Tanla Platforms Limited (TANLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 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 M. Ritu Mehta from Tanla Platforms. Thank you, and over to you, ma'am.

Hello, everyone. I'm Ritu Mehta and I lead Investor Relations for Tanla Platform. On behalf of everyone at Tanla, I would like you to welcome to our earnings call for Q4. Joining with us today are Uday Reddy, our Founder, Chairman and CEO; Deepak Goyal, Executive Director and Chief Business Officer; and Aravind Viswanathan, our CFO. Uday Reddy, our Founder Chairman and CEO, will share his perspective and business imperative and strategic progress made by Tanla. After his opening remarks, we'll be happy to engage with the participants and address their questions. Before I hand it over to Uday, let me draw your attention to the fact that today's discussion may feature statements that are forward-looking in nature. All statements other than statements of historical fact 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 presentation that is uploaded on our website. Now over to Uday.

Thank you, Ritu. Good afternoon, everyone. A very, very warm welcome to our Q4 earnings call. As you know, Tanla is single-mindedly focused on enterprise and we are the market leaders in APAC, and that is really making the difference in our last year results. Our strategy is working very well. FY '22 has been a phenomenal year in all metrics and we achieved INR 3,000 crore revenue milestone. We had a very strong revenue growth with the best-in-class margin and cash flow profile. Revenues grew 37% year-on-year. Gross margin grew 57% year-on-year, and we generated over INR 425 crores of free cash flow, and our cash balance is over INR 920 crores. Our organic growth mission is in full flight. Our revenue and EBITDA has gone -- has grown by 6x and 12x in the last 6 years. Uniqueness of Tanla is that while we grow like a start-up, we have the balance sheet and cash flows of the market leader. As I look forward, this digitization is the opportunity of this generation. We are seeing an explosion of the digital interactions in India. Transactions, transacting users have doubled in the last 3 years to over 200 million users while digital clock has increased 3x in the same time. We are operating at the rule of 60, which is aspirational for most of the cap companies. We are pretty confident the momentum will continue. Let me give you an update on Wisely. The last 3 months have been significant for Wisely. Last Friday, for the historic day as a Wisely went live, which is Vodafone Idea network as part of our multiyear exclusive partnership. We will showcase our Wisely to both via network and global tech giants in the next 60 days. Wisely will deliver tangible ROI, and I cannot wait to showcase this to the world. I'm very excited about our exclusive partnership with the Truecaller, which we announced in the Mobile World Congress in Barcelona. I'm confident that we will be able to build unique propositions to our enterprises while enhancing user experience to 300 million monthly active users. Wisely resonates well with enterprises. One of the large customers that we spoke to has put it very nicely. I quote, "one of the reasons we really like Wisely is that you're not selling platform or software, but delivering business outcomes." We have a strong balance sheet. This gives us optionality for acquisitions. We are growing fast at high profitability. So any acquisition has a very high bar for Tanla and most acquisitions would dilute either our top line or bottom line. Further, we have a very strong organic strategy. We are focused on Wisely, a single platform strategy, and we don't want any distractions. Having said that, we are always open to any special acquisitions, which complement our Wisely strategy. Also, we have been consistently returning our cash to our shareholders. We returned INR 180 crores in FY '21 and INR 95 crores in FY '22, which adds up to 31% payout of our net profits. In the coming year, our biggest focus is driving our very strong innovation engine focused on creating greenfield opportunity for us. The biggest best we are making to achieve this on our talent. We are introducing new ways of working and building a team obsessed about innovation and customer success. Our employees are excited this opportunity to work on cutting-edge technology and build their career with us. I'm very excited. My team is very excited, and I'm confident that FY '23 will be the year of Wisely. I'm happy to take and we are -- rather we are happy to take your questions now. Go to Ritu or you want to open first.

[Operator Instructions] The first question is from the line of [ Pranav Shadria ] from Elvis Financial Services.

My first question is regarding the growth for the platform business. So for last year or so, the growth for this has been fairly strong. And also -- so how should we see this growth going forward? Because you said that this will be -- the growth will be driven by Wisely and one more finance one, which we want to understand is the realization led growth now because a fair bit of growth is happening on the realization side which I'm not too sure that how much will continue. So if you can throw some color on that. Yes, that's my first question.

So Pranav , if you can just clarify on your second question, what do you mean by realization? Are you saying pricing?

Yes. I mean enterprise segment realization, if I look at last 1 year has seen a fair bit of growth maybe because you are having more traffic coming from Wisely. So are we going to see more volume-led growth? Or it will be continuing this direction?

It's a good question like -- and our enterprise business is growing much faster than industry. We are growing -- as you know, Karix is the largest CPaaS services company in India. And Karix is going much faster than any other industry or any other similar partners in India. That's number one guys. Number two, even if you look at our platforms business, okay? And as part of my opening statement, I made it very clear we're going to invest a lot of money on the platform rather than innovation, and one can expect platform announcements, new platform, new features announcements in the next 11 months. So to answer your question guys, we are going to grow on both the fronts, both enterprise side as well as platform side. But as you know, like platforms is -- I mean, the way we book the revenues, the way we collect the revenue, the way we charge the revenues to our end client are slightly different from the way we charge in terms of CPaaS services. So in other words, like our margins are much better on the platforms business. And so yes, we are going to grow on both the fronts. And we are pretty excited.

Okay. One more question, if I may. Your CapEx has sort of increased almost INR 63-odd crores for the full year. Is it largely towards the investment? And how should we see this going forward? And does implementing Wisely require you to put CapEx upfront?

So Pranav , let me know if understand, for the time for the company of our size, okay, which is generating more than INR 430 crore, INR 440 crore, the clear cash every year like now. So the CapEx is very, very small. And depends like we are investing a lot of money on the innovation. And in the sense, even if you add up the numbers, I don't think it's crossing around INR 65 crores per annum. It's a very small number. And but yes, this year also we're going to spend an equal amount if not more. And to answer your question, like, we don't need to really invest upfront in terms of any of the platform requirements. But definitely, we're going to spend a bit of money on the innovations and which is going to accelerate our platforms the growth.

The next question is from the line of Harshit Toshniwal from Premji Invest.

Am I audible?

Yes, yes.

Thanks for the good results. Two questions. One is that when you look at the overtime growth. I think when we look at 1 cr client count that going at around 16%, 17% even on an exit basis. So that is a pretty strong number. To understand that how the EBITDA growth in the enterprise business [indiscernible] and what can we add from the ticket size growth. Is 20%, 25% of our estimate in industry is going up when and [indiscernible] but when we look at our cash balance, around 30%, 40% of that is in BBS Singapore, which is another account, and that mentioned that we can't earn interest on that. Can we get an explanation what is the need to keep high cash in Singapore? And why aren't you earning in any interest on that balance sheet sir?

Harshit, sorry I've been trying to hold you, but you're not clear. Your voice is not clear, very, very [indiscernible]. There's a lot of background noise. Can you please go slow. Can you please ask one by question?

Is it audible now?

Yes, we can hear you, Harshit, but I would like to know, are you connected to the earphones?

Okay. Now I'm on direct phone. Is it okay now?

Okay. This is better. Yes.

Yes. Okay. Sorry, sorry. I'll just repeat the two questions. First is on the growth that there is a 16% of 1 CR-plus client count growth even on an acreage basis, which is fairly strong. And clearly, as we move forward, the volumes and the organic ticket size of this client will also keep on increasing. So expecting that 20%, 25% growth in the medium term, I mean, is that a very tall task? So I want to get a sense about the overall industry growth in your estimate and the second question is on our cash balances that around 30%, 40% of our INR 900 crore cash that is with the Singapore -- BBS Singapore account where we don't earn any interest which is why our overall other income yield look suppressed. I wanted to get a clarity on why do we need to keep that? And why is it not earning any interest for us?

Maybe Harshit, let me take the second question first and then I'll pass on to Deepak to give you a perspective on the industry growth rate. A lot of our ILD business has done overseas, and it's in dollars. So given that it is dollar balances, we don't earn interest on that, right? There are challenges around moving cash across entities. There are practical implications, et cetera. So we are looking at it, and we are seeing what we can do. And obviously, as we plan our global expansion, the idea is that we will be using or cash overseas to fuel that. So that is where we are. So there's not much of an investment opportunity there from -- with respect to your dollar funds. Deepak, you can give a perspective on the growth.

On the industry growth, so we estimate the industry to grow by 18% to 20% in overall volumes. And if you further bifurcate that, so about 12% to 14%, I would say, is organic from the existing use cases and the existing customers and all that. And I'm talking about overall industry. And then there is another about 6% to 8% is, as you know, a lot of new companies are emerging and they are growing much, much faster than those established enterprises. And there are new use cases are emerging with existing customers as well as with the new customers. So I would put about 6% to 8% there. So overall, it's about 18% to 20% growth is what we are witnessing.

All right. Deepak, Just one follow-up on this. Now when we look at our new client addition and I'm coming with the context of Karix is a very strong player when it comes to all the traditional large enterprises. And clearly, that is the moat on that side. But our new client growth, basically, when I look at all the new whether volumes are -- volume growth is actually exponential. Over there, even when we look at our presentation, I think the new client growth is still not as great as the traditional one. Now what gives us confidence that if industry is going at 18%, 20%, we'll be able to deliver a better growth than the industry because we are already sitting on a very high pedestal. And secondly, in the new client segment, it's not as if we are doing extraordinarily different from our traditional strategies.

So if you see, we are -- for the last so many years, we have been growing more than the industry, okay? So that we have been -- we have demonstrated in the past many, many years. And as far as the new customer segment is concerned, so I'll just tell you the life cycle. So there is a year -- we acquire customers, okay? And we may acquire it at a different stages of the year, right, or different months of the year, right? And then they come, we onboard them and we end up -- the business ramp up. And then the next year, they become our existing customers. So when they are fully ramped up, so that revenue is actually counted in our existing customer base. So maybe that's why you may not see a huge growth as such in the new customer segment.

And to support that point, our calendar starts of fresh for new customers, right? So if you look at customer cohorts, and we have a slide on that, you would find that our CAGR across multiple years after we onboard the customer, we see a lot of growth. So to look at it just from year-to-year, you will not see a significant jump. But like Deepak said, you will have to look at, we add them, it's for the current year, and then next year, we again start fresh. So the way to look at is we added 270 customers, which gave us INR 100-odd crores of revenue for FY '22, but they are obviously the base for further growth for FY 23.

So like whatever we acquire this year, okay, the real growth or the volumes would be seen, I would say, the next year and also it's like that. And whatever we acquired last year, you would see in this year so it's like this.

Understood. Understood. And just one follow-up on the previous one, which I asked about Singapore account. And pardon me for my -- it's a very basic question that -- I just want to understand the flow of the transaction, see, for example, we have an ILD client and simultaneously that message is delivered in India. Now the receivables on the client, that goes into the Singapore account. Let's say, for example, what we receive from an Uber or Amazon that will go to the Singapore account. But what we pay to Bharti Airtel for termination, that goes from the INR balance. Is it why that balance is so high? I just want to understand that even though ILD business has slowed in this last 6, 7 months, our reserve balance or cash balance in the Singapore account that has grown -- that has kept on increasing. So I just want to clarify that.

Okay. For any ILB business, okay, right? Entity is not allowed to enter into any agreements with any tech giants because the ILD business. And the entity has to be also in India. In other words, none of the Indian entities, including Tanla or Karix or Gamooga are not entitled or not allowed rather to enter into any tech giants in the business. That's number one. Number two, the same entity also have an agreement with the ILD license providers. For example, that Tanla Singapore has got the direct agreements with the Airtel , they have entered into agreement with VIL and whoever has got the ILD license. ILD is [indiscernible] business, even from the telco's perspective. Okay, Bharti Airtel got 2 licenses, 1 license to operate within India, another license to operate outside India, okay? So 2 different entities. So similarly, we have to operate with the entity who has got the license to operate an ILD business. So both -- to answer your question, both buying and selling happens at Singapore level.

Okay. Understood. Got it. And so as this is what is going to be a key for any investments in the -- in growing the international business. That is how we are going to monetize that cash balances over there.

Yes.

Okay. And I think I'll come back into the queue for any further questions. Congratulations for good set of numbers.

Thanks, Harshit. Thank you.

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

Congrats on a good set of numbers. I have 3 questions, basically, if I may. The first question is on your plans for Wisely deployment, both in India and overseas this year, so more color on that considering that now you have announced partnerships with both Vodafone Idea and Truecaller. The second question would be on the status on rolling out consent management around Trubloq by telcos. And at what stage is it in currently? And what can be the potential opportunity for Tanla from this? And the third one would be on employee attrition and any wage cost pressures that we are seeing considering the supply side pressures especially for tech companies. So those will be my 3 questions.

Okay. Thanks a lot, Reddy Uday here. In terms of Wisely plan both for India and the global is, yes, we are -- now we have given -- I mean, we are putting a lot of trust on domestic business. And you will hear a lot of -- you will see a lot of enterprises who will be using the Wisely going forward. And once we see that success in India, and probably, we will look at the global markets in the bank. We will get to concentrate in India. We don't really make it big Wisely and domestic has to really make it big because we take this platform to the global market. That's number one. Number two, in terms of consent management on Trubloq. And we have deployed, we have rolled out, as you know, like if the consortium between the -- I mean, all the telcos where we managed 60%, 70% of the telcos, and we also have to work with other platform providers. It could be a tech manager or it could be IBM. So and also regulators are involved. So it is -- we have delivered the product, but we see a bit of challenges with standard operating practice this year, whose telcos have to sort out among themselves. As a platform provider, we have nothing to add anything here. But having said that, like I think we will see definitely some light on this consent management. It is going back and forth, with between the operator and the regulator. We hope it will be started out very soon. That's the number two. Number three, in terms of employee attrition. As you know, like the Karix has been around the last 20 years and so is the Tanla. And our core team is pretty intact. The core team who has been with us for almost for 2 decades that's pretty intact. But having said that, we see a bit of challenge with the junior folks. We also have the similar challenges we're trying to address that, but we don't see any problem with our core team. The problem is it's only someone who has joined during the COVID and there, we have no -- absolutely there is no relationship with them. That's where we see a challenge, but we're trying to address that issue. But I mean -- I completely agree with you, like you know, we're also seeing issues that any technology company is facing now a days.

The next question is from the line of Amit Chandra from HDFC Securities.

Sir, my first question is on the Wisely platform. So just a continuation of the last thing from the last question. So on Wisely, we have big plans. So Wisely will enable the phase of growth for the platform business next year. So if you can elaborate like more on our plans internally, what we have in terms of the revenue contribution from Wisely maybe in the next financial year. And also, can you elaborate on the partnership with Microsoft in terms of the co-sell partnership with Microsoft? Is it that Microsoft is going to sell the platform for us or any collaboration in terms of sales all of the Microsoft. So that is why also the exclusive partnership that we have with like Vodafone, so from when is it going to contribute to revenues? And in terms of the partnership we have with Truecaller. So what exactly is the like nature of the partnership we have. If you can elaborate on that?

Okay. Amit, Uday here. Let me start with the Truecaller. Truecaller as you know, what our information says under this is public information. They have around 300 million unique users and most of them are far from India. And so this -- and we have access to this 300 million unique users. So they were never in business messaging [ carrier ]. For example, if you look at WhatsApp, this is predominantly a messaging app or P2P messaging app-like. But whereas Truecaller was never into business messaging, okay? Since now they have access to 300 million users. They're also trying to see how they can monetize their reach. One of the -- where they can monetize it to business messaging. That's where Tanla and Truecaller came together. We have decided to enable messaging feature on their 300 million handsets, the apps rather. And that's number one. That's what we have been doing for the last 6 to 8 months. And now that the business messaging API are exclusively available only to us that it is not available to any other CPaaS provider, not only India but in the world. So there's a big opportunity for us. And so that is about a Truecaller. In terms of Microsoft arrangement, yes, Microsoft and Tanla has developed this Wisely platform. And where ever we have the large opportunities, we come together and we kind of -- we work together and that Microsoft and Tanla has one [ agreement ] with VIL. And also, we are working with a couple of other large deals. It's working really, really well. So we are extremely happy about relationship with Microsoft. That's the number two. So in terms of the Wisely contribution to overall numbers, it's too early to comment but I'm pretty excited when it comes to Wisely, VIL we went live, and that's what we announced to the market on last Friday. And our revenue slope margins are going to clock from last Friday that will be perfectly 2 months in this quarter. And so that's 100% traffic has to go through our Wisely platform. So we are really excited about that opportunity. And in the next 2 months, what we decided is to showcase the Wisely offer to -- not only to Vodafone Idea Network, but also to the large telco -- to large tech giants globally. In the next 60 days, we are planning to come up with customer advocacy that is going to set the agenda for Wisely for the rest of the period.

Okay. And sir, in terms of the competition, obviously, we have seen increase in the competition, especially in the platform business. So what kind of risk we are seeing to the margins that we are in doing so because the margins that we operate. So I'm not talking about a 90% margin, but adjusted for all the overheads, maybe it's 70% margin that is there for the product business. So are you seeing any risks to that, whether you need a little more investments or something of that sort to focus more on the volume growth and focusing on the margin?

Amit, this is my personal view and my view is one cannot build the platform unless until you have tremendous terminology. We cannot buy platforms -- companies platform business from third parties, that is very risky offer any. I've seen it personally, and it's not easy to build the platforms unless until you have tremendous terminology. And also to -- and one should have access to tremendous technology comp in the skill set. If we don't have both of them, it's difficult to build and run. So we don't see, I don't know what you meant in the competition if we have not been in the competition, and we are not scared of any competition. We have been built -- the entire Tanla has built on platforms for the last 22 years. We have seen enough competition in last 22 years. And we have, in fact, we know competition so that we are not in the comfort zone. So we are happy to face the competition. But as we speak, we don't see any competition, and we have been in the space for quite some time.

Okay. And sir, on the enterprise business, apart from the seasonality this quarter, are we seeing any other headwinds maybe in terms of scaling down of some clients or something of that sort or is it like normal breathing [ source ]?

Deepak, do you want to take that?

Yes, sure. So see, there are some always a few customers, some volumes keep moving from one place to another place. But there's nothing as such as everything. I mean, if you look at Q4, it's pretty normal. In Q3, we have seen some good profitable effective campaigns coming in, which was because of Diwali and Christmas and the New Year and stuff like that, and which were not there in Q4 and that's about it. And plus we had to -- if you see a number of days where our businesses on a -- you could account as per the days. So there were 2 days less in Q4 as well compared Q3.

And sir, on the enterprise side, if you can provide some color on what portion of the business we are getting from the start-up ecosystem, right? Because I know that we have been working on closing with some of the start-ups or like newer companies, Internet companies. So based the valuation going down or with the global valuation is also coming down. So are we seeing some kind of current spending on especially on this, I don't know, especially on the marketing side as our SMS marketing campaigns and all those side from these start-ups.

Yes. So we have a very strong program to acquire startups in India. And it's been a very successful program. And if you see that we have been acquiring these customers from all the verticals and one of them is fintech, which is very big for us. and very -- has a huge potential. But then another one is gaming, which has come up very well. I mean, you can see a lot of gaming companies coming up. You must have seen ads during IPL then there is adtech sector, which has been -- which has boomed in COVID times and now in more and more companies adding them to adtech sector as well. And if you ask me, does it cut on marketing spend? The answer is no. Because that's where they actually acquire the customers. They all want to acquire more and more customers. Okay, so maybe they would cut every anywhere else, but they would not cut here because that's where they see the acquisitions coming in. And now if you see the trends have changed. Earlier, I was talking about a few years back, people would spend a little bit on the digital campaigns and rest would be done on the traditional media. But now very serious budgets are allocated for the digital campaigns because here, as Uday mentioned earlier, we provide business outcomes as well. It's not just about sending one-way communication. In fact, we take responsibility, we work with the customer and ensure that they achieve the KPIs for which -- and the ROI which they're spending the money. So that way is a win-win for us as well as for our customers. And once they acquire the customers, they become -- then we ensure that we retain their customers very well. We provide customer delight and all that with our various campaigns. So that's how it works.

And sir, like one last question from my side.

Sorry to interrupt, I would request you to please come back in the queue.

But let me answer, Amit, last question is slightly different in the sense that he was different to our global competitors and the industry. Amit, it's a good question in the sense like we have been pretty clear from the day one, we are different from our peers in the global market. Our competitors in the global market and elsewhere, they are diluting. They're raising the money left [indiscernible] . They have been acquired in the companies and that is their strategy. But our strategy is very simple. We believe in build, but not buy, and our strategy is working right. So I strongly believe that people fail to integrate the companies. That's where they see the challenge in the global market, but we don't have the same problem with EBITDA. So our strategy is working. So that's what I've to say.

[Operator Instructions] The next question is from the line of Tanu Poddar from Mount Intra Finance Private Limited.

Am I audible? I just want to confirm that.

Yes, you are.

My question is regarding the 800 billion transactions, which is stated in the presentation. So since '19, '20, it was already said 200 billion transactions. And after that, it has become 800 interactions. So I just wanted to understand the difference between transactions and interactions and why has there not been any growth in the last 2 years in the 800 billion transaction?

So certainly, it's a good question. The difference between the interaction and transaction is, for example, HDFC send any communication on SMS, okay and so then they [indiscernible] mobile phone and they charge per SMS, right? or per e-mail or voice or notification, right. That's all transaction like. Whereas interaction is, it is mainly two way. For example, like where normally telecom resources are not involved. It is over the Internet. So that is all interactions side. Let me give an example in terms of interaction side. For example, Gamooga is heavily, which is our 100% subsidiary is involved in the marketing automation, where they enable the interaction between the enterprise and the customer, okay? It's going back and forth, back and forth. Wherein, they may or may not use the telecom resources like SMS, voice, e-mail or anything else like. So I suppose if you inquire anything about with enterprise through bot, and then the company response to you over the bot, that's all interaction like. So there is a lot of difference between interaction and transactions like. So interactions are to go through the roof, and we don't normally charge for interaction. We charge per the unit user per month and whereas transaction is used per transaction. Transactions are paid for transactions. That's the difference between these two. And interactions are increasing day by day. So is the transaction like. In fact, we have given the transactions volume in terms of both GLC and SMS in the presentation, but we have not updated the interaction looks like.

Okay. Sir, actually, your unit revenue that is what the question I was coming to comes to around INR 0.004, if I take the entire revenue and divide it by the number of interactions, which is quite less. So if you could provide some clarity regarding the unit economics?

Yes. So I don't -- interaction is more from a perspective of saying the kind of scale that we handle, Tanu, it's not directly linked to financials because like somebody like a marketing automation would have significant amount of interactions, but the revenue will not be comparable because they actually get paid based on active users or some other metric, which is not here. So just looking at interactions versus revenue is not a logical way of looking at value per interaction. So it is very different depending on business. So if you take SMS transaction is interaction. But when you look at some of the other aspects, you have a very different psyche.

Okay. Sir, just one last question. Sir, what kind of revenue do you get from the A2T messages like per SMS, what would be your charge?

So we've not called out pricing because it's again different depending on whether it is international, long distance, extra-long distance. What we have done is we have broken down our revenues between platforms and enterprise. And that is the kind of breakup that we look at, and that's how we look at our business.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, I just wanted to understand, first, on the platform mix, like in next 2 to 3 years, how do you see platform contribution to the gross profit. I think currently, it is at about 23%, right? So do you see that going about 30%, 35% in next 2, 3 years?

So today, it's about 26%. So clearly, you've heard Uday talk about Wisely, which is a big bet. Our strategy going forward is around our single platform strategy. So because definitely, we expect that the platform contribution will keep going up, and we should see that improvement every year. In terms of exact quantification as to where that will be, I'm not a position to give a number, but it is fair to assume that it will accelerate every year.

Fair enough. So ideally that means that your EBITDA margin also should improve quite significantly, right, as your platform contribution expected to go up. So maybe from currently 23%, you expect it to go up substantially in the next 2, 3 years, right?

Yes. Definitely, In fact, I think in our last earnings call, we have talked about it, that typically, a SaaS company operated gross margins upwards of 60%, 70%, right? So one of our aspiration is as we leverage our platforms, we will see a structural shift in our gross margin. While I cannot comment exactly what time frame where we will reach. But directionally, you're absolutely right. The intent is to move towards platforms and that will structurally mean that our gross margins will -- profile will improve. So you're right, in that.

Understood. And sir, in your opening remarks, you did mention that you expect this rule of 60 that confident that this momentum you expect to continue, right? So if I have to just think about the breakup -- maybe your top line growth, 35%, 40% range and the EBITDA margin, 20%, 25% range. So that would be a fair breakup between top line and margin when we talk about rule of 60%?

That's a difficult question to answer, right? We always say a trade-off as you go into more platform business, your revenue is equal to your gross margin or a substantial portion of your revenue is equal to your gross margin. So it is difficult to kind of give a mix at any point of time, right? But directionally, over a medium term, you're right that our gross margins and EBITDA will move up, and that will contribute but what is the exact contribution, I really will not be in a position to give a breakup at this time.

I got the direction. And my final query is on -- when we talk about the 60% it's mainly organic? Or do you factor in a potential acquisition or inorganic portion as well when we talk about the 60% rule?

See, if you really look at it, I think Uday mentioned this multiple times. We are very, very confident on our organic strategy, right? We have a tremendous capability and track record to build platforms at scale, right? So we always back ourselves on bill with [indiscernible], right? While there can always be small capital acquisitions that we may evaluate from time to time, largely, our focus is to drive our business organically.

The next question is from the line of Dipesh Mehta from Emkay Global.

A couple of questions. First of all, just want to get a sense about how the competition you are looking from telecom operator [indiscernible]. So how do you expect such competition to have implication on overall industry dynamics over medium term? Second question is about the VI deal, Vodafone India deal? What would be our current market share and how it is likely to change once the 100% traffic move from our platform. Third question is about the divergent trend, which we are seeing in this quarter between platform and enterprise business. I'm referring sequential number. Typically, we have seen both business move in tandem. This quarter, there is a divergent trend. So if you can help us understand what is different? Last question is about weak cash generation. If I look at Q3, Q4, both OCF to EBITDA conversion remained weak. So if you can help us understand how one should look at it?

So what is the first question, sir.

The first question was in terms of telcos operating.

Yes, yes. So in terms of -- see, the way it works is, without picking up any names here, the way Tanla and the Karix have been working with the industry is sometimes we collaborate and sometimes we compete with them. So that's how the -- even the telco industry works in the sense like all the telcos have to be to talk to each other through interconnects. That's how they have to cooperate themselves, they have to call out with themselves. Sometimes like -- and most of the time, they compete, okay? This is how it works in the telecom industry. And we have been working for quite some time like that and that nothing is new. And so that's number one. Question number two?

The divergence between platform revenues and enterprise.

As I told you earlier, like both Karix and Tanla has been growing steadfast in the last couple of years. The momentum will continue both in enterprise and platform business. And -- but it all depends on for example, like whenever we grow on platforms, that's going certainly add to our bottom line. And so that's a basic difference between enterprise and platform business. But both are growing much faster than the industry.

And only other point I'll make Dipesh sir, it's not always been the case if you really look at it, Q1 of this year also where there was a little bit of drop, right? You would have seen that platforms business did grow while enterprise dropped, right? So there are instances in the past also because I think it also depends on composition, where our platforms are and the volumes there, okay? I'll come to your cash flow question, and I think you are at fourth question, so we'll come to that after that, right? So from a cash flow perspective, if you look at it from a year perspective, we're still at 90% of PAT as OCF, right? So we obviously had a little bit of skew in terms of much stronger cash flow generation in H1 and our working capital, while it's still negative, it's less negative compared to H1. I think we've seen a lot more growth on the domestic side of the business that we've talked about, and that tends to have a little higher DSOs than some of the other businesses. So there is a little bit of shift. But I think from a year perspective, if you look at we've done well, and I think that is what we will be targeting every year, Dipesh. And your fourth question is -- so on the VI deal, I think Uday kind of talked about it, we will start getting our revenue in terms of -- because we've gone live in -- on 29th, right? So we're not kind of calling out what is our share vis-a-vis what will be incremental there, but maybe we would cover it in more detail in the coming quarter.

Sir, just a couple of follow-ups. In terms of OCF to EBITDA. So now you are indicating 70% is a reasonable number to sustain over medium term. [indiscernible] OCF to EBITDA conversion.

Full year perspective, we're at about 90% . Sorry Dipesh?

So let's say from full year, I'm referring OCF to EBITDA. It is roughly around 70%, 69% to be precise. So roughly 70% is what we converted EBITDA to OCF. This is the good indicative number for medium term?

Yes.

Understand. Second follow-up is about the telecom operator related competition. I think in terms of their focus on this enterprise business seems to have increased materially compared to, let's say, 2 years back kind of thing. So my sense is intensity, at least from their perspective, seems to have increased. You don't think anything in markets or do you think it is stale because at least from interest and perspective, they are more vocal about their enterprise business.

Dipesh, I've already mentioned, like, if you look at our business, we are not just depending on telcos, okay? For example, Truecaller has nothing to do with the telecom. WhatsApp has nothing to do with the telco. E-mail has nothing to do with the telco. Push notification has nothing to do with the telcos. Okay? So they have very, very limited investments and also through interconnect, nobody has got any control on channel. We are allowed to connect to any of the telcos in India, I think that some telcos are also in the SMS business. And I cannot really talk about their strategy, but I see it is very negligible. So I don't really waste my time discussing what that is.

Okay. Last question. Can you say a number of transaction processed by Trubloq in this quarter.

So we already mentioned in the presentation...

We will share it particularly.

It is not there only for a month.

The next question is from the line of Amit Mishra, Individual Investor.

Congratulations on a very good financial year. I have two questions. So the first one is about the Mr. Uday had this morning came on CNBC and give a good talk. He discussed about because about 5, 6 platforms to be released in the next 11 months. So the question is, I'm assuming that there are like features on Wisely, additional features on Wisely because we are following one platform strategy. So can you give some ideas like in what sort of ideas would these be like voice, video or -- can you please elaborate on that?

Possible Amit, it is a good question. Like all [indiscernible] conversation is like we are launching the products, which are going to work on the Wisely platform. Wisely is a platform whereas all the platforms be it Truecaller, be it the WhatsApp, be it SMS or e-mail, any other platform or any of the products that we think of are going to ride on that, in the platform. That's the reason we always call it as platform of platforms, okay? We don't want to call it some time -- and these are all usually using the words and -- but as you rightly said, we have a single platform strategy. And either we done some other products or we allow the other platform or products to ride on our platform, okay? So to answer your question, yes, we are working on a couple of large products, which I cannot really talk about it. So and we're also launching some of the additional features on existing platforms.

Yes, just a quick follow-up on this voice and voice can be processed already on Wisely right? And video as well, you have capability to process like I'm talking about more from markets outside India. I think they have much wider -- they are much widely used these features compared to India, I think.

Yes, Amit, to let you know, as of today, [indiscernible] video platform or products have been integrated with Wisely. In future, and the question, yes. So the video is going to pick up a lot. And I don't know the time lines, but definitely, that will be one of the channels that we're going -- we love to work with.

And second question is about the tender business, which is with global clients and they're frequently tendering the business. How we are doing, how we are faring there. And if competitors are lowering their bets , what is our strategy basically to counter that, to not lose the business?

Deepak, do want to take that?

Yes, sure. So Amit, we are doing fairly okay. And in fact, if you see, we are present in most of the top tech 10 giants, right? And these are guys who keep on doing. I think you are referring to them only, and they keep on doing the tenders every 2 years or every year and all that, okay? But we are very much there. And as far as -- see, this pricing is part and parcel of the business, right? I mean, if the prices go down, and we also put the negotiate with the telcos and all that. So it is -- you can see in our margins, which are very much stable. So that reflects that everything is fine.

Yes. I mean, like that makes me wonder like if we are losing some business because we want to also maintain the margin. And frankly so I'm not questioning that part of the strategy. So are we like losing business because of margin in some places?

See, I won't call it losing the business. I would see this is -- you look at your business and you want to retain your profitable business, which is doing well, and you are out of focus on more and more profitable business going forward basis, right? Sometimes you let go of certain business, certain volumes to your competition. So yes, that is -- so that is all part and parcel of your overall strategy, right? As Uday said, we are committed to the rule of 60, and that's what matters to us.

Perfect. No, no, that's very good. That answers this question. And just the last one. On the Truecaller partnership, what would be the revenue model because it's like business messaging service for Truecaller and it would be per transaction, we would be charging something or we are going to give them a monthly basis, some charge they will pay us. We are likely empowering that part of their new business. And is there any opportunities you see to which can benefit Tanla by accessing Truecaller's ecosystem, clients and 300 million strong users there. So can you elaborate.

Amit, if you see -- see, we charge our customers on a per transaction basis, okay? And we have a revenue share model with Truecaller, we have partners there, right? And as far as the benefit is concerned, I mean, it's like this, we have 300 million user base okay? Which is a very, very niche kind of a segment, right? We have -- I mean, obviously, they have smartphones and they are the ones who actually care about spam and everything, right? So you can understand we're talking about very, very premium user base of Truecaller and it's 300 million, which is equivalent to any, you can say, the large telcos in India, right? So we have that kind of base with us. And we see that this Truecaller business messaging sits right between somewhere between SMS and WhatsApp somewhere in the middle, right, which is there is a big gap there, and it sits right there. And it's going to -- and we are going to solve a lot of business problems of our enterprise customers with Truecaller coming in. So you would see in the next few weeks and months when we roll out more and more use cases on Truecaller and which is actually going to benefit our enterprise customers.

Yes, because I was asking this because this is an exclusive partnership unlike WhatsApp. WhatsApp is being served by other competitors as well. So this is excluding partnerships. So I see like great potential here. Of course, you must be seeing much bigger picture. But when can we expect something tangible from this partnership added to the top line? Just some time line, if you can?

I mean we are going commercial live very soon. So you would see the impact in the subsequent quarters.

Q2, can we expect in Q2?

Well, Aravind, you would like to say something here?

No, I think as Deepak said, we are going live. It is real. So we will start doing it incrementally every quarter going forward. It's a big bet for us. So it will reflect in Q2 also, so absolutely.

Due to time constraint, this was the last question for today. I now hand the conference over to Ms. Ritu Mehta for closing comments.

Thank you, everyone. That was the last question for today. In case we couldn't take your questions due to time constraint, please free to reach out to Investor Relations team. Have a good day.

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