Affle 3i — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Affle 3i (formerly Affle India) delivered a record-breaking Q4, beating traditional advertising seasonality to maintain revenue run-rates at par with the festive Q3. The company successfully expanded margins through AI-driven operational efficiencies and saw robust growth in Developed Markets (27.3% YoY). Management is pivoting to its '3i' strategy (Innovation, Impact, Intelligence) with a bold mid-term 10X growth target and a commitment to 20%+ organic growth in FY26.

Highlights

  • Revenue for Q4 FY25 reached ₹6,023 million, representing 19.0% YoY growth.

  • Full-year FY25 revenue stood at ₹22,663 million, up 23.0% YoY.

  • Q4 EBITDA margin expanded by 289 bps YoY to a record 22.2%, with EBITDA at ₹1,340 million.

  • PAT for the quarter grew 17.8% YoY to ₹1,031 million; full-year PAT grew 28.5% to ₹3,819 million.

  • CPCU business delivered 104 million conversions in Q4 at a rate of ₹57.8 per conversion.

  • Operating cash flow grew significantly by 62.4% YoY to ₹4,260 million for the full year.

  • Management guided for 20%+ organic revenue growth in FY2026.

  • Cash balance exceeds ₹1,300 crores as of the end of the financial year.

Key financials

  1. Revenue 6,023 Mn +19%YoY
  2. EBITDA Margin 22.2%
  3. PAT 1,031 Mn +17.8%YoY
  4. CPCU Conversions 104 Mn
  5. Operating Cash Flow 4,260 Mn +62.4%YoY

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

  • India & Global Emerging Markets
    71.1% Revenue Contribution15.9% YoY Growth (Adjusted)
  • Developed Markets
    28.9% Revenue Contribution27.3% YoY Growth9.7% Sequential Growth

Guidance & targets

Revenue

  • Organic Revenue Growth Revenue · FY2026 · High confidence 20%+
    we can sustainably aim for around 20% growth in FY2026... what we are talking right now is organic growth.

    — Anuj Khanna Sohum, CEO

Margin

  • EBITDA Margin Expansion Margin · FY2026 · Medium confidence Gradual expansion
    We will be pushing for a gradual EBITDA margin expansion by a few basis points each year.

    — Kapil Bhutani, CFO

Other

  • Marketing and Promotion Expenses Other · FY2026 · High confidence 2% - 3.5%
    Basically, our target is to spend about 3%-3.5% on the upper side and about 2% on the lower side for the marketing and promotion expenses.

    — Kapil Bhutani, CFO

Headcount

  • Human Resource Cost Increase Headcount · FY2026 · Medium confidence No steep increase
    In FY2026, we don't expect there to be a steep increase in our human resource cost. We'll broadly maintain the current level of expenses.

    — Kapil Bhutani, CFO

Risks & concerns

  • Seasonality in Advertising Budgets

    medium

    Q4 typically sees a 5-10% sequential dip; while Affle beat it this year, they cautioned analysts to keep it in their future models.

    Both acknowledged

  • Fraudulent AI Agents

    medium

    The rise of AI brings risks of fraudulent AI traffic; management claims their mFaaS platform and patents provide a defensive moat.

    Management acknowledged

  • US Recession Impact

    low

    Management believes their small base in the US and ROI-linked CPCU model makes them resilient to a mild recession.

    Analyst downplayed

Areas of evasion (1)

  • Specific percentage breakdown of the gaming vertical (Category G) vs others.

Q&A highlights

2 direct
Organic vs Inorganic Growth for FY26 Direct
I believe we may consider selective and carefully picked acquisition targets through this year, but what we are talking right now is organic growth.

Confirms that the 20% growth guidance is purely organic, with acquisitions providing potential upside.

Asked by Anmol Garg, DAM Capital

Gaming Vertical Exposure Partial
We do not break the contribution of the categories of EFGH, but I would say it is fairly balanced. Categories E, F and G are all reasonably balanced.

Investors were concerned about over-exposure to gaming; management clarified that e-commerce/entertainment (E) and other categories are equally significant.

Asked by Arun Prasath, Avendus Spark

Capital Deployment and Buybacks Direct
At the moment, we are looking to deploy every single asset of the company, cash included, towards delivering greater growth because we are on a 10x growth plan in the medium term.

Indicates that the ₹1,300cr cash pile is earmarked for growth/acquisitions rather than immediate shareholder returns like buybacks.

Asked by Deepak, Sundaram Mutual Fund

2 min read 5 chapters

Detailed narrative

Beating Seasonality through Developed Market Expansion

Affle achieved a rare feat in the AdTech sector by maintaining Q4 revenue run-rates at par with the high-festive Q3. This was primarily driven by outperformance in Developed Markets, which grew 9.7% sequentially and 27.3% YoY. Management noted that while India and Emerging Markets saw typical post-festive tapering, aggressive sales efforts and new account logos in North America neutralized the seasonal dip.

Operational Leverage via AI and Automation

The company reported a record EBITDA margin of 22.2%, up from 19.4% a year ago. This expansion was attributed to 'intelligent automation' and AI-supported workflows which allowed employee costs to decline 2.9% YoY despite revenue growth. Management indicated that they have reached a stage where revenue can grow 20% without a commensurate 20% increase in workforce, signaling structural margin tailwinds.

Strategic Pivot to 'Affle 3i'

Marking its third decade, the company rebranded to Affle 3i Limited, focusing on Innovation, Impact, and Intelligence. A key part of this strategy is the deployment of 'Opticks AI' for automated creative personalization and the development of 100 live AI agents. The company also strengthened its IP moat, reaching 13 granted patents and 36 total filings across the US and India.

Vertical Diversification and the Gaming Question

While the acquisition of YouAppi has bolstered Affle's presence in the gaming vertical (Category G), management emphasized a balanced portfolio across EFGH categories. Category E (E-commerce, Entertainment, Education) remains a core pillar. Management argued that their competitive advantage in Developed Markets actually lies in 'underserved' non-gaming verticals where incumbent players have neglected ROI-linked performance models.

Robust Cash Position and Capital Allocation

Affle ended the year with over ₹1,300 crores in cash, bolstered by a 62.4% YoY increase in operating cash flow. Management was clear that this capital is intended for 'sensible, long-term growth' rather than buybacks. They are actively looking for 'selective and carefully picked' acquisition targets to support their medium-term 10X growth ambition.

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