Ladies and gentlemen, good day, and welcome to the Matrimony.com Q1 FY25 conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Banerjee from ICICI Securities. Thank you, and over to you, sir.
Hello, everyone. Thank you for joining in. On behalf of ICICI Securities, I would like to welcome all of you to the Q1 FY25 earnings call of Matrimony.com. From the company, we have Mr. Murugavel Janakiraman, Managing Director and CEO, and Mr. Sushanth Pai, the CFO. Over to you, Mr. Murugavel. Please, proceed with your opening remarks. Thanks.
Thanks, Abhishek. Good evening, everyone. For the first time in many years, we had a decline in YoY revenue growth, year-on-year revenue growth. The growth was flattish on a quarter-to-quarter basis. The main reasons are, top of the funnel profiles has been flattish. Auspicious days have been off of what it was in Q1 of last year, and that has impacted the growth. Q2 revenue will dip mostly on account of seasonality and also due to lower billing in Q1. We expect billing growth to come from Q3 onwards. Before going to the Q1 discuss, I'd like to talk about some of our initiative to get growth back on track. We have sought for shareholders' approval to enter into newer businesses beyond the matrimony field.
We will take advantage of over two decades of experience in the consumer internet space across various segments of users and also leverage our reach among millions of users. We're exploring certain new initiatives. We'll launch these initiatives post-board review and approval and, update you accordingly. We are centering our process and offering in personal services, which has started showing traction due to ongoing measures such as more retail, which solidify Elite Matrimony through airport experience centers. We're also looking at various initiatives to improve our core offerings, such as language version and also launching an initiative to drive growth. We already launched the MeraLuv.com for the U.S. market. MeraLuv is an exclusive dating app for the Indian Americans in the US. Love.com will be launched in this quarter.
We can observe that despite the muted growth, muted growth in the quarter and salary increments, the profit after tax increased on a quarter-over-quarter basis on account of efficient operation and marketing optimization. Now, coming to the results in Q1. On a consolidated basis, the actual billing of INR 117.5 crores, a decline of 3.1% quarter-over-quarter and 5.6% year-on-year. Revenue at INR 120.6 crores, a growth of 1.1% quarter-over-quarter and decline of 2.2% year-on-year. Key highlights for the matchmaking business in Q1 are as follows: billing at INR 116.3 crores, a decline of 2.5% quarter-over-quarter and 4.8% year-on-year.
Revenue at INR 118.6 crores, a growth of 0.8% quarter-over-quarter and decline of 1.6% year-on-year. We added 2.64 lakhs paid subscriptions during the quarter, a decline of 1.8% quarter-over-quarter and 5.6% year-on-year. Average transaction value for the matchmaking business has been flattish, both on a quarter-to-quarter basis and year-on-year basis. We created about 29,600+ success stories in the quarter. Now, coming to the marriage services business, the billing was at INR 1.2 crore, decline of 38.3% quarter-over-quarter and 49.6% year-on-year. Revenue was INR 1.97 crore, a growth of 29.9% quarter-over-quarter and decline of 27.7% year-on-year.
Loss in the quarter was INR 2.2 crore, as compared to losses of INR 3.1 crore in quarter 1 of FY 2024. On the billing and revenue outlook for Q2 , matchmaking revenue is expected to have a slight decline on a quarter-to-quarter basis and year-on-year basis, as discussed earlier. Marriage services billing is expected at a similar level that of Q1. Now let me pass on to Sushanth to comment on the key profitability.
Thanks, Muruga. Our EBITDA margin for the matchmaking business in Q1 is at 22.6%, as compared to 19.1% in Q4 and 24.1% a year ago. We had salary increments of about 6% for all eligible people in Q1. Marketing expenses for matchmaking in Q1 are at INR 47.1 crore, as compared to INR 47.9 crore in Q4 and INR 43.1 crore a year ago. Excluding marketing expenses, our margins in matchmaking are at 62%, as compared to 60% in Q4 and a year ago. On a consolidated basis, our EBITDA margins in Q1 are at 16.7%, compared to 14.2% in Q4 and 17.2% a year ago.
Tax rate in the quarter is at 23.8%. Profit after tax is at INR 13.97 crores, a growth of 19.1% quarter-on-quarter and decline of 1.4% year-on-year.
...Share of loss from Astro-Vision, our associate company, is INR 1.9 lakhs. Cash balance is at INR 382 crores. We've had a robust cash generation in this quarter. ROCE is 16.7% annualized. On the outlook for Q2 margins, we expect the profit after tax to be slightly lower than the levels of Q1. I would like to end with a customary safe harbor statement. Certain statements during this call could be forward-looking statements on our business. These involve a number of risks and uncertainties, uncertainties that could cause the actual results to differ materially from such forward-looking statements. We do not undertake to update any such forward-looking statements that may be made from time to time by on our behalf of the company, unless it is required by law. Now we can open the floor for Q&A.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Gautam Rajesh, which is an individual investor. Please go ahead.
Yes. Good evening, sir. I had two questions. My first question is, is what sort of growth do we expect in the core matrimonial services business? Has the pricing growth been weaker because of the competitive intensity, or is there a consumer demand issue at higher prices?
So growth is largely driven by two factors. One is that the profile acquisition, the top of the funnels, and is also the conversion, the converting of free members into paid members. So this quarter, as we mentioned, we had, you know, almost like half the number of auspicious or Muhurta days of wedding days compared to the Q1 of the last year. Normally, what we've seen was during those wedding days, there is an increase in registration and also the revenue also moves up on those days. Because if you know that people are, you know, getting married to our matrimony services, there are lot more publicity and also auspicious days where people choose to register also.
So we are in a, as I, as I said, you know, less than half of the Muhurta days compared to what it was in Q1. So the top of the profile acquisition was flattish on Q1. So if the profile growth increases, that's one of the, the growth part. If we have the double-digit growth on profiles, we could expect a similar level of growth, you know, going forward. Again, it doesn't happen immediately because there's a fresh conversion, also renewal conversions. In terms of converting our free members into paid members, you know, because you get millions of registered, converting certain percentage people go for a paid registration. And also is an outcome of the various segmentation, various pricing strategy to convert those users into paid users.
So, so our effort was on both the sides, converting the free users into paid users, increasing the percentage user going for paid users through product improvement, segmentation, pricing strategies, and also work towards the top of the funnel growth on profile acquisition. So business in terms of what is the growth expect, it's an outcome of these things, our ability to convert free members to paid member, how well you can improve and also getting more users to sign up on the platform. If both the things improve, the growth can be a double digit or more, depends on how these both the factors gets played out.
Okay. So, early double digits are like, closer to the 18, 19 double digits?
No, no, no. I think the growth it depends on how the profile acquisition, the growth and also the conversion, it improves on also.
So primarily dependent on profile acquisition and conversions?
Conversions. Yeah, exactly. Yeah.
Understood. Understood. My second question was, what are the new initiatives that you mentioned already, but like that we are looking to drive growth, because we are historically talking about astrology among other businesses that are related to weddings. What's any progress on that? Is there anything that you can give to us, maybe astrology or any other business that you're looking into to drive growth?
So we have a MatchAstro, so we are just working on fine-tuning some offerings. So after that, of course, that will be driving it. It will be effectively integrated into our core offerings, matchmaking. So the members of Matrimony.com can avail astrology services. The MatchAstro, we are looking at, you know, the positioning will be an exclusive, marriage, love and relationship app. So we are just focusing on only on these domains, the marriage, love and relationship. So MatchAstro is going to be independent app. Also, it'll be integrated into our offering. You know that we have, millions of users and, you know, people do look at, horoscope, as one of their deciding factors. So, so far, we have only automated the horoscope matching, as offering. So going forward, customer...
No, already it's integrated to some extent, but we are continue to fine-tune this offering. Today, only a 1-hour consulting, we are now going to reduce it to 15 minutes consulting, because 15 minutes consulting, because most of the people do prefer shorter consulting time. So basically, we're integrating astrology offering as part of our core product offering, as well as MatchAstro is going to be an independent app for marriage, love, and relationship. So it's very, very early stages, but definitely we see that as an opportunity. And other initiatives are, we are going to launch Love.com, L-O-V-E.com, an exclusive app for serious relationship. So, so we are looking at that as an opportunity as well. So we hope to launch Love.com before the end of Q2.
With that, I believe that we have the product offering for all segments of the users now.
Yes, sir. Clarification on horoscope. Did you launch it or is it in a beta stage or like, are you going to?
... No, it's sort of beta stage only, but so it's available in the Play Store, but we are not marketed actually. So it's more of we are just trying to do the product offering. As we are making the changes, and so once it's ready, then we can, we'll be stepping up.
It's launched, but it's not marketed?
Yes, exactly. Yeah.
What was it called again, sir?
It's called MatchAstro, and it gives you astrology app for marriage, love, and relationship.
Match?
MatchAstro. MatchAstro.
Okay. Okay. Thank you, sir.
Thank you. A reminder to all the participants that you may press star and one to ask your questions. The next question is from the line of Nigel, which is an individual investor. Please go ahead.
Hi, good evening. Sir, I had two questions. My first question was about over the next 2-3 years, how do you see the margins of the business going?
Okay. What else, Nigel? What other questions?
That was my first question about where do you see the margin going over the next 2-3 years? And my second question is, our advertisement costs, do you expect them to continue staying high or, and pulling down the margins, or is there going to be any change over there?
Yeah, with respect to margin, so the business has operating leverage. The revenue increases, the margin will increase. So if you look at our people costs, other operating costs, it's fairly operating at the 10 range. Only the marketing costs gone up in all this year. But as we see that, you know, there is a bit of softening optimum on the marketing side. The trend continues, that could be a possibility of reduced marketing expenses. However, the margins will improve if the revenue increases. So that's the response to your first question. In terms of advertisement expense, we already told, so it depends.
At this point in time, we expect to operate at a similar level, but as we progress, the trend continues in the market, we may reduce the marketing spend. Yeah.
All right. Is there any specific guidance to a number we can expect for the margins? Is there anything you'd like to share about that for the next 2-3 years?
No, 2-3 years, you know, today we're looking at excluding the marketing, we are operating at a gross margin of 62%. It can even move up to, you know, upward of 65% and above also. So that's the advantage we have in this business actually, so.
All right. Thank you, sir.
Thank you. Participants who wish to ask questions may please press star and one. The next question is from the line of Ashish, which is an individual investor. Please go ahead.
Hello, sir. Thanks for the opportunity on this call. Okay. Sir, I just want to ask you one question, right? So there are a lot of fast-growing segments which are adjacent to your business lines, for example, online astrology, et cetera, right? Which have a much faster and higher growth rate. So why are we not exploring those kind of business areas which are adjacent, have a larger target addressable market size, more repetitive customers, et cetera? So that's the only question from my side. Thanks.
Ashish, as you said, so we don't want to be yet another player in astrology, so we have launched MatchAstro. And we really want to focus on marriage, love and relationship. If you look at astrology, even the general astrology consulting, 60% of consultants are related to marriage, love, and relationship. So we just want to focus on these domains, rather than being yet another astrology player, you know, focusing on all segments. So anyway, you know, it works very well because, you know, marriage, people use astrology or horoscope consulting. So we are also launching Love.com. So a lot of youngsters do other questions related to, you know, how the future is going to be in terms of the relationship.
So we'll be integrating MatchAstro across our offerings into Love.com or in all our matrimony sites. But as I, as I said, MatchAstro is also going to be independent app. So the thing is that we want to focus on, you know, particular segment, and we want to provide a offerings that resonates well for the people in that segment. So we're going to only focus on marriage, love, and relationship, not yet another astrology app, you know, because there are players in that segment. We want to focus on only on the marriage, love, and relationship.
Got it. One last question, one additional question, right? So sir, last quarter, Info Edge kind of indicated the fact that competitive intensity, at least in terms of their ad spend, they, they see it coming down or in the process of coming down, right? So I think they also have their call today. Can you share some insight on competitive intensity on online matchmaking, please?
Yeah, and the fact is that, you know, in North we see that, the competitive intensity has come down significantly. There's a clear softening of, advertisement spend in the market, particularly the TV advertisements. But other markets it continue to remain at a elevated level. So we continue to watch and take appropriate action, and if it continues the softness, you know, then we also take appropriate actions to optimize our marketing spend or further invest within the other initiatives.
Got it, sir. And sir, what about buybacks? Are we planning any, sir?
The board will take note of whatever that, you know, that we have, the shareholder capital allocation policy. The board will, you know, conduct and decide at appropriate time what to be done.
Okay, sir, thanks a lot. All the best.
Thank you. Thank you.
Thank you. A reminder to all the participants, to ask a question, please press star and one now. We'll wait for a moment for the question queue to assemble. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thanks, ICICI Securities for hosting this call, and thank you everyone for joining. If you have any questions, you can write to us, and we'll be happy to interact with you. Have a good weekend.
Thank you.
Thank you.
Thanks, [Josh.
Thank you.
Thanks, everyone.
Thank you, everyone. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.