Ladies and gentlemen, good day and welcome to Tanla Platforms Limited Q1 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ritu Mehta. Thank you, and over to you, ma'am.
Welcome to our Q1 earnings call. Joining with us today are Uday, Uday Reddy, Founder, Chairman, and CEO; Deepak Goyal, Executive Director and Chief Business Officer; and Arvind Viswanathan, CFO. Uday will share his perspectives on business imperatives and strategic progress made. After opening remarks, we'll be happy to engage with participants and address their questions. Before I hand it over to Uday, let me draw your attention to the fact that today's discussion speeches' statements are forward-looking in nature.
All statements, other than statements of historical facts, would be deemed forward-looking in nature. Such statements are inherently subject to risk and uncertainty, some of which cannot be predicted or quantified. A detailed disclosure in this regard is made available in the presentation, and it is uploaded on the website. Audio recording and transcript will be available on the website soon. I now hand it over to Uday.
Thank you, Ritu. In addition to Arvind and Deepak, Abhishek, who's our new CFO, is already on the call. He has joined a couple of days ago. Very warm welcome, Abhishek.
Thank you.
Yeah. So good evening, everyone. I'm sure you had a chance to go through our results in detail, but let me capture some of the important points. We delivered 10% year-over-year revenue growth and was a flattish on a sequential basis on a seasonally weak quarter. We improved our gross margin percentage on both YoY and sequential basis. The numbers don't reveal the full picture. Over the last four quarters, we have seen a material shift in the market. We had flattish organic growth on a YoY basis.
We saw several disruptions in international messaging business on the back of the consolidation between the CPaaS players globally, as well as shifting of use cases to OTT channels. We have exited ILD deal in this background. This would have had an accumulative impact of around INR 120 crores of revenues and around INR 30 crores of gross margins.
But how did we react to this disruption? By focusing on things we can control, building great platforms, winning new customers, and delighting existing customers with the new offerings and creating a winning culture, delivering the great service to our customers. What did this translate to? We completely mitigated the above impacts with incremental growth on our focus strategic areas. If we normalize for ILD impact, we have grown around 13% organically as a company.
Growth was led by our pivot to rich media, which is OTT contribution to revenues moved from 18% to 20%, an incredible growth of 177% year-on-year. This is also reflected in our customer metrics. The clients we added in FY2024 contributed to around INR 60 crore of our revenues in Q1. Our customers greater than INR 1 crore was 329, and we have retained and grown our large customers.
12 of our top 20 customers of the last Q1 continues to be in top 20 in Q1, and the remaining customers are in the top 30. Our focus on customers and the new channels have helped us overcome the negative impact of market shifts, and the worst of the base effects is behind us. In parallel, we have not lost our focus on innovation. Our MaaP platform for Google RCS has gone live in July, and expect the revenue stream to start in Q2.
I expect RCS to scale up quickly and be meaningful by the end of this financial year, and we are the best place to capture this market. On Wisely ATP, we have signed a commercial agreement with a global tech giant to address the demands of the scam on their leading IP messaging platform. It's a great validation for Wisely ATP capability to tackle scams.
Due to these confidentiality clauses, we cannot disclose anything more on this engagement at this point in time. In closing, I will say that Tanla is in a market-leading position. We have recognition from the industry analysts like Gartner as a visionary in the CPaaS Magic Quadrant two years in a row. We are moving up the ranks every year, and things are very encouraging. As a team, we are happy. We are hungry and humble.
Our work is more than just technology. It is about empowering users. When your aspiration is inspiring, people want to be part of this journey. We have employees joining us from the most leading brands in the world of technology and consulting. We will continue on this mission in Q2, and I would like to thank all of you for the trust. We are going to keep working hard for you. Thank you, Ritu. Now, I'm going to hand over to.
Yeah.
Yeah. Okay.
Neil, we can start the Q&A.
Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchscreen 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. Participants, you may press star and one to ask a question. The first question is from the line of
Yes, sir. Thanks for the opportunity. Also, my first question is on the worst revenue. Can you hear me?
Sir, sorry to interrupt.
We can hear you clearly. Go on.
Okay. Okay. So, sir, my first question is on the WhatsApp revenue, which is driving the enterprise growth. But if I see the WhatsApp growth quarter-on-quarter, it has been the lowest in the last four or five quarters. So is it fair to assume that the WhatsApp has rescaled, and from here, we can see some moderation in growth? Or is it fair to assume that the momentum will continue?
And secondly, the enterprise growth ex of OTT has been soft for the last three quarters. And as you mentioned, it was due to a drop in volumes and also from the ILD volumes. So what's the update there when we can see the volume growth recovering there? In terms of seasonality, quarter two, quarter three is strong in terms of seasonality. Are we on track to have a good quarter two and quarter three in terms of the enterprise growth ex of WhatsApp? These are the first questions.
Amit, are you done with your question?
Yeah.
So, Amit, let me take this. This is Arvind here, right? Hope you can hear me clearly.
Yes, sir. Disturbance in the line. Now I can hear you clearly.
Sure. So, Amit, WhatsApp last year, when we probably started this, right, was a sub-INR 50 crore per quarter business, right? Today, we are close to a INR 150 crore per quarter business. So obviously, we have scaled up substantially, right? And growth continues to be close to double-digit sequentially, right?
But it's probably not 50% sequential or 30% sequential that we have seen. So there is obviously a base effect at play. But the good part is the incremental revenue in absolutes are not coming down, right? That's important because before a growth of 50% on 8% of the business, we saw something on 20% of the business, right? Even if it's a smaller growth, it contributes more to the overall company growth.
So in that sense, I would say we are still very, very bullish on OTT growth, not just WhatsApp, as Uday mentioned in his opening remarks on RCS, on Truecaller. So that is something that we continue to be very bullish on, right? And I think that market is growing, and we are quite confident as far as that is concerned. To your second question on the non-OTT, which is basically on the SMS side, you are absolutely right, right? Q1 is always little seasonally.
Q4 also is little seasonally. Q2, Q3 are typically stronger, particularly from a domestic side. So I do think domestic will pick up in Q2, Q3 in line with historical trends, right? ILD, I think, probably is close to bottoming out, right? Because we've seen a lot of erosion there. So that's how we see the market as far as Q2, Q3 is concerned.
Okay. And on the Wisely ATP deal on WhatsApp that you have announced, obviously, we're not disclosing the price. But is it fair to assume that this is similar to what we did with Trubloq in 2018? And we're living from 2 to 3 years down the line. We can assume similar scale.
First point is I want to just clarify, Amit, that we have not announced which OTT it is. I will not be in a position to comment on that. At this stage, we really can't share anything more than what Uday mentioned in his opening remarks, right? When the time is right, obviously, we will share it. Right now, we are constrained to share anything more than what was shared, what is there in the public domain already.
Okay. In terms of the margins, obviously, we have recovered margins in this market. How do you see the margins? Is it the drop in the platform revenue going to have some impact in revenues or maybe newer revenue streams that are getting added that are having lower revenues, or will we see these margins provisioned in 90%?
So in a way, if you look at it, Amit, and I think that's an important kind of takeaway, right? We have had an impact in the platform business because of one of the deals that we exited. Despite that, we have kind of held market, right? Because that's the kind of growth the platform business has done outside of that. So if you look at it, the business has kind of grown 30% plus if I normalize for this impact.
And that's how we've been able to kind of hold it. Now, there is no impact going forward from a negative standpoint, right? So as some of our newer platforms scale up, that will definitely help shifting the mix towards platform. And that's how we see it, right? I don't think we will see a big shift directionally in a quarter or so. But if you look at, as RCS scales up, as MaaP scales up, you will have more growth in platforms. And the shift of mix will definitely help in the medium term.
Okay. So thank you and all the best.
Thanks. Thanks, sir.
Thank you very much. Next question is from the line of Anil Sarin from K16 Advisors. Please go ahead.
Good evening, management. Thanks for the opportunity. These have been tough times where international SMS revenue has been going down. I just wanted some very basic questions to be answered. When you say digital platform revenue, what exactly does it mean? Enterprise, I can understand. But digital platform, if you can just put it in layman's terms, what it means, that's my first question.
Let me kind of explain that to you, Anil. Digital platform revenue is where we have deployed a platform where we get either a revenue share or a subscription fee where there is no cost of services, right, as part of it. This business typically operates like a typical SaaS model where you have deployed the platform, you either get a license fee or you get a subscription fee or you get a revenue share fee.
There is no cost of services there. This platform goes on a standalone basis and runs at very high gross margins. It's predictable. It has all of the SaaS elements. Something like a Trubloq, something like a Wisely ATP, all of these will fall under the digital platform business.
Okay. Okay. Thank you. That's useful. Another question. What was the Vodafone revenue overall? And in the Q1, what was the drawdown due to Vodafone not being there? So what was the revenue last year, same quarter of Vodafone, which is not there in this quarter?
About INR 22 crore. Both revenue and gross margin more or less are similar there, right? About INR 1 crore difference. But Q1 of last year was around INR 22 crore of revenue, which is zero in Q1 of this year. And almost that entire piece has flown into gross margin also, Anil. So it was INR 21 crore of gross margin, which has become zero in Q1 of this year.
Okay. Thanks. That's very useful. Also, in the OTT business, what is your market share now? OTT is a very broad word. But let's say WhatsApp, last time you had mentioned that you are number two in WhatsApp, or was it number one? So basically, just talk about your market share and who are the main players in WhatsApp and enterprise business in India.
So it's kind of difficult to view a market share per se, right? But I would say we would probably be at an aggregate level. It's a guesstimate. Across all OTTs at this stage, we would probably be around 25% of the market, right? But we've kind of gained a lot of share, right? I think this number would have been closer to 20% last year, right? Or even lower. So that's really what has happened as far as the OTT side of the world is concerned.
Okay. One thing, right now that you're adding, so a couple of questions on that. How does RCS compare technically with WhatsApp? What are the use cases that RCS has, which will help it take share in the OTT market?
So I would say that historically, right, if you look at, I think RCS, where we feel will play a big role, will be to starting with on the promotional side of it, right? So if you look at it, RCS, I don't know if you've seen an RCS message, Anil. It's a rich media message, right? So it has a huge improvement in click-throughs on promotional that we've seen from a use case standpoint, right? It also has conversational, but I would say probably WhatsApp at this stage is superior on conversational.
But on typical promotional messaging, I think RCS is very, very good. There are a lot of use cases that we have built on RCS, right? Including workflows, rich media in terms of delivering messages with PDF and attachments where you see a differentiation. So I think it holds to start with somewhere between SMS and WhatsApp. The full potential of that channel has to be explored, right? I think it's a little bit of market development that we will end up doing, which will give us a head start in terms of capitalizing on the market.
So Anil, basically, Uday here, basically, I'll tell you the difference between RCS and WhatsApp. WhatsApp has got its own application. So myself and Amit, you use every day. You can also have a dedicated application on your handset sitting, okay? So unless you have a WhatsApp application, you cannot communicate with your contacts, okay? Right?
Whereas RCS normally sits in your SMS inbox. It doesn't need any separate application, right? So whenever we receive RCS, it goes and sits in SMS inbox. So that's the basic difference. When it comes to functionality, it is absolutely the same as RCS is the same as WhatsApp in most of the use cases, right?
Okay.
Am I clear, Amit?
Yeah. That is helpful. Uday, if you can just so this would be in terms of pricing, it will be cheaper than WhatsApp and more expensive than SMS, or how I mean, what would be the value proposition to the ultimate customer? Why he should choose RCS over WhatsApp or over SMS?
It's a good question, Anil. So WhatsApp is owned by the Meta, as you know. But whereas RCS, in terms of technology, it is owned by Google. But it is driven by the mobile carriers. So mobile carriers are the ones who are going to decide the price. So as you rightly said, the SMS is in between sorry, RCS is in between SMS and WhatsApp in terms of pricing.
Okay. Okay. Great. One last thing. It's very important to say Wisely ATP has been sold in the international market. So what is the outlook in terms of your distribution and branding initiative such that we hear more good news about Wisely ATP in the international market? Domestically, you have already highlighted, Uday, that probably there is more effort that needs to be done by the government. So better to try to push on the international side. So if you can talk without getting into specifics of the order, what are you doing over there?
Yeah. A couple of things. The platform, the global messaging platform that we just announced a couple of days ago, is a global contract . Okay? So the minute we find a scammer, the minute we find a scam, all we have to do is the minute Wisely ATP finds a scammer and scam, we need to push these details to that platform. And they bring down not only the links, but also they go ahead and close the account. Okay? So that is a so it's a global contract.
That's number one. Yes, we are trying to sell in India. Let's hope for best. But in the international market, we have not really, I mean, pitched this solution to the international and any of the telcos. Unless we see the good result in India, we don't want to really rush to the international market.
Okay. So just last question on ATP. What is the outlook for the rest of the year domestically with the banks or with other users?
Anil, we're not giving any guidance, right? Let's hope for best. We are putting all our efforts. Whenever there is an update, definitely we will update the market.
All right. Thank you so much. Once again, congratulations on all the presentations and the shareholder letter and the chairman's message. Those are things which really help in understanding the company. Please keep up the good work. Thank you.
Thanks, Anil.
Thanks, guys. Thanks, guys.
Thank you very much. Parasaman, Zoom up, press star and one to ask a question. Next question is from the line of Deepak Chokhani from Shade Capital. Please go ahead.
Hi, sir. I have a couple of questions. May I ask you a question? ValueFirst International acquisition is key to close this month. Since it's been almost a year since the last update, is it possible to share some hard numbers this particular unit achieved last quarter in terms of top line and EBITDA so that we can get an idea as to how big it can be?
So, Deepak. Uday here. So we are in the final leg. We hope we will get the final nod from RBI in the next couple of weeks. So once we get a nod from RBI, we should be able to close the VF International deal, right? So that's number one. Number two, we are looking at INR 200 crore on an annualized basis, right, in terms of revenues on an annualized basis.
Sorry. INR 200 crore on the revenues. And what would be the EBITDA and? And Tanla?
The EBITDA would be in low single digits, Deepak.
Got it. Okay. Okay. And next question is probably on the cash.
Can you please come in a better reception area? Your voice is breaking.
One sec. Is it any better?
No, sir. It's still breaking.
Okay. Go ahead with the questions, okay, sir, because maybe in a bad manner.
It's the INR 300 crore cash. What's the plan? Are we looking at?
Sorry. Interrupting. Your voice is breaking. Can I request you to rejoin, please? Thank you. Next question is from the line of Amit Agarwal from Leeway Investments. Please go ahead.
Good afternoon. My first question is regarding a news that came into the newspapers that the Delhi Metro business has gone to our competitors. Any reason that they have been able to get that business and we were not able to do that? Is it because of the technology or pricing? What is the company's thought on this news?
Amit, can you please repeat the question? Sorry, we didn't get. The line was cut.
There was a news article that Delhi Metro business has gone to our competitors. What is the reason that they were able to get this business? Is it because of technology or is it because of pricing?
Deepak, you want to comment on that? Deepak?
Can I?
Yeah. We can hear you, Deepak. Please go ahead.
Yeah. Yeah. Hi. So it's Deepak Goyal.
So Deepak, we can't hear you. Deepak.
Hello?
Deepak, sir, can you?
Amit, one minute. No, I think Deepak is also on a bad network. Can you just pass on that? Let him come back. Amit, we will answer your question. Do you have any other questions?
Yeah. My other question is regarding the platform business. Sir, we were told that platform business is a very unique model. How come platform business could be shifted to other suppliers, not to us? Because I was told that platform business is a patent business. And to shift that business should be very difficult for other person to handle the business. And comment on that?
In fact, we are the ones who have exited the deal. We have not lost the deal just because of the technology. Okay? Vodafone Idea Limited was asking for minimum guarantees. Our position is very clear. We are not in the business of giving the minimum guarantees. We play to our strength, which is our core strength, is technology. So we have exited this deal. And I'm sure it was a very, very good decision for Tanla. So we were very happy about our decision.
My other question is regarding MaaP. I'm interested in MaaP model. Is this a platform business or an enterprise business model?
So, Amit, you? MaaP is a platform business, Amit.
How much revenue are you expecting in the first year or?
Yeah. We don't want to give the guidance, definitely. But whenever we deploy a platform, it is expected to face meaningful revenues on a yearly basis. We just went live with Vodafone. And it is expected to show some of the revenues will flow in Q2 onward, right?
Q2 onwards. How much of the investment in this platform and the platform is patented? Yeah. Sorry. How much have we invested in this platform? And do we have any patents?
We should be able to share an update early next week on that, Amit, on the IP. On the patent side, from an investment standpoint, typically, our investment is more holistic, right? So we've not called out a number, but you have a view in terms of what we are investing in platforms every quarter or every quarter, yes.
Okay. My only question is regarding the Delhi Metro business.
Sir, Deepak, are you back?
Yes, sir. Deepak Sir, can I request you to unmute your line and go ahead with your question?
Yeah. Yeah. I'm back. Am I audible?
Yes.
Yeah. Yeah. So what I was saying that there are many cities which are coming with Metro services. And we have one Chennai Metro. We are providing excellent solutions, technology, and use cases. Must have missed out on this one, but it's not because of any technology or anything.
So any further business from any of Metro that we can be hopeful of in the future?
Yeah. Yeah. So we actually have a few deals in our pipeline. As soon as we close those, we will let you know. But let me just tell you, this Metro business is not like it's very in terms of revenue or anything, it's not going to be like a very high revenue business or something, right? So we have much bigger deals in our pipeline.
All right. Deepak Sir, we lost your audio. Can you hear us?
No, no, no. Effectively, what Deepak is trying to say is this Metro, I mean, we have been doing with the Chennai Metro for quite some time. And we have launched most of the solutions on the Metro deal. And so it's nothing new to us. We have not lost the deal because of the technology to our competitors who work with the line. And we don't see a huge potential for this Metro business, right?
So it's probably is it sub INR 10 lakhs per month or probably even less than that? Yeah. Yeah. It's less than INR 10 lakhs per month business, right? So we don't even spend too much time discussing about these issues in our management meetings.
Okay. Thank you. That is a great.
Thank you. Next follow-up question is from the line of Deepak from Shade Capital. Please go ahead.
Am I audible now?
Yes.
Sir, two quick questions. Retail cash, what's the plan? Buyback or acquisition?
Deepak, we have not really decided on anything. We had a board meeting yesterday, as you know. We have not really discussed on that. Whenever there's an update, definitely, I mean, we will definitely inform the SEs.
Okay. The last question. In terms of ATP conversation with Indian banks, how do you see that planning rather?
Yeah. We are showcasing this ATP to a lot of the banks. Let's hope for best, Deepak. Let's hope for best.
Okay. Thank you, sir. All the best.
Thank you. Next question is from the line of Kavit from Yogya Capital. Please go ahead.
Hello. Now audible?
Yes.
Yes. I have a couple of questions. First of all, do Telesign use a company for terminating messages in India or any other region?
Sorry. What's that? Are you talking about Telesign?
Yes.
Telesign is an international aggregator. They don't have direct connectivity to... It's an international aggregator, Kavit.
Okay. Okay. So the next question would be regard to pricing. So how is the pricing trend for NLD and ILD messaging in India? What is the pricing trend in NLD and ILD?
Deepak, you want to take the question?
Yeah. Can you repeat the question? You said about the pricing for NLD and ILD?
Yeah. Yeah. So let me take the question now, Deepak, if it's okay with you. So Kavit, effectively, you want to. It's a very. I mean, in the sense that sometimes what happens is Jio and Airtel, if I'm allowed to say, have got a direct deal with tech companies, large tech companies. They have long-term deals, which they close long back, okay? Whereas Vodafone, to our knowledge, have not closed any long-term deals with any tech giants, right? So that's number one.
Number two, sometimes aggregators do bring the traffic to India. And depending on the volume, depending on the commitment, they do get the differential pricing from the different carriers, right? So it's very difficult to say. It's not one single price across all the price points. It differs from one aggregator to another. The same thing applies to even NLD.
Yes. Okay. I understood. And m y other question is, in terms of our non-OTT business, you said that we did see some erosion earlier. Can you please explain what was the erosion about and how are we confident that we are near bottom?
Okay. So we basically talked about erosion of business on the international messaging, largely because of two things, right? One is that there has been, like Uday mentioned, a lot of the big enterprises are trying direct deals with the telcos. The other aspect is you've seen a lot of migration of messaging into OTT channels like WhatsApp and WhatsApp, basically, right? And therefore, that entire volume market has shrunk, Kavit. So that's really the impact.
Why do we think it may have bottomed out? Because we've seen a lot of erosion already, right? And now what we've seen, at least in the last three, four months, is things have been more stable. But we'll have to keep watching it. I mean, we can't comment forever on these, but at least we believe it's closer to the bottom compared to where it was a year back, for sure.
Yeah. I understood. My other question was regarding the competition. How is the competition shaping up in the CPaaS industry domestically? I think Airtel is working with its own CPaaS way. How are we placing them? Would any other telco player do similar to Airtel?
No, I think competitive environment is largely the same, right? Whatever you are talking about is a development of 2022, right? I think things have moved on from there. I would say it's a normal environment which you can expect in any industry from a competitive standpoint. I don't see any big shift in competition per se.
Yeah. Would you do similar like Airtel or is it something like we do better than any telco player?
So I see for us, everybody who is competing is a competitor. So we don't really differentiate on that basis, right? So the environment has not changed from what it was.
Yeah. Okay. Okay. I understood. Okay. Thank you and all the best. Thanks. Thanks, sir.
Thank you very much. Ladies and gentlemen, we'll take that as a last question. And now, I hand the conference over to Ms. Ritu Mehta for closing comments.
Thank you, everyone. That was the last question for today. In case we could not take your questions due to time constraints, please feel free to reach out to the investor relations team. Good evening.
Thank you. Thanks.
Thank you very much. On behalf of Tanla Platforms Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.