Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tanla Platforms Ltd (BOM:532790, Financial) delivered a 10% year-on-year revenue growth.
- Gross margin percentage improved on both year-on-year and sequential basis.
- The company successfully mitigated the impact of exiting the Vi ILD deal by focusing on strategic areas, leading to 13% organic growth.
- Significant growth in OTT contributions, with revenues moving from 18% to 20%, reflecting a 177% year-on-year increase.
- Tanla Platforms Ltd (BOM:532790) has been recognized by Gartner as a Visionary in the CPaaS Magic Quadrant for two consecutive years.
Negative Points
- The international messaging business faced disruptions due to global CPaaS player consolidation and shifting use cases to OTT channels.
- Exiting the Vi ILD deal resulted in a loss of around INR120 crore in revenues and INR30 crore in gross margins.
- WhatsApp revenue growth has moderated, showing the lowest growth in the last four to five quarters.
- The enterprise growth excluding OTT has been soft for the last three quarters due to a drop in volumes.
- The company faces challenges in the international market, with significant erosion in international messaging volumes.
Q & A Highlights
Q: My first question is on the WhatsApp revenue driving enterprise growth. Given the recent trends, can we expect moderation in growth, or will the momentum continue? Also, when can we see volume growth recovering in the enterprise segment?
A: WhatsApp revenue has scaled significantly, growing from INR 50 crore to INR 150 crore per quarter. While growth rates have moderated, the absolute incremental revenue remains strong. We are bullish on OTT growth, including WhatsApp, RCS, and Truecaller. For non-OTT, particularly SMS, Q2 and Q3 are expected to be stronger due to seasonality, and ILD volumes seem to be bottoming out.
Q: On the Wisely ATP deal, can we expect it to scale similarly to Trubloq in the next two to three years?
A: We have not disclosed the specific OTT involved in the Wisely ATP deal and cannot share more details at this time. However, we are optimistic about its potential and will provide updates when appropriate.
Q: How do you see margins evolving, especially with the impact of the platform business and new revenue streams?
A: Despite exiting a significant platform deal, we have maintained margins due to strong growth in other platform areas. As new platforms like RCS and MaaP scale, we expect a favorable shift in the revenue mix towards higher-margin platform business.
Q: Can you explain what digital platform revenue entails?
A: Digital platform revenue comes from deploying platforms where we earn either a revenue share or subscription fee without associated service costs. This operates like a SaaS model with high gross margins and predictability, including platforms like Trubloq and Wisely ATP.
Q: What was the impact of exiting the Vodafone deal on revenue and margins?
A: The Vodafone deal contributed around INR 22 crore in revenue and INR 21 crore in gross margin in Q1 last year, which is now zero. Despite this, we have managed to maintain overall margins through growth in other areas.
Q: What is your market share in the OTT business, particularly WhatsApp?
A: We estimate our market share across all OTTs to be around 25%, up from approximately 20% last year. We are gaining share and remain confident in our growth prospects.
Q: How does RCS compare to WhatsApp in terms of use cases and pricing?
A: RCS offers rich media messaging similar to WhatsApp but does not require a separate application, as it integrates into the SMS inbox. Pricing for RCS is typically between SMS and WhatsApp, driven by mobile carriers.
Q: What are your plans for Wisely ATP in international markets?
A: We have a global contract for Wisely ATP to combat scams, but we are focusing on achieving strong results in India before aggressively pitching it internationally.
Q: What is the status of the ValueFirst international acquisition?
A: We expect to finalize the acquisition soon, pending RBI approval. The unit is projected to generate INR 200 crore in annual revenue with low single-digit EBITDA margins.
Q: What are your plans for the company's cash reserves?
A: We have not made any decisions regarding the use of cash reserves, such as buybacks or acquisitions. Any updates will be communicated in due course.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
