Ladies and gentlemen, good day and welcome to Q4 FY22 earnings conference call of Tanla Platforms Limited. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ritu Mehta from Tanla Platforms. Thank you, and over to you, ma'am.
Hello, everyone. I'm Ritu Mehta, and I lead investor relations for Tanla Platforms. On behalf of everyone at Tanla, I would like to welcome you to our earnings call for Q4. Joining us today are Uday Reddy, our Founder, Chairman, and CEO. Deepak Goyal, Executive Director and Chief Business Officer, and Aravind Viswanathan, our CFO. Uday Reddy, our Founder, Chairman, and CEO, will share his perspectives on business imperatives and strategic progress made by Tanla. After his opening remarks, we'll be happy to engage with the participants and address their questions. Before I hand it over to Uday, let me draw your attention to the fact that today's discussion may feature statements that are forward-looking in nature. All statements other than statements of historical fact could be deemed forward-looking in nature. Such statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
A detailed disclosure in this regard is mentioned in the results presentation that is uploaded on our website. Now over to Uday.
Thank you, Ritu. Good afternoon, everyone. Very, very warm welcome to our Q4 earnings call. As you know, Tanla is single-mindedly focused on the enterprise, and we are the market leaders in CPaaS, and that is really making the difference in our last year results. Our strategy is working very well. FY 2022 has been a phenomenal year on all metrics, and we achieved INR 3,000 crore revenue milestone. We had very strong revenue growth with a best-in-class margin and cash flow profile. Revenue grew 37% year-on-year. Gross margin grew 57% year-on-year. We generated over INR 425 crore of free cash flow, and our cash balance is over INR 920 crore. Our organic growth mission is in full flight.
Our revenue and EBITDA has grown by 6x and 12x in the last six years. Uniqueness of Tanla is that while we grow like a startup, we have the balance sheet and cash flows of a market leader. As I look forward, digitalization is the opportunity of this generation. We are seeing an explosion of the digital interactions in India. Transacting users have doubled in the last three years to over 200 million users, while digital lock has increased 3x in the same time. We are operating at the rule of sixty, which is aspirational for most of the SaaS companies. We are pretty confident the momentum will continue. Let me give you an update on Wisely. The last three months have been significant for Wisely.
Last Friday was a historic day as Wisely went live with the Vodafone Idea network as part of our multi-year exclusive partnership. We will showcase power of Wisely to both Vi Network and global tech giants in the next 60 days. Wisely will deliver tangible ROI, and I cannot wait to showcase this to the world. I'm very excited about our exclusive partnership with Truecaller, which we announced in the Mobile World Congress, Barcelona. I am confident that we will be able to build unique propositions to our enterprises while enhancing user experience to 300 million monthly active users. Wisely resonates well with enterprises. One of the large customers that we spoke to has put it very nicely. I quote, "One of the reasons we really like Wisely is that you are not selling platform or software, but delivering business outcomes." We have a strong balance sheet.
This gives us optionality for acquisitions. We are growing fast at high profitability, so any acquisition has a very high bar for Tanla, and most acquisitions would dilute either our top line or bottom line. Further, we have a very strong organic strategy. We are focused on Wisely, a single platform strategy, and we don't want any distractions. Having said that, we are always open to any stacking acquisitions which complement our Wisely strategy. Also, we have been consistently returning our cash to our shareholders. We returned INR 180 crore in FY 2021 and INR 95 crore in FY 2022, which adds up to 31% payout of our net profits. In the coming year, our biggest focus is driving our very strong innovation engine, focused on creating greenfield opportunity for us.
The biggest bet we are making to achieve this on our talent. We are introducing new ways of working and building a team obsessed about innovation and customer success. Our employees are excited with the opportunity to work on cutting-edge technology and build their career with us. I'm very excited. My team is very excited, and I'm confident that FY 2023 will be the year of Wisely. We are happy to take your questions now. Over to Ritu, or you want to open question? Yeah. Okay.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We request participants to limit their questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pranav Kshatriya from Edelweiss Financial Services. Please go ahead.
Hi. Thanks for the opportunity. My first question is regarding, you know, the growth for the platform business. You know, for last year or so, the growth for this has been fairly strong. Also, you know, how should we see this growth going forward? Because, you know, you said that this will be, you know, the growth will be driven by Wisely. One more, you know, finer nuance which we wanna understand is the, you know, the realization-led growth, because a fair bit of growth is happening on the realization side, which I'm not too sure that, you know, how much will continue. If you can throw some color on that.
Yeah, that's my first question.
Pranav, if you can just clarify on your second question, what do you mean by realization? Are you saying pricing?
Yes. I mean, enterprise segment realization, if I look at, you know, last one year has seen a fair bit of growth, maybe because you are, you know, having more traffic coming from Airtel. Are we gonna see more volume-led growth or it will be, you know, continue in this direction?
No, Pranav, that is good question, right. Our enterprise business is growing much faster than industry. We are growing, as you know, Karix is the largest CPaaS services company in India, and Karix is growing much faster than any other similar partner in India. That's number one, right. Number two, even if you look at our platforms business, okay, and as part of my opening statement, I made it very clear, we're going to invest a lot of money on our platform travel innovations, and one can expect platform announcements, new platform, new features announcements in the next 11 months.
To answer your question, right, we are going to grow on both the fronts, both enterprise side as well as platform side. But as you know, like, you know, platforms is, I mean, the way we book the revenues or the way we collect the revenues, the way we charge the revenues to our enterprise is slightly different from the way we charge in terms of our CPaaS services. In other words, like, you know, our margins are much better off on our platform business. We are going to grow on both the fronts and we are pretty excited.
Okay. One more question, if I may. You know, your CapEx has sort of increased, you know, almost INR 63 crore for the full year. Is it largely towards the investment? You know, how should we see this going forward? Does implementing Wisely require you to, you know, put CapEx up front?
Pranav, like, you know, for the size, for the company of our size, okay, which is generating more than INR 430-INR 440 crore free cash every year, like, you know, the CapEx is very small in the sense like, you know, we are investing a lot of money on the innovation. In the sense even if you add up the numbers, I don't think it's crossing around INR 65 crore per annum. It's a very small number. Yes, this year also we're going to spend equal amount of, if not more. To answer your question, right, we don't need to really invest upfront in terms of any of the platform requirements.
Definitely we're going to spend a bit of money on the innovations and which is going to accelerate our platforms, the growth.
Okay. Thank you. That's it from my side.
Thank you. The next question is from the line of Harshit Toshniwal from Premji Invest. Please go ahead.
Hi, good. Hi there. Am I audible?
Yes. Yes.
Okay. Hi. Thanks for the good results. Two questions. One is that when you look at the overall growth, I think when we look at the 1 CR per client count, that's growing at around 16%-17% even on an exit basis. That is a pretty strong number. I would just want to understand that, how do you anticipate the growth in the enterprise business? The 16% is base and, what else can we add from the ticket size growth? It's 21%-25% of our estimate, even industry is growing at 20%. I'll ask a second question also similar to whether it's. When we look at our cash balance, around 30%-40% of that is in DBS Singapore, which is a dollar account.
There's no mention that we're going to earn interest on that.
Can you give some explanation what is the need to keep such high cash in Singapore, and why are we earning any interest on that balance itself? Thank you.
Harshit, sorry, I've been trying to hold you, but you're not clear. Your voice is not clear. Very feeble.
Okay.
There's a lot of background noise. Background noise. Can you please go slow. Can you please ask one by one?
Yes.
Harshit, I would request if you
Is it audible now?
Yes, we can hear you, Harshit, but I would like to know, are you connected to the earphones?
Okay. Now I'm on direct phone. Is it okay now?
Okay. Yes, this is better. Yes. You can proceed.
I'll just repeat the two questions. First is on the growth, that there is a 16% of 1 CR plus client count growth even on an exit basis, which is very strong. Clearly, as we move forward, the volumes and the organic ticket size of each client will also keep on increasing. Expecting a 20%-25% growth in the medium term, is that a very tall task? Want to get a sense about the overall industry growth in your estimates. The second question is on our cash balances, that around 30%-40% of our INR 900 crore cash that is with the Singapore, DBS Singapore account where we don't earn any interest. This is why our overall other income yield looks suppressed.
Want to get a clarity on why do we need to keep that and why is it not earning any interest for us? Thank you.
Maybe, Harshit, let me take the second question first, and then I will pass on to Deepak to give you a perspective on the industry growth rate. Right.
Right.
You know, a lot of our ILD business is done overseas and it's in U.S. dollars. Given that it is U.S. dollar balances, you know, we don't earn interest on that. Right. There are challenges around moving cash across entities. There are taxation implications, et cetera. We are looking at it and we are seeing what we can do. Obviously, as we plan our global expansion, the idea is that we will be using our, you know, cash overseas to fuel that. Right. That is where we are. There's not much of an investment opportunity therefrom with respect to your U.S. dollar funds. Deepak, if you can give a perspective on the growth.
Hi, it's Deepak Goyal here. Yes, on the industry growth. You know, we estimate the industry to grow by 18%-20% in overall volumes. You know, if we further bifurcate that. About 12%-14% I would say is organic from the existing use cases, from the existing customers and all that. I'm talking about overall industry. Then there is another about 6%-8%. You know, as you know, there are a lot of new companies emerging and they are growing much, much faster than those established enterprises. New use cases are emerging with existing customers as well as with the new customers.
I would, you know, put about 6%-8% there. Overall it's about 18%-20% growth is what we are witnessing.
Got it. Harshit Toshniwal, just one follow-up on this. Now when we look at our new client acquisition. I'm coming with the context that Karix is a very strong player when it comes to all the traditional large enterprises, and clearly that is the moat on that side. Our new client growth, basically when I look at all the new where the volumes are, volume growth is actually exponential. Over there even when we look at our presentation, I think the new client growth is still not as great as the traditional one. Now what gives us confidence that if industry is growing at 18%-20%, we'll be able to deliver a better growth than even the industry because we are already sitting on a very high pedestal.
Secondly, in the new client segment, it's not as if we are doing extraordinarily different from our traditional set itself.
If you see, we are, you know, for last so many years, you know, we have been growing more than the industry. Okay. That we have been, we have demonstrated in the past many years. As far as, you know, the new customer segment is concerned, I just tell you the, you know, the life cycle, you know. There is a year, you know, we acquire customers. Okay.
Mm-hmm.
We may acquire it at different stages of the year, right? Or different month of the year, right? They come, we onboard them, and we end up business ramp up, and then the next year they become our existing customers. You know, when they are fully ramped up, so that revenue is actually counted in our existing customer base. Maybe that's why you may not see a huge you know growth as such in the new customer segment.
Okay. I think that moves the.
That point, you know, our calendar starts afresh for new customers, right? If you look at customer cohorts, and we have a slide on that, you would find that our CAGR across multiple years after we onboard the customer, we see a lot of growth. To look at it just from year to year, you will not see a significant jump. Like Deepak said, you know, you will have to look at, you know, we add them, you know, it's for the current year and then, you know, next year we again start afresh. The way to look at it is we added 270 customers which gave us INR 104 crores of revenue for FY 2022, but they are obviously the base for further growth for FY 2023.
Like whatever we acquire this year, okay, the real growth or the volumes would be seen, I would say the next year, you know. It's like that.
Understood.
Whatever we acquired last year, you would see in this year. It's like this.
Understood. Just one follow-up on the previous one which I asked, that Singapore account. Pardon me for my English. It's a very basic question that just want to understand that flow of the transaction. Say for example we have an ILD client and simultaneously that message is delivered in India. Now the receivables from that client, that goes into the Singapore account. Let's say for example what we receive from an Uber or Amazon, that will go to the Singapore account. But what we pay to Bharti Airtel for termination, that goes from the INR balance. Is it why that balance is so high?
Uh-huh.
I just want to understand that, the even though ILD business has slowed in this last 6-7 months, our reserve balance or cash balance in the Singapore account, that has grown, that has kept on increasing. Just want to clarify that.
One minute. Ashu, Uday here. Okay. For any ILD business. Okay. Right.
Mm-hmm.
Entity is not allowed to enter into any agreements with any tech change because.
Right.
It's ILD business and the entity has to be outside India.
Mm-hmm.
In other words, none of the Indian entities, including Tanla, Karix or Gamooga are not entitled or not allowed, rather, to enter into any tech change.
Okay.
For ILD business. That's number one. Number two, the same entity also have an agreement with the ILD license providers. For example.
Mm-hmm.
That Tanla Singapore has got a direct agreement with Airtel. They have entered into agreement with VIL and whoever has got the ILD license. ILD is a market business. Even from the telcos perspective, okay, Bharti Airtel must have got two licenses. One license to operate within India, another license to operate outside India. Okay. So two different entities. So similarly, we have to operate with an entity who has got a license to operate as an ILD business. To answer your question, both buying and selling happens at Singapore level.
Okay. Understood. Got it. Basically this is what is going to be our key for any investments in growing the international business. That is how we are gonna monetize that cash balances over there.
Yes. Yes.
Okay. Understood. I think I'll come back into the queue for any further questions. Thanks a lot and congratulations for good set of numbers. Thank you.
Okay. Thanks, Ashu. Thank you.
Thank you. The next question is from the line of Balaji Subramanian from IIFL Capital. Please go ahead.
Balaji. Hi. Thanks for taking the questions. Congrats on a good set of numbers. I have three questions, basically, if I may. The first question is on your plans for Wisely deployment both in India and overseas this year. Some more color on that, considering that now you have announced partnerships with both Vodafone Idea and Truecaller. The second question would be on the status on rolling out consent management around Truecaller by telcos. You know, at what stage is it in currently, and what can be the potential opportunity for Tanla from this? The third one would be on employee attrition and any wage cost pressures that we are seeing, considering the supply side pressures, especially for tech companies. Those will be my three questions. Thank you.
Okay. Thanks, Balaji. Uday here. In terms of Wisely plan, both for India and the global, yes, we are now putting a lot of thrust on domestic business. You will see a lot of enterprises will be using Wisely going forward. Once we see that success in India, and probably we will look at global markets. Till the time, we would like to concentrate in India. We want to really make it big. Wisely and domestic has to be really make it big before you take this platform to the global market. That's number one. Number two, in terms of consent management on Truecaller.
We have deployed, we have rolled out, as you know, like, you know, it's a consortium between the three. I mean, all the telcos where we manage 60%-70% of the telcos. We also have to work with other platform providers. It could be Tech Mahindra or it could be IBM. Also regulators are involved. We have delivered the product, but we see a bit of challenges with the SOP, standard operating practices here, which telcos have to sort out among themselves. As a platform provider, we have nothing to add anymore here. Having said that, like, you know, I think we will definitely see some light on this consent management.
It is going back and forth between the operators and the regulator. We hope it will be sorted out very soon. That's the number two. Number three, in terms of employee attrition. As you know, like, you know, Karix has been around for the last 20 years and so is Tanla. Our core team is pretty intact. The core team who has been with us for almost 2 decades, they're pretty intact. But having said that, we see a bit of challenge with the junior folks. We also have the similar challenges. We are trying to address that, but we don't see any problem with our core team.
The problem is with only the someone who has joined during the COVID and there we have no relationship with them. Absolutely there is no relationship with them. That's where we see bit of challenge, but we're trying to address that issue. We are. I mean, we are. I completely agree with you. Like, you know, we are also facing issues that any tech any technology company faces nowadays.
Okay. That answers my questions. Thanks a lot and all the best.
Thanks, Balaji.
Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please go ahead. Amit Chandra.
Yes, sir. Thanks for the opportunity. Sir, my first question is on the Wisely platform. You know, just a continuation of the last thing from the last question. On Wisely, you know, we have big plans. Wisely will enable the, you know-
A phase of growth for the platform business next year. If you can elaborate, like more on our plans internally, what we have in terms of the revenue contribution from Wisely maybe in the next financial year. Also if you can elaborate on the, you know, on the partnership with Microsoft in terms of the co-sales and, like, partnership with Microsoft. Is it, that, you know, you know, Microsoft is going to sell the platform for us? Or, you know, any, like, collaboration in terms of sales, you know, along with Microsoft. That is one. Also the exclusive partnership, that we have with, like, Vodafone. From when, you know, is it going to contribute to revenues?
You know, in terms of the partnership we have with Truecaller, so what exactly is the, you know, like, nature of the partnership, if you can elaborate on that?
Okay. Amit, Uday here. Let me start with the Truecaller. Okay, Truecaller, as you know, what our information say is, and this is a public information. They have around 300 million unique users, and most of them are from India. This and we have access to this 300 million unique users. They were never in business messaging earlier. For example, if you look at WhatsApp, this is predominantly business messaging app or P2P messaging app, like. Whereas Truecaller was never into business messaging. Okay? Since now, they have access to 300 million users, they're also trying to see how they can monetize their reach. One of the ways they can monetize is through business messaging.
That's where Tanla and Truecaller came together. We have decided to enable a messaging feature on their 300 million handsets, the apps rather. That's number one. That's what we have been doing for the last 6-8 months. Now that messaging, the business messaging APIs are exclusively available only to us. Like, it is not available to any other CPaaS provider, not only in India, but in the world. This is big opportunity for us. That is about the Truecaller. In terms of Microsoft arrangement, yes, Microsoft and Tanla have developed this Wisely platform.
Wherever we have the large opportunities, we come together and we work together and that's where Microsoft and Tanla has one agreement with Vi. Also we are working with a couple of other large deals. It is working really well. We are extremely happy about our relationship with Microsoft. That's number two. In terms of the Wisely contribution to our overall numbers, it's too early to comment, but I'm pretty excited. When it comes to Wisely Vi deal, we went live. That's what we announced to market on last Friday. Our revenues slope margins are going to clock from last Friday. That means effectively two months in this quarter.
That 100% traffic has to go through our Wisely platform. We are pretty excited about that opportunity. In the next 2 months, what we decided is to showcase the Wisely offer to not only Vodafone Idea network, but also to the large telco, large tech giants globally. In the next 60 days, we are planning to come out with customer advocacy. That is going to set the agenda for Wisely for the rest of the fiscal year.
Okay. Sir, you know, in terms of the competition, obviously we are seeing increase in the competition, especially in the platform business. What kind of risk we are seeing to the margins that we are enjoying? Because, you know, the margins that we operate. I'm not talking about the 90% margin, but, you know, adjusted for all the, you know, overheads, maybe it's 70% margin that is there for the product business. Are you seeing any risk to that, whether you need, like, more investments or something of that sort to, you know, like, focus more on the volume growth rather than, you know, focusing on the margin?
Amit, this is my personal view. One cannot build a platform unless and until you have tremendous domain knowledge. Okay? We cannot buy platforms, complete platform business from third parties. That is very risky of running. I have seen it personally, and it's not easy to build a platform unless and until you have tremendous domain knowledge. One should have access to tremendous technology competence skill set. If you don't have both of them, it's difficult to build and run. We don't see. I don't know what you mean by competition. We have not seen any competition, and we are not scared of any competition. We have been built, the entire Tanla has built on platform for the last 22 years.
We have seen enough competition in the last 22 years, and in fact, we love competitions so that we're not in the comfort zone. Okay? We are happy to face the competition. As we speak, we don't see any competition, and we have been in this space for quite some time.
Okay. Sir, on the enterprise business, apart from the seasonality, you know, this quarter, you know, like, are we seeing any other headwinds maybe in terms of scaling down of some clients or something of that sort? Or, you know, is it like normal business for us?
Deepak, do you wanna take that?
Yeah, sure. See, there are some always, you know, few customers, some volumes keep moving from, you know, one place to another place. There's nothing as such as everything. I mean, you know, if you look at Q4, it's pretty normal. In Q3 we have, you know, seen some good profitable festive campaigns coming in, which was, well, you know, because of Diwali and Christmas and the New Year's and stuff like that, and which were not there in Q4, and that's about it. Plus, we had to, you know, if you see number of days, our business is on a. You know, you can count as per the days.
There were two days less in Q4 as well compared to Q3.
Okay. Sir, on the enterprise side, you know, if you can provide some color on what portion of the business, you know, we are getting from the startup ecosystem, right? Because I know that we have been working, like, closely with some of the startups or like newer, like, companies, internet companies. You know, with the valuation going down or with the global valuations also coming down. Are we seeing some kind of, you know, like, cut in spending on you know, especially on this, you know, especially on the marketing side as you know, SMS marketing campaigns and all those side, from the startups.
Let me tell you, we have
How is it impacting?
Yeah. We have a very strong, you know, program to acquire startups, you know, in India. It's been a very successful program. If you see that, you know, we have been acquiring, you know, these customers from all the verticals, and one of them is fintech, which is very big for us. It has a huge potential. There's another one, gaming, which has come up very well. I mean, you can see a lot of gaming companies coming up. You must have seen ads during IPL.
There is edtech sector, which has boomed in COVID times, and now you know, more and more companies are adding on to edtech sector as well. And if you ask me if there's a cut on marketing spend, the answer is no, because that's where they are actually acquire the customers. You know, they all want to acquire more and more customers, okay? Maybe they would cut everywhere, anywhere else, but they would not cut here because that's where they see the acquisitions coming in. Now if you see the trends have changed.
You know, earlier, you know, I was telling you about a few years back, people would spend a little bit on the digital campaigns, and rest would be done on the traditional media. Now very serious, you know, budgets are allocated for the digital campaigns because here, as Uday mentioned earlier, we provide business outcomes as well. You know, it's not just about sending one-way communication. You know, in fact, we take responsibility. We work with the customer and ensure that, you know, they achieve the KPIs, you know, for which, and the ROI for which they're spending the money. So that way it's a win-win for us as well as for our customers. Once they acquire the customers, they become, you know. We ensure that, you know, we retain their customers very well.
We provide customer delight and all that with our various campaigns. That's how it works.
Okay. Sir, like, one last question from my side.
Sorry to interrupt. I would request you to please come back in the queue.
Okay. I will come back in the queue.
Thank you.
Thank you.
Let me answer Amit's last question slightly different in the sense like he was referring to our global competitors and the industry. Amit, it's a good question in the sense like we have been pretty clear from day one. We are different from our peers in the global market. Our competitors in the global market and elsewhere, they are diluting. They are raising the money left, right, center. They have been acquiring the companies and that is their strategy. Our strategy is very simple. We believe in build but not buy, and our strategy is working right.
I strongly believe that like, you know, where people fail to integrate with the companies, that's where they see the challenge in the global market. We don't have the same problem with that. Our strategy is working. That's what I would like to say.
Thank you. A reminder to participants connected to the webcast, if you wish to ask questions, please dial into the number and enter star one. The next question is from the line of Tanu Potdar from Mount Infra Finance Private Limited. Please go ahead.
Hi. Am I audible? I just want to confirm that.
Yes, you are.
Yeah. Thank you for taking my question. My question here is regarding the 800 billion transactions which is stated in the presentation. Till 2020, it was always said, 200 billion transactions, and after that, it has become 800 interactions. I just wanted to understand the difference between transactions and interactions, and why has there not been any growth in the last 2 years in the 800 billion transactions?
Tanu, it's a good question. The difference between the interaction and transaction is, for example, HDFC sends any communication on SMS. Okay? Then they terminate onto your mobile phone, and they charge per SMS, right? Or per email or voice or notification like. That's called transaction like. Whereas interaction is, it is mainly two-way. For example, where normally telecom resources are not involved, it is over the internet. That is called interaction type. Let me give one example in terms of interaction type. For example, Gamooga, which is our 100% subsidiary, is involved in the marketing automation, where they enable the interaction between the enterprise and the customer.
Okay? It's going back and forth, back and forth, wherein they may or may not use the telecom resources like SMS, voice or email or anything else like.
Mm-hmm.
Suppose if you inquire anything about with enterprise through bot, okay, and the company responds to you.
The bot. That's called interaction rate. There is a lot of difference between interaction and transaction rate. Interactions are, they go through the roof, and we don't normally charge per interaction. We charge per the unique user per month, and whereas transaction is used per transaction. Transactions are paid per transaction. That's the difference between these two. Interactions are increasing day by day. So is the transaction rate. In fact, we have given the transactions volume in terms of both DLT and SMS, in presentation, but we have not updated the interactions growth rate.
Okay. Sir, actually your unit revenue, that is what the question I was coming to. Comes to around INR 0.004. If I take the entire revenue and divide it by number of interactions, which is quite less. If you could provide some clarity regarding your unit economics.
Interaction is more from a, you know, from a perspective of saying the kind of scale that we handle, Tanu. It's not directly linked to financials because like somebody like a marketing automation would have significant amount of interactions, but the revenue will not be comparable because they actually get paid based on active users or some other metric which is not there. Just looking at interactions versus revenue is not a logical way of looking at value per interaction. It is very different depending on business. If you take an SMS, transaction is interaction, but when you look at some of the other aspects, you know, you have a very different psyche.
Okay. Sir, just one last question. What kind of revenue do you get from your A2P messages, like, per SMS, what would be your charge?
No. We have not called out pricing, because it's again different depending on whether it is, you know, international long distance, national long distance. What we have done is we have broken down our revenues between platforms and enterprise. You know, that is the kind of breakup that we look at, and that's how we look at our business systems.
Okay, sir. Thank you. That would be all from my side.
Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Thank you very much, sir, for the opportunity. I just wanted to understand first on the platform mix. Like in next 2-3 years, how do you see platform contribution to the gross profit? I think currently it is about 23%, right? Do you see that going about 30-35% in next 2-3 years?
Today it's about 26%. Clearly we've heard Uday talk about Prizee, which is a big bet. Our strategy going forward is around our single platform strategy. Deepak, definitely we expect that the platform contribution will keep going up, and we should see that improvement every year. In terms of exact quantification as to where that will be, I'm not in a position to give a number, but it is fair to assume that it will accelerate every year.
Understood.
From that.
Fair enough. Ideally that means that your EBITDA margin also should improve quite significantly, right? As your platform contribution expected to go up. Maybe from currently 23%, you expect it to go up substantially next two, three years, right?
Yeah, definitely. In fact, I think in our last earnings call we had talked about it. That, you know, typically a SaaS company operates on gross margins, you know, upwards of 60%- 70%, right? So one of our aspirations is as we leverage our platforms, we will see a structural shift in our gross margins. While I cannot comment exactly what timeframe where we will reach, but directionally, you know, you're absolutely right. The intent is to move towards platforms and that will structurally mean that, you know, our gross margins profile will improve. So you are right in that.
Understood. Sir, in your opening remark, you did mention that you expect this Rule of 60, that you're confident that this momentum you expect to continue, right? If I have to just think about the breakup, maybe a top-line growth 35%-40% range and an EBITDA margin 20%-25% range. That would be a fair breakup between top line and margin when we talk about Rule of 60%.
Deepak, that's a difficult question to answer, right? You know, there is always a trade-off as you go into more platform business, you know.
Right.
Your revenue is equal to your gross margin or a substantial portion of your revenue is equal to your gross margin. It is difficult to kind of give a mix at any point of time, right? Directionally over a medium term, you are right that our gross margins and EBITDA will move up, and that will contribute, you know. What is the exact contribution, you know, I really will not be in a position to give a break-up at this point.
I got the direction. My final query is on when we talk about the 60%, it's mainly organic or do you factor in potential acquisition or inorganic portion as well when we talk about the 60% rule?
See, if you really look at it, I think Uday has mentioned this multiple times, you know. We are very, very confident on our organic strategy.
Okay.
Right? We have a tremendous capability and track record to build platforms at scale, right? We always back ourselves on build vis-a-vis buy.
Right.
While there can always be, you know, small tuck-in acquisitions that we may evaluate from time to time, largely our focus is to drive our business organically.
I understood. That's about it from my side. All the very best, sir.
Thank you.
The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Yeah. Thanks for the opportunity. Couple of questions. First of all, just want to get sense about how the competition you are looking from telecom operator, Airtel has Airtel IQ. So how you expect such competition to have implication on overall industry dynamics over medium term? Second question is about the Vi deal, Vodafone Idea deal. What would be your current market share and how it is likely to change once the 100% traffic move from our platform? Third question is about the divergent trend which we are seeing in this quarter between platform and enterprise business. I'm referring sequential number. Typically, we have seen both business move in tandem. This quarter there is a divergent trend. If you can help us understand what is different. Last question is about weak cash generation.
If I look Q3, Q4 both, OCF to EBITDA conversion remain weak. If you can help us understand how one should look at it? Thanks.
Okay. What is the first question, sorry?
The first question was in terms of telcos operating.
Yeah, yeah. In terms of, see the way it works is, without speaking of any names here, the way Tanla and Karix have been working with industry is sometimes we collaborate and sometimes we compete with them, like. That's how even the telco industry works, in the sense like, you know, all the telcos have to talk to each other through interconnect. That's how they have to cooperate themselves. They have to collaborate themselves. Sometimes, like, you know, and most of the time they compete. Okay. This is how it works in the telecom industry. We have been working for quite some time like that, so that's number one. What is number two?
The divergence between platform revenues and
Enterprise.
Enterprise. As I told you earlier, like, you know, both Karix and Tanla have been growing steadfast in the last couple of years. The momentum will continue both in enterprises and platform business. But it all depends on, for example, like, you know, whenever we grow on platforms, that's going to straightaway add to our bottom line. So that's the distinct difference between enterprises and the platform business. But both are growing much faster than the industry. Only other point I'll make, Dipesh, that it's not always been the case. If you really look at it, Q1 of this year also where there was a little bit of drop, right?
You know, you would have seen that, you know, platform business did grow while enterprise dropped, right? You know, there are instances in the past also because I think it also depends on compositions, where our platforms are and the volumes there, right? I'll come to your cash flow question and I think you had a fourth question, so we'll come to that after that, right? From a cash flow perspective, if you look at from a year perspective, we still at 90% of PAT as OCF, right? You know, there we obviously had a little bit of skew in terms of much stronger cash flow generation in H1 and our working capital, while it's still negative, is less negative compared to, you know, H1.
I think we've seen a lot more growth on the domestic side of the business that we've talked about, and that tends to have little, you know, higher DSOs than some of the other businesses. There is a little bit of shift. I think from a year perspective, if you look at, we've done well, and I think that is what we would be targeting every year, Dipesh. Your fourth question is...
Vi. On the Vi.
On the Vi deal, I think Uday kind of talked about it. We will start getting our revenue in terms of, you know, because we have gone live on the 29th, right? We're not kind of calling out what is our share vis-a-vis what will be incremental there, but maybe we would cover it in more detail, you know, in the coming quarter.
Just couple of follow-up. In terms of OCF to EBITDA, now you are indicating 70% is a reasonable number to sustain over medium term. That's how once you look OCF to EBITDA conversion.
From a full year perspective, you know, we are at about 90%.
Yeah.
Sorry, Dipesh?
Yeah. Let's say from full year, I am referring OCF to EBITDA. It is roughly around 70, 69 to be precise. Roughly 70% is what we converted EBITDA to OCF. This is the good indicative number for medium term.
Yes.
Understand. Second follow-up is about the telecom operator-related competition. I think in terms of their focus on this enterprise business seems to have increased materially compared to, let's say, two years back kind of thing. My sense is intensity, at least from their perspective, seems to have increased. You don't think anything in marketplace or you think it is same? Because at least from interaction perspective, they are more vocal about their enterprise business.
Dipesh, which I've already mentioned, like, you know, like if you look at our business, we are not just depending on telcos. Okay? For example, Truecaller has nothing to do with the telco. WhatsApp has nothing to do with the telco. Email has nothing to do with the telco. Push notification has nothing to do with the telcos. Okay? They have very, very limited say in SMS. And also through interconnects, nobody has got any control on channel. We are allowed to connect to any of the telcos in India. I think seven telcos are offering SMS business. I cannot really talk about their strategy, but I see it's very negligible. I don't really waste my time discussing what that issue.
Okay. Last question. Can you share number of transactions processed by Truecaller in this quarter?
We already mentioned in the presentation. Can you please refer to the presentation?
We will share it separately with you.
Yeah, it is not there only for a month you're given. Thanks.
Yeah.
Thank you. The next question is from the line of Amit Mishra, Individual Investor. Please go ahead.
Hello. Hi everyone. Congratulations on very good financial year. I have two questions. The first one is about the you know, Mr. Uday Reddy this morning came on CNBC and give a good talk. He discussed about 5, 6 platforms to be released in next 11 months. My question is, I'm assuming that there are like features on Wisely, additional features on Wisely, because we are following one platform strategy. Can you give some ideas like in what sort of areas would these be like voice, video or. Can you please elaborate on that?
If possible. Amit, it's a good question. Like, all I said in today's conversation is, like, you know, we are launching the products which are going to work on Wisely platform. Wisely is a platform whereas all the platforms, be it Truecaller, be it WhatsApp, be it SMS or email, any other platform or any other product that you think of are going to ride on the single platform. That's the reason we always call it as platform of platforms. Okay. We don't want to call it some platform. These are all usually used in the words and.
As you rightly said, we have a single platform strategy, and either we develop some of the other products or we allow the other platform or products to ride on our platform. Okay. To answer your question, yes, we are working on a couple of large products, which I cannot really talk about it. We are also launching some of the additional features on existing platforms. Let's. I'll let Deepak Goyal.
Yeah, just a quick follow-up on this. Voice can be processed already on Wisely, right? And video as well, you have capability to process. Like I'm talking about more from, you know, markets outside India. I think they have, you know, much wider use of these features compared to India, I think.
Amit, like, you know, as of today, none of the video platform or products have been integrated with Wisely. In future, 100% yes. That video is going to pick up a lot. I don't know the time frame, but definitely, that will be one of the channels that we're going to allow to work with.
Second question is about you know the tender business which is you know with global clients and they're frequently tendering the business. How we are doing how we are faring there? If competitors are lowering their bids what is our strategy basically to counter that you know to not lose the business?
Deepak, you wanna take that?
Yeah, sure. Amit, we are doing fairly okay. You know, in fact, if you see, we are representing most of the top ten tech giants, right? These are guys who keep on doing. I think you're referring to them only, and they keep on doing.
Yes.
The tenders every two years or every year and all that. Okay. We are very much there. As far as, you know, see, this pricing is part and parcel of the business, right? I mean, if the prices go down then, you know, we also further negotiate with the telcos and all that. It is, you know, you can see in our margins are very much stable. You know, that reflects that everything is fine.
Yeah. I mean, like, that makes me wonder, like, if we are losing some business because we want to also maintain the margin, and rightly so. I'm not questioning that part of the strategy. Are we, like, losing business because of margins in some places or?
See, I wouldn't call it losing a business. I would,
Yeah.
See, this is you look at your business and you want to retain your profitable business which is doing well and you want to focus on more and more profitable business going forward basis, right? Sometimes you let go certain business, certain volumes to your competition. Yeah, that is all part and parcel of you know, your overall strategy, right?
Right. Right. Right.
Yeah.
Understood. Yeah.
As Uday said, you know, we are committed to the rule of sixty, and that's what matters to us.
Perfect. No, no, that's very good. This answers this question. This is the last one. On the Truecaller partnership, what would be the revenue model? Because it's like business messaging service for Truecaller and it would be per transaction you would be charging something or we are going to give them, you know, a monthly basis, you know, some charge they will pay us because Wisely is powering that part of their new business. Is there any opportunities you see, you know, which can benefit Tanla by accessing Truecaller's ecosystem, clients and 300 million-strong users there. Can you elaborate more?
Amit, if you see. See, we charge our customers on per transaction basis, okay? We have a revenue share model with Truecaller. We are partners there, right? As far as the benefit is concerned, I mean, it's like this, we have 300 million user base, okay? Which is a very, very niche kind of segment, right? Obviously, they have smartphones, and they are the ones who actually care about spam and everything, right? You can understand we're talking about very, very premium user base of Truecaller. It's 300 million, which is equivalent to any large telcos in India, right? We have that kind of base with us.
We see that, you know, this Truecaller business messaging fits right between SMS and WhatsApp, somewhere in the middle, right? Which is, there is a big gap there, and it sits right there. We are going to solve a lot of business, you know, problems of our enterprise customers with Truecaller coming in, right? You would see in the next few weeks and months then when we roll out more and more use cases on Truecaller, and which is actually going to benefit our enterprise customers.
Yeah. Because I was asking this because this is exclusive partnership, unlike WhatsApp. WhatsApp is being served by other competitors as well. This is exclusive partnership, so I see, like, great potential here. Of course, you must be seeing much bigger picture. When can we expect something tangible from this partnership added to the top line? Just some timeline, if you can.
I mean, you know, we are going commercially live very soon. You would see, you know, the impact in the subsequent quarters.
Okay. Can we expect in Q2?
Well, Aravind, you would like to say something here?
No, no. I think.
Can we
As Deepak said, you know, we are going live. It is real, you know. You will start seeing it incrementally every quarter going forward. It's a big bet for us, so it will reflect in Q2 also, absolutely.
Okay. Thanks, everyone. Good luck for this one, this year.
Thank you. Thanks, Amit.
Thank you. Due to time constraint, this was the last question for today. I now hand the conference over to Ms. Ritu Mehta for closing comments.
Thank you, everyone. That was the last question for today. In case we couldn't take your question due to time constraint, please feel free to reach out to investor relations team. Have a good day.
Thank you then. Thank you.
Thanks for your time. Bye-bye.
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.