A very good afternoon, and a warm welcome to our Q3 earnings call. Joining with us today are Uday Reddy, Founder, Chairman, and CEO; Deepak Goyal, Executive Director; Anup Batra, CFO; and Anuradha Chava, GC and Company Secretary.

Before we start the call, 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 the statements of historical fact could be deemed forward-looking in nature.

Such statements are inherently subject to risk and uncertainties, some of which cannot be quantified or predicted. A detailed disclosure in this regard is mentioned in the results presentation that is uploaded on our website.

Audio recording and transcript will be available soon. Hope everybody got a chance to go through our presentation and the shareholder letter.

The management will be happy to answer any questions, and we will now open the floor for Q&A. Michelle, if you could open the floor for Q&A.

Sure, ma'am.

Thanks for the opportunity. My first question is on the enterprise side.

Obviously, we have seen the recovery there in terms of growth both in the OTT side and the enterprise excluding the OTT. Now if you can throw some more color in terms of whether this is more led by seasonality or this is led by some structural changes that are happening in the enterprise business ex of OTT.

Because last quarter you mentioned that there were some impact from some client-specific drawdowns. Where are we in terms of the stability of the existing portfolio?

Also in terms of the domestic messaging volume, how the volume has picked up and how the telcos are seeing for a price hike in this segment?

Deepak, you want to take this one?

Sure. Sure, Uday.

Hi, Amit. Deepak here.

Overall, we have seen a good quarter, as reflected in the numbers. It is not just about seasonality, but overall I would say that we did pretty well.

If you look at the volumes on the SMS side, our volumes are growing. We have in fact been winning a lot of new customers, and we have added net new customers to our portfolio.

Those customers have ramped up. We have tried to change our mix a little bit.

We focus on more profitable routes. We focused on customers sending in messages to outside of India, and we've been growing that.

That is also brought in some additional profitability. On the OTT side, you must be aware, as we speak today, we have been recognized by Meta as the Partner of the Year, we are their most preferred partners now.

As we discussed on the last earnings call, incentives were withdrawn by Meta, but still, overall, this business is growing. We are also trying to charge for our additional services, for bots and everything.

That is also giving us additional revenues, which is contributing to the bottom line. We feel that this is going to sustain for the future also.

Okay. Sir, you mentioned about obviously the WhatsApp OTT business, the volume growth is back, but more from an Meta perspective, they have been very volatile in terms of pricing.

First, they have cut the pricing. Now again, there has been a pricing increase.

How do the enterprise clients view this? Also, any price hike there is going to impact the adoption of WhatsApp as a alternative channel, or you're seeing very strong demand there in terms of adoption?

Or also in terms of pricing, why there is so much volatility from the Meta side?

See, Meta is known for this. When they see there is strong demand, they would increase the prices.

Okay. There's nothing new.

That is happening on the ad business also, and that is happening here as well. Having said that, I would say that customers continue to ride on this channel as they see great ROI coming in.

We would also say that we also have alternate channel that is RCS available for the customers, and they are trying that as well, which is far, far cheaper. Even there, the ROI is pretty good.

Then we have other rival channel available with us. Even at RCS, as you are aware, we are the largest.

It is working well. Just to answer your question, yes, the demand remains quite strong for WhatsApp.

Yeah. You mentioned about that you have been adding new customers, and we have seen that the new customer addition has been pretty strong over the last two quarters.

If I see the revenue added from these customers, there has been a sharp decline in terms of what we have added in this quarter. If you can explain how the journey of a new client is and what actually defines a new client in terms of whether we start at a very low engagement level and then we ramp up within that and how much typically is the ramp-up timeline in terms of when we onboard a client?

See, for a customer to fully ramp up, it takes good three, four quarters once we onboard a customer. I also mentioned a couple of quarters back that we are focusing on our existing customers also to increase our wallet share where we already present.

That exercise also worked very well for us. In parallel, we were working on adding new customers as well, which we did.

You would see the results in the coming quarters. Because, as I said, it takes time to build all the solutions and everything, and ramp the customer.

We have to work on a lot of use cases. That work is going on in parallel.

I can tell you that our engine is going pretty well on both the sides. On the existing customer side, where we are continuously working on increasing our wallet share, and we are also working on adding absolutely net new customer which were never there with us.

Sir, lastly sir, last question from my side is on the platform side. Obviously, we have a stated strategy there in terms of scaling the platform business.

Are we satisfied with our performance in terms of what we have achieved in the platform business? Because the growth has slowed down versus what we have done maybe 1 or 2 years back.

In terms of the new platform launches outside of India, we have onboarded some new customers. What is the ramp-up timelines there and when we can see some strong growth in the platform segment?

Yeah. Amit, it's a good question.

In fact, we have won one deal on our ATP in India. We're going to go live anytime soon.

We should able to start billing probably if not January, probably in February itself, right? That is one bank that we added on ATP to start with.

Secondly, we have delivered the impact to our Indosat customer. They're pretty happy.

We're also in discussions with other telcos. As it's a gigantic platform.

It takes a bit of time to sell this platform. Once you deploy, it's tightly integrated with network, handset, and the SIM.

It takes a bit of time, but we are doing whatever we can do from our side to sell more of platforms in the international market.

Okay. Sir, in terms of launches, are we there in terms of whatever launches we have to make on the platform side, or we are still working on some new products, some new innovative products?

Because we are always ahead in terms of understanding the industry trend and coming up with some innovative product, and that has been our strength on the platform side. Anything if you can share with us in terms of what we're working on and what can be the future growth drivers on the platform business?

Amit, I'm afraid I cannot really tell you what are the platforms that we are working right now. Definitely, you'll get to see and hear something good in this quarter.

Our innovation engine along with GTM engine is going very, very good. It's solid.

Our innovation team is working on a platform, and which has to go live by end of this quarter. As and when we go live with both telcos and enterprises, we should able to update our shareholders.

Okay. Thank you, Uday sir, and all the best for the quarter.

Thank you.

Thanks, Amit. Thanks.

Thank you. Good evening, sir.

Deepak Chokhani here. Quick two questions.

With a strong bank balance of ₹1,000 crore, do you think our existing businesses has enough TAM for us to continue growing, or should we be considering investing or incubating other businesses which are related to our business? That's question number one.

Question number two is, we haven't seen any domestic mutual fund participation in our shareholders list. What efforts company is making to attract them?

That's it. Thank you.

Hi, Deepak. We have a strong balance sheet.

We have good cash balance. Honestly, our efforts are more to do with addressing the existing TAM currently, because it is growing at a decent pace.

Likewise, there are certain products that we have which are category creators in themselves. There, we are not limited to the current CPaaS TAM, but like Wisely.ai has geographical attraction.

We would want to continue to invest our energies in the near term in accelerating the growth on the existing platform that we have built, not just in India, but to go global. That is one.

Having said that, we continue to invest, like Uday mentioned, we are working on new platform. We want to expand our TAM with the innovation engine that we have and cater to greenfield opportunities.

We do intend spend decent amount of funds on the new innovations that we're doing internally. That is one.

And

On the same point, you think the enterprise and the platform business has enough TAM for us to continue growing in the near future? Because it seems like things have kind of saturated in terms of the market or the top line, and not only for us, just for the entire sector.

Deepak, it is not saturated. It is actually growing at almost 8% to 12% range year on year.

With OTT changing the landscape, honestly, the market is expanding. In that sense, digital adoption is going through the roof, UPI transactions, etc.

There is enough market opportunity there. At the same time, having said that, you know that we have geographical expansion aspirations.

We would want to expand our geographical territory so that we are able to address to a larger TAM.

Okay. Okay.

The next question was basically, are we are we making any efforts to attract any because, given the mutual at least the domestic mutual fund flow has been so huge and and and I sometimes wonder why what what efforts are we making to attract them?

Yeah. Deepak, there, I think what we are trying to do currently is obviously, we need to engage more.

We are going to increase our coverage. We're going to increase meetings with the set of investors in the near future.

Obviously, our first endeavor was to make sure that we get back on the growth trajectory, which I think we have started demonstrating quarter-on-quarter improvements in the number. Now that the growth momentum is back, we obviously have taken a note of this.

Internally also, we have discussed that as management, we would want to go out and engage with both the domestic funds as well as foreign institutional investors. We are going to focus on that aspect as well.

Okay. Thank you and all the best.

Thank you.

Thank you for the opportunity. Sir, as you explained a lot of things on the industry side, but wanted to understand how competition is evolving in India in the CPaaS market and especially from global CPaaS player and telco backed platforms.

Another question on the OTT and RCS that gaining traction. How should we think about the growth trajectory going forward 2 to 3 years?

Deepak, you want to take this question? Hi.

I couldn't hear it properly. Can you please repeat?

Yeah. Wanted to understand on the competition side CPaaS market, especially from global CPaaS player and telco backed platforms.

Another question on the OTT and RCS gaining traction. How we should think the growth trajectory of traditional SMS versus newer channel over the next 2 to 3 years?

Deepak, are you there?

We are seeing good amount of growth coming in on the SMS side also, as Anup just mentioned, that the UPI transactions are going through the roof. Such kind of transactions attract SMS-based notifications and OTPs and so on.

Likewise, if you look at OTT, now the focus is not only on the top 200 or 300 and large enterprise customers who are into B2C business, but the TAM is increasing to SMEs. There are hundreds and thousands of SMEs are there.

Now the focus by the OTT players is how we can build solutions for them, right? That market can be really, really huge.

That's where we are putting a lot of focus on, whether it's voice or otherwise. A lot of work is going on that.

Both SMS and OTT are going to grow in the future. I think your another question was about the competition from the international players, am I right?

Yes, sir.

Yeah. If you really see, Indian market is quite complex.

Almost every large CPaaS player had their presence in India, or they still have it. Let's say, for example, Twilio came and Twilio bought ValueFirst, and ultimately, we acquired ValueFirst, and now they're with us.

Sinch is there, but they're not doing that great. Infobip is almost on the verge of collapsing in India.

Yeah. If you really look at the international players, they don't have much presence left in India anymore, which we predicted 3 years back as well.

Okay. Thank you, sir.

Also wanted to understand currently our annualized revenue on the customer cohort grew around 34% approx. How much headroom remain for wallet share expansion within the top 20 and 30 customers bracket?

See, there is there's still room. Okay?

We feel that we we we have quite I can't quantify in the percentage right now, but there is there is still room left. There is work in progress for that.

Also, Jyoti, just to add to what Deepak said, basically, we are trying to focus on accounts basis the wallet share that we have and not just on the large customer cohort, but also customers which are between 20 to 50 million per month kind of number that we generate from them. We're targeting to focus on the lower end of pyramid as well so that we bring them on the higher ladder on the pyramid.

We would want to focus on those segments as well. That's why I think overall, there is still a lot of headroom available for growth by increasing the wallet share on the other segments as well from the cohort.

Thank you so much, sir.

Yeah. Thank you and congratulations for a good set of numbers.

What I see from the presentation is that your enterprise communication finally is going at double-digit rate YoY. If I project from your previous conferences, what I gather is it is because the pricing situation has become much better.

My question is, do we see the pricing pressure in enterprise communication to remain stable, and the market share to remain stable, or can they turn volatile again?

Abhishek, in the near future, we would want to assume that there will be stability. However, having said that, competition environment is still active, and there is continuous pricing pressure.

That remains. However, both from a sourcing side as well as from the selling price side, we have been able to maintain this thing and our growth is also increasing.

In the near term, it is stable. Because we operate in a highly competitive environment, long-term view is difficult, but near term is stable.

All right.

Thank you. I think that's all from my side.

Thanks for the opportunity. I have an industry-wise question.

Globally, we are seeing that banks and especially financial institutions, they are moving from OTPs to passkeys, also 2FA being replaced by passkeys. I want to understand what are your views on it.

Do we see SMS OTP volumes going down in the future? I want to have some understanding as to how does it impact our terminal value in your opinion.

Go ahead.

Deepak, would you want to answer that? Go ahead.

I think my line is weak.

Go ahead.

Dharvi, can you please repeat the question?

Sir, my question is, as we've been reading on that globally banks and financial institutions

Yes.

Hello, am I audible now?

Yeah. My question is that globally, we are seeing that banks and especially financial institutions, they are moving from OTPs to passkeys.

Also, two-factor authentication is being replaced by passkeys. In my opinion, the SMS volume for OTP should decrease in the future.

What are your views on it? I want to have some understanding as to how this decrease in volume, if it happens, how does it impact our terminal value.

If I could get some views on it from your end.

Dharvi, while brands are using new ways of authenticating a user, but at the same time, I think OTP continues to grow and remains most secured channel. We have not seen any drop, decrease in the volumes in OTP even when the new technologies have been made available.

Also, I think even if, let's say, OTP use case shifts from SMS, there are many more use cases that are growing in the market. Like we mentioned, notifications is going through the roof because of the transactions that happen on digital channels.

We don't see any impact on OTP traffic in the near future.

Thank you so much, sir.

Good afternoon, sir. Can you hear me?

Yeah. Just do we have any guidance when it comes to our top line and margins?

Mainly on the margins front, now you've done well in this quarter. What is the steady-state range, first of all, one can expect?

Rahil, we would not want to give any guidance on any number, because it will be forward-looking. As we said, we are aspiring to continue to build on our growth momentum, and I think it should continue.

Are we paying equal focus across all the platforms and channels we have, or is there a certain area where the company is spending more to get more market share?

On both, Rahil. We are focusing on both segments, and you would see that on both of them, we are growing continuously.

Focus is there on both the segments.

Okay. Yes, thank you, sir.

Hi. Good evening.

Can you hear me?

Yeah. I have three questions.

The first one is on the ValueFirst international business acquisition. I know approvals haven't come through, and it's hard to exactly know when the timeline would be, but do we know why the approvals are taking so long to happen right, for the acquisition to go through?

That's question number one. It was also mentioned that some 40,000 40 crores RSUs are being amortized under the employee expenses.

I wanted to understand how much of it has been amortized this quarter, and how long will that process happen? The third question is I'm not sure if I have this information right, but NIC, National Informatics Centre, is a customer of Karix.

I believe that the SMS to government organizations has gone to some other firm. How much of an impact would that have on the bottom line and the top line for starting next quarter?

Anuradha, first question.

Hello, Gopinath. Let me just answer the question regarding regulatory approvals for ValueFirst International.

Like you said, it is pending. We cannot tell you the timeline, because regulatory approvals are approvals, and we are constantly in touch with the regulator.

We are trying to resolve it, and we will update the market as and when we have an update from the regulator. Having said so, we just want to inform Yeah.

Please go ahead.

No, sorry. The timeline, I understand, but do we know, do we understand the reasons why it's taking a lot of time?

Why it's taking a lot of time, there are some questions and we're just responding to the questions from the regulator.

Okay. Okay.

For the second question? Deepak, you want to take on NIC?

Yeah. For NIC, sir, it's like this that firstly, when you talk about what will be the impact of the top line and bottom line, then impact is in terms of bottom line, the impact is not material, number one.

Number two, I would say that, when NIC floated this RFP, they came up with a very stringent eligibility criteria, which requires a lot of different kind of certifications and

Deepak, are you there?

Okay.

Yeah. In the meanwhile, Gopinath, let me answer the second question around VF RSUs.

The vesting is over 2 years, and this is the third quarter of that vesting.

Understood. Roughly 5 ₹5 crore a quarter?

Yes. Yes.

Deepak, are you there?

Hi, Uday. Am I audible?

Yes, sir.

Yes, yes, you're audible. You're talking about NIC.

Yeah. I was talking about NIC.

Firstly, I would say that, you asked for what would be the impact on our top line and bottom line. I would say the impact is not material.

It's not much. If we really lose it.

Just to give you more details about it, when NIC floated the RFP, they came up with a very strict eligibility criteria, which requires a lot of different kind of experience and certifications, security audits, a lot of stuff. What we have found is that there are serious anomalies with whom this tender has been awarded.

We have raised this with the with NIC, and we are awaiting for a favorable response from their side. It is not yet over, as far as we are concerned.

Got it. Got it.

Another thing to add, great job on the Tamil Nadu e-Governance Agency product launch that you had. Any idea on how the volumes and when the volumes might pick up, or is it how do we make money out of it?

Is it per-message basis there, or how is that contract going to work out?

Yeah. We always work on per-transaction basis, and this is our focus on going on to each and every state in the country and enable them to to be able to communicate and interact and engage with the citizens over there.

Let's say, for example, Tamil Nadu, it's a very, very interesting project. We have already worked for more than 3 months to activate our bots for more than 55 various government departments in Tamil Nadu.

They're very, very happy with it, and the service has been launched. It'll take some time to ramp up where citizens would understand that they can reach out to a particular number to ask for various things from the government.

They can, in fact, interact with the government department directly, and vice versa, where if there are any government schemes are there, any new developments are there, they can reach out to the citizen. This has been built for that.

We believe we are working very closely with them, and we believe that it'll bring very good volumes for us in the near future. I cannot say in terms of what revenues and all that, but we feel this is going to be pretty good one.

Right. Are there any projects underlying going on with other governments similar to that of Tamil Nadu?

Yes, yeah. Yeah.

We have We have We have many more, states in the pipeline with us, because each and every state wants to go for it. We are Operator:

No, I got what

I needed. Am I audible?

Yeah. No, yeah.

I was saying that, yeah, we are working with various other states as well.

Yeah. Thanks a lot for the update.

This is hoping for the best. Thank you.

Just to tell you one more thing, we are with NIC, we are very strong on WhatsApp. Our company, ValueFirst, they are the primary providers for WhatsApp services over there, and that is growing very well over there.

Thank you, everybody. In case any questions remain unanswered, please write to investor helpdesk.

Thank you.