ROUTE MOBILE LIMITED (ROUTE) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to RoadMobile Ltd. Q2 FY27 earnings conference call. As a reminder, all participants will be in the lesson-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on a touch-tone phone. Please note that this conference is being recorded. I now head the conference over to Mr. Tushar Agnihotri, Chief Executive Officer, RootMobile Ltd. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us for RootMobile's earning call for the second quarter and first half of fiscal year, 2027. I'm Tushar, and it's my pleasure to welcome you all. Joining me today are Vinay Benyala, who will take you through the operational and strategic highlights of the quarter, And Rajkil, who will walk you through our financial performance in detail. Following our opening remarks, we will open the floor for questions. Before we begin, a quick note. Our quarterly earnings presentation was uploaded yesterday, and I hope you had an opportunity to review it. Some of these statements made during the call may be forward-looking in nature and are subject to risk and uncertainties. Please refer to disclaimers in our presentation for further details. Now, let me begin by setting the context for the quarter. At our strategy of date and name, we outlined our ambition to move root mobile up the value chain from a messaging provider to a full-stack, AI-enabled customer engagement platform, while continuing to strengthen our operator business. Six months into this journey, we are beginning to see this strategy taking shape in what our customers are buying, in the capabilities we've added, and in how we are working with the wider proximity group. When we spoke in July, we explained that the dip in gross margin was driven by the loss of traffic from few, large, high-margin customers. We also indicated that we expected to recover from this. Now, in this quarter, we made progress on that front. Gross margin recovered from 22.4% in quarter two, from 20.9% in quarter one. Also, revenue on a Y-on-Y basis grew by 5.4%. Our focus this quarter was not simply on adding volume, but also on improving the quality and mix of our revenue. And that distinction is very important. Our portfolio of new products, including RCS, WhatsApp, and other IT messaging solutions, grew more than 30% on a year-on-year basis, and now contributed to over a tenth of our revenue. This is the shift in revenue mix we committed to at our strategy upgrade in May, and we are now seeing it reflected clearly in our numbers. Q2 was also our first quarter with Heltar as part of RootMobile, as we aware Heltar adds our AI native no-code engagement player to our existing channels. We're already taking these capabilities to our enterprise customer base through the RootMobile and Proxima Series teams. This strengthens our move up the rally chain from messaging towards full-stack customer engagement platform. Alongside our enterprise team, the enterprise business, we're also Our AI-driven firewall solutions are now deployed at 12 operators, and we see a healthy pipeline of new opportunities. These solutions offer the potential for high-margin recurring revenues. Together with Netco KPI, which we are developing with the Proximus Global Ecosystem, they provide an additional growth opportunity alongside enterprise messaging. Our association with The Global Telecom Group gives us an important advantage as we develop these capabilities and take them to the market. We've also strengthened our leadership and presence in key markets. In Latin America, Marco has joined us as CEO of Massif, a Colombian subsidiary, to lead the next phase of growth across the region. And in India, our participation at Global FinTech Fest helped deepen our engagement with financial service leaders and ecosystem partners. BFSI continues to be our largest vertical, making this as an important market for us. Looking ahead to the second quarter, second half of the year, sorry, our priorities are clear. First, we will focus on converting our pipeline, particularly in high-margin opportunities across fiber solution and new products. Second, we will scale health out of cross-markets, leveraging the broader RootMobile and Proximus global sales ecosystem. And third, we will maintain a large focus on cost discipline. Our priority remains execution, improving the quality of revenue, building high-value capabilities, and delivering sustainable long-term value for our stakeholders. With that, let me hand over to Vinay, who will take you through the operational and strategic highlights of the quarter in greater detail. Over to you, Vinay.

Thank you, Dushar. Good evening, everyone. I hope you're all doing well. As Tushar mentioned, we uploaded our quarterly earnings presentation earlier, and I hope you had a chance to review it. Let me structure my comments in four parts. First, the shape of our revenue growth this quarter. Second, gross margin and how the specific items we discussed in Q1 have played out. Third, a few key business metrics. And finally, the key business developments of the quarter. Starting with revenue, in Q2 FI27, revenue from operations was Rs.1180 crore, up 5.4% year-on-year and 2.4% quarter-on-quarter. For the first half of FI27, revenue grew 7.4% year-on-year to Rs.2331 crore. We processed 47.6 billion billable transactions during the quarter and 93.4 billion in the first half. I would again highlight the quality of this growth. Our new products portfolio comprising RCS, WhatsApp, and other IP-based messaging solutions grew 36.7% year-on-year and 35.8% quarter-on-quarter to Rs.128 crore in Q2. It now contributes more than 10% of our revenue, compared with approximately 8% a year ago, and continues to grow meaningfully faster than the company as a whole. We are seeing this growth across use cases, such as conversational commerce, customer care, and banking journeys, as well as in RCS, supported by the expansion of our direct operator coverage. The ILD business continues to face growth challenges, and we remain focused on managing it for absolute gross profit rather than volume. Second, on gross profit. Last quarter, we explained that our gross profit margin of 20.9% was affected primarily by a temporary disruption in traffic from select large high margin customers while we deployed new solution capabilities for them. A smaller part of the impact came from the security incident at our Colombian subsidiary. As I said then, this was not business we had lost. First, in Q2, gross profit margin recovered to 22.4% compared to 20.9% in Q1 and 22.1% in Q2 last year. Gross profit was 264 crore, up 9.8% sequentially and 6.8% year-on-year. The improvement was driven primarily by higher margin traffic from our new products and existing customers. Third, a few key business metrics that I would like to discuss. As detailed in the presentation, net revenue retention for the first half stood at 105%. Recurring revenue, which we define as revenue from customers billed in every month of the period, accounted for 93% of revenue over the 12 months from last year to September this year, up 89% as we reported in FI26. On an annualized basis, 80% of the customers now generate more than a million dollars of revenue each, In annual billing, compared with 73 in F526. Client concentration has also eased slightly, with our top 5 customers accounting for 30% of revenue, as compared to 33% last year. By vertical, financial services remains our largest segment, contributing 15% of revenue, followed by digital natives at 12%. Finally, the key business developments that we experienced in this quarter. The most significant development of the quarter was the completion of our Heltar acquisition in July 2026. We acquired Heltar Technologies' AI-driven customer engagement business through a slum sale. The acquisition strengthened our non-SMS portfolio across WhatsApp, RCS, Voice, and Communication Analytics, While adding AI-native, no-code, customer journey orchestration capabilities for enterprise customers across India and international markets. We signed the business transfer agreement on 13th of July and completed the transaction on 29th of July. The total consideration was Rs. 33.7 crore, of which Rs. 23.9 crores was paid at closing from internal accruals, While the remaining 9.8 crore rupees is deferred and payable 18 months from closing. The operating model remains as outlined in our July presentation. Heltar is sold through the RootMobile and Proximus Global sales teams and supported by our existing support teams. Product development continues to be led by Heltar's core team, which we are strengthening through targeted hiring. The early signs are encouraging. Several blue-chip enterprises were already live on the platform when we acquired the business, and we are now seeing early wins across banking, healthcare, retail, consumer durables, and education. We are also seeing opportunities emerge in the Middle East and Latin American market. Let me share two examples from India. A healthcare provider in India is using Heltar to enable appointment booking, doctor search, test reports, and hospital information through WhatsApp. A fashion brand in India is using the platform for conversational commerce, covering the customer journey from product catalogs and recommendations through to purchase. Commercially, Heltar provides an opportunity to expand our subscription-based and AI-led revenue streams as customer accounts grow. Over time, it also creates the potential to move towards outcome-based pricing models rather than pricing based solely on the number of transactions. In Latin America, moving on, in Latin America, we strengthened our leadership with the appointment of Marco Erkisch as CEO for Massivian, our Colombian subsidiary. Marco will support the continued growth of the business across Latin America and its integration within the broader Proxima's global ecosystem. In BFSI, our largest vertical, we participated in Global FinTech Fest 2026 as a cloud communications partner and exhibitor. We showcased our omni-channel messaging, intelligent routing, and digital engagement capabilities, engaging with financial services leaders, technology partners, and other ecosystem stakeholders. We also introduced our omni-channel communications and conversational AI capabilities to prospective customers and partners at the event. Discussions focused on how digital customer journeys are evolving across onboarding, servicing, payments, and customer support. To summarize the quarter, revenue growth has continued, gross profit margin has recovered, and new products now contribute more than a tenth of our revenue. With Helta, we have added an AI-native engagement layer to our portfolio and are already taking these capabilities to the market. With that, I will hand over to Raj to walk you through the detailed financial performance. Over to you, Raj.

Thank you, Vinay, and good evening, everybody. I'll summarize our financial and operating performance during the quarter ending September 26 before opening the call to Q&A. As described by Tushar and Vinay, we delivered growth in revenue and gross margin, both sequentially and year-on-year. Our Q2 revenue from operations was 11,797 million INR, representing an increase of 5.4% year-on-year and 2.4% sequentially, continuing the momentum from the previous two quarters. This quarter, our new products portfolio grew meaningfully quarter-on-quarter, which demonstrates the strong demand for our solutions and continued customer engagement. In Q2, we reported a gross profit of 2640 million INR, which is higher by 6.8% year-on-year and higher by 9.8% sequentially. This growth was driven primarily by our new products portfolio, which I mentioned earlier. These carry higher margins than our core messaging traffic. Close profit margin for the quarter stood at 22.4% versus 22.1% in the same quarter last year and 20.9% in the previous quarter, an expansion of around 30 basis points compared to the prior year, reflecting the richer mix from our new products. On a reported basis, operating costs were higher than the previous quarter, mainly due to non-recurring impacts related to the massive insecurity incident and timing of a provision for performance-related bonuses. Let me be clear. These one-off costs do not impact the run rate and will moderate and return to normal levels in the coming periods, hence positively impacting EBITDA. Adjusted EBITDA for Q2 was 1184 million INR, which is higher by 8.7% compared to the previous quarter, as the strong DM performance more than offsets the non-recurring cost. This all contributes to an adjusted EBITDA margin of 10% for the quarter, which is 50 basis points ahead of the previous quarter. We are working on multiple levers, both growth and cost optimization, to revert to EBITDA margin of around 12%, which would result in a mid-single-digit EBITDA growth year-on-year. Adjusted profit after tax was $825 million INR, which is lower 70.8% a year-on-year, but up 20.4% sequentially on the last quarter. I will now hand over to the moderator for the Q&A session.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Bharat Gulati from Dalal and Procha. Please go ahead.

Yeah, I hope I'm audible. Just a few questions around the recurring revenue and NRRs for the quarter and the reported years that you've shown. Just trying to understand what is the nature of the non-recurring revenues. Or let's say it's been 10% in FY25 and 11% in FY26. And last 12 months, it's been around 7 odd percent.

So what's the quality of those revenues?

Do they come in again? Or are they completely non-recurring in nature where those revenues are one off?

Yeah. Sure.

So let me take that. And so, you know, if you look at the kind of business that we do, it's basically supporting different kind of use cases for enterprises. So, you know, it could be transaction-related communication. It could be promotional or specific campaign-related communication. And then there are authentication-related communication. Now, with WhatsApp, we also have more conversational or bi-directional or, you know, interactive kind of communication which gets supported. But primarily, when you look at non-recurring, it is largely one-time campaigns or, you know, certain marketing campaigns that enterprises run. And these are typically not recurring because these are specific to a particular promotion or a particular product, you know, placement that the brands or the enterprises want to run. And sometimes they go away. But then, you know, again, these are sporadic. Once again, the same enterprise might come back with a new product promotion or a new campaign that they want to run for a certain customer set. So you can consider them as one-time campaigns which come and go, but the same enterprise might continue certain other businesses with us. Now, we classify them under various buckets, depending upon how the engagement with the particular enterprise is, and that kind of contributes to the non-recurring part of the business.

So, let's say if we were to quantify it in terms of our 105% NRR that we've reported for H1, you know, that comes out to around 22,787 million rupees of revenue. How much of this NRR would be recurring and non-recurring? I mean, you know, I'm just trying to understand the quality of growth over here, because if you see the non-recurring mix, if we eliminate that out of the business, there's basically no growth. So is non-recurring business a part of, I mean, is that part of our growth or is that just getting coming into the business to aid numbers temporarily and then again going out in the next year?

So typically, you know, even what might be non-recurring could be on an annual basis, it might come back to the way we define net recurring revenues, you know, we only look at customers whom we have built consistently through the entire period. So, you know, that customer, if, for example, you know, in the last six months, if that particular customer has not run a campaign with us, it will drop out of the net recurring revenue. But, you know, the same customer might come back in the season next year and provide us certain revenues for a new campaign or certain seasonal campaigns that they run typically on an annual basis. So that's the way it works. It might drop out for a certain month because of which it might not appear in the net recurring revenue. But, you know, to give a very accurate answer, we need to do a little bit more deep dive into the numbers and get back to you. So because, you know, it's basically a more mathematical calculation here, but we can do another deep dive and come back to you with more specifics.

And if I just may add, you know, as you correctly pointed out, that there's some C-sliding factor comes in. As you will see that, you know, some will see typically the OND, which is October and November, December, is a period where we see a bump in numbers, and that can be placed in the non-recurring category. But also that we are selling solutions where we, based on the number of planters, we devote to develop a solution. We charge customer one-time monies as well. A lot of these factors go in on the creation of this non-recurring revenues. As we keep on adding customer, in a particular quarter, it may be slightly higher, and the following may be slightly lower, and density strategy also comes in play. So it's very difficult to very accurately predict that how would the next quarter be on the long recurring revenues. But, yeah, as Vinit suggested, we can deep dive over, but you will never get a very, very accurate answer, Because there can be a campaign done by a PSU bank on a certain activity they want to conduct in a given quarter. There can be citizen communication coming from, let's say, a state government to suggest there is a hurricane or there is some communication going towards agriculture or anything. So, while we keep on working closely with all our customers, it's very difficult to very accurately make a prediction how my subsequent quarters would be like.

Understood, understood.

Would it be possible to share what GRR we've done for H1?

We can work that. We can work that out, Bharat. We'll take that offline.

I'll need to do the calculation on that. We can get back to you.

Done, done. Okay. And just last few questions. On growth, I mean, sort of volume growth has been dipped this quarter, which was pretty healthy over the past four quarters. So, anything specific to call out how volume growth would be looking like in, let's say, the coming few quarters, given that we sort of hit a plateau at that 45 billion mark and then now moving to the 48 billion mark? So, any commentary on the volume-based front?

It's very difficult to make a prediction on volumes in the following quarters, but we see that there should be an upward movement, primarily because we are hitting the season now, and a lot of e-com companies, a lot of other retail companies do a lot of communication around this time, around this period. So, we're hopeful that these volumes will continue building up for us in the O&E quarter. We cannot make a long-term prediction, but of course, with this quarter, we're hopeful of looking at slightly improved volume numbers.

Understood, understood. Understood. And just if you talk about our portfolio of long-distance messaging, how has that played out during this quarter? Do we continue to see it flatlining or has there been an improvement in terms of update over there? What's been the outlook on that?

On the long-dressing messaging inwards to India, we have already touched upon that there are certain headwinds, but it's lastly childish. On the outward, which is a message which is going from India to other countries, now that we're working with a lot of banks, we've managed to pick up a couple of contracts which are outward traffic which is going to countries outside of India,

Yeah, so on the long distance, we've seen some trends there, you know, we've seen some slight decline with certain aggregators, but then we've added some direct enterprise volume in the last quarter. So, it's a mix of events which is happening there. You know, certain aggregators are losing revenue, but as we mentioned in the previous quarter commentary, we were working on initiatives to see what we can do on the long distance, and we've been able to win back some of the enterprise traffic, which is helping compensate some of the losses that we had. So, it's still not in a growth phase, but, you know, we are, as we mentioned in the last quarter, looking at different initiatives where we can sustain or create some momentum around the long distance business.

Understood. That's helpful. That's it for my time. Thank you.

Thank you. Before we move to the next question, a reminder to the participants, to ask a question, you may press star and 1. Next question is from the line of Dipesh Mehta from MK Global. Please go ahead.

Thanks for the opportunity. A couple of questions. Sir, I just want to get a sense about case balance. We have roughly around 13.5 billion.

Sorry, because your voice is not very clear. Is it better now? Can you hear me? Yeah, this is better. Thank you.

Yes, so we have a case balance of 13.5 billion. I just want to understand what will be the free case, which exclude, let's say, security deposit and all those kind of balance. Can you give me that number? What is the free balance? And what is the, let's say, our plan to use that free balance? If you can give some sense, because I think we are accumulating cash. So far, not seeing, let's say, any specific use, which we have called out. So, if you can give some sense around it. It is roughly 50 percentage of market cap, what we have overrote this. Second question is on the business side. Can you help me understand, let's say, any changes in the pricing which we have observed in last few months, particularly with RCS and WhatsApp, and how it is, let's say, affecting business dynamics? And last question is on the Q3 seasonality. How do you expect Q3 seasonality to play out this time? Thank you.

I didn't get the last part. Last question, please. Can you say it again? The third one. The third question.

It's a seasonal 18, quarter, three business. Generally, this is a festival period when you generally benefit from traffic.

Okay, I'll take the second and third one, and I'll let Vinay answer the first question. On the RCS, there have been price changes, which has been communicated by TEPCOs to us. This has come into effect from 1st of September. In fact, our RCS numbers are looking still healthy as we talk. Will there be impact in the long run? Look, we're getting into season right now. So I don't see much impact coming to VJP. But in the long run, we have to see how brands see the ROI is coming from RCS. And they, of course, will take the corrective measures, or they may add more business also if the response is encouraging. So, yes, the prices have gone up. In fact, for marketing, it's gone up by multiple folds. But our numbers are encouraging, but we will wait for the season to pass by And then perhaps we'd be in a better position to see how the long-term impact of this fine stage will be like. On the seasonality, we were fairly confident that business will build up from where we are right now. We will see a lot of marketing campaigns coming away. It's only that the blend may shift this time. You know, what it used to be, heavily SMS, maybe now split across SMS, WhatsApp, and RCS. How will that split happen between RCS and WhatsApp is, again, something you'll observe during the quarter, and then we'll be in a better position to go to to comment about that in the coming ones. So we'll be optimistic of the business to grow because of the season in this quarter, because of the season setting in. But the split is very difficult to comment because of this recent type changes. And I'll ask Mene to take the first part, please.

Yeah, sorry to interrupt before we answer. I just want to get a sense about what changes happen, because we are not that familiar. If you can give some quantification, what was earlier, how it is changing?

See, the earlier rates were in vicinity of the pricing of SMS.

They have seen that it was growing in a very rampant manner, and they wanted to bring some sense around the growth. And also, they want it to be somewhere compared and compatible with the pricing of WhatsApp. So they have taken the prices up. I'm sure, you know, they will evaluate this and perhaps take actions as I suggested earlier. But the growth, as I said, is nearly double of what the pricing put earlier. Yeah, the pricing on the utility and authentication is marginal, but on the marketing, the pricing have actually gone up substantially. Does that answer your question, Dipesh?

Yeah, and any change on WhatsApp message?

No, WhatsApp, nothing, nothing major, nothing major.

Just adding to the seasonality point, what Dushar already said, in addition to that, you know, Massivian, we had that breach which is now behind us. So, you know, again, we will see some good revival in the Massivian business because typically Q3 for them is fairly strong. So, we are hoping to see some revival there. And going back to your first question on the free cash, we have around 1150 to around 1200, somewhere in that range of free cash. And in terms of use, as we've discussed earlier, you know, one is obviously the dividends, which is still marginal. But we are again looking at certain acquisitions in different. So there are two categories, again, as you mentioned earlier in specific markets, like we are evaluating something in the Western markets, something in the Latin American market, but nothing is at a, You know, these are still early stage evaluation where we are still looking at the business performance and forming a view on valuation, destructure, etc. So, it's not something which is materialized to an agreement stage right now. But as we've mentioned, you know, it's a critical area where we are looking at inorganic growth and we are evaluating multiple targets in different markets, both for product and for market expansion.

Whether at board level, let's say, any discussion about, let's say, till what point in time you will continue to deliberate about M&A and not returning back to shareholder either through buyback or dividend?

So, Dipesh, we clearly see there are opportunities in certain markets. We are evaluating, as Vinay said, on both ends, geography expansion and product expansion both. We really see a couple of markets in that time which are really interesting at this point of time. Now, we are evaluating them. We are identifying targets in those markets. If we are able to, then we would, of course, prefer. Our choices will be to actually expand through some acquisition in that market. Saudi is a very interesting market also. KSA is going at a very good pace. So that's another market. So, we have few markets in mind. We are absolutely keen on using the monies with us to build expansion. That's the primary goal.

So, we want to do for, so we want to hope for an inorganic opportunity. Can you give me the area, focus area where, let's say, you want to plan to deploy some of this capital?

Look, that's also what a declaration, but I won't, yeah. Go ahead, Greg.

Yeah, so like I said, there are certain companies which are very advanced conversational AI solution providers in the Latin American market. And again, the reason I keep going back to that market is because the margin profiles in that region are very attractive. And again, you know, the size and scale of assets is kind of fitting into our dean size criteria. So that is one important evaluation criteria. Obviously, you know, we do not, we want to restrict to the size that we can execute. And that is where This particular market is very attractive. Again, certain other markets like in Southeast Asia, there are a few select companies that we are interacting with, potential targets that we are interacting with. And again, the idea there is, you know, markets which are large. So you can guess which ones in the Southeast Asian market we will be looking at. And again, these are not the largest in that market, but you know, the companies which are the immediate first contender for markets, market share, etc. So that is how we are evaluating this. Essentially, what we are doing is we are doing a lot of the market. We are not going after the SMS leaders. We are trying to pick targets who are stronger on some of these alternative channels and trying to build that out in the portfolio.

Understood. And last question is on the guidance. Last time we indicated about mid-to-high single-digit revenue, we adjusted a bit of margin of dual percentage. How comfortable we are to, let's say, deliver on?

Yes, I'll take that question, Pesh. So you're correct on revenue. Our guidance was mid-to-high. So, we will reconfirm that at the mid-range. So, that is trending positively, as we noted sequentially, we see growth there. In terms of the EBITDA margin, as again, I also noted, H1 was impacted by some certain non-recurring impacts and some customer-specific items. So, again, they will moderate. So, we will see a recovery of them not happening in the coming period. So, therefore, the EBITDA margin trajectory will improve in the coming quarters, not lapping those one-off items. We will see a seasonal uplift, as Tushar mentioned as well, and we are targeting some high-margin pipeline conversion opportunities, as well as our normal cost optimization, which will be a continuous factor. So, if you add all those up, then we are working on multiple levers, again, both on revenue and costs, And to revert back to around 12% EBITDA margin, which would then result in a valid 6% increase in EBITDA growth year-on-year.

I understand. Thanks for answering my question.

Thank you. Next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.

Yeah, thanks for the opportunity. So my first question is on the revenues from the new product sources. So there we have seen a very healthy growth. Obviously, it is acquisition-led. But if you can provide the organic growth there in terms of QOQ and YOI, and also in the organic growth, are we seeing some like one of in terms of some campaigns that were there in the market, especially on the WhatsApp? So, is it also powering the revenue, and what would be the normalized growth there?

Hi, Amit. Amit, you could add that we had definitely an impetus in our business after we had Delta on the side, which is added to our revenue and cross-marge and so forth. But apart from that, and as mentioned earlier, by responding to one of the questions on RCS, that we've seen some decent RCS growth as well. So, it's been a blend of organic and organic growth. So, we see a healthy growth. I'm sure you would have read in our presentations that the new product contribution is gone to one-tenth of our overall revenues. So, that's encouraging. This season, we expect this to even improve because we hope that, and in fact, all indicators are that the contribution of the new products, towards the marketing messages which go out will be more towards the new product, which is SMS, sorry, WhatsApp and RCS than SMS. So, we are really optimistic, and we are certain that this will keep improving in the months and quarters to come.

Okay. Amit, just to add to what Pasha said on the split between organic and organic, so the acquisition is, you know, just a mid-single-digit kind of revenue contribution in the quarter, around 5 crore odd number. The rest is all organic growth in the new product as well. So the acquisition is not a very large revenue scale. Acquisition is more product which we tucked into our capabilities. So just adding that detail there.

No, no, so in that organic, is there any some like one-time campaign revenue in that, or is it more like more like, you know, broadly?

No, this is not one time. We expect that swing to continue. No, they were not like a marketing campaign or, you know, as we were responding to one of the questions earlier, a recurring and non-recurring. This is this we are fairly confident is going to be a recurring business for us. Alongside we have, as I said, you know, we see some trend where a shift is happening towards the new product. We would want to keep building on that shift so that new product contribution keeps improving from the place we are at at this point of time.

Okay. And in terms of margins, obviously, we have seen, you know, expanding the gross margins, But the EBITDA margins, even on the adjusted basis, the expansion was not in line with the gross margin. So this is only because of the Helter acquisition, or is there any one-time cost in employee expenses which we have recorded in this quarter?

Yes. So as I said earlier, in H1, there were some definite one-time costs, and then they won't recur in the future period. So, for example, we had some costs from the Massivian security incident in terms of extra activity required in that region to get us back on track, which we are now back on track, and there is a performance bonus which we've provisioned for, which will help us support our H2 plans, particularly on some good pipeline discussions we're having, and look to convert those, and then lift that H2 EBITDA margin back up to the around 12%.

Okay. And then on this margins, you have mentioned this 12% margin. So is it fair to assume that the exit for this year would be somewhere around that? And if you can provide some bridge in terms of how do you see that bridge from 10% to 12% happening?

Again, the bridge from 10% to 12%, saying again, so first of all, at 10%, if you take out the one-off items, then they are meaningful. So you will see that 10% on a normalized basis lift naturally. So that goes up. The first thing that happens is that definitely goes up on a normalized basis. And then you have our multiple levers for H2, which I've mentioned before, which will then, again, further lift that trajectory. And, again, seasonality does help us. So these campaigns are at decent margins, and as discussed, you see the new product portfolio margin, that's increasing quarter on quarter, and we see that trend, a very positive thing, and it's a good high-margin business. So, yeah, there is a pathway, and we're confident of working towards that pathway. I mean, important to know, it does come with some, we will then make sure we're going to exit the address.

Okay, and my last question on the ILD part, obviously, you mentioned that there is some softness there, but is there any change in terms of the stance that you're seeing and what portion of the overall portfolio of sales seeing, you know, why kind of a degrowth and in terms of the stress in the ILD portfolio, is it stable or is it increasing? Can I take that?

Yeah, so, Amit, as I said in response to one of the earlier questions, what we are seeing is, you know, there are certain, certain kind of ILT traffic which we are receiving from a specific aggregator we saw a little bit of softness, but we have taken some specific measures to go direct with enterprises. So, that is where we are able to bring back some of the revenue. So, you know, it's a mix, but as I highlighted earlier, growth is still not very easy in that sector, that segment of the business. So, it's still not a very, how would I put it? It's still not a very simple growth environment. We are trying to create, you know, benefits or value add for some of these customers and going back. But to put it very plainly, it's not a market where we can, you know, confidently say that we will experience 5 or 6 or 6% of growth. So, if that answers your question.

Okay. Okay, sir. Thank you and all the best.

Sure. Thank you. Thank you. Participants, if you wish to join the question queue, you may press star and one. Next question is from the line of Hemal Tanki, an individual investor. Please go ahead.

Hello, sir. Am I audible?

Yes, you can go ahead.

So, my first question is, like, in Q2, basically, we have covered the Claro revenue or not. So, Claro deal, basically, we have cracked a few times ago. So, probably in last on-call, you mentioned that this revenue may start from the Q2. So, have we, basically, achieved any kind of revenue in this Q2? or they may give it from the Q3.

Sorry, I did not get the question clearly. You are referring to which component of the revenue?

So, Claro deal. Okay, you are breaking up to us over here also. We can't hear you very clearly.

Claro, okay, I think Claro revenue.

Yeah, yeah, so I am talking about the Claro deal. So, have we basically received any kind of revenue in Q2 from the Claro deal or yet not received?

Yes, I think Claro revenue was there in the previous quarter as well, and it continues. So, it has stabilized now. So, maybe there was some confusion because we already had revenue in the last quarter as well, and it continues. It's a stable customer for us now.

Okay, okay. So, actually, what is the percentage of that particular deal if we compare it with the gross revenue?

So, if I look at, so, we don't give out individual customer revenue as such, but, you know, So, it's become a significant customer for us in our firewall business.

Yeah, yeah. So, overall, basically, I need to have an idea about the overall firewall revenue, basically, what we have achieved. So, what is the overall firewall revenue as compared to the percentage of the total revenue?

So, these are some data points which we have not disclosed publicly, but it is still single-digit percentage contribution to revenue. It's not a very large component of revenue.

Okay. Okay. And what is the, like, average profit margin in that particular segment?

Profit is very strong. You know, we have customers where we make even up to 70% gross profit in that product. But on a blended overall business basis, it would be somewhere in the 50% to 60% range.

Okay. Okay. Thank you. Thank you very much. And one last question is that, so I've been looking about, like, more such kind of deals Is that, like, we are, like, ongoing deals or something like that?

Yeah, so that is definitely a very key segment for us because, one, the product is quite unique. There are not many players who are offering this product in the market, and I think Tushar in his opening remarks also mentioned that Firewall will be a very critical growth segment for us. So we are actively scouting. We are actually in discussions with some customers at fairly advanced stage of discussion. So, we should be, ideally, we are hoping for certain conversions in the next few quarters.

Okay, okay. Thank you, sir.

Thank you. Ladies and gentlemen, to ask a question, you may press star and one.

Participants, to ask a question, you may press star and one.

As there are no further questions from the participants, I now hand the conference over to Mr. Raj Gil for the closing comments.

That's great. Thank you, moderator. So, as usual, thank you all for your participation and your very engaging questions. We look forward to engaging you in the next coming periods and on our next investigation. With that, I wish you all a good rest of your day, wherever you are, and hope you all go into the weekend with good vibes. We won't see you again until next quarter, maybe, so happy Diwali for you all and season's greetings there. Goodbye, everybody. Thank you.

Thank you very much, sir. On behalf of RoadMobile Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.