Good evening, ladies and gentlemen. Welcome to the conference call of Route Mobile Limited to discuss its Q4 and FY 2026 results. At this moment, all participants are in the listen-only mode. Later, we will conduct a question and answer session. At that time, if you have any questions, please raise your hand and we will unmute your line to ask questions. Please lower your hand after you have completed the question. Before we begin, I would 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 two of the presentation for the detailed disclaimer. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Binyala. Thank you, and over to you.
Good evening, everyone, welcome to Route Mobile's Q4 and full year FY 2025, 2026 earnings call. I'm Vinay Binyala, Chief Strategy Officer and Investor Relations Officer at Route Mobile. Thank you for joining us. We have a full house today, and we appreciate the continued engagement. I would first like to introduce my colleagues at Route Mobile who are joining us on this call today. Seckin Arikan, Chairman of the Board, Route Mobile and CEO of Proximus Global, Rajdipkumar Gupta, Managing Director of Route Mobile, Tushar Agnihotri, Chief Executive Officer of Route Mobile, and Raj Gill, Global Chief Financial Officer at Route Mobile. Before we begin, a brief note on the format. We are running this quarter's call slightly differently. In addition to the usual financial results and business highlights, we are dedicating a significant portion of today's session to a strategy update.
Given the evolution of our business over the past year, shaped by broader market trends and sharpened internal strategic focus, we felt this was the right time to share that thinking with the shareholders and the analyst community in some depth. We believe it provides important context for the numbers also. The structure for today's discussion will be as follows. Tushar Agnihotri, our CEO, will open with a business overview and the strategic direction we are pursuing. Seckin Arikan, our Chairman and CEO of Proximus Global, will cover Route Mobile's role within Proximus Global and the larger Proximus Group. I will follow that up with a walkthrough of the growth strategy and business metrics, with Tushar adding color and context where relevant. Raj Gill, our Group CFO, will take us through the financial results and outlook. We will have time for Q&A at the end. Over to you, Tushar.
Good evening, everyone. Thank you for your time today. We've structured this session around four themes. I'll cover the business fundamentals, what Route Mobile is, how it's built, and where our differentiation lies. Seckin will provide the Proximus Global context, which is central to understanding the broader strategic picture. Vinay will then walk through the growth strategy in detail and we'll run through the business metrics together. Raj closes out with the financial results and guidance. Let's begin. I want to use this slide to establish the framework for the details that follows. The straightforward message is the reset is largely behind us, and the business that has emerged from it is structurally healthier. We say that with confidence and the numbers also reflect the same clearly. Gross profit margins expanded in FY 2026 as relatively low margin ILD volume has exited the mix.
What remains is more resilient, more defensible revenue base. To put the numbers to that, FY 2026 was the first time that our annual gross profit crossed INR 1,000 crores. That translated to a 22.9% gross profit margin for the year. The driver was exactly what I have described, the exit of low margin ILD business, partially offset by the growth of higher margin domestic revenues. It's a milestone that reflects quality of earnings, not just scale. Two growth engines are gaining real traction. One on the product side, RCS, WhatsApp and AI-enabled messaging have grown at 43% Compounded Annual Growth Rate over the period FY 2022 to FY 2026. That trajectory points towards where the channel mix is heading.
On the MNO solution side, our firewall and network API products are building into a high margin recurring revenue stream that sits alongside the enterprise business. We have created a solid pipeline for the AI-driven A2P SMS and voice firewall solutions that we offer to MNOs, this will reflect in revenue expansion from this line of business in the coming quarters. Two structural advantages underpin the whole approach. First, India as a Global Innovation Hub, what we incubate and what we prove in India, we deploy worldwide. The Aakash Education Network API deployment is the tangible proof point of that model. We developed and deployed a network API-driven silent verification solution for the client which helps them address requirements such as tracking students drop out during the online registration process. Same solution can now be extended to customers across the globe.
Second, Proximus Global being part of the group provides Route Mobile cross-sell access to 900+ MNOs relationship and a global enterprise base that no standalone CPaaS company can access. We are being deliberate about capital allocation, targeted bolt-on acquisitions to Deepen platform capabilities and meaningful returns of excess capital to shareholders. We have also defined robust frameworks to support build versus buy decisions when evaluating product expansion or entering into new geographic markets. The reset was a difficult one. I believe it has made us more focused, more defensible business, and one that is well-positioned for the next phase. For those newer to Route Mobile story, a quick look at the business fundamentals.
3,100+ enterprise clients, 175 billion messages processed annually, 280+ direct MNO connections across the globe, INR 4,400+ crores in revenue for FY 2026. What distinguishes us as a preferred A2P SMS solution provider for global enterprises is a direct connect with MNO globally. These connects are not routed through intermediaries and are direct agreements and platform integration built over two decades of partnership with such MNOs. That depth of operator partnership is a genuine competitive barrier and it's our customers' delivery rates and pricing that aggregate-only players cannot replicate. This positions us strongly as a partner for traditional A2P SMS solutions. We have been profitable since year one of operations and that discipline continues. In FY 2026, our cash flow from operations- to- OIBDA ratio was 100%+, reflecting a healthy cash generative business.
I would also want to talk about our platform evolution story as it provides important context for where we're taking the business. Route Mobile was built on A2P SMS. That remains a significant part of our business today. The platform has evolved meaningfully and we now offer a unified full stack platform that encompasses all channels of communication that an enterprise could require across RCS, WhatsApp, Viber, email, and more recently, network API products that sit at the MNO's backend. Silent authentication, SIM swap detection, and device verification amongst others. Capabilities that very few messaging platforms offer. This enables us to deliver cutting-edge, secure customer experience solutions to enterprises. The direction is clear. From connectivity infrastructure and towards AI-powered intelligence at the enterprise engagement layer. As we move up this value chain, the margin profile improves and the customer relationship becomes structurally stickier.
This evolution from pure connectivity to an AI-powered engagement platform is exactly what the growth strategy is designed to accelerate. Three things that differentiate Route Mobile in the market. First, global connectivity. Being part of Proximus Global immediately expands our direct MNO access to 450+ carriers. 280+ direct connects of Route Mobile and an additional 170+ direct connects that BICS adds to the ecosystem. This is not replicable in a short time horizon and it translates into delivery reliability and pricing that aggregators cannot match. Second, a full-stack CPaaS platform, SMS, voice, email, RCS, WhatsApp, omni-channel, one single platform, one integration with AI-ready capabilities embedded natively across the channels. Third, Proximus Global being part of a multi-billion EUR telecom group gives Route Mobile access to distribution and technology partnership that a company of our scale simply could not access independently.
Seckin will elaborate on this. I can, I want to flag it here as a genuine structural advantage, not a financial characterization. A brief walk through the Route Mobile journey, because I think the discipline of how we build the business is relevant context for assessing the credibility of the plan ahead. We started with $2,000. We built direct carrier relationships systematically country by country. We listed ourselves on BSE and NSE. We made targeted acquisition to add capability and enter new geographic markets. We transitioned from an aggregator model to a direct enterprise platform model. The acquisition of Route Mobile by Proximus was a pivotal moment in that journey. It moved Route Mobile from being a well-run regional CPaaS company to being the enterprise connectivity and AI platform of a global B2B telecom group.
The strategic and commercial implications of that are still playing out. They are very much in our favor. The current chapter which Vinay will take you through in detail, is about the next evolution of that journey. With that, let me hand over to Seckin.
Thank you, Tushar. Good evening, everyone. I'm Seckin Arikan, Chairman of Route Mobile's board and CEO of Proximus Global. I want to spend a few minutes on the Proximus Global context because I believe it is important for understanding the full Route Mobile story. Proximus Global brings together three businesses focused on delivering communications and customer engagement services to global enterprises. We operate across three core businesses, BICS, our global connectivity platform, Telesign, our digital identity and communications API business, and Route Mobile, our enterprise CPaaS and omni-channel engagement platform. Each fills a distinct role in the enterprise connectivity value chain. Route Mobile fills the one that is most difficult to build, direct at scale enterprise relationships across a platform that spans messaging, voice, AI, and network APIs.
None of the other entities in the Proximus Global Group do that at the scale and efficiency that Route Mobile does which makes it, in my view, strategically very important. Let me be specific about what Proximus Group membership means for Route Mobile in practice because I believe it is sometimes underestimated. BICS has direct relationships with most of the mobile network operators globally. For Route Mobile, that is a commercial distribution channel. As we seek to expand our RCS delivery reach, we can leverage this mobile network operator access to Accelerate our initiatives. When we develop a new network API product, a silent verification solution or a fraud detection capability, we have an immediate path to those operators at global scale. That is an extraordinary advantage for a company of our size.
BICS is also enabling a rapid pipeline development for the A2P SMS and voice firewall solutions that Route Mobile offers to mobile network operators globally. Telesign has a deep and established enterprise customer base in the U.S. and the European markets. Many of those customers have requirements that Route Mobile's omni-channel CPaaS platform is well-positioned to address. The cross-sell pipeline is active and building gradually. Route Mobile is not executing this plan alone, the distinction matters significantly for how you assess execution risks. This slide illustrates the scale and the global reach that Proximus Global has as a group. Trusted by several Fortune 500 enterprise clients across the globe. Ability to connect with 5 billion-plus individuals worldwide. 200-plus billion messages processed annually. Truly omni-channel CPaaS platform. Ability to offer enhanced digital identity solutions that aim at fraud prevention.
What I would like to ask you to note is the two-directional nature of this relationship. Route Mobile brings enterprise relationships and CPaaS platform capability to the group. The group, through BICS and Telesign, brings distribution reach, operator relationships, and a customer base that amplifies what Route Mobile can achieve independently. As the platform continues to evolve, GenAI, firewall, network APIs, those capabilities enhance the value proposition of the entire Proximus Global group for enterprises and operators alike. It's a cycle, and it's one we are investing in with conviction. To close, let me bring together the key reasons why Route Mobile within Proximus Global is a compelling opportunity. Three reasons this is compelling. First, absolute operational strategic backing. Joint commercial programs are running with BICS and Telesign. This is an active execution, not a future opportunity. Second, the cross-sell opportunity is near-term and measurable.
BICS customers who have never been offered CPaaS, Telesign enterprise accounts who have yet not been introduced to Route Mobile's omni-channel suite. These are real conversations underway. Third, Route Mobile is building an AI-native CPaaS platform at precisely the moment enterprises are accelerating AI adoption in their customer engagement strategies. The demand is clear. The platform is being built to meet it. With that, I will hand it over to Vinay for the strategy detail.
I want to address this directly because the credibility of our recovery plan depends on a clear-eyed account of what we experienced. Certain headwinds converged in the past 18 to 24 months. The most significant was structural. A2P SMS, historically a significant revenue driver for us, is in secular decline. Certain large enterprises migrated to WhatsApp, RCS, and other OTT channels. This shift has affected every CPaaS business with material A2P exposure. The second was AIT, Artificially Inflated Traffic. An industry-wide cleanup triggered a significant decline in A2P SMS volumes globally. As an aggregator, Route Mobile was exposed to that contraction. Third, macro. Enterprise CPaaS budgets were cut as part of cost optimization cycles over the past few years in response to high A2P SMS costs in certain geographies. Discretionary communication spend was amongst the first categories to be reduced.
Fourth, our new products grew at 11% year-on-year, but from a small base. At approximately 8% of total revenue, they are not yet large enough to offset the A2P revenue decline. Fifth, post-acquisition integration complexity added a layer of operational challenge that was not purely market-driven. We have spent the past 12 months understanding each of these precisely. The strategy I'm about to walk through is a direct response to every one of them.
If I can add something here. When we looked at what happened, the honest conclusion was that some of the headwinds were genuinely outside of control. The AIT cleanup, the macro spending cycle but some of them, particularly the pace of product mix transition and the integration complexities, those were things we could have moved faster on. We've been direct with ourselves about that. The strategy Vinay is about to walk you through reflects the candor. It's a specific plan, not a generic recovery narrative.
This is the playbook. Before I walk through it, I want to highlight an essential fact. Execution is already underway across every element of this. This is not a forward-looking plan. It's a live program. Route Mobile is making a deliberate shift to platform defensibility. The architecture has three layers. At the top, platform strengthening. Two pillars. Elevate is about omni-channel platform, scaling RCS, WhatsApp, and Ocean, moving up the value chain, improving margin quality, deepening customer lock-in. Innovate is the AI and India innovation hub. GenAI-ready CPaaS, internal AI deployment, and India as the product incubation center for Proximus Global Group. The middle layer is near-term growth execution. Deepen refers to core market penetration. We have 3,100 plus clients, majority using our solutions for a single communication channel. The wallet share opportunity within that base is substantial and requires no customer acquisition spend.
Expand drives geographic growth backed by Proximus infrastructure and Telesign enterprise relationships. The foundation layer is Accelerate, M&A and partnerships. AI-led acquisitions to compress the capability build timeline, ISV and partner ecosystem to expand sales reach and the Proximus cross-sell, which I would describe as the most structurally distinctive and underappreciated element of the entire plan. The five pillars reinforce one another. Deepening the core strength strengthens the positioning and validates the platform differentiation. Platform differentiation in turn, enables geographic expansion. M&A could help accelerate all other initiatives. It is a compounding engine. That said, M&A will be driven basis a well-defined evaluation framework which helps determine whether build or buy towards the various initiatives such as developing or acquiring certain specific platform capabilities or new market entry through organic setup versus a local acquisition.
I want to add one thing here. When you look at the architecture of the strategy, the thing that gives me personal conviction is that each of these pillars has a clear line of ownership internally and a set of active programs behind it. This isn't just a slide we built for this discussion. The M&A pipeline is already live and evolving. Piloting products in the India market and then taking them to global customer base is already in the works. The omni-channel platform is being actively sold.
Three focus areas under the first pillar. Omni-channel scale, RCS, WhatsApp and Ocean. This is our direct commercial response to A2P SMS decline. As enterprise clients migrate off SMS, we need to be the platform they migrate to. RCS and WhatsApp are growing. Ocean ties the channels together and creates the platform stickiness that makes customer relationships more durable. We are also witnessing that enterprises are leveraging different channels for different use cases. For instance, plain notifications are still being transmitted through SMS, whereas interactive customer support use cases are being supported over WhatsApp and RCS. Our Ocean platform addresses exactly this requirement by enabling all channels through a single platform, offering a one-stop shop to enterprises for all their customer engagement requirements. Next, GenAI-enabled CPaaS. Enterprises increasingly want to deploy AI-powered customer engagement, intelligent chatbots, voice agents, personalized messaging workflows.
We are actively enhancing the platform to be the trusted CPaaS delivery layer for that. CRM, ERP, and CDP connectivity, AI-accelerated deployment pipelines. The development work is already underway. We support ready integration between our platform and several commonly used CRM, ERP, and CDP platforms. Firewall and network APIs is an extremely exciting component of our business offerings. Regarding A2P SMS and voice firewall for mobile operators, our AI-powered fraud detection and revenue optimization solutions create recurring managed services revenue streams for mobile network operators and we are witnessing strong operator demand and pipeline build-up for these solutions. We are also leveraging Proximus Network API initiative Konera to offer differentiated innovative solutions around silent verification, SIM swap, and device location to enterprises. These solutions create high barriers to entry as they require integrations with mobile network operators. We are actively pitching these Network API-based solutions to enterprises.
These are capabilities that make Route Mobile genuinely difficult to displace. I would like to highlight three active programs around this theme, which we are referring to as Innovate. The internal AI. We have a live AI program running across organizational functions, including customer support, engineering, and deployment. We are driving measurably lower cycle times, better support resolution rates, and faster product delivery. We are scaling this mandate aggressively across every function. GenAI chat and voice solutions. We are building AI-native conversational agents for both chat and voice channels, not basic FAQ bots. Multi-turn contextual AI interactions that meet the growing enterprise demand for intelligent customer engagement across chat, voice, and messaging. Route Mobile is positioning as the CPaaS delivery layer for that demand. Network API deployment. The Aakash Education proof point.
We deployed a network API-powered silent verification solution to Aakash Educational Services, one of India's leading largest edtech platforms. We are now ready to commercialize this solution across the Proximus footprint globally.
I'd add a thought of on India specifically, because I think it's worth understanding the philosophy behind the India as innovation hub framing. India gives us world-class engineering talent at a cost structure that allows us to take product risk that a Western development center simply can't. We can build, test, prove, and iterate faster. The Aakash deployment took just a few months from concept to live. The velocity is a competitive advantage and the Proximus Global relationship means that once something is proven in India, we have the distribution to take it global immediately. The combination is genuinely unusual.
Next, let's look at core market penetration, our highest ROI near-term opportunity and it sits entirely within the existing client base. We serve 3,100 + enterprise clients, the majority on a single channel today. There is limited to no customer acquisition cost required to capture this opportunity. We visualize three specific plays, key account management, account for account deepening, focus on moving clients from transactional single-product relationships to multi-year multi-channel platform engagements. The value uplift when clients go multi-channel is significant. Cross-sell and upsell to drive migration of SMS-only clients to RCS WhatsApp Voice, delivering meaningful revenue uplift with minimal incremental sales cost. In most cases, this will lead to expansion of use cases that we support for the same client. Solutions-led selling, shifting from API connectivity to platform solution engagements. Larger deals, longer relationships and better margins to be driven. The base is there.
The task is to deepen it systematically. Let's look at our geographic expansion plans. With a structural advantage that fundamentally changes the economics of entering new markets, we enter new markets which present higher than industry average growth opportunities. This changes both the risk profile and the Return On Investments related to such expansion. We have identified certain priority emerging markets, including Mexico and Philippines. These are high-growth, under-penetrated CPaaS markets with a strong enterprise demand in BPO financial services and e-commerce verticals. These are also large markets for the OTT messaging solutions, such as WhatsApp and Viber. In the U.S., Telesign's infrastructure gives us a lane into the world's largest enterprise messaging market. One Route Mobile has had limited direct exposure to historically. In Europe, GDPR-compliant messaging for financial services and logistics where our compliance credentials carry real weight with enterprise buyers.
Overarching all of this, the Proximus network effect. Every BICS customer is a potential Route Mobile engagement. We are actively converting that opportunity today, especially on the mobile network operator solution side of the business. The fifth pillar, and the one that compounds the returns on all the others. Organic growth alone will not close the AI capability gap within the timeframe the market requires. Our M&A strategy targets conversational AI and CPaaS-adjacent capabilities, compressing a two to three-year organic build cycle into 12 to 18 months. Our acquisition criteria are clear, AI-native capability, a complementary customer base, and a credible path to accretion within two years of closing. These will be small to mid-sized acquisitions, primarily for capability and not necessarily for scale of the target business. We are also evaluating new geographic market entry through potential acquisitions.
These will, however, be slightly longer drawn processes as the target evaluation would need to be more thorough in terms of immediate value add through the acquisition. Partner and reseller go-to-market. We look at expanding the ISV and System Integrator ecosystem. We also expand telco white label distribution. Scalable and capital efficient approach towards this initiative. We have onboarded certain large clients over the past year through our partner ecosystem, and we believe this could be significant revenue driver if we leverage it in the appropriate fashion. The Proximus cross-sell. Joint go-to-market programs into BICS and Telesign enterprise bases. This will deliver high ROI and structurally unique solutions which Route Mobile can bring to the market. No standalone CPaaS company has access to this lever.
On M&A, I'd be clear about our philosophy here because I think it's worth articulating for the record. We're not looking to make large transformational acquisitions. We're looking for targeted capability-led transactions where the technology accelerates the roadmap and the customer base is complementary. The integration risks need to be manageable. The time to accretion need to be defined. We've been through the complexity of a large integration. The experience shapes how we approach this. Discipline, specific, and capital efficient.
Let me now run through the business metrics. The next four slides provide the quantitative picture that sits behind the strategy we've just covered. They cover the new product revenue trajectory, geographic mix, industry vertical breakdown, and the customer cohorts. These are worth looking at carefully as they explain both the headwinds and the early evidence of recovery. New products revenue is the most important forward-looking metric in these results, so I draw your attention to it. FY 2025, 2026 new products revenue came in at approximately INR 3,500+ million. The four-year CAGR since FY 2022 is 43%. Growth moderated to 11% year-on-year in FY 2026. The tougher comparative period and macro environment are reflected in that. As RCS, WhatsApp, and AI-enabled products continue to scale as a proportion of revenue. Two things follow structurally, greater revenue resilience and rapid growth.
FY 2026 is a base we are building on, not a ceiling. On the geographic mix. India remains the largest termination geography. ILD volumes declined but were partially offset by domestic volume growth. We added new large domestic customers and also witnessed revenue growth from existing clients. The reduction in U.S-headquartered customers' contribution also reflects the loss of ILD revenue, the same structural dynamic we have been discussing throughout. The geographic expansion strategy we have just covered is designed to accelerate the diversification of this mix over the coming years. Vertical breakdown. Useful for understanding where the headwinds are concentrated.
Financial services remains our largest vertical and we've seen good growth from domestic Indian fintech and BFS clients. High frequency, high stickiness usage patterns, which is exactly the client profile we want to deepen. Digital native declined due to a specific U.S.-headquartered client migrating to alternate channels. E-commerce fell, reflecting the loss of ILD traffic from a global major. The common thread is the ILD and global enterprise exposure we've discussed. Domestic recovery is partially offsetting this, and the product mix shift we are executing is designed to accelerate that recovery. This slide probably best explains the revenue dynamic for FY 2026, so it's worth a moment. Two things drove revenue decline despite relatively stable transaction volumes. First, customer mix shift. ILD revenue was concentrated in a small number of high-value accounts.
The revenue was partially replaced by domestic customers but domestic average revenue per account is significantly lower than ILD. The silver lining, domestic clients carry relatively higher gross margins, the profit mix is actually healthier even as the headline revenue compressed. Second, pricing compression. ILD transactions command a structural pricing premium over domestic routes. The same transaction volumes processed domestically generate materially less revenue. This is a pricing dynamic, not a volume problem, it underscores why the product and channel mix transition is central to the revenue recovery story.
I'll close the session with a broader reflection. The metrics Vinay has just walked through tell a consistent story. The challenges of the past two years were real and specific and the recovery is real and building. Gross margins are moving in the right direction. New product revenue is on a clear upward trajectory. The domestic customer base is growing. None of those things happen by accident. They reflect the strategic choices we've made about to invest and where to hold the line of quality. The base we're building from is sounder than the one we started this reset from. I'm confident in the direction. With that, I will hand it over to Raj.
Thank you, Vinay, good evening, everybody. I'll quickly summarize our financial and operating performance during Q4 2026 and for the full year. I will look to the future with our financial guidance and capital allocation plans. Starting with Q4 revenue and gross profit. Our Q4 revenue from operations declined by 3.8% year-on-year, driven by the structural SMS market volume declines in ILDO, as described earlier. This is partially offset by encouraging growth in our domestic business and non-SMS products. Looking at the current quarterly trend, revenue grew by 2.2% sequentially to INR 11,309 million, supported by INR 45.1 billion transactions during the quarter.
From a gross profit perspective, absolute margin grew 16.6% year on year at INR 2,639 million, while the percentage margin increased to 23.3% as compared to 19.3% in Q4 last year, mainly driven by a shift from lower margin ILDO volumes, delivery of our routing and cost initiatives along with focus on retention and growth of our high-margin existing customers. Turning to EBITDA and profit after tax. Adjusted EBITDA for Q4 increased by 11.9% year on year to INR 1,343 million, while being lower in absolute than previous quarter due to seasonality. This represents a 10-quarter record in terms of Adjusted EBITDA growth, demonstrating the ability to land the gross margin flow through benefits as OpEx is constrained to mainly wage indexation and receivables provisions.
This all contributes to an EBITDA margin of 11.9%, which is higher than the 10.2% seen in the prior year. Adjusted PAT was INR 1,144 million, which is up 34.6% year-on-year and 11.6% on a sequential quarter basis. The PAT margin has also increased to 10.1% compared to 9.3% last quarter and 7.2% last year. The strong PAT trajectory is mainly driven by higher gross margin, foreign exchange movements, lower financing costs, and a lower effective tax rate. I will briefly touch on the full-year results before moving on to the final section. Revenue from operations declined 3.7% year-on-year to INR 44,082 million.
At the same time, gross profit increased by 5.9% year-on-year at INR 1,007.3 million, and the margin increased to 22.9% versus 20.8% in the previous year. Adjusted EBITDA grew by 0.4% year-on-year to INR 525.9 million. EBITDA margin expanded to 11.9% compared to 11.5% last year. Profit after tax, adjusted for exceptional items, is higher by 6.7% year-on-year to INR 376.1 million, with PAT margin at 8.5%. Our cash position stood at around INR 1,400 crores as at March 31st. This is our usual Adjusted EBITDA and PAT walks, which we produce every quarter. Now looking ahead to future ambitions. The team took us through the strategy, growth opportunities and positioning of Route Mobile.
Let's dive into what this means for the coming financial year. Revenue is expected to grow by mid to high single-digit, driven by the exciting growth playbook and the tangible competitive advantage we see. Our laser focus on moderating cost of sales and driving AI-led OpEx efficiencies will continue to deliver stable margin performance. We will deliver the expected increase in revenue while achieving an EBITDA margin of around 12%. It's worth noting we deliver a strong EBITDA to cashflow conversion and this will continue in the coming year. Moving on to how this translates to our capital allocation strategy. We will adjust our dividend policy to re-return a higher portion of our available free cashflow while leaving room for value-creative initiatives going forward.
Our regular dividend will meaningfully increase from INR 11 per share to a sustainable level of INR 16.5 per share, which represents a 50% increase. This will be payable each quarter as usual. Thank you all for your kind attention during the prepared section of this call. I will now hand over to the moderator for Q&A.
Thank you. We will now begin the question and answer session. If you have any questions, please raise your hand and we will unmute your line to ask questions. We have the first question from the line of Kunal Ochiramani. Please go ahead.
Sorry, Kunal, there's some background noise there. We have the question from the line of Amit Chandra. Please go ahead.
Hello, can you hear me?
Yes, Amit, we can hear you. Go ahead, please. Yes, Amit, please go ahead.
Yeah, yeah. Yeah. Thanks for the opportunity and, you know, thanks for the, you know, elaborate, you know, update on the strategy which was actually missing. Firstly, sir, obviously we have actually laid down the plan for growth in terms of recovery for the next year. If I see, you know, the shift that has happened in the industry where, you know, most of the traffic has shifted from the traditional channel to the new channels, and a new, you know, revenue stream has been created over the last one year. If I see the competition, you know, they have scaled up that WhatsApp OTT or, that, you know, segment of the revenue pretty fast, and that has now become 30% to 35% of the revenue.
For us, it has been only 8% of the revenue from the new products. Where we have missed, in terms of, you know, like the cross-sell and identifying the new opportunity, is it only related to the transition, you know, the transition-related challenges or is there something lacking in terms of offerings to the clients? That was a big shift and, you know, from here on, how do we see the new products revenue contributing to growth from here on? Still, we are at a very small part in terms of the overall, like revenue mix. That is the first question.
Secondly, you know, obviously in the existing base, we have seen a decline of the ILD portion which was earlier, you know, like major part of our total revenue. How this shift has been over the next like two years and currently what portion of the revenue is from ILD? I also see the termination, you know, why is the India portion has been coming down. This is only because of the drop in the ILD revenues or is it something else to it? Thank you.
Sure, Amit. We'll take those questions one at a time. I think the easiest one is on the product differentiation. I think when you look at the non-SMS product portfolio that we have, I think in terms of channels, our platform supports all the communication channels that an enterprise could look at whether it is WhatsApp, RCS, in fact, Viber in certain Asian markets, email. I would not really say that the platform is, you know, falling short in terms of capability. In terms of scalability also, we have serviced customers where, you know, we have supported significantly large transaction volumes on a daily basis for some of our customers on these channels. I believe in terms of technology and the platform capability, we are pretty much there in terms of what the market needs.
Also in terms of what we are doing around the product, we are creating another layer on top of this, where we will be able to address a lot of GenAI and AI intelligence related requirements that enterprises are now adopting aggressively. Tushar, you would like to add something there?
Alongside that, Amit, thank you for the question. Alongside bringing in some new offerings in the market, something we call the Speles Konera, which we launched a few months back in India. That's some intelligent platform we bring into the country which will, which is, falls under a generic category of Network API, where we leverage our association with telecom operators and give some solution which will be novel to the market. We are testing these solutions along with telcos in the market, and we're pretty hopeful that this will bring us a new customer base and give impetus to our new product focus in the country.
Yeah.
I think my last call I also highlighted about the telecom product, like telco and the enterprise segment. As I mentioned before also, I think the firewall piece of our business is growing very fast. In fact, I'm proud to say that last month we have achieved the highest amount of revenue ever in our firewall business. Some of the contract which we are winning with the help of BICS is going to be play a very critical role in overall growth of our numbers as well. I know, the sales cycle for the firewall deals are longer but recently we have closed one large deal as a Claro that is live now.
We believe that the telco focus of our business with the help of BICS is definitely going to play a very critical role in coming years down the line. That is one area where we all need to focus on. AI native CPaaS solution is something which we are very serious about, and AI native firewall solution, especially the telecom fraud. Digital fraud is the biggest piece where most of the telcos are looking out for a solution. We as a company, 365squared, especially focusing more on this AI native solution for the operated solution. We have successfully implemented certain solution in some of the operators, and we are very much in talks with various operators.
With the great support of BICS, we do see that business is going to grow multifold in coming years down the line.
To address some of the other questions you had, Amit, regarding ILD and the India termination. ILD, as you rightly pointed out, over the last year we did witness decline but if you look at the last quarter, we have seen that stabilizing now. I think whatever decline we were expecting is now in the base. And, you know, even in the, in the run rates, I don't think we are seeing any further threat to that segment of the business. In terms of total contribution to the revenue, you know, I'm not 100% sure if we've discussed this in the public domain in the past, but it's around a quarter to one third of our revenue, somewhere in that range. That's where ILD in terms of our overall business stands.
India termination, I think you highlighted yourself that, you know, ILD, given the price point that it attracts per transaction. If there's a decline in ILD, it results in a decline in ILD, sorry, in India termination. That said, you know, we have also offset some of this ILD loss with domestic business wins which we also spoke about during the presentation. We are seeing growth in domestic customers not only in India but in other parts of the world as well. You know, that's a big push as Tushar also mentioned, you know, either with the new products and in some of the markets, we are still seeing SMS business grow.
In some of the emerging markets, we are still seeing good growth around SMS and obviously are pushing hard for the non-SMS components within our portfolio.
Yeah. Just to add, Amit, just to add one more point out here, Amit. I know most of this OTT players, they are trying out different channel of communication such as WhatsApp or RCS. We are definitely reaching out to them and giving these options to use our channel either on WhatsApp or RCS. We have onboarded few large OTT customer who are testing our platform to move traffic from SMS to RCS, and that discussion is going on. We are very early stage but yes, we started generating revenue from this OTT player on RCS especially, and some of the WhatsApp use cases.
Okay. J ust to follow up. In, you know, in the presentation, you know, the strategy of growth, pillar one, the Platform Innovation. Obviously, you know, you said that firewall and Network API is the focus area. We have been growing fast there. Where is that growth getting reflected? This 8% of the revenue which is the new product also includes the, like, network API revenue, or is it in, you know, x of that?
Amit.
Yeah. The next gen products won't include that revenue because largely it is still related to SMS because, you know, there is a little bit of a voice firewall component to it but largely it is A2P SMS firewall solution that we are deploying for operators. That revenue is still being accounted under the SMS segment of the business. The new, the next gen that you see is largely channels like WhatsApp, RCS, email, and, you know, the OTT channels.
Okay. Any like number, what would be the contribution in terms of percentage to the, in terms of the mix from the network and firewall? If you can just break up the, you know, the current revenue in terms of the old age kind of services versus the newer services and in terms of the strategies that you have laid out, you know, firstly SMS, ILD, you know, AI native services and the firewall and like network API solutions?
Amit, yeah.
The current revenue mix in terms of, you know, if you can give some idea, it will be better for us to understand how the mix will change maybe in the next one year.
Sure, Amit. Unfortunately, we don't disclose that in the public domain. We will still, you know, evaluate internally, and we can come back with communication to the analysts and shareholders around this. In the past, this has not been public information. We'll figure out what's the best way to provide some guidance around this b ut in terms of, you know, the non-SMS portfolio, as you've seen the presentation, it's around 8%. We are, you know, identifying ways in which we can grow that business significantly. On the AI, it is still kind of a new solution that we are bringing in. In terms of revenue contribution, it will take some time, but what it will also do in parallel is it will drive adoption of the non-SMS platform itself.
You know, because the solution becomes more attractive for an enterprise, we will see the channel adoption and revenue around the WhatsApp and RCS channel also pick up when we deploy these AI capabilities.
I think, sir, Amit, the more focus on AI coming forward at Route Mobile is more mainly how we can enable a customer faster onboarding. I think through AI we are going to make certain changes in our platform very soon. You will definitely see the outcome of those changes in coming quarters b ecause as far as the platform is concerned, as Vinay has mentioned, we have everything what market needs, but there are certain AI capabilities required with the current platform. I think we are definitely already have a plan to do that, and we already have some kind of engagement on that. Very soon you will see that impact of AI on our revenue as well.
Okay.
Thank you.
Last question on the guidance. On the guidance, obviously, you know, we are guiding from mid to high single-digit. Is it, you know, this appears to a bit lower in terms of the kind of, you know, initiatives that you're taking. In terms of the, you know, in terms of growth, what segments will drive this? Secondly, on the margins, you know, obviously we are targeting around 12% and we are seeing a mix towards the higher margin, you know, revenue streams. If, you know, once the mix changes, we, you know, the margin should have been higher. Why we are, you know, sticking around to the current levels-
Amit.
Are we also planning to invest in this?
Amit, it is. Amit, I think last one year we have not given any kind of a guidance, if you remember. You know, like market was always expecting some kind of a guidance. We would love to be little conservative in giving the guidance, at least we are coming up with a guidance this year and y ou are right,
Okay
This mix will definitely add value to our overall growth and plus EBITDA margin as well. Yes, we are confident this year that there is a growth and there is a product mix. There is a market, new market, where we are focusing on. We're talking about the domestic market setup as well. I think all these things really gives that kind of a confidence to the management that we need to give some kind of a guidance to the market which we were not giving in past. At least now we have started. We will definitely try to overachieve our number. On a, on record, I will say the guidance which we have given, at least we are positive that there is a growth, and that's exactly how we need to look at.
Thank you, Amit.
Okay, sir. Thank you.
Yeah. All the best. Thank you.
Thank you, Amit. We have the next question from the line of Shweta Sharma. Please go ahead.
Hello. Hope I'm audible.
Yes, Shweta, please go ahead.
Yeah. Thank you so much, sir. Sir, could you please provide volume-wise breakup domestic and overseas?
Just give us a moment. I mean, we can do this. I mean, can we take this offline? We can share the data, I mean, but it, we need to figure out I'm sorry, but I just need to check if this has been discussed in the public domain in the past. I'm not 100% sure if this has been a metric which we disclosed, Shweta. Only for, you know, competitive reasons. I mean, we would not want to hold back information but it opens up a bit of our competitive advantage in the market. Let me just figure out what is the best way to address this. We can take this offline with you.
Okay. Okay, sure, sir. Sir, my second question is, could you quantify the difference in gross margin between your traditional A2P SMS business and these new AI-driven solution? What percentage of your 175 billion transaction are now solution-based rather than just delivery-based?
Sure. The margin difference depends upon the solutioning that we do around the channel as well. You know, typically, if you look at the portfolio margin today, large part of that is obviously coming from the SMS business that we do. On the firewall, the margins are higher because that is more product-oriented business and we have customers where it is being used on a license basis, plus the value add for the customer is significantly higher there. The firewall generates additional revenue for the operator, where they are okay to share a larger part of the benefits with us. The margins there could be anywhere in the range of, you know, depending on the type of engagement, it could range from 30% to all the way up to 60%, 70%. That is on the firewall.
On the channel side of the business, I mean, the portfolio gives you a good guidance of where we stand. As we talk about AI and other solutioning around the channel, that could generate additional margin because some of those platform capabilities could easily generate, you know, significantly higher margin as compared to the portfolio margin. Unfortunately, I'm not able to give you an exact breakdown of product-wise margin at this point. Once again, you know, because you understand the market, it's highly competitive, and we would not want to open up all of our cards in the public domain on product-wise, geography-wise, margins that we generate.
Okay. Sure, sir. No issues. Sir, if you're not able to provide the exact number, can you provide a breakup of growth, like domestic and overseas, in terms of volume growth in Q-?
Sure. We have seen volume growth in India domestic business. We have seen volume growth in rest of the world domestic business. The only segment where we saw decline last year was ILD, the international traffic coming into India. You know, and we've seen similar kind of growth rates in India and non-India domestic clients. The only segment where we had challenges which again, as I mentioned earlier, which have bottomed out and we believe is in the base now, is the ILD business, where last quarter we've seen no further drop in that business either. We believe that is also in the base. Moving forward, I think as we provided in the guidance as well, we should start witnessing recovery in the business.
Okay. If my understanding is correct, domestically and overseas, when we see volume growth, it's the same as the last quarter, right?
I mean.
Like, growth or in terms of percentage, like it's the same, in quarter or it's the same as YoY? What's the?
Sorry, I don't think we've disclosed in the previous year as well, but I mean, we have seen consistent In the previous year, if you look at FY 2025, we still had a slight decline, I mean, a still slight growth in the domestic side of the business, slight decline in ILD. The trend is similar. What we are saying is by the end of Q4, we are not expecting any further drop in the ILD business either, at least from the run rates that we are seeing and what we are hearing from the clients, I think we bottomed out there. On domestic, over the last two years we've seen growth coming in. The trend remains where it is. Only moving forward, we should now see recovery in the business.
Okay. Thank you so much, sir. That's all from my side.
Thank you, Shweta. Next question is from the line of Dipesh Kumar Mehta. Please go ahead.
Yeah, thanks for the opportunity. I have four questions. I start with one by one. First, just want to understand what will be your organic CapEx plan and M&A investment plan in next two to three years. If you can give some sense about how we are looking some of these investment.
Sure, Dipesh, sir. Organic CapEx is not significant as you've seen in the past also. I think our internal budgets are around Raj, you want to highlight that number on the organic CapEx?
I mean, it's We do have some organic initiatives but it's not a meaningful number. Pretty much flat year-on-year. We are looking at some internal CapEx developments to support platform growth and move to omni-channel products.
On M&A, we are evaluating two targets and of course we will at the right time, we will share the opportunities.
Yeah. Just to add, Dipesh, the any M&A I think probably we'll do something in AI based.
Yeah. That's fine, sir. I think in those couple of areas which you highlighted, the reason for asking this is about the cash which we have on balance sheet, what we generate every year, and what is our payout. If I look, our payout is roughly around 30%. Our cash is roughly 40% of market cap. Yield on cash is less than 4% for us. If I combine all these number, CapEx, which we got is roughly around INR 30 crore-INR 40 crore per annum. Dividend, we declare INR 140 crore per annum kind of number. Last two year I'm combining. Roughly around INR 200 crore to INR 250 crore is we spend on organic CapEx, we spend on dividend. In these two year, if I combine the FCF which we generated is more than INR 1,000 crore.
Now, if we don't have any, envisaging any, let's say, very large acquisition, then why we are accruing cash on balance sheet? That is what I try to understand.
Dipesh, let's go one by one question. To answer your question, as I said, we are definitely evaluating certain targets for acquisition. We would definitely want to make sure that any acquisition which we do should add a value to our current existing portfolio. Something in AI, because AI is a need for the market today, I think we believe that AI will add lots of value add to our portfolio offering, we are definitely evaluating some targets in this space and very soon we will announce that as well. As far as the cash is concerned, the management and the board is very much aware of this. We are definitely looking out various other option to deploy the cash and we will definitely share in coming quarters what are we going to do with this cash.
As of now, we are very clear this cash will go, I think mainly on some of the acquisition which we are planning soon.
Right. Are we envisaging our M&A investment will be higher than our FCF and the cash on balance sheet in next three years?
Dipesh, the M&A acquisition sizes are not very large. You know, these are more capability add-ons. We are not acquiring for scale. I mean, we are not evaluating targets for scale. There are a few geography expansion targets, but as I think we mentioned in the presentation as well, the evaluation cycle around those will be more complex. In terms of the product capability, there are a few ideas and areas which we are evaluating very closely, and those are not very large acquisitions.
Yeah. Look, Dipesh, if you're focusing on the kind of cash balance at the end of the year, a couple of things. As you know, we do utilize a meaningful amount of cash on vendor prepayments, which is kind of a usual practice, for which we get some really good commercial benefits. That is always a good use of cash. We did end the year really strongly in terms of cash collections. A lot of focus internally on that. It drove the kind of cash balance at the end of the year.
No, I understand. What would be the reason for low yield on cash? Our yield on cash is meaningfully lower than, let's say, market rate. Can you provide some sense what will be the cash breakup and why it is lower?
Yeah, I mean, look, I mean overall interest income is up year on year. We are looking at, yeah, looking at moving all our funds into kind of higher high interest bearing kind of fixed deposits. Again, the focus is on those-
Those are other uses of cash. Yeah, we'll look at all of our kind of cash balances and optimize in the next coming quarters.
Sir, our yield on cash, we have INR 1,400 crore cash. Other income in, if I exclude Forex gain, it is not yielding even 3% if I look quarter-over-quarter kind of thing. That's why I just try to understand if you can give composition of the cash, where we deploy [our].
Dipesh, we can get back to you offline on this. I think what Raj is also saying here is that, you know, we can relook at the treasury policy and identify what would be the ideal way to I mean, the idle cash or, you know, the temporarily unutilized cash, what could be the best return on it. It will be a bit of a treasury decision which we need to relook at.
Sure. Sure. Coming back to the new product side, I think if I look, let's say our growth versus some of the peers which are listed in reporting number, now we have capability, we have platform ready but numbers are lacking in terms of last couple of years. Can you provide what kind of changes we are making now with whatever, because from technical capability, you said we are there. From platform perspective, we are there. We have more than 3,000 enterprise client with us. Still the traction is not visible. I'm referring to last two, three years where WhatsApp become very sizable for some of our peers number. Can you provide, let's say, what changes you are making and now we can participate effectively?
Dipesh, just to add to your question, you know, like Rajdip here. We also want to make sure some of the deals on this OTT channels are profitable to the organization. It is not just I want to follow the same SMS fundamentals on these deals. It is very critical for us if we want to sell a solution and we want to really solve the customer problem and customer is paying for that solution in part. We really want to focus on these kind of customers who are paying higher margin to our portfolio. It is not just a game of bulk messaging where I can just go and lower the price and win the use case. If that is the case, I could have grown multifold in last few years down the line.
We have taken a collective call as a group. We really want to sell our solution as a solution company, and we will solve the customer problem and customers should value the solution which we are building for them. That is where I see it is value. It's a long sticky business model we want to create out of OTT channels like RCS or WhatsApp or email, and we will stick to that and we will make sure I think one of the reason if you see a growth in our gross margin is because of that we let many other small businesses to go where we were either bleeding or we are doing lots of small low margin games.
If you onboard a customer at very large scale, trust me, you really need to spend lots of CapEx in terms of serving that customer. There are certain calls is very, very important. Some of the use cases of Metro is a very classic use case. Like if we are, we are deeply integrated with that entire platform of Metro ticketing which where we are hardly getting replaced by anyone but our margins are very high on those solution. I think end of the day, you need to see what are you trying to build and for the long term, and how are you going to create value to your customer. It is not about winning that more volume or re-increasing your revenue.
It is what kind of customer you are winning and what kind of margin you're making out of that customer is very critical for us.
Sorry.
Dipesh.
Yeah. Sorry.
Dipesh, as Rajdeep said, you know, we are very carefully choosing our customers. We actually trying to ensure that the platform we provide to our enterprises, that fetches the money than pure margin play and getting into a game of margins and dropping of prices. Our choice of customer are purely basis, you know, what kind of bottom lines we can draw from them. Our focus is more forward-looking. We're building those solutions which will fetch us returns over long period. We are not gonna get into complete volume game here of creating margins by pure volumes here. One is that, you know, of course, we are creating value add in our platform to fetch us more monies.
Alongside, we're focusing on new age products, you know, which is, which perhaps, you know, is available only with couple of partners in the country. The network API which you touched upon, the Konera is something which we have unique, and we don't have much competition around that. We're fairly hopeful the investments we're making there, along with the AI capabilities which are building on the platform, will gonna fetch us good returns in the quarters to come.
Now, what would be the market growth in this alternate channel? Can you help us understand and let's say whether you expect in next couple of years we will reaching to market growth rate based on the strategy which we have laid out for us?
If you look at market expansion by OTT channels, if you actually look at today, roughly 60% market is dominated by SMS, and we clearly see a shift happening towards RCS and WhatsApp, and all will depend how I'm able to orchestrate a customer journey on these channels. From the pure play, giving them options which are available with the brand to concluding the sales over there. This is evolving. You know, earlier it was pure play, a menu-based, you know, workflows which were there on the WhatsApp or RCS channel which is clearly moving towards AI. Those are the capabilities which we need to work on and build on our platform so that we are future ready. That's where our focus is. Okay.
We're keeping a focus and eyes there to ensure that we're ready and we scale at the right time. We're keeping, as I said, keeping margins coming from our platform and not purely from the OTT unit pricing margins in.
Fair point. I think broadly try to understand, let's say market is at 60%, we are at 92% dependency on SMS. The segment which is growing, we have limited share, that's our growth rate compressing on-
Dipesh, I think there is a firewall revenue also which is also calculated as a part of messaging. Okay. Which is different. Your assumptions might be different but again, I am telling you as a growth trigger point, it is firewall, network API, OTT channels, along with email is going to. You need to understand, we were from last two years doing this integration with the BICS and Telesign, which is now completely over. We do see a value in terms of how we can create a cross-sell, up-sell opportunity within the group. That will also going to play a big role in upcoming quarters.
I have last two questions. Just I give it right now, and then maybe you can answer. First is about the Network API opportunity you mentioned a couple of times. Just want to understand, let's say, what is the size and scale of this opportunity over next three-year perspective, India and then outside India, and how you are looking across this market. Second question is about some of the financial data related thing. We indicated some kind of trade receivable return in the notes. Can you quantify the number? What was the number in forth quarter ? What led to it in terms of the return trade receivable? What will be the OCF/EBITDA ex-expectation for the year? Thank you.
So with the kind of fraud-, Can I answer that quick?
Yes.
No, sir. Go ahead, sir. Go ahead.
No, go ahead. Go ahead.
Sorry. Sorry. Go ahead. Go ahead.
S ure.
I think the idea of network API, if you see, is a very early stage. You know, a network API is a layer which is within the operator ecosystem lying from very long time b ecause of the digital fraud increase in multiple reason, I think network API is going to play a very critical role in terms of mitigating the risk of digital fraud. I think that is where people started believing, most of the financial institution, they started believing that OTP-less authentication could be the one right way to use network API. SIM swap, I think there are many other KYC use cases can be used directly with the operator infrastructure. It's a very early stage to quantify, but what we can see the value out of it is going to be phenomenal.
In coming quarters, you will start seeing some of the more use cases as what Aakash Educational Services we have deployed recently. We are in talks with multiple customer as a initiative of Konera product launched by Proximus Global. We may not quantify at this point of time but as far as the potential is concerned on network API is huge. That's what only I can tell you. On the other side, other question, Vinay or Tushar, if you can just add.
Yeah. On the financial receivables, Raj, you want to take that?
Yeah. Look, I mean, in terms of receivables, there was, the total quantum is less than INR 5 crore. It's a range of smaller customers, so no one big individual customer but more of a cleanup exercise. I mean, some are quite, I think on average is probably about INR 10 lakhs or INR 15 lakhs per customer. A bit of a cleanup exercise there. No big one item.
Yeah. It's range of, I think 0.4% of revenue.
Yeah. It's not [significant].
Thank you, Dipesh. Next question is from the line of Shubham Jain. Please go ahead.
Hello, am I audible?
Yes, Shubham. We can hear you. Yes, go ahead.
Sir, I believe my questions are answered, but I just had a few small queries. Sir, firstly, you've mentioned that the worst is behind us, but I don't see any sign of growth in your revenue. I mean, if we see Tanla as a peer, it has grown relatively better than us. What's the cause for that? Secondly, when we enter into partnerships with our global partners, what type of arrangements are we getting into?
Are you talking about the revenue or like what comparison you're doing?
Sir, from a revenue as well as, a margin point of view. I believe, they are in a similar-
I think first to just correct your understanding on revenue side, because we are not here to talk about any other company. We can talk about Route Mobile. I think, in terms of revenue, overall revenue, I think we are the largest right now in India. We cannot comment on how others are growing, and what we can talk about is Route Mobile in this call. I request everyone, please stick to Route Mobile. Any question related to Route Mobile and our growth story, we are happy to answer those things.
Sure, sir. Second would be that, you have mentioned the worst is behind us, but the guidance that you have provided for FY 2027 doesn't really indicate any sign of recovery. I mean, from 11.9 to 12, I don't think that's even a growth or any. Please help me understand, I mean, what's happening inside the company or what sort of expectations do you actually have? Sorry, I'm just new to the business, so I'm trying to understand what's happening.
Sure, Shubham. Let me take that and then probably Tushar, Rajdeep, please add in. If you look at the numbers, you know what we have been saying is that what has gone out of the system was ILD revenue, which comes at significantly higher realization rates which is being replaced by domestic business in various markets. In most of the markets, domestic rates are significantly lower than what ILD rates would be. That means replacing a single ILD message with a significantly larger volume of domestic traffic. That is where, you know, the growth rates will take some time to start looking like bigger numbers because the base effect will creep in, I mean the base effect will start creeping in now.
That is where, you know, the growth rates for the next year are where we are looking at. As Rajdeep pointed out earlier, the internal initiatives are designed towards ideally, you know, achieving something above those growth rates. That is where we are targeting. Essentially what we are saying is in the most likely scenario is what we've indicated in the guidance and that is where we are driving aggressively towards.
Sir, could you give us an overview of what was the product mix before all those headwinds arrived and what has been the product mix currently and what is your expectation of it changing going forward?
Sure. Shubham, on the product mix, there is one more point which I need to clarify, which probably missed out in some of the other responses earlier. On the product mix on WhatsApp, particularly if you look at it in India, we have seen volume increase happening for us. In terms of volume, it has gone higher in terms of contribution but the pricing on WhatsApp itself was revised during the year. That is where the realizations went low. The revenue growth is not really reflective of the kind of business that we are winning on WhatsApp. That is one challenge in terms of that 8% of revenue coming from non-SMS products. Ideally, it should have been higher if the pricing had remained steady.
Moving forward, I think we are not giving a product price guidance but we are looking at good growth around those products, the non-SMS product portfolio.
Okay, sir. Sir, lastly, what's our ILD exposure currently in the overall revenue mix?
I think I mentioned it earlier on the call. It's around a quarter to one-third of the revenue, somewhere in that range.
Is it bound to eventually reduce more or?
Ideally, you know, we would want the contribution of other products to increase and that would automatically take ILD lower, but it will not be a one-year or a two-year outcome b ecause the volumes are large it will take time for that contribution to go down significantly. But because we are driving growth through other channels, we would expect that to gradually, you know, keep shrinking.
Okay. Sir, lastly, I believe I asked a question earlier on the type of arrangements that we have with our global partners. Could you elaborate on that as in, I mean from a how do we share our revenues? How do we pay them? If you could help us understand.
Sorry, are you referring to, I mean our go-to market partnerships that we have with, other System Integrators and ISVs or I mean, sorry, I don't get which partnerships you're referring to?
I think proximity and all of that you have mentioned, our partners are.
Okay. Those are clearly related party transactions which are defined through agreements at arm's length basis. The way it works is, I'll give you an example of what we do with Telesign. Telesign needs to send a lot of SMS traffic into India and other markets where Route Mobile is able to provide them the best cost. We have our cost and we have agreements which define how much we can mark up those costs and we charge Telesign and BICS when they send us that traffic. It's well defined in the related party agreements and it is all transaction-oriented. Per transaction we charge them and we charge a margin on top of our cost.
Okay, sir. That's it from my end.
Thank you, Shubham
I'll get back to the queue. Thank you, sir.
Thank you, Shubham. Next question is from the line of Kunal Ochiramani. Please go ahead.
Am I audible?
Yes, Kunal, we can hear you. Please go ahead.
Sir, revenue per billable transaction fell from INR 0.29 to INR 0.25, which is 14% decline in a single year. On domestic SMS, Indian pricing has come to INR 0.10 per message and operators are capturing 70% to 80% of messaging economics as source. RCS is being priced below SMS for some players to gain share, which are, which you also agree that is distorted pricing. My question is, w hat exactly is the pricing floor for A2P SMS in India? Do you believe that RCS will reprice upwards once operators set a floor? Will it simply commoditize at SMS level and compromise your blended realization further?
Also just wanted to understand, when you say that you have an assumption that our revenue will grow at mid to higher single-digit, what kind of pricing revenue per transaction we are taking for FY 2027 versus FY 2026? This is my first question.
Kunal, the RCS pricing you just touched upon is largely because there's no interconnect arrangement among the telcos. For the first year when Google launched this service, there was some understanding, there's still among the telcos. When they terminate messages on the other network, there are absolutely no charges. For those reasons, there was some degree of flexibility in quoting the pricing to the markets. I guess that's changing now. What we hear, that there is some discussion which is happening among telcos, which will definitely take the prices upwards. We're hopeful that this will help the market and this will not cannibalize, as you correctly mentioned, the A2P SMS market. Overall, Vinay, would you like to add?
Sure. In terms of, you know, the pricing that you mentioned, how have you taken it in the, in the guidance that we provided. Kunal, it is a little bit more complicated at our end because India is one part of the business, but then we also have business in some of the other geographies. The way we really do our planning is, you know, we have individual business teams that look at various markets, different categories of customers. We do a bottom-up build-out when we look at a plan for the subsequent year. That is how we have approached it. It's a mix of various parameters, you know, in certain. It's basically looking at customer additions in certain markets. Mix is also changing, so there are various moving parts there.
The basic way we've done it is, you know, certain customer volume assumptions and pricing for those customers. That's how we really arrived at the guidance.
Lastly, because the volume base is growing the domestic markets where Vinay earlier mentioned, the pricing is much lesser compared to the ILD. We do not expect a dramatic shift upwards in the unit pricing or unit realizations, you know, on the revenue side.
My second question is, our growth implies that we will again grow at mid-to-higher single digit. While Indian CPaaS market is essentially volume saturated domestically, like every large enterprise is already using it. OTP growth is slowing as app-based authentication expands for non-financial use cases, and new volume is only coming from geographic expansion or market share shifts. Given this, how do we see genuine long-term CAGR assumption for next five years? What percentage of growth will come from India?
Kunal.
And international-
Kunal. Kunal, as we have already laid down in our presentation, we are opening up new geographies. We are setting up a new office in the different locations. Different domestic market is going to be our new focus. Some of the product line which we just shared, whether it's OTT or SMS or email, I think we do have a plan in the firewall solution along with network API. All this, see, even if you see that, there is a drop in SMS volume, but the digital use cases are increasing day by day in almost all the emerging countries. We as a company already well positioned ourself in most of the emerging countries, including the LATAM as well, right? I think we do see potential in terms of overall growth.
The way we are working on our strategy right now, there are certain market in Latin America, like Mexico. Brazil is a big market where we definitely would try to do something over there. Philippines is another market for us. Australia is going to definitely different market for us. I think all these things will definitely add overall growth story. For us, like, Route Mobile is not a India-centric company. We always serve the customer globally, including Middle East, Africa. We believe that digital adoption in these markets are going to increase multifold, especially in LATAM and Africa. We will definitely get advantage of those growth in coming years.
Understood, sir. Sir, lastly, these questions have been pressed a lot of times by investors in previous calls also. Since half of our enterprise value is still in cash, and we are generating some INR 600 crore operating cash annually. If we are at the same run rate, in next three to five years, our cash balance will significantly exceed our enterprise value. Can you tell us specifically in order of priority, what would you intend to do with this capital? If M&A pipeline, what geographies? If no M&A materialization next 18 to 24 months, will Board consider special dividend or buyback? Critically, is this capital allocation decision made by Route Mobile Board independently or does it require Proximus Group sign-off, given their 75% ownership and their, they have a huge debt burden also.
No, no, not at all. Every decision is made by Route Mobile Board, and there is a representative of Proximus Global as a part of the Route Mobile Board. The Route Mobile Board is capable enough to take call on behalf of Route Mobile. We have a very smart board members. They do understand business. They contribute to our day-to-day growth. As far as the cash is concerned, as we already mentioned, there are multiple discussion we are having on various many times in a year that how to use this cash. Acquisition could be the first choice, but there could be all other discussion which you have shared. As and when we come to some conclusion, we will definitely come back to you.
If you read our update, I think from this financial year, we have increased our dividend to INR 16, INR 16.5 from INR 11. We are definitely trying to create value to our shareholders. That is one of the priority for us in coming years down the line as well.
Understood, sir. Even after we are generating INR 600 crores of cash and as committed dividend will be INR 104 crores, we will still have some INR 400500 crores operating cash flow or free cash flow every year after dividends. This pie will eventually increase. I hope that Board considers it.
Yes.
Thanks to investors.
We will definitely. Sure, sure.
Thank you so much. This was very helpful. Thank you. All the best.
Thank you, ladies and gentlemen. That was the last question. This concludes our conference. Please feel free to share your unanswered questions to investors@routemobile.com. Thank you for joining us and you may disconnect your lines.