Ladies and gentlemen, good day, and welcome to Matrimony.com Q2 FY 2024 results conference call, hosted by ICICI Securities. 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. Thank you, and over to you, sir.
Good evening, everyone. On behalf of ICICI Securities, I would like to welcome you to the Q2 FY 2024 earnings conference call of Matrimony.com. From the company, we have Mr. Murugavel Janakiraman, MD and CEO, and Mr. Sushanth Pai, the CFO. Over to Mr. Murugavel for his opening remarks. Thank you, sir.
Thank you, Abhishek Banerjee. Good evening, everyone. Wishing you all a very happy Diwali. Despite quarter two being a seasonal quarter, we've achieved a 7.8% year-on-year growth on matchmaking billing, this was in line with what we had indicated during the quarter one call. In quarter two, on a consolidated basis, we achieved a billing of INR 117.1 crores, a decline of 6% over previous quarter, and a growth of 1.3% year-on-year. Revenue of 121.6 crores, a decline of 1.4% over the previous quarter and growth of 5.9% year-on-year.
The key highlights for the matchmaking business are as follows: Billing for the quarter was INR 114.9 crores, a decline of 6% over the previous quarter and growth of 1.8% year-on-year. Revenue was at INR 119.2 crores, which was a decline of 1.1% over the previous quarter and a growth of 6% year-on-year. We have added 260,000 paid subscription during the quarter, which was a decline of 1% over the previous quarter and growth of 1.4% year-on-year. The average transaction value for matchmaking business increased by 1.2% over the previous quarter and 0.4% year-on-year. This was in line with our customer acquisition strategy.
I'm also happy to share that we have launched a new version of BharatMatrimony app and website to delivering an enhanced user experience and functionality. We also enhanced the ability to connect with matches over shared interests, such as lifestyle hobbies, now people can find matches based on hobbies and interests. We expect this initiative to add further value to our customers. Now, coming to the managed services business, revenue was 2.4 crores, a decline of 10% over the previous quarter and a growth of 1.6% year-on-year. We've been working towards driving the, actually the breakeven or profitability, so we are taking steps to make that happen.
The EBITDA loss for the quarter was 2.1 crores, a down of 3.1, which is down from 3.1 crore over the previous quarter. On the billing and revenue outlook for quarter three, matchmaking revenue year-on-year growth we expect to be at similar level as compared to quarter two. On wedding services, revenue and losses are expected to be similar level as Q2. Let me now pass on to Sushanth to comment on the key profitability highlights. Sushanth over to you.
Thanks, Muruga. Our EBITDA margin for the matchmaking business in Q2 is at 21.3% as compared to 24.1% in Q1 and 23.1% a year ago. Marketing expenses are at INR 46 crore as compared to INR 43 crore in quarter one. In this quarter, the provision for the disputed Google service fee is for the full quarter. However, in quarter one, it was only for two months. Along with some increase in marketing, this was the main reason for the decline in EBITDA margins in matchmaking business. Excluding marketing expenses, our margins in matchmaking is stable at 60%. On a consolidated basis, our EBITDA margins in Q2 are at 15.1% as compared to 17.2% in quarter one, and 16.3% a year ago.
Tax rate in the quarter is 24% as compared to 23.2% in quarter one. Profit after tax is at INR 12.53 crores, a decline of 11.6% quarter-on-quarter, and growth of 7% year-on-year. Our share of loss from the associate, which is Astro-Vision, is INR 1 lakh. Return on capital employed annualized is at about 17% as compared to 21% in quarter one. Our cash balance is at about INR 337 crores. On the outlook for Q3 margins, our profit after tax in quarter three is expected to decline slightly on a year-on-year basis, mainly due to lower revenue growth and Google service fee provision. Also, just to recollect, in quarter three of last year, we had a one-time gain on account of land sale for INR 5.8 crore.
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 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 or on behalf of the company, unless it is required by law. With this, we can open the floor for Q&A. Over to you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kaustav Bubna from BMSPL Capital. Please go ahead.
Yeah, hi. So, you know, I noticed you had put up, you had put up a disclosure that you've secured the domain name love.com, or something like that, for casual dating. So just wanted to understand where did this mindset change come from to get into casual dating? And, what's the... I mean, what is the company's plans over here? How much, by when do you start to see user growth in this space? And, I mean, when do you really see the scaling? How much money will you invest in it? Do you plan to acquire someone, or do you plan to grow this organically? Whatever you can tell us regarding this.
Yeah, thank you for asking the question. So basically, we don't want to, you know, get into casual dating. I just want to get that clarified. We want to get into a serious relationship set domain. So because what we, you know, we kind of figured out was, the casual date in India, that there are players there in India, in the casual dating space. There's also player like Tinder and all. They're seen as a frivolous and, and they don't stand for something meaningful. So our ability always been that tell people to find the meaningful relationship. While matrimony is there, you know, then people can come to the matrimony. The intent is very clear, they want to get married.
However, we figured out there are set of users who want to, you know, fall in love or, you know, want to have a serious relationship. We believe there is an opportunity in this space, so that's why we bought the domain love.com. The intent to launch the service in the serious relationship space, that's what love.com is attempting to do. It's in line with our ethos and values and helping people to find their life partner. In terms of investment, you know, the product may be launched, you know, maybe next couple of months.
We're working on it. And, it's too early to, you know, what are the level of investment we're going to do. So, so probably maybe next quarter will be the question to give some comment on that, because at this point of time, the focus on getting the product right, we to understand how do you want to take the product forward or marketing, other strategies. So we've not really worked on those aspects yet.
Could you at least share if you are gonna grow this organically or you're gonna acquire company? Because your competitor, for example, I think a few years ago, a year ago, I don't really remember the exact time, have acquired Aisle. So because, you know, there's... In this space, we had spoken earlier, too, on a private conference call, where we had discussed that, you know, these homegrown casual serious dating websites or casual dating, whatever you want to call them, the homegrown ones, they just don't have it in them to grow beyond a certain level. UI bugs, all those issues [crosstalk] take it.
Answer the question. So sorry about it. No, we not intend to acquire anyone. So, you know, I think that's not possible at this time. We just want to, because, you know, we are into a serious relationship. I don't think anybody India who are in that segment, I think that's our understanding. So, we prefer to build it organically.
Okay, excellent. Thank you so much. Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask questions. The next question is from the line of Anurag Purohit from Anived PMS. Anurag has dropped off. The next question is from the line of Ankur Jain. Please go ahead.
Hi, good evening. Thank you for the opportunity. I have two questions. The first question is on the marriage services business. So I just wanted to know, the progress in that particular segment. I mean, do you see yourself in a stronger position now to charge subscription from more number of vendors or the mandap, mandap owners? And what is the timeline for break even that you have in mind? That's my first question.
Yeah. See, the business, we are, you know, working on various front, be it on the product side, technology front, and our value propositions. And, while you... What ShaadiSaga have integrated, we, we definitely see that, some of the fundamental things to be addressed. So while working on this journey of getting some of the fundamental things right, value propositions right to the customers, we also taken a step to optimize the cost.
So we see that the cost is going down. So we believe that, somewhere in quarter four, I think not the entire quarter, I think somewhere in quarter four, we believe we can get to the break even on a cash basis or get close to cash basis. So, so that, that's, how, how we are looking at the business moving forward. Once you get to the breakeven, once you get close to the breakeven, then obviously you have plans to scale this business. But at this point of time, the focus is to optimize the cost, get the value proposition right, and get to the breakeven. So that's which hope will sometime happen in the next four to five months.
I agree. Yeah, thanks. The second question is a little longer question.
Mm-hmm.
You know, it is about the telecalling process in both matchmaking and the wedding services business. So, see, what I've observed in a classified business that, you know, the moment a potential customer evinces interest by sharing the mobile number, there is a mad rush among the vendors to chase the customer, and it annoys the customer. So one, I wanted to know, how does that process work in the wedding services business of Matrimony? Like, you know, if there is a potential customer, do they share the mobile number? And what happens once they share the mobile number? Is it, like, disseminated to all the vendors who can call the customer?
That is one I wanted to know, how does that process work? And, the second question, again, related to this telecalling hygiene is, why the company executives... So again, in certain classified business, there are targets which are given to telecalling executives, and once they get the details of a customer, they want to upsell some package to that customer. And, you know, they call the customer umpteen number of times. And somewhere in the Google reviews of Matrimony, I found one review where a customer said that, "I had requested not to be called because I'm at work, but still, you know, I get number of calls, and that really annoys me." So I wanted to know, how does the company manage the hygiene when it comes to telecalling, where the executives are given targets to nudge the customer to buy a particular package, but at the same time, the delicate balance is managed so that it doesn't annoy the customer? So I wanted to know this both for wedding services as well as for matchmaking. Thank you.
Yeah. Let me, you know, first talk about wedding service.
Mm-hmm.
Wedding service, when the customer are interested in availing the, you know, particular service or photography, for example, once you understand the customer requirement, the leads are sent to only limited number of vendors, so not too many vendors. Again, so that way, now the customer is annoyed with too many vendors calling. However, the point I made just earlier is we have to understand what customer wants, what are the value points you want to offer. If the customer does want the phone call from vendor. In fact, you are just asking some of the fundamental question also. I think there's something working on those things. That is point of time to respond. The customer needs are not in too many vendors. We need, that's where the most of the character service work.
We limit the number of vendors that, the lead is sent to. However, you know, we are looking at, you know, further into it, so that the customer is, is not annoyed with, even the customer getting called to even say four vendors or five photographers. So that's something, because sometimes the customer want, you know, four, five vendors also, because we help the customer to evaluate pricing and package to decide. However, instead of standard numbers, we are going for possibly can, you know, optimize according to the customer requirement. Location might need one, two, three vendors or five vendors. These are some of the things, something we need to work on it and improve. When it comes to matchmaking, matchmaking definitely is nothing like, you know, there's a, there's a control. It's not that a telecalling executive can make unlimited number of calls.
We have, you know, close to 1,000 telecallers. We have, make good number of calls on a daily basis. There's a limit. There's also provision for customer to, you know, to set, DND interface. Also, we send an SMS after certain number of calls to give an option for our customer to say, "Do not call." The thing that, one of the review already mentioned, could be one of the subject fixing that probably because could have not happened with telecalling, probably could have been some other process. There are multiple processes. Could be in a process failure at one of the calling. As per a general calling, there's no unlimited call. There's only limited number of call. There's a provision.
There's also communication to the customer to ensure that the customer has a control over whether they want to receive call or not. It's not that the customer is at the mercy of, or not at the receiving end, and, you know, they cannot stop the call. However, there are times, you know, people would, you know, when the customer told they were not enabled the DND, I think they are. When you're dealing with those people, that could have been one or two mistakes here and there. However, you know, so these are the exceptional cases, not the norm.
Right. Yeah, got it. Thanks. Yeah, I just wanted to, you know, know about the hygiene part of telecalling. Thanks a lot for answering this question.
Very important for us, because for us, the customer experience paramount. We want to ensure that the customer are having a great matchmaking experience. Yeah.
Thank you.
Thank you. The next question is from the line of Sonal Minhas from Prescient Investment Management. Please go ahead.
Hi, sir. Am I audible?
Yes.
Okay.
Yes, Sonal. Go ahead.
Good evening, everyone. I just wanted to understand, with regard to the revenue guidance, which you mentioned,
Mm-hmm.
That, for Q3, I think you mentioned there is a revision in guidance for Q3. Just wanted to understand the subjective part of it. Why, why is that so? Why were the new billings visibly down? And, secondly, what is the outlook for the year, as a whole, assuming Q4 is, maybe you can just extend it to Q4 as well? That was the first question.
Yeah. So basically, if you look at the first six months, the growth in matchmaking around the four and five to six.
Mm-hmm.
So the quarter Q3 also looked a similar level of growth. While we are taking steps to move to much better growth, we are still not reached the double growth yet, you know? We are seeing around the 10% growth. We also expect that there will also be a similar growth in the billing or matchmaking. So basically, yeah, you know, we are taking steps, but still, we, you know, still not able to move to that level of growth yet. So there are new initiatives or steps we are taking. We believe that as we progress, we've been able to move to a double-digit growth. Yeah. Also, the Q3, we also indicate that, you know, well, for us, both quarter two and quarter three are seasonal quarters, because, you know, quarter two had a lot of inauspicious period. Quarter three will have, again, some bit of and festival seasons. So both Q1, sorry, Q2 and Q3 gets impacted in terms of the revenue.
Got it. Got it, sir. And the second question on this whole litigation with Google. Just wanted to understand, is the current EBITDA indicative of the margins that the business is going to have, assuming similar top line, or there are more provisions we need to do, we need to take going further?
Well, I think the provision will be at, similar levels only. You want to add anything to it?
On the Google litigation, as you are aware, we have appealed with the division bench, and the hearing is in progress. So on a best estimate basis, we have created a provision. The only difference is in quarter one, there was only for two months. In quarter two, the full provision has come. So a similar sort of provision will continue in the coming quarters. Therefore, we have said in the next quarter, our overall PAT levels will be slightly lower than what we have achieved in the same quarter of last year. And in last year, same quarter, we had a one-time gain on the account of land sale, and in this coming quarter, that will not be there. Despite that, we are saying it will be just slightly lower than what we had achieved in Q3. The provisions will be very similar, given that our top line is also growing at a very, you know, moderate sort of a pace.
I understand that. Okay. All right, sir. That's it from my side. Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask questions. The next question is from the line of Anurag Purohit from Anived Portfolio Managers. Please go ahead.
Hi, good evening. My question is regarding revenue for this quarter, because historically, our revenue, quarterly revenues always tends to be a percentage or two higher than the billings in the previous quarter. This quarter, there's a 2% decline compared to the billings of last quarter. Any particular reason for this?
Yeah, sometimes, you know, because the billing of last quarter was INR 124.5, but the revenue was INR 121. It sometimes depends on, you know, which months of the period that sometimes the revenue has added up. So it takes here and there some changes, but it's also how the package mix would also have to do with it now. That is some, yeah.
Okay. And Sushanth, so PAT might be slightly declining in Q3 versus Q3 of last year, but how about EBITDA? Would that also witness some pressure versus last year, or there would be some momentum, particularly coming from the marketing spend point of view?
Yeah. So, you know, even the EBITDA, we believe there will be a slight, you know, decline, because mainly because the Google service provision fee affects EBITDA also.
Okay. There won't be any counter from advertisement spend? I wanted to understand more on that, particularly because if you... From competitive intensity point of view, Jeevansathi is now saying that there is some respite in their marketing spend, but we don't see similar in Matrimony's marketing spend. So just wanted to understand more on that, how that direction would move for future.
You know, the thing is that on the marketing spend, definitely, you know, the Jeevansathi has reduced the marketing spend, and they entered some other market also. They continue to now invest in one and two market, which is North India and West and Maharashtra market, and definitely reduce the marketing spend. But however, the other players continue to, you know, invest in marketing. Also we see the marketing spend, which is sort of reduced in North and West because of overall the spend that it is in the category of those markets. But however, there's increasing marketing spend happening in other markets. So net-net, the competitive intensity into marketing continues to remain, because while Jeevansathi definitely reduce the marketing spend.
So if the other player also reduce the marketing, then definitely we also look at optimizing the marketing. That is one because while there is a north and west reduce, but other markets, the marketing spend has shifted in order, but overall, the level of the marketing spend remained at the more or less similar level. I'm looking at, not at the overall basis, I'm looking at the other player also. So that's why we continue to, you know, spend, in the... Anyway, well, there is some reduction compared to what is spent in quarter two, but it'll be around the growth range on matchmaking. So that's how the marketing spend, spend will continue till, if there is some reduction in the marketing spend, in, you know, by industry player.
So then what happened in campaigns and all of that?
Yeah, people increased it to increase the marketing cost and put on account of we launched a new TV campaign because we also launched a new product. We launched new campaign on basis of how to, you know, finding right partner based on hobbies and interest. And in not a new campaign, there's average duration is higher so that increases cost of marketing spend. So that are reason for some increase in marketing spend, I'm assuming.
Okay. So essentially, Q3, there should be some respite on that front, compared to Q2 of this year?
Yes. Yeah.
Okay. Wanted to understand in terms of industry, because you are still growing on YoY basis, given Jeevansathi's revenue are kind of now also plateau to a at a certain level. How about Shaadi? What is your sense on that?
Actually, honestly, we don't have any idea about, because it's not a public company, we don't have any information about the other players. But definitely, given Jeevansathi, they graduated, and we also moved the free model, and there is sort of combination of things that paid. The revenue has gone down. But however, so we, we don't have any information about other players. So we continue to take steps to grow our business, and while we are not moved to aggressive growth, but again, we are some percent, but we are taking steps to see whether we can move to that aggressive growth.
Okay. Thanks, and all the best, and happy Diwali to you.
Oh, thank you so much.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask questions. The next question is from the line of Rishabh from Carnelian Capital. Please go ahead.
Yeah. Hi, good evening, sir. Just a few quick question. In case I've missed, I wanted to know what is the amount of provision that we have charged on account of the Google litigation?
Yeah. See, due to the sensitivity involved, we are not disclosing any specific numbers. All we have said is, on a best estimate basis, we have provided, because Google has, you know, certain tiers and all of that, and where we fall in, so it's not a very straightforward thing. But broadly, you know, the way we see is that if not for the provision in this quarter, our PAT margins would have been at least maybe 300 basis points better than what it is.
Okay. Okay. Also, by when do we have the next hearing or when is the resolution expected on this front?
We don't know. It all depends on, you know, how the court deals with it. Currently, the court is in the midst of this, and we don't know. It has to... You know, they progress, you know, they don't give us the dates in advance, so we have to wait for it. And also, in parallel, the case is also lying with the CCI as well, so that also needs to be, needs to progress. So, it will, I think this will all take some time as we go along. We need to wait and monitor.
Okay. But, sir, also, like you alluded also in the previous question, that, you know, the, you know, the growth has been, cyclical. We're expecting, you know, moderation in billing. So even like, you know, the total number of billings has been going very sticky between, you know, like 22-26. So, what has really led to this stickiness and, you know, despite our putting in so much of, efforts in advertising and all, we do not really see this billing or number of subscriptions going up. So is it, due to, you know, any, we losing any market share, or what is it that is, you know, basically not leading to the growth, expected growth?
No, basically, while we are taking steps to, you know, do the better growth and, yeah, and we are definitely putting our efforts, taking initiatives. But definitely growth is around the in this category, there are, between our business, there are multiple, services, be it online matchmaking, personal services, we also have a Jodii. So, but there are some challenges as well. There are some segments or some markets, the proper growth is not happening. So the combination of multiple, factors, not helping us to move to the double-digit growth. However, the good thing that, you know, we are the one player continuing to grow, continuing to move up, while only continuing profit.
What our window here is to drive growth, but there are challenges there, as I said, so in a part of the project. But we are definitely working on it, definitely taking steps now. So unlike other businesses, the matchmaking business also have a, the separate specific issue, because every year we have, a new set of customers, and, you know, we have to convert them into paid users. On that basis, some segments we are not seeing some growth also. So yes, definitely the difference is like, unlike other SaaS business, there is some place that we can continue to add to the base. So more people get married. So we're also taking steps like love.com and other initiatives. We hope these, all these initiatives are still in progress and will help us to move to double-digit growth.
Mm-hmm.
That's on the growth. The Google issue, again, just want to elaborate it. Yeah, it's a multiple forum, taking time, and definitely we thought they would increase the profit, but these are some of the problems with that. Yeah, as Sushanth said, it may take time, and we don't know how long it's gonna take now. But while companies are fighting, we hope we're able to overcome another problem. With Google, not to do everything possible to get this revenue from previous year.
Sure. Thank you so much, sir. That's all from my side.
Thank you. Before we take the next question, participants who wish to ask questions may press star and one to ask the question. The next question is on the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.
Thank you for the opportunity. The first question is on this Google issue. As a management, have we experimented in any micro market that if we take the users to a different page for payment, does that affect the user behavior? We can always segment the market in a small city and try it out. So have we done that?
Pulkit, yeah, it's something we've not tried yet, because most of the payments in India is happening in UPI. So we are not sure, you know, because most of the users in India are app users, are mostly 80% users. So taking them outside of the app mean they have to go to website. So we have not done that. But definitely, you know, something we have to figure it out. We have to work out beyond the case, we also need to figure out, the fixed payment, see what kind of impact it will have, you know, but pros and cons, we have to evaluate. We have not done that yet.
So you've not done that, but is that something you're willing to experiment and planning to experiment?
No, no, definitely no, because obviously we don't want to, you know, kind of give hard-earned money to Google. Definitely, Google is everything, a monopoly. That's why they think we are fighting. And, you know, just forcing people to pay, you know, part, the revenue. It, you know, it's a taxing company, so I'll be very vocal about the Google, you know, taking the hard-earned money of Indian companies, and even they're taking the money outside of India as well. So the government also losing revenue on tax as well. So we've been fighting, we're educating and, you know, highlighting the issue. Probably, we will be taking, you know, related steps as we were about to overcome the challenge.
Right. So that's the good thing in your business model, because, I mean, you can actually experiment based on micro markets, based on small, you know, different segments [crosstalk]
Right.
Different apps and therefore, see, I mean, and first of all, it will be a big thing because then you can roll it out in India and then, you know, mitigate these costs.
Absolutely. We are not doing that, but we definitely will experiment so far because we've not built recently a significant launch, a new version of Matrimony.com. So we have to look at what are the various experiments, what will help us to continue our revenue, and at the same time, are able to overcome the challenge, either legally or otherwise, also. I like the answers of Pulkit. We'll experiment, definitely, various experiment.
Hello?
Yeah. Please go, yeah.
Yeah, I was seeing that the app has been refreshed, and there's certain update.
Yeah.
You launched the app and, you know, you made the marketing spends. Now, this has happened, I think, two weeks ago and as well as one month ago, when I look at least the iPhone app store. How is user behavior or engagement post that? Are you seeing any trends or any uptick in engagement at least? I know is what I was trying to understand.
Fairly good, but not clear in this team. So we launched a new version of app, definitely is, is much better, but still there are some, you know, keeping issues which are working on and addressing it. It may take another couple of weeks for us to set all the customers, based on the customer feedback, fixing some of them. Because a complete revamp, it's not an incremental change is what we have done. So, so project value launched, few weeks ago, but still there are, areas we need to improve or there are section we need to modify. We're working on it. Maybe, maybe one month down the line, probably would have moved to a much better level. We definitely need also when we launch a complete new version, it takes some time for user to get adapted to the new version.
So now we're seeing that there is, you know, improved traction and, and, increased engagement. And also one more point is that when you launch a new version, it also takes time for user to download the new version. It's not that all the users are migrated to the newest app. That also takes more of their time. So we believe that probably, you know, one month down the line, we've also addressed some of the, you know, the small, small issues. And also we expect, at that time, a majority of users have downloaded that new version of the app.
Understood. Got it. Thank you so much, and all the best.
Thank you.
Thank you. We would like to remind participants that you may press star and one to ask questions. As there are no further questions from the participants, I would now like to hand the conference over to the management for the closing comments.
Thank you so much, Abhishek Banerjee, and thanks once again, everyone, for joining the call. Once again, wishing you all a very happy and prosperous Diwali, and look forward to seeing you soon. Thank you so much.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.