Over the past two-and-a-half years, the company’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) have swung from a loss of 21% to a positive margin of 8.5%, which he attributed to operating leverage kicking in from sustained investments in research and development and global sales over the past three years.
At the core of this profitability push, according to Subramanian, is Amagi’s Software-as-a-Service business model. He highlighted the company’s net revenue retention rate of 127% as a key indicator of underlying strength. “This is equivalent to a same-store sales metric. That means our existing customers…for every ₹100 that they spent last year, they’re spending ₹127 with us. So, it’s a classic land and expand business,” he said. This expansion within the existing customer base, coupled with declining sales, research and development (R&D) and cloud costs as a share of revenue, underpins his confidence in margin expansion.
Looking ahead, Subramanian said Amagi has the potential to significantly scale profitability as the business matures. He suggested that a stable-state EBITDA margin of around 25% over the next two to three years is not an “unreasonable” directional aspiration, stating that comparable global vertical software companies operate at similar margin levels.
Also Read | IPO Corner: Amagi Media Labs explains SaaS model, revenue mix, and path to profitabilityAddressing concerns that growth could taper as Amagi’s customer base expands, Subramanian argued that the company is still in the early stages of a large structural shift in the media industry. “Less than 10% of the market has actually moved to the cloud worldwide…Almost 90% of the market has to transform over the coming decade,” he said. With more than 450 customers today against a potential market of over 10,000, he sees substantial headroom for both acquiring new clients and expanding offerings within the existing base.
On capital allocation, Subramanian confirmed that a portion of the IPO proceeds will be used for inorganic growth. He described Amagi as a “glass-to-glass” media company offering end-to-end capabilities, with its main competition coming from legacy hardware vendors. The acquisition strategy, he said, will focus on three areas: adjacent capabilities, technology tuck-ins, and companies with existing customer contracts to accelerate market penetration.
Subramanian added that the heavy lifting on Amagi’s core platform, ‘Amagi Now’, has already been completed. With major capital investments behind it, the company is now entering a phase of “harvesting” those investments, even as it looks to deepen its presence in a market that is still largely at the start of its cloud-driven transformation.
For the entire interview, watch the accompanying video
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