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Corporate Report

Published on: Aug. 23, 2021, 6:58 p.m.
Route to success
  • Gupta: looking for acquisitions

By Lancelot Joseph. Executive Editor, Business India

As per an IDC forecast, the communications platform as a service (CPaaS) segment will post 33 per cent compounded annual growth rate (CAGR) over 2019-24. Its key drivers are: rapid adoption of smartphones for commerce and communication by consumers; ease and scalability offered by CPaaS platforms to add communications channels; maturity of adjacent technologies such as chatbots, analytics, etc that help companies effectively segment and target customers; and finally, digital transformation helping companies better leverage multiple communication channels.

 CPaaS is a cloud-based delivery model that lets you add voice, video, and messaging features to your existing business software using an application programming interface (API). CPaaS allows you to cherry-pick real-time communications features and embed them in your apps and services. And yes, PI-driven architecture helps brands and companies seamlessly integrate new communication channels with existing digital stacks without investments in the hardware and pay for it on a volume basis.

 The Mumbai-based Route Mobile Ltd (RML) is one of the largest players in the Application to Person (A2P) messaging business and an emerging player in the high-growth CPaaS segment.  It has a global presence in the Asia Pacific, the Middle East, Africa, Europe, and North America.

RML started its journey in 2004 as Route SMS Private Limited, literally from Rajdip Gupta’s bedroom in Mumbai. “We opened up our first international office in London, UK in 2011. The next year we launched the India enterprise division, officially certified as a GSMA open solution connectivity, and launched our own fully functional SS7,” explains Gupta, the MD & Group CEO who then expanded the business to Dubai and Nigeria before rebranding in 2016 as Route Mobile Limited (RML).

 After that there was no looking back. RML acquired Cellent Technologies (India) Pvt Ltd. and Start Corp India Pvt Ltd, besides expanding the business to Ghana and Singapore. In 2017, it acquired Call 2 Connect India Pvt Ltd and 365squared Ltd, and expanded to the US and Kenya; by then it was ranked no 2 by ROCCO report 2017. “We were listed as one of the top 5 fastest growing Indian companies in the UK by ‘India Meets Britain’ Tracker 2018, and the Top 5 Tier 1 vendors in A2P SMS Messaging – as per ROCCO report 2018, as we expanded our business in Bangladesh, Nepal, Sri Lanka and Uganda,” adds Gupta talking about some of the early laurels of RML.

Key strengths

In 2020, RML emerged as the only Asian company covered in Gartner’s Market Guide for CPaaS, and in October 2020, it listed on the Indian bourse – BSE and NSE, when Route ranked among the Top 6 Tier 1 Vendors in A2P SMS Messaging – as per ROCCO report 2020. On the BSE, the RML listed at Rs651 and is currently trading at Rs1,935.

“As communication channels of enterprises evolve from disparate A2P-based messaging system to CPaaS-based communication we believe RML is favourably placed to benefit from industry tailwinds. Key strengths of RML include: network pipe developed with MNOs (240 direct relationships), firewall-based offering (aids in strengthening MNOs-based relationship), robust client economics with companies such as Facebook and Google providing strong client reference ability, and leadership positioning in regions where Route operates. We believe growth in revenue should manifest into operating leverage and we estimate revenue, EBITDA and EPS to grow in FY21-F23E at a CAGR of 22.1 per cent, 26.2 per cent and 27.9 per cent, respectively,” states an ICICI report on the company. 

“However, strong client reference ability and robust client addition is present, where RML’s client list includes technology giants (Google, Facebook & Samsung) and leading Indian banks. This provides strong client reference ability and aids in top-tier client addition in our view.”

  • Pathak: on innovation mode

    Pathak: on innovation mode

 In 2021, RML won two gold in the Juniper Research Award for CPaaS provider of the Year and the best SMS firewall, and also featured as The Next 500 India's Top Midsize companies in Fortune Magazine. It also entered into a strategic partnership with Du Telecom to launch its global A2P Messaging Hub, besides announcing a technology partnership with Truecaller to introduce the Truecaller Verified Business Caller ID for enterprises and acquired Sendclean from Sarv.

While RML cannot disclose its clients’ managers, Vestige Marketing Pvt Ltd has been using RML mobile for SMS service for the past two years. “During these two years we have received excellent support from the Route team. Due to their better services, not only have we tremendously increased our SMS credit with them, but we have also taken missed call services from them,” says the manager at Vestige who is currently, in discussion with RML for even WhatsApp integration. “Their system is very transparent and the support team has been very proactive and supportive,” he adds.

“RML has helped us forge strong relationships with our customers. With its SMS alert services, we have been able to send informational, transactional, and promotional SMS messages in multiple languages to our customers and deliver excellent engagement,” says a source from one of the largest commercial banks in India.

“Route Mobile is a good partner with a high-speed reactivity of support and we face few issues with them. The problem of opening routes in some countries remains like with most other carriers, but their reactivity makes the quality of service remain at the top level,” says a technology executive from a major European technology company.

And a major retail brand in the Middle East says: “For the last 10 years, we were using more than seven to eight messaging vendors and have had no clarity in terms of cost control or quality management. With Route Mobile’s onsite deployment of SMS and voice gateway, things have become very streamlined. Due to our business units present globally, this implementation of Route Mobile into our in-house architecture was worth the change. The team is very transparent in terms of finding solutions to our issues and also, their support team is very proactive and helpful and is available 24x7 for our business needs.”

Enterprise communication services

RML as a cloud communications service provider, caters to enterprises, over-the-top (OTT) players, and mobile network operators (MNO). Its enterprise communication services include new-age solutions in messaging, voice, email, and SMS filtering, analytics and monetisation. Route Mobile offers enterprise clients a cloud communications platform that can be deployed and integrated with existing business applications and systems. RML has a diverse enterprise client base across a broad range of industries including social media companies, banks and financial institutions, e-commerce entities and travel aggregators.

  • Owen: competitive solutions

    Owen: competitive solutions

“We are a global communications platform as a service (CPaaS) player directly competing with peers such as Sinch, Infobip, and Twilio besides Tanla, Valuefirst, Karixm and Exotel. Our company caters to the banking, financial services, and insurance (BFSI) sector. We deliver an entire communication product stack, based on CPaaS principles, infusing communication commerce across a broad range of industries including social media companies, e-commerce entities, and travel aggregators,” points out Gupta.

 “Our communications platform comes with a unified API that includes a wide range of products & services for a diverse set of industries. Through our acquired company 365squared, we cater to telecom operators by providing them firewall, analytics and monetisation solutions and Call2Connect offers world-class customer support solutions, back office & consultancy services as well,” says Gupta who started at Aptech Computer, where he joined as an Oracle trainer. After a stint, he moved to AIS Comp, a US-based software company.  

Gupta’s exposure to the larger technology landscape and experience with the technical side saw him being offered a position as technical head – wireless division, at Gurukul Online. After a chapter with Gurukul, he moved to software consulting with various companies including IBM in the UK.

“We are on ‘innovation mode’ at all times and are adding newer products to our technology stack to help enterprises manage their omnichannel communications in a comprehensive manner. We are actively working with enterprises in their journey of customer acquisition, customer retention and customer care. A deep omnichannel communication platform combined with a holistic unified consumer view will make us a global player in a Customer Experience Platform as a Service (CXPaaS) domain,” says Milind Pathak, chief business officer at RML.

According to Gautam Badalia, the chief strategy officer at Route, “Global businesses are embarking on experience-led transformation journeys, and customer communication remains pivotal in offering new services and driving revenue opportunities. RML’s omnichannel platform is positioned to meet the expectations of these businesses across industries, by delivering transformational and hyper-personalised customer experience, optimising their campaign spend and maximising their return on investments (RoIs).”

Financially, RML has done well. From Rs504.9 crore (FY18) it has tripled to Rs1,406.2 crore (FY21). The net profit also kept pace, and during the same period moved from Rs47.5 crore to Rs132.8 crore.

For the first quarter of FY22 versus Q4 FY21 (consolidated), the revenue from operations for the quarter ended 30 June, 2021 stood at Rs377.5 crore as compared to Rs362.4 crore in Q4 FY21. While the operating profit (EBITDA) stood at Rs49.1 crore as against Rs51.5 crore, it reported a profit after tax (PAT) of Rs34.3 crore as against Rs35.5 crore, accounting for a PAT margin of 9.1 per cent.

“We are in the midst of a communication revolution, with both enterprises and their customers exploring multiple channels to connect with each other. Route Mobile aims to be a CX partner to businesses, with its CPaaS-enabled solutions that help create seamless customer interactions,” discloses Tushar Agnihotri, country head, India and regional head (APAC) of RML.

 “With over 250-plus carriers directly connecting to our global platform, we now have the operational scale, reach and economic advantage to succeed in these high growth markets. This platform enables us to build competitive solutions that combine our advantages in technology, breadth of portfolio, scale and, very importantly, lower cost structure,” observes John Owen, CEO (Europe & America) at RML.

  • Shanbhag: exploring growth opportunities

    Shanbhag: exploring growth opportunities

 “Despite its global scale, the company’s cloud-based architecture entails low capital requirement, driving high return ratios; this has spurred cash flow generation – a trend we expect to sustain,” states Pranav Kshatriya, analyst at Edelweiss research.

Wide range of solutions 

While RML is globalising, it is investing too. North America and Latam combined present close to 50 per cent of RML’s global CPaaS opportunity, “and as such will be our focused geographies to explore growth opportunities for our CPaaS solutions portfolio,” says Vikram Shanbhag, EVP (America) at RML, adding that “we have invested in our global expansion to offer solutions to our new customers and we have been widely successful in growing our revenues. We intend to focus more on cross-selling and up-selling a wider range of solutions and services to our customers.”

“Digital-first customers prefer engaging in real conversations in real-time and on the channel of their choice. At Route Mobile, we work on the fundamental principles of customer service, by enabling brands to digitalise their customer communication with our CXPaaS solutions to deliver superlative customer experiences,” observes Tanmay Ayare, global head (marketing and communications), RML.

Finally, at RML, the key to the overseas market is digital acceleration and digital adoption by enterprise customers is speeding up because of the pandemic situation. “We do see that growth in terms of requirements comes from various enterprises and most of the enterprises started adopting digital platforms sooner. Our focus continues to be Europe and America as a region; we have strengthened our leadership teams to build focus in these markets,” says Gupta, looking for new acquisitions in any market.

 “Yes, we are looking out to grow and expand our business in Latin America, the US, and Europe, and keeping that in mind we have recently appointed John Owen as a CEO for this market. John brings lots of credibility and experience in this market where we do see that the gross margin and the revenue mix are much higher and the digital adoption is also high. In terms of messaging penetration, the US is a very high margin market and we are looking forward to expanding ourselves in the US in a big way in the coming days,” sums up Gupta.

However, from a structural standpoint, one should watch the following key risks, as listed by analysts: an accelerated shift to newer channels of communication (which will put pressure on SMS-based messaging volumes); any potential stagnation in the top-5 client spends which contribute 50 per cent of RML’s revenues; its pricing vis-à-vis the competition coming under pressure as larger global players (Twilio, Sinch) consolidate their business operations.

 It may also be noted that Route also works with global aggregators in terminating traffic in certain geos, and therefore, any adverse consolidation by these global aggregators may negatively affect the revenue profile.

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