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Tanla Platforms Ltd

| Q4 FY26 Earnings Conference Call Transcript

BULLISH SENTIMENT

Report Source

⬤1st May 26

Summary : Tanla Platforms is bullish on future growth driven by new platform launches, international expansion, and AI innovation, despite facing FX volatility and regulatory delays.

Management Perspective positive : Uday Reddy stated, 'I'm personally working on this platform for the last 40 days. I think we should be able to announce the market in the next probably a month time. Superb. All the best.' Anubhav Batra mentioned, 'we are accelerating our efforts on the GTM side to ensure that the proportion becomes higher and it reflects in the overall performance of the company.' Deepak Goyal said, 'I'm overall very happy the way our team has performed in terms of on the OTT space.'

Concall Report Analysis & Insights

Business Overview

  1. Tanla Platforms operates in the CPaaS industry, offering digital platforms and messaging services.
  2. The company focuses on innovation-led differentiation and expanding its customer base.
  3. Key offerings include anti-phishing platforms and various messaging channels like OTT and SMS.
  4. They serve large enterprises, including PSU banks and e-commerce companies, and are expanding into SME markets.
  5. Tanla is an AI-native company, building platforms using artificial intelligence.

Future Growth Prospects

  1. Management expects to launch a new 'gigantic platform' within the next month.
  2. The company is investing heavily in GTM (Go-To-Market) and innovation for future growth.
  3. International expansion, particularly outside India, is a significant focus area.
  4. They aim to increase market share in the growing CPaaS industry, targeting over 10% annual growth.
  5. New technologies like RCS are unlocking significant possibilities for the company.

Management Insights

  1. Management prefers building new solutions over acquiring companies due to high AI valuations.
  2. They have signed a third ATP deal with Bandhan Bank and went live last month.
  3. The company is reworking its hedging policy to reduce P&L volatility from FX exposure.
  4. Investments in GTM and innovation are expected to bear fruit in coming quarters, improving EBITDA.
  5. Tanla is performing well in the OTT space, winning new customers and increasing wallet share with existing ones.

Signs of Skepticism

  1. Management did not provide specific growth targets or forward-looking statements for FY27/FY28.
  2. The reasons for the persistent delay in ValueFirst international acquisition closure remain somewhat vague.
  3. Lack of detailed disclosure on the platform business revenue breakdown and per-user charges.
  4. Management could not disclose specific business volume from UPI notifications.

Risk Factors

  1. The company experienced a significant FX loss due to USD-INR fluctuation, impacting profitability.
  2. SMS messaging business faces continuous pricing pressure despite volume growth.
  3. Regulatory delays from RBI are hindering the closure of the ValueFirst international acquisition.
  4. The market for AI companies has skyrocketing valuations, requiring careful investment decisions.
  5. Potential for regulatory changes affecting SMS usage, like UPI notifications.

Good To Know

  1. The company has cash of ₹1,000 crores and has conducted share buybacks and dividend payouts.
  2. Tanla was recognized as 'Partner of the Year' by Meta and Google in India.
  3. The company's CPaaS market is largely driven by top 250 customers, with a long tail of smaller enterprises.
  4. The UAE subsidiary of ValueFirst is expected to contribute ₹150-170 crores top line with 22% gross margin.
  5. The company is exploring options to close the ValueFirst deal this quarter.

Key Drivers

  1. New gigantic platform launch imminent.
  2. Strong international expansion focus.
  3. Increased wallet share with clients.
  4. Investments in GTM yielding results.

Key Analyst Discussions

Competitive Environment

  1. Analysts asked about Tanla's 'right to win' against competitors, citing the Bandhan Bank deal.
  2. Questions were raised about the working model of CPaaS players in Western countries compared to India.
  3. Inquiries were made about the competitive landscape for OTT channels and pricing pressure.
  4. Analysts asked if the company is seeing penetration from existing clients or acquiring net new clients on OTT.
  5. Questions about larger companies moving to in-app notifications and its impact on SMS/WhatsApp business.

Market Trends & Consumer Behavior

  1. Analysts asked about the broad revenue range expected for the next three to five years.
  2. Questions were raised about the stabilization of the market between different channels (SMS vs. OTT).
  3. Inquiries were made about the growth rate of OTT channels and whether it aligns with overall market growth.
  4. Analysts asked about the impact of promotional vs. utility messages on WhatsApp revenue growth.
  5. Questions about the growth of SME market for OTT services.

Financial Highlights

  1. Analysts questioned the continuous fall in operating margins since FY22 and future stabilization.
  2. Queries were raised about the 12 crores FX loss and the company's hedging policy.
  3. Questions were asked regarding the capex requirements, expecting ₹100-150 crores per annum to continue.
  4. Analysts inquired about the revenue scale-up for ATP deals and their fixed-price or message-based nature.
  5. Questions were posed about the impact of UPI transactions on SMS notifications and related business.

Product Composition

  1. Analysts inquired about new products and platforms the company is working on.
  2. Questions were asked about the percentage mix and growth target for the Digital Platform segment.
  3. Inquiries were made about the revenue contribution from new logos and specific channels like WhatsApp and RCS.
  4. Analysts asked about the mix of government-led institutions volume in the overall volume mix.
  5. Questions about the stability of the enterprise business ex-OTT and increasing spend on existing channels.

Strategic Considerations

  1. Analysts questioned why the company is not pursuing acquisitions in AI or related growth areas.
  2. Queries were raised about the international expansion strategy and expected growth from domestic vs. international.
  3. Questions were asked about the delay in closing the ValueFirst international acquisition.
  4. Analysts inquired about the possibility of splitting the company into different entities for better valuation.
  5. Questions about the number of telcos expected to be acquired internationally in the next 2-3 years.