Thanks @ vnktshb, what is the gowth prospectus of e CPCU business? I have not understand this segment properly.
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From a cyclical perspective the December quarter should have been the largest in ad spends globally and always the largest quarter in any AdTech firm. You can check Google quarterly number trends as well. This applies for businesses with APAC only geo split as well. Diwali was also in Oct 27, and all Ad spends for festival sale in e-commerce would have happened in Q4 only.
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Any news on receivables?
december qtr is largest for them also.
One thing is clear from Q3Fy20 concall. Affle does not use cookies based method to collect the user data and in case cookies based method gets restricted in future Affle will not have any impact. It will probably user a process as below
a. User downloads an app which is free to use but will show advertisement to user
b. While downloading the app the user will be shown different permissions like using location, device storage, camera etc
c. A device profile will be created based on the different inputs like his mobile device phone model, OS and may be using other parameters. This device profile will be in hash format probably and Affle will not be knowing who is the exact user which is fine as per Privacy laws
d. As per the different app/web browsing usage of the user Affle will serve different advertisements to that user
As Affle does not know identity of the user as they know only hash value of the device profile privacy laws will not have any impact.
Experts can comment if the above understanding is correct.
From the competition perspective Foreign players like Tradedesk will not be able compete due to very low CPCU in emerging markets. Will need to see which are Indian counterparts.
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Tradedesk is not a competition and they are in a very different SaaS business model with very strong tech.
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Affle does not have SDK, nor an unique user store. There are SDK scanners which can be used to check which apps have their SDKs. Or the company would have a segment called publishers and would have some case studies there. You can see the difference here, https://affle.com/media/affle-publishers/ and https://www.inmobi.com/case-study/publishers. As far as I know they dont have direct API connections with Apps as well. They have API connections with networks like Taptica, Mobvista etc on the CAKE SaaS platform ( not owned https://getcake.com/resources/). For RevX DSP they would have connections to AdX, Smaato, MoPub and other exchanges. This is not exclusive
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What Affle does well is advertiser relationships and connects in India/SEA. They are very strong in India. Secondly, they give affiliate/Third party network inventory, DSP and re-targeting inventory through Vizury. India mobile ecosystem is spending money on user acquisition and hence they get a seat at the table ( 10% share of wallet) along with Google, FB, InMobi etc. due to the size but other smaller players also have the same capabilities.
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Not sure if RevX/Vizury numbers split is given. This is the only part with a tech play. Both are acquired firms from Bangalore and the success of the merger would be a determining factor to see if Affle can be a strong tech player or not. If they work out well, it would be a very good India play.
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if you attended the concall was there a discussion on receivables?
plz send concall highlights
thank you so much for concall transcript
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Affle has signed a definitive agreement to acquire Mediasmart Mobile S.L. (âMediasmartâ), through its wholly owned subsidiary Affle International Pte. Ltd
Mediasmart is a mobile advertising technology company. It provides a self-serve mobile programmatic platform with unique incremental impact measurability for Proximity and App marketing campaigns.
Affle is buying it for 5.12 mil Euro. Mediasmart did a revenue of 5.95 mil euro last FY (ended dec). Although there is no information of profitability , the acquisition price looks cheap at less than 1 times Sales.
Opinion- Affle has stuck to its core business of mobile marketing for the past decade. All its acquisitions are related to mobile marketing which is a good sign. It would be interesting to find out how will this acquisition play out given that CPCU in developed countries is way higher than emerging markets.
This EU company seems to be struggling a lot with contracting sales Nos. Not sure it was due to weak markets in EU overall or high competitiveness. By bringing their backend in India could improve their competitiveness but driving sales should be the ultimate goal. These markets also have good competition from the likes of Trade desk etc. also, we need to keep in mind that EU authorities have been hammering US tech giants with higher taxes and restrictions. I guess Affle has a real opportunity to scale it big. Letâs see if they could execute here. IMO, this acquisition seems to be just creating a beachhead in the EU.
Disc: exited recently due to valuation concerns will look to reenter on deeper correction.
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Thanks for the update.
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Why buy a DSP when they already have RevX ?
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Location targeting can be done only when users through apps disclose location (instead of IP based targeting which is at city level). Affle doesnt have SDK and neither does MediaSmart. If it is through buying audiences over exchange, the same feature is available over TradeDesk or any other managed service DSP.
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How much of the backend is going to be brought from Spain to India ? They have very few developers and in India Affle in itself doesnt have a strong tech team/tech culture. Their platform to run affiliate traffic is outsourced( CAKE). Plus Spain is any case low cost.
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The good part is Spain based team can help expand in LATAM and in Europe. If they are able to take the same products to LATAM it would be good to see , but there are other ad networks from Europe/LATAM as well doing similar work like Crobo, Glispa, Applift, Taptica, RevMob etc.
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The sales is degrowing and acquisition is done at 1X Revenue. Why would differentiated tech be sold for so low ?
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another interesting thing to mull is that InMobi is at a $1 billion valuation (7000 Cr) while Affle which makes about 4% of InMobiâs topline is already valued at 50% of InMobi? 3600 Cr mcap as of today, or roughly 15x sales! Nothing makes sense here. Right? you just answered that question yourselfâŚ" nearing $1 billion in revenues. Whatâs interesting though is that InMobi with its billion dollar valuation couple of years back was still not profitable" its not positive on operating cashflows so obviously no matter what the sales may be its still burning cash, Affle still is still cash positive and has been for a while ,
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InMobi has multiple business lines and if you look at just the line of business and region InMobi and Affle compete head on InMobi is far bigger and lot more profitable.
Affle profitability in DSP and remarketing is negative. The business which makes money is affiliate line with no owned tech and geographically concentration in India.
Second part is reinvestment of profits to take bets on more adjacent lines.
This is a tangential point. If Affle was awesome I wonder why it wasnât able to entice significant PE/VC investment for a much better terms. InMobi investors are Sherpalo, Kleiner Perkins, SoftBank and Mithral ( Peter Thiel).
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fair, I think they are mostly focused on In app advertising on the premise that soon mostly all people will do things on a certain app, I wont say they have no competition , but if they can dominate this vertical even Domestically that is huge since the penetration is till very low . Also they are going deeper down into vernacularâs which will be something very difficult for an outside company to do now , I think at a 2500-3000 cr marketcap its a fair bet if they can maintain a 30% cagr till 2025 and then taper down to 20-25 for the next few years, seems like a likely situation.
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Please show me one app where you can see Affle Ads and apps where Affle has a SDK presence. Are they bidding over exchanges or through direct connection.
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Which vertical are they dominating ( versus Google, FB, IronSrc, InMobi etc) domestically ?
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What is their Vernacular play ? Any owned property ? Like DailyHunt or Sharechat or Glance ?
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this might help with how they differentiate and donât really compete per say with facebook, google ?
on a side note what are your thoughts on vertoz advertising ?
I have written a post on this earlier. Vertoz is also a affiliate network like Affle.
Expect affle( and larger digital ad eco system) to benefit from current situations leading to a newer way of living life( work/social/ activitiesâŚ)
- Mobile usage increase ( higher share of budgets towards digital spend). Evident from telco commentaries.
- Fence sitters ( brands) will start to experiment with digital, current spends will tilt towards Affle zone - this will come at cost of traditional advtsg.( banner, hoarding, news paperâŚ). Mktg strategy will factor ability of digital advertising in such disruptions.
- Profiling engine pitch with outcome focus will get better traction as opposed to pure play digital advertising.( as and when we come out of slump, all brands would like to push aggressively on mktg, scaling mktg is more practical on platforms like Affle and Indiamart, Naukri etc)
- To be seen how company manages cash flow and receivables- which is key issue in b2b plays, hoping that larger revenue coming from agencies/startups - they have a well thought out cash preservation to tide this overâŚsome slow down will be evident in near term
Valuation has more ground footing at current levels.
Invested and looking to add.
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