Ladies and gentlemen, good day, and welcome to the Affle India Limited first quarter FY 2022 earnings conference call hosted by Dolat Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jain from Dolat Capital. Thank you, and over to you, sir. Hi. Thank you, Shankar. Good morning, everyone. On behalf of Dolat Capital, we welcome you all to the Q1 FY 2022 conference call of Affle India Limited. I take this opportunity to welcome the management of Affle India Limited, represented by Mr. Anuj Khanna Sohum, who's Chairman, Managing Director, and CEO of the company, and Mr. Kapil Bhutani, who is Chief Financial and Operations Officer of the company. Before we begin the discussion, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide 21 of the company's earnings presentation for a detailed disclaimer. I will now hand over the call to Mr. Anuj Khanna Sohum for his opening remarks. Over to you. Good morning, everyone, and thank you for joining the call today. I trust all of you are keeping in good health. We celebrated our second IPO anniversary on August 8th, 2021, and what better way to mark the anniversary than to conclude the quarter with our highest revenue, highest conversions, highest CPC rates, and highest cash on our balance sheet, anchoring our continued focus on sustainable long-term value creation. We achieved approximately 70% year-on-year revenue growth in Q1, comprehensively beating our Q1 CAGR growth trend of 41%, which is well above the industry average growth trend. We attained INR 120 crore plus quarterly revenue and further strengthened our position in the ecosystem with enhanced platform and product capabilities across the global emerging markets. Our Affle 2.0 strategy, anchored on the 2 Vs, is enabling us to unlock innovative vernacular consumer experiences in partnership with mobile OEMs and operators across emerging markets and driving deeper verticalization for our advertisers across the EFGH industry verticals. As a result, our direct customer contribution has grown to 71% of our revenue in Q1 FY 2022. Our investments across products and platforms are performing very well, contributing meaningfully to overall growth and enabling us to consistently stay ahead of the curve by fortifying our market position. Our scalable platform has consistently delivered profitable outcomes, resulting in healthy margins and cash flow positive operations. The world is undergoing a paradigm shift that accelerates connected experiences, redefining the digital priorities of advertisers globally and especially across emerging markets. We are optimistic of the emerging industry trends, we continue to disrupt both traditional and digital marketing business models by leveraging artificial intelligence and machine learning capabilities to drive user engagement and conversion across the connected devices. We pride ourselves for our differentiated ROI-linked CPC business model, to elucidate this, we also included the overview of three emerging market case studies in our earnings presentation for India, Indonesia, and Malaysia. We look forward to taking you through our platforms and case studies during the analyst and investors day that we plan to organize later this year itself. Affle delivered a broad-based growth coming from both India and international markets. Our CPC business model and business noted a strong momentum, delivering 31.5 million users conversion during this quarter, an increase of 85% year-on-year at a healthy INR 42 CPC rate. Our India and international contribution balance is at about 50/50% each, will see a change in favor of international from the next quarter due to the consolidation of Jampp and our greater on-ground presence in Latam. Our efforts towards enhancing our team globally and building local on-ground presence in key international geographies are paying off well and will augment the next level of growth in the long term. As in this quarter, while India faced a devastating second wave of COVID-19, the resilient nature of our business enabled our positive growth trajectory. I'm extremely grateful to all the Afflers who not only ensured continuity of growth business plans, but also helped the company provide support to local communities during such times of crisis. Affle is committed to nurturing a culture that drives innovation, thought leadership, and collective growth. Keeping with our record and trends of recognition and accolades, Affle, which is already a Great Place To Work-certified, also received a Special Badge of Honor, commitment to being a great place to work. We are focused on a strategic goal, executing on our long-term priorities and investing wisely. We are also proactively adopting ESG to deliver all-round sustainable growth to all our stakeholders. With that, I now hand over this discussion to our CFO, Kapil Bhutani, to discuss the financials. Thank you, and over to you, Kapil. Thank you, Anuj. Wishing everyone a good day, and hope all of you are keeping safe and well. I would like to thank our investors for supporting the company during its QIP. Our strong cash flow and balance sheet with highest cash balance as of date will ensure that the company continues to invest to drive long-term sustainable growth through innovation, market expansions and consolidations. In Q1 FY 2022, the company reported revenue from operations of INR 1,525 million, a growth of 69.8% year-on-year. Our EBITDA for the quarter stood at INR 351 million, an increase of 56% year-on-year. In terms of OpEx and inventory and data cost was at 58% of the revenue from operations in line with previous annual trends. You would have noticed that our employee costs sequentially increased by 14.5%. This trend continues from past few quarters as we are enhancing our teams to deepen our access across global emerging markets. We have made any additional investments during this quarter in our strategic minority investment, which continues to do well, and we have recorded gain on fair valuation of our investment during the quarter. To provide clarity on our business operations, we have normalized profit after tax for the one-time item in our earnings presentation uploaded on the stock exchanges. Our profit after tax for the quarter stood at INR 357 million, a year-on-year increase of 90.3%. Normalized profit after adjusting the gain for any investments was INR 295 million, an increase of 57.2% year-on-year. We remain focused on working capital management. Even during the second wave of COVID-19, our collection efforts were resilient. Our cash flow from operation was INR 396 million, and the operating cash flow to PAT ratio was 134.2%. This shows quality of our customers and robustness of our operations. With this, I would like to end our presentation. Let's please open the floor for questions. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star then two. 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 Rahul Jain from Dolat Capital. Please go ahead. Yeah. Hi. Congratulations on strong quarter and also touching the records sequentially with conversions. I would like you to enlighten us on how our business is shaping on a couple of dimension, such as changing privacy policies, increased shift of media budget towards digital, any specific vertical within EFGH that is driving your momentum, and also the pricing trend both in terms of our CPC rate and the inventory cost across key markets? Thank you for your question. Well, privacy policy, as I have mentioned, in our, I think, Jampp specific investors call that also happened, I think there was a good amount of discussion on that. We see this as a long-term trend, which has already got some history to it. If you see the Personal Data Protection Act in Singapore or PDPA, they've been around for several years. What these regulations do is provide the consumers the opt-in and opt-out mechanism at any point in time that the digital ecosystem must honor and comply with from regulatory requirements perspective. When we see further the privacy policies and what is the impact and what's happening on the larger internet-specific ecosystem, say, what's happening on iOS or what's happening on Android, what's happening on the browser and the cookies, I think what we need to look at is first and foremost the fundamentals of this business. The fundamentals are like this. The consumers are on digital screen. The advertisers are shifting the budgets comprehensively towards digital. The regulation comes in and says, "Please, all ecosystem players, you need to respect the consumer's data and deal with it in a proper, responsible manner. Take consent, store it properly, share it properly, and do not misuse it." Right? This is the overall framework. Within which Affle takes a certain stance and says, "Okay, what am I going to do with respect to the cookies on the browser?" Affle took a stance on that many years ago. Google also responded many years later, and Google has still not done anything on the cookies yet. The ecosystem is responding for sure to these kind of larger trends. Affle's business is deeply insulated from anything to do with the browser or anything to do with cookies on the browser, because our business is not dependent on that, right? While our privacy policies and all are fairly comprehensive and they cover it, the investors need to know that Affle's business is deeply anchored on the in-app ecosystem, deeply anchored on emerging markets, where the consumers are decisively using Android as their platform of choice, and iOS impact on emerging markets is minuscule. Overall, Affle's business is deeply anchored on the on-device and the in-app ecosystem. The on-device ecosystem works in partnership with OEMs and carriers, and there is a fair amount of control and emphasis that the OEMs and carriers also have beyond just accepting a standard version of Android, because they have control over the version of the OS and the experience and what happens on the device. We are deeply partnering with operators and OEMs around the world to make sure that we have that shared influence on the ecosystem play, and our position is strong there. We're also looking at the Android ecosystem very closely and seeing that, hey, let's look at how has Google responded on the cookies, which has been an issue that's been around for many years. We know that the cookies on Android or Google ecosystem is only going to have some variation or change in 2023 or so. What's going to happen on the devices and what is already happening on iOS, if you look at Affle rolled out certain changes that requires a much more clearer consent from consumers on iOS devices. We have seen that the digital ecosystem, whether it is the larger companies, and most of them have reported results already, have actually done phenomenally well, and they are all anchored in a market like North America, where iOS contribution is almost 50% of the total market share. What we are seeing is that the digital spends of the advertisers are continuing to grow in developed markets as well as in emerging markets, irrespective of the need for greater consent. Affle's overall position and outlook is that every single jurisdiction in the world and every single digital platform would need to comply with privacy regulations, and we are already showing signs with Affle that we have got our platforms accredited at the Singapore standard with respect to the Personal Data Protection Act and other acts, and we are ready for these regulations to come across emerging markets as well. Whether it's India, Indonesia, Africa, LATAM markets, all of these jurisdictions in the next three, four years will have regulatory policies as well as some opt-in mechanisms on iOS and Android. The fundamentals of business are like this. The consumers have a choice. Do I opt in and take ads and enjoy an app or a service for free, or do I reject ads and be willing to pay? I think the balance of trends would lie in favor of a lot of the consumers, especially the youth as well as the rural consumers who are going to continue to fuel the next billion devices or the next several billion devices, will necessarily, in my view, go for opting in. So the trends will continue, and see that the advertisers and consumers will both go for digital advertising and provide their necessary opt-ins and compliances. In terms of digital budget shifting, I think I've already answered. I think the consumers are clearly married to connected digital devices. Advertisers will necessarily need to shift. In my view, at least 50% of the total ad spend must happen on digital devices across emerging markets as well, and we will see continuous CAGR growth on digital advertising spend growing. In terms of our focus on which verticals will deliver better growth, our view is overall in the top 10 verticals that Affle has anchored over 90% of business on, which is category E, F, G, H. We have seen consistent growth across these verticals and advertisers large and small in these industry verticals adopting digital much faster than what we have seen in the previous times, and that's reflected in our growth. Clearly, the advertisers are bringing in more budget, wanting more, and we have also seen the innovations that we are delivering, that it's not just online conversions, it's not just new online conversions, but repeat online conversions. We're also seeing offline conversions and some of the case studies overviews that we have shown in our earnings presentation will give you some flavor of what's happening so that gives you a sense of where this is headed. In terms of CPCU trend, achieving ₹42 CPCU, which is our highest, is actually very comforting given the fact that volumes are growing, and volumes obviously growing because record number of conversions that are notionally higher but still important to see that it's ₹42 CPCU and it's not INR 40. As we grow our business into more international markets as well as make decisive certain vertical focus impact on developed markets, I think the CPCU rate will see a positive upward lift progressively just because of the market dynamics and mix. We are in a value-driven business, w e are not a cost plus business model, w e look at ROI-linked pricing, w e look at ROI-linked value creation for the advertisers, and we are fundamentally adding value to our customers, and therefore we command a fair share of that back. As volumes continue to grow, we keep pushing and nudging our ability to extract higher CPCU rates from advertisers as well. I'm pretty bullish about the overall trend and the sustainability of our growth and bottom line performance over the long term. Mr. Jain, do you have any further questions? Yeah. Sorry. Just on this CPCU trend, of course, through higher international exposure will definitely increase. Will that be applicable to Jampp integration as well? Well, absolutely. I think Jampp is largely present in LATAM and America in certain key verticals, and we, as our own platform, would comprehensively enhance their capability to go for deeper funnel conversions, deeper ROI-linked business model. That would necessarily help not just improve the CPCU rate, but Jampp's own margin profile and profitability over time. As we continue to do what we have already done very well with Appnext and mediasmart, which is not just acquiring, but fundamentally adding value at a platform level, at a business model level, and then at an operational level to be bottom line and margin centric and focused. Our organization is deeply focused, and we don't leave, if possible, even a single cent on the table. We are going to negotiate, we're going to be tough, and we're going to not just fight for growth, but also for defending margins and delivering cash flow positive performance as you have seen consistently from us. That is what we will impact into the lives of Jampp, and we will see great outcomes, I'm sure, in the current financial year itself. Sure. Appreciated. I'll join back in the queue. Thank you. The next question is from the line of Mohan Kumar from JM Financial. Please go ahead. Hi, sir. Congrats on a great set of numbers. My first question is three-fold. We've seen a really strong first quarter. What is the organic growth rate that we can actually expect of this year? Will Jampp actually have now better run rate than they had last year, given that they've finished like one month of having Jampp with us? Do we have some clarity on whether the revenues will be higher than last year? The final question is, [audio distortion] to the connected TV apps that you have, you guys have signed a couple clients over the last couple months. With Jampp kind of giving to the U.S. where connected TV is a bigger ecosystem, can we expect a larger growth rate over there over the next year or so? Great questions. Thank you. Indeed, Q1 has been a fantastic quarter for us. Typically, if you see our quarterly growth trends, organic growth trends, you will find that Q3 is generally the peak of our performance in any given financial year. So it's Q1, then Q2 is higher, and then Q3 is the highest, and then Q4 is somewhere between where Q2 or Q1 were. Overall within this year, we should see very healthy organic growth without Jampp. When we look at Jampp getting added, you're absolutely right in inferring that with Affle on boarded, we will definitely look at, first of all, unit economics of Jampp. At what CPCU rate can they sell, what kind of conversion can we drive, and extracting higher value on unit economics and turning it fundamentally profitable at each unit economic assessment, and then pressing the accelerator for growth, right? We as an organization are looking for all-round well-balanced growth, not just driving revenue growth and revenue growth and not impacting the bottom line profitability and collection. We will first and foremost focus on Jampp's unit economics and then press the accelerator for growth, and that's our strategic execution part. My aim would be to grow it better than whatever they did last year on top line as well as improve the bottom line substantially. I've given some guidance on that in the Jampp specific call the last time in terms of what our ambitions are with them. With respect to connected TV, thanks for bringing it up. This has been our organic investment into the connected TV product because we have already verified and done the feasibility in partnership with certain customers and campaigns to ensure that this is already revenue generating and that we can run it profitably. Doing that in emerging markets where connected TV is at a very, very nascent stage today. I can safely say that we are thought leaders, first movers in bringing this out for the advertisers and the partners in the ecosystem. Our focus will continue to be on connected TV across emerging markets first, because that has always been our first execution ground, and we are very emerging market focused. When should we take these new initiatives onto Jampp? I think we will give it some time. Let us first ensure that the core business for Jampp is upgraded with the Affle 2.0 strategies on verticalization, going deeper on vernacular, going on operator OEMs, and verticalizing it to get the CPCU business and the margin profile going. Once we solve and put Jampp on that growth trend, we can also incrementally add whether with Jampp or our own on-ground presence in developed markets on connected TV. Let us build the connected TV success in emerging markets first as part of our strategy. That's how we are executing this. This is our home ground. This is where we are strong. Thanks a lot, sir. Just a follow-up question. You mentioned that cash on the books is the highest it has ever been. You still have some proceeds left from the QIP. Can we expect announcement of a deal over the next quarter? I don't want to put you in a situation where you've got to say something that you don't want to, but can we expect a new announcement of an acquisition, a sizable one in the near term? We've been reading a lot about the Indus OS battle that has kind of phased out. I just want to kind of hear something from bosses' mouth on where are we there, and are we actually planning to buy Indus OS out completely? If there's something you can't share, I'm more than happy to kind of let this slide. Well, having a strong balance sheet is important. I think it builds confidence not just of investors, but also of the team that you always know that you have options, you can do things. If you look at the history of our company, all our investments have been largely funded through internally accrued cash flows. I love the discipline of the way the organization has executed on that. Just because we have cash from QIP, there should be no added pressure to go ahead and deploy it. The reason why we did the QIP was because internally we already knew that Jampp was waking up, and this would be useful to have done at that time, and the timing was perfect. We raised the QIP in the first week of May, and we announced the Jampp agreement signing on the ninth of June. You can see that we raised money just in time and deployed it with efficiency in a deal that was very sensibly balanced. Is there any other deal that will come in the future? Certainly. Is there any time horizon, this financial year, next financial year? Well, we'll wait and see. What I want you to know is that we are only doing strategic transactions, very carefully calibrated, and we are deploying this money as if it is generated through internal accruals and cash flows. Very, very careful in terms of how we deploy any investment, whether internally on our products or externally on inorganic acquisitions. With respect to Indus OS, given that this is an Affle India Limited call, let us all be absolutely clear that Affle India Limited has fully exited its position with respect to Indus OS. Any battles that are being pursued are strictly being done by the promoter group companies, Affle Global Private Limited, and I'm not authorized to speak on that. It would suffice to say that Affle India is fully exited from Indus OS, carries absolutely zero risk with respect to any legal tussles that are going on. In business not everything goes as per plan. I guess Indus OS could have been scripted as a different story, but it is where it is. Affle is going to be tough. It's going to continue to focus on its own business and let Affle Global Private do what it must do and let the course of the laws of the land decide where it falls eventually. But that's all I would like to say for now. It would suffice to say I'm quite happy with where things are overall. Definitely. Congratulations on a great set of numbers and all the best for future quarters. Thanks a lot. Just to clarify, [audio distortion], one question was this. There is no revenue from Jampp recorded in this quarter. Jampp consolidation will happen only from the 1st July. The question was making sense that we have one month of Jampp in our results. There is no Jampp inclusion in our results. No, I get that. I was mentioning that we closed it at the end of June, and we've got one month to get some clarity on how Jampp is going to play out for the rest of the year. Thanks for the clarity. Thank you, Himesh. All the best. Thank you. The next question is from the line of Rishit from Nomura. Please go ahead. Rishit from Nomura, your line is unmuted. Please unmute the line from your side and proceed. Mr. Rishit from Nomura, if you can hear me, please unmute the line from your side and proceed. Maybe we can take the next question and come back to Rishit later. Sure. As there's no response, we take the next question from the line of Vikas Mantri from Moonfort Ventures. Please go ahead. Hello. Hello. Very good morning. Thanks, Anuj, for a great set of numbers and congratulations to your team. You are delivering consistently good outcome. I have a very small question that what is the churn rate of our customers? Well, let me answer that with the two lenses. We are an ROI-linked CPCU business model business, which means that we work with customers and campaigns with a very clear disclaimer to them that, "Look, I'm only going to drive your campaign to the extent that I'm seeing healthy conversions with consumers." If any advertiser's campaign is onboarded and we keep advertising and the consumers are somehow not converting for that particular advertiser, Affle would essentially go back to the advertiser and say, "Look, I can't be running your business. I'm not getting enough conversions with consumers." We are a consumer platform company. As a consumer platform company, we have a very wide basis of access and reach to consumers. The advertisers whose campaigns are performing well with us are seeing clear ROI linkage, and therefore, there is an extremely high recurrence and retention rate. Having said that, we do not promise any particular customer any minimum conversions on a recurring basis because of the nature of our business model. We basically go for driving the campaign and see how the consumers convert and respond, and optimize for maximizing that. There is absolutely no minimum commitment with an advertiser or something like that. The advertisers who have been benefiting on the ROIs that they generate by the conversions that we drive have been necessarily working with us multi-years, quarter on quarter, and so on, and we are seeing a very, very strong retention trend. We haven't given out any specific numbers. You would see this particular time we have given one very important trend, which I think is a mega trend in our industry, and it's a very important trend to note even for us, and we monitor it rather closely, which is related to the direct customers' growth, primarily which is powered on the EFGH categories. What this means is that the number of advertisers who are working directly with Affle, not through some other intermediary or agency, and therefore, their data and the first-party data that we're receiving from these advertisers is direct with us, is 71% of our revenue. This used to be in FY 2020, about 57%, and before we went public, FY 2019, I remember it was much higher. I think over the last two and a half years, we have seen a systematic shift where we are able to work directly with our advertisers, and the trend has been even more clearly established during the COVID-19 times, where the advertisers are coming direct and working with our platform. This is a very healthy trend, and this should give you an indication with respect to the quality of customers, and also the cash flows should give you an indication that we are largely collecting. A significant amount of our profits is getting collected in cash flows. It's a very good quality of business overall. That's right. Still, can you give me the number of retention? It's over 97%, 98%? What is it about? Can you give this? Let me work with the approval of our board and see when do we start revealing it on a consistent basis with respect to customer retention and cohorts. That's right. So on. At the moment, we are where we are, and I try to give you the answer so that you can derive comfort from the numbers that are already reported. That's right. Thanks, Anuj, for making such a great company, at least from India. Only last question is that how many of our customers are VC-funded and others are normal? Okay. This is a great question. I give you qualitative insight. Most of the time, we are working with larger enterprises, and we also work with a long tail of customers. It'll be fair to say that our company has always been run with a very comprehensive risk management framework. We don't take deep exposures with customers who are dependent on the next round of funding or something like that. Of course, most of our customers are large customers or a significant part of our revenues is coming from those customers, which you and I would qualitatively assess that these companies would still be around for the next five years. I think we have a very safe profile of customers, and before we take on bigger business or volumes growth from any customer, we do this risk assessment on creditworthiness. You can be assured that Affle, when it reports revenue, it is doing it with the lens of collecting it. Thanks a lot, Anuj, for doing a great work and listing so early, and we are really beneficiary of that. Thanks a lot. Thank you. The next question is from the line of Rishit from Nomura. Please go ahead. Hi. Thank you for taking my question. Congratulations, Anuj, for this. A couple of questions. One is related to the Appnext ecosystem. You've done two acquisitions and one investment, which is the DiscoverTech and Bobble AI, I guess. Could you just help us understand what is happening in those areas? Do we expect traction to come from these acquisitions? Any color on monetization strategy would be super helpful. That's all I have. Two follows. Sure. When we look at Affle's overall business, when I was answering all the earlier questions, I made two very distinct points, and I would like to revisit them. First was on-device engagements with consumers as part of our consumer platform. What does on-device engagement mean? It means that we work with OEMs, we work with operators to make sure that our software and our ads and content and recommendations to consumers can be deeply integrated on the on-device experience of the user at multiple touch points across the journey of the consumer on the device, even before the consumer has gone and launched a specific app that they have installed and is used by them on their device. The second part of the ecosystem is what is called the in-app ecosystem. The in-app ecosystem is when we are reaching and engaging with the consumers while they are using one or the other app on their device, which means that we now need to work with the app developers through ad exchanges, programmatic traffic, or premium app developers through direct integration of our SDKs or through API server-to-server integration. We have the entire technology stack to then work on the in-app ecosystem. Now, both of these ecosystems are very closely linked because the same consumer is on the same device, and it's actually a continuous journey. You open your device, you navigate through your device, you find an app, and you use the app. You close that app, you're back on the device. Again, you go to another app in some other folder, and so on. As a consumer journey is a natural interconnect between on-device experience and in-app experience, back to on-device experience and in-app experience. In the Appnext ecosystem, overall within our plan, we are very clearly focused on the OEMs, handset manufacturers around emerging markets, and we are working with them to integrate our technology at various touch points on the device. The monetization strategy for both these ecosystems is actually very similar. As far as the advertiser is concerned, the advertiser is being sold conversion, ROI-linked conversion, and it does not matter to the advertiser whether the conversion is happening on the device, whether it's happening on this touch point or that touch point. As long as we deliver a conversion which necessarily happens within the app of the advertiser, that's when we earn our revenue. The monetization strategy is common. The reaching out to the consumer strategy is either on the device or in-app, and it is blended perfectly on the device, and I think this is where our strategic differentiation lies. Your question was also about DiscoverTech, which is a small acquisition that we did in January 2021 this year, and the Bobble AI minority investment, which we have doubled down on in the last quarter at the same time, and we have invested in acquisition of them. I think both of these are strategic, and we are seeing great momentum there. We have exclusive monetization capabilities into our platform on Bobble, and we are increasingly seeing greater monetization happening there. With respect to DiscoverTech, it is still very small, but we are already seeing impact because we already had launched our global OOBE platform products in January this year, and it was done before the completion of DiscoverTech acquisition itself. These are growth areas for us, and we are very privileged, and I expect to beat the industry average growth trends progressively and consistently with all of these investments in products which are already proven to generate revenue. We just have to consistently scale it one step at a time. The revenues will essentially start coming from. Do we have anything in numbers from these investments, or it's largely something which will come in the Q2 to Q3 this year? It's not significant. The numbers are not significant. I think as they become significant, we will certainly update. I think overall, all these platforms are seeing great adoption, great adoption in the ecosystem with partners. Most importantly, if you look at companies like, let's say, Digital Turbine, or you look at ironSource or even any private companies that are in the space, today, you can absolutely, certainly stand tall and say that Affle's products, platforms are addressing the end-to-end consumer platform opportunity and the end consumer journey, both on device as well as in-app, like no other platform. We are so deeply focused on emerging markets while none of these companies are anchoring on the emerging markets. We have a extremely strong moat and competitive advantage on these products and platforms for emerging markets. Okay. A mandatory question on the privacy policy. Just wanted to understand two parts to that story. One, do you foresee that a lot of these investments could shift towards areas where they've got first-party data? That is one. Second, when you look at one of the largest player in the U.S., or probably the largest, I think, in the ad tech space. They've talked about investing in creating their own UIDs. While obviously for us, given Android ecosystem, maybe the risk is not as large as the iOS ecosystem. Still, are we hedging our bets through creating an alternate mechanism where we are still ring-fenced so that, in case if Google adopts something like that, we still have a play at a much larger scale? Thank you. See, the best way to get first-party data is to be directly connected with OEMs and operators, directly connected with the advertisers. I think we are in a very strong footing there as a company. That's as far as first-party data is concerned. I think our company is in a very good position with respect to first-party data, both with the advertisers and publishers. Now, most of these players that you're talking about, they get first-party data largely from the publisher side only, not from the advertisers, because they're not on the conversion business model. This biggest player that you're referring to, I believe it is The Trade Desk that you're alluding to, and they're launching their own UID and so on. Let me tell you why there is a urgency for them to do that is because a lot of their business is still on the PC, on the browser. Even if it is on mobile, a lot of the business is still browser and cookie-enabled. They are trying to de-risk from the cookie to have an ID which works together. The same goes for companies like Criteo. I think the UID side of it, we have investments internally within our platforms. We have a unique identifier for each device. Are we going to open it up for the ecosystem, or are we going to do something bigger on that front? I think I'll reserve the options for later. It would suffice to say that in terms of first-party engagements with both advertisers as well as on publishers, we are in pretty good stead. I don't see budgets necessarily shifting in one direction or the other. I think broad-based digital advertising spends are going to grow in every single bucket of digital advertising that one can see globally. Can I squeeze in one more? Is that okay? Just if you were to look at, let's say, employee expenses. We've expanded a fair bit over the last, I think, three to four quarters. We're expanding on-ground presence across several of these markets. When do you expect the benefit to start coming of those investments? That's it. Thank you. The benefit is already there. What you're saying is when you start investing and putting people on the ground in different markets or in different products, you start seeing that showing in the OpEx of the company on the P&L. You'd also increasingly start seeing those markets delivering greater revenues over time. I think within this financial year, second half of this financial year, it will support the organic growth trend by having people on the ground. You would see a consistent pattern in our company, a good balance between investing organically, internally, as well as doing consolidation opportunities on fair value and attractive valuation basis as and when the opportunities come. I think. Summary point is that all our investments are done in a very carefully calibrated manner, and they are done with a view not just for long-term returns, but within the financial year itself, we want to see turnarounds. It's a good balance of immediate outcomes as well as long-term returns on sustainable basis. Perfect. Thank you, and all the best. Thank you. The next question is from the line of Mayank Babla from Dalal & Broacha. Please go ahead. Hi, am I audible? Yes, you are. Thank you for taking my question. Congratulations on a great performance. Sir, my first question was regarding the margins. While you had commented that you've increased employee count on ground, could you shed some light on the margin weakness despite improvement in CPCU rates? Kapil, I would like you to take the question, and I'll just take a breather for a moment. The voice was not clear. Can you repeat the question, please? Sir, the margin weakness is purely attributable to the increase in employee count on ground because even our CPCU rates have improved. Could you shed some light on the margin weakness Q-over-Q and Y-over-Y? If you see there, the EBITDA margins are about 2% out from the previous quarters. Largely 1.5% is coming because of the employee expense, is majorly attributed to that, and there is some support other expenses which are also taking on it. Right? Our GP margins are almost similar, which are also happening on the cost side of the data inventory. Primarily, the contributor is increase in the employee cost. Sure. sir, if you can, what would be the equilibrium level of margins going ahead, if it's possible for you to give some qualitative guide? We believe that we should be able to sustain at the current level of margins, about 25% of EBITDA without adding to inorganic numbers into it. Organically, we are comfortable with 25% of EBITDA margin. Right. Sir, related, just a number. What would be the latest employee count? It's around 425 plus. Exact count is not on top of my mind. It's 425 plus. Okay. Sir, just last question- I'll just help you with that. 425 plus is based on the full-time employees who are under direct employment contract with the company. We also have certain functions where we have people on contract or outsource and so on. It's not the full reflection of the workforce, but the employee count answer can be best given to this extent right now. Right. Sir, just my last question directed towards Anuj Sir. Sir, in the Jampp call, you had mentioned that Jampp, you will convert from the cost per impression model to the current CPCU model that we have. Sir, I just wanted your views on what is the process and challenges in this conversion of business model. I'll correct your question. there's a cost per install, was how it was being framed in the call that we have on Jampp. moving towards CPCU business model essentially means that going to the advertisers and taking the ROI linked deeper funnel KPI, and the advertisers would then necessarily need to share deeper first-party data with respect to conversions. it requires a few things. One, that educating the entire team on how to sell, how to position it, and then it requires certain integrations on the cloud computing side, on the tech side, how do you receive that data? How do you process that data using the data science algorithms? How do you optimize it towards greater outcomes? Linking it to Affle's core platforms and the core cloud computing efficiencies with which we manage such higher volumes of data and optimization. Those are the two broad things that need to be done, and that's pretty much it. Once we do that, then it's about execution. Optimizing it one vertical by one vertical, one market by one market. Within this financial year, I expect to achieve that with Jampp. We completed the acquisition on 1st of July. Nine more months of this financial year from 1st July, we should be able to achieve that. We will then see good outcomes with respect to not just growth, hopefully, but also on the bottom line. For Jampp, on standalone Jampp basis, we're not going to reach the kind of bottom-line performance that Affle has already optimized itself for, but they will definitely show clear signs of improvement versus their own previous trends. Okay. Thank you so much, Anuj sir and Kapil sir, and best of luck for the rest of the year. Thank you. Thank you. The next question is from the line of Rajamohan Venkataraman, a professional investor. Please go ahead. Yeah. Thank you for the opportunity, and congratulations on a great set of numbers as well as consistent delivery on your promises. Generally, Anuj, I wanted to understand your broad perspective of open internet to walled gardens, as you see it playing over the next five years, are you seeing increased momentum in the open internet market, when compared to walled gardens? Especially, since the last three years of Affle's privacy policy. If it were true that the open internet space is gaining in momentum, though you consistently talk about the huge 10 billion connected devices opportunity for Affle over the next 10 years, do you see the existing virtuous cycle to have become more structurally pronounced, especially after the pandemic? In this light, are you more confident of hitting 10 billion devices than when you were, when you initially set this target? That's a great question. Thank you for asking that and keeping the emphasis on long-term strategy and bringing the 10 billion connected devices vision and goal of our company for Affle 2.0 strategy for this decade. [audio distortion], let's go with the definitions first. What is open internet? What is walled garden? Now, these were not standard terms. Walled garden was a term that was coined with respect to the value-added services where operators were saying that only if your product is on our website or the operator's portal, only then the consumer can do it or the billing is also controlled by the operator. This was actually for that industry. The same terminology has now been applied by several people on Facebook, Google, Apple, and the ecosystem, and saying these guys are closed or they're more walled gardens, and so on. The companies like some of the other companies who don't work with Google, Facebook, or are head-on trying to go and compete with Google, Facebook in their space, specifically, let's say Trade Desk, they coined the term open internet, and we support open internet, and so on. The way I see it is with more fundamental lens. Where is the consumer? This business is not about where the advertiser is and where Google, Facebook are. It's really about where the consumer is. If the consumer is spending time on a device, or it is spending time within apps, or it is spending time within certain apps which are now being labeled as walled gardens, it is the consumer's prerogative, it's the consumer's choice. Depending upon where the consumer is spending more time, the advertising budget would normalize over there eventually, right? Let's say all of us decide, we'll only go with walled gardens. We'll only use Google and Facebook and nothing else. What will happen? The advertiser's budget will necessarily gravitate on the walled gardens only. If the consumers decide, no, not Google, Facebook, I'm spending a lot of time on, let's call it the open internet apps and the experiences, then the budget would shift over there. Now, what has happened over these years is that, especially, let's say emerging markets lens, Indian consumers, largely demographic profile is either heavily youth-oriented or there are increasingly rural audiences that are coming up. They don't have any specific ascendancy towards, let's say, a Facebook or a Google per se. WhatsApp continues to remain important, but things will change. In the next five years, there could be something else that becomes more exciting for the consumers, and their attention and time would shift. Affle takes a very holistic stance on this. Right? Most of our business is coming from the open internet side or the non-Google, Facebook side. We are also having a very clear open path where we are integrated with Google and Facebook and on WhatsApp and so on. Because if the consumer is there, why should I stop going to the consumer there? We are a consumer platform. Why should I say that I'll only target the consumer when he comes out of the walled garden, and I'll stop targeting him when he goes in the walled garden. Affle doesn't have that view. We are consumer-centric. We're saying wherever the consumer goes, right from the first-time device till they change to another device, wherever they go on the device, I will strive to make sure that Affle's platforms are able to reach and convert the consumer on all of those touch points without having any negative bias one way or the other. That's how we run our business. In terms of how the trends are evolving and our goal towards 10 billion connected devices, we have taken some clear strategies on that front. One, we are going deeper with the vernacular strategy. We're going deeper with OEMs and operators and partnering and investing in that space. We are also very clear on going beyond the mobile device to other connected devices, such as connected TVs. We've invested in that very early. I think we're one of the first people in India and in other emerging markets to bring connected TV as a product and a proposition that advertisers can actually come and adopt together with us. We are ahead of the curve there. We also launched something called Household ID internally. We don't open it up in a big fashion, but what this means is that the advertisers can come and say, "I want to target certain location and certain households." Which means, there could be 10 devices within the household, two laptops, five mobile devices, maybe two connected TVs over time. This could be a phenomenon where we're saying that we want to go after targeting a certain household for a certain kind of a product and proposition. I think these are capabilities that we have invested in organically, and I'm pretty confident that in the next five years, you will see a massive lift in the direction of reaching out to more connected devices. Launching into other emerging markets like Africa, LATAM, and strengthening presence in other emerging markets. We are also trying to see when we should make some foray into China and so on. It's all lined up towards the 10 billion connected devices mark. In our earnings report, you would also see that there is a research report that's mentioned, which talks about how by 2025 itself, there will be 6 billion new connected devices that will come. I think that my confidence is high and the commitment is strong towards achieving the Affle 2.0 goal of 10 billion devices over time. That's a great answer, Anuj Sohum, and quite a confident answer, too. The second question you did mention- I'm sorry to interrupt. Mr. Venkataraman, may we request you to come back in the queue for a follow-up, please? There's one final question which I had. Sure. Go ahead. If I can squeeze in. Coming to operating leverage, let me take this question first, finally, and close it out. You have indicated to a natural scope of improving CPCU through internationalization and developed market penetration. Will this create opportunities for serious operating leverage improvement? Also, want to understand operating leverage in your existing businesses, which have been at about 25%, 26%. Can you say that you have reached the maximum in operating leverage in your existing businesses, or is there scope to further improve it? Great question. I'll answer very quickly. Not everybody may have done the study. Let me give you a sense quickly. The unit economics of our businesses, if we make INR 100 of revenue, we are roughly investing about INR 60 of that INR 100 in what we fully expense out in our data and inventory cost. Now, this is fully expensed out on the P&L, but I want all the investors here to know that a good part of this, the data part of it, is actually an investment. Which is not reflected on the balance sheet, but we are consistently investing so that we have deeper vernacular verticalized insights into our platform so that we consistently keep on going for greater growth and deeper growth going forward. Right? This 60% is a consistent investment that we are making, and we expense it out fully. Comes the rest of the 40% plus that is left. Within that, we see all our operating expenses and also the taxes and so on. You typically see a profit after tax in the range of 19%-20% odd and so on. Have we maximized on the operating leverage for our organic business? The answer is no. As we continue to scale, we will always see that the operating expenses will not grow as fast as the revenue growth organically, and therefore, there will be margin expansion. However, because of the acquisitions that we have done in organic acquisitions and all of those companies, whether it was mediasmart, Appnext or the prior ones. All of them, when we acquired them, they had one thing in common. They were not profitable, t hey also had another thing in common, t hey were just breaking even. they were not burning, but they were also not adding to the bottom line. Affle acquired them at the appropriate valuation, which was obviously a very good transaction for them and for us. we have consistently worked on turning it around on the unit economics one step, one inch at a time, and making them profitable in year one, more profitable in year two, and so on and so forth, to bring them to the same level of efficiency that Affle's core business is. with these acquisitions as well, you have seen that our PAT margin has been consistently in line and appropriately balanced because the organic business was expanding the margin, the inorganic one was averaging it down, and the same thing will happen with Jampp now in this year. Jampp is a bigger transaction, so you will see the mathematics of it getting added up. if you take a three-year view to it, we will bring every single business to the highest possible extraction possible with respect to margin and value creation. You will see expansion over time, w henever there is any inorganic transaction, the math of it would add up and a new balance would be formed, and from there, we will inch it up again towards 25% EBITDA and higher. Understand, Anuj, thank you very much for your detailed answers, and wish you the best. Thank you. Thank you. Due to paucity of time, may we request all the participants to please limit your questions to one per participant. Next question is from the line of Ruchi Burde from BOB Capital. Please go ahead. Congratulations for a very strong set of numbers. I have one question, Anuj, on your direct customer business. Could you explain us what are the factors which are driving this particular trend of elimination of agencies and intermediary? A follow-up to that, will this trend manifest into more sales and marketing efforts for Affle? Great question. I would look at the positives of this trend first, and the positives of this trend are that you are having a direct integration with your customer, you're invoicing them directly, you're contracting them directly, you're collecting from them directly, and that has huge advantages in itself. Having said that, when we talk about the agencies business, agency business is a very important business, some of holistic cross-channel media, traditional, digital, and there's a very different proposition. Now, a lot of the large companies, global companies, are mandated to work with agencies. They have to use it, the agencies, for all their advertising touchpoints, and therefore, the agencies are super important partners for Affle. We are a neutral entity as far as this trend is concerned. We are receiving this trend with open arms as it comes in favor of digital direct advertisers wanting to work with tech platforms directly like ours, and we have been a beneficiary of the trend. Have we been a catalyst to make that trend happen? The answer is no. We continue to be best friends with the agency groups, and we would never create channel conflict that, hey, we are with the agency, and we'll try to tell the advertiser, "Hey, why are you with the agency?" Nothing like that. Right? We are neutral. When we work with the agencies, we treat them as our direct customer. When we work with the advertisers as the direct customers, we respect that relationship just as well. Does it mean we have to invest more one way or the other? Well, in some cases, yes, because when we work with agencies, you convert one agency, there may be 10, 15 or 20 apps of their customers that they are promoting. When you work with each one of them directly, you've got to contract it differently. Having said that, even when the agencies work with us, the end campaign is for the advertiser, and we necessarily mandate to our team to ensure that the relationship is two-fold because some advertisers may go and say, "We'll work with agencies once they get bigger." Some advertisers may say, "We don't need the agency now, we're going to go direct." We need to make sure that the end relationship with the customer, as well as with the intermediary agencies, is very, very strong. We have been investing both ways, and I don't see any dramatic change in the cost structure with respect to sales and account management for direct customers versus the agency-based indirect customers. Thank you. All the best. Thank you. The next question is from the line of Ponkar Gogardare from Shree Consultancy. Please go ahead. I just wanted to know the margin compression in the international business quarter-over-quarter. You have alluded to the fact that it's more to do with the employee cost, but there is a significant more than 50% drop in the margins in the international business quarter-over-quarter. Any particular reason for that? Even the Jampp is not included in this quarter. With regards to- Yeah. international business is a different aggregation of different geographies. Different geographies have a different margin span. As the cyclic effect of all those geographies happen, there is a certain amount of compression on the gross margins on certain geographies, which will improve over a period of time. Is there too much change in the geographies mix quarter on quarter that is giving this kind of margin compression, or what is it like? It is not only the cyclic effect, but also certain campaigns which give a higher margins or higher ROIs or lower margins are higher. The combination of all is there, and we believe that the fair numbers are these numbers only at the moment. We have an endeavor to increase the margins in international markets. You have to appreciate that we are not fully grounded on our feet in the international markets. There is a need to invest by giving away some margins in certain geographies. Those investments are built into the margins in international geographies as we try to expand in those geographies. As we are very well-grounded in India, we are not very well-grounded in all markets. That is where the employee expense are being incurred to improve our foot presence on those geographies to improve the margins. These combined factors, you have to take it forward. The current margins in this quarter are sustainable, you are saying? Which you will try to improve. They are sustainable margins, and we look forward to expanding our market reach in international markets. Which is a function of volume. As we increase our volume in international markets, as we increase our scale, we will see greater efficiencies coming in. When we go to, let's say, certain new markets or within existing markets, if we open a new vertical, we work with the advertisers and we try drive the conversion for those advertisers in these verticals, and we need to invest. I think I mentioned that earlier. The data and inventory cost that we expense out every quarter has a good element of investment in that. I would say even close to 10% of the total data and inventory cost is actually not because it is driving a conversion. It's being invested to learn, to optimize so that we can deliver greater growth going forward. There is a good element of investment in the P&L itself, which is fully expensed out. As we expand to new verticals and new geographies, but we still maintain an overall balance in terms of our business. We are clearly not running the company for just maximizing the bottom line. We are investing where the investments are well deserved. That will show over time. As we scale our business in more international geographies, we will actually see the margin profile moving back, and then you'll see greater operating leverage coming on a consolidated basis. Okay, just one small clarification I need. Have you been talking to the exchanges regarding this ASM issue? With regards to this, the exchange don't discuss on ASM issues. They don't give transparency on the ASM issues, although we have reached out to the exchanges. They say they have automated systems which flags out certain parameters. They have about 8 to 10 parameters, and they work around with that parameters. We don't have full transparency on the ASM issues from the exchanges. Okay. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Thank you very much, everyone, for joining today and for your very detailed questions. I would want you to leave this meeting knowing that your company, Affle, is stronger, not just in terms of financial outcomes of this quarter, but fundamentally, strategically, with a long-term view, much stronger on its products, platforms, people, its balance sheet, its cash position and all of that together. Also on corporate governance. I think we have adopted proactively the ESG to go ahead and take all of those efforts that are necessary to be a well-governed company, to deliver all-round sustainable growth to all our stakeholders. With that, thank you for your time, and I look forward to our next engagement. Thanks, everybody. Stay safe. Thank you very much, sir. Ladies and gentlemen, on behalf of Dolat Capital, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.