Ladies and gentlemen, thank you for your patience. The conference will begin shortly. Please stay on hold.
Ladies and gentlemen, good day and welcome to the Vaibhav Global Limited Q2 and H1 FY2026 earnings conference call. As a reminder, all the 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nishita Bhatt from Adf actors PR. Thank you. Over to you, Ms. Bhatt.
Earnings conference call for second quarter and half year ended 30th September 2025. 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 operating remarks by Mr. Sunil Agrawal on the business operation, key initiatives, and broad outlook, followed by the discussion on financial performance by Mr. Nitin Panwad. After which the management will open the forum for the 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, Nishita. Good evening, everyone, and thank you for joining VGL 's Q2 FY26 earnings call. I hope you have reviewed the results and investor presentation. We are pleased to report another strong quarter with revenue growth above our guidance range and strong growth despite macro headwinds. The September quarter also marked a period of operational stability across regions, supported by efficient inventory planning and improved execution. We reported consolidated revenue of INR 877 , reflecting a 10.2% YoY growth. Gross margin stood strong at 63.5%, well within our target range of 60%+ , owing to strength of our vertically integrated global supply chain. This structure enables cost efficiency, operational flexibility, and industry-leading margins, a differentiator which none of our peers have in place. On the digital side, momentum remains steady with digital contributing 42% of B2C revenue.
We remain on track to achieve 50% sales contribution in digital by FY2027. Let me briefly cover our regional performance during quarter two of the financial year. Total revenue in U.S. dollar terms for U.S. and U.K. recorded a growth of 6.7% and 5.7%, respectively, while Germany remained flat. In U.S., we addressed tariff uncertainties by pivoting to casting process in U.S. and procuring parts of the input from U.S. This was made possible by leveraging over four decades of manufacturing learnings in India. This integrated model provides cost benefit and requisite agility for our operations, aided by advanced inventory shipments made in Q1. FY2026 positions us well for the festive season. In the U.K., the business continued to consolidate its position, supported by a strong management bandwidth and portfolio synergies between TJC and Ideal World. Wage growth outpacing inflation also aided spending recovery in U.K.
We are pleased that Ideal World is very well assimilated with TJC and is now churning low single-digit EBITDA margins. We're confident of achieving double-digit EBITDA margin within two years. In Germany, while revenue remained broadly flat, we achieved a healthy expansion of nearly 410 basis points in gross margins, driven by a sharper product mix and a stronger pricing discipline. The TV channel sustained its positive momentum, growing 6% in the first quarter. Digital revenue, however, declined 9% owing to team realignment. We are confident of delivering EBITDA breakeven for the full year FY 2025-2026. We continue to focus on the four pillars of our growth strategy, namely widening reach, new customer registration and acquisition, customer retention, and repeat purchases. In Q2, our TV network reached 127 million households as of 30 September 2025. Our unique customer base stood at 714,000, up 5% YoY and the highest in our history.
New customer acquisition was 380,000 on TTM basis, while the retention rate remains stable at 41% on the TTM basis. Customers purchase an average of 22 pieces. Sustainability remains integral to our operations. Our ICRA ESG rating was further upgraded to 73. This reaffirms confidence in our governance and execution capabilities amidst a dynamic macro environment. With Germany now certified as a great place to work, VGL Group is now Great Place to Work certified across the globe. Under our Your Purchase Feeds program, each unit sold funds a meal for a school-going child. We are pleased to have served the 160 millionth meal this quarter, currently providing about 55,000 meals every school day. We continue to strive towards our goal of serving 1 million meals per school day by FY 2040.
On the clean energy front, we generated 1.2 million kWh of solar energy during the quarter, meeting 100% of our manufacturing power needs. We are advancing towards our goal of achieving carbon neutrality under Scope 1 and 2 by 2031. We remain focused on creating long-term value for stakeholders. Thus, the Board has declared a second interim dividend of INR 1.5 per equity share, implying a 53% payout. We are pleased to have delivered revenue growth slightly above the guided range of 7% to 9%, which was supported by efficient execution and a robust supply chain. In the medium term, we are confident to achieve mid-teens revenue growth with steady improvement in operating margins. Finally, I will say that while external risks persist, our balance sheet remains robust, and we are well- positioned to sustain our profitable growth momentum.
I will now hand over the call to Nitin to discuss financial performance. Over to you, Nitin.
Thank you, Sunil. Good evening, everyone, and thank you for joining quarter two of financial year 2026 earnings call. I will now walk you through the financial highlights. As Sunil mentioned, we stayed watchful of market trends and managed our operation with agility. Consumer demand across major markets was influenced by changing spending patterns and continued tariff and geopolitical uncertainties. Consolidated revenue for the quarter was INR 877 crore, which is up 10.2% year-over-year, reflecting growth higher than our guidance despite an evolving business environment. During quarter two, the total revenue in U.S. dollar terms in U.S. and U.K. recorded growth of 6.7% and 5.7%, respectively, while Germany remained flat. In the U.S., the uptick was driven by proactive inventory planning supported by our in-house manufacturing capability. The performance was further enhanced by a strong traction in digital business, which is now contributing 42% of sales in U.S. v ersus 39% in last year.
We believe that the digital-first and vertically integrated model like ours are favorably positioned to capture long-term growth. In addition, during the quarter, we began jewelry casting operation in U.S. and also started sourcing key metals locally. This approach helped us to navigate tariff-related challenges effectively while keeping our supply chain advantage intact. In the U.K., TJC regained growth momentum supported by strong merchandising and operational efficiency. Ideal World continued to make a positive contribution to profitability. Ideal World has already achieved a low single-digit EBITDA margin and is on the course of achieving double-digit EBITDA margin in next two years. In Germany, we have improved our gross margin by 410 basis points year-over-year in past quarter, supported by a better product mix and pricing discipline. The TV business continued to grow 6% in first half of the year.
However, digital revenue declined by 9% owing to team resettling there. We have now fortified bandwidth of digital business with the requisite talent. With continued focus on margin enhancement and cost discipline, we expect Germany operation to achieve EBITDA breakeven for full financial year FY 2025-2026. From the sales platform point of view, TV revenue stood at INR 487 , up 6.7% year-over-year, while digital revenue grew 14.3% year-over-year to INR 336 , reflecting continued strength in omnichannel performance. Digital now contributes 42% of overall revenue, and we remain on track to reach 50% by FY 2027. Lifestyle products accounted for 36% of total sales, up from 12% of FY 2018, with a medium-term target of 50%. The budgetary program continued to contribute meaningfully and is at 38% of our total B2C revenue.
Gross margin stood firm at 63.5%, consistent with historical trend and supported by our vertically integrated model. Achieving a margin of 60%+ even in one of the most dynamic and challenging business environments reflects structural strength of our unique business model. EBITDA margin improved by 130 basis points to 10% and is up by 28% year-over-year in absolute terms. The EBITDA margin expansion was driven by productivity improvement and operating leverage in employee cost, which shows 160 basis point improvement. Shipping cost shows 30 basis point improvement year-over-year, and maritime cost shows 40 basis point improvement year-over-year. As a result, PAT increased by 71% year-over-year to INR 48 . Our unique business model continued to generate steady cash flow for us. Some parts of our cash flow were cautiously invested in inventory to address tariff-related uncertainties.
Even after this adjustment, we generated INR 66 of operating cash flow and INR 55 of free cash flow. The balance sheet remains strong with INR 156 of net cash, reflecting prudent financial management and strong liquidity position. ROCE at 20% and ROE at 13% indicate continued improvement in returns. The Board has declared a second interim dividend of INR 1.5 per equity share, representing a 53% payout, consistent with our commitment to reward our shareholders. While the external environment remains dynamic, we continue to take a calibrated approach to growth. We are maintaining our FY 2026 revenue guidance at 7%- 9%, supported by operating leverage. We remain confident that the resolution of tariff-related and macroeconomic challenges over time could create upside in this range. Over the medium term, we continue to aim for mid-teen revenue growth along with operating leverage.
Thank you, and over to you, moderator. We may now open the lines for Q & A.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchstone 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Shreyansh Jain from Swan Investment Managers. Please go ahead.
Hello, good evening. Congratulations on a good set of numbers. My first question is if you could help us understand what would have been the constant currency growth for the three geographies, specifically U.S., U.K., and Germany. I think that slide is missing from this year's VGL presentation. Can you just help us with that first?
Hi Shreyansh, Nitin here. Constant currency growth is around 5.5% for the current quarter.
No, I'm asking specifically for U.S., U.K., and Germany, or maybe if you have the actual currency, the actual revenues that we would have done in dollars.
U.S. is 6.7% growth year-over-year, and U.K. constant currency growth is 4.1% year-over-year.
Okay, okay. All right. My next question is. When I'm looking at your segment and numbers this quarter, obviously we've started doing some of the casting in the U.S. itself. When I look at your India and the ROW where essentially our manufacturing operations are based out of, when you l ook at the profitability. The profitability has g one up significantly, you know, from 33% last year in India, it's gone up to 50%, and ROW from 38.5% to 55%. What is actually transpiring, what is happening in these two geographies? Sir?
The second part to my question is, you know, when I look at U.S., U.K., and Germany, which are essentially three operating geographies, our absolute EBIT actually has not increased, say about INR 5 or INR 6 increase in these three geographies. It's only because of India and ROW that we see the EBIT increase of, say, about INR 20 . Can you just help us understand because there's a lot of confusion there?
Yeah, so.
Your voice is cracking. Can't hear you.
Is it better now?
Yes sir, it's here now.
So detail.
Sorry to interrupt, sir. Your voice is still cracking.
Just a moment, sir. Give me a moment, I will reconnect your line and then you can go ahead.
Okay.
Ladies and gentlemen, thank you for patiently holding. We have the management back on the call and Mr. Shreyansh, you can continue with your question.
Yeah, yeah. Hi Shreyansh, I'm not sure how much you heard, but the detail working, Prashant will share with you that U.K. and India both profitability comprising the dividend income of their parent companies, which is, which is subsidiary companies, I mean which is us. The detail profitability, Prashant will share with you. In U.K., there's a significant improvement in the profitability.
To interrupt, is it just a moment, sir?
Repeat from U.K. again.
Sir, can you speak a sentence now?
Thank you, Sunil. Good evening, everyone, and thank you for joining. Is it audible?
Continue. Yes. Yeah.
Okay. Yeah. Sorry for the interruption. Somehow there is a network issue here. Shreyansh, I was mentioning that Prashant will share the detailed profitability with you. The improvement in the number you see in the segmental reporting includes the dividend income in the U.K. and India, which Prashant will share with you separately. In terms of operational profit, there's a significant improvement in the U.K., U.S., and the Europe operation in all of the other retail entities.
Okay. Sir, second is, you know, U.S. profitability. Obviously you're saying it, it's improved, but I'm just looking at the last four quarters. The trend in the profitability of U.S. margins from 11 has come to 7, 6.8, and then now 5.2, and U.S. obviously 60% of our business. Right?
How should we look at the profitability of the U.S. business? My last question, sir, is some sense on Germany if you can help us. We were understanding that we had spent a lot to actually premiumize your OTA lines and improve your customer set. Obviously, Germany has been a little weak in this quarter. Lastly, sir, there is some volume value degrowth. PV sales ASPs have gone down by 6% and on the digital side our volumes have gone down by 2% whereas ASP has increased by 10%. Give some sense on what is happening in each of the digital categories.
Sure. First, in U.S. profitability, U.S. has a growth of 6.7% and we have invested that money mainly in our digital marketing where we have done our investment in OTT apps like Roku and also the digital platforms like [AppLovin SDK]. This quarter compared to last year, around 10 point in our margins in U.K.—sorry, in U.S.—from 5.1% to 5.2% compared to last year same time. Q3 is a significant quarter where we generate a high single digit to double digit profitability in our retail operations. In terms of the Europe—sorry, in Germany part—Germany past quarter we have seen the slowness in terms of especially the sales in digital part where we have done a reshuffling in the team related to the lower conversion and traffic issues that we have seen internally in our platforms.
We have already done the changes and we are seeing the returns are better compared to the previous quarter we have seen and we are confident that Germany will be profitable in the next two quarters. We will make a full year profitable from the Germany operation. Especially, the major improvement we have done in Germany in terms of gross margin side, gross margin was improved around 410 basis points year-over-year in Germany related to better pricing and the product mix that we are offering to the end consumers. You mentioned about the price point of TV and web. Price point is more driven by the consumer demand, what consumer is looking for, and we keep on offering to the consumers a different set of products. Not necessarily that number will specifically drive the consumer traction.
It is because of 30,000 different SKU portfolio, volume growth is not directly linked with our sales we offer based on the consumer requesting. Like last year, we have seen a pretty good response from the gold and the lab-grown side also that resulted in the higher ASP. We have seen the growth in our absolute ASP, the similar in range in this quarter. We also seen the traction towards the fast fashion jewelry which is resulting in the higher volume growth. We offer what consumer is looking for within the trend and the fashion in the respective territories.
Thanks, sir. I'll get back in the queue for more questions. Thank you.
Thanks Shreyansh.
Thank you. Our next question is from the line of Lakshmi Narayanan from Tunga Investments. Please go ahead.
Thank you for your question. Just want to understand what is the half year EBITDA loss in Germany and what is the plan? I mean how do you think this year would actually end? The second question is related to profitability. I see that we have actually maintained healthy profitability. Is there any one off that actually resulted in it or what activities we have done to ensure that the profitability is high and therefore do you expect the profitability to be maintained at these levels? The third question is that you had actually mentioned lab-grown diamonds sales have actually almost double digits. I just want to understand what is that percentage now and are we getting higher margins from those products? I think these are my three questions.
Thank you. Let me answer your initial questions. Germany first half EBITDA loss is roughly around EUR 700,000, and that will be compensated in coming quarters with the improved margins that we are seeing. Gross margins are also improving in our digital contributions. The second thing is the profitability is a no. 1 off adjustment in the profitability; it is just a purely operational performance, and this is helped mainly by operating leverage improvement in revenue and also reviving the Ideal World operation, which was making losses in past many years even before the acquisition.
Now that business is resulting in profitability to us, contributing positively in your bottom line. The third part is the lab-grown diamond. We started that business 18 months back, so since then that category is growing pretty well for us. Last year the share was around 5.5% for this business, and now it is almost 10.3% of our total sale debt business. We continuously see consumer traction towards the lab-grown diamond, and we are continuing to offer it in all three territories.
Sir, on the profitability side, do you think this is something which can be maintainable at these levels for this year?
Certainly, that is possible. We are seeing that the higher gross margins, despite the tariff-related hits that we have in the U.S., we managed to pass on the pricing to the consumer. Now with the casting process that we have started in the U.S., that will result in terms of better pricing compared to the competitors who don't have that kind of ability. That may give us an offering, that may give us an ability to take a higher gross margin from the consumer.
That part will cover off in terms of the profitability, and we are pretty confident with the process that has already been started, and some of the shipments have already been tested successfully. We expect that some of the margins we can pass on to the consumer, and some of the margins we can also profitability.
This is Sunil here. Another thing that is helping us is the lower employee cost. Some process automation, some LLM AI benefits. We are seeing the employee cost to be lower, and that will continue to go down in company.
Does that answer your question? Lakshmi Narayanan, I think we have lost the line. I will take the next question now. The next question comes from the line of Pritesh Chheda from Lucky Investments. Please go ahead .
Sir, I couldn't hear. Did you quantify the H1 2026 half yearly German loss, EBITDA loss?
Yeah. Half year Germany is a EBITDA loss, but the company will compensate against the H2 of the performance in season time and the last quarter of the year.
Can you quantify that? Nitin, can you quantify again?
Yeah, the losses was around. EBITDA loss for the first half of the year this year is around EUR 700,000.
EUR 7 million. You are saying 700. That's EUR 0.7 million. Right?
Yeah, right.
You're saying that the H1 loss and the H2 profit will nullify each other. It will be a neutral year in FY 2026. How was it in H2 2025? Was there a loss in half year last year in Germany?
Yeah, it was break even last year. Last year was break even.
The other thing is from the presentation I couldn't figure out your original properties, your baseline properties of Shop LC and TJ Uhhhm,
C.
Okay. TJC U.K. At what rate, those two assets grew? What we now see is the segmental, which is U.S. and U.K., and then there is one more channel being bought in U.K. If you could just clear that for us in quarter two and H1. What was the growth?
Sure.
The presentation doesn't carry. That's why. Yeah.
Sure, sure. I'll add, ask question to separate that. Also, share separately whether the U.S. grew by 6.7% year-over-year and U.K. grew by 4.1% year-over-year in GBP.
This is in the TJC U.K.
Yeah. U.K. combining Ideal World and TJC both.
Ideal World and TJC with the Mindful and the two properties U.K. is a 10% growth rate.
Yeah, you Mindful and t he properties are separated. It is coming in under the Europe. That is separate, but the major territory U.S., U.K. is 6.7 and 4.1.
So is Europe. Okay, so there you have put it. If what I see is a 10%. Okay. There's a. What you mentioned is 4.7 GBP growth. There is a rupee depreciation and the reported growth. Okay.
Yes. Yeah, rupee depreciation.
Okay, can you give. For the 10% growth that we see YoY, what will be the constant currency growth?
Yeah, 5. Quarter two is 5.5% growth in U.S. dollars in our retail units.
5.5. Okay. Okay. Any reason why we are not seeing the profitability improvement happening in the U.S. business? What are the key areas that one should look at because U.S. business, the margin that it was and the margin that it is, is a significantly different number. If you could just highlight that.
Sunil, would you like to add on it?
Yeah, sure. We believe we invested more in digital customer acquisition through OTT as well as digital properties. There's a new social media called [AppLovin], the video game people play Solitaire or Candy Crush. In those games there are ads coming. We invested in that platform quite a bit in the last couple of quarters, and that also impacted our profitability. That's an investment to understand the platform and to acquire customers from the platform. In OTT, especially Roku, we invested quite a lot of money into app downloads, and we had over half a million app downloads in the last quarter. That gives our brand visibility and customer acquisition as well. From a people point of view, we had the benefit of HR cost benefit, airtime benefit. Overall for the group, the digital expense is higher.
Okay, so basically U.S. went through the cycle and continues to be in the investing cycle where you first bought some cable homes, then you added digital spending, then now you're highlighting this gaming publishers where you are putting up your ads and then the OTT. So basically in a three year phase you've been continuously putting up one or the other investment. How should we look at this U.S. business now? Every time there is a new reinvestment which is done. If you could just call out there.
Yeah, as we guided, we will grow 7% to 9% with the leverage and profitability, and that leverage will come from a combination of U.S., U.K., and Germany, all three geographies.
Okay, can you call out the margin expansion now? Possible from what you're reporting at a single-digit number aggregate since your answers are also aggregate. So. The margin number, which is let's say about 9%, is what we are seeing directionally where they should head to.
Yeah, EBITDA is right now around 10% for this quarter. We expect this to further expand in current Q3 as well as Q4.
That is your seasonally higher quarter on annual basis. If one has to look at a 9% number X other income, this X other income 9% number annual basis next year or year after, where it should head, considering the strategy that you put in place.
We don't give specific guidance on the margin, but we do expect that the margin would expand higher than the revenue growth. We're giving 7.7% to 9% revenue growth for the current year, and the margin would expand higher than that year-over-year. Since the economy is pretty dynamic, especially with the tariff expanding or shrinking and refining solutions around them, it is very difficult to give specific guidance. As you rightly mentioned, we are making investment in different areas. Yes, specific guidance is difficult just because it's dynamic, but we expect to have leverage or decent leverage for the year as well as for the coming year.
Okay, my last question is. On these. Tariff issues and whatever tariff, how looking at the margin number, looking at the growth number, you fairly mitigated it. If you could just throw some light on the avenues of these variations?
Yeah. What we learned in the U.S. is 80% of our business is jewelry. Of that 80%, about 75% to 80% is silver, gold, or platinum. For that, we've done the castings from third parties in the U.S., and those castings were brought in to Asia for finishing and setting the stones. The original major portion of jewelry is made in the U.S. The tariff, the reciprocal tariff, is not applicable on the value addition. When the casting is U.S. made, there is no tariff. There is zero tariff on the casting portion itself, which used to be 5.5% earlier. All in all, our cost, the tariff cost, comes to below 5.5%, which used to be pre-reciprocal tariff.
Okay, thank you very much.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address the questions from all the participants in the conference, kindly limit the questions to two per participant. Should you have follow up questions, please rejoin the queue. Our next question comes from the line of Deepesh from Maanya Finance. Please go ahead.
Yeah, hi, am I audible?
Yes, sir.
Okay, just wanted to know how many shipments have we done by the visits. Casting experience, casting tariff experience. We have paid only 5.5% tariff. How many ship, I mean I just want to know how many test shipments have we done and whether that over a longer period of time will be applicable?
Yes, multiple shipments. I don't have exact number, but I think it's already gone. This is so far the casting has been done by third party. We have set up our own casting operation, which should be operational by about November 15. All the machines and all the permits have already been received. Now installation is going on.
How much CapEx have we done on this?
Not too much. CapEx on casting is not substantially high, fairly limited. It is the manpower, the know-how, and the process that is the crucial element.
If you can just quantify how much has been the investment in the U.S. which we have done for this specific thing.
Less than $0.5 million. Also, not a significant amount of manpower is required in U.S. machinery process, and the setting up the machinery is less than $0.5 million.
$0.5 million?
Less than $0.5 million.
Great, great. This will just understand that, you know, when we mentioned that we will not be able to quantify how much our margin expansions because of the tariff. Of course, if the tariff reduces, the margins will vary. Just wanted to understand this being a very significant factor because most of our revenues come from the U.S. Most of our jewelry manufacturing is done that. I mean, most of our sales come from jewelry. Even if the tariffs reduce, let's say even to 15% or even 10%, still because of this, the arrangement of casting, which we are doing, how much do you think that, you know, the sales of your entire jewelry thing will be done by this casting unit and we will be using that and significantly increasing our margins because this will be at least that the entire tariff will come to our margins. Right?
It depends on the environment. If the competitors get the product from their supplier, because there's no other vertical retailer who does manufacturing themselves, but they are sellers to those retailers. If they themselves have same process of counseling done in the U.S. and then make the jewelry in India or China, wherever can save the duty also. It will be a dynamic environment, the competitive environment. We'll try to maximize as much as we can. It seems very dynamic.
Okay. Because if we had done the shipments, I mean the entire quarter, I was not able to understand why our margins from U.S. were significantly lower. Because we actually got a tariff advantage of around 50%. Even if we have passed it on to the customers, still, there have been a significant advantage in terms of the competition?
It is not necessary that all the other players are paying 50% and then importing into the U.S. There are different shale tariffs in different countries. For example, Thailand is 20%, Dubai is 10%, the U.K. is 10%, and Europe is 15%. Everybody has scrambled and found different suppliers in different countries. I don't believe at a 50% tariff it is feasible because of consumer sentiment, where it would increase the price by one and a half times in sale. The differential may be anywhere between 10% to 15% of that. How much we can capture is still yet to be seen.
Okay. How much of our sales are from jewelry? Fine, I'll follow.
Sorry to interrupt. Yes, please rejoin the queue.
Yeah.
Thank you. Next question comes from the line of Rupesh Tatia from Long Equity Partners, please go ahead, sir.
Thank you. Thank you for the opportunity. My first question actually is on Germany. Germany, I think growth rate is a bit of a shocker. I mean, is German market as big as U.K.? U.K. is roughly INR 950 million market. Germany maybe around INR 250 million now. If the German market is as big as U.K., then the growth shouldn't plateau before, you know, let's say INR 500 million, INR 600 million sales. What is happening? I think some more explanation would be very useful.
Sure. Germany internal, our own internal challenge in quarter where we had our digital team was restructured because some of the earlier players that we had, the overall ecom lead, the meta marketer, the Google marketer, we changed everybody. The disruption caused digital to reduce by 9%. We grew 6%. Data should be growing much higher than TV as you've seen in U.S. and U.K. and as Germany was doing. It is internal disruption that led to flat kind of growth. We expect this growth to resume in this quarter and onwards.
At least, I mean, Germany can grow at 20% kind of rate for next two years. That's like a fair assumption to make?
I can't say 20% or so, but I can say double digits. That is what our expectation is for this quarter and next. This year and next.
Q3 I think is a very big quarter, obviously seasonally adjusted, and unfortunately in that quarter only we have all this 50% tariff. With that, obviously you found this costing solution. Do you feel at least from your side, from supply side, are you well prepared if the consumer demand holds and there would be, you know, if the season is good in the U.S., especially season is good in the U.S., U.K., everywhere, you would be able to capture a decent amount of market share from that. Do you feel confident?
Most definitely confident as we ever have been in our ability to navigate any challenges like tomorrow. We want to be conservative in our guidance.
Okay. Okay, I have more. I'll come back in with you.
Thank you. Our next question comes from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Sir, two questions. First one is on this content and broadcasting expense. I think we had earlier guided that we would maintain like 18% or so percentage of revenue. I see that it is inching up almost every quarter now and ahead of the revenue growth. I mean, can you specify where are we investing, in which geography specifically? Is there a revised guidance on this content and broadcasting expense?
Hi Gaurav, Nitin, so the content broadcasting past financial year was roughly 19%, and we maintain the IVA because this was the area where we are investing most of the amount. Over here, first two quarters is normally the lean quarter for the year, and the season is the most, the biggest quarter of the year where we see the percentage terms, this cost goes down.
We expect that this cost will be in the range of, not this, like this year, in the range of 19%. The major investment of this cost is going towards our U.S. market. As Sunil mentioned earlier, our investment is in line mainly with the gaming platforms, the OTT platforms like Roku, and the other, the Facebook marketing and the basic. That is why the major investment is in the U.S. only.
Nitin, just a quick follow- up on this. I think you used to measure the performance of this digital investment, highlight how it has been playing out over the last one, one and a half years since we started aggressively investing in digital. I heard about this, [AppLovin], how it is playing out because I think overall growth is still muted. Right? Give us a sense that how you're measuring it and whether it is giving you the desired result, in what metrics you are measuring it. Just give us a sense on that.
Yeah, let me take that. We look at the customer lifetime, the cost against the customer lifetime value. When we started this about two years ago, we ramped up the investment. At that time, the cost of acquisition was taking a little over a year to cover the cost. Now that has come down to between six to nine months. Our aim is to bring that down to within three to six months of the acquisition of the customer. As we bring it more between three to six months, we will further continue to expand the investment because they can recover the cost in a short period, and then the subsequent period is where the cash flow comes from that customer. It has progressively improved, and there are multiple platforms within digital. Within those, we invest some places, reduce some other places where we see the ROI being lower. It's pretty dynamic, and our team watches it pretty closely on a day-to-day basis within the guidelines given the ebb and flow of the investments made.
Understood, sir. The second question is on the overall market share. Just give us a sense of, in all the three geographies, over the last one year, how has the market share trended for VGL entities versus the, I think, four or five competitors in each geography that we track.
We track it against the publicly listed companies. Earlier it was Curate Group and Evine, there's the Shop HQ. Now the Shop HQ are not in the business anymore. When compared to Curate in Q1, also Q2 FY 2022, we were at 3.1% market share. Now against this Curate, we had 4.6% market share. That is in four years. We expanded our market share almost 50% from 3.1% to 4.6%. Long way to go for us. Long runway. Between these two listed entities, if you look at the wider market that we see, U.S., U.K., and Germany, we see there's a $30 billion worth of market which is addressable by us, which is TV, TV-related shopping, and Ecom TV, Ecom/ TV. That size is about $30 billion. Of that, our market share was 1.5% only. There's a long runway for us to get into the total addressable market size.
And so.
Just take it back about $20 billion. Of that, we are about $400 million, so just about 2%.
This quick follow up, sir, on.
Sorry to interrupt. Can you please rejoin the queue.
Just a follow up if you don't mind.
Okay.
Just one quick question on both U.S. and U.K. where we are facing tariffs issues and we have found ways to lessen the impact. I mean just wondering when we look at our competitor and when we are [1B], I mean if this gives us some additional firepower in terms of gaining market share. What you would have seen in the last two quarters, just give us a sense that does it benefit us or we are in equal fitting compared to competitors. Any sense on that would be helpful on the same market share point.
We believe that we have advantage over our immediate competitors. None of them are vertical, so there's at least one or two hops before they get the advantage. Everybody else is not as agile as we are because we have our operations in the U.S. If somebody else is there, they are manufacturers in the U.S., they're manufacturing in India or China or Thailand, and they're only reselling to other retailers in the U.S. They can't set up manufacturing, but we can get it done through third parties, and many people are doing that also. We still are much more advantageous than them. There's a potential to gain the market share more. There's also potential for consumer sentiment to be subdued in the U.S. given the tariff, given the noise of inflation, and some kind of immigration and all that. That noise makes people cautious. We are being cautious in our guidance. We have to balance this advantage against the consumer sentiment.
Understood, sir. Thank you. Thank you. Appreciate your answer, sir. Thank you.
Thank you very much. Our next question comes from the line of Sahil Sharma from Dalmus Capital Management. Please go ahead.
Yeah. Hi. Thank you for the opportunity. I just wanted to understand within the B2B space what would be the share of jewelry and lifestyle products, and B2B sales seem to be more consistent. Also, how do you see the segment going ahead?
Don't know. The share of the market size of B2B is pretty massive, and we never really app because it was not as material for us. Given that China Plus One .
I was asking within your B2B revenues, what would be the share of jewelry and lifestyle products?
Pretty much all jewelry. Our B2B is pretty much all jewelry or gemstone or jewelry. We got advantage of China Plus One . That was there by U.S., U.K. All those players after India got 15% tariff, that slowed down a bit. In the longer run, I see that story to continue because once India is able to strike the deal with U.S. government risk reduction, wherever we in India settle 15%, 16%, 17%, it will be so much better than China or even Thailand. That story will be there. I expect the B2B to be stable or slightly higher growth rate than B2C because of that story unfolding. We learn, we benefit because of the scale, and we also learn about the market dynamics happening with other retailers. It's a win-win for us as well as retailer.
Understood. Just trying to understand this reduction in the time period for covering the customer acquisition cost. Do you have a breakup of digital sales directly from your own assets like website and apps, and the ones which are redirected from other channels and marketplaces?
Marketplaces minuscule. Amazon or Walmart are minuscule. Overall, for the whole year we do less than $5 million of marketplaces. That's just about 1% of our revenue. This is all our own properties.
How much of that now would be redirected versus say a year or two ago?
Actually, marketplace is a little higher. Earlier, it used to be 2-3% of our total sales. Now it's down to 1%-1.5% of total sales because our focus was to make it profitable at marketplace. They were not profitable earlier and on Amazon. Now we are profitable on Amazon, but we are not able to scale substantially up profitably in marketplaces. Secondly, we don't own that customer, so repeat purchase from that customer, lifetime value of the customer is non-existent for us. We have to make money within the first purchase on the marketplace, and at that level, scaling is not as much easier as it is on our website. That's where our attention is.
Okay, the last question, actually I was trying to understand within your own website or app, how much of it would be a customer coming directly to the website and how much of it would be redirection from, say, a Roku or some other gaming platform as you mentioned. That's what I was.
I understand. Sure, sure. From Roku or Fire TV or gaming applications, all of those customers transact on our website only. We don't do transactions. There's no transaction platform on those. I mean, there's no checkout mechanism on those platforms. TikTok has it. We don't do much business on TikTok. Amazon has it. Amazon, as I mentioned, we are less than 1.5% of our total sales are Amazon.
Okay, I think fine, maybe I'll reconnect later on this. On the lab-grown diamonds, are our gross margins similar to the rest of the business or are they lower or higher?
Definitely higher.
Okay, thank you so much.
Thank you, ladies and gentlemen. We will take that as our last question for the day. I would now like to hand the conference over to Mr. Sunil Agrawal for the closing comments.
Thank you everyone. 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 all once again on behalf.
On Vaibhav Global Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.