Route Mobile Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Route Mobile Ltd (ROUTE) Q4 FY22 Earnings Concall

Management Update:

• ROUTE said it posted its best quarterly revenue in 4Q. And added that heading into FY23, it’s already witnessing very strong growth momentum and is confident of delivering at least 40% YonY growth in FY23.

• ROUTE commented that attrition rate increased from 11% in FY21 to 21% in FY22 and onboarded 174 new employees in FY22.

Q&A Highlights:

• Ashish Chopra from Goldman Sachs asked about the revenue run rate of MR Messaging. Rajdip Gupta MD answered that on M.R Messaging performance, ROUTE is very much sure that they will continue with the same kind of revenue in a monthly basis.

• Ashish Chopra from Goldman Sachs also asked about the conservatism on the revenue guidance. Rajdip Gupta MD clarified that ROUTE is guiding 40% growth. And historically ROUTE has always over-achieved its numbers. Also added that it might be a conservative number, but said 40% growth is also beyond the industry growth.

• Ashish Chopra from Goldman Sachs asked about the Masivian EBITDA margin for FY22 and the trajectory post investments going forward. John Owen CEO said it will follow the same trajectory as last year. So it will be trailing or planning up to that sort of high teens outcome in the year. Last year Masivian had clocked a 16% EBITDA margin at a portfolio level for the full financial year.

• Sunil Singhania from Abakkus asked about acquisition plans going forward.  Rajdip Gupta MD said that the company is probably looking out to acquire something in voice and mobile identity to complete ROUTE’s entire stack.

• Pranav Kshatriya from Edelweiss asked about the reason for employee cost excluding Masivian in 4Q22 going up 33%. Rajdip Gupta MD replied that there were some variable components of the salary which got integrated into this. In terms of employee benefit expenses there was the annual meet, which is part of the staff welfare expenses, which is accounted for in the employee benefit expense.

• Pranav Kshatriya from Edelweiss also asked that on a run rate basis how much employee expenses should be assumed ex of Masivian. Rajdip Gupta MD answered that it should trend down because some of these benefit will not be there. On an absolute basis ex of M.R Messaging and Masivian, ROUTE should see Q1 FY23 employee cost to be lower.

• Manik Taneja of JM Financial asked about the competitive intensity in LatAm. Rajdip Gupta MD answered that the competitive intensity is largely there in Brazil at this point in time. There are a lot of other virgin markets in LatAm, where there is a lot of potential, and are expanding the wings into those markets.

• Manik Taneja of JM Financial asked about any price increase in the next 12 months, especially with regards to WhatsApp Business Messaging piece. Rajdip Gupta MD said the company doesn’t envisage any immediate price increase on the WhatsApp front.

• Abhishek Bhandari from Nomura enquired about the salary hike, when ROUTE plans to give salary hike which will impact employee cost. Rajdip Gupta MD said that on salary hike, ROUTE always has a cycle of salary increment in April.