Route Mobile's Q2 and H1 FY26: A Strategic Shift Towards Profitable Growth

Route Mobile Limited, a prominent global CPaaS provider, has unveiled its unaudited financial results for the second quarter and first half of fiscal year 2026, signaling a strategic pivot towards disciplined, profitable growth. The company's management highlighted a robust recovery in momentum, driven by new product traction and optimized business strategies. For H1 FY26, Route Mobile reported a revenue of ₹8,440 crore. The second quarter saw a sequential revenue increase of 6.5%, reaching ₹4,520 crore, alongside a notable expansion in gross profit margins.

The company's performance reflects a conscious decision to prioritize quality-led growth. The gross profit margin for Q2 FY26 expanded to 22.1%, a 70 basis point increase from the previous quarter, underscoring the effectiveness of their strategy to retain higher-margin traffic and refine routing strategies. This focus has translated into strong EBITDA growth, which increased by 16% sequentially from ₹115 crore in Q1 to ₹133 crore in Q2. While reported profit after tax (PAT) was impacted by one-time exceptional items, primarily vendor write-offs, management emphasized that these do not reflect the underlying operational strength of the business.

Diversified Revenue Streams and Strategic Initiatives

Route Mobile's revenue streams are increasingly diversified across various industries, with FinServ contributing 15%, Digital Native 11%, and Tier 1 CPaaS partners 10% of H1 FY26 revenue. The company's new product portfolio, encompassing WhatsApp, RCS, and Email solutions, demonstrated significant traction, growing by 13% quarter-on-quarter. This growth outpaced the consolidated revenue growth, highlighting the successful adoption of their omnichannel and integrated solutions platform.

Key strategic initiatives during the quarter include a leveraged partnership with Tech Mahindra to onboard a major global logistics provider for A2P SMS services. Route Mobile's Email Communication Platform empowered a leading South Asian e-commerce giant to process over 170 million email messages within 24 hours. Furthermore, the company enabled a global Hyperscaler to deploy premium RCS messaging services across India, enhancing customer engagement. A notable new product launch is the seamless bus ticket booking on WhatsApp with Shohoz in Bangladesh, simplifying travel through in-chat functionalities.

Financial Summary (H1 FY26)

Outlook and Management Focus

Management expressed confidence in sustaining the growth momentum into the second half of FY26, anticipating a better performance. They project the effective tax rate to normalize at historical levels and expect the strong CFO/EBITDA conversion to continue. The company is actively exploring tuck-in investments in AI-based companies to augment its product portfolio and plans to expand its BPO capabilities by adding 500-1,000 seats due to strong market demand.

Route Mobile's strategic direction involves a clear focus on both the telco and enterprise segments, with dedicated teams driving sales in each area. The company is also deepening its Network API capabilities, particularly through the Konera initiative with Proximus Global, aiming to create new revenue streams by enabling enterprises to leverage telecom operator services. While not providing specific numerical guidance, management is optimistic about achieving new heights, driven by a robust pipeline and clear strategic objectives.

Concluding Thoughts

Route Mobile's Q2 and H1 FY26 results underscore a successful strategic recalibration towards profitable growth and diversified revenue streams. The company's emphasis on high-margin traffic, new product adoption, and strategic partnerships positions it well for sustained performance. Despite the impact of one-time exceptional items, the underlying operational strength and disciplined capital allocation signal a confident path forward for the global CPaaS leader.