TANLA - TANLA PLATFORMS LIMITED Share Price

In the earnings call for Q4 FY25 held on April 25, 2025, Tanla Platforms Limited's management provided a cautiously optimistic outlook for the future. Key highlights discussed include:

1. OTT Channel Growth: The OTT channels now account for approximately 29% of total revenue, highlighting significant ramp-up performance. The management noted that revenue from OTT is expected to continue to grow, although the growth rate may moderate due to a high base effect.

2. ILD SMS Revenue Impact: The contribution from International Long-Distance (ILD) SMS has decreased to below 10% of total revenue. Management indicated that this is no longer a significant headwind for the overall revenue forecast moving into FY26.

3. Platform Expansion: Management announced successful deployment of the RCS (Rich Communication Services) platform with two large telcos outside India, expecting to see revenue contributions from these deals starting in Q1 FY26.

4. Gross Margin Projections: The company aims to maintain gross margins within a narrow band of 25% to 27%. The decline in margins observed is largely due to pricing pressures experienced in the SMS segment, but management expressed confidence that any future pricing increases would positively impact both revenue and gross margins.

5. Financial Health: Tanla platforms closed FY25 with a cash balance of Rs.1,009 crores, representing a significant milestone as the highest in company history. This robust cash position allows for further investments in technology, employee talent, and potential strategic acquisitions.

6. Dividend Announcement: An interim dividend of Rs.6 per share was declared, emphasizing the company's commitment to return value to shareholders while maintaining a focus on growth.

Management's outlook is buoyed by anticipated growth in OTT revenues, ongoing international expansion, and the consistent performance of technologically advanced platforms designed to meet current market demands.

Q&A Section Summary from Tanla Platforms Q4 FY25 Earnings Call

Question 1: What would be the ILD SMS revenue for the fourth quarter? When can we see the benefit from the pickup of OTT channels?

Answer: Our ILD revenue is now less than 10% of our total. OTT channels are performing well, contributing nearly 29% to revenue. We don't see ILD as a significant pain point moving forward. The ramp-up from OTT will enhance our top line, but we do not expect major declines from ILD to affect our FY26 outlook.

Question 2: What explains the relative weakness in platform revenue QoQ?

Answer: The QoQ dip is just a blip and shouldn't be overanalyzed. We signed deals for RCS deployment with two international telcos, which will contribute in Q1. Our platform business remains critical for future growth, and we expect it to perform better as use cases expand.

Question 3: What should we expect regarding the gross margin in the enterprise segment going ahead?

Answer: We aim for gross margins between 25% to 27%. While we faced pricing pressure, we believe we've bottomed out. Any future price increases will positively impact our top line and margins. We're also improving efficiencies in delivering solutions to customers.

Question 4: What is the outlook for the industry, especially with declining SMS volumes?

Answer: The FY25 was challenging, largely due to pricing pressures, even as volume grew modestly. However, we see a growing role for OTT, which has increased from 15% to 29% of our total revenue. We remain optimistic about strong growth opportunities here, despite commodity pressures in the SMS sector.

Question 5: Can you shed light on your global expansion strategy and efforts?

Answer: Our global expansions are deliberate and strategic. We're ramping up international enterprise business and have deployed platforms to major telcos outside India. Our focus remains on proving our solutions' success in new markets before making loud proclamations about growth.

Question 6: How do you perceive the contribution of the Wisely ATP product going forward?

Answer: Wisely ATP has a strong potential. Although it's taking longer to gain traction, we have positive client renewals and case studies that prove its value. We're optimistic about its future and continue to see a good pipeline for this technology.

Question 7: Can we expect growth in both top line and bottom line in FY26?

Answer: While I cannot issue forward guidance, we finished FY25 on a solid note, with Q4 growth of over 2%. We have positive trends in OTT and RCS that could contribute to growth moving forward. We believe we're better positioned than in previous years.

Question 8: What is the status of your cash reserves and M&A strategy?

Answer: Our cash balance stands at Rs.1,009 crores, and we have declared an interim dividend of Rs.6. We're investing in talent and technology but remain open to strategic acquisitions that would offer synergistic growth opportunities.

Question 9: How does India's WhatsApp revenue realization compare to other countries?

Answer: India's WhatsApp pricing reflects local SMS rates, which are lower compared to other countries. This affects our revenue realization, but we expect future pricing adjustments to align more competitively as market conditions stabilize.

Question 10: What's the outlook for the Indian enterprise segment over the next few years?

Answer: While we don't provide explicit forecasts, we're optimistic about continuing strong performance as we exit FY25. We're seeing good traction and momentum that could support a favorable outlook for the coming years.