Q1 19/20

Aug 1, 2019

Thank you, Lizan. Hello, everyone. This is October 1 quarterly earnings call post our IPO. As you are aware, Indiamart got listed on BSE and NFC stock exchanges on last month, July 4. I would like to thank all the stakeholders, everyone, shareholders, investors, employees and customers for their continued support during the successful journey towards the IPO. On this call, would start by providing you a brief overview of the company, and then I would pass on the call to Prudhish Chandra, who will elaborate more on the operation and financial performance for the quarter. I hope you have had a chance to go through the earnings presentation that we circulated yesterday and also it is uploaded on Investor Relations website of Indiamart as well as on both the stock exchanges' website. You can go through the earnings presentation that would give you a lot more idea about all the information that we have to share this quarter. Just a brief overview of the company. Centiamart started its operation as a limited company in 1999 and today we are the largest B2B online classified marketplace with over 60% market share. CMR provides a robust two way discovery model with almost 88,000,000 registered buyers on our platform with 5,600,000 registered suppliers on our platform. In aggregate, we display more than 60,000,000 products and services on our platform marketplace, which are further categorized into 138,000 categories coming from 54 different industries and 1,000 plus towns and cities of India. On a monthly basis, we match make almost 37,000,000 enquiries with suppliers listed on our platform. That is almost 15 matchmaking every second on our platform. Our platform is completely free for the buyers. We earn revenue primarily through the sale of advertising and listing subscription packages to the suppliers, which offers a range of benefits including the priority listing to the supplier's stores, access to the RFQs depending upon the subscription service tier, premium number service and access to advanced lead management system that we have designed internally at Indiamart as well as an integrated access to the third party online payment gateways to all the paying customers. So, is the premium business model? Today, have 133,000 paying customers of Indiamart. Another important thing that I would like to highlight is that our revenue comes primarily from subscription and we collect subscription monies in advance for one year, two year and three years along with the monthly packages. While we collect monies upfront, we recognize revenue only on for the period of the contract. This results into a negative working capital and leads to a higher deferred revenue on our balance sheet. As a result, we generate lot more cash from operation as against the EBITDA. For example, last year FY19, we generated INR255 crores of cash from operation as against the EBITDA of about INR82 crores. As discovered, suppliers on our marketplace by searching products and services or by posting business enquiries called RFQs. Our business model is very unique in that sense that suppliers can choose the RFQ or the buyers as well as the buyers can search for the suppliers. This gives us very behavioral information about supplier preferences and we utilize those supplier preferences very effectively in our algorithmic matchmaking, thereby improving experience for supplier as well as buyer. Last year, on an annual basis, we had about seven twenty three million visits on our website in FY 2029. And seventy five seventy six percent of that visit were coming from the mobile website and mobile apps. In addition, I would like to emphasize that almost 100% of this traffic is organic. That means we do not spend any money in advertising on attracting any buyers or sellers on our platform. And our cost of buyer acquisition typically becomes zero that way. Our buyers are coming from 1,000 plus cities and towns of India. As you can see in the earnings presentation, only 36% of our buyers come from metro and rest of the buyers come from thousands of towns and cities of India. BIOS satisfaction remains at the forefront of our business model along with our efforts to provide BIOS with the comprehensive discovery platform. We also personalize the BIOS experience like BIOS search on India Mart by matching the behavior based preference of suppliers with respect to location as well as the product categories. Currently, are doing this with the traditional algorithms, but also experimenting with machine learning and artificial intelligence in the algorithm to use the supplier behavioral data to improve our matchmakings further. Along with our strong SME supplier base, we now have started to attract bigger brands and larger suppliers on our platform. Today, almost 100 plus suppliers, be it from Tata Motors to Tata Steel or Philips to Schneider, JCP, Fevicol, Pedilite, Mahindra and names like that have also started to advertise side by side of the SMCs on our platform. We believe that this would also be a good profitable growth opportunity for Intramart in terms to come. We continue to make investments in revenues that will drive future growth by focusing on increasing new customer acquisition as well as improving supplier engagement and retention. As part of these, we continue to explore and experiment with newer opportunities in fintech and SaaS. And now I will hand over the call to Pritiksandra, who will talk about the quarterly performance. Thank you, Dinesh. Welcome, ladies and gentlemen, and thank you for taking time out and joining us on our Q1 FY twenty twenty earnings conference call. As you would have noticed in the results declared yesterday, Media Mart achieved consolidated total income of INR152 crores in Q1, delivering a strong growth of 37% year on year, which in the past have been at around 25%. Looking at while we remain cautiously optimistic on the macro conditions and it would be our enabler to deliver solid performances, so for this quarter, the revenue from operations were at INR147 crores on a consolidated level, representing a growth of almost 30% year on year. The growth was primarily due to increase in the number of paying subscribers by 17% year on year to approximately 1.33 coupled with higher realization from existing customers. EBITDA margins for this quarter increased significantly from 11% in Q1 last year to 26% and driven primarily by increase in the revenues as well as optimum utilization of resources during the period. I just wanted to highlight that effective 04/01/2019, we have adopted in the AS 116 on lease accounting due to which as compared to last year, our rent expenses has decreased by INR 4.5 crore and there is a corresponding increase in the depreciation expenses and the finance cost. Excluding this impact, on a like to like basis, our EBITDA margin has improved from 11% Q1 last year to 22% Q1 this year on a consolidated basis. As on June 2019, deferred revenue has increased to INR $6.10 crores as compared to INR $4.61 crores last year, an increase of 32% on a year on year basis. This reflects the strength of our business model and also provides much better visibility for revenues in future. As a result of this deferred revenue, our cash flows are generally higher than EBITDA we generate. So our cash flow from operations for this quarter increased by 18% to INR 54 crores in Q1 against the EBITDA of INR 37 crores. We had a closing cash and investment of INR746 crores as in June 2019 as compared to INR448 crores as on June 2018, representing an increase of 67% year on year. Thank you very much. And we are now ready to take any questions. Thank you. Thank Ladies and gentlemen, we will now begin the question and answer session. First question is from the line of Jay Nandwani from Perfect Research. Please go ahead. Good evening, I've got a few questions, which I will be listing on. Question number one, Is the model different in terms of the internal sales part? Question number two, what has been the reason for negative net worth historically? And also, it is observed that profitability was raised close to IPO by reducing the advertisement spend from more than 19% of sales in FY 'sixteen to 1%. Now can we still grow without that advertisement? Question number three, maintain does the company plan to make investments in startups from the company owned funds like InfoSD? Or does it seem that the promoter, Mr. Dinesh, had investments around 32% in personal security? And lastly, what went wrong with the Torexo transaction model and companies like Qudan are doing quite well? Goodwill created was around INR 100 crores and then it was impaired in a short time. And what is competitive how do we plan to sustain in that competitive landscape where the likes of Alisoft and Amazon exist? We are platform being a horizontal one, which world over are leading corner. In India, this one is a good example. So one similar fate to India market. Thank you. Excuse me, sir? Yes? Sir, we are not able to hear you. Yes. Now we are back. Okay. Thank you. Okay. So shall I repeat my question, No questions are noted. We'll try to answer one by one. Okay, sure. I understand your first question was why our gross assets are only INR $6.07 crores, whereas Geraltile gross assets are INR 125 crores or similar. INR 160 crores around. Yes. So I think I do not know detail I haven't agreed in detail about this. But I think they have purchased office block. And if I remember correctly, when the IPO came, one of the important clauses of IPO was to make office blocks. I think they have taken a big office block in Bangalore. So I think that is why their gross block is higher. Actually, I'm talking only about the computer gross block that I checked in the notes. So it is not about the property, it is only about the computer. INR160 crores of computer, I am sorry, I don't know. Maybe they are maintaining their own data center, we only lease data center from outside. So I would not be able to answer on behalf of Jaz. Ours is all the computers that we have is the local computers that we own for our employees. And all the servers and everything, they are leased on a yearly or a monthly or a quarterly basis from the data centers, which are located in U. S. And in Singapore as well as in India. Second question is negative net worth. So let Prateek answer that one and then I'll come back to So this negative net worth question is with respect to the historical financial statement. And if you see in terms of the financial statements, there are when you look at historical financial statements, there are two, three different adjustments that you need to look at. Specifically, expense, which you would see in our profit and loss historically has been a net loss on financial liability at SCTPL, which was essentially the difference between the fair valuation of preference shares that we had as of the period end. This was introduced by virtue of the Ind AS. It was a non cash expense and only an accounting adjustment. And it was there year on year. Before IPO, we converted all the dividend shares to equity shares. So this expense is not expected to come in the future. So one, if you adjust our net worth for this entire adjustment, you would find that one net worth was actually positive in even years More prior to the importantly, the second question related to this was with respect to the advertising. So advertising, if you notice my historical financial was last done majorly in FY 'eighteen. And that was essentially the planned advertising that we did, which was campaign we did. We hired Jifan Khan, who was our brand ambassador at that point of time. So we did a TV advertising business. After that, we haven't done any advertising as such, so it is not that any advertising decision was with respect to the considerations of the IPO. We typically decide for doing advertising depending upon our business needs. And currently, we believe that we do not require advertising as both the suppliers have been going pretty handsomely for us. And most of the growth has largely been organic. So the advertising was only for the brand and we believe that our plan has an enough visibility as of now. Another point that you said that profitability is only achieved after dropping the advertising. So if you look at our earnings presentation uploaded on the stock exchange as well as on the India Mart Investor Relations website. If you go to the slide number nine, which is cash generated from operating activities, though the advertising expense prior to that in FY 'fifteen-'sixteen that you will see was to the tune of INR30 crores to INR40 crores. However, the cash generation has improved from INR 15 crores to INR $2.59 crores. So even if we had the cash even if we had the INR 25 crores to INR 35 crores of advertising, we would still be generating cash in excess of INR200 crore. So that is not really just to cut down on the advertising to become profitable. We have genuinely become profitable by increasing our revenues by 30% and continuing our cost at 16%, 17%. You can adjust it for the advertising cost as well, still we are far more profitable quarter on quarter and year on year. So now coming to the third question on the market share. So B2B market place is about $700,000,000,000 opportunity in itself and this study was done about three years ago by Walmart that the overall B2B market size is about $700,000,000,000 in 2020. Another statistic is that digital advertising market is growing at about 25% per annum and slated to become about INR25000 crore by 2021. So if you really see, there is a market itself is growing at double digits beyond our own reiteration of growth. And when we say 60% share, it is only in the B2B classified segment. We do not take the advertising and search segment. So I do not see any immediate need for worry in terms of growth rate. We continue to believe that as in the past, we have been growing at around 25% plusminus, we should be able to hold our growth in the customer addition as well as in the ARPU, resulting into revenue growth of about 25%. As you can see historically, we have been growing at about 15% to 20% in the net customer growth and the rest of the growth is coming from the increased realization from revenue per customer. So we continue to believe that we'll grow. Regarding Tullxo, Tullxo as a business we started in 2014 and Rajesh, would you like to tell me the learnings from the Tullxo business that we have taken and why instead of running two separate brands, it made sense to do one single brand and supply the learning at Indamar and how the cash flow has increased because of that. So in fact, if you go back and see a typical B2B commerce model, it involves cataloging, pricing, involves knowledge of inventory. And then we had logistics and marketing as two additional stuff. Now, when we did Olexo, we realized that the maximum value that buyers on the platform got was from a detailed product cataloging, availability of pricing of these products and these two things in itself were one of the biggest challenges that buyers typically would face. Just to give you an idea, the farther you are there from the larger wholesale markets of Delhi or Bombay, the overall prices become less and less transparent for you. Capacity keeps on increasing. Sitting in Agartala, you will never be able to figure out that product X, which may be selling at INR100 in Agartala actually sells for INR70, INR80 in Bombay Delhi. So that was one realization that if we can get detailed product specification and if we could get prices for a large number of categories instead of just focusing on the MRO products that we were doing at Alexo, it would actually be able to gain substantially, and that is one of the reasons we decided to instead of focusing on just one category of MRO, take it to all the categories which are available on India Mart on the platform. Second, India Mart, if you see, we get a substantial amount of organic traffic by virtue of what we've created over these years, whereas in Olexo, we were going ahead and spending money on acquiring this traffic because this was a new platform that we had created. So from a business standpoint, over a period of time, we realized that it would make much larger sense if rather than investing on acquiring traffic at the LEXO, why don't we use the overall traffic which we are gaining at India Mart for this purpose? And also, because of detailed product catalogs and because of pricing, if you look at our traffic growth over the last two point five, three years now, we've seen a substantial jump happening on India Mart platform. Lastly, one of the things that we were doing at Tolexo was logistics. We realized that unlike B2C logistics, where home deliveries were something which were not being done earlier at a mass scale, B2C logistics have been happening for ages now. So the transportation setups that are existing in the country are extremely well suited to a B2B scenario. So instead of adding a lot of value there, we were unnecessarily adding one layer of cost because we were coming in between. So we decided that instead of becoming a roadblock there, it will be easier if we let the buyers and the sellers actually manage the deliveries between themselves. And therefore, because of these three reasons broadly, we decided to in fact do or to use the learning from Talexo at India Mart, which was a much larger platform and continue to do and what Solexo was doing. Now with respect to your question on Uran and the other competitors, as Dinesh mentioned, the entire B2B space is a $700,000,000,000 space. And you are going to see multiple players coming in and looking at different segments of this B2B market altogether. So specifically, if you go back and see what Uran is trying to do is very similar to a metro wholesale gas and city business or an Amazon business for that matter, that they're working on taking limited number of products, which are mostly to do with FMCG, for example. And they would target digital owner and buyers like them. Secondly, they're focusing on building up their own logistics, logistics, means having trucking being done internally and warehousing being done there. Thirdly, they are also going ahead and offering credit to buyers who are buying from sellers on their platform. So all those three things, if you really go back and see, first, whatever Metro Cash and Carry and Walmart does is very different from the product or the kind of coverage that India Mart has. Again, just to give you an example of some of the recent products which have been inquired for on our platform. First product is Vortex Tube. Second is Hot Liquided Iron, Industrial Wall, right, Poly Electrolyte Powder, right, Octanol Solvent. Now when you look at products like these, it will give you an idea on the kind of coverage we do as far as products in B2B are concerned, and that's extremely wide rather than getting focused on limited number of products or categories there. Secondly, as I mentioned, we don't really see out of our own experience that we add value into the logistics space. Let Udaan go back and do what they would have their own philosophy. When we look at what they're doing on the credit side, I think that's an interesting area for us to look at. It is something can be replicated. There are no entry barriers there. And therefore, over a period of time, we will definitely evaluate and see if we can offer the same for our own customers and users on the platform. Another question that you asked was around the investments that I have made in my personal capacity and what would be the India Mart strategy going forward. So, I have been very active investor, mostly looking at two platforms, either the Thai platform or looking at the GSF platform, Global Super Angels Class Forum. So most of my investments have happened through that. Yes, those investments are mostly small investments, 40 to 10 lakh each. In certain cases, it has gone to INR 20 to INR 5 lakh. The whole idea is to learn about the investment and also to learn about the startup ecosystem and the new things that are happening. And India Mart and personal investments are completely dealing from that perspective. So what I do for my learning purpose or for my giving purpose or for my knowledge grasping purpose is not directly to be reflected into the India Mart strategy. India Mart will take its own course of action. The broader use of cash that we look at India Mart, one, obviously, we have now adopted dividend distribution policy. The details of that would be uploaded once the minutes of the meetings are confirmed on the website as well as on the stock exchange. Two, I think we will continue to have with the size of our company, we'll continue to build a cash balance or a balance for our own usage tomorrow in case of any interesting opportunity comes for acquisition. And three, as I said, we continue to focus on fintech and SaaS opportunities and continue to look forward to any partnership opportunities either by way of investment or by way of acquisition. So if any of that will come, we'll definitely look at that. That's about it. Now we can move to the second question. Second person. Thank you. The next question is from the line of Vivekanand Subramaniam from Ampu Capital. Please go ahead. Hi. Thanks for the opportunity. I have two questions. The first one pertains to the gross margins that you earn in your business. How do you look at that evolving? What are the various factors involved there? And related question on margins is you mentioned about customer acquisition cost being negligible. Can you throw some light on the lifetime value of the customers, quantifying that and also explaining customer churn? Second question is with respect to the business inquiries. What are the factors that drive growth here? And can you talk a little bit about your strategy in providing, So Vivek, to your questions on the gross margin, the way we look at it, if you look at our financials for the year ending March, specifically the standalone financials, you would see a note in the financial statement which talks about our view on the gross profit. And therein if you see, our gross profit last year in March 2018 were more at around 65 odd percent, which has moved to around 72% in this quarter. The way we see our gross profit is that in our business, essentially there are two things. One is the acquisition of the customer and second is the servicing, which is essentially the renewal and the upsells of the existing customers. So any cost which is related to the existing customers is considered above the line, which is what we're referring it as customer service cost. All the other costs, whether it's the bidding and distribution, the technology, the marketing, that comes below the line of the gross profit. So I would encourage you to go through that note and that note explains this very clearly. In case if there are still any doubts, you could let me know and I can help you understand that. Excuse me, sir. Your voice is breaking up. Yeah. Am I able to hello? Yes, sir. Please go ahead. Yeah. I was saying I saw the note, that's why I was looking for the factors that drove an improvement there. Okay. Now so if you see, there are mostly improvements coming from the cost of servicing and revenue per customer improvement and revenue per person improvement. So as our product is becoming more self engaging, the customers are able to upgrade to higher services as well as one single person is able to renew and serve and upsell lot more customer than he was able to do earlier. So as a result, our overall cost is only increasing at 16%, 17%, whereas overall revenue is increasing at 29%, 30%, which is resulting into the operating margin. The main operating leverage that you will see is the increasing ARPU that we have and decreasing cost that we have. Understood. And could you also Now coming to the coming to your second question, about the cost of customer acquisition. So in a typical market case, there are two kind of cost of customer acquisition. There is a cost of buyer acquisition and there is a cost of seller acquisition. So while I was referring to the cost of customer acquisition, I was referring to the cost of buyer acquisition. In many marketplaces, you will see there is an advertising being done for cost of buyer acquisition. So whether it is any transactional marketplace or travel marketplace or any classified marketplace, so our cost of buyer acquisition is INR 10,000,000,000. Now coming to the cost of seller acquisition, our cost of seller acquisition versus its lifetime value. So our cost of seller acquisition to lifetime value is about seven to eight times of the cost of customer acquisition. Our typical cost of customer acquisition is about seven to eight times the typical lifetime value of our customer is about seven to eight times of the cost of customer. You asked for the churn, So if you look at our 133,000 total customer base, about two third of the customer base is in the annual and multi year segment and about one third of the customer base is in the monthly segment. In the two third annual and multi year segment, we typically see a churn of about 18% to 20%, whereas in the monthly segment, we typically see a churn of about 5% on a monthly basis. That 18% to 20% is on the annual basis that I was talking and 5% to 6% of the 5% approximately of the monthly churn that we are talking. So that is about LTV and churn. Third question that you asked is about business enquiries. So business enquiries come from two different angles. One, increase in traffic. An increase in traffic again happens because of the two things. One is increase in unique users and repeat visits by the user. Second, their conversion on the website. Their conversion on the website improves over the call and over the RFQs. So that is how our inquiries have increased. If you look at our overall number of inquiries that have increased, let me give you exact numbers. Our registered buyers have increased from March 16, R27 million to March 17, R69 million, March 18, R60 million, March 19, R83 million and now June 19, about R88 million. In terms of total number of inquiries, total number of inquiries, March 16 is RM 115,000,000, March 17 is RM 157,000,000, March 2018 is INR290 million, March 2019 is INR449 million. On a quarterly basis, we are now generating now doing a matchmaking of about INR113 million matchmaking. As you can see that we peaked out in around December and last quarter was there was some subclueness because of the market challenges that you see. However, it has started to improve again in this quarter. And we believe that there is a very strong inquiry growth. If you convert that total inquiries into the per customer inquiry, then you will see that over the last three, four years, the number of inquiries delivered per customer has also almost doubled or tripled over the last three years. Okay, then we can move to the next. Thank you. Thank you. Next question is from the line of Adya Sen from Jefferies. Please go ahead. Hi. Good evening, Dinesh, Rajesh and Prateek. Firstly, congratulations on the good set of numbers. I just wanted to check on the revenue growth, if I were to sort of speed it up between paid subscribers versus annualized revenue per subscriber. The paid subscriber addition or at least on a sequential basis seems to have been a bit muted, while the annualized revenue per subscriber seems to have seen very strong growth. Could you explain the reasons for both these trends and how we should look at it going forward? So to your questions on paid subscribers as well as ARPU, if you see our paid subscriber year on year has grown by around 17%, wherein for quarter on quarter, yes, we have seen some subunit. There were essentially openings that has happened, which has resulted into our customer acquisition rate to this quarter to be 3,000 approximate net customer addition as compared to almost 5,000 to 3,000 that we used to do every quarter. One is that as we were explaining that we have two kind of customers, one is monthly customer and the second one is the annual and the multiyear customer. So we took the price hikes of annual entry level customer from 25,000 per year to approximately INR 30,000 per year plus tax. This price hike was effective January 1. And in our experience, we have seen that it typically takes six to nine months before a price hike is actually absorbed by the market. So there is some slowness in the terms of customer acquisition, what we were making, which has been continuing, which we expect that it should cover up in the next one, three months. The second is more about the customer churn, which has increased slightly because of the ongoing toughness in the macro environment that we foresee. So as we expect economy improves slightly, we expect that this churn rate should certainly kind of come down and should stabilize to the earlier levels that what we've been experiencing in through the last year, year and a half. I think looking at the last month number, I can see that we are very large on track to add similar number of net customer addition next quarter as we have been doing in many other quarters. Right. And the higher revenue per campaign is because of the pricing that you've taken? Even on a sequential basis, you said it was exactly first glance, even on a Q o Q basis, the increase seems pretty sharp. Arya, price hike doesn't result into average realization per customer per revenue immediately. Ours is more of a multi tier, multi year model. So as you can see, we have four tiers of subscription, silver annual monthly silver annual, gold and platinum. And within platinum, we have multiple tiers. And similarly, we have monthly annual and multiyear subscription. So average realization comes from two, three things. One, increase in the increase in prices of any particular tier as well as mix changes. So as you will see that our mix slowly and slowly has been moving towards platinum being more and more than the overall subscriber base. As we have been saying that our 40% of our overall revenue comes from top 10% of our customers. So that is also resulting into and we keep taking price increases of the various packages at different different intervals. And since we have a lot of customers for monthly and annual and multiyear mode, the overall increase is a way to respond of what goes on into our deferred revenue and what comes out as a revenue. So I think it's a very we can expect a strong ARPU increase or a realization increase for the next two, three quarters because we had seen last year, there has been a strong collections increase, increasing into higher deferred revenue. Right. But even the mix change impact should be a slow thing, right? Because on a sequential basis, the increase seems pretty sharp. Sequential basis, where are you seeing? Let me see. 41.7 going to 43.6. Let me see, let me see. I am probably going answer. No, sir. So, Arya, what you're doing essentially is that you're taking the patient end customer. So if you look at Q o Q, essentially if you see from Q3 to Q4, there has been a good increase in terms of the number of suppliers specifically towards the mix. So since we're taking the closing customer as a denominator, that is why it is reflecting it that way. Otherwise, it has largely been gradual improvement in mix, which we've been seeing over the years. Okay, understood. Fair enough. Secondly, could you remind me what is the you've given the churn rate separately for the two thirty days, what's the combined churn rate and how much was it maybe six months back or a year back? Actually monthly and annual, you will not be able to compare combined. So as I said, monthly, you will have to look at separately and annual and multi year, you will have to look at separately. Even we tried coming to a single number, which we could track on my dashboard, it is hard. It is very confusing. So we always have to track two different numbers. Monthly numbers on a monthly churn basis. On monthly churn basis, it used to be 4%, which has increased to about 5%. And the annual churn numbers, which used to about 16% to 18%, which has increased to 18% to 20%. Okay. Also on margin, this quarter has been very strong. Is there a seasonality that we should expect going forward? And what is the sort of outlook on margins from here on? So margins improved continuously. Continuously, our revenues are improving at about 25%, whereas our cost increases at 78%. Only quarter four is an aberration because in quarter four, while our revenue continues to improve at 25%, the cost suddenly increases big time because quarter four has a higher collection quarter or a higher billing quarter, which results into a higher variable And that is why the margins actually look lower in the quarter four, whereas the cash flow from operation looked much higher in the quarter four. I can give you an example of the last two quarter 4s. So the quarter four of FY 2019 So quarter four of FY 'nineteen, whereas revenue grew at 28% overall revenue, the expenses were no, the manpower expenses were at 45% of the total expense as against 39% in the previous quarters. So that typically results into the EBITDA, which is about 15% as against 20% EBITDA in the previous quarter. So if you really see margin improvement is happening slowly and slowly only, about 1% per quarter or so. Except that the quarter four, you will see a margin dip, whereas the cash flow from operation in the quarter four is far higher. So quarter four cash flow from operation as against the INR $50.60 crore cash flow that we are doing now per quarter, quarter four was the INR 98 crores cash flow from operation. So it's very similar to nopiri.com business. Fair enough. And lastly, the traffic growth seems a bit tepid. Any particular reason for that? I think I've already repeated. Yes. Anyway, yes. As I already said, the traffic was growing very rapidly over the last three years. So if you really see our traffic and inquiries, they both have grown tremendously over the last three, four years. So the registered buyers have been growing at about 45% CAGR. The traffic has been growing at 40% CAGR and the business enquiries delivered has been growing at 57% CAGR. So this was the case until the quarter two, quarter three also. I think quarter three towards the end of the quarter three and the quarter four, there has been some tepid response due to the demand in the market, has seen again an uptick in the June. And we believe if the economy improves quickly, that should not be a problem. However, currently our number of leads and number of RFQs per customer continues to be much above the any customer expectation. We continue to lag behind on the number of suppliers rather than on the number of buyers, because in the last three years, a lot more buyers have come in onto the platform, whereas the supplier growth has been only at 125%. So I think there has been a tepid response, but I guess that is due to the economy while it is improving again and hopefully it will improve in the next quarter. Right. Thank you. That's all from my side. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two participants only. The next question is from the line of Shiv Kumar from Unifi Capital. You said that the top 10% customer gave you 40% of revenue. What was the trend over the last few quarters and last year for full year? If you look at yearly trend, it used to be 38% in FY 'seventeen, 39% in FY 'nineteen and about 40% in FY 'nineteen and continue to remain at about 40%, 41% to thirty days. And the number of top end customers have also increased as you can see, top 10% customers. Okay. Essentially, are the platinum plan customers, right? Not exactly. Not exactly, yes, but by and large, like that. By and large, they would be platinum. So maybe 8090% would be the 1000% customers would be platinum. And with regards to the decrease in paying sub prices, which was slightly on the lower side this quarter, you're again guiding that you will come back to the regular run rate of 5,000 to 6,000 compared to 15,000 we got to see in this quarter. What do you see that confidence that you can support given the recurrence and all scenario? Is that okay? Depending upon our last month closing, which closed yesterday. Can you quantify it, Dinesh? I am not allowed to quantify that. Okay. And finally, one question on the fixed type trend. The fixed growth has been really strong with SEA. So should we again, like you said earlier, should we assume that you would increase it by 1% in the second quarter? Or would it be actually more than that? Juuk has a substantial Y on Y basis this year. Okay. So it would be a little difficult to give you a quarterly guidance as well. But if you look at historically, our revenues have been growing at the rate of around 25%, what percent, 25% to 30% growth rate. Our expenses have been growing at around 17% to 18%. We expect that the similar trend should continue. So accordingly, I'm sure that you can work out as to what the EBITDAs would look like. Got it. Thank you. Not a problem. Thank you. The next question is from the line of Rishabh Shabiri from MT Global. Please go ahead. Line for the current participant has dropped off. We'll move on to the next question from the line of Adajas Roy from KG Capital. Sir, I wanted to know what is the optimal level of cash that you want to maintain and after which you will think of other revenues, like you said, you're planning to do transactions and you want to give it further business proposal. So is there any ballpark number that you want to maintain? So when you look at the total capital, I think this number, if you want to specify what is number which will be good forever, it will never be one number. It is a moving number altogether. Depending upon at what scale, at what size we are operating, what are the opportunities we have, what are the future plans we have, I think this number will continue to change. What we see is that the Board essentially takes a call on this aspect. And basis that, we will go back and decide what we need to do with extra cash if we have any at that point in time. So I think getting a specific number is not possible at this point. Okay. And as you mentioned, sir, you are looking into lending business as well. So are you planning to go on your own? Or are you planning to do it through a partner or a partner on NBFC to move into it? So this is Dinesh here. One, as I said, we only said that we would look at Fintech business. Currently, are only doing the payment business. Since somebody asked question about Udaan, we say that lending to the buyers and sellers looks like an interesting opportunity. So we will study that. Primafassee, we do not believe in lending from our own books. We believe in remaining a technology platform and connecting the lenders to the lendees, I would continue to follow that route rather than using our own books for lending. That is what is the understanding as of now. As I said, these are way too early questions to be even answered because we have only found that space to be investing, not yet done anything on that on the ground. Right. So just wanted to know your thinking. I got it. That's it. Thank you, Rahul. Thank you. The next question is from the line of Jeevit Bhavath from GS Investments. Please go ahead. Congratulations on good set of numbers. First of all, I wanted to know what was the further income of INR14 crore? Thanks, Vivek. So your question of other income, as I discussed earlier that we have close to INR $7.45 crores of cash in bank as on June 30. Most of this investment is largely in the mutual funds and the liquid funds. So, charter income is essentially the mark to market changes in those investment values as of the period end. Coming to your second question, which is around slowdown and moat and opportunity. So opportunity wise, there are two sides of the opportunity. One is what is the total SME size. About 60,000,000 SMEs are there in the country. About 20% of them use e mail or some kind of Internet for their business. About 1.2 crore GST registered SMEs are there in the business are in country. On the buyer side, as I said, about INR 700,000,000,000 B2B opportunity is there. I think that and on the digital advertising side, about INR 25,000 crores digital advertising market is going to be there. So if you look at the macro side, India is growing, interest per capita income is growing, number of SMEs are growing, their overall turnover is growing. This slowdown which has happened probably is for a far more temporary period, we have seen word over whenever a large scale reforms like GST has been introduced, the economies have had certain level of hiccups. In fact, India was much better economy to be able to handle that without much disturbance. So I believe that these disturbances are temporary in nature and should come back. Coming back to our moat, as we said that we are not dependent on any single category or any single geography. There are machinery to medical to agriculture to clothing to all kind of industries that we do. No single industry accounts for more than 9% of our supplier base. And even our buyer base is very, very scattered around the country, only 35%, 36% of our buyer base comes from metro cities. So two third of our buyer base come from Tier two, Tier three and Tier four town cities and villages. So I believe that we have a very good dealer penetration in terms of buyer and very good behavioral data to be able to improve our matching going day by day. So we continue to believe that India is a good opportunity, SME is a good opportunity and B2B is a good opportunity. I think I have answered. Yes. What about the growth you're expecting, sir, from the bottom line and any chance of technological acceleration in technology as which we have, you can highlight that also, sir? So technological side, let me answer first because that is closer to my heart being a technologist. We have seen our company evolve from being pure desktop based company to mobile website to mobile app to multiple mobile apps. So I think now we are a company which operates on a service oriented architecture and is able to serve various things. You will see voice and vernacular use on our platform. You can also see lead management system and SaaS on our platform. Similarly, you can see use of fintech on our platform and use of artificial intelligence and machine learning on our platform. I think we continue to remain very strong and very ahead of the technology. You can try our website and try our voice search and multilingual search and also compare that with other platforms that are available in the market. The growth So growth rate, as you can see, this particular quarter, we have had 30% growth rate. However, in the last four, five quarters, we have had 25% growth rate. So I think going forward anywhere in between the two for the next two, three quarters, we can expect. Okay. We can move to next question. Yes, sir. The next question is from the line of Maldisha from Tractical Advisors. Please go ahead. My all the questions have been answered. Thank you. Thank you. The next question is from the line of Deepa Pudat from Sire Capital. Please go ahead. Yes. Thank you very much for the opportunity. Now sir, we are talking about a big opportunity growth rate, big opportunity for in front of us in of our B2B business. And still our paying subscriber, maybe it grew only by 2% this quarter, maybe it will come back to 5,000, which is still is a 4% quarter on quarter growth. So is this a possibility that we can grow it at a much faster rate given the kind of opportunity we are talking about? So, now when we go back and look at what are the factors that will drive net adds, one of the important realizations we've seen is the overall Internet adoption that we get to see amongst SMEs. When you look at the KPMG research report, which was done last year, out of the 63,000,000 SMEs that are there in India, only 17%, one-seven percent of all the SMEs use Ethernet for some business purposes, which also includes having an e mail account. So when you go back and look at this penetration and compare this with what we see in China, China in 2015 alone had a 34% penetration there. So what we are seeing is as this penetration continues to improve within the SMEs, the rate of net additions can continue to improve. However, it's the movement of this adoption, which will be one of the biggest drivers on what kind of growth can we really go back and achieve for ourselves. So let's just hope that with the DST being launched, Aadhaar being pushed, digital adoption being pushed by the government, we see a higher adoption rate. And I think once that happens, we are probably the best placed company to exploit that increase from there. So is there any kind of data that you track by which is there any data you track by which you will be able to tell that adoption rates has increased or is it on the increasing trend among the SME? Because 70% of 63 is still about INR 10,000,000, right, is about INR 1 crore customer whereas we have about INR 1.33 lakhs of being subscriber. Obviously, when you look at adoption rates to customer conversion, that number, as I said, will continue to improve as more and more people see you play. So we cannot have a direct correlation that if there are 10,000,000 SMEs who are using Internet today using an e mail, what would be the net customer adds that will sort of result in? Let me answer it the other way around also. So if you really see a comparable company, which is 1688.com in China, so that company is Alibaba subsidiary company, and they have about 1,000,000 paying customers. So and China is 10x bigger economy and 10x bigger size. And they are exactly very similar model as on as in the MR domestic B2B marketplace. So I think and given that we have INR 1 crore bought GST registered businesses and today 90% of our businesses come from GST registered businesses only. So I believe that there lies at least a similar kind of opportunity ahead of us. The net add, there is a typical migration of the mindset that has to happen because product industry and manufacturing industry by and large is habitual of either a dealer distribution based sales network or a walk in or a call in based sales network. Lead management based sales network is not the buffet of the product industry or the manufacturing industry. So that is where most of the churn or most of the adoption related challenges happen. And that is causing slow adoption once a lot many people and the newer generation is habitual of lead management based adoption, I think the adoption rate should improve. So that will inherently increase our customer net addition from 5,000, 6,000 to maybe 8,000, 9,000, 10,000 rate? I can't quantify, but yes, I mean, that would be our endeavor. Understood. And my second question is regarding your total number of paying subscriber, which is about 1.3 lakhs. So any kind of vision we have, let's say, how many years you want to reach 0.5 or 1,000,000 kind of paying subscribers, this is the time frame that we want to achieve that. Any vision on those front would be helpful. I can only give you a historical presentation. In 2,001, I had one lakh total number of free listed companies or as against INR 55 lakh today. And I had only 1,000 paying customer by then. And I used to tell my sales force that we will make all these as our paying customers. And in 2019 or 2018, we became 100,000 customers. So given that now we have 5,500,000, maybe in twenty years' time, we could have a 5,500,000 paying customers. 5,500,000. Okay. So here, have about 5,500,000. Understood the context. Sure, sure. Understood the context. Yes. All the way back. Thank you so much. Thank you, sir. Thank you. As there are no further questions, I now hand the conference over to the management for the closing remarks. Thank you, ladies and gentlemen, for joining our Q1 FY twenty twenty conference call. I'm very happy that all of you could take out time and join, And we are very delighted to have a interest and participation that you have shown and we'll continue to interact with you through various platforms. You can visit our Investor Relations website as well as keep an eye on the stock exchanges. In the meantime, if you have any further questions, please do reach out to our Investor Relations team. And thank you very much once again. Thank you.