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Route Mobile Ltd
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Good evening, ladies and gentlemen. I am Michelle, moderator for this conference. Welcome to the conference call of Route Mobile Limited arranged by Concept Investor Relations, to discuss its Q4 and FY '20 results.
We have with us today Mr. Rajdip Kumar Gupta, Managing Director and Group CEO; Mr. Gautam Badalia, Group Chief Strategy Officer and Chief Investor Relations Officer; and Mr. Suresh Jankar, Chief Financial Officer.
[Operator Instructions] Before we begin, I would like to remind you that some of the statements made in today's earnings call may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to Slide #2 of the presentation for the disclaimer. Please note that this conference is being recorded.
I now hand the conference over to Mr. Rajdip Kumar Gupta, MD Group CEO. Thank you, and over to you, sir.
Thank you, Michelle. Good evening, everyone. I wish you all good health and prosperity. FY '24 has been a remarkable year for Route Mobile. We have been able to post our highest quarterly revenue in Q2 and Q3 and registered a good growth in H1. We continue to acquire some large customers and deliver unique solution across industries.
The CPaaS industry is facing headwinds since November '23, including enterprise cost optimization initiative, particularly from global OTT and shift in communication channels. While some of this structural change will take time to stabilize, we remain vigilant to leverage emerging opportunities. Route Mobile strategic road map position us to seize this moment and establish our leadership in the CPaaS ecosystem.
The imminent closure of the Proximus deal will bolster our portfolio, extend our global footprint and ignite our innovation pipeline, creating unparalleled potential for Route Mobile in the future. The synergies derived from this partnership will complement our products, geographies, and customer base, while accelerating our journey towards the $1 billion revenue. We have fallen short of our revised guidance. However, we have secured strategic deals and laid the groundwork for a stronger FY '25, expecting significant growth in revenue and profitability driven by the synergies within the Proximus Group.
Some key development of FY '24, some new customer wins, we signed a direct contract with leading e-commerce cloud computing company, providing CPaaS services across 10 countries, including India. We secured an exclusive A2P monetization deal with Vi India, now active since April 1st, '24. We were appointed as an exclusive partner for A2P monetization with MNO in APAC. We have partnered with Robi Axiata, Bangladesh as a technical enabler sales partner for RCS business messaging. We have installed our Map server with Robi, and we want to replicate the same solution with other operators globally.
In terms of new product achievement, we pilot the metro ticket booking across WhatsApp and RCS for select Indian cities, generating the highest user traffic in just 3 hours on WhatsApp business messaging.
On the award and recognition, Route Mobile was ranked as Tier 1 vendor in the A2P messaging market impact report by Rocco excelling in both enterprise and MNO categories; awarded Juniper's best mobile authentication solution Platinum Partner award; feature as a major provider in Gartner's Magic Quadrant for CPaaS and highlighted in full Gartner's high-cycle reports.
I'm very proud of my team for having delivered a successful financial year and congratulate them on the great performance. Finally, leveraging a solid FY '23, '24 performance, the Board of Directors has proposed a final dividend of INR 2 per share following an interim payout of INR 9 per share.
Now I will pass it over to Gautam to walk us through the financials in details. Thank you for your time, and let's continue working towards a successful FY '25. Over to you, Gautam.
Thank you, Rajdip. Good evening, everyone. To start with, we've already uploaded our quarterly earnings presentation on our website as well as stock exchange website. I hope you had a chance to go through the presentation. I'll quickly summarize our financial and operating performance during Q4 FY '24 and for the full year FY '24 before opening the floor for Q&A.
Further to what Rajdip said about the current industry dynamics, there were a few related factors highlighted in Slide 14 of the earnings presentation, which affected our growth and profitability in FY '24. These factors are the first factor essentially is MRMs, Mr Messaging's financial performance was adversely impacted in FY '24, going to geopolitical issues in Europe and a particular client of Mr Messaging undergoing the industry consolidation. So some of these things affected Mr Messaging's revenue and that had financial impact, I mean, on the payout as well as on the impairment that's been captured on the financials.
There was a soft devaluation of Naira and that had an impact on the revenue in the Nigerian market. And there was a provision for an onerous contract, which is already being renegotiated. And hopefully, I mean, if things go fine in terms of the renegotiation of these provisions will be to out back and into the books.
In volume terms, moving back to some of the business KPI, in volume terms, we processed 34 billion transactions in Q4 FY '24 and 126 billion in FY '24. India continues to be our largest market by termination, accounting for over 48% of our revenue by termination. India termination revenues grew by 19% in FY '24.
The revenue contribution from U.S. headquartered clients as a percentage of total operating income reduced from 46% in FY '23 to 42% in FY '24. Revenues from U.S. headquartered customers grew by only 4% during the same period in absolute terms. You may refer to Slide 19 for this. Further, Q4 is generally the weakest quarter for Masivian from a seasonality perspective.
In terms of the cash flow, we witnessed improvement in the normalized cash flow conversion. In FY '24, our normalized CFO to EBITDA conversion was 56% as against 45% in FY '23. This is referred on Slide 16 of the earnings presentation. We believe there will be marked improvement in the free cash flow generation in FY '25.
With this backdrop, let me walk you through our financial performance. In terms of Q4 FY '24 performance, Q4 revenue from operations grew by 0.8% Y-o-Y and declined 0.7% sequentially to INR 10,170 million. Billable transactions stood at over INR 34 billion in Q4 FY '24 as compared to INR 31 billion in Q3 FY '24 and INR 27 billion in FY '23. Average realization per billable transaction declined to INR 0.30 compared to INR 0.33 in Q3 FY '24 due to a significant increase in the domestic volumes in India.
Gross profit margin expanded to 21.8% as compared to 21.3% in Q4 FY '23 and 21.2% in Q3 FY '24. EBITDA for Q4 decreased by 9.4% Y-o-Y and 2.9% Q-o-Q to INR 1,204 million due to reasons mentioned above, plus there were a few expenses related to MWC and a few other events conducted by the company during the last quarter. EBITDA margin contracted from 13.2% in Q4 FY '23 and 12.1% in Q3 FY '24 to 11.8%.
Profit after tax adjusted for exceptional items declined by 10.3% Y-o-Y and 5.3% sequentially to INR 934 million in Q4 FY '24 with PAT margin declining from 10.3% in Q4 FY '23 and 9.6% in Q3 FY '23 to 9.2% in Q4 FY '24.
In terms of the full year performance, FY '24, revenue from operations grew by 12.7% from INR 35,692 million in FY '23 to INR 40,233 million in FY '24. In terms of certain KPIs, billable transactions increased from INR 107 billion in FY '23 to INR 126 billion in FY '24. Average realization per billable transaction was INR 0.32 as against INR 0.33 in FY '23. We had a net revenue retention of 106%. Gross profit margin decreased to 21.4% in FY '24 versus 22% in FY '23.
EBITDA non-GAAP grew by 8.4% to INR 4, 949 million in FY '24. EBITDA margin stood at 12.3%. In terms of operating leverage, EBITDA as a percentage of gross profit stood at 58%. Effective tax rate for the year was around 15%. Profit after tax adjusted for exceptional items grew by 11.7% Y-o-Y to INR 3,720 million in FY '24 and PAT margin was 9.2%.
Average receivable days increased to 80 days and payable days increased to 66 days. We onboarded 43 employees during Q4 FY '24 and 53 employees left during the same period.
With these highlights, we open the floor for Q&A.
[Operator Instructions] The first question is from the line of Nikhil Choudhary from Nuvama.
My first question is on revenue growth expectations. Rajdip, Gautam, we have been guiding our revenue growth each year. What top us from not giving numerical guidance this year? Or any range band you can highlight for growth expectation in FY '25?
So let me just answer this, maybe Gautam can add. So Nikhil, I think there is lots of synergies post deal with the Proximus, which needs to be planned. And I think that is 1 reason we are not able to give any guidance at this point of time. Gautam, if you want to add, please?
Yes. No, no, sir. Absolutely. So I think we are, I think, expecting the closure to happen anytime now. And once the closure is done, I think a lot of these synergies will be quantified and some of these are material and will warrant shareholders' approval. So once some of these things are kind of approved by the shareholders, I think it will be worthwhile to then give the guidance for FY '25 and beyond.
So just -- I request you to kind of bear with us for maybe some time before we kind of talk about -- but as Rajdip highlighted, I think some of the large deals have already gone live, like the Vodafone deal has gone live from April 1.
So some of those benefits are naturally kind of define flow through now. But the synergy -- I mean, because these are material numbers, and we'll have a significant bearing on the full year performance in FY '25. And hence, I -- we'll request you to kind of just hold it until we get the share -- minority shareholders' approval for the same.
Sure. Can you at least quantify what kind of benefit you are seeing now as matter is almost complete, while you might not want to classify it between FY '25, '26. But after the merger, now you have more clarity, more integrated. Can you please quantify how much could be a potential benefit or the value synergy?
So I think it will be worthwhile for us to kind of validate or give any of those guidance once the transaction is closed. So please bear with us for a few days, I think, for the transaction closure and then I think we can publicly talk about a lot of these numbers.
Sure, Gautam. Also, our -- clearly, we are seeing challenges in the ILD revenue side and ILD revenue continued to decline even in this quarter, right? Any color -- and what kind of visibility you have going forward, especially on growth perspective?
Nikhil I think we went live with Vodafone Idea firewall on 1st of April, and we see -- do see a growth in traffic at our end. And I think our firewall is doing fantastic job. There were some leakages, which we have identified. I think the Vodafone team is already taking action on it. So I think as of now, we are just 1 month like in terms of our exclusive deal with Vodafone Idea, and we have seen a growth on ILD volume. But I'm sure that volume will grow in coming quarters as well.
And Nikhil just to add, I think we have -- from an Indian ILD standpoint, I think there was a growth. I mean, while it was a single-digit growth, we witnessed growth. So there was no decline per se from an Indian ILD standpoint. I think the decline was largely more from a rest of the world standpoint. More to do with Mr Messaging and Masivian. And seasonally, I mean, it's a weak quarter for Masivian. So some of these things had a little bit of a bearing from a growth in volume standpoint.
Got it, Gautam. My last one is on the INR 100 crores of line credit facility we have issued for Route U.K. Any color on what it is for?
Yes. So this is essentially for a bank guarantee that we have to give it as part of a contractual arrangement. So it is essentially backed by fixed deposits. And since Route Mobile U.K. is kind of doing it and the fixed deposits are being held in India, so this was -- this approval was warranted.
So what we have mentioned, improvement in cash flow is including the assumption of INR 100 crores going perfectly for that, right?
No, this INR 100 crores doesn't go out of the balance sheet. So essentially, this is cash sitting on the balance sheet. So this is only a guarantee, which is a noncash, I mean, outside balance sheet.
The next question is from the line of Kaustav Bubna from BMSPL Capital. [Operator Instructions] As the current participant is not answering, we'll move on to the next question, which is from the line of Dipesh Mehta from Emkay Global.
A couple of questions. First about the onerous contract. If you can provide some detail about the onerous contract where we made some provision?
Second question is about the EBITDA margin. I think you indicated 60 bps one-off into '24. Should we want to assume that 60 bps will not recur and your margin would be 60 bps higher in next fiscal?
Third question is about new products. New products again quarter-on-quarter seems to be down, so more like flattish performance even though industry and some of your peer has shown good acceleration. So if you can provide some color around it.
Dipesh, I will start from question #3. So I don't know what my peer is doing, but as far as our customer onboarding is concerned on our peers on WhatsApp or other channel of communication, we are doing fairly well, and we have a great pipeline, and we are definitely looking out to scale this business in coming months. So as a company, I think we are very bullish about this growth potential, which we are right now seeing based on the current pipeline. Gautam over to you.
Yes. So just adding to the question number 3. So essentially, Masivian has a very good profile of some of these new products, but we have been able to cross-sell a lot of these new products. Unfortunately, this is a seasonally weak quarter. But for Masivian, I think we have, overall, I think, grown our new products business meaningfully well. But I think Masivian was, I mean, because of the seasonality aspect, a little bit of a drag on the new products growth.
Coming to the onerous contract, I think -- the onerous contract, I mean, because of confidentiality and because of the competition sensitivities around it, we would not want to kind of call it out, but we can kind of give you a perspective that this is being negotiated. And once the negotiations are through, we'll be able to kind of get some benefits back to the -- as a write-back and into the books. So at this point in time, we'll want to reserve our comments on this onerous contract, but I mean, there are active negotiations already happening, I mean, on this count.
And on the second question, I think on the EBITDA margin, yes, so I think Q4, typically, we have a little bit of one-off, I mean, in terms of some of the events that we attend in terms of our EOP planning that happens. And plus, I mean, the drag because of...
Plus the variable payout as well, I think in [indiscernible].
Yes. So some of these things, I think, there's a bit of a [ drag ]. But yes, some of these things should normalize. We are hopeful, I think MRM, I think, should bounce back strongly. So they are kind of working very closely now, I think, across the teams to see whatever synergies they could bring from the group. So yes, so I think that's where we are.
Just to get further detail about the EBITDA margin, when I refer, I was not retiring for quarter 4. I am referring from '25 because in your presentation, you mentioned 60 bps impact in FY '24 because of various factors you highlighted. So my question is more about next year. When you look from a margin perspective, do you think that is likely to be fully recovered?
So Dipesh here in -- again, I mean, so as I said, I think there will be a lot of material related party transactions. So I'll request that we discuss this once some of these approvals from minority shareholders are narrated by the...
And just on the onerous contract, whether it is -- because it pertains to domestic market-related business or it is outside of India business?
No, it is outside of India.
The next question is from the line of Amit Chandra from HDFC Securities.
So first question is, sir, you mentioned about the changing landscape in which enterprises were looking for cost optimization and also in terms of alternative channels for communications. So if you can please elaborate and started from November onwards. So how do you see the situation there, has it stabilized and how we see that shaping maybe in the next year?
Because the shift was mostly from the traditional channel to the OTT channel. And now with the price hike in the OTT channel also, can we see stability in the domestic and the ILD volumes? And also a big shift in terms of the channel is not reflected in our numbers in terms of the like new growth areas. If you see Y-o-Y, it is there, but sequentially, we are not seeing that kind of growth. So how to reach there?
So Amit, let me just start this. I think if you talk about the large OTT players, they have actually cut down their costs and they have not moved their channel to another channel. Like they're sending OTP from SMS, they have not moved that to WhatsApp or other channels. So that's -- in fact, as a company, we are already in talks with the large OTT players. If they want to shift their channel for A to B, we as a company, we are happy to help them in those areas as well. And we are in talks with various other channels, OTT players if they -- to use multiple channels provided by Route Mobile.
And as far as the volume is concerned, I think we do see stability now. We see that in the last few months, the numbers are getting better from OTT players, and they do understand the potential of SMS being a better way to authenticate than other channels because of lots of data security and other aspects, which they also believe in.
So for me, the next few quarters or coming years down the line, ILD business will flourish and people -- OTT players will come this because for WhatsApp price hike to INR 0.025 makes more sense for them to go for OTT channel. But there are many companies. If they're looking out to use WhatsApp channel, we -- definitely as a company, we'll provide those APIs in various parts of the world.
Okay. And sir, in terms of the Vi deal, we're happy to hear that it has gone live. So you mentioned in earlier calls that in terms of the overall revenue potential. So how we can see the ramp up here. So like from first month only, it has picked up or it will take time to ramp up to the -- on the fullest potential?
It has picked up from first month onwards. It varies -- we definitely see a growth coming from large OTT player as well because of our firewall, we are able to block lots of leakages, which were happening domestically as well as on GT level coming from outside. We were able to mitigate those risks through our firewall. And there are lots of new channels being used for gray route like a flash call. We have identified those leakages and we shared the entire detail with Vodafone, and we try to put like mechanism on a firewall to block those. So we have definitely seen a growth in ILD business in last month.
Perfect. And sir, my last question would be I mentioned that the weakness is coming mostly from Mr Messaging and seasonally weak Masivian. So these 2 acquired entities have been facing problem over the last, I think, 2, 3 quarters. So most of the challenges you're seeing are in this portfolio? And if you can elaborate more at what kind of challenges? And is the client exits or if you can elaborate more or give some more color what's happening there?
So as Gautam mentioned, Amit, because of the geopolitical issues, like they were serving some customers in Russia and Ukraine kind of -- and those customers got impacted. So I think there's a reason behind it. And we are working very closely with Mr Messaging. As far as Masivian is concerned, I think they're doing fairly well. Q4 for them is always a weak quarter. But as far as the growth is concerned, Masivian is doing fantastically well. On Mr Messaging side, we as a group company, working very closely with them in terms of supporting them to win more contracts in their region. So I think both the companies are fairly well placed and whatever the dip we have seen in the market because of the certain geopolitical issues in part?
The next question is from the line of Swapnil Potdukhe JM Financials.
My first question is with respect to the ILD messaging trains, right? Now you mentioned that some of the weakness that we are seeing is because of things happening outside of India, especially MRM and Masivian. Now the question here is if that is so, were some of the entities in U.S., which contribute meaningfully to your revenues? In the Americas, 42% and Europe 14%. Do they also include someone like a Facebook, Google, Amazon, and they were the main customers in those particular regions as well. And that is why the impact is there already or it is something very, very reasonable to those particular geographies.
It's very reasonable to those geographies, Swapnil.
And if you could elaborate a bit more, Rajdip, I mean is it like the Ukraine situation is something which is happening -- affecting your...
Mr Messaging, we're working with some large customer based out of Russia, like so they were -- we had a large contract with them. And because of the -- they're operating from Europe, they have been told to stop working with those customers. So I think there's 1 impact. There's -- I think Gautam you want to add to this?
Yes. So I think on the ILD front in India, I think from some of these U.S. headquarter clients, we've been doing well, but it could have been much better. I think for some of these clients, I mean, they have been a little cautious about their spend. So some of that I think is being reflected across the board. It's not only relevant from a Route Mobile standpoint, I mean it's across the CPaaS industry.
But now I think with this WhatsApp pricing, I think they're talking about INR 0.028. So it's pretty much, I mean, close to the parity levels of ILD pricing. So we believe a lot of these things will come back. Some of the issues related to as Rajdip highlighted, Mr Messaging and Masivian are more regional. And once they start to get the traffic back, I think we should do fairly well. But we're waiting for at least some of these ILD traffics to ramp up, especially now with the Vi deal is going live.
So on that, Gautam, at one point of time, you mentioned that Vi deal has a potential of around $100 million in revenue terms. Does that figure stay the same? Or is there any change because that was, I think, 2 or 3 quarters back. So any...
So we continue to serve Vi even in the previous year. So adjusted for, I mean, whatever revenue that gets cannibalized, I mean we should do incrementally about INR 500 crores, INR 600 crores from the Vi deal.
So I think Swapnil you need to also understand the synergy between approximately TeleSign and Route Mobile, like -- and I think keeping that in mind, I think we need to understand that there is definitely a potential where we have a direct excess of some of the large U.S. customer, which we don't have as a Route Mobile as of now. So we will definitely come up with a strategy as to how to win more large OTT players sitting in the U.S. and how to start directly -- working with directly with TeleSign to win more large accounts. So keeping all this in mind, I think we are very fairly -- very much sure that we will achieve that number of INR 500 crores to INR 600 crores, which we have guided.
No. But is that a change from the earlier assumption that the Vi deal will add around INR 800 crores of incremental revenue to your top line? And now it is just INR 500 crores to INR 600...
No, no. So Swapnil. We continue to terminate about INR 200-odd crores of revenue. I mean you would be doing that as we speak even last year, right? So to that extent, I mean, that would be revenues that will get cannibalized this year. So that INR 800 crores needs to be adjusted for whatever we have been doing last year, right?
Okay. Okay. And the other thing is with respect to your receivable days going up meaningfully this year. Now is it entirely related to the firewall deals? Or is there more to read?
No, we realized [ a chunky ] bit of payment, I mean, towards the first week of April. So that had a little bit of a bearing in terms of the receivable days going up.
Okay. But that jump has been meaningful...
Yes, it is meaningful, you are right. So it was a large OTT payment, a couple of large OTT payments that we received during the first week of April.
Okay. Okay. And this one-off provision have you already provided for it? Or -- and if you have provided where exactly will that reflect?
No, it is part of the exceptional item, and you can maybe also refer it as within the cash flow statement.
Okay. So any recovery over there will not get reflected in your operating profit? Is that understanding correct then? It will come as other income or something.
Yes. It will get maybe get kind of written back in the same head. Yes, you're right.
Okay. And the last question is with respect to your domestic volumes. How have they moved in the recent past? I mean, is there any incremental thing addition in terms of clientele earlier you used to disclose that you have -- you were winning some BFSI clients and all. Has there been any incremental gains over there.?
So per se in India, I think we have done fairly well. I think domestic volumes have grown in double digits for India. So there, I think we are very, very bullish.
And this is despite the fact that there is a 20-odd percent hike in the NLD pricing.
Yes, Swapnil, yes, you are right. We -- in fact, we are able to close some large account last quarter, and we already have some great pipeline for this quarter as well.
The next question is from the line of Shivan Rajesh Kabra, an individual investor.
Sir, I wanted to ask you about...
Sir, your audio is not clear. May we request you to use your handset, please?
Okay, sure. Am I audible, now?
Yes, sir, please proceed.
Sir, I wanted to ask you about receivable. So there has been a jump of almost INR [ 390-odd ] crores in receivables. So can you throw some light on that?
Sorry, the voice was not very clear. Can you please repeat the question?
Yes. I actually wanted to ask you about receivables. So there has been a jump of almost INR [ 390 ] crores that has impacted our cash flow. So wanted to...
Sir, I'm sorry to interrupt. Your voice is breaking. I'm there's high and low in your volume.
Are you on a speaker? I think it is better you just...
Sir, you better use your handset, please?
No, I am using a handset. I wanted to...
Sir, it's high and low, your volume, I mean, like the pitch is high and low. So we are unable to understand.
I think you are asking about the receivables. I think we've just answered it prior to this. I think the query, I think, was on receivables. So I think we received a large payment from a few OTTs and clients during the first 10 days of April and hence, that receivable, the skew that you see there got impacted.
[Operator Instructions] The next question is from the line of Gokul Maheshwari from Awriga Capital.
Sir, my question is that you guys are working on certain firewall deals in LatAm market. Is there any update on that?
So I think it is an ongoing and these are a little confidential kind of information to be shared publicly. So I think some of these things are being kind of chased by the teams, and they're working closely with those -- on those opportunities. As and when they rectify, we'll come back to you with an update.
Secondly, just on the receivables front, if you could just quantify the amount which you would have given as an advance to the telecom operator. I mean, given that it is there in the balance sheet, but the revenue flow has not yet happened for those investments. Can you exactly quantify that?
Yes. So I think on the balance sheet, I think it is called out under the cash flow statement in the notes. So about INR 448 odd crores is what was given out and out of which I think we would have consumed about INR 70-odd crores during -- during the year gone by.
Okay. And lastly, just on the international messaging. Could you just give an indication of what is the volume growth for the industry and volume growth or degrowth in the industry for FY '24? And how would have Route fared versus the industry performance?
So actually, there is no data published as such, but we have seen a domestic growth in various markets wherever we work in a domestic market, whether it's Middle East, Africa or India or other Asian countries where we directly operate at work with enterprises. We have definitely seen a growth on the domestic front. And as a company, I think we are very bullish to focus more on the enterprise side. And I think that's what I can share, but we don't have any number as such about the overall market growth in last year.
The next question is from the line of Dipesh Mehta from Emkay Global.
Just want performance number for MRM and Masivian, if you can give some revenue and EBITDA kind of thing, even maybe Q-o-Q or Y-o-Y some comparison, how they fare? Second question on the receivables. If I look 3 months -- about 3 months, it is 18%, it seems to be slightly higher than usual trend. So if you can -- I understand you said some of the payments you received, but about 3 months, 18 months seems to be on a higher side, if you can give some sense.
Yes. So in terms of -- I'll give you the quarterly numbers for Masivian and Mr Messaging. So Masivian did about INR 514 million in INR terms. So there was a 17% Q-o-Q drop there. Mr Messaging, they did INR 1,795 million in Q4 FY '24. So again, we also witnessed about a 17% Q-o-Q decline.
For Masivian, as I highlighted earlier, it was more seasonal. Sorry, what was your other query? On the receivables, yes. On the receivables, a large part of our receivables also comes from a lot of these PSU clients where there are quarterly settlements. So maybe I think there is a little bit of a skew because of that.
Sir, do you expect it to be that kind of thing? Also we -- are 3 months also almost 1/5 of your receivables?
So Dipesh, maybe we can discuss it offline. We -- yes, so I think we can discuss it offline.
The next question is from the line of Ronak Chheda from Awriga Capital.
Am I audible?
Yes, sir you're audible. Please proceed.
I have a couple of questions. First is on the revenue retention, which has come in at 106%. Now I understand you've already spoken on the industry not doing well. But how should one look at this number? Is this a sustainable net retention ratio, which should be assuming for the business going forward given the environment we are in? That's the first question.
So Ronak, I think -- for sure, I think FY '25 looks much better from a growth standpoint and a lot of this growth will be garnered from existing clients. So I think the NRR should improve materially in FY '25. Once I think we will be able to kind of give you more and more color on some of these synergy approvals are in place with respect to Proximus. I think at that point in time, we can also touch upon, I mean, how we see this NRR improving during the course of this year.
Okay. And the second question is on -- we've seen the volume growth, right, on the transactions of around 17%, 17.5% for the full year versus the revenue growth is around 12%, 12.5%, right. So when you [ tack ] up this, what -- I think what I'm trying to gauge is how should we look at the volume? Because you mentioned that -- now there is some volume has gone and exited the system and some of this has changed the channel. The volumes which have changed the channel should not have -- should still be part of this number, right? So how should we look at the volume which is...
A significant increase of these volumes is attributable to domestic volumes, which is at a much lower realization.
Okay. So for a full year basis, qualitatively, ILD volumes have degrown for us?
No, ILD volumes have increased.
For the full year?
Yes. For the full year, ILD volumes have come up because I think there was a price increase also during the course of the year.
No, no, I'm asking on the volume basis.
Yes. Because of the price increase, the volumes have come off. So yes, there was a decline in the ILD prices. You're right -- ILD volume, sorry.
So the highly volumes on a full year basis have -- must have degrown, and a lot of this is domestic and hence this is. And in Rajdip's opening remarks, you mentioned that there are -- some of these are more structural changes, right, for the industry itself. How are you thinking now for the industry itself to recover from these structural changes, do you see a case for industry to do a double-digit volume growth over the next 3 years? Or that would be far-fetched given how the clients are thinking?
So you have to see Ronak in 2 ways, like there will be definitely a volume growth going to happen because of the multichannel approach by the customer. So we will see a growth in omnichannel, whether it's the WhatsApp, RCS and e-mail or maybe SMS. So overall transaction growth is definitely going to be there.
And how much is going to be on SMS and how much is going to be on RCS or WhatsApp, probably that is we have to wait and see. But I can just let in terms of adoption and transaction growth that is happening across the channels, and that is exactly one good thing where we believe as an industry as a CPaaS [Technical Difficulty] in fact, all the CPaaS companies are now very well placed to offer multiple channels to their existing customers as well as to the new customers. So overall transaction is going to increase in coming years down the line.
Understood. And this Proximus deal is supposed to get closed in the next couple of weeks. That is how we should be reading into your commentary?
Yes, Ronak, I think we -- I think this month is what I think we are anticipating for the closure and it could happen very, very soon.
We'll take the next question from the line of Aniket Kulkarni from BMSPL Capital.
So with respect to this Vi India deal, is there any concern regarding receivables given the financial situation of the company? Or I mean, do they pay upfront as the contract unfolds?
So strictly speaking, we would monetize that revenue from the enterprise, just collect the revenue and then pay to Vi. So per se, except for whatever is the advance given, I mean there is no, I mean, delinquency risk, so to say. But I mean on a monthly basis, also, we keep realizing substantial chunk of revenues from those enterprises for which we have to settle with Vi. So per se, I mean, the risk associated is very, very miniscule.
And can you quantify how much advance has been given so far?
So that is, again, I mean, confidential, so we would not want to divulge it in any public forum. And we are also bound by the confidentiality in the agreement.
So it is part of the number that's already called out in the balance sheet. So we have given advances to a few operators to the extent of that INR 448 crores, which is there in the balance sheet.
All right. Okay. And secondly, on the debt front, the debt seems to have gone up on a year-on-year basis. So is there anything particular in this or it's just normal business?
Yes. I mean it is just normal. I mean so average maturity of this debt would be like kind of a year.
Okay. So [indiscernible] because it went from INR 140 crores to around INR [ 380-odd ] crores or so.
Yes, that's correct. So a lot of these contracts that we have done, we would have parked FDs in certain currencies and then taken the debt and then some of these are on a monthly basis self-retiring.
The next question is from the line of Devraj Singh an individual investor.
I actually have 2 questions, but 1 has already been answered. So I just have a small question. I think about -- I would say about 2 or 3 calls ago, you had shared something regarding the intention of Proximus not to take Route private, right? Does that still stand considering where we are in terms of the equity being tendered, et cetera?
Sorry, Dev, can you just repeat your question, please?
Yes, sorry. So I just want to say a few calls ago, you had mentioned the intention of Proximus not to take Route private? So does that still time?
Yes, indeed, that indeed still stands. And I think there is no plan of taking Route as private.
And intention was captured in the open offer document as well.
Right, I know. But considering the amount of equity that has been tendered, I was just wondering if anything has changed that. And the second question I wanted to ask is that one of the consistent themes has been that the synergies with Proximus will help us get to a better margin profile, right? So considering the deal has been in the works for a long time now. I just want to know what sort of margin profile is all the new products that have been launched. I'm seeing that the new product revenue is approximately 20 to 50 or something like that. So I just want to understand what sort of margin profile are these new products showing?
Yes. So the new products, I mean, most of the new products entail a much higher margin than the SMS margins.
So these would be around?
Yes, it could vary from, I mean, 30% to 75% to 80% in case of e-mails, right? So at a blended level, it should be around that 30%, 35%.
30% or so. Okay. That's what was guided earlier as well.
[Operator Instructions] The next question is from the line of Ritu Shah from Janak Merchant.
Hello?
Yes ma'am, please proceed.
Yes. So I just wanted to ask, so what's the purpose of giving a security deposit to the MNOs? I mean is there any risk they have from our side? We are just giving a service? So why a security deposit?
No, it is a contractual negotiation that has happened, and it's essentially a quarter -- so they are giving their network exclusively to us to manage it for them, so for which they take the security deposit.
Okay. So like renew it, after 4 to 5 years once we're done, we get back the deposit, right? And then if we renew the contract -- so if we renew the contract, we have to give the deposit again every time?
Yes, so it depends on the negotiations then. But yes, these are -- I mean, this can be rolled over to the subsequent period if the contracts are renewed.
[Operator Instructions] The next question is from the line of Sangam Kandi and individual investor.
Yes, am I audible?
Yes, sir.
Yes. Actually, one of my question is that when will be the deal closed with the Proximus is already answered. Secondly, I wanted to ask the INR 1 billion target of the management. Actually, we missed the profit guidance in the FY '24. So is the target still on? And my second question for today is will the top management in the Route Mobile get changed post the Proximus deal?
So to answer your first question, Sangram, I think we are very much intact with our INR 1 billion revenue target. And we are working towards that. If you see the kind of work we are doing on different channels, the kind of synergies we're working with our customers. And along with this partnership with Proximus still also going to add lots of value to Route Mobile. And I think in terms of management, I think we may not able to share any information as of now. Probably you have to just wait and what post the deal happens.
Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now hand the conference over to Mr. Rajdip Kumar Gupta for closing comments. Over to you, sir.
Thank you, everyone. Thanks for showing your interest, and thank you for all your support as an investor, looking forward for the support again. And once again, thank you. Once again, have a nice evening, guys. Take care.
Thank you very much, sir. Thank you, members of the management. On behalf of Route Mobile Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.