Affle 3i — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Affle delivered a landmark performance in Q3 FY25, achieving record milestones in revenue, PAT, and CPCU conversions. The company demonstrated strong operational leverage with significant EBITDA margin expansion driven by AI-led efficiencies and the successful integration of past acquisitions. Management remains bullish on its '10x growth journey,' supported by a turnaround in developed markets and a focus on premium, high-ROI conversions.

Highlights

  • Quarterly revenue surpassed INR 6,000 million for the first time, reaching INR 6,017 million (+20.6% YoY).

  • Quarterly PAT exceeded INR 1,000 million for the first time, standing at INR 1,002 million (+30.5% YoY).

  • Highest-ever EBITDA of INR 1,314 million with a record 21.8% margin, expanding 245 bps YoY.

  • CPCU conversions crossed 100 million (103.3 million) at a record CPCU rate of INR 57.8.

  • Developed markets grew by 23.3% YoY, contributing 26.4% to quarterly revenue.

  • Inventory and data costs improved to 60.3% of revenue, down from 61.1% in the previous quarter.

  • Management reaffirmed 20%+ revenue growth guidance for FY2025.

  • Operating cash flow for the nine-month period stood at INR 2,837 million.

Key financials

  1. Revenue 6,017 Mn +20.6%YoY
  2. EBITDA 1,314 Mn +35.9%YoY
  3. EBITDA Margin 21.8%
  4. PAT 1,002 Mn +30.5%YoY
  5. CPCU Conversions 103.3 Mn
  6. CPCU Rate ₹57.8

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 ContributionRevenue Growth
India & Global Emerging Markets73.6%19.7%
Developed Markets26.4%23.3%

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY2025 · High confidence 20%+
    We continue to exceed our performance targets and are confident of delivering 20%+ growth in FY2025 and sustaining this growth trajectory ahead.

    — Anuj Khanna Sohum, Chairperson, MD & CEO

Margin

  • EBITDA Margin Margin · Medium-term · Medium confidence 23%
    We are expecting EBITDA to stabilize at around 23% in the medium-term.

    — Kapil Bhutani, CFO & COO

  • PAT Margin Margin · Medium-term · Medium confidence 17% to 18%
    PAT to be around 17% to 18% in the medium-term.

    — Kapil Bhutani, CFO & COO

Other

  • Long-term Tax Rate Other · Long-term · High confidence 19%
    Our long-term tax rates will be in the range of 19%, plus / minus a few basis points on a long-term basis.

    — Kapil Bhutani, CFO & COO

Risks & concerns

  • Growth Tapering in Emerging Markets

    medium

    Analysts noted growth in emerging markets (excluding India) appeared to be tapering; management attributed this to a focus on premium pricing and collection discipline.

    Analyst acknowledged

  • Seasonality Impact in Q4

    low

    Q3 is historically the peak quarter; management noted Q4 is typically flattish or slightly lower, though they aim to beat this trend as they did last year.

    Both acknowledged

  • Walled Garden Competition (Meta/Google AI)

    low

    Management believes AI tools like Meta's Advantage+ will actually drive more budget toward performance-based advertising outside walled gardens.

    Analyst downplayed

Q&A highlights

3 direct
Tapering Growth in Emerging Markets Direct
The emphasis for us this year consistently has been on deriving not just growth, but growth together with deeper profitability and better pricing... We are choosing the business that we want to do.

Management clarified that lower growth in emerging markets is a deliberate choice to prioritize 'premium growth' and disciplined collections over volume.

Asked by Swapnil Potdukhe

Competitive Threat from Meta's Advantage+ Direct
I don't see a threat with respect to what Meta is doing at the moment. What we see instead is an opportunity that we could go to the advertisers and educate them and say, 'Hey, open it up.

Management argues that AI tools in walled gardens actually help shift advertiser mindsets toward ROI, which benefits Affle's non-walled garden platform.

Asked by Lokesh Manik

Inventory Cost Management vs. CPCU Rate Direct
I would attribute that completely to the strength of our platform and algorithm... You just want to make sure that you show the minimum number of ads to get the maximum number of conversions.

Explains how Affle maintains flattish inventory costs while increasing CPCU rates through algorithmic efficiency rather than just premium inventory partnerships.

Asked by Deepak

2 min read 5 chapters

Detailed narrative

Record-Breaking Financial Performance

Affle achieved a significant milestone in Q3 FY25, with revenue crossing INR 6,000 million and PAT exceeding INR 1,000 million for the first time. Revenue grew 20.6% YoY to INR 6,017 million, while PAT surged 30.5% YoY to INR 1,002 million. This performance was underpinned by a 35.9% YoY increase in EBITDA, which reached INR 1,314 million, reflecting strong operational leverage.

CPCU Model and Pricing Power

The CPCU business model continues to be the primary growth engine, delivering 103.3 million conversions during the quarter. The CPCU rate reached an all-time high of INR 57.8, up from previous levels, demonstrating Affle's ability to command premium pricing. Management attributed this to the platform's algorithmic strength in delivering high-ROI outcomes for advertisers, particularly in premium segments like iOS.

Operational Efficiencies and AI Integration

EBITDA margins expanded by 245 bps YoY to 21.8%, driven by a decrease in inventory and data costs to 60.3% of revenue. Management highlighted that GenAI is being leveraged internally to drive automation and autonomy across teams, allowing the company to scale revenue without a proportional increase in headcount. Employee costs actually declined 6.5% YoY despite sequential wage hikes.

Developed Markets Turnaround

Developed markets, particularly North America, showed robust momentum with 23.3% YoY growth, contributing 26.4% of total revenue. This turnaround follows strategic initiatives to integrate platforms like Jampp and YouAppi and operate under a single local entity structure in the U.S. Management noted that this structure also serves as a natural hedge against currency and tariff risks.

Medium-Term Margin and Growth Outlook

Management provided clear medium-term targets, expecting EBITDA margins to stabilize around 23% and PAT margins between 17% and 18%. They reaffirmed a 20%+ revenue growth guidance for FY2025. The long-term vision remains focused on a '10x growth journey,' supported by the CEO's 10-year leadership commitment and a consistent focus on sustainable, cash-flow-positive growth.

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