Affle 3i — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

Affle 3i delivered a robust start to FY2026, achieving record highs across all key financial metrics despite global macroeconomic and geopolitical headwinds. The company's performance was driven by its differentiated CPCU model, deeper AI integration via Opticks AI, and strong growth in Developed Markets. Management remains committed to a 20% organic revenue growth target and is actively but cautiously evaluating M&A opportunities under a strict '20/20' rule.

Highlights

  • Highest-ever quarterly Revenue of ₹6,207 million, up 19.5% YoY and 3.1% QoQ

  • EBITDA reached a record ₹1,397 million, growing 33.7% YoY with a margin of 22.5%

  • EBITDA margin expanded by 239 basis points YoY, marking the 5th consecutive quarter of sequential expansion

  • PAT stood at ₹1,055 million, an increase of 21.8% YoY and 2.4% QoQ

  • CPCU business delivered 107 million conversions at an increased rate of ₹58.0 per conversion

  • Developed Markets outperformed with 23.3% YoY growth, contributing 27.7% of total revenue

  • India & Global Emerging Markets grew 18.1% YoY, contributing 72.3% of revenue

  • Management reaffirmed a medium-term EBITDA margin target of ~23% and a 10x decadal growth vision

Key financials

  1. Revenue from Operations 6,207 Mn +19.5%YoY
  2. EBITDA 1,397 Mn +33.7%YoY
  3. EBITDA Margin 22.5%
  4. PAT 1,055 Mn +21.8%YoY
  5. CPCU Rate ₹58
  6. Consumer Conversions 107 Mn

What they filed

Q1 FY27: revenue up 20.3%, net profit up 20.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue543 602 602 621 647 +19%717 +19%724 +20%747 +20%
EBITDA113 131 134 140 146 +29%163 +24%161 +20%168 +20%
Net profit92 100 103 106 111 +21%119 +19%120 +17%128 +21%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue ContributionYoY Growth
India & Global Emerging Markets72.3%18.1%
Developed Markets27.7%23.3%

Guidance & targets

Revenue

  • Organic Revenue Growth Revenue · FY26 · High confidence 20%
    We are looking at an organic, sustainable, consistent growth pattern of about 20% on the revenues.

    — Anuj Khanna Sohum, CEO

Margin

  • EBITDA Margin Margin · Medium Term · Medium confidence 23%
    Our goal in the medium term is to achieve about 23% EBITDA margin as we continue our margin expansion goals.

    — Anuj Khanna Sohum, CEO

Other

  • Decadal Growth Other · by 2035 · Medium confidence 10x
    We started this financial year with the significant launch of our Affle 3i vision and our strategic action plan with the goal to deliver 10X decadal growth.

    — Anuj Khanna Sohum, CEO

  • Acquisition Criteria (20/20 Rule) Other · Ongoing · High confidence 20% EBITDA and 20% Top-line Growth
    We will only acquire a company that we believe will be able to get to around 20% EBITDA, and we can grow it about 20% y-o-y on the top line. This 20/20 rule has to be absolutely sacrosanct.

    — Anuj Khanna Sohum, CEO

Risks & concerns

  • Geopolitical and Macroeconomic Uncertainties

    medium

    Wars in the Middle East and potential trade tariffs were noted as factors that could impact advertiser sentiment, though Affle claims resilience.

    Both acknowledged

  • Competitive Intensity in India

    medium

    Analysts raised concerns about Trade Desk's activity in India; management cited their direct-client mix and localized tech as superior moats.

    Analyst downplayed

  • ROE impact from high cash levels

    low

    Analysts noted ROE is taking a hit due to idle cash; management responded they will not overpay for acquisitions just to deploy capital.

    Analyst acknowledged

Areas of evasion (2)

  • Specific breakdown of margins by geography (India vs Developed)
  • Specific timeline for the next acquisition

Q&A highlights

3 direct
Competitive threat from Trade Desk in India Direct
Our competitive moat in India is coming from multiple dimensions... about 75% of our overall revenues is from direct customers. If you look at the Trade Desk reports... their business is very agency led. I think about 80% of their business or more comes from ad agencies.

Clarifies Affle's structural advantage (direct client relationships and CPCU model) against global DSPs entering the Indian market.

Asked by Swapnil Potdukhe, JM Financial

Impact of Agency (GroupM) restructuring and AI disruption Direct
We should be less impacted versus if I linked it to the earlier question... Somebody like a Trade Desk where about 80% of their revenue is through agencies... will see a much bigger challenge in this kind of transition.

Management argues that their direct-to-advertiser model insulates them from the current turmoil in the traditional agency ecosystem.

Asked by Deepak, Sundaram Mutual Fund

Sustainability of Gross Margins vs Operating Leverage Direct
The advertisers... are seeing that the average lifetime value of a digital consumer is actually going up because there is more volume of conversions... Therefore, our ability to price it effectively with the advertiser also goes up and we should be able to defend that for many years.

Explains why CPCU rates are rising and why management believes they can maintain gross margins even as they scale.

Asked by Arun Prasath, Avendus Spark

2 min read 6 chapters

Detailed narrative

Record Financial Performance and Margin Expansion

Affle 3i reported its highest-ever quarterly revenue of ₹6,207 million, representing 19.5% YoY growth. EBITDA grew significantly faster at 33.7% YoY to ₹1,397 million, leading to a 239 bps margin expansion to 22.5%. This marks the fifth consecutive quarter of sequential margin improvement, driven by operational efficiencies and AI-supported workflows.

CPCU Model Drives Pricing Power

The core CPCU business remains the primary growth engine, contributing ₹6,200 million in revenue. The company delivered 107 million conversions during the quarter. Notably, the CPCU rate increased to ₹58.0, up from previous levels, which management attributes to the rising lifetime value of digital consumers and Affle's ability to deliver high-quality conversions.

Developed Markets Outpace Emerging Markets

Developed Markets showed strong momentum, registering 23.3% YoY growth and increasing their contribution to 27.7% of total revenue. This growth is attributed to deeper customer engagements and local direct sales. Meanwhile, India and Global Emerging Markets grew at a healthy 18.1% YoY, maintaining a dominant 72.3% share of the business.

AI Integration and Tech IP Portfolio

The company has fully integrated Opticks AI, a Gen-AI powered creative engine, into its unified Consumer Platform Stack. This technology enables hyper-personalized, real-time ad generation. Additionally, Affle received its 14th patent grant in India for advertisement fraud detection and achieved status as an Apple-certified partner, enhancing its credibility in the iOS ecosystem.

Disciplined M&A Strategy and the '20/20' Rule

Management emphasized a conservative but active approach to acquisitions, evaluating 5-10 companies at any given time. They introduced the '20/20' rule: any acquired company must be capable of achieving a 20% EBITDA margin and 20% top-line growth. Despite high cash reserves, the company refuses to overpay, prioritizing long-term value over immediate ROE metrics.

Resilience Against Competitive and Structural Shifts

Addressing the entry of global players like Trade Desk into India, management highlighted that 75% of Affle's revenue comes from direct customers, whereas competitors are often 80% agency-led. This direct relationship, combined with deep tech integration for conversion data, is viewed as a significant strategic moat that protects Affle from shifts in the agency landscape.

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