Table of Contents
Tanla started FY26 with quiet confidence, delivering its second consecutive quarter of revenue growth (up 1.6% sequentially). OTT channels are clearly gaining traction, now accounting for nearly one-third of overall revenue.
Meanwhile, platform investments—highlighted by an imminent AI-native platform launch in Southeast Asia and expanded RCS deployments in Indonesia—are moving forward steadily. Still, with margins under pressure and cash flow turning negative this quarter, Tanla needs platform bets to translate quickly into meaningful returns. Execution in the next few months will be crucial.
The Good
Revenue climbed again—up 1.6% QoQ to ₹10,407M (~$121.5M). OTT-led channels are gaining share fast, now representing a solid 32.3% of revenue, up from 19.9% a year ago. SMS volumes continue to rise, even if pricing pressures mute that impact. The AI-native platform deal is signed with a Southeast Asian telco and ready to launch, and RCS MaaP deployments with Telkomsel and Indosat are poised to go live this quarter.
The Interesting
Enterprise growth is increasingly driven by OTT rather than traditional SMS, and Tanla is fully embracing this pivot. WhatsApp, RCS, and Truecaller are now central to Tanla’s omnichannel narrative, with user experience becoming the deciding factor in shifting certain use cases away from SMS.
Counterintuitively, WhatsApp’s recent pricing shift from unlimited messaging to per-message billing has actually raised enterprise costs, encouraging migration to richer channels.
On another front, international long-distance (ILD) messaging—which previously dragged on revenue growth due to rising prices and OTT migration—has stabilized. While ILD still accounts for a high single-digit percentage of revenue, its lower single-digit gross margin means it’s now a less material part of Tanla’s growth story.
Meanwhile, overall margin pressure persists, with EBITDA margins dropping to 15.8%. Free cash flow turned negative (–₹309M/~–$3.6M), primarily due to delayed collections pushing days sales outstanding (DSO) to 91 days. A ₹175 crore (~$20.4M) tender-offer buyback went ahead anyway, raising questions about the strategy’s timing, tax implications, and optics in light of recent financial performance.
The Unknown
The AI-native platform—touted as deeply embedded, subscription-based, and strategically critical—still lacks clarity on monetization. Tanla expects significant revenues to hit in Q2, but investors are justified in their caution.
Likewise, the RCS strategy in Indonesia hinges on Google closing its deal with Axiata. Until that happens, Tanla’s ambitious claim of full-market coverage remains hypothetical.
Finally
Tanla is at a pivotal moment. Platform promises are compelling, and the channel mix is improving rapidly, but the cash narrative is less reassuring. With margins strained and cash flow in reverse, investors need more than promises—they need proof that these big bets deliver real returns.
The upcoming quarter will be crucial in proving whether Tanla’s platform investments translate into tangible returns—and whether operational execution ultimately matches strategic ambition.