ROUTE - Route Mobile

📊 NSE: ROUTE 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/14/2025 12:28

💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations grew 6.5% sequentially to INR 11,194 million in Q2 FY26. New generation products (IP-based messaging and Email) outperformed the core, growing 13% QoQ. Growth was driven by routing synergies and strong performance in the Masivian segment, though partially offset by structural SMS market impacts.

Geographic Revenue Split

Route Mobile operates globally across LATAM, Middle East, India, and Africa. India remains the highest contributor in terms of volume growth and International Long Distance (ILD) business. Outside India, the company serves large global customers, though specific percentage splits per region are not disclosed in the provided documents.

Profitability Margins

Gross profit margin expanded to 22.1% in Q2 FY26, a 70 basis point improvement from 21.4% in Q1 FY26 and a 100 basis point improvement YoY from 21.1%. This was driven by a strategic shift toward high-margin accounts and optimizing the customer mix.

EBITDA Margin

Adjusted EBITDA margin stood at 11.9% in Q2 FY26, up from 11% in Q1 FY26. EBITDA grew 16% sequentially from INR 115 crore to INR 133 crore, reflecting disciplined execution and a focus on profitable growth over pure volume.

Capital Expenditure

The company operates a CAPEX-light business model. While specific future INR figures are not provided, management indicated they are evaluating capital allocation for the BPO business which is showing growth. Net cash position remains strong on the balance sheet.

⚙️ Operational Drivers

Raw Materials

The primary operational cost is 'Routing and Operator Costs' (interconnect charges paid to telecom carriers), which represent the bulk of the cost of services. Other costs include salary inflation and trade receivable write-offs.

Import Sources

Sourced globally from telecom operators in regions including India, LATAM, Middle East, and Africa to facilitate global message termination.

Key Suppliers

Telecom network operators globally; specific company names (other than the parent/partner Proximus/Telesign) are not listed.

Capacity Expansion

As a CPaaS provider, capacity is measured by transaction throughput. The company handled increased volumes in Q2 FY26, particularly in domestic markets, though specific unit capacity limits are not disclosed.

Raw Material Costs

Cost of services is reflected in the gross margin of 22.1%. The company is driving better costs through routing optimization and synergies with the Proximus group to expand margins.

Manufacturing Efficiency

Not applicable as a service provider; efficiency is measured by EBITDA margin expansion (up to 11.9%) and constraining operating cost growth to 11.5% YoY.

Logistics & Distribution

Not applicable.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth will be achieved through a 'profitable growth over volume' strategy, focusing on high-margin new-gen products (IP messaging, Email) which are growing at 13% QoQ. The company is leveraging routing synergies from the Proximus acquisition and expanding into new verticals and sectors where they previously had no presence.

Products & Services

CPaaS (Communications Platform as a Service), IP-based messaging, Email solutions, Network APIs, SMS filtering, and BPO services.

Brand Portfolio

Route Mobile, Masivian.

New Products/Services

New generation product portfolio including IP-based messaging and Email solutions, which currently grow at double the rate (13% QoQ) of total revenue (6.5% QoQ).

Market Expansion

Expansion into LATAM via Masivian and deepening strategic partnerships in the Middle East and Africa. The company is also targeting new industry verticals.

Strategic Alliances

Strategic partnership with Proximus and Telesign. Telesign alone contributes approximately 15% of total revenue through related party transactions.

🌍 External Factors

Industry Trends

The CPaaS industry is shifting from traditional SMS to IP-based messaging and Network APIs. Route Mobile is positioning itself by growing its new-gen product portfolio at 13% QoQ to stay ahead of structural SMS declines.

Competitive Landscape

Competes in the global CPaaS market against other aggregators and direct-to-carrier API providers.

Competitive Moat

Moat is built on a global 'super-network' of operator connections and routing synergies. The partnership with Proximus provides a scale advantage and a captive revenue stream (15% from Telesign) that is non-dilutive to margins (10-11% EBIT margin).

Macro Economic Sensitivity

Sensitive to global enterprise communication spending and digital transformation trends.

Consumer Behavior

Enterprises are rapidly adopting IP-based messaging and Email for customer engagement, driving the 13% QoQ growth in Route's new-gen products.

Geopolitical Risks

Operations across LATAM, Middle East, and Africa expose the company to regional regulatory changes and trade dynamics.

⚖️ Regulatory & Governance

Industry Regulations

Subject to telecom regulations in every operating country, including data privacy laws and anti-spam regulations for A2P messaging.

Legal Contingencies

Reported an exceptional item of INR 28.08 crore in FY25 related to the write-off of advances to vendors. Management believes core profitability remains unaffected by these one-time items.

⚠️ Risk Analysis

Key Uncertainties

Structural changes in the SMS market could impact 80-85% of traditional revenue. The risk of minimum revenue guarantee (MRG) commitments to operators can lead to further write-offs if volumes do not materialize.