Good morning, and welcome to Shiprocket Limited's Q1 FY27 earnings conference call. From the management of Shiprocket, we have with us Mr. Saahil Goel, MD and CEO, Mr. Tanmay Kumar, CFO, and Mr. Shreyanse Jain, Associate Director, Investor Relations. 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 the management concludes. With this, I hand over to Mr. Saahil Goel for his opening remarks. Over to you, sir.
Thank you. Good morning, everyone, and thank you for joining Shiprocket's first shareholder earnings call. Excited to be kicking off this milestone call for our company. As an agenda, given it's our first call, I will quickly go through the business model, spend some time on that for a few minutes, and then hand over to Tanmay for doing the financial analysis section before we get into Q&A. I think to begin, I would like to quickly explain what Shiprocket is. Shiprocket is an e-commerce enablement platform that allows small businesses, independent retailers, SMEs, selling outside of marketplaces directly to end consumers. It's designed for sellers who sell through social media, conversational commerce, through their own websites, powering their own digital marketing. As they do this, they need the infrastructure to be able to power shipping, payments, and marketing effectively.
Shiprocket becomes that digital infrastructure for them and is India's largest e-commerce enablement today by revenue. Shiprocket is becoming the one-stop shop for MSMEs to be able to run their business end-to-end and be able to digitize. Just to give an idea of our scale, as of FY 2026, we powered over INR 32,000 crore in GMV, 20 crore in transactions. We served about 50 crore consumers. This, in a way, is representative of the off-marketplace sales, large B2B channels for various lakhs of sellers in the country through Shiprocket. We do this without owning any of the assets because that's the business model. Before getting into how we do this, I think what's important is to look at the way we look at the market. We see that today India has about 8% retail penetration which is, compared to U.S. and China, fairly low.
India is at the beginning of its digitization in tier two and three cities, where half of India's e-commerce today already is tier two-plus cities. Shiprocket has a majority of their GMV coming from tier two and three cities. There's a lot of growth happening in that section. When you look at the entrepreneurs and the MSMEs in India, there's about 6 crore MSMEs. Even if we look at the non-kirana section of this, it's still lots of small businesses that are needing to digitize. I think Shiprocket is trying to build the model in such a way where we are able to do that for the coming years by creating a platform where it is built like a network of rails.
We connect with over 250 partners across payment gateways, courier companies, warehousing partners, ERP and accounting companies, and basically everything that the merchant needs to be able to run their business. We power everything from discovery all the way to delivery. We work with over 42 courier partners to be able to provide a wide variety of use cases around hyperlocal and documents and cross-border, et cetera. By being a completely asset-light platform, we are able to go deep into owning the data and the consumer behavior, the carrier behavior, the seller behavior. We are able to power checkout and transactions and able to observe money as well as cash on delivery money, and hence we are sitting in the money flow. Because we are the owner of the transactions, so to speak, we become the trust maker between our partners and our merchants.
That's sort of the way the platform is built. This allows us to continuously innovate, continuously build more offerings as the market evolves and as consumers evolve themselves. Just to quickly explain how the platform is built. It's built like a modular system, where everything from catalog management to payments management, fraud management, warehousing, inventory management, all of that stuff is built very similar to how India's leading marketplaces build them. The difference is that we don't sell it as software, and we distribute the operating system to our merchants to set up for them individually. Then the platform is built where we charge the merchants as a transaction fee, so as and when they send a shipment or as and when they make a checkout, they pay us. Our incentives are completely aligned with the merchants' incentives as well.
To quickly, we just explained our business in two segments, the way we economically look at the business. We have our core shipping business, where we integrate with over 250 partners and 42 couriers to be able to enable optimization of shipping across the country. We have various value-added services which make the transaction not only better for the merchant but also margin accretive for our business as well. This is all powered with intelligence from over 700 million transactions that we have powered so far until date. Core has been profitable for quite some time now, and we saw that it grew in operating leverage from 6% EBITDA about three years ago to about 12% in FY 2026. The business there is scaling. It continues to add merchants, continues to add new transactions.
As over the years, we started figuring out merchants' problems across the stack, we found that merchants had issues with faster delivery. So we built the omnichannel business a few years ago, which is basically allowing merchants to do appointment-based deliveries into, let's say, the quick commerce outfit. It's allowing merchants to be able to do hyperlocal deliveries as well from their retail source. We also kind of allowed merchants to frictionlessly sell across borders, through integrations into global marketplaces like Etsy and Amazon and eBay, allowing merchants, let's say, in a tier two city, easily to be able to, without putting their inventory, globally be able to sell into foreign B2C channels, right?
Finally, as we built the data engine, we also built a checkout and MarTech platform where we made shopping possible for tens of thousands of websites, safely, by creating a login and a checkout experience where consumers can use it in a very easy way. This whole stack together is our emerging business, and largely, it is the same transaction, which is originating from core, and then we are able to monetize it across the different various margin pools over time. This is the design of the business. Our emerging business obviously has grown at a much faster pace, almost three times that of shipping, and obviously, as we get into the numbers, we will see how it will get this quarter. But last financial, it grew about 60%-65% as a segment.
Just quickly want to touch upon how some of our acquisitions in the past have played out. We have acquired WNS systems. We acquired the entire PTL and cargo business. That was acquired as a technology capability in 2022. We have merged a number of competitor, Pickrr, in 2023, which got us the team talent as well as our checkout business. I think the company in the past has been acquisitive, and we have been able to integrate successfully into our business and are delivering results across core as well as emerging. Saahil, generally speaking, Shiprocket is working across a very diverse set of merchants. If you really think about all the logos you see, there are many cases, and many brands that we might recognize as offline brands as well as online brands.
But for every brand that you see, there is another 100 that are working with Shiprocket trying to build their business, scale their business. Merchants, there are millions of people in social media who are trying to use content and conversational commerce to begin their business, start their business, sometimes scale their business. Sometimes they are offline shops, sometimes they are complete entrepreneurs. Many of these businesses graduate to then doing like 15 million orders a month, and at that point, they start getting running their own website where you have many platforms in India, like Shopify and so on. From there, as it scales, merchants start to become more multi-channel. Sometimes they sell across marketplaces, quick commerce outfits, and so on. Merchants also wanting to go cross-border at a certain point.
Then also retail, like multi-store retailers, who are also using the platform to build quick commerce and faster commerce from there, from the retail point. Saahil, so it spans a variety of use cases, and the point is that the way our platform is designed is that, on one side, we plug into various suppliers, whether it is logistics or payments or anything. On the other hand, we have customers who we acquire digitally, and are able to serve a variety of use cases. As India digitizes in the coming years, and as and when these kind of once the next generation comes in, and they want to use the next generation tools to power their own business, that is what Shiprocket is ready to go after.
We will stand for the merchants, we will represent their needs in the market, and we will continue to innovate on solving for the same. Very excited, and with that, I would like to hand over to Tanmay, who will go through the highlights for the first quarter.
Thank you, Saahil. Good morning, everyone. Let me take you through the quarter. I will do this in three parts. First, the platform numbers, then cost and margin, and then overall, what we created and shipped this quarter. Our transactions grew 36%, and GMV 31% this quarter. Against an FY 2026 revenue growth of 24%, we grew revenue at nearly 34% this quarter. Transactions up 36%, revenue 34%, both moving together, which is a healthy mix. Overall, merchants were up 14%, and average revenue, which is ARPU, was up 18%. Essentially, if you see, this is a very interesting metric because the way we grow our business is essentially by adding, retaining, and growing merchants. So the revenue from new merchant additions as well as the revenue of the merchants itself growing because the platform is monetized variably.
Overall cross-sell from core to emerging is what drives this entire growth overall for the business. This is an interesting metric, and this is something that drives overall growth for the business. So merchant up 14%, ARPU up 18%, giving us overall 34% revenue growth. Adjusted EBITDA, although on a very small base, frankly, grew nine times to INR 8.9 crore. The other thing I will highlight is overall trailing 12 months matrices, which is 216 million transactions. Since Saahil spoke about the FY 2026 numbers very highly, here, I will highlight these three key numbers, which are on TTM basis for everybody to get like-to-like how we are moving. Overall GMV for the last 12 months was INR 34,600 crore. The merchant count on a TTM basis was INR 2.24 lakh +.
Our performance improved across key metrics this quarter. So revenue from operations was INR 592 crore, up 34%. Core was INR 411 crore, up 22%, and emerging was INR 182 crore, up 70%. Now, emerging share itself in the business owing to this higher growth, has moved from 24% last year to 30% in this quarter. It is growing significantly. This growth has come simultaneously with expansion in contribution margin and EBITDA for both the segments. So core adjusted EBITDA for the quarter was INR 52.7 crore. Margin was 12.8%, and it was 50 basis points better than last year, same quarter. Emerging adjusted EBITDA moved from - 38% to - 24%, roughly 13.8 basis points improvement in a 12-month span. The contribution margin with this revenue growth went up 43% YoY and went up 10% sequentially.
This has happened with emerging contribution margin itself improving, and that has led to the overall contribution margin growing at a faster rate than revenue. Like I mentioned before, emerging has grown with significant bits in contribution margin as well as in EBITDA, and we have a detailed breakout subsequently, which I will talk about. In our case, adjusted EBITDA is essentially cash EBITDA. It is adjusted largely for ESOP costs and for the Ind AS 116 rent treatment. This is essentially cash coming into bank. That number has grown to INR 8.9 crore, although on a very small base, like I said earlier. As far as the unit economics is concerned, what I would point out is that in our case, every order is incremental to the bottom line. Last year, we made almost like INR 0.22 of adjusted EBITDA per transaction.
This quarter, we are making INR 1.5 per transaction on EBITDA. You can see this continuing to improve by quarter and by year. Adjusted EBITDA improved by INR 79 million and PAT improved by INR 43 million. The delta is primarily increase in share-based payments which had happened a couple of quarters back, reflecting in this quarter. Let me come to core. The key level I will point out for you is that for core, our transactions grew 31%. Many of our large D2C merchants performed better this quarter compared to last quarter, and thereby giving us a larger footprint in the mix, and we are seeing stronger retention and growth there. That, along with some rate compression on the input side that we have been getting from our partners, is what you are seeing manifest in these numbers.
Emerging revenue is INR 180 crore, up 70% YoY and 14% up sequentially. Omnichannel, it has three businesses, and omnichannel is up 92%. This is the largest part of emerging. This is our quick commerce, cargo, and omnichannel fulfillment business, and it continues to grow fueled by quick commerce and PTL. We work with long tail here. Cross-border was down marginally. We work with long tail here on new cross-border, and global volatility has hit our merchant confidence. We are focused right now on higher margin and profitable customers. With stabilization of macro, right now, the focus continues to be on profitability and on this cross-border piece of emerging. The market business, this is the youngest business in emerging. This base is small, frankly, I will say, but it is growing very rapidly.
It is at a slightly better margin, and there is a lot of potential here. As I talk through some of the newer offerings we have, I will talk about continued innovation that we are doing on this front. How is overall growth getting driven? Essentially, there is a wider base that is buying more of the stack. Our cross-sell on a 2,24,000 merchant base, has grown 150 bps. Last year, percentage of core merchants who were buying emerging was 7.3%. Now it is 8.8%. Some of this is same merchants buying more of the stack, and some of it is emerging becoming an entry point in its own right. Merchants who come to us first through emerging and then use core. This is also a very interesting dynamic that we are seeing play over time.
One merchant buying two products and the same merchant buying four are both counted once, when I talk of the overall cross-sell mix. The shift we are seeing under stage is what is actually happening inside the base. Merchants served via emerging business itself has climbed from 30,000 last year to 48,000 this year, same quarter. To come to overall segment performance, Q1 FY 2026 versus Q1 FY 2027. This is a full bridge, core and emerging, and from the venue down to loss before tax. The cost between contribution margin and adjusted EBITDA is almost 17.9% of the revenue this quarter versus 18% last year. In core, it has improved from 8.7% to 8.4%, and in emerging, it has moved from 47% to 39%.
The key other number that I would like to highlight is that, overall, after adjusted EBITDA, as you could see, the key number, which is between the adjusted EBITDA and PAT, is that of share-based payment expense. This number is a non-cash number, which has marginally grown, between last year same quarter to this. Overall, loss before tax has improved from -INR 18 crore to -INR 13.7 crore now. Alongside the numbers, let me show you what we built this quarter. The problem at checkout, our shopper is shown literally multiple UPI options, multiple wallets and a card form, and every extra choice is a chance to abandon. This is what QuickPay does. It remembers the shopper's own preferred UPI app, whatever it is, and it surfaces that only once in one tap.
It also surfaces the discount and the net saving of funds at the moment when he is taking the decision. Essentially, conversion is a function of removing cognitive load. We take that decision away, and while we give that choice, and therefore what is the outcome for the merchant from here is that the merchant gets higher prepaid share and a higher checkout conversion. This higher prepaid mix reduces cash on delivery handling and the RTO cost, and therefore this is margin accretive and not just top-line improvement, but a margin accretive for the merchant. This is one in addition to the in the checkout space. We added Seal Deal. Essentially, this sits on the cart page at the moment just before payment. Three things it does. It recommends the complementary product personalized to the shopper.
It creates urgency with a limited time offer, and it also The intent is to pull down the cart abandonment, and it gamifies the market. Essentially, it could say things like, "Add INR 99 more, and shipping is free," and so on. The outcome it drives for the merchants is that they can get higher average order value and higher attach rate per order. Essentially, this monetizes the traffic the merchant has already paid for to acquire. There is no incremental acquisition to it. This makes it easier sell at the checkout button. Third innovation that we launched is an AI assist, which answers the shopper and essentially cuts the merchant support load. Basically at pre-order, it converts a browsing customer into a buyer. Intent is to answer product questions, recommend the right product, and it can initiate checkout right from inside the chat.
And on post-order, it can handle things like where is my order, returns, cancellations, and so on. The key differentiator is that, see, older chatbots were rule-based. Somebody had to sit and configure every rule, et cetera. Here, the merchant gives us a URL, the system reads the site, builds its own knowledge base, and goes live rapidly. It handles any consumer's query, and it keeps learning. That's this third launch that we did. Fourthly, talking about ads itself, which has seen significant product enhancements. Now, talking about how the problem-solving for the small merchant, the barrier for a small merchant was never ad budget, right? It is the creative, find a designer, find an agency, how can they get two-week turnaround, because they tend to work with smaller agencies and so on. This AI ads produces ad creatives in minutes.
It gives you multiple formats out-of-the-box. It can give you static banners for every placement. It can give them editable templates that you can change. It can create shots from product images, and it can give you 360 spin views of the product, and so on. The differentiator versus a generic AI tool is essentially the context. Shiprocket can see brand's own ads performance tool in our own connected ad account. And we can see the category-level performance overall. Therefore, the intent is that what it drives for them is, one, it makes it easier for them to do all of this, but although also personalizes. A headphone ad versus a face cream ad need to have very different creative hook sets, and the system knows without being told what to do.
The model keeps improving off thousands of creatives generated across the network, and this has been launched in beta. On omnichannel, essentially, let me first explain what the challenge for a B2C brand is. For a B2C brand selling on quick commerce, the hardest thing is stocks being ready to and getting your truck, getting your delivery slot at the dark store or a warehouse. Because they're smaller. The larger businesses can do it, but for them, there's a lot of work that's happening in emails, spreadsheets, and WhatsApp, et cetera. Our system is integrated with quick commerce platforms. The dark store places an order, we are notified there automatically, a truck is assigned for pickup, the delivery slot is booked, and the goods leave the dark store.
It is essentially that offering here, where effectively we aggregate purchase orders across many B2C brands into slots and give the brand visibility of what is coming and where the truck is. This enables brands to ride on the overall quick commerce growth story. As our DNA, you would continue seeing every quarter continued innovations and additions, because that's how our business is. Overall, to summarize, therefore, for our business, the transactions are growing. The revenue is. Transactions are growing the fastest, our revenue is growing with them. Our contribution margin is growing faster than revenue. And the adjusted EBITDA per transaction has grown from INR 0.22 to INR 1.5, like I said. That's the summary on the financial numbers, and now, we are happy to take questions.
Thank you very much. We will now begin the question and answer session. Participants connected on the audio bridge 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 a question. Participants connected on the webinar link can click on Ask Question tab or raise an icon to ask a question. Kindly announce your company name before proceeding with your question. A request to all the participants, kindly limit yourself to two questions per participant and rejoin the queue for a follow-up. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Sachin Salgaonkar. Kindly announce your company name and proceed with your question.
Hi, thank you for the opportunity. This is Sachin Salgaonkar from BofA Securities. Saahil, Tanmay, Shrey, congrats on a great set of numbers. I have a couple of questions. First question on the core business. We are seeing a good growth on 22% YoY. Tanmay, as you indicated, contribution margin growth and EBITDA margin growth is something better than the revenue growth. Is this a trend which will continue where, ideally, we should expect growth in similar range? A related part of the question was on margins. Looks like your EBITDA margin is largely stabilizing. Is the 12.5%-13% one could look and consider more like a steady state EBITDA margin for this business? Let me pause here and then I will take the second question.
Thank you, Sachin. This is Saahil. Just to give you a quick perspective on both the questions. I think, the core business obviously saw a higher transaction growth this quarter compared to the bit last year compared to revenue, and contribution margin grew better than revenue this quarter. From a growth perspective and a modeling perspective, the contribution is ultimately made up of a mix of our enterprise versus long-tail customers, as well as a mix of what kind of shipment flows, zones, et cetera, come into it. Then there is obviously some operating leverage there, in terms of our people.
I think the CM has improved a little bit, over this revenue growth, and we expect it to maintain around that range as it has in the last. From an EBITDA perspective, again, the business, if you look at it over a three-year projection, you will find that the adjusted EBITDA has gone from 6% to 12%, and we continue to obviously invest behind growth in sales in this business because we are seeing there are opportunities that are coming up. Over a larger period of time, obviously you can model how the leverage kicks in because of the design of the business, where essentially every transaction that happens in core is margin accretive to the bottom line after overheads are removed. The rate of growth of overheads, you can model from historical data.
I think over a period of time, you will get an answer of where it can go, simply because of the design of the business.
Thank you. Very clear. Second question is on the emerging business. When we look at the three subcomponents of business, be it MarTech, omnichannel, cross-border, how should one think about the contribution to EBITDA margins from these business? Logically, MarTech has better margins as compared to others. The question out here is, should we see a material improvement in margins going ahead as MarTech goes through an inflection point and sees good growth? Any time frame we could think when this could be close to EBITDA breakeven? Thank you.
Sachin, won't be able to give you a time frame in terms of guidance, but I think the MarTech business is higher margin, yes, and it's growing at a very rapid clip. Of course, caveat is the base is small. But still, we are seeing a lot of good kind of adoption and lots of merchants and lots of new product innovation happening there. So definitely it's a driver for the improvement in contribution margin. I mean, if you look at the CM percentage for emerging, it's gone from about 9% or 10% last year to about 15% this year. While adjusted EBITDA went from -35%, -38% to about -24%, -25%. So from a leverage perspective, you can see that growth is the real lever that continues to drive all of the metrics. I think overall, obviously, the segment grew about 70% and omnichannel grew from 90%.
MarTech will get a faster clip. Omnichannel obviously is a pretty large part of the emerging business. I think as the business grows, right, again, same playbook as core, similar answer, I guess, where you can look at how costs right after contribution are growing, and then you can look at how contribution margin is growing, in absolute terms as well in emerging. That will give you a good sense too. You want to add anything Tanmay?
Yeah, sure. Let me explain what goes inside a contribution, what goes between contribution and adjusted EBITDA for a minute. Contribution margin essentially has what goes in as direct costs. It also has some elements around the investments, I would say OPEX that are happening around CAM and they are happening around other elements like performance marketing, et cetera. Everything that is relating to getting the overall revenue is coming in as cost there. Clearly, you would notice that in 12 months time, this is improved by almost 600 basis points. That is a trajectory. While the adjusted EBITDA, which is after contribution margin, essentially we have overheads, which have got the G&A costs of the head office. Just for everyone on the call, we are close to about 1,500 odd people organization.
A large part of that investment is going in emerging and more so in product intent. There is not only an operating leverage happening in the contribution margin per se.
There are two levers there. One is the mix shift towards MarTech, because MarTech is growing faster. Number two is that there is operating leverage. Contribution margin improved in 12 months by (INR 6 million), from 9.3% to 15.3%. But adjusted EBITDA has actually moved by 13.8 basis points, from -38% to -24%. You could see operating leverage on both counts, and you could see the trajectory essentially, is what I would point out through numbers.
Great. Thank you, Saahil and Tanmay, and all the best.
Thank you.
Thank you. Next question is from the line of Della Desai. Kindly announce your company name and proceed with your question.
Sure. Thank you for the opportunity. Hi, I am Della. I work at Axis Capital. Congrats on a good set of numbers. I had a few questions. I see that the customer acquisition cost for the core business, the CAC, that seems to have moved up both year-on-year and quarter-on-quarter. It was around INR 3,100 in last year same quarter, versus INR 2,800 last quarter, versus INR 3,600 roughly this quarter. Could you help understand how that works and why it has moved up?
Sure, Della. Thank you for the question. I think just to first quickly explain how we acquire our customers, we run digital marketing on various mediums. We run YouTube marketing, Google marketing, we have a lot of organic content, events and so on. And we acquire our merchants through them landing on our apps and our website, and they sign up, they go through a process, they have their KYC, quickly put money into a wallet and start shipping. This is a model. And then obviously we have got inside salespeople who help them during the onboarding process to be able to acquire them to customers. This is where the CAC sits. We obviously try various new ways to reach out to a newer set of customers, to reactivate existing customers.
This CAC, I think the key thing to understand is, while the number may have fluctuated a little bit, the breakeven is what we focus on because the CAC at a 3,000-odd number typically breaks even with margin from the customers in a very short span of time. I think we can assume that to be within a range. I do not expect the CAC to trend into an ever-increasing number. That is not sort of the direction. It is the set of experiments. We try different things over a period of time, and there will be some fluctuation there. I think that is the way to think about the CAC, because it has been trend up over many, many years and we know the components and we know what we are trying to end. That is my answer to this.
Got it. It is more experimental than seasonal. Is that the way to think?
Yeah. It is not seasonal.
Okay. Cool. My second question is on MarTech specifically. How many power merchants today are using MarTech? Or how should we think about the penetration of MarTech into the core GMV?
We do not segmentally kind of break that out, Della. What I can tell you is that the way any of our emerging businesses are built, and MarTech is no different, is where we find the kind of brick-and-mortar product, which in this case was checkout. Pick the middle of the funnel where we get power users, and then we start working with them. Over time, as we learn the business and we learn the automation, we learn the problem statement, we productize them, we productize our process as well, productize our adoption as well, and then it goes across the stack. It is a healthy mix across the stack, whether it is our top merchants or power merchants or even the long tail. And it is true for most of our emerging products. So it is not sort of concentrated across one segment over the other.
Got it. My third question is on the core business. It seems that the third-party logistic partners have also gotten focused on the D2C and the SMB segment. So what are we seeing on ground in terms of traction? Any competition, any updates on threat from the 3PLs in the D2C space?
Della, I think, just if you think about our business model. Our business model is to connect with leading 3PLs who run the best networks in India. Everything from India Post to the best set of courier companies, hyper local, Air Surface, forward reverse, special logistics. So we do everything because we do not actually own the assets. We integrate into our partners. And so for us, that along with the whole stack to power their marketing, power their ads, power their checkout, use shipping data to power better checkout, use checkout data to power better last mile, and create a single data lake and a single platform for smaller merchants. That is the business model.
A lot of these merchants that are right now selling into like INR 20 crore transactions last year into tier two and three cities from metros and from tier two are enabled on the Shiprocket platform because that is the specific need that they have, where they want to work with a single vendor who can kind of manage all of this core platform but still give them the best-in-class services from the market. This is where our 250+ partners come in. So under that construct, as you think about our business, if we powered INR 32,000 crores in GMV last year, the overwhelming majority of that is the D2C channel. Because that is what we stand for. We built the business around that. And that is the faster-growing part of the market as we report. So with couriers, quantity to that, we can.
I mean, it is obviously the fast-growing market and everybody will want to participate there. But ultimately, I think that the context and the data that allows us to drive outcomes for our merchants comes from the fact that we have designed this platform completely tailored to their needs, and obviously there are several sub-segments of merchants, several use cases, several workflows that over the years have gotten fit, which continuously allow the merchant to succeed. So yeah, from an on-the-ground perspective, I think we continue to focus on our business, find new pockets of problems to be solved and continue to solve them and deliver growth. So we focus on that.
Thank you. Della, I will request to come back for a follow-up question. Next question is from the line of Avnish Sharma from JM Financial Services. Please go ahead.
Hi team. Avnish this side from JM Financial. Thanks for the opportunity. So my first question is with respect to power merchants. So I see ARPU is up about 25%, which looks very strong. But the number of power merchants is actually slightly lower on the year-on-year basis. How should we reconcile these two? Is the ARPU increase predominantly coming from existing merchants spending more, or there is a cohort mix effect as some smaller power merchants are behind the threshold?
Yeah, sure. There are two numbers that I would point you to. I will explain how we've seen this happen. Our overall merchant count on a TTM basis has now become 242,000. That number is growing. As far as power ARPU and power number count is concerned, yes, power ARPU growth has been stronger. What we've seen is that a lot of our top merchants are growing much more strongly, and that's a function of how the market has behaved, which is, I guess, very strong in terms of our larger merchant base growing their own business rapidly. What we've simultaneously done is that we have focused on overall expansion.
The way we've seen our business work is that over, and it's been the case for last several years, is that our overall merchant base tends to act as a funnel, and then we've seen that merchants who succeed and continue to grow get retained, and they grow into becoming power merchants. While from an overall macro perspective, we are seeing the larger merchants growing faster, what we've focused on, Avnish, is that we are increasing the funnel, and we've doubled down on that part of the business as well. We see that over a longer period of time, can't say now, is that as the base expands, you should see the results, but not obviously what happens tactically over next couple of quarters, et cetera, will be the function of macros, but that's the action we are taking as well.
Understood. My second question is with respect to seasonality. Just wanted to get a sense on a whole year basis, like is there something like Q1 is better, Q2 is better, Q3 is better, or something like that? Or some quarter seen as expenditure-heavy quarter? Just on that lines, yeah.
Hey, Avnish, this is Saahil. There is one seasonality baked into the business every year, where essentially because we are predominantly working with folks selling outside of marketplaces on their direct channels. What ends up happening is when Q3, the season, whatever for e-commerce generally hits. Essentially, a lot of our merchants pull out of marketing and redirect inventory to the marketplace. At least the bigger ones. So quarter three tends to be not the best quarter for our company, unlike the rest of the general e-commerce trend. That's the only thing I wanted to point out. But other than that, there isn't any other seasonality effects in our business as such.
Understood. Thank you. Those were my questions. All the best.
Thank you.
Thank you. The next question is from the line of Kunal Thanvi. Kindly announce your company name and proceed with your question.
Hi, thanks for the opportunity. I am Kunal from Banyan Tree Advisors. I had a couple of questions. One was on the first principles on the core business. We understand that as an aggregator platform, we help both the B2C companies and on the merchant and other side, the supplier, which is the large logistic company, to pull the logistics demand. Was curious to understand, once a large B2C company scales up and they are doing very large volumes, have we ever seen a case where they have directly moved on to work with the logistic partners, and we lost them as a customer? That is question number one. A related question to this is, what would be the realization differential between, say, our largest customer, say a brand like, say, Mamaearth, which is the largest B2C company in India, and say, the smaller long tail of customers?
Will the realization and margins on these two cohorts of the customers be very different? If you can directly help us understand that. The second question was on We can listen on the core business, we are the largest player and there is definitely a right to win. But in these new areas where we have entered, with the same cargo fulfillment and then say MarTech and the checkout, there are different competitors that already exist. The problem has been perhaps solved by some, I understand, because they are not end-to-end logistics players, the problem is half solved. But from a merchant point of view, what is our right to win or value proposition that makes them switch the service or the service provider that they are already using? If you can help us understand that.
Is it easier for us to convert an existing customer or is it easier for us to sell it to a new customer merchant because the new merchant is not working with anyone, so you can kind of give them the entire stack. These are the two questions.
Thank you, Kunal, for the question. Two parts to your first question. First, how do merchants graduate on the platform? I think, look, the platform is designed to have pricing based on volumes. Because obviously we have contracts with our partners, where we get discounts with volumes and pricing with volumes, and we are able to model various things together. But as an aggregator, one thing we are able to do is use multiple contracts across 42 courier partners to cherry-pick sort of the right quality and the right kind of SLA for each shipment that goes through the Shiprocket system using years and years of over 70 crore shipment data. So we are able to understand which hub. We have a predictive model, in fact, that allows us to be able to route.
That is the real value that the shipping platform brings to the table, where suppose there is spillover demand and certain things are choked. Even no matter how large a brand is, that information and that instant routing or that layer to be able to route across different partners is become more valuable as the brands become larger.
When the brands are smaller, the enablement itself becomes a value proposition to say, "Okay, I actually don't have contract or the ability to get contract, so I'm going to start with Shiprocket's app maybe, and then basically use my recommendation engine." Through that Instagram kind of audience all the way to, let's say, somebody like a large customer, the value prop continues to be that of allowing them to be able to access various partners, use the data and intelligence around recommendations, reduce RTOs, for example, as we use our data across the stack. And obviously pricing is a function of volume on the platform, and that automatically leads to different yields at different segments.
But it's built in a self-growth way, where merchants, as they grow, they're able to buy more services, but they might be paying slightly lower for the shipping rates because that is how the market works. The market works on volume versus pricing. We are not any different from what the customer expects in the market. I hope that answers your first question. To your second question, I think while there are providers doing solutions for single point, I do think that the data scale makes a huge difference here. Because for us, with over a decade of data on a consumer behavior, we've got 15 crore consumers we've served with about 30 crore online shoppers. We see about 93% of our checkout getting addressed filled automatically. We're able to fraud score on the RTOs across consumer and address data.
All of that leads to outcomes for the merchants where it's all tied together. Because having independent vertical software versus having a stack which is connected and integrated, and sharing the data across the stack is what drives outcomes. For example, for our merchants itself, we are able to distribute them into checkout, into ads, and into omnichannel CPL from the core business itself. To your other point, where do we add customers directly there versus here? Obviously, on the core base, there's a natural expansion. We've seen the crossover rate grow there every year and continue to grow. We also see merchants, depending on their life cycle, where they are. For example, somebody may be using a direct courier. But right now their marketing problem needs to get solved.
They may actually go for the marketing solution to begin with, and then over time it creates an opportunity pool for shipping to be sold as well. As a company, just as a first principle, we think of enabling orders. That's what we're doing eventually. Where we're saying is we want to enable merchant orders and then be able to power more and more margin pools on the same order, irrespective of what their entry point is. That should be the mental framework to think about the business over a period of time. I hope that answers most of the questions, Kunal.
Yeah. Thanks. Just one follow-up on the MarTech side. If you can help us understand the potential market size there and our right to win, and when we help them add, when we help them convert, is it only limited to their own website or we help them contextualize ads on other social media platforms like Instagram, Facebook, et cetera? If you can go deeper into MarTech as an opportunity from a longer term perspective, it would be very helpful. Because what we understand is the profitability on MarTech would be much different than our core business, which kind of comes, like the realizations come down with the scale. In this, is it also true to assume that the large part of the MarTech revenues are direct through to your profits? If you can help us understand that. Thanks.
Sure. Just to quickly address that. I think MarTech, we are enabling first a checkout transaction and a conversion Suite on the platform, right? Tanmay showed some examples of how we continuously add features and innovations there to keep driving up the conversion rate for the customer. So one part is to help them get more orders from the customers or the reserves that they generate. The newest part there is for us to help them drive more traffic and better traffic, better ROAS on their ads, right? Which is through platforms like Instagram and Facebook and WhatsApp. And we use our commerce data, right, behavior data to be able to pick and choose.
For example, not tying delivery data to marketing leads to poor RTO outcomes because if it is not the same platform, and you know a large part of India is still cash on delivery, which then has RTO. And if that information is not making its way back to the marketing targeting, it does not work, right? So we bring that kind of delivered ROAS kind of model to the table where we say, "Look, we can help you look at your net return on ad spend, manage RTO in the middle, and then also help you be able to generate creatives which are grounded in purchase data." Because unlike sort of the ad platform, Shiprocket sits on actual purchase data, right? So we have catalog, we have consumer, we have inventory, we know how many times they bought, we know where they stay, and so on.
So we are able to model what kind of things get sold where, and that also goes back into creating the ads on that side. But again, it is a new business. The reason I am sharing some details there is because it is exciting, and I think it is a way for us to help the merchant create more upside in their own business, right? So it is worth going after and doubling down.
Thank you very much. Kunal, I will request you to come back for a follow-up. Next question is from the line of Shreyansh Talesara. Kindly announce your company name and proceed with your question.
Hi, Saahil and team. Congrats to you guys for the listing. Just a small clarification question if I got the understanding right. I think your TTM shipments that you guys have mentioned in the PPT is around 216 million, and if I just calculate the TTM revenue from the core business, it is around INR 15,600. So your average realization per shipment comes to about INR 72. And if I just put the same logic in FY 2024, 2025, 2026, this was around INR 96, INR 89, INR 84. So which has come down to INR 72 right now. How should I read this, if I have got the understanding right?
Yeah. This is Tanmay. The number that you are referring to is overall transactions, not necessarily the core one. Now overall transactions, the way we measure is we measure transactions which are unique orders, whether they are shipments or they could be a checkout transaction. If there are two offerings going through a one particular transaction, they are counted as one. So this is that total count that you are seeing as growing almost by 36% over years. Therefore, overall realization that you would see, which is yet to come down, is also partly happening on because you are referring to the overall number, it is happening because of the mix shift between overall core and emerging. The emerging business has got now overall 30% contribution to our business, versus 24% last year, and that has got the market stack, which is growing rapidly, and that is causing this.
Now, the other number that I would point out is overall, how do you see the margins growing for the overall business? And that overall, on a percentage basis, has been improving, and that is something that as a business model, we have been tracking and working on.
Okay. Are you guys calling out the number of shipments in the core business itself, purely on the core business side? Do we have that info available?
We are not calling that out particularly, but just for your overall understanding of how this has moved. Overall, core, and that is the number that I did share when I was talking about core, we are gaining good traction there. The core volumes per se, without talking specifically about the number, transactions to core have grown by 31%, while the revenue has grown at 22%. Like I mentioned there when I was speaking about this is happening because of two things. Number one, our margins are growing. Essentially, what is happening is there is an input cost compression that we are passing on. That is the dynamic that is happening in the market.
Number two, the fact that our larger merchants are growing faster has contributed to the mix shift within it, because like Saahil mentioned, there is a gradation in terms of overall revenue per transaction in core.
Fair point. Maybe just to understand it better, let us say your core business has your domestic shipping element and you have certain value adds like delivery boosts, your early CODs, if I got the understanding right. Those are also clubbed under your core business. What would be the element of these other value-added optionalities that we give with the domestic shipping platform? Just to segregate within the core, what is the domestic shipping platform, that is contribution, and a little bit more value add services that you guys are providing within the core?
This is Saahil. Shreyansh, we don't want to close the breakup, but I tell you the way to think about it. How these value-added things came about were merchants that problem backward. So whether we built ensuring their goods in transit or helping them with early cash visibility or helping them with conversion, NPS measurement on their tracking page, a bunch of things that we can do for them, which drive results. So I think as every year or every quarter goes by, we find more problems. Now we can choose to build them into the platform, or we can choose to monetize them. So that's a function of little bit of how we think it'll help the merchant, because we don't want to. Right now, the focus of the company is to continuously add transactions.
Not necessarily expand every drop of margin at this point, because the transaction is far more valuable because, if you think about it, of the INR 30,000 gross in GMV last year, roughly 25%-30% goes into marketing. Think of it this way. Hence getting the transaction into the company and then monetizing it across the stack is the motion. Hence, while there are several value-added things we are building and can build, how we monetize it, do we monetize it, is a function of what we want to do at that time. Depending on how the overall business is running.
Okay. Good luck.
Thank you, Shreyansh.
Thank you, Shreyansh.
Thank you very much. Ladies and gentlemen, we will take that as our last question. I will now hand the conference over to Mr. Saahil Goel for closing remarks.
Thank you, everybody, for joining today and we look forward to delivering on all of our plans, and thank you for joining us today. Look forward to seeing you the next quarter.
Thank you very much. On behalf of Shiprocket Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.