Affle 3i Limited: Navigating Market Currents with AI-Powered Growth in Q2 & H1 FY2026

Affle 3i Limited has once again demonstrated robust financial performance, reporting its highest-ever quarterly revenue, EBITDA, PAT, and conversions for Q2 and H1 FY2026. The company's strategic focus on AI-led solutions and a diversified market approach has enabled it to deliver consistent growth despite prevailing market challenges. This period marks a significant milestone, with the company achieving its sixth consecutive quarter of sequential margin expansion and tenth consecutive quarter of sequential topline and EBITDA growth.

For Q2 FY2026, Affle 3i Limited recorded a consolidated revenue of INR 646.7 crore, reflecting a 19.1% year-on-year growth. The EBITDA stood at INR 146.1 crore, growing 28.9% year-on-year, with an EBITDA margin of 22.6%. Profit After Tax (PAT) reached INR 110.5 crore, a 20.1% year-on-year increase. The half-year performance for H1 FY2026 was equally strong, with revenue at INR 1267.5 crore, EBITDA at INR 285.8 crore, and PAT at INR 216.0 crore, showcasing a balanced performance across both quarters.

Strategic Innovations Driving Performance

The company's Cost Per Converted User (CPCU) business model remains a core strength, driving 109 million conversions at an average CPCU rate of INR 58.0, generating INR 631.9 crore in revenue. Affle 3i Limited's commitment to innovation is evident in the recent launch and integration of 'Niko', an AI agentic capability designed to automate and drive ROI-driven growth advertising for marketers in the iOS ecosystem. Complementing this is 'OpticksAI', a GenAI-powered creative engine, both of which enhance AI automation and efficiency within the mobile marketing ecosystem. These innovations are crucial in delivering greater ROI impact for advertisers in a shorter timeframe, allowing the company to manage a larger volume of campaigns and clients.

Affle 3i Limited's intellectual property portfolio has also expanded, with two new patents granted in the US, bringing the total to 16 granted patents. These patents, including one for ad fraud detection and another for user visibility count, reinforce the company's competitive moat and ability to deliver quality user conversions globally. The management highlighted that AI automation now penetrates over 80% of the company's activities, from campaigns to internal operations, significantly boosting productivity.

Market Dynamics and Geographical Performance

The company's growth is broad-based across industry verticals and geographies. India and Global Emerging Markets collectively contributed 73.9% to the revenue, growing by 20.0% year-on-year. This growth was supported by strong digital ad spends and an early festive season in India. Developed Markets also showed resilient performance, growing 16.8% year-on-year and contributing 26.1% to the revenue. This diversified revenue base acts as a natural hedge against market-specific turbulence.

Despite the positive performance, the company acknowledged the impact of the Real Money Gaming (RMG) ban in India, which was partially offset by the early festive demand. Some budget rollovers from Q2 to Q3 in developed markets were also noted due to advertiser caution amidst tariff uncertainties. The management, however, expressed confidence in a strong Q3, with a robust pipeline of festive budgets already in hand. The company also made additional provisions for RMG collections, amounting to approximately 0.5% of revenue from operations, reflecting a prudent approach to potential risks.

Outlook and Strategic Vision

Affle 3i Limited's management reiterated its commitment to aggressive growth and margin expansion. The company is actively evaluating a pipeline of around 10 potential M&A targets, seeking strategic fits that align with its DNA and offer the right valuation. This disciplined approach to inorganic growth, combined with continuous organic innovation, is central to its long-term strategy of achieving 10x decadal growth.

The company's ability to command higher CPCU pricing consistently underscores its premium platform positioning and its value creation for advertisers. By focusing on high lifetime value users and delivering measurable impact, Affle 3i Limited is not just growing its top line but also expanding its margins, reinforcing its competitive advantage in the global ad tech ecosystem. The company's disciplined financial management, healthy balance sheet, and robust operating cash flows provide a strong foundation for sustained growth and value creation for its shareholders.