Route Mobile Limited (ROUTE) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I'm Rio, moderator for this conference. Welcome to the conference call of Route Mobile Limited, arranged by Concept Investor Relations, to discuss its Q3 and 9 months FY '25 results. We have with us today, Mr. Rajdip Kumar Gupta, Managing Director; Mr. Gautam Badalia, Chief Executive Officer; Mr. Raj Gill, Group Chief Financial Officer; and Mr. Vinay Binyala, Chief Strategy Officer. [Operator Instructions] Before we begin, I would like to remind you that some of the statements made in today's earnings call may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to Slide #2 of the presentation for the detailed disclaimer. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajdip Kumar Gupta. Thank you, and over to you, sir.

Thanks, Rio. Good evening, everyone. I hope you are doing well. I would like to share an important update about our evolving organizational structure and what it means to Route Mobile. As you may have seen in the recent announcement, Proximus Group has created Proximus Global, which brings together BICS, TeleSign and Route Mobile under a single umbrella. We believe this marks the beginning of an exciting phase of growth for all of us. For us, at Route Mobile, this organization will present both an affirmation to our strength and significant opportunity to leverage the combined capabilities of our sister organization on a much larger scale. Within this new structure, our leadership has evolved to position us from maximum impact. I have now assumed the role of Managing Director, and I will focus my expertise on accelerating our business across international market and tapping into the remarkable product diversity across Proximus Global. Gautam Badalia has now taken on the role of Chief Executive Officer of RML and will guide our day-to-day operations and strategic vision, continuing to build on the momentum we have already seen. Gautam and I will closely collaborate to ensure that our long-term strategic initiatives align seamlessly with all our operational activities. It's essential to note that this expanded group structure will disrupt how our clients or our partners to interact with Route Mobile. In fact, the new setup promises to enrich our offering by drawing on BICS' global connectivity footprint and setting a strong hold in retail identity. All of this blends seamlessly with Route Mobile's strength in customer engagement solutions. We believe that together under Proximus Global, we can move more swiftly on innovation and streamline decision-making across the board. That synergy should directly benefit our enterprise customer, [indiscernible] clients and mobile network operators and partners worldwide. We are also excited about the far-reaching potential of having access to an established footprint in more than 100 countries. This type of coverage creates an avenue for faster product rollout, stronger collaborative solutions and far deeper support network ultimately. That should translate into tangible advantages to investors, not just for -- not just in terms of operational revenue, but also because it gives us the kind of scale needed to solidify our market leadership in the CPaaS pace. As always, our committee remains to drive sustainable profitable growth. We will keep you updated on how the changes at Proximus Global impacts Route Mobile, including any new product strategies or regional expansion that results from this transition. I'm confident that these steps we are taking now as a position for long-term success, and I look forward to sharing more details as we continue on this path. Now I hand over the call to Gautam.

Thank you, Rajdip. Good evening, everyone. Wishing all a very happy New Year. It gives me -- so we have uploaded our quarterly earnings presentation. Hope you had the chance to go through the same. It gives me immense pleasure in stating that Route Mobile has yet again delivered industry-leading growth, both on revenue and profitability despite the festive season being not so buoyant. In an environment where most of our regional and global competitors are demonstrating flattish to single-digit growth, Route Mobile performance definitely stands out. Since H2 FY 2024, the CPaaS industry has been going through a structural shift in terms of the overall market dynamics. The industry has been grappling with issues like artificially-inflated traffic, overall macro headwinds and trust deficit issues with large global enterprises, which has coerced them to evaluate alternate channels for communication. We believe Route Mobile, along with Proximus Global, is best poised to capitalize on these adversities by virtue of the following 3 factors. As a trusted partner to the enterprises globally with 450-plus mobile network connects, Route Mobile continues to have the widest reach with the telcos globally. Route Mobile also has been the biggest proponent of curbing gray routes by deploying firewalls on the networks. Additionally, Route Mobile has also started deploying anti-spam filters with leading telcos globally. In terms of the second factor, so we kind of today are following follow the fun approach. So our Route Mobile, along with Proximus Global, has an unparalleled reach across the globe, which definitely helps us render the best quality of service and plus be the partner of choice for all large global enterprises. In terms of the third factor, we leverage the diversified portfolio across the group to cross-sell upsell and become one of the most integrated and comprehensive service provider across the connect, engage and protect layer of the communication value chain. While we continue to leverage these strengths, we have also started our journey to move up the value chain by drawing actionable insights from the first-party data models using LLMs and machine learning tools to render more effective and personalized communication. In terms of some of the developments for the quarter gone by, we have demonstrated an industry-leading revenue and gross profit growth of over 15% on a Y-o-Y basis. Gross margin continues to be stable. Operating margins were impacted marginally, owing to impact of INR 57.1 million of long-term incentive plan, which pertained to the period July to December 2024. We shall continue to have an impact of INR 120 million during CY '25. However, about INR 10 crores of operating cost is nonrecurring on a quarterly reported basis. Adjusted for that, EBITDA would -- reported EBITDA would have been INR 40.72 crores in Q3 FY '25, which is 11.9% EBITDA margin. And I mean some of the related party transactions that's happening across the group actually is happening at a lower markup than the portfolio operating margins. And hence, adjusted for that, I mean, EBITDA margin for 9 months FY '25 would pan out to be about 12.33%. Other income during the quarter gone by reduced significantly owing to ForEx loss in Q3 FY '25 as against gain of INR 250 million in Q2 FY '25 and gain of INR 147 million in Q3 FY '24. This impacted the PAT margins, and hence, the PAT margins were slightly lower. One area where we have done exceedingly well has been the free cash generation capability of the business. During the 9 months gone by, our CFO to EBITDA conversion was a staggering 102%. Considering the superlative performance, the Board has recommended an interim dividend of INR 3 per share. With this update, I also welcome Raj Gill as the group CFO, and would request him to quickly introduce himself and highlight these key areas of trust. Over to you, Raj.

Yes, sir. Thank you, Gautam, and good day, everybody. So first, let me introduce myself. My name is Raj Gill, the newly appointed CFO of Route Mobile, and I'm to terribly excited to be here and work with you all. In terms of kind of focus areas, clearly, we are very much focused on driving value, and key pillars of that will be clearly driving synergies, focusing on revenue opportunities to strategic partnerships, but also cross-sell upsell and driving efficiencies across the Proximus Global family. And to that end, I'll be working very closely with Proximus Global to unlock key areas of growth for the next phase of our growth journey. So again, looking forward to working with you all, and excited to be here. So I would now hand over to Vinay for the next phase.

Thank you, Raj. Good afternoon, everyone. It's a pleasure to speak to all of you. Wishing you a very happy New Year. We already uploaded our quarterly earnings presentation on our website as well as on the stock exchange websites. Hope you had a chance to go through the presentation. Adding to the overview shared by Gautam, I will run you through the highlights of our financial and operating performance during Q3 FY '25 and 9 months FY '25. Despite the industry headwinds as highlighted by Gautam, we have delivered industry-leading Y-o-Y growth of 13.1% in the 9 months FY '25. Revenue from operations grew from INR 30,063 million in 9 months FY '24 to INR 34,006 million in 9 months FY '25. We have delivered 150% growth in the new product revenue, 60% growth in new -- in revenue excluding new products, over the last 11 quarters. EBITDA has grown by 60% over the same period. This translates to a CAGR of 40% in the quarterly new product revenue, 18% in the quarterly revenue excluding new products and 19% in the quarterly EBITDA. This reflects our consistent business performance over the recent past despite evolving industry dynamics. You may refer to Slide 13 of the earnings presentation to see more details on this. Now to discuss some of the key business metrics. In volume terms, we processed 116.6 billion billable transactions in the 9 months FY '25. Compared to this, we processed 38.9 billion billable transactions in Q3 FY '25 versus 31.2 billion in Q3 FY '24 and 40.5 billion in Q2 FY '25. Average realization per billable transaction marginally increased from INR 0.275 in Q2 FY '25 to INR 0.304 in Q3 FY '25. This was driven by a change in the mix of domestic and ILD traffic volumes in India. In 9 months FY '25, we had net revenue retention of 105% with 90% recurring revenue. The same is discussed on Slide 11 of the earnings presentation. Another key aspect of the geographic mix of our business. In terms of geography, India continues to be our largest market by termination, accounting for 51% of our revenue by termination. The details on other geographies which we focus on are available on Slide 9 of the deck. We continue to witness strong momentum on the next generation products, which grew by 21% on a Y-o-Y basis. You can see the details on Slide 7. Gross profit margin was sustained at 21.1% in Q3 FY '25. EBITDA grew by 9.1% on a Y-o-Y basis. EBITDA margin growth contracted marginally from 12.5% in 9 months FY' 24 to 12% in 9 months FY '25. Effective tax rate for the 9 months FY '25 was 21.2% against the 15.1% in 9 months FY '24. PAT in 9 months FY '25 declined by 4% versus the same period in FY '24. Cash and cash equivalents stood at INR 9,303 million, and net cash was INR 7,457 million as on December 31, 2024. Cash flow conversion, which Gautam highlighted, in the 9 months FY '25 was very strong at 102%. We onboarded 60 new employees during the quarter. Unfortunately, 57 left us, so net addition were 3 employees during the quarter. This is a very quick summary of the quarter and 9 months gone by. Thank you. And with that, we will open the floor for Q&A.

Thank you very much. [Operator Instructions] The first question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead. Jyoti Singh, if you can hear us, please go ahead with the question.

Yes. Sir, if you can guide us on the guidance front going forward?

Yes. So I think we continue to kind of drive industry-leading growth. I mean, 2 things, I mean, which are kind of outside our control, I mean, are external factors, macro headwinds, right? But despite that, I think we'll continue to maintain, I mean, the kind of growth trajectory that we are talking about. And the endeavor will be to do better than what we have done in Q3, in Q4. And then going forward, on a 3-year basis, I think we already had kind of indicated about a 15% CAGR growth. So largely, I think we'll try to kind of embark on that kind of a trajectory. And in terms of margins, I think, as I said, I mean, there were a few one-offs. Adjusted for that, I think we'll be in the vicinity of our current operating margins run rate.

Okay. And sir, another question on the shifting on the messaging side. So like earlier, we were getting message through message. Now we are getting on the WhatsApp message. So obviously, it is impacting the margin. So if you can guide us, what are the -- what kind of opportunity we are seeing going forward?

Yes. So let me start, and probably, we can talk about [indiscernible]. Jyoti, if you see, we as a company, probably the first Indian company who deployed the [indiscernible] in Bangladesh. And RPS is evolving very big in various markets as we speak right now. For the SMS, I know there is an impact of rapidly shifting from SMS to WhatsApp, but there are many use cases which is still there on SMS. And as a company, I think we are not only focusing on 1 channel of communication, but we are focusing on RPS in a big way and in coming days we believe that RPS is definitely going to be more interactive, I think no value creation than SMS, but I think both the products will have the market. And as far as the WhatsApp is concerned, we're also supporting lots of customers where the customers are shifting from SMS to WhatsApp. We are also getting those kind of customer on board. So I think it's definitely a channel shift from SMS to WhatsApp, but in that case also, we're fairly well planned and we already have a platform and technology where we are serving customers for WhatsApp as well. Gautam, if you want to add?

Yes, no, no, just adding to what Rajdip is saying, I think a lot of conversational use cases are definitely moving to the OTT platforms. And that's why I think differentiated, I mean -- and kind of a lot of thought leadership, I mean, needs to kind of go in. And then some of the examples that we have done, I mean, in terms of the metro ticketing use cases, we are trying to replicate that for various other industries. And hopefully, I think by the time we do the next quarterly earnings presentation, we'll come back to, I think, the wider audience with few unique use cases, I think that we'll be able to kind of coin on the conversational platforms. So I think we're working and creating more and more such unique use cases across the platforms. And I think seemingly, I mean, it seems very, very exciting. I mean, I mean to kind of drive the SMS leg of the business, which continues to be a cash cow and also capture the conversational pie of the business where -- through such unique use cases.

Jyoti, just to add here, like our metro ticketing solution which we have deployed in India, we have deployed the same solution in Indonesia. For their metro ticketing and that is the kind of opportunity we believe [indiscernible] set up in almost 100 countries. We have a larger market now and where we can use all these use cases in those markets and the classic example of deploying this ticketing solution in Indonesia.

Next question is from the line of Pritesh from Lucky Securities.

Yes, sir, between your commentary in H2 and what growth has come in quarter 3, can you tell me where are those mistakes, if any?

Sorry, Pritesh, can you please repeat that query?

I said between the commentary of your quarter 2, if you check your commentary in the quarter 2 and growth that is coming in at quarter 3 now, so you had a clear situation where H2, you had said that the growth will be far, far higher than H1. So I'm just wondering if there are any areas of slippages that you want...?

Fair point, Pritesh. I mean that's a very, very fair observation, though we have demonstrated a higher growth than Q2 in Q3. But I think 1 thing I think in terms of the domestic volumes, I think the domestic volumes have come off a little bit. That's largely because I think till Q2, we -- I mean, for a particular bank, we were getting their entire share of traffic while there were 2 CPaaS players impaneled with the bank because of, I think, some issues with the platform of the competition. Unfortunately, I mean, in Q3, I mean, the platform of the competition, I mean, started working fine. So we lost that volume. So that actually led to a little bit of an impact in terms of the domestic NLD business. But for that, I think we have witnessed almost mid to -- I mean, close to mid teen kind of a growth in terms of volume on ILD and rest of the world. So I mean, from that perspective, I think it was a very strong quarter. It was only on the domestic front, I think, where because of -- I mean, we were getting that opportunistic traffic, we lost that traffic in Q3. So that was only the slippage, if I were to kind of call it out. And it had a little bit of impact on the new product strength, largely driven by -- I mean, the change in pricing strategy, I mean, that played out, I mean, by WhatsApp. I mean -- but for that, I think it was a pretty strong quarter from our perspective.

And is there any other, say, on a 9-month basis where you can tell us how much is the TeleSign -- yes. Yes.

So on a 9-month basis, I think with TeleSign, we have done close to about INR 298-odd crores of business.

So let's say, the INR 300 crores of business coming from TeleSign, and then you had the Vodafone deal execution this year, right?

That's correct. That's correct.

So if you could then tell us which are the pieces of business we should have declined and how much is the pricing decline?

So this INR 300 crores also has -- I mean, on a like-to-like basis, last year also, we had a decent amount of business with TeleSign because they were our existing clients. So not this entire INR 300 crores was...

That was INR 100 crores, that was just INR 100 crores last year. Last full year INR 100 crores.

Come again, Pritesh. Sorry, I missed your voice there.

Last full year was INR 100 crores, right?

No, no, no, last full year was INR 150 crores.

INR 150 crores. Okay.

Yes, yes.

And Vodafone?

So Vodafone, again, I'm kind of trying to highlight. Vodafone actually is a supplier. So we are getting the volumes from the enterprises. So across all enterprises, we have seen growth. I think where the growth has kind of been a little muted has largely been with the aggregator business of ours, where because of issues around the AIT, the artificially inflated traffic, I think that's where I think the business has kind of got a little impacted. But for that, I think on the enterprise side of things, business continues to be rock solid.

Okay. And any areas of pricing decline?

So this quarter, I think we are -- on an overall basis, we've seen pricing, I think pretty much, I mean, been stable and marginally increased. So there isn't any much significant decline on a 9-month basis.

And the ILD pricing adjustment would have flowed in this year, right? In 9 months?

Yes. So essentially, I think you are right. In the first half, I think there were certain adjustments [indiscernible]. So we've seen, I mean, growth happening in the quarter on volume front as well as on [indiscernible]. On the 9-month -- so Pritesh, I can come back to you on the 9 months. I don't have it offhand, but I can share that perspective.

Thank you. Next question is from Yash Darak from RSPN Ventures. Please go ahead.

A few bookkeeping questions. So as you rightly said, the employees have increased by 3 in this quarter on a net basis.

Sorry, your voice is a little turbulent. Not very clear.

Hello?

Yes, go ahead.

Yes. So employee cost has increased by quite a bit while the net addition in employees was only 3 employees. Could you explain how has the employee cost increased so much?

Yes, yes. So I think in the employee cost base, there is a long-term incentive plan, I think, which is there, which is almost to the tune of about INR 5.77 crores which was not there, and that pertains to July to December of -- in 2024. So essentially, I mean, the entire impact was taken in the quarter gone by. And as I mentioned, I think the total operating overhead, if you were to look at it, for the last quarter, I think about INR 10 crores of operating overhead is nonrecurring. So you can pretty much -- I mean on a run rate basis going forward, adjust that INR 10 crores into the operating cost run rate.

So are you expecting the employee cost trajectory to be going on? Or is it going to reduce by INR 10 crores?

No, no, It wouldn't reduce. So I think if you add up the employee cost plus the other expenses, which includes about [indiscernible] loss. So what we are saying is about INR 10 crores of that pile is nonrecurring. So going forward, about INR 110 crores would be the running base.

Yes, I got it. And what about the employee cost? Is it going to run in the same trajectory? Or is it going to decrease from there since the incentive plan wouldn't be there?

The incentive plan would be there for the current year as well. So as I said, I think last quarter had an impact of 2 quarters. So it will reduce to about INR 3 crores per quarter, which was about INR 5.77 crores for -- I mean, which got booked in Q3 FY '25. Going forward, on a quarterly basis, that run rate will be about INR 3 crores till the end of the calendar year.

Okay. And secondly if you could explain why the interest was decreased a bit and the effective tax rate guidance for the year?

Yes. So the interest cost has reduced because we have retired a loan that we had during the month of December. Early December, I think we retired a loan that we had. And in terms of the effective tax rate, I think it is fair to assume it to be in the vicinity of 20%.

And the final question. In the beginning, you said that there's an issue of inflated traffic -- artificially inflated traffic, if you could explain what that is and how does it affect our business?

No, essentially, what has happened is, I think, globally, I mean, if you remember, maybe 1.5 years back, I think when -- I mean the Twitter deal was happening, at that point in time Elon Musk had called out about a lot of -- about 5% to 10% of the traffic coming onto the Twitter's platform was actually fake bot traffic. And this was kind of an issue that I think all large global enterprises are grappling with. So -- and it led to a larger introspection by a lot of large global enterprises. And since then, I think, I mean, a lot of these artificially generated traffic which enterprises were paying for, it wasn't yielding them any ROI per se. That has completely kind of been shed off from the industry growth. So this is 1 area I think that I think the overall CPaaS industry kind of grappled with over the course of the last 1, 1.5 years.

Okay. And any guidance for the full year FY '26?

I think let us try and kind of close the next quarter, I mean, and kind of demonstrate a stronger performance than Q3. And I think then we will kind of reassess and come back to you with the guidance for the subsequent year. But on a 3-year trajectory basis, I think we are talking about a 15% CAGR growth.

Next question is from Nikhil Choudhary from Nuvama.

I just want to understand on return guidance slide. How we are thinking the exit run rate for us will be in Q4 FY '25? Earlier, the guidance was 18% to 22%. So how we should think about Q4?

Yes. So Nikhil, I think the endeavor will definitely be to do better than Q4 -- Q3 that we have performed. I think the run rate also kind of -- is kind of depicting the same. Whether -- I mean so the endeavor will be to kind of really push the ante I mean in terms of the growth there. So yes, I think we'll definitely do -- endeavor to do better than what we have done in Q3.

Sure, Gautam. Second thing, your comment that related party volumes are coming at lower margin. Why there will be lower margin on related party volume?

No, essentially, I mean, the related party approvals and the mechanism, I mean, that's been kind of validated by a large accounting firm as well. Has been -- I mean at an EBIT margin level, I mean, most of these transactions are happening close to -- in and around our EBIT margin levels. And hence, I mean, which is lower than our operating margins. So to that extent, I mean, it is dilutive at the operating margin level.

But any reason for that to -- let's say, going forward, if volume keep on increasing from [indiscernible], then that should be margin dilutive, is it fair understanding?

This is governed by a very detailed exercise done by 1 of the large big 4 firm. And I think they do this assessment on a periodic basis. So whenever I mean there is any material change, we'll definitely call it out. But today, I mean, some of these related party transactions are happening in and around our EBIT margin level.

Sure, Gautam. The last one, just want some clarity on the contingent liability for 1 of the contracts we created. Any details and update there?

Yes, yes. So I think this is the contract, I think where -- so this is actually an exclusive cargo contract in Southeast Asia, where what has actually happened is there have been challenges in terms of I think, increased sanction conditions where a lot of social media apps have been banned and there are some structural shifts happening in that market. So I mean, we are in the midst of a renegotiation with the partner, invoking the contractual rights under the signed agreement where some of the structural shifts or any change in their existing conditions, I mean, it gives us the right to negotiate or renegotiate the terms of the agreement. So we've already triggered that. There have been a couple of rounds of negotiation there. So hopefully, I mean, we should be able to kind of come to an amicable solution there. Since this is an ongoing discussion and we have not been able to close that discussion and considering the materiality of the contract value, I think the auditors deemed fit and even from a management standpoint, I mean, we thought it would be prudent and pertinent to get this captured as an emphasis of matter.

Next question is from Yash Dedhia from Maximal Capital.

So this is Sarvesh here. So I have 2 queries, 1 is just for my understanding. So now we are moving in terms of channels, moving from SMS to, let's say, WhatsApp and other communication modes. So in terms of the pricing, how do they differ? Are we getting lower price per transaction? And in a sense, then there is a revenue gap that we'll have to pull? So that is one. And second is you have that edge that you so from a client perspective, you will be having tie-ups with all telecom operators, et cetera. So you can provide that sort of a single solution, which the client would be finding very difficult to do it himself. Now in this mode, where basically things are being done over Internet rather than SMS. So does that edge goes away for you?

So in terms of... yes, Rajdip.

It's a very good question. Let me start with this. To also understand the opportunity as a group we bring on table. Let's take an example of TeleSign product. You can always completely access security-based products like [indiscernible] product. And these products are -- you have a direct access of all the product work they have bid. And we can bring all these products to markets where we operate, will create more value to Route Mobile. Along with that, you need to also understand this is one of the largest wholesale voice player in the world, and we are providing voice solution to the global operator as well. We will also get a direct access to all operators when this is supporting them to sell our product as well as a part of our commission. So it is not just SMS as a 1 solution offering or [indiscernible] 1 solution offering, we are not talking about Engage, which is a customer engagement program platform along with the security, which is a secure product. And then the Connect, which is our connectivity piece. So all these capabilities we have now in-house as part of 1 team. Before when we used to go to a single operator, we only used to [indiscernible]. Along with the firewall we have a digital security product, along with that, we have SMS [indiscernible]. So our portfolio has grown multifold. And we can actually offer multiple solutions to the same customer or a new customer. I think that is the advantage we bring on table as 1 single group. And I think 1 way to look at Route Mobile as a company where we have a permission which is combined solution of BICS as well as TeleSign. Yes, Gautam, you can add to this. Hello, Gautam?

Yes, yes, yes. So yes, I mean, does that answer your query or you want anything -- any other issue clarification?

Just on the revenue that we realized for a transaction -- so I understand now you have a broader suite of products. But now if the transaction were to move from SMS to, let's say, WhatsApp, do you realize similar or lesser? And to what extent lesser sort of revenue per transaction?

It's more than SMS, for sure, I can tell you.

Okay. Okay. And secondly, given...

Just to highlight, just to highlight, I mean, the use cases are different. I mean -- so per se, I mean, 1 is not cannibalizing other. I mean, so there are different use cases. I mean, where SMS is being used and conversational messaging, I mean, is used for a differentiated use case.

Understood. And given that where we are seeing some shift also, your new product revenue, which is where we have grown at 20% odd, which was probably the aspiration for the entire company, isn't it too low a growth number for something which is at a nascent stage and where we are also getting the benefits of synergies from the group as a whole?

No, it has a little bit of an impact because of the WhatsApp and pricing, I think overall, I think, got it southwards. So it also has that effect, I mean, as part of the overall kind of revenue number growth that we have garnered there.

Wanted to add out here, this whole merger and I think everything we announced in the month of January or mid-December. But now we have access of -- from the customers of TeleSign and BICS as well and where we can grow and sell RPS, WhatsApp as a 1 solution to all the existing customers of these 2 companies as well. I mean that is a big opportunity we see in coming days for Route Mobile.

Yes. Yes, fair point. I think some of those process synergies, I think it's more a timing effect. It is a matter of time that we'll start to kind of lock those process synergies. So I think the entire Proximus Global team is kind of very, very optimistic and very kind of excited about the new products opportunity, and we are chasing some big ticket [indiscernible].

And sir, earlier we had a vision of reaching $1 billion in revenues in 3, 4 years from now. And now I think our guidance is more like 15%. So more like a 50% growth over 3 years. So have we revised down our sort of an aspiration to -- in 3, 4 years meaningfully?

So I think right now, I think the industry is going through a little bit of a structural step, let things stabilize. I mean what we can kind of always definitely call out is when the industry today is growing at kind of 10%, 11% kind of a growth, as I said, I mean, most of our competitors are growing, I mean, flattish or single-digit growth. We are definitely outperforming the industry. So I mean, once there is a little bit of more confidence in the market, I mean the sentiments improve, I think we'll definitely increase our growth trajectory. So at this point in time, I mean, we would not want to be very, very overambitious in terms of calling out a very high number. But that aspiration of $1 billion definitely is an aspiration that we want to achieve sooner than later. But looking at the current market conditions, we'll want to stick to that 15% kind of growth guidance for the next 3 years. 15% CAGR, yes.

Okay. And finally, on your accretion base, now this looks to be as high as -- much higher than any of the IT services company also. And since they are generally the job profile is a little bit different than what is expected out of a tech-focused company. So how do we see this 20%, 25% attrition rate to be lowering? And what are the regain attrition rate in this? How do we see this in that situation?

No, no. So I think let's look at it holistically right now. I mean let's look at -- because, I mean, we are talking about Proximus Global as an integrated framework, right? And we are looking at drawing kind of general synergies. And that synergies, I mean, will entail a little bit of cost optimization as well so that we remove redundancies in the system. So I mean historically, our attrition rates have been at par with the industry. And then, I mean, for this quarter, I mean a little bit that has happened, I mean, is a function of a wider integration initiative rating across the group.

Thank you. The next question is from Kaustav Bubna from BMSPL Capital.

So you spoke about Proximus Global and how Route, BICS and TeleSign is grouped under 1 umbrella now. But could you speak more about -- currently, in the current formation, if Route accesses TeleSign's client, what is Route paying for? I mean, is there some sort of a transaction? Is TeleSign getting a certain percentage of the financial gain from that transaction? That's the first question. And the second question is where do we go from here? We spoke on previous calls about -- because I think TeleSign first, a few years ago, had tried for an IPO, and then that did not happen and now Proximus has got into Route. So it's -- could you give some to direction on where do we go from here? Is there a potential of TeleSign merging, like getting listed through Route? Or speak a little bit about both these things.

Yes. So in terms of the first question that you had. So -- yes, yes. So all the related party transactions that we do, largely, I mean, they are there on a cost plus markup basis. The markup, as I said, I mean, is close to the EBIT margin levels. So that's the broad framework of transactions that we do. I mean -- and it applies both sides of the equation. In terms of TeleSign, I mean with the Proximus Global, I mean the broader strategy around there, I mean, so TeleSign, I mean, they've been doing phenomenally well in terms of growth. I think where they were kind of looking at, was a lot of cost offshoring. And that's why, I mean, India today continues to be, I mean, 1 of the key markets from a GCC standpoint. And then considering use mobile, I mean we are always functional where we were able to demonstrate high growth. With -- I mean by driving profitability as well. So some of that, I think, as part of these integrations, synergy exercise, which even Raj alluded to, will be the cornerstone to kind of drive going forward. And in terms of merging integrations and all, I mean, right now, every -- all options are open. I mean nothing is kind of -- everything is at the drawing board level. I mean there is nothing concrete that has kind of been kind of discussed, finalized. So I mean, it will be difficult to call out, or very premature to call it out right now.

Understood. When you say how much revenue is Route right now doing in the digital identity business?

So currently, what we are doing, we were already doing this with Masivian, which is our wholly owned subsidiary, we were doing close to $1 million already with them. And as I think we've highlighted, I think, TeleSign has a very -- I mean a significantly more evolved digital identity stack. So we'll leverage their strengths of the stack and then take it to customers. But a lot of these digital identity solutions needs -- I mean, governance from -- I mean, the data privacy regulations and stuff. So it requires a lot of -- I mean so a little bit of an approval process in India and particularly, I mean, with the DPDP law, I think recently, I think, kind of being involved. So some of these things are being navigated. Discussions are ongoing with regulators. We are doing sandbox testing, I mean, for some of the solutions with enterprises and telcos. So I think it's moving in the right direction, but I mean, we haven't seen, I mean, any significant revenue from that coming through right now because, I mean, it will entail -- it's a little longer sales cycle, but once you are able to demonstrate the value drop to an enterprise in terms of helping them curb the digital fraud, I think -- we believe, I mean, it has humongous potential.

And when you say TeleSign is INR 300 crores business in 9 months, what business is this?

So this is all -- I mean, for destinations where we have better cost economics, they are using our routes to terminate their enterprise traffic.

Thank you. The next question is from Saumil Shah from Paras Investments.

So you've been always guiding for a 13% EBITDA margin. And I mean, even in the previous call, you were mentioning that 13% EBITDA margin is our endeavor to reach. But for the 9 months, we are still at 12%. So are we facing severe competition? And would you like to revise your guidance?

So, I'll tell you -- as I said, I think -- I mean, the 9 months gone by had few cost elements which are one-offs. I mean, a large integration kind of happened. There were a few incentive schemes that were rolled out. When we were giving that guidance, I think some of those things were not baked into it. So -- and particularly, I think the most important thing is the related party transaction that's happening. That's happening today at a margin which is lesser than the operating margin for the company. So I mean, if you adjust for that, I think we are already at a 12.33% kind of EBITDA margin trajectory. And I mean, we still maintain that we'll be closer to, I mean, 12.5%, 13%.

For this year?

For this year on an adjusted basis, we'll be closer to the 12.5%, 13%. So non-GAAP basis, yes.

Okay. And the related party transition what you mentioned, so that is this INR 300 crore, which we are doing -- which we did for 9 months. So as the scale increases, then I mean, what do you expect for coming years?

So I think we are constantly kind of looking at all avenues where we could maximize this. I think now, a decent amount of run rate is already kind of baked into -- in terms of monthly throughput. And I think the market is also very dynamic. So I mean this needs to be kind of looked into on a real-time basis regularly. So at this point in time, I think there are some additional routes that we have been able to identify during the course of this month. We are looking at increasing the throughput there, but it will be a minor kind of an increase. We're not looking at a very major increase, I mean from the current run rate.

Okay. So as of now for 3 quarters, we are saying we had a INR 300 crore run rate for 3 quarters. So it's INR 100 crores per quarter?

A little more than that because the throughput started from June 18th onwards. And 1 other thing, I think, essentially, what's not played out yet is the cross-selling synergy where, I mean, Proximus Global selling our omnichannel solutions, and we kind of selling solutions around digital identity and some of the pieces, I mean, that BICS has in terms of their platform capabilities. So some of those things, I think we haven't seen -- I mean, revenue traction yet, but I think we've already made a few pieces and submitted our proposals. So as and when we have it, I mean, some of these opportunities could be built and these are high in terms of margins.

Next question is from the line of Meet Rachchh from Equirus Portfolio Management.

Gautam sir, any update on large deal wins apart from the metro ticketing solution? Any large RFPs in which we have been participating organically as well as in synergy with the parent company?

Yes. So there are some large deals, I think, in the offering. I mean, I mean we stand a very good chance, I mean in some of them. But I mean till this kind of officially kind of there in black and white, I mean we'll not want to call it out. But I think there is some good momentum there.

And what could be the average size for a large deal win for CPaaS industry?

But it is difficult to call that number out yet. I mean let us first sign it. I mean, we'll definitely kind of make it public.

Sure, thanks.

But the only thing we can tell you is it's large in size.

Okay. Okay. Okay. And in terms of tenure, it will be like 3 years, 5 years, 7 years? Or 1 year and then renewal will happen?

It will definitely be long term. Anyway we can't mention right now, but definitely it is a long-term deal..

Next question is from Karthik, who's an individual investor. Please go ahead.

So I have 2 questions. First is more on the -- maybe my understanding and based on what participants had spoken. And essentially when you move from OTP-based digital authentication to digital identity solution that you're talking about. I was under the impression that at the time a note gets created, you get some revenue on that, right? So obviously, you're using -- losing some revenue when you move to digital solution, right? So -- and I know you talked about trying to see how you can tap more revenue based on digital identity solutions. Is it possible -- first of all is the understanding, right? And second is how much revenue loss are we looking at when we move away from OTP-based solutions to non-OTP?

No, so we still -- yes, Rajdip, go ahead.

I think you need to also understand that digital option is -- I mean there are different use cases also, right? There are many use cases of customer support is moving out to WhatsApp, this is not the SMS piece of it, right? You need to understand is our omnichannel [indiscernible] there is an opportunity for the [indiscernible]. It is not just SMS moving from SMS channel to WhatsApp channel. It is a use case which is being created because of the OTP channel, that is the potential we see in long term years to come. RCS has its own potential as compared to WhatsApp along with the business products which we have, like we say [indiscernible] has a different market itself, right? Because we know that digital adoption is increasing, digital fraud telco will also increase right now. We probably have that unique solution for this market, like markets where we operate, so we can get more value out of that. So I think you should not read through that as SMS is lower than the channel. There are different use cases which is going to remain there and WhatsApp or even for RCS may have a different use cases and we should see the growth in those channels because of the new use cases arising right now. Gautam?

Yes. And just adding to what Rajdip is saying, the biggest reason for digital fraud today, I mean, is because with OTP, you have something to fish, right? And with digital identity solution, you pretty much make it silent. So if you don't have anything to fish and the entire 2-factor authentication happens at your backyard with an algorithm that I think we'll be able to kind of -- that the digital identity solution is able to provide. So we would make the same money, and it would be better in terms of margins. But it would be -- I mean, reduce the TAM from our perspective. I mean, the TAM will only increase and it will only increase our stickiness with enterprises.

Excellent. Yes. That's heartening to know. So the next question is more on the -- I think you talked about using LLMs for better customer service. And I was looking at your presentation, you also mentioned you have about 20 data centers. And with the recent DeepSeek news that is running around, do you foresee using DeepSeek model and potentially that reducing your cost and helping, I assume you used some sort of NVIDIA GPUs for these LLM-based solutions. And do you -- what are your thoughts on the recent DeepSeek turmoil?

Yes. So in terms of the LLM models, I think definitely, I mean, there is a lot of disruption around it. And we believe, I think, the LLM models from a communication standpoint could really kind of be a big, big differentiator, I mean, for the world of communication. And within that, I think we are already looking at kind of adopting some of these models for internal optimization in terms of the ticketing systems, in terms of creating intelligent data insights, data models, which we can then kind of through AI/ML, make it more and more robust. I think some of these things are already kind of happening as we speak. So we believe -- I mean, with LLM models, I think the opportunity and -- essentially, I mean, the personalization and effectiveness from -- for any campaign that an enterprise runs, can significantly improve. And that is what I think we are already kind of working on internally.

Okay. Do you use NVIDIA GPUs? Or do you use the accelerators or just GPUs? Do you know that?

Sorry, can you please repeat your query?

So for the LLMs, do you use NVIDIA GPUs or Intel GPUs, or do you know that? Can you throw some light on the infrastructure used for LLM inference here or...

Probably, that could be a different discussion we can have separately. We can add more technical detail in this call. So better to have a one-on-one call with you if you want to know more about it.

Thank you very much. We'll take that as the last question. I would now like to hand the conference over to Mr. Rajdip Kumar Gupta for closing comments.

Thank you, everyone. Thank you for joining, and have a nice evening. Take care. Thank you.

Thank you very much. On behalf of Route Mobile Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.