Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
ROUTE MOBILE LTD (NSE: ROUTE) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
Tushar Agnihotri — Chief Executive Officer
Sashkin Arikant — Chairman
Rajeshwar Singh Gill — Chief Financial Officer
Rajdipkumar Gupta — Managing Director
Analysts:
Unidentified Participant
Amit Chandra — Analyst
Unidentified Participant
Dipesh Mehta — Analyst
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Good evening ladies and gentlemen. Welcome to the conference call of Root Mobile Limited to discuss its Q4 and FY26 results. At this moment all participants are in the listen only mode. Later we will conduct a question and answer session at that time. If you have any questions, please raise your hand and we will unmute your line to ask questions. Please lower your hand after you have completed the question. 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 2 of the presentation for the detailed disclaimer. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Binyala. Thank you. And over to you.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
Good evening everyone and welcome to Root Mobile’s Q4 and full year FY25 26 earnings call. I’m Vinay Vinyala, Chief Strategy Officer and Investor Relations Officer at Route Mobile. Thank you for joining us. We have a full house today and we appreciate the continued engagement. I would first like to introduce my colleagues at Route Mobile who are joining us on this call today. Sashkin Arikant, Chairman of the Board, Route Mobile and CEO of Proximus Global. Rajdeep Gupta, Managing Director of Root Mobile.
Tushar Agnihotri, Chief Executive Officer of Route Mobile and Raj Gill, Global Chief financial officer at RootMobile. Before we begin, a brief note on the format. We are running this quarter’s call slightly differently. In addition to the usual financial results and business highlights, we are dedicating a significant portion of today’s session to a strategy update. Given the evolution of our business over the past year, shaped by broader market trends and sharpened internal strategic focus, we felt this was the right time to share that thinking with the shareholders, the analyst community in some depth.
We believe it provides important context for the numbers also. The structure for today’s discussion will be as follows. Tushar Agnihotri, our CEO, will open with a business overview and the strategic direction we are pursuing. Sashkin Arikan, our Chairman and CEO of Proximus Global, will cover Route Mobile’s role within Proximus Global and the larger Proximus Group. I will follow that up with a walkthrough of the growth strategy and business metrics with Tushar, adding color and context where relevant.
Raj Gill, our group cfo, will then take us through the financial results and outlook. We will have time for Q and A at the end. Over to you, Tushar.
Tushar Agnihotri — Chief Executive Officer
Good evening everyone. Thank you for your time today. We structured the session around four themes. I’ll cover the business fundamentals, what routemobile is, how it’s built and where our differentiation lies. Seshkin will provide the proximus global context which is central to understanding the broader strategic picture. Vinay will then walk through the growth strategy in detail and we’ll run through the business metrics together. Raj closes out with the financial results and guidance. Let’s begin.
I want to use this slide to establish the framework for the details that follows. The straightforward message is the reset is largely behind us and the business that has emerged from it structurally healthier. We say that with confidence and the numbers also reflect the same clearly, gross profit margins expanded in FY26 as relatively low margin ILD volume has exited the mix. What remains is more resilient, more defensible revenue base. And to put the Numbers to that, FY26 was the first time that our annual gross profit crossed INR 1000 crores.
That translated to a 22.9% gross profit margin for the year. The driver was exactly what I have described. The exit of low margin ILD business partially offset by the growth of higher margin domestic revenues. It’s a milestone that reflects quality of earnings, not just cake. Two growth engines are gaining real traction. One on the product side, RCS, WhatsApp and AI enabled messaging have grown at 43% compounded annual growth rate over the period FY22 to FY26. That trajectory points towards the towards where the channel mix is heading.
On the MNO solution side, our firewall and network API products are building into a high margin recurring revenue stream that sits alongside the enterprise business. We have created a solid pipeline for the AI driven A2P SMS and voice firewall solutions that we offer to MNOs and this will reflect in revenue expansion from this line of business in the coming quarters. Two structural advantages underpin the whole approach. First, India as a global innovation hub. What we incubate and what we prove in India we deploy worldwide.
The Akash Education Network API deployment is the tangible proof point of that model. We developed and deployed a network API driven silent verification solution for the client which helps them address requirements such as tracking students dropouts during the online registration process. So solution can now be extended to customers across the globe. Second, Proxima Stobal being part of the group provides root mobile cross sell access to 900/mnos relationship and a global enterprise space that no standalone CPAAS company can access.
And we are being deliberate about capital allocation targeted bolt on acquisitions to deepen platform capabilities and meaningful returns of excess capital to shareholders. We have also defined robust frameworks to support build versus buy decisions when evaluating product expansion or entering into new geographic markets. The reset was a difficult one. I believe it has made us more focused, more defensible business and one that is well positioned for the next phase. For those newer to Roop Mobile story A quick look at the business fundamentals 3100 enterprise clients 175 billion messages processed annually 280/ direct MNO connections across the globe INR 4400/crores in revenue for FY26 what distinguishes us as a preferred A2P SMS solution provider for global enterprises is a direct connect with MNO globally.
These connects are not routed through intermediaries and are direct agreements and platform integration built over two decades of partnership with such MNOs. That depth of operator partnership is a genuine competitive barrier and it’s our customers delivery rates and pricing that aggregate only players cannot replicate. This positions us strongly as a partner for traditional A2P SMS solutions. We have been profitable since year one of operations and that discipline continues. In FY26 our cash flow from operations to EBITDA ratio was 100% plus reflecting a healthy cash generative business.
I would also want to talk about our platform evolution story as it provides important context for where we’re taking the business. Root Mobile was built on A2P SMS that remains a significant part of a business today, but the platform has evolved meaningfully and we now offer a unified full stack platform that encompasses all channels of communication that an enterprise could require across RCS, WhatsApp, Viber email and more recently network API products that sit at the MNO’s backend standard authentication, SIM swap detection and device verification amongst others capabilities that very few messaging platforms offer.
This enables us to deliver cutting edge secure customer experience solutions to enterprises. The direction is clear from connectivity infrastructure and towards AI powered intelligence at the enterprise engagement layer. As we move up this value chain, the margin profile improves and the customer relationship becomes structurally stickier. This evolution from pure connectivity to an AI powered engagement platform is exactly what the growth strategy is designed to accelerate. Three things that differentiate route mobile in the market First, Global connectivity Being part of Proximus Global in immediately expands our direct MNO access to 450 plus carriers, 280 plus direct connects of root mobile and an additional 170 connects that big as to the ecosystem, this is not replicable in a short time horizon and it translates into delivery, reliability and pricing that aggregators cannot match.
Second, a full stack CPaaS platform, SMS voice email, RCS, WhatsApp, omnichannel one single platform, one integration with AI ready capabilities embedded natively across the channels. Third, Proxims Global, being part of a multi billion euro telecom group gives Root Mobile access to distribution and technology partnership that a company of our scale simply could not access independently. Seshkin will elaborate on this, but I can I want to flag it here as a genuine structured advantage, not a financial characterization.
A brief walk through the Root Mobile journey Because I think the discipline of how we build the business is relevant context for assessing the credibility of the plan ahead. We started with $2,000. We built direct carrier relationship systematically, country by country. We listed ourselves on BSE and nse. We made targeted acquisition to add capability and enter new geographic markets. We transitioned from an aggregator model to a direct enterprise platform model. The acquisition of Root Mobile by Proximus was a pivotal moment in that journey.
It moved Root Mobile from being a well run regional CPAAS company to being the enterprise connectivity and AI platform of a global B2B telecom group. The strategic and commercial implications of that are still playing out and they are very much in our favor. The current chapter, which Vinay will take you through in detail is about the next evolution of the journey. With that let me hand over to Sethkin.
Sashkin Arikant — Chairman
Thank you Tushar and good evening everyone. I’m Setkin Erkan, Chairman of Root Mobiles Board and CEO of Proximus Global. I want to spend a few minutes on the Proximus Global context because I believe it is important for understanding the full Root Mobile story. Proximus Global brings together three businesses focused on delivering communications and customer engagement services to global enterprises. We operate across three core bix, our Global connectivity platform, Telesign, our Digital identity and communications API Business and Root Mobile, our Enterprise CPAAS and Omnichannel engagement platform.
Each fills a distinct role in the enterprise connectivity value chain. Root Mobile fills the one that is most difficult to build direct at scale enterprise relationships across a platform that spans messaging, voice, AI and network APIs. None of the other entities in in the Proximus Global group do that at the scale and efficiency that Root Mobile does, which makes it in my view strategically very important. Let me be specific about what Proximus Group membership means for Root Mobile in practice because I believe it is sometimes underestimated.
Bix has direct relationships with most of the mobile network operators globally for Root Mobile that is a commercial distribution channel. As we seek to expand our RCS delivery reach, we can leverage this mobile network operator access to accelerate our initiatives. When we develop a new network API product, a silent verification solution or a fraud detection capability, we have an immediate path to those operators at global scale that is an extraordinary advantage for a company of our size. Bix is also enabling a rapid pipeline development for the A2P, SMS and voice firewall solutions that Root Mobile offers to mobile network operators globally.
Telesign has a deep and established enterprise customer base in the US and the European markets. Many of those customers have requirements that Root Mobile’s omnichannel CPaaS platform is well positioned to address. The cross sell pipeline is active and building gradually. Root Mobile is not executing this plan alone and the distinction matters significantly for how you assess execution risks. This slide illustrates the scale and the global react that Proximo Global has as a group trusted by several Fortune 500 enterprise clients across the globe ability to connect with 5 billion plus individuals worldwide 200 billion messages processed annually Truly Omnichannel CPAAS platform ability to offer enhanced digital identity solutions that aim at fraud prevention what I would like to ask you to note is the two directional nature of this relationship.
Root Mobile brings enterprise relationships and CPAAS platform capability to the group. The Group through Bix and Telesign brings distribution reach, operator relationships and a customer base that amplifies what Root Mobile can achieve independently. As the platform continues to evolve genai firewall network APIs. Those capabilities enhance the value proposition of the entire Proximus Global group for enterprises and operators alike. It’s a cycle and it’s one we are investing in with conviction.
To close, let me bring together the key reasons why Root Mobile within Proximus Global is a compelling opportunity. Three reasons this is compelling. First, absolute operational strategic backing. Joint commercial programs are running with Bix and Telesign. This is an active execution, not a future opportunity. Second, the cross sell opportunity is near term and measurable. Biggs customers who have never been offered CPAAS Telesign enterprise accounts who have yet not been introduced to Root Mobile’s omnichannel suite.
These are real conversations underway. Third, Root Mobile is building an AI native CPAAS platform at precisely the moment enterprises are accelerating AI adoption in their customer engagement strategies. The demand is clear. The platform is being built to meet it. With that I will hand it over to Vinay for the strategy detail.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
I want to address this directly because the credibility of our recovery plan depends on a clear eyed account of what we experienced. Certain headwinds converged in the past 18 to 24 months the most significant was structural ILD. A2B SMS, historically a significant revenue driver for us is in secular decline. Certain large enterprises migrated to WhatsApp, RCS and other OTT channels. This shift has affected every CPAAS business with material ILD exposure. The second was AIT artificially inflated traffic.
An industry wide cleanup triggered a significant decline in A2B SMS volumes globally. As an aggregator route mobile was exposed to that contraction. Third, macro enterprise CPaaS budgets were cut as part of cost optimization cycles over the past few years in response to high A2P SMS costs in certain geographies. Discretionary communication spend was amongst the first categories to be reduced. Fourth, our new products grew at 11% year on year but from a small base at approximately 8% of total revenue, they are not yet large enough to offset the ILD revenue decline.
And fifth post acquisition integration complexity added a layer of operational challenge that was not purely market driven. We have spent the past 12 months understanding each of these precisely. The strategy I am about to walk through is is a direct response to every one of them.
Tushar Agnihotri — Chief Executive Officer
If I can add something here. When we looked at what happened, the honest conclusion was that some of the headwinds were genuinely outside the control. The IT cleanup, the macro spending cycle. But some of them, particularly the pace of product mixed transition and the integration complexities, those were things we could have moved faster on. We’ve been direct with ourselves about that. The strategy Vinay is about to walk you through reflects the candle. It’s a specific plan, not a generic recovery narrative.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
This is the playbook and before I walk through it I want to highlight an essential fact. Execution is already underway across every element of this. This is not a forward looking plan, it’s a live program. Root Mobile is making a deliberate shift to platform defensibility. The architecture has three layers at the top. Platform strengthening two pillars. Elevate is about omnichannel platform scaling RCS, WhatsApp and ocean moving up the value chain improving margin quality deepening customer lock in Innovate is the AI and India innovation hub Genai Ready CPaaS internal AI deployment and India is the product incubation center for Proximus Global Group.
The middle layer is near term growth execution. Deepen refers to core market penetration. We have 3,100 plus clients majority using our solutions for a single communication channel. The wallet share opportunity within that base is substantial and requires no customer acquisition. Spend expand drives geographic growth backed by Proximus infrastructure and Telesign enterprise relationships. The foundation layer is accelerate MA and partnerships AI LED acquisitions to compress the capability build timeline, ISV and partner ecosystem to expand sales reach and the Proxima’s cross sell, which I would describe as the most structurally distinctive and under appreciated element of the entire plan.
The five pillars reinforce one another. Deepening the core strength strengthens the positioning and validates the platform differentiation. Platform differentiation in turn enables geographic expansion. M and A could help accelerate all other initiatives. It is a compounding engine that said M and A will be driven basis a well defined evaluation framework which helps determine whether build or buy towards the various initiatives such as developing or acquiring certain specific platform capabilities or new market entry through organic setup versus a local acquisition.
Tushar Agnihotri — Chief Executive Officer
I want to add one thing here. When you look at the architecture of the strategy, the thing that gives me personal conviction is that each of these pillars has a clear line of ownership internally and a set of active programs behind it. This isn’t just a slide we built for this discussion. The M and A pipeline is already live evolving. Piloting products in the Indian market and then taking them to global customer base is already in the works. The omnichannel platform is being actively sold.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
Three focus areas under the first pillar omni channel scale RCS, WhatsApp and Ocean. This is our direct commercial response to a 2P SMS decline as enterprise clients migrate off SMS, we need to be the platform they migrate to. RCS and WhatsApp are growing. Ocean ties the channels together and creates the platform stickiness that makes customer relationships more durable. We are also witnessing that enterprises are leveraging different channels for different use cases. For instance, plain notifications are still being transmitted through sms, whereas interactive customer support use cases are being supported over WhatsApp and RCS.
Our ocean platform addresses exactly this requirement by enabling all channels through a single platform, offering a one stop shop to enterprises for all their customer engagement requirements. Next gen AI enabled CPaaS enterprises increasingly want to deploy AI powered customer engagement intelligent chatbots, voice agents, personalized messaging workflows. We are actively enhancing the platform to be the trusted CPAAS delivery layer for that CRM, ERP and CDP connectivity AI accelerated deployment pipelines.
The development work is already underway. We support ready integration between our platform and Several commonly used CRM, ERP and CDP platforms. Firewall and Network APIs is an extremely exciting component of our business offerings regarding A2P SMS and voice firewall for mobile operators. Our AI powered fraud detection and revenue optimization solutions create recurring managed services revenue streams for mobile network operators and we are witnessing strong operator demand and pipeline buildup for these solutions.
We are also leveraging Proximus Network API Initiative Conera to offer differentiated innovative solutions around silent verification, SIM swap and device location to enterprises. These solutions create high barriers to entry as they require integrations with mobile network operators. We are actively pitching these network API based solutions to enterprises. These are capabilities that make Root mobile genuinely difficult to displace. I would like to highlight three active programs around this theme which we are referring to as Innovate.
The Internal AI we have a live AI program running across organizational functions including customer support, engineering and deployment. We are driving measurably lower cycle times, better support resolution rates and faster product delivery. We are scaling this mandate aggressively across every function. Genai Chat and Voice Solutions we are building AI native conversational agents for both chat and voice channels, not basic FAQ bots. Multi turn contextual AI interactions that meet the growing enterprise demand for intelligent customer engagement across chat, voice and messaging.
Root Mobile is positioning as the CPAAS delivery layer for that demand. Network API Deployment the Akash Education Proof Point we deployed a network API powered silent verification solution to to Aakash Education, one of India’s leading largest edtech platforms. We are now ready to commercialize this solution across the Proxima’s footprint globally.
Tushar Agnihotri — Chief Executive Officer
I’d add a thought on India specifically because I think it’s worth understanding the philosophy behind India as innovation hub. Framing India gives us world class engineering talent at a cost structure that allows us to take product risk that a Western development center simply can’t. We can build, test, prove and iterate faster. The Akash deployment took just a few months from concept to live. The velocity is a competitive advantage and the Proxim’s global relationship means that once something is proven in India, we have the distribution to take it global immediately.
The combination is genuinely unusual.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
Next let’s look at core market penetration, our highest ROI near term opportunity and it sits entirely within the existing client base. We serve 3,100 plus enterprise clients, the majority on a single channel. Today there is limited to no customer acquisition cost required. To capture this opportunity we visualize three specific plays. Key Account management for account deepening focus on moving clients from transactional single product relationships to multi year multichannel platform engagements.
The value uplift when clients go multichannel is significant. Cross sell and upsell to drive migration of SMS only clients to RCS WhatsApp voice delivering meaningful revenue uplift with minimal incremental sales cost. In most cases this will lead to expansion of use cases that we support for the same client solutions led selling shifting from API connectivity to platform solution engagements Larger deals longer relationships and better margins to be driven. The base is there, the task is to deepen it systematically.
Let’s look at our geographic expansion plans with a structural advantage that fundamentally changes the economics of entering new markets. We enter new markets which present higher than industry average growth opportunities. This changes both the risk profile and the return on investments related to such expansion. We have identified certain priority emerging markets including Mexico and Philippines. These are high growth under penetrated CPAAS markets with a strong enterprise demand in bpo financial services and E commerce verticals.
These are also large markets for the OTT messaging solutions such as WhatsApp and Viber in the US. Telesign’s infrastructure gives us a lane into the world’s largest enterprise messaging market. Oneroot Mobile has had limited direct exposure to to historically in Europe GDPR compliant messaging for financial services and logistics where our compliance credentials carry real weight with enterprise buyers and overarching all of this the Proxima’s network effect Every BICS customer is a potential route mobile engagement.
We are actively converting that opportunity today, especially on the mobile network operation operator solutions side of the business, the fifth pillar and the one that compounds the returns on all the others. Organic growth alone will not close the AI capability gap within the time frame the market requires. Our MA strategy targets conversational AI and CPaaS adjacent capabilities compressing a two to three year organic build cycle into 12 to 18 months. Our acquisition criteria are clear AI, native capability, a complementary customer base and a credible part to accretion within two years of closing.
These will be small to mid sized acquisitions primarily for capability and not necessarily for scale of the target business. We are also evaluating new geographic market entry through potential acquisitions. These will however be slightly longer drawn processes as the target evaluation would need to be more thorough in terms of immediate value add through the acquisition partner and reseller go to market. We look at expanding the ISV and system integrator ecosystem. We also expand Telco white label distribution scalable and capital efficient approach towards this initiative.
We have onboarded certain large clients over the past year through our partner ecosystem and we believe this could be significant revenue driver if we leverage it in the appropriate fashion and the Proxima’s cross sell joint go to market programs into BIX and Telesign enterprise bases. This will deliver high ROI and structurally unique solutions which route Mobile can bring to the market. No standalone CPAAS company has access to this lever
Tushar Agnihotri — Chief Executive Officer
On M and A. I’d be clear about a philosophy here because I think it’s worth articulating for the record. We’re not looking to make large transformational acquisitions. We’re looking for targeted capability led transactions where the technology accelerates, the roadmap and the customer base is complementary. The integration risks need to be manageable. The time to accretion need to be defined. We’ve been through the complexity of a large integration. The experience shapes how we approach this disciplined, specific and capital efficient.
Vinay Binyala — Chief Strategy Officer & Investor Relations Officer
Let me now run through the business metrics. The next four slides provide the quantitative picture that sits behind the strategy we’ve just covered. They cover the new product revenue trajectory, geographic mix, industry vertical breakdown and the customer cohorts. These are worth looking at carefully as they explain both the headwinds and the early evidence of recovery. New products revenue is the most important forward looking metric in these results, so I draw your attention to it. FY25 26 new products revenue came in at approximately Rs 3500 million.
The four year CAGR since FY22 is 43% growth moderated to 11% year on year in FY26. The tougher comparative period and macro environment are reflected in that as RCS, WhatsApp and AI enabled products continue to scale as a proportion of revenue. Two things follow structurally greater revenue resilience and rapid growth. FY26 is a base we are building on, not a ceiling on the geographic revenue mix. Two key observations here India remains the largest termination geography partially a function of the ILD domestic shift.
As international enterprise clients reduced spend, we’ve grown the domestic business, new large domestic customers added and the revenue growth from existing. Two observations on the geographic mix India remains the largest termination geography. ILD volumes declined but were partially offset by domestic volume growth. We added new large domestic customers and also witnessed revenue growth from existing clients. The reduction in US headquartered customers contribution also reflects the loss of ILD revenue.
The same structural dynamic we have been discussing throughout the geographic expansion strategy we have just covered is designed to accelerate the diversification of this mix over the coming years. Vertical breakdown useful for understanding where the headwinds are concentrated. Financial services remains our largest vertical and we’ve seen good growth from domestic Indian Fintech and BFS clients. High frequency, high stickiness usage patterns which is exactly the crime profile we want to deepen.
Digital native declined due to a specific US headquarter client migrating to alternate channels. E Commerce fell reflecting the loss of ILD traffic from a global major. The common thread is the ILD and global enterprise exposure we’ve discussed. Domestic recovery is partially offsetting this and the product mix shift we are Executing is designed to accelerate that recovery. This slide probably best explains the revenue dynamic for FY26, so it’s worth a moment. Two things drove revenue decline despite relatively stable transaction volumes.
First, customer mix shift. ILD revenue was concentrated in a small number of high value accounts. The revenue was partially replaced by domestic customers, but domestic average revenue per account is significantly lower than ild. The silver lining? Domestic clients carry relatively higher gross margins, so the profit mix is actually healthier even as the headline revenue compressed. Second, pricing compression ILD transactions command a structural pricing premium over domestic routes. The same transaction volumes processed domestically generate materially less revenue.
This is a pricing dynamic, not a volume problem, and it underscores why the product and channel mix transition is central to the revenue recovery story.
Tushar Agnihotri — Chief Executive Officer
I’ll close the session with a broader reflection. The metrics Vinay had just walked through tell a consistent story. The challenges of the past two years were real and specific and the recovery is real and building gross margins are moving in the right direction. New product revenue is on a clear upward trajectory. The domestic customer base is growing. None of those things happen by accident. They reflect the strategic choices we’ve made, about to invest and where to hold the line of quality. The base we’re building from is sounder than the one we started this reset from.
I’m confident in the direction with that. I will hand it over to Raj.
Rajeshwar Singh Gill — Chief Financial Officer
Thank you Vinay and good evening everybody. I’ll quickly summarize our financial and operating performance during Q4 26 and for the full year. Then I will look to the future with our financial guidance and capital allocation plans starting with Q4 revenue and gross profit. Our Q4 revenue from operations declined by 3.8% year on year driven by the structural SMS market volume declines in ILDO as described earlier. This is partially offset by encouraging growth in our domestic business and non SMS products.
However, looking at the current quarterly trend, revenue grew by 2.2% sequentially to $11,309 million supported by 45.1 billion transactions during the quarter. From a gross profit perspective, absolute margin grew 16.6% year on year at 2.639 million while the percentage margin increased to 23.3% as compared to 19.3 in Q4 last year, mainly driven by a shift from lower margin ILDO volumes. Delivery of our routing and cost initiatives along with focus on retention and growth of our high margin existing customers.
Turning to EBITDA and profit after tax adjusted EBITDA for Q4 increased by 11.9% year on year to 1343-million while being lower in absolute previous quarter due to seasonality. This represents a 10 quarter record in terms of adjusted EBITDA growth, demonstrating the ability to land the gross margin flow through benefits as OPEX is constrained to mainly wage indexation and receivables provisions. This all contributes to an EBITDA margin of 11.9% which is higher than the 10.2% seen in the prior year.
Adjusted profit after tax was 1144 million which is up 34.6% year on year and 11.6% on a sequential quarter basis. The PATS margin has also increased to 10.1% compared to 9.3% last quarter and 7.2% last year. The strong PAT trajectory is mainly driven by higher gross margin foreign exchange movements, lower financing costs and a lower effective tax rate. I will briefly touch on the full year results before moving on to the final section. Revenue from operations declined 3.7% year on year to 44082 million.
At the same time, gross profit increased by 5.9% year on year at 1073 million and the margin increased to 22.9% versus 20.8 in the previous year. Adjusted EBITDA grew by 0.4% year on year to 5259 million. EBITDA margin expanded to 11.9% compared to 11.5% last year. Profit after tax adjusted for exceptional items is higher by 6.7% year on year to 3761 million. With Pat’s margin at 8.5%. Our cash position stood at around 1400 crores as at March 31. This is our usual adjusted EBITDA and PAT walks which we produce every quarter.
So now looking ahead to future ambitions, the team took us through the strategy, growth opportunities and positioning of route Mobile. So let’s dive into what this means from for the coming financial year, revenue is expected to grow by mid to high single digit driven by the exciting growth playbook and the tangible competitive advantage we see. Our laser focus on moderating cost of sales and driving AI led OPEX efficiencies will continue to deliver stable margin performance. Therefore, we will deliver the expected increase in revenue while achieving an EBITDA margin of around 12%.
It’s worth noting we deliver a strong EBITDA to cash conversion and this will continue in the coming year. Moving on to how this translates to our capital allocation strategy, we will adjust our dividend policy to return a higher portion of our available free cash flow while leaving room for value creative initiatives going Forward our regular dividend will meaningfully increase from 11 INR per share to a sustainable level of 16.5 INR per share which represents a 50% increase. This will be payable each quarter as usual.
Thank you all for your kind attention during the prepared section of this call. I will now hand over to the moderator for Q and A.
Questions and Answers:
Operator
Thank you. We will now begin the question answer session. If you have any questions please raise your hand and we will unmute your line to ask questions. We have the first question from the line of Kunal Ojiramani. Please go ahead.
Unidentified Participant
Sorry
Vinay Binyala
Kunal, there’s some background.
Operator
We have the question from the line of Amit Chandra. Please go ahead.
Amit Chandra
Hello, can you hear me?
Vinay Binyala
Yes Amit, we can hear you. Go ahead please. Yes, please go ahead.
Amit Chandra
Yeah, so thanks for the opportunity and thanks for the, you know, elaborate an update on the strategy which was actually missing. So firstly sir, obviously we have actually laid down the plan for growth in terms of recovery for the next year. But if I see the shift that has happened in the industry where most of the traffic has shifted from the traditional channel to the new channels and a new revenue stream has been created over the last one year. If I see the competition, they have scaled up that WhatsApp, OTT or that segment of the revenue pretty fast and that has now become 30 to 35% of the revenue.
But for us it has been only 8% of the revenue from the new products. So where we have missed in terms of the cross sell and identifying the opportunity, is it only related to the transition now, the transition related challenges or is there something lacking in terms of offerings to the clients? Because that was a big shift. And from here on how do we see the new products revenue contributing to growth from here on? Because still we are at a very smaller part in terms of the overall revenue mix.
So that is the first question. And secondly, obviously in the existing base we have seen a decline of the ILD portion which was earlier major part of our total revenue. So how this shift has been seen over the next like two years and currently what portion of the revenue is from ild? And and I also see the termination wise the India portion has been coming down. So this is only because of the the drop in the ILD revenues or is it something else to it? Thank you.
Vinay Binyala
Sure Amit. So we’ll take those questions one at a time. So I think the easiest one is on the product differentiation. So I think when you look at the non SMS product portfolio that we have, I think in terms of channels Our platform supports all the communication channels that an enterprise could look at Whether it is WhatsApp, RCS, in fact Viber in certain Asian markets, email. So I would not really say that the platform is falling short in terms of capability in terms of scalability. Also we have serviced customers where we have supported significantly large transaction volumes on a daily basis for some of our customers on these channels.
So I believe in terms of technology and the platform capability we are pretty much there in terms of what the market needs and also in terms of what we are doing around the product. We are creating another layer on top of this where we will be able to address a lot of gen AI and AI intelligence related requirements that enterprises are now adopting aggressively. So Tushar, you would like to add something there?
Tushar Agnihotri
Thank you for the question. Alongside them bringing in some new offerings in the market, something we call vspheres Conera which we launched a few months back in India, that’s some intelligent platform we bring into the country which falls on a generic category of network API where we leverage our association with telecom operators and give some solutions which will be novel to the market. We are testing these solutions along with telcos in the market and we’re very hopeful that this will bring some new customer base and give impetus to our new product focus in the country.
Rajdipkumar Gupta
I think the I think in my last call I also highlighted about the Telcom product like Telco and the enterprise segment as I mentioned before. Also I think the firewall piece of business is growing very fast. In fact I’m proud to say that last month we have achieved the highest amount of revenue ever in our firewall business. Some of the contract which we are winning with the help of BECS is going to play a very critical role in overall growth of our numbers as well. I know the sales cycle for the firewall deals are longer but recently we have closed one large deal as a claro that is live now and we believe that the telco focus of our business with the help of Beck is definitely going to play a very critical role in coming years down the line.
So that is one area where we all need to focus on AI native CPAAS solution is something which we are very serious about and AI native firewall solution especially the telecom fraud, digital fraud is the biggest piece where most of the telcos are looking out for a solution and we as a company 365 square especially focusing more on this AI native solution for the operated solution and we have successfully implemented certain solution in some of the operators and we are very much in talks with various operators and with the great support of bics, we do see that business is going to grow multifold in coming years down the line.
Vinay Binyala
So to add to address some of the other questions you had Amit, regarding ILD and the India termination. So ild, as you rightly pointed out, over the last year we did witness decline, but if you look at the last quarter we have kind of seen that stabilizing now. So I think whatever decline we were expecting is now in the base and you know, even in the, in the run rates. I don’t think we are seeing any further threat to that segment of the business in terms of total contribution to the revenue. You know, I’m not 100% sure if we’ve discussed this in the public domain in the past, but it’s around a quarter to one third of our revenue somewhere in that range.
So that’s where ILD in terms of our overall business stands and India termination, I think you highlighted yourself that ILD given the price point that it attracts per transaction, if there’s a decline in ild, it results in a decline in India termination. But that said, we have also offset some of this ILD loss with domestic business wins which we also spoke about during the presentation. So we are seeing growth in domestic customers not only in India but in other parts of the world as well as. So that’s a big push.
As Tushar also mentioned either with the new products and in some of the markets we are still seeing SMS business grow. So in some of the emerging markets we are still seeing good growth around sms. And obviously you’re pushing hard for the non SMS components within our portfolio.
Rajdipkumar Gupta
Yeah. And just to add Amit, just to add one more point out here Amit, I know most of this ODT players, they are trying out different channel of communication such as WhatsApp or RCS. We are definitely reaching out to them and giving this options to use our channel either on WhatsApp or RCS. And we have onboarded few large ODT customer who are testing our platform to move traffic from SMS to RCS. And that discussion is going on. We are with very early stage. But yes, we started generating revenue from this OTT player on RCS especially and some of the WhatsApp use cases.
Amit Chandra
Okay and so just a follow up. So in the, you know, in the presentation the strategy of growth pillar one, the platform innovation. So obviously you know you said that firewall and network API is the focus area and we have been you know, growing fast there. So where is that growth getting reflected. So this 8% of the revenue which is the new product also includes the like network API revenue or is it in you know extra of that and it’s. And yeah,
Vinay Binyala
Yeah but so the, the next gen products don’t include that revenue because largely it is still related to SMS because you know there, there is a little bit of a voice firewall component to it but largely IT is a 2P SMS firewall solution that we are deploying for operators so that revenue is still being accounted under the SMS segment of the business. So the new, the next gen that you see is largely channels like WhatsApp, RCS, email and you know, other OTT channels.
Amit Chandra
Okay so any, any like number what would be the contribution in terms of percentage to the, in terms of the mix from the network and firewall and if you can just break up the current revenues in terms of the old age kind of services versus the newest services and in terms of the strategies that you have laid out firstly sms, ild, AI native services and the firewall and firewall and network API solutions. So
Vinay Binyala
Amit, yes revenue
Amit Chandra
Mix in terms of if you can give some idea it will be better for us to understand how the mix will change maybe in the next one year.
Vinay Binyala
Sure Amit. So unfortunately we don’t disclose that in the public domain. We will still evaluate internally and we can come back with communication to the analysts and shareholders around this. But in the past this has not been public information. So we’ll figure out what’s the best way to provide some guidance around this. But in terms of the non SMS portfolio, as you’ve seen the presentation, it’s around 8% and we are identifying ways in which we can grow that business significantly. And on the AI it is still kind of a new solution that we are bringing in.
So in terms of revenue contribution it will take some time but what it will also do in parallel is it will drive adoption of the non SMS platform itself. So because the solution becomes more attractive for an enterprise, we will see the channel adoption and revenue around the WhatsApp and RCS channel also pick up when we deploy these AI capabilities.
Rajdipkumar Gupta
And I think Amit the more focus on AI coming forward at root mobile is more millead how we can enable customer faster onboarding. And I think through AI we are going to make certain changes in our platform very soon. And you will definitely see the outcome of those changes in coming quarters. Because as far as the platform is concerned, as Vinay has mentioned, we have everything what market needs but there are certain AI capabilities required with the current platform, I think we are definitely already have a plan to do that and we already have some kind of engagement on that.
And very soon you will see that impact of AI on our revenue as well.
Amit Chandra
Okay, thank you. Last question. On the guidance. So on the guidance. So obviously we are guiding from mid to high single digit. So is it. So this appears to a bit lower in terms of the kind of initiatives that you’re taking. So in terms of the, in terms of growth, what segments will drive this? And secondly on the margins obviously we are targeting around 12% and we are seeing a mix towards the higher margin revenue streams. So if you know once the mix changes we, you know the margin should have been higher.
So why we are sticking around to the current levels are we also
Rajdipkumar Gupta
Amit, I think last one year we have not given any kind of a guidance. If you remember, you know like and market was always expecting some kind of guidance and we would love to be little conservative in giving the guidance but at least we are coming up with a guidance this year. And you are right, this mix will definitely add value to our overall growth and plus EBITDA margin as well. But yes we are confident this year that there is a growth and there is a product mix, there is a market, new market where we are focusing on.
We are talking about the domestic market setup as well. And I think all these things really gives that kind of a confidence to the management that we need to give some kind of a guidance to the market which we were not giving in past. At least we have started. And we will definitely try to overachieve our number. But on a on record I will say the guidance which we have given at least we are positive that there is a growth and that’s exactly how we need to look at.
Amit Chandra
Thank you Amit. Okay. So thank you and all the best. Thank you.
Operator
Thank you Amit. We have the next question from the line of Shweta Sharma. Please go ahead.
Unidentified Participant
Hello. Yes,
Vinay Binyala
Please go ahead.
Unidentified Participant
Yeah, thank you so much. Sir. Sir, could you please provide volume wise breakup, domestic and overseas.
Vinay Binyala
Just give us a moment. I mean we can do this. I mean can we take this offline? We can share the data. I mean but it we need to figure out. I’ll. I’m sorry but I just need to check if this has been discussed in the public domain in the past. I’m not 100 sure if this has been a metric which we disclosed only for, you know, competitive reasons. I mean we would not want to hold back information but for it opens up a bit of our competitive advantage in the market. So, so let me just figure out what’s the best way to address this.
We can take this offline with you,
Unidentified Participant
Okay? Okay, sure sir. My second question is could you quantify the difference in gross margin between your traditional A2P SMS business and these new AI driven solution also want what percentage of your 175 billion transaction are now solution based rather than just delivery based?
Vinay Binyala
Sure. So the margin difference depends upon the solutioning that we do around the channel as well. So you know typically if you look at the portfolio margin today, large part of that is obviously coming from the SMS business that we do on the firewall the margins are higher because that is more product oriented business and we have customers where it is being used on a license basis. Plus the value add for the customer is significantly higher there. So the firewall generates additional revenue for the operator where they are okay to share a larger part of the benefits with us.
So the margins there could be anywhere in the range of, you know, depending on the type of engagement it could range from 30% to all the way up to 60, 70%. So that is on the firewall on the channel side of the business. I mean the portfolio gives you a good guidance of where we stand. But as we talk about AI and other solutioning around the channel that could generate additional margin because some of those platform capabilities could easily generate significantly higher margin as compared to the portfolio margin.
So unfortunately I’m not able to give you an exact breakdown of product wise margin at this point. Once again because you understand the market, it’s highly competitive and we would not want to open up all of our cards in the public domain on product wise geography wise margins that we generate.
Unidentified Participant
Okay, sure sir, no issues. So if you not able to provide the exact number, can you provide a breakup of growth like domestic and overseas in, in terms of volume growth in uk? Sure. So we have
Vinay Binyala
Seen, we have seen volume growth in India domestic business. We have seen volume growth in rest of the world domestic business. The only segment where we saw decline last year was ild, the international traffic coming into India. So and you know we’ve seen similar kind of growth rates in India and non India domestic clients. The only segment where we had challenges which again as I mentioned earlier which have bottomed out and we believe is in the base now is the ILD business where last quarter we’ve seen no further drop in that business either.
So we believe that is also in the base. So moving forward I think as we provided in the guidance as well we should Start witnessing recovery in the business.
Unidentified Participant
Okay, so, so if my understanding is correct, so domestically and overseas when we see volume growth it’s the same as the last quarter, right?
Vinay Binyala
I mean
Unidentified Participant
Growth in terms of percentage, like it’s the same and in quarter or it’s the same as yoy. What’s the.
Vinay Binyala
Sorry, I don’t think we’ve disclosed in the previous year as well. But I mean we have seen consistent in the previous year if you look at FY25 we still had a slight decline. I mean a slight growth in the domestic side of the business, slight decline in ild. So the trend is similar. But what we are saying is by the end of Q4 we are not expecting any further drop in the ILD business either. At least from the run rates that we are seeing and what we are hearing from the clients, I think we bottomed out there.
And on domestic over the last two years we’ve seen growth coming in. So, so the trend kind of remains where it is only moving forward. We should now see recovery in the business.
Unidentified Participant
Okay. Okay. Thank you so much sir. That’s all from my side.
Operator
Thank you. Shweta. Next question is from the line of Dipesh Kumar Mehta. Please go ahead.
Dipesh Mehta
Yeah, thanks for the opportunities. I have four questions so I started one by one. First just want to understand what would be our organic capex plan and M and A investment plan in next two to three years. If you can give some sense about how we are looking some of these investment.
Vinay Binyala
Organic capex is not significant as you’ve seen in the past also So I think our internal budgets are around. Raj, you want to highlight that number on the organic capex.
Rajeshwar Singh Gill
Yeah, I mean it’s, it’s. We, we do have some, some organic initiatives but it’s not a meaningful, meaningful number. So. And pretty much flat year on year. But we are, we are looking at some internal capex developments to support platform growth and move to move to omnichannel products
Tushar Agnihotri
On, on M and A. We are evaluating a couple of targets and of course we love. We’ll build at the right time. We will share the, the opportunities.
Rajdipkumar Gupta
Yeah but just to add the page, just to add the page. The any M and A. I think probably we’ll do something in AI based.
Dipesh Mehta
Sir, I think in the couple of areas which you highlighted the reason for asking this is about the case which we have on balance sheet what we generate every year and what is our payout. So if I look our payout is roughly around 30%. Our case is roughly 40 percentage of market cap Elon case is less than 4 percentage for us. Now if I combine all these number capex which we incurred is roughly around 3040 per annum dividend. We declared 140 crore per annum kind of number last two year. I’m combining so roughly around 200 to 250 crore is we spend on organic capex we spend on dividend in this two year FCF which we generated is more than thousand crore.
Now if we don’t even envy searching any let’s say very large acquisition then why we are accruing case on balance sheet? That is what I try to understand. Even the payout which you indicated depends.
Rajdipkumar Gupta
Let’s go one by one question to answer your question as I said we are definitely evaluating certain targets for acquisition. We would definitely want to make sure that any equation which we do should add a value to our current existing portfolio and something on AI because AI is a need for the market today and I think we believe that AI will add lots of value add to our portfolio offering. And we are definitely evaluating some targets in this space and very soon we will announce that as well. As far as the cash is concerned the management and the board is very much aware of this.
We are definitely looking out various other options to deploy the cash and we will definitely share in coming quarters what are we going to do with this cash. But as of now we are very clear this cash will go I think mainly on some of the acquisition which we are planning soon.
Dipesh Mehta
So are we envisaging our MAD investment will be higher than our FCF and the case on balance sheet in next three years.
Vinay Binyala
So depish the MNA acquisition sizes are not very large. So you know these are more capability add ons. We are not acquiring for scale. I mean we are not evaluating targets for scale. There are a few geography expansion targets but as I think we mentioned in the presentation as well the evaluation cycle around those will be more complex. But in terms of the product capability there are a few ideas and areas which we are evaluating very closely and those are not very large acquisitions.
Rajeshwar Singh Gill
Yeah, if you’re focusing on the kind of cash balance at the end of the end of the year, a couple of things. As you know we do utilize some meaningful amount of cash on vendor prepayments which is kind of a usual practice for which we get some really good commercial benefits. So that is always a good use of cash. And we did end the year really strongly in terms of cash collections. So a lot of focus entirely on that. So drove the kind of cash balance at the End of the year.
Dipesh Mehta
No I understand. And what would be the reason for low yield loan case? Our yield loan case is meaningfully lower than let’s say market rate. Can you provide some sense what will be the case breakup and why it is lower?
Rajeshwar Singh Gill
Yeah, I mean look, I mean overall interest income is up year on year but we are, we are looking at yeah looking at moving. Moving all our funds into kind of higher high interest bearing kind of fixed deposits but again the focus is on those, those, those other uses of cash. But yeah we’ll look at all of our, our kind of cash balances and optimize in the next coming quarters
Dipesh Mehta
Case we have 1400 crore case other incoming if I exclude forex gain it is not yielding even 3 percentage if I do quarter 400 kind of thing. And that’s why I just try to understand if you can so if you can give composition of the case where we deploy our case
Vinay Binyala
So the page we can get back to you offline on this But I think what Raj is also saying here is that we can relook at the treasury policy and identify what would be the ideal way to I mean the idle cash or the temporarily unutilized cash. What could be the best return on it. It will be a bit of a treasury decision which we need to relook at. So is that.
Dipesh Mehta
Sure. Coming back to the new product side I think if I look let’s say our growth versus some of the peers which are listed in reporting number now we have capability, we have platform ready but numbers are let’s say lacking in terms of last couple of years. Can you provide what kind of changes we are making now with whatever because from technical capability you said we are there. From platform perspective we are there. We have more than 3,000 enterprise client with us still the traction is not visible and I am referring to our 23 years where WhatsApp become very sizable portion of some of our peers number.
Can you provide let’s say what changes you are making now we can participate effectively.
Rajdipkumar Gupta
Just to add to your question you know like Rajdeep here. So we also want to make sure some of the deals on this odd channels are profitable to the organization. It is not just I want to follow the same SMS fundamentals on these deals. It is very critical for us if we we want to sell a solution and we want to really solve the customer problem and customer is paying for that solutioning part and we really want to focus on this kind of customers who are paying higher margin to our portfolio. It is not just a game of bulk messaging where I can just go and lower the price and win the use case.
If that is the case, I could have grown multifold in last few years down the line. We have taken a collective call as a group. We really want to sell our solution as a solution company and we will solve the customer problem and customers should value the solution which we are building for them. That is where yseed is value. It’s a long sticky business model we want to create out of OTT channels like RCS or WhatsApp or email and we will stick to that and we will make sure. I think one of the reason if you see a growth in our gross margin is because of that we let many other small businesses to go where we were either bleeding or we are doing lots of small low margin games.
If you onboard a customer at very large scale, trust me, you really need to spend lots of capex in terms of serving that customer. So there are certain calls is very, very important. Some of the use cases of Metro is a very classic use case. Like we are deeply integrated with that entire platform of Metro ticketing which where we are hardly getting replaced by anyone but our margins are very high on those solution. So I think end of the day you need to see what are you trying to build and for the long term and how you’re going to create value to your customer.
So it is not about winning that more volume or increasing your revenue but it is what kind of customer you are winning and what kind of margin you’re making. Another customer is very critical for us.
Dipesh Mehta
Yeah, sorry.
Tushar Agnihotri
The patient rap said, you know, we are very carefully choosing the customers. We actually trying to ensure that the platform we provide to our enterprises that fetches the money than pure margin play and getting into a game of margins and dropping of prices. So a choice of customers are purely a basis, you know, what kind of bottom lines we can draw from them and our focus is more forward looking. So we’re building those solutions which will fetch us returns over a long period of and and we are not going to get into complete volume deal here of creating margins by pure volumes here.
So one is that you know, of course we are creating value add on a platform to fetch us more monies and alongside we’re focusing on new age products, you know, which is which perhaps you know is available only with a couple of partners in the, in the country. So the network API which you touched upon, the Conera is something which we have unique and we don’t have much competition around that and we’re Fairly hopeful. The investments we’re making there along with the AI capabilities which we are partnering with and building on a platform will going to fetch us good returns in the quarters to come.
Dipesh Mehta
What would be the market growth in this alternate channel and help us understand and let’s say whether you expect in next couple of years we will reaching to market growth rate based on the strategy which we have laid out for us.
Tushar Agnihotri
So if you look at market expansion by OTT channels if you actually look at today roughly 60% market is dominant by dominated by SMS and we clearly see a shift happening towards RCS and WhatsApp and all will depend how I’m able to orchestrate a customer journey on these channels from the pure play giving them options which are available with the brand to concluding the sales over there. Now this is evolving. Earlier it was pure play menu based workflows which were there on the WhatsApp or RCS channel which is clearly moving towards AI and those are the capabilities which we need to work on and build a platform so that we are future ready.
And that’s where our focus is. We’re keeping a focus in eyes there to ensure that we’re ready and we scale at the right time and with keeping as I said keeping margins coming from a platform and not purely from the OTT unit pricing margins
Dipesh Mehta
Fair point the I think broadly try to understand let’s say market is at 60 percentage we are at 92 percentage dependency on SMS the segment which is growing. We have limited share and that’s why
Rajdipkumar Gupta
Depesh I think there is a firewall revenue also which is also calculated as a part of messaging. Okay so which is different so your assumptions might be different but again I’m telling you as a growth trigger point it is firewall network API OTT channels along with email is going to also you need to understand we were in a from last two years doing this integration with the BIGS and telesign which is now completely over and we do see a value in terms of how we can create a cross sell upsell opportunity within the the group and that will also going to play a big role in upcoming quarters.
Dipesh Mehta
I have last two questions just I give it right now and then maybe you can answer. First is about the network opportunity mentioned couple of times Just want to understand let’s say what is the size and scale of this opportunity or next three year perspective India and then outside India and how you are across this market. And second question is about some of the financial data related thing we indicated some kind of trade in the notes. Can you quantify the number? What was the number in quarter four and what led to it in terms of the return rate receivable and what would be the OCF EBITDA expectation for the year.
Thank you.
Tushar Agnihotri
So with the kind of. Sorry sir.
Rajdipkumar Gupta
So I think the idea of network API if you see is a very early stage. You know network API is a layer which. Which is within the operator ecosystem lying from very long time because of the digital fraud increase in multi reason. I think network API is going to play a very critical role in terms of mitigating the risk of digital fraud. And I think that is where people started believing most of the financial institution they started believing that OTP less authentication could be the one right way to use network API Sim swap.
I think there are many other KYC use cases can be used directly with the operator infrastructure. It’s a very early stage to quantify but what we can see the value out of it is going to be phenomenal. In coming quarters you will start seeing some of the more use cases as what Akash Education we have deployed recently. We are in talks with multiple customer as an initiative of Conera product launched by Proximals Global. So we may not quantify at this point of time but as far as the potential is concerned on network API is huge.
That’s only I can tell you. And on the other side, other question Vinay or Tushar if you can just add.
Vinay Binyala
Yeah. So on the financial receivables, Raj, you want to take that?
Rajeshwar Singh Gill
Yeah, look, I mean in terms of receivables there was, I mean the total quantum is less than. Less than 5 cross but it’s a range of smaller customers. So no one big individual customer but more of a cleanup exercise. I mean some of. I think an average is probably about 10 or 15 lakhs per customer. So a bit of a cleanup exercise there. So no big one item.
Vinay Binyala
Yeah, it stands at I think 0.4% of revenues.
Operator
Thank you Dipeshit. Next question is from the line of Shubham Jain. Please go ahead.
Unidentified Participant
Hello. Am I audible? Yes
Vinay Binyala
Shubham, we can hear you. Yes, go ahead
Unidentified Participant
Sir. I believe my questions are answered but I just had a few small queries. So firstly you mentioned that the worst is behind us but I don’t see any sign of growth in your revenue. I mean if we see Tanla as a peer, it has grown relatively better than us and what’s the cause for that? And secondly, when we enter into partnerships with our global partners, what type of arrangements are we getting? Into and so third is network. Are
Rajdipkumar Gupta
You, are you talking about the revenue or like what comparison you’re doing?
Unidentified Participant
So from a revenue as well as a margin point of view, I believe they are similar.
Rajdipkumar Gupta
First you just correct your understanding on revenue side because we are not here to talk about any other company. We can talk about Route Mobile. I think in terms of revenue, overall revenue, I think we are the largest right now in India and we cannot comment on how others are growing. And what we can talk about is Route Mobile in this call. So I request everyone please stick to Root mobile. Any question related to Root Mobile in our growth story, we are happy to answer those things.
Unidentified Participant
So second would be that you have mentioned the worst is behind us. But, but the guidance that you have provided for FY27 doesn’t really indicate any sign of recovery. I mean from 11.9 to 12, I don’t think that’s a, that’s even a growth or any. Please help me understand, I mean what’s happening inside the company or what sort of, sort of expectations do you actually have? Sorry, I’m just new to the business so I’m trying to understand what’s happening.
Vinay Binyala
Sure. Subham, so let me take that and then probably Tushar Rajdi, please add in. But if you look at the numbers, you know what we have been saying is that what has gone out of the system was ILD revenue which comes at significantly higher realization rates which is being replaced by domestic business in various markets. And in most of the markets domestic rates are significantly lower than what ILD rates would be. So that means replacing a single ILD message is a significantly larger volume of domestic traffic.
So that is where the growth rates will take some time to start looking like bigger numbers because the base effect will creep. I mean the base effect will start creeping in now. So that is where the growth rates for the next year are where we are looking at. And as Rajdeep pointed out earlier, the internal initiatives are designed towards ideally achieving something above those growth rates. So that is where we are targeting. But essentially what we are saying is in the most likely scenario is what we’ve indicated in the guidance and that is where we are driving aggressively towards.
Unidentified Participant
Could you give us an overview of what was the product mix before all those headwinds are arrived and what has been the product mix currently and what is your expectation of it change on
Vinay Binyala
The product mix? There is one more point which I need to clarify which probably missed out in some of the other responses earlier. So on the product mix, on WhatsApp particularly if you look at it in India we have seen volume increase happening for us. So in terms of volume it has gone higher in terms of contribution. But the pricing on WhatsApp itself was revised during the year. So that is where the realizations went low. So the revenue growth is not really reflective of the kind of business that we are winning on WhatsApp.
So that is one challenge in terms of that 8% of revenue coming from non SMS products. Ideally it should have been higher if the pricing had remained steady and moving forward. I think we are not giving a product wise guidance but we are looking at good growth around those products, the non SMS product portfolio.
Unidentified Participant
Okay sir, so lastly, what’s our ILD exposure currently in the overall revenue mix?
Vinay Binyala
So I think I mentioned it earlier on the call. It’s around a quarter to 1/3 of the revenue in somewhere in that range.
Unidentified Participant
So is it bound to eventually reduce more or
Vinay Binyala
So Ideally you know we would want, we would want the contribution of other products to increase and that would automatically take ILD lower. But it will not be a one year or a two year outcome because the volumes are large. It will take time for that contribution to go down significantly. But because we are driving growth through other channels you would expect that to gradually, you know, keep shrinking.
Unidentified Participant
Okay, and so lastly I, I believe I asked a question earlier on the type of arrangements that we have with our global partners. Could you elaborate on that? As in from a, I mean from a. How do we share our revenues, how do we pay them? If you could help us understand.
Vinay Binyala
Sorry, are you referring to, I mean our go to market partnerships that we have with other system integrators and ISVs or. I mean, sorry, I did not get which partnerships you’re referring to.
Unidentified Participant
I think proximity and all of that you have mentioned. Okay, so those
Vinay Binyala
Are, those are clearly related party transactions which are defined through agreements at arm’s length. Basis. So the way it works is I’ll give you an example of what we do with Telesign. So Telesign needs to send a lot of SMS traffic into India and other markets where Route Mobile is able to provide them the best cost. So we have our cost and we have agreements which define how much we can mark up those costs. And we charge Telesign in BIX when they send us that traffic. So it’s well defined in the related party agreements where, and it is all transaction oriented per transaction.
We charge them and we charge a margin on top of our cost.
Unidentified Participant
Okay sir, that’s it. From my end. If I have anything Else I’ll get back to the queue. Thank you sir.
Operator
Thank you. Sham. Next question is from the line of Kunal Omani. Please go ahead.
Unidentified Participant
Am I audible?
Unidentified Participant
Okay. Yes Kunal, we can hear you. Please go ahead.
Unidentified Participant
So revenue per billable transaction fell from 29 Pasha to 25 Paisa which is 14% decline in a single year. And domestic pricing has come to 10 paisa per message. And operators are capturing 70 to 80% of messaging economics as source. So RCS is being priced below SMS for some players to gain share which are which you also agree that is distorted pricing. So my question is what exactly is the pricing floor for A2P SMS in India? And do you believe that RCS will reprice upwards once operators set up floor or will it simply commoditize at SMS level and compromise your blended realization further?
And also just wanted to understand when you say that you have an assumption that our revenue will grow at mid to higher single digit, what kind of pricing revenue per transaction we are taking for FY27 versus FY26? This is my first question.
Tushar Agnihotri
The RCS pricing you just touched upon is largely because there’s no interconnect arrangement among the telcos. For the first year when Google launched the service there was some understanding but they still among the telcos when they terminate messages on the other network there are absolutely no charges. For those reasons there was some degree of flexibility on quoting the pricing to the markets. But I guess that’s changing now. There is what we hear that there is some discussion which is happening among telcos which will definitely take the prices upwards.
So we hopeful that this will help the market and this will not cannibalize as you correctly mentioned, the A2PSMS market overall, whenever you’d like to add.
Vinay Binyala
Sure. So in terms of, you know, the pricing that you mentioned, how have we taken it in the. In the guidance that we provided? So Kunal, it is a little bit more complicated at our end because India is one part of the business but then we also have business in some of the other geographies. So the way we really do our planning is, you know, we have individual business teams that look at various markets, different categories of customers and we do a bottom up build out when we look at a plan for the subsequent year.
And that is how we have approached it. So it’s a mix of various parameters. So it’s basically looking at customer additions. In certain markets mix is also changing. So there are various moving parts there. But the basic way we’ve done it is certain customer Volume assumptions and pricing for those customers. That’s how we really arrived at the guidance.
Tushar Agnihotri
And lastly because the volume base is growing with domestic markets where Vinay earlier mentioned the pricing is much lesser compared to the id so we do not expect a dramatic shift upwards in the unit pricing or unit realizations on the revenue side.
Unidentified Participant
Second question is our growth implies that we will again grow at mid to higher single digit. While Indian CPAs market is essentially volume saturated domestically like every large enterprise is already using it, OTP growth is slowing as app based authentication expands for non financial use cases and new volume is only coming from geographic expansion or market share shifts. So given this how do we see genuine long term CAGR assumption for next five years? What percentage of growth will come from India?
Rajdipkumar Gupta
As we have already laid down in our presentation, we are opening up new geographies, we are setting up a new office in the different locations, different domestic market is going to be our new focus. Some of the product line which we just shared, whether it’s OTT or SMS or email, I think we do have a plan in the firewall solution along with network API all this see even if you see that there is a drop in SMS volume but the digital use cases are increasing day by day in almost all the emerging countries and we as a company already well positioned ourselves in most of the emerging countries including the Latam as well.
Right? So I think we do see potential in terms of overall growth the way we are working on our strategy right now. There are certain market in Latin America like Mexico, Brazil is a big market where we definitely were trying to do something over there. Philippines is another market for us, Australia is going to definitely different market for us. So I think all these things will definitely add overall growth story. So for us like Root Mobile is not a India centric company. We always serve the customer globally including Middle East, Africa and we do see believe that digital adoption in these markets are going to increase multifold especially in Latin and Africa and we will definitely get advantage of those growth in coming years.
Unidentified Participant
So lastly these questions have been pressed a lot of times by investors in previous calls. Also since half of our enterprise value is still in cash and we are generating some 600 crores operating cash and newly and if we are at the same run rate in next three to five years our cash balance will significantly exceed our enterprise value. So can you tell us specifically in order of priority what what would you intend to do with this capital if MNA pipeline, what geographies and if no MNA materializes in next 18 to 24 months.
Will board consider special dividend or buyback or and critically is this capital allocation decision made is made by Route Mobile board independently or does it require Proxima’s group sign off given their 75 ownership and their they have a huge debt burden also?
Rajdipkumar Gupta
No, no not at all. Every decision is made by root mobile board and there is a representative of Proximus Global as a part of the root of our report. The Route Mobile board is capable enough to take call on behalf of Road Mobile. We have a very smart board members. They do understand business. They contribute to our day to day growth. And as far as the cash is concerned as we already mentioned and there are multiple discussion we are having on various many times in a year that how to use this cash acquisition could be the first choice but there could be all other discussion which which you have shared as and when when we come to some conclusion we will definitely come back to you.
But if you read our update I think from this financial year we have increased our dividend to 16 rupees 16.5 rupees from 11 rupees. So we are definitely try to create value to our shareholders and that is one of the priority for us in coming years down the line as well.
Unidentified Participant
Understood sir. Even after we are generating 600 crores of cash and as committed dividend will be 104 crores we will still have some 4,500crores operating cash flow or free cash flow every year after dividends and this pie will eventually increase. So I hope that board considers it and we will
Rajdipkumar Gupta
Definitely. Sure, sure.
Unidentified Participant
Thank you so much. This was very helpful. All the.
Operator
Thank you ladies and gentlemen. That was the last question. This concludes our conference. Please feel free to share our Unanswered questions to investorsootsmobile.com thank you for joining us and you may disconnect your lines.