I believe they overpaid here. They should only invest in AdTech.
Disc: Reduced holding and small investment.
The assumption here is correct. Affle does not in fact use any cookies as that is a tech only applicable in the browser/web environment whereas affle is purely mobile /in app specific player.
However, privacy issues/regulatory concerns pertaining to digital advertising (mobile advertising being a sub -set of that) is going to restrict/lessen any ad tech player ability to precisely target the intended users compared how they used to do it before. OEM partnerships and SDK integration allows this phenomenon to mitigated when it comes targeting the intended users for which the advertisers pay big bucks.
The entire industry is coming up with sandbox solutions whereby the user privacy is not compromised and at the same time the ad tech players like affle can continue to attract big advertising dollars because of the value ad products that they have i.e. Appnext (in app targeting platform), Revx ( Retargeting platform) etc.
My view is that by buying all kinds of different ad tech platforms that they have in recent history will allow them to capture the advertising dollars that percolate outside of the walled gardens like Google and Meta. By acquiring significant scale they can outcompete all the long tail and smaller ad tech players.
This would for sure have lot of implications on their EBITDA margins and not to mention the difficulty of the integrating the various different cultures of the companies that were started in different countries like Brazil, Israel etc.
What is interesting to me also that unlike inmobi (the next biggest ad tech player in india focused on mobile advertising) has been constantly trying to incubate and create new products in programmatic, sdk /OEM partnerships etc in house and not relying on whole bunch in acquiring businesses from outside. Affle on the other hand is flushed with Capital which it has decided to deploy in acquiring different businesses with different offerings from different geos.
What strategy will work only time will tell !
7 Likes
Affle (India) Limited Q3 & 9M FY2024 Earnings Conference Call February 05, 2024
-
Our 15-gen AI patent filings have strengthened our intellectual capital and the Rs. 7.5 billion recently raised cash capital has strengthened our financial balance sheet
-
We consciously invested in new product use cases and ecosystem-level partnerships to unlock premium inventories and touch points on connected devices including CTV, Apple SKAN, iOS App Store, and other OEM app stores both in India and international markets. This was the first significant step towards our long-term strategic direction as the premium converted users enable higher lifetime value for advertisers
-
We continued to enhance our consumer-centric platform offerings progressively delivering stronger than ever quarterly EBITDA of Rs. 967 million and PAT of Rs. 768 million. Our CPCU business
delivered about 84 million conversions during the quarter, at a CPCU rate of Rs. 57.0 helped us achieve CPCU revenue of Rs. 4.77 billion, an increase of 38.2% y-o-y and 19.2% q-o-q -
We continue to witness a robust market opportunity as advertisers steadily accelerate their digital spending, resulting in broad-based growth in our CPCU business in global emerging markets.
-
Our growth in Developed Markets together with YouAppi was about 67% y-o-y and 14% q-o-q
-
While most of the other industry players are adopting Gen AI to optimize human capital and cost, Affle is investing in Gen AI-powered innovations to go much beyond cost efficiencies to enable long-term revenue growth and competitive advantages
-
We filed 15 new patents in India during Q3. These patents power futuristic use cases of interaction, training, and integration of Gen AI agents and cover advanced AI areas including personalization & recommendation, predictive analysis, privacy, and enhanced fraud detection
-
We have included 3 case studies, which are focused on travel, food tech, and e-commerce conversions for a global FMCG company
-
Our Affle2.0 Consumer Platform Stack continues to be recognized in the industry as the top performer and we recently won top rankings and awards across various industry forums and indexes.
4 Likes
The actual pain area of the business is developed market and RMG in India. Some of the Key abstracts from the concall for better understanding:
Page 6: In the developed markets, the growth what you are seeing has been long awaited. First of all, in developed markets we were degrowing for several quarters. We were dealing with deeply internal issue and sorting them out. We knew we would sort it out because we had a clear action plan. We have to see the growth in that context. This is the growth that we deserved, which belonged to us but had evaded us because of certain issues. We fixed those issues decisively and won it back.
The bad news of CY2023, the subdued quarters of developed markets, will appear as better performance in CY2024 because as we build up from here you will start seeing much bigger year-on-year positive trends for developed markets.
Question on RMG: We have seen some sequential weakness because of RMG to some extent. Is RMG now coming to the base and we will see good growth from here on?
Answer: RMG has impacted us basically in the last two quarters - in Q2 FY2024 and Q3 FY2024. In Q2 FY2024, RMG impacted us in midway because of certain regulatory changes, which impacted the fundamentals of the RMG category and kind of ROI measurement these people do. There was a clear impact and last quarter we quantified it. This quarter the impact was bigger because typically bigger budgets were expected from RMG, but they were holding back. The impact was for the whole quarter Q3 FY2024 versus half the quarter of Q2 FY2024.Once RMG budgets come back, we will be the first company to take them on to a profitable advertising campaign and deliver value for them.
3 Likes