Good evening, ladies and gentlemen. I'm Abhijeet Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Quarter 1, FY 2025 Earnings Webinar. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions once the presentation concludes. Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer, Mr. Brijesh Agarwal, Full-time Director, Mr. Jitin Dewan, Chief Financial Officer, and Mr. Prateek Chandra, Chief Strategy 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 risk 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.
Thank you, Abhijeet. Good evening, everyone, and welcome to IndiaMART's Quarter 1 FY 25 Earnings Webinar. We have circulated our earnings presentation, which is available on our own website, as well as the stock exchange website. We are sure that you would have gone through the presentation, and we would be happy to take any questions afterwards. I'm pleased to report that IndiaMART has delivered a consolidated collection from customers of INR 366 crore in the quarter one, representing year-on-year growth of 14%. Deferred revenue has grown by 23% to INR 1,474 crore on consolidated basis. Consolidated revenue from operation has grown by 17% to INR 331 crore. Unique business inquiries grew to 25 million, representing year-on-year growth of 15%. Our total paying subscribers have grown to 216,000.
As we have been communicating since the last few quarters, we continue to see more than anticipated churn on the customer base in the Silver bucket. In addition to this, our new supplier acquisitions were slightly lower this quarter compared to what we have been doing during the last few quarters. As a result, we have been able to add only 1,500 new paying suppliers on the net basis in this quarter. On the other hand, our Platinum and Gold customers, which constitute approximately 50% of our customer base and 75% of the revenue, continue to have low churn and grew both well, very well in terms of ARPU as well as count. We will continue to make investment and undertake measures to enhance customer experience and improve retention, as well as drive deeper penetration of the customers, paying customers in the focus city.
On the inorganic investment front, in keeping with the vision of empowering businesses digitally, we are pleased to share that we have got into an agreement to acquire 10% stake in M/s Baldor Technologies Private Limited , which operates IDfy, an integrated identity platform offering products and solutions for KYC, background verification, merchant onboarding, buyer onboarding, risk mitigation, and digital privacy. Further, as communicated in the last earnings conf call, as well as on the stock exchange, we have onboarded Mr. Jitin Dewan as the new Chief Financial Officer of the company. Now, I will hand over the call to Brijesh for the update about Busy Infotech . Thank you, and over to you, Brijesh.
Hi, good evening, everyone. Bizy has done a net billing of INR 23.4 crore in this quarter, representing a YOY growth of 4%. The revenue from operations have grown by 15% to INR 15.5 crore. The deferred revenues have grown by 41% to INR 51.5 crore. EBITDA for the quarter is at INR 1 crore with margins of 7%. The net profits for the quarter was INR 3 crore. The cash from operations was at INR 11.8 crore. During this quarter, Bizy has sold 9,700 licenses, closing the total count of 373,000 licenses at the end of June 2024. We are focused on growing our new customer base and increase the overall growth rate in the coming quarters.
With this, I'll hand over the call to Jitin to update about the financial performance.
Thank you, sir. Good evening, everyone. I will take you through the financial performance for the quarter ending June 2024. Consolidated collections from customers was INR 366 crore in the quarter, representing year-on-year growth of 14%. IndiaMART standalone collections from customers for the quarter were at INR 341 crore, registering year-on-year growth of 15%. The standalone revenue from operations stood at three hundred and fifty crore, registering year-on-year growth of 18%. Our growth in revenue was primarily driven by over 13% improvement in realization from paying suppliers, and the remaining by increase in number of paying suppliers. Deferred revenue stood at fourteen hundred and twenty-one crore, an increase of 22% on year-on-year basis. EBITDA of IndiaMART standalone business stood at INR 117 crore, representing a margin of healthy 37%.
This margin expansion is due to organic operating leverage, certain cost optimization initiatives, and saving due to lower customer acquisitions. As our customer growth picks up, the margin expense will be normalized to gradual operating leverage inherent in the business.... Consolidated net profit for the quarter was INR 114 crore. Consolidated cash generating from operations was INR 136 crore. Consolidated cash and treasury balance stood at INR 2,319 crore as of June 30, 2024. Thank you very much, everyone. We are now ready to take any questions.
Thank you, Jitin. 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. Now, we'll wait for a few seconds while the question queue assembles.
First question is from the line of Sachin from BOFA. Hi, Sachin, please go ahead with your question. Sachin, please unmute yourself.
Hi, thank you for the opportunity, and congrats on a good set of numbers. My two questions are: first question, wanted to understand a bit more on EBITDA margin. Just wanted to double check that there is no one-offs associated with that, and should we consider this as a steady state EBITDA margin going ahead? Of course, you know, as and how the operational leverage comes, you might see a bit of an improvement. So that's question number one. Question number two, wanted to again understand a bit more on net adds. For last few quarters, it's hovering in the 2,000-odd range. When should we see an inflection point coming, where these net adds accelerate going ahead?
So, Jitin, you want to take up the EBITDA margin question?
Sure.
Thank you, Sachin, for your question. So EBITDA margin is 37% for the current quarter. So, if you see about 2%-3% was the operational leverage which we were supposed to get, because in Q4 there are higher collections, and therefore, collection-related costs will also be there, which has not been in Q1. So that is one. Second, then we were doing few cost initiative, cost optimization initiatives in the last few quarters, which have been now realized, and therefore, there is a saving which is structured. And then the last bit of it is since, as you know, that we have not been able to add the customer addition is on the lower side, and therefore, the cost related to that is also on the lower side.
Once it picks up, then the cost will again be there on that side, and therefore, you will see a lower EBITDA margin to that extent.
Just to add, April and May are generally the examination time, so most of the joinings that you have seen in the headcount are June latter half joining, as well as some of the joinings have happened in July. So some of these costs will come back and so we expect the margin to taper off a little bit from here, maybe at around 33%-34%, and that should be the steady state margin from now on. On the net add side, as I said, the churn in the Silver and Silver monthly and Silver annual buckets continued to be stubborn.
While we have taken certain steps to avoid churn in the tier three, tier four. So we have stopped onboarding customers which were traditionally high churn location or high churn areas. But the results of that are yet not visible because the main cities are also affected by churn. So I think we continue to make adjustments into our product as well as our strategy to see what is the churn expectation from the market, or what is it that we are not able to find correctly. And the only thing that I can say is that we are continuing to work on that side. I don't want to press the pedal on the gross addition until unless we have got the handle of the churn.
Let's wait for another 2 quarters to see if the churn is able to come under the control, and we are able to get back to a higher customer addition. But, on the margin side, as we said, you know, if you really see in the last year and a half, we have consistently improved on the margin from 26%-27% to now, 34%-35% range.
Thank you. Just one quick follow-up out here. Assuming what you said, let's say, you know, for next couple of quarters, at least for six months, the net adds remain at these levels. Should we assume EBITDA margins be high to current levels, and then eventually as the net adds pick up, the margin should normalize to 33-34? So ideally and logically, for next few quarters, margin should be in the range of 36, and when your net adds pick up, that should normalize to 33-34. Is that a fair assessment?
...No, as I said, from 37, I think the 3%, will immediately come back, so around 34, I am pretty sure that we should be able to deliver, over the next 2 quarters. I cannot comment, when the net adds increase, whether we'll go to 33 or whether we'll be able to maintain 34 by then.
Got it. Thank you.
Thanks, Sachin. Next question is from the line of Jasdeep Walia from Clockvin e Capital. Hi, Jasdeep, please go ahead with your question.
Sir, can you hear me? Hello?
Yes, we can hear you.
So thanks for taking my question, sir. My question is, do you try to ascertain if the, the, the pricing is acceptable to your clients, in the sense that the cost that they're incurring on IndiaMART, is it making- is it driving value for them? So, as of now, the ARPU, the, the increase at 13%, it's pretty high, you know, and it looks good on the presentation, the margins have increased. But, does it make sense to actually reduce pricing and drive net adds and let's say, let the margin remain at 29%-30%, which was the case, last year?
So just want to hear your thoughts, because if the pricing is beyond the means of the customer, you know, you might face even more customer churn in future, which is bad for the long-term health of the business.
So, sir, if you see the breakup of the ARPU, the most of the gain is coming from top 10% of the customers, while the most of the churn is coming from bottom 50% of the customers. Bottom 50% of the customers, neither there has been any price increase. I mean, we are at the same price point as we were before COVID. So there has not been any price increase on the Silver Monthly or Silver Annual, except for the fact that we gave a discount of 20-odd% during the COVID, which we withdrawn after the COVID. Other than that, most of the ARPU growth has happened in the top 10% of the customers, not in the overall customer base.
So the assumption that the price would help us reduce the churn seems incorrect there. On the top tier of the customer, as and when we feel, also, we have not increased the prices on the top tier of the customer. As you know, we told you that we've been experimenting with the category-based pricing, and we have been developing a framework for city and category-based charging. And that framework is now being adopted by larger number of newer sales, and that is resulting into the higher ARPU. So it is only when certain categories which are a very high-value product, there only the price has been increased, which is reflecting in the ARPU.
But at the entry level of categories, there has not been any increase on the price.
Sure.
The churn also at the gold and platinum level continues to remain at around 1% per month.
Got it, sir. So my second question is, what's the growth in gold and platinum subscribers, both in terms of number of subscribers and in terms of sales to gold and platinum clients?
So we don't directly sell in gold and Platinum. We generally upsell from monthly and annual Silver. So most of this growth is coming from upsell from Silver Monthly and Silver Annual. As I said, we remained at around, we used to be at around 48 odd% customers from gold and platinum. Now we are at around 50% of the customers from gold and platinum. So in the last one year, while the overall customer base has grown by only 15,000, I think the gold and platinum itself has grown by eight, eight odd thousand.
Got it. And what's the growth in sales to Gold and platinum customers on a YOY basis for this quarter?
I did not understand that.
Sir, your revenue, which is coming from gold and platinum customer only, how has it increased on YOY basis for this quarter?
As I said, about gold and platinum customers count about 50% of the customer count and about 75% of the revenue.
Got it. And got it, sir. What was this revenue percentage last year?
Last year is about 48 and 72, maybe. 73, maybe.
Okay, sir. Thank you, sir. That's all from my side.
Thanks, Jasdeep. Next question is from the line of Kushagra, from Old Bridge Capital. Hi, Kushagra, please go ahead with your question.
Yeah, hi. Can you hear me?
Yes, you are audible.
Yeah. Okay. Thank you for the opportunity. Just two questions. So, on this, you know, what I see is, the concentration at the top is increasing, right? So the question really is on, you know, the category saturation. I mean, are your categories getting saturated, and hence the star suppliers or, you know, the gold and platinum guys are gaining, gaining the most in those respective categories? Of course, them being able to, you know, corner a lot of lead generation, which is happening on your platform. So, the question is, are there challenges on the expansion within the existing categories? So are your existing categories sort of saturating?
And then a sort of an attached question is: for you to grow from here on, if we have to look at the growth levers for you, what would be the growth levers, you know, and how important would be, the expanding of categories, in your overall growth drivers? That, that's my first question.
So if you see, on the category saturation side, if you see from, say, three years ago or, say, five years ago, our top categories used to be 5%-6% of our total customer base, when we were, like, 150,000 paying customers. Now, at 200,000 odd paying customers, the top categories are still 7%-8%. So it's not that the categories have grown, only on the top side of the platform. In fact, if you see this particular slide, maybe four years ago, I think you will see the percentages have not really changed. And so there are multiple categories which are available for us. Similarly, for the cities also.
We have been stronger in New Delhi, we have been stronger in western part of the country, Maharashtra and Gujarat. We have been okay in Tamil Nadu, but we have not been so great so far in places like Karnataka and Andhra and Telangana. So I think there is still a lot more penetration which is possible across many of those cities. Third, so on the growth lever, as I continue to say, you know, every year, our monetizable categories increase by 10% from the previous year. So if we had only 20,000 odd monetizable categories pre-COVID, today we have about 40,000 odd monetizable categories. And similarly, if we had only 5 big monetizable cities, now we have maybe 10 monetizable cities today.
So I don't think there is an issue with respect to, you know, either the growth lever or a near-term saturation. Having said that, I've still not been able to prove why the silver churn is not coming under control, while the gold and platinum customers are continuing to be a promoter of the platform and be a very, very strong user of the platform. I mean, last month, one of the highest engagement in terms of buyer and sellers both, if you see all of those numbers are going highest ever. So there's something that has changed post-COVID that we have still not... And a lot of our manpower is also new. So we are continuing to struggle on that silver churn side.
Other than that, there is no other problem.
Okay. So to understand this better, what you were explaining for the category expansion and the cities available, let's say for one of those industries, let's say construction materials, you would be very heavy within - you would be performing very well in Delhi, Maharashtra, Gujarat, construction and building raw material, the first one, and but Tamil Nadu and some of the southern states may not be as good.
So to understand this right, the question really was, within the states where you have already marked, where you have already significant presence, and the category is big for you, is there a case where, you know, whatever leads are getting generated within that particular category, the top guys, the star suppliers, are actually cornering more and more of it, and hence the pain point is being felt by the silver and the smaller customers? Is this what's happening in your platform or not really?
So, our platform works like this. So in terms of quantity, yes, but in terms of quality, everybody gets equal opportunity to participate. Our quality of the RFQs, whether you are a star supplier or whether you are a, Silver Monthly customer, the quality of the leads that you will see, or the timeliness of the leads that you will see, there is no restriction on that. However, yes, since you are paying INR 30,000 versus somebody who's paying INR 300,000, the quantity of the leads you can consume higher. There is a equal opportunity, within that, yes, you may be competing with star supplier or leading supplier because of the, on, on every buyer.
However, the younger suppliers also have this agility that they are the owner of the shop or owner of the factory, directly deals with the buyer. So, and they while the larger suppliers typically depend on IndiaMART staffers, maybe one or two expert lead managers who work there as a lead management person IndiaMART. so I think there are advantage, disadvantage to both, while. So we are able to retain lesser number of the total customers that we used to onboard and used to retain versus versus today versus the pre-COVID era. And that 10% lesser number that we are able to retain is making all the difference.
Understood. Sure, this is helpful. The second question really is on the traffic and the underlying metrics. So if I look at your traffic now, even on a quarterly as well as on an annual basis, has been hovering around the same range of, you know, 25-26 crores quarterly, 100-110 crores a year. And the conversions, basically, which is visible in those unique business inquiries, are also holding on to that same 9-10%. So the question really is, are there sort of levers to for you to attract more traffic or sort of increase that unique business inquiries from here on?
And also, if you can give a sense on the traffic, like which categories are getting more traffic and how the category mix has changed in your traffic despite the overall headline traffic number remaining stagnant for the last couple of last many quarters, actually. Yeah, that's my second question.
So while you are right that traffic seems to be stagnant, but unique business inquiries, if you see this particular quarter, have grown by 15% year-on-year. So they have been, you know, for the last three quarters, they've grown well. Yes, you are right, in the FY 2024, in the first half of the FY 2024, they did not grow. But now it is at a healthy run rate of about 100 million unique business inquiries for the year, which is even higher than the FY 2021, 2022, when there was so much of shortage of material and so much of shortage of medicine and other things.
So if you compare pre-COVID, I think we are going to be about 30% higher unique business inquiries. In terms of traffic, yes, there is a flatness, and we believe that if that flatness continues, we will try and address that through the digital advertising and through the digital video advertising. But we have not yet going there, but if need be, we will go there.
Right. Just one last data question. If you can give us the gross adds number in Q1? That's it. Thank you, and all the best.
We only disclose the net add numbers.
Okay. All right, thank you.
Next, we will take a question from the chat box. This question is from Abhishek Bhandari. "So are we on track to achieve 20,000 paying subscribers additions in FY 2025? Do we expect a significant improvement in net addition in H2 FY 2025?
See, given the last two quarters, last three quarters of 2,000, 2,500 and 1,500, I'm in no position to commit any numbers on the net add as of now. I can only say let's go quarter by quarter, and as soon as we hit 5,000-6,000 again, and then only I can give you any year-end number. On the revenue side and on other sides, I think most of our numbers are driven by collection, so that you know already what is going to come.
Thank you. Next question is from the line of Vivekanand from Ambit Capital. Hi, Vivek, please go ahead with your question.
Vivekanand ?
Thanks for allowing me the opportunity to ask questions. I want to start with the functional PNL that you present, where you have a disclosure between the customer service cost and the sales and marketing cost. So my question here is that, yes, churn is an issue, and you are struggling with your manpower as well as perhaps consumer behavior or supplier behavior, but why are you cutting on the selling and marketing costs? That is something I want to understand, because we saw something similar play out in FY 2021 as well, right? You curtailed your selling and marketing costs. And then suddenly when things opened up, you then had to run to hire people, and that is currently still hurting you, right? Because you are saying that many of your sales and marketing staff members are new.
So why curtail this in the first place? Understand that you should—you are curtailing gross adds, I understand that. But, why, why curtail manpower in this? That's question one.
Mm-hmm.
And, do you want me to ask the second question, or do you want to respond to the first?
No, answer me answer first. So, you know, I think about the last three quarters, we have been trying to do is to cut down on the areas where, you know, to identify the areas, whether cities or the categories, where we were onboarding customers and losing them at a faster speed. So, what we have tried to do is cut down on those areas, and that is what is being reflected here, as a percentage. Also, as a percentage of revenue, there is some bit of a natural leverage that is coming. Because, the most of it is coming from customer service cost.
So customer service cost is the manpower of the existing customer servicing, and sales and marketing is the manpower of the new client acquisition side. So we have only curtailed on the gross addition side, and we will, as soon as we get the handle on the churn, we will probably reinvest on that. But you are right, we should not go quite up and down from 17%-14% like that.
Also, Vivekanand , this selling and marketing, essentially this is a cost of acquiring a new customer. Roughly around 50% of our sales comes in from the channel partners, wherein the cost is completely variable to the acquisitions made in that particular quarter. In case if there is a change in the acquisitions, this cost will accordingly move lower or higher for that matter.
So your channel partner strategy remains the same. Is that correct? That the approach of adding new suppliers, new paid suppliers, half of them are still coming via channel partners, even though you have curtailed gross adds?
Yeah, by and large. Yes, by and large.
Okay. And, sir, if I may press a little bit on this, the insourcing strategy that you were discussing about, does... That hasn't had any bearing on this channel partner model at all, is it? Or,
No, no, no, no.
Am I confusing?
So there are two things. One is our own. See, there are about 50% sales were coming from our own staff, but they were not on a IndiaMART role. They were on a third-party temp staffing role. While there are the channel partners, the channel partners have their own different organizations. Channel partners have their own. So what we have done is stop using a third-party payroll temp staffing service because to contain the employee attrition a bit. And in the last 2 quarters, I think its employee attrition has come down, which should help us increase the efficiency.
And some of this is also resulted into reduced cost of customer acquisition on a gross basis. However, on a net basis, since the churn is so high, the net customer addition cost still looks very, very high. But those efficiencies have also resulted into improved operating margin.
Right. Okay, I know Kushagar asked this question: How much can you, stretch the ARPU lever? And, if you, if you can help us understand, like, we know that the top 1% ARPU, is almost 4 times of that of the top, top 10%. Within the top 1% also, is there, is there a very big differential in the ARPU, or are they, are these 2,000 paid suppliers, roughly paying something similar? I'm just trying to understand, what would be the highest that a supplier is spending on IndiaMART? Is it like INR 5 crore, INR 2 crore? Is it that big, or is it very close to-
No, no, no. INR 50 lakh, INR 50 lakh, India. INR 50 lakh.
I see. Okay. Thank you so much, and all the very best.
Thanks, Vivekanand . Next question is from the line of Nikhil from Nomura. Hi, Nikhil, please go ahead with your question.
Hey, hi. Thanks for the opportunity. My first question is again on margin. Just want some clarity here. So Prateek, what you mentioned that we generally pay lower to channel partner when there are less supplier addition, but that should not impact your margin on QoQ basis, right? Given supplier addition remained low since last two, three quarters. And second thing, again, here is what Dinesh sir mentioned, that, you know, the sales and marketing expense is lower because of less gross addition, and that's why we are not investing. So are we saying that, you know, given we don't have clarity in terms of what is causing the higher churn, that's why we are controlling the spend on sales and marketing?
As soon as we, let's say, figure out the challenges in algorithm or some other issue, we'll start pressing the case again, which will help us in supplier addition and will lead to, again, increase in sales and marketing.
To some extent, yes, because if I, if I want to go aggressive on the gross, gross, gross acquisition until I have sufficient visibility on the churn, I don't want to, because you know, we acquire customer at who will pay me 3,000 INR a month. So until and unless he pays me for 6-9 months period, it will be a loss-making customer to us. So if we are not sure of retaining the customer, then why unnecessary—I mean, not that we are reducing the growth addition, but we are not growing the growth, growth addition.
Sure, sir. Just trying to understand it better. Let's say what you mentioned earlier, that tier three, tier four customer, which were, you know, you acquired earlier and leading to higher churn, then the cut in cost on those area, why we are not investing in the area like you mentioned, that we are not very well penetrated in Karnataka, right? So why-
We are doing that, you know, so that's why I said on an overall gross addition, we have not reduced. I think we are still at 95% of the highest ever gross addition. Okay? 5% plus, minus keeps happening, but so we have cut down from those areas and doubled down into the metros and those areas.
Okay. So, last one on margin, sir. Let's say in steady state, where you are adding supplier at 5,000, 6,000 per quarter, where should be your margin when you will be again spending on sales and marketing, you'll be again spending on servicing? Assuming whatever operating leverage you will still have. So what would be steady state margin in that scenario?
That's too imaginary to tell, because by that time, if the salaries suddenly change, as happened in 2020 to end and 2023, all my, you know, prophecies go bad. No, otherwise I would have, you know, during the COVID, I guided you for the 35%, but suddenly the salary market changed big time. So the guidance went bad. So I think let's just see next two, three quarters and then come back there.
Dinesh, sir, basically what I want to understand is, would we be investing more compared to what we are investing now, and our margin can go down lower than-
If we invest more, you know, our normal operating leverage will also show up, right? It is, you know, because most of the margin is coming from top gross margin bucket, not from the bottom sales and marketing and G&A and all that.
Sure, sir. Sure, sir. The second thing is, last quarter you have guided that, you know, you will achieve 5.5K supplier in quarter two or quarter three. This quarter you said that, we are not getting any supplier addition. So what has changed between the two quarter?
Yeah, I mean, the entire Q1 churn has been very, very stubborn. So, you know, for the entire quarter, we have been able to do only 1,500 net add. So I'm still not able to see that by just doing tier three, tier four cut here and there, those were anyway 10% of the overall customer acquisition. So I think the bigger issue is how do we handle Delhi, Bombay kind of a bigger geography churn, and we still don't have much answer on that. So I think we are going to make big changes on the product side now. If you see the unique buyer to multiple inquiries, do you have that slide, Abhijeet?
The number of times a buyer is being introduced to a supplier. If you-
The ratio between-
Yeah, the ratio of total inquiries, total business inquiries delivered to unique business inquiries. That ratio we are slowly and slowly again converting. So that ratio we are looking at probably going towards more like 4 from 6.
Understood.
Currently, we are at five.
Pardon me?
Currently, we are at 5.25 million inquiries, and 128 was delivered.
Mm.
Currently, we are at 5, which we are-
Yeah, which used to be at 6.
Which used to be at 6.
Now I'm planning to bring that down to four.
Sure, sir. Understood. Just the last one in terms of data, how much is your churn in Silver, Gold, and Platinum category?
So, Gold and Platinum, less than 1% per month, and Silver Monthly is about 6% per month, and Silver Annual is about, you know, 36%, 3%-4% per month.
... Sure, sir. Churn actually slightly increase in platinum as well? Because last quarter you mentioned 0.5%.
0.5% in platinum, 1% in gold.
Okay, understood. Thanks a lot. Good luck for coming period. Thank you.
So we have another question from the chat box. The question is from Mr. Girish Shetty: Is there any common feedback you are getting from the silver customers who are not renewing?
I think people are, people are saying so, and that is why we are acting on the competition side. People are saying that it is difficult to do the maturity. So there are buyers which are, but they are not yet converting. They are, they are very price-sensitive buyers. The buyers have become very price-sensitive, and we are not able to mature. So that is something has led us to introduce one buyer to lesser... You know, earlier we used to do 6 suppliers, now at 5, and we are planning to go towards 4 maybe.
Okay. Next question is from the line of Mr. Amit Chandra from HDFC Securities. Hi, Amit, please go ahead with your question.
Hello, am I audible, sir?
Yes, yes, Amit, please go ahead.
Okay. Yes, sir, thanks for the opportunity. So my first question is, obviously, we have seen the growth coming from the ARPU, but if I see the ARPUs in the top 1 and top 10 customers, that there the growth has been much higher than the average levels. And, if I see the increase in the top 1 customer, that has been almost flat or 4%-5% YoY. So most of the growth in ARPU is coming from the existing customers. So is it fair to assume that, you know, the existing customers are buying more and, you know... So if you can explain what kind of value-added services they are getting versus others?
And also, in terms of the churn that you mentioned, that is very, I know, difficult to judge what is causing the churn. So if you can throw some light in terms of the selling process, is there some mis-selling happening from the channel partners? And, in terms of how the, you know, acquisition engine and the renewal engine functions, is it the same, you know, the person who is acquiring, he is doing the renewals or there is some separate team for both?
So we have separate divisions for Amit, if you are done, can you please mute yourself? Yeah, we have separate divisions for new client acquisition, and silver customer servicing, and key clients division, which serves mostly gold and platinum customers at various places. For tier three, tier four, we have a centralized team here in Noida, as well as in Chennai, for Tamil speaking areas, Tamil and Malayalam speaking areas. For the silver monthly, we have a dedicated customer team, again, here in Noida and one in Chennai. So this is how our divisions are structured. In terms of ARPU growth, so yes, you are right, because most of the changes have happened at the platinum level.
It is not the price increase, but it is the price rationalization for categories which are of higher value, and the price rationalization for categories which are of the lower value. Earlier, there was a flat price for everything. So, it has actually become more rationalized pricing for the customer, as well as better realization for us. And, as I said, we haven't changed any pricing for Silver Monthly and Silver Annual customers in the last five, six years. The only change that we did was during the COVID, where we passed on 20% discount and we removed that discount in FY end of FY 2022. So that's the. And that's the strategy also.
So that at the bottom of the pyramid you play the leadership role whereas the marketplace becomes more richer and richer in terms of data and in terms of verified supplier availability. And once you have enough number of suppliers and it is able to attract enough number of buyers then you monetize the suppliers who are competing with each other to go towards gold and platinum for more and more buyers and RFQ and buy leads.
In terms of number of customers, net customer growth in the top ten customers? Yes, if we have only moved from 200,000 to 215,000 in the last 5-6 quarters, the top ten percent has also increased only from 20,000 to 21,000. However, from the 20,000, if you really see, there was 10%-12% of the churn that also got filled. So most of the upgrade is happening from the Silver Monthly and Silver Annual towards the Gold and Platinum. In fact, this year we have seen a lot more number of Gold customers over the last that came because of the 50,000 odd customers that we increased in the FY 2023 and mid of FY 2024.
That is what has resulting into the continued growth. If this customer growth stagnates for a longer period of time, as I said earlier, also, it can become a problem for any marketplace.
Amit, just to add-
Okay.
When you look at the overall ARPU increase in the gold and platinum subscribers, it's also indicative of the fact that the ROIs that they derive, right, you know, that justifies the extra ARPU that they are willing to pay for subscription to IndiaMART. And we have not seen the churn, you know, increase despite this increase in the ARPU in the gold and the platinum category. So that's a sticky customer base which continues to you know pay us more for the ROI that they are already deriving out of the platform.
Yeah. No, so, obviously, what we're trying to understand is what value the top 1 and top 10 customers are deriving. Obviously, it's the, you know, power of the platform wherein, you know, they are getting the, you know, bulk of the traffic. But, you know, in terms of the Silver Monthly, is it, you know, very different in terms of, how the platform functions for Silver Monthly versus, in terms of RFQ generated, or in terms of quality of, quality of lead being generated?
Sir, only difference in the quantity, no difference in the quality of the lead.
Yeah.
Only difference is you get more inquiry, more visibility, but it does not differentiate between the RFQ quality being distributed either to a silver or to a platinum.
Yeah, so-
In fact, most of these customers which are in gold and platinum-
They are serving all over India.
We're from the silver category itself. These are customers who have been able to build a team, you know, call upon leads, convert customers well, and that is when they've transitioned to a gold or a platinum subscription base. So therefore, you know, the gold platinum subscribers are coming in from that same base of silver itself. It's just that they've been able to use the platform a lot better than some of the other silver subscribers.
Sir, lastly, are we seeing any risk from the ONDC, or is ONDC an opportunity for us, wherein it can create an additional channel in terms of the MSMEs?
Whenever they become popular enough to be able to attract a B2B, I think it will be good for us. But they are only trying to do a very few categories like, you know, taxi and food-
Mm-hmm.
and maybe some grocery, little bit.
So, are we having any plans to, you know, go live on ONDC or any, any like-
Until unless they become popular enough in the B2C category and they, you know, see, there is no point being a very early adopter there.
Okay. Okay, sir, thank you, and all the best.
Thanks, Amit. Next question is from the line of Rahul Jain from Dolat Capital. Hi, Rahul, please go ahead with your question.
Hello.
Hi, Rahul.
Yeah, hi. Sorry to go into this question, which has been asked so many time, but in a different way this time. You know, while you're trying to solve this, attrition issue or subscriber issue, whatever you want to call it, have we done any analytics around the age demographics or let's say, additional behavior profile of the retained subscriber versus a high attrition, to understand, a much more deeper cause of it rather than the numerical part of it?
We are doing a lot more case studies, a lot more, you know, statistical analysis. Within the same category, within the same city, some of the customers end up doing better, and some of the customers end up having a lot more to tell about why this platform is not working for them. So there are contradictory things available. One of the most common thing is that we could see is that it is becoming very, very difficult for us to mature the buyer, and that is why we are trying to reduce the competition, manage the competition within the marketplace. So that's one thing that has come out clearly. Other than that, not many anything very common that is emerging.
Some of the time, many suppliers are very hyperlocal suppliers, so I don't want to deal outside of the Noida, Greater Noida. While IndiaMART as a platform historically was a global platform, then became a national platform, then became a regional platform, even today, it's not a hyperlocal platform. I mean, you can't have that I only deal in the sector eighteen and around in Noida. So, sometimes some of those customers who come in, they come with the wrong expectation. But other than that, mostly it is with respect to either maturity not being there, or we are getting very retail custom buyers. Because IndiaMART had become popular during the COVID, even for medicine, even for consumer items, because consumers were...
So a lot more retail buyers end up coming to IndiaMART. Despite the fact that there is a minimum order quantity written on the platform, the price is so lucrative because IndiaMART is majorly known for 2 things. 1 is variety of products, variety of suppliers, and the number 2 is the cheapest price because IndiaMART does offer the cheapest price for anything. There is no way to avoid retail buyers coming onto any web platform. The only thing that we can do is not reform their inquiries or not reform their RFQs. Because if we can identify that this buyer is a retail buyer, then do not matchmake him with 3, 4, 5 sellers.
So these are the two common feedbacks that we are getting, difficult maturity and retail buyers.
Okay, I think that's very helpful. Just one more thing on the ARPU side. You know, we're seeing significant improvement, so is there... I mean, obvious things are known, but is there anything you are doing specifically to raise the value for the high-paying subscriber that is driving this kind of a growth? And what is the most sustainable growth in ARPU for FY 2025 and 2026, if you have that in your mind?
So on the value front, the effectiveness of the relevant matchmaking is increasing. The higher the engaged the supplier is, the better we have his behavioral data. So we are able to push the more right kind of inquiries and RFQs to the... And that happens even better for a platinum or gold subscriber, because we have a very large number of data points, which kind of lead he is purchasing and which kind of lead he is not purchasing. So that's the value system, because if we have no data about you, we will try to send you buyers only from your locality and for all categories that you have indicated.
But if we have data about you, that then we are able to send, show you more RFQs, which are of your area of interest and of your categories of interest, rather than the categories that you've indicated initially. Because your behavior is a lot more repetitive. And since gold and platinum has almost like a daily basis, they use the platform, they end up leaving a lot of footprint on the platform for us to be able to do a better matchmaking for them. And that helps them get a more relevant lead. So that's a general algorithmic thing that is built into the platform. The second question was?
Yeah, appreciated the color. I mean, you, you touched one important element where you said, you can't help out much in terms of retailer, retail buyer coming onto the platform, but definitely just like you have, taken better control on the telesales part of it, maybe the next step over, over a period of time would be to take, care of the customer acquisition, the, the channel partner thing eventually into the system, wherein the understanding of the onboarding process and where is the mismatch happening in terms of expectation versus outcome, would be more closely monitored within the guidelines of the organization. I think that may probably help, at least on incremental basis, if not for the existing set.
Yeah. Thank you. Good suggestion, yeah.
That's it from my side. Thank you.
Okay, thanks.
Thank you, Rahul. Thank you, ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. Dinesh Agarwal for closing comments. Over to you, sir.
Thank you very much, ladies and gentlemen, for joining our quarter one FY 25 conference call. We have tried to address your queries in the time available, but if you still have any questions, please feel free to connect with our investor relations team. Their contact details are available on our website. Thank you very much. Have a great evening, and see you next time.
Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you for joining us. You may now disconnect your lines.