Why Tanla Platforms Share Price is Falling

Cloud communication provider Tanla Platforms recently added a golden feather to its hat.

In February 2023, the SaaS company launched an anti-phishing technology platform, Wisely ATP in partnership with Vodafone Idea (VI).

It was unveiled by telecom regulatory authority of India (TRAI) chairman Dr PD Vaghela at the Mobile World Congress in Barcelona, Spain.

The AI-based solution can be deployed into the core network of a telecom operator. With the use of artificial intelligence (AI), the solution detects whether the message's call to action (URL or phone number) is malicious or not. The solution, using AI and deep learning, analyses the sender's reputation and acts. For instance, if the sender is a recorded spammer or a fraudster, it will block the message.

This is a big move, which should help Tanla Platforms to bolster its presence in the cybersecurity space.

Despite all this, Tanla Platforms share price continues to fall on the bourses. Shares of the company are down around 60% in the past one year! In 2023 so far, Tanla shares are down around 22%.

Let's find out why.

#1 Weak financial performance

For the quarter ending December 2022, Tanla Platforms' net profit came at Rs 1,165 million (m), which is 26% lower on a YoY basis. Revenues came in flat at Rs 8,757 m.

Tanla Platforms Quarterly Performance

Quarter ending	Dec-21	Mar-22	Jun-22	Sep-22	Dec-22
Total revenues (Rs in m)	8,890	8,576	8,046	8,621	8,757
Gross profit (Rs in m)	2,028	1,841	1,307	1,395	1,513
Gross profit margin (%)	23	22	16	16	17
Net profit (Rs in m)	1,580	1,406	1,004	1,104	1,165
Net profit margin (%)	18	17	13	13	13
EPS (Rs)	12	11	8	8	9

Data Source: Ace Equity

As you can see, margins have declined gradually over the past one year while EPS is also falling. In Q3, the company reported a negative cash flow of Rs 867 million! For the last two-quarters, the company's cash flows have been negative. This can be attributed to the strategic partnerships which it made recently.

Declining cashflows

#2 Industry challenges

According to the company's website, the communication platform as a service (CPaaS) industry suffered from many challenges in the last one year. CPaaS companies still continue to suffer from challenges like phishing attacks, fraud, complex connectivity, operational inefficiencies and more.

Grey route traffic is one of the biggest headaches for companies operating in this space. Over the years, grey route traffic has increased leading to billions of dollars in revenue leakage every year in the CPaaS economy, according to the company.

CPaaS offerings use multiple aggregators to get the necessary coverage for customers. This means messages may take longer to get from point one to point two when using aggregators. These connectivity issues can muddy the waters when it comes to quality and coverage, thereby squandering message deliverability time.

These industrial challenges have hurt the overall business of Tanla Platforms lately.

What next?

The company's total revenues in monetary terms are declining but its consumer base is expanding.

Number of customers on the rise...

Along with this, the latest AI development by the company - Wisely ATP, is scaling up well. According to the management, it contributed to around 35% of the company's gross profit in the December 2022 quarter.

How Tanla Platforms share price has performed recently

On a YTD basis, Tanla Platforms is down 22.1%. In the past one year, Tanla has fallen around 60%.

Tanla Platforms has a 52-week high of Rs 1,638.2 touched on 08 April 2022 and a 52-week low of Rs 559 touched on 23 March 2023.

About Tanla Platforms

Tanla Platforms, previously known as Tanla Solutions, is a cloud communications company based in Hyderabad, India. The company provides value-added services in the cloud communications space.

Tanla Platforms was also one of the early adopters of blockchain and cloud technology in India.

To know more about Tanla, check out Tanla Platforms' financial factsheet and Tanla Platforms news and analysis.

You can also compare Tanla with its peers:

Tanla Platforms vs Route Mobile

Tanla Platforms vs L&T Infotech

Also check out the detailed comparison article on Tanla Platforms vs Route Mobile where we arrive at a conclusion about which stock is better.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...