Route Mobile Limited (ROUTE) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I'm Alarik, your moderator for this conference. Welcome to the conference call of Route Mobile Limited arranged by Concept Investor Relations to discuss its Q1 FY '26 results. We have with us today Mr. Rajdip Kumar Gupta, the Managing Director and Chief Executive Officer; Mr. Vinay Binyala, the Chief Strategy Officer and Investor Relations Officer; and Mr. Raj Gill, the Group Chief Financial 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, the Managing Director and Chief Executive Officer. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us today. I'm honored to be speaking with you once again as the CEO of Route Mobile Limited. It is a privilege to step back into the role at such a pivotal moment in our journey. I want to take a moment to thank our outgoing CEO, Gautam Badalia, for his leadership and contribution. As I return to lead the company in the capacity of CEO, my focus is to enhance the core strength of the company and drive the next phase of our growth story. While we faced headwinds in the past quarter, particularly in revenue growth, I'm encouraged by the significant improvement we delivered in both gross profit margin and EBITDA margin by focusing more on profitability than volume. Looking ahead, my priorities are clear. We will double down on our core business and serve our customers with even greater rigor. Our primary focus will revenue diversification through expansion of our global footprint for our non-SMS product portfolio such as WhatsApp and RCS, voice solution, along with AI-driven firewall solution for MNO. We will also drive business expansion through cross-sell initiatives across Proximus Global. We have identified immediate area of actions, which we'll walk you through over the course of today's discussion. We will put more efforts in our product innovation pipeline to create differentiated solutions and stay ahead of market demand. Further, we will sharpen our market focus to drive sustainable growth in targeted segments, ensuring every initiative is aligned with delivering superior performance and shareholder value. I'm excited for what's ahead and deeply committed to ensuring our company to emerge stronger, more agile and more innovative. With the support of our talented team and trust of our investors, I'm confident we will continue to drive profitable growth and long-term value. Thank you for your ongoing support. I look forward to partnering with all of you on this journey. I will now hand over this call to Vinay to run through the entire key business highlights of the past quarter and Raj to provide an overview of the financial performance. Over to you, Vinay.

Thank you, Rajdip. Good evening, everyone, and hope all of you are doing fine. We have uploaded our quarterly earnings presentation. Hope you have had a chance to go through the same. Let me start by talking about what shaped our first quarter performance. We're really seeing some significant ongoing changes across the broader CPaaS industry landscape. There's been a structural shift in certain parts of the market, particularly around how enterprises evaluate messaging channels, pricing models and delivery quality. Against this backdrop, our performance reflects both the impact of these changing dynamics and some deliberate choices we've made to prioritize quality of business over volume. Now we are operating in what I would call a dynamic and rapidly evolving landscape, one that presents challenges but also opens up new opportunities for businesses like ours. The ongoing softness in A2P SMS segment, combined with shifting customer preferences has created a unique business environment. As part of our margin-focused approach, we have actually consciously stepped back from certain low percentage gross profit margin opportunities. In the A2P SMS business, these opportunities were not essentially aligning with our long-term view of profitable growth. This recalibration, along with regional factors in a few markets, contributed to a decline in our top line this quarter. But here's what I'm really pleased to report. Despite these revenue headwinds, our gross profit margin performance has actually improved. This really underscores our commitment to sustainable quality-led growth and maintaining a strong focus on our profitability. Now while we witnessed certain challenges around the A2P SMS business, we have leveraged our omnichannel capabilities to unlock business opportunities by supporting enterprises requirements across other digital communication channels, which include WhatsApp Business messaging, RCS, e-mail and voice. We have onboarded several large marquee customers through our omnichannel platform over the past quarter and are actively expanding our pipeline for these solutions. Let me talk about our partnership model for a moment. We are actively engaging with global system integrators to accelerate our go-to-market approach. We are deeply integrating our omnichannel platform with such global system integrators to reduce the time to market for these solutions. For instance, we recently completed the integration of our RCS platform with one of the largest players across the globe. On the product innovation front, we continue to focus on enhancements to our existing platform. We have -- for instance, we've integrated WhatsApp voice capabilities into our platform, which enables us to cater to an expanded set of use cases for our enterprise customers. And then there's our firewall solutions. We recently onboarded one of the largest mobile network operators in Latin America, and we will be deploying our AI-powered firewall and spam protection solutions across various countries where this operator has presence. We have also witnessed green shoots of cross-sell opportunities where the Proximus Global Group companies have started creating sales pipeline for Route Mobile omnichannel communication solutions. And this is currently more towards the APAC market, certain regions within the APAC market. We are also leveraging the extensive reach of BICS, which is a part of the Proximus Global Group, to strengthen our relationship with telecom operators across the globe. We are approaching several global operators to expand the sales footprint of our firewall solutions and map solutions. Finally, let me touch upon something that's really exciting for us. We are shaping our approach to the telecom API opportunity. By participating actively in the broader API ecosystem, we are looking to create new revenue streams for digital service delivery. This will also help future-proof our business for opportunities ahead. Now let me walk you through some key numbers and really tell the story of our performance last quarter. During the quarter, we processed 39.3 billion billable transactions, which is actually similar to the volumes we processed in the first quarter last year and marginally higher than what we saw last quarter. The average realization per transaction was INR 0.27 and this was largely influenced by a shift in our traffic composition, particularly a higher share of domestic messaging in India. India continues to be the largest market by termination and contributes 46% of our total overall revenue. We have maintained a stable trajectory across our next-generation product portfolio, and we are continuing to support enterprise use cases across these channels. We have witnessed growth of 11.4% year-on-year in this segment. We have onboarded several marquee enterprises with evolved customer engagement use cases that we support through the IP-based messaging solutions. On the strategic side, we continue to deepen our analytics-based firewall solutions integrated with telecom operators globally. On the people front, we added 26 new employees during the quarter and saw 63 exits. Operationally, we maintained continuity and execution strength across our delivery teams even as we continued internal efforts to improve processes, automate workflows and strengthen alignment across functions. We are actively evaluating deployment of AI solutions to automate several processes and enhance efficiency. Overall, while Q1 reflects the combined effect of industry shifts and our internal choices, the core of our business remains strong with the right capabilities, partnerships and relationships in place. We remain committed to disciplined execution and strategic focus as we move forward, while our primary focus is on reviving top line growth and hence, drive higher gross profits. With that, I will now hand it over to Raj to take you through the financials in more detail. Over to you, Raj.

Thank you, Vinay, and good evening, everybody. I'll summarize our financial and operating performance during the quarter ending June '25 before opening the call to Q&A. While our year-on-year performance was impacted by industry dynamics, our sequential quarterly results are encouraging as we delivered good gross margin expansion. Our Q1 revenue from operations was INR 10,508 million, which is a reduction of 4.8% year-on-year. This is largely due to the structural SMS market volume impacts in parts of our business. This is partially offset by continued growth in routing synergies and non-SMS products. Gross profit in Q1 is INR 2,251 million, which is in line with the previous quarter. Gross profit margin is 21.4%, which is sequentially higher than the 19.3% delivered in the previous quarter, but marginally down 0.3% year-on-year. The upward trend on margins reflects our focus on customer mix and new higher-margin customers. Operating costs year-on-year after adjusting for FX impact and noncore items is constrained to only 4% growth. Salary increments and one-off trade receivable write-offs are offset by nonrecurrence of prior year incentives. Adjusted EBITDA for Q1 decreased by 16.3% year-on-year to 1,154 million and 3.9% versus the previous quarter. The year-on-year decline is primarily due to the revenue impacts described earlier. This all contributes to an adjusted EBITDA margin of 11%, which again is sequentially higher than the 10.2% seen in the previous quarter. Profit after adjusting for exceptional items and FX was INR 835 million, which is down 10.3% year-on-year, mainly due to the flow-through of the impacts that are impacting reported EBITDA. With that, I will now hand over to the Q&A session.

[Operator Instructions] The first question comes from the line of Jyoti Singh from Arihant Capital Markets Limited.

Sir, just wanted to ask few questions that what are the reasons for the higher other expenses and the increase in the tax rate? And about Proximus Energy, like you mentioned during the management commentary that it is playing out well. So just wanted deep down on that side. And another when we can expect good growth and better margin expansion in the future? And also, if you can provide some color on the messaging volume side, which is continuous decline till earlier quarter. And then I will ask more questions.

Yes. So other expenses was mainly driven by some large foreign exchange losses on remeasurements. So again, noncash items, primarily from our U.K. entity. And from a tax perspective, yes, the slightly higher tax rate is a function of that kind of different profit geographies and some of the -- some good profit generated in some of the domestic markets, which impacts the effective tax rate.

Sure. So Jyoti, touching on the question regarding synergies. So as we mentioned in the opening comments, we are seeing some initial traction around synergies. On the sales synergies, we've always had the cost as we refer to as the cost of goods sold synergies, which we have realized within the group. So that has been active for over a year now. But on the sales synergies, we are recently seeing traction, especially in the Asian market. In certain countries within the market, we are seeing one of the group companies within the Proximus Global Ecosystem, which is able to create a reasonable pipeline for the omnichannel solutions, which Route Mobile offers. So in terms of monetization, we may see some of these opportunities starting to contribute in terms of revenue. But these are interesting green shoots where we are seeing success of what we had initially planned as part of the acquisition. Besides that, on the other front, on the telecom operator side, we have certain areas where we are collaborating with BICS, which is again part of the Proximus Global Group. And we are leveraging -- so BICS is one of the largest voice operators globally, and they have very deep relationships with telecom operators across the globe. So the objective there is for our firewall solutions, we are leveraging the reach that BICS has and it is supporting our sales team in creating opportunities for the firewall solutions that 365squared part of Route Mobile offers. Further, what we are also doing is there are some innovative solutions, which are being developed and offered to operators, for example, the map system, which is supporting RCS messaging. So once again, we are leveraging BICS reach to -- reach out to operators and deploy these kind of solutions for them. So these are some of the areas where we are working closely within the group to unlock opportunities. And hopefully, we should see revenue momentum coming out of these opportunities in the near term. I think the next question you had was around growth and margin expansion. So unfortunately, in terms of revenue growth -- in terms of revenue, we were -- we witnessed a little bit of decline in the last quarter, which was primarily due to certain customer situations which we experienced. However, we were able to sustain or rather improve the gross profit margin that we were making on the business. This was essentially because some of the business that we lost was not really the highest gross profit margin business for us. So in that sense, the mix changed within the business, and we experienced direct -- sorry, gross profit margin expansion. You had a question on volume decline. Can you please repeat that? I don't think I got that very clearly.

So on the Massaging volume, which was earlier quarter, it was declining. So what's the situation now?

So on the volumes, I think we are flat. We are at slightly higher level than last quarter, and we are at the level where we were last year. So I think in terms of volume, we are not seeing a hit. The issue we are experiencing is that some of the international volumes has been impacted, which has been replaced by domestic volumes. So the pricing -- average pricing has moved, which has resulted in the revenue decline. So we don't really have a significant issue on the volume side. The challenge rather is in terms of the realization and the revenue.

Okay. And one last question, sir, like you mentioned in the PPT that this time 26 new employees has joined compared to 63 employees left. So just want your commentary on that side, why so much -- a higher number of employees leaving comparatively joining. So is there the synergy, which is not playing out very well with the Proximus? And what is the issue exactly?

No, rather, this is acquisitions that Route Mobile had affected over the past several years. So we have been rationalizing some of the teams across the companies that we have acquired, and we have identified roles or responsibilities, which can be centralized within India or any other region where we have operational presence. So for example, finance and accounting can be supported from one region, and we have done some rationalization on that front. Plus there were certain businesses, which did not deliver the level of performance that was expected. And so basically but what we would like to assert is the team which we have today, as we also mentioned in the commentary, is able to support all the business processes and is driving the business at the scale and level that we are expecting it to drive. So we are not experiencing any challenges in terms of business continuity or operations. It's more of rationalization or natural attrition that we are facing.

The next question comes from the line of Nikhil Choudhary from Nuvama.

My first question is on revenue decline. In your presentation, you have mentioned that you lost one large digital native enterprises, which started directly sourcing from MNO. So Rajdip, we haven't seen clients directly partnering with MNO in the past, especially the large client. Is it a new trend which is starting? And can you quantify the impact in this quarter?

Nikhil, I think, see -- it's a customer, which you are talking about has it now new trend. They would love to -- there are a few customers like they love to work with the operator, not everyone, one of them. And I think the reason they wanted to move to operator directly because they have a new ecosystem within the company, which believes that having direct partnership with operators, where they are not just talking about SMS as one option with operators, they're talking about data. They're talking about other what we call services of operator to be used as a bundled deal with them. So I think -- so SMS is a part of the entire bundled deal when they directly go to the operator. So I think they want to just get more leverage on their relationship with the operators so that they can buy and sell more product offering with those operators. So that's a new trend. But it's not with almost all the customers, it's 1 of 2 customers only.

Sure, Rajdip. I mean, let's say, if one large customer can do it, what stops other customers from following the same channel? I mean it will impact our business...

No, not at all. I think we need to also understand, Nikhil, when I -- I think I have already mentioned this in the past, when there's a large customer who's using our platform for Route Mobile, they're not using for one destination, right? And they use for 20, 30 destinations for various reasons. And plus, they don't want to go and do a tie-up with all the operators globally to get into those legal framework, understand the legal regulatory issues over there. So I think most of the customers, they prefer to work with the aggregator and that is a trend. And I think this one customer who has definitely changed their mindset because of their multiple services, which they are using from the operator right now. But there's no trend from any other such customers.

Got it. And Rajdip, we have seen similar things happening with our peers. What we understood is there is some level of compensation and that's what we get, right, when there is a transfer of such large customer to telecom operator. Did we get a certain amount for this transaction, any benefit? Or is -- I mean...

Yes. Yes. No, there is a benefit because our firewall -- suppose our firewall is there with an operator and that particular customer moved to, say, operator directly. Indirectly, we also make margin because of our firewall plays within that operator and there is a revenue share understanding we already have with the operator. So we will definitely get a little higher DM, direct margin with that customer indirectly.

Got it. And Rajdip, can you quantify the impact both on revenue as well as margin from this customer's change in structure of contract?

Vinay, do you want to quantify that?

Yes. Sorry, Nikhil, so we don't want to call out specific customer level information. So that will be difficult to share publicly because it becomes a little competitive intelligence. So we want to refrain from sharing customer-specific details.

Got it. The last one is on new product revenue. New product growth had been simply coming down. It reached low double digit now, one of the lowest since COVID. So I mean, what's happening? It actually declined Q-on-Q this quarter. So what's the pipeline and what's the outlook on that -- in that particular segment?

So Nikhil, that's a fair question. Now the thing to understand there is -- WhatsApp is a significant component of the new product revenue segment. And WhatsApp, a lot of that business we do within India. Now WhatsApp has revised their pricing for the market, which also results in us revising the selling price to remain competitive. So on the volume front, we have definitely seen growth. But on the pricing front, there's been dilution of almost 12% to 13% on the pricing. So that is where despite volume growth, you will not see commensurate revenue growth. But once the pricing stabilizes, we'll again see higher percentage revenue growth as well on that segment of the business.

Yes. I understand, Vinay but I think the pricing revised -- revision happened about 2, 3 quarters back, if I'm not wrong. So what justified decline on Q-on-Q basis? Why it is not picking up when the volume is improving?

So there's a little bit of timing effect as to when we need to pass on the changes to the customers. So we have been kind of managing with the pricing and gradually passing on the benefit to the clients. And that is where to stay competitive and retain the business, we had to take that hit in this quarter.

Sure. Last one, Rajdip, just on yearly guidance. I mean we started with a relatively weak note. Can you give us some color about the growth in -- as well as margin in FY '26?

So Nikhil, I think we are not sharing any guidance as you've seen even last quarter. But I think one thing I can assure you about me coming back as the CEO of Route Mobile, and I think there are 3 areas, which I really want to focus now is one is growth, cost optimization and the synergies. So I think we definitely have these 3 stories, which I'm leading now myself, and I want to make sure there is definitely a synergy between Proximus Global and Route Mobile to create more value at Route Mobile. Cost synergies, definitely, yes, because we are a platform play company, and we really need to understand how many people plus the AI implementation within our ecosystem needs to be done. And growth is something which I'm working on the special focus on the new logos and new customer, especially on telco product and RCS. So I think these 3 things I can assure to you all. But in terms of guidance, probably I might not give the guidance.

Got it, Rajdip. Congratulations, Rajdip, and best of luck for your new journey at Route.

Thanks.

The next question comes from the line of Nihar Mehta from Bay Capital.

I just wanted one question on the slide on customer cohort, right? The TOFU, the top of the funnel of large deal size, $15 million and $10 million, there has been a significant decline from 8 customers to 5 and from 9 to 7. So is there a specific churn that has happened there? Or what are the causes of such a decline?

Sure. So one of the largest customers is, as we mentioned, one of the digital native customers, which we had where they are going direct to the operator. And unfortunately, we lost that revenue. It's become a significantly smaller customer now. Another one was one of the large financial services client that we had in India, where we had repricing. So this is typically done through a bid process. And in terms of the competitive landscape, the pricing was revised. And accordingly, our revenues were impacted because of the revised pricing. These are 2 large ones where we had -- and other than this, there were certain aggregators where we had a revenue decline. So Mr Messaging, which is one of our portfolio companies, caters largely to aggregators. And some of those aggregators are contributing significant revenue and their revenues got impacted with their end customers probably transmitting lower volumes to those aggregators. So these were primarily the reasons. The one, which is difficult to recover is the large digital native, which has gone direct. But on the others, we have an -- I mean it's a difficult market but we can create opportunities where we can have a plan to create a recovery plan around that lost revenue and gross profit margin.

The next question comes from the line of Pritesh from Lucky Investments.

I didn't understand one comment of yours about the GP improvement with giving away certain business, which were low margin. When you see your EBITDA on a Y-o-Y basis, GP number, the GP has declined more than the volume decline. So I was wondering how should I understand this [Technical Difficulty]

Are you referring to Message volume or the revenue as volume, sorry?

So you guys have given a billable volume number, which is...

Yes. So billable...

[indiscernible] Correct?

Yes, sorry, go ahead.

No, you go ahead.

Yes. So basically, the way to look at it is the billable volume does not directly translate into revenue or GP because the volume in every country comes at a different selling price and the cost price in every region and country will be different. So the mix of the volume, which country is contributing, how much volume will drive the revenue and how much margin or how much markup we are able to do in that specific country on that volume will define the GP. So directly linking the volume growth to GP...

[indiscernible] significant change in the volume this year quarter-on-quarter, quarter 1 this year and quarter 1 last year.

Sir, your voice is not very clear. Can you just make it loud and clear, please?

I said for the answer that you have posted -- you can hear me now?

Yes. If you can talk a little slow -- if you can talk a little slower, it will be good for us. Okay?

Yes, I think this must be better.

Pritesh, please go ahead with you question and unmute yourself in case if you're on mute.

So I'm just -- so in this interpretation of yours, which means there has to be [Technical Difficulty]

Sorry to interrupt, Pritesh, you're breaking up again. Please relocate yourself to a place where you get better cellular network and use your handset mode in case if you are using the speaker mode.

I'm using handset mode only.

Okay. Please go ahead with your question.

Then in the -- the answer that you posted, then there has to be a significant shift in the volume mix between quarter 1 and quarter 2, country volume mix. Is that the case?

So within country -- it's a little bit more complicated, Pritesh, because within the country also, there are 2 price points. So most of -- some of the countries like India, we have a different price point for international, different for domestic...

See why I'm highlighting, there's a plus 5% Y-o-Y volume growth but there's a minus 10% GP decline in absolute terms. So I'm posting the question from that angle.

You're saying Y-o-Y, right?

Yes, Y-o-Y.

So Y-o-Y, one big impact is the digital native client, which was an international client, plus we had -- plus we also had a contract, which we signed with Vodafone Idea in India, where we had a discounted pricing, which was not available in Q1. So we went live only in July or around August, and that is where we got the benefit in FY '25, which was not there in the previous year. So last -- if you compare Y-on-Y, we did not have the Jio -- sorry, the Vodafone Idea benefit in that quarter. So that again contributed to the direct margin expansion.

[Operator Instructions] The next question comes from the line of Siddarth from Vittae Money.

So my thing would be, as Suresh sir highlighted on multiple previous con calls that he have been a part of. Is that -- the global CPaaS industry is going through a downturn. And when the industry was doing well, you are the one who is outperforming. And since the broader industry is not doing that well, you've been not able to be that competitive. So I just want to understand how the industry would play around going forward and how the trajectory would be for Route Mobile? And a potential rebound or could you just give us some...

Yes, I think it's a good question, Siddarth. Let me just talk about Route Mobile and probably I will not talk about the competition and about the industry. As a Proximus Global, if you see the kind of combination we have between TeleSign, Route Mobile and BICS. And we definitely talk about new product line platform play as a company where we're talking about RCS as one solution along with the map server. We're talking about the omnichannel solution along with our firewall solution. I think probably we are now going -- reaching out to multiple customer operators where we are not looking at just enterprise as one segment for our growth. We're definitely looking at telecom operator also as a growth area for us.

Okay. And if that works for you fine sharing, can you just give us a percentage outlook of how it could be going forward?

As Vinay has already mentioned, there was a large firewall deal we won in Latin America, I think, and probably there are many more discussions we are having with multiple operators towards RCS and map servers. So these deals are going to be finalized in coming quarters, and you will see the impact of these in terms of our revenue and margin as well.

Okay. Okay. And just in my -- further follow-up of two questions. So the last quarter, you mentioned that the 365squared was rolled out and it is expected to do well since it has a lot of synergy from Proximus Global set of customers. Just want to understand how it is going? And how [indiscernible] could be going forward and the revenue contribution potentially? That would be my...

So this firewall deal which we have won is a combination of BICS and 365squared. So it's a relationship of BICS, which helped us to win this contract. And I think 365 is doing fantastically well with the great pipeline they have right now. And I think they're also closing some large accounts very soon.

Okay. Okay. And what is the percentage of revenue that potentially contributes to top line or so?

That -- do we have that number right now?

We are just doing that. So we have not disclosed in the past in public domain but just hold on...

No, no. I think we would still not -- prefer not to disclose. But as I mentioned, there are certain large contracts which we are going to -- we've already won and there is certain pipeline which we have will definitely contribute in overall growth of Route Mobile. So that's what I can share with you right now.

Okay. Okay. And I'll end my question with the last question that I have. So the recent management changes is something that I have a query on where I just want to understand how the person who has currently relieved -- how has Route's management performed on an overall under his governance? And how the recent changes in the corporate management could signal future of the Route Mobile...

Siddarth, I think I'm back as a CEO, and I think I know this ecosystem for the last 21 years. And Gautam has done a fantastic job in the last 7 years with Route Mobile in various roles. And I think whatever he has delivered as an individual capacity is fantastic for the group. And I think I'm very thankful to Gautam and what his role and responsibility, which he has delivered in the last 7 years with us. As far as the new management is concerned, I think the new management is very much capable, smart and they all have a simple approach of growth, and they believe that the company, which we -- as a Route Mobile has a huge potential in the current scenario where the markets -- there's a headwind. But in spite of these headwinds, we believe that the kind of product line which we have, we will definitely come -- emerge as a winner. But it may take some time because -- it may take some time. But definitely, we have a vision to achieve new heights.

The next question comes from the line of Dipesh Mehta from Emkay Global Financial Services.

A couple of questions. First about the ILD business. Can you provide some sense how ILD business is playing out? It remains weak but if you can give some more details around it on ILD business? Second question is about sequential, are we confident, let's say, sequential revenue growth returning in the business because now we are in Y-o-Y down, Q-o-Q down. So just to get sense about some of the factors headwind which you said. From sequential perspective, I think some of the factors are unlikely to have any incremental headwind, particularly with the large account where you say it is moving to direct to Telco, so unlike to have incremental impact. So if you can give some sense on sequential growth trajectory. Third question is about cash generation. If you can give some sense about operating cash flow or operating cash generated during this quarter.

Sure, Dipesh. So on ILD, I'll start off and then Rajdip, please add in. So ILD, as we discussed, Dipesh, there was one key customer where we were impacted. But other than that, we've not seen real challenges with the other large ILD customers that we have. We've onboarded a few new clients as well, where we are seeing revenue trickling in now. So -- but these are large clients who can contribute significant volumes moving forward. So although there has been an impact in the last quarter, we believe it's not like it's end of the story, but we will need to replace it with other customers who still are sending communication into the Indian market through traditional channels. And also, we are opening up the other channels as well for some of these clients. So although we've had impact on certain select customers, there is still potential, and we are tapping into new customers to cover up those gaps. Rajdip, you want to add to that?

No, no, I think it's well covered, Vinay.

Yes. On the operating cash flow, which is the easier one, so we -- on a normalized basis, we would have done around 120-odd percent of CFO to EBITDA in the last quarter. That is where we are. And in terms of the return of revenue growth, so we believe we've had significant impact in the current quarter sequentially. And as Rajdip already highlighted and we covered in some of the opening comments, we are working on a pipeline. We have several initiatives which are in progress. For example, the firewall initiatives, the map server and other initiatives around the telecom solutions. The benefit we get from the telecom solution is that there is also potential to generate on the back of it A2P SMS revenue because we can position to be a preferred partner or an exclusive partner when we deploy these solutions. So we have certain levers that we are pressing for revising revenue growth in whatever shape and form it comes, but we hopefully should not have further decline from where we are. We should see a revival there. In terms of -- but what we are fairly confident about or what we believe should hold up is the direct -- gross profit margin percentage that we have. We do not have any onetime or any items which should reverse or which should fall out in the future. So we believe this should hopefully be sustainable as we move forward. Does that answer your question?

Just on the revenue part, I think I require some more -- this year, we might have a more flattish performance considering where we are in Q1. But if one look, let's say, next 2-, 3-year perspective growth trajectory in the business, you can -- Rajdip can come in and give some sense, are we confident we are returning back to, let's say, mid-teen kind of growth profile in this business? Or considering some of the structural changes which are playing out, even next 3-year perspective, this seems to be more optimistic assumption?

Definitely, yes, Dipesh, I think there is definitely a plan. And I think I joined back as the CEO of Route Mobile. I think I do have some synergies and plans now to execute. You will definitely see some growth coming up in coming quarters that I can assure you. And there is a larger synergies we are working with Proximus Global as a group, being a partnership with Salesforce or larger companies like Infosys or Tech M, I think these companies are also going to contribute a big way in terms of our revenue growth. And I think we are working very closely with companies like these where we believe that we can be the partner for digital communication and we can serve their customers. I think these alignments are very much there. And I think we are now at the final stage of some of integration, which we are already doing with them. I think we are definitely looking forward with growth. And I think some of the customers, some of the pipeline and some of the synergies which we have are definitely going to drive our growth story.

Understand. And last is about the new product. Now partly you answered in one of the earlier questions. But the way I look, let's say, what the pricing correction and volume, typically, when some of these channels which are relatively new, even volume pricing in case changes, underlying growth should not have any material challenge, right? It might be, let's say, slower than earlier. So just want to get sense RCS, let's say, which we indicated even 2 years say, whether we are able to monetize it well across countries?

So we are indeed, Dipesh. I think that is exactly where we, as a company, when we talk about a platform agnostic company and any customer coming to me has option to choose channel which they want to communicate with, right? And if the customer is willing to use RCS to experience instead of SMS, I think we, as a platform, we already have the option for him. And at the same time, we have a WhatsApp and e-mail as other solutions also. There is some kind of a trend which is happening right now in the market where customers are trying to evaluate different channels and probably they are finding more outcomes with new channels where they say merge customer engagement through these channels. And I think we are a very early stage still on these new channels adoption. And probably, I think this awareness in the market about RCS and WhatsApp is growing fairly well. And that is exactly where we look at in coming quarters, how we -- entire ecosystem is going to drive the volume and the revenue growth.

[Operator Instructions] The next question comes from the line of Kaustav Bubna from Boundless Management Solutions.

Yes. So in the previous call, the management spoke about 2 plays in this business really, the messaging piece and the platform play. And they spoke about how the platform play is a future high-margin driver. So could you explain really in detail to a layman understanding this platform play exactly what it is? And how it will become a high-margin play, in detail, as much detail as you can.

Okay. I will try to explain this. So when I talk about firewall solution, Kaustav, firewall solution we deploy with operator and where we charge based on managed services along with per transaction, where operator pay us per transaction basis plus managed services charges, which is complete DM to us, which is a complete SaaS model. At the same time, when we talk about RCS platform, that's again a managed services and plus a SaaS model for us. So when we talk about CPaaS in a box kind of solution where a single operator looking out to enable their customers to offer WhatsApp for business or other channels, we can deploy the entire solution within on-prem within the operator so that operator can enable their customer for you to start using these channels under their white label platform. So these are certain solutions, which is completely 100% margin kind of a game where we believe that more deployment of these solutions will definitely going to help Route Mobile to increase our margins.

Okay. Okay. So you're talking like the platform play is mainly a firewall solutions, RCS, what CPaaS and above, all of these things.

Yes, yes.

And if you -- and I mean, just a general question. I know you all are, for some reason, refraining from talking about what's happening in the CPaaS industry because I guess we've already spoken about it in the past, and there's no point wasting time on that. Just wanted to understand for this core business, the business -- the CPaaS SMS business, which saw, I guess it was also mentioned in earlier call, unrealistic realizations in the past due to whatever issues that were going on in the industry. How -- now with that leveling out and coming back to realistic levels, I mean, your new business would have to grow meaningfully for you to show incremental growth. So I understand you're not giving numbers, but in this new business, these firewall deals, what else is there? I mean could you give some sort of more clarity in terms of how this shift in business will actually end up leading to overall growth in the business?

So Kaustav, you need to understand one thing. The digital landscape itself, digital payment landscape or digital platform landscape. I think digital adoption is growing multifold every single country right now, okay? But there are multiple channels being used to serve the digital requirement for the customer, right, whether it's WhatsApp, RCS or SMS. So there is no more SMS as just one single channel anymore. There is WhatsApp and RCS because people prefer conversational based channel more than SMS. But SMS still have a lot of relevance where people still believe that SMS can be used for their use cases. But there are many use cases which are getting emerged both on WhatsApp and RCS. So that is the entire growth story. And I still believe that we are very early stage on RCS as well as on WhatsApp, okay? And these channels will definitely see every single customer require one mode of channel for better communication with their end users. So that is where I think the adoption ratios are growing, and that is where we believe that this more use of these channels will help Route Mobile to grow. In terms of firewall solution, in terms of our other solution, I think as I already mentioned the synergies with BICS, where they are one of the second largest in terms of roaming business in the global market where they have relationships with almost 400 operators globally. I think we want to leverage those partnerships and connection with them so that we can reach out to all these operators directly as one of the partner with them so that we can sell our product directly to this customer. And I think one of the firewall, which we won recently is because of this synergy. And that is exactly where we are trying to build overall GTM for Route Mobile right now.

Okay. And this digital identity piece, which is for fraud, digital fraud, et cetera, which -- basically TeleSign has got the big portfolio there, correct?

Yes, we do -- as I think as Vinay has already mentioned about the telecom API play, right? And that's a very big initiative we have in-house now at Route Mobile as well as Proximus Global. I think the Telco API is one initiative for digital fraud. I think we are already working with TeleSign to get those API in Indian market. We really need to understand the current market scenario, how the customers are looking out this API to be used. We are definitely in touch with various customers. We are doing some pilot testing. There are some sandbox installation has already been done in India with a few customers. Those testings are getting done, but it's a longer process because there are lots of security aspects we have to clear and to close the customer sometimes takes 3 to 6 months or maybe 9 months. So there are certain things which we are already working on right now. We really don't want to call it out the revenue and the potential. But yes, as a requirement is concerned, as a company, we are very much focused on digital identity product, which TeleSign has a suite.

The next question comes from the line of Jayshree Bajaj from Trinetra Asset Managers.

My question is with growing geo diversification, especially in America and Europe, how are you managing the regulatory and compliance and localization data sensitive segments like BFSI and all? And is this adding to the cost structure materially?

Jayshree, Route Mobile is GDPR compliant company, and we are a server installation to every single aspect. As far as the customers are concerned, I think we are 100% GDPR-compliant company from last so many years. So I don't see there's any challenge. And I don't think there's a cost impact or involved anything on that.

So to add to what Rajdip is saying, Jayshree, we have been operating in various geographies with customers across different industry verticals. So we cater to banks in Middle East, banks in Latin America, banks in India, which are the most rigorous in terms of compliance requirements. And the fact that we are able to serve these customers over the year, we are able to comply with the regulatory requirements in these different countries where we are operating. So I think we understand that part of the business, and we have been able to operate in complete compliance with all these multi-geography jurisdictions.

Okay. And my second question is the revenue generated from the retail and travel and hospitality is approximate to 2%. So are there any specific efforts to diversify the industry mix? Or we are just focusing on BFSI, digital native and CPaaS partner ecosystem?

So our product is fairly industry agnostic. The split that you see there is more in terms of which industries are really using that communication more aggressively or the ones who are using our platform more aggressively. So we do have a few solutions which are verticalized. So for example, banking, we have developed certain plug-ins and layers, which can be used by banks. But largely, it's not like our solution or platform cannot be used by a particular industry or would require a lot of customization or specialization for a particular industry. But rightly pointed out, internally also, we are looking at designing these vertical components, which then make the product more compelling for those industry verticals. But other than that, within the retail space as well, we have some of the largest global brands who are using our platform. And even within travel and hospitality, we have some really reputed brands who are using the platform. So it's more about where we have had success, but it does not really hold us out of any vertical in terms of deploying the platform.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Raj Gill, the Group Chief Financial Officer, for the closing remarks.

That's great. Thank you, operator. So firstly, thank you for all your questions. So we appreciate your continued support, and we look forward to engaging with you again. Have a good weekend, everybody, and bye for now.

Thank you, gentlemen. Ladies and gentlemen, on behalf of Route Mobile Limited and Concept Investor Relations, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.