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Tanla Platforms Limited Q1 FY25 Earnings Call Summary
Call Details • Date: July 19, 2024 • Duration: 39 minutes • Participants: CEO, CFO, Head of Investor Relations, and various investment firms • Transcript available on investor relations website • Signed by: Seshanuradha Chava, General Counsel and Company Secretary
Key Highlights • Revenue Growth: • Achieved 10% year-over-year revenue growth • Stable gross margin despite international messaging sector challenges • Strategic Shift: • Increased OTT revenue contributions from 8% to 20% • 13% organic growth excluding Vi ILD deal impact • New Launch: • MaaP platform for Google RCS expected to drive significant revenue growth
Management Insights • Market Position: • Strong commitment to innovation and market leadership • Q&A Session: • Addressed concerns about WhatsApp revenue growth and margin stability • Management expressed confidence in future performance
Specific Inquiries • Digital Platform Revenue: • Explained as a SaaS model with high gross margins • Impact of Vodafone's Absence: • Revenue drop of approximately INR 22 crore in Q1 • OTT Market Share: • Estimated around 25%, an increase from the previous year • RCS Advantages: • Integration into SMS inboxes and promotional messaging capabilities
Product and Market Strategy • Wisely ATP Product: • Ongoing international market strategy with a cautious approach • ValueFirst Acquisition: • Expected annual revenue of INR 200 crore but low EBITDA margins • Daily Metro Business Loss: • Voluntary exit from Vodafone deal; focus on technological strengths • MaaP Model: • Expected to generate meaningful revenue starting in Q2
Competitive Landscape • No significant changes in competition noted • Optimistic about future opportunities while maintaining a cautious approach to smaller deals
Key Management Participants • CEO: Uday Reddy • CFO: Aravind Viswanathan
Financial Performance Highlights • Platform Business Growth: • Growth rate slowed to 10% due to exit from Vodafone deal. • Gross margins in the platform segment increased by 35%. • UPI Transaction Impact: • Banks limiting notifications for smaller transactions affecting messaging business. • OTT Revenue Growth: • Increased from 4% in FY23 to 12.5% in FY24.
Future Outlook • OTT Market Potential: • Significant growth expected in the OTT segment. • Decline in international SMS volumes has likely bottomed out. • Fiscal Year 2025 Outlook: • Optimism about OTT growth opportunities, but no specific guidance provided.
Market Position and Competition • OTT Messaging Adoption: • Substantial increase in enterprise adoption noted. • Potential to become the largest player in the Indian OTT market. • Regulatory Challenges: • Importance of regulatory clarity for product adoption emphasized.
Financial Clarifications • Impact of Vi Deal: • Residual impact expected in Q1; traction seen in platforms. • Approximately ₹5 crore in losses remain from the Vi deal. • Digital Platforms Contribution: • Contributed 34% to gross profits, with future growth expected.
Regulatory and Competitive Landscape • Collaboration and Competition: • Collaboration with Tech Mahindra and IBM on Trubloq DLT platform. • Data Privacy Regulations: • Pending implementation of the DPDP bill in India; optimism for overseas markets.
WhatsApp and OTP Limitations • Regulatory Restrictions: • RBI mandates SMS for OTPs, limiting WhatsApp usage. • Margin Comparisons: • Margins for WhatsApp and SMS are currently similar, with potential for higher profitability.
Capitalization of Expenses • Expense Management: • Only employee costs related to product development are capitalized; operational costs fully expensed.
Conclusion • The call concluded with an invitation for further questions to the Investor Relations team.
Earnings Call Overview • Date: January 24, 2024 • Transcript submitted on: January 30, 2024 • Key Participants: • Uday Kumar Reddy (CEO) • Aravind Viswanathan (CFO)
Financial Performance • Focus on Q3 results for the quarter ending December 31, 2023. • Revenue contributions discussed from: • International Long Distance (ILD) SMS services • National Long Distance (NLD) SMS services • ILD facing challenges and decline in growth, but management believes revenues have bottomed out.
Market Trends • Shift towards alternative messaging channels (e.g., WhatsApp) impacting ILD volumes. • Domestic market growth driven by new use cases and messaging platform adoption.
Gross Margins and Messaging Concerns • Increased costs leading to lower margins in ILD compared to domestic messaging. • Shift towards RCS and WhatsApp for promotional messages noted.
Platform Business Insights • Softness attributed to the exit of the Vi contract, but growth in other areas. • New subscription-based deals in Advanced Technology Platform (ATP) expected to offset Vi loss.
Revenue Targets and Business Strategy • WhatsApp revenue target reached a quarterly run rate of ₹100 crores. • Discussion on potential demerger of the platform business; focus on building the business first.
Total Addressable Market (TAM) • Projected growth from $2-3 billion to $5-6 billion by 2027. • Steady growth anticipated, with some areas experiencing exponential growth.
Scalability and Regulatory Challenges • Scalability of ATP product depends on bank user base; significant commitment from a major private bank noted. • Frustration expressed over regulatory delays affecting product adoption.
Merger and Volume Growth • Regulatory approvals causing delays in the merger of VF Middle East and Indonesia. • Confidence in achieving double-digit volume growth in the upcoming fiscal year despite soft volume growth attributed to cost-cutting measures.
R&D Expenditure • R&D spending reported at ₹40 crores over nine months, averaging ₹12-14 crores per quarter. • Successful sale to a top bank with potential for significant subscription-based revenue.
Conclusion • Ongoing investments in R&D and new product development. • Target growth rate of at least 20% for the digital platform over the next few years. • Invitation for further inquiries to the Investor Relations team.
Tanla Platforms Limited Q2 FY2023-24 Earnings Call Summary
Key Highlights • Date of Call: October 20, 2023 • Revenue Achievement: Surpassed ₹1,000 crore for the first time • Growth Metrics: • 19% revenue growth • 30% increase in profit after tax (PAT) • Acquisition: ValueFirst contributed approximately ₹100 crore in revenue • Future Expectations: Anticipation of growth in Q3 due to price increases and seasonal spending
Organic Growth and Challenges • Organic Growth: 7% year-over-year increase • Volume Drop: 7% decline attributed to price elasticity and reduced promotional spending
Q&A Highlights • Price Increases: • Aravind Viswanathan stated they are not margin dilutive. • Contract Loss with VIL: • Uday Kumar Reddy does not expect margin pressure. • Wisely ATP Project: • Progress on regulatory approvals and commercial agreements.
Client and Market Insights • E-commerce Deal: • Onboarding complete; revenue generation has begun. • Market Share: • Gaining ground in WhatsApp segment and UPI transactions. • Client Bucket Decline: • Decrease from 21 to 17 clients due to ValueFirst consolidation, not significant losses.
International Opportunities • Saudi Arabia ATP Opportunities: • Regulatory delays noted; strong revenue potential emphasized. • Vodafone Contract: • Chose not to extend due to Vodafone's financial situation.
Competitive Landscape • Route Mobile Concerns: • No customer losses reported; focus on maintaining competitive edge. • EBITDA Growth and Pricing Pressures: • Acknowledgment of pricing sensitivity among Indian customers.
Partnerships and Future Directions • Kore.ai Partnership: • May not be suitable for the Indian market; exploring other platforms. • Co-sell Arrangement with Microsoft: • Acknowledgment of evolving technology landscape.
Technical Clarifications • Firewall Management: • Current management of domestic messages; no impact on ILD business post-deployment.
Conclusion • The call concluded with an invitation for further questions via email, emphasizing the company's strategic focus on the Indian market and cautious international expansion.
Key Highlights • Date of Call: July 21, 2023 • Financial Performance: • Reported EBITDA: 20% • Strong cash flow generation despite a seasonally weak quarter
Strategic Investments • Acquisition: ₹375 crore acquisition of ValueFirst • New Product Launch: Anti-phishing platform, Wisely ATP, expected to gain traction in Q2 • Contract Signing: Major e-commerce player for messaging services in India, targeting 60-70% market share
Q&A Session Insights • Market Share Inquiry: Target of over 60-70% for e-commerce messaging services • Pricing Strategy: Upcoming price resets to be clearer by end of Q2 • Competition Concerns: Tanla's competitive edge with bundled services and Wisely ATP • Capital Expenditures: Focus on platform investments and innovation center
Customer Base and Revenue Trends • Kore.ai Partnership: Secured significant banking client in India; advanced discussions in Indonesia • Revenue Growth Expectations: Historical increases from Q1 to Q2, influenced by IPL's impact • Employee Strength: Combined workforce of Tanla and ValueFirst expected to be around 1,000-1,100
Market Potential and Customer Roles • ATP Market Potential: Significant but too early for precise figures • Customer Roles: Banks as primary customers for ATP services to combat phishing
Financial and Strategic Clarifications • HDFC Bank Payment Model: Charge per user per month for SMS services • International Expansion Plans: Targeting Saudi Arabia and Indonesia post-ValueFirst acquisition • Cash Acquisition Strategy: Aimed at avoiding dilution, reflecting a stronger cash position
Closing Remarks • Gratitude Expressed: Thanks to participants and invitation for further inquiries • Call Conclusion: Operator thanked attendees and indicated the call's end
Announcement Details • Date of call: June 9, 2023 • Purpose: Discuss proposed acquisition of ValueFirst • Key participants: • Uday Kumar Reddy (CEO) • Aravind Viswanathan (CFO)
Strategic Rationale for Acquisition • Importance of local market knowledge • Market stabilization post-Airtel entry • Five key reasons for acquisition: • Enhanced bargaining power • Complementary customer base • Potential operational efficiencies • Cultural fit • Access to talent • Confidence in scaling international operations and driving growth
Acquisition Overview • ValueFirst India Acquisition • 100% purchase from Twilio for $42 million • Expected closure: Early July 2023 • Consolidation in Q2 financials • ValueFirst Middle East Acquisition • Purchase for ₹20 crores • Expected closure: September 2023 • Consolidation in Q3 • Combined revenue: Approximately ₹950 crores • Expected net incremental revenue: ₹650 crores
Financial Projections • ValueFirst's current EBITDA margin: ~5% • Tanla's EBITDA margin (Q4 FY23): ~20% • Goal: Improve ValueFirst's profitability to double digits • Expected 2% dilution in EBITDA margins from acquisitions • Attractive valuation: 7x EBITDA
Q&A Highlights • International Revenue Potential • Growth opportunities in Saudi Arabia and Indonesia • Potential for upselling services to ValueFirst clients • Margin Improvements • Projected increase of 140-150 basis points • Exit margin expected around 20% • Synergy Benefits • Cost synergies and improved profitability through integration • Customer Overlaps • 60% overlap in customer messaging • No anticipated revenue loss; opportunities for cross-selling • Retention Program for ValueFirst Employees • RSU plan for top 20-25 employees • Total allocation of ₹50 crores over two years
Additional Inquiries • Rationale behind Twilio's acquisition and sale of ValueFirst • Industry consolidation effects on revenue negotiations with telcos • Request for detailed business segment matrix in future reports
Conclusion • Call concluded with thanks and invitation for further inquiries to the investor relations team.
Submission Details • Date of submission: May 3, 2023 • Earnings call date: April 27, 2023 • Compliance with BSE and NSE regulations • Key management present: Uday Kumar Reddy (Chairman & CEO), Deepak Goyal (Executive Director), Aravind Viswanathan (CFO)
Key Highlights • Opening Remarks • Ritu Mehta emphasized forward-looking statements and risks. • Uday Kumar Reddy introduced executives and discussed strategic updates.
• Business Strategy • Focus on Platform and Enterprise businesses with separate EBITDA reporting. • Significant growth in digital interactions, especially UPI transactions. • Target market projected at USD 5-6 billion by 2027, potentially USD 11 billion with expansion.
• Investments and Innovations • Over ₹175 crores invested in FY '23 across four segments: Wisely Communicate, Wisely Engage, Wisely Protect, Wisely Experience. • Development of the Wisely platform for rapid solution deployment.
• Financial Performance • FY '23 revenues: over ₹3,350 crores; PAT: around ₹450 crores. • Improvement in profitability with gross margins returning to 20%. • Commitment to return 30% of consolidated PAT to shareholders.
Future Outlook • Detailed financial reporting for Enterprise and Platforms starting Q1 FY '24. • Optimism for growth in FY '24, especially in the Enterprise business with new customer onboarding.
Q&A Session Insights • Enterprise Business Growth • Deepak Goyal discussed growth from existing and new large customers. • Emphasis on transaction-based business growth, particularly UPI.
• Product Developments • Updates on Wisely ATP and its positive reception from banks. • Focus on newer communication channels like WhatsApp and RCS.
• Geographic Expansion • Positive performance in UAE with expectations for significant revenue growth in FY '24. • Interest in expanding into the Middle East and Southeast Asia.
Conclusion • The call concluded with a focus on disciplined growth, enhancing shareholder returns, and navigating market challenges.
Tanla Platforms Limited Q3 FY23 Earnings Call Summary
Key Highlights • Date of Call: January 23, 2023 • Submission: Transcript submitted to BSE and NSE on January 27, 2023 • Management Present: CEO Uday Kumar Reddy and key executives
Financial Performance • Platform Business: • 26% year-on-year growth in gross profit • Significant contributions from Wisely platform • Strong performance in Wisely Network and Wisely OTT • Anticipated growth in Wisely Communicate and Wisely Engage • Enterprise Business: • 2% sequential revenue growth • Focus on customer retention and expansion into non-SMS channels (e.g., WhatsApp)
Q&A Session Insights • Competitive Landscape: • Increased competition from CPaaS providers and telecom companies • Successful customer retention and optimism for future growth • Operating Cash Flow: • Negative cash flow due to strategic investments; expected normalization in future quarters • Rule of 40 Metric: • Company performing well in platform business with 26% growth • Post-COVID Industry Growth: • Transaction volumes growing, especially in UPI, despite price erosion
Product Development and Challenges • New Platform Launch: • B2B product aimed at enhancing user protection, currently under regulatory approval • Volume and Revenue Growth: • Projected 15% volume growth in India, despite pricing fluctuations • EBITDA Performance: • Acknowledgment of challenges and confidence in future growth
Strategic Focus • Wisely Communicate Features: • Emphasis on blockchain-based security and API access • Revenue Goals: • Aim for each Wisely platform to achieve gross margin of ₹100 crore • Market Dynamics: • Increased product penetration among top customers • Non-SMS revenues now 14% of enterprise business, up from 10%
Future Outlook • Scalability of Platform Business: • Potential to surpass enterprise volumes in 4-5 years • Global Expansion: • Focus on demonstrating value in India before pursuing global opportunities • Investor Relations: • Invitation for further questions directed to the Investor Relations team
Conclusion • The call highlighted Tanla Platforms Limited's strong performance in its platform business, strategic focus on customer retention, and optimism for future growth despite competitive pressures and market challenges.