AFFLENSEFebruary 14, 2022

Affle 3i Limited

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69turns

9analyst exchanges

3executives

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Management on call

Anuj Khanna Sohum

Chairman, Managing Director

Kapil Bhutani

Chief Financial & Operations Officer

Anmol Garg

DAM Capital

Key numbers — 40 extracted

35%

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 qua

58.5 million

ll 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% y-o-y at a Rs. 51.8 CPCU rate. The l

91.2%

oted a strong momentum delivering 58.5 million user conversions during the quarter, an increase of 91.2% y-o-y at a Rs. 51.8 CPCU rate. The last two years were strategically crucial for us as we comp

Rs. 51.8

tum delivering 58.5 million user conversions during the quarter, an increase of 91.2% y-o-y at a Rs. 51.8 CPCU rate. The last two years were strategically crucial for us as we completed our Affle2.0 st

69%

build a 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 investo

31%

nd 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 1

rs,

e cases, we continue to include case studies in our Earnings Presentation from the past few quarters, showcasing the power of our platform 3 Affle (India) Limited February 07, 2022

Rs.3,394 million

health. Continuing our growth momentum - In Q3, the company reported Revenue from Operations of Rs.3,394 million a growth of 125.5% y-o-y. Sequentially, our revenue has increased by 23.6% driven by team efforts

125.5%

th momentum - In Q3, the company reported Revenue from Operations of Rs.3,394 million a growth of 125.5% y-o-y. Sequentially, our revenue has increased by 23.6% driven by team efforts and healthy festiv

23.6%

erations of Rs.3,394 million a growth of 125.5% y-o-y. Sequentially, our revenue has increased by 23.6% driven by team efforts and healthy festival spending by the advertisers. Our EBITDA for this q

Rs. 677 million

efforts and healthy festival spending by the advertisers. Our EBITDA for this quarter stood at Rs. 677 million, an increase of 76.4% y-o-y and 29.9% q-o-q. If we compare our Opex on a sequential basis with th

76.4%

pending by the advertisers. Our EBITDA for this quarter stood at Rs. 677 million, an increase of 76.4% y-o-y and 29.9% q-o-q. If we compare our Opex on a sequential basis with the previous quarter,

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Guidance — 14 items

Anuj Khanna Sohum

“As we continue to grow and transform it over the subsequent years, we hope to achieve materially higher EBITDA performance on Jampp and therefore drive margin upside overtime on that business.”

Anuj Khanna Sohum

“iOS and IDFA changes would mean that advertising on iOS will be less effective.”

Anuj Khanna Sohum

“We look at it holistically for the decade ahead and build a platform that will deliver on the momentum of consistent sustainable growth across our platforms.”

Anuj Khanna Sohum

“The market is growing at about 25% to 30% CAGR as an industry across emerging markets.”

Anuj Khanna Sohum

“There is a lot of macroeconomic tailwinds helping us to continue this momentum but there is a massive runway for consistent growth before we start feeling that the growth will normalize or will reach a certain flattening point.”

Anuj Khanna Sohum

“It is linked to the founder’s earnings that will be at the end of the third year which are Elad, Eran and the team but the non-founding shareholders have already been paid off now.”

Kapil Bhutani

“Rest, some USD 5 odd million will be paid after another 18 months.”

Anuj Khanna Sohum

“If we were to analyze the trend further over last four financial year and just look at Q3 converted users, you will find that the CAGR is 67.2%.”

Anuj Khanna Sohum

“We expect this kind of adoption to continue to increase for many years as more of young generation will start coming on digital devices as well as people from well beyond tier III cities to rural markets will start coming on smart devices.”

Anuj Khanna Sohum

“In India alone, we expect in the next few years to have over 1 billion connected devices and the number of online shoppers in India to be close to 0.5 billion.”

Risks & concerns — 4 flagged

We are doing exceptionally well and there is no concern that we have at the moment concerning data privacy and issues about that.

— Anuj Khanna Sohum

What’s important is that there should be no undue stress on what we must do on it just because there is cash in the bank.

— Anuj Khanna Sohum

There is no real vertical concentration or customer concentration risk at the moment.

— Anuj Khanna Sohum

The Jampp acquisition was signed perfectly for us because we wanted to be the first hand going into the US market to experience how to turn this challenge into an opportunity and we did that well in at least for the last few months.

— Anuj Khanna Sohum

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Q&A — 9 exchanges

Congratulations on a strong performance during the quarter. I have a couple of questions. Firstly, wanted to understand that this time our India standalone revenue has increased a bit, however we saw some drop in the PBT during the quarter. What could be the reason for the same? Secondly, what is the Jampp contribution during the quarter. Also, how much of the Jampp business has shifted to the CPCU model given that the non-CPCU growth rate during the quarter was higher than the CPCU growth rate?

Kapil Bhutani

The margins for India business are almost the same as the Q2 FY2022. However, on a y-o-y basis, there can be a slight difference because of the rise in inventory & data cost due to the festive season as it involves a lot of demand and supply. On a q-o-q basis, our margins are stable. PBT can be attributed to an increase in the cost of human resource investments. In this quarter, Jampp’s contribution to our consolidated revenue was approximately a third and on EBITDA performance, we were able to bring Jampp up to 7% to 8% margin in this quarter. It is as per the playbook and the expectations wh

Thank you for the opportunity. My question is on the Vizury. Correct me if I am wrong, we acquired Vizury mainly for the retargeting purpose and now the rules of the retargeting game itself are being heavily distracted because of privacy- related concerns. As we know, Facebook is very heavy on retargeting and they have given a tepid outlook given the performance in the last nine months. I understand Affle is more into New User Acquisition campaigns. However, if you could visualize and explain to us what kind of disruptions are you anticipating in the New User Acquisition campaigns? How Affle i

Anuj Khanna Sohum

Thank you for your insightful question. First of all, Vizury and Engage360 products are doing exceptionally well for us and we are extremely happy with the way we are going about it. The way we work on the Vizury product specifically is through deeper integrations with the advertisers and reliance on first-party data. This eliminates any confusion related to data privacy concerns because our technology sits deeply inside, integrated with the advertiser working as part of their one platform & system and leveraging their data to engage with the consumers. In our parlance, we call it first-party

Thank you. Congratulations to the team on the spectacular performance. A couple of questions. Firstly, from a TV ad spend data perspective, we see India is the major market that continues to grow on this piece. Any sense of when this is going to change and would further add up to the momentum that we are already experiencing. Secondly, how should we see the Jampp business to perform in the near term? We know our long-term view is aligned, but do we see more things to be captured in the Jampp business given the tailwinds that you had highlighted earlier could play out and reach a certain size a

Anuj Khanna Sohum

Thank you for your questions. The first one is on TV ad spend. Yes, it is interesting to note that India still has such a huge ad spend on TV and also other channels but I am not going to make any expert view on TV advertising. Today, in digital advertising as a percentage of total advertising India stands at about 25%. This means out of every USD100 being spent on advertising, only about 25% is going 8 Affle (India) Limited February 07, 2022 towards digital. My view on it is clear and the writing is on the wall that the advertisers have no choice, but to shift at least 50% of their total budg

We have done the Jampp acquisition but we have a lot of cash lying with us. What will we do with that cash? We also know that you are particular about the 10 Affle (India) Limited February 07, 2022 acquisitions that must have some capabilities. Could you give us a view on what capabilities are we lacking and in which direction are we thinking to have further acquisition?

Anuj Khanna Sohum

Thank you for that question. It links back to what we did earlier with Appnext. We have consolidated our position there. I want to make sure that when we do an acquisition, we must prove beyond doubt first of all to our internal management team, our board and then to our shareholders that what we did in the acquisition was spot-on responsible and we delivered outcomes as per plan. Now, if you see the track record of the company, when we do an acquisition we deliver on it and make sure that we have done it right. Similarly, we go on to the next one and so forth. Yes, there is cash in the bank a

Thank you for taking my question. Congratulations on a great set of numbers team. Few questions more towards the accounting side. Kapil, if you could explain what sits in the difference between the consoleidated and the standalone revenue right now because I believe approximately one-third of the revenue is from Jampp. So, what is the balance in the consolidated?

Kapil Bhutani

The balance in the consolidated is our existing without Jampp, the international business which constitutes of RevX, Vizury, MaaS as well as the Appnext. Till Q1, our financials were without Jampp and there was almost 50:50 split between India and international which now is skewed towards international because of the Jampp. What would be the free cash flow for the quarter? There is about Rs. 500 Crore Net Cash balance on our balance sheet for the period 9M FY2022, after deducting for the current liabilities on account of acquisitions. The free cash flow in our cash flow statement for the 9 mon

Congratulations on a good set of numbers and thanks for the opportunity. Wanted to understand the trend of converted users as in the last quarter we added around 17 million users and this quarter added around 10 million users on a sequential basis. It is higher than the usual trend we had previously? Is the shift in the ad dollars from iOS to android supporting the incremental additions for Affle or some other elements that you want to touch upon? 13 Affle (India) Limited February 07, 2022

Anuj Khanna Sohum

Thanks for that question. The best way to look at trends is when we talk about conversions. The historical trends are a great indicator of what is to come in the future. In the last nine months, we delivered about 138.7 million conversions from converted users at approximately Rs. 50 CPCU rate. If we were to analyze the trend further over last four financial year and just look at Q3 converted users, you will find that the CAGR is 67.2%. These are statistics and trends that we have already shared. These are the long-term trends that I am talking about i.e either nine months of this financial ye

Congratulations on a fantastic set of numbers to the entire team. A couple of questions. Firstly, we are seeing this whole Metaverse theme playing out and the whole world going gung-ho over it, but let us say we look at the potential use cases with brands like H&M. They have gone out to set up digital storefronts where virtual customers come and interact with them & their products. Now, how would Affle fit in here? Would the customer interactions be virtually measured? I am aware of the fact that this is a hypothetical question and even we are so early in the theme, could you share your insigh

Anuj Khanna Sohum

Thank you for your kind words about our performance. On your question, if you look at one of the recent patents that were granted to us in the US Patent Office, it talks about gesture-based voice intelligence driven interactions. This shows how this patent is preparing us for a scenario where the human interaction with the machine or technology would be much more subtle. It will not be a voice command or type-in and touch something but it could be as simple as a subtle gesture. This gesture could be to your avatar or your digital persona. Therefore, it could lead your digital persona to behave

Congrats on the results. Two questions. One is would you be able to help me with Jampp’s revenues in the base quarter because I believe you mentioned one-third of the revenues in this quarter is coming from Jampp? If we have to understand the Jampp specific growth, how is that number in the base quarter?

Anuj Khanna Sohum

I can tell that our organic growth has been quite fantastic on a y-o-y basis and seeing from a bottom-line perspective, the organic growth is over 50% y-o-y. In terms of EBITDA, around 86% of the EBITDA came from the organic business. Kapil, if you can share any specific numbers on Jampp as I don’t have that data immediately on my hand. Qualitatively, we are highly 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. Jampp has approximately grown by about 30% plus in this quarter versu

Thank you everyone for staying tuned into the call today. I sincerely appreciate the support and the belief that the investors have shown continuously in the company. The questions were insightful and forward-looking. Also, the tech evolution is exciting and we are passionate about our industry. We are deeply committed and have a strong conviction & belief in delivering superior growth. We are here to build Affle to last for the long-term. We look forward to more opportunities to answer your questions. Thank you and stay safe.

Management

Speaking time

Anuj Khanna Sohum

Moderator

Kapil Bhutani

Mayank Babla

Manish Poddar

Rahul Jain

Pritesh Thakkar

Sumere Choksy

Anmol Garg

Arun Prasath

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Opening remarks

Anmol Garg

Thank you Rutuja. Good morning, everyone. On behalf of DAM Capital, we welcome you all to the Q3 and 9M FY2022 Conference Call of Affle (India) Limited. I take this opportunity to welcome the management of Affle (India) Limited, represented by Mr. Anuj Khanna Sohum who is Chairman, Managing Director and Chief Executive Officer of the Company; and Mr. Kapil Bhutani who is Chief Financial and Operations Officer of the Company. Before we begin with the discussion, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer to slide 24 of the Company’s Q3 earnings presentation for a detailed disclaimer. I will now hand over the call to Mr. Anuj Khanna Sohum for his opening remarks. Thanks and over to you Anuj!

Anuj Khanna Sohum

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 are profound catalysts of our Affle2.0 culture of tech innovations and sustainable profitable growth. True to our culture – I am incredibly proud that in less than 2 years our team has achieved more revenue in this one quarter than the full-year revenue of FY2020 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% y-o-y at a Rs. 51.8 CPCU rate. The last two years were strategically crucial for us as we completed our Affle2.0 strategic foundation anchored on the 2V (Vernacular & Verticalization) and 2Os (OEMs and Operator) partnerships. We fortified our consumer platform tech stack and invested towards markets & teams expansion glo

Kapil Bhutani

Thank you Anuj. Trust all of you are keeping safe and in good health. Continuing our growth momentum - In Q3, the company reported Revenue from Operations of Rs.3,394 million a growth of 125.5% y-o-y. Sequentially, our revenue has increased by 23.6% driven by team efforts and healthy festival spending by the advertisers. Our EBITDA for this quarter stood at Rs. 677 million, an increase of 76.4% y-o-y and 29.9% q-o-q. If we compare our Opex on a sequential basis with the previous quarter, Inventory and Data cost increased by 22.7%, almost in line with revenue growth. Employee expenses increased by 18.1% on account of the appraisal cycle effective from the month of October, our continued investment to enhance our team to deepen our access across India & International markets and the cost of ESOS. The cost of ESOS for the current quarter was Rs. 13.58 million and total ESOS expense for the current grant is valued at Rs. 219.53 million for 4 years. Our Reported Profit After Tax for the qua

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