Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Route Mobile Ltd (BOM:543228, Financial) reported an improvement in gross profit margin, increasing sequentially from 19.3% to 21.4%, reflecting a focus on profitability.
- The company is expanding its global footprint and diversifying revenue streams by focusing on non-SMS products such as WhatsApp, RCS, and AI-driven firewall solutions.
- Route Mobile Ltd (BOM:543228) has successfully onboarded several large marquee customers through its omnichannel platform, enhancing its customer base.
- The company is actively engaging with global system integrators to accelerate its go-to-market strategy, recently integrating its RCS platform with a major global player.
- Route Mobile Ltd (BOM:543228) is leveraging synergies with Proximus Global Group to create sales pipelines, particularly in the APAC market, and strengthen relationships with telecom operators globally.
Negative Points
- Route Mobile Ltd (BOM:543228) experienced a 4.8% year-on-year decline in revenue, primarily due to structural SMS market volume impacts.
- The company faced challenges in the A2P SMS segment, with ongoing softness and shifting customer preferences affecting revenue.
- There was a significant decline in the top line due to the loss of a large digital native enterprise customer who started sourcing directly from MNOs.
- The average realization per transaction decreased due to a higher share of domestic messaging in India, impacting revenue.
- Route Mobile Ltd (BOM:543228) saw a decrease in adjusted EBITDA by 16.3% year-on-year, attributed to revenue impacts and increased operating costs.
Q & A Highlights
Q: What are the reasons for the higher other expenses and the increase in the tax rate? Also, can you provide insights on Proximus Energy and expectations for growth and margin expansion?
A: Other expenses were mainly driven by large foreign exchange losses on remeasurements, primarily from our UK entity. The higher tax rate is due to different profit geographies and good profit generated in some domestic markets. Regarding Proximus Energy, we are seeing initial traction around synergies, especially in the Asian market, with group companies creating a pipeline for omnichannel solutions. We expect revenue momentum from these opportunities soon. Despite revenue decline, we improved gross profit margins by focusing on higher-margin business. Messaging volumes are stable, but international volumes have been replaced by domestic ones, affecting revenue.
Q: Is there a new trend of large clients directly partnering with MNOs, and what impact does this have on Route Mobile?
A: Some customers prefer direct partnerships with operators for bundled services, including SMS, data, and other offerings. This is not a widespread trend, and most customers prefer working with aggregators like us due to the complexity of dealing with multiple operators globally. We do benefit indirectly when such customers move to operators where our firewall solutions are deployed, as we have revenue-sharing agreements with those operators.
Q: Can you explain the decline in new product revenue and the outlook for this segment?
A: WhatsApp is a significant component of our new product revenue, and recent pricing revisions have led to a 12-13% price dilution, affecting revenue despite volume growth. The timing of passing these changes to customers has also impacted revenue. We expect revenue growth to improve once pricing stabilizes.
Q: What is the outlook for Route Mobile's growth and margin in FY26?
A: While we are not providing specific guidance, we are focusing on growth, cost optimization, and synergies. We aim to leverage synergies with Proximus Global and focus on new customer acquisition, especially in telco products and RCS. We are confident in our ability to drive growth and improve margins through these initiatives.
Q: How is Route Mobile managing regulatory and compliance challenges with growing geo-diversification, especially in sensitive segments like BFSI?
A: Route Mobile is GDPR-compliant and has been operating in various geographies with rigorous compliance requirements. We have been able to serve banks and other sensitive sectors across different regions, ensuring complete compliance with regulatory requirements without significant cost impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
