Good evening, ladies and gentlemen. I am Avijit Vikram, Head of
Investor Relations. On behalf of IndiaMART InterMESH Limited, I
welcome you all to the company's quarter two FY '27 earnings
webinar. As a reminder, all participant lines will be in the listen-only
mode, and there will be an opportunity to ask questions after the
presentation concludes.
Joining us today from the management side, we have Mr. Dinesh
Agarwal, Chief Executive Officer; Mr. Brijesh Agrawal, Whole-Time
Director; Mr. Jitin Diwan, Chief Financial Officer; and Mr. Prateek
Chandra, Chief Strategy Officer.
Before we begin, I would like to remind you that some of the
statements made in today's call may be forward-looking in nature and
may involve risks and uncertainties. Kindly refer to Slide 3 of the
earnings presentation for the detailed disclaimer.
Now, I would like to hand over the call to Mr. Dinesh Agarwal for his
opening remarks. Thank you, and over to you Sir.
Dinesh Chandra Agarwal:
Thank you, Avijit. Good evening, everyone, and welcome to
IndiaMART's quarter two FY '27 earnings webinar. We have
circulated our earnings presentation, which is available on our website
as well as the website of the stock exchanges. We are sure you would
have gone through the same, and we would be happy to take any
questions afterward.
IndiaMART has delivered consolidated revenue from operations of
Rs. 429 crores in the quarter two, representing a year-on-year growth
of 10%. Consolidated collection from customers grew to Rs. 443
crores, representing a 9% year-on-year growth for the quarter two.
Consolidated deferred revenue grew to Rs. 2,029 crores, representing
a 16% year-on-year growth. In quarter two, unique business enquiries
were 27 million. Our total paying supplier base was 2,17,000 at the
end of quarter two, reflecting a net decline of 615 suppliers during the
quarter. This decrease can primarily be attributed to an elevated churn
at the Silver subscription.
Our Platinum and Gold customers, which contribute approximately
50% of our customer base and about 75% of revenue, continue to have
good upsell and retention rate. We are consistently working to
enhance our artificial intelligence capabilities across the platform by
refining our intelligent matchmaking and standardising cataloguing,
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and leveraging AI for voice-based applications. We are focusing on
providing a seamless discovery experience.
Parallel to those technological advancement, building a trusted
marketplace remains a fundamental strategic priority. We are actively
enhancing our multi-layered user verification and platform protection
features to foster a highly secure, transparent environment. Through
these core improvements, we are strengthening our overall
matchmaking ecosystem. Our primary goal remains unchanged, to
serve as the highly reliable digital partner of MSMEs, providing the
robust ecosystem they need today to grow sustainability tomorrow.
Now, I will hand over the call to Brijesh to update about BUSY
Infotech. Thank you, and over to you, Brijesh.
Brijesh Kumar Agrawal:
Hi. Good evening, everyone. At BUSY, we have done a billing of Rs.
46 crores in Q2. This represents a YoY growth of 20%. The revenue
from operations are at Rs. 37 crores, which is a 27% year-on-year
growth. The deferred revenues are at about Rs. 155 crores, and that
shows a 40% year-on-year growth, while the cash from operations
stood at about Rs. 12 crores.
In Q2, we sold approximately 11,000 new licenses, bringing our total
licenses sold to 4,66,000. We recently launched BUSY Magic, which
has a new UI interface for BUSY. This is something which is seeing
an encouraging market adoption. We are in the process of revamping
the entire technology base of BUSY, and we are entering the last leg
of doing those changes now.
Beyond this specific rollout, we continue to broaden our overall
product portfolio so that our customers can get better values and more
intelligent capabilities by using BUSY. And apart from the
developments on the product side, we actively work to expand the
sales and the distributive channels that we have, so that we can
continue to maintain decent growth in the business.
With this, I will request Jitin to take over and discuss about the
financial performance.
Jitin Diwan:
Sure. Thank you. Good evening, everyone. I will take you through the
financial performance for the quarter ending September 2026.
Consolidated collections from customer was Rs. 443 crore in the
quarter, representing YoY growth of 9%. IndiaMART standalone
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collection from customer for the quarter was Rs. 394 crores,
registering YoY growth of 8%. Consolidated deferred revenue stood
at Rs. 2,029 crores, an increase of 16% on YoY basis.
Consolidated revenue from operations was Rs. 429 crores for the
quarter, registering YoY growth of 10%. Consolidated EBITDA was
Rs. 159 crore for the quarter, representing margin of 37%.
Consolidated other income was negative Rs. 8 crores during the
quarter, primarily due to increase in bond yields, which led to MTM
losses. We believe that it is notional loss and will reverse in the next
few quarters.
Consolidated net profit for the quarter was Rs. 91 crores. And the cash
generated from operations was Rs. 135 crores for the quarter.
Consolidated cash and treasury balance as at the end of the quarter
was Rs. 3,234 crores.
Thank you very much, and now we are ready to take questions. Over
to you, Avijit.
Question-and-Answer Session
Avijit Vikram:
We will now begin the Q&A session. If you wish to ask a question to
the panellists, kindly raise your hand and allow camera and
microphone access. Alternatively, you may type your questions in the
chat menu and we will revert on that. Please restrict to two questions
so that we will be able to address questions from all the participants.
We will wait for a few seconds while the question queue assembles.
Moderator:
First question is from the lines of Kunal Thanvi from Banyan Tree
Advisors. Please unmute yourself and go ahead with your question.
Kunal Thanvi:
Hi, thanks for the opportunity. I had two questions. One was regarding
some of the operational parameters. When we look at, say, net active
buyers and the unique business enquiries, we see a declining trend on
a YoY basis, and this has been trend for a while now. How should one
look at it, and how long do we think this trend will continue, given the
fact that we have been tightening the verification process, etc., etc.?
And like would you attribute any of this decline to searches coming
through GenAI rather than, say, the traditional Google searches? Like
is there any element of that in this decline?
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And the second question is, one of our competitor recently talked
about morphing or moving towards a marketplace kind of model,
platform kind of model from just classified. Your thoughts on the
same is something that we are looking to hear. Thanks.
Dinesh Chandra Agarwal:
Kunal, which platform are you referring to going from classified to
marketplace model? JustDial?
Kunal Thanvi:
Yeah, just that. There is a change in management in that company.
They recently talked about that they are looking that they aspire to
make sure that the entire transaction is done on their platform, and
they plan to move towards that direction.
Dinesh Chandra Agarwal:
Okay. Yeah, on the daily business unique enquiries or the active
buyers that you are saying, that active buyer and daily business
enquiries have been declining a little bit for the past two quarters now.
And yes, you are right. One, sometime in the JFM with so much of
LLM-based agentic thing happening, everyone wants to protect his
own data and unique advantage.
So one, we ourselves also went ahead and started putting many things
behind the login. Also, we started putting that you can't just scrape my
website forever without doing any login. And third, certain
information which we thought is very strategic and very proprietary to
IndiaMART that we were displaying, that we stopped displaying on
the search engine and to all the LLM certain things, and we kept it all
behind the login.
So yes, there might be certain losses that are occurring from Google
landing. And you would remember that at the same time, Google AI
Overviews had expanded from 10%, 20% now to 50% of the searches
or even higher. So, yes, 10%, 15% decline on that is happening. Some
of it is strategic to us and because we want to save our proprietary
data, because most of these LLMs are now absorbing the data and
suggesting the results in their own words.
So since these are early days and there is no protection, we are not
freely going to distribute our strategic data easily. So that's the reason.
And so we are okay to let go of this 10%, 20% of the current business
enquiry, and that's why we are spending where it matters. So if I look
at 100,000 categories, the top quartile of the categories, where the
maximum amount of business happens at IndiaMART, that's where
we spend time, money, energy to derive more enquiries and more buy
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leads by doing advertising specifically on the search, and we will be
expanding on to other mediums also.
So if you really see, there is a little bit growth in Q2 from Q1. But yes,
we have lost about 10% to 15% from the best ever highs. Now,
coming to the marketplace kind of model. So I will not jump to the
conclusion that we aspire to do the complete transaction, means
completely doing away from the listing model, going to the
marketplace model. But yes, if you remember our history, we have
been trying to do multiple things slightly secluded from IndiaMART.
We had done a Tolexo also about a decade ago, and then we had a
payment platform which tried to complete transactions. We only
closed the payment platform sometime around '21, '22. And we are
also trying to get into credit facilitation. So whether you want to call it
as a complete end-to-end 100% marketplace movement, no. But do we
want to go closer to the transaction? Do we want to make sure that
buyer and supplier fulfilment is better? Yes. Every classified and
listing platform wants to know more and more details about the buyer
and seller, and that makes it more effective and better experience for
everyone. Thank you.
Kunal Thanvi:
Yeah. Thank you. Just one follow-up. On the first part, when you said
you have stopped giving the entire data to the AI engines, etc. So now
this is one big thing that you have spoken in the past also, which is
like fight for data, like who will share what with whom, right? In this
crossfire, how does a platform, classified platform, like one should
think about. Today, that this number is, say, 10%, 15%? Say, going
ahead, will it become a higher number or it will even become bigger
because people can't do it on, say, AI platforms, so they have to come
back to these classified websites itself. How should one think it from a
longer term perspective? Because as you said, more and more Google
searches are moving towards AI-led searches.
Then for our business model, how do we think about this and like is
there any possibility of a partnership with these AI models? Because
now we are looking at some of the FMCG companies who are
working closely with AI models to get some revenue out of them
rather than competing with them. How do one think about this entire
position of sharing some data, not sharing some data, and letting go
some customers from a longer term perspective? Thank you.
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Dinesh Chandra Agarwal:
Three different questions here. One, on a month-on-month basis or on
an immediate quarter-on-quarter basis, how is this going to fan out?
Nobody knows because there's a huge technological shift going on and
huge fight for data going on right now. And everybody is trying to
know where it will land and how it will land and what would be the
steady state situation in a couple of quarters or couple of years' time.
The second part is how it is going to affect or give benefit or loss to
our buyers and sellers or users. Users are going to adopt to these
things slowly and slowly. And that's why I'm saying, the technology is
going to happen much faster in months, in quarters, while the actual
landing will happen in years. So over the next couple of quarters to
couple of years, this will remain a little volatile.
Having said that, it is the judgment of the management and to see
where we feel what data is proprietary to us and what data we should
distribute for the purpose of training and what data we should give for
the purpose of RAG. All three are totally different. For the purpose of
training, I think redacted data which is not PII data should be given,
and if there is an opportunity to earn revenue, should be taken. And
even we would be open to doing such things. But for the purpose of
training using the PII data or identifiable information, I don't think one
should be able to give it for the purpose of free learning to anybody
and everybody.
For the purpose of RAG, we will have to think who becomes useful
for what. For the purpose of actual agency or agents, it is still to be
seen what kind of agents we will allow and what kind of agents we
will not, and at what frequency we will allow and what frequency we
will not.
Kunal Thanvi:
Sure. Thank you, and all the very best.
Moderator:
Thank you. Next question is from the lines of Amit Chandra from
HDFC Securities. Please unmute yourself and go ahead with the
question.
Amit Chandra:
Thanks for the opportunity. Just the continuation on the AI thing. So
where we are in terms of our AI journey, in terms of implementation
of tools and agents in our platform, and where exactly we are seeing
the benefits of the AI adoption. Is it primarily on the like margins
expansion because we automate the back end, or is it also used as a
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primary tool for enhancing the buyer and the seller experience? So
where we are in that journey and where we aspire to be?
Dinesh Chandra Agarwal:
Yeah, all round. I think there must be almost like 20 plus AI things are
going on. You can say from starting from pre-sales, data preparation
to sales data meeting fixation, to service ticket resolution, to catalogue
design and production, to category mapping, to category audit, to user
verification, to automatic verification, to category intelligence.
And then, if you remember, we have been the pioneer at the large
scale voice AI. Almost 1 lakh buyers are being served for the past one
year now. Almost past one year, every day, almost 80,000 to 100,000
buyers are being served by our voice AI agent. And on those buy leads
and RFQs are posted live on IndiaMART platform for the last more
than a year now. So many different experiments are going on. Some of
them are cost advantage, some of them are better intelligence for us,
and some of them are time advantage.
Many different benefits will occur to us over a period of time. We are
very hopeful and very delighted to have this technology. I think every
quarter we are learning many new things. Today itself in the board
meeting, I think we are the first time used, instead of slides, we used
videos. Something which is we discovered only one month ago. So
there are so many things. At BUSY also, the entire BUSY 21, BUSY
Magic as a platform, its UX was designed almost nine months ago. It
was designed using AI-based technologies. So I think AI is
everywhere. I mean now it is hard to distinguish where it is not.
Amit Chandra:
No. That is right. But what I am trying to understand is that, whether
we are experimenting with AI with multiple things or are we very
certain about that these things will be a kind of a differentiator for us.
Dinesh Chandra Agarwal:
We are very certain, and we are not experimenting. It is all deployed.
It is being deployed, continuously being deployed. It is being
improved, continuously being improved. And it is not only deployed
at one place, it is deployed for the last. I mean, we have been using AI
since 2018, but I think over the last two, three years, every process,
every place, AI is being deployed.
Amit Chandra:
In terms of the impact that we are seeing this on our business, so what
are the areas like? Obviously, the margins are higher, so maybe we
can attribute it that some of the cost is not increasing because the AI is
taking care of some of the cost increases. Plus, in terms of
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matchmaking, the experience is improving, but it is not reflecting in
terms of the higher number of enquiries or the increase in the net
additions. So whether, is it still those benefits are yet to accrue to us?
And also in terms of the investments that we are doing in this AI, this
is being expensed out in terms of the P&L and also the models that we
are using, these models are all in-house models, or we want to
outsource or partner with some of the larger like model companies to
enhance the experience?
Dinesh Chandra Agarwal:
Yeah, just hold on. Let me answer those many, then you can add
more. Otherwise, I will forget. First of all, in terms of model, now
there is an entire model garden, I guess. We are using all kind of
things. From Gemini to Claude to ChatGPT, to Gemma, to Alibaba
Qwen, to Grok, to whatnot. And my general tendency is to not
develop these inside, but some of the times we have to. But mostly,
my general tendency is as to this is not our core area of operation.
Your second question was, should it be reflected into revenue or
repeat buyer behaviour, or more customer sign up, or reduced churn,
or reduced cost? See, it has been last two years or so, the AI is as
much as it is helping people, as much as it is also taking away from
people. While it is helping us heavily in many opportunities which we
could never do, it is taking away or giving those similar tools which
we were distributing in the hands of public, where a lot of things they
can do on their own.
So I guess a net-net benefit, as I said, over the next two, three years,
four years, can remain very volatile. The good part is that with the
tighter understanding and deeper understanding of ours in this
particular area, I think if we don't grow too much, at least we are not
going to go heavily in the red or completely do away. So I think
there's a downside protection that I can definitely offer to you that we
understand the technology well, we are using it well. We can see lot of
opportunities, while there is other things that are going.
The greatest part that I've heard, most of our consultants and some of
them are PhD consultants, some of them are dean at well-known top
10 universities in the world, have told us that your data at IndiaMART
is very, very valuable. And AI and your IndiaMART data, if used
effectively, can actually become a very useful force in protecting your
turf and growing your turf in the times to come. We have started to
slowly integrate BUSY and Livekeeping and IndiaMART altogether
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at the back end. If you remember, four, five years ago when we
acquired BUSY, we said for the first three years, we are not going to
touch anything, because this is the first ever large acquisition that we
did, and we didn't want it to go wrong.
In the last two years, we have started to understand how it works, and
first we started to make some changes at BUSY itself. Now we have
started to see what kind of data exchanges that we can do, what kind
of technology integration that we can do. There are many things that
we will do and we can do. The good part is that we understand this
whole ecosystem and technology. The bad part is nobody can predict,
given the pace is too much and too many opportunities and too many
players are in the system today. Nobody can predict next two, three
quarters or next two, three years.
Amit Chandra:
As such, one more question lastly, the most awaited one. What's
happening to the churn?
Dinesh Chandra Agarwal:
Yeah. Amit, as I said, the Silver level churn, until it improves, we are
not pressing pedal on the gross addition. So 500 here and there, and
we know that last two years we have been flatter on the total customer
base, and most of our growth has come in from the ARPU growth and
from the upsell growth. But as soon as we get a better handle on the
Silver customer sign up, I mean churn, I think we will press pedal on
the growth as well.
Amit Chandra:
Okay, sir. Thank you and all the best.
Moderator:
Thank you. Next question is from the lines of Ritvik Agrawal from 3P
Investment Managers. Please unmute yourself and go ahead with the
question.
Ritvik Agrawal:
Yeah. Thank you for the opportunity. Wanted to understand on the
quality of growth, maybe going forward over in two, three years down
the line, how do we see majority of growth coming from? Will we
continue with this ARPU hike trend, or do we also expect some
growth to come from paid suppliers going forward?
And secondly, on BUSY, incrementally, I am able to see, you can
correct me if I'm wrong, the collection growth has been declining. As
in terms of what we saw in the fourth quarter '25 to somewhere around
fourth quarter '26, that collection growth has been declining. I mean,
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just wanted to understand, is this something which is one-off, and do
we expect this to come back? And if yes, then how?
Dinesh Chandra Agarwal:
Yeah. Let me first, on a longer term basis, I think we expect value
growth and volume growth to go hand-in-hand. We always had about
10% odd value growth and 10% odd volume growth in the longer run.
In the last two, three years, most of the growth has been coming from
value, not from volume. But in the next two, three years' timeframe, if
you want to see, it has to be balanced value and volume growth.
On the BUSY, I think we had made some accounting changes, which
has resulted into very high collection of 80%, 90% that you see. On a
like-to-like basis, I think we have already given commentary then.
Brijesh can clarify more on that. But if you see the net billing or the
revenue numbers, they are all okay.
Brijesh Kumar Agrawal:
So just to clarify, if you're referring to the overall growth of billing
that we saw in Q1 and Q2 of this year, you would have seen a 10%
and a 20% increment in this year. This has also happened because of,
one, when we looked at billing in the last year, right? The overall
changes that we had done in the methodology of the billing, as well as
we had done a specific focus on customer win back during that time
period. Both of these two things have resulted into a higher base for
last year, quarter one, quarter two. And you can already see that as we
move from quarter one to quarter two, our quarterly growth rates have
improved. From Q3 onwards, you will actually be able to see far more
comparable growth rates, which should be in line with the 20% to
30% overall growth rates that we have been seeing. Both of those
resulted into higher growth.
Ritvik Agrawal:
Understood. One more question, if I may. On the margin side, I can
see our margins have been improving sharply. In a steady state, any
trajectory or where do we envisage this can go? Any comparable from
global peers would be helpful here.
Dinesh Chandra Agarwal:
You are talking about IndiaMART or BUSY?
Ritvik Agrawal:
IndiaMART.
Dinesh Chandra Agarwal:
IndiaMART, we have been guiding 33% margin, and I think that is the
margin we are comfortable with in the long run. On EBITDA margin,
IndiaMART, we have been guiding long-term 33% margin.
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Ritvik Agrawal:
This quarter, I can see we had 40%.
Dinesh Chandra Agarwal:
Yeah, because it is quarterly. Our margins are cost is upfront, revenue
comes from behind, from 18 months past. That is why the margins are
never comparable. If you have to compare, we have to compare, I
mean last year same, this particular quarter, because we are not
investing heavily on the sales side. So that's why you are seeing
elevated margin. As we get better understanding of the churn, we will
start to invest in the sales side heavily.
Ritvik Agrawal:
So from 1Q '25 onwards, I can see it has always been ahead of 35%,
except for 2Q FY '26. So 33% sounds to be a little lower, right?
Dinesh Chandra Agarwal:
We can be a little conservative.
Ritvik Agrawal:
Conservative. Okay. Okay, got it. Thank you.
Moderator:
Thank you. Next question is from the lines of Abhisek Banerjee from
ICICI Securities. Please unmute yourself and go ahead with your
question.
Abhisek Banerjee:
Yeah. Quickly, just a couple of questions. First, on the margin bit,
right? The ESOP costs have actually gone down this quarter from
what has been the trend. So do you expect ESOP cost to be around this
level only for the remaining quarters, at least for this year? And given
we have been talking about AI allowing a lot of efficiencies to be built
in, right? So is there going to be any leverage that we will get on
personnel cost as a proportion of revenues from, say, next year or
something, or at least in the foreseeable future?
Dinesh Chandra Agarwal:
Yeah. Let me first answer the AI thing, and then ESOP thing Jitin can
answer. So on the AI part, I have been saying since last year, in the
short run, the cost of experimentation and not being behind, I think it
will add to the overall cost. In the longer run, it may improve our
margins substantially, and it may improve our revenues also
substantially. So I am saying in the short run.
Whatever saving that we get, we end up spending at some other place
for the more opportunity spend, or sometimes even higher. So that's
why you see many large tech companies are actually running at the
lowest ever profit margin today, because they are investing a lot on the
AI experiments. Many of those people are capitalising it. So I think
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somebody had asked the question, are we capitalising any of the
expenses?
So we are not. 100% of our expense are expensed out, whether it is in
the manpower, whether it is in the AI research or anywhere else. None
of the expenses at BUSY or IndiaMART or Livekeeping or IIL
Digital, any of our subsidiaries are ever being capitalised. At least, no
manpower expenses, no software expenses. Only the real capital
nature of expenses like a fixed asset or others which are required by
law, those are the only ones being capitalized.
So many of those are seen as capitalization expenses by large tech
companies. In our case, it is all being expensed out immediately. In
terms of ESOP, I think it is purely timing effect.
Jitin Diwan:
Yeah. Just a couple of points on ESOP. One is the way ESOP is
designed, every year the expense goes lower. So we are in the second
year of when we had our first ESOP scheme. So that's how the
expense was supposed to be lower. Second is about the organic churn
of the employees, which goes, and it depends if the employee has
gone, which had longer ESOPs, that gets adjusted in the overall
expense. But the ESOP expense which you are looking at now is the
baseline. So it should remain as is.
Dinesh Chandra Agarwal:
As and when we will create new pool. And then it will increase
suddenly and then slowly, slowly go down.
Jitin Diwan:
Then we will have our next review.
Dinesh Chandra Agarwal:
Yes.
Abhisek Banerjee:
Understood. And when is that going to be?
Dinesh Chandra Agarwal:
What?
Abhisek Banerjee:
Any idea on the timelines of when that can happen?
Dinesh Chandra Agarwal:
On the ESOP?
Abhisek Banerjee:
Yeah.
Dinesh Chandra Agarwal:
I mean, last ESOP, we did some time around last year, right?
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Jitin Diwan:
Yes, last year.
Dinesh Chandra Agarwal:
And at the end of the financial year, the board will decide when and
how much to allocate as an ESOP. We generally avoid every year. So
at the end of two year or three year, we do it mostly like that. If there
are any specific hirings that have happened with the promise of stockbased compensation, that little bit we keep doing every year. But other
than that, any larger ESOP pools, we do. So for example, last we did
in 2022, and then we did it in 2025. Before that, we did it in 2018. I
think between two, three years gap, you can see one stock-based
compensation scheme.
Abhisek Banerjee:
Understood. On the lending business, lending facilitation business,
rather. Could you, please provide some colour? I just wanted to
understand, like, see on your platform, you have never really had
transactions. And there are now quite a few B2B platforms which
allow transactions. So does that make you kind of slightly weaker in
terms of the data that you have? And what kind of traction can you get
from the lenders atleast? If you could give some colour on that, please.
Dinesh Chandra Agarwal:
So I mean, everybody has his own strength. The transactional
platforms have their own weaknesses and strength. As a large
horizontal, multi-industry, classified and directory platform, we have
our own strengths. We get the intent to purchase. If we capture the
intent with the eligibility to get eligibility of financing, I think and
when it goes to BUSY or Livekeeping, it is finally the actual account
booking. We get the supply chain information at the firsthand before
anybody else gets that information. So there are certain inherent
strengths that we have.
Having said that, are we going to go into every opportunity that we
have? No. I think our objective is very clear. It is not to do the
lending, lending. It is to support the marketplace because at
IndiaMART, there are so many large equipments that are bought and
sold. And they cannot be bought like a B2B marketplace with the
transaction. So I think at those places, you need some kind of a credit
facilitation systems because we get the intent at the time where
nobody has seen the transaction.
Abhisek Banerjee:
Got it. But would you be able to kind of give pre-approved credit lines
or something of that sort, or would it be just kind of a lead generation
exercise? And if you have started any pilots, etc., and if you can share
some colour on that that would be great.
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Dinesh Chandra Agarwal:
No. I mean, I think we will keep doing smaller experiments, and then
we will see whatever comes. We will keep telling you quarter-onquarter.
Abhisek Banerjee:
Understood. Thank you. This is very helpful.
Avijit Vikram:
So we have some questions from the chat box, so I will take a few of
them. First question is from Ravi Purohit. When we look at other
classified companies like Naukri.com, CarTrade, OLX, etc., they have
started monetising buyers on their platform by offering them
significant value-added services. Broad question is, can we remain just
a pure play classifieds company only?
Dinesh Chandra Agarwal:
Yeah. So I think, if I understood the question correctly, what you are
asking, that B2C classified businesses have started to monetise a large
base of their consumer side also. So either in terms of Prime
membership or in terms of candidate membership.. But at least
Naukri.com and the earlier version of Zomato, or Amazon Prime or
something like that.
On the B2B side also, there are examples in the world where Alibaba
in China has a membership for buyers also at a very small, some $20
or something like that. Once our markets mature to that layer, as I
said, we have started to now verify the buyers, started asking for the
PAN, GST, and Udyam of the buyers also. So in order to increase
trust and repeat business, some point of time, we will have a verified
business buyer program and a paid verified business buyer program.
We are currently in the process of doing certain pilots. As and when
anything becomes significant enough, we will come back and tell you.
If you go to the platform and explore, there are many different
experiments that keep on running time-to-time.
Avijit Vikram:
Okay. Thank you. So we have a couple of questions from Ashwin R.
So first one is, Gold and Platinum are roughly half our customer base,
but 75% of revenue. And you have said growth will be ARPU-led
until churn is fixed. ARPU growth has historically run 5% to 10%. At
what point does ARPU expansion hit a saturation ceiling if the Silver
pool keeps shrinking? And is there a limit on how much price and mix
means ARPU can carry revenue growth without customer additions?
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Dinesh Chandra Agarwal:
So two parts to it. Yes, 5% to 10% in the natural system has been
growing, and that's what we are also getting to 8% to 10% revenue
growth. But how much can it be stressed or not stressed? Do I really
want to stress that more? No. In terms of the Silver side churn, can I
improve certain quality of Silver acquisition, which can actually go to
Gold and Platinum, rather than trying to get all the similar kind of. If I
can do a better targeting on Silver, that this particular customer is
more likely to stay, and this particular customer is less likely to stay or
medium likely to stay.
If I can actually go and pinpoint and target the actual green, super
green customer set, either by turnover or by industry or by geography,
triangulated into all three of them, I think we can continue to feed
Gold onboarding or Gold and Platinum onboarding. Having said that,
in the last two years or so, our overall Silver numbers have not
improved, and thus the overall Gold and Platinum numbers are also
stagnant. So we are trying our level best. As and when something
happens, you will start to see.
Avijit Vikram:
Kshitij, you can continue with the queue.
Moderator:
Sure. Next question is from the lines of Shreya Chatterjee from
Ageless Capital. Please unmute yourself and go ahead with your
question.
Shreya Chatterjee:
Hi. Thank you for taking my question. So I wanted to have a more
nuanced understanding of what is happening, like what all measures
are you taking to reduce the Silver churn. Like you had mentioned,
verification of buyers and doing like mobile verification, PAN card
verification. What all measures are you taking, and what all qualitative
metrics are you seeing on the Silver churn side?
Dinesh Chandra Agarwal:
I think if you see the last three years chronology, what all we have
done, the first thing that we tried to improve was the service levels,
because many of our employees were new. So we improved the
service level. The second phase, if you look at 2024, most of the time,
'24, '25, I think we worked on the quality of buy leads and quality of
RFQs, where we worked on high intent, we worked on quantity,
specification, enquiry relevancy, feedback was the thing, which
actually improved. Customers actually loved it. But then most of the
benefit again accrued to the Gold and Platinum customers because
they were the highest user of buy leads and RFQs and enquiries. Then
because the traffic was also not growing much, we thought how we
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can increase the overall buyer numbers. We took two different
approaches.
We started to experiment and invest into the performance marketing.
If you see our advertising expenses in the entire of last year are now
running at Rs. 8 crores, Rs. 9 crores per quarter, and this is almost
touching the Rs. 10 crore per quarter budget. And we are spending
most of this advertising money on the top quartile of the categories.
Another thing that we did is reduce the overall unique business buyers
to the enquiry delivered. We are reducing the competition as well as
reducing the headache for the buyer, how many people he has to speak
to. Multiple things that we did. We also tried to improve on the trust
side, where TrustSEAL verification and trust communication. We
have also launched a trust assurance program. Now every buyer is
actually protected up to Rs. 5 lakh of purchase, if the purchase is truly
taken from the verified bank accounts and from the TrustSEAL
suppliers. So multiple initiatives we are doing. Most of that benefit is
accruing to Gold and Platinum suppliers, and some of it is coming to
the Silver suppliers also. It is not that the Silver suppliers are
completely not happy. The overall 12-month retention of the Silver
supplier, which used to be four or five years ago versus today, is 10%
lower, and that is the only difference. Otherwise, we would be looking
at 10% volume growth and 10% value growth.
Shreya Chatterjee:
Got it. And any sense on when this churn would improve even slightly
for Silver buyers? Also you were mentioning that you are planning to
start some buyer monetisation program, so what is the status on that?
Dinesh Chandra Agarwal:
I did not say I am planning to start. I am experimenting with this.
Because the world over, Alibaba has done some good job, Amazon
has done some good job, Costco has done some good job. Back in
India, even Zomato has done some good job on that. I think it is not
easy to crack. Asking of Rs. 1,000 to Rs. 10,000 per buyer per year.
Anyway, this is something as a program needs to finally scale
automatically. We have started to experiment. If at all any experiment
becomes successful, we will definitely be more than happy to come
and let you know.
Shreya Chatterjee:
Any sense on the numbers like the Silver churn declining in the next
few quarters, or you want to keep an open view and see how is it
going, how is it evolving?
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Dinesh Chandra Agarwal:
Yeah, I mean, last two, three years, or two years, I have stopped
giving any guidance on that because there has not been any certainty. I
can only say that on a best effort basis, we are trying to honestly do
multiple efforts. Exactly when it will result into a better outcome, we
don't know.
Shreya Chatterjee:
Got it. And lastly, your employee count has increased slightly quarterover-quarter. Is it more on the sales side that you are onboarding
employees or how is it?
Dinesh Chandra Agarwal:
Yeah, mostly on the business side. I don't think it has grown anything.
In fact, from the last-
Jitin Diwan:
Just 30 plus got added in last quarter vs previous quarter..
Dinesh Chandra Agarwal:
Business as usual.
Shreya Chatterjee:
Okay. Got it. Thank you. Thank you for taking my questions.
Avijit Vikram:
Thank you, Shreya. We have a question from the chat box from
Ashwin R. Will IndiaMART Finance operate strictly as a zero-risk,
fee-based distribution marketplace for partner banks and NBFCs, or
will it commit balance sheet capital through FLDG arrangements or
seek an NBFC license? What is the maximum capital and maximum
first loss exposure you are willing to underwrite, and how will this be
disclosed?
Prateek Chandra:
Sure. On this entire initiative of credit, as Dinesh also said, our
primary objective of looking at this credit enablement is that how can
we improve the buying experience of people on the IndiaMART
platform?
As we kind of go along, I am sure a lot of products will evolve. In that
case, as we are running kind of in a couple of pilots currently, but
those are really saying they are early stages currently. I think once it
scale up, we would be having a much more evolved business model
wherein we can kind of now talk about as to what kind of capital and
those will be kind of committed. Currently, there is no significant
amount of capital that has kind of been getting committed on these
initiatives.
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Dinesh Chandra Agarwal:
Yeah, but rest assured, anything even to the tune of few crores a
quarter, I will come and tell you first. Rest assured, there is no
question of us taking a huge capital risk.
Avijit Vikram:
I think we can take one more, Kshitij, yeah.
Moderator:
Sure. Next question is from the lines of Pranaya Jain from Banyan
Tree Advisors. Please unmute yourself and go ahead with your
questions.
Pranaya Jain:
Thank you for the opportunity, sir. I have a few questions. One is, sir,
can you throw some light on the growth in Gold and Platinum supplier
base of ours? Can you talk about how that is trending?
Dinesh Chandra Agarwal:
So since the overall subscriber numbers has not increased, we do, I
think, publish overall number on a yearly basis. In the last year, it had
grown by 1,000-2,000. Previous to previous year, it was about 3,000
or so, in the Platinum segment. Platinum and Gold segment together, I
don't think we have been giving a detailed outcome. We always give
that top 10% customer base, top 1% customer base, and top overall
customer base. There are pools. We have not been giving exact details.
On approximate numbers, it is about 50% of the customer base, Gold
and Platinum, and about 75% of the revenue. If there is a material
change in that number, we will come back and tell you for sure.
Pranaya Jain:
Understood. Got it. My second question is on organic versus paid
traffic. You answered in the previous question as well, that you've
been spending on paid advertising. Can you talk about what
percentage of your traffic currently on the buyer side is now coming
through organic channels versus due to paid advertising? Going
forward, is there any plan to ramp up on marketing spends?
Dinesh Chandra Agarwal:
On the 26 million unique business inquiry, 27 million unique business
inquiry that you see. I think about a million odd would probably every
month, so that is about 3 million in a quarter. 10% of our traffic,
approximately, is now coming through the organic paid thing. It also
does a little bit of a cannibalisation. There could be almost 20%-40%
cannibalization depending upon which particular area. The good part
is that that 10% traffic that I bring using the paid versus this overall
unique business enquiry. The unique business inquiry is across all the
100,000 categories, across all the tier one, tier two, tier three cities,
across all the GST, non-GST customer, consumer business, super
business category.
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The 1 million that we are able to get is more targeted customer, which
is the top quartile of the category, which is the typical Tier 1, Tier 2
mix, with little bit of a tier three mix. I think we are getting more and
more sophisticated on where to spend money, rather than saying that
out of the 10 million odd unique buyers every month, we now get 20%
coming from paid advertising. We will probably continue to get a
lower percentage of that, but more useful traffic than what we attract
from the normal organic.
In the organic term, I do not say no to anybody, but in the advertised
traffic, I think I would be very conscious of the fact where am I
spending money and what kind of traffic am I getting, what kind of
conversion am I getting, which industry I am getting from, what kind
of quantities I am getting from. I think those are the things. As we will
get better and better at that, because unlike a single brand doing
advertising, we are a multi-brand, multi-category, multi-geography
thing. We have to do a local matchmaking for each one of them. That
makes it very difficult. It is one step even more difficult than what
best in the world Amazon would do. Amazon is a multi-category,
multi thing. It still fulfils everybody nationally or at least regionally.
While in our case, it has to be fulfilled at locally.
It is now our data science team that has been able to understand that
how to run this in such a small patches of category plus geography
plus demography. All of these three combined together, we spend Rs.
10,000 a month on that segment. It is a very little, very highly targeted
segment that we are able to do. Once we get a better handle on that, I
think we will spend maybe double the investment on that side.
Pranaya Jain:
Right. Understood. That is very helpful. Just one last question from
my side. Sir, any thoughts on buyback?
Dinesh Chandra Agarwal:
Capital allocation decisions, including buybacks, are for the Board to
consider. We will convey your suggestion to the Board.
Pranaya Jain:
Understood, sir. Thank you so much, and all the best.
Moderator:
Thank you. That was the last question for the day. I would now hand
over the call to Dinesh Agarwal for his concluding remarks. Over to
you Sir.
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Dinesh Chandra Agarwal:
Thank you, Kshitij. Thank you, ladies and gentlemen, for joining our
quarter two FY '27 conference call. We have tried to address your
queries in the time available. But if you still have any questions,
please feel free to contact with our investor relation team, sir. Happy
Diwali, and happy prosperous New Year to everybody for the
upcoming season. Have a great day and a great evening. Thank you.
Moderator:
On behalf of IndiaMART, we thank everyone for joining us on this
webinar. You may now disconnect your lines. Thank you.
Notes:
- This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings.
- No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of
IndiaMART InterMESH Limited.
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