Ladies and gentlemen, good day, and welcome to the Vaibhav Global Limited Q2 and H1 FY24 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Disha Shah from Adfactors PR. Thank you, and over to you, Ms. Disha.
Good evening, everyone, and thank you for joining us on Vaibhav Global Limited earnings conference call for the quarter and half year ended 30 September 2023. Today, we have with us Mr. Sunil Agrawal, Managing Director; Mr. Nitin Panwad, Group CFO; and Mr. Prashant Saraswat, Head of Investor Relations. We will begin the call with opening remarks by Mr. Sunil Agrawal on the business operations, key initiatives, and a broad outlook, followed by discussion on the financial performance by Mr. Nitin Panwad, after which the management will open the forum for Q&A session. Before we get started, I would like to point out that some statements made or discussed on today's call may be forward-looking in nature and must be viewed in conjunction with the risks and uncertainties that we face.
A detailed statement and explanation of these risks is included in the earnings presentation, which has been shared with you all earlier. The company does not undertake to update these forward-looking statements publicly. I would now like to invite Mr. Sunil Agrawal to make his opening remarks. Over to you, sir.
Thank you, Disha. I welcome you all to Vaibhav Global Q2 FY2024 earnings conference call. I hope you have reviewed our results and the presentation that details our business operations and current market trends. Our financial performance in Q2 was in line with our guidance. At the group level, sales for the quarter were at INR 705 crores, showing an increase of 9.1% over the same quarter of the last financial year. Gross margins in Q2 FY2024 came in at 61.4% of the revenue. Over the years, VGL has created a robust supply chain. We are the only company in our peer group that has its own manufacturing setup in addition to a global sourcing base. This vertically integrated supply chain has enabled us to consistently maintain gross margin above 60%.
Better pricing and a focus on operational efficiency has enabled us to improve profitability margins during the quarter. EBITDA margin for the quarter was 9.5% of revenue versus 8.1% in Q2 FY 2023. In absolute terms, EBITDA was higher by 29% YOY, suggesting operating leverage. Let me now take you into each of our retail markets. In Germany, our proprietary teleshopping channel, Shop LC, will now be airing on HD channels in 13 million and 2 million households through Vodafone and Tele Columbus networks, respectively. With these distribution arrangements, Shop LC Germany is now present in approximately 95% households, thus further strengthening our visibility and market share. We would like to reiterate that by H2 of FY 2025, we will be breakeven in Germany.
Publicly available data suggests that broader macro challenges in U.S. have peaked out with a gradual rebound in consumer demand and confidence. The U.K. economy, however, grapples with an ongoing cost of living crisis, exacerbated by increased mortgages, rentals, and inflationary pressure. Nevertheless, our endeavor is to engage with our existing customers better as well as expand our reach. Today, our broadcast coverage is approximately 139 million homes, which is approximately 4% higher Q-o-Q. Furthermore, we have been streamlining our portfolio of branded products. In connection with our flagship umbrella brands, that is, Shop LC and TJC, our enhanced product brands help us gain customer loyalty while maintaining overall margins. Presently, revenue generated from these brands' branded products constitutes approximately 29% of overall B2C revenue, with a target to increase it to 50% by FY 2027.
This growth is expected to be achieved by integrating brands based on comprehensive metrics that consider factors such as price laddering , brand archetype, and unique offerings. Further the four R's, that is, broadening reach, new customer registrations, customer retention, and repeat purchase rate, remain our key priorities for overall growth. The reach of our TV networks by the end of Q2 of FY 2024 was approximately 139 million TV homes. We reach TV homes through cable, satellite, telco networks, and over-the-air antenna, also called OTA platforms. Our products are also available on digital channels, including their primary websites, smartphone apps, OTT platforms, and marketplaces. New registrations in the trailing twelve months period came in at 3.1 lakhs. Our customer retention rate is still at 37% on TTM basis, which is 40% of last year. Customers bought an average of 23 pieces on TTM basis.
Our dedication to sustainability and community welfare continues to be our priority. I'm pleased to share that this quarter we touched the milestone of donating 81 million meals to school children since the inception of our midday meal program called Your Purchase Feeds. We serve approximately 46,000 meals every school day. This initiative aligns with our commitment to making a positive impact on the communities. During the second quarter, Shop TJC UK has executed an asset purchase agreement to acquire the assets of Ideal World, which includes its IP rights, broadcasting rights, studio equipment, and other intangible assets. The purchase consideration of the deal was GBP 1.125 million. Ideal World, through its proprietary TV shopping channel, is in the teleshopping and digital retail of lifestyle products.
Ideal World is one of the major tele shopping brands in the UK, with a legacy of over 21 years. We expect that this transaction will create synergy and help us continue market-leading growth. Further, we also acquired 100% equity of Mindful Souls BV for a purchase consideration of EUR 12.5 million. Incorporated in Netherlands in 2018, Mindful Souls mainly serves United States, one of the largest e-commerce markets, through its proprietary e-com websites and marketplace. While more than 90% of revenue is derived from US, it also has presence in UK, EU, Canada, and Australia. It primarily sells subscription boxes comprising fashion jewelry, gemstones, and lifestyle products. The company's performance over the period has been robust, having achieved an annual turnover of EUR 18 million, with a healthy EBITDA approximately 10% in 2022.
We expect Mindful Souls' native digital ability to allow us to strengthen our digital businesses and create synergies for Mindful Souls through our deep sourcing and manufacturing abilities. Both acquisitions were funded through internal accruals, reflecting the strength of our balance sheet and strong cash-generating business model. We continue to reward our shareholders, and despite major investments undertaken recently, the board has declared a second interim dividend for this financial year of INR 1.5 per equity share. We look forward to maintaining this fine balance between growth investment and quarterly payout to generate sustainable value for our stakeholders. As I conclude, I would like to emphasize that over the period, we have exhibited resilience in our performance. And so with recent acquisitions, we are now revising our guidelines.
In FY 2024, that is the current financial year, we expect the top line to grow between 13%-15% and in the high teens range in FY 2025, with decent operating leverage. We are confident in our business model, value proposition, and execution abilities, and hence, in the mid to long term, we expect to maintain revenue growth rate in the mid-teen range. With this, I now hand over the call to Nitin to discuss financial performance. Over to you, Nitin.
Yeah, it's me. Good evening, everyone, and welcome to Vaibhav Global's Q2 FY 2024 earnings call. Our Q2 FY 2024 revenue reached INR 705 crores, which shows year-over-year growth of 9.1%. US and UK sales in local currency terms were down by 3.3% and 2.2% respectively. However, in constant currency terms, the group revenue has grown by 4% year-over-year. Germany continues to play well with increased household penetration and customer outreach. Germany maintained its growth momentum and revenue grew by 62% year-over-year. Having achieved 95% of household penetration in Germany within two years of operation is incredible. We believe that these building blocks in place, we will be breaking in Germany by halfway of FY 2025.
In the current economic environment, we are still seeing that customers remain cautious about pricing and seeking out deals with lower spending on discretionary items. Keeping this trend in mind, we continue with our value-conscious product offering to match the customer demand, supported by our vertical integrated supply chain. During the quarter, our TV revenue has a growth of 2.3% year-over-year to INR 4.6 crores. Additionally, our digital revenue witnessed a robust growth of 13% year-over-year to INR 263 crores, underscoring our investment in digital platforms. TV revenue is attributed to 61% of our total retail revenue, with the remaining 39% attributable to digital platforms. TV includes customers accessing our products through our proprietary TV channels that are released via cable, satellite, and OTT.
Digital refers to online purchases on our own proprietary website, shopping apps, OTT platforms, and social media. Our core focus remains to encourage customer to transact on both TV and digital platforms, which gives them a unique shopping experience. Such Omni-channel customers generate significantly higher lifetime value than customers that either buy only on TV or only digital. In our overall product mix, the revenue contribution from lifestyle products was at 27% in Q2 FY24, which has significantly increased from single digit level a few years back. This clearly demonstrate our ability to expand wallet share by entering existing categories over time. It is pertinent to note that lifestyle category has a growth at CAGR of 31% during the last five years. Lifestyle products categories include home decor, fashion accessories, apparels, beauty products, et cetera. This trend has also balanced our revenue streams.
Our Budget Pay feature provides customers with the convenience of buying on installment. During the quarter, the products sold by Budget Pay contribute 39% of total retail revenues. This feature has an added level of affordability for our customers. Gross margins in Q2 continue to remain strong at 61.4%. Profit before tax for the quarter is INR 31 crores, which is higher by 31% year-over-year, 33% year. Our sustained efforts in operational efficiency and better pricing have enabled us to consistently improve our profit margins during the last few quarters. We are committed to sustaining this positive momentum and delivering consistent value to our stakeholders. Owing to improvement in profitability ratios and prudent financial management, ROCE and ROE have also improved marginally and are 16% and 10% respectively. Recently, we made two major acquisitions.
The first acquisition pertains to execution of asset purchase agreement to acquire assets of Ideal World Limited, a major television brand in U.K., with a brand legacy of over 21 years. I believe the combined synergies through an efficient and lean cost structure, we will able to continue our market leading growth in retail profitably. The second acquisition pertains to an e-commerce company, Mindful Souls, a Dutch-based e-commerce company, having sales presence in U.S., U.K., EU, Canada, and Australia. Its performance over the period has been robust, having achieved an annual turnover of EUR 18 million, with a healthy EBITDA margin of 10% in 2022 calendar year. We expect that this acquisition will allow cross-learning with huge growth potential in the digital segment for us, wherein we could also leverage our supply chain and sourcing capabilities. We remain cash accretive in each reporting period.
During the half year ended 30 September 2023, operating and free cash flow stands at INR 85 crore and 55 crore respectively. At the end of Q2, VGL remained net cash positive with a balance of INR 26 crores, after spending more than we ever in the year. We strongly believe in creating value to our shareholders, and are pleased to announce that the board of directors has approved a second interim dividend for the fiscal year of INR 1.5 per equity share. To conclude, we have demonstrated resilience and strength in our performance. We are confident in the business prospects ahead of us and will continue our growth trajectory with higher margins in the long run. Having completed recent acquisition, we would like to revise our revenue guidance.
As Sunil just mentioned, in the current financial year, we expect our revenue to grow between 13%-15% and in the high-teens range in FY 2025, with decent operating margins. Further, in mid- to long-term range, we are confident of maintaining a mid-teens revenue growth. With this, I hand over the call to moderator. Thank you.
Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shreyansh Jain from Swan Investments. Please go ahead.
Hello?
Yes, Shreyansh Jain.
Sir, congratulations on the two acquisitions. My first question is, sir, pertaining to slide number 44, where we are seeing that U.K. continues to face muted consumer sentiments and U.S. we're seeing gradual recovery. But when I look at the local currency Q-o-Q, U.K., in fact, has been better versus U.S. So just wanted some sense on what are the markets looking like individually?
Can you repeat the question again? My slide was trying to open my presentation.
Yeah. So sir, in the slide, we had mentioned that, U.K. continues to face, muted consumer sentiments. But, when you look at your Q-o-Q number in local currency for U.K., we've grown about 11 odd %. Whereas, U.S. we've seen, recovery, we had mentioned in the presentation we'll be seeing some recovery, but, the number looks to be a tad weaker versus U.K. So just wanted some sense on, this divergence.
Yeah. So slide 43 is with the economy as such, not our Vaibhav Group's numbers. So U.K., from 30.9%, ratio that U.K. had, has gone down to 25% year-over-year e-com contribution for overall retail. And U.S. slightly improving, to 15.5% from earlier 13-something percentage market share. So U.K. continues to face overall macro challenges, as well as e-com is facing more headwinds than overall retail. So, U.K. does have overall macro challenges, and in this environment, we bought Ideal World at a great value, and we believe that we can add substantial value to the Vaibhav Group with this acquisition.
Similarly, TJC itself will grow and, as per our guidance for next financial year, and within this financial year, we are giving a guidance of 13%-15% growth overall for the business with this acquisition. Now, without the acquisition, we'll continue to grow, we'll stay with our original guidance of 8%-10%. With acquisition, it will be 13%-15% growth combined at both markets. Now, to your question, how the U.S. economy is better and why we are not? Because in economy as such, U.S. is still doing a little bit better, but TV shopping has not done as well because people have moved out and they're spending more on experiences rather than products. Even on product essentials, they are buying, but discretionary spend is still a bit subdued.
Even the Amazon, they, they recently declared their results. They shared that the essentials did done well, but discretionary has been a bit challenging for them as well.
Oh, thank you so much, sir, for the detailed explanation. My second question is, sir, on the acquisitions. So we understand Ideal World was already facing some issues, but Mindful Souls also, from what we understand, is doing really well, and they're growing at rates of approaching 100%. So just wanted to understand the rationale for this, the promoter selling the company to Vaibhav, which is true.
Yeah. So basically, many of the e-com companies, promoters, they go from project, you know, venture to venture. So they sold this venture to us along with the 42 people team, and they went on to the next venture. So they have another venture of snacks or on the crochet, the knitting, and the three other ventures. So they sold the biggest venture, not the first venture to us, got the cash, and then we went on to grow other ventures. So that is the environment in Western world, like these entrepreneurs, people come with the idea, grow and then sell.
All right. So my last and final question is on the balance sheet. So, when I look at your cash flow statement, there has been some decrease in other assets. But, when I'm looking at the balance sheet for this September versus March, whereas in September last year, I don't see any decrease in other assets, but there has actually been an increase. So that was one, and the second is, we see an entry of gold loan. So just wanted to understand even that number.
Sure. Let me take this. So other asset is long-term deposits that we have. We have kept those deposits in U.S., so those deposits were redeemed, so that is why we have there is a movement in other assets. And the other question is gold metal loan, which is the facility we are getting. Before we were importing the gold from outside India, which takes a lot of time, but now we are getting this facility locally, which saves time and the cost also in terms of freight. So the gold metal loan facility from banks that we are getting, and we repay within a month that time.
Okay. So, so coming back again to the deposits, where was it, in the March quarter? Because there's not been a significant increase, from your March numbers. So just, trying to understand that.
Yeah, it was with us in a couple of years with us. We had a long-term deposit that we had it. We haven't redeemed those deposits because we are not required, and with the recent acquisition, it was required, so that's why we have redeemed those deposits.
Okay. And the last is the INR 29 crores of CapEx. What is this for, sir?
So out of INR 29 crores, 12 crores is related to the asset purchase agreement from Ideal World, and the remaining is related to the other intangible assets, which is the IP applications and the release of our samples.
Sure. Thank you. I'll come back in the queue for more.
Thank you.
Thank you. The next question is from the line of Hritik Tulsyan from Concept Investw ell. Please go ahead.
Hello. Yeah, am I audible?
Yes, we are.
Yeah. Hi, sir. So my first question is, so if we see in the IP, so our own brand contribution is 29% of B2C, right? So if you can give any view on how we are doing in terms of customer retention and growth in the customer base for our own brand. So that is my first question.
Yeah. So, we again have separate numbers for brand customer or non-brand customer yet. We haven't broken that down, but we are seeing that a slight margin benefit to us in brand, and also we look and build some customers the brand affinity when they develop, they stay longer. I'm not sure if you have data on that separately. Do you have data?
Yeah, we don't have that data readily available.
Okay. So, I mean, so if you can give any qualitative figure, like internally, how is it doing, better than your expectations, or you think it can still, you know, get better, if you have any internal expectations regarding your own brands, and how is that plan out doing?
They're definitely available to us because that's why we've given a guidance of 50% of brand revenue by FY25. We're seeing benefit in terms of better margin and also customer affinity, so that a lot on value.
Okay. And my next question, so like if we see TV, growth has been quite muted this quarter as well. So, like, when do you expect it to get better, like, from, in the other, the coming two quarters, or you think it can make, get better in FY 2025? If you have any, you know, view on that.
So, the coming two quarters, it'll be better because, we've given a guidance, and a higher guidance, as we've done 8%-10% growth and like the right guidance for this financial year. We expect Q3 and Q4 to be better for television, as well as e-com, both of them. Next year, definitely, noticeably better for, two reasons. One is that we've got some extra time that we've taken in U.S. And the second thing, we expect the economy to stabilize, as I mentioned in my comments, that the U.S. economy seems to be moving up, and people are coming back to the normal life.
People went away quite aggressively for experiences last year, year and a half, and when they have had their fill of the experiences, they'll come back to normal life and spend at home and watching our programming on television or through streaming.
Okay. Do we have any other M&A lined up or in the pipeline, which we can expect, you know, to get closed in the coming two quarters, if you have anything?
No, nothing in the foreseeable future.
Okay, okay. So my last question is, you have elaborated in your investor presentation that we got benefit of 1.1% from logistics cost negotiation, right? So if you can elaborate a bit more on that, that how or what, what was it, if that is possible?
So I'll take this. So we have around 1%, 1.1% benefit in the margin side from logistics side, partly related to the lower volume that we are getting, and partly related to our operational efficiency in terms of clubbing the orders and negotiation with the carrier partners.
Okay, okay. Thank you so much, and all the best for your future endeavors. Thank you.
Mm-hmm. Thank you.
Thank you. The next question is from the line of Nilesh Shah from Envision Capital. Please go ahead.
Congratulations, Sunil and the team, on a steady quarter. Sunil, would be helpful if you can throw some light on the two acquisitions. What's been our rationale behind these acquisitions, and both a qualitative and a quantitative perspective in terms of what is it that we hope to achieve these two acquisitions in terms of synergies and how these acquisitions will accrue value to us? If you can just kind of throw some light on that, please.
Sure. Ideal World has a 21-year of brand recognition in U.K. market, much before this came on the scene. And we got phenomenal value at a great price of GBP 1.125 million whole brand, and a customer list of 480,000 customers that we had. And we also got a giant position on the TV EPG with them. So it creates a we get visibility into the customer mind for very low value, and without sourcing credibility we expect this to become profitable within a year. So this will add the revenue as well as to the bottom line in coming years for us. The second brand, Mindful Souls, has two benefits. One is the digital learning, it's a digital media brand.
We are TV/e-com company, and digital native brand is coming from a bit different angle, and we wanted that learning within the customer. We are developing that learning as well, but getting that learning from outside will definitely help us. Second benefit that we had was as a subscription business. So on an average, that customer buys six and a half months. So whenever they enter the business, they continually subscribe for six and a half months. These are assured annuity business in the model, and we wanted to learn that annuity because we don't have it yet. Thirdly, there's a leverage of supply chain, because the product that they were selling, we were already manufacturing ourselves. So we can build our scale and leverage to better cost manage that.
It's already a 10% EBITDA business, and we expect that we can take that business to 14%-15% EBITDA very quickly.
Okay, great. Thanks. That's very helpful. My second question is around the margins. So from a peak of 15%-16%, we went all the way down to maybe 6%-7%, and from there, the margins have witnessed a steady recovery to about 9%. I'm just kind of trying to understand that are there any kind of very visible low-hanging fruits that we see for the margins to kind of go from 9% to whatever the earlier highs of 15%? Or is that just going to be purely a function of scale, that as we grow at our guided rate, the margins could go back to the earlier levels?
Or are there any specific levers that we can see which will help us to kind of see further improvement in the margins, apart from, of course, also the fact that Germany will. You expect Germany to break even by H2 of FY25. So apart from Germany and scale, are there any other levers that we currently see which will help us to kind of recover or claw back some of those margins?
Yeah. Great question, Nilesh. As you rightly said, Germany will be one of the majors, because it's still right now in a build-up phase, and it's negative to the our margin base. But it help, the scale will definitely help. As we, as you've seen in the last few quarters, as we scale better the margin and better the revenue growth, the margin growth has been more than that. This model is a beautiful model when it grows and can be it, it's ugly when it decreases. So as we expect the growth to continue, our margin will continue to be leverage for us. Other than that, we continue to look for a product line or within product categories, any particular space that we find with better margin, we continue to look for that.
We also stay away from products that doesn't give margin. For example, there was, we proposed to, and there was a lot of discussion around gold. So we constantly look at product offering to us and category to us, and look at the opportunity to expand the margin. So even, when we had, inventory, change, last two years, the customer consumer taste changed, and we had to make the changes to inventory. We didn't need to go below 60% in our ability to, sell competitively and be agile, and we continue to scale that and leverage back as the opportunity comes.
Great. Great. Thank you so much, and best wishes.
Thank you. The next question is from the line of Pritesh Chedda from Lucky Investment Managers. Please go ahead.
Yeah, hi. So I have one question. When I was looking at a presentation, I couldn't find the customer count number. Can you share what is the customer count number now? The active customer numbers which you give.
Yeah. Hi, Pritesh. Active customers are 450,000, trailing twelve months, 30 September.
Okay. So now my associated question here is, customer account number is what we are not seeing improvement. From our PNL, we landed up spending about 5%-6% of our EBITDA margin on first, buying more airtime, and second, spending on the digital side, being only present or only channel, and, you know, we tried to pick up some customers. Any reason why we don't see those spends still translating into customer, and how are we looking at this matrix? How are we looking at improving the matrix on the customer count number? Now, this 450 also obviously includes Germany, I think. So if I recall, pre-COVID, we were at about 350, 360, then we went to a certain higher number, and then that number cluttered down to a 450 number.
But this 450 number includes Germany now. So, you know, if you could spend some time on this part, some time on the margins that we had used to acquire some airtime, some digital spend, yet not transferring to customer, it's very helpful for me to get some comments there.
Yeah, sure, Pritesh. So our customer count, customer count is a factor in our business. Of the U.S. hit overall, on television or even on e-com. So during COVID, we had a good audience, active audience, and our customer count was very, was essentially high on the back of high audience. And after COVID, when economy opened up, people were hungry for experiences. People traveled quite, aggressively. And during that experience, we lost that audience, and therefore the customer count was lower than the previous year. Having said that, even after including Germany, our customer count for U.S. and U.K. put together is higher than pre-COVID period. I don't have a number off me, maybe, Nitin can pull out and give it to me, but that number is noticeably higher than pre-COVID period.
We expect the numbers to come back to normal numbers after the people settle back in their daily lives. We also appreciate that our average price point went up on the back of us offering little bit higher price points owing to addressing the inflation, addressing products. As we see in long run, our average price point will come down, volume will go up, and the customer count will go up.
What you mentioned is a forecast. What are you—what strategies have you changed to deliver that forecast? My other question was, what, why are we not seeing it still happening in the last two years, despite spending 5-6% of our sales margin and spending on digital?
Yeah. So we take up return distribution whenever we get the opportunity. We don't wait for that, and we don't really hold back our investments, because these are very long-term relationships we could build, and whenever the opportunity comes, we take it. And opportunity came to happen, we take it in U.S. and U.K. in last two years when they presented themselves. And digital spend is constant learning, constant spending, so we will be continue to do that. But again, I repeat, compared to the 2020, 2020, compared to 2019 to 2020, which is pre-COVID period, our customer count is noticeably higher. After the call, our team will take out the number and share with you how much is the current development basis.
I see here the UK was 715 Q4. Where is Q3 number?
How much is your Germany count, if you can tell us, is 450?
54,000. Hold on, let me check again. Germany, it is 153,000.
How much?
Fifty-three thousand.
So which means that your, which means that your UK and US number has moved from 350-360 to 400,000, about 40,000-50,000 addition. But, Sunil, the amount that you have spent from the PNL is much higher, so all these customers have come really expensive. Are we looking at that?
Yeah. We look at all the affiliates that we do, we look at very clearly, 1 month, 3 months, 6 months, 9 months, 12, 15, and 18 months. So we have a criteria already in place in those markets, then what products we agree from these markets. And that churn constantly happens, a bit of, churn, not a big lot, but that churn happens. So we are very careful about the, how much we spend, where we spend. And on digital, the customer lifetime is shorter, and the cost is, cost per customer acquisition, different channels is, in our visibility constantly. And we spend based on what the customer lifetime is worth for us.
So we are quite careful about that, but we have to be cognizant of how the economic macro conditions are and what is the average price point we are currently giving. As you will appreciate, with 400,000 customers in U.K. and U.S., our ASP is noticeably higher compared to pre-COVID period, therefore the revenue growth compared to pre-COVID period.
Are you gonna relook at some of these spends? Because one of the, one of the previous participants who asked on margin lever, you said growth is the only margin lever, which means you're not gonna relook at these spends. Is the interpretation that I have to do, or what is the change in incremental strategy that you want to deploy for your forecast of customer count to go up?
Yeah, we, we don't just forecast the customer count, we also don't just manage the customer count because the business is so dynamic.
Directionally, you mentioned, right? Incrementally, you see customer count going up, volume going up, pricing coming down. Yeah.
The business is so dynamic, but we look at overall, ASP, a balance between ASP and the customer count, customer, new customer acquisition, and average, total unique customers and our average selling price, and the total revenue growth and total margin growth. We have multiple variables we look at on very, variable basis, on a daily, weekly basis. We expect to meet our guidance of 13%-15% growth this financial year and high teens% the next financial year.
Okay. So, on the margin side, we'll not see any cutting down of any cost, right? It's just your sales growth which brings in everything.
... We look at the costs on a weekly basis. In fact, I'm involved into weekly basis of this affiliate cost structure. And we look at the numbers, we look at very minutely, what market is working, where we need to get out, where we need to double down. It's a constant process and weekly process. Wherever we can come out with get better cost, we get the better cost. There can't be a guidance on that, we will cut so much percentage of the airtime cost. There cannot be any guidance on that.
Okay. And, when you said 13% growth for FY 2024, this includes the acquisition, right?
Yes. So without acquisition, it will be 8-10. With acquisition, it will be 13%-15% growth.
So you've moved up your number from 6 to 8, to 8 to 10 now, right? That's how it is.
Yes, we moved last quarter, in the last couple of quarters ago. So 8-10 for this financial year without acquisition. With acquisition, it's 13%-15% this financial year.
Next year also it is, high teens, right?
Next year, high teens, with leverage.
Okay. Okay, I'll come back if I have more questions. All the best.
Mm-hmm. Mm.
Thank you. The next question is from the line of Rohan Mehta. Please go ahead.
Good evening, sir. Thank you for the opportunity. I first off wanted to ask your opinion on what the impact of this geopolitical tension in and around Israel is likely to be on our operations, since we are spread across various geographies. Has there been any noticeable change in consumer sentiment or any other impact that you may foresee of this?
So far, we haven't seen impact on the business at all. I can understand the impact on the people's psyche and people's dissonance and instability. I understand that. I feel for the people who have suffered. But from a business point of view, we haven't seen any impact so far.
So in terms of discretionary spending, it's not likely to impact our target demographics, is it?
So far it hasn't, unless the conflict widen to widen maybe widen that area, and so far we haven't seen. We've not taken that into account in our forecast, because that is so, you know, unpredictable, and we can't really build that into the current. If the conflict is concerned within Palestine and Israel, then I don't see it impacting us. But if it gets a wider conflict, it may, but that is difficult.
Okay. Fair enough. Perfect. And sir, in terms of diamond prices, having gone down, is that a potential risk for us?
No, not really. I personally, I think diamond prices going down is a temporary phenomenon, happened with the confluence of a few factors. And I believe the diamond prices would come back up, in closer the future. But, we are not diamond-centric business anyways. We are as so much colored gemstone or plain in metal or non-jewel. Diamond is a very small portion of our business, so that is not really important.
Okay. Okay, so it would not really affect our average ASP that much?
No, it will not.
Sir, in Germany, you know, Germany has a tie-up with Tele Columbus. So, what kind of investment did we incur to, you know, acquire these 2 million odd households that we've got?
Yeah, we acquired 13 million RGB homes on Vodafone and 2 million on Tele Columbus.
Right.
So we acquired 15 million homes in this month. We just acquired early October, late September. So these two homes, we can't disclose the amount because NDA, it's signed by NDA. But that takes our profitability from H1, H2 of current financial year to H2 of next financial year. Because it takes about 1 year to 18 months for a household to mature.
Got you. Fair enough. So, sir, do you plan any further investments in Germany?
Germany, we are 95% covered, so there is no need further. There is very small incremental homes that we may acquire in Germany or in Austria. So not much spend. Our guidance of next financial year break even, H2 of next financial year break even time.
Thanks, sir. Sir, also, in terms of the targets that have been sort of given in the mid to high teens for FY 2025, what would be, if you were to say two or three key triggers to spur the growth, you know, to based to justify this projection, what would those be, triggers?
Yeah. So number one thing is, a higher revenue per home, that we already addressing. Number two, I'm seeing the U.S. economy, improving. So with the customer coming back to their normal lives, we will see some growth coming back in. And also our merchandising learning that we are doing, with the branding that we are improving, I, I look to improvement happening with our, better per home, per reach that we have, like, position of customers for marketing and, and, and hopefully with better, repeat purchase from the customer, from the same household that we acquired, and from the same customer that we acquired. So four Rs that we focus on, reach, retention, reach, reach, retention, and retention and repeat are our drivers of business.
Okay. So, interest rate pressure is not right now impacting us in the U.S.?
Not very much. Our price points are not very high, so I'm not seeing so much. Earlier, I was skeptical of U.S. falling into recession and U.K. also falling in recession, but that kind of, the recession worries are now on the back burner. That makes me feel comfortable in doing the guidance.
Got it. Okay. So just one last question. Do you look at the digital route to acquire customers separately, and whether there is a dedicated strategy for that versus, a non-digital, methods?
Yeah. So we have three ways to acquire, at least four ways to acquire customer. Number one is predominantly television. Number two is digital. It will be paid media, who very frequently book affiliate and influencers. And number three is marketplace that we sell on, Amazon, Walmart, and eBay. And number four is OTT. OTT is part of digital, but still is a separate strategy. That is through Roku and ITV and DirecTV and all the other fast platforms, FAST, free ad-supported TV, and also through app platform, app environment. So all these four have our people in charge of them in respective locations and have their own budgets and strategies.
Okay. So digitally would not be any more focused upon, compared to the other three, okay?
Yes, it is, separate teams for digital, and they have their own budgets and targets-
Okay.
to go after the current number of customers, revenue from per customer, retention rate, and lifetime value, and the, and the track. So they have their own targets.
Yeah. Understood. Understood. Thank, thank you so much for answering my question, sir. All the best.
Thank you, Rohan. Thank you.
Thank you.
Thank you. The next question is from the line of Nihar Mehta. Please go ahead.
Hi, Nihar. In terms of digital channels, are you in any step, like, how are you planning to increase your digital presence, talking in relation to B2C money that we have done from the-
You are not very clear, Nihar. Can you repeat your question? I heard something about digital, but repeat, please.
So are you planning to... How are we planning to, you know, increase our digital presence and in this with relation to the this remote revenue from business digital? So anything that should increase it further?
If I understood your question correctly, you're asking what are we doing to, capitalize or penetrate digital further? Is it correct?
Right. Right. Correct. Correct.
Yeah. The answer to Rohan's question, so we have separate teams for digital, paid digital. So, digital also has separate teams within digital. One is the customer digital sales to the customer that we acquire from television and other reasons for paid acquisitions. So within paid, we have Facebook teams, we have Google teams, we have affiliate teams, and we have influencer teams. So, we have attention to grow all paid channels as well as organic. So we also have SEO team to improve our SEO footprint for all the business that we have, U.S., U.K., Germany, and we capitalize on whatever we can get organically. Yes, there's a lot of attention in building up the paid profitably.
Profitably in the sense that we must acquire customer at half or one third of the lifetime value, or is one year lifetime value of a customer. Earlier it used to be two-year lifetime value, we've now brought it down to one-year lifetime value. So we must acquire a customer at half to one third of the lifetime value of that customer. And different product categories have different lifetime values, jewelry has a higher lifetime value, lifestyle has a lower lifetime value, so the customer acquisition cost in the lifetime value is lower, and daily acquisition cost is higher. Yeah, so we have a strategy in place to accelerate in that area, but given the guard rail of a certain percentage of lifetime value.
Thank you so much.
You're welcome. Thank you.
Thank you.
Thank you. The next question is from the line of Tapan Parekh . Please go ahead.
Hello, good evening. Am I audible?
Yes.
Yeah, hi. So my question would be, like, you mentioned a target of 14%-15% revenue growth for FY 2024. So, like, can you elaborate on the specific strategies on marketing that will drive this growth?
Supan, can you repeat the first question again?
Yeah, I just mentioned. You mentioned that your target for this FY 2024 is 13%-15% revenue. So can you elaborate, like, how you're going to achieve this growth? Like, are any specific strategies or the markets that will drive that particular growth?
Yes, Tapan, as I mentioned earlier in Nihar and Rohan's question, we have marketing teams in place for television, for e-com, for OTT, for marketplace. And there are a lot of drivers for growth, the product, the marketing, the message, the content, and getting the network in, getting the existing product to purchase higher, or scale up the existing product. So there are a lot of different marketing strategies from multiple channels that we have in place in US, UK, and Germany. So we have multiple growth drivers available to us, but from broad category, you can take four Rs are there. One is the reach, then next is the repetition, third is retention of the customer, fourth is improving the repeat purchase of the customer.
Within the four R, we have multiple subsegments, that is, TV, digital, marketplace, and OTT.
Okay. And I also would like to ask how confident are you in achieving 15 growth by FY 2025?
Really confident. I'm generally I tend to be conservative, although post-COVID we were kind of taken off guard when people went out and we could not meet our guidance. But other than that I take pride in that we met our guidance and exceeded our guidance largely.
Okay. Okay, yeah. Thank you.
Yes.
Thank you. Participants who wish to ask questions, press star and one. Ladies and gentlemen, as there are no further questions, I now hand the conference over to Mr. Sunil Agrawal for closing comments.
Thank you, operator. So I want to thank all the participants for your time and great questions. If you have any further questions, feel free to reach out to Prashant Saraswat at VGL or Amit Sharma at Adfactors PR India, and we'll be happy to answer your questions. Thank you once again.
On behalf of Vaibhav Global Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.