Affle (India) Ltd (AFFLE) Q2 FY23 Earnings Concall Transcript

Affle (India) Ltd (NSE:AFFLE) Q2 FY23 Earnings Concall dated Nov. 08, 2022

Corporate Participants:

Chetan Shenoy Anand — Share and Stock Brokers.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

Analysts:

Shobhit Sangro — Anantara Brokers — Analyst

Abhishek Bhandari — Nomura. — Analyst

Rahul Jain — Dollar Capital. — Analyst

Anmol Garg — DAM Capital — Analyst

Bharat Shah — ASK Investment Managers — Analyst

Ashwin Mehta — Ambit Capital. — Analyst

Arun Prasath — Spark Capital. — Analyst

Mayank Babla — Enam Asset Management. — Analyst

Vina Mota — Stalin — Analyst

Raj Mohan Venkataraman — Individual Investor. — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY 2023 Earnings Conference Call of Affle (India) Limited, hosted by Anand Rathi Share and Stock Brokers. [Operator Instructions] I now hand the conference over to Mr.Chetan Shenoy from Anand Rathi Share and Stock Brokers. Thank you, and over to you.

Chetan Shenoy Anand — Share and Stock Brokers.

Thank you, Rutuja. Good morning, everyone. On behalf of Anand Rathi, — we welcome you all to the Q2 and first half FY ’23 Conference Call of Affle India Limited. I take this opportunity to welcome the management of Affle (India) Limited represented by Mr. Anuj Khanna Sohum who is our Managing Director and Chief Executive Officer of the company; and Kapil Mohan Bhutani, who is Chief Financial and Operations Officer of the company. Before we begin with the discussion, I would like to remind you that some of the statements made in today’s conference call may be forward-looking in nature and may involve some risks and uncertainties. — kindly refer to slide 26 of the company’s Q2 earnings presentation for a detailed disclose. I will now hand over the call to Mr. Anuj Khanna for his opening remarks. Thank you, and over to you, sir.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Thank you. Good morning, everyone, and thank you for joining the call today. I trust that all of you are keeping in good health. We achieved robust organic growth in the first half of this financial year, despite the ongoing global headwinds that have impacted businesses globally. We closed this quarter with our highest quarterly revenue run rate highest conversions and highest EBITDA anchored on our Apple 2.0 growth strategy, tech innovations and sustainable long-term value creation. Apple delivered year-on-year organic growth revenue and revenue growth of 29.1% and PAT growth of 39.6% in Q2. and revenue CAGR of 61.2% in Q2 over the last 3-year period, much ahead of the industry growth trends. Our CPCU business noted a strong momentum, delivering 64.7 million user conversions during the quarter, an increase of 32.7% year-on-year at an INR51 CPC rate. In terms of H1 FY ’23, we achieved year-on-year revenue growth of 6.4% and and PAT growth of 61.4%, and this was well supported with balanced organic growth over the first two quarters.

Our sequential growth was approximately 10% higher on revenue in India and similar trends in other emerging markets and 2% higher on revenue overall in Q2 and a clear pattern, a clear trend of bottom line margin expansion on both quarter-on-quarter and year-on-year basis. Our resilient performance in these testing times is a testament to our ROI linked CPCU business model, the broad-based balanced growth and strong on-ground teamwork across global emerging markets. However, we did see a negative impact of the global headwinds in developed markets, U.S. and Europe. If not for the negative impact in developed markets, we would have potentially earned around USD3 million to USD four million of revenue more in the first two quarters of this financial year. To mitigate the short-term impact, we have also realigned our execution strategies and operating resources to focus on improving our platform level pricing and profitability as well as maximizing our strategic partnerships and overall productivity with even greater emphasis on bottom line margin expansion and cash flow growth. Now as per our understanding of the trends in the industry or in discussions, the near-term industry growth outlook across global markets expect that approximately 10% sequential growth in H2 versus H1. — as more advertiser budgets are getting unlocked and balanced over the festive quarter and Q4 of this financial year. Apple’s strong organic growth momentum in H1 should enable us to beat any short-term industry trends in his and we can realistically aim to end FY 2023 with year-on-year organic growth percentage aligned with the long-term industry growth of 25% CAGR over the next few years. Given our asset-light platform-based business model, it is reasonable to expect margin expansion, and thus, our overall growth percentage on EBITDA and PAT in H2 will be significantly higher than our growth on revenue.

In view of our long-term optimistic growth outlook of 25% Asia, — we are continuing to invest in our organic growth operations, and we are also actively evaluating inorganic growth is in line with our APlu2.0 growth strategy and execution track record. We are placing even greater emphasis on value-driven strategic investments based on bottom line financial fundamentals and cash flow returns, and we remain optimistic about our bottom line growth for this financial year. Our focused execution on Apple 2.0 strategy anchored on the two Bs and the two old level partnerships have enabled us to drive deeper verticalization for our advertisers. This has further strengthened our moat and our direct customer contribution has continued to be stable at 74% of our revenue in H1 FY ’20. We further established our industry part leadership position by winning the prestigious enabling Technology Company of the Year Award for the fourth consecutive year at the MMA Smart India 2022 and several other campaign awards at industry events. To reflect upon our platform strength, we have also included three case studies in our winnings presentation focused on omnichannel solutions for our customers in retail, entertainment, food tech sectors and emerging markets. With that, I’ll now hand over the discussion to our CFO, Kapil Bhutani, to discuss the financials. Thank you, and over to you, Kate.

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

Thank you, Anuj. Wishing everyone a good day. In quarter two financial year 2023, the company reported revenue from operations of INR3,545 million a growth of 29.1% year-on-year. Sequentially, we have — while our overall revenue has increased by 2%, we have a significant revenue growth of 10% in India and similar growth trends in other emerging markets. on a quarter-on-quarter basis, except for the developed markets, which anyway has much lower contribution for us on a consolidated basis, our business across emerging markets remains resilient and strong bottom line growth momentum and margin expansion. Our EBITDA for the quarter stood at INR723 million, an increase of 38.8% Y-o-Y and 5.3% growth on quarter on cost on quarter basis. EBITDA margin stood at 20.3% in this quarter versus 19% in quarter two and 19.8% in quarter one sequentially. We are focused on higher profitability margin expansion. This quarter, our EBITDA margin crossed 20% plus after the fourth quarter period with the profit after tax also slightly notched up. In terms of opex inventory and data costs, stood at 62% of our revenue from operations witnessing improvement of improvement over our last few quarters then.

Our employee benefit expense for the quarter increased sequentially due to investment in human resource focused investment in human resources, focused on business development expertise and some currency adjustments. Further, we also rolled out our platforms in other regions, including Lat Am region. Our normalized PAT for the quarter was $587 million, an increase of 39.6% Y-o-Y. Normalized PAT margin increased to 16% versus 14.9% in Q2 last year. and 15.6% in previous quarter sequentially. We remain focused on working capital management. Our cash flow from operations and collection efforts have been robust. We are not seeing any increase in pre loss was — in regards to our balance sheet, you would have noticed a significant increase in the line item as the other financial assets. This increase is on account of fixed deposits having a longer tenure of more than 12 months and thus classified as noncurrent. As an update on our investment and talent unlimited online travel limitations, i.e., models — this investment continues to be classified as held for sale by the Board of the company while we continue to maintain 26.24% stake in problem. Looking ahead, we remain confident of long-term growth prospects. — and we’ll continue to invest in our organic growth as well as evaluate inorganic opportunities with well celebrated focus on higher bottom line growth for the financial year 2023 and beyond. With this, I end my presentation. Let us please open the floor for questions.

Questions and Answers:

Operator

[Operator Instructions} Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shobhit Sangro from Anantara Brokers. Please go ahead.

Shobhit Sangro — Anantara Brokers — Analyst

So, I have a few questions. So, given the macroeconomic risk globally and especially in U.S. and Europe, so have you seen any air budget cut from our clients, and what are the sentiments? And how do you see the second half of this fiscal? And second question is how much your Jampp contributed this quarter as compared to last quarter.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Thanks for your questions. I think in my commentary, I had already provided actually quite a lot of detail on what’s the impact of developed markets per se. Now the way we should look at it is that Affle’s business is in a very privileged position because of our deep focus on India as well as other global emerging markets. And because of that, we are continuing to see a very clear growth pattern in India as well as in other emerging markets on a sequential basis. When we compare Q1 to Q2, we see a very clear sequential growth pattern in India and that pattern is also similar in other emerging markets. Now in developed markets, and what, and because of that, a lot of the investors are saying, “Oh, how come Affle is so immune to what’s happening to really keep on growing.

And I think we have a differentiated business model, emphasis in emerging markets, and that keeps us reasonably insulated and privilege of what’s happening, but there is definitely a negative impact in the global developed markets, primarily in U.S. and Europe, and we have also in this commentary quantified that. We said that, look, if not for the macroeconomic global headwinds, we believe we would have earned USD three million to four million additional revenue in the first two quarters in H1 this year. Now even without that, I think our performance is very resilient. But in case the budget cuts or the impact of the global headwinds was to be not there, we would have actually earned $3 million to $4 million more in H1, and that would have been even more phenomenal in terms of results. Now then that comes to your second part of the question, like what’s happening in H2, right? What should we expect in H2? And we have also given a very clear direction there that overall, in H2, we expect to see that the industry growth outlook based on our assessment of the discussions in the industry forums, and we have tagged into so many industry forums, we’re listening to our competitors, we’re listening to what’s happening across all markets.

And we understand that the industry growth outlook expected at around 10% sequential growth in H2 versus H1. So even with the macroeconomic risk factors, we will still continue to be growth oriented. And as far as Affle is concerned, I mean, obviously, our growth momentum in H1 year-on-year basis were quite substantial. And on a sequential basis also, we have seen that Q1 to Q2, we have been able to keep a good growth momentum overall, at least on the global emerging markets. And with the fact of the festive season, the festive quarter as well as the balanced budgets that the advertisers are looking to increase over the festive quarter as well as Q4, it is reasonable to look at 10% sequential growth. And even with that, we are already emphasizing that our focus on bottom line margin expansion profitability would absolutely ensure that our EBITDA and PAT is growth is better than the growth because of the bottom-line sensibility and focus and the asset-light business, every incremental growth is obviously leading to better margins and profitability. So with that, I think I would like to answer the question at that. Now with respect to Jampp, I think we are already looking at the situation where last year, Q2, we also had Jampp.

This year, Q2, we also have Jampp. And the balances very clear that it’s 100% organic to organic comparison, there is no need to split and slice and dice into Jampp versus non-Jampp. But qualitatively speaking, Jampp is more calibrated on developed markets and rest of Affle’s business. So there is impact and we have quantified that. But overall, as a group, now has an integrated proposition, we are seeing clear advantages because we’re also launching our other products and use cases in Latin American markets and so on and so forth. So there is a lot of positive synergies in year two of Jampp in terms of business expansion and bottom line performance. So we are quite satisfied with that. Can we take the next question, please?

Operator

Thank you. The next question is from the line of Abhishek Bhandari from Nomura.

Abhishek Bhandari — Nomura. — Analyst

Hi Anuj. I just have two questions. First is your investment in.

Operator

I’m sorry to interrupt you, Mr. Bhandari. May we request you to speak a bit louder. We cannot hear you.

Abhishek Bhandari — Nomura. — Analyst

Is it audible now?

Operator

Yes, please go ahead, sir.

Abhishek Bhandari — Nomura. — Analyst

Okay. Sorry for that. So Anuj, my first question is on your investment in Kashkaru. If you could explain the rationale for that investment? And how do you think that investment adds to your business more from a medium- to long-term perspective. That’s one. Secondly, on the Bob, I think you mentioned in the opening comment, it has been classified as a financial investment. And I think there was a press release will suggest that the deal with Capton possibly has not yet concluded. So maybe you could update on what’s happening on that particular one. Thank you

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

All right. I think both of these questions will be answered slightly differently. The first one is actually not an investment of Affle India Limited. It’s not part of the list co. It is an investment. It’s a financial minority investment made by the holding company from Singapore. And since the holding company has no other operating business other than its investments in the Affle India Limited as a promoter as well as any other investment that is doing, which are financial in nature. So that is to the extent I can speak with respect to pouring pounds, which is the entity which is a U.K.-based entity that owns the business of cash core India. And with respect to any strategic advantages or so on with respect to cash flow’s business in India, that our teams are actively exploring and everything else being equal, I think there will be natural inclination for gastro and Affle India to work together since they have a common shareholder in the holding company. So I think that’s to that extent. I think the second one is a more relevant question because it is linked to Affple India’s investment in Babel and, or rather Talent unlimited, which owns and operates under the brand of Babel in India. And yes, it is an investment that’s held for sale for certain reasons. I mean, but at the same time, the Krafton deal hasn’t happened because Krafton is a Korean company and as a Korean company, they have their own shareholders, they’re a public estate company in Korea. And there are certain complications with respect to the agent. Therefore, the closing didn’t happen as per the time. In fact, we extended the closing once and the closing still did not happen. And therefore, at the moment, we are not pursuing any further discussions with respect to Krafton as a potential buyer of that equity. We are going to explore further possibilities as the time unfolds. We are happy to maintain the 26.24% ownership until we find an honorable buyer who would actually close the transaction. So that’s pretty much it. And I think from a strategic point of view, Babel continues to be an important partner and our binocular keyboard focused on innovative related use cases. And then we are actively working with them to see how to grow that business.

Abhishek Bhandari — Nomura. — Analyst

Thanks Anuj and all the best. Yes, Anuj thank you. Thank you and all the best.

Operator

The next question is from the line of Rahul Jain from Dollar Capital.

Rahul Jain — Dollar Capital. — Analyst

Yeah. Hi. I hope my line is audible. I have one question on the group side. So, you were mentioning at something about the realigned strategy to the later it bit more on that? And to your comment of H2 growth of 10% over H1 would imply growth on a Y-o-Y basis for H2. So, I understand that delivering this would still be a credible given what kind of matters we have, but in that light as we presume that FY ’21 should be slightly lower organically while the CAGR acquisition of 5% as maybe over the four to five years?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think on your first question on realigned strategy, I think the core strategy is the same. When we talk about realigning the operating resources, I think we are essentially talking about deeper focus on pricing and profitability. So I did comment on that, right? I said like, what does that mean, right? And how do you decode that, right? So whenever there is a recessionary conversation or backdrop, there is infusible pressure on pricing. And I think one of the things that we’re doing is very strongly defending pricing even if you look at in Q2, I think we delivered our highest volume of conversions, but we held our pricing at INR51 as CPC, which is actually quite a commendable effort by our team. And similarly, focus more on profitability, right? Not just picking any business, but big business that is going to deliver profitability, big business that is going to deliver cash flow and credit risk managed business, right? So I think we are looking at the quality of business being made even more resilient in these times, and therefore, delivering a better impact on the bottom line. Same thing applies to — this is a great time actually to look at any better optimization where we can maximize the profitability of the company.

The same applies to all the assets that we are integrating, whether it is Jam or any specific organic or inorganic activity that the company is doing, the emphasis is disproportionately higher on bottom line focus. We have always been a bottom-line-centric company, unlike many other fast-growing tech companies. I think that’s one thing that differentiates Affle, and that is what our investors also value and take pride in. So that is what we are emphasizing here in terms of even deeper realignment on bottom line focus. While the time, the second part of your question is about growth. Now what I said is about 10% is the industry growth outlook that we have understood based on the industry forum discussions we would love to beat it. We have always love to beat industry average growth and whatever the times be. And from a bottom line perspective, we think that we will do even much better than that, significantly better than that. So Overall, we will end this year, hopefully, at a honorable, very honorable level of meeting or exceeding expectations from a bottom line perspective by any standard. Now like H1, we have already grown quite nicely, right? And next year H1, I believe that it should follow a similar trend, and we will continue to be optimistic because the emerging markets focused. I think there is reason to be optimistic and in H2, — as per what you said, the growth is going to be all it is, I think on a lower base, it’s actually easier to grow much faster. So I think I would still maintain that FY ’24 or ’25, the outlook for the company, I mean, as long as I’m leading the company, we will continue to want to beat industry average growth comprehensively on the top line and even more so on the bottom line. So without giving any more detailed guidance on it, I think you can understand the mindset with which we are leading the company.

It’s growth oriented. It’s profitability-oriented, and we will want to beat industry average growth trends. Even this year, if you combine H1 and H2, our goal would be to not miss on the 25% organic growth, long-term trend that we have. So yes, markets are turbulent but can we be stronger? Can we be more resilient? Can we find those pockets of growth? And the answer is yes, and we are pushing our teams for that. So until the last day of the year is we’ll be writing for every single dollar of revenue and every single incremental dollar of profit. So let’s see how Q2 and as two unfolds. And for next financial year, we have two more conversations to go. But at the moment, I would not look at it with any further clouds of pessimism or anything like that. I think the industry growth outlook with consumers going more and more digital, emerging market trends where even when there is recessionary pressure, let that pressure be on traditional media. I mean if advertising budget is pushing lease sink on traditional at the digital should say, even if digital has pressure at least CPC should thrive. So I think we should be more and more insulated, and we should find those pockets of growth is my thesis, and that’s how we’re executing.

Rahul Jain — Dollar Capital. — Analyst

[Indecipherable] Yes, it’s a small verification on the margin comment that you made, is this verify a better growth in H2 and a better margin in two or is also building a potential acquisition could model on Jan?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think we are seeing a year one was about integrating together. I think we have done that. We have done that phenomenally well. So when I speak Affle now, I speak with the full embrace of Jam. And when we are talking about expanding the margin of the company, I think it’s one is linked to volume as our business is growing. I said we are asset light business. Our expenses will grow slower than our revenue growth, right? So therefore, there will be natural margin expansion trend. But has the strategic emphasis, we’re also focusing on pricing and profitability, which means that we are picking business or picking only the volume of business that can support the profitability metrics and not give any volume-based discount because that is where the pressure comes mean people are looking for, hey, give me something cheaper because there’s a recession there is a need for our product. There is a need for driving conversion with consumers for all our customers. What they are sometimes looking for is can they get it cheaper in this time, which means it impacts pricing effects profitability. So how do we aim for growth but also play a very strong defense play, right? So I think — so being offensive and growth-oriented is one, by making sure that we are even more strong on our defense than our growth and in this strategy. And I hope that is understood well. And that applies to Jam, it applies to every single part of Affle’s business.

Rahul Jain — Dollar Capital. — Analyst

[Indecipherable]

Operator

Thank you. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead.

Anmol Garg — DAM Capital — Analyst

Yes. Thanks for giving me opportunity. Actually, I just had a couple of questions. Firstly, just wanted to ask Anuj that we are implying a 25% type of — we are talking about a 25% growth for FY ’23. Now we have already in the first half, we have done around 35% organic growth. So would this mean that seasonality of 3Q will not play out in this year — that is first. And secondly, I wanted to ask a bookkeeping question from Kapil that in this particular quarter, we have seen a ForEx gain into our cash flow statement by the tune of around INR7 crores. So if you can highlight what was in regard, what does it regards to? And how does it come out in the P&L statement? Thank you.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

All right. Thanks, Anmol, for your question and very insightful. Let me, first of all, clarify that when I talk about growth or any growth percentage or the industry, I’m only talking organic growth now versus last year’s H1. This year, H1 is last year H1 had one difference. In last year, Q1, we did not have Jam. In this year, Q1, we had Q2 to Q2 comparison is absolutely clear because in both the quarter 2, we had — so when we talk about growth, right, as an industry, we say the industry will grow at an average use 25%. And we’re talking about organic growth, right, incremental organic growth. In our case, we have given you two commentaries. One, for the full financial year, our goal is to attain organic growth 25%, which is the industry average CAGR growth trend that we are looking at. And we are always long term trying to keep pace with that or beat that, right? That excludes the Q1 with respect to Jam. Then I’ve also given you some industry outlook between Q3, Q4 seasonality. And whenever there is seasonality, there is obviously incremental budgets. But the customers are also hedging and they are careful. So while the budget is incremental, they may not spend all of that in the same Q3 festive season, but they will spread it over Q3 and Q4. So therefore, what we are looking at is H1 versus H2, and seasonality incremental budget will have a spillover effect in both Q3 and Q4, and we expect that the industry would on an average liver 10% higher sequential growth from H1 to H2, and we hope to meet that or beat that, right? That’s on the revenue side. But then on the profitability side, we hope to beat that more comprehensively. And that’s exactly what I said. So the outlook on that, I hope the math is more clear. And it is not that, we have already grown quite well in H1 overall over 35%. And then will we see a muted seasonality, but I think we have given very clear commentary anchored on industry outlook as per our understanding. In terms of your second question, which is ForEx statement. Kapil, I think you can take this up because it’s directed to you.

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

Yes. [Indecipherable] This pertains largely to access getting revalued to foreign assets on the [Indecipherable] and it has been offsetted mostly from the reserves, opening reserves, and it does not have an impact on the P&L per se, right? So it is an adjustment of each line item the current, non-current assets or current or non-current liabilities getting slowed into the balance sheet and getting offsetted in the results [Indecipherable], right, and it is not booted through P&L.

Anmol Garg — DAM Capital — Analyst

Sure. Just a follow-up on that. If you can also highlight that what are the margin levers that we can think about in for second half of this year?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think the — sorry, can you hear me?

Anmol Garg — DAM Capital — Analyst

Yes, yes, okay.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

The margin levers are anchored on a few things. One, ensure that our pricing is resilient. Second, ensure there’s enough volume and growth to meet or exceed the industry trends. And in combination of that, keeping a tighter balance with respect to that every incremental revenue that has come at healthy pricing should not– the opex increase has to have productivity and efficiency, which means that even though we are consistently investing in our own growth, and you can see even in Q1 to Q2, you would see that our opex is increasing. And a lot of you will say, Hey, hold on a second, isn’t the recession time, why are you increasing your opex? We believe in the long-term industry growth trend, so we’ll keep investing to ensure that we can capitalize on that growth trend, and we are well resourced for that.

So therefore, when we look at it with this balance pricing first, the second is the enough growth in volume with respect to incremental budgets for H2 versus F1. Third, the asset-light business and scale on bottom line expansion will also come in because our opex is not going to increase and keep pace with the growth in revenue. So this is exactly what we saw in Q2 this year, whether you see it sequentially or you see it on a year-on-year basis. And the same trend, I think, will continue in H2 as well and beyond. And all the investors who had earlier got confused, Affle is growing fast. It’s an asset-light company, how come we don’t see margin expansion. But only — there was always organic margin expansion. But because we were also acquisitive and we were acquiring companies that are less profitable. In the previous year period, it was averaging itself downwards because the organic growth and the inorganic growth has been blended together. Now when you see Q2 to Q2, there is no inorganic in Q2. It’s Q2 compared with Q2 last year or versus Q1 and you can clearly see the pattern of EBITDA and PAT margin expansion. So those are the levers, and it’s a very natural expectation. I mean whatever I’m just saying it is something that should be a common understanding with all our shareholders.

Anmol Garg — DAM Capital — Analyst

Sure. Sure. Thank you. I’ll get back in the queue.

Operator

Thank you. The next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead.

Bharat Shah — ASK Investment Managers — Analyst

Two questions. One, to an earlier question by a participant, you made a remark that in ’24 and ’25, you are looking at the organic growth of 25% plus and you aim to beat the industry so long you are the leadership of the farms. So was that just in [Indecipherable] or is it anything a change in leadership is in contemplation?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

There’s no change in leadership contemplated as long as I’m healthy, fit in time, I expect to hope to lead the organization for decades to come. I think the nature of that comment is to be interpreted that I’m giving you a peek into my mindset. How do I set targets for this company? How do I tell my leadership team? How do I convince them that, hey, many times, we have a very strong leadership team and this is not just a one-man thing that Anuj says something and everybody has to follow. I think we have a very vocal leadership here including Kapil. Many times, we are challenged and debate ourselves and this is my mind set, we’re growth oriented. We have to beat the industry average growth rate to our team. I said the line of questioning is are we better than the rest of the players in the industry? Are we competitively stronger? The answer is yes. Is our business model unique, differentiated? The answer is yes. Emerging market, is their growth? The answer is yes. So why won’t we beat the industry average rotate? That’s how I set the target for the team. And therefore, the emphasis that because a lot of times, this conviction has to be delivered top down, and we have to live by that example. And therefore, that comment. I don’t see any leadership change that would be dramatic. Our company has led consistently for the last 17 years, and I’m still a very young man, I’m only 44. So it’s a long way to go, sir.

Bharat Shah — ASK Investment Managers — Analyst

Sure. And just wanted to hear about what the remark was supposed to be. Thank you for that. The second, while it’s understood that FLAs of our greater focus on emerging markets, India and other emerging markets included, and developed market is a smaller percentage and that the smaller percentage is rather quickly faced some [Indecipherable] The question that we get to the developed market, the space, the speed and the way that market seems to be getting modeled. What are the structural reasons why you believe and remain confident that the emerging markets and the developing markets would continue to provide not only resilience, but a strong long-term super growth.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Well, look, I’m very confident about two things: One, the consumer adoption curve on digital. And these are fundamentals of our industry. These are the fundamental drivers of our industry. And I believe that all of us on the call today can reasonably safely say that none of us is leaving the mobile device for our connectivity on the mobile device anytime soon for the next three years or four years. And the next generation in our home, the younger generation in our home is spending even more disproportionately connected time online. And therefore, the adoption curve of connectivity in India, in Africa, in Indonesia, in Vietnam, in Thailand, Malaysia, Philippines, Middle Eastern geos, Lat-Am, all of these places, we will see massive consumer adoption over the next three years or four years, it will continue in. And the propensity for transacting higher value, higher volumes of transactions on mobile or connected devices will actually go up. So that is one of the main anchors that I see for emerging markets to have resilience and growth for many years to come.

The second trend that makes me very sure about this is that the advertisers in emerging markets are still under calibrated on digital versus developed markets. And developed markets, digital is decisively more than 50% of the total ad spend, whereas in emerging markets, it’s depending upon which market we look at, it’s either in the 20-odd percent or the early 30-odd percent, but it is nowhere close to being above 50%. So the advertisers will need to also face the reality and shift budgets to the more efficient, digital connected mediums and where the consumer is. If the consumer is spending disproportionate time on digital and transactions are happening there, why should the money continue to not follow. So the advertisers will shift the budgets. And both of these anchoring megatrends, which I think none of us can debate against provide me the clarity that, look, these markets will continue to grow. What’s the difference between developed markets, developed digital adoption has already reached a certain level of maturity, and digital advertising as a percentage of total ad is already more than 50%. So one could see a clear difference between developed market adoption curve on both the consumer and the advertiser side, as well as the emerging markets is a big difference. And therefore, I’m very confident that the industry outlook. And then within that, I’m wanting to assure myself that our team, our platforms, our business model is competitive versus other players. And therefore, maybe grow faster than the industry average growth. So this is my only thesis. It’s grounded in reality.

Bharat Shah — ASK Investment Managers — Analyst

But would you not expect the supply at the speed with which the developed market seems to be kind of getting muddled. It’s one thing about maturity of the markets in the developed markets and relatively higher penetration of digital. But the speed at which the whole space seems to become chaotic, is that a source of supply or do you think it is quite in the nature of things?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Well, I think — look, first of all, I don’t know the objectives muddled and chaotic. I mean to me, I can see a sense in what is happening in developed markets. I think the customers are feeling where we inflation, of employment, the cost and efficiency. There’s so many factors moving there right from currencies to — I mean, in Europe, we already know there’s all kinds of geopolitical factors and so on. So I think the there is conservatism. But that does not mean that digital advertising will not deliver growth. Now if you’re looking at some examples, let’s say, I don’t know, the big tech. The big tech, if you see — if your question is coming from how quickly Meta or Facebook has gone from where they were to where they are. If your question is born out of that, then I think you have to just look at — start from looking at our own homes, which teenagers are spending time on Facebook. I mean, I don’t see that happening as much. And it is still the older people who were once on Facebook and as a habit and inertia continue on Facebook.

I think the consumer pool of that has gone, and that’s why there was a need for Facebook to shift from Facebook to Meta to something else, and that something else hasn’t materialized as per the expectations that we set. And therefore, they are seeing a massive hit in terms of confidence levels and otherwise. And of course, Affle has done certain changes, which is impacting them, looking at them as an isolated case is not shaking my thesis and belief of digital advertising as a clear trend even in developed markets. That I think the overall industry on it — first of all, advertising is resilient, digital advertising will be resilient. And if there is a recessionary uncertainty, of course, some budgets will shrink. And I think that is something to be expected. Now we are fortunate that we are focused on emerging markets where such recessionary backdrops are weaker. And they’re not — we are not seeing as much impact in emerging markets, and therefore, Affle is in a good place. But is it making me nervous looking at U.S. and Europe that, oh my god what is happening there, the speed or modeled or — No, not at all, sir. I can understand what is happening there, and I can understand what is happening at Meta, and I’m still bullish.

In fact, I think that if this kind of player of recession continues, it should strengthen Affle’s ability to find value-driven strategic M&A consolidation opportunities in developed markets also, and we will keep an eye out for that. I will be very careful and realistic about what we execute on, but I see an opportunity for us that when markets are down, we should go ahead and look at strategic acquisitions and look at value-driven deals because we will find them cheaper in this time. So we need to look at our execution strategy, say, where there’s turbulence, how do we navigate, where there is — so in emerging markets, we need to grow. In developed markets, we need to navigate into that turbulence carefully and find opportunities to become stronger. So that’s how I see it. And I wouldn’t necessarily agree that the speed and the space is all muddled and become — it’s not so dire a situation at all. Meta is just one example, and we can decode that, we can understand that.

Bharat Shah — ASK Investment Managers — Analyst

No, thank you very much. That’s clear.

Operator

Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.

Ashwin Mehta — Ambit Capital. — Analyst

Hi, thanks for the opportunity. In terms of employee cost this quarter saw an increase. So what were the areas of investments there? And does this increase the billion near term or most of it will start to give us leverage as we go forward? And the second question was to can terms of the levels of intangible capitalization in this quarter? And any outlook on the D&A going forward, we saw some increase this quarter.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Right. I think the employee cost wise, we are basically following our growth plan, an organic growth plan and investing into the areas, whether it is sales and on-ground presence in emerging markets and other emerging markets as well as going for deeper verticalization. And therefore, focusing on teams which are verticalizing our platform even further to unlock a more strategic value so we can be giving more ROI to the advertisers and drive more profitability from those verticals. So I think this is in line with our approach and the strengthening of our own moat and backing it up. And I think what I want my investors and the analysts look at is the company is capable of backing its strategy and delivering resilient results, it’s a sign of confidence. If you had seen that Affle is delivering better bottom line margin expansion at the back of opex reduction, I would not be celebrating that. The only reason to celebrate this Q2 result is to say 20% plus EBITDA while opex was being increased and investing in areas of growth. So clearly, the company is bullish, it is doing the right things, and it is seeing financial fundamentals in its unit economics that when it grows, it delivers margin expansion. I think that is what I want to emphasize upon. And I think the employee cost is broad-based backing our strategy of verticalization emerging markets and having on-ground presence. For the second part of your question, I’ll pass it over to Kapil.

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

Hi, Ashwin. So our capitalization on intangible for the newer product lines or the new models is almost similar to the Q1 and around $2.2 to $2.3 million.

Ashwin Mehta — Ambit Capital. — Analyst

Okay. Just to follow up–

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

There is no major shift from Q1 to Q2.

Ashwin Mehta — Ambit Capital. — Analyst

Okay. Okay. And does the increase in terms of amortization largely happened because of translation for us or [Indecipherable].

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

So if you see the amortization comparison from last year to this year, you would have seen a significant change as we go forward because it catches up. So there is — in the PBC, you will see about INR four crores to INR five crores differential on the amortization from the previous– previous on by oil basis. So you can see that catching up effect in this quarter itself on a year-on-year basis.

Ashwin Mehta — Ambit Capital. — Analyst

And Anuj, if I could just squeeze one more in. So we saw your data and inventory costs come off this quarter. So this largely because of the Jam efficiency starting to play out, intersectors on where are we in the journey of Jam profitability approaching our own [Indecipherable].

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think it is — our emphasis is on profitability and productivity and the strengthening partnerships. And I think the — we are looking at multiple legs of it. We’re looking at profitability per employee, per team member people call it productivity in or we look at it from the lens of profitability, profitability of each region, profitability of each vertical and so on and so forth. With respect to Jam, I think the emphasis even was always there because year two and year three is about maximizing profitability. And some of the rationalization of revenue, which we talked about the $3 million to $4 million in H1 that we would have made incrementally more had it not been for the headwinds, right? I think that is bringing a deeper urgency across the organization to ensure that, hey, if there is anything left to be done, can I please do it, right? I mean, can I make sure that pricing is better, my margin is better. What else can I integrate within the core tech stack of the company to leverage that, what’s happening in, let’s say, Southeast Asia or in India that can be implemented even better in Latin America and Africa. So there is a lot of internal hurdle towards that. And I think that is a positive thing. Will I want to quantify Jam’s profitability percentage for you at this call, perhaps not. Because we are still finding that balance because in developed markets, some of the revenues are not there and so on. So let us look at it on a more broad basis by the end of this year.

Ashwin Mehta — Ambit Capital. — Analyst

Sure. [Indecipherable].

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

With Jam qualitatively speaking, I think one of the investors had asked me, and it was a hypothetical question is that if you had to pay more for Jam now with the hindsight of having owned it for a year, one year ago, would you do that? And the the answer is yes, I think it’s a strong sale and it’s a good thing for us.

Ashwin Mehta — Ambit Capital. — Analyst

Thanks. Good to hear, and all the best

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Yes.

Operator

Thank you. The next question is from the line of Arun Prasath from Spark Capital. Please go ahead.

Arun Prasath — Spark Capital. — Analyst

Hopefully, now it is better?

Operator

Yes. Please go ahead.

Arun Prasath — Spark Capital. — Analyst

Yeah. Okay. Thanks. Thanks for the opportunity. My first question to Anuj we are — I take your point that the emerging market is strong and developed markets, we are saving some macro headwinds. But if you see our own numbers, if you see the India segment top line, sequentially, that’s grown at 10 percentage, but year-on-year, it is more like a 20% we are used to see this number at much higher 30, 35 percentage. So are we really seeing any growth slowdown in India as well at the category level? Or is it like more like some base, high base issuing the best quarter issues?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think the way to look at India right now is certainly on a sequential basis. And the reason why I emphasize that is because the headwinds and related issues are primarily sort of common across H1 in Q1 and Q2. And when we look at emerging markets doing better versus developed markets that thesis can only be analyzed on a sequential basis, not on a year-on-year basis. Now, in terms of year-on-year basis, you start looking at it and you say, Oh, how come India is only growing in the 20-odd percent and not 30-odd 40-odd percent? I think there is — there are also India or emerging market-specific issues, which I think we are quite resilient against any which ways, and I’ve talked about this before as well. If one of the verticals, let’s say, edtech or crypto or fintech is down, I think Affle is able to still get enough conversions sold and delivered to other industry verticals in our ecosystem. And because we have broad-based growth, we are able to capture that. in one particular quarter, in some particular quarter if one vertical is impacted. One area there is suddenly a negative trend, like during Covid, travel and transport, hospitality was down, retail was down now that is coming back up like with a vengeance. And on the other hand, we have education tech and fintech, the crypto side of Rintega so on. There was — these issues will happen. And in a fast-growing company, — in some quarters, you’ll see 30% in one area and suddenly, you cannot explain every quarter will be 30%, it could be 26% and another and so on and so forth. So I think we have to see longer-term trends and averages. I wouldn’t read into that as India is growing slower and there is a problem. I would read into that as whatever India was at six months ago, where India are today, look at the sequential trend quarter-on-quarter, this is moving nicely. — okay?

And that’s how we should see it. We should also keep in mind that this is at the back of a lot of start-ups not getting funding. There are all kinds of issues and yet Apple is able to be resilient because our base of advertisers is wide. And there’s always this emphasis within Affle to have broad-based growth across advertisers across verticals. Whenever there is any customer concentration that’s building up, that’s a risk that I want to cure as soon as possible. right? So I think that’s another peek into our mindset. And therefore, please analyze India in that light. And if you’re looking at forward-looking modeling, then I would — my guidance has always been a pre-IPO of course, every on the call. that I expect 25% CAGR growth for the industry, and therefore, I want to peg against that

Arun Prasath — Spark Capital. — Analyst

That’s helpful, Anuj. My second question is related to the ForEx, the kind of fluctuations of alter depreciation we have seen in this quarter. Generally speaking, keeping aside the accounting for a moment, I mean, where we are booking in which line item, Generally, for a business is rupee depreciation is good for you. or bad for you? And as a follow-up to that, I would also like to understand what would be the constant currency growth that you had for Q2 in, say, in revenue as well as at the bottom-line level. If you can share that, that will also be very helpful. So yes.

Kapil Mohan Bhutani, — Chief Financial and Operations Officer

So we — to say you have to understand the business of Affle is very diverse in emerging markets. We have been building happens in the local currency, right? — give you a statement that the currency movement is advantages or disadvantages. It depends on which currency movement is happening, right? So there the where we have this advantage on currency movement because of the dollar getting stronger. And there is some advantage on the dollar side. So largely, at the moment, the — if I say on an average basis, we would be mostly neutral to it. There are — the costs are generally in dollars. So we — there is a pressure on the cost on the dollars. But it gets neutralized on the other side. if you see at bottom line, we expect will be more muted on the currency currency movements, as we are quite hedged with currency billings we have in the emerging markets as well as in India. Right. So — and on your full question of constant currency, we are — we have historically not presented a constant currency or some arisen basis. So we are not maintaining that and commenting on that. Because if I comment on I think it is important to I will ask to comment on the last three quarters also.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

But I think the way to look at our business, I think I’ve always maintained that, that we have been — I mean — and I’m not taking any credit for it, by the way. I mean we are naturally hedged on the currency risk. When we see INR versus USD or across the board, the currencies that we are — in some markets, we see a negative impact in some markets, we see a positive impact. And that balance is thankfully quite held up. I mean, in the sense that it neither do we see a positive fluctuation nor do we see a negative fluctuation with respect to currency. And we have seen INR move from 70 all the way to 82 and so on and many times up and down. And — and I think in this entire journey, both as a public company and even when we are privately held, not because we are doing some massive currency management thing naturally based on where all we are doing business, what percentage of business is where, what cost and so on, we have been naturally blessed and hedged on that. Internally, yes, it’s something to be also seen that what else should we do beyond the natural balance that we seem to be enjoying. But there isn’t a huge currency management function that we do within our financial operations teams at the moment. And the reason for that is because we see that balance. We have seen it consistently that we are naturally hedged, and it doesn’t impact us dramatically.

Arun Prasath — Spark Capital. — Analyst

Just as a follow-up to this, — if you

Operator

Sorry to interrupt you, Mr. Arun may I request you to please rejoin the queue, we have participants waiting for their turn.

Arun Prasath — Spark Capital. — Analyst

It is just a follow-up question to the currency.

Operator

May we request you to please rejoin for the queue, sir.

Arun Prasath — Spark Capital. — Analyst

Sure.

Operator

Thank you. The next question is from the line of Mayank Babla from Enam Asset Management. Please go ahead.

Mayank Babla — Enam Asset Management. — Analyst

Hi, am I audible?

Operator

Yes, you are. Please go ahead.

Mayank Babla — Enam Asset Management. — Analyst

Thank you for taking my question. And congratulations on a good set of numbers. Just wanted a clarification on what was the reason for the inventory and data costs to come off significantly? And can we expect this to be the new normal or the trajectory going ahead?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

I think the — to me, the data and inventory goes didn’t really come down, it just stayed flat. In fact, as notionally moved up a little bit. But as a percentage of revenue, while the revenue was also overall only 2% increase, while emerging markets was better. So I think there’s no dramatic trend to take out of it. But I do think that there are levers within our hands to make sure that the inventory and data cost can be optimized. It means you can — we can buy cheaper, right? Because inventory data was where we are going out there and we’re buying the programmatic inventory or we’re paying for the impressions and clicks and so on. And I think as we get more volume, the commodity pricing, I think we can pressure that now. And if we play it smartly, like we can commit more volumes to certain sources and so on. And I think those kind of levers are there, and we’re working on those efficiencies with our team, and we started to do that in the last six months, a lot more because we’ve always maintained a very new stance that we will algorithm decide where we buy from, right, because we’re looking for conversions on the probabilities of conversions and so on and so forth. However, there is some optimization there to see that, hey, if you find amount with some particular platform or supply source or publisher can we go and do some negotiation there and see what we can optimize? So, there are certain levers that are being used, but I wouldn’t really call out any trend there at the moment, yes? So, I think let’s, to call it a trend, we may need to assess it for a bit longer. But I think it should be in that range bound in some cases, a percentage here or there, but I think it should be range bound in an expected zone, yes.

Mayank Babla — Enam Asset Management. — Analyst

Sure. Thank you so much and best of luck for the work for you.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, right now, we will request you to please limit your questions to one participant. The next question is from the line of Vina Mota from Stalin.

Vina Mota — Stalin — Analyst

Hi good morning. Sir, am I audible?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Yes,

Vina Mota — Stalin — Analyst

Yeah. I had one question regarding the CPCs. So we’ve been that the CPCs have been on an upward trajectory for a while now. And the, like, given the business model you have, it augurs well for you as well. But overall, in the developed markets with Meta, with Snapchat, we’ve been seeing that they’ve been losing on the price per ad for a while now in the developed markets or the rest of the world markets as well for them. So how do you see this trend going ahead for you? Do you see that there’s some risk to the upside from here? Or do you, like what are the risks that you see? And how do you see that CPCs moving going forward considering that the larger players are losing out on the price per ad for a few quarters now?

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

See, I think the fundamental aspect about our company, and you can check the history of our company, we always have identified ourselves as a consumer platform company, even though we are a B2B company, we are not direct to consumer, but we say call our tech stack, the consumer platform stack, we call ourselves as a consumer platform company. And in essence, what I’m trying to tell you is that our revenue is coming from the actions that the consumers are taking and delivering almost an assured ROI linkage with respect to performance to our advertisers. And when you say price per ad is coming down, that should mean that I should see efficiency in my inventory and data cost because inventory for me is the price of ad that we pay because we are a buyer of ads. We are buying the ads and we are delivering conversions to the advertiser, right?

So, when we deliver conversions to the advertiser, the question then becomes that as long as the end consumer is increasing their average wallet percentage spend online and as the consumers are doing more conversions with higher-value products online over time, you should be able to see a higher CPC rate because CPC stand for cost per conversion, right? It’s a cost per converted conversion per user, right? So, I think that cost per conversion that is going up or is being maintained, there is actually opportunity to push that up. And when we when we say that we will be resilient on our pricing, we are saying, let’s go for volume without discounting the price, but at some point, in time, we can have as to say, let’s go for volume while increasing the price. I am not in the business of selling commodity where on volume will give it account. While most of the buyers may still ask for it, but we try to defend it and we explain to them, it’s an ROI linked business model justification of CPC. So, your observation is right. Price per ad which, in other words, or seeing is price per impression, price per click is coming down.

And ROI linked CPU cost per conversion is we can do it more profitably. So, one of the ways the advertisers can ask for a CPU adjustment is saying, “Hey, you are buying the impression and click much cheaper, and therefore, your cost and your ability to earn that conversion at a lower cost has gone up, share some benefit with me. We should always focus on margin expansion. If it means that at INR50, I can get a higher volume with my margin expansion at the lower data inventory cost, I will take that business, right? So, I think our focus on margin expansion, profitability is linked to pricing. It’s linked to top right at the top is pricing right at the bottom is profitability. And we’re looking at optimizing for that in a very strong manner across all our business units. So, I hope that answers the question. But the main fundamental difference is please don’t put just a blanket label of ad tech on Affle. And therefore, on CPCU, don’t please see it as a cost per impression, cost per click and therefore, simply cost per conversion. Conversion is Rinke-based event, whereas impression and click are the raw material, the commodity within the digital advertising. If not, I think I’ve given it a long enough answer and I believe we still have a Q2. Thank you for the question, though.

Operator

Thank you. The next question is from the line of Raj Mohan Venkataraman an Individual Investor. Please go ahead.

Raj Mohan Venkataraman — Individual Investor. — Analyst

Yeah, and thank you for the opportunity. Congratulations on the margin improvement. My question was in the light of you indicating to hypothetically being positively disposed to inorganic opportunities in developed markets under current recessionary environment would have — will we be looking at organizations like say digital — like say, a digital turbine whose market caps have crashed 80%, 90% to nearly half of asethough the revenues may be 4, 5x pal generally looking at it from a client addition perspective, have discussions at the Board level happened at acquiring bigger companies.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

See, I can tell you two things about our psyche there. Yes, discussions happen because we are intellectually sharp and alert and we just as you are seeing possibilities and the math of — we see all possibilities as well. But we are also very mindful of two things. One, when we are executing on a very solid track and when I say that, I mean that to an external light, it might seem risky that they have operations in so many countries in the world, across so many currencies, I can tell you that from where I see it, it’s a very predictable path of execution that we are on. Now, acquisition that we do add a certain element of risk to it, the risk of integration, risk of things going well or not, and that is why all our investors are deeply watching it for at least four, five quarters and saying, how is it without this with this? And how is it going? Because everybody has nervousness in this unknown factor of what has come. So if you look at our M&A strategy, and one of the things that has worked really well for us is that we have been very conservative on the value that we are paying and the size of that M&A. So let’s see the last 3, okay? Media Smart, less than $10 million, half next, $25 million Jam, $40 million. Now, compared to our own market cap compared to our own revenues, bottom line, cash and bank balance, whichever indicator I look at,

I always see first case scenario. If this were to go bad, can we still be a very strong, resilient company and deliver value to our shareholders. And when the answer is I’d say, okay, we have covered all the risks. We think it is the right decision. Let’s take it. But if ever we are wrong, made that not consumers. So when your question is on, let’s go and get manage or merged with or blend with or acquire — you also acquired a lot of baggage of those — there is a reason why those companies are losing value. There’s a reason why those companies are not doing well. And part as industry insiders, we know those reasons many at times, and we know where to go and where not to go. So there are certain acquisitions that Digital Turbine has done that Affle had deep insights into. We had the first right to do them or the opportunity to do them in terms of timing when we start looking at it. And I won’t name them, but we certainly were not feeling a loss that, hey, digital die acquired those companies all the best. We wouldn’t have done that acquisition. So I think the Raj, we are looking at all opportunities and respecting all possibilities, but we know a lot more in terms of what’s inside going on. And therefore, we are extremely carefully calibrated and our execution strategy on inorganic has been flawless so far, and I hope to keep that track record. No uncollar. Affle is doing a good job of its execution. If we keep doing what we are doing with M&A should be seen as sort of strategic reasons, opportunistic value in terms of pricing at which we transact in terms of timing. It will be let’s say, last year, if we’ve done a particular M&A, it would have been more expensive versus this year. So I think those kind of optimizations we would do, but we would never just go and do it for size. I think there is no reason for us to just go and because something is cheap and is looking big, let’s do it. I don’t want to get tempted into that. So we’ll be very careful.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Mr. Anuj Khanna Sohum — Managing Director and Chief Executive Officer

Well, thank you very much, everyone, for very insightful questions and a good dialogue. I certainly enjoyed it. I hope it was valuable for you and you have a deeper insight into Affle’s mindset. And clearly, for a majority or a significant majority part of our business, we are insulated from the headwinds of the macroeconomic factors. And the good news is we still have tailwinds in those emerging markets. And as far as the economic factors are concerned, I think there is actually some impact is limited and is quantified so that you can all assess it. But there is also opportunity in there for us because a lot of the competitors were fundamentally not as strong on their balance sheet, we’re fundamentally not as profitable, so if they lose $3 million to $4 million of revenue, they are deeply heart, whereas for us, we can still deliver a resilient outcome. And so in that sense, we are in a very strong and privileged position to navigate through as two, and as we go along, we’ll continue to give you a transparent commentary on our expectations so that you know what we expect. And then we’ll talk about next financial year and beyond after that. Thank you again, and stay well. Bye-bye.

Operator

Thank you. Anandrathi Share and Stock Brokers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.