Route Mobile (NSE:ROUTE) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to ROUTE MOBILE LIMITED Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Agnihotri, Chief Executive Officer. Thank you, and over to you, sir. Good evening, everyone, and thank you for joining us for ROUTE MOBILE's earning call for the first quarter of fiscal year twenty twenty seven. I'm Pishar, and it's my pleasure to welcome you all.

0:47 Joining me today are Vinay Penyala, who will take you through the operational and strategic highlights of the quarter and Raj, who will walk you through the detailed financial performance. Followed our prepared remarks, we will open the floor for questions. Before we begin, a quick note that our quarterly earnings presentation was uploaded yesterday, and I hope you've had a chance to review it. Some of these statements we make today may be forward looking in nature. These are subject to risks and uncertainties, and I request you to refer to the disclaimers in our presentation. Let me set the context for the quarter before handing over. This was a quarter of important progress on these strategic priorities we laid out earlier this year. We returned to year on year revenue growth and just as importantly, the quality and mix of that growth continued to shift in the direction we have committed to, with a new product portfolio growing meaningfully faster than the business as a whole.

1:50 We're clear eyed about the margin softness this quarter as we're able to explain several of the items that we've done, margins are specific in nature and largely transient, and we are actively working through each of them. Our conviction in the medium term trajectory of the business is unchanged. At the same time, we took a decisive strategic step with health care acquisition, a precise expression of the build versus buy philosophy we articulated at our strategy update in May, and one that accelerates our move up the value chain from messaging in messaging into full stack AI native customer engagement. We also saw strong external validation of our execution and of the shared global vision with Proximus Global.

2:36 Taken together, this was a quarter of steady operational delivery, disciplined strategic action, and continued strengthening of the positioning for the years ahead. We remain focused on execution and on delivering long term value for our stakeholders. With that, let me hand over to Vinay to take you through the quarter in more detail. Over to you, Vinay. Thank you, Vishal. Good evening, everyone, and I hope you are all doing well. As Vishal mentioned, we uploaded our quarterly earnings presentation last evening, and I hope you had a chance to go through it. I will structure my comments in four parts. First, the shape of our revenue growth this quarter. Second, a discussion around the margin performance and specific items that affected it.

3:23 Third, the key business and product developments for the quarter. And finally, a few minutes on the HealthTire acquisition, which we believe is an important strategic milestone for the company. First on revenue. In Q1 FY 'twenty seven, revenue from operations grew approximately 10% year on year and 2% quarter on quarter. I would highlight the quality of this growth. The drivers are the ones we have been highlighting for the past several quarters, continued strength in growth in our new products portfolio and customer additions to our AIML driven firewall solutions business portfolio. I want to draw your attention to the new products portfolio, RCS, WhatsApp and other IP based messaging solutions. New product revenue grew 14% year on year and 11% quarter on quarter, growing meaningfully faster than the company as a whole.

4:14 This is the engine of the business mix transformation we have been committed to, and the sequential acceleration demonstrates that we are aggressively driving momentum around the non SMS solution portfolio. The ILD business, which was the principal source of revenue decline through FY 2026, continues to be a challenge in terms of growth for the near term. Second, let me address gross margins and provide additional context around the reported numbers. Gross profit margin for the quarter was 20.9%, which is lower than the levels we exited FY 'twenty six at. There are two key drivers for this margin deterioration. The primary driver is certain developments in specific customer accounts. We witnessed temporary disruption in traffic from select existing large high margin customers as we are deploying new solution capabilities to address evolving business requirements of these customers.

5:12 This is not revenue or gross margin that we have lost, but just a temporary disruption, which will be restored in the coming quarter as we continue to offer the new solution capabilities to these customers. These are account specific situations rather than broad based deterioration in pricing or margin, and we are actively working through each of them. The second smaller factor impacting gross profit margins in the past quarter is the security incident at our Colombian subsidiary. The gross margin performance translated into an adjusted EBITDA margin of 9.5% for the quarter. We recognize this is below the trajectory we have guided to. I want to be specific here. We view several of the items that impacted this quarter as largely transient.

5:58 Third, let me spend a moment on the key business developments of the quarter because they reinforce the strategic direction I have just described. We are seeing strong external validation of our execution capabilities and of the global vision we share with Proximus Global. And practically, it strengthens our right to win in large enterprise engagements worldwide. Conera Proximus Global's network API and enterprise connectivity platform won the best application service provider award at the Carrier Community Global Awards in 2026. This is a recognition of the continued innovation coming out of Proximus global ecosystem and network APIs, a category we believe will be an important growth factor for the industry over the coming years. On the product and platform side, we continue to strengthen our global RCS footprint, expanding direct operator integrations and advancing towards broader direct coverage access across markets.

6:54 New partnerships and platform enhancements further reinforce our ability to drive scalable, rich business messaging experiences worldwide. We also further enhanced Ocean, our omnichannel engagement platform with new campaign management, reporting, audience management, and white label capabilities while expanding deployments across international markets and progressing strategic use cases. Together with Heltar, which I will come to next, Ocean sits at the core of our ambition to move up the value chain from messaging into full stack customer engagement. Finally, let me spend a few minutes on Heltar because this transaction is a precise expression of the M and A philosophy we have articulated at our strategy update in May.

7:39 On July 13, we signed a business transfer agreement to acquire the identified business undertaking of Heltar Technologies Private Limited on a slum sale basis. Helta is an AI driven omnichannel customer engagement platform. At its core, it turns communication workflows into fully automated self running programs from a single prompt to a live customer journey. Its chatbot and automation capabilities span WhatsApp, RCS, and voice, and the voice capabilities are being extended upon. It carries AI driven analytics that helps enterprises measure and optimize communication performance. The platform is low code and prompt driven, which means enterprises can configure and launch new use cases in days rather than months. Several large enterprise customers already run high value sales and marketing programs on the Helter platform with measurable improvements in conversion rates and ROI.

8:34 Why does this matter for ROUTE MOBILE? Three main reasons. First, capability acceleration. We have consistently said that organic development alone will not close the conversational AI capability gap within the time frame the market demands. Helter compresses what would have been a multiyear internal build into an immediate deployable platform, consistent with our build versus buy framework. Second, distribution leverage. We saw several global enterprise clients, the majority of whom use us for a single channel today. And that gives our key account and cross sell teams an AI native engagement layer to take into that to take into that base. There is limited incremental customer acquisition cost attached to this opportunity. And third, it directly accelerates our non SMS revenue, which has compounded at over 40% annually over the past four years and is central to our medium term revenue mix ambitions.

9:29 In terms of structure, the transaction is a slum sale of the identified business undertaking as a going concern. This includes the Heltar brand, the intellectual property, the technology platform, the team who will transition to ROUTE MOBILE. Heltar's founding team, alumni of IIT Kharagpur, will continue to lead the platform within ROUTE MOBILE. The transaction is expected to close in the coming weeks subject to customary closing conditions. The transaction is being fully funded through our internal approvals and is not material in the context of our balance sheet. To summarize the quarter, we have returned to year on year revenue growth with new product revenues growing 14% year on year and 11% sequentially, ahead of the company average. The margin softness this quarter was driven by specific and largely transient items.

10:17 Our strategic positioning continues to strengthen as reflected in the industry recognition that we have received, and we have taken a strategic decision with the acquisition of Heltar. With that, I will hand it over to Raj to walk you through the detailed financial performance. Over to you, Raj. Thank you, Vinay, and good evening, everybody. I'll summarize our financial and operating performance during the quarter ending June 26 before opening the call to Q and A. As described by Tushar and Vinay, the top line revenue grew sequentially and year on year, while EBITDA margins were impacted by in quarter specific items. Our Q1 revenue from operations was INR 11,515 million, representing an increase of 9.6% year on year and 1.8% sequentially.

11:06 This demonstrates the resilience of our business with strong demand for our solutions, heavy, healthy traffic growth and continued customer engagement. In Q1, we reported a gross profit of INR 2,404 million, which is higher by 6.8% year on year and lower by 8.9% sequentially. Gross profit was affected by a combination of market dynamics and specific account related factors, which we are actively addressing. Gross profit margin for the quarter stood at 20.9% versus 21.4% in the same quarter last year and 23.3% in the previous quarter. Gross profit margin is primarily affected by the specific factors explained earlier. However, we are focused on onboarding higher margin accounts, pushing our new product portfolio and optimizing ROUTE, which will support margin expansion over the coming quarters, reinforcing our commitment to profitable growth and long term value creation.

12:09 On a reported basis, we constrained OpEx growth to 2.9 year on year, mainly due to salary inflation, higher expenditure on consulting fees, and a provision for an advance. Adjusted EBITDA for Q1 was INR $1,089,000,000, which is lower by 5.6% year on year and 18.9% as compared to the previous quarter due to the aforementioned in quarter margin impacts. This all contributes to an adjusted EBITDA margin of 9.5%. Adjusted profit after tax was $686,000,000 which is up 16.6% year on year and lower by 14.1 sequentially, driven by EBITDA flow through. I will now hand over to the moderator for the Q and A section.

13:00 Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Divyaj Jaju from Trinidad Asset Managers. Please proceed. Hello. Good evening, sir. Thank you for the opportunity. So could you elaborate more on the customer retention kind of how has the annual revenue retention, like, improved over the last few years, particularly among, like, main enterprise clients.

13:53 So so the customer retention... The net revenue retention stands at 98% for the year. We had slight impact in just one of the key customers, which we are also working on recovering over the future period. But overall, we are not seeing significant risk on the existing customer portfolio. As I mentioned, there was one high margin customer where we are trying to do a product upgrade, new feature rollout. So that revenue again should come back to us, but rest of the portfolio seems quite stable at this point in time. Okay. And as as the huge cash is seen on the... Our balance sheet, so how we are thinking to elevate over the next few years? Like, any particular investments are there or, like, any shareholder return will be possibility how the company is seeing?

14:43 So so that's a that's a fair point,. So we hold around 1,300 plus crore rupees of cash on the balance sheet, cash and cash equivalents. And as as we have demonstrated, you know, we have a well laid out strategy for evaluating potential acquisitions to fill capability gaps. That is one area in which we are looking at utilizing cash. Besides that, there are certain organic initiatives as well where we plan to deploy optimization solutions internally as well as, you know, we might do some headcount increases depending upon the business requirements. So... But but, look, that is on the organic side. It will still be limited by the growth of the business in a way. But inorganically, we are fairly selective. There are two different approaches towards acquisition that we are following. One is the capability acquisition, which is reflected in the health of our deal as well, which is not very large in terms of deal size, but it fills a significant capability gap for us. On the other side, we are actually looking at potential acquisitions where we can scale up business, but those will be fairly more involved decisions where the decision making process will be slightly longer given the cash outlay could be larger in terms of value. So that... Those are the reason which we plan to utilize cash. And again, we have a dividend program in place where, you know, certain portion of the cash is returned to the shareholders as well. So that is the way we are looking at the cash utilization. We have big focus on growth initiatives where where we find useful deployment for the capital.

16:11 Okay. Thank you, sir, for guiding. Thank you. The next question is from the line of Bharat Gulati from Dallal and Docha. Please proceed. Yeah. Hi. Thank you for the opportunity. Congrats on a good set of numbers. Just trying to understand on the top line, our volumes have seen a good growth on a Y o Y basis, but on a quarter on quarter basis, they've largely been flattish for the past four quarters, past three quarters on a growth from a growth standpoint. So how do we see that going forward? Is this largely seasonal? Do we see a pickup in this? And do we expect to maintain similar sort of volume growth that we have done historically?

17:01 The volume growth we're expecting or the season setting in in the next couple of quarters, we see enough swing coming away. We had some losses, but we could compensate with some good wins in the last few quarters. That helped us meeting the volumes levels steady volumes level. But as we see the season setting in, we were expecting the volumes to grow by 10 to 15% in the next couple of quarters. Got it. Got it. Got it. Fair enough. And the just trying to understand on the OpEx front, right, we've taken the wage hikes on this quarter. So what would the employee costs look like going forward? How do we see operating leverage playing out? Would it be more broad based than it was in this quarter?

17:49 Yeah. Sure. So, Bharat, that's that's an interesting question. Raj, do you want to take that? Yeah. Yeah. You're you're perfectly right. The the wage hikes are are behind us. So now we're at a a run rate, and and we don't materially expect the salary cost to go up. It's pretty pretty flat in in the coming quarters. So we shouldn't even see any sort of employee additions? Are we investing into talent? Or is that also broadly done with and we should sort of see inflation like year on year growth on that front? Yes. We would typically hover around the kind of 800 count markets. It's not going to materially change, but we are back filling where we need and then recruiting to support our product and sales growth in the coming quarters.

18:34 It's not going be material, but we are looking at that talent pipeline. Got that. Got that. That's helpful. Just trying to just once again to touch upon the top line growth. I understand the ILD business would be a drag on our top line. Considering... If you normalize that, let's say, for x of ILD, what would have new product portfolio volume growth and our existing domestic SMS volume growth be at? You know, I understand some of the industry is also seeing strong volume growth in the business from India. Miss India headquarter business is getting terminated outside India, which is, again, not an... Which is a non ILD or business. So how are we seeing growth from that standpoint? So Bharat, we don't break down the volume into confidence, but I can give you a high level flavor. So so, you know, an ID, what what what we are trying to indicate is that growth on that base is, you know, where where it's not matching up the company average, but it's not like we are seeing a degrowth or dilution of business there. I mean, we are still chasing customers and it's sustaining for us at the levels we are. In terms of domestic, as you rightly mentioned, we have good traction going for the domestic business, which we demonstrated in the previous quarter as well, for the specific situations which I referenced. So I volume again for us is a mix of IND plus domestic and that's similar to it might be slightly different from competition as well. And on the new product, as I said, we witnessed significant growth

20:04 in the last quarter. We had 14% year on year growth on that segment of the product... Of the business, and, obviously, it was driven by higher volumes. Got it. Got it. And just a couple of more questions on, you know, how are we seeing growth? Because I understand you spoke about a net retention revenue of about 98%. So is this majorly growth driven by new customer additions? And just how do we see wallet share going forward? You spoke about cross sell of products. So how strong is the cross sell already in terms of shifting them to the OTT products? Sure. So so I mean, know, selectively, wherever we are seeing customers having processes where we can enter with the new or the non SMS product portfolio. The sales teams are actively pitching to the existing key customers. So so the way we look at our portfolio is, you know, there's a set of the top 50 customers which generate significant revenue from our... For us.

21:02 And the idea is to target those customers and identify opportunities. And, obviously, a lot of these customers would have vendors taking care of certain business processes for them. So, you know, it's it's either replacing an incumbent, which is not a very straightforward sales cycle, but we are also looking at new business processes where we can fit in our non SMS product portfolio. So that is the way we are attacking the the cross sell approach in the business. With Helter coming in, I think we have a strong proposition for the customer base where we had a significant layer on top of just the communication channel, and that will be a big push once we close the transaction, hopefully, in the coming few weeks. That should really create additional traction around the non SMS volumes and business for us. And should that have a good impact on Q2 numbers? Or will that take some time to ramp up and sort of really come up in the numbers?

21:55 It should take some more time to ramp up. Know what? We move to the companies when they're setting up their comps budget. It's it's... Doesn't, you know, scale up in the in the same fiscal year. So right now, the play is happening between channels. So, you know, some... A loss of SMS is gain of WhatsApp. A gain of WhatsApp is reflecting a loss of our sales perhaps. So while we see we are present and ensuring the wallet share stays with us of any enterprise customer, we see the scaling up happening gradually and gradually quarter over quarter. We see that setting in by last week of last quarter, sorry, this financial year, and and and continue growing as we go into the next fiscal year. Got it. Got it. And just lastly on...

22:40 You know, we've been seeing some impairment last year. It's good to see there's been none of that in this quarter. So do we largely believe that it's out of the books and no more debtors should sort of turn into bad debts? Yes. Yes. It's a fair reflection of the position. So we're not expecting any future issues like that. They're all in the past. The next question is from the line of Dipesh Mehta from MK Global. I have a few questions. So maybe I start one by one. First one to get update on FY 2027 guidance. Last time we indicated revenue margin, dividend kind of guidance.

23:32 Can you provide update to that? Yes. I'll take that. Yes, we're one quarter into our fiscal year. So we will hold out for now, and we will look at how we progress through the quarter. But as you can see in the financials, revenue was definitely strong. We are on track for the dividend and the EBITDA margins, we are working to actually address those in quarter specific items with a range of options. So a bit early, but we'll come back in future quarters. Understand. So broadly, adjusted EBITDA is there. I wanted your input.

24:18 Do you think 12%, which we broadly indicated, considering the business trajectory you expect in next three quarters as well as certain one off costs, which you have this quarter, considering both factors, 12 is still possible to achieve kind of thing in the remaining period? So, Ditesh, like we mentioned in the opening comments, there are certain factors which are transient, which we believe will reverse over the coming quarters. Some of them might be slightly stickier. So by the end of this quarter, we'll have a clear view of where we should be landing the year. But ideally, we should not materially deviate from what we had guided. Exact indication sorry. You able to hear me? Sorry. Yeah.

25:04 Yeah. Understand. Understand. Yeah. Second question is about the update on the security incident which we face at MACVM. Can you provide update, let's say, where we are in terms of the traffic, in terms of the remedial action which we have taken and how to expect massive growth trajectory in coming quarters? So the investigation remains ongoing with the support of our cybersecurity specialist, and the platform continues to operate under enhanced controls and monitoring. Massive is keeping the effective customers informed and the regulators informed as the investigation is progressing, and we will continue to provide updates as the first further information is available. But we were hopeful of an attestation to come away very soon, which will actually encourage us to go back and get back leaders from the end prices which are impacted at this point of time.

26:01 So... Yep. So, hopefully, I see we should be back in track very soon and, you know, back with our... You know, whatever business was affected temporarily should be back with us very soon. Do you expect any further cost incurred on the remedial ex... Or quarter one is provision is sufficient for us to cover? While we have made... As you mentioned, we have made provisions already. They can be very minor increase in in the cost, very, very minor. But, yeah, not... Nothing major is expected. Whatever we have provision for should we actually address all the expenses towards the security agencies and apartments. Yeah.

26:51 Understood. Third question is on the sales and marketing headcount. If I look at it, it has declined double digit sequentially as well as on Y o Y basis. Can you help us understand what any, let's say, change in the growth strategy, which lead to sales and marketing headcount decline? And can you provide broad thought process around how to look that number? Give me moment, because I'm just trying to look it up. Hello? Yeah. I got your questions. You're trying to understand what happened on the sales and marketing headcount.

27:37 Right? No issues. So maybe you can revert later. Another question which I have on the case conversion, can you provide, let's say, some sense about how you expect case conversion in first from quarter one and for the full year? Last year was very strong. Can you give some sense how you expect this year to play out? So, Deepesh, Q1, the closing balance is what we had reported. We had some delayed collections with some of the key customers in the first quarter. I mean, it's not a collection issue at first. It's just a timing issue. The reconciliations that the customers need to do took a little longer than ideally we would have expected. And March was a significantly strong collection. So if you look at it quarter on quarter, the cash flow has been weakened this quarter just because of the delay in collections. I would not say there are any defaulters in that list, but these are like large customers who typically reconcile the data in their systems as well. So that collection should flow in during the quarter and the cash position for the rest of the year should go back to the typical 75% to 100% conversion from EBITDA, which we have, the EBITDA to transfer from operations conversion. Q1, Q1, I would just want to, you know, caveat was slightly challenging because of the delayed connections from some large clients. And these are in specific geographies, largely India and UAE.

28:54 And it's not a one off. I mean, we've had it in the past 10 instances, and those customers have been long standing customers from us. So we do not see a risk around it. It's just a timing problem if we are in company. I understand. But for the full year, you are comfortable at around 75 percentage conversion? Yes. Yes. We will revert to that correction. I mean, to that cash conversion level for the year. Understood. And the last question which I have is about the non SMS business. Now we've seen some, let's say, progress and acceleration in growth. How to understand that business margin profile compared to our traditional SMS business? So as mix change, do you expect what kind of implication on margin on blended business? So the depletion of the Heltas acquisition, we would try to bring Heltas to geographies where the competition is not relatively as intense as you see in India. So we're trying to bring it to LatAm, we're trying to bring it to European market and U. S. As well.

29:53 And we see that we can make decent upfront revenues and from revenue with high margin with acquisition of enterprise customers in those geographies. The initial feedback after we demonstrated the capabilities of the platform were very encouraging. And we're fairly hopeful that when we bring this platform to those geographies, we see upswing in our RTM levels. So broadly, I'm not very clear. So you are indicating a non SMS margin profile is likely be better than SMS. Okay. That's right. I'm saying the the the improvement of the margins will be better on the new newest... Your non SMS products from the geographies, which is, you know, apart from India, using the Heltar platform, which brings in some interesting capabilities.

30:46 As I said, the reflection is very good and very positive from the enterprises and from the initial demonstration of capabilities. Does that answer your question? Yes. So broadly, just to be very clear, let's say currently it is below double digit percentage revenue share. As we clearly, let's say, approaches 20%, 30% of revenue, you expect it to be margin accretive rather than margin dilutive. That is the right way to understand? So, Dipesh, honestly, if you look at different markets, the margin profile varies even for the non SMS portfolio. And honestly, currently, if you look at our non SMS mix, it's in certain specific regions at this point in time. So when we bring in the Heltar platform also, it's going to be a bit of experimentation for us. So for this year, we would not want to commit to any margin expansion or dilution because of these product solutions or the non SMS product solutions.

31:44 You know, we'll have to play it out. We have different pricing models around those products, and we'll take a little bit of time before we can formally indicate what kind of expansion we can expect from deployment of these solutions. Thank you. Maybe you can let her revert on the sales and marketing headcount question. Thank you. Sure. Sure. Thanks. Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please proceed. Yes. Thanks for the opportunity. So my first question is on the revenue from the new product stream. So obviously, we are seeing good healthy growth there, and that is around 9% of the revenue. So but if I see more from an industry perspective, the portfolio seems to be very small. And also the overall growth in the portfolio is also lower versus what the competition of the industry is doing at. And if you can indicate what is the market share maybe in WhatsApp or Sears that we are having because the growth is lower.

32:53 So are we also having a lower market share or we are losing market share there in the WhatsApp and the RCS space? Amit, at this point of time, there's no published report to state exactly what is the market share of any participant in actual data. We have rough indication, though, of the volumes of WhatsApp and RCS, and that's also not published. I mean, that's our basis. Market intelligence, we arrive to certain numbers. But we see we have a decent share, not that we can't improve on that. But having said that, I mean, I am unable to comment at this point in time exactly how is the competitive space within The U. Because largely due to non availability of a consolidated market report on WhatsApp and RCS.

33:45 Yes. I'm just saying that because in terms of what base we have and the base of what the competition is almost three x of the base of WhatsApp and RTS that we have, and they're growing much faster versus what we are talking. So that's why there's an indication that are we likely using market share there? Or is it that we are trying to do something different there? So Amit, our attempts have been to go the market without compromising on the direct margins. There has been some aggression at the marketplace on the pricing of FOSSAP and RCS, and we don't really want to participate around that. We would intend to keep our margins intact and healthy in a manner that we can continue sustaining these offerings over a period. So for those reasons, I just said, it may one, just said I can't accurately comment.

34:36 But having said that, our strategy is very clear to keep our PMs intact and strong. And secondly, on the, you know, impact that... Sharp impact that we had on the gross margin. So you mentioned that there is one, you specific client specific event where there is a traffic reduction due to some solution deployment. And this happened after we have given the guidance in the last quarter in terms of strategy for the longer term. So is it something that was not planned? Or what actually caused this to happen? Because I think the gross margins for this would have been much higher. That's why the impact is so sharp. So if you can throw some more light in what actually happened and what makes us confident that we are going to see a reversal there. And in terms of the incident that happened, at what time frame during the quarter that happened, at the start of the quarter, middle of the quarter, at the end of the quarter. So that is So you're talking about the customer where we are reflecting some loss of TM and revenue is largely because of development which needed to be done, which they had specifically come up with. And and that led for us to... And this was last minute, and that's why we had to go back and then to a drawing board and prepare to work on this development.

36:04 It took us some time, but we are in the testing stage with bank, and we're fairly hopeful that this is going to be back with us in no time. So you will see the reflection in this quarter. We're hopeful that those revenues and margins will be back with us. Okay. No. So just what I'm trying to understand is that are... That we had a full quarter impact for this or we had a, you know, only a partial impact in this quarter? So... We will see partial impact in the quarter. We we should be able to recover. We we should have, the recovery soon, and the balance quarter should be on track. Okay. And also, it would be helpful if you can quantify or give the bridge in terms of the gross margin impact that what has actually caused in terms of quantification, what was the impact from this incident. And also in terms of the security incident that happened in, like,.

37:06 So as far as my reading, this happened at the end of the quarter, maybe in the last week of the quarter. And that's why I don't know if it had a very big impact on the margins. So the margin impact is largely driven by one specific client event. So is it such a big impact as the gross margins went down for sharply? So as I stated earlier, the investigation remains ongoing with the support of cybersecurity specialists. The platform continues to operate, and they are continuous monitoring. We are making a good assessment of the impacts, and we should be in position soon to exactly reflect upon the impact.

37:55 But yes, we're making assessment of the exact impact of the entire are we keeping the effective customers and the regulator all informed about the investigation process? And we'll continue to provide updates as we get more information about the sequence. But as said, as far as impact is concerned, we are making a good assessment, and we should be in position to give you more information soon. Okay. So, Vinay, if you can provide the bridge in terms of the margin impact, if you can, it will be helpful. Sure. So Amit, in terms of exact breakdown, I need to just double check internally. But what I can tell you is at a high level, the key items were the customer specific situation, which we've been discussing. We had some impact on aggregators, multiple aggregator accounts where we have a way to recover those margins as well. I mean, we have some routing optimizations and ways to get back that margin. But these are the main issues where we believe these are transient.

38:59 These have happened in the past and we've come out of these situations. So it is nothing out of the ordinary in the business. Just that the impact in this quarter has been a significant one, but there are ways to get back from these impacts in the business. Okay. And also in the segmental breakup that we gave, the India specific month, I know segment profit has been like negative in this quarter and does not happen in the previous so many quarters. So any specific route to that? Yes. So the large Indian sorry, the large customer which we are discussing where we had the impact was an Indian customer. That is where you see the impact on the Indian entity in the breakup. Okay. Thank you.

39:47 Thank you. The next question is from the line of Kevin Gandhi from Capgru Capital. Please proceed. Hello? Thanks for taking my question, sir. I hope my voice is audible. Yeah. Kevin, we can hear you. Please go ahead. Yeah. Yeah. Yeah. Thank you. Yeah. Thanks for taking my question, sir. So my question was on the true call with the partnership which we have chosen. Right? So, like, just wanted to know how much of the potential are we actually seeing from that deal because we have more to 50 or 50 users as you've mentioned in the notification. How we are, like, how we are pursuing that? Because I think that might seem to be great order for this mobile. Just wanted to hear from this. So Kevin, thank you for the question. We are testing the Truecaller as a platform with certain customers.

40:38 I mean, early for us to identify exactly what kind of margins we can bring in, but it certainly opens up more markets for us. Truecaller has very decent share of market in multiple continents. And, we've been fairly hopeful that, you know, if this one is testing and this testing, is of the platform and the integration of this platform with certain enterprise customers, once they go successful and, we, make an assessment of how much we can, monetize that, we perhaps would be able to give you more, stronger views here. So too early to state anything because we just signed up a deal with them and we're taking it to multiple markets and enterprises. But but too early for us to give you a accurate assessment of what we can bring in.

41:29 Okay. So, like, would that give the access to all the PCR consumers which Truecaller has? Like like, would we be able to actually set up the platform for the entire user base of Truecaller across the world? Is... Would that be assessment? So... Okay. So so that is a reach which is provided by Truecaller to any of the partner. How to monetize this, you know, they we can use rich media on the platform. We can do multiple other things, but that's something as I said. This is something, you know, once we actually have a a live case, only then we'd be in a strong position to comment on. We are, as I said again, as I've... As mentioned earlier, we we are testing this with multiple enterprises in multiple geographies, and we're hopeful that this this once works, we can give you more accurate assessment.

42:19 Okay, sir. Got it. Sir, my second question was on the Claro deal. So I just wanted to know where are we actually in the process of, like like like like, getting the platform established with Claro. And, also, just wanted to know how much potential are you seeing for for, like, Claro as well? Because as far as I understand, in FY '23, we had signed a deal with the. And Claro seems to be almost 20 x, like, subscriber count of Claro seems to be 20 x, the deal which we have done in the past. So that was, I guess, a 200 CR deal for two years. So as far as Claro goes, I know it's it's it's in a partnership with, I guess, Boxing's. So just wanted to know, like, what's the share of ROUTE MOBILE in the CLARUTE deal?

43:04 And how are you pursuing this deal? What's the potential? So, yeah, that's the second question. Taro, it's a multi country firewall deal for us, which, you know, this... Which mean... Which means that we have to deploy a certain platform, which all of these telecom operators. Now we understand we are behind time. We were supposed to be done with the deployment and should have gone live by now. But it is certain reasons which are beyond our control. There have been delay in the deployment, but we're fairly hopeful that this quarter we should be up and running with them. And we will have some tangible revenues coming away very soon. But the deal stands, the deal is on. It's only that deployment has taken a bit more time. And for those reasons, we have not seen trickling the revenue trickling in as yet. And, Kevin, just to add to what Tushar said and relevant to your question is in terms of Claro, I think we have, as Tushar was saying, multiple geographies, and we don't have a blanket contract where we can deploy all Claro networks. So there are select networks which they have signed up with us, and some big ones like Columbia are not part of the contract. So, you know, in terms of the population that you were referring to, it is a fraction of what Claro services globally, and we have those select networks where we are working with them. Just just to put put things in perspective here.

44:25 Okay. Okay. So in terms of Claro, like, what might be the share of Google mobile versus three sixty versus, like, the share of, like, revenue? The Claro deal is more of a, you know, five word deal, you know, which, you know, which is fixed plus variable. So, I mean, there is no share as such. You know? It's basically the more the platform is able to identify gate traffic going in, more we are able to monetize. There's some fixed component and there's some variables. So there's nothing... I mean, there's nothing like a share check and everything because the exclusively intact network belongs to us for terminating any international traffic in that geography.

45:12 Okay. Okay, sir. Got it. And then last question was just wanted to understand the revenue composition of IIT versus NAD. I know the quarter is what we speak to 9% now. So what's the broad state of the revenue as far as the IID and the NID goes? So given we don't break it up as public information, but IID still continues to be significant for us because, you know, we still service very large global customers. Unfortunately, we don't disclose the exact percentage breakup. So I'm not going to spell out the exact proportion here, but what I can tell you is that it's still a very relevant part of our business with very good customers in the portfolio. I'm sorry. I'm not able to spell out exact details here. Okay. Okay.

45:57 But the... But as far as my understanding was the margins are quite lower for for the IIT, right, versus the NAD? Sorry. Sorry. Say it again, please.. Okay. Okay. So as far as my understanding goes, I believe that the margins of IIT are much lower than the NAD, if I'm not wrong. In in absolute value, no. In percent, it will be maybe yes. Okay. Okay. Okay. Okay. Those are the only questions. Thank you. Thanks, Kevin. Thank you. The next question is from the line of Bharat Gulati from Dallal and Rocha. Please proceed. Yeah. Hi. Thank you for the follow-up. Just wanted to understand on the gross margin front, when we talk about this transitionary in nature, I completely get that. But do we expect these margins to revert back to the levels of q three, q four of FY twenty six, or do we expect them to revert to what we to historically do at the 22, 22 and a half percent levels? Just trying to understand that have these structurally changed our business margins towards that higher 24 to 25% mark, or do we eventually believe that in the medium to long term, we'll revert back to the 2022% area?

47:19 Yeah. So whereas as as we pointed out, you know, there are multiple moving parts to that. And as I said, you know, some of them are reversing automatically once we deploy the product and the customer comes back. Some of them will take a little bit of more effort from, you know, the business point of view in terms of identifying better routes, identifying better margins, which which which is feasible, but, you know, the time time... Timeline to that could be slightly different from what we can do on the loan cases of specific customers. So that is where, you know, at this point in time, if you ask me at the end of July whether I can, you know, accurately guide whether we'll get a 22% or a 21.5% for this quarter or whether we'll revert all the way back to 23, it's a little difficult estimate to make right now because a lot of these pieces are moving as we speak.

48:06 But as you mentioned earlier, depending upon how much of this correction we are able to do, we can land up in that range of 21.5 to 23%, which we've been operating over the last five or six quarters. Fair enough. Fair enough. Fair enough. That's really helpful. So just trying to under... So maybe directionally, if you can help me, you know, I think that we're planning to enter the new... Planning to enter new markets for RCS. And I typically understand RCS is slightly better margin than WhatsApp and SMS business as well given the corporate... Given that, you know, Google wants to take up the market share from Meta. So do we expect that to sort of drive gross margins? Again, I understand that you can't put a number to it, but directionally, if that business grows and it's growing for us at 14% this quarter, do we directionally see those margins going up structurally?

49:00 No. She's just like the... Bharat provides a better margin option for aggregators. So our our focus and our efforts will be more to take and promote that as a channel. There's certain geographies where we have deployed the platform and we have some exclusive arrangements also. Given that, our focus definitely will be towards RCF and we're fairly confident that, that can certainly blend and improve our margins a little better. Got it. Got it. And just lastly, I'm trying to understand that the level at which you are growing at, even if I understand that we're seeing good growth in the non ILD business, basically, our domestic SMS business and our new product business. As long as that continues to grow at this pace, when can we... You know, like, what share of the business would ILD be, let's say, two years down the line? And then where do we see the new product business as a share of the overall business? Right now, as of this quarter, it's at 8%.

50:00 So just if you can give some sense of what would the business mix looks like look like a year or two years from now given the same sort of growth continues? Yeah. So, Bharat, we continue to focus on all the businesses. You know, there's... Our our attention towards all the three units, which is IND, domestic and new product is seen and we are efforts to ensure that all the three segments continue growing at the same pace. So it's very difficult for us to say which will have what share of the old revenues. But we just hope that the one which is giving us highest margin has the highest share and the energies will be towards that.

50:46 So just to add to what Trishar is saying, even though we are saying that ILD is facing challenges in terms of growth, it is not that we stop pursuing opportunities there. You know, there are some large opportunities that we are looking at. Just the conversion and timelines are a little bit out of our control. So so the idea is, you and the reason why ILD continues to be important is it is large scale from each single customer. The ticket sizes are large. Although the percentage margin is low, it gives very good ROI to the business. So that is where Pushar is trying to indicate that, you we're not we're not leaving out any of the levers in the business. If it is a large enough opportunity, we will pursue it and try to close it. Fair enough. Fair enough. That's helpful. And just... So if you could give some sense of what could cause growth to come back in ILD. I understand spends are sort of compressed right now from the customer standpoint because there are other means to, you know, other cheaper means to execute the same thing.

51:43 So what could bring back the growth in that segment? And then how would that impact the remaining WhatsApp and sort of the OTT vertical? Yeah. So this will largely... But it can come back, definitely, and it can go get back to the growth path. It will be remain to be seen that how telecom operators are looking at and what is their strategy in the times to come. When I say strategy, a large leading pricing strategy. They they... I mean, they've been fairly ambitious on the pricing side over the last past... In the last few years. And if they finally decides to rationalize the pricing, I'm quite hopeful that we can bring back the same growth which we have observed over last few years in early.

52:34 So it remains to be seen how telecom operators see this business and how do they intend to grow this year. And also, we are seeing a slight bifurcation of business as well. In certain use cases, I was still relying heavily on the telecom oriented messaging solutions like SMS, RCS, and certain interactive use cases are now preferentially moving to WhatsApp and RCS. So we are seeing that transition happen, and that is where, you know, some of the solutions which we are bringing in should ideally drive the non SMS portfolio and our core platform, the SMS and RCS platform, still focuses on onboarding customers who need the telecom infrastructure. So so from our point of view, we are more driven by what the enterprise needs as a solution point, and we offer all of those channels to the solution... To the enterprise. Sorry.

53:21 Got it. Got it. And so lastly on... I understand that from October 1, Meta has certain new rules regarding using its own models to deliver the app with the conversational AI or chatbot onto Meta, onto WhatsApp. So that gives certain benefits to customers for... Such as free messaging and so on. So is the recent acquisition largely to leverage that opportunity and to sort of get that application capability to leverage Meta's LLM's? Yeah. So we've made observations, Bharat. I mean, we're trying to interpret it accurately exactly what it reflects and how it adds, you know, to the acquisition we've made. How does it bring more benefits to us? We're still evaluating it. It's, you know, better for good reasons, have been fairly they've been they've been shifting their policies, pricing policies fairly frequently.

54:21 So, you know, what one is, of course, it's important to interpret them and also see exactly what is their long term game like. How would they want the entire board framework, which they are now exposing to enterprises will pan out, and and how and how do we fit in and how do we, make most of it. So... But it's it's very early for us to, comment. As I said, you know, we we made a good observation of that, and we're making interpretations and and how... And, of course, I'm trying to plan how do we grow and benefit the most from it. From today's standpoint, do we do we have the capabilities to explore that opportunity that Meta has brought to the customers? Are we already capable to integrate with the Meta LLM?

55:10 Yeah. So the platform which we have in that is extremely flexible. They offer different elements to the enterprise. They have, you know, if it is an appropriate or meta or whichever AI the enterprise wants to use, including voice AI. So it's it's fairly flexible. It's a choice of the enterprise on how they want to run their solutions. So so it's... It opens it up for the enterprise. And it can also leverage the the entire meta infrastructure that you're referring to. So it's it's fairly open the way the enterprise wants to use it. Got it. That's really helpful. Thank you so much. So that's it from my side. Sure. Thank you. As there are no further questions from the participants, I now hand the conference over to mister Rajkil for closing comments. Over to you, sir. Good. So thank you all for your very engaging questions.

55:59 So with that, we will close the call. So we appreciate your continued support, and we look forward to engaging with you again. Have a great weekend. Thank you. Thank you. Thank you. On behalf of ROUTE MOBILE LIMITED, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.