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Route Mobile Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from Route Mobile Ltd (ROUTE) Q4 FY24 Earnings Concall

  • Revenue Growth and Industry Challenges
    • Highest quarterly revenue in Q2 and Q3 FY24.
    • Good growth in H1 FY24.
    • Headwinds in CPaaS industry since November 2023.
    • Enterprise cost optimization initiatives.
    • Shift in communication channels from global OTT players.
  • Acquisition Impact
    • Imminent Proximus deal closure.
    • Bolsters product portfolio.
    • Extends global footprint.
    • Ignites innovation pipeline.
    • Synergies to complement product, geographic, and customer base.
    • Benefits from certain deals already visible like Vodafone deal.
  • Financial Performance
    • Fell short of revised guidance.
    • Q4 FY24 revenue grew 0.8% YoY, declined 0.7% QoQ.
    • FY24 revenue grew 12.7% YoY.
    • Gross profit margin contracted in FY24.
    • EBITDA grew 8.4% YoY in FY24, margin at 12.3%.
    • PAT grew 11.7% YoY in FY24.
  • Outlook
    • Expecting significant growth in revenue and profitability in FY25, driven by synergies from Proximus acquisition.
    • Working towards successful FY25.
  • ILD Revenue Challenges
    • ILD revenue continues to decline.
    • Growth witnessed in Indian ILD segment.
    • Decline largely from rest of the world and Masivian.
    • Vodafone Idea deal went live on April 1st.
    • Growth in traffic observed.
    • Expects further growth from larger players as leakages are blocked.
    • Litigations identified, Vodafone team taking action.
  • Credit Facility Purpose
    • GBP10 million credit facility for Route UK.
    • To provide bank guarantee as part of contractual arrangement, backed by fixed deposits in India.
    • Approval required as deposits held in India.
    • Not impacting cash flow improvement assumption.
  • Communication Channel Shift
    • Route Mobile in talks with OTT players to facilitate channel shift if needed.
    • Offering APIs for multiple channels, including WhatsApp.
    • WhatsApp price hike makes SMS more cost-effective for OTP authentication.
  • EBITDA Margin Outlook
    • 60 bps one-off impact on EBITDA margin in FY24.
    • Impact unlikely to recur in FY25.
    • Margin expected to improve by 60 bps in FY25.
    • Dependent on related party transactions and approvals.
  • New Product Performance
    • New product revenue down quarter-on-quarter, attributed to seasonality impact on Masivian.
    • Overall, strong pipeline and growth potential for new products.
    • Bullish on scaling new product business in coming months.
  • Messaging Business Challenges
    • Messaging impacted due to geopolitical issues in Russia and Ukraine.
    • Lost customers in those regions.
    • Working closely with Mr. Messaging to support new contract wins.
    • Masivian performed well, only faced seasonality impact in Q4.
    • Masivian revenue ₹514 million in Q4 FY24, down 17% QoQ.
    • Messaging revenue ₹1,795 million in Q4 FY24, down 7% QoQ.
  • US and Europe Revenues
    • Major OTT clients in US and Europe were cautious on spending.
    • Impacted overall ILD traffic growth.
    • Expects recovery with WhatsApp pricing nearing ILD pricing parity.
  • Domestic Volumes Growth
    • Domestic volumes in India grew in double digits, despite 20% hike in NLD pricing.
    • Able to close some large accounts last quarter.
    • Have a strong pipeline for the current quarter as well.
  • Receivables Jump
    • Receivables increased by around ₹390 crores.
    • Impacted cash flow conversion.
    • Large payments received from OTT clients in first week of April 2024.
    • Caused a temporary spike in receivables.
  • Volume vs. Revenue Growth
    • Transactions volume grew 17.5% in FY24 vs 12.7% revenue growth, attributed to significant increase in lower-realizing domestic volumes.
    • ILD volumes degrew due to price increase.
    • Overall transaction growth expected across channels.
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