Sector Outlook 2022: Route Mobile will grow organically in US, Europe, says Rajdip Gupta, MD & Group CEO

Rajdip Gupta, Managing Director & Group CEO, Route Mobile, talks about his business outlook for the sector in 2022, challenges, growth and expansion plans, acquisition strategy, raised fund of Rs 867 crore through the QIP, client verticals among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The year 2022 is around the corner. How the new year will be for the company and what is your expectation from it? Also, exponential growth has been seen in space in the last couple of years. Do you think that the momentum will continue?

A: Last time, we provided growth guidance of 20-25% growth to the market and we are upgrading the growth rate between 25-30% this year. So, our potential and the growth trajectory has increased a lot in the last few quarters and the coming quarters, the adoption ratio of the digital platform is building as a big platform. For instance, you can have a look at things like WhatsApp for Business and there are around 40 crore users of WhatsApp and if there is commerce is involved through a WhatsApp platform then payment gateway that we have launched recently. So, we have a plan to focus more on the market where the adoption ratio is increasing a lot maybe it is Latin America, Africa or Asia. So, the coming quarters will be very bright for CPaaS companies and we are quite bullish about the growth in the coming quarters also.

Q: You have talked about adoptions of technology but there is a huge competition in it 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 will you move ahead?

A: The R&D Department of Route Mobile is very big. To build new technology, we have done proper hiring to build new technology and built a new team in the last three years. We have been closely working on channels like RCS, WhatsApp and Viber for the last three years and recently we have worked a lot on Voice. So, the competition doesn't bother us, if we are providing guidance of 25-30%, it means we are capturing a share of the competition. In the coming days, India as a market is a $1 billion market and our market share stands around 10-12% at present. We will have a target to grow it up to 25% in India, itself. The kind of pipeline we have and we have also recently onboarded a few customers - including large banks, like Bank of India and Bank of Baroda - will bring substantial volume growth in the coming quarters. And, we are very bullish that our team after focusing more on R&D is now focusing more on the new channel of communication. The enterprise must have multiple choices to communicate with the end-consumer. When an enterprise has a choice that they want to sell through a particular channel and when an enterprise 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 and from our platform they can use all the channels together through our unified communication platform. So, I think, in competition, there is more to gain than lose and we are very excited even to compete with people all across the globe.

Q: What are the geographies where you will like to grow and expand in 2022?

A: Recently, we acquired a company Masivian in Columbia. If you will divide Latin America then it will be divided into two and they are Spanish speaking countries and Portuguese speaking countries and through the Columbian acquisition of Masivian will help us in catering to the Spanish speaking countries But Portuguese speaking countries like Brazil is still untapped. I think Latin America will be our focus area in this quarter and the next couple of quarters. Along with that, the African market is also developing as smart penetration in the country is increasing gradually. If you will look at the African market at present then there is hype. So, we will focus on Africa and Latin America, which is a big market because of population because in our business, I think, it is very critical to see what is the number of the subscriber for any operator in any country. For instance, Nigeria has a population of around 220 million of which almost 65% are using mobile but smartphone penetration is low in the country. But the way the adoption of smartphones and digital platforms is likely to happen in this market, we will be a direct beneficiary of this adoption.

Q: You have talked about the acquisition of Latin America but it will cater to just the Spanish speaking population but the Portuguese speaking population is still untapped. So will you make any acquisition in that direction, if yes, what would be the acquisition strategy going forward in the next year? 

A: Definitely, I think, the company's growth trajectory and the way we plan our growth is organic and inorganic. For instance, our entire growth in the US is organic in which we have hired senior management at a different level. Similarly, senior management has been hired in Europe and we are hiring other people. So, we will have an organic look at the US and Europe. But in Latin America geography, we try to acquire some companies in Brazil and the neighbouring countries. Apart from that, our voice business, which is a unified communication platform and has grown well in the market, will have a focus on acquiring some companies because, after that acquisition, Route Mobile will move from CPaaS to UCaaS, which means a unified communication platform is a service. So, we have to see that our portfolio grows and we can offer multiple services to our customers plus create cross-selling and up-selling opportunities within the acquisition. For instance, in the case of Masivian, its email business was quite big and we have moved their entire email business on our platform. Recently, we also acquired an email company Sendclean. So, for every tuck-in acquisition that we do, we are aware of its value and why it is being done. Thus, maybe we have acquired a small email company in India but the email business has a potential of almost $17 billion. So, we know that if we acquire any company in any market then our current portfolio directly goes into it and we can sell all these services to their customers. So that is a clear strategy we have for acquisition in an inorganic way.

Q: What is the line-up? You have said that voice is an area where you will be interested what beyond this?

A: Voice is one business but if we see apart from market growth wise but geographical growth-wise I think the Portuguese countries will be our target whether it is Brazil or the neighbouring countries. Or something in Africa for sure because Africa is also a very big market and potential is quite high and we are already a large player in certain markets of Africa like Nigeria, Ghana and Kenya and are already known as a large player and have huge banking customers in the country. So, we will focus on two countries namely Brazil or neighbouring countries of Brazil or Africa for acquisition apart from voice.

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Q: What would be the ticket size of these acquisitions and what would be the timeline for the same?

A: We judge a particular asset and ticket size is not important for us and maybe it is $10 million or $100 million but it depends on fact that how its product portfolio matches with our product portfolio and what kind of up-sell and cross-sell opportunities we can create with that. So, ticket size can go up to $100 million and can also be $20 million.

Q: The company has raised Rs 867 crore via QIP last month. Help us understand how would this money be used in 2022?

A: It was very clear that we are raising the QIP for acquisition and we have a vision that the fund that is available with us - our cash on book stands around Rs 1,100 crore at present - will be used in the acquisition and organic growth purposes in terms of spreading ourselves in different countries. Currently, we are operating in 15 countries and Australia is such a market where we have to build our team, we have to build a team in Malaysia and we have to hire more people in Singapore. So, we are looking out to expand organically at least in 8-10 countries. So, we will approach organically in 15-25 countries where we will place our sales team. Apart from this, we will definitely acquire a few companies inorganically.

Q: What is your current client base and which of the client verticals (e-commerce, OTTs, telecom operators) are you focusing more on for maximum growth in 2022? 

A: Right now our 365 firewall company is deploying its firework work in four operators of Latin America and they are large operators and it will be announced soon. Similarly, we are deploying CPaaS in an Asian operator and the announcement will be made next week. So, our CPaaS platform is being deployed in the Asia-based operator. So, our operator-based business is showing healthy growth and our pipeline is quite strong. In terms of domestic customers in India and International customers of Route Mobile like recently, we have onboarded a large marketing cloud customer which has a potential of $7-10 million in yearly revenue. The customer will be live in the coming quarter. Similarly, if you have a look at our focus in CRM maybe it is the sales force, or Zoho or any other CRM applications/options that are available in the market I think our APIs have already integrated. So, I think, CRM will play a larger role in Route Mobile growth and we will focus on making our APIs available in all the CRMs that are available in the market. I think you will get a chance to see its results in the next two-three quarters.