Affle 3i

Affle 3i concluded FY26 with its 13th consecutive quarter of sequential topline growth, reporting INR 7.24 billion in revenue for Q4 FY26, an increase of 20.3% YoY. For the full year, revenue reached INR 27.1 billion, growing 19.5% YoY. EBITDA for FY26 demonstrated robust growth of 26.3% YoY to INR 6.1 billion, with margins expanding by 120 bps to 22.5%. The company also generated strong operating cash flows of INR 5.02 billion during FY26, reflecting a ~25% CAGR over the last five years.

Management clarified that the gross margin reduction, with inventory and data costs at 63.3% of revenues in Q4 FY26, is a conscious investment. These investments are directed towards launching more verticals, expanding into new geographies, deepening direct-to-advertiser integrations, and emphasizing premium positioning to target higher-value lifetime users. The company anticipates these investments will lead to margin improvements, with gross margins expected to return to the 37%-38% range within approximately one year.

Affle positions itself as a technology thought leader, leveraging its AI-powered consumer platform stack for ROI-based advertising. Key differentiators include direct integration with advertisers' first-party data, deep verticalization across key industry verticals, and unique IP for distinguishing human from non-human (AI agent) traffic. This strategy provides a competitive moat against both walled gardens and emerging GenAI native platforms, especially as the digital ecosystem evolves with AI-generated content and agents.

To support its inorganic growth ambitions, Affle's Board approved a preferential issue of equity shares to Affle Holdings, raising approximately INR 11 billion through warrants, with a 25% upfront payment. The company is actively evaluating over 10 potential acquisition targets, having shortlisted about four for deeper due diligence. The M&A strategy focuses on acquiring entities that can expand Affle's customer base, sales force, and tech stack, with the goal of transforming them into Affle's CPCU business model and strengthening its presence in developed markets. A meaningfully sized transaction is realistically expected within the current calendar year.

Affle's growth remains broad-based across key industry verticals and geographies. India and global emerging markets contributed 71.6% of Q4 FY26 revenues, growing 21.2% YoY, while developed markets contributed 28.4%, growing 18.0% YoY. The company's platform reaches over 4 billion connected devices across mobile, CTV, and digital out-of-home, demonstrating its ability to adapt its CPCU model to diverse consumer touchpoints and drive conversions across a connected journey.

Despite a challenging macro environment in Q4 FY26, marked by geopolitical events and temporary market softness, Affle's CPCU business model proved resilient. Management highlighted that in times of economic uncertainty, advertisers increasingly prioritize ROI-linked spending, making the CPCU model a preferred choice. This inherent resilience, combined with a focus on high-quality revenue and disciplined execution, underpins the company's confidence in achieving its medium-term 20% CAGR and 10x decadal growth vision.