# 1. Financial Performance ## A. Key Figures * **Q3 FY26 Revenue:** **₹717 Cr** consolidated (+19.2% YoY, +10.9% QoQ) * **9M FY26 Revenue:** **₹1,985 Cr** (+3% YoY) * Q3 FY26 EBITDA: ₹1,630 Cr (+24.1% YoY, +11.6% QoQ) · EBITDA Margin: 22.7% * 9M FY26 EBITDA: ₹4,490 Cr (+28.5% YoY) · EBITDA Margin: 22.6% * **Q3 FY26 PAT:** **₹119 Cr** (+1% YoY) * **9M OCF:** **₹254 Cr** · **OCF/PAT ratio:** 75.8% (vs. target >80%) ## B. Revenue Growth * **Resilient Top-Line Performance:** Revenue growth persisted despite a **₹10–12 crore headwind** from the RMG ban, indicating underlying demand strength and market share retention. * **Operational Leverage Improving:** Other expenses as a % of revenue declined sequentially despite higher seasonal marketing spends, with further efficiency gains expected over the next 2–3 years. ## C. EBITDA & PAT * **Sustained Margin Expansion:** Achieved 7th consecutive quarter of sequential EBITDA margin improvement, driven by **230 bps gross margin expansion** from favorable data and inventory cost trends. * **Productivity Offsets Wage Hikes:** Employee costs remained flat despite significant salary increases, supported by AI automation and functional centralization in low-cost regions. * **Core Profit Growth Outpaces Sales:** PBT from operations grew 7% QoQ—faster than revenue—highlighting operating leverage from innovation and platform efficiency. ## D. Cash Flow * **OCF Temporarily Pressured:** Low OCF-to-PAT ratio due to delayed agency collections from client audits; normalization expected in Q4 with cycle easing. * **Strong Cash Conversion Target Maintained:** Affle reaffirmed its target of **85%–95% OCF-to-PAT** for the year, consistent with historical performance. ## E. Balance Sheet * **Healthy Financial Foundation:** Robust balance sheet and cash flows continue to fund strategic investments in technology and talent under the Affle 3i growth roadmap. * **Working Capital Dynamics Monitored:** Recent debtor increase slightly outpaced incremental revenue, though no broad collection risks identified beyond a prior provision for Indian RMG. --- # 2. Product & Segment Performance ## A. Key Figures * CPCU Revenue: **₹7.14 Billion** (+19.6% YoY, +12.9% QoQ) * India & Emerging Markets Revenue: 73.9% of total (+19.8% YoY, +11.0% QoQ) * **Developed Markets Revenue:** **26.1%** of total (+17.8% YoY, +10.9% QoQ) ## B. CPCU Business * **Core Growth Engine:** CPCU model delivered strong sequential and annual revenue growth, driven by high conversion volumes and a stable monetization rate. * **Strategic Differentiation:** Platform enables cross-device (mobile + CTV) user attribution and conversion tracking, enhancing advertiser ROI and driving budget shifts from linear TV. * **CTV as Growth Catalyst:** Connected TV integration improves upper- and mid-funnel branding while boosting conversion efficiency, making CPCU increasingly attractive for full-funnel campaigns. * **AI as Tailwind:** Non-browser, in-app focus insulates Affle from AI disruption; instead, AI app growth creates new user acquisition and monetization opportunities. ## C. India & Emerging Markets * **Resilient Anchor Market:** India maintained low-single-digit growth despite full-quarter impact of real money gaming (RMG) regulatory headwinds, supported by diversified vertical demand. * **Broad-Based Recovery:** RMG revenue loss offset by balanced expansion across all verticals, with no reliance on any single sector for compensation. * **iOS Parity Achieved:** Transition from Android-centric to strong iOS performance enables targeting of premium users, enhancing conversion value and competitive positioning. ## D. Developed Markets * **Early-Stage Expansion:** Developed markets show promising growth momentum, with investments focused on scaling operations and capturing opportunities across verticals. * **Growth Runway Ahead:** Management expects episodic outperformance above **10%** in select quarters as international platforms mature. * **Geopolitical Resilience:** US entities operate independently with segregated P&Ls, shielding performance from external tariff or geopolitical risks. --- # 3. Vertical & Geography Mix ## A. Industry Verticals * **Outperforming Verticals:** Categories E and F (E-commerce, education, entertainment, FinTech, FoodTech, FMCG) represent the strongest and most resilient growth drivers, with exceptional performance across all sub-sectors. ## B. Regional Contribution * **Hyperlocal Strategy:** Business model emphasizes localized, compliant operations with advertising strategies tailored to local market dynamics, including consumer behavior, festivals, and holidays. * **Local Execution, Global Collaboration:** Even when working with global players, campaigns are managed by local teams to ensure consumer centricity and market relevance. * **Shift in Consumption:** Web content consumption is shifting toward in-app mobile usage over browser-based browsing, a trend accelerated by AI-driven personalization. ## C. CTV Expansion * **CTV Leadership:** Connected TV (CTV) is a key growth driver in India, with Affle performing exceptionally well and winning industry awards, reinforcing its leadership in the Indian Adtech ecosystem. * **Platform Expansion:** Expanding consumer-centric platform to unify mobile and CTV in-app experiences, capitalizing on rising consumer time spent on CTV devices. --- # 4. Technology & Innovation ## A. Key Figures * **Patents Filed:** **39** total filings (**3** new in FY) · **16** patents granted ## B. AI Optimization * **Technology-Led Differentiation:** Growth increasingly fueled by AI-driven innovation, with Niko—Affle’s next-gen agentic AI engine—enabling fully automated, real-time optimization of bidding, targeting, and budgeting on the Newton Platform. * **Strategic Impact of AI:** Advanced data intelligence enhances campaign effectiveness and margin sustainability, while broader shifts in user behavior—toward AI-first browsing over traditional search—position Affle at the forefront of digital advertising evolution. ## C. Patent Portfolio * **IP as Competitive Moat:** Ongoing expansion of intellectual property focuses on AI-driven advertising and user engagement, with proactive innovation in traffic classification protected through active patent filings. * **External Validation:** Technology leadership recognized through **five recent awards** from independent juries, reinforcing platform credibility and differentiation. --- # 5. Customer & Campaign Metrics ## A. Key Figures * **Customer Case Studies:** **5** approved across Hospitality & Travel, Gaming, and Edtech verticals * **Industry Recognitions:** **70** accolades in AppsFlyer Performance Index and **30+** campaign-level awards * CPCU Rate: **+3.1% YoY growth** despite mix shift toward Emerging Markets ## B. Case Studies * **AI-Driven Scale in Key Verticals:** Multiple case studies validate **AI-led dynamic optimization** driving conversions in Hospitality & Travel across emerging markets, with strong traction in non-RMG gaming and global Edtech. * **Premium User Monetization:** Repeat conversion strategies and **Agentic AI capabilities** are enabling higher monetization on Android and iOS, particularly in Gaming and Edtech. * **Verticalization Success:** Category H (Hospitality & Travel) shows strength with **three dedicated case studies**, reflecting deepening domain focus and client impact. ## C. Awards & Recognition * **Technology Leadership Validated:** 70 industry recognitions, including top honors at AppsFlyer and awards like **'Emerging Martech Innovator of the Year'**, reinforce platform differentiation. * **Client-Centric Excellence:** 30+ campaign-level awards highlight effectiveness of the **AI-powered Consumer Platform stack** and strength of advertiser partnerships. ## D. CPCU Rate Trends * **Pricing Power Amid Mix Pressure:** CPCU rate improved YoY due to **higher advertiser willingness to pay**, driven by proven campaign ROI and value delivery. * **AI Acceleration Impact:** Niko’s automation has enhanced campaign learning speed, enabling scalable acquisition of **higher lifetime value users**. --- # 6. Strategic Initiatives & M&A ## A. Strategic Focus & Verticalization * **Long-Term Vision in Motion:** Affle is executing on its **Affle 3i 10x growth vision** through disciplined capital allocation and strategic investments in innovation to deepen its competitive moat. * **Dual Growth Engine:** The company is advancing both **organic and inorganic strategies**, with a clear focus on **deepening verticalization** across 10–12 international industry verticals and ad tech layers. * **Verticalization Framework:** Two-pronged approach includes **industry verticalization** (e.g., healthcare, edtech) and **ad tech stack verticalization** (from DSPs to OS-level integration), enhancing platform specialization via AI and existing campaign data. * **Premium Monetization:** Growth is supported by **premium user targeting**, focusing on high-lifetime-value conversions through differentiated ad placements. ## B. Acquisition Strategy & Pipeline * **Pipeline Refined, Execution Imminent:** From an initial list of 10–12, the company has narrowed its acquisition targets to **four**, with active due diligence underway and decisions expected at the right time and price. * **Inorganic Growth as Accelerant:** Acquisitions are designed to create a **"short circuit" to faster organic growth**, enabling immediate revenue uptake and cross-selling, potentially shifting growth into **"fifth gear."** * **Proven Playbook, Larger Scale:** While maintaining the same **acquisition and integration playbook**—targeting revenue-based multiples—the company plans **larger, more scalable deals from 2026–2030**, building on past integration experience. * **Strategic Target Profile:** Focus remains on acquiring businesses with **established sales teams and customer relationships** in developed markets to accelerate international footprint. ## C. Leadership & Execution Capacity * **Senior Leadership Expansion:** Appointment of **Sameer Sondhi as CEO, North America** and **Chief Strategic Investments Officer**, alongside **Vipul Kedia as COO**, strengthens execution capability across developed and emerging markets. * **Geographic Leadership Clarity:** New structure assigns **Vipul Kedia to lead India and emerging markets** and **Sameer Sondhi to lead North America and developed markets**, aligning talent with strategic growth vectors. --- # 7. Risks & Ad Tech Factors ## A. Key Figures * Opex, Inventory & Data Costs: 62.4% of revenue (investment-driven) * **Future Growth Investments:** **~10%** of data and inventory costs allocated to long-term initiatives ## B. Inventory Cost Trends * **Strategic Cost Expansion:** Elevated cost ratio reflects intentional investments in international verticalization and user base scaling, prioritizing growth over near-term margin optimization. * **Long-Term Data Strategy:** Management deliberately broadens data collection beyond immediate monetization to build deeper user personas and fuel sustainable growth. * **Cost Structure Uncertainty:** Rising inventory costs as a percentage of revenue under review to determine if trend is temporary or structurally embedded. * **Emerging Ad Opportunities:** AI-powered apps adopting advertising models create new inventory; Affle is positioned to capitalize via advanced traffic classification. * **Traffic Integrity Focus:** Prebid filtering implemented to distinguish human, authenticated AI, and fraudulent bot traffic for fair monetization. ## C. Regulatory Exposure * **Proactive Global Compliance:** Uniform, high-standard data privacy framework across all markets exceeds DPDP Act requirements; no operational or cost impact expected. * **Regulatory Tailwinds:** Stringent data laws have boosted consumer consent rates globally, including among premium iOS users in India. * **Trust-Driven Partnerships:** Affle’s compliance credibility enhances collaboration with global advertisers and publishers on first-party data initiatives. * **Geopolitical Caution:** Broader regional geopolitical tensions noted as a risk factor, though specifics not disclosed. ## D. Vertical Performance * **Underperformance in Healthcare:** Category G and healthcare verticals require increased investment and strategic focus to reverse current weakness. --- # 8. Guidance & Outlook ## A. Key Figures * Revenue Growth (9M FY26): 19.3% YoY * EBITDA Growth (9M FY26): 28.5% YoY * PAT Growth (9M FY26): 20.3% YoY ## B. Growth Targets * **Ambitious Internal Benchmarks:** Management maintains a disciplined focus on **20% to 25% average revenue and EBITDA growth** as core KPIs, with incentive alignment reinforcing commitment to exceed current 19%–20% modeled growth. * **Confidence in Outperformance:** Leadership expresses strong conviction in achieving **45% combined YoY revenue and EBITDA growth**, with EBITDA growth consistently outpacing revenue to drive margin expansion. * **Resilient Growth Trajectory:** Despite macro headwinds, company performance is characterized as **robust and sustainable**, underpinned by defensible technology and market positioning. * **Long-Term Acquisition Roadmap:** Strategic M&A plan includes **one major acquisition in 2026, 2028, and 2030**, spaced 1–2 years apart, with potential for smaller deals in between to complement organic growth. ## C. Margin Expansion * **Opex Leverage Driving Margins:** Operating expenses expected to grow slower than revenue, enabling **further margin rationalization** and sustained EBITDA margin expansion. * **Targeted Margin Growth:** Internal goals emphasize **20% to 25% EBITDA margin growth**, supported by disciplined investment calibration and tactical flexibility to balance growth versus margin outcomes. ## D. Q4 Expectations * **Cautious Revenue Outlook:** Q4 revenue likely **flat to slightly lower than Q3**, with management advising conservative modeling while retaining upside potential if geopolitical conditions stabilize. * **FX Neutrality Maintained:** **No P&L impact from INR depreciation** due to natural hedge from foreign currency costs; FX exposure actively managed to protect margins. * **Strong Underlying Momentum:** Despite Q3 challenges including RMG impact and US tariff uncertainty, performance held up well—supporting optimism for **resilient Q4 top-line delivery**.