where we as a management team continue to focus on is improvement in the operating cash flow of the company. In FY 2023, our normalized CFO to EBITDA conversion was 45%, slightly below our 50% baseline guidance, which we had given at the beginning of FY 2023. You may refer to slide 21 of the earnings presentation. We have demonstrated significant improvement in the normalized operating cash flow generation during H2 FY 2023.
As our inter-enterprise business continues to grow, it will definitely have some impact in terms of working capital. However, most of these enterprises are large enterprises with very strong rating credentials. If need be, we can always get these quality revenues or quality receivables factored without recourse to demonstrate better operating cash flow generation of the business. The receivable and the payable cycles have steadied to a large extent, and hence we believe the normalized operating cash flow of the company should improve considerably going forward. Notwithstanding the above, we continue to remain committed to deliver normalized CFO to EBITDA conversion in the range of 50%-75% in FY 2024. The normalization will largely pertain to the security deposit given by us for any large strategic firewall deal, which according to us, should be considered as capital employed.
Typically, such strategic deals yields ROC in the range of 25%-50%. This is some of our past such firewall deal experience. With this backdrop, let me walk you through our financial performance. In terms of Q4 FY 2023 performance. Q4 revenue from operations grew by 61.1% on a YoY basis and 2.3% sequentially to INR 1,087 million. Billable transactions stood at over 27.4 billion in Q4 FY 2023 as compared to 27.7 billion in Q3 FY 2023 and 18 billion in Q4 FY 2022. Average realization per billable transaction improved to INR 0.37 as compared to INR 0.36 in Q3 FY 2023.
Gross profit margins stood at 21.3% as compared to 22.4% in Q3 FY 2023 and 21.1% in Q4 FY 2022. The slight contraction in gross margin is attributable to the seasonality in the business of Masivian and certain markets for Mr Messaging, for Mr Messaging being affected due to geopolitical issues. Adjusted for their gross margins, Route Mobile gross margins expanded during the quarter gone by. JFM, that January, February, March is seasonally the weakest quarter for Masivian. As we head into the subsequent quarters, this will improve significantly. EBITDA for Q4 increased by 91% YoY and 4% QoQ. EBITDA margin improved from 13% in Q3 FY 2023 to 13.2% in the quarter gone by. Effective tax rate for the quarter was 14%.
Adjusted profit for tax grew by 90% YoY and 19% sequentially. Tax margins improved from 10.2% in Q3 FY 2023 to 11.9% in Q4 FY 2024. For the full year, revenue from operations grew by 78% from INR 2,020 million to INR 35,692 million in FY 2023. In terms of certain KPIs, billable transactions increased to 107 billion transactions as compared to 52 billion in FY 2022. Average realization per billable transaction was INR 0.33 as against INR 0.39 in FY 2022. We had a net revenue retention of 124%. You may refer to slide 12 for these KPIs. Gross profit margin expanded to 22% vis-à-vis 21% the previous year.
EBITDA non-GAAP grew by 77% to INR 4,566 million in FY 2023. EBITDA margin stood at 12.8% in the year gone by. In terms of operating leverage, EBITDA as a percentage of gross profit was at 58% in FY 2023. Effective tax rate for the full year was around 13%. Adjusted profit for tax grew by 92% on a YoY basis to INR 4,00 7 million in FY 2023. That margin improved to 11.2%. Net cash was INR 7,737 million as on March 31, 2023. Average receivable and payable days were around 62 days in the year gone by. With this, we open the floor for Q&A.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may 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. To ask a question, please press star one on your touch-tone phone now. We take our first question from the line of Anil Nahata, an investor. Please go ahead. Mr. Nahata, your question, you can please ask your question.
That's a quick set of numbers this quarter, and congratulations for that. I wanted to ask a question regarding the area that has opened up in terms of the AI filtering and other security related platforms that you are developing. Just wanted some color, actually, what is the kind of market size that you see in India for this kind of products which are coming year or two, and also abroad? That is the first question that I have.
Hello? Hello?
Yeah. Hi, Rajdip here.
Anil, right?
Yeah, Anil. Correct.
Anil, hi.
Hi.
The market size, I think we still, the entire product itself, you know, is very early stage. Honestly, if you talk about market size, what is the current market size India or abroad, I think it's a very early stage of POC with multiple operators, what we are doing. I think we cannot, we may not able to give you any kind of a market sizing at this point of time, but probably by next quarter, next call, we can give you some kind of, numbers for sure.
Which will be the kind of business model that you will follow in this? Is it something like, you will deploy a telco and bring to telco or you will be going directly to the enterprises or a mix of those?
If you see our entire security product, you know, like Route Mobile already has a company called 365squared. T hey have specialized themselves for firewall solution. With this current deployment solution which we built for anti-phishing is something it for operator as well as for enterprise. Our focus is definitely going to be both the side of the business. Just to answer your question, it's operator as well as enterprise.
Okay, Rajdip. I will look forward to some more details in the next quarter or the quarter after when you have a better opportunity to explore the market. The other question I have is in terms of a request that if you can, going forward, start putting your market share numbers for the Indian market, particularly in terms of what is your market share for the domestic as well as the international kind of business. That will be a very good parameter to judge like how Route is doing vis-à-vis the competition. If you can give some numbers around that, it will be great right now.
India itself is a very fragmented market, right? There are Tier 1, Tier 2, and then there is also lots of double counting happens between, because some reseller using another reseller. I think honestly, to be honest with you, it is impossible to give some kind of a market share. Yes, we believe ourselves with our total market share for India domestic traffic is over 20% as of now.
Thank you. We take our next question from the line of Nikhil Choudhary from Nuvama. Please go ahead.
Hey. Hi. Thanks for the opportunity and congratulations on such a good result. First question from me is I want a bit of understanding on what led to such a strong revenue growth in this quarter despite of seasonality. Just want to understand what were the triggers and with such a strong exit rates coming in FY 2023, what kind of revenue growth do you expect in FY 2024?
Nikhil, let me just start with this question.
Sure.
I think we have already given guidance of 20% growth for the next year. you know. I think in last quarter, as we were already talking about, onboarding few large banks, and I think all those banks are already onboarded, not only in India but in Ghana, in Nigeria also we onboarded two large banks as a customer. Apart from that, there is an lots of traction we have seen in Middle East market and Latin market as well. I think it's the overall combined growth in all the market where we operate, and some of the large bank has contributed a lot in last quarter, especially four banks.
Thanks, Rajdip. Just one more. Can you give some color on the geopolitical impact on Masivian? What basically happened there and when do you believe that could get resolved? Thank you.
It was not Masivian. It was not. Gautam is I think it's-
Mr Messaging. Yeah, yeah.
Yeah. Gautam, if you can.
Yeah, yeah. For Mr Messaging, I mean, they traditionally have been terminating quite a bit of their communication messages into Russia. That had got impacted quite a bit in the last quarter. Again, I mean. For things to go normal, I mean, we'll have to just wait it out. For the current month, I think for the month of April, I mean, we have insights into Mr. Messaging's number. I think things are coming back to normalcy. I mean, the growth coming from some other markets, while Russia is still impacted, some of the other markets have started to pick up for them.
Thanks, Gautam. That's it from my side. Thanks for the opportunity.
Thank you. We take the next question from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Thanks for the opportunity. A couple of questions. First of all, just want to get sense about new product revenue growth. We have shared total number, but can you share what would be the organic revenue growth for the year in new product? If I do some working about sequential revenue growth, it seems to be muted on quarter-on-quarter, or rather it is quarter-on-quarter decline seems to be the case. Just want to get sense on from you about new product perspective, because earlier we indicated new product likely to be higher share of revenue. So far it remain in single-digit kind of number, low single-digit kind of percentage mix.
If you can give some sense how it is likely to play out for us, and if you can break up it further across products, how the growth is playing out. Second question is about the price hike. Can you provide some sense about NLD, ILD, as well as international market, how the pricing is behaving? If you can give some sense, any changes in pricing playing out for us. Last question is about gross margin. Earlier we indicated about over next couple of years, our gross margin should expand, and we give aspirational target of a billion-dollar revenue. If you can provide some sense, once we hit, let's say, billion-dollar mark, what kind of gross margin one should expect? Thanks.
Dipesh, hi. Let me just start with second question first, and then, Gautam, maybe you can add. Dipesh, I think, honestly, as you see, the digital adoption and penetration is increasing day by day. Any new product has its own life cycle. It takes really two to three months, maybe four months also for a one deployment.
I think we have seen a very good traction in last financial year where we, I think our overall volume on WhatsApp, RCS, even email has grown multifold. If you come, a t the same time, our revenue for SMS also grew multifold as well, right? If you talk about if we hit INR one billion, what could be my gross margin? Honestly, we have aspiration to hit about 25%+ . If I, maybe more than 25%. That's what I can tell you right now. I think it's a three-year horizon, which may change the product mix a lot. It can be over 30% also. What was your first question? About NLD price, right?
Yeah, ILD and NLD pricing.
ILD price, yes. I think there is a price increase in India, which has happened, I think, from the month of 22nd April onwards. Again, how much is going to impact the revenue of overall, in coming quarters, we have no idea. Because mainly we have seen if there is a price increase in market, there is definitely dip in the volume. We want to just wait and see how this quarter goes. As for the last one month, we have seen, I think we have not lost single customer because of price hike, but we are able to maintain our revenue run rate.
Any changes in international market? We operate in multiple market. India is roughly 45%.
Y es, there is. Definitely. Our firewall is going live in Sri Lanka from 21st of May. There is a steep of price increase going to happen. We are increasing price to almost $0.15. That is one thing. Apart from that, I think various other market where there is a firewall is getting deployed, prices are getting increased. We have seen most of the OTT players adopting these prices, and they are happy to pay, and we are still serving them as a customer. We don't see any impact. There are few countries where we have a exclusive firewall deal. One of them is, like, Mobitel in Sri Lanka, which is going live on 21st of May. I hope I'm able to answer your question.
Yeah. Thank you.
Thank you. We take the next question from the line of Mohit Motwani from Nuvama. Please go ahead.
Hi. Thanks for the opportunity, and congratulations for a great set of numbers. Just had two questions. One on what was the Masivian and Mr Messaging revenue for the quarter, and how much of performance link payout is pending, and what is the quantum in FY 2024 and 2025 that you're expecting? Thank you.
Gautam? Yeah.
Yeah. The revenue of Mr Messaging for the quarter, right?
Yes, for the quarter.
I have it in INR 147 crores was the revenue of Mr Messaging.
Okay. Masivian?
Masivian was, one second, INR 50 crores.
INR 50 crores, right?
Yeah.
Okay. How much of the payout for the acquisition that you have made from... There were some performance link payouts, right? How much of that would be coming in, kicking in FY 2024 and 2025?
Current year, I think we have a payout of about $6 million to Masivian in this month. And from the earn- out, it's about $2.36 million that we have to pay to Masivian at the end of this month. And the subsequent month, we have a payout to Mr. Messaging of around EUR 6 million
Any color on what you will end in in FY 2024 for the whole year? Any color on that?
For the full year, the Masivian's balance payout of EUR 6 million I think will be done in November. There is no other payout that is due in the financial year FY 2024.
Okay. Sure. Thank you so much for answering the questions.
Yeah.
Thank you. We take the next question from the line of Moez Chandani from Centrum Broking. Please go ahead.
Yeah. thank you for taking my question. my first question was that I noticed that you've done some borrowings of about INR 100 crore this FY. Can I understand how you plan to utilize that debt?
Yeah. I mean, this is, these borrowings are more from a treasury management standpoint. It's backed by cash collateral, so to say. And the borrowing has been done in the U.K. entity. And against the cash collateral that we have as deposits. This would be positive carry transactions from our perspective.
All right. Understood. Also, I noticed that you've, you know, called out a few, about six industries, in your revenue contribution from select industries. Those six come to about 63%. Can I understand what constitutes the other 37% and how you see those industry mix moving in FY 2024? Any particular industry that you want to call out?
From our perspective, we have a very long tail and we do this analysis only for the top 150 clients. Within that, we call out the key sectors. At this point in time, considering the new products and the strategic business units that we have created for some of these new products like TruSense, we believe that BFSI and FinTech will be a very key industry vertical that we'll be focusing on in a big way, along with e-commerce.
All right . Great. Okay. Thank you. Thank you so much.
Sure.
Thank you. If participants wishes to ask a question at this time, press star then one on your touchtone phone now. Take the next question from the line of Yash Tiwari from Vertichem. Please go ahead.
The entire team of Route. The journey from $2,000 to half a billion is really phenomenal. I have two questions.
Thank you.
Thank you. As much as we have got to see Mr. Gupta, follow Mr. Gupta on different interviews, firewall product. I believe. How much do you expect the potential is, unrealized potential? Secondly, in terms of the South American market, there have been quite a number of acquisitions, and you've set up STS subsidiaries as well. Do you see a upside, significant upside from there from the activity happening in South American market?
Yes. First of all, thank you very much. Definitely, yes. Our firewall solution is another very unique solution which we have built from last so many years and is deployed in multiple operators globally. Somehow I think I don't want to talk about my product, but indirectly I think it is definitely adding lots of value to our overall growth as a company. This particular year, I think we as a team have taken a target to close at least eight operators. That's the only thing I can tell you. There are already deal which is getting closed in next one or two weeks. That we already in a process of that. Maybe, I can just give a guidance about six to eight operators to be closed this year globally on our firewall side.
Indirectly, all these firewall deals are linked with Route Mobile revenue also because if 365squared put their firewall and they become the exclusive gateway, which means that every single SMS has to flow through Route Mobile platform. In that case, we have an advantage of setting the price for the market. Since we work very closely with all the OTT player, I really don't need to go in market to search for a customer because the customers are already there as a part of Route Mobile customer. What we need is just open a gateway for them the moment we have exclusive partnership with this kind of, you know, operators.
I think this year is definitely is a year for us, which is where I'm going to close at least eight operators for sure. With that, I think that's what the... You know, like when I talk about my roadmap for a billion-dollar revenue, I think the firewall deals will definitely contribute a lot in next three year down the line in our, that journey. That's the thing I can share right now with you.
In terms of our strategy in Latin America, I think we have recently acquired a license in I think in Chile. With that, we have an access of all the operators, as a direct connectivity. Now we can start selling those connectivity to OTT players all across the globe, along with the domestic customer base out of Chile. We already set up our sales team in Peru and in Mexico now.
We believe, in next three year down the line, contribution coming from Latin America is also going to be, you know, like substantial in terms of, what it is today. I hope I'm able to answer your question.
Very well, sir. As a retail investor, it brings a lot of confidence. I wish you all the best. We continue staying this journey with you.
Thank you.
Thank you. We'll take the next question from the line of Vivek N., an investor. Please go ahead.
Yeah.
I'm sorry to interrupt. Yes, Mr. Vivek, you may have to come a little away from the device that. Then you may have to speak, because there is a lot of disturbance from the background.
Okay. Is it better now?
Yes, please go on.
My query is, what are the comparable companies in the Indian and international landscape, against which, Route competes? Thank you.
That's a good question. Honestly, like, for us, we compete with ourselves every single day. You know, there is a huge market of over $60 billion. I think everyone has their pie in this market. As a company, we don't want to get compared with anyone. I think we want to focus more on our roadmap, which we have defined. If you talk about comparison, there are definitely comparison companies available in India for a domestic market.
Again, as I said, Route Mobile is a global company. We build the entire platform to serve the global customer. We are connected with over 1,000 operators, which means that there are only few set of the Tier 1 aggregator in the world who have this kind of connectivity. We are one of them. Okay? Every single market, if I go, there will be some kind of a competition. We operate from 22 countries. In each country, we may have three, four domestic competitor, where at the same time we have in India as well, and you must be knowing all the names.
Thank you.
Thank you. Participants who wishes to ask a question at this time may press star and one on their touch-tone phone now. We take the next question from the line of Abhishek Sharda from Hem Securities. Please go ahead.
Yes, sir. Thank you for the opportunity. Congratulations for good set of numbers. My first question is regarding your guidance that you mentioned that FY 2024 will be able to achieve at least 20% growth. Is it fair to understand that this 20% is organic growth, or it is a mix of both organic and inorganic?
It is completely organic growth.
Okay. We have plans for acquisitions also, right?
Sharda, I think. Let me just answer this question. Route Mobile has always believed that, you know, like if you want to grow multi-country and you really need to set up teams all across the globe, acquisition could be, it is always a good option, right? Right now, I think, we are in process of integrating all the acquisitions which we have done in past. I think integration is also very key for Route Mobile to make sure all the companies which we acquired are well integrated. I think we are fairly successful in those integration as of now.
Yes, you are right. We are definitely looking out for certain acquisition, and maybe we cannot give any kind of a timeline. It may happen in six months also, or it may happen in one year also, or maybe three months also. As a company, we always believe that we can grow multifold if we really want to be global by acquiring certain local companies. We may We don't want to shy away with that. Right now, I think we don't have anything in our plate to look for. Yes, in coming quarters or years, we'll definitely look into that for sure.
Okay, sir. Understood. Sir, secondly, I just want to understand about the hiring plans. What are your hiring plans and what is the current attrition rate?
I think the attrition, it is already mentioned that the presentation, you know, like as a tech company, we are definitely looking out to build some product in-house. As a normal company, requirement against attrition, we keep on hiring. We are looking out to add more people. How many people? Probably I cannot answer that right now. We do have a plan to hire. In fact, we are already hiring people as of now also. How many we need, I cannot quantify as of this moment.
Okay. Okay, sir. Thank you for the responses. I'll come back if required.
Thank you. We take the next question from the line of Keval Shah from Banyan Tree Advisors. Please go ahead.
Yeah, hi. Thanks for the opportunity. I have two, three questions. Could you share what was the organic and inorganic revenue for the Q4 FY 2023?
One second. organic revenue growth was 53%.
Okay.
The rest was inorganic.
Okay. You just mentioned, there was a hike in ILD prices. Could you quantify the amount, like, percentage-wise? What was the hike in April?
I can tell you about India. I think it is increased by 25%.
Okay. In India, 25%. Okay.
Yeah.
Okay, sure. Thanks.
Thank you. We take the next question from the line of Vivek Sethia from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a good set of numbers. I had a couple of questions. Before those couple of questions, just wanted to continue on the previous question about the NLD, ILD pricing. If you could just highlight if, like, what has been the last hike taken in NLD, ILD? Going forward, like, how do you expect the rates, you know, to move? Yeah, if you could answer that, then maybe I'll move forward to my next two questions.
Sure. I think honestly it all depends on operator, right? We have nothing to increase or decrease price because for us it is a pass-on. Pass-through price. You know, like, the last price increase happened I think one year back, and exactly after one year the operator in India, he has increased by 25%. That's the only thing. No way we go and influence our operator to increase or decrease, but it completely depends on the operators, like you said.
This last price increase which you talk about, is just NLD or is it for ILD also?
ILD.
Okay, this is ILD.
Domestic ILD, yeah. Whatever price increase I'm talking about right now is only ILD.
Okay.
I have no idea because there was some kind of discussion, but nothing happened. I'm looking forward for it, because as of today, we have no intimation from operators to increase the price, NLD price, as we speak. On ILD it is definitely increased in month of April.
Okay. The 25% increase you spoke about was for ILD. Okay.
Yeah, yeah. It was for ILD only. Just Sorry if I'm not able to mention correctly, but it is just only for ILD only for India.
Okay. C oming to my next question, just wanted to understand, like, any particular reason for the decline in new product sales? going forward, how do you see that pan out? if you could provide, me with the number for the new customers onboarded. I think I couldn't find it in the PPT.
Declining, Gautam?
No. 135 new customers were onboarded.
Okay.
Quarter gone by, yeah.
Any particular reason for the decline in new product sales during the quarter?
No, it's more to do with seasonality. I think Q3 happens to be our best quarter. Q4 is a seasonality impact that is there. On a YoY basis, there's like a 24% growth in new products.
Okay.
Yeah, in the quarter gone by.
Okay. You spoke about Masivian and MRM having some issues with regard, due to which, you know, we see gross margin under pressure, like. How do you see that panning out, going forward? Is it something long-term or, like, it was just a one-off for this quarter?
No, no. It's a seasonality. For Masivian it's a seasonally weak quarter. Even last year, so calendar year for JFM, January, February, March, typically is the weakest quarter for Masivian . As the year kind of progresses into the subsequent quarters, their revenues and margins profiling improves dramatically, right? We've seen that trend for now the last two years as well from a calendar year standpoint. It is not a surprise from a Masivian standpoint, the numbers. For Mr Messaging, the impact was largely more to do with their traffics getting impacted into Russia. For, you know, for termination into Russia. Other than that, I mean, the business continues to be as robust. April, kind of a run rate, things are again back to normal. That seasonality aspect has to be kind of accounted for, every year for Masivian at least.
For MRM, you're saying that the political issue is resolved now. Now there's no such issue existing as of now.
Russia continues to be very low in terms of the revenue contribution. It is the other markets that have picked up well for them.
Okay. - Thank you so much.
Thank you. Participants who wishes to ask a question, press star one on your touch-tone phone now. We take the next question from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Yeah, thanks for the opportunity. Just one data point related question. Can you share revenue from firewall business and Call 2 Connect for the year or quarter, whichever you can share?
I think, Deepesh, Gautam can send you offline. Is that okay?
No issues. Thank you.
Thank you. We have next question from the line of Aditya Jhawar, an investor. Please go ahead.
Thank you for giving the opportunity. Sir, could you explain me about the cash flows? Why when an IT company or product-based company, our cash flows are at 50% or maybe around 70%? Could you explain me?
Your voice is not clear. I don't know.
Hello. Now is it clear? Hello?
No. No. It's not clear.
Now?
I'm sorry to interrupt, sir. There is a wind blowing right from behind, so that's. We're not able to understand the question. If you want to come a little aside and then ask the question again.
Yeah, I've closed the fan.
Yeah.
Is it okay now?
Yes. It's okay.
Okay. I was asking that, being a product-based company and with IT in this industry, why are the cash flows at 40% or 50% or maximum 70% odd here? Could you explain about that? How can we improve going forward? That's my doubt.
Yeah. I think I did talk about it during my commentary about the initiatives that management will be taking. I mean, there is definitely an increased focus to improve the operating cash of the company. There were certain prior period payments that we have done in the year gone by. In some years, historically, we have also delivered over 100% EBITDA to cash flow conversion. There are some strategic investments that we are making in terms of some of these firewall deals which warrants security deposits to be given.
Now, from our perspective, as I said, we consider that as capital employed with a return on such capital employed, potential being as high as 25%-50%. As a business, I mean, the business is also kind of growing at a superlative growth rate. Some of the enterprise business in India, Middle East, has so working capital requirements. Again, as I said, most of these clients are and some of these large clients even have sovereign grade rating, right? We can always get this factored and realize better operating cash flows.
it is just that, I mean, the business is self-sustaining, and we've been able to kind of meet our working capital requirements through the regular monthly cash flows that we are able to generate. Hence, there was no reason for us to kind of get into such factoring arrangements. In our case, unlike most of the other IT companies.
A significant part of our cost of goods sold is paid to the operators, whereas in most of the IT, ITeS companies, if you were to look at it pays only the human capital costs that is kind of there. That is a degree of difference between an IT company versus how a CPaaS company should be looked at. Happy to kind of also maybe circle back offline to kind of give you more color to the analysis.
Yeah. I'll connect you offline. The other question I have, so regarding the product revenue. Okay, we have been maintaining a growth rate like, INR 30 odd crores for a quarter and INR 40 odd crores. Where, when, at which point of time can we see a jump here that is kind of like any product-based company has huge revenue growth here? I'm asking about, any two years or three years. Yeah.
Definitely, as I said, because I think, it all depend upon the adoption ratio and the most of the adoption ratio is happening now. Most of the enterprise customer are now getting well-educated to understand the advantage of using this digital platform. We're talking about new product.
Okay.
Lots of traction happening. Right now we are doing lots of POC with the customers. Large banks, you know, like large enterprise customers, those POCs are still going on as we speak. Probably in coming quarters we will see the growth. See, at the same time, we need to also understand the adoption of SMS itself is so high right now. In India, even this classic example of your Google Pay, people are paying INR 5 using Google Pay nowadays. Which means that-
Yeah.
The entire transaction of SMS is also going to grow multi-fold. Even if we do say like a billion-dollar revenue in next three years down the line, and out of that probably we'll see INR 7,000 crore coming from SMS only. We cannot just avoid the SMS side of business, which is growing at the same realistic along with the digital new channels of communication. What we are very confident of, like what we have built as a product, as a portfolio, as an entire stack which has email, SMS, voice, RCS, you name it, right? Every single product which we've built have a live customer and paid customer. We are very happy to say that every single channel which we have built in-house are generating revenue for us, and which also has a great pipeline for the coming quarters to come.
Okay. firewall business also comes in inside this product revenue or?
No, no. That is-
Definitely, yeah.
Yeah.
No, no. That's separate, yeah. Uh, that is-
Th at's separate.
-separately reported.
Okay. The last question I have, regarding the next year guidance? How much we can expect from the organic? Because I see this year we have done pretty good in the organic side and in inorganic also we have done pretty good. The next year you are giving guidance of 20%. Majority-
See-
the high ratio. Yeah.
The idea is very simple. Even I have given 70% growth last year, and then we did 78%, right? It is always good to be conservative, and then aggressive, and then overachieve. I think, based on the current INR 3,005, INR 700 crore, it will be 25%-20% growth. It is definitely a good growth guidance to the market, but we have always overachieved our guidance in past so many years, and we will try to do the same thing this year also.
It will be from the organic or the more from.
Organic. Completely organic.
Okay, sir. All the best. Wish you all the best. Thank you.
Thank you.
Thank you. We take the next question from the line of Mohit Motwani from Nuvama. Please go ahead.
Hello. Hi. Thanks for the follow-up. Just wanted to get your thoughts on the acquisitions that you spoke about. You know, you'll be evaluating. Just want to understand, these will be more a buyout kind of transactions where you will look at some players like Masivian, Mr Messaging or more like bolt-on acquisitions and any amount that you will earmark for these. Any sense you can give on that will be helpful. Thank you.
Yeah. At this point in time, I think, there are certain product capabilities that we have been kind of sorting for since, for some time. We continue to kind of look for a quality asset on, virtual contact center, with a strong, voice pack. That is one area which is kind of, a wide space. We'll definitely look at, opportunities, I mean, if that comes up in that space. Besides that, we have aspirations to get into U.S., but again, it's at a drawing board stage right now.
Nothing has kind of reached that stage where we can kind of come and give you some sense of how things are shaping up from an inorganic acquisition standpoint. At this point in time, I think, on the organic front itself, there are a lot of opportunities that are coming up, not only from an enterprise CPaaS standpoint, but also from a lot of those firewall deals that are kind of there, and they are big opportunities from a size and scale standpoint. The focus right now is to focus on some of these organic opportunities in a big way.
Some of the new strategic business units that we have created for product-specific approach, essentially TruSense. We're very, very bullish on TruSense. At this point in time, I think we are building a very strong foundation for that product. Then the intent is at this point in time to do a lot of POCs with as many enterprises as possible, and take it live in some of these large densely populated countries like India, and some of their adjoining markets. The product is already live tested in Colombia with a lot of marquee enterprises, including the largest banks in those countries. We see a lot of potential for such products, especially into FinTech, BFSI and e-commerce domain.
That's a significant chunk of our energy today is now focused on some of these organic initiatives. For the inorganic opportunities, I mean, we'll see, I mean, if there are quality assets that come by, I mean, we'll not shy away from evaluating and contemplating such transactions.
Thank you, Gautam, for the detailed response. Thank you.
Thank you. We take the next question from the line of Suresh Kumar, an investor. Please go ahead.
Good evening. Sir, I have, two questions, sir. Regarding this acquisition side, anything is planned in this financial year, particularly in next quarter or so? How many, companies are being, planned for acquisition? What will be the growth expected from those companies? The second question is regarding your, market share in India.
Can you just repeat the question, please?
Sir, in the inorganic growth, you will be acquiring companies now, sir, for this financial year, 2023-2024. How much new acquisitions or how much is planned for this financial year, and what is the growth expected out of those acquisitions?
Let me just answer this question. As I said, before also, we are not right now in a, you know, looking out for any acquisition. As I said, we will look for it if there is a right company which matches with our, you know, like DNA. Right now there is no plan of acquisition as we speak. We are definitely looking out. It may take two year, it may take 1 year, but I cannot quantify, like, what kind of revenue and what kind of margin. Right now, I think you can just take it as a statement. Right now, we are not looking for acquisition. We are integrating and we are building product in-house, and I think we are on the right track of doing that thing right now.
Okay. Okay, sir. My second question, sir. In the inorganic growth, what is the guidance, sir? Any growth for this financial year?
we are giving the overall growth guidance of 20% as a company.
Yes, sir. That was told for organic growth. For this inorganic, around 30% is contributed from this acquisition partner, sir. Any growth guidance for this financial year only for those partners?
Everything will become organic from first of April because all the companies that we acquired was fully integrated for the last year. Everything is organic. This 20% organic growth rate that we have kind of given a guidance for includes all the companies, including the companies that we had acquired in the past.
Okay, sir. Sir, my third question, sir. Sir, regarding in the Indian market, you said your market share is around 20%. Any plan of, increasing that or, how you are planning to increase that market share, sir?
Yes, that's a good question. I think my market share in India is over 20% now as we speak. We are definitely, as I said, there are few number of large banks where we are already doing our POC and we are in talks with them. There are large enterprise customers, e-commerce customer where we, our team is focused working with them. I think we are looking forward to increase our market share to 25% this financial year. That is something which we as a company have taken a target internally, and we want to make sure that our market share to grow by almost 25% this year in India.
Okay. Thank you, sir. Thank you.
Thank you. We take the next question from the line of Vivek Sethia from HDFC Securities. Please go ahead.
Hi, sir. Thanks for the follow-up. I just have one question on the borrowings part. If you could please repeat, like what are the INR 100 crore borrowings pertaining to as it was zero in FY 2022. Now I see it's INR 100 crore, both short term and long term. If you could throw some light on it.
No, no. As I said, we have net cash of INR 737 odd crores. Some of these borrowings are essentially more treasury management, wherein we are getting positive carry. These are backed by cash collaterals.
Okay. just to confirm on the ILD price hike, which you said this was done last year April, right?
No, this April.
April 2020. Okay. Like a month back, you're saying?
That's right.
Okay. Okay. Okay. Okay. Thank you.
Just to add, last April 2022 was also the same time when they increased the pricing.
Right. Right. That was the confusion which I had. Okay. Yeah. Thanks for the clarification.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Over to you, gentlemen.
Thank you, everyone. Have a great evening. Take care. Bye.
Thank you, sir. Ladies and gentlemen, on behalf of Route Mobile Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.