Summary
Affle 3i Limited - Q3 FY2026 Earnings Call Summary Monday, February 02, 2026 10:00 AM IST
Event Participants
Executives 2 Anuj Khanna Sohum (Chairperson, MD & CEO), Kapil Bhutani (CFO & COO)
Analysts 6 Abhisek Banerjee, Anand Triveti, Anmol Garg, Ashwin Mehta, Deep Shah, Deepak, Mayank Babla, Rohan Nagpal, Shobit Singhal, Siddharth Misra, Vivek Doshi
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹717 crores | +19.2% YoY, +10.9% QoQ; Milestone quarter exceeding ₹700 crore quarterly run-rate. |
| EBITDA | ₹163 crores | +24.1% YoY, +11.6% QoQ; 7th consecutive quarter of sequential margin expansion. |
| EBITDA Margin | 22.7% | +90 bps YoY; Achieved despite incremental costs from labor code changes and employee provisions. |
| Profit After Tax (PAT) | ₹119 crores | +19.1% YoY, +8.0% QoQ; Highest-ever quarterly profit delivered. |
| CPCU Revenue | ₹714 crores | +19.6% YoY, +12.9% QoQ; Represents 99.6% of total revenue. |
| CPCU Conversions | 11.97 crores | +15.9% YoY; Reflects stronger platform adoption and vertical deep-diving. |
| Average CPCU Rate | ₹59.6 | +3.1% YoY; Highest-ever rate driven by premium iOS conversions and verticalization. |
| Inventory & Data Cost | 62.4% of Rev | Up from ~60-61%; Reflects deliberate investment in international vertical data intelligence. |
| 9M OCF to PAT | 75.8% | Below 80-90% historical range due to temporary agency audit-related collection delays. |
Geographic & Segment Commentary
- India & Global Emerging Markets: Contributed 73.9% of revenue, growing 19.8% YoY; growth was resilient despite a ₹10-12 crore base-effect loss from the Real Money Gaming (RMG) ban. Management noted strong traction in E-commerce, Edtech, and Fintech, alongside a shift toward premium iOS conversions and Connected TV (CTV).
- Developed Markets: Contributed 26.1% of revenue, growing 17.8% YoY and 10.9% QoQ; results were driven by budget normalization and steady new account additions. Strategic focus remains on deeper verticalization (EFGH categories) to unlock higher unit values from premium users.
Company-Specific & Strategic Commentary
- Agentic AI (Niko): Launched “Niko,” a next-gen agentic AI engine for fully automated self-service bidding and budget allocation, which improved ROI for hospitality and travel campaigns.
- Leadership Expansion: Appointed Sameer Sondhi as CEO for North America & Chief Strategic Investments Officer; promoted Vipul Kedia to COO for India and Emerging Markets to anchor the “10x vision.”
- Intellectual Property: Filed 3 new patents in FY26, bringing the total to 39 filed and 16 granted, focusing on AI-driven optimization and filtering non-human agentic traffic.
- CTV Strategy: Leveraging Connected TV to capture traditional TV budgets by linking CTV branding to mobile-based performance conversions on the CPCU model.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue/EBITDA Growth | 20% to 25% (FY27) | Management targets a combined Revenue + EBITDA growth metric of ~45% with margin expansion. |
| OCF to PAT Ratio | 85% to 95% (FY26) | CFO expects normalization in Q4 as periodic agency client audits conclude. |
| Inorganic Growth | 1 Major Deal (CY2026) | Evaluating 4 shortlisted targets (from 12) focusing on international verticalization and sales access. |
| Q4 FY26 Revenue | Flattish to Slight Dip | Seasonally Q3 is the peak; management is cautious but optimistic about beating historical trends if macro holds. |
Risks & Constraints
| Risk | Context |
|---|---|
| Inventory Cost Pressure | Data/inventory costs rose to 62.4% as the company invests in vertical intelligence for new markets, which may persist for a few quarters. |
| Geopolitical Instability | While cloud-based operations offer resilience, management noted that physical conflict or macro shifts could impact advertiser budget allocation. |
| Regulatory (DPDP Act) | The Indian Data Protection Act requires compliance; however, management views this as a moat that favors larger, certified players over smaller competitors. |
Q&A Highlights
Inorganic Strategy
- Question: What is the status of the acquisition pipeline? (Shobit Singhal)
- Answer: Narrowed the pool from 12 to 4 targets; currently in active due diligence. Aiming for a “sensible” decision at the right price, targeting one major deal in 2026, 2028, and 2030 (Anuj Sohum).
Margin and Tech Investment
- Question: Why did inventory and data costs jump ~130-230 bps? (Shobit Singhal/Rohan Nagpal)
- Answer: Approximately 10% of these costs are “investment in nature” to build verticalized intelligence for international markets. We are expensing these fully rather than capitalizing (Anuj Sohum/Kapil Bhutani).
India Growth Resilience
- Question: What offset the RMG ban impact in India? (Anand Trivedi/Abhisek Banerjee)
- Answer: The RMG impact was ~₹10-12 crores. Growth was recovered through broad-based demand in E-commerce, Edtech, and a strategic pivot to premium iOS users and CTV (Kapil Bhutani/Anuj Sohum).
Operating Leverage
- Question: Why was employee expense flat despite wage hikes? (Anmol Garg)
- Answer: Efficiency gains from AI automation and centralizing support functions in lower-cost markets like India/SE Asia allowed for hikes without increasing total opex (Anuj Sohum).
Key Takeaway
Affle 3i delivered its strongest-ever quarterly performance in Q3 FY2026, surpassing the ₹700 crore revenue milestone with a 19.2% YoY growth and recording its 7th consecutive quarter of EBITDA margin expansion to 22.7%. Growth was robust across both India and Developed Markets, fueled by a strategic shift toward premium iOS conversions and the integration of “Niko,” its agentic AI engine. Despite a marginal increase in inventory costs due to deliberate investments in vertical intelligence for international expansion, the company maintained bottom-line discipline with PAT growth of 19.1%. Management is currently conducting due diligence on four acquisition targets to accelerate the “10x growth vision” and expects OCF normalization in Q4. While Q4 is seasonally weaker, the company remains confident in its 20-25% growth targets supported by a localized, privacy-compliant technology moat.
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