Sectoral outlook 2022: Route Mobile will experience organic growth in the United States and Europe, says Rajdip Gupta, Group Managing Director and CEO
Rajdip Gupta, Group Managing Director and CEO, Route Mobile, talks about his business outlook for the sector in 2022, challenges, growth and expansion plans, acquisition strategy, fundraising of Rs 867 crore via QIP, vertical customers among others during a frank chat with Swati Khandelwal, Zee Business. Edited excerpts:
Q: The year 2022 is fast approaching. How will the new year be for the company and what do you expect? In addition, exponential growth has been observed in space over the past two years. Do you think the momentum will continue?
A: Last time we provided growth forecast to the market of 20-25% and we are improving the growth rate between 25-30% this year. So our potential and growth trajectory have increased a lot in the last quarters and quarters to come, the adoption rate of the digital platform is building like a big platform. For example you can take a look at things like WhatsApp for Business and there are around 40 crore of WhatsApp users and if there is commerce through a WhatsApp platform then the payment gateway we have recently launched. So we have a plan to focus more on the market where the adoption rate is going up a lot, maybe it’s Latin America or Africa or Asia. So, the next few quarters will be very bright for CPaaS companies and we are also quite optimistic about the growth of the next quarters.
Q: You mentioned technology adoption, but there is huge competition and many players are entering the segment and there is a constant evolution of technology. How do you see it and is it a challenge for you and how are you going to move forward?
A: Route Mobile’s R&D department is very large. To create new technology, we have hired the right way to create new technology and built a new team over the past three years. We have worked closely on channels like RCS, WhatsApp and Viber for the past three years and recently we have been doing a lot of work on Voice. So we don’t mind the competition, if we give a guidance of 25-30%, it means that we capture some of the competition. In the next few days, India as a market is a $ 1 billion market and our market share is currently around 10-12%. We will aim to grow it up to 25% in India itself. The type of pipeline that we have and we have also recently onboarded a few clients – including large banks, like Bank of India and Bank of Baroda – will result in substantial volume growth in the coming quarters. And we are very optimistic that our team, after focusing more on R&D, is now focusing more on the new communication channel. The company must have several choices to communicate with the end consumer. When a business has the choice to sell through a particular channel and when a business decides to use a particular channel like WhatsApp, SMS, eMail, or RCS, then Route Mobile will be a platform that will act as a one stop shop. store and from our platform they can use all channels together through our unified communication platform. So I think in competition there is more to winning than losing and we are very excited even to compete with people all over the world.
Q: What are the geographical areas where you would like to develop and develop in 2022?
A: Recently, we acquired a Masivian company in Colombia. If you divide Latin America, it will be divided into two and they are Spanish speaking countries and Portuguese speaking countries and, thanks to the Colombian acquisition of Masivian, it will help us to meet the needs of the Spanish speaking countries. But Portuguese-speaking countries like Brazil are still untapped. I think Latin America will be our focus for this quarter and the next two quarters. Along with this, the African market is also growing as smart penetration in the country gradually increases. If you look at the African market right now, there is some hype. So we are going to focus on Africa and Latin America which is a big market because of the population because in our business I think it is very critical to see what the number of subscribers is for n ‘ any operator in any country. For example, Nigeria has a population of around 220 million, nearly 65% of whom use mobile, but smartphone penetration is low in the country. But of how the adoption of smartphones and digital platforms is likely to occur in this market, we will be a direct beneficiary of that adoption.
Q: You mentioned the acquisition of Latin America, but this will only target the Spanish speaking population, but the Portuguese speaking population is still untapped. So, will you be making acquisitions in this direction, if so, what would be the acquisition strategy for next year?
A: Certainly, I think, the company’s growth trajectory and the way we plan our growth is organic and inorganic. For example, all of our growth in the US is organic in which we have hired senior executives at a different level. Likewise, senior executives have been hired in Europe and we are recruiting other people. We will therefore have an organic look at the United States and Europe. But in the geography of Latin America, we are trying to acquire companies in Brazil and neighboring countries. Apart from this, our voice business, which is a unified communication platform and which has developed well in the market, will focus on the acquisition of certain companies because, after this acquisition, Route Mobile will switch from CPaaS to UCaaS, which means unified communication the platform is a service. So we need to ensure that our portfolio grows and we can offer multiple services to our clients and create cross-sell and up-sell opportunities within the acquisition. For example, in the case of Masivian, their messaging business was quite large and we moved all of their messaging business to our platform. Recently, we also acquired an email company Sendclean. So for every integrated acquisition we make, we are aware of its value and why it is being made. So, we may have acquired a small courier company in India, but the courier business has a potential of almost $ 17 billion. So we know that if we acquire a business in any market, our current portfolio will be directly affected there and we can sell all of these services to their clients. So it’s a clear strategy that we have for inorganic acquisition.
Q: What is the composition? You said that voice is an area you will be interested in, what about beyond?
A: The voice is a business but if we see apart from the growth of the market but the geographic growth, I think the Portuguese countries will be our target, whether it is Brazil or the neighboring countries. Or something in Africa for sure because Africa is also a very big market and the potential is quite high and we are already a big player in some African markets like Nigeria, Ghana and Kenya and are already known as a major player and have huge bank clients in the countryside. Thus, we will focus on two countries namely Brazil or the neighboring countries of Brazil or Africa for the acquisition outside the voice.
Watch the full video here:
Q: What would the ticket size be for these acquisitions and what would the timeline be for the same?
A: We deem that a particular asset and the size of a ticket is not important to us and maybe it’s $ 10 million or $ 100 million, but it depends on how its product portfolio fits. to our product portfolio and what kind of upsell and cross-sell opportunities we can create with that. So, the size of the note can be up to $ 100 million and it can also be as high as $ 20 million.
Q: The company raised Rs 867 crore through QIP last month. Help us understand how this money would be used in 2022?
A: It was very clear that we were increasing the QIP for the acquisition and we have a vision that the fund that is available with us – our cash on book currently stands at around Rs 1,100 crore – will be used for acquisition purposes. and organic growth in terms of us spreading in different countries. Currently we operate in 15 countries and Australia is a market where we need to build our team, we need to build a team in Malaysia and we need to hire more people in Singapore. We are therefore looking to grow organically in at least 8 to 10 countries. Thus, we will organically approach in 15-25 countries where we will place our sales team. Apart from that, we will definitely acquire a few companies in an inorganic way.
Q: Who is your current customer base and which verticals (e-commerce, OTT, telecom operators) are you most focused on for maximum growth in 2022?
A: Right now our 365 firewall company is rolling out its fireworks display in four operators in Latin America and they are big operators and that will be announced soon. Likewise, we are deploying CPaaS at an Asian operator and the announcement will be made next week. Thus, our CPaaS platform is being deployed at the operator based in Asia. So our operator-based business is showing healthy growth and our pipeline is quite strong. For domestic customers in India and international customers of Route Mobile, as recently we have onboarded a large cloud marketing customer that has potential of $ 7-10 million in annual revenue. The client will be live during the next quarter. Likewise if you take a look at our focus on CRM it might be the sales force, or Zoho or any other CRM application / option available in the market, I think our APIs have already been integrated. . So I think CRM will play a bigger role in the growth of Route Mobile and we will focus on making our APIs available in all CRMs available on the market. I think you will have a chance to see its results over the next two or three quarters.