Affle 3i Limited (AFFLE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day -- and ladies and gentlemen, you have been connected for Affle 3i Limited conference call. Ladies and gentlemen, good day, and welcome to the Affle 3i Limited Q1 FY '27 Earnings Conference Call hosted by Elara Capital. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Karan Taurani from Elara Capital. Thank you, and over to you, sir.

Thank you, Bharat. Good morning, everyone. On behalf of Elara Capital, we welcome you all to Q1 FY 2027 Conference Call of Affle 3i Limited. I take this opportunity to welcome the management of Affle 3i Limited represented by Mr. Anuj Khanna Sohum, who is the Chair Person MD and CEO of the company. And with him, we have Mr. Kapil Bhutani, who is the Chief Financial and Operations Officer of the company. Before we begin the discussion, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer to Slide 2 of the company's earnings presentation for a detailed disclaimer. I will now hand over the call to Mr. Anuj Khanna Sohum for his opening remarks. Thank you, and over to you, Anuj.

Thank you. Good morning, everyone, and thank you for joining the call today. I trust all of you are keeping in good health. Q1 FY '2027 marks our 14th consecutive quarter of sequential top line growth and recorded our highest ever quarterly revenue, EBITDA, PAT and consumer conversions. During the quarter, we delivered revenues of INR 7.47 billion, a growth of 20.4% year-on-year. This is robust considering the negative impact of regulatory and macroeconomic headwinds on some customer segments like RMG. Over 95% of our revenues witnessed over 25% growth year-on-year, adjusting for that impact, reaffirming our consistent execution on the medium-term guidance that we have committed to our stakeholders. Our continued focus on bottom line sensibility translated into much better profitability. EBITDA stood at INR 1.68 billion for the quarter and recorded a robust 20% year-on-year growth with stable EBITDA margins at 22.4%. Profit after tax for the quarter stood at INR 1.28 billion, growing by 21.7% year-on-year. This proven performance of our differentiated CPCU business model reinforces our compounding growth story. As we deepen our verticalization strategy, strengthened direct advertiser integrations and expand our audience intelligence capabilities, we continue to enhance the scale and competitiveness of our AI-powered consumer platform stack across connected devices, including mobile, CTV and now other agentic autonomous intelligent connected devices. These structural advantages provide a strong foundation for our sustained growth as we build on our vision of 10x. India and global emerging markets continue to anchor our business growth, growing by 20.2% year-on-year and contributing 72.2% of our revenues in Q1 FY 2027. Our disciplined sales execution, deeper customer engagements and continued new logo additions have also strengthened our presence across developed markets which grew by 20.7% year-on-year and contributed 27.8% of our revenues. Developed markets account for a disproportionately high share of the steadily growing global advertising budgets. Accordingly, we remain focused on progressively increasing our participation across these markets and aligning our revenue mix more closely with the underlying global advertising budget mix. Alongside our market expansion initiatives, we are also very committed to strengthening the way we operate. The strategic acquisition of AdColony assets enhances our publisher ecosystem and audience intelligence capability, further reinforcing our ability to deliver premium consumer conversions with measurable ROI for advertisers globally. We aim to unlock significant competitive advantage by activating over 100,000 mobile apps to reach over 500 million connected devices in developed markets this year. Building on the launch of Niko and OpticksAI, we have also enhanced capabilities of our AI-powered consumer platform stack through new AI-led innovations designed to empower mobile app marketers, growth managers and advertisers with deeper consumer intelligence and full funnel campaign visibility. By combining AI-driven campaign intelligence with real-time performance analytics, -- these capabilities enable faster, data-driven decision-making, smarter campaign optimization and stronger marketing outcomes. In parallel to our organic growth initiatives, -- we would like to transparently update our shareholders that we are making strong progress on the inorganic acquisition or the larger inorganic acquisition as we enter the phase of due diligence by third-party advisers appointed by us. We aim to close the larger M&A by early 2027 and the identified targets shall accelerate our expansion across developed markets by providing deeper and differentiated access to customers and verticals. This quarter, we have featured 5 customer-approved case studies in our earnings presentation. The first case study showcases how our conversion first CTV and cross-screen capabilities, maximize new converted diners and first orders for a leading O QSR app in India. Next 3 case studies highlight how leading travel brands across emerging markets, leverage our AI-powered campaign optimization, proprietary audience intelligence and big optimization capabilities to target high-intent travelers, driving stronger booking performance and consumer engagement. The third case study demonstrates how a leading German quick commerce player leverage Affle's consumer platform to scale its presence in a new European market levels by combining AI-powered keyword intelligence, agentic AI and app growth intelligence to target and convert high-intent grocery shoppers with sustained efficiency. Affle continues to be recognized as the technology thought leader across industry for -- this quarter, our platforms won 18 awards at Connected TV Asia Symposium 2026, including best CTV ad tech for addressable TV and best CTV technology company of the year award. We were recognized at the e4m India Digital Marketing Awards 2026, including Best campaign, use of mobile and mobile monetization. We also received the Gold Award for the best cross-channel programmatic campaign at the Agency reported Programmatic issue awards 2026. Further reinforcing the global recognition our platforms continue to be recognized across multiple categories and singular largest latest quarterly trend reports. We continue to strengthen our technology IP portfolio through sustained innovation, our robust IP portfolio, representing 300-plus unique and possible patent claims spans across fraud intelligence, human versus nonhuman data distillation, precision targeting contextual and gesture-based advertising and next-generation AI native ads and engagements across key industry verticals, reinforcing our differentiated and defensible position as the digital advertising ecosystem continues to evolve rapidly. As we look ahead to the upcoming festive quarter, we remain encouraged by the demand environment across our key markets. With a disciplined strategy, a resilient business model and a clear road map for the next phase of Affle's growth generally, we are well positioned to sustain our momentum and create long-term value for our stakeholders. With that, I now hand over the discussion to our CFO, Kapil Bhutani, to take you through the financial details of the quarter. Over to you, Kapil.

Thank you, much. Good morning, and hope all of you are keeping safe and well. Building on our 7-year track record of consistent implication as a listed entity, we have started FY '27 with a strong financial performance in quarter 1. Our disciplined growth with focus on operational efficiency, supported by robust profitable growth. And let me now take you through our financial performance in quarter 1 financial year '27. On a consolidated basis, we delivered a year-on-year growth of 20.4% in our revenues from operations, 20% growth in our EBITDA and a 21.7% growth in our profit after taxes. We reported a consolidated revenue of INR 7.47 billion during quarter 1 of FY '27, marking a 3.1% sequential growth over our robust growth of quarter 4 in financial year 2026. This was driven by a broad-based momentum across industry verticals in both India and international markets. Our stand-alone margin on our standard -- sorry, on a standard basis, our India revenue grew by 20.4% on year-on-year and 9.2% quarter-on-quarter. While on adjusted basis, our India revenue increased by 18.1% year-on-year and 5.9% quarter-on-quarter. Our revenues grew by -- our revenues grew across geographies as India and emerging markets expanded by 20.2% on a Y-o-Y basis and 4% on a sequential basis, while developed markets expanded by 20.7% year-on-year and about 1% sequentially. Our continued investment in scalable platform operations and intelligent automations and lost productivity and operational efficiencies. This has accorded us in a business group with disciplined workforce thereby strengthening our operating leverage by sustaining healthy profitability. Consequently, we posted EBITDA of INR 1.68 billion an increase of 20% year-on-year and a robust 4% growth sequentially. Our EBITDA margins also improved from 22.3% to 22.4% quarter-on-quarter further, we did not see any major volatility in ForEx rates in the current quarter as seen in quarter 4? Turning on OpEx, our inventory and data costs stood at 63.2% of revenue from operations and remained broadly in line with our rebased quarter. Our employee cost increased by 3.4% sequentially, primarily on account of annual release of appraisals and bonuses [indiscernible] geographies. Year-on-year, our employee cost increased by 7.8% despite higher outflows due to impact of currency. Our operations have been executed efficiently with team strategies led by AI supported work flows as we continue to scale our businesses. During the quarter, our other expenses stood at 5.6% of our revenues from operation and increased margin by INR 2.3 million quarter-on-quarter. Due to our on-going building business promotion equities to support expansion across developed markets. We achieved profit before tax of INR 1.58 billion, reflecting a growth of 22.1% year-on-year and 6.6% quarter-on-quarter. Further, we grew our profit before tax from operations by 4.7% sequentially. Our profit after tax at INR 1.28 billion, an increase of 21.7% year-on-year and a 7.5% quarter-on-quarter. Our PAT margin improved to 16.6% on total revenue -- of the total revenue, up from 16% in Q1 last year. On a sequential basis, our PAT margin improved marginally by 14 bps with effective tax rate of 18.6% for the full year -- this is based on full year basis of FY '26. We continue to prioritize efficient working capital management. And as such, there were no material changes in our collection risk. The company is on track to achieve robust OCF to PAT ratio for the full year. We had achieved 110% of operating cash flows to PAT in FY '26. This upfront higher OCF from the last year is being reflected in the OCF for the current quarter. We believe that as we move to quarter 2, OCF-to-PAT ratios will normalize. Backed by our strong performance, and balance sheet, the disciplined capital allocation, we remain well positioned to pursue both organic and organic growth opportunities in line data and exclusion. We continue to invest in scalable technologies and strengthen our global revenue mix and execute financial -- to be executed with financial discipline as we create long-term value for our stakeholders. With this, I end our presentation, let's open the floor for questions.

[Operator Instructions] We have our first question from the line of Karan Taurani from Elara Capital. Thank .

My first question would be on this geopolitical impact price? So you mentioned that 95% of the markets grew towards 25% and above. Could you throw some light here in terms of which markets exactly saw the negative impact. Obviously, one doesn't know in terms of how much time this can last but could we say that organically, if things were to be normal, we are on track of reported growth in excess of 25% on an annualized basis, assuming that second half would be higher growth because of festival and other things. Can you throw some light on this, please?

Thanks for that question. I think what I was mentioning was that due to regulatory and macroeconomic headwinds, certain customer segments like we already know RMG had an impact. And last year, RMG was a contributor. This year, it is not. Similarly, there were certain areas of impact we saw in fintech in certain categories. But overall, when we normalize it and we see our business, it gives me a lot of confidence and even deeper conviction because on an adjusted basis, 95% of our revenues have actually seen over 25% growth year-on-year. And I think that is defensible. How long will it take for the market forces to adjust till we see across the board on 100% of the business, 25% growth. I think we'll wait and see how that works out. But I think the internal confidence, the on-ground momentum is very, very strong. And it gives us a lot of conviction to give guidance on a medium-term basis that if the analysts are modeling us at 20% growth, they should derive confidence from the fact that 95% of the business is actually growing at 25% plus.

Right. And your gross margins have been coming off since quite a few quarters. Obviously, this is on the back of investments in some new markets as pointed by you. But any update over there? When could gross margins see a recovery or premiumization of data cost and other things will lead to gross margins being a similar brand right now?

Look, we are doing quite a few things strategically to enhance the competitive moat of our company, especially in developed markets. I think the strategic acquisition of assets for AdColony is a meaningful addition to what we will unlock as a significant and sustainable competitive advantage. As we activate over 100,000 apps, which I talked about, we believe we will get to a reach of over 500 million connected devices in developed markets. This will actually help with not only margin expansion, but actually greater ROI delivery to our advertisers and potentially even better performance for the publishers who we will integrate with. So I think this is definitely the direction that we are taking. So margin expansion should happen based on the efforts that we are already doing, and that's fundamentally lifting it up versus, let's say, one of the reasons why you also see impact on the margin. I think in the last earnings call, Kapil had mentioned that if you look at the CPCU rate, now the average CPCU rate is above INR 60 -- so if you look at it on a currency adjusted basis, that means we're actually passing some of the benefit to advertisers because of the currency adjustments that are happening. And that has actually impacted the margins in the short term a little bit. But overall, I think our business is robust. We are able to create enough value for the advertisers even with these macroeconomic currency-related headwinds and yet be margin -- our margins are actually expanding from a very -- from a bottom line perspective. If you look at our profit before tax, it's grown 22% versus revenues growing at 20.4%. And that actually shows that margin is expanding. And yes, we are negotiating these headwinds, whether regulatory or macroeconomic headwinds very well while creating value for not only our customers in terms of delivering ROI, but also to our shareholders. I think you will see within this financial year, we will see better margin expansion, especially in developed markets.

We have our next question from the line of Vijit Jain from Citigroup.

Congratulations on great broadly diversified growth rate in the quarter. My first question is on AdColony. Now it's been a few months since you acquired it. And I heard you talk about the 100,000 app unlocks 400 million to 500 million devices that you aim to leverage with this acquisition. would be great to know where this stands right now in terms of those live app integrations where it stands and whether getting to that 100,000 app unlock requires sales effort from your side? I mean, just a general flavor of what it requires to get to that level of app integrations as well as would be super helpful to understand. That's my first question.

Thanks for that question. Yes, it's an organic natural course of business execution where we are taking the technology and the brand assets of AdColony. -- and going to the market. So AdColy is a very well-established brand name in the ad tech ecosystem. In fact, in year 2020, 2021, we had an opportunity to look at the acquisition of AdColony as an entire company and not just the assets that we acquired, but the entire business and the entity of AdColony. And at that time, the pricing that we were asked to bid around was around INR 400 million. So AdColony is a big name in the ecosystem. And what we have now managed to do in 2026, which I see as a windfall strategic gain is to buy those strategic assets with which we can now organically in the normal course of business with our own existing teams and as part of our business development activities without incurring dramatically new costs or anything like that in our normal course of business, -- the apps that we already deal with, we'll be able to activate them with the SDK integration in the normal course of business through this year. And it will actually unlock the deeper reach, deeper audience and consumer intelligence across 500 million connected devices in developed markets alone. And this is the kind of strategic advantage that we will unlock in this course of business. So AdColony is meaningful, and it will just happen in the normal course of business. It's not that we have to invest any humongous amount of ongoing capital. So I see this as organic unlock of value by utilizing this technology and brand asset that we have acquired.

Understood my next question is, so you said in your opening remarks that global ad budgets in general, and I'm guessing this is more specific to you guys where you operate, is growing faster than DM than in EM right now. I mean, is that understanding correct? Is that what you were alluding to? And I would be great to understand why you think that is happening? That's my second question. And I'll follow up with the last question after that.

I think for us, India and emerging markets will continue to grow meaningfully in a sustained way. We don't see any challenge in that. In fact, we are very bullish about it. In terms of DMs, what we are saying is that with organic as well as inorganic investments that we are making, we will calibrate up because in developed markets, the -- if you look at the total ad spend in the world, developed markets would easily take more than 50% of the share of the ad budgets that are getting allocated or spent in those markets. It's the size of the markets and the economies. And therefore, what we are saying is that we are also looking at investing towards that and capturing more of those advertising budget mix for ourselves because we are a global player. And when we work with our advertisers, we want a meaningful percentage of that wallet share. So it is our ambition to get to that. And the most effective and efficient path in terms of capital allocation and value creation is what we are going to be navigating towards both organically and inorganic. And I think AdColony acquisition is one very clear evidence of that, right, because it's super efficient. I mean had we acquired it in 2020, 2021, we would have paid INR 400 million for it. We have been very prudent. We have waited. We are very patient. And we have taken the assets that we value, which we know that we can unlock value with. And again, so DMs is clearly a focus area and huge runway for unlocking long-term growth, right, next 5 to 10 years, I think because our base is still small, so we can grow fast and there is a long, long way to go there because we are still small. The addressable market is very, very large in developed markets, and that's what we are highlighting here. In emerging markets, we are -- we have great competitive advantage in India and other emerging markets. And I think most of the competitors are finding it hard to keep up with us.

Understood. My last question. So in general, now we're seeing ad tech industry, you guys as well as well as the larger guys, everyone build out AI and agentic AI in their digital ad product. I would like to understand how have, in general, cost of data assets moved in response to that. I can see when I look at the broader industry, some of the walled gardens like on the social media side have reported higher yields in general on their ads, whereas other large platforms are seeing a lot of competitive pressures and some of the open web platforms, specifically like Trade Desk have clearly seen a lot of competitive pressure. So in general, for you, as a player in this ecosystem in DM markets, especially, how have these costs moved? And is there any advantage and opportunity specifically see from that?

I can tell you this -- you've asked a very tactical question related to costs and so on. But I would like to tell you that the essence of what's happening with AI is way more strategic and impactful. If you look at the discourse I made specifically around autonomous agent intelligent connected devices. And I think I've mentioned very clearly that what are we talking about? We are saying that these are -- like, for example, mobile phone is a device which works with human input, right? I mean you have to click and touch and do something to make it work What you're going to see -- but it has agentic intelligence in it. You can have AI agents inside your mobile device, assisting you in your human experience and what you're doing. But you will also have autonomous intelligent devices. For example, a smart TV, as we call it today, is smart is context aware, who's watching it, who's -- what kind of content should be shown. But it will become even more autonomous, it will become even more agentic intelligent. You would see vehicles becoming more autonomous and having agentic intelligence. You will see screens outside homes in retail stores, not just being smart screens and showing content, but perhaps having the screen could have a camera where they're seeing who's coming. And if it is a sports person who's walking nearby, the kind of content it would show would be different from, let's say, if it was an older person or an adolescent walking by. So I think these -- a lot of screens and a lot of digital a lot of connected devices, digital connected devices will see autonomous agentic intelligence. And that's the kind of AI disruption that we are seeing, which we are working towards, and we are making sure that our innovations and patent portfolio is covering all of that, not just in emerging markets like India, but also in developed markets where we have covered those patents. And then we are looking at also in the case of AI, see a lot of times, people are using AI as an automation tool, right? And I think that is where it comes with either cost saving or what is the cost benefit analysis. I think that's very basic and it's very tactical, and it's a no-brainer. So anything that you can automate with AI, you should absolutely go ahead and do that. But I think what we are talking about is much further ahead in terms of human versus nonhuman content, what is getting created by humans, what is getting created by AI? Are you showing an ad to a human? Are you showing an ad to an AI? Are you showing an ad on a content created by human -- or are you showing an ad on a content created by AI? And I think those kind of human versus nonhuman data distillation technology. That is something that will be a key differentiation, and we are already not only working towards that, but ring-fencing the IP. So I think my answer to you is that we are seeing a lot of advantage, and we are keeping ourselves future-proof and future ready with respect to AI at a very strategic at a very deep level.

We have our next question from the line of [ Deepak Saha ] from Ashika Institutional Equities.

Congrats on great set of numbers. I have just one question, sir. If we see last week some of the SSPs have reported their numbers and CTV is growing quite rapidly, almost 35%, 36% and the commentary around CTV is very strong. And if we see the PPT very interesting case study for the CTV conversion on, right? So just trying to understand the unit economics for CTV and our broader strategy for CTV because should be relatively smaller on the CTV channel. And how are we seeing CTV space growing? So that's all from my side.

Thanks for that question. I know which you're talking about. And quite frankly, I'm not particularly impressed by any channel-specific commentary. If you look at Affle, one of the biggest differentiations and competitive differentiation that our platform offers is that we are a consumer platform. Now what do I mean by consumer platform? It means that we are a consumer-centric platform, which is mapping and ensuring that we are engaging with the consumer across the entirety of the connected devices that this consumer is engaging through his journey, which includes mobile. And the same consumer who's on his mobile phone may also be watching the CTV at their own home. The same consumer might move out of their home and go to their car and may have another -- either an autonomous or an agentic intelligent connected device in their car. And that same consumer may go into a pharmacy for health care-related issue or to a retail store to just do their usual grocery kind of shopping in a physical sense and may have another screen that they engage with there. So these are called AI CDs, which is autonomous or agentic intelligent connected devices. So when we, as a consumer platform look at, a, Mr. consumer with whom we want to drive a conversion, we can show this user an ad on a mobile screen, on a CTV or other AI CDs, right, and drive one efficient conversion with this consumer for our advertiser, which could be looking at branding and driving off-line conversions or it could be an online performance and driving online conversion. This is what we are doing. Now in terms of how the consumer attention is moving between mobile, CTV and other devices, we believe that the advertising budget or the advertising, the number of impressions or the amount of engagement that we want from the consumer on those devices should be directly proportional to the consumer's own attention on those devices, right? And where we get maximum, let's say, conversions -- attention to conversion ratios. And at the moment, CTV is showing very, very positive engagement with our consumers. So the case study that we, for example, showed there was driving conversion first CTV and cross-screen capabilities. And that's what I mentioned in our conversion first focused case study. And CTV, working with smart, let's say, QR codes or other engagement models with mobile phones driving conversions, that's the methodology we have. Now these other companies which are not having a consumer platform-based approach, they are just selling inventory at a particular touch point. And I think that business is, in my opinion, commoditized, and they are selling whatever a buyer is asking for and trying to make their margin on it. And I'm glad they are making some money for now. But I think the core difference in our approach is that we are consumer-centric. And if the consumer is spending more time on CTV and we can drive conversions from there, then Apple is absolutely on it. But we are conversion-centric and which channel do we show an add-on, whether it's mobile, CTV or other AICDs, I think that will be algorithm dependent from our side. But we are seeing good outcomes at the moment with CTV and combination on mobile.

That's very helpful. Just one quick follow-up, sir, on the developed market side, if you can help us understand CPC unit economics. My understanding is it would be fairly higher, but at margin level, say more or less same, but the absolute flow-through would be relatively higher. Is it the right way to think about it? Yes, it is the right way to think about it, that the kind of the volumes that we are dealing with in terms of the Affle servers, our consumer platform stack at the back end because we are globally anchored on emerging markets in a strong way, and now we are calibrating up in developed markets as well. the volume of business and the volume of traffic that we are dealing with for the level of revenue that you see is much higher. I would say it's 5x higher because in emerging markets, there are a lot more users, a lot more connected devices connecting, whereas in developed markets, you get paid more for less level of activity, right? So in terms of our competitive advantage, we are seeing 2 things. One, we are able to run almost a 22%, 23% EBITDA business with an anchoring on emerging markets, which is extremely hard to do given the volume of activity that we have to deal with and the unit economics are harsher. When we go to developed markets, I mean, the math is slightly different, but it is to our competitive advantage in favor because our technology stack is dealing with great efficiencies. and a much larger volume of data that we are able to filter, distill and manage well. So when we go to developed markets, we are seeing better unit economics in that sense. I won't go into the exact margin profile and the CPCU numbers, but it would be sufficient to say that it is an easier journey for us in developed markets versus what we have been used to in terms of unit economics of emerging markets.

[Operator Instructions] Next question is from the line of [ Kavish Parikh] from 360 ONE Capital Market.

Congratulations on a good set of numbers. Anuj, on the broader global industry today, are you seeing any early signs of an impact from slowing smartphone adoption globally as high memory prices take device costs higher? Are you witnessing any sort of moderation in the incremental device additions that you typically record each quarter or any impact on replacement cycles across your key markets? That's my first question.

So thanks for the question. No, we are not seeing any impact. I think what we are seeing instead is a lot more time that the consumers are spending per consumer per device on the time spent on digital content consumption is actually going up across the board, across markets. And I think this trend would continue. Now we don't really look at whether the device is necessarily a new device or an old device. I think what we're looking at is the consumers' attention and the time spent. So in terms of just purely number of devices, I think with connected devices, with mobile devices, we are seeing a steady sort of consistent number and pattern without any particular sort of deviation versus what you said. It could also be that, hey, some of the people instead of buying a new device are going for a secondhand device or just not upgrading or keeping their phone active. So I think we are seeing a number of connected devices following a consistent pattern, and there's no impact at this moment on -- at least on all the data that we look at.

Understood Second question, Kapil, CF to EBITDA conversion was relatively weak this quarter at about 41%. You did allude earlier that we also saw a couple of quarters of weak cash conversion last year as well and that subsequently normalized by year-end. Could you just dive a bit deeper into what drove this weak conversion in 1Q '27. Is this an active call to deepen penetration across certain geographies or verticals? Does it pertain to that?

No, it's just the flow of the funds. So if I had 110% OCF to PAT ratio, that means I collected about INR 45 crores operating cash flows in the month of March, right, ahead of the year-end. So then you are left with less receivables to be collected over the next 90 days or 80 days, so these get affected, right? So you had an upfronting of the cash flows, right? So this will get normalized. -- when we go into the quarter 2 and quarter 3. So you will see about 80%, 85% OCF to PAT ratio by quarter 3.

Got it. And lastly, on the strong growth and margin performance, could you help us understand the impact of currency movements on this quarter and maybe the last few quarters? What part of our cost base is dollar denominated? And how did the dollar movement affect revenues and costs? How much did it contribute to the reported growth? Costs other than data and inventory seem to be fairly in control despite part of it being impacted by dollar. So some clarity on this would be great. So as I mentioned in my commentary, right, this quarter had a stable USD to various currencies, right, not only INR. So we didn't see any impact -- additional impact what we had in quarter 4 or quarter 3 right when there was spike in the USD to other currencies, 72% of our business is largely coming from emerging markets and India and when we have other cross currencies ROIs to be guaranteed to the - progress to the clients. So you need to adjust to the CPC - billing may happen in dollar but you will need to adjust it to the ROI required in their local currencies also. So only 20% of our business of US is dollar to dollar and rest of - rest is you have to adjust the CPC rates to the ROIs progressed. We are not a service company where you can have a power rate and then - all the revenues in dollar, so ROI based CPCU based business where you need to calibrate the cross currencies ROIs for the client. So we had steep increase in the US currency rate across last quarter and that affected our take rate or you can say the inventory cost in t the previous quarter 4. This quarter, if you see sequentially, we were largely flattish because the dollar movements were not that steep.

The next question comes from the line of Anmol Garg from DAM Capital.

I had a couple of questions. Firstly, Anuj, if we look at in terms of increasing penetration in developed markets, which are the key areas, industry you want to target through organic or inorganic route? And in addition to that, given that, that market is relatively more mature, do you think that it can have an overall impact on our growth rates going forward? Because given that in this quarter, if we look at ex of currency, our developed market growth will be on a Y-on-Y level, maybe in the range of 11%, 12%. So is that market relatively slowing growth overall? And will -- as we sort of increase our presence over there, can it affect our overall growth rates?

I don't quite agree with that analysis. And, yes, they are mature markets in the sense that the addressable market is large, and it is so large that the overall growth might -- from an overall high-level macro perspective less. But the fact that we are entering the smaller base with a differentiated business model with a differentiated technology stack, we see that we will be growing at least that 20% class in developed markets consistently. We see many growth pegs there. We see growth pegs in gaming. We see growth pegs in e-commerce, entertainment. We are seeing a positive growth even in areas of health care. So we have a very strong thesis across some of the top 10 verticals that we are deeply verticalized for. And when we go into this market with our approach as a consumer platform on a CPCU business model, covering the entirety of the consumer journey and so on, I think we should be very, very optimistic and very clear that at least 20% growth is sensible to be pegged at. I did mention earlier that internally, when we execute all our business plans internally are pegged that 25% growth, and we are very convinced and seeing the right kind of momentum on the ground to realistically peg ourselves internally on that. So when our external stakeholders and analysts are modeling us at around 20%, I don't see why that should be tapered down with view of developed markets given that the addressable market is so large, we are small, and we are giving you a very clear thesis of our differentiated execution pathway.