Tanla Platforms Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Tanla Platforms Limited (TANLA) Q3 FY22 Earnings Concall

Management Update:

• TANLA’s gross margin increased from 19.3% in 3QFY20 to 29.5% in 3QFY22. The company said it has not raised any capital post the public offering and build the business through internal approvals.

Q&A Highlights:

• Manish Poddar from Nippon India asked about the company’s market share in Trubloq and when DLT will be rolled out for voice messages. Uday Reddy CFO said that it should be upwards of 63%. On DLT, it’s yet to be decided on voice but will be in deployed in the near future.

• Abhimanyu Kasliwal of Choice International enquired about growth plans in India and internationally. Uday Reddy CFO said the company expects reasonable growth from India and most of the current revenues are coming from India. In terms of international expansion, TANLA said unless until it comes out with case study from the Indian enterprises, telcos and Wisely, the company is not in a hurry to look at international expansion.

• Tejas Shah from Unique Stock Broking asked about Trubloq, if it’s deployed in Middle East. Uday Reddy CEO said that Trubloq is being deployed but all the models have not gone live in the Middle East as yet. The deal is a license deal and not a revenue share basis deal, and so it’s not going to really move the company’s revenues or margins going forward.

• Amit Chandra with HDFC Securities asks about the decline in performance of top 20 customers in 3Q of 5-6%. Aravind Viswanathan CFO commented that the company’s top 20 has not declined but the contribution has declined. Top 20 customers have grown 28% YoY. TANLA added that its objective is to reduce concentration but not by making these customers de-grow but by expanding base.

• Amit Chandra with HDFC Securities also asked another follow-up about how frequent is the change in the top 20 client profile and if there has been any exit of large client. Deepak Goyal, Chief Business Officer answered that the company has not lost any customer in even the top 100 in the last 10 years. TANLA is getting consistent business from them. There might be some wallet share swings from one or two customers, which is part of the business, but TANLA’s top 20 customers are growing well.

• Amit Chandra with HDFC Securities asks about Trubloq market share and the competitors. Aravind Viswanathan  CFO answered that only in 3Q21 the market share was 70% which was an anomaly. After that the company has been upwards of 62-63% over the past nine months. And the competitor who is handling the rest of the traffic is IBM deploying with AirTel and TechMahindra deploying with Jio, which is about 35%.

• Amit Chandra with HDFC Securities asks about the driver of Enterprise margins. Uday Reddy CEO said that the big driver is in terms of shifting business mix and the fact that TANLA had a lot of festival driven campaigns in both ILD and NLD.

• Balaji Subramanian of IIFL Capital asked about what has changed the international rollout strategy. And the gross margin the company makes on non-SMS channels, mainly WhatsApp messages. Uday Reddy CEO answered that the company has not changed any strategy, but the company doesn’t want to go to global market without having at least one successful case study in India. On gross margins, for it to push to 50%, it takes bit of time.

• Milind Karmarkar from Dalal & Broacha asks if Trubloq and Wisely would help solve the problem of phishing messages once implemented. Uday Reddy CEO said that these messages are not going through the company’s routes. These messages doesn’t go through any of DLT platform in India as it comes under peer-to-peer messages. However, TANLA is developing a platform that controls these phishing messages going forward.

• Ikshit Naredi of Naredi Investments asks about the co-selling agreement with Microsoft. Uday Reddy CEO answered that wherever the company goes, including India, TANLA sells along with Microsoft and Wisely is on Asure stack. The platform the company is deploying with VAL is on Microsoft Asure cloud. It’s a joint effort.