Affle 3i Limited delivered robust financial performance in the first quarter of FY27, reporting consolidated revenue from operations of ₹7.47 billion, a 20.4% increase year-on-year. The company recorded its highest-ever quarterly revenue, profit after tax (PAT), and consumer conversions during the period.

Profit after tax grew by 21.7% year-on-year to ₹1.28 billion, while EBITDA rose by 20% to ₹1.68 billion. Management attributed the growth to disciplined execution across industry verticals and geographies, despite regulatory and macroeconomic headwinds affecting specific customer segments like ready-made garments (RMG).

Financial Performance

The company maintained stable profitability metrics amidst growth. EBITDA margins remained steady at 22.4%, an improvement of 10 basis points quarter-on-quarter from 22.3%. PAT margins improved by 60 basis points sequentially to 16.6%.

Revenue from operations grew by 3.1% sequentially over the robust fourth quarter of FY26. On a standalone basis, India revenue increased by 20.4% year-on-year and 9.2% quarter-on-quarter.

Geographic and Segment Growth

India and global Emerging Markets continued to anchor business growth, expanding by 20.2% year-on-year and contributing 72.2% of total revenues. Developed Markets also showed strong momentum, growing by 20.7% year-on-year and accounting for 27.8% of revenues.

Management noted that over 95% of revenues witnessed over 25% growth year-on-year when adjusted for headwinds in specific segments. The company is progressively increasing its participation in Developed Markets, which hold a disproportionately high share of global advertising budgets.

What the Numbers Show

The divergence between top-line growth and profit expansion highlights improving operational leverage. While revenue grew by 20.4%, Profit Before Tax (PBT) expanded by 22.1% year-on-year. This suggests that cost controls and scalable platform operations are allowing profits to outpace revenue growth, reinforcing the efficiency of the CPCU (Consumer Platform Stack) business model.

Operational Updates and Outlook

Inventory and data costs stood at 63.2% of revenue, broadly in line with the previous quarter. Employee costs rose by 3.4% sequentially due to annual appraisals and bonuses, but increased by only 7.8% year-on-year despite currency impacts.

Operating cash flows (OCF) to PAT ratio was lower in the current quarter due to upfront collections in March FY26, which boosted OCF in the prior year-end. Management expects this ratio to normalize in Q2 and Q3, targeting an 80-85% OCF to PAT ratio by Q3.

Strategically, Affle 3i is leveraging the acquisition of AdColony assets to activate over 100,000 mobile apps and reach 500 million connected devices in Developed Markets this year. The company is also pursuing a larger inorganic acquisition, currently in the due diligence phase, with a target closure by early 2027 to accelerate expansion in mature markets.

Affle 3I has outlined an ambitious growth roadmap, with management stating that acquisition-led mergers and acquisitions (M&A) will serve as the primary driver of 10x growth, while simultaneously maintaining revenue growth and margin expansion. The update, shared during the company's latest concall, builds on its earlier stated target of achieving at least 20% growth through a combination of organic and inorganic channels.

Growth Strategy Highlights

The management's commentary underscores a multi-layered approach to scaling the business, with M&A activity positioned as the central engine for transformational growth. The company's dual-channel strategy balances organic expansion across existing business lines with strategic acquisitions designed to unlock step-change growth opportunities.

The key parameters from the concall update are summarised below:

Strategic Priorities

Management indicated that acquisition-led M&A will be the key lever for driving 10x growth, reflecting an aggressive inorganic strategy aimed at significantly scaling the company's footprint. Alongside this, the company remains committed to sustaining revenue growth and margin expansion, ensuring that profitability metrics are not compromised in the pursuit of scale. The at-least-20% growth target, encompassing both organic and acquired avenues, continues to serve as the near-term benchmark for business performance.