Tanla Platforms Ltd. - Concall Notes - Jan 2023

Industry Overview

The market is quite competitive presently, one of the large telecom providers also made efforts to enter into this market for the last two quarters. And other than that, there are other CPaaS providers who are also there in the fray. 


This industry will get bigger if the number of digital transactions like UPI, SMS etc. go up.  Globally large telecom operators have not gotten into this business but in India it is a different case.


Biggest bellwether industry for CPaaS business is banking.


At pure play platform companies, gross margins tend to be high. They tend to be 80% plus and may not be 96%. But also these businesses have a huge investment in R&D and sales and marketing. But it can be safely presumed that platform business will have very high gross margins.


Business Overview

Wisely has two scaled platforms - (1) Wisely Network (2) Wisely OTT.  Wisely Network is on track to be ₹100 crore annualized gross profit processing over 33 billion transactions through AI/ML engines.  Wisely OTT crossed 1 billion volumes in Q3 generating strong gross margins.

There are other Wisely platforms like Wisely Communicate & Wisely Engage, which are already in customer success phase.  Wisely Communicate is seeing strong traction with the banking customers. For one of the banks, around 50% of their critical UPI traffic is going through Wisely platform.

There is already one very large global platform, which is in the innovation phase.  It will address one of the pressing challenges faced with the consumers globally.  The idea behind the platform will be revealed later.  It is a B2B platform.

There are steady improvements in the enterprise business both w.r.t revenue growth as well gross margin improvement and maintaining its market share.


The company is growing around 15% in terms of transactions and in terms of volumes, especially the UPI transactions.  The company serves most of the banks and the UPI transactions growth is immense.  But, the growth of volumes or transactions w.r.t to new use cases has stabilized though.  Prices of these transactions have definitely deteriorated in the last 3-4 quarters though.

The company has acquired some very large customers.  With the large customers, it takes time to integrate. Presently the integration is going on and the much bigger impact will be visible in the next few quarters.


The company is not betting on Silent Network Authentication, which is an encryption on the SIM card number.  This solution comes from GSM standards like.  The company believes SMS is very powerful and easy to use.


There are multiple channels supported by the platform like SMS, Voice, Email, Whatsapp and Truecaller.  Multiple new products are in the development phase.  The company is ensuring to penetrate more and more channels and more and more products to its existing customers.


Non-SMS revenues are probably about 14% and majorly from Whatsapp. 


The company is able to retain its wallet share, its customers, and have grown its margins as well.


The Platforms business & Enterprise side of business are different.  Platforms are where enterprise or Telco specific needs are served whereas the enterprise business is more in terms of helping them communicate right with the end user. So this way, one is not going to get substituted by the other. They are two very independent businesses with very different drivers for growth and both have an interesting and exciting future ahead.


The company’s core market is in India.  Though there are aspirations to go global, the company would prefer to validate all its value propositions in India before scaling it globally.

Profitability Levers

Expecting pricing pressure to get normalized.

Growth Levers

There are three specific areas where the company is working to grow its business -

  1. Retain its customers and its wallet share

  2. Add new customers

  3. Focus on other than SMS channels like Whatapp

Technical Expertise

Wisely Communicate comes with multiple propositions -

  1. End-to-end encryption of SMSes

  2. The whole network runs on the blockchain where it will eradicate counterfeits, which is the big concern globally.

  3. It offers all the channels with one single API and it can offer many of the suppliers.  For example, like HDFC or one of these banks download a piece of software in the cloud and they have access to all the channels, their partners, their supplier and reports are written in the blockchain and get reconciliation on the fly

Financial Performance

The platform business gross profit grew 26% year-on-year and Wisely contributed 35% of the platform gross profit. It is projected that revenue from Wisely can scale up to 50% in the coming couple of quarters.
Note: Gross margin is the amount of money a company has left after subtracting all direct costs of producing or purchasing the goods or services it sells. The higher the gross margin, the more money the company is able to contribute to its indirect costs and other expenses like interest.

Operating Cash Flow (OCF) is negative in Q2 & Q3 as there were some one time adjustments done for one large telco w.r.t payment terms.  Otherwise, the company has a good track record of good cash flow generation.  The cash flow will become normal from Q4 onwards.


The Rule of 40 or Rule of 60 does apply only for SaaS companies.  The company is growing year on year at 26% and EBITDA margins from the platform business will take the company beyond Rule of 40.

Note: The rule of 40 states that a healthy SaaS company has a combined growth rate and profit margin of 40% or more.


The management has guided in Q1 that EBITDA might come back to 20% by Q3 but we are at 17.4% now.

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