ROUTE MOBILE LTD (NSE:ROUTE) Q2 FY23 Earnings Concall dated Oct. 21, 2022,
Corporate Participants:
Rajdipkumar Gupta — Managing Director & Group CEO
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Analysts:
Unidentified Participant — — Analyst
Pritesh Chheda — Lucky Investment — Analyst
Abhishek Bhandari — Nomura — Analyst
Manik Taneja — JM Financial — Analyst
Dipesh Mehta — Emkay Global — Analyst
Moez Chandani — Centrum Broking — Analyst
Vivek Sethia — HDFC — Analyst
Ajaypal Singh — Asian Paints Limited — Analyst
Aditya Yadav — Transient Capital — Analyst
Aniket Pande — ICICI Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the conference call of Route Mobile Limited arranged by ICICI Securities and Concept Investor Relations to discuss its Q2 FY 2023 results. At this moment, all participants are in a listen-only mode. Later we will conduct a question-and-answer session [Operator Instructions] Before we begin. I would like to remind you that some of the statements made in today’s earnings call may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to slide number two of the presentation for the disclaimer.
I now hand the conference over to Mr. Aniket Pande Lead Technology Analyst at ICICI Securities. Thank you and over to you sir.
Aniket Pande — ICICI Securities — Analyst
Thank you Inba. Hello everyone listening everyone happy Diwali and a happy weekend ahead. Thank you to the management of Route Mobile for giving us the opportunity to host you for your Q2 FY2023 Earnings Call. We have with us today Mr. Rajdipkumar Gupta, Managing Director and Group CEO, Mr. Gautam Badalia, Chief Strategy Officer and Chief Investor Relation Officer and Mr. Suresh Jankar, Chief Financial Officer.
I now hand over the call to Mr. Rajdip Gupta.
Thank you and over to you sir.
Rajdipkumar Gupta — Managing Director & Group CEO
Thanks Aniket. Good evening everyone. On behalf of entire RML team, I would like to wish you all a very happy Diwali in advance. I’m happy to announce that this another solid quarterly performance in Q2 FY2023 remarks six consecutive quarters of sequential revenue and adjusted PAT good. This is despite the geopolitical tensions, massive volatility across various currencies and various other uncertainties that we all are grappling with. The underlying strength in the business continues to be robust and we are optimistic of close to 60% Y-on-Y revenue growth in FY 2023. Fueled by our resilient platform, deep domain expertise and highly capable Route Mobile team spread across 20 global location, we are winning quality TPs [Phonetic] worldwide. The quarter gone by, was in fact, our best quarterly revenue and operating profit to date.
Some of our key business highlights of Q2 FY 2023 are as follows. RML secured a preferential partnership deal with Telenor Group for five countries, which is Finland, Malaysia, Thailand, Pakistan and Myanmar. We were again recognized as a representative vendor in the latest Gartner Report. As part of our capital allocation strategy, we completed INR1.3 crore [Phonetic] buyback through the open-market route in Q2 FY 23, further gives us a superlative performance in H1 FY 23, I’m pleased to inform you that our Board of Directors has approved an interim dividend of 30% that is INR3 per share. Regarding our organic strategy we continue to focus on key markets like India, GCC, LATAM and Africa.
We have already started reaping the benefit of our investment in LATAM and early trend looks very promising. In terms of our inorganic strategy, the team is focused on integrating all the acquisitions we have done and derive synergies. We may exclude certain investments in coming days and we try to complete all these acquisitions which we have done differently.
With this, Gautam will walk you through our financial highlights in greater detail.
Over to you Gautam.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Thank you, thank you Rajdip. Good evening everyone. Wishing all of you a very happy and prosperous Diwali. We have already uploaded our quarterly earnings presentation on our website as well as on the stock exchange website. Hope you had a chance to go through the presentation. I’ll quickly summarize our financial and operating performance. During the quarter Q2 FY 2023 and H1 FY 2023 before opening the floor for Q&A. As Rajdip highlighted, the quarter gone by has been an outstanding quarter considering the seasonality of our business.
Further our business has yet again demonstrated strong resilience, despite global headwinds, inflationary pressure, geopolitical turmoil, energy crisis and rising interest rates. The strong foundation coupled with multiple engines of growth has been our secret sauce for demonstrating six consecutive quarters of sequential revenue and adjusted profit growth, as highlighted in slide 19 of the presentation. In volume terms we have processed over — around 27 billion transactions in Q2 FY 23, which is again the highest quarterly billable volumes processed by us till-date.
In terms of geography India continues to be one of our largest markets by termination accounting for 47% of our revenue by termination. You may refer to slide six for the same. We continue to increase our market-share in India and are on-track to surpass our guidance of $175 million revenue coming from India in FY 23. In terms of our investments in Masivian over the last few quarters, the early trends as we highlighted looks very promising. Masivian topped 21% sequential revenue growth in Q2 FY 23 coupled with margin expansion. We continue to witness very strong momentum on the next-generation products, Y-o-Y growth of 116% — one may refer to the slide 21 of the presentation.
In terms of cash conversion, cash conversion for this period was slightly muted, largely because of three factors. A large PSU bank mandated the collection of our overdue receivables through the government e-marketplace portal which is called the GeM portal. The integration process with GeM portal led to overdues receivable remaining outstanding as on, September 30, 2022. Further, some of our large global CPaaS customers have been taking slightly longer than their stipulated payment cycle going through the headwinds mentioned above.
In terms of payables, there was a slight reduction in terms of the days payable because we settled an outstanding invoice with a large MNO in lieu of some additional discount. With this backdrop, let me walk you through our financial performance. In terms of Q2 FY23 performance revenue from operations grew by 94% from INR4,357 million in Q2 FY22 to INR8458 million in Q2 FY23. There was a sequential growth of 16% billable transactions increased from 10.8 billion in Q2 FY22 to round 24.8 billion in Q1 FY23 to 26.9 billion in Q2 FY23.
Average realization per billable transaction increased from INR0.294 in Q1 FY23 to INR0.314 in Q2 FY23. Gross profit margin expanded from 21.2% in Q2 FY23 to 22.3% in Q2 FY23. EBITDA grew by 77% from INR617 million in Q2 FY22 to INR1,094 million in Q2 FY23. There was a sequential growth of 27% in EBITDA as well. Effective tax-rate for the quarter was 11.7% going through some deferred tax credit that we had.
EBITDA margin expanded from 11.8% in Q1 FY23 to 12.9% in Q2 FY23. Adjusted profit for tax grew by 103% from INR454 million in Q2 FY22 to INR921 million in Q2 FY23 as compared to INR872 million in Q1 FY23. Adjusted PAT margin was 10.9% in Q2 FY23. For H1 FY23, revenue from operations grew by 94% from INR8,132 million in H1 FY22 to INR15,749 million in H1 FY23.
In terms of certain KPIs, billable transactions increased from INR18 billion in H1 FY22 to INR52 billion in H1 FY23. We have a net revenue retention of 128%, you may refer to slide 17 of the earnings presentation. We added over 350 new customers in the six months across all units. Gross profit margin expanded from 20.8% in H1 FY22 to 22.4% in H1 FY23. EBITDA grew by 76% from INR1108 million in H1 FY22 to INR1954 million in H1 FY23. In terms of operating leverage, EBITDA as a percentage of gross profit stood at 56% for the six-month period.
EBITDA margin contracted from 13.6% in H1 FY22 to 12.4% in H1 FY23. Adjusted profit before tax grew by 116% from INR831 million in H1 FY22 to INR1,793 million in H1 FY23. Adjusted PAT margin improved from 10.2% to 11.4% for the same-period. Net cash as on September 30, 2022 was INR8,062 million. Average receivable days increased from 57 days in FY22 to 65 days in H1 FY23 and average payable days decreased from 86 days in FY22 to 68 days in H1 FY23 only two reasons mentioned or highlighted above. Cash flow from operations was INR240 million in H1 FY22. Cash outflow relating to investing activities was INR410 million towards the payment of purchase consideration of INR118 million and the split of that amount was essentially deferred payout for the email platform and advanced as well. And there was a capex of INR333 million. Cash outflow from financing activities was INR1604 million, primarily due to buyback of INR1492 million which includes tax.
We onboarded 142 new employees during the six-months period and 146 designed during the same-period.
With this we open the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] Our first question is from the line of Aniket Pande some ICICI Securities, please go-ahead.
Aniket Pande — ICICI Securities — Analyst
Thank you. Congrats to the Route Management team on a great performance on all metrics. I wish I had a couple of questions, first, wanted to understand what led to such a strong revenue growth in this quarter and how your guidance of 60% looks quite modest? Any specific mechanism for that?
Rajdipkumar Gupta — Managing Director & Group CEO
Aniket hi, Rajdip here. I think as I’ve already mentioned in past also, Route Mobile is a global company operating from 20 different global destination and we have termination all across the globe. We have signed a few large OTT player in last quarter — a few quarters. In fact we are working very closely with them to increase their termination in various other countries. Initially when we onboarded those customers, they are using one or two countries, now these customers are using more than 13 to 14 countries and that is a kind of potential we carry with every single customer which we onboard on our portfolio that we can — at least offer them more than 200 countries if they want to terminate messages through us.
And I think one of the reason our revenue and I think our volume is increasing, because based on our close working with those OTT players as well as some of the large banking customers started sending traffic with us in the last quarter and the same trend is going to continue for the coming quarters as well.
Aniket Pande — ICICI Securities — Analyst
Thank you. And my second question one, your EBITDA margin has expanded quite massively in this quarter. If you could walk us through the headwinds and tailwinds on the margins and also your margin aspiration in coming years?
Rajdipkumar Gupta — Managing Director & Group CEO
Aniket, we have always talked about our aspiration to increase our margin in coming quarters because we believe that omnichannel adoption is going to increase more-and-more incoming quarters or years to come, as we are at very early stages of adoption, all across the globe, not only in India. As we speak, if you see our new — revenues coming from newer technologies has increased per quarter around 16% to 15% and we at the current run-rate almost are doing almost about INR33 crore to INR36 crore. If you just we do on an annual basis [Indecipherable] INR50 crores run rate. So, I think as and when this new line of communication — the new channels will get adopted more by our customers, our revenue — the margin guidance will definitely increase more-and-more and we believe that — I think all this channel of communication has much higher gross margin as compared to the messaging and that is exactly where we as a company focus and there is one slide we have presented in our presentation — I think the kind of customers we are on-boarding not just from India but various part of the world on our new channel of communication.
Gautam if you just want to add anything to this?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Yeah. Aniket, I mean to just address both the points, right. So, I think besides what Rajdip just highlighted there was an [Indecipherable] price increase that had happened which was always — I mean that is very positive I mean [Indecipherable] pass-through. The, other thing is, besides that new product contribution that’s definitely continuing to show good momentum. I think some of our acquired entities like Masivian, they have started to now do really well. I mean we had invested over the last few quarters to expand their team, and they have some seasonality aspects and now I think they are getting into the phase of the year which are the best for them and we seen tremendous improvement in their margins as well.
So going-forward I think we have already called out, we are talking about 100, 150 basis-points improvement in our EBITDA margin for the year.
Aniket Pande — ICICI Securities — Analyst
Thank you.
Operator
Thank you. Our next question is from the line of Pranav Kshatriya from Nivama [Phonetic], please go-ahead.
Unidentified Participant — — Analyst
Yeah hi thanks for the opportunity and congratulations on a good set of numbers. My first question is again a bit on the margin, you talked about around 11.5% EBITDA margin which is 150 basis-point higher than what was the Q4 margin. But if I look at your H1 performance, it is closer to 12%. So what is making you conservative in terms of the margin guidance or you are just keeping it conservative and there is a possibility that you might over-achieve it?
Rajdipkumar Gupta — Managing Director & Group CEO
Pranav, it’s good to conservative and over achieve that’s what I believe.
Unidentified Participant — — Analyst
But I mean technically we should not be seeing any headwinds on the cost side for the next — are there, anything you want to call-out that in the next quarters maybe? Because what I was expecting is it’s not that the gross margin led expansion is there — this margin expansion is because of the operating leverage coming through? And in the coming quarters because those are — H2 is seasonally stronger we should see even more operating rate or you do expect some more investments happening in H2?
Rajdipkumar Gupta — Managing Director & Group CEO
So Pranav, I as the CEO of a company would love to have more visibility of company in various global markets where we are operating now and I think if you see from last one or two-quarter, we are going very aggressive on attending lots of conferences. I think they are willing to spend some kind of marketing stuff as well because I think marketing is also one area for spend where we have capped the marketing budget but definitely there will be a cost in the coming quarters especially on marketing side.
Unidentified Participant — — Analyst
Sure, sure. And in terms of the revenue I mean, you talked about scaling up of the certain OTT but can you give a little more granular color. I mean — if I look at the spurt in the revenue compared to-Q1 what is contributing? Is the standalone Route Mobile growth is what is contributing bulk of it, MR Messaging is contributing, Masivian is contributing, what exactly is driving this growth?
Rajdipkumar Gupta — Managing Director & Group CEO
So, I think we have the numbers. I will request Gautam to just share the numbers Gautam if you can, if you have the numbers?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Sure. Hi Pranav. Actually the growth has been there across all the entity. In terms of organic growth, I think we have demonstrated over 20% growth on a sequential basis. And, as I said Masivian also had demonstrated that kind of growth so we seen it across-the-board. And I think we are now entering into — supposedly one of our best quarters after historically Q3, so hopefully I think that operating leverage too definitely play out plus there is some degree of optionality — I’m just trying to call that out as well which may kind of lead to further surprises in terms of margin expansion.
Essentially a lot of the cost we’ve been very conservative in terms of front-loading it so some of that I think may — I mean in due course work-out favorably for us — so I mean we’ll just wait-and-watch some of those aspects but there is some degree of optionality also there into the margin expansion.
Unidentified Participant — — Analyst
Sure. Sir, just one last question from my side. There seems to be a fair bit of investment on the working capital side, should we expect this to reverse or how should we see this investment will continue so far in the second-half of the year?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Yeah. So, I think be growing at breakneck speed — so it will definitely warrant some amount of working capital but having said that there were a few cases so I just had called it out that I think this GeM portal thing it was kind of something which caught us in the wrong foot and hence some amount of working capital got blocked there, now they are all streamlined, hopefully going-forward we’ll not have issues with any working capital issues with respect to the GeM portal stuff. And for some additional price discount I mean we also kind of settled one of the large MNO outstanding. So some of these things I mean are more and more tactical, more strategical moves that we’ve taken and that will augur well for us in terms of the overall margin expansion.
Unidentified Participant — — Analyst
Sure. Thank you Gautam, Rajdip and the entire Route Mobile team, wish you a very, very happy Diwali. Thank you so much.
Rajdipkumar Gupta — Managing Director & Group CEO
Thanks.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go-ahead.
Pritesh Chheda — Lucky Investment — Analyst
Sir, I have one question. In your cash-flow there is INR83 crores being deployed in other financial assets and other assets before operating cash-flow, so what is this INR83 crore?
Rajdipkumar Gupta — Managing Director & Group CEO
For a large part of that, there were INR64 crores out of that is the unbilled revenue, essentially I mean the services being rendered but we were not able to invoice it, so that is part of the receivables so that should be construed as part of the accountancy rules.
Pritesh Chheda — Lucky Investment — Analyst
And in your balance sheet, so there are two areas right, so there is a area which is more longer-term financial assets, other financial assets, where there is an increase and there is the part in the current assets. I can understand the unbillable part in the current assets or is there unbillable part even in the longer-term financial assets?
Rajdipkumar Gupta — Managing Director & Group CEO
No. Unbilled revenue [Multiple Speakers] unbilled revenues is part of the financial assets.
Pritesh Chheda — Lucky Investment — Analyst
Yeah, there are two financial — okay there are two financial; one is long-term in nature, one is short-term in nature in your balance sheet. One is part of your current asset, within current assets, you have other financial assets. And then there are longer assets where also you have a financial asset. Do you have your balance sheets in front of you?
Rajdipkumar Gupta — Managing Director & Group CEO
So, the other non-current financial assets last part of that is the fixed deposit having maturity of more than 12 months.
Pritesh Chheda — Lucky Investment — Analyst
That is the other financial asset. [Multiple Speakers] other non-current financial assets. Perfect. So which means that this INR50 crore is cash generation in any case whereas around 40 crores have gone unbillable being [Multiple Speakers]. Okay, thank you.
Rajdipkumar Gupta — Managing Director & Group CEO
Welcome.
Operator
Thank you. Next question is from the line of Abhishek Bhandari from Nomura, please go-ahead.
Abhishek Bhandari — Nomura — Analyst
Yeah thank you for the opportunity. Rajdip and Gautam, I just have one simple question. Longer-term in a business like yours what should be the CFO to EBITDA ratio? I was under the impression that the kind of business what we have typically our working capital cycle should be very small. So is the business — is the industry undergoing through a change and what is a sustainable number here over a medium-term perspective?
Rajdipkumar Gupta — Managing Director & Group CEO
Hi. So, I think on a sustainable basis, I think we should be able to achieve a, 50% to 75% conversion and we as part of our guidance we have called that out as well. There were certain one-off in this — hopefully I think that should get course corrected once we report the full year number.
Abhishek Bhandari — Nomura — Analyst
So, you mean to say there is no change in the billing method or payable terms from the clients?
Rajdipkumar Gupta — Managing Director & Group CEO
No.
Abhishek Bhandari — Nomura — Analyst
Okay, thank you.
Operator
Thank you. Our next question is from the line of Manik Taneja from JM Financial, please go-ahead.
Manik Taneja — JM Financial — Analyst
Hi thank you for the opportunity. Can you just walk us through the — given the increasing share of our global business and some of these acquired businesses have higher margin [Indecipherable] why are we not seeing an impact here in terms of gross margin expansion? And, secondly, just to prod you a little bit further on the weak cash generation. If you could help us understand last two government movement and — yeah?
Rajdipkumar Gupta — Managing Director & Group CEO
So, let me answer the question and then Gautam you can add. Manik, you need to also understand the various geographic presence we have. Like, if you go to Africa there would be very different gross margin — than if you go to Asia or go to Latin-America that’s a totally different market. So, I think the overall — when we consoled our balance sheet, I think that’s exactly what we present you. Gautam, you can just answer this.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
So Manik, honestly I think there was some issue with the voice. If you can just repeat your queries, I just missed some last part of it.
Manik Taneja — JM Financial — Analyst
So, the first question was with regards to the gross margin performance, while we continue to see a — derive a higher share of revenues from geographies and some of the acquired businesses have higher gross margin profile as per the data you have provided.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Fair enough. So yeah, so I’ll address this first. I think Rajdip highlighted the key aspects, I’ll just add to what, he said. So some of the large OTT players right because of the size and scale and the rate at which they grow I mean there are some volume-based discounts which essentially leads to kind of a drag on the overall portfolio gross margin, but that is then adequately compensated by the new products and some of the acquisitions that we’ve done which are at higher gross margins, so that’s the way to kind of look at it.
And from our perspective if you were to look at it some of these large OTT players, we are able to service them in multiple geographies. It doesn’t — I mean the serviceability of some of these accounts doesn’t warrant significant operating costs so there is tremendous operating leverage that kicks-in and hence it leads to higher ROCE.
Manik Taneja — JM Financial — Analyst
Sure. And then second question was with regards to the cash generation, if you could help us understand what’s changed with regards to the government procurement?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Yeah, so I think this is for one of this large PSU bank that we were providing the services. At the very last moment, we were told that the entire billing has to be routed through the government e-marketplace portal which is the GeM portal. So we had to get ourselves integrated, that process is again kind of — a process which warrants a little bit of time because we are doing it for the first time, so some part of that bank’s quarterly revenue — I mean a large part of that was that — as it had to be settled through the GeM portal, but now those things have been streamlined, we are already integrated. We have already received the payments of this particular bank and subsequently.
Manik Taneja — JM Financial — Analyst
So, should we expect an improvement in cash-flow in 2Q [Phonetic] itself?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Yes.
Manik Taneja — JM Financial — Analyst
Okay. And one last one from my end, basically the industry as a whole has seen significant increase in R&D pricing over the course of last 24 months, how are we seeing both — the pricing model in NLD and ILD volumes if I have think about the next 12 months?
Rajdipkumar Gupta — Managing Director & Group CEO
So Manik, Rajdip here. So, for us it is pass-through prices right, so definitely we did see some kind of a volume dip but based on the price increase I think it is a pass-through for us and I don’t see there is any impact going to — in fact we are going to gain more out of that rather than any impact.
Manik Taneja — JM Financial — Analyst
Sure. But Rajdip, do you think we could probably see that situation where NLD and ILD prices increases?
Rajdipkumar Gupta — Managing Director & Group CEO
It all depends on the operator Manik because [Indecipherable] thousands of operators basically, and different operator have a different aspiration and I think definitely most of the operators believe that the estimate is one of the big thing for them, when I think most of them are trying to increase prices all across the globe. You never know. But I can’t comment on their behalf, but probably they may see.
Manik Taneja — JM Financial — Analyst
Sure, thank you and all the best for the future.
Operator
Thank you. Our next question is from the line of Dipesh from Emkay Global, please go-ahead.
Dipesh Mehta — Emkay Global — Analyst
Thanks for the opportunity and congrats for strong results. A couple of questions from my side. First about the data-related question, can..
Operator
Your audio is a bit muffled, if you’re on speaker, please switch to handset?
Dipesh Mehta — Emkay Global — Analyst
Is it better now?
Rajdipkumar Gupta — Managing Director & Group CEO
Dipesh, if you can be a bit louder please?
Dipesh Mehta — Emkay Global — Analyst
Yeah, can you help me with the acquired entities performance this quarter? If you can give revenue run-rate of Masivian and MRM. Second question is about EBITDA margin expansion optionality. I think Gautam earlier alluded to — I was bit not sure what he is referring to. If you can provide some more detail what he tired to convey? And last question is about ILD price hike and rupee depreciation, both of these vectors are positive for our revenue growth this quarter. So, can you provide some quantification of those benefit versus normal business. Thank you.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Sure. So Dipesh, Masivian’s revenue for Q2 FY Q3 is about INR562 million.
Dipesh Mehta — Emkay Global — Analyst
Sorry I missed the number, Gautam.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
INR562 million in INR terms.
Dipesh Mehta — Emkay Global — Analyst
Okay.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
For MR Messaging it’s INR1720 million. Is that sufficient or you want further entities?
Dipesh Mehta — Emkay Global — Analyst
No, that’s fine thanks.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
So, your second query was on the optionality that we were talking about, right. So what is the happening is I think in terms of the ESOP cost, right. The first year, the impact of the ESOP cost is the maximum. I think we are now past the 12 month, so going-forward from the next quarter onwards there would be a drastic reduction in ESOP cost because it will reduce from 48% to almost 28% for the full-year, so that is the extent of the reduction that we’ll kind of pay out. Sorry what was the third query? I hope that addresses your query Dipesh. What was the third point?
Dipesh Mehta — Emkay Global — Analyst
Third question was about ILD tariff hike and rupee depreciation benefit, if you can quantify those benefit versus usual business growth?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
ILD because of the price increase, definitely there was benefit in terms of realization.
Rajdipkumar Gupta — Managing Director & Group CEO
So I think Gautam, Dipesh we also buy in dollars and my customer also pays in dollars. So I hope you are aware of this for ILDs.
Dipesh Mehta — Emkay Global — Analyst
No, that’s fine. But when you…
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Dipesh, sorry to intervene so about 35% of our revenues is in dollars 35% of the revenue is in euros, so in a way I mean, those things had settled off. In terms of the capital commitment that we have in terms of euros for MR Messaging will tend to benefit because of the depreciation of euro but some amount of it will be offset by what we have to pay to Masivian in dollars, so net-net if you look the in terms of the capital commitment between MR Messaging and Masivian, we are net — we have a net euro exposure, so in a way we will benefit in terms of the capital commitment.
Dipesh Mehta — Emkay Global — Analyst
Understood. Maybe I can take it offline, thank you.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Sure.
Operator
Thank you. Our next question is from the line of Moez Chandani from Centrum Broking, please go-ahead.
Moez Chandani — Centrum Broking — Analyst
Good evening and thank you for taking my question. My first question is on your revenue guidance of 60% revenue growth year-on year. Now, looking at H1 we’ve already grown at 94% so in that sense are we being a little conservative with our revenue guidance of 60% or are you, expecting to see some slowdown over the next couple of quarters because even if our QoQ growth is flat, we should be able to comfortably exceed that guidance?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
So Moez, I think 60% is definitely a very good number — guidance. So, I think we want to stick with 60% and we are definitely — we as a team are looking-forward to achieve over 60% also. But as far as the guidance is concerned I think you want to stick with 60%.
Moez Chandani — Centrum Broking — Analyst
Okay understood. My second question was on the two acquisitions, two small tuck-in acquisitions that were being planned. So, could you give us a timeline on when we expect those acquisitions to be completed?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
I think both the acquisitions are still going through the due-diligence process and right now it’s under the process only, so as soon as we have the outcome of the diligence I think then we can definitely share some data, but as of now it may take some time that’s what we can tell you.
Moez Chandani — Centrum Broking — Analyst
Okay. All right. Thank you so much.
Operator
Thank you. Our next question is from the line of Vivek Sethia from HDFC Securities, please go-ahead. Mr. Vivek Sethia, please unmute your line and go ahead.
Vivek Sethia — HDFC — Analyst
Sure, good evening to everyone. So my question — and I had a question I just wanted to understand the breakup of the acquisition Masivian, Interteleco and MRM and just a follow-up on that since you — your target is to achieve that 60% revenue growth, so could you break that up in terms of how much would be organic and how much would be from the acquisitions? Hello?
Rajdipkumar Gupta — Managing Director & Group CEO
Yeah. So, I think from an organic standpoint — organic growth standpoint I think we should be able to achieve a 25% to 30% growth rate and balance we’re looking at contribution from the acquired entities.
Vivek Sethia — HDFC — Analyst
Okay, cool, got it thank you.
Operator
Thank you. Our next question is from the line of Ajaypal Singh from Asian Paints Limited, please go-ahead.
Ajaypal Singh — Asian Paints Limited — Analyst
Yeah hey congratulations for the good set of numbers. My question is with respect to the revenue growth. We have achieved 94% of the revenue for the Y-o-Y quarter Q2 growth. I have seen there is a number of [Indecipherable] added which is of INR236 crore. What is the other aspect which has led to the increase in revenue and any major customer which we have added in the quarter and generated revenue? And will it be one-off or it will be continued incentivization [Phonetic]
Rajdipkumar Gupta — Managing Director & Group CEO
It will be continuous Ajay, we have added two banks, we onboarded few banks and those traffic started coming from last quarter. As I said earlier also there is a large OTT player we have signed and we have now started servicing these customers to 13 countries. We are also working very closely with some of the large CPaaS player so that volume is also increasing. So there are multiple reason know like where — because of which our volumes are increasing and it’s properly a strategy we define that we want to work with everyone, especially with the CPaaS player also, and we all support them than competing with them in various market.
So apart from that — I think banking customer and OTT players has contributed a lot along with our Masivian and MR Messaging — for the upcoming quarters as well.
Ajaypal Singh — Asian Paints Limited — Analyst
Yeah, I’m hoping for the best result. One more thing, if I split the 94% of the growth rate how, much has been coming from the acquired entities growth rate and how much is the normal business growth rate?
Rajdipkumar Gupta — Managing Director & Group CEO
Gautam?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Yeah, so organic growth rate on a sequential basis was 20.6% balance is attributable to some of the acquisitions that we’ve done.
Ajaypal Singh — Asian Paints Limited — Analyst
Okay, so 95% has been [Indecipherable] 20.6 is organic? and the remaining 70% which is on YoY which are not here in my…?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Ajay you’re talking about quarter-on-quarter sequential growth?
Ajaypal Singh — Asian Paints Limited — Analyst
No, YoY I am talking about.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
YoY just give me a second. 40% is the YoY organic growth rate.
Ajaypal Singh — Asian Paints Limited — Analyst
Okay cool. Thank you for answering those questions.
Operator
Thank you. Our next question is from the line of Saurav Khatarooka [Phonetic], please go-ahead.
Unidentified Participant — — Analyst
Yes hey. First of all, very happy Diwali to the entire Route Mobile team. Sir, I have two main questions, you talked about margin improvement — in future [Indecipherable] WhatsApp, Viber new-edge gets more adoption and that is something which we have been hearing for many quarters now, based on your client interactions what do you think is the reason for the slow adoption in these? And then second is, would you be — this is a request — can you present this breakup of new-edge technologies versus SMS growth or revenue split in the investor presentation from next time maybe, just like some of the software services front report their digital growth.
Rajdipkumar Gupta — Managing Director & Group CEO
Sorry, we probably already have one in our presentation, it’s on slide 21, if you might have missed it.
Unidentified Participant — — Analyst
Okay, I might have missed it. I mean just another one — the second question is about Call 2 Connect, in Q2 FY22 you had sold about 1,000 feeter facility addition and I see the employee count in your investor presentation is 724 does that includes the Call 2 Connect employee count. And even if that is the case, I mean what is the current utilization of the 1000 feeter capacity? And the last small one, it is about that Click2Pay service which you had launched some time around Q3 last year any traction on that? Thanks, those are the ones.
Rajdipkumar Gupta — Managing Director & Group CEO
It’s 700 plus employees completely for Route Mobile and I think on Call 2 Connect we have a separate set of employees. That number if Gautam has he can share. [Multiple Speakers]
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
First one is — rest is around contract 200, on payroll it’s about 200 odd employees or Call 2 Connect.
Rajdipkumar Gupta — Managing Director & Group CEO
And overall, it would be more than 1,500 if I’m not wrong.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
That’s right, and in terms of the utilization at this point in time it’s running at 50% utilization. So we were running at 300 seats and we just got additional orders of 200 seats right now. And there are some active pipeline that we have some of this. I think should fructify in this quarter.
Unidentified Participant — — Analyst
And on Click 2 Pay is there any traction anything you would like to highlight?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Click 2 Pay sorry Rajdip. Click 2 Pay I think definitely there is some amount of traction, in fact I think it just deployed a conversational commerce platform with Coca Cola in UAE where they tried, tested our Click 2 Pay but they had their own proprietary payments solution which they integrated it, so we are kind of taking it to clients at this point in time, nothing which warrants kind of highlighting at this point in time, but we’re seeing good traction on that as well from a 360 degree conversational commerce experience.
Unidentified Participant — — Analyst
Thank you. Thank you and congrats again for the good set of numbers.
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
Thanks.
Operator
Thank you. Our next question is from the line of Rohan Gopane [Phonetic], a retail investor, please go-ahead.
Unidentified Participant — — Analyst
First of all, thank you for the opportunity and congratulations for the current number. I have a couple of questions. First is I have seen in [Indecipherable] people are using Google Authenticator and other apps to basically authenticate the program and compared to the traditional SMS based authentication. So, what’s your view on the impact of this on our business?
Rajdipkumar Gupta — Managing Director & Group CEO
So, not at all Rohan, it is all about the different use cases are arising based on the current requirement, okay SMS is still there — WhatsApp is still there, most of the WhatsApp use cases are customer support as of now which cannot be taken over by SMS. So, I think because of the digital adoption ratio increasing day-by day there are various number of use cases are also arising. So Click 2 Pay — Google all new channel of communication which has a different use cases and we don’t see that as a like competition to message, SMS but that will have a different use-case and different customer set for that.
Unidentified Participant — — Analyst
Will we adapt to that style of authentication?
Rajdipkumar Gupta — Managing Director & Group CEO
It’s a customer choice to — based on the customer use case. If the same customer is in four channel of communication including voice, SMS, email and they may use Google Authenticator also that is available and that is available since very long time.
Unidentified Participant — — Analyst
Okay, cool. Second question is regarding the buyback. Sorry if I’m wrong, I’m seeing that in the investor presentation it has been clear that promoters have not participated in the bi-elect, right. I have seen that your stake has been increased on corporate, so can you just clarify on this?
Rajdipkumar Gupta — Managing Director & Group CEO
Sorry, can you please repeat your query?
Unidentified Participant — — Analyst
I’m seeing that in the buyback, the promoters have not participated right?
Rajdipkumar Gupta — Managing Director & Group CEO
There are no open-market that’s, right.
Unidentified Participant — — Analyst
And I see the — what is the shareholding pattern I can see that promoters have increased their shareholding this quarter. So that’s what I wanted to understand?
Rajdipkumar Gupta — Managing Director & Group CEO
Pursuant to the buyback, the shareholding of the promoters had increased but thereafter there was a small block that was offered to our marquee investor so that resulted in the resultant shareholding of the promoters marginally falling below their March shareholding.
Unidentified Participant — — Analyst
Okay cool. And I just have last question on, what’s your view on macro-environment and how you see that [Indecipherable] will impact our business?
Rajdipkumar Gupta — Managing Director & Group CEO
So I think till now we are largely present in emerging markets, we haven’t seen too much of headwinds in terms of what is today happening in the developed markets plus what is happening, especially in markets like India because of digitization because of the initiatives by the government to digitize the economy. You’ve seen the micro transactions increase multiple times and as CPaaS partners through enterprises, we tend to benefit out of the increased number of transactions.
So per se, we haven’t faced the heat that the developed markets are facing at this point in time and yeah so I think that is where we are right now and for a lot of large OTT players from the US and even companies like Alibaba, TikTok I mean you name it, most of these companies are largely from the US, the OTT players they are looking at their growth coming from emerging markets and hence we tend to be a big beneficiary.
Unidentified Participant — — Analyst
Okay cool. Sir thank you for answering my question and a happy Diwali to the whole management.
Rajdipkumar Gupta — Managing Director & Group CEO
Thanks Rohan.
Operator
Thank you. Our next question is from the line of Mohana Kumar [Phonetic], an individual investor. Please go-ahead.
Unidentified Participant — — Analyst
Congrats on a great set of numbers. Just a quick question regarding the positive messaging I see that message is around 20% this quarter, which is much higher than the rest of expenses, any particular reason why that number is a little higher?
Rajdipkumar Gupta — Managing Director & Group CEO
Sorry which number? Can you repeat?
Unidentified Participant — — Analyst
Purchase of Messaging Services so it’s up about 657 versus 565 last quarter.
Rajdipkumar Gupta — Managing Director & Group CEO
It’s a function of the increase in revenue as well, right. Revenue increased from INR730 crores to INR850 crores, so it’s all contained because it’s a little more…
Unidentified Participant — — Analyst
I think it’s a little more than the revenue, just want to know.
Rajdipkumar Gupta — Managing Director & Group CEO
No, it’s a gross profit — so gross profit margin if you were to clock it for both the quarters it’s around 22.4% and 22.3% so pretty much — I mean it has been at high-level.
Unidentified Participant — — Analyst
Got it, and just a second question regarding the — and I know you’ve mentioned that you’re a bit conservative but if you just look at the basic run-rate from current levels we’re looking at, like second-half is much stronger for you guys than first half, just looking at current run rate we are looking at 70% growth. Would I be wrong if I’m morphing into 70% 80% Y-o-Y growth?
Rajdipkumar Gupta — Managing Director & Group CEO
Small kind of caveat there, I think definitely Diwali also actually has happened and there are obvious specificity have actually happened in Q2 this time, so there is some amount of that, that has already paid out in Q2. Notwithstanding that, I mean we definitely believe Q3 and Q4 will be good but I think we have already given a guidance of 60% we want to stick to it and so that we kind of outperform that number.
Unidentified Participant — — Analyst
Just a follow-up on that, you mentioned the Diwali aspect has already kicked-in so what do you mean by that, we’re still like almost a couple of weeks away, so Diwali is next week so just trying to understand how has that played out in the last quarter?
Rajdipkumar Gupta — Managing Director & Group CEO
Mohan, there are lots of sale has been already — I think it was there in last month, if we see like whether it’s Amazon, say for Flipkart and so that’s what Gautam is trying to mention.
Unidentified Participant — — Analyst
Got it. Sounds good and thank you very much hope you have successful next couple of quarters, happy Diwali and all the best.
Rajdipkumar Gupta — Managing Director & Group CEO
Thank you.
Operator
Thank you. Our next question is from the line of Aditya Yadav from Transient Capital, please go-ahead.
Aditya Yadav — Transient Capital — Analyst
Yeah hi thanks for the opportunity. Apologies if the question is a bit repetitive because I joined the call a bit late. Sir, as you’ve been guiding previously that we are we trying for like 100 basis points, 200 basis-point margin expansion this year and that is the vision for the company and although the revenue growth has been super and blockbuster to say but on the margin front, even if you look at year-on year, the margins have been flat to a bit negative they are getting leveled.
Rajdipkumar Gupta — Managing Director & Group CEO
Yeah. I think we discussed this point earlier. So I think what is happening is there are some large clients right, where the revenues grows in multiples and we service them across multiple geographies and they happen to be I mean, million dollar clients — so over a period of time as we deepen our relationship with them, there are volume-based discounts which essentially tends to be a drag on the overall portfolio margin but the newer products, some of the acquisitions that we have done which are doing tremendously higher gross margin, they tend to offset it and hence while the gross profit margin has that remained at 21% 22% but in terms of the operating leverage that flows in, in terms of the EBITDA margin expansion that actually should — and from our perspective we look at it from a return on capital employed perspective.
So for servicing some of these large multi-million dollar clients we don’t need to tend to incur too much of operating overheads, so whatever we are able to generate in terms of gross profit flows directly to the EBITDA and hence leads to vendors — higher ROCE.
Aditya Yadav — Transient Capital — Analyst
If it flows down to the EBITDA then obviously the margins should expand and as you are saying okay sometimes you have with certain clients — with larger clients there is a bit of..
Rajdipkumar Gupta — Managing Director & Group CEO
So, there is some amount as cost impact on the EBITDA margin has been because of the front-loading…
Aditya Yadav — Transient Capital — Analyst
What I am saying is over year-on-year these things should normalize a bit and we should see some kind of expansion in the margins?
Gautam Badalia — Group Chief Strategy Officer & Chief Investor Relations Officer
So Aditya, exactly what we are trying to say the last one hour, that new product is something what we all are focusing right now. As and when the adoption of new channels will happen and more customer will be on-boarded for the new channel, our margin will expand for sure and the kind of guidance we have given in the market that we have the aspiration to grow our the GPs in the range of 25% to 30% and we are working towards that.
Aditya Yadav — Transient Capital — Analyst
And the short-term goals also which we discuss the 100 basis-point to 200 basis point expansion every year that also remains?
Rajdipkumar Gupta — Managing Director & Group CEO
Yeah we’ve already called out I think as part of our guidance 100 basis point, 150 basis-point improvement in our EBITDA margin [Multiple Speakers]
Aditya Yadav — Transient Capital — Analyst
Thank you. That’s all from my side.
Operator
Thank you. Our next question is from the line of Anil Nathan, an Individual Investor. Please go-ahead.
Unidentified Participant — — Analyst
Yeah hi. My question is that this new channels like WhatsApp and all, have they been able to make significant volumes to reach a couple of percentage of the overall revenue so-far?
Rajdipkumar Gupta — Managing Director & Group CEO
Indeed. Because we do see lots — we are already onboarding lots of customer on WhatsApp as we speak and not only on WhatsApp but on Viber as well as on other channels. [Multiple Speakers] I think I answered you.
Unidentified Participant — — Analyst
I’m sorry maybe I am having an issue at my end, I will go through the transcript, thank you so much.
Operator
Thank you. Ladies and gentlemen that was the last question. I now hand the conference back to the management for closing comments.
Rajdipkumar Gupta — Managing Director & Group CEO
Thank you everyone and wish you all a very happy Diwali and a prosperous New Year as well. Thank you once again.
Operator
[Operator Closing Remarks]