# 1. Financial Performance ## A. Key Figures * Revenue: ₹6,467 Mn Q2 FY2026 (+19.1% YoY, +4.2% QoQ) · ₹12,675 Mn H1 FY2026 * EBITDA: ₹1,461 Mn Q2 FY2026 (+28.9% YoY, +4.6% QoQ) · ₹2,858 Mn H1 FY2026 (+31.2% YoY) · 22.6% margin * PAT: ₹1,105 Mn Q2 FY2026 (+20.1% YoY, +4.8% QoQ) · 16.5% margin (up from 16.1%) ## B. Revenue Growth * **Transformational Momentum:** H1 FY2026 marks a pivotal phase in executing the Affle 3i vision, with record quarterly performance across key metrics and balanced growth in both quarters. * **Growth Headwinds:** Current revenue growth slightly below **20%+ guidance**, impacted by external disruptions including the **RMG ban in India** and **US tariff uncertainty**. * **Long-Term Trajectory:** Despite near-term headwinds, company maintains track toward long-term **10X decadal growth** objective, underpinned by consistent execution and platform scalability. ## C. EBITDA & Margins * **Sustained Margin Expansion:** Achieved **6th consecutive quarter of EBITDA margin improvement**, driven by algorithmic efficiencies, intelligent automation, and disciplined cost management. * **Operating Leverage in Action:** Margin gains reflect **non-linear Opex growth** relative to revenue, supported by tech platform economics and productivity gains from automation. * **Incentive Alignment:** Bottom-line focus embedded in culture, with sales and business leaders incentivized on **both revenue and margin performance**, reinforcing profitability discipline. ## D. Profit After Tax * **Record Profitability:** Highest-ever quarterly PAT achieved on back of strong core operating performance, with **PAT margin expanding 53 bps H1** despite flat absolute growth. * **PBT Strength:** Underlying profit before tax grew **2% YoY and 8% QoQ**, indicating resilient core operations and effective margin reinvestment. ## E. Cash Flow & Balance Sheet * **Cost Discipline:** Sequential decline in **other expenses by ₹74 Cr** and temporary moderation of **marketing spend by USD 5 million** reflect strategic prioritization ahead of key demand cycles. * **Efficiency Investment:** Rising employee costs (+7% QoQ) tied to **variable pay**, not headcount growth, as automation drives productivity gains. * **Capital Cycle Impact:** Seasonal uptick in D&A expected in Q2 due to **capitalization of new tech assets**, consistent with historical patterns. * **Strong Financial Foundation:** Healthy balance sheet and robust cash flows position Affle to pursue growth opportunities through **FY2026 and beyond**. --- # 2. Conversion & Pricing Metrics ## A. Key Figures * **Conversions:** **90 Mn** (Q2) at **₹58** CPCU * **Non-CPCU Revenue:** **~₹15 Cr** after seven quarters ## B. CPCU Performance * **Performance-Driven Model:** Affle maintains a strict conversion-based pricing framework, charging advertisers only upon KPI achievement, differentiating from CPM-based DSPs and absorbing campaign execution risk. * **Premium Positioning:** CPCU pricing reflects lifetime value delivery, supported by algorithmic efficiency and AI integrations (Niko, OpticksAI), enabling sustained pricing power and higher returns for advertisers. * **Strategic Non-CPCU Engagements:** Non-CPCU revenue stems from client-specific needs or data-readiness gaps, with initial engagements serving as a funnel to transition clients into full CPCU models over time. * **Monetization Tailwinds:** Cheaper traffic supply enhances scalability, allowing Affle to process significantly more impressions at the same cost base while maintaining or increasing CPCU rates. ## C. Conversion Volume * **Diverse Conversion Types:** Conversions span new users, repeat users, and online-to-offline foot traffic via proximity targeting, expanding the platform’s applicability beyond digital-only outcomes. ## D. Pricing Trends * **Pricing Discipline Intact:** Despite market-wide CPM compression due to supply surplus, Affle retains strong pricing power, growing volumes without discounting and leveraging competitive demand across verticals. --- # 3. Geography & Market Mix ## A. Key Figures * India & Emerging Markets Revenue Contribution: 73.9% of total revenue (20.0% YoY) * India Standalone Revenue Growth: 24.8% YoY · 10.5% QoQ (adjusted: 26.3% YoY) * Developed Markets Revenue Growth: 16.8% YoY * **Developed Markets Revenue Contribution:** **26%-27%** * **India & Emerging Markets Business Share:** **~73%** of total business ## B. India Operations * **Resilient Domestic Growth:** India delivered strong standalone revenue expansion despite sector headwinds, with **early advertiser budget releases** fueling nearly 25% growth during the festive season. * **Strategic Home Market:** India remains the company’s largest and most critical market, with top strategic priority, highest employee base, and standalone reporting structure. ## C. Emerging Markets * **Structural Challenges in High-Volume Markets:** Emerging markets share India-like demographics—large user bases but low high-LTV user penetration—resulting in **challenging unit economics** due to limited advertiser spend. * **Asset-Light International Reach:** Affle 3i can generate revenue from international markets without local entities or teams, enabling efficient cross-border scalability. ## D. Developed Markets * **Disproportionate Growth from Small Base:** Developed markets achieved 8% YoY growth on a 26%-27% revenue share, driven by deeper client relationships and localized sales execution. * **Scalable Tech Advantage:** Competitive strengths are now being replicated in developed markets, with long-term margin improvement potential hinging on **converting large user bases into higher-value engagements** in emerging regions. --- # 4. Product & Technology ## A. Key Figures * **Patents Granted:** **16** total (including **2 new US patents**) * **AI Automation Penetration:** **Over 80%** of organizational activity * Device Reach: 3.8 billion connected devices globally ## B. AI Capabilities * **AI-Driven Growth Engine:** Expansion fueled by proprietary agentic AI—Niko—integrated into the unified platform, driving ROI in mobile marketing and enabling scalable campaign automation. * **Complementary AI Stack:** Niko enhances backend cost and placement efficiency while boosting frontend conversions, working in tandem with **OpticksAI** to deliver end-to-end creative and operational intelligence. * **Productivity at Scale:** AI automation enables management of **hundreds of additional customers and campaigns** without proportional cost increases, underpinning margin resilience and operational leverage. * **Cross-Platform Scalability:** While currently focused on iOS, Niko’s architecture supports future deployment on Android and other ecosystems, signaling long-term platform extensibility. ## C. Patent Portfolio * **Strengthened IP Moat:** Recent US patents enhance capabilities in **ad exposure measurement** and **cross-device fraud detection**, reinforcing technological differentiation and trust with global advertisers. * **Innovation Validation:** Patent pipeline reflects deep, organically developed expertise in AI and ad tech, supporting claims of sustainable competitive advantage. ## D. Platform Integration * **Unified Tech Stack Execution:** Successful integration of Niko and OpticksAI into a single platform enables seamless, intelligent campaign orchestration across a massive device network. * **Scale & Intelligence:** Platform’s reach across **380 crore devices** is supported by advanced device intelligence, allowing precise targeting of high-value conversions in complex, low-density markets. --- # 5. Client & Demand Trends ## A. Key Figures * **Revenue Mix:** **73%** from diversified verticals in India and global emerging markets * **Agency Revenue Contribution:** **~25%** of total revenue ## B. Advertiser Budget Timing * **Festive Shift Driving Momentum:** Robust Q3 engagement pipeline supported by US advertisers deferring spend to festive periods, including early Diwali-driven campaigns in September. * **Demand Resilience Amid Tariff Uncertainty:** Budget reallocation to December quarter reflects strategic optimization due to tariff concerns, with Affle’s AI automation enhancing ROI to offset slower budget growth. * **Post-Acquisition Monetization:** Revenue generation extends beyond acquisition, with campaigns targeting **repeat transactions** and engagement among converted users driving incremental value. ## C. Vertical Diversification * **Proven Cross-Market Scalability:** Three new client case studies validate full-funnel strategies in fintech (India), CTV-driven ROAS for US e-commerce, and dynamic omnichannel retail campaigns in Latam. * **Technology Replication Success:** Diversified revenue base across EFGH verticals and emerging markets underscores effective replication of AI-driven, efficiency-focused models globally. ## D. Agency vs Direct Mix * **Channel Neutrality Strategy:** Equal treatment of agencies and direct advertisers ensures consistent service quality, with no push toward specific engagement models. * **Multi-Touchpoint Value Capture:** Growth driven by rising digital engagement and transaction volumes, with highest LTV customers engaging across app, marketplace, and physical store channels. --- # 6. Risks & Ad Tech Exposure ## A. Key Figures * **Additional Provisioning:** **0.5% of Revenue from operations** (RMG collections) * Topline Risk (RMG Ban): Potential loss of 2.5% of consolidated revenue ## B. RMG Revenue Impact * **Elevated Collection Risk:** RMG vertical in India saw heightened credit risk, prompting material additional provisioning reviewed by auditors, with further assessment ongoing. * **Resilience Outlook:** Management expects full recovery within **one to two quarters** if a potential RMG ban materializes, limiting long-term topline impact. ## C. Tariff Uncertainty * **Stable Advertiser Spend:** No observed budget cuts from clients despite tariff-related uncertainties in developed markets, including legacy policy impacts. * **Navigable Headwinds:** Company acknowledges short-term shifts (e.g., festive timing, RMG, budget pacing) but views them as manageable within current operating environment. ## D. Conversion Density * **Dilution in Conversion Quality:** Despite near-doubling of connected devices in India, high-value transacting users remain flat at ~10 crore, leading to declining conversion density. * **Structural Competitive Advantage:** Focus on emerging markets provides a key moat, as global peers remain **>80% concentrated in developed markets** and **~90% reliant on gaming revenue**, limiting their adaptability. --- # 7. Guidance & Outlook ## A. Key Figures * **Growth Target:** **20%** YoY (medium-term guidance) ## B. Growth Forecast * **Resilient Outlook:** Confident in medium-term 20% growth trajectory despite RMG-related carry-forward impact, supported by secured festive season ad budgets. * **Strategic Patience:** M&A activity expected to increase with aim of **one deal every 1–2 years**, following a deliberate, multi-year evaluation process. * **Capital Discipline:** Business promotion budget unchanged; expansion plans under review for optimal timing and ROI. ## C. Strategic Priorities * **Premium Platform Discipline:** Firmly avoids low-margin opportunities to preserve strategic focus, brand positioning, and long-term profitability. * **Competitive Moat:** Ability to reject unattractive business reinforces **premium perception among advertisers** and insulates against competition chasing volume. * **Core-Centric Growth:** All M&A and investment activity focused on strengthening the **single cash-generating consumer platform**, with **~10 targets** under active evaluation for ecosystem fit. * **Diversified Growth Engine:** Expansion driven by **three pillars**—spend growth from existing clients, new client acquisition, and geographic reach—creating a naturally hedged revenue model. * **Long-Term Focus:** Reinvestment in supply side and pricing strategy aimed at enhancing platform quality and **increasing wallet share**, not short-term top-line boosts.