Q2 Concall notes,
Financial Highlights (Q2):
- ₹1,000 crore revenue, 19% growth, 30% PAT growth.
ValueFirst Update:
- Strong Q2 performance, ₹100 crore contribution.
- Improved EBITDA to 20%, targeting 15% post-consolidation.
- Overseas acquisition in Q3, adding ₹60-70 crore quarterly.
Organic Growth:
- 7% YoY revenue growth.
- 7% volume drop in domestic business due to demand elasticity.
Wisely ATP Innovation:
- Recognized as a visionary in Gartner’s Magic Quadrant.
- Finalizing deals with banks, expected to go live in Q3.
Q3 Outlook:
- Expected growth quarter.
- Levers: domestic price increase, potential Phase 2 spends.
- Margins expected to remain stable.
Customer Reaction to Price Increase:
- Price hike initially impacted budgets.
- Expect promotional spend to rebound in Q3 during the festive season.
Margin Impact of Price Hike:
- Price increase won’t dilute margins, and it could enhance them in the long term.
VIL Contract Loss:
- Anticipated impact unlikely in Q3; seeking to compensate through other business.
- No significant margin pressure foreseen.
Wisely ATP Update:
- Successful POC with four major banks, reducing complaints by 90%.
- Progress slowed due to regulatory approvals; clarifications with RBI, TRAI, and DOT.
- Commercial agreements with banks in the works, with one major bank close to finalization.
- Plan to go live with Wisely ATP after agreements, enabling further enterprise deals.
Status of E-commerce Deal:
- International customer onboarding is complete.
- Revenues and traffic started flowing into platforms.
- Full capacity expected by the end of Q3.
NLD SMS Pricing:
- NLD pricing remains cheaper than RCS and WhatsApp.
- Other channels offer rich media, conversational features, and long messages.
- Customers have the flexibility to choose channels based on their needs.
E-commerce Deal Ramp-Up:
- Aim to handle about two-thirds of the e-commerce player’s traffic.
- Striving to achieve this goal by the end of Q3.
WhatsApp Market Share:
- 15% market share.
- Recent Growth Partner of the Year award from Meta.
- Market share boosted by ValueFirst acquisition.
- Rapid growth in WhatsApp business and other OTT channels.
- Expanding use cases and user journeys.
Future Market Share Expectations:
- Expect significant growth in market share over the next 2-3 years.
UPI Transactions:
- Present in the BFSI sector, with a 70-80% presence in originating banks.
- UPI transaction share linked to customer base.
- Presence in seven to eight of the top 10 banks, contributing to UPI transaction share.
Greater than ₹50 Crore Client Bucket:
- From 19 clients in the previous quarter, now at 17.
- Includes ValueFirst, which is an intercompany customer.
- Lower spends and the absence of IPL-related seasonal spends in Q2 contributed to the reduction.
- No significant customer loss, some clients shifted from ₹13 crore to ₹12.2 crore per quarter.
Volume Degrowth:
- Sequential domestic business volume declined by 7%.
- No detailed breakdown of volume impact provided, but it’s acknowledged that there may have been year-on-year benefits from ILD and NLD price increases.
Wisely ATP Deployment in Saudi Arabia:
- Pursuing ATP opportunity in Saudi Arabia.
- Delays due to Data Protection Bill approvals in both India and Saudi Arabia.
- Impact expected to be significant once deployed.
- Focus on tight integration with mobile carriers and data privacy considerations.
Revenue Impact and TAM for Wisely ATP:
- SaaS-based product with subscription pricing.
- TAM mentioned is for the revenue the company aims to retain, not total TAM.
- Ongoing work to determine revenue share with ecosystem players.
- Intent to minimize the impact of Vodafone’s exit from the firewall business in the fourth quarter.
- Levers include domestic price increase, new solutions on OTT channels, and a focus on innovation.
Expansion Strategy and Focus on India:
- History of operating in multiple countries.
- Current strategy is to focus on India, the largest opportunity.
- Understanding of the local market and tariffs.
- Aim to become market leaders in each geography before expanding to other countries.
Customer Loss and Competition:
- No customer loss to Route Mobile.
- Emphasis on superior technical capabilities and features.
Market Dynamics:
- Pricing pressures in the Indian market due to price sensitivity.
- Customer demand for the best solutions at competitive prices.
Strategies and Innovations:
- Focus on innovation in platforms, solutions, and offerings.
- Approach to customers: Reducing overall costs and increasing ROI.
- Largest OTT network for differentiated communication options.
- Offering alternatives like RCS, Truecaller, and WhatsApp for improved engagement and ROI.
- Efforts to provide value-added services and cost reduction solutions.
Partnership with Kore.ai:
- Kore.ai partnership for over a year.
- Realized Kore.ai platform better suited for European and American customers, not Asian.
- Decision to work with other similar platforms to expand business in India.
Co-sell Arrangement with Microsoft:
- Long-term agreement with Microsoft.
- Technology changes in cloud space and AI/ML in the last year and a half.
- Watching the situation closely in light of DPDP bill and evolving regulations.
Impact of Vodafone India Deal on International Traffic:
- The termination of the Vodafone India deal has no impact on the company’s International Long Distance (ILD) business.
- The ILD business can continue independently, without relying on a specific telecom operator.
- The company’s role in the Vodafone deal primarily involves managing their Firewall, which distinguishes between international and domestic messages for revenue protection.
- Other ILD businesses conducted by entities like Karix Mobile and ValueFirst remain unaffected by this termination.
- Pricing and services provided to other telecom operators are not impacted by the conclusion of the Vodafone India deal.
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