Tanla Platforms Limited (TANLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '22 Earnings Conference Call of Tanla Platforms Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Ritu Mehta from Tanla Platforms Limited. Thank you, and over to you, Ms. Mehta.

Hello, everyone. I, Ritu Mehta, lead Investor Relations for Tanla Platforms. I hope you and your family members are safe and healthy. On behalf of everyone at Tanla, I would like to welcome you to our first earnings call for Q1. Joining us today will be our Chairman & CEO, Mr. Uday Kumar Reddy; Deepak Goyal, our Chief Executive Officer (sic) [ Executive Director ] and Chief Business Officer; and Mr. Aravind Viswanathan, our CFO. Uday Reddy, our Chairman and CEO will share perspectives on business imperatives and strategic progress made by Tanla. After the opening remarks, we'll be happy to engage with participants and address their questions. Before I hand it over to Mr. Uday, let me turn your attention to the fact, that this discussion may feature statements that are forward-looking in nature. All statements other than statements of financials facts could be deemed forward-looking in nature. Such statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. A detailed disclosure in this regard is mentioned in the results, the presentation which is uploaded on our website. The audio-video recording and -- the audio recording and the transcript will be available soon. Over to now -- over to Mr. Uday, our Chairman and CEO.

Yes. Thank you, Ritu. Good evening, everyone, and a very warm welcome to all of you to our Q1 earnings call. Hope you and your families are doing safe and had a chance to get vaccinated. Tanla is grateful to participate in the vaccination drive and partner with CoWIN through NIC to enable communications to millions of Indian citizens. We are absolutely privileged. We had a stellar start into the year across all metrics. We have consistently accelerated our revenue growth with our year-on-year growth rates improving every quarter for the past 5 quarters, and we have delivered 38% year-on-year growth in revenue. Our gross margin improved further during the quarter as the contribution of platform business went up from 31% versus 17% in the Q1 of last year. Our operating profit and the net profit was at all-time high and reflects the financial discipline we have consistently demonstrated. We have delivered our second consecutive quarter of INR 100-plus crore of net profit. We have delivered operating cash flow of 102% of EBITDA. Our financial performance demonstrates the robustness of our business model across all dimensions: revenue, profitability and cash flows. Let me give you my perspective on how I look at financial metrics. SaaS companies started to operate at Rule of 40. What is Rule of 40? The revenue growth rate plus -- the revenue growth rate plus EBITDA margin percentage should be equal or above 40. But Tanla operated at the Rule of 60 in Q1 on organic basis, which is an aspirational target for most of the SaaS companies globally. Tanla will continue to surpass the industry standard and operate at levels significantly higher than Rule of 40 in the coming quarters. So how do you maintain this momentum? We have a 3-fold strategy going forward; the Wisely platform, the global expansions and partnerships. Let me lay down my thoughts on each of these. The first is our platforms. As I said many times in the past, we are a platform company. We have an outstanding track record of commercializing new innovations. We launched 2 gigantic platforms back-to-back within a year which saw a massive adoption. Wisely, an enterprise-based platform is built for the entire CPaaS ecosystem for the global customers. We are seeing massive traction with our Indian customers, and we continue to invest on these platforms. Axis Bank, one of our marquee customers, have benefited on data privacy, on data security and single source of truth with the implementation of Wisely platform. The second big focus area for growth is partnerships. We believe this is a huge opportunity through specific partnerships and I'm personally driving this. We have already announced the partnership with Microsoft on Wisely, but we see multiple opportunities to partner with entire CPaaS ecosystem. The third focus area is our global expansion. We see a massive opportunity outside India for CPaaS, and we will enter into key markets very soon. We are excited by the opportunity in front of us. Our teams are fired up to be the fastest-growing CPaaS company at this scale in the world. We have been disciplined about returning the cash to our shareholders through buybacks and dividends. And once again, I'm happy to announce the Board has approved open-market buyback of INR 65 crores, which is 10% of Tanla's stand-alone results at a price not exceeding INR 1,260 per share. With this, I'm opening the floor for Q&A.

[Operator Instructions]. The first question is from the line of Kushagra Bhattar from Old Bridge Capital.

A couple of questions, Uday. First is on capital allocation. If you can provide some insights on capital allocation, like how much you will -- you are thinking of investing in bolt-on acquisitions, and how much cash you guys want to keep on books? And also with this buyback announcement, how much cash you would be returning for the remaining year -- for the remaining quarters? And within M&A, what kind of targets you have in mind as you would be directly competing with the global guys who are acquiring companies quite aggressively. So any color on this will be helpful.

Good question. As I mentioned right now, we have allocated around INR 65 crores towards the buyback for this year. That's number one. That of course, we have to pay 20% of tax on the CPaaS, of course. That's what we are going to allocate to the -- towards the buyback. That's number one. Number two is like now as I told -- as I mentioned earlier, we are pretty clear on the acquisition cycle. We are not here to acquire any company for numbers, it's very clear. We may look at bolt-on acquisitions. So as and when we find an interesting bolt-on acquisition, which is going to drive the value addition for our single platform strategy, which is going to be -- which is Wisely, we are pretty open. But we have not identified any acquisition as yet. But as and when we find any interesting bolt-on acquisitions, we won't mind looking at this one. And the third one is, we continue to invest on the platform, platform business, which we are very, very clear. On average, we are spending around INR 10 crores to INR 12 crores per quarter on Wisely, and that will continue. And the third important thing is we want to strength -- we want to allocate certain amount of money towards our global expansion. We are looking at interesting markets. The first market definitely is going to be Dubai, which we want to launch very, very soon. So this is how we're going to allocate our -- capital allocation.

Sure, sure, this was quite explanatory. Just a follow-up on that, in terms of your global expansion, what kind of hiring you are contemplating right now in terms of how much people you're going to hire and what are -- what would be the types of hiring. I know you have mentioned that you won't be investing too much, but just a follow-up on this, then I'll ask my last 2 questions.

Sure. So definitely, our strategy is very simple. The Wisely is owned by Tanla Digital, which is a India-based company. And so this platform owns the IP and also, this company is going to offer even the operations for our global customers. So only when we have offices outside India, we will have only sales and marketing office. We will not have anybody offering anything other than our sales and marketing. We're pretty clear about that. So yes, but the rest of the operations are going to be from India.

Okay. Got it. And -- okay. And second question is on your stand-alone business. So correct me if I'm wrong, is your stand-alone business largely presenting the platform business. And if yes. And the related question is, I almost see a 10% quarter-on-quarter decline in your stand-alone, but margins have sort of improved. So when we compare quarter-on-quarter, it appears that the subsidiaries, Karix and all, would have faced marginal pressure on the margins. So any color on stand-alone numbers? And how should we look at it going ahead will be helpful?

Yes. You rightly said, the stand-alone, the parent company always operates in the platforms business, and we'll continue to operate a platforms business, and the revenue and the gross margin are driven mainly because of the -- we have seen a bit of growth in the platform business, that's the number 1. Yes?

So if I can also add to that, if you really look at our margin performance that -- we've seen an improvement in gross margin, largely driven by increased contribution of platform business. And that platform business, historically resides in our stand-alone. And therefore, you would see that improvement happen with respect to this. But in many ways, these are integrated businesses. So we look at consol from an overall profitability perspective. But there is a certain amount of seasonality in Q1 with respect to the Karix business. But platform business has definitely done well, and that has driven profitability. And that is kind of reflecting at an entity level depending on where the business is housed.

Okay. So was this quarter-on-quarter 10% decline was also seasonal for the platform business?

There's an element of seasonality for sure in our business. That's why we keep looking at Y-o-Y as a relevant trend, right, in this business. So you can get into more details, but I will definitely look at Y-o-Y trends of this business more than Q-on-Q.

Understood. Understood. And last question from my side. So it's on new customer addition. I would like to know how revenues of a new customer grows at Tanla. For example, if I see your presentation, you added almost 73 new customers but the revenue was only INR 28 million. But when I look at the same number for FY '21, 259 customers -- new customers added almost INR 952 million, so is it that customers get added in 1Q and then start contributing handsomely from 2Q and 3Q onwards? Just how the trajectory of the customer moves once start -- once he is onboarded on Tanla would be helpful.

So let me kind of give you a perspective on that from a quantitative perspective, and let me ask Deepak to define in terms of how we really land and expand with customers, right? From a numbers perspective, if you look at it, right, it was not very different last quarter, last year also in Q1, right? So we actually have grown the revenues from our new customers in Q1 of this year compared to Q1 of last year. But typically, if I try to do a simple math, Kushagra, it's like I think about INR 3 crores or so is the revenue that we got from new business in Q1, which typically is like for half-a-quarter. So if you look at it for a full year because we start the slate clean in any financial year. Effectively with no growth, the client base of Q1 would give something like INR 24 crores of revenue for the year, right? And you kind of build on that in Q2 and Q3 and Q4. So you have the highest contribution of revenues. And it's very common, whenever we open a clean slate, as far as new customer definition is concerned in a financial year, it ends up being about 0.5% of revenues in the first quarter, but ends up being reasonably larger by the time we end the year. But I will let Deepak talk to you in terms of the journey, in terms of how we really scale up once we enter a customer.

Hi, this is Deepak here. Thanks Aravind. So I will just tell you how we acquire the customers and how they grow. So when we say we have acquired a certain number of customers in Q1 and the revenues are about INR 3 crores. So it could be that some of the customers you might have acquired in beginning of April or maybe mid of the quarter or maybe end of the quarter. And then it takes some time, maybe 2 to 3 weeks to onboard that customer and then the testing starts. And then -- as you know, our business is purely transaction-based. So we need to onboard the customer in the particular quarter. And then we need to work with our customer and ramp up their volumes enough. That takes time. So we have acquired customers in Q1, and we would see their full ramp-up coming in maybe in Q2, by the end of Q2 or maybe in Q3. So that's how the business ramps up. So yes, we have done maybe just INR 3 crores in Q1, but we would see in the coming quarters, business is getting increased with these kind of customers.

I would request Mr. Bhattar to rejoin the queue for follow-up questions. [Operator Instructions]. The next question is from the line of Milind Karmarkar from Dalal & Broacha.

I had 2 questions. One was that cost of services continues to come down as a percentage of revenue. So just wanted to understand how much operating leverage, post the gross margins, can still be extracted over a longer period of time? So that was my first question. And the second question was about global expansion. So one would, obviously -- when can we see the traction? And second was that what is our experience at Etisalat in UAE?

Yes. Milind, thanks for your question. A couple of things. One is on the global expansion, both of Dubai and Etisalat, we'll see the traction for the next 9 months to come. So though we are -- we have been deploying our platform with the both mobile carrier in Middle East, Du and Etisalat. Since it is a blockchain platform, it has taken longer than what we expected, what the even telcos -- what -- telcos and the regulators are coordinating this deployment. It is behind its schedule. That's how market has worked even in India because blockchain is little complicated technology. It's taking a little longer than what we expected, number one. Number two, if you have to really comment on my global expansion and the expected revenues from this year, this year is going to be -- we will be busy deploying our platform for a global market. And we may see little revenue coming from the global market. But our first priority is to deploy the platforms with the mobile carrier as well as deploy these -- the connectivity with enterprises. It takes a bit of time. And probably next year is going to be big for our global numbers. But this year, if we have to say, we cannot expect much from the global.

You had a question on operating leverage. I can take that Milind. I think if you look at one of the metrics that we track is how much of our gross margin gets converted to EBITDA, right, at least from an overhead standpoint. And we've seen almost that move from something like 71% last year same quarter, to about 78% in the current quarter. So clearly, we are doing a lot of work on that. Having said that, it's obviously not going to be 100%. There are investments on the areas that Uday kind of laid out clearly. But so long as we continue to -- we stay focused on our growth, continue to scale up our platform business, I think there will be a certain amount of leverage. I don't think we have reached the full potential on it. But we are also going to be cautious in terms of leaving room for investments because that's going to be big from our perspective to scale the global opportunity in front of us. So we're not going to leave anything unturned from an investment standpoint. But obviously, we'll be very tight as far as our costs are concerned.

The next question is from the line of Anil Sarin from Centrum Wealth Management.

Milind has already asked something that I had to ask. But regarding global expansion, as you go out, maybe Dubai is first and maybe there will be other countries down the road, there, the volumes tend to be lower because the population is lower, et cetera. But the per message price tends to be higher. So what I wanted to know was if you take a few countries together, how much time is it going to take you to replicate at India -- what India currently represents as just a global part of it, basically, how do you replicate? How do you double your revenue by rolling out globally? And what time frame do you have in mind?

Thanks, Anil. Yes, I agree with you like you know the per transaction cost is very, very high if you compare to Indian prices. So when we deploy our platforms, we deploy our platforms in line with their local capacity, local needs. That's number one. But when we're going to go live with the Wisely platform, Wisely platform deployment takes a bit of time, right? So we have to deploy with the telcos as well as with the enterprises side, okay? It takes a bit of time. As I told you earlier, we've been busy deploying the platforms with both the mobile carriers as well as with the enterprise this year. And once we deploy this platform it's pretty easy to scale up. That's number one. Number two, once we see -- once we demonstrate the good virtues of this Wisely platform to our Indian customers and our Indian customers are going to be the mouthpiece for the global customers. So once the global enterprises see the benefits of this platform, it is pretty easy to scale. So once we see -- the deployment may take time. Two is, we should be able to demonstrate some good virtues of this platform. Once both are addressed, it is pretty easy to scale the business.

The next question is from the line of [ Deepak Chhugani ] from [ Ray Capital. ]

Just one question. Why has the buyback quantum been set as -- it seems a bit low given the buyback last year was almost 3x bigger than the current buyback offering.

Yes. So let me give you a view on that [ Deepak ]. I think we had an option of going for 10% on an open-market buyback. I think the advantages of that is that you have a faster execution time. And we just felt that the tender offer would take a lot of time to kind of conclude, right? So we felt this is more efficient means of returning cash to shareholders and we went ahead with that effort. So that is broadly our thinking in terms of the buyback quantum.

The next question is from the line of [ Anish ] Gupta from Prudent Investments.

These are just a few questions that I just wanted to ask. My first question is, is the company planning to expand its operation using the blockchain technology, except for the current platform they are in, that is CPaaS. Are you guys planning to use the blockchain technology otherwise as well in various domains? And my second question was can you give the overview of the revenues from Wisely and Trubloq on your overall revenues in this quarter?

Yes, [ Anish ] the first question is that we are not working on any other use case on the blockchain other than a CPaaS. In fact, we have a lot of opportunity within CPaaS, and we are busy building our global product on the Wisely platform. So to answer your question, right, absolutely not looking at any other use case on the blockchain. That's number one, right? Number two, if we have to give you the revenues for Wisely, they are not really meaningful for this quarter. Probably, we should be able to share the numbers from Q2 onwards.

Numbers on Trubloq would be fine.

Sorry?

The numbers on Trubloq in India, how much are they contributing to the overall revenue?

I'm afraid that we don't share the numbers by the platform. So we had a look at the consolidated numbers at the platforms' level or just enterprise level. So I mean, we don't share the numbers by platform.

The next question is from the line of Manish Poddar from Nippon India AIF.

I just had one question. So can you probably help me understand, let's say, the DLT revenues right now, whatever you're booking, is it largely from messaging? Or have you started booking revenues from voice also as of now?

Manish, the current DLT is completely driven by the Indian telecom regulator, TRAI. So this -- when the regulation came in 2018 June, and we went live in the 1st of September last year 2019-'20. This use case as we speak, is only for SMS, and within SMS, the content management is a bigger module. As we speak, that is going live. Probably, it takes a couple of more months to fully go live on content management. And my guess is once we finish all the use cases on the SMS, the regulators and the mobile carriers may look at other use cases such as voice. But right now, only SMS.

So as of now, if I get it right, it's not part of the regulation. And if regulation changes, then the voice overall rollout will happen?

Manish, it is part of regulation. Both voice and SMS are part of the regulation. But when it comes to implementation, the regulators have decided to go one by one. So we are just in the process of finalizing -- complete the SMS implementation. Once you complete that, they may ask us to roll out even voice.

So is there a timeline? So is there a time line for that, sorry?

No. The Tanla is not about who's going to decide. The regulator has to decide it, Indian telecom regulatory, TRAI has to decide. As of today, I have no visibility to the timeline.

The next question is from the line of [ Niral Gangar ] from Neev Investment and Management Advisors.

My question is that what I see in the top line from Q2 onwards, it is ranging between INR 600 crores to INR 650 crores. Generally, your Q1 revenues are lower, when do we expect to break out from the INR 600 crores to INR 650 crores range?

[ Niral ] like we said -- kind of covered in my last call also. As a company, we don't want to share. We don't want to give any forward-looking statements. But having said that it is the first time that Tanla came on call, and we did mention of about Rule of 40 and Rule of 60, okay? So most of the SaaS companies are looking at Rule of 40 and we have operated at Rule of 60 in Q1. So I would like to leave this discussion here.

I have another question, we are entirely into CPaaS industry, right? So what are the risks involved? And how do we plan to mitigate those risks because we are only in one business segment, considering the company is growing very fast, how do we plan or what risk do we foresee? And how do we mitigate those?

So [ Niral ], like any CPaaS company concentrate only in CPaaS in the sense like if you look at our competitors -- large competitors from Europe and the U.S. they do concentrate only in the core business. That's number one. Of course, the risk is we are operating only in one country. That's where we see a bit of risk there. And that's the reason like we have decided to expand into the global market through our one platform strategy, which is Wisely. So that's what the -- how we're going to de-risk ourselves from concentrating from -- on only one country.

My question was that NPCI said that they are launching voice calls. So will Tanla be able to cater to that kind of thing? Or it will be that if voice calls take over SMS and other channels, then there will be a problem to the company.

So CPaaS covers for more than probably 7 to 8 channels. It could be voice, it could be SMS, it could be e-mail, it could be push notification, it could be OTT players, it could be video. So there are channels. We are pretty agnostic with channels, and we work with each and every channel if possible. So including, in fact, Google has announced an app here, and we keep that in this new channel as part of our platform. So we are pretty agnostic to channels.

And just to add, we are one of the largest providers for the voice-based CPaaS solutions in the country today.

Yes. Thanks, Deepak. Absolutely. Absolutely. Absolutely. It will be -- in terms of capacities, we are the largest CPaaS player who is providing voice for more than one decade, both in terms of capacity, in terms of the customers that we serve in India, we are the largest.

[Operator Instructions] The next question is from the line of Dipesh Mehta from Emkay Global.

Two questions. First is, I think, a couple of the media article indicated the international SMS charge is high. So can you help us understand what would be the implication on our business from the -- so what kind of benefit we envisage? Second question is, I think, on the previous question about the DLT and implementation on voice call. By when do you expect it to be implemented? And what would be -- whether our platform is ready to handle voice calls also kinds of things, and where you can do filtering out kind of thing.

Okay. Dipesh, to answer your question on the DLT, our DLT platform is the first platform to launch. We launched our DLT platform in 2019 February in Barcelona. Our DLT platform can handle both SMS and voice. So we're pretty ready for the last few years. But telcos are using this platform only for SMS. And as and when they want to use for voice, we probably -- we are the first one to go live on voice also. So on that front, the platform has been ready with all capabilities [indiscernible]. But it is up to the Indian telecom regulator, TRAI, to mandate mobile carriers and the enterprises to use the voice. That's number one, right? In terms of ILD, the prices, the telcos -- all the telcos, each and every telcos in India have increased the ILD prices from first or second week of July, and they have doubled their prices. And when it comes to Tanla, we're absolutely -- we have no impact -- a negative impact -- we see a positive impact. So I don't see any problem there. Deepak do you want to add anything over there?

No, nothing, Uday. Uday, you have covered it.

So Aravind (sic) [ Uday ], you intend -- so you're suggesting there is no impact or it will be positive impact because I presume you should have a positive impact because of the price hike.

I said we will have positive -- this is Uday here, Dipesh. I said we will have a positive impact.

So can you provide some color what -- how much one should assume because of this change?

Dipesh as I told you, like I'm not here to give you any forward-looking statements, but all I'm saying is it will have a positive impact on both on top line and the margins from the quarter 2 onwards. Let's hope for that.

And is it possible to say ILD [indiscernible] for -- from a revenue perspective?

Sorry, come again.

ILD business is how big for us from a revenue perspective?

From revenue perspective, I'm afraid I need to share with you later, Dipesh. If it is okay with you.

The next question is from the line of Balaji Subramanian from IIFL.

I had a couple. So first one is how should one look at your gross margin going forward? I understand that increasing mix of platforms is indeed a tailwind. But has there been any increase in the competitive intensity especially in the past few quarters after Sinch and Twilio have entered the market? And my second question actually would be a couple of questions with a housekeeping in nature. So one is then any timeline by which you will become a full tax-paying company? And the last one is, why is the interest income or other income, just INR 4.3 crores in this quarter despite your cash balance being somewhere close to INR 720 crores.

So let me handle the 2 housekeeping questions first, and then we cover gross margin. From an interest income perspective, it's kind of given down -- the breakdown of our cash, Balaji. So if you look at it, a reasonable portion of our cash is -- a reasonable portion of our cash is overseas because of our business, right? It is not earning too much of interest. And we're very, very conservative in terms of our investment. So if you really look at it today, both of our investments are in fixed deposits with banks. And therefore, the interest rate yield is less. So you would kind of correlate back to the kind of FDs that we have, and that's kind of broken down as we have given in our income statement. From a tax perspective, we delivered about 19.3% ETR, right, in the quarter. I really can't tell you in terms of what is my outlook on ETR, but there is a geography mix between certain overseas subsidiaries vis-a-vis domestic and there are tax rates, which is -- vary based on that. But I don't expect any sudden big shifts as far as tax rates are concerned. From a gross margin perspective, I will let Deepak talk about the competition and the intensity of competition in many ways, right. But clearly, the lever here is with respect to platforms, right? And I think that is the big driver. But from a pricing and competitive environment, maybe I will let Deepak chip in, in terms of what he's seeing in the market.

So Balaji, yes, Sinch and Twilio have entered into Indian market. And we have already had one large player, Infobip, for more than 3 or 4 years in India, right? So I would say since this is good for the industry. This is good for all of us, and it's very healthy competition. All these companies, they are apparently focusing on enriching their platforms, enriching their offerings to the enterprise customers. And we also do the same. As Uday has said multiple times, we are an innovation company. And we already have deep inroads into our enterprises in India. We have demonstrated multiple times. So it also keeps us on our toes to deliver more and more solutions, to deliver more and more channels. And let's say, currently, we are working on to enrich our conversation platform, right? We have been winning a lot of customers, and we have already shown in our investor deck also, right? So we have been winning customers and -- on conversation, which is the future. And so this is what we are doing. And in terms of pricing, there is a little bit of pressure. I won't say there's no pressure. But for the companies like us, customers see more from a value point of view, not from a pricing point of view, right? Though we have to be on the -- we have to give the right pricing to the customers, but they look at us more from the value point of view.

The next question is from the line of Kawaljeet Saluja from Kotak.

My question is related to the Rule of 40. Now, I'm aware of the Rule of 40, but still wondering as to how it's applicable to Tanla, can you just elaborate a little bit on why you made that the thing.

Kawaljeet, it's Uday. Thanks for coming on call. And Kawaljeet, basically if you look at any SaaS company, okay, right? So sometimes they just concentrate on top line. Sometimes they concentrate on bottom line, okay? But if you look at any SaaS company, there is almost a Rule of 40 there, okay? If you go on and do a little bit of Google, there's a Rule of 40 there. Each and every company -- SaaS company I'm talking about, the companies who are operating at a scale always look at the Rule of 40. Either they have to grow the top line or grow at bottom line or mix of both, okay? But the total growth, whether it is from the revenue or from the margins, from the EBITDA has to be minimum equal to 40. That's how most of the U.S. companies do operate at Rule of 40. And since we are also a platform company, we are operating within SaaS and CPaaS. In fact, most of our competitors do look at Rule of 40 and we have been monitoring Rule of 40 for the last almost 2 years and that's how we position ourselves when it comes to likes of the analysts or our competitors. Any platform company, which are generating revenues on revenue share or the subscriptions, they always look at Rule of 40.

Maybe I think I have a follow-up question, but it's better to take it off-line. The other question that I had, and I may have missed it is that is the buyback and open-market route or a tender route?

Buyback is an open market...

And when you went through a discussion internally on the merits of a tender versus open market, what were the pros and cons, and why did you gear towards open market route?

So I think we had that deliberation. And I think the key difference, I think, was in terms of the positive on the open market with -- in terms of time. And second is in terms of the EPS accretion on a relative basis. So those are the key considerations.

The next question is from the line of Sudhir Bheda from Right Time Consultancy Services.

And particularly now, we are operating at Rule of 60, so that is a really great changes, and we have passed that journey of 40. Am I audible, sir?

Yes please, Sudhir. Please go ahead.

Sir, my question is there is some considerable drop in Q-o-Q revenue. So is it a seasonality involved as I was listening to your previous answer, or there is some COVID impact also because second wave was very severe in month of May. So a drop in the revenue is attributed to seasonality or COVID, Q-on-Q I'm talking about. That is my first question then -- please answer, and then I will ask my second question.

Sure. So Sudhir, I think there is definitely a seasonality in this business. This business has to be looked at from a Y-o-Y perspective. If you kind of look at trend lines here, typically, Q1 is soft, Q3 is probably the strongest quarter in any given year, right, because that's where there is maximum festivals, functions. And therefore, there's a lot more promotional traffic, right? Q4 is strong but tapers off vis-a-vis where Q3 leads, right? And Q1 tends to be the weakest quarter. So the right way of looking at the business is on a Y-o-Y basis. If you actually look at our performance, right, we've actually done better on a Q-o-Q basis here compared to last year. We had a double-digit de-growth last year in Q1 vis-a-vis Q4, 13%. And we kind of dropped about 3% in the current quarter. So actually, given the kind of seasonality that one has, I think we've entered the year quite well. We're quite happy with that.

And sir, my second question, see, now we are rolling out the substantial revenue from the overseas market as of now for this year. So can you throw some growth perspective when either is a pie of the market will go up or we will increase our market share or how we will stack up to -- for the growth in the next 3 quarters?

So Sudhir, let me put it this way, right, I think we should not get distracted by the fact that we're looking at global markets to think there is lack of opportunity in India, right? And I'll probably let Deepak talk about the kind of opportunity we have in India. India continues to be a very, very exciting market for us, right? But I think it is important to focus on both. It's not a question of either-or. So by current year, we don't expect big upside on revenue from the global market, we kind of taking all the foundational investments that are needed to ensure that it take off in the coming year. But India still has a whole lot of potential, and I will let Deepak of take you through in terms of the key trends of deciding business in India.

Yes. Yes, sure. So firstly, I would say that we are building a very strong foundation this year to expand into different geographies globally, right? As Uday said, UAE is our first destination. We have already started acquiring customers there. We already have 2 operators where our deployment is almost complete for DLT, which is our Trubloq. And we would be -- you would see, we would be acquiring a lot of enterprise customers in UAE, right? So then coming to India. I mean, India always remain very, very exciting for us. We have been growing, as you can see, Rule of 40 earlier and a Rule of 60, it is all -- mostly India, right? And we see -- and there are multiple growth drivers, what we see in India, right? One is there is organic growth. I mean, India is a -- there is a digital adoption, which is growing like anything in India. I mean it is much more than the regular economy is growing in India, right? So for example, we are present in all the verticals in India. We have all the major enterprise customers, any vertical you see, we have with us and there we see digital adoption is growing very much. There -- that's why their number of transactions are growing and our volumes are growing, right? So that is -- that we can call it organic growth with what we are getting. Number two, with our new platforms right now, I would talk about Wisely, and I would talk about our conversation platform, right? We see that we would be increasing our wallet share with our existing customer base because for -- due to regulations and customers tend to have more than one service provider, and we would see that we would increase our wallet share with our existing customer base. Then as you have already seen, we have been acquiring customers quarter-on-quarter, right? We have been -- and we are focusing on new execution in a big way. There is a very large chunk of customers outside. There's a very large start-up ecosystem in India, right? And we have been onboarding a lot of start-ups. Last year, we have demonstrated, we have onboarded as ed-tech companies like WhiteHat and Byju's and many others, right? So -- and we have seen how these companies have grown over the period of years, right? And so this is what we have been focusing upon, and we are very bullish on our India business.

And sir, one small question, if I may chip in. What kind of overseas revenue do you expect in '22, '23, it can be 20%, 25% of our existing business? How it will be?

I think it's a little early to kind of comment on that, Sudhir. I think we will progressively build on it. Obviously, the opportunity is very, very large. But I don't want to get ahead of myself to kind of...

That's right. But are you planning to some U.S. or the U.K. kind of developed market or you will be continuing to be like in Gulf and Southeast Asia? Or how it is?

No, we will be on key markets. Obviously, we will address the key markets.

I didn't get you. Pardon, sir?

We will address the key markets, U.S., Europe. They are the big market. We will definitely address them. But I think a key thing there, Sudhir is -- and I think Uday has alluded to this, we don't want to go and pick up any business in those geographies. Our objective is not to be present in a geography. Objective is to be present in a geography doing the kind of business we want to do, right, which is a platform business. It is kind of tied into our one platform strategy. So Wisely is going to be the big thing that we're going to take globally. I think, therefore, it is not about just entering a market, it's about entering the market in the right way, with the right partnerships, with the right base. And that what I think once we get in, we probably are going to be invincible because one thing you need to kind of see is we operate in India, and we are head and shoulders above everybody else from a leadership perspective. And that's the kind of aspiration we have as we enter a geography.

Great, sir.

And I would also like to add one thing here. Our good amount of revenues are coming in from very large tech giants based in Silicon Valley in the U.S. right? They're already our customers for more than a decade now. And we would be -- I mean, once we are -- once we go outside, we expect a lot of business coming in from these customers for different countries as well. As of now, this business is for India, but we see a lot of business coming in for different geographies as well.

The next question is from the line of Kushan Virani from InCred.

So my question was more on the market share. Actually, I understand that we have aspirations to improve our global market share. But at the same time, are we also increasing market share in India? And what I also wanted to understand was outside of India, what is the kind of demand? I mean what sort of demand is there? I mean is it demand for Trubloq? Or I mean -- that's something that I wanted to understand. What part of CPaaS is in demand outside of India?

Yes. So India is growing. In fact, we are around $500 million to $600 million market last year, but we kind of quickly grew into almost $900 million in market in India. And we are the largest player in CPaaS in India, right? So our revenue market share is up also, 42% market share, and we keep gaining the market share every year. If you look at our last 5 years, we keep gaining our market share. So that's number one, right? Number two, when it comes to our -- if you look at Wisely, Wisely is built mainly for the global market and the Trubloq is built for in the Indian market. So when we go to the international market, as I told you earlier, we are going to go with Wisely platform. And we see a greenfield opportunity for our Wisely platform in most of the CPaaS markets. So we're pretty excited.

And my last question was that are we looking at any other use cases of blockchain technology in the communications space, I mean, I saw in your presentation, somewhere it was mentioned IoT. I mean, is there something apart from what we are already doing that we're looking at?

So for us, IoT is part of CPaaS. And our blockchain platform, mainly the Wisely, we will be addressing all the use cases, spreading across industries and spreading across all the channels. But as of today, the IoT is not enabled as yet on Wisely. But in the due course, we're going to add even IoT based on the demand. But as of today, no. And to answer your question, right, are we looking at any other use cases on blockchain. Absolutely no. We see a massive opportunity within communications space. So we would like to use our time and energy to launch more use cases on CPaaS, rather than looking at any other market. So we have built a massive competency in and around blockchain for the last 2 years within Tanla.

We'll take one last question, which is from the line of [ Tejas Shah ] from [ Unique ] Capital.

Yes. How do we bring in the business with Vodafone. If you can throw some light?

Can you repeat the question?

How are we growing our business with Vodafone because Vodafone was primarily our big client. Now being in trouble financially, how does it impact us?

Yes, absolutely right. Vodafone is one of our biggest partners for the last 7 years -- 7 to 8 years. So Vodafone, as you know, it has got the global presence. That way we have a massive opportunity sitting outside India. If you have to really comment on our recognition -- on VIL, so since like our Karix is being the largest enterprise player in India with almost more than 30% market share, so we have a lot of capital business. And secondly, we also work with most of our -- probably all the telcos in India. In fact, if you look at our Trubloq, Trubloq has deployed with 5 telcos out of 7 telcos. So we have equally -- strong relationship with other telcos. So the minute we see any problem with any telco, we kind of got -- immediate shift our traffic to other telco. So we are not depending on one telco. Telcos for us, mobile carrier for us is a supplier and the minute we see any quality issues or any other challenges, we quickly shift our traffic to other telcos. So we have -- to answer your question I see absolutely no issue with any telco in India.

Are we growing our relations with Reliance? Or are we in business with Reliance or no?

Absolutely. We do a lot of business with Jio. We have been doing with them for some time. So yes, we do business with Jio, yes.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, for the participation. In case we couldn't take your questions due to time constraints, please feel free to reach out to our Investor Relations team. Have a nice day. Thank you.

Thank you. On behalf of Tanla Platforms Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.