Hi, good evening everyone. This is Yashashri from Chorus Call. Welcome to FSN E-Commerce Ventures Limited Q3 FY25 earnings call. From the management at Nykaa, we have Ms. Falguni Nayar, Executive Chairperson, MD and CEO. Mr. Anchit Nayar, Executive Director and CEO, Beauty. Ms. Adwaita Nayar, Executive Director, CEO, Nykaa Fashion and Head of Owned Brands. Mr. Vishal Gupta, CEO, Nykaa Distribution. Mr. Abhijeet Dabas, EVP NykaaFashion.com. Mr. P Ganesh, Chief Financial Officer. Before we start, we would like to point out that some of the statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. Kindly note that this call is meant for investors and analysts only. By participating in this event, you consent to such recording, distribution, and publication.
All participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation from management concludes. With that, over to you, Falguni ma'am, for opening remarks.
Thank you. I think I'll start with the performance highlights. Really, you know, welcome to all of the investors and shareholders and analysts, and really happy to say that, you know, we are delighted to have a pretty good growth momentum both at the GMV level where, for the quarter, our GMV is at INR 4,528 crore, which is a 25% year-on-year growth. This is for consolidated own Nykaa performance, and from a revenue from operations perspective, we have witnessed INR 2,267 crore in the quarter three, which is a 27% year-on-year growth. As you can see, the revenue from operation is growing faster than GMV, and I think for the first time we are seeing some reining in of the discounting that happens in the industry. I think from a gross profit perspective, it's been a fantastic quarter with gross profit at INR 991 crore, which is a 30% year-on-year increase.
The EBITDA has also come out at a pretty healthy level of INR 140.8 crore, which is a 42% year-on-year growth. There's been an improvement in EBITDA margin as well as PAT margin, with PAT coming out at INR 26.4 crore for the quarter, which is a 51% year-on-year. All in all, excellent performance at Nykaa with a strong momentum in most of its businesses as we'll see as we move along. In the beauty business, and I just want to remind all of you that this is the vertical definition of beauty and fashion that we now follow with a number of underlying businesses under those. The beauty growth has come out at 30% year-on-year growth. Sorry, it's a 32% year-on-year growth at INR 3,389 crore.
This is, when you look at it from a year-on-year, I mean nine-month perspective, it's been a 30% year-on-year growth at INR 8,716 crore. This was at the GMV level. On the revenue also, the beauty growth has been strong at 27% year-on-year from a quarter three perspective, where the quarter three beauty net revenue has come out at INR 2,060 crore. On a nine-month perspective, also it's been a healthy growth at 25% year-on-year growth, and the number stands at INR 5,356 crore. Strong performance across e-commerce, physical stores, owned brands, and E-B2B business. From a fashion perspective, while the GMV growth for the quarter is at 8% year-on-year and the GMV number is INR 1,130 crore for the quarter, it needs to be seen in light of generally a subdued fashion industry business for this quarter as well as for most of the year.
On a nine-month basis, the fashion GMV has grown at 10% year-on-year, and it now stands at INR 2,767 crore. So from the revenue perspective, I mean, yes, while the overall growth in the GMV has been subdued, I think companies worked very hard to do a number of initiatives. You can also see that our revenue growth has come out strong at 21% year-on-year, and the revenue for the quarter is at INR 199 crore. And for the nine months, this number is INR 513 crore, which is again a strong 21% year-on-year growth. I think some of the stronger revenues in terms of both LBB, which is a business, this vertical is acquired, as well as services business makeup for this growth in revenue, and also the shrinkage of leakages between GMV to net revenue line item. Next.
At one Nykaa level, really happy to say that we now have a cumulative customer base of about 40 million, which is a 29% year-on-year growth. In terms of the physical retail, also the expansion continues. We are today at 221 stores, largest beauty retail network in the country, and of these, about 12 stores were launched during the quarter. We have focused a lot on quick delivery. I think we've been sharing with all of you that 70% of our beauty orders are delivered within the same or next day in top 110 cities. Overall, also there has been huge improvement in order to delivery timelines for beauty business. The highest brands were launched in the beauty business this year, as well as in fashion business.
I think in the beauty business, if we talk about, like we've seen some of the most accelerated brand launches at 200 numbers in beauty business and 217 fashion brands. But in beauty business, we saw some of the launches like NARS, Eucerin, GHD. All of you know that these are really big brands globally. So a lot of great global brands are choosing to come into India and launching with Nykaa. Story similar on fashion where you're aware that we earlier launched Foot Locker, and now this quarter we've also been able to launch Snitch as well as Victoria's Secret more recently. Of course, it is after the quarter end, but a lot of exciting brands have been launched on both the platforms. And finally, on the content-led education, we continue to do a lot.
You're all aware that this quarter saw NYKAALAND execution, and we'll talk more about it later, as well as Nykaa Wali Shaadi, which is, you know, Shaadi, as all of you are aware, is a very big business in the country, and Nykaa clearly wanted to be that go-to platform for all the Shaadis, and this was solidified through our Nykaa Wali Shaadi, where we have a four-part OTT programming series along with Tiger Baby, which has been a huge success, ranking as top 10 within the week of launch, so I think all of these properties have given us more than a billion plus reach, continuing our journey about educating and recruiting customers in the top funnel. All this has led to about 513 million consolidated GMV for our businesses for this quarter.
With that, I'll move on to multi-beauty, multi-brand retail, where I'd request Anchit to take this forward.
Yeah, great. Thank you. So I think as Falguni said, it's been a very strong quarter for the beauty vertical as well. And you can see that the beauty vertical has delivered a 32% growth year-on-year and a GMV of INR 3,389 crore. This is some of the highest growth we've seen over the past several quarters, as you can see from the table above. Next slide, please. A lot of the growth, you know, has been driven by a big investment which we've made over the past several quarters, something which we've discussed with the community as well around customer acquisition. And this is really bearing fruit now in terms of the financial performance of the beauty business. As you can see, our annual unique transacting customer count has grown by 26% year-over-year, which is the highest growth in AUTC over the past six or seven quarters.
Today, our AUTC for Q3 FY25 stands at 14.8 million, the highest we've ever had. As you know, Q3 is the festive season for the retail industry. In light of that, we do host our flagship Pink Friday sale in November. This year as well, we hosted the sale towards the end of November, early December, and the results were very strong. The sale delivered a growth of 36% year-over-year on GMV terms. We got over 86 million visits to the app across the 10-day period of the sale. Customer growth was strong at 55%. We had a very strong conversion in terms of order conversion at over 4%. This is a fantastic opportunity for us to acquire customers and to do a lot of top-of-mind awareness building for the brand Nykaa as well.
In terms of the initiatives we took that were unique to this sale, there were some tech developments. As you can see on the top right, for the first time on the app, we were able to show the best price on PLPs. We also enabled express checkout as well as personalized recommendation widgets so that we're able to show the right and the relevant products to the relevant consumers. Off-platform, we did a lot of top-of-mind awareness building across outdoor advertising, print, Spotify, and Zomato as well, and I think all of this has led to a very strong performance on sale, which is a good outcome for us as well as our brand partners and ultimately the consumers as well.
Speaking about new launches, I think it goes without saying that Nykaa continues to remain the partner of choice for global brands who are looking to enter the India market. As India continues to improve in terms of its importance to global brands as they look for growth for the coming years, we are seeing an influx of some of the best brands globally. In this past quarter alone, we have launched Kérastase, which is a haircare brand owned by the L'Oréal Group. This was launched on Nykaa. And this has historically been a brand that's been available only in salons, and it has come to specialty retail platforms like Nykaa for the first time. Next, we also launched GHD. GHD is a haircare brand, again, that was launched exclusively on our platform. And then finally, NARS and Eucerin.
Eucerin, again, a derma cosmetic skincare brand, one of the best brands globally in the space, launched exclusively on Nykaa this quarter, as did NARS, which is in the color cosmetic space. Some other brands that have also launched include some Korean brands such as TIRTIR, Numbuzin, and AXIS-Y, as well as premium color cosmetics brand Laura Mercier and haircare brand Y. So you're seeing a massive influx of brands. And again, choosing Nykaa as the primary destination to enter the India market. Talking a little bit about Nykaa Wali Shaadi, as you've seen in previous presentations, Nykaa is very focused on creating proprietary IP that can help us to create a lot more awareness for beauty as a category in the country and leveraging content very effectively to achieve that goal. And this was no different.
We believe that India has the second largest wedding market in the world after China, and it's almost a $130 billion market. This is the second largest consumption category after food and grocery, and upper-mid and high-income households, which is a large part of our consumer base, contribute to 50% of the total market. So for us, it was a no-brainer that we should make the connection between beauty and weddings. It is a very synergistic category, and we wanted to cement our position as the go-to destination for beauty as it relates to the wedding season, which was also in Q3 of this year and parts of Q4. In terms of what we did, we actually created an OTT TV show that is now live on JioCinema. It was produced by Zoya Akhtar and her production company, Tiger Baby .
It featured four real brides who are getting married over the past several months and a behind-the-scenes look at what the wedding process means to them and the role that beauty plays. This show is now among the top 10 shows across all OTT platforms based on viewership, and this is as per third-party sources. The reach we've got on social itself has been over 250 million, and we worked with 70+ experts to create additional content around this OTT show, which we created. Of course, for us, we believe strongly in the flywheel of content to commerce. Along with the content, we also drove a number of on-platform initiatives, including a sale event, to capitalize on the reach and the awareness, which we were driving through the Nykaa Wali Shaadi show.
That has resulted in a positive outcome in terms of commercial actionables, and that is also something which we're very happy about. Moving on to the next slide. This is just the trailer of the show, and I encourage you all to watch this on JioCinema when you get a chance.
Beauty is this look today for me, and it always will be now if anyone asks me. Beauty has a whole new definition. It's so many layers deep. It comes from how you feel about yourself, how you project that, and how the people around you make you feel.
I feel like when you meet the right person, you just know that this is it.
Yeah, I think just to add a few words about Nykaa Wali Shaadi, again, as we always say, I think category creation is incredibly important in a very nascent beauty market like India. And these are the kind of activities that go a long way. We had many brands, third-party brands as well, participate as part of Nykaa Wali Shaadi. And again, it reiterates that Nykaa continues to be a partner of choice, not just for its distribution and retail capabilities, but also, importantly, for its marketing capabilities, which we are quite uniquely positioned in. Next slide, please. Coming to speak a bit about our brick-and-mortar retail business, as you know, today we are, of course, the largest specialty beauty retailer, both online and offline, with 221 stores, 47 of which were added this year, and 12 have been added in Q3 FY25 alone.
The contribution to our omnichannel beauty GMV from physical retail is at 9%. So that stayed constant over the past several quarters. And in terms of total retail space, today it's at about INR 2.1 lakh sq ft across 73 cities. In terms of, you know, for us, physical retail is also a great way to premiumize the beauty market. And today, 90, we have over 90 prestige beauty brands in our stores. Two-thirds of our store's GMV comes from prestige beauty brands. And as a result, we have, I would say, best-in-class productivity at about INR 4,250 a sq ft on a monthly basis in terms of GMV. Financial performance for the physical retail business, strong GMV growth again at 34% year-over-year, so slightly higher than the overall beauty vertical. But I think most importantly, we've seen very healthy growth on same-store sales growth, like-for-like growth at 19%.
And despite the investment we're making behind retail, we continue to see the network be profitable at the PAT level. And on the right, you'll just see some images of the kind of stores which we've been opening over the past several quarters. Next slide, please. Again, just some more images of the stores we've opened in Q3 FY25. As I said, 12 new stores launched. And importantly, also across three new cities. So Agartala, Mohali, and Belgaum are the three new cities where we have stores. And these are some images of our stores. You can see very high-quality, world-class execution in tier two, tier three towns as well, such as Raipur, Mohali, and Thrissur. A big focus for us in the past several quarters, and something we've spoken about before, is Nykaa wants to continue to invest behind the premiumization of the beauty category.
And as we see more consumers entering the world of prestige beauty, as the Indian consumers tend to have better affordability in the coming years, we want to be well-positioned to take advantage of the growth of luxury beauty in India. Currently, luxury beauty is very under-penetrated in India. And we believe that physical retail is a great way to continue to drive penetration and growth of this segment of the overall BPC landscape. As a result, we have launched six flagship stores across India. These are large-format stores, 3,000+ sq ft , and many more to come. Currently, they are in the major metros of Mumbai, Delhi, and Bangalore, but you'll see some more from us in the coming months. In terms of the brand mix, you can see from the right side, it's a good mix of premium as well as luxury brands.
We are offering our brands a lot more space to do the relevant storytelling. We are also focusing on services in our stores. You're seeing a lot more focus on gifting and experiences, skin consultations, as well as makeovers in store, which we call beauty services, as well as leveraging AI and virtual tools better to help our consumers make better purchase decisions in store. With that, I will hand the presentation over to Adwaita to take you through the beauty-owned brands.
We're excited about this opportunity we have to build a house of brands at Nykaa. Until now, we've obviously been a strong retailer, and we have now set our eyes on an ambition of being a very strong house of brands as well. First, to kick off on the beauty side, our house of brands portfolio now is, as of Q3, INR 468 crore of top line. It has tripled in the last three years. We're seeing great momentum here spread across about seven brands. On the right-hand side, you can see the channel split. As of Q3 FY25, about 50% is from our own Nykaa online channels, 13% is from Nykaa stores, and then about 35% is spread across GTMT and other platforms, including other e-commerce platforms. Moving on, I'll now talk about three of our biggest brands. The first is Nykaa Cosmetics.
This is a cosmetics brand that we've been building over the last five years- six years. We've just taken Rasha Thadani on as our ambassador, which is a move that we're excited about, given sort of the, she represents everything the brand represents, which is all about youthfulness and trend. This brand is now a top five color cosmetics brand on the website. As of Q3, it has crossed over INR 440 crore of GMV from a run rate perspective annualized. And we've also been focused on increasing the physical footprint of this brand. So it now is listed across 11,000 GTMT doors across 200 cities and is, of course, present in all the Nykaa stores as well. Moving on, another brand that we're incredibly excited about is Dot & Key.
This is an acquisition we did back in 2021, and we're happy to say that today it's one of the largest skincare brands in the country. It is, as of Q3, an annualized GMV run rate of INR 900 crore. So it has grown absolutely exponentially. And on the right-hand side, you can just get a taste of what this exponential growth has been. So in FY22 and Q3, it was a 35-crore brand, which is approximately around the time when we'd acquired it. And now in the quarter that we're just wrapping up, it's over INR 500 crore, and this is at an NSV level from an annualized run rate perspective. So obviously, massive acceleration, 15x in three years. From the perspective of how much we paid for it, we do believe that it was a good deal. Back in 2021, we acquired 51% for INR 97 crore.
Just recently, we completed another 40% or so for INR 265 crore. Yeah, and so we're feeling quite good about where this brand is. We continue to be really focused on leaning into this brand along with Nykaa Cosmetics in a big way going into next year. The next brand we'll talk about is Kay Beauty. This is a brand that we started building four to five years ago. Again, it's been growing extremely well. Again, you can see in Q3 of FY22, it was just about a INR 100-crore brand, and now it is crossing INR 330 crore. Again, 4x growth in just a matter of a couple of years. This brand is actually one of the fastest-growing brands on the platform, and we feel excited about having built this brand completely from scratch.
And so we're really honing our skills as brand builders within, obviously, the larger ecosystem of Nykaa. All right, moving on. So that wraps up our beauty-owned brand section. Moving on to our fashion-owned brands and the brands that we're building there. So you can see in Q3 of FY25, we've delivered about INR 120 crore of GMV. This is pretty flat from last year. It has been a year of just sort of focusing and consolidating our efforts on fashion. We had a handful more brands, but we've actually now decided to just focus on five, and those five are listed here. We feel that the tail was not adding enough value and also, obviously, drawing attention and investment, whereas we feel that we want to just double down on what really are the big brands in our portfolio.
And so you will see us being a lot more focused on our assortment going forward. And within these, of course, we're extremely excited. Nykd, Kica is our lingerie, and our athleisure brand, respectively. And we think those are absolutely incredible spaces to play in. And then 20 Dresses, RSVP, and Gajra Gang are our plays in Western wear and Indian wear. Again, a space that Nykaa has a huge set of customers who like us for that category. So it's a place that we obviously want to play. On the right-hand side, you can see how the shift of channels has actually changed. So in Q3 of FY25, the quarter that's gone by, you can see that we're now actually focusing more on our own channel of distribution, which is the hot pink. And we're sort of decelerating on selling in GTMT offline, basically non-Nykaa channels.
We feel that fashion-owned brands have to really be built on our own channels and not really go far and wide. So obviously, the channel strategy differs from category to category, but in fashion, we're clear that we want to be more focused on the Nykaa platforms. So with that, I'll hand over. Sorry, this is just a quick glimpse of, again, what our product sort of looks like. You guys have seen this in prior meetings. We are definitely remaining focused on being very trend-led and really meeting the customer where they're at. So with that, I'll hand over to Vishal, who will walk us through our E-B2B business.
Hi, thanks, Adwaita. So dear friends, we had another great quarter on our path to profitable scale. You can see that we grew GMV by 53%. And by delivering about INR 260 crore, we now are at a run rate of INR 1,000 crore GMV. And you can see that it's 12x growth in three years. And a lot of the growth is driven as we continue to drive scale and reach. And we now reach INR 2.6 lakh retailers and 1,100 cities. So we are national. We are deep in India, tier three, tier four, and very high retailer base. Next. And this really helps us to improve our profitability, where you can see that in gross margin alone, we have improved by almost 250 basis points, which is driven a lot by ad income. So as we grow more scale and more retailer visits to our app, we get more ad income.
And consciously, we are driving positive mix by selling higher margin brands on our platform, which drives our gross margin. And with scale, obviously, our cost also comes down. We had a few third-party warehouses in a few geographies. And as we got scale in those geographies, we moved away from 3P to our own warehouse. Yeah, because that is more efficient. And reduction in freight as we improve our order density, et cetera. Even the sales and distribution cost you see is coming down. Overall contribution margin improved by more than 500 basis points. So I think we are well on our way to profitable scale, and we will continue to keep scaling till we reach profitability. Thanks. Now I hand over to Abhijeet for fashion.
Thank you. So on fashion, like Falguni ma'am mentioned a while ago, I think in the midst of a tough quarter in general for online fashion as a space, the business has been resilient. GMV has grown 8%, as you can see on the left side, reaching INR 1,130-odd crore. And more importantly, putting into perspective that fashion in the scheme of things for Nykaa is still a young business. We only launched the business around six years ago, but in the last three years, we have seen still more than a 2x growth on GMV as well as on revenue.
On revenue, as you can see on the right side of the slide, there's been a more healthy 21% year-on-year growth in revenue to close to INR 200 crore, largely driven by strong traction seen on the content business of LBB through events such as NYKAALAND and Nykaa Wali Shaadi, as well as higher services-related income. So overall, tough macro environment, but still in the middle of that, we've been able to continue to grow. Next slide. I think this just puts into perspective what Nykaa Fashion as a platform brings to customers as well as to brands. So again, over the last three years, we have continuously augmented our assortment by adding relevant brands across categories. The number of brands that we now offer to customers is more than 4,000, and that's a 3x increase over the last three years.
Across all categories, there have been relevant brand additions throughout the last year itself. We spoke about Foot Locker when we gave the last quarterly update, but along with that, over the last quarter, we've continued to add further brands. We've added the likes of Tommy Hilfiger, Victoria's Secret more recently, Snitch in the men's category. And I think for customers, Nykaa Fashion has established itself as a platform which is curated, yet offers a complete assortment of all the relevant brands across all the categories and differentiated offerings from those brands. At the same time, for brand partners, we have continued to be the platform which also brings great quality customers and allows selling fashion in the way that they would like to sell fashion. And that reflects in many underlying indicators that we are able to further see in our P&L in the further slides. Next slide.
Just a glimpse of the kind of events that LBB has been able to execute over the last year. Just again, to put in perspective, since acquisition a few years ago, LBB has scaled 9x in revenue. We spoke about Nykaa Wali Shaadi a bit earlier in the presentation today, but NYKAALAND and many other such campaigns which have been driven by LBB have delivered great value. Next slide. Most importantly, in the midst of even a difficult year, while continuing to grow the business, I think the bottom line has seen significant improvement through the year. We have seen a more than 700 basis points improvement in gross margin, which is a significant move from 44% last year, same quarter, to 51% this year. This is largely on the back of marketing and services income working with brands.
Our fulfillment expenses have come down by close to 100 basis points as we have optimized our route planning and become better at saving packaging costs. Marketing expenses are higher on account of two things. Firstly, we have invested ahead of the curve in campaigns and events as well as in customer acquisition, and this reflects in the middle of a tough quarter. We have still continued to acquire customers. Just to share, our visits and our unique visitors have both been at all-time highs in the last quarter, and that augurs well for quarters going forward because that just creates a base of customers which will continue to serve us well as our retention and underlying metrics remain healthy. All of that has resulted in still a contribution margin of 184 basis points better year- on- year and also continuous improvement in EBITDA.
So overall, while growth has been steady, we have made giant strides on bottom line, and that shows in this slide. Thanks.
Thanks, Abhijeet. So we'll take a quick snapshot on the financial performance. As Falguni mentioned at the beginning of this call, our top line and bottom line both delivered a healthy growth this quarter. As we can see, revenue grew 27% YoY and has been in line with the last three years' CAGR. EBITDA growth was higher at 42% YoY in Q3, led by healthy gross profit growth, while we continued to invest in marketing to drive growth. Moving on. What we see in this slide is a snapshot of our consolidated profit and loss account for quarter three as well as nine months FY25. As can be seen, gross profit grew 30% YoY, outpacing revenue growth of 27% during the quarter. And similar trend has been seen in the nine-month period as well. Further, there has been an improvement across most of the cost line items.
And this is one of the factors which has led to a healthy EBITDA margin expansion of 69 basis points during the quarter and 42 basis points for the nine-month period. Moving ahead. Yeah, this is a quick snapshot of our vertical reporting. We have seen healthy improvement in gross margins across both beauty as well as fashion verticals. And this has contributed to improved EBITDA margins in both the verticals. We'll see the details of this in the next slide. Moving on. Yeah, here you can actually see the snapshot in terms of the EBITDA expansion from 5.5%- 6.2%. And as you can see, this has been across both the verticals and across most of the cost elements as well as gross margins. You can see that leverage and fulfillment and employee expenses, that's also driven expansion. The gross margins is something which has expanded.
The leverage benefit in terms of other expenses is also starting to show through. Overall, across multiple parameters, there has been efficiency kicking in. In spite of the higher investments in marketing, which has also resulted in accelerated customer acquisition, in spite of the higher investments we have seen in marketing, the overall EBITDA margins have expanded. Moving ahead. Yeah. Here, as you can see, Nykaa continues to focus on prudent capital utilization. Our balance sheet is seeing healthy improvement across key ratios. You can see that fixed assets turnover has reached 9.4. Working capital days have been consistently reducing and have come down to 36 days. This has resulted in the ROC of the overall one Nykaa business coming in at upwards of 10%. We need to bear in mind that the beauty business is highly profitable with a much higher ROC percentage.
And the beauty business is funding the growth of the newer businesses, which is fashion and Nykaa D. So all in all, through internal accruals, we have been able to manage to fund the new businesses and still deliver a higher ROC on a consistent basis. Yeah, with that, I'll open the floor for Q&A.
Thank you very much. We will now begin the question and answer session. If you'd like to ask a question, please click on the Ask a Question tab. And separately, you can type in your questions in the text box provided. Before asking the question to the management, please introduce yourself, providing your name and your organization name. If possible, you may switch on your video as well. Please limit yourself to a maximum of two questions so we can accommodate as many as possible. Ladies and gentlemen, we will wait for a moment while the question queue assembles. I now request Aditya Vikram to please accept the prompt on the screen. Aditya, please turn on your webcam and mute yourself. Introduce your organization name and go ahead with your questions, please.
Hi, thank you very much for allowing me to ask the question. So good numbers overall, but just a quick question. With Shein coming in, what would be the impact on the fashion brand, considering it seems like there would be very high competition?
I think I'll just take the question and then I'll pass it on to Abhijeet. I think we must understand that fashion is a very wide business with women's Western wear, women's Indian wear, men's wear, sportswear, as well as kids and home. And Shein is only in one category. And I think one has to see that these are businesses with more than 2,700, I mean, 4,000+ brands and more and more international brands also coming into the country with, we've always had Revolve and others. So I think the market is very wide and no one brand can dominate it. So I think that's what I do believe that it should not have much of an impact. With that, I would like Abhijeet to come in.
Thanks, Falguni ma'am. So I'll just add on to that. I think women's Western wear, which is the category where a brand like Shein typically plays, is one of the fastest evolving. I think these are also categories which are style-first and maybe not as much brand-first as a category like sports, where you find very few brands for many years taking lion's share of the business of that category. The reason is that trend changes very quickly, fashion changes very quickly. On our side, we've also seen a proliferation of what we call D2C brands come to the fore in specifically categories like women's Western wear. So I think as a platform, we will continue to be at the forefront of bringing the best fashion to customers. The category will still continue to be very fragmented. And in saying that, there will still be a multitude of brands.
And again, demand is very wide. The number of brands supplying that demand is also very wide. So I think it's still a very large playing ground. So we don't see such a massive impact.
Thanks for that answer. Then a follow-up question. Your beauty business or the beauty line is clearly doing well. You have high gross margins and you are making good profit. It seems like the EBITDA as well as the bottom line is not growing as fast, right? Or it is growing fast in comparison to your YoY numbers. And this primarily looks like that most of the expense are going on the marketing side to grow the other business, right? When do you see normalized marketing expense or do you see marketing expense continue to go up as you ramp up other businesses? And that would be all. Thank you.
I think if I just wanted to highlight is that if you look at the beauty marketing and ad expense, it's come out at 10.1% for this quarter against 9.5% a year ago. And this is for a beauty vertical and consists of all the businesses together. So yes, there is some additional marketing money being spent. And we highlighted most of that as new customer acquisition has been at its fastest pace over the last year. And we think that it's a worthwhile investment to make. And similarly, we've done a lot of upper funnel, what you call is educating and bringing consumers' interest into the category through events like NYKAALAND and Nykaa Wali Shaadi. Many of those are also part of this spend. And we do believe that our marketing spend has been accelerated because we believe in the category.
We believe in our domination of the category and want to continue to maintain that. But yes, I think it is something that can easily be controlled. It's a marketing expense that's considered a variable expense and totally controllable. So it's more in line with, for that year, what strategy we would like to follow. With that, I'd also like to request Anchit if he wants to come in and add something to this.
No, I think you covered most of it. Again, as we've said in the past few quarters, the beauty business has quite a healthy profitability. But because the penetration of the category and the per capita consumption for the category is so low, there is a lot of category expansion work that needs to be done. And ultimately, the benefit of that, the benefit of a larger TAM will accrue to us because ultimately, we are the largest player in the space. So we see it as an investment for the future. And investment in customer acquisition is one of the larger buckets of our marketing expense. And you're seeing the benefits of that play out, right?
The investment in customer acquisition of the past few quarters has been one of the major drivers for the growth, the revenue growth, which we've seen in the beauty business in these Q3 numbers, so our hypothesis seems to have been correct that there is a lot of growth yet to be had, and we continue to want that growth. So I think we'll continue to invest in the beauty business. It's a business that has the profitability to support its customer growth plans, and in terms of supporting other businesses within Nykaa, as Ganesh said, we continue to fund all of our expansion in new businesses through the cash accruals of the beauty business, so that will continue.
But I think the good news is, as we said before, we believe that, and as you can see from our numbers, the losses in B2B are reducing significantly as that business starts to reach, as it starts to mature a bit. It's still a very, very young business. And fashion as well, you're seeing significant improvements in profitability despite there being subdued growth. So if I look at B2B, the numbers here are quite self-explanatory, but contribution margin improvement of 500 basis points. So we believe that trend will continue. So losses will reduce in B2B. And in fashion, I think as growth picks up once again for the overall fashion industry, you'll see a lot of operating leverage in that business too.
So we're quite optimistic that we'll continue to fund growth for all of our businesses, new and old, but that the losses should be reducing even more from here for both fashion and B2B, which should be good news for the overall profitability as well.
We have to add to what Anchit mentioned. As we can see from the numbers, while given the focus on new customer acquisition, etc., there is higher investment in marketing. In spite of that, the EBITDA margin for the beauty vertical has actually gone up.
Thank you. We'll take our next question from Sheela Rathi from Morgan Stanley. Ms. Sheela, can you please accept the prompt on your screen? Sheela, please turn on your webcam, unmute yourself, and go ahead with your question, please.
Yeah, thanks for taking my question. My first question was just to understand what is the revenue profile of LBB? I mean, wanted to understand, I believe it's supporting the fashion revenues also, and at the same time, it's enabling marketing income for us, supporting the beauty business also, so just wanted to get more details about how LBB is driving the growth for us.
I think LBB business, when we acquired it about a year ago, was a content business that creates content for a lot of brands, including non-beauty brands that they always had in their portfolio. Obviously, their skill set lies in creating events and activities and content at scale. That is what we are leveraging LBB for: NYKAALAND, Nykaa Wali Shaadi, Nykaa. We used to do Nykaa Femina Beauty Awards that has been now taken in-house. It's called Nykaa Beauty Awards, which was again an in-house event. Acquisition of LBB has allowed us to do a lot of content and event activity all in-house.
We've accelerated the number of events that we do, be it beauty bars or be it we do a lot of fashion events where we take it's like a trunk show, which we take it to various events where customers come in and experience that. We recently did an event which was called The New at Nykaa, which was new launches of the beauty private labels, obviously Foot Locker events. So many such events have all been done by the team, and that is what this team was insourced. And obviously, with the kind of focus that they get in terms of accessing all of the Nykaa's beauty and fashion brand partners has led to acceleration in their ability to earn revenues, and that is what is reflected in their numbers.
Falguni Nayar, what would be the revenue profile of LBB today?
Profile is all event activity. They charge clients for various event activity, which is all costed individual event-based on estimation of the costs.
This will get captured in the fashion revenues, or does it get captured anywhere else?
Captured in fashion revenues as well as they also have out-of-pocket expenses against those events. So they spend it. So it is obviously captured both on revenue as well as expense items.
Understood. So just to understand the 21% revenues growth, which we have seen for fashion, if we X out LBB, how would be the fashion revenue growth for us?
It's very difficult for us to say because we also have had a huge improvement in GMV to NSV ratio by controlling what we call as leakages. And it's a combination. So revenue growth momentum has been higher than the GMV growth momentum. And what we disclose is basically vertical level reporting. And this is what the number is at the vertical level.
Understood. And my second and final question is with respect to the gross margins for the beauty business. Just want to understand how is marketing income doing for us on a year-on-year basis? And if there are any trends in terms of brands enabling more marketing spends in this quarter, it will be helpful. Thank you.
I think in this quarter, it has done well, but I'll ask Anchit to answer it.
Yeah, I think headline, it's done well. There were a couple of quarters of softness in marketing as brands were deploying more of their A&P budgets towards promos versus advertising. I think it's something we've discussed in the past as well, Sheela. But that trend has finally seemed to be reversing. And brands realize that there is significant brand awareness work to be done in a market, in a nascent market like India. So a lot of the money that was being deployed for promo is now being redeployed into advertising. And that's a plus for us. So we're optimistic. We're seeing early shoots of it improving. And we don't think it's a Q3 phenomenon. We think it should continue into coming quarters as well. Also, we at Nykaa are also offering a lot more advertising opportunities for brand partners.
Something we've spoken about in the past is allowing brands to now advertise not only top of funnel in terms of on our homepage, but also allowing lower funnel advertising opportunities like PLAs and other such ad capabilities have been built and are now quite widely used by our brand partners. That is also a net positive for the services income that we generate. Finally, also, of course, we've created quite significant capabilities in terms of events and experiences and content creation, some of which we covered in terms of what LBB is contributing to our brand partners. That is also an additional revenue stream for us, which was not as monetized in the past, that I think will be a net positive in the future. I think we're quite optimistic. Again, I think no one has a crystal ball.
No one knows what's going to happen with discounts in coming quarters. But at this point in time, it looks like things are improving. And brands are looking to invest a lot more into marketing than they have in the past few quarters.
And sorry, just one follow-up here, Anchit. Will it be across the board or just the large brands, or will it include the D2C brands also?
You can't paint all the D2C brands with one brushstroke, right, so even within D2C brands, there are different types. And so I think even the D2C brands, especially the ones that are doing well, continue to want to reinforce that leadership position, a lot of the D2C brands want to break out to get the velocity that they need to become a critical brand, and so they're investing behind that, so yes, there are some D2C brands that are struggling, and I think there's an opportunity for consolidation on that front, but I think they're not all the same. There are some which are doing really well, and those continue to want to invest behind building brand because that's ultimately what leads to sustainable revenue growth for them in the long term.
Thank you. I now request Sachin Dixit from JM Financial to please accept the prompt on his screen. Sachin, please turn on your webcam, unmute yourself, and go ahead with your questions, please.
Yeah, hi. This is Sachin from JM. My first question is largely a comparison between what is happening for Nykaa between BPC and fashion. Largely, BPC is growing well. Fashion has been muted while obviously it's gaining market share compared to other online fashion players, but still muted. However, I mean, my understanding is the customer base would roughly be similar in terms of income bracket and all. So how do you see the differentiated customer behavior on your two different platforms? Can you break down that for us?
I think we have always said that we have a more premium customer in fashion, and we do not think that the fashion customer had issues about spending. I think I've repeatedly said that our fashion business is young. People forget that. It's just a five-year-old business, and we continue to do assortment expansion that makes the assortment more complete, and that will allow us to grow the platform faster going forward, so it's a working process. Over the last two years, we've done a lot of focus on assortment building, completing certain L3 assortment that we used to not have in the past, bringing certain exciting brands onto our platform, which again, we didn't have in the past. Like Libas was a new brand that came in last year. Obviously, Foot Locker is very interesting.
They're seeing a lot of new D2C brands in fashion are coming up who are doing extremely well, like The Souled Store and Snitch, FableStreet, Freakins. They're all choosing to do business with Nykaa, so I think there is a lot going on. It's such a wide space, and we do believe that we are one of the top three platforms of choice, like Myntra, Nykaa, Ajio are the three big platforms of choice. We are a very large platform, and we remain in customer consideration, so I think we remain very positive about the business. I think some of the growth near-term got affected due to a marketing strategy that was followed, which was a little bit narrower, and I think some of those tend to be experiments in early days that sometimes set you back by a quarter or so.
But we don't think this is a long-term issue. Yes, it does have to be seen in the light of our overall industry, fashion industry not being at its strongest over the last one year. And it needs to be seen in that light. But I think it can't be a long-term issue. And we do believe that consumers are going to continue to spend on the basis of certain exciting brands that we will be bringing into the country or exciting brands that will get created in the country that will be available on Nykaa platform. I think with this, I would also like Adwaita to add if she'd like to add something.
No, I think you covered it.
Okay. Anything from you, Abhijeet?
Yeah, maybe just one additional thing. I think it's a huge strength for the Nykaa ecosystem to actually have beauty and fashion offered as, in a way, complementary categories. And I think we are, given that fashion is a much newer business, like has been mentioned several times, we are also incrementally getting better every year and every quarter at how to cross-leverage both categories and how to understand our customers better. So if anything, we have seen a lot of positive goodness because of that across both businesses and more fashion because it's the newer business. And we'll continue to keep getting better at it. But yeah, that's the only thing I will add.
Understood. My second question would be a follow-up on the part that Abhijeet mentioned. Do you see a lot of cross-sell that is happening between the two platforms? Are you seeing, because I remember when at the time of IPO, a few quarters post-IPO, we did talk about that the fashion user base is slightly different to the beauty user base that we have on the platform. Are we seeing that change? Is there more cross-sell that we are seeing?
I think we had given in the past that about 50% of our new customer acquisition has been part of Nykaa ecosystem earlier. But 50% is new to Nykaa. And the fact that fashion e-commerce was five times larger than BPC e-commerce made us believe that there would be customers who would be fashion-first. But over time, beauty and fashion are lifestyle choices, and customers tend to have overlap. So I think overall beauty consumption in the country is on the rise. And many fashion-first customers also are becoming beauty customers. Nykaa's own customer acquisition is far accelerated in beauty now and also in fashion to a certain extent, but a lot more accelerated in beauty. So finally, it's the same kind of consumer. But they either approach through their fashion-first outlook or their beauty-first outlook. And we benefit in either scenario.
But we do believe in vertical commerce and the consumer's choice and journey being very vertical-oriented. But with today's digital possibilities, where everything is one click away, according to us, it's not a deterrent. And in fact, having two separate vertical focus assets allows us to do more for both the sets of customers.
Yeah, which is fair. I was just asking on the 50% number that you mentioned, right? Have you seen that trend upwards or downwards?
It's gone. I mean, we have a lot more cross-pollination going on through better digital frameworks, and the number is slightly gone up.
Sounds good. Thanks so much,
But just to add, I think it's not something which we have done very aggressively, proactively, so that opportunity always remains. Cross-sell is one, but I think, as was just mentioned, cross-pollination, so getting existing beauty consumers on the Nykaa.com app to download and to buy on the Nykaa fashion app, that hasn't been done at scale, but that is something which we can always do. I think we're just waiting to, as Abhijeet said, continue to strengthen the assortment, and then we'll start to do a lot more work there.
Got it. Thanks so much and all the best.
Thank you. I now request Harit Kapoor from Investec to please accept the prompt on the screen. Harit, please turn on your webcam, unmute yourself, and go ahead with your questions, please.
Yeah, hi. Good evening. Am I audible?
Yes, please go ahead.
Yeah. So I just had two questions. One was on fashion. So this increase in the marketing spends, how do we read this? Do we read this as an increase in customer acquisition costs because the transacting customer and visits haven't increased to that extent? Or is it just an accounting adjustment because LBB is in revenue as well as in expense? So just wanted a little bit of clarification on that.
It's a bit of both. So LBB has a higher percentage of marketing expense because that's the only expense they have in their revenue. And also, there is a certain small amount of advertising in customer acquisition costs for the fashion business.
Got it. And the second was just two number-related.
Sorry, the adversity was also for only one to two quarters and since corrected. It's a mixed number.
Great.
Sorry, go ahead. What was this?
My second was on just two number-related questions. One was on working capital. Ganesh, do we expect that this reduction in working capital days is representative of full year, or do we see some adjustments happening at the end of the year, etc.?
So directionally, as you would see over the last few quarters, the working capital days have been consistently coming down. So in that sense, the reduction which you are seeing, we can take it as a representative of an ongoing basis.
And also just one last thing on the margins. Is there anything to call out in terms of YoY impact and GCC in terms of basis points? Because I remember the same time last year, you had called it out. But if it's not, is it relevant to call out this time around?
We have not specifically called it out this time because last year was the first time that had come in, and it was not really there in the base. Whereas now, consistently four quarters, we have had GCC come into the base. Although the current year's current quarter would be a little higher given that we have now opened the second store, etc. But given that GCC is in the base, that's the reason we are not calling it out anymore.
I think on GCC, we remain quite optimistic about the market and the fact that it's a high-consumption market with a lot of opportunity to do profitable business. However, the rollout of the stores has been slower than expected. And e-com roll-out is also pending adoption of the technology stack over time. So I think in that sense, in the GCC right now, the level of activity is not very high to be needing to call it out. But yes, there's been some investment in GCC over the last one year.
Great. Thanks for taking my questions. Wish you all the best. Thank you.
Thank you. I now request Sachin Salgaonkar from Bank of America to please accept the prompt on his screen. Sachin, please turn on your webcam, unmute yourself, and go ahead with your questions, please. Sachin?
With an opportunity, just a couple of questions. One, Falguni, I just wanted to understand how one should think about the steady-state EBITDA margin on the BPC business. The last few quarters, we have seen the margin hovering in the range of, let's say, 7.5% at the low end to 9% at the high end. Are we actually at that level, or do we see room to improve? And how far are we from a steady-state margin? That's question number one.
I think the beauty EBITDA is a combination of Beauty.com, which enjoys a very good EBITDA number. There is a certain percentage now. We have been disclosing that about 8% of the business comes from retail, which is also a profitable business for us, but lower profitability than Dot-Com. It can be positively impacted by the profitability of the beauty private label, which is on the uptick. We talked about it, that we've seen very good growth in our private label business, both in terms of level of revenue and profitability improvements have happened, some profitability improvement, and there could be more going forward. Lastly, it also is a combination of the weight of the Superstore business, which tends to have a negative profitability. I think we have given some idea of how each of those change every quarter.
So we tend to report retailers' percentage of omnichannel revenue every quarter. And beauty-owned brand, also, we are giving at least the GMV and how it is changing every quarter. And finally, on the E-B2B business, also similarly, I think some investors have been asking, and we said that we can give the composition of the E-B2B GMV as percentage of our total beauty GMV. And I think that has been reasonably constant over the last one year. So it's not really breaking out of the weightage zone. But yes, I think there is some amount of adverse effect on EBITDA margin coming from the investment that we make in E-B2B business.
Got it. Clear on that.
We have a positive momentum because we think that the EBITDA loss in E-B2B will go down over time.
Got it on that. Second question is on fashion. Clearly, we are seeing a slowdown in the industry slightly on a more prolonged basis versus the original expectations. And of late, we are seeing some increase in marketing expense and plus a sort of a Shein launch, which directly might keep, at least in certain pockets, competitive intensity high. Any general thoughts on break-even in the fashion business potentially getting pushed back, or you're comfortable with a break-even next year?
We remain comfortable because if you look at it, if our marketing expense, which became adverse from 24.6%- 30.5%, if that had stayed under control, we could have possibly had EBITDA margin growth this quarter. So I think the main thing here to balance, and that is what it is for all e-commerce businesses, is to balance between growth and profitability. And all customer acquisition costs us, and typically, the customer that you acquire breaks even on second or third order. So that's the investment we make ahead of becoming profitable on that customer. So I think we remain reasonably confident that as the ratio of new to repeat customer keeps improving in the fashion business, we should be in a better place.
So, I think today, fashion businesses where we have acquired about 6 million customers. I'm giving rough numbers ever acquired, 6 million, 6.5 million, of which about 3 million are annual transacting users. I think we continue to want to create an engagement level in fashion customers. I think I'm a big believer that e-commerce is all about assortment first. We are really working very hard to continue to improve our assortment. I think because the fifth year of a business is not too long a life, but because most of it has happened during our publicly being publicly listed, there's a lot of attention onto it. I think as our assortment keeps improving, and we are really excited about what we've been able to do so far and what lies ahead.
And I think the long and short of it is the way the industry is emerging with so many players, such a large market. I think e-commerce has a role to play. So we remain confident, and we will try to keep working on marketing expenses in a zone that we feel long-term comfortable.
Thanks, Falguni. Last question, just wanted to understand directly on E-B2B. How many cities do you further want to expand? How many more years could we see further expansion in the E-B2B business before it comes at a meaningful scale and the incremental investment should not be as high?
I think we are not focusing from a city perspective level. I think the way we are looking at it is that we have a certain revenue growth target, and a certain amount of revenue growth happens through improvement in productivity of the existing network, and some amount happens through investment in newer geographies. I don't think we are covering all over the country. So I think the new geography is not like going to a totally new geography. I think we already cover 1,100 cities, which is very wide, and like you saw last year, we increased by 2,150 cities, so I don't think overnight it's going to change to covering 3,000 cities or anything like that. So I think we'll keep adding to the coverage in a way that the overall unit economics of the business doesn't get worse.
Very clear. Thank you.
Thank you. I now request Videesha from Ambit to please accept the prompt on her screen. Videesha, please accept the prompt on your screen. Videesha, can you please unmute your line? Since there is no response, I now request Vijit Jain from Citi to please accept the prompt on his screen. Vijit, please turn on your webcam, unmute yourself, and go ahead with your question, please.
Hi. Am I audible?
It is sounding muffled.
Yeah. Okay. I'll try and be loud. Good evening, everyone. My first question is, now you have had same-day delivery for about a little more than two quarters, I believe, now. Could we talk a little bit about what kind of customer behavior changes are you seeing in the cohorts where you've been able to deliver within that time frame? Has it led to better retention metrics in a quantifiable way? And if you can talk a little bit about whether other metrics in the business, like RTOs and returns and exchanges, those metrics are different meaningfully when you and where you offer SDD, NDD versus the existing offerings. That's my first question.
Yeah. Anchit, would you like to take this?
Yeah, sure. So I think, look, as we say, for us, as for any e-commerce or any retail business, convenience is one of the three main pillars of really building a consumer value proposition. And we've always worked on improving our speed, and that reflects in the fact that our OTD, order-to-delivery timelines, have reduced from over four days to less than two days over the past two, three years. And today, as we've said before, 70%+ of orders across 110 cities are sitting at same-day or next-day delivery. So our speed is getting a lot better. But it's not that we are doing this at the platform level. We're doing this across the assortment and across a majority of our demand in terms of, as I said, top 110 cities are now 70% SDD, NDD.
So there is no real difference in the KPIs for consumers who are receiving orders same-day or next-day versus those for whom it's taking slightly longer, whether it be on average order value, anything like that. So again, it's because we're trying to solve for a pan-India rollout here of SDD, NDD. And it's available on the entire assortment. So it's not like there's some limited assortment, etc. So anything that we can, if you live in a particular PIN code in a particular city, then a large part of that assortment is now available. So I would say there's not too much of a difference in some of the KPIs we track.
Got it. Anchit, because I asked that because in general, for a lot of e-commerce platforms, generally, when you've seen sped-up fulfillment for whatever reasons, RTOs tend to go down and those kinds of metrics we see. So I was wondering. But thanks. Your answers were helpful. My second question is on fashion business. I just wanted to get a broad sense on about a year or so back, at one point of time, you guys had mentioned that when you're launching new products, either through your own brand or through others, the journey from concept to retail is like six months to one year for most of the goods on the platform. Has that shrunk meaningfully since? Do you think that is one of the major vectors of competition that you will see as Shein comes on board into India? That's my second question. Thank you.
I think our own brands on our platform is not a very large contribution. I mean, we've always announced it that it's about 10%-12%, but that was always we had said the GMV of our own brands to our GMV of our fashion omnichannel business, and within that, it had also the fashion private label that we sell on a third-party platform. So I think I just want to remind you that really, yes, I do understand that fast fashion is what Shein will bring in, and fast fashion is what is prevailing in the industry now. So to that extent, own labels would have to do that. But I think if you're asking for a rollout for Dot-com, Dot-com is going to get that kind of speed of new launches through a lot of D2C and other brands that are also coming onto our platform.
International brands, D2C brands like Cider is a very similar model to Shein. So there are other players from China which have a similar model that are operating all. So there are a number of players who will cater to that need for speed of launch. And our own labels may also participate in that. With that, I think if Adwaita wants to come in.
Yeah. No, I think we are not trying to launch at an interval quicker than six months. We don't really think that is the problem to be solved or the need of the consumer. I think the consumer does want constant freshness with new drops every month. So our own brands are obviously dropping product every single month to provide them the newness. But yeah, that cycle does begin six months in advance. That being said, we do retail, as Evan said, a lot of other fast fashion brands and folks who are able to bring trends to the market very, very quickly. And so we're being able to leverage that sort of fast fashion trendy behavior via our third-party brands, of which we've struck a couple of very interesting arrangements where we have a lot of exclusive merchandise coming from those brands and players.
Got it. Thank you so much. Those are my questions.
I think at a strategic level, if I may say so, at this point, we want our fashion labels to be enablers to our Dot-Com business and, I mean, they are being built as brands with a journey which is independent of just our platform and beyond that also. But I don't think the ambition is to build a very big fashion brand with the aggression of trying to match some of the fastest, largest fashion brands in the country. So we are not coming from that. I always see that for even beauty that we are a retailer first, and we want to continue to build strong retail platforms. I think on beauty.com now, we are so large that that is also giving us opportunity to build our beauty brands in a much stronger way because we are a very large distributor.
But again, when we are building those brands, we are building them both on platform and off platform. So we have a brand approach to building brands, but distribution strength is also important, and that is what is a unique source that Nykaa has.
Thank you.
Thank you. Both of them.
I now request Siddhartha Bera from Nomura to please accept the prompt on his screen. Siddhartha, please turn on your webcam, unmute yourself, and go ahead with your questions, please.
Yes. Thanks for the opportunity. The first question is on this growth on the BPC side in the NSV. So we have seen now for quite some time that the NSV growth has lagged the GMV growth in the BPC segment. So what is really driving this? Will this converge at some point, or there are some fundamental changes in the business which will continue to drive this? Some thoughts here?
It has converged this time. This time, the NSV growth is slightly faster than the GMV growth.
Okay. Okay.
Oh, sorry. Sorry. I think NSV and revenue from operations is similar. I think, yes, the GMV is still slightly higher at 32%.
Yes. So anything particular which we should look at which has changed? Because it's like for the last few quarters, we have seen consistently NSV underperforming the GMV. So any thoughts here will be helpful?
No, I think what we were telling you earlier was that basically, this is reflective of all the brands who sell on our platform. And discounts in the industry had been going up over the last five, six quarters because of competitiveness amongst all the brands. A lot of international brands are coming into the country. A lot of domestic brands which already have been there for a long time are competing with each other. And a lot of D2C brands were also jumping into the picture. So that had led to additional competition. And as a result, the brands were discounting to compete with each other. So there is some amount of that reflection in there.
Understood, and second is on this BPC business. Again, I mean, if I look at the profitability, it's been at least at the EBITDA level. It's been stuck at a certain range for quite some time now with offsetting factors always coming from a bigger push towards growth. Do you think at some point or at a certain scale, we should start touching that double-digit type of profitability in the near next few quarters, next few years?
Yes. I think what I've been trying to say is that it is most of the investment. We have done a lot of improvement in many of the direct cost items, and I think marketing, which is also a direct cost item, we have chosen to invest a little bit more than, say, a year ago when it was at 9.5% for beauty, and now it's at 10.1%. We don't see this as something that's adversely affecting the business. We see it as a conscious strategy and decision to invest more in marketing to accelerate our growth, and that you can see in terms of acceleration in our customer acquisition and in our growth, and we do believe that that's been very valuable. I think the next line that we need to really work on is other expenses, which have been 12.6% a year ago and only 12.5% now.
There could be some improvement in controlling those expenses, and we would like to do that. And yeah, so I think net net, we do believe that over time, we like to control both marketing expenses, bring them down, and control other expenses, bring them down, and those two can lead to improvement in EBITDA margin for beauty vertical.
Got it. Lastly, on the gross profitability side for the BPC, do you think there are further levers where we can look to sort of improve that from where we are already, like higher growth in the house of brands or some other areas where you can think that we'll continue to improve our gross profitability, or this is largely probably at a level where we need to look at more other costs to sort of improve the overall profitability?
No, I think while gross profit margin is quite healthy, yeah, I think I wouldn't say that there are no drivers at all available to e-commerce businesses. I mean, advertising is one such driver, charging for maybe faster delivery at a future date or a whole bunch of stuff. But I think we have a very large business. So what all will move the needle is a key question mark rather than are there ways in which we are improving our gross profit margin. We are, of course, improving. We showed earlier that even in B2B business, we've had improvement in gross profit margin. We have had some improvement in gross profit margin overall in beauty business. It's moved up from 42.2% a year ago to 43.4% now.
So, I don't think that. It's, I wouldn't say that. Oh, it's a very healthy number, and I don't want you to believe that, oh, it's going to go up soon. But I also would not like to admit that there is no ability to improve that. And yeah, as a company, we keep trying to improve our gross profit margin. But because it's a very large number on a large business, you have to do a lot of initiatives so that it can move the needle.
Yeah. Maybe I can add. I would say that each of the individual businesses that sit within the beauty vertical have certain opportunities to improve gross margin. For example, for the multi-brand retail business, if the premiumization of the category plays out nicely, then that is also margin accretive. If ad income, as I spoke about earlier, if that continues to revive and if we continue to create more opportunities for brands to advertise on our platform, that could be gross margin positive. And for B2B as well, there are things the team is working on to improve gross margin, as you said, house of brands. But I think where it gets very complex is that this vertical is a combination of those businesses.
So sometimes, even if each business is independently improving their cost structure, improving their margins, if one business that is smaller than the other grows faster naturally off of a smaller base and becomes a larger percentage of the total mix at a consolidated level, that can look like it's staying flat. So I hope you understand that complexity also. But what I can assure you is that each of the underlying businesses have improved their respective margin profiles over the past several quarters and years for that matter.
Got it. Thanks a lot, man.
Thank you. That was the last question we can take today. You may reach out to Nykaa's investor relations team for any additional queries. I would now like to hand the conference over to management for closing comments.
No, thank you very much. We've really enjoyed this participation with all of you. I hope we've been able to answer most of your questions, and I also want to thank my team on this side who have participated in this call and provided you access to that thought process, so thank you very much, everyone who have participated in this call, and with that, look forward to connecting with you in future.
Thank you.
Thank you.
Thank you.
Thank you.