Voice of the head – Non-SMS channels seeing healthy traction
We interacted with Rajdipkumar Gupta, MD and CEO – Route Mobile, to understand the demand environment/outlook. KTAs: i) After a steep decline in Q1 revenue, the business is seeing signs of stability on sequential basis. Route expects to fare better in Q2 vs Q1. Further, Q3 is likely to benefit from seasonality. The SMS demand environment has been steady since a few months, while traction is seen across non-SMS channels like WhatsApp, RCS, Email, etc. ii) Route intends to defend gross margin at the Q1FY26 level (~21%) and aspires to improve EBITDAM to 12-13% in the medium term. iii) It is leveraging Proximus’s synergies through Telesign’s expertise in digital identity and fraud prevention and, with BICS’s integration into Proximus Global, it can gain direct access to the global telecom ecosystems for scaling-up its firewall solutions. iv) It is working on driving cross-sell/up-sell opportunities, thus offering Telesign’s digital identity and fraud prevention solutions across Route’s stronghold markets in Asia, Africa, and the Middle East along with Route’s CPaaS offerings to enterprise client networks in Europe and US. v) The company onboarded a major LatAm MNO, and is expected to roll out AI-driven firewall and threat protection solutions across its markets. The management refrained from providing specific revenue growth/margin guidance, given continued softness in the A2P SMS segment, customers shifting to alternate channels, and macro uncertainty; however, it indicated signs of stability on sequential basis and its aspiration of delivering sustainable profitable growth over the medium term. We retain BUY on the stock with TP of Rs1,100, at 18x Jun-27E EPS.
Unlocking synergies with Proximus Group
Route Mobile is expected to benefit from synergies with the Proximus Group by utilizing BICS’s global operator relationships and routing efficiencies, while also leveraging Telesign’s enterprise relationship and expertise in digital identity and fraud prevention. Proximus Global unlocks a unique value chain that seamlessly connects enterprise demand (Route Mobile), operator access (BICS), and digital trust (Telesign). It could further bolster cross-selling of products across regions and deepen credibility with large enterprises, thus accelerating penetration in Europe and North America—markets where it has historically had limited presence.
Advancing up the value chain
Route is moving up the value chain by shifting, from being a channel provider to a solutions-led CPaaS player. It is monetizing telecom network APIs via initiatives like Catana/Aduna, while investing in digital identity solutions as authentication shifts beyond SMS. In FY25, new product revenue grew 38% YoY on rising enterprise demand for IP-based messaging—WhatsApp, RCS, and Email—as well as end-to-end omnichannel capabilities. Alongside AI-driven fraud protection (365guard) and strategic partnerships and alliances with Microsoft, Infosys and other partners would position Route as a trusted solutions enabler. The CPaaS industry faced growth challenges in recent quarters, though the management remains optimistic about the medium-term growth potential.
