Good evening, ladies and gentlemen. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Q1 FY24 earnings webinar. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer, Mr. Brijesh Agarwal, Whole-Time Director, Mr. Prateek Chandra, Chief Financial Officer. Before we begin, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to slide number three of the earnings presentation for the detailed disclaimer. I would like to hand over to the call to Mr. Dinesh Agarwal for his opening remarks. Thank you. Over to you, Dinesh.
Good evening, everybody, and welcome to the IndiaMART FY24 earnings webinar. Sorry for the slight delay in starting. I hope you guys can hear us clearly. We have already circulated our earnings presentation, which is available on our website as well as on the stock exchange website. I'm sure you would have gone through the presentation, and I would be happy to take any questions from you. I'm pleased to report that IndiaMART has started its financial year on a positive note, with about 36% year-on-year growth in collections to INR 321 crores and 25% growth in deferred revenue to INR 1,202 crores. Revenue from operations also grew by 26% to INR 282 crores. Total traffic and resulting unique business inquiries on the platform remained stable.
In people time, we added about 238 new people, new employees across sales, service, product, and technology in this quarter. We will continue to make these investments in strengthening our organization to leverage the growth of it. In this quarter, we decided to return count in our entry-level packages and restore the prices to the pre-COVID level. Due to this change in the price of the net customer addition of 5,000 was lower than our guidance. It would take us at least one more quarter to normalize the impact of this pricing. We should get back to our guidance of seven-eight net customer addition per quarter from Q3 onwards. As you may have noticed, we have expanded our board with the addition of Mr. Aakash Chaudhry. Aakash is an entrepreneur, co-founder of the Aakash Educational Services Limited.
He successfully scaled up Aakash Institute before selling the business to the BYJU'S. We look forward to working with him closely and benefit from his experience. Before I conclude, I would like to say that we have reviewed our capital needs in this quarter and approved the distribution of surplus funds, as it is INR 500 crores to the shareholders by way of buyback. This buyback remains subject to the approval of shareholders. Overall, we stay confident of growth on all important metrics as we see improving macroeconomic environment and increased penetration of internet by business. I will hand over the call to Brijesh for update on Busy Infotech. Thank you, and over to you, Brijesh.
Hi, good evening, everyone. Busy has delivered a revenue of INR 23 crores in the Q1. This represents a YoY growth of about 94%. The revenue from operations have grown by about 36% to INR 13 and a half crores. The deferred revenue has grown by 37% to INR 36 crores. The EBITDA for the quarter stood at INR 3.1 crores, which is a margin of 33%. The net profits for the quarter was INR 3.6 crores. We generated positive cash flow of INR 11.1 crores within this quarter. We've also sold about 9,000 new licenses in Q1 itself. Now, the total count is up to 340,000 licenses at the end of June 2023.
The overall performance has been in line with our expectations. We are focused on the Busy run project, as we had discussed it last time. Hopefully, we are on track to achieve that. With this, I will hand over the call to Prateek, so that we can discuss about the financial performance.
Good evening, everyone. I will take you through the financial performance for the quarter ending June 2023. Consolidated collection from customers and revenue from operations grew by 26% each to INR 321 crores and INR 282 crores, respectively. Deferred revenue for the quarter stood at INR 1,202 crores, an increase of 25% on a YoY basis. IndiaMART standalone collection from customers for the quarter were at INR 298 crores, and revenue from operations stood at INR 268 crores, registering year-on-year growth of 23%- 25% respectively. Our growth in revenue was primarily driven by 16% increase in paying subscription suppliers and 8% improvement in ARPU due to higher monetization. Deferred revenue were at INR 1,165 crores, representing a YoY growth of 25%.
IndiaMART standalone EBITDA stood at INR 76 crores, representing a growth of 27% YoY and margin of 28%. Consolidated EBITDA was at INR 77 crores, representing a margin of 27%. Our consolidated net profit grew substantially to INR 83 crores as compared to last year, primarily due to changes in fair value gains on treasury investment. Consolidated cash flow from operations was INR 91 crores, and cash and treasury balance were at INR 2,394 crores as at the end of this quarter. The buyback proposal, as approved by the board, is for buyback up to 12.5 lakh shares at price of INR 4,000 per share for an amount not exceeding INR 500 crores. This is proposed to be done by a tender offer route with pro-rata participation from the promoters and the promoter group.
As this accounts to around 24% of the share capital in Aerchain and approximately 2% of total paid-up equity shares, the proposal remains subject to the approval from the shareholders. Thank you very much. We are now ready to take on the questions.
We will now begin the Q&A session. If you wish to ask a question to the panelists, kindly raise your hand and allow camera and microphone access. Alternatively, you may type your question in the chat menu, and we will revert on it. Please restrict to two questions so that we may be able to address questions from all the participants. We will wait for a couple of seconds while the question queue assembles. Just waiting.
First question is from the line of Manish Gupta from Solidarity Advisors. Hi, Manish, please go ahead with your question. Manish, you're on mute.
Thank you for the opportunity. This is, I have two questions. First question is for Prateek Chandra. That if you look at your revenue to collection ratio, FY22 and in FY23, it is about 80%. Is my understanding correct that all your selling cost is written off in the same year? Because it doesn't show any, there's nothing in prepaid expenses, in selling costs, and therefore, if one will follow the matching principle of selling costs apportioned to revenue proportionately, under IFRS, your reported margins will expand by 4% or 5%?
Manish Gupta, to answer your question, the financial cost we have reported is as per the India, which is pretty much in line with the IFRS. What it talks about is that essentially any cost that you incur needs to be recognized upfront. Since we, you know, we pay upfront for the customer acquisition, which is primarily a setting and investigation cost, we recognize the entire cost upfront and depending upon the period of the contract, the revenue gets recognized. Your point is correct that from looking at a pure matching perspective, of course, the costs are taken upfront, while the revenues are taken over a period of contract. Not all the costs, because there are servicing costs also, and the servicing costs would be coming commensurate to the revenue.
Yeah, my point was only on selling costs, which is about 20% of revenue. To the extent that all the selling costs are being recognized upfront, the true profitability is actually higher than reported profitability.
Right. Actually, calculated by way of the collection from customers. There is a slide on collection from customer and collection margin.
My second question was that our top 10% of customers are approximately 50% of revenue. Is it for, you know, you have such extensive disclosures, is it possible to add a disclosure on gross additions and net additions of your top 10% customers?
The top 10% customer is nothing, does not direct inward or outward from there. It is just the total number of customers, which is INR 208,000, and top 10% becomes, you know, 20,800 customers. The revenue recognized from the top 10% customers is, that is 46% in this particular case.
My question is it possible to report addition in that bucket separately?
That I anyway talked about, because, when we say top 10% customer, and I have said this multiple times, that, you know, our Platinum bucket itself is greater than top 10%. Earlier it used to be almost equal to the top 10%. All of those customers are in the Platinum subscription, and in the Platinum subscription, our churn rates are less than 1% per month.
Okay. My last question is that, will we see Busy in a cloud format at some point in time?
There are two things that we are doing with Busy. One is to take the Busy desktop version and make that available on cloud. Essentially, it is a desktop version, but it's a machine which is hosted on cloud, which you can access within a remote desktop or specifically from inside. That is something which we are going to launch in the near future. The lower, let's say, Busy as a SaaS version, I think that is multiple years away, because what has been created in the last 25 years at Busy, it will take many more years before we could create it as a SaaS version.
Okay, thank you.
One more addition to this, we've already introduced a mobile app, that connects with the Busy desktop. It means the data that is available to users on the Busy desktop, it syncs on the cloud, which can be viewed using a mobile app. One can also now create orders, invoices, receipts, through the mobile app, which syncs back into the Busy desktop. That's another product that is not just a couple of quarters back.
Okay. Thank you.
Thanks, Manish. Next question is from the line of Ruchi Mukhija from Elara Securities. Hi, Ruchi, please go ahead with your question. Sorry, Ruchi, we can't hear you.
Hi, thank you for the opportunity. I have two questions. Firstly, we've seen for IndiaMART platform, the traffic has been static for some quarter. Even the unique employees has been, I would say, range bound in the recent quarter. You're saying that to reach the guidance of about 6,000-7,000 quarterly paying vendor additions, they would take some more time. In that context, the pricing increase in your two-year growth category that seems that it carries some risk. We just want to understand what is the reasoning behind taking this pricing increase at this point of time?
We were at INR 3,000 per month, or INR 30,000 per year pricing, which was in September or November 2018. We continued doing that until 2020, then in 2020 we hit the COVID. A lot of micro and small enterprises were facing challenges on the cash flows and normally. That's when we gave the discount to, from INR 3,000 to INR 2,500. If you really see what we have restored back is 2018, September to November prices. It is not really increasing any prices at the bottom of the pyramid, just the going back to the old price. It was established, we carried that price for almost two and a half years.
Could you talk about, was it affected throughout the quarter or it was taken in between the?
That's in the middle of the quarter.
Was there any change in the conversion rate after the pricing increase, or we saw almost a similar run rate even after the pricing increase?
No, as I said, we had productivity issues. That we have seen every time there is a change in the price, it takes three months to four months for productivity to get back to the previous level. We have only completed two months so far. I think in a couple of more weeks, the productivity should get back to the previous.
Understood. Now, second aspect I wanted clarity was on the buyback. It's a welcome announcement. We just wanted to get more clarity. We've been announcing dividends at a several, I would say, frequently. We've done buyback even last year. You've been rewarding or distributing our cash to the shareholder. Is there some thought process where we put commitment and quantify how much on regular basis, could we return capital to the shareholder?
Ruchi, thanks for your question. As a company, if you see our track record, we've been using both dividend distribution and buyback for distributing these surplus funds. You know, this buyback, you know, was primarily decided because when we reviewed, we find, you know, we have almost INR 2,400 crores of cash balance as of now. If you see in the last few years, we've been generating anywhere between INR 500 crores-INR 600 crores of cash every year, including the income from treasury and the cash flow from operations.
Looking at, you know, the cash flow generation as well as our own growth capital needs and the safety cash requirements of the business, we found that this INR 500 crore was a surplus fund which needed to be distributed to the shareholders. Accordingly, we proposed a buyback of, you know, INR 500 crore. Understood.
Understood. That's helpful. Thank you, and all the best.
Thanks, Ruchi. Next in queue is Anmol Garg from DAM Capital. Hi, Anmol. Please go ahead with your question.
Yeah, hi. I hope I am audible. Yes.
Yes, Anmol.
Yeah, hi. Firstly, congratulations on a good buyback announcement. I had a couple of questions. Firstly, if I look at our paid supplier, as a conversion factor, then we are at around 2.7% of the total supplier. Historically, this has been in the range of 2.3%-2.5% odd. Given that the paid supplier growth that we are seeing for a longer term, which is 7,000-8,000 kind of paid supplier addition, and given that our total supplier additions has been a little bit softer than that, in terms of the growth rate. We will surpass 3% kind of number on the conversion factor at some time. Do you think that this is the kind of, which is sustainable, in terms of the, if you talk on the overall conversion factor? What are the factors that, or what are the things that we are doing to add onto the new paid supplier?
First wise, the in the classified space, the premium classified space, you know, anywhere between 2%-3% to 4%-5% paying subscriber base is very common and very normal. If you see from our own angle, you know, total GST supplier base is about 13 million-14 million today in the country. On top of that, we probably have only about 20%-25% on our book, rest is non-GST books at around INR 25 lakh that we have. We do all kinds of things to make suppliers register with our portal. Many buyers, many people who come as a buyer first, they are given a seller Indian one button from where they register, which is available on mobile app as well as our desktop portal. Apart from that, you know, we have a field sales force of about, you know, 1,500 people of our own and 150 channel partners in different cities.
They also have field sales force, and these people have a IndiaMART mobile ERP system on their app, where they go and collect this information from the various wholesale markets. That is another source. Third, we regularly visit all the traders and select any directories that are there, and then do email marketing and telemarketing to them. We also run a freelancer program, which typically helps on the supplier register. These suppliers also call us on our helpline number 9696969696. From there also, we get supplier register. We have been getting about 0.1 million supplier every quarter free of cost, and about 6,000-7,000 suppliers per quarter, they come in per quarter. That is, INR 8 lakh plus INR 600,000. That is fine, I think.
Sure. Thanks for the detailed answer. Another thing that I wanted to understand is that this year we have added some 280 odd employees. Now, last time we indicated that, for addition of 7,000-8,000 kind of paid supplier, we need to add some 120-130 employees, to service them. Now, the paid supplier addition has been a bit lower this quarter, despite that, the total addition in the employees has been higher. If you can indicate, do you see that the paid supplier additions maybe in the second half of the year, which will be much higher than 7,000-8,000?
It's more of a, you know, planning and deployment and education. Since the prices have been increased in the middle of the quarter, we believe that is the right thing to do. The productivity loss is temporarily two, three months odd, and that might be the reason. We will definitely like to get back to our 7,000-8,000 numbers, sometimes later this year, for sure. Where the hiring of the numbers are concerned, people are to be hired and trained and deployed on the street, especially June, July is a time when lot of campus hiring concludes after the examinations. You know, plus minus 100 here and there will continue to happen, I think.
Sure. Lastly, from my end, I just wanted to have understanding on the margin trajectory. How should we look at the margins, particularly for FY 24 and beyond also?
By 24, I've been saying that, you know, the target is to see if we can reach 30%. Historically, pre-COVID, our margin was 28%, which has been changed from 12%- 15%- 28%. Now, on a full year basis, if we can reach 28% and maybe towards the end of the year, if we can reach on a quarterly basis, towards 30%, that should be our target. Going beyond, I think, you know, as I said earlier, also these businesses typically operate in a 25%-35% margin.
I think we are in the middle of that, and we would like to stay that way to maintain our growth. If you see the operating leverage, that operating leverage is slowly playing out. We have changed the cost during the COVID, and then there is a sudden run-up of the cost because of the salaries in the market, and the salary people. I think we are fine at 30%. Let's see, once we stabilize at 30%, how do we go from there?
Sure, Dinesh. Thanks for the answer. That's it from my end.
Thanks, Anmol. Next in queue is Mr. Rahul Jain from Dolat Capital. Hi, Rahul, please go and give your question.
Yeah, hi. Hope I'm audible.
Yes, please.
Yeah, thanks for the opportunity. firstly, you know, just want to understand your experience. You, you shared a little bit about that, but it would be great if you could spend some more time on that. What is the general experience for you for this kind of price hike impact? Is it on the new additions on that basis, and also increase on the existing monthly plans on the Silver basis. If you could tell in both the aspects that what kind of impact you have observed and what is your past experience and your understanding, how, when, how and when it should normalize back?
We don't increase prices of the existing products. I mean, existing is existing customers. Existing customers will pay higher price when it comes to, you know, next upgrade or next year anyway. For example, on the monthly scheme, it has taken our INR 2,500. As long as you don't change, you'll continue to pay INR 2,500. There is no increase on that. It is only the new customer who is coming in, is coming in at INR 3,000. It is very incremental impact on the overall ARPU to begin with. Just over the year and a half or so, it starts to make overall impact, because if the entry level price is higher, then the upper price is also higher, earlier price is also higher. That is how we see it.
It's the good part is in our business, any price hike that is taken in either, that is reflected immediately in the ARPU or any. If you see there is a consistent growth in the average revenue per customer, year-on-year, despite the fact that we have actually reduced the price from INR 3,000 to INR 2,500, because some other package and some other, maybe Gold or Platinum, that's where we compensated. There's a mix of so many different packages and different customer vintage that is visible in the average revenue per customer. In the past also, we have seen that it takes typically two to three months or maximum to finally get back to the previous product sales productivity.
Once it is stabilized, then I think, it builds up the base for, both. It helps us reduce the term, from 2,500 subscribers, and it also helps us, increase the, further upsell the price from say, INR 40,000 to INR 45,000.
Right. Right. Yeah, thanks for that color. Just one more question regarding the sales cost, which has also gone up 6% Q2 despite weak net addition. Is it that we have also increased our channel partner commission along the lines of price hike?
Not really, because, the cost will go up, probably because, the productivity has gone lower. That is why you might be seeing it. I don't think it is anything different.
If the channel partners are monetized, or, you know, commercialized based on the conversion, is it higher because our gross addition would be much higher and the net is lower, so we might have paid for a higher addition, but the net impact was lower. Is that the understanding, right?
We have that answer.
You want me to repeat the question, sir?
No, I don't have that answer upfront, sir. Maybe you can send us an email, and we can give you that answer.
Okay.
Because I don't think, it is 100% not variable, because we do provide assistance, a minimum guarantee, for channel partners, and then there is a variable form. And more, I mean, half of our cost is essentially not completely variable, because there we pay on a per person basis. On half of the cost, we can say, we pay, you know, which is a completely channel partner on a per hosting basis. There also, you know, we do provide an early support to the channel partners, depending upon their own vintage business. Therefore, it could be a mix of the things we will look into and then we can come back to you with a detailed answer there.
Sure. Just one clarification to your earlier comment, where you said the upsell plan prices are also revised up. Is that what you were trying to say?
The once we stabilize this, the upsell prices are also accordingly revised, because we have a fair pay upsell approach.
Right. you're saying that you would do it after some time, or it is already implied, but would be relevant, as these people progress into this plan?
As these people progress.
If the effective date would be what?
It is not as effective date, because, you know, if you come in at INR 3,000, your annualized cost becomes INR 30,000. The, your multi-year, if you take a 3-year package, it becomes INR 50,000. If you came in at INR 2,500, your annualized cost is at, you know, INR 25,000.
Right. Right.
That's likely.
Essentially what you're saying is that if you take a multi-year plan, that longer tenure discount also would have, you know, that revision would have happened even if I take a 2, 3-year plan versus what I would have taken a 2, 3-year plan a year.
Mm-hmm.
Yeah. Yeah. Understood. Understood. Is there a way to understand what could be the addition to the EBITDA or revenue on a like-for-like basis because of this pricing impact on annual basis?
There will be a difference to business. Out of the 3,000, 208,000 customer out there, you could see again, maybe 2,000 customers per month on the new pricing. Imagine it is. That is going to come at, so 1% new customer is going to come at 20% higher. It's a 0.2% addition to the revenue, to the additional collection per month.
Right. Okay, I'll take this offline. Thank you. I'll join back the queue.
Thank you, Rahul. Next question is from the line of Mr. Abhisek Banerjee from ICICI Securities. Hi, Abhisek. Please go ahead with your question.
Hi, sir. Thank you for your time. Just quickly on the, you know, pricing changes that you have taken, what is now the differential between the Silver and the Gold plan, vis-à-vis what it used to be earlier?
The Gold plan, again, there are still, Gold and there is a site Gold. Maximiser is about INR 60,000 per year, and the scale is around 40,000 and 60,000, INR 40,000 per year. For, you know, multi-year, there are various discounts available. The price list is available on our website. If you go to the corporate.indiamart.com, the prices for various services are given there.
No, got it. My question was, with regards to, do you think, this will lead to your customers kind of upgrading to a Gold plan, because you're bringing the pricing differential lower? Is that, something that you are hoping for?
I think as I explained earlier, to Rahul, and answer, it has a scheduling effect on your customers over a period of time and older customers coming up for renewal. For them, the pricing is passed on even more slowly, because we cannot, somebody paid last year, say INR 27,000, we cannot suddenly start INR 30,000. We will probably take it up for in two renewals, that has increased. Typically, the pricing takes effect only, and that suppose it's INR 3,000 full increase, annually, it will come probably in three years time. Abhishek, actually this price increase is more of a restoration of the old price rather than increasing the price from the levels where it was. We are also even operating with similar differentials.
Got it. Got it. Also with regards to the guidance in terms of adding new subscribers, the 7,000-8,000 number, is it with regards to basically the full year? As in, you want to say that you would add between 28,000-30,000 new subscribers for FY24. Is that what you're trying to say? My understanding was that quarterly number was in the range of 8,000-9,000.
Quarterly number was in the range of?
INR 8,000-INR 9,000.
It was 8,000-9,000. That means last time we had revised the guidelines to around 8,000, and now I'm saying that we decided to do 7,000-8,000. This is from 9,000. Earlier we used to guide 8,000-9,000. It was correct for FY23, because in FY23, it was the first full year of our expansion. Now, we have added roughly about 60,000 new customers in the last 18 months. Those 60,000 new customers, many of them are coming for the first time renewal. First-time renewal rates are much lower than the second-time renewal and then the third-time renewal. What happens is the churn rate effect comes in. That is why the addition rates have to kind of...
We have to go on a growth path and then consolidate, go on a growth path and then consolidate. If we, if we stretch the pattern heavily on the growth, the first-year churn will not let you grow beyond the current point. You have to let the first-year customer migrate to the second year and third year, and once that balancing happens, then you can print the growth pattern.
Understood, sir. That is clear. You know, now, if I look at the margin guidance that you are giving, you know, 28% for the full year, I'm actually struggling to understand, given the kind of revenue growth that you're seeing. Also, you have earlier said that you will not need to hire too many new people. My model tells me that the margin uplift should be higher, right? I'm trying to understand, is it that are you building in for more tech investment? Are you building in for, you know, more investment into CAC? You're going to do SEO. If you could give us some clarity on that, then we'll also understand why, you know, the margin uplift will not be as much as it should be. I mean, in a, when the other expenses are kind of topped out.
Effectively, if you look at the margin numbers, we have, our cost is still remaining at 72%, 73% quarter on quarter. You know, we continue to invest behind newer technologies also. The newer technologies are more expensive. We continue to move towards the cloud again, and cloud is again, one more expensive. On a default basis, the first-year customer needs lot more service support. The upfront CAC also needs lot more consideration the first time. That is why I'm little afraid of giving you a guidance above some 50%, because the cost pressure is continuing in the last 18 months.
Mm-hmm.
Whether it is the salary cost pressure or whether it is the technology cost pressure. I think, and it was completely different, the first 18 months of the COVID and then the last 18 months.
Understood, sir. That is helpful. One last question from my side, if Brijesh Agarwal can answer this. Busy, we are seeing a very, very strong ramp-up, right? Where from here? Last year, your objective was to kind of consolidate what you had acquired. Is this year going to be an all-in, I mean, all-out growth year? How are you looking at it?
The guidance that we had actually given earlier is that every single year that we spend at Busy run, our aim would be to increase the growth rate. That has been the strategy. Even in this particular year, we want to increase the growth rate as such. What you see in, let's say, Q1, you know, is also a result of certain exceptional growth that we've seen in a couple of areas. What we can go ahead and confidently say, that as we start to push for our own geographical expansion, we should be able to achieve our growth rates than what we've seen in the prior years.
Got it. Thank you so much, congrats on great set of results. Yeah, we'll catch up with you later.
Thanks, Abhishek. Next question is from the line of Mr. Amit Chandra from HDFC Securities. Hi, Amit, please go ahead with your question.
Yeah, hi Am I audible?
Yes.
Thanks for the opportunity, sir. My simple question is, in terms of the growth that we're seeing in terms of the paid subscriber and overall level is around 16%-18%. If I see the growth in terms of the various buckets, in terms of Platinum, Gold, how has been the growth there in terms of the absolute number of customers? Is it higher than the overall company level or how is it trending? Because if I see the ARPU, they're going up. There is a migration from monthly to Gold to a Platinum. What is the parameters that will show us that there is a migration going on? In terms of what percent of the customers upgrade every year?
This, you see the top 1%, that is why we give this top 1%, top 10% numbers, right? because we don't provide the exact, Silver monthly, Silver annual, Gold and Platinum numbers. we do provide top 1%, top 10%.
I know that is in line with, you know, the overall company, because every time if you do top 10, then the growth rate for all three markets is, you know, for us it's the same. Internally, how has been that tracking? That's what I want to know, in terms of absolute numbers.
We will discuss internally, and maybe we'll try to find one KPI which can help you decipher that.
So if-
In general, if I want to give you the overall trend as of now, what is the mix? Currently out of the 2 lakh customers, about one fourth are on the Silver monthly, about three fourths are on the direct topic. Similarly, you know, if I look at the Platinum and Gold customers, they currently account for about 50% of the customer base. I've given you all the three numbers.
Okay. In terms of the upgrade, how many of the monthly paid subscribers who are there on the platform, like six months, they upgrade to a higher package. What is that number, if you can give any number that you can share there?
Typically, we have about 2% of the customers of the total base. Typically, you know, that can range, you know, from manager to manager, from industry to industry, from city to city, anywhere between 1%, as low as 1%, as high as 3%. On the overall basis, approximately 2% customers are trying, able to get to upgrade from a monthly to a annual subscription. I think I would generally be happy.
Okay. Sir, in terms of the monthly additions or in terms of this, you know, paid subscriber addition that we're doing, is it all in the monthly bucket or is it we add some customers adding to Gold, Platinum as well?
We don't add much customers to the Gold bucket, but in the, between the Silver, we add about 60% on the monthly and about 40% on the annual.
Okay. lastly on, you know, the price hike that we have announced for, you know, the monthly subscribers, what is the price hike that you have taken ever in terms of Gold, Platinum, in the past? Any plans to increase price there in Gold, Platinum?
That is clearly visible. If you see the top 10% customer revenue, I remember we started giving that number. It was in the range of INR 17 lakh or so, annually, quarterly about... It has grown up almost by 30%-40%. Yeah, I know, it, and the growth of top 10% customer used to contribute, you know, 40% of the revenue. Now, today, they are contributing about 48% of the revenue on a Gold revenue base. The overall customer base as well as the ARPU, in fact, most of the ARPU gain would have come typically from the Gold and Platinum, because if you see from quite 2018, I have not increased any prices in the Silver. I've only given a discount during the COVID. Now we are withdrawing that discount. Since September, October 2018, the Silver monthly and Silver annual prices are same.
Okay. Sir, now the last question is on the margin. Obviously, we have seen some margin expansion, but if you can now throw some light in terms of what, you know, what proportion of the cost will increase, you know, in line with the in line with the growth in terms of the paid subscribers and what proportion of the cost will be increasingly? In terms of overall cost.
Let's go to the slide where we have those costs, functional ESOP. This particular slide can give you some idea how costs are associated. You know, Things until FY 20 were very different, and post FY 22, things are very different. Let's not take FY 21 and 22 as a benchmark. If you compare FY 20 versus FY 24 now, or FY 23 now, it can give you the different cost structure that has been going into different segments, this particular slide.
No, sir, but in terms of total cost, if you can, you know, in terms of total cost, what is, you know, actually going in line with this paying subscriber and from here on, how do you see that cost structure in terms of revenue?
Yes, we are looking at maintaining the margin and probably increasing the margin up to 30%. I don't expect the margin to expand very rapidly or contract very rapidly. I just expect the margins to fix at, like, this around 28%-30%, or 30%-32%. We'll see what was the reverse further.
Okay. Okay, sir. Thank you, and all the best.
Thank you, Amit. Next question is from the line of Mr. Sarang Sanil from RW Investment Advisors. Hi, Sarang. Please go ahead with your question.
Hello, Brijesh, thanks for the opportunity. My first question is to Brijesh sir, then I'll come back to IndiaMART please, next. Sir, you said that Busy is planning to launch desktop cloud version. I believe you already have a mobile app version which updates real time, and I believe it's through cloud. Why is it so hard to have a desktop cloud then?
When we have a mobile app, which connects directly with the desktop application and the data is same. The kind of activities that you're able to do in the mobile application are still limited to viewing that data. In terms of entering some vouchers or vouchers, you have limited number of these vouchers that can be entered through the mobile app. However, there are organizations which have multiple offices, or there are multiple people who are working remotely on the accounting system, and they need to have access to the same desktop software over a cloud machine. Therefore, Busy Online actually makes sense for those kinds of customers.
Therefore, Busy Online, which is desktop available on cloud, is a product that services that particular segment, where there is a need to access remotely, at any point in time from anywhere.
Sure, sir. That was perfect. Right. On the IndiaMART business side, is it possible to give a split between metros and rural? Is it possible to give a volume split and value split? It can be on an overall 2,208,000 also. Is it fair to assume that the metro side has better margins?
Metro side would have better margin because metros, you know, as a physical margin number is given. The paid suppliers from metro cities were 54%, while tier two cities we had about 28%, and rest of India, 18%. Rest of India used to be 10%-12%, if I remember correctly. We have now have a better trainee in presence and better standard presence. In terms of, value, we don't have split here, but you can assume that 50% of the of the collections or revenue would come from metro cities. Because metro cities would have a better and a deeper penetration of Gold and Platinum and a better ability to serve the customer. You know, the tier, the rest of India, which is 18% in terms of the customer base, would only account for maybe 12% of the revenue.
Understood, sir. Just want to understand a little better, sir. What is that factor that the paid supplier see to stick with IndiaMART or the new suppliers coming at a higher, you know, as point of, right? Because I can see, you know, in the past couple of quarters, the traffic has been flat. This is regarding on the buyer engagement side. Traffic has been flat, registered buyers, this is not material. Active buyers, this is material that has been flat. Unique business inquiry that has been flat. What is that one factor you think you would switch to a new, paying supplier?
If you look at the active buyer base, there has been a jump from a 30 million active buyer yearly to 37 million active buyers in the last two years. Last two years means FY20 to FY22. However, we did not increase the customer base in those two years. We ended FY20 at INR 147,000, and we ended December 2022 at INR 155,000, I think. This whole 7,000-8,000 additional active buyers has not been monetized. Also, this 7,000-8,000 active buyers, which has been increased, their nature has changed. Their nature in FY20 and FY21 was mask and gloves and sanitizers, so there is no not much of a mask selling, not much of a gloves selling or oxygen selling or not much of that.
Now it's gone back to the usual business, previous usual business. While you see this is flat, actually there is a lot of transition that has happened from the shortage-led demand to the broader industry demand. That is also needs to be fulfilled. That is also a huge activity which is a B2B kind of scenario. If we can match them properly to a buyer, to a right buyer, to a right seller, I think there is even we could for even double the number of sellers with the same buyers.
The problem is not that people need more inquiries, people need more relevant inquiries where the maturity has happened better. If you see, we continuously work on enriching the buyer profile and making sure that the right buyer goes to the right supplier. By doing that, you actually do not need for any buyers to come back again and again on your platform. You actually get better maturity then. There are two ways to do it. Either you start vertically with one small sector or one small industry. That's what we used to do or you start horizontal and then keep tweaking the buyer-seller matchmaking better and better. Today, even more possibilities are emerging, because earlier we could do that only on certain parameters.
Parameters means you find parameters such as location, such as quantity or such as product category. We can, with the advent of large language model business, in the artificial intelligence, we can actually do extra analysis and do the matchmaking even better. In coming years, we will see even further better development of machine learning algorithms using these large language models that have emerged, to be able to do that even specification-level matching, matchmaking, or even, you know, even the buyer profile-level matchmaking. I'm not worried even right now, we are just continuing to manage the situation for two years or more, then obviously the problem will reduce.
Understood. You are not worried about the on the buyer side. My last question is, do you think generative AI or any of that, you know, application on that side would help in improving the margin on a medium to long term?
Generative, not, I don't think the generative would help, but a lot of predictive AI will help. While the whole of the attention of the market is on the generative, in fact, that whole large language model has a lot more impact on prediction, because earlier very different, and now it is very different because now unstructured data can do a much better prediction.
Got it, sir. That was helpful. Thank you, and all the best.