AFFLE INDIA

Riding the auto industry rebound

Affle India is a global technology company with a proprietary consumer intelligence platform that delivers consumer engagement, acquisitions and transactions through relevant mobile advertising. The platform aims to enhance returns on marketing investment through contextual mobile ads and also by reducing digital ad fraud. The prospects for the company going ahead are quite bullish.

Consider:

• Promoted by Affle Holdings, a Singapore-registered company which counts Microsoft, NTT DOCOMO, Dentsu, Madison and the Times group among its investors, the company serves clients across commerce (Amazon, Flipkart, Jabong, BookMyShow, Mesho, Goinibo), mobile apps (Wynk, Zee) and traditional consumer industries (J&J, Reckitt Bankiser, McDonalds, Air Asia, Axis Bank, Nissan). Over the past 13 years of its existence, the company has accumulated 2.02 billion customer profiles, including 300 billion data points, across India, developed geographies (America, Europe, Japan, Australia, Korea) and emerging geographies (South East Asia, Middle East, Africa). These consumer profiles and data points form the company’s primary building blocks for operations. The majority of the company’s revenues in recent years was earned through client campaigns undertaken on a cost per converted user (CPCU) basis, for which nearly 50-55 per cent of revenues is incurred as data cost.
• Affle’s business is a relatively secular one with predictable earnings and cash flows. The predictability of business will result in lower volatility of price and shareholder returns. Again, the business enjoys a relatively high pricing power and is able to withstand competitive pressure, which works as a great moat for equity shareholders of the company.
• Affle has acquired Jampp, an Argentina-based leading programmatic marketing company, for $ 41.3 million. Jampp’s programmatic mobile advertising platform is widely used by leading app marketers in North America, Latin America, APAC and other global emerging markets. This acquisition will help Affle enhance its presence in android-heavy global emerging, Latin American and many other markets. Though initially the acquisition of Jampp may be margin-dilutive, later it would provide high-growth opportunities. The company will convert Jampp’s business model from a CPI (cost per installation) to a CPCU (cost per converted user) model with immediate effect. Affle is confident that it will enhance Jampp’s EBITDA margin to a high single digit from a flattish margin in 12 months. And from the second year, this margin is expected to improve to 15-20 per cent.
• Affle has increased its stake in Bobble AI, an Indian company which has launched the world’s first conversation media platform, from the current level of 8 per cent to 17.72 per cent. This will enable Affle to strengthen its presence with OEMs and operators.
• The company is going from strength to strength on the financial front. During the last five years, its sales turnover has expanded by around four times – from Rs 65.63 crore in fiscal 2017 to Rs 266.73 crore in fiscal 2021, with the profit at net level spurting from Rs 33 lakh to Rs 28.23 crore during this period. The company’s financial position is steadily improving, with reserves at the end of March 2021 standing at Rs 140 crore against its equity capital of Rs 25.50 crore.
• Prospects ahead are all the more promising as experts expect a strong growth in mobile ad revenue going ahead. Digital advertising spends are slated to report a 32.5 per cent and 18 per cent CAGR respectively in India and South East Asia in the next few years, because of rising active internet users, rapid adoption of smartphones and connected devices, and a young population.

Of course, the share price has skyrocketed. Hence, it is better to wait and accumulate these shares at every decline.

PERFORMANCE INDICATORS (Rs. in crore)