Affle (India) Ltd
NSE:AFFLE
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Affle (India) Ltd
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Ladies and gentlemen, good day, and welcome to the Affle (India) Limited Q3 FY 2021/'22 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anmol Garg from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thank you, Rutuja. Good morning, everyone. On behalf of DAM Capital Limited, we welcome you all to Q3 and 9-month FY '22 conference call of Affle India Limited. I take this opportunity to welcome the management of Affle India, represented by Mr. Anuj Khanna Sohum, who is Chairman, MD and CEO of the company; and Mr. Kapil Bhutani, who is the CFO of the company.Before we begin the discussion, I would like to remind you all that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. So kindly refer to the Slide 24 of the company's Q3 earnings presentation for a detailed disclaimer. So without any further ado, I'll hand over the call to Mr. Anuj Khanna Sohum for his opening remarks. Thank you, and over to you, Anuj.
Thank you. Good morning, everyone, and thank you for joining the call today. I trust all of you are keeping in good health. Entrepreneurial passion, conviction and commitment, our profound catalysts for our Affle 2.0 culture of tech innovations and sustainable profitable growth. True to our culture, I'm incredibly proud that in less than 2 years, our team has achieved more revenue in this 1 quarter than the full year revenue of FY 2020 reported post our IPO.In the last 9 months, we surpassed the previous full year's cash flow from operations by 35%. Our CPCU business noted a strong momentum, delivering 58.5 million user conversions during the quarter, an increase of 91.2% year-on-year at an INR 51.8 CPCU rate. The last 2 years was strategically crucial for us, as we completed our Affle 2.0 strategic foundation anchored on the 2 Vs, vernacular and verticalization; and 2 Os, OEMs and operator partnerships. And we fortified our consumer platform tech stack, and we invested towards our market and team expansion globally.In this period, the global tech ecosystem experienced extensive shifts, new privacy norms unfolded, pandemic struck the economies worldwide, while the consumer adoption of digital and connected devices increased multifold. Our business continues to be resilient and is in high growth momentum towards our vision of reaching over 10 billion connected devices in this decade ahead.This quarter also witnessed a robust broad-based uptake in advertiser spend towards mobile marketing, well-supported by the festive season too and coming across the top industry verticals in India and international markets. Powered by our ROI-linked CPCU business model and unique position in the industry, we continue to grow as the preferred mobile marketing company across global emerging markets and beyond.Historically, our India and international contribution, valued at about 50-50 each, shifted last quarter in favor of international on account of our successful integration of Jampp and our efforts to build local on-ground presence in newer international markets. The contribution stood at about 69% international and 31% India in this quarter. I would like to thank all the analysts and investors for attending our first Investors Day held in December 2021, where we unveiled our Affle 2.0 consumer tech platform stack. Our top 8 leaders presented 9 sessions with live demos of our tech platform and case studies with different customer testimonials that provide clarity on how our Affle 2.0 culture, our strategy, our tech IP and execution focus are all deeply aligned to leverage upon the tremendous digital shift ongoing globally.Our tech-IP-enabled consumer platform innovations, in particular, and all our organic as well as inorganic investments, in general, are performing well, and we continue to establish new thought leadership benchmarks in our industry globally. We had a remarkable start in 2022 with our tech stack recognized as the best technology platform for advertising, and we won several of the top awards at the prestigious India Digital Awards organized by IAMAI. Affle also won the Technology Company of the Year and 16 other top awards at the fifth edition of MOBEXX Awards organized by Adgully. These wins came across top and most relevant categories, including Most Outstanding Programmatic Platform, excellence cross-screen campaigns, best use of chatbots, in-store commerce and more.To ensure deeper understanding and appreciation of our consumer platform use cases, we continue to also include case studies in our earnings presentation for the past few quarters, showcasing the power of our platform to deliver consumer conversion and drive value for our customers across key verticals and markets.We are a value-driven organization, and we strive to ensure that our performance is driven by utmost integrity and transparency. In view of the same, the Board has decided to appoint Mr. Bijynath, who is the Non-Executive Independent Director of the company, as the Non-Executive Chairman of our Board to be effective from [ April 1, 2020 ]. I will, of course, continue to lead the company as the Chief Executive Officer.In spirit, we were already prepared to do so in 2020. However, given that we've just gone publicly listed at that time, hence, we did not want to undertake any major changes of leadership structure of the company in 2020. I believe now is the right time to set forth this change for holistic organization. And I now hand over the session to our CFO, Kapil Bhutani, to discuss the financials. And thank you. Over to you, Kapil.
Thank you, Anuj. Trust all of you are keeping safe and in good health. Continuing our growth momentum, in Q3, the company reported a revenue from operations of INR 3,394 million, a growth of 125.5% year-on-year. Sequentially, our revenue has increased by 23.6% driven by team efforts and healthy festival spendings by the advertisers.Our EBITDA for this quarter stood at INR 677 million, an increase of 76.4% year-on-year and 29.9% quarter-on-quarter. If we compare our OpEx on a sequential basis with previous quarter, inventory and data cost has increased by 22.7%, almost in line with growth -- revenue growth.Employee -- sorry, employee expenses have increased by 18.1% on account of appraisal cycle effective for the month of October. We continue to invest to enhance our team to deepen across -- to deepen our access across India and international markets and including the cost of ESOS, which for the current quarter is INR 13.58 million. And the total ESOS expense for the current grant is valued at INR 219.53 million for a period of 4 years.Our reported profit after tax for the quarter stood at INR 621 million, a year-on-year increase of 102.6% and a sequential growth of 30.4%. Our normalized profit after tax after adjusting gains on fair valuation of our financial instruments was INR 601 million, an increase of 96% year-on-year and 42.9% quarter-on-quarter. We remain focused on working capital management and continue to see robust cash flows from operations. Our collections were robust and ratio of cash flow from our operations to profit after tax stood at 106.4%. This shows quality of our customers' robustness of operations.EPS has been adjusted for stock split for the current quarter as well as comparable period. At the postquarter event subsequent to our share purchase agreement dated June 8, 2020, Affle International Ltd., a wholly-owned subsidiary of Affle (India), acquired 66.67% shares of Appnext. We decided to acquire 28.33% of Appnext, post-balance-sheet event. The liability to acquire these shares were already recognized in our accounts and accounting of the financials were already getting done on an anticipated acquisition method.In June 2020 -- hence, the minority interest in our books since June 2020 continues to be at 5% for Appnext business. I draw your attention to Note 6A of the consolidated financial results for the same. With this, I end our presentation. Let us please open the floor for questions.
[Operator Instructions] The first question is from the line of Anmol Garg from DAM Capital.
Anuj and Kapil, congratulations on a very strong performance during the quarter. So I had a couple of questions. Firstly, I wanted to understand that this time, while our India business revenue has increased quite a bit, however, we have saw some drop in the PBT during the quarter. What could be the reason for the same? That's my first question.And secondly, wanted to understand what will be the Jampp contribution during the quarter. And also, if the Jampp -- how much of the Jampp business has shifted to CPCU model given that the non-CPCU growth rate of -- during the quarter was higher than CPCU growth rate?
So to answer that, there is this the...
Okay.
Anuj, do you want to take it or should I take?
I was going to hand over to you.
So the margins for the India business is almost the same as the Q2 for the current year, if you see it. However, if you see on Y-o-Y, there can be a slight differences because of the data inventory costs when you do in the festive season, there are a lot of demand and supply in questions. But if you see on a quarter-to-quarter basis, our margins are stable. The PBT can be attributed to 2 reasons, is increase in the cost of the human resource investments.On -- can you repeat the second question, sir?
Yes. Sure.
Kapil, I'll take the second question. So in terms of the Jampp's contribution, in this quarter, Jampp's contribution on revenue was approximately 1/3. And in terms of EBITDA performance, we were able to bring Jampp up to the 7% to 8% EBITDA in this quarter, which is as per the playbook and the expectation that we had set that we will, in the first year of the acquisition, bring it to single high-digit EBITDA performance, and we have achieved that in this quarter. Of course, it's helped a little bit by the festive season on the volumes. But over time, we believe, in the first year of the acquisition, we should be able to keep this momentum moving in a favorable way.And so the Jampp contribution, you're right, I think it's contributing some part of the revenue on the CPCU side already and some part is still in the non-CPCU, but it's a healthy mix as the transition has progressed. Just as a reminder, we signed the term sheet to acquire Jampp only early this year, and we completed the acquisition only on 1st of July. So the 6 months have gone since we actually completed it and about 9 months since we really kind of put ink on the table to commit towards this transaction. So it's a work in progress.And as we continue to grow and transform it over the next subsequent years, we hope to achieve materially higher EBITDA performance on Jampp and there should -- there could be margin upside over time on that business for us.
The next question is from the line of Arun Prasath from Spark Capital.
Anuj, my question is on the Vizury. Correct me if I'm wrong, we acquired Vizury mainly for the retargeting purpose. Now the rules of the retargeting game itself is being heavily disrupted because of the privacy-related concerns. You know that Facebook is very heavy on retargeting and they are -- they have given very tepid outlook and we know the performance in the last 9 months. So I understand Affle is more towards UA campaigns, but if you can visualize and if you can just explain to us what kind of disruptions that you are at least anticipating in the UA campaigns and how Affle is ready to take over or to meet the challenges. That is my first question.
All right. Well, thank you for your insightful question. First of all, Vizury and Engage360 product, Vizury is doing exceptionally well for us. We're extremely happy with the way we are going about it. And the way we work on the Vizury product specifically is deeper integrations with the advertisers and reliant on first-party data. That pretty much eliminates any confusion related to data privacy or concerns because our technology sits deeply inside and integrated with the advertiser, working as part of their one platform and system, leveraging their data to engage with the consumers. In our product line, we call it the first-party data. We've been doing exceptionally well there. And there is absolutely no concern that we have at the moment with respect to privacy or data privacy and issues pertaining to that.Also, because Vizury and our retargeting business are much smaller part of our overall business and there is a massive room for consistent growth. If you look at one of the case studies that we have attached in our earnings presentation, I mean, the last one that's already attached there, it is showcasing how we have actually managed to do -- bring massive success for one of our customers in the context of iOS and IDFA-related changes. Now most of us would think that iOS changes, IDFA changes means that advertising on iOS will be less effective and so on. If you look at the results of that particular campaign, of course, it's not representative of every campaign, which shows that we would do 41% higher ROI in scan campaigns, which is on iOS 14, versus Android campaigns for the same product in the same period. Now of course, it's not comparable exactly because the users are different. But I mean, hey, I mean it's a very important benchmark that, look, we are able -- our tech stack can actually deliver outcomes on iOS as well. We've seen that not only for new-user-acquisition campaigns but also in some limited sense on being able to do some retargeting, where the advertiser's first-party data is available. So that one sort of quick answer to you on that.But overall, what we are seeing as a trend is that our company is sorted. And our capabilities, in the last 2 years, we have made a solid foundation to address whether it's data privacy issues or whether it's iOS porting-related issues. And we are looking at this very holistically for the decade ahead and building a platform that will deliver on the momentum of consistent, sustainable growth. So -- and across our platforms, as I mentioned in my commentary, we are doing well. All our investments and the pieces of those investments, we are very privileged that every single one of them that we've done is actually performing well. So I'm confident, therefore, as you would have seen that, increasingly, our investment size or size of transaction has gone up. I mean Jampp, just 6-months-odd ago, was our largest transaction. And the reason for that bigger transaction is because we are very convinced that our playbook is working. And we did the smaller transactions whether it was last several years ago, Vizury or the more recent ones, Mediasmart, Appnext and now Jampp. And our confidence is very high, and we've become much better at doing this, and this is clearly working well for us. Thank you.
Understand. Second part of the question is -- second part of the first question, could you be more specific than I said -- when I asked that what sort of disruption that you are anticipating in the UA campaigns in the future and how Affle is ready for those challenges?
See, I did try to address that by showing you that case study and reference to that. If you kindly go and look into that. And also the Analyst Day that we had -- sorry, the Investors Day that we had in December, we had a full topic on that. But in fact, on iOS, we -- this is actually one of our fastest-growing business units in the company at the moment. And this is an exciting time. So what I'm -- indicate to you with that is that we are ready for any changes that may happen even further in the ecosystem. While we have already shown in the last 6 to 9 months of execution that we have negotiated one of the bigger changes and transitions in the ecosystem on iOS quite well, both for the user acquisition, new-user conversions as well as for repeat-user conversion. So I think that's quite a specific answer, I thought. I mean what else would you like to know?
Okay. All right. Just -- you said that Affle today has -- that overall scheme of things, retargeting would be small part. Can you just give a ballpark to quantify that? Is it something like 10%, 20%? Some ballpark number would be interesting.
See, I'm not at liberty to reveal that because of the fact that there is competitively sensitive information. But what I can tell you is that when we work with our advertisers, for example, an advertiser A, we look at the entire consumer life cycle, right? So not just getting the first conversion with the consumer, but also getting repeat online conversions from that consumer for the same advertiser as well as looking for online to off-line conversion of that particular user with that same advertiser. So we are trying to maximize ROI on that particular consumer. Now a lion's share of the budget of the advertisers, as a trend, actually goes towards new-user acquisition, especially in emerging markets because you would imagine all the advertisers thinking they are going to be next 100 million users, we want to get them first. And once the user is in the bag, they feel that, that's like a second priority there, to go and maximize the lifetime value. So most of the emerging markets advertisers or even developed market advertisers in emerging verticals are thinking and putting higher budgets on new user acquisitions. So we -- I mean, for us, it is competitively sensitive to reveal this bit because our competition would then know how Affle is proposing and pitching to the customer. And then that's the reason why our Board doesn't reveal that at the moment.
Sorry to interrupt you, Mr. Arun. May I request to please rejoin the queue? We have participants waiting for their turn. The next question is from the line of Rahul Jain from Dolat Capital.
Congratulations to the team for very spectacular performance. I have just a couple of questions. One, from a TV ad spend data perspective, you see here the only market which continues to grow on this piece. So any sense you have in terms of when this is going to change and would further add up to the momentum that we already have in? That is question number one.Second is, how should we see the Jampp business to perform in near term? I know your long-term view is aligned, but do we see more things to be captured in the Jampp business given the -- some of the tailwinds that you highlighted earlier could play out and it leads to a certain size, and then you will see a more normalized growth? So if you could share your thoughts on both of this.
Thank you for your questions. The first one on TV ad spend, yes, it is quite interesting to note that India is still having such a huge ad spend on TV and also other channels. But I'm not going to take any expert views because on TV advertising, but what I can tell you is that today in digital advertising, as a percentage of total advertising, India stands at about 25-odd percent. That means out of every $100 being spent on advertising, only about 25% is going towards digital. My view on it is very clear, that the writing is on the wall, that the advertisers have absolutely no choice but to shift at least 50% of the total budgets on digital. It's a matter of -- I think they have to do it. I mean how -- the sooner they do it, the better in terms of digital adoption and transformation. And I think therefore, there's a massive runway for growth. And where will this budget come from? And of course, the total ad pie would grow, but digital will grow faster at the expense of the TV ad spends are becoming digital. I mean most of the traditional ad spends, some of them will go in favor of becoming digitized and digital. And of course, I think digital is also getting to TV. I mean the TVs are also becoming smart TVs increasingly, Connected TV propositions that you already know, our company has already launched products and is building thought leadership in that space as a first mover in India. I think these are areas that will actually help the advertisers to transition and adopt particularly even faster. So that's that.The second question that you have is about Jampp in the near term. And I think the way to look at Jampp, I think what we have done in the last quarters is already indicative that we are already upselling, cross-selling, transforming the opportunity more holistically with Jampp. And we are doing really well on the scan network for the iOS, the post-IDFA changes. We're doing really well on that basis. The -- I think we, as a whole group, right, I mean, we have grown quite a bit over the last several years. But we are still having a massive runway for growth, consistent continued growth because the market in every geography is much larger. And the market itself is growing at a 25% to 30% CAGR as an industry across emerging markets. So there's a lot of macroeconomic tailwinds helping us to continue this momentum, but there's a massive runway for consistent growth before we start feeling that the growth will normalize or they'll reach a certain point where it's flattening. I don't think we are anywhere close to that at the moment. So I have a lot of expectations in the near term for consistent growth trends as well as I think, I would say, near to midterm, in the next 3 to 5 years, we should continue to see a fairly impressive growth in the entire industry for ad tech.
Sure. So you said 30%, if I missed that number on the ad spend allocation. And one follow-up is that any specific reasons we accelerated on this Appnext stake purchase. I think what I recollect is it was after third year but it's happened after 2 years now. And also valuation upside was very nominal, was this part of the original contract? And lastly, on how the retention thing would be now for Elad and some other key members?
Wonderful questions. No, no, just let me complete. So on the TV ad spend or the digital ad spend, I think the percentage that I was saying was approximately 25% of the total ad spend is going to digital. That was -- I mean, of course, you can look at different reports say different numbers, but this is my assessment of and reading of the market at the moment.
No, sorry to interrupt, but I think -- I was asking you were saying 25% can actually go to some number. I think you said 30% or something. I missed that.
No, no, 50%. I said minimum 50% should go to digital. And the reason when I come up with the number is because in a lot of the markets in the world, digital is already over 50%, yes? And by the way, digital for India or emerging markets means primarily mobile, okay? So this is a very, very interesting and privileged industry to be in because of the solid growth momentum and runway ahead. Now coming to your question on Appnext, okay? So on Appnext, we had a clear contract where we had to buy out up to this percentage of the shares by the third year. So what you will see in our disclosures that we have done our payment of that now to consolidate our ownership of 95% immediately. And there's still a retention-linked -- significant part of it, I think those numbers are already disclosed and maybe, Kapil, you can elaborate, where it's actually linked to the founders' earnings around the end of the third year, which is Elad and the team, but the known shareholders' already been kind of paid off now, and we've consolidated the entire ownership into our hands. And the reason to do that now is, first of all, a strong indicator that our acquisition and organic plans have worked out really well, especially Appnext has done fantastically. And therefore, we are ready to accelerate that. And also, in fact, it leads to better alignment and a much stronger retention of entrepreneurial alignment. Kapil, you may kindly elaborate further.
So if you see that we have -- the payment for this 28% is the same as been in the liability for the -- at the time of the acquisition itself. There is no change in the amount. The amount was predecided. And about INR 3 million is being paid now. Rest, INR 5-point-some-odd million, will be paid after another 18 months. This INR 3 million is going out to nonfounders' payments so that the alignment of the founders can remain 100% with Affle, right? There is no obligation of the founders to the investors of the original Appnext business and we have the full alignment of the Appnext founders to Affle.So -- and also, our financials were already accounting it as a 95% for consolidation purpose on an anticipated acquisition method. And the liability was already accrued in the balance sheet. So what you will see is that a dip of INR 3 million in the liability side on account of this payment. That's the only change in the financials.
The next question is from the line of [ Vikas Mistry from Moonshot Ventures ].
I have a small question that during that slide has said that we will not build a test for the -- and we haven't done -- we have done Jampp as acquisition, but we have a lot of cash lying with us, what we're trying to do with that? And I also know that you are very particular about that acquisition must have some capabilities and all that. So please give us a view that what capabilities we are lacking and which direction we are thinking to have an acquisition further.
Well, thank you for that question. I think it links back to what we did earlier with Appnext, and we consolidated our position there. And I want to make sure that when we do any acquisition, we must prove beyond doubt to, first of all, our own internal management team and to our Board and then to our shareholders that what we did in the acquisition was absolutely spot-on, responsible and we have delivered outcomes as per plan. Now if you see the track record of the company, we do an acquisition, we deliver on that. We make sure that we've done it right, and we'll go on to the next one and so on and so forth. So yes, there is cash in the bank. But I mean the cash in the bank is not necessarily a bad thing. But I think what's important is that there should be no undue stress that oh, we must do something just because there's cash in the bank.I think we have to make sure that acquisition is taken very seriously. Our whole process and playbook of long courtship period, analyzing the company, deeply meeting them at the -- not only at the right time when they are at breaking even, but the right price point for us, and then systematically turning them around on much greater success environment. So it has to be carefully calibrated. Now is there anything really missing in Affle that I'm looking for today nervously out there to try and fix? The answer is no. I think our foundations with our tech stack, our Affle 2.0 consumer platform stack is a rock-solid foundation on which we have already delivered great outcomes, and this is a future-ready foundation. It's not a foundation that we are -- we've built something great in the past and we're just milking it. Now we've built the thing as future-ready. We have launched Connected TV product. We could launch online to off-line connect with the consumer. We've launched household sync and household ID capabilities and tenant in the company. Our patrons are talking about gestures and the metaverse world and so on. So I mean this is a company that is forward-looking and future-ready. And our platforms are built and our innovation culture is helping us to keep it consistently in that realm. So I'm not necessarily out there actively chasing something to be closed. But at the same time, we are very, very grounded. So we're watching what's happening in India and all our markets, every other starter and we have become quite an aspirational team for any entrepreneur to come and align with. So we find a lot of incoming requests coming from entrepreneurs who want to join the Affle entrepreneurial team. And so we are very privileged and we're very careful. And we are watching closely. We're assessing closely. And when the right opportunity comes, we will not be on the back foot, I can assure you of that. We are growth-oriented, an aggressively growth-oriented company, and we will take the right steps at the right time. I hope that answers your question. And if I -- and of course, we're also investing in the cash to be utilized for increasing the overall growth of the company, working capital, organic expansion plans. So I think it's all in a good tandem and balance. I hope that answers your question.
Sorry to interrupt. The line of Mr. Vikas has been -- they have -- Mr. Vikas has left the queue. We'll move to the next question, which is from the line of Mayank Babla from Dalal & Broacha.
Am I audible?
Yes, you are.
Yes, you are.
Congratulations on a great set of numbers, team. And just a few questions more towards the accounting side. Kapil, sir, if you could tell me what sits in the difference between the consol and the stand-alone revenues right now because I think approximately 1/3 of the revenue is from Jampp. So what is the balance in the consol?
So balance in consol is our existing, without Jampp, international business, which is -- which constitutes of RevX, Vizury, MAAS as well as Appnext, right? So if you see before Q1, the Q1 will have without Jampp and there is -- there was a 50-50 split between India and international, which is now skewed towards international because of the Jampp.
Okay. Sure. And sir, what would be the free cash flow for the quarter?
Free cash flow for the quarter would be in the range of about INR 500 crores.
Okay. Okay. And sir, last question was to Anuj, sir. Sir, in the case study about BYJU'S, it was mentioned that you've done optimization for the lower-funnel conversion metrics. Sir, could you expand a little more on that? Can you throw some light?
Well, I think the business that we're in, our focus is always to align the outcomes in terms of conversion to deliver ROI to the advertisers. And when we work in Tier 2, Tier 3 sound cities in India and to onboard new customers, our focus always is to optimize high-intent users, right, in those cities and getting -- using all our capabilities of the platform, whether it's vernacular capabilities, ads and contextual placements and so on and so forth to then optimize for what's called lower-funnel conversions. Now we -- what we have shared here is expressly approved by our advertisers, I mean, to the word and to the T. And beyond that, I'm not at the liberty to say specifically for that particular advertiser or particular campaign, but I can perhaps I'll answer for you generally what these lower-funnel conversion metrics mean. And it typically means that user who has gone well beyond installing the app of the advertiser, well beyond registering into the app to actually subscribing or adding to a shopping cart or showing a very clear purchase intent with respect to -- or even in certain cases, doing the actual transaction, okay? So the deeper funnel means like to start from the top, what is the top of the funnel, somebody seeing an ad. And as you filter the funnel down -- going down, down, down, you can go down to a transaction, the first transaction, the fee transaction, online to off-line transactions. So our goal is to consistently drive -- maximize ROI for our customers, and that means -- necessarily means that we must optimize for deeper-funnel conversions. I hope that answers your question.
Yes, it does. Can I squeeze in just one more, sir, please?
Please go ahead.
Sir, could you please -- is it possible for you to give us a split between the converted users for Jampp and our balance of the business and the same for the rate of conversion?
No, I'm not able to give you that at the moment, but you can -- I mean, behind all of these I've already mentioned, so these are competitively sensitive information, right? Our competitors, most of them are not publicly listed companies, at least a smaller one. And they're all trying to pick on these calls and details that we share with our investors and for good measure. And I think -- so -- and of course, now we are sharing our case studies as well. I mean it's almost like giving an invitation to a competitor to pick that information and go and make a competing piece to get in and say, look, I can -- so I think we are balancing act, and please see that we are very transparent to the extent that we can be. And where we believe we need to necessarily abstract, then we do that because it's important for retaining the business advantages. Otherwise, we'll end up telling our CPCU per country, per vertical, per market and then per platform. And I can assure you that will be almost an open invitation for competition. So even internally within the company, by the way, I mean, some of this data is done systematically in the platform so that no one person have a full insight into it.
The next question is from the line of Pritesh Thakkar from Asian Market Securities.
Congratulations on a good set of numbers. Just wanted to understand the trend of converted users. As in last quarter, we added around 17 million users. And this quarter also, we've around added 10 million users on a sequential basis. It is higher than the usual trend what we had previously. So just wanted to understand, is it shifting the ad dollars from iOS to Android supporting the incremental additions for Affle or some other elements that you want to touch upon?
Thanks for that question. I think the best way to look at trends when we talk about conversion, I think the historical trends are a great indicator of what's to come in the future. Now if you look at the last 9 months, we have delivered 138.7 million conversions from converted users, and we have done it at approximately INR 50 CPCU rate. And if we were to then analyze the trend further over the last 4 financial years and just look at Q3 converted users or conversions, you'll find that the CAGR is 67.2%. And these are statistics and trends that we have already shared, and these are long-term trends. And I'm talking about either 9 months of this financial year or even 4 years of Q3 analysis and trend. And that's an indication that the consumer adoption clearly across markets. And I think you can relate it to your perhaps open individual experience that all of us, especially during the last 2 years, have gone may more on our screen time on digital and connected devices. And that is true across the board globally. And this is not a one-off shift. I mean it's the new sort of normal now. And we expect this kind of adoption to continue to increase for many, many years as more younger people start coming on digital devices as well as people from well beyond Tier 3 cities, rural markets start coming on smart devices. In India alone, I would expect in the next few years to have over 1 billion connected devices and the number of shoppers in India expected to be close to 0.5 billion shoppers online, like people who are ready to transact online to be at least 0.5 billion over the next few years. And this is a massive digital adoption trend. That's a multiyear, multifold digital adoption and that will continue. So this is definitely going to help us to keep the momentum of this kind of a growth.
Sure. It was very helpful. Again, if you can provide any specific vertical out of [ ESGH ] that we have that is contributing the most to the overall conversion of revenue growth this quarter.
Thanks for that question. I think the way we have provided the data so far is maybe what I can see, instead of choosing one which is contributing more or less, let me tell you there's a very well-balanced, broad-based growth that Affle is delivering. Unlike, let's say, many years ago -- I mean, 3 to 4 years ago, we were deeply anchored on e-commerce. I think now it's much more broad-based. And we see each of these verticals is becoming a very, very strong business unit in the company in years to come. We have deeply anchored ourselves on our 2 V strategy, verticalization and vernacular. And both of these 2 V strategy help us to basically go deeper, much more deeper in each of the verticals and hyperlocal with each of the consumers to deliver the deeper funnel conversions and ROI. And I think this is working really well for us. Picking any one vertical out and saying this is the highest, I think, wouldn't be as insightful as telling you that it is a very broad-based growth across verticals, across geographies and there's no real vertical concentration or customer concentration risk at the moment. And we are building our products, people teams, processes and data science capability is very verticalized for each of these markets. We are getting much sharper in our execution in these verticals. Thanks.
Again, on the margin front, I have a small question. So you indicated there is some pressure cycle we had this quarter. So if you can quantify how much is the impact for this quarter from the baseline.
Just to give you an answer on this, we have about INR 13.5 million costs coming in, in INR, that is INR 1.35 crores for the ESOP in this quarter, which has contributed in a slight increase. Secondly, we have increased our manpower by about 6%. The rest is on the increase in the salaries of the employee cost.
Next question is from the line of [ Samir Chowsky from Inda Security Advisors ].
I hope I'm audible.
Yes, sir, you are.
Yes, you are.
Okay. My commendations on a fantastic set of numbers to Mr. Khanna Sohum and the entire team. So I have a couple of questions. Now firstly, we are seeing this whole metaverse theme playing out and the whole world going gung ho over it. But let's say, we look at the potential use cases with brands like H&M, they have been going out and setting up digital storefronts, virtual customers come in and track with them and their products. Now how would Affle fit in here? Would the customer interactions be able to be virtually measured? I'm aware of the fact that this is a hypothetical question, given we are so early in the theme. But if you could just share your insight on that.
First of all, thank you for your kind words on our performance and much appreciated. Secondly, it's a good question because it's a forward-looking question, which is a question that is deeply valid given the fact that Affle is anchored on a culture of delivering forward-looking innovations consistently. And so the consistency of -- if you look at one of the recent patents that we got granted in the U.S. patent office, it talks about gestures. How -- at this moment, the human interaction of the machine is -- especially mobile devices, is either voice-based or it is touch-based where we are typing some info or by clicking or by typing something into your phone -- this is the format of digital technology. Now if we go into the world of metaverse or you want to...
I'm sorry to interrupt you, but Mr. Anuj, your voice is breaking, sir. We cannot hear you clearly.
Okay. I am sorry. [indiscernible]
Sorry, sir, but we cannot hear you.
Anuj, your voice is not -- is cracking up.
Okay. So operator, I think you should call me again. [indiscernible]
Let me call Mr. Anuj again. Please give me a moment. Ladies and gentlemen, thank you for patiently holding your line. The line of Mr. Anuj is connected back. Thank you, and over to you, sir.
I hope you can all hear me much better now. And what I was talking about was how the recent patent that Affle got is actually preparing ourselves for a scenario where the human interaction with the machine or technology would be much more subtle. It will not be a voice demand or it will not be a type-in and touch something but it could be as simple as a very subtle gesture and that gesture could be to your avatar or to your digital persona and therefore, it could lead to your digital persona behaving in a certain manner just based on very subtle gestures or your technology assistant, it could be robots, there could be other sort of intelligent devices or connected devices, but there will be new consumer interaction experience. And in order to make sure that our product road map, our IP portfolio is ready for the future, Affle is already invested in not only filing for these patents but actually achieving success in getting those patents granted in the, let's say, most important U.S. patent office. And I think this shows that Affle, the company that hopefully a lot of you are -- or your funds are invested, in is prepared and thinking ahead and is demonstrating that in its actions with tangible kind of outcomes being secured. Now to your specific question about what brands like H&M are doing, I think what is absolutely wonderful about the world ahead is that digital-first companies are going more into the physical world and starting to create off-line storefronts. And of course, those off-line storefronts also are very, very digitally advanced. And in Singapore, we have seen that already. I mean we've seen off-line storefronts that are completely unmanned and is served by robots. I mean we've also seen some hotels in Singapore where there's a robot that does room service. I mean so there are things which are already happening in the world where off-line industries are becoming more digital and they're going into -- including the world of metaverse. And then we also see digital companies are going more and more off-line. So what I'm trying to tell you is that don't be looking at it from one angle, keep the entire consumer journey as an integrated journey in the physical, virtual and augmented physical and virtual worlds, which all become one integrated journey. And so H&M would have to then look at how is that digital store connecting with the way the behavior is in a physical store, mapping of the actual human behavior to the human avatar behavior, authentic avatar versus a fraud avatar of the units. So there will be all kinds of interesting technologies. And I think for us being a built -- even our broad tools, which we have several patents on, the fundamental essence of that is the ability to know which interaction is a human interaction and which interaction is a machine interaction. Today, if a machine is doing something on behalf of the human, one must check, is that authentic or is that fraud. And that ability that our company already has with the patents granted plus the ability to look at gesture-based communications as well as other subtle forms of communication, I think to that extent, I can tell you we have visualized. And as the world unfolds and the consumer adoption and behavior has changed, I think we will have some big advantages in emerging markets because chances are that some of these things will get adopted in the Japan, Korea, Singapore, U.S. or China faster than it gets adopted in India, Indonesia, Vietnam and Africa and Lat Am. And so we will have some advantage of foresight and then better preparation to localize, vernacularize our innovation, while we don't want to be second to any, and we are well-prepared and kind of keep ahead. So thanks for that question. This is the best that I could do to answer it.
Absolutely. That's a great perspective. I'm cognizant of the time, so I'll just ask my last 2 questions together. So we've been over this question of privacy many times before. And I understand Affle is not affected by the changes in the browser privacy norms by Google. You've highlighted this during previous calls. But let's say, in the future, Google alters on-device privacy norms via operating system updates, would this also affect hybrid Android systems? These are utilized by OEMs. Would the OEMs retain, say, the control over the privacy and user data norms, given they utilize these hybrid systems, which are not pure-play Android systems?And secondly, if it's possible, could you break down your connected device numbers in terms of mobile and nonmobile devices like, say, in a percentage term? Or is it too nascent to provide this number as the entire spectrum is mostly covered by mobile connected devices? Is there any revenue contribution from these as well? That's all from my side.
Well, thanks for the question. So yes, I will, first of all, reconfirm, Affle is deeply insulated with anything that's happening on the browser or cookies. And for whatever it's worth, I think for the entire tech industry, cookies is like a technology more than 20 years ago with HTTP and browser in the Internet, and we are looking forward to new technologies and better, more efficient Internet, and I think better things will come around. So I've absolutely no love for the cookies going away, and I think Affle's business has no impact at all.In terms of what has already happened on iOS, the fact that the whole industry was so nervous about it and some of the companies are obviously still impacted, and we've seen that from some of the bigger players announcing that they are deeply impacted by iOS changes. Even for us, Affle was deeply anchored on emerging markets, which are predominantly Android. And so we had very little exposure to iOS. But we saw a great opportunity. We saw like when the landscape is changing for the incumbents in a way that, that's making them nervous, maybe be a new entrant with an innovative platform capability and create a new position for ourselves. And we did that very well with Jampp. I think the Jampp acquisition was timed perfectly for us because we wanted to be, firsthand, going into the U.S. market, experiencing how to turn this challenge into an opportunity. And we did that very well. And at least for the last 9 months, I think we've done really well on the IDFA part. So that gives me confidence to say that when -- as and when Google does something, which by the way, is at least a few years away because of your own question, the complexities of hybrid OEMs, hybrid models and who will retain control, I mean, making changes on the Google ecosystem is way more complex versus Google making any change on its browser or Apple making any change on its iOS platform. And because of those companies that aim a few years away, we are no longer even nervous about what changes happen on iOS, let alone having nervousness about what might happen on Google. So I think -- I just want you to know that being a hands-on entrepreneur in this space and a significant owner within the Affle group, I am not nervous about this particular thing. At the same time, we're not ignoring it or taking it lightly. It's not like, oh, we've solved everything. There will be changes. There will be challenges, but I think that the confidence with which we are solving those challenges has just gone up because of the way we have negotiated and transformed to be challenging to an opportunity on IDFA. So one step at a time, let's see. Let's not get overly excited by what might happen on Google. And I assure you that's many years away and we'll have many more quarterly calls in between that to address it progressively.
That last question on the connected device mix, if you could just allude to that.
Yes. Yes. So on connected devices, we look at -- our perspective is very simple. We are a consumer-centric consumer platform. Wherever the consumer goes, whether it is mobile or it is wearable devices or it's Connected TV or the consumer goes off-line, we will follow and go to all of those places with the consumer, whether it is the metaverse or whether it is the physical real world. I think the -- so our focus is consumer-centric. Now within that, how important is it now to, say, segment our revenue by what's on mobile versus what's on other connected devices, I think at the moment, it is very, very nascent to go into such granularity. But what's important for you to know is that our strategy is clearly consumer-centric. And that is a big differentiation because there many companies whose strategy is very focused on one part of the consumer's journey. They say we only deal with consumer when he is on Facebook or when he is on Google, when he is on off-line or when he is on TV. And we're saying, hey, hold on a second, we need to look at the consumer holistically, and that's the only way I believe this business can be done well for the long term.
The next question is from the line of Manish Poddar from Nippon India.
Congrats on the results. So just probably 2 questions. One is, would you be able to help me with Jampp's revenues in the base quarter? Because I think you mentioned 1/3 of the revenues this quarter is coming from Jampp. So just what is the -- let's say, if I have to just understand the growth, how is that number that's in the base quarter?
What do you mean by growth? You're talking about Jampp-specific growth?
Yes.
Oops, I think I don't have that specific number. But what I can tell you is all I prepared for is to tell you that our organic growth has been quite fantastic on a year because -- on a year-on-year basis. And I think we are seeing, from a bottom line perspective, well over 50% of our growth in terms of EBITDA organically is coming from the organic business and 86% of the EBITDA is actually coming from the organic business. Now Kapil, if you have any specific numbers on Jampp, but -- I mean, I don't think I have that data immediately on my hand. But what I can tell you qualitatively is I'm super satisfied with the kind of growth momentum that we have jointly unlocked on the Jampp business through upselling and cross-selling the various use case scenarios.
So when -- yes, sorry, Kapil.
So Jampp has approximately grown by about 30%-plus in this quarter -- for the previous quarter. You can see that we have made a commentary that last time, it was just about 30% of our turnover. And this time, it's just about 1/3 of the turnover. So you can make it out and it's contributed about in the range of 30%-plus growth in the Jampp business.
Okay. Anuj, just any sense when -- let's say, how is the market growing up there? And let's say, any sense on the market share for Jampp in the market which it caters to?
You see, I mean we operate as one connected consumer platform. Our goal is to integrate and already are doing well integration of Jampp as part of our platform overall. And when we look at growth, in Latin American markets, clearly, the growth is of the standard of emerging markets. But when we look at developed markets also, including for what Jampp is doing, I mean, I think the way for the market size is huge, we are having a massive runway for growth. And in terms of our execution focuses, we focus on key emerging verticals in those markets, which are high-growth verticals, even in those markets. So I mean I don't have any specific data points on what is our revenue as a percentage of market share of the total market share at the moment. But I think it's -- I can simply tell you one thing, that every single business unit in our company and every single entrepreneur leader in our company is at least gunning for 25% to 30% growth on CAGR terms. And the reason for that is because the industry average growth rate is at least in that realm. And so it is part of the DNA of Affle, anybody who's running any part of the business in Affle is clearly gunning for a growth above industry average growth. And for us, that means 25% to 30%. We are not giving any leeway to one market or the other. Second, it has to be a deeply profitable growth. And everybody has to aim for that high teens of profitability. So there is a consistent focus on these 2 elements. And therefore, we talk about sustainable profitable growth as a part of our culture. It's not just about 1 quarter or 1 business unit. Everyone has to be aligned by that. And so the entire organization is geared towards that outcome. And I think that should give you an assurance. So if you're looking at modeling Jampp separately from us and trying to find a growth rate pattern for that or for any part of our business units, kindly look at it holistically as one platform, which is going to deliver that kind of growth. And there could be one quarter where one platform does better than the other or another one. But I mean, those things would average out over time.
Okay. And just one last one. So in terms of other income, let's say, this INR 14.5 crores run rate, is there any one-off in this? Or this is largely the cash yield on the -- the yield on the cash, which is on the books?
You see for quarter 3 is largely on the cash -- the yield on the cash. But if you see from quarter 2, quarter 2 had the fair value adjustments for our investments. So you'll have to eliminate both and it has been given in our presentation, the elimination of the group. If you can refer to the presentation for greater details.
So roughly about, let's say, INR 50 crores, INR 55 crores is the run rate for this year, let's say, the mark-to-market of, I think, INR 5 crores to INR 7 crores in the last quarter?
Can you repeat the question? I'm missing...
So let's say, roughly INR 50 crores of other income on the books, and let's say, if you are running 4%, 4.5% yield, that would give you the cash on books.
You can take it that way, but the yield is about around 3%, 3.5% something, 3%, 3.5%.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Anuj Khanna Sohum for closing comments.
Thank you, everyone, for staying tuned into the call today, and I sincerely appreciate the support that the investors have continuously shown and the belief that the investors have shown the company. Some of the questions were very insightful, forward-looking and also looking at tech evolution. And then I think that is something that's super exciting. We are passionate about our industry, and we are deeply committed and we have strong conviction and belief that we will deliver superior growth. And we are here building Affle to last for the long term. And I look forward to more opportunities to answer your questions. Thank you, and stay safe.
Thank you.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.