Good evening, ladies and gentlemen. I am Avijit Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Q4 and FY 2024 earnings webinar. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Joining us today from the management team, we have Mr. Dinesh Agarwal, Chief Executive Officer, Mr. Brijesh Agrawal, Whole-time Director, and Mr. Prateek Chandra, Chief Financial Officer. Before we begin, I would like to remind you that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to slide number 3 of the earnings presentation for the detailed disclaimer. Now, I would like to hand over the call to Mr.
Dinesh Agarwal for his opening remarks. Thank you, and over to you, sir.
Good evening, everyone, and welcome to IndiaMART's FY 24 earnings webinar. We have circulated our earnings presentation, which is available on our website as well as on the stock exchange website. I'm sure you would have gone through the presentation, and I will be more than happy to take any questions afterwards. I'm pleased to report that IndiaMART has delivered a consolidated collection from customers of INR 484 crore in Q4 , and INR 1,474 crore in the full year, representing a year-on-year growth of 16% and 21% respectively. Deferred revenue grew by 24% to INR 1,440 crore on consolidated basis. Consolidated revenue from operations has grown by 17% to INR 315 crore for the Q4 , and 21% to INR 1,197 crore for the full year.
Unique business inquiries have also shown some good growth this year, from 24 million, representing a Y-o-Y growth of about 14%. Total paying suppliers have grown to 214,000. The net paying supplier addition was slightly improved from about 1,800 suppliers last quarter to 2,700 suppliers in this quarter. As we have been communicating since the last two quarters, we continue to see more than anticipated churn on first-year Silver customers. While our Platinum and Gold customers, which constitute approximately 50% of our customer base and 75% of revenue, continue to have very, very low churn and continue to grow healthily in terms of ARPU as well as numbers both. As soon as we see improvement in the churn on the Silver customers, we would come back with a better guidance on net addition per quarter.
As we continue to strengthen our organization and leadership, we are set to welcome Mr. Jitin Diwan, who would be joining us as a CFO designate from May fifteenth, and would take over the role of CFO from June fifteenth. Mr. Prateek Chandra, who has been with us, as the Chief Financial Officer for almost nine years now, would move on to become the Chief Strategy Officer and focus more on inorganic growth, including exploration of mutual synergies between IndiaMART and its investee companies. Now, I will hand over the call to Brijesh to update about Busy Infotech. Thank you, and over to you, Brijesh.
Hi, good evening, everyone. Busy has done a net billing of INR 18.1 crore in Q4, and INR 69.7 crore in the full year. This represents a year-on-year growth of 29% and 45% respectively. The revenue from operations grew by 24% year-on-year to INR 14.4 crore in Q4, and it grew by 23% to INR 53.3 crore for the entire year. The deferred revenue has grown by 59% to INR 43.5 crore. Busy has also generated positive cash flows from operations of INR 6.1 crore during the quarter, and INR 24 crore for the full year. During the quarter, we also sold 9,500 new licenses, taking the total count of licenses sold to 364,000.
The new licenses sold during the entire year are approximately 33,000. The overall performance has been in line with our expectations, and we are focused on maintaining our growth rate in the coming year as well. With this, I'll hand over the call to Prateek so that he can discuss about the financial performance.
Good evening, everyone. I will take you through the financial performance for the quarter and the fiscal year ending March 2024. Consolidated collection from customers were INR 484 crores in the Q4 , and INR 1,474 crores on a full year basis, representing a year-on-year growth of 16% and 21% respectively. IndiaMART standalone collection from customers for the quarter were at INR 465 crores, and for the full year were at INR 1,399 crores, registering year-on-year growth of 16% and 20% respectively. The standalone revenue from operations stood at-
...INR 299 crore for the quarter and INR 1,139 crore for the full year, registering year-on-year growth of 17% and 21% respectively. Our growth in revenue was primarily driven by a 6% increase in paying subscription suppliers and a 10% improvement in ARPU due to higher monetization. Other revenue stood at INR 1,440 crore, an increase of 24% on a YOY basis. EBITDA of IndiaMART standalone business stood at INR 90 crore for Q4 , and INR 334 crore for the full year, representing a margin of 30% and 29% respectively. Consolidated EBITDA was at INR 84 crore for Q4 , and INR 331 crore for the full year, representing a margin of 28% for both the periods.
Consolidated net profit for the quarter was INR 100 crore, which included one-time net fair value gain of INR 29 crore on account of revaluations of a few of our investments, primarily ProcMart, due to their recently concluded fundraise activity. Consolidated cash generated from operations was INR 260 crore for Q4 and INR 559 crore for the full year. Consolidated cash and treasury balance stood at INR 2,340 crore as of March 31st, 2024. Board of Directors have also recommended a final dividend of INR 20 per equity share for fiscal year 2024, subject to approval of the shareholders at the AGM. Thank you very much. We are now ready to take any questions.
We will now begin the Q&A session. If you wish to ask a question to the panelists, kindly raise your hand and allow camera and microphone access. Alternatively, you may type your question in the chat menu and we will revert on it. Please restrict to two questions so that we may be able to address questions from all the participants. We'll wait for a couple of moments while the question queue assembles.
First question is from the line of Vivekanand Subbaraman from Ambit Capital. Hi, Vivekanand Subbaraman, please go ahead with your question.
Yeah, hi. Thank you for the opportunity. This is Vivekanand Subbaraman from Ambit. So my two questions, the first one is on collections. The last two quarters, we have been seeing that the standalone collections have been growing at 16% year-on-year, materially below the trajectory, the 20%+ trajectory that, Dinesh, you keep highlighting. I understand some of this could be due to churn, which may be temporary, but your aspiration was to grow collections at 20%-30% CAGR, and now collections is growing at a materially slower pace. So just wanted to get your thoughts on the extent to which the market is penetrated, and are there any other challenges that you see that are perhaps symptomatic of this issue, which is obviously a very big one for investors?
The second question is on the margin trajectory. We are seeing that the margins are improving, costs seem, costs seem to be under control, not growing at the same pace as before. Could you help us think through the margins for this, for the standalone business, over the next two, three years and the key levers? Thank you.
Thank you, Vivekanand. Yes, you rightly highlighted the last quarter, our collections grew by 17% quarter-over-quarter, and this particular quarter, our collections from customers grew at 16%. So, as you rightly highlighted, that the number of customers, net customer addition has not been growing for the last four quarters or so, and that is putting a pressure on the collection only for coming from the ARPU. So if you really see, out of the 16% or 17% collection growth that we are getting, only 6% is coming from the new customers, while most of the other 10% is coming from ARPU growth per customer. We were hoping that, you know, we will get another 2-3% increase in the customer base per quarter, which is happening.
Last quarter, we added the lowest ever customers at 1,800 customers, and this quarter, we have added 2,700 customers. I'm hopeful that, you know, slowly and slowly we will improve on net customer addition. And my aspiration, as you rightly said, continues to be 20%-25% in the collection growth. Thirty percent at this juncture, on a standalone basis sounds a little difficult, but yes, on a consolidated basis, I continue to have an aspiration for 33% of the collection growth or revenue growth. Is there anything else? Nothing materially that I can say. One thing that I can probably point out is that we have continuously found ways on the Platinum customer to improve the ARPUs.
And some of those ARPUs, as we have slowly and slowly as we are implementing the category-based, pricing, some of those, customers are taking little more time, than anticipated, to convert to higher value packages. So that could be, just one, but I am not yet, able to definitely say that other than the customer churn, anything else is, doing that. On the margin side, as you can see, two, three things have happened. One, we got our last quarter annual increment affected from the first of December instead of first of January. So some of it is, helped by that. Secondly, if you see on the sales and marketing side, we have continued to improve, quarter- and- quarter in terms of sales and marketing cost per,
So while it was, it used to be, you know, 20% in the FY 2023, it has come down to 18%, and in this quarter it is 17%. How it has been happening? Because as I promised you, we are going to probably cut down a little bit from Tier 4 and non-profitable places. So that optimization and focusing on more core markets has been able to do this. Some of it could be productivity gain. Also, the overall cost base, which had grown very, very rapidly from mid of FY 2022 to mid of FY 2023, because we were hiring heavily on the product and technology front also. So if you see, there is a consistent drop from 19%-17% as revenue from operation, so that is also helping.
Maybe a very little coming from the general and administration. So general administration is not coming much because most of the juice has already been taken out. But as the revenue will continue to grow, maybe a few bits every year we will get from there. So from that perspective, I can assure you that we are now feeling a lot more confident of 30% plus margin, and maybe we will improve by 1% every year going forward from here. Thank you.
Thank, thank you, Dinesh, for the very elaborate answers. Just pressing a bit further on the collections point, how confident are you to resolve this issue with respect to churn? Because this is the Q3 that churn seems to be cited as a key issue, and you don't yet seem to have the answers to resolve the elevated levels of churn. And, if I may also add, could you help us understand the churn levels in percentage terms across the key customer buckets? Thank you.
So as I said, in the Platinum customer, our churn are like 0.5% per, per month, or 6%-7%, 8% per annum. On, Gold, we continue to have 12%-14% or, one percent per month, or 12%-14% per annum. On the Silver side, on a Silver Monthly, we are like 7%-8% per month, and on the, Silver Annual, we are running at, about 14% per annum. So these are the, churn metrics that I, repeated last time also.
Very little improvement, even if we get 1% per month improvement in the daily, monthly or the Silver Monthly, what we call internally, and Silver Annual, I think we would be suddenly looking at double the net customer addition from here on. So, I hope that over the next quarter or so, I should be able to give you some positive results. But that's the only thing I can say for now.
Sure. Thank you, and all the best.
Thanks, Vivekanand. Next question is from the line of Nikhil Choudhary from Nuvama. Hi, Nikhil. Please go ahead with your question.
Yeah, thanks for the opportunity. Dinesh, so, my first question is on the collection side again. Just want to understand, last time when we discussed, the commentary by you was that collection, we will go back to 20% plus in coming quarters and given the collection slow down further. So while supplier addition part was part of the expectation, I believe, so was there some disappointment even on ARPU side, and that's what led to collection where they are? Also, while ambition is to get back collection to 25% or 30% growth, any guidelines for FY 2025 for coming quarters, given supplier addition continue to remain lower?
... I would continue to hope for a 20%+ collection. You know, Prateek is telling me to say Holi was in the last week in March. I don't want to take that face behind the shield. But, you know, all said and done, I think 20% collection is doable. We should have done that. Purely and purely could be one day here and there missed, but 20% collection is doable, and I'm confident, and I continue to be confident that we will deliver a 20% collection growth coming quarter and coming many quarters.
Sure, sir. There is, for the improvement, in other few KPIs, sir, especially registered buyer increased further. Last time you mentioned that, you know, it could have increased due to some, scrapping or something, or web, web crawling or something. But, is this improvement is, now a sustainable trend or organic trend? And do you think, this will lead to improvement even in, you know, purchasing or unique business inquiry increasing? Because, while the unique business inquiry increased 14% YoY from a lower base, it's at a similar level what we were seeing in Q2 . So from that level, we haven't seen a material improvement in business inquiry. So, is registered buyer can be seen as early indicator there?
I think you should always focus on unique business inquiries. And unique business inquiry number has grown handsomely by 14% this quarter also, and 14% last quarter also. So effectively, if you see FY 2022 and FY 2021 were both COVID years, and during the COVID, we have gone through a lot of, you know, shortage and a lot of medical devices and medical related items, food and food related items. Now, that world has gone back to physical world, you know, we hardly saw a very little drop in unique business inquiry in FY 2023 and FY 2024. We are almost back at FY 2021 and 2022 numbers. So effectively, now we are consistently doing 23-24 million per quarter.
So I'm confident that next year we will comfortably be looking at 100 million+ unique business inquiries. So I don't get where are you saying that 14% was last quarter also and this quarter also? In terms of the registered buyers, as I said, a lot of scraping nowadays is very common for very popular website. And people also come and try and see if this particular number or this particular email or has an account on IndiaMART or account on Facebook or account on Amazon or account on Zomato. So there are a lot of these advertising companies are also trying to collect this kind of data from different mechanism.
So that is why I don't rely too much on the registered buyer numbers or the traffic numbers, more so on the unique business inquiries numbers.
Sure, sir. Understood. Sir, last one on margin. Margins were very strong, sir, similar to last quarter. Even though you highlighted that wage hike started from December this time, still, on Q-o-Q basis, the margins were more or less flattish, right? Despite two months of wage hike in Q4 . And clearly, sales and marketing is the one part where there was hardly any improvement on Q-o-Q basis, despite general trend what we have seen in previous years, that you pay large bonuses. Is it fair to assume that, you know, the benefit is largely due to lower bonus payment?
No, sir. So if you will see the customer service cost, the most of the bonuses will go into the customer service because they come for renewal and upsell. On the sales and marketing, if you see on quarter-on-quarter, this is the new customer acquisition engine. Most of the bonus will be... and bonus this particular year also, I, if I remember correctly, was higher by 40% from the previous year, same quarter. So I don't know which number you are referring to.
Sure, sir. Understood. The only point, last one I have is regarding, the employee addition, which was about 200. Just wanted to confirm, is this addition was for the full quarter, or this 200 addition was during the end of quarter, just from cost perspective?
I don't have that detail. I don't have that detail.
Sure, sir. Thank you. Good luck for upcoming period.
Thanks, Nikhil. Next question is from the line of Swapnil from JM Financial. Hi, Swapnil, please go ahead with your question.
Hey, thanks for the opportunity. First, I wanted to understand the breakup of the collections growth, which is around 16%. So what I understand, obviously, it includes the paying supplier base and then the ARPUs. But there is also a third element, which is basically the average tenure or customers are taking a longer period tenure instead of one year or a monthly plan. So that also supports collections growth, if I'm not wrong. So just wanted to understand. So, if I were to break it down, what would be the collections growth attributable to? Because some of the customers would have taken longer tenure plans within that 16%.
Thank you, Swapnil. I don't have that particular number handy. Not much of a material change, because on the multi-year customer mix. So annual and monthly mix, annual has definitely increased by 4%-5%, because monthly customers we have tried to discontinue from tier four towns. But you want to add something?
Yeah. So, Swapnil, just to clarify, I think when you're looking at ARPU, that is essentially the, the revenue numbers, which is a, a result of the collections done in the previous quarters. Because, you know, 80% of the revenues is coming in from the opening balance of deferred revenues of that particular quarter, right? So when we look at collection for the quarter, you know, the 6% is, like you say, the customer growth. And you can say roughly around 10% is an ARPU growth or collection per customer growth. So most of this growth is largely from the Gold and Platinum customers.
No, but he's asking annual versus multi-year. Has there been a change in the mix?
No, no. The mix had been pretty similar.
It's just the total customers or count of the annual, and multi-year has grown. Gold and platinum customers count has grown.
Yes, that's the only thing.
Not a material change there. That's also available in your Deferred Revenue schedule. If you really see Deferred Revenue schedule, the current and non-current portion haven't changed materially.
Okay, I take your point, but if I were to just understand it a bit more. So typically collections growth, collections mainly comes from the renewals or people in the Gold and Platinum tiers, right? Because Silver inherently contributes very less to the collections.
Yeah.
You know, right? And my sense is like the 80% of the collections comes from the premium categories, versus around 20, 15%-20% from Silver.
Yeah.
So why would a churn... So my question is, why would a churn in Silver category impact your collections growth? I mean, if it contributes just 15%-20%-
Mm.
To your collections, why is your collections growth slowing down then?
Mm. Yeah, you are very right question, and that should have slowed down only by 1 or 2%, not by 4 or 5%. You are right. So that 4 or 5%, because what happens if the, if there is a continuous continuous low growth in the customer base, we our ability to upsell from the Silver to Gold to Platinum also gets limited. So the collection growth, while you are right, it comes from Gold and Platinum majorly, but it's been four quarters or or three full quarters where we have not been able to grow customer base significantly.
Every time we add 5,000, 6,000, 7,000 customers, we also add a pipeline to Gold and Platinum, which will give you nine months later or six months later, the same customer will go to the Gold or Platinum and give you INR 100,000 there. So since this, and I explained this earlier also, when this started happening, that if the net customer addition is one quarter here or there, I'm not bothered about long-term growth opportunities. But if the customer addition for four, five quarters is going to be affected, then it will start to show up in collection first. Collection last quarter was 17% growth, and revenue was still growing at 21%.
This quarter, if you see, collection growth has also come down to 16%, and revenue growth has also come down to 17%. So if you take our business, customer growth, followed by deferred revenue growth, followed by collection growth, followed by deferred revenue growth, and followed by revenue growth. So they all will show up one or two quarters after the thing. So if something goes wrong for a continued larger long period of time, it's more like a 100-day moving average. So if the number of customers for 365 days have not been adding up to the expectation, the collection will start to slow down. If the collection will start to slow down, a deferred revenue would start to slow down.
If Deferred Revenue would start to slow down, the revenue would start to slow down. So that's what we are seeing, and I am hoping that customer growth would take a U-turn from here on, and over the next two-three quarters, it should come back to our 5,000-6,000 normal customer growth.
Okay. One more question with respect to the churn itself. Now, you in the opening remarks, you mentioned that the churn is happening mainly in the first-year Silver Monthly customers, right? And I'm presuming they would be onboarded at an average realization of around INR 2,500, which was the norm prior to the May hike that we took. So if we are not able to retain these customers who were there at a two, you know, at INR 2,500 per month, and now we have taken a 20% hike in May, what is the confidence level that you have to keep on adding customers at INR 5,500-INR 6,000 that you just mentioned?
Because, I would presume the customers who are on a lower realization, they would be, you can retain them far easier than someone who is on a, you know, 20% higher realization. And we are seeing the challenge in the lower-
One, I think, our price was INR 3000 plus tax, just pre-COVID. We brought it down to INR 2500 during the COVID, because the COVID. We wanted to support the thing. The churn did not go out of hand in the May until March 2023. And you may be completely right that, you know, is this INR 500 that is causing this churn to happen? While all our understanding is that it is purely and purely affordability item, it is nothing to do with the conversion item or stickiness item. People who want to try at that point of time, it does matter. So our gross additions should suffer, and they did suffer.
But on a trial basis, if somebody tries it for a month or two or three, either he will get enough value that it'll be more than enough for, for a INR 2,500 or a INR 3,000 rupee, even for a INR 5,000 rupee customer. It is the entry level which is more problematic. Post INR 3,000-INR 6,000, there are very few customers who want to continue on a monthly basis. They would either move to a Trust Seal or move to a Maximiser or move to a Star Supplier within a year or 18 months of time frame. There are very few, few customers who stay for second year or a third year on a Silver Monthly customer.
In the Silver Annual, yes, you can say that, almost 50% of the customers will continue even in the second year as a Silver Annual, but not in Silver Monthly.
But, just... But what is, then what is the confidence that we, we would be able to do 5,000-6,000 additions that you just mentioned, next year, given that this issue may persist, right, next year as well?
As I said, you know, I've been trying. I can only say I'm trying.
Okay.
Reducing the price won't help. That much I can say.
Okay, got it. Thanks for the opportunity and all the best.
Thanks, Swapnil. Next question is from the line of Samarth Patel from Equirus Securities. Hi, Samarth, please go ahead with your question. Okay, we could not connect with Samarth Patel. We'll take question from Mr. Anirudh Shetty from Solidarity Advisors. Hi, Anirudh, please go ahead with your question. Anirudh, please unmute yourself.
Yes. Hi, am I audible?
Yes. Yes, you are audible. Yeah.
Thank you for the opportunity. Just a couple of questions from my side. So just one question is, you know, as we aspire to grow collections at 20% plus, is it fair to assume that the unique buyer inquiries also must grow at a similar pace? 'Cause finally, it's the buyer inquiries that feeds our customer growth, addition growth or ARPU increase over time. And if that's true, then do you think that you know, the business inquiry growth that we're looking to achieve, which is say 93 million going to 100 million, would that be sufficient to kind of drive that growth? So just wanted to understand how are we thinking about long-term, you know, business inquiry growth to kind of achieve our aspirational collection growth?
Yeah. So, if you see, our traffic, and active buyers and unique business inquiries over a long period of time, have grown at a 20% CAGR growth rate, while our paying suppliers have grown at 15% CAGR rate. So we still have sufficient enough margin, and this is on a CAGR level, to monetize customers better by doing a better matchmaking. So I don't think it's the number of buyers. Yes, number of buyers would help, and, but will that is that a limiting factor for us over the next few quarters or few years? No. So over a longer period of time, even if my business unique business inquiries grow by 15%, I think we should continue to grow by 20% in terms of the collection growth.
For now, even if we are growing at 10%, because we had an excellent jump from FY 2022 to FY 2023 at 30-odd%, I think we are fine there. It is not because of the less number of buyers that we are reducing. Yeah, it is because of the kind of buyers that a supplier is looking for, or the location in which a supplier is looking for, that is not happening. And most of the time, we are still finding the suppliers' own ability to understand and put enough time and energy on the platform to be able to convert those leads.
So they say that you have enough leads, but we could not convert them, because the buyer was asking for too much of a discount, or we did not do enough follow-up. So those are the one of the important pieces of churn. But yes, more buyers would definitely help. And we continue to find ways to serve the buyer better so that we can have more repeat buyers, because in terms of the total registered buyers or in terms of the last 12-month active buyers, we are already reaching almost 40 million active buyers. Looking at the B2B market size, I don't think... I mean, we might be already 40% penetrated in terms of the buyer side base.
I just keep assuming that there would be 100 million B2B buyers in India, whom we can attract, on a yearly basis. How many of them we can attract, on quarterly basis, on monthly basis, that is the more important piece for us. Hope that answers.
Very helpful. And, if, say, if the market is 100 million, we are at 40, do you think at some point advertisement could help to attract more buyers? And, from a frequency of transaction perspective, just getting them to do more, transact more on your platform, what are the levers that we have available there?
Yeah. So when we get a little bit handle on churn, I think we will try and address the buyer churn also. First, let us get some comfort on the supplier churn, and then we'll come to the buyer churn also.
So my next question is on the gross profit margin. You know, the last couple of years, gross profit margin seems to have come down. Just want to understand the reasons and, you know, going forward, where do you think the gross profit margin could settle?
Pre-COVID, it was 72%, now we are 73%. I mean, FY 2021, 2022, 202... were anyway different years, and then we got back all the investment in place. I think we are doing fine, and we'll continue to probably improve by 1, 1% from here on.
So we should see an improvement in when you say EBITDA margin can improve by 1%, that's is that primarily going to come from gross profit margin improvement, or we could see
I think it'll come more from the bottom, less from the gross profit margin. Gross profit margin might improve by 0.5% or so, but sales and marketing and technology and content, I believe we will we should be able to... I mean, it's a combination of all of them, but not on a quarterly basis, but on a yearly basis, when we will draw the trend, we will know. But I'm more confident that we should be able to do more than 1% for sure.
Got it. Thank you for taking my questions. That's it.
Thanks, Anirudh. Next question is from the line of Abhishek Banerjee from ICICI Securities. Hi, Abhishek, please go ahead with your question. Abhishek, we can't hear you.
Hello, can you hear me now?
Yes, yes, Abhishek.
So, so sorry. So sorry. No, just, trying to understand on the manpower cost bit, right? The, the net additions have been low for almost, the last four quarters. So, by now, we would think that, manpower should have come off a little bit in terms of, additions. So what is your outlook going ahead? And also, this quarter, I saw that the outsourced sales cost has actually declined on a sequential basis, right? So is that indicative of a strategic call to, you know, not outsource as much anymore? Because, some of the churn was also, due to this.
So, Abhishek, I, Prateek here. So if you, you know, recollect in the last quarterly call, we communicated that, you know, from a sales outsourcing standpoint, there were two kinds of outsourcing. One, you know, we had a channel partners arrangement, and roughly around 50% of the sales were coming in out of the- 40% of the sales were coming in out of that arrangement. So that continues to be as it is. We continue to, you know, build on that piece. The second kind of an outsourcing was, you know, wherein we have outsourced sales, and it was more, the-
Temp staffing.
The temp staffing to the kind of the companies like GI, Spectrum, TeamLease kind of companies. That part is what we were looking at, you know, building the sales team in-house and reducing dependence on, you know, those kind of outsourcing.
Temporary sales staff.
So, so that was a movement that we planned for the teams, that was supposed to be done in two to three quarters time frame. So half of that movement has happened, so that's why you see a reduction in the outsourced sales cost, you know, to that extent, and that cost would have got added to the, manpower cost. Other than that, it has been, the normal increments and the headcount increases in the other functions, if there is.
That is why you are not seeing the manpower cost coming, declining, because some of the outsourced sales costs have shifted to the manpower.
Understood. Understood. So also, with regards to the additions, right, net additions, given that from Q1 FY24 is when you had the problem of churn, and if I think that... So by this time, probably, most of the people who were on the verge would have churned out, right? So that kind of implies that Q1 FY25, the churn numbers should come down, pretty sharply. Is there something that I'm missing in this analysis?
Sorry, Abhishek, we could not understand the-
No.
one year that you, you're drawing first.
No. So I'm saying, see, these people, the people who were churning out were mostly Silver Monthly and Silver yearly customers, right? So I would imagine that the people who were churning out, I mean, the less valuable customers would have churned out within a year's time frame, right? Because, they all their subscriptions would have expired. So from Q1 FY25, we should not see the same problem, in, in... I mean, that is what at least-
It's a cyclical, yeah.
So, Abhishek, this is like, let's say, the customer acquisition, and the churn is like it's a monthly progress, right? It happens every day. So, you know, it will continue to be a cyclical issue. The only thing what we saw in the last year was that, you know, since we started acquiring customers a year before, the proportion of the first-year customer to the overall customer base, you know, was slightly higher. And because of which, since in the first-year customers, there was a higher churn, you know, you were seeing that kind of, you know, churn. So, only, as a proportion, if that mix improves, that benefit would certainly be visible.
However, the churn rate, if I compare it on like-for-like basis on the Silver customers, specifically the first-year customers, whether on a monthly or on an annual basis, that continues to stay at the elevated levels, as we said.
No, that I understand. But just now, you also spoke about the first-year customers, right? So obviously, if the net additions have been on the lower side in the last one year-
You are right. You are right. So if the net additions are lower, the first year, churn should come down, on a yearly basis, because the net addition itself is lower.
Understood.
So that should help us by some margin, yeah.
Great. So also, if I were to try and understand the strategy for monetizing the other part of the supplier base, who are not paying anything right now. And I know, I mean, this is obviously much easier said than done. But, but is there something that you're working on? Because, see, on one hand, I completely understand the value-added offerings that you are giving for your Platinum customers, I mean, for people to be moving to the higher end of the spectrum, right? But at the same time, there is obviously need for a platform to be a place for, you know, just converted businesses. I mean, largely offline businesses to just come online and exist, right? Or to create a foothold on the online, online part. So what is the strategy?
Is there any way that some kind of monetization can be worked out here?
I mean, we tried in the past, by way of Ratoon or things like that. I mean, you're, you're saying that is there a value in charging a lifetime free?
... or at a very low cost with no ROI, free, free listing in a directory.
Yeah.
I mean, monetizing something 1,000 rupees a year, the cost of sales is too high, you know. The cost of sales is too high, but it's a good idea. We will, we will try once again to see if there is something that we could sell for 1,000 rupees a year.
Perfect. And in terms of the overall, you know, consolidated performance, I was a little surprised to see that, Busy, on a yearly basis, has not really, you know, outperformed on the profitability part. Anything that you would like to call out there, and if there are any corrective actions that are being, you know, put in place?
I don't think we should look at the profitability of Busy. My continuous recommendation to Busy is to have zero EBITDA and invest all the money that they can generate into growth. So I'm not even looking at INR 1 crore quarterly EBITDA as being something substantial. My only advice is that don't go into negative, but don't try and chase INR 2-INR 3 crore EBITDA every quarter or INR 2-INR 3 crore of EBITDA every year. So
The other thing, Abhishek, there is, if you see, our deferred revenues-
Yeah.
have grown by 59%, the net billing has grown by 44%. So what you see is that, there is money that has been collected from the customer, which is yet to be recognized. So when you see the accounting EBITDA, accounting EBITDA will be on a lower recognized revenue, whereas all the costs of manpower marketing that we've invested in, that is already budgeted in, and that is why you see lower EBITDA there. But when you look at it on a, let's say, cash-to-cash basis, the margins still are healthy.
Understood. Understood. So also, you've very kindly shared a sheet on your CapEx expenditures and all. There, I saw some strategic investments which were done in this year to the tune of around, I think, INR 25 crore. Yes. So, what was this? If you could give us some clarity.
These have been the follow-on investments that we've been making in our, you know, investee companies. This is the yearly number of INR 25 crore, Abhishek. So I can give you, in fact, the entity-wise breakups, you know, maybe later on.
Got it. No, no, that, that's fine. I was just trying to understand if something fresh you have done or not. Okay, this is very helpful, sir. Thank you so much for your time.
Thanks, Abhishek. Next question is from the line of Sarang Sanil, from RW Investment Advisors. Hi, Sarang, please go ahead with your question.
Hello. Hi, good evening, sir. Thank you for the opportunity. Firstly, sir, was there any depreciation amortization item that has materially impacted this quarter? And should we expect this run rate to continue? Because we saw quite a jump this quarter.
Yeah, Sarang, so in this particular quarter, other than the regular depreciation, there is a you know, one-time impairment charge on a right of use of land that we had. During the quarter, this is the land, it is there in Sector 75, Noida. And during the quarter, we received a cancellation notice from the authorities. And while there is a provision to file an appeal against that particular order, and we have already filed that appeal, that appeal is you know, pending review in front of the appropriate authorities. But out of a conservative basis, we have taken that impairment provision. Once the outcome of the appeal is more clear, that point of time, we will revisit this provision.
This is to the extent of INR 3.5 crore.
Okay. So we can expect about INR 6-INR 7 crore run rate?
Yes.
All right. So secondly, though in the previous call you had mentioned that, moving outsourced salespeople to permanent payroll of the company does not help us on the cost side. Just wanted to double-check that this strategy have not really aided our margin expansion this quarter.
Yeah. The only thing is that, as you bring them in, from a temp staffing payroll to a company payroll, while most of the benefits are same, people do value a large company payroll thing, and hope that results into some percentage point reduction in the attrition or retention, which further helps us improve the productivity. That helps us improve the sales and marketing cost.
Sure. So there's no training cost per se when they migrate to permanent payroll, right?
... I mean, that would be immaterial to make any difference on the... But I'm saying, the attrition has a two-edged sword. One, it will give you a cost of hiring, cost of training, and the other, gets you a productivity dent both. So in case we are able to save a few percentage points on attrition by moving people from outsource to in-source, in-house, that should generally help us save some cost and save, give some better productivity.
Awesome. So in the medium to long term, that's, it's a lever for margin. Got it, sir. Okay, thank you so much, and best of luck.
Thanks, Sarang. Next question is from the line of Jasdeep Walia from Clockvine Capital. Hi, Jasdeep. Please go ahead with your question.
Sir, can you hear me?
Yes, we can.
Sir, thanks for taking my question. So what is the growth in the number of Gold and Platinum customers for FY 2024 and for Q4 2024?
Gold and Platinum customers are now at about 49% of the total customer base, which was about 47% at the beginning of the year.
Okay.
At the beginning of the year, we were 206,000 customers, right?
Mm-hmm.
203. 203,000 customers, and 47.5% of that was Gold and Platinum. Now we are 49%, to be precise, of-
What was the number at the beginning of the year? 46.9?
No, 40, 47.5, now it is 49.
Got it. Sir, what is the growth in revenue of your Gold and Platinum customers for the year?
I always say, that approximate number I have given you, that now it is close to 75%, but it is still not exactly 75%. I think you can give the exact number of, what is the 75% exact?
Seventy-three percent.
73% is the current exact number of the revenue. I won't be able to give you last year number.
We have ARPU.
Last year, top 10% ARPU, if you see, last year's top 10% ARPU in the FY 2023 was INR 214,000. For the FY 2024, it is INR 247,000, which is very similar to Platinum ARPU.
Got it, sir. And sir, is there any change in the churn metrics for Gold and Platinum customers, or they remain?
So nothing on the Platinum side. Platinum is about 12% of our customer base or so, keep varying because the bottom, because of the denominator. On the Gold side, as I said, about 40% or 35% of our customer base, that's where, because the numbers have gone quickly high from 45% of 150,000 to now 49% or 50% or so. So there we have seen a big number. So there might be 1% churn reduction from 10%-11% to 12%-13%, but that's about it.
Yeah. Just to clarify, the churn actually is dependent also on the vintage of the customers and the evaluations of the customers. So they may, like, it can vary because of, you know, these factors. However, on a like-for-like basis, there is no change as such in the Gold and the Platinum customer churns.
They are, they are by and large stable, and by and large growing, and by and large, paying more, more money.
Got it, sir. Thank you. That's all from my side.
Thanks, Jasdeep. Thank you very much, everyone. It has been a very engaging session. I would now like Dinesh, sir, to give his concluding remarks.
Ladies and gentlemen, thank you very much for joining our year-end conference call. We have tried to address your queries in the time available, but in case any of your questions were not taken up, please do reach out to our investor relations team on ir@indiamart.com, and we will be able to help you from there. Thank you, and have a great day, and good wishes for your next financial year. Thank you very much.
Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you.