Great. Good evening, ladies and gentlemen. This is Ravi Gothwal from Churchgate Partners, and on behalf of IndiaMART InterMESH Limited, I would like to welcome you all to the company Q2 FY 2022 earnings webinar. As a reminder, all participant line will be in the listen only mode, and there will be an opportunity for you to ask question once the presentation concludes. Joining us today from the management side, we have Mr. Dinesh Agarwal, Managing Director and Chief Executive Officer. Mr. Brijesh Agrawal, Whole-time Director. Mr. Prateek Chandra, Chief Financial Officer. Mr. Puneet Gupta, Vice President, Strategic Planning and Investor Relations. Before we begin, I would like to remind you that some of the statements made in today's webinar may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to the slide number three 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. Over to you, sir.
Thank you, Ravi. Good evening, everyone, and welcome to IndiaMART's Quarter 2 FY 2022 results conference call. You may have noted that we have circulated our earnings presentation, which is available on our website as well as the stock exchanges website. I'm sure you would have gone through the presentation, and I would be happy to take any questions afterwards. The nation is emerging out of the second wave of COVID-19 and the business activity is picking up, we are also seeing a broad-based recovery. For the quarter, our revenue grew by 12% to INR 182 crore, and deferred revenue by 20% to INR 756 crore. The collections from customer for this quarter stood at INR 223 crore, representing a 36% growth year-on-year.
On the paying customers front, we have added about 4,500 paying subscribers in the quarter, leading to a total paying customers of about 150,000 paying customers as on 30th September 2021. We believe that as the economic recovery continues, we should see improvement in the customer share as well as the new customer acquisition, leading to a higher net customer addition going forward. On the buyer metrics, our traffic grew to 284 million in the quarter two, leading to 26 million unique business inquiries during the quarter. We are further improvising our matchmaking using the AI/ML-based capabilities that we have developed over the period of time to increase the buyer fulfillment with lesser number of matchmakings.
While the unique business inquiries will remain unaffected and will continue to grow at their regular pace, the total business inquiries delivered or the total matchmakings that we report would reduce over the next couple of the quarters. On the strategic investment front, we have taken a 26% stake in Aerchain. Aerchain is offering a SaaS-based solution to automate procurement operations for businesses basis AI/ML and mobile. We have also made a follow-on investment of INR 10 crore in the Mobisy technology that offers Bizom, a sales force automation and distributor management system. Post this round our investment ownership in Mobisy will stand at about 16%. All these investments are aligned and augment our strategic focus to make doing business easier for businesses through various SaaS-based and commerce-based solutions.
Overall, we remain optimistic about the improving macroeconomic environment and will continue to focus and make right investments to strengthen the value proposition for our customers. I would like to thank you and hand over the call to Prateek for financial performance in detail. Thank you, and over to you, Prateek.
Thank you, Dinesh, and good evening, everyone. I will take you through the financial performance for the quarter ending September 2021. Consolidated revenue from operations was INR 182 crore in the quarter, a growth of 12% year-on-year, driven by both increase in ARPU and paying subscribers year-over-year. Consolidated EBITDA was INR 83 crore, representing a margin of 46%. Net profit for the quarter was INR 82 crore with a margin of 38%, and cash generated from operations during the quarter was INR 99 crore. As of September 30th, 2021, cash and investments balance stood at INR 2,466 crore. Thank you very much. We are now ready to take questions.
Thank you, Prateek. We will now begin the Q&A session. Please allow camera and microphone access if you wish to ask question, and use the raise hand option. You may type your question in the discussion panel, and we will revert to you if any question remains unanswered. Please introduce yourself and restrict to two questions so that we may be able to address questions from all the participants. We will wait for a couple of second while the question queue assembles. The first question is from the line of Mihir Damania, Ambit Investment Advisors. Please go ahead.
Yeah. Hi. Thanks for taking my question. When we are looking at all the acquisitions you've made, where do we see the most progress? As in progress, I mean integrating them with IndiaMART, and then potentially providing software as a service. What would be an estimated timeline of when do we expect to start providing software as a service, in addition to what we already provide.
Thank you. Out of the investments that we have, I think the first investment that we made was in Vyapar app. It is a mobile-based user-first accounting software. When we invested in that company, Simply Vyapar, they had less than 10,000 paying customers by then. Now, I think they are closer to 100,000 paying customers. Their revenue has also grown significantly, as you can see in our annual report for the year FY 2021. I think to your question that which one is the most promising startup which we have invested so far, Vyapar remains that one. The other investments have been done very recent and mostly are at the smaller level as of now. The second question you asked is what kind of SaaS-based services IndiaMART already provides and what is the addition that we would want to do on that.
As you can see, IndiaMART provides the content management system, the website-making solution, the Lead Manager or customer relationship management, lead management solution. Those kind of solutions are already as part of the bundled program of IndiaMART advertising subscription. We continue to add more and more offerings on that. For example, payment-based solutions or even invoicing and inventory-based solutions. I think we will continue to add more and more solutions on the SaaS platform slowly and slowly.
Okay. Thank you. A follow-up on that. We have almost INR 1,700 crore of free cash in our books. You already hinted in acquiring one or two major assets, major companies. Where do we stand right now? It's almost been seven, eight months since we raised the QIP and you've not acquired any large company or anything as such, only minor investments in some of the investments you already made. Any progress on that?
As said earlier, yes, you are right about six, eight months, but we have also gone through the COVID 2.0 wave. We have done, I think, five investments since then. We keep meeting companies, depending upon their size and our liking and their availability. We continue to look for larger opportunities as well. As and when something will come up, we'll definitely let you know.
Okay. Thank you. That's it from my end.
Thank you, Mihir. Next question is from the line of Anuj Sehgal, Manas Asian Equities Value Fund. Please go ahead.
Yeah. Hi. I just wanted to understand on the business model. You have a subscription-based business model, and I think in the past you did try a transaction-based business model, but that did not do well. Maybe you were ahead of the time then. What are your thoughts on a transaction-based business model for IndiaMART? The reason I ask is, as we see globally and also in India, a lot of other players and your competition is moving in that direction where they are trying to take a commission of the transactions that happen on their platforms. Just want to understand how you view this, both as an opportunity and as a threat. Thank you.
Thank you. I think we've learned a lot from our Tolexo experiment. We did learn many things regarding the cataloging, regarding the pricing, and regarding the use of customer reviews and ratings through that platform. We found that doing 100% pure buy now, order now, pay now may not be the right thing for a pure B2B platform which has a variety of categories ranging from components to material to the finished goods. We implemented some of those learnings into IndiaMART. Currently, as you can see on the screen, from discovery we have moved to the conversation phase. Slowly we are adding pieces which will take us closer to the transaction. We already have a Pay with IndiaMART platform. We are also trying to add a few logistics and tracking platforms like Shipway is there. We have also made an investment into SuperProcure and Aerchain.
We have started to evaluate certain transaction financing, but we haven't had much success on that. Going forward, I think it will be a combination of subscription plus maybe closer to the transaction, the way probably Shopify does there in the U.S. or the way probably 1688.com does there in China. I think we will continue to move in that direction. Will our goal be to take a large cut of the transactions, like 10%, 20%, 30%? I don't think that is what we are destined to, but we'll definitely try to make it easier to do business here in India. Cheaper to do business here in India rather than becoming a commission agent of a larger portion of the transaction going forward.
Okay. Thank you very much. If I may just follow up. Are there, in your experience, because as you rightly mentioned, you've gone through this experience and you've learnt a lot, are there certain categories which are more amenable to a transaction-based model and certain which you think are totally a no-go and therefore you will continue to focus on a subscription-based model? Just if you could maybe highlight some examples, that would be helpful.
We started with the industrial MRO supplies. MRO supplies, we thought that those were more amenable to because they were ready-made items. Could be screws, could be bearings, could be safety shoes kind of products. Those are the products which probably can be bought off the shelf. They are easier to be done as a platform. If you start to add a lot of logistics into the B2B, every category has a very different logistics challenges. We were finding that we were not adding much value in disrupting a B2B logistics. I think we need to find a new way of doing that.
As I have mentioned a few times, we are trying to see if we can get into the conversational commerce kind of a platform, through our Lead Manager and through our CRM, where after certain conversations, people can place order directly to the supplier. That would be our endeavor. Many categories like high-value categories or many categories where customization is required, those categories may not be ready or may not be ever ready for a buy now, pay now kind of a transaction.
Okay. Thank you. Thank you very much.
Thank you. A reminder to all participants that you may use raise hand option on your screen if you wish to ask a question. Next question is from the line of Amit Chandra, HDFC. Please go ahead, Amit.
Yeah. Thanks for the opportunity. My first question is on the cash collections. We have seen quite a significant improvement there in the cash collection. That is despite the paid supply addition, which is actually lower than what we're expecting. Has there been a rise in the customers which are longer duration customers and how that has changed in the mix? That is first. If you can highlight the churn that is there in the various churn in the monthly, yearly packages and how that churn has increased or decreased over the last few quarters. That would be the second question. Third would be the total business inquiries delivered has come down despite there is increase in the traffic. Has there been any change in the conversions or the ROI for a seller?
Thank you. Let me answer one by one.
Yeah.
Yes, there has been a good recovery in terms of the collection from customers. Despite the fact that the number of net customer addition has been only at around 4,500 or so. The collections improvement typically tell that the customers who were earlier satisfied with IndiaMART, they were waiting for markets to open up, and now they have started to upgrade into higher services or either higher tiers. Some customers have moved from silver to gold, and some customers would have moved from gold to platinum. Also, longer duration packages have become better. As you can see in terms of the mix, not much of a change has happened. If you compare that change from one year ago or so, we were at about 66% current deferred revenue versus currently running at about 63% current deferred revenue.
Not much of a change in terms of duration, but I think in terms of the actual service upgrade, there has been a good change. Also, as I said, during both the COVID waves, the churn really went very high. We have seen a consistent recovery in churn over the last two, three, four months, especially in the month of September. I can say that we are just a couple of notches below the churn which we achieved at the pre-COVID levels. In terms of numbers, I think it would be let's wait for one more quarter before I can start to give you monthly churn and annual churn and multi-year churn. The third question was?
Sorry to interrupt, but has the churn changed either in the positive direction in the last few months?
That is what I'm indicating, so that the churn was deteriorated heavily during the April, May, and June quarter, and it has improved by certain notches. It is still below it by certain notches from the pre-COVID-19 levels.
Sir, also in terms of the recovery that we have seen, so was the recovery there for the full quarter, or it was mostly backended? Are we happy with this 4,000 numbers, or we can see this accelerating to 6,000-7,000, which was the normal number pre-COVID?
Normal number pre-COVID was 5,000-6,000, as I have guided earlier also, that by December quarter we should be reaching there. What happens after that is anybody's guess, how economy fares and how SMEs fare. As of now, the 5,000-6,000 numbers looks doable in the immediate quarter. To your question whether the recovery was mostly backended, no, recovery was pretty broad-based during the quarter. Yes, there was a definite betterment in the month of September.
Okay. Sir, in terms of the cash collection, we have the healthy improvement that we have seen. Is that fair to assume that the next year would be pretty strong in terms of numbers, at least 25% growth, if we assume the existing cash collection rate to continue. Is that the thing? Also, if we maintain at that levels and in terms of the costing, if we are at INR 100, INR 110 crore of quarterly expenses, then there is a fair bit of chance that we can expand on our EBITDA margins from here on. What is your take on that?
On the EBITDA margin, as I said, we were at 28% pre-COVID-19. We were increasing that EBITDA margin every quarter by odd 1%, and we were slowly increasing that. During the COVID-19 first wave, there was a lot of uncertainty, and we did a lot of automation, which actually made our EBITDA jump despite the fact that the collections were negative because the revenues comes from the previous collection. That’s why the revenues were actually flowing in while the expenses were immediately stopped. That is why you see a jump to that 48% kind of EBITDA margin. As I have been guiding that half of that would come back. I think it would be fair to assume that we will probably be trending at around 38% kind of EBITDA margin going forward.
Again, we have seen that the collections which were negative for almost the first three quarters of the pandemic have started to now grow. During the first three quarters of the pandemic, we have enjoyed the benefit of that deferred revenue, which resulted into better revenue. Now that the collections have started to improve, the revenue will follow through. Whether it will immediately start to mimic the 30%? No. It will have a mixed 0% collection growth that we had three quarters ago and a 30% collection growth that we have today. It will be probably mixed to anywhere between 15%-20%.
Okay. Sir, the last question from my side. As I asked earlier, the total business inquiries has actually come down in terms of delivery.
Yeah.
What is driving that, and is there any change in seller ROI or the traffic conversion to business inquiries, why that is coming down?
As I said in my opening remarks, that we now have the capabilities to do a better matchmaking. If you see the unique business inquiries, they have remained same. Unique business inquiries last quarter was also about 26 million, and this quarter is about 26 million. Unique number of buyers who are coming and posting an inquiry on IndiaMART platform, that has remained consistent. Given that now we have slightly better capabilities on doing the matchmaking so that the conversion ratio can improve for buyer as well as seller both without doing too many matchmakings, that is why we are making certain changes into the algorithm. I've already guided that this will not affect the unique business inquiries, but it will continue to have a negative impact on the total business inquiries or total matchmaking stuff.
Okay. Sir, lastly, what is our strategy to increase the conversions in the sense that the total number of free listing to paid listing? Are we investing in that area in terms of technology to accelerate that, and will that result in higher conversions and better additions?
I think, let this economy stabilize. We started to do far better in January, February, March this year only, and then the second wave happened. We have only got one quarter to say that, okay, the economy has stabilized. Once the economy is stabilized, because you see, the medium and large enterprises, they recover faster. The smaller enterprises, a three months dip in their business takes a very long toll on them. Until and unless there is a three quarters of continuous improvement in the economy, I cannot comment on that side. On the technology side, in fact, imagine just a year and a half ago, all of our sales used to come from people going to these businesses and doing face-to-face sales. Today, almost 80% of that sales is coming by telephone and by online measures.
I am pretty sure that we have rebuilt the entire technology and entire tracking system, who could be interested because we cannot do the door-to-door marketing that we used to do earlier. How would this pan out going forward? That will depend upon the economy and the pandemic pan out.
Okay, sir. Thank you, and all the best.
Thank you.
Reminder to all participants that you may use raise hand option on your screen if you wish to ask a question. Next question is from the line of Prateek Kumar, Antique Stock Broking. Please go ahead, Prateek.
Yeah. Good evening, sir. My first question is on the change in average revenue per paying supplier. There's small dip. I know that last quarter it was slightly higher than normal time. What should we generally infer from this?
Sure. Prateek, the way we see ARPU here, it is essentially the revenue for the quarter, and that is divided by the total number of paying customers at the end of the quarter. All of a sudden in the last quarter, if you see the total number of paying subscribers that we have on March, it was roughly around 152,000. It came down to 146,000. There was a spurt in the ARPU that you would see in the June quarter. This month, that spurt had been kind of normalized because as our customer have increased there, and our overall revenues have stayed pretty much similar what it was in the last quarter. That hopefully explains the variation in the ARPU.
Understood. The second question is on fundraisers by some of your competition, startups like Moglix or OfBusiness. While we have also raised a significant amount of money recently, how the usage of fund may be different for us versus for them? I'm just asking a hypothetical question, in case we can throw some light. They are raising from private market, we raise from public market. Any views on that?
Sir, every business is very, very different. OfBusiness, for example, is a very different business. It's not a marketplace. They are solving a very different problem to provide credit to the small and medium enterprise, by way of taking a dealership of some of the large brands. They are more of a transaction financing business. B2B is a very, very large opportunity. As I've been telling, almost INR 1 trillion of GMV happens in B2B every year. There is a Kirana B2B, there is a garment B2B, and then there is a raw material B2B. There is a construction B2B, and there is a B2B transaction financing credit. Everybody is doing very different work. Moglix is trying to solve MRO and procurement solution.
We are trying to work towards providing them now apart from marketing, the buyer and seller communication solution, trying to look at the more payment solution. Everybody is trying to solve this whole large problem in a very, very different manners. Multiple hits and tries would be done. Fortunately for us, we have found one large problem that has been solved of finding a buyer and seller and finding a product at a cheaper price, at a trustable source. Which has resulted into a network effect business where there are more buyers attracting more suppliers and more suppliers attracting more buyers thereon, which has also started to become a profitable business. Just three years ago, we were also not profitable. I think it is a cycle that will evolve.
Fortunately for us, we have access to capital from the stock market as well as we generate about INR 300+ crore of cash flow from operation. That gives us a lot of ability to do better experimentation. I hope that answers your question.
Right. That answers it. Last question is on how do you see ad spend going or panning out over next 6-12 months?
We've been asking this question. As I said, currently the buyer-side traffic is enough for us and there are too many uncertainties. We do want to do some branding exercise. I don't think anything of that is being planned as of now in this quarter. At max, last time whenever we did branding exercise, it was generally to the tune of INR 20 crore-INR 30 crore a year. If at all it will come, most probably maybe JFM or maybe next financial year.
Sure, sir. That's it from my side. Thank you.
Thank you, Prateek. Next question is from the line of Manish Gupta, Solidarity Advisors Private Limited. Please go ahead.
Thank you for the opportunity. I had two questions. The first question is that how much of your increase in paying suppliers is coming from suppliers who are migrating from the freemium model? That's the first question. The second question is that you mentioned you have 100,000 paying customers in Vyapar. How many of your 150,000 paying customers are currently using Vyapar as well?
Let me answer the second question first. On Vyapar, when we did the investment, at that point of time, we did a survey, and we found that there was about 10%-15% overlap between their paying customers and our paying customers. We have recently, last quarter, started an experiment to see if any new customer who signs up at IndiaMART, would he be interested in taking up Vyapar, and the pilot seems to be encouraging. We do not have any access to the 100% customers of the Vyapar to see how many of them are IndiaMART customer, because IndiaMART customers are slightly bigger size than Vyapar. I think anywhere between 10%-20% overlap should be possible, given what we have seen in the last two, three months of our experiment. In terms of how many new customers come from our freemium model, almost 90%.
Almost 90% of the customers in general would have registered at IndiaMART or we would have registered them at IndiaMART, and they would already be a free-listed company on IndiaMART. Then we would go, and that's the part of the sales process itself. Maybe 10%-15% customers who directly sometimes call on our helpline to say that we would directly be interested into a paying customer, there could be those new businesses or some businesses which we would have not discovered till then. By and large, most of the customers upgrade from their free listings.
One more question, if I may. Dinesh, how do you think about what could be the number of paying suppliers you could have? Because at some point in time, the marginal suppliers might not get business because the well-run suppliers are taking all the business away, the inquiries that are coming in. The number of product categories that you've got on your platform also will saturate at some point in time. The 150,000 odd paying suppliers, where do you think you are in terms of the total-- what could this number be in five, 10 years, you think?
Instead of putting a number, let me put some of the other numbers around us. People say that there are 60 million SMEs in India, and 99% of our customers, we take it mandatory to make them only if they're GST-registered customers. The GST-registered customer base is about 12 million. Out of that, the manufacturing and trading and business services kind of people, they would be around half of them or 60% of them. From there, we think that our total addressable market, just the GST, should be anywhere around two million or so. Another way of looking at it would be Vyapar or Tally or this whole space. Tally claims that they have about two million paying users in India. The third measure that I see is the number of customers 1688.com has in China.
They have about one million customers in a slightly bigger, maybe 2x bigger economy on the MSME size today. Their average revenue per customer is about $1,500 in China. They are continuing to grow at about 30% per annum. If you look at the number of SMEs advertising on Google or Facebook, or the number of SMEs who are advertising on Justdial kind of platform, they are all in the range of 0.5 million here and there. Given that we are a B2B platform, our number could be slightly lower, if you extrapolate 10 years from here, I think a 0.5 million number should be no big deal.
If I may ask one more question, Dinesh. That you're generating so much of cash, you have INR 2,000 odd crore of cash on your balance sheet. How do you think about the size of the bets that you are taking?
Yeah, you are right. We had very little cash three years ago, two years ago, when we started to learn this. We have started to take smaller bets first. We do not have any experience of investing or M&A from the past. I think from that perspective, let's learn, do smaller investments, see how that pans out, build the capability inside to do the pilot and co-piloting or go-to market strategies, and continue to look for bigger ones as and when they come up. I think the cash on the books has accumulated much faster than we would have imagined. I think there is a lot of expectation that we should do bigger deals, but at the same time, we should be cautious that what kind of deals we should do, and that should add to growth as well as profitability both.
Thank you.
Thank you, Manish. A reminder to all participants that you may use raise hand option on your screen if you wish to ask question. Next question is from the line of Kailash. Please go ahead.
Good afternoon, Mr. Dinesh and the panel, and seasons greetings to all of you from Kuwait. I have a very operational question. While your annual report says that IndiaMART is certified to ISO 27001 for information security, may we know what are the technical controls that IndiaMART deploys? We are an online property, so I'm sure we must be subject to a lot of cyber attacks. That's number one. Number two, where are our systems hosted? Are you hosting on-premise or are you considering cloud? We could use a lot of cloud-native services for your AI and ML and other use cases. Thank you.
Let me answer the second question first. All of our hostings and all of our infrastructure is in the data centers. Some of the old data centers are more like colocation data centers. Most of the new migration has happened towards the cloud. Today, maybe we are 66% purely on these virtual cloud platforms like Amazon or Google Cloud platforms, and still 33% legacy on the colocation data centers across U.S., Singapore, and India. Coming to the second question on the cybersecurity side.
Multiple things are being done, whether it is firewalls, whether it is API gateway, whether it is prevention of denial of service attack or distributed denial of service attack through sophisticated load balancers, whether it is data scraping denial, and fixing any personally identifiable mode, whether it is AI/ML blocklist-based algorithms to block certain restricted items, which could be restricted here in India or which could be generally restricted everywhere. There are technologies to detect re-entry of fraudulent buyers or fraudulent suppliers. Multiple solutions are implemented. I think we are also in the process of certain more certifications, and as and when they will come, we will let you know. I'm also thinking of adding one slide within the investor presentation going forward.
Good. Thanks for highlighting that. I think, yes. I wish you all the best for the coming quarters as the economy improves.
Thank you.
Thank you. A reminder once again, if you wish to ask question, please raise your hand option on your screen to ask any question. In the meanwhile, I'll just take a couple of questions from the discussion panel. I'll read out for the management. Can IndiaMART register sellers from outside India? Are there many sellers outside India who would like to register and sell in India? Can they register on a platform?
Earlier we used to have such facility. As of now, over the last five, seven, 10 years, we have not focused on that area, and we have internally debated on sell in India kind of a solution. Very recently, we have started to focus a little bit on the exports again, but not yet on the sell in India. On the export side, I think two, three quarters ago, we have started to experiment with the export-only buy leads as our IndiaMART Verified Exporter program, and we are seeing some good uptick on that side. Probably that has coincided with our Make in India and reduction in the corporate taxes and incentives that the government are giving. I think we are trying to revive on the exports, but not yet on the sell in India.
Okay. Moving on to next question. What kind of GMV IndiaMART would be generating across the whole ecosystem, and do we have the strategies to monetize this strength better than the subscription model currently? Do we have internal numbers, how much % of revenue from our subscribers would be coming from IndiaMART?
When we look at our numbers, basis the overall number of business inquiries which have been delivered, the average order values that we get from sample of these RFQs that we have, and the feedback we have from our customers on how many of those RFQs have been fulfilled. Basis that, our estimation is that we facilitate trade worth about $20 billion every year through the IndiaMART platform. That $20 billion worth of trade that we facilitate versus the revenues that we are able to generate. You would see that the current monetization would be a little lesser than 1% of the overall transaction value. Given the fact that in B2B these are not very high margin businesses, we think that the current model of subscription that we've adopted allows us to monetize this well enough to a certain extent.
Obviously, there are opportunities which have been explored in the past by players like 1688.com in China and beyond, where they're able to increase this monetization as the overall ecosystem actually matures a little bit, and therefore there is a potential upside in terms of the ARPU. For example, the ARPUs that we have here, which is closer to about $600, $650, compare that with China, which is at about, let's say, $1,500 currently. There is certainly a scope, but currently, given that we are in a market where we see a lot of growth potential, and this is a time where we would want to focus more on that, and keep building up tools, solutions which will help us improve this monetization in the years to come.
Thank you, Dinesh. We will now take follow-up question from the line of Mihir. Mihir, please go ahead with your question.
Yeah. Thanks for the follow-up. I just wanted to understand if there's been any impact on Justdial entry to the B2B business model space.
Mihir, nothing so far. We haven't seen any customers or we haven't got to hear any customers about Justdial B2B yet to [JD Mart] or something like that. I think they are also going through certain changes in their own management. As of now, we don't see anything. We are confident that our network effects and our experience in building B2B business has a lot more deeper understanding, and that should help us remain the leadership position with us. I do not see any challenges as of now. Whatever comes later, we'll see to it.
Thank you. Mihir, are you there? All right. We'll move on to the next question. Sir, what is limiting our growth here at 25% and above? Is it the inherent situation of the economy, or do we need to provide any further innovative services to our users? The company like Shopify are growing at a 40%+ despite operating in the developed economies.
I think it will be great. I cannot comment whether 40% is the right number or 20% is the right number. If we have seen our historical growth rates, they have been at around 25%-28% CAGR. I think we would love to maintain that. Specifically, the CAGR has been impacted in the last two years due to the pandemic. Otherwise, I think we'd love to remain in that 25%-30% growth rate system. Hopefully, we'll emerge stronger and much better economy, and should be able to do a better job in coming years.
A similar question on the strategy. What is IndiaMART's strategy to accelerate from, say, 150,000 subscribers to 500,000 million subscribers in the coming years? We have been at 140 to 150,000 subscribers for last couple of years. How do we want to accelerate the growth from here on?
If you see the number of paying customers, they were also increasing with the rate of 15%-20% per annum. Even despite the fact that the last two years have remained more or less same, 147,000 and 152,000, still the CAGR is maintained at 16%. I would say that barring the pandemic, we would continue to stretch this number anywhere between 15%-20% per annum. Now that we have a much stronger network effect, given that earlier we were having 50 million-60 million visits on our portals every month. Now we get about 80 million-90 million visits on our portal every month. That definitely means more buyers have come into the ecosystem of IndiaMART.
Since the suppliers have had a certain rough time over the last two years, I'm sure all of them will come back, and on the strategy side, on the ground, you see most of our sales used to come from field sales operation, and where our field sales force, old field sales force used to do this. Now we have three-pronged strategy to acquire customers. One, in the larger market, we have our own field sales force, as well as we have got channel partners who operate with the field sales force.
We have also got good success because of this pandemic-led online adoption and people's acceptance of the telephone-based and online-based sales. Today, almost 20% of our sales have started to come from telephone and online-based mechanism. I think with all the three channels, I am sure that as the economy opens up, we would be doing a better job in terms of customer acquisition.
Thank you, Dinesh. We'll take next question from the line of Swapnil from JM Financial. Please go ahead.
Thanks for the opportunity. Just one question. Historically, we have been saying that the quarterly subscriber addition would be in a steady state of 5,000 to 6,000. My question is, what would be required, what we need to do to increase that beyond that 5,000 to 6,000 quarterly additions? If I were to compare it with, let's say, 1688.com, the way they grew was between 2000-2012, the pace of subscriber addition was significantly higher than what is ours. After that, the focus was on ARPU increase. I would just like to understand, what is your strategy to increase that 5,000 to 6,000 first, subscriber number. Second, on ARPU increase as well, once that number has reached a certain level. Thank you.
Yeah. Last two, three years, as you see, we have been trying to maintain that 5,000 to 6,000, and that has been difficult ever since the IL&FS crisis happened. That is why our first goal is to overcome this and become consistently at 5,000, 6,000 customers. As I said, we have a very good plan now in terms of telesales, online sales, channel-based sales, and our own field sales. I'm sure if we have to go faster on the customer acquisition, given that now we have a lot more ammunition in terms of buyers also and in terms of buyer inquiries also. Probably the stage would be set as soon as the economy opens up. Do you want to add something?
In fact, on the channel side if you see, our dependence on field-based sales operations to acquire customers pre-COVID was significantly higher than the other channels, contributed very little to customer acquisition. Today, we are operating with four different channels altogether. That, of course, has increased the firepower that we have to go back and acquire customers in larger numbers. We've actually used the COVID period of these 18 odd months to carry out experiments. Some of them have really worked very well for us, and they are scaling up. One, that readiness does exist ahead of us.
Second, when you look at the pre-COVID causes on what were the reasons which limited the kind of net customer additions we were seeing, we did mention that the transition from doing business in an offline model where you either have a shop in a wholesale market or where you would typically have dealers or distributors or retailers helping you sell a product. The transition required a shift in the mindset altogether. That shift in mindset is something which if it happens naturally, it only can happen at a gradual pace. What COVID has come and done is that it has shaken this entire belief that in order to be better prepared, SMBs need to have a hybrid kind of a presence.
I think given this fact that there is a better realization on having a hybrid presence, both offline as well as online, there is a definite shift that we are seeing in that mindset. As the business starts to get back to normality, overall GDP that we were doing pre-COVID, we start to cross those GDP levels. I am sure this is going to be an additional reason for us to be able to acquire a higher number of customers. That's the second big change that we are seeing here. Third, of course, as we've mentioned, because of the overall stress that the SMBs have faced over the last 18 months, it's the customer churn which has been one of the reasons why the number of net adds has not grown. It's not the acquisition pace which is where the real challenge is. It's been churn.
As we are now seeing easing up of the economy, normalization of the businesses, we've seen an improvement in churn in the last quarter. Hopefully, if nothing further goes wrong, we should see that improvement to a level where we were there pre-COVID, and that should again help us add the overall number of net adds every quarter that we are able to see. There are these three things that have happened which we believe will help us get higher net adds from the 5,000-6,000 numbers that we used to do pre-COVID.
On the ARPU, any time when you have higher than 20% addition, the ARPU will decline. When you have lesser than 10% net addition, the ARPU will increase. The average growth rate of the ARPU has been at 5%, and which I think we will be able to maintain at 5%. Because that is the price rise that SMEs are comfortable with. I think ARPU growth at a 15%-20% customer addition typically remains at 5%. If the customer addition grows higher than 20%, the ARPU growth will reduce. If the customer growth grows below 10%, then the ARPU growth increases.
Right. Just a follow-up question to that. When we talk about 1688.com, they reached a level of 900,000 or one million paying customers, and that's where their volume growth stagnated in a way. In fact, it came down after that. What will be that number where our volume growth will not grow after a certain period? Is there any number that we can?
No, sir. We will not be able to put any number there. That will depend on the India shining story. Let's see how far is the sky from India is.
Okay. Another question on your tech employee additions. Last quarter, you mentioned that you would be increasing your product guys to around 600 employees. Right now, it's around 475. In one quarter, I don't see much increase in that number. By when you would be adding those employees and what kind of output do we expect from them basis that addition?
On the employee side, we are all aligned. I think we continue to add people. Some months are good, some months are not so good. We will continue to add more number of people. We are committed to make about 600 product and technology employees. It is growing, albeit slowly, but I think we are committed there. In terms of sales and servicing, as I said, the sales and servicing employee headcount is now, because it is spread across the channels and tele channels and outsourced channels, it would be wiser to look at the outsourced sales cost along with that to see the number of employees growing. We will continue to grow that number as well, because in the JFM, we had good time in hiring the people. That was reflected in the last quarter.
Again, the last quarter, I mean, the April-May-June quarter, we could not hire anybody. Again, this quarter we have worked on hiring. Hopefully, the results should be visible in the next quarter.
Okay. Thank you for taking my questions.
We will take last question from the line of Pranav Kshatriya. Pranav, please go ahead.
Yeah. Hi. Thank you for the opportunity. I have two questions. Firstly, if we look at in this quarter, the cost has come to almost INR 100 crore per quarter, which is what you have sort of guided that will be the steady-state cost. From here on, how should we see the cost going forward? I mean, will it stay steady and possibly grow at 15%-odd, which is what has been the growth rate pre-COVID, when you were growing at around 23%? That is my first question. Secondly, if I look at the funnel, I think there is too much of a concentration which has happened in the platinum customer, and that could possibly be because of how the two-speed economy is that the top guys are doing relatively better than the bottom guys.
Do you think that you can do a pricing intervention or a sales intervention where you put in more resources and get this pyramid corrected so that you onboard more paying customer, although by giving some freebies, discount or things like that, so that you have a proper funnel which actually eventually grows. These are my two questions. Thank you so much.
Yeah. On the first question, Pranav, you are right that we've been guiding INR 100 crore-INR 105 crore steady-state number on the expense side. The only thing is that over the last six, nine months, talent pricing has changed quite a bit. So I think instead of 15%-16% growth rate in the cost, I think you should budget more like 20% growth rate in the cost. Given that the talent pricing has been re-rated, and we should not be losing our talent to that. On the second question, given that we have not added many customers and most of the revenue has been coming from the top of the pyramid, currently it looks like that. If we start to add lot many more customers, I think it should stabilize there at 43%-44%.
It is slowly growing at 1%, because most of the pricing increase comes at the platinum customer. Those are the most engaged customer. If you remember, we were talking about differential pricing, and the differential pricing will again be implemented mostly into the platinum tier. I guess your question on how do we acquire more silver monthly customer, that remains the bigger question. Because of the churn has also happened mostly in that silver monthly bucket, and that is why the pyramid seems a little disproportionate. We believe that once we start to acquire customers in silver annual and silver monthly at the large numbers, the pyramid should be back to the normal position.
Okay. Thank you so much.
Thank you, Pranav. With this, we come to an end of the Q&A session, and now I hand over the call to the management for their closing remarks.
Thank you very much, ladies and gentlemen, for joining our conference call. We have tried to address your queries in the time available, but if you still feel that there is some questions are unanswered, please feel free to connect with our investor relation team, and they will help you as much as they can. Thank you very much.
Thank you.
Have a very, very good Happy Diwali, sir.
Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you.