Affle (India) Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Affle (India) Ltd (AFFLE) Q2 FY23 Earnings Concall

Management Update:

• [00:01:49] AFFLE said it closed 2Q23 with its highest quarterly revenue run rate, highest conversions and highest EBITDA, driven by the Affle 2.0 growth strategy, tech innovations and sustainable long-term value creation.

Q&A Highlights:

• [00:10:24] Shobit Singhal from Anand Rathi enquired that looking at macroeconomic risk globally, if AFFLE’s clients are cutting their ad budget. Anuj Khanna Sohum MD replied that on a YoY basis and sequentially, AFFLE has seen substantial growth and even with risk factors, AFFLE will still continue to be growth oriented.

• [00:10:48] Shobit Singhal of Anand Rathi asked how much was Jampp contributed in 2Q23 vs. 1Q23. Anuj Khanna Sohum MD said that Jampp is more calibrated on developed markets than rest of Affle’s business. Overall, as a group and an integrated proposition, AFFLE is seeing clear advantages.

• [00:26:52] Anmol Garg from DAM Capital asked if the seasonality of Q3 will play out in 2023. Anuj Khanna Sohum MD said what AFFLE is looking at is H1 vs. H2. Seasonality’s incremental budget will have a spillover effect in both Q3 and Q4, and AFFLE expect that the industry would on an average give a 10% higher sequential growth from H1 to H2.

• [00:27:27] Anmol Garg from DAM Capital also asked about forex gain in the cash flow statement of a tune of about INR7 crores and what does it regard to. Kapil Mohan Bhutani CFO replied that it pertains largely to foreign assets getting revalued.

• [00:31:10] Anmol Garg from DAM Capital enquired about the margin levers that can be thought about for 2H23. Anuj Sohum MD answered that the margins levers are driven by pricing, ensure enough volume and growth to meet or exceed industry trends, and keeping a tighter balance.

• [00:44:33] Ashwin Mehta of Ambit Capital asked about the employee cost increase in 2Q23 and the areas of investment there. Anuj Khanna Sohum MD answered that the employee cost is following the company’s growth plan and is in line with its approach.

• [00:44:54] Ashwin Mehta of Ambit Capital enquired about the levels of intangible capitalization in 2Q23 and outlook on D&A. Kapil Bhutani CFO answered that AFFLE’s capitalization on intangibles for the newer product lines is almost similar to 1Q23 and around $2.2-2.3 million.

• [00:47:09] Ashwin Mehta from Ambit Capital asked about the reason for increase in amortization. Kapil Bhutani CFO clarified that YoY the amortization has changed as it catches up.

• [00:50:23] Arun Prasath from Spark Capital asked if the company is seeing any growth slowdown in India at the category level. Anuj Khanna Sohum MD said that India is to be looked on a sequential basis. On longer term trends, India is moving nicely.

• [00:58:51] Mayank Babla from Enam Asset enquired about the drivers of inventory and data cost coming down significantly and if this is the new normal. Anuj Khanna Sohum MD answered that for AFFLE, the data and inventory cost didn’t come down but stayed flat. However, AFFLE added that the cost can be optimized by buying cheaper. AFFLE believes it should be range bound in an expected zone.