Earnings Call Transcript - XNSE:SHIPROCKET 2026-11-05

Operator

Ladies and bruntmen, good afternoon, and welcome to ShipRocket's Q2 FY27 earnings conference call. As a reminder, all parcel lines will remain in listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. For participants connected on only audio, if you need any assistance during the conference call, please signal the operator by pressing star followed by zero on your touchstone keypad. We have with us today Mr. Sahil Goyal, MDM CEO. Mr. Tanmay Kumar, CFO, and Mrs. Treance, Gen, Director, Investor Relations. I now hand the call over to Mr. Tanmay Kumar for his opening remarks. Thank you and over to you, sir.

Speaker 7

Good evening, and welcome to the call, our second agilistic company. Thank you. Now, this quarter, our revenue is up 35%. Consisted EBITDA is up close to 14 crores. Our emerging businesses grew 60% plus with much better economics, and we have turned back positive. I will walk you through a short funding presentation and hope that we can have our conversation and question answers.

Tanmay Kumar, CFO

ChipRocket remains focused on its focus.

Speaker 7

300 to 320 million Indian shops online today. Online is about 8% of retail, heading to about 15% by 2030. India has about 60 million retail MSMEs, and about 45% of online retail U&B already comes from T2 and beyond. All of you, and... On the market remains unchanged. We are very bullish on D2C and on quick commerce. The merchants guiding this growth will not be their own logistics, their own checkout, their own marketing staff. They will rent it. They will use it from the people who build it, and that is what we serve, and that is what we provide.

Tanmay Kumar, CFO

Shipwocket is a race.

Speaker 7

Under Indian e-commerce, we have technology and technology first. A seller in Jaipur or Coimbatore opens one dashboard and gets everything that happens after discovery. Payments, procurement, shipping, customer experience, returns, and so on. 22 bus plus senior partners, 250 ecosystem partners, one dashboard. Data, money, trust flows through one platform. Our merchants do not need to understand logistics. She just needs to make a great product and that is what we are.

Tanmay Kumar, CFO

Let me walk you through the financial numbers.

Speaker 7

Overall, the revenue was 670 crore plus, up 35%, and adjusted EBITDA was 14 crore plus, at 2.1% margin. Core revenue was about 450 cross, up 25%, and adjusted EBITDA about 59 cross at 12.8% margin. Emerging. Segment, revenue was about 2.10 crores, up 61%, and it adjusted the data margin improved from minus 31.5% to close to 21% negative, so there is a 10 basic points improvement. Growth is broad-based. Core is scaling profitably, and emerging continues to scale faster. And we generated about 65 crores of cash from operations in the first half. That's about 2.3 times the 23 odd crores that we made in XORUS last year. So overall, most engines are performing in growing and with better economies. We'll walk you through quality growth metrics. On trading 12 months basis, we are at our highest ever on all the fees to 33 million transactions, about 37,400 crores of GAB, and close to 236,000 plus active merchants on metrics have grown. In the quarter, GAB grew 33%. Transactions leave 34%. If you ask, this operating number shows we are living ahead of what we set out in the beginning of the year. We are excited about overall 35, 34% plus transaction growth. We are reaching more merchants. We are getting deeper into transactions, and that is exciting. When we grew 35% and the build is simple. We keep adding merchants, which was up about 8%, and merchants do more business with us, and revenue per merchant is up 25%. The RQ is up with more and more emerging adoption, while we continue to drive overall merchant economy. So, I'll just say the data up. 3.3x obviously from a very small base, it was 4 crore last year, same time, and it is now 14.2 crore. And more importantly, we are now path-positive, and this is delivered largely due to operating leverage from platform scale. We'll talk about it subsequently. So growth is volume-less, broad-based, And it's not price-less to, you know, to that point around. Overall, contribution was $130 crore, up 43% against the revenue, which grew 35%. So profitability has been improving overall for the platform. We continue to, on a unique economy perspective, we continue to grow profitably. The frequency growth in revenue for overall business was 7% in Q1 over Q4, and now it is 14% Q2 over Q1. Margin is at 93.3%, up 11 basic points. The interesting stat here is that every incremental rupee of revenue this year came with about 22% contribution margin. That is how you see the growth in margin. So, frequently we held contribution margin even if emerging became much bigger share of the mix. So, contribution margin is growing faster than revenue, and that you can see overall operating leverage in the first line of the P&M. Adjusted EBITDA was at the 14.2 crore margin at 2.1% against 0.9% a year ago, and 1.5% last quarter. So it's improved growth years, on average, on year and frequently, and in both core and emerging. Adjusted EBITDA excludes other income entirely.

Tanmay Kumar, CFO

So this improvement is all operating. Pat at, you know, $60 million against the loss of 20 crores a year ago is about $21 crore swing.

Speaker 7

So here's the pat walk. The $21 crore swing, I would break into three parts, about $10 crore coming from higher adjusted debitter, which is half six, about $5 crore coming from lower reserve costs. And about 5.5 crores from higher other income from higher ITU funds. Everything is next to about 4 million. So the piece of charge now keeps falling as a share of revenue. It's under 4% from 6% a year ago. So 3 fourths of the pack improvement is operating. And yes, there is higher in other income due to stronger balance sheet post-ITU. And we have an effect of only half a quarter of... The stronger balance sheet post-IPU in the numbers for quarter two. Just a recap on the two segments. Core is the shipping, it drives profits. In emerging, we have checkout and MarTech and Omnichannel, the compound growth. This quarter, Core was about 69% of revenue and emerging was about 31% up from 26% a year ago. So Core generates the profit. We deliberately reinvest part of it in emerging. That's the reinvestment choice we've been exercising. Core brings the merchant and the transaction, and emerging monetizes more of that relationship. This is critical as you think of this company five years ahead or ten years ahead. This is how we intend to continue building a compounding business. The core transaction per up 31% that's a volume growth in core. Is there any... About 460 crores. This was up 25 crores, like I mentioned before. The gap is market and mix. So, the cooler leads that we pass are true. And larger merchants are going more. That's a second. And thirdly, there are new categories like hyperlocal, which carry a little lower revenue for transactions. We have been trying new ways. Hyper market, super market, food, all of that we are starting. It's very early. New category in the fast lane. But for some time, we've been focusing on speed, same-day delivery, fast delivery, partners we've been ranking up. So all of that, I think we'll see a portion of that and we'll see more and more growth coming through. Now, the contribution margin... Of about 97 crore, up 25%, which is steady at 21.1. So we are investing a bit in cap. Frankly, as I've been saying from before, so long as our cap is back in just one year, it's a beneficial investment to do. And we are focusing on ramping up the overall merchant base. We've also been investing in experience centers in core. For that, we held the percentage and focusing on growth. I just said the return of about 59 crore, up 29%. That's faster than both revenue and contribution margin growth. Both margin at 12.8% against 12.4% and then you think the operating yield is coming in. So core is doing well at improving margin and it is self-funding the emerging value. We do not own a page, and that is the point here. We are career neutral. Every order goes to the network, best place to deliver a transaction. So, hey, I fix the partner, order by order, learning cost, speed, and performance as a PIN code, lane level, argue prediction, and at this intelligence. So no single network dependence, and we know things about stress networks, and that is why we went for the small market. So that is the point here. And then, you know, we are standing in hyperlocal, so demand for fast energy is now everywhere. Hyperlocal is a natural extension of the same platform, with two new use cases, like I briefly mentioned, retail stores and restaurants, and so on. So, multiple well-known brands that we started using, and also restaurants. AI is playing a role. You know, I'll talk to Radar, I'll talk to Analytics, which Radar optimizes the courier collection, and it's a wide spectrum. Essentially, the idea is to continue providing better access for the merchant and choosing the right network for every order where the value is. Radar is our AI-powered control tower. So, it continuously analyzes network data to find set lanes and zones by courier before they can affect the performance of the merchant. So, an example, let's say from some cities, let's say Chandigarh is with a state 79 pin code, let's say of 20, 30 years stress, but in the same percent of you are moving through them because what... What happens in this case is that a radar picks them up and then drives it courier by courier. So sellers use it in three ways. A dashboard showing which lane and pin codes are stressed. They use it for autoblock, so others are not assigned to a stressed courier. And a real-time radar occurs when they choose a courier in the ShipNow screen. So, Rada also sees the ILG strategy agent on the, you know, I'll talk to you in the next slide, very surfaces and exceptions that the seller should act on, right? So, these are network data, you know, that merchants should get, and we give it to them the seller. We moved the FitMocket platform to an authentic experience with an AI-embedded cross-sellers daily workflow. We have launched it in beta to about 1,000 odd users. So, an analytics agent sits alongside the dashboard, you know, seller asks in chat, and it drains into the numbers in a split screen, and instead of seller doing the analytics by hand, they get the insight. The idea is that they get the power in the hands of the merchant on what's happening to the business. Omni-channel grew 79% year-on-year this quarter on fairly healthy merchant additions. So as brands grow Omni-channel, the hardest problem is staying in stock on foot commerce. So we refinish dark stores through an appointment-based delivery, you know, booking slots from the brand's warehouse, match appeals with the loads on time. And we give them real time to visibility. Smaller brands do have a challenge. We talked about it last time. It's going very well, close to half of omnichannel is now getting driven through that list. And as you know, quick commerce is going very well. So this business will more and more get indexed to quick commerce, which continues to grow fast. And several well-known brands, you know, use it today. So, we move in our rebrand store to our store equipment center on time so that people will get it faster. So, that's the whole idea here. Martek is now rebranded as faster. It's 102% year-on-year and powers about 1.3 billion. of annualized G&D, about, that's about 11,200 crores. There are two legs, ads, which help machine sanitize and check-out, that comes with all shoppers. So what is interesting is that we are finding that the decision maker is the same within the organization, and this means more and more bundling selling or crop selling opportunity between the three, which means you should see We have seen this activity within market growing over time. Our guide to when here is the data, what's there, real delivery addresses, consumer persona, and we see the journey from click to delivery, so we can show merchants better work and real conversion of Lyft as one unified source. So, the upside is that fewer than 10% of our merchants use MarTech products today. So, it's a cross-fill opportunity, and increasingly, it's also becoming an acquisition engine in its own life. So, every MarTech product runs on data from its own deliveries, and that's why it converts better and continues to grow, so we will have.

Tanmay Kumar, CFO

Here are financials from the emerging segment.

Speaker 7

The emerging revenue was about 2.10 crores. It was up 61% and 18% sequentially. The 32 crores we added this quarter is the largest sequential addition in the last six quarters. So, Martek up 102%, Omni channel up 79%, Crosswater 2 is up 9%. We continue to invest in product, brand, and capability, and we keep adding merchants across Martek and Omni channel. Contribution margin is about 33 crore, two and a half times a year, whatever a year ago. Margin is 15.4% against 10% with every subvertical utility. So, frequently it is in a similar range, because Ami channel is a growing share, and it is investing in a virtualized network now that keeps the margin. It's slightly lower in the shorter term, but this can really be a big advantage. Adjusted EBITDA margin improves by more than 10 percentage points to minus 21% from minus 31%. In last quarter to this quarter also is a 3 percentage point improvement, just in one quarter. That's the first term. That number is also interesting. We are scaling emerging and improving its economies at the same time. 9.3% of core merchants now use emerging products, up 140 basic points year-on-year. Merchants serve through emerging views, 75% to 62,000+, as merchants adopt Omnicannel, Martech, and CropBorder. And the funnel now runs both ways, about 17,000 to 1,300 new merchants joined us through emerging this quarter against 5,400 a year ago. So, another interesting fact which is not here is that Martech has close to 20,000 merchants, checkout customers engaged, versus our overall base of 226,000 and that tells you the opportunity. As you know, Discovery is moving from Google to AI Assistant, so now there is no second page. So that makes AI visibility the new SEO. Atlas tracks how brands across, appear across activities, NNI, Cloud, Perplexity, and Google to AI, etc. And it finds that and helps fix them. So how it runs is, you go to the dashboard, you run the brand scan live against a competitor or a similar product, then walk through the prompts and the gaps that it throws. It throws out where you are mentioned, where others are mentioned, where you are not. The system gives you an AI visibility score, a mention rate, a share of voice, and a citation rate. The prompt gaps and the questions where the brand does not show up at all. And the citations, which size is the AI coating. And then it gives you a way to fix. So there is a tool we call Hydra, our built-in AI writer. It creates content to fill in the gaps through a set of ready-to-run agents. So that's this product. Now, this one is, you know, term-driven retargeting, essentially. So, the average D2C website converts 1-2% of the business. Now, recovering a random card can, you know, can convert 5-10% of them, but building those journeys is very hard. So, now, you know, We made it easy, it's an existing product, but what's become easier is that now a motion just describes it only in a chat, for example, and it covers abandoned costs and, you know, drive repeat. So generally it's created through the chat commands and then it runs it so, you know, it can run it across WhatsApp or email or SMS push. We've also, on the checkout, we've also, you know, there's a feature addition where the merchant can share payment links, a shopper can send the payment to a family or a friend, so a daughter can shop and her parent can pay and, you know, the order can complete still on our own. It helps younger drivers and less tech-saving users and so on. So, similarly, there is discount magic, so, you know, the best price. It is now, you know, it is now on the product page, not just on the checkout, so it just lets add to cars and buy now. So, overall, you know, in summary of the numbers, score about 59 crores at adjacent debita, emerging at negative 44 crores, group debita of 49 crores. The cost between contribution margin and investor debita fell as a percentage of revenue in both segments. Like I mentioned before, the IPO happened towards the third week of August, so the finance cost reduction due to the payment of the loan as well as the increased other income reflect impact of half a quarter over here. We, then we, against a negative 20 crores, we delivered a year break even this quarter, and for the overall first half now, our revenue is up 34%, core is up 24%, and emerging is up 65%, but it's already, that's the product picture. The economics continue to improve, and so these numbers give us the confidence that... We are largely on track to deliver on the vision and the roadmap that we had on the VPN term. So that is, we are very, very excited on how directly the business is growing. That is all I have to share over here in terms of oral numbers.

Tanmay Kumar, CFO

I will hand back for question and answer now.

Operator

Thank you very much, sir. We will now open the floor for the Q&A session. To ask a question, participants connected on audio call may press star followed by one on their touchtone keypad. If you wish to withdraw yourself from the question queue, you may press star followed by two. Participants connected on webinar may click on a raise hand option. We request participants to keep their questions pleased to allow us to accommodate as many participants as possible. We will wait for a moment while the question queue assembles. The first question is from Sachin Salgauga. Kindly introduce yourself and proceed with the questions.

Sachin Salgauga, Analyst — Wofa Securities

Hi, thank you for the opportunity. This is Sachin Salgauga from Wofa Securities. I have two questions. First question regarding margins for core business. We did see contribution margin largely constant at 21.1 for last four quarters, and EBITDA margin also almost in the same range. And Tharma, I do understand your point that you guys are investing, so CAC is a bit high. The question out here is, you know, are these steady-state margins? When should we start seeing improvement in margins and, you know, how to think about where margins stabilize? And let me actually go through the second question also right now. We read in media about your strategy on food delivery. I was trying to understand, if you could elaborate, what are you guys trying to do on a food delivery point of view? That would be helpful. Thank you.

Speaker 7

Thank you, Sachin. This is Thail. Thank you for both the questions. See, on the core side, you are right that, you know, there is investment again in AI for experience as well as in acquiring more customers, you know, at large. And obviously, you know, the reality of the business is kind of evolving, and we want to do the right thing in the long run for the business. That being said, the margins are obviously slightly improving in the shorter term, but in the longer run, I do see them improving because it's the nature of the way the team is constructed. Essentially, the design of the business has fixed people, more or less, who are working towards selling, acquiring, servicing, building, engineering, and so on. And then we've got growth in customers as well as in R2, which leads to higher margins downstream. So I think that rhythm has not changed or is not going to change. So in the longer run, automatically, you know, the margin should improve. On the second question, sorry, on food, so basically, we stand for allowing anybody who runs their business to be able to go and reach their customers directly and be able to sell and grow their business, right? And if you've been following our kind of overall vision to be able to kind of reach larger markets, we have been talking about different categories that could use our stack. As part of that, one of the categories we've been trying is restaurants, where potentially they're using our faster marketing stack to run Facebook ads. They're using our checkout to be able to convert sort of visitors on their website. And then finally, they're using the hyper-local delivery, you know, integration to be able to deliver from their store. So essentially, that's a new kind of category we are trying out amongst others at Google. Hope that answers your question, Sachin. It does.

Sachin Salgauga, Analyst — Wofa Securities

Just a follow-up out here. Eternal continues to be one of your key shareholders. Is there at some level a conflict what you are generally seeing with Eternal, or it doesn't necessarily matter because it's more a passive investor out there?

Speaker 7

I don't think there's any conflict. I mean, Eternal is a financial investor, first of all. And secondly, like... We aren't in the marketplace business, right? We're simply giving that business tool. For example, restaurants also have PTL and cargo needs. They also have advertising and WhatsApp needs. They also have voice and AI needs. So I think you've got to think of it from that perspective. So I don't think it's not really an access to application at all.

Sachin Salgauga, Analyst — Wofa Securities

Got it very clear. Sahil, when you said in the near term, margins in the core business might be here and in the medium term, it will improve. Is it fair to say that for a couple of quarters, it could be largely range-bound because you continue to make these investments in AM?

Speaker 7

Sachin, it's hard to give you a future timeline loss. I mean, I think I'm going back to saying the way the business runs is that, right? And then, like I said, few quarters, you know, the realities of where we need to invest, you know, where is the competition going, all of those things, you know, can make our decisions, you know, difficult to kind of give you a prediction on. So, for some direction, nothing is changing, all right? Just to sum it up. Nothing is changing. There is... As our goal is concerned, there is far greater operating leverage opportunity on the overall EBITDA, and we've spoken market before, and that we don't see any change there, and there is a smaller operating leverage in the contribution margin. So that's how the structure of the PNX cells is, or the way it is, and that we don't see a change here. I mean, we're just speaking a quarter here, essentially. So if you see it in medium term, I don't see any, our, you're not seeing much different in our... You know, how the business is right. Great.

Tanmay Kumar, CFO

Thank you, and all the best. Thank you, Dr. Kim.

Operator

Thank you. We'll take the next question from Deila Desai. Please introduce yourself and proceed to the questions.

Della Desai, Analyst

Hi. Thanks for the opportunity. Good evening, everyone. So my first question is, you know, the call volumes have grown 31% year-on-year. Revenue grew 25, which implies like a 4% to 5% decline in realizations. And the carriers earlier had mentioned that they've passed through the fuel wage and the cost inflation in Q2. So how should we think about your realization trend against that backdrop? And how are these carrier costs being passed through to merchants? If you could just shed light there. And I have two more questions. Maybe I can follow it up after your answer.

Speaker 7

So, Della, hi. This is Sahil. Thanks for the question. So, your question is, like, you know, what's happening on the yield or whatever, right? So, look, first of all, the transactions is what, you know, we gain from the market. That's the way we observe our business because price and margin is a downstream outcome. Price, I think, is also a function of, you know, how many kinds of customers are making up a cohort or which customers grew more in a certain period, and, you know, that leads to some level of changes there. So, for example, if a larger customer grew more, right, the price may look like it's changed along with the volume in that particular period. So, there is some of that effect. There's a mixed effect in the base along with, obviously, some amount of changes. Fuel pricing, et cetera, did get passed on, more or less. Like I said, we don't absorb it, and that shows up in the contribution margin, right? So while you see that 31% on transactions and 25% on growth on revenue, you'll see, like, similar growth on absolute contribution as well. So purely the margins are held, you know, while this kind of play between transactions and revenue continues to pan out, this is a mix of stuff.

Della Desai, Analyst

So what you're saying is the top five customers or the top ten customers have grown faster, which is why the decline in ease. Is that what you're saying? So how the salience moved on these customers?

Speaker 7

I'm not saying that. I'm saying that customers, data, and mix can be yielding different. Got it. Because of their size, right? So you could say that you've had larger customers generally doing better, or you've added more mid-plus larger customers, and hence you're reflecting in the mix in a certain way. Some percentage points from there. Some percentage points also from the carrier mix. I think it's very hard to try and give you an exact walk, you know, because it kind of fluctuates with a mix. I'm simply telling you those variables that cause it. I don't think you should infer at all. Got it. We are doing better, but yeah, there are bigger customers doing slightly better this quarter year.

Della Desai, Analyst

Got it. So that's helpful. My second question was on MarTech. You mentioned that 10% of shift circuits merchants currently use MarTech products. So what could possibly be, you know, the constraints to adoption for the larger cohort? And in that context, could you also shed some light on the competitive intensity that we're seeing in MarTech especially checkout?

Speaker 7

Yes. Thanks. So, I think the reason we are at 10% is not because we have an adoption barrier. We are at 10% because we started this business from 0% three years ago, right? So, we are practically doing adoption, which means that the penetration would only continue increasing. From an opportunity set perspective, obviously, there's several tens of thousands of websites which are running sort of the non-new age checkout, let's call them, which is the majority of the checkout in the website market in India today, irrespective of the platform. And from a competition lens, yes, there is competition. You know, it's an exciting market. There are other players out there who are, you know, going after the same pie. And obviously, you know, ShipRocket continues to try and win this as a full stack offering using our intelligence and trust with the shipping and so on. So that's kind of the way we are going at it. And we are going after our distribution from shipping and from other products in a big way. So that's in some ways, you know, sitting on capture. So, yeah, there's a lot of headroom. You know, I look at it as the opposite, like, it's only 10% done, and every month we are adding, like, tons of customers. It is, you know, we are growing very rapidly, right? We've almost moved and doubled, right, in this business over the last couple of years, and continue to grow at a very, very fast clip, and continue to also be able to demonstrate growing take rates as we are growing in the... In the G&B, showing that, you know, we are able to go.

Operator

Got it. So I just want to squeeze in one last question for you to interrupt you, ma'am. Ma'am, there are other participants. Sure. I'll come back. Thank you so much, ma'am. A request to all the participants to kindly limit their questions to only two per participant. Should you have a follow-up question, please rejoin the queue. We'll take the next question from the line of Avinash Sharma from JM Financial. Please go ahead.

Avinash Sharma, Analyst — JM Financial

Hi, team. Thanks for the opportunity. Am I on you? Yeah. Yeah. So I have three sets of questions. So one of the three players in its training got highlighted their increased focus on the D2C market. And I presume this will be one of our top supply partners. So how does this impact Shiprocket and the risk associated with it given that we rely on them and they're targeting what was our key focus area in the first place?

Speaker 7

Okay. Okay. So, thanks. Thanks, Abhinash. Sorry, Avnish. Thanks, Kyle. Yeah. So, look, I think the, you know, if you think about it, a large part of, I would say more than 90% of our business is G2C, right? Because we hate the category and we're trying to build a direct to-end solution. Now, this is a high yield category because shipping here is not just a cost leader. It's an experience builder. It's a way, you know, small merchants reach out to consumers fan in here. So, we need the best shipping provider and best experience to do it. I think from the carrier perspective, there's a high yield category, and if you map the whole market, you know, there's larger, very large UTC, and then there's like a long tail, and then there's everyone in between. So I think we are concentrated in some way towards slightly different parts of the market. That being said, our offering doesn't change based on what our suppliers would like to do, right? Our value cost and the fact that we are able to build solely for this segment and be able to offer them marketing, checkout, shipping, all of it in a box, you know, connected way, continues to be how we compound, right? You know, we, like if we plan the overall market and look at the growth rate of e-commerce, you look at the growth rate of quick commerce and look at the growth rate of B2C as a market. And then you look at shift profit growth rate in the last, you know, couple of quarters of H1. Sequentially, you'll get a fair idea of, you know, how this is affecting, if anything at all, in the overall sense. I hope that's an answer, Anish.

Avinash Sharma, Analyst — JM Financial

Understood. And my second question was, last quarter to my question was seasonarity. Management highlighted that Q3 is a seasonally weak quarter. I want to understand when we save Fusional Week, is it in terms of growth or is it in terms of margins? So I understand that D2C bands might push sales through the marketplaces during the festive and hence could be impacting growth. So how should we see on the margins going forward in the Fusional Week quarter?

Speaker 7

This should be no change, Abilish. It's just lower volume. That's it. So you will see it last year, you will see it the year before you will see it this year. It's not us. It's the way, like, as you rightly described, in this quarter, large brands and a lot of our brands actually decide to either not sell aggressively on the GDP channel or they start pushing the inventory into marketplace and the marketplace marketing dollars are, you know, at the all-time high. So, brands always pull out of PPP for like a month or so, and that ends up hurting the quarter a little bit. But it's not in terms of margin or anything. It's at low volume, that's all. Yeah. So, I mean, here and here, you should see the range of damage. We just talk more.

Avinash Sharma, Analyst — JM Financial

Understood, understood. And lastly on, so emerging Maristians improved around 1000 WIBs, but the absolute cost is still growing. Sorry, sir.

Operator

I'm sorry to interrupt you, sir. I would request you to kindly rejoin the Q4 policy. There are others who are waiting for that. Sure. Thank you. We'll take the next question from Garima Mishra. Kindly introduce yourself and proceed with the questions, ma'am. So, hi, am I audible?

Garima Mishra, Analyst — Kotak Securities

Yes, you are. All right. Thank you so much for the opportunity. My questions were more on the emerging business. Tanmay, you did mention in the presentation that you've been adding an increasing amount of revenue on a quarterly basis in this particular segment. So let's say, you know, the 30 plus crores that have been added sequentially, is this a number that is sustainable? This is a number that can just keep going up given the traction you're seeing in some of the sub-segments.

Speaker 7

The interesting part is that if you look at, let me just break this, right, in terms of what is driving, right? So, let me parse a bit, check out, and then tie a Martix suite. Now, on the Martix suite, it is grown at 102%. The interesting reason why we see this growth rate continue is that if you think of a decision maker for a marketing suite, the person who's making a decision for the checkout is the same who will take the decision for the ads and for the engaged remarketing. And we are seeing more and more of these products selling, right? So the momentum will continue. That is one, and the fact that, you know, we've only sold to 20,000 out of a pretty large base. I also wanted to point out what market is that. On ground, and this is someone else asked this question, and I would add here that we do find that our product has much superior weight as it's backed by, you know, visibility of the actual data, et cetera. So, you know, in terms of anonymous shoppers, in terms of address, they're like 10-20% better than what we see across the market. So, I think this is, we are a strong proposition there, and we continue. The second is, on the omnichannel, I think rising on the rates of the quick commerce growth, like we mentioned, and that will, and that we've just begun to be frightened, right? It's a very early year. So, on both the key growth drivers, there is a lot of confidence that you should see sustained growth. If I work in YouTube. Yeah, yeah, yeah. All right.

Garima Mishra, Analyst — Kotak Securities

That is very clear. Second question is on, let's say, margin for both the segments. Now, if I see the core business particularly, right, you will see at least this quarter the way I compute simply contribution minus EBITDA gives you the fixed cost of the business. That fixed cost itself is up from maybe 19% on a viable basis. And of course, we don't have too much quarterly history here. But you think there is potential for this fixed cost growth at least to sort of keep coming off big time, particularly for the core business?

Speaker 7

Yes. I mean, with scale, clearly, you shouldn't see the growth in the overhead cost is going to be much lower versus the growth in revenue. So, that answer is a straight yes, very much, on the call for business P&L.

Garima Mishra, Analyst — Kotak Securities

Understood. That's the question I have.

Operator

Thank you so much. Thank you. We'll take the next question from Kunal Thunbi. Please introduce yourself and proceed to the questions.

Kunal Thunbi, Analyst — NMT Advisors

Hey, hi. Thanks. This is Kunal from NMT Advisors. I had a few questions. First of all, congrats on good side of numbers. Now, one question was on power merchants. So, we see this number, you know, it has been slightly, you know, stagnant or re-growing in recent times. If you can share with us, how do one think about these power merchants and the growth from a longer term perspective? And have we reached the plateau or it is something that we are not able to reach through? The second question was on MarTech, like, and even, you know, the Omni Channel business. On MarTech, we saw, like, last quarter the growth run rate was closer to 200%, and it is 100% now. Like, is it, like, which number is, you know, if there's a base that has caught up, like, how do we think about the growth on MarTech from a longer term perspective and also from a medium term perspective, because as you said, the penetration is much lower. Like, is, like, you know, that was the second question, and Omni Channel, the question was around unit economics. We understand, like, in the presentation, you did explain, you know, what we are doing in Omni Channel. If you can help us understand the unit economics, who pays us, you know, what is the role of, say, of LinkedIn and Zepto, like, are they paying us or they are not paying us? Like, if you can just run through that business in slightly more detail along with, you know, some unit economics indications, because, like, will it be better margin business? Because smart tech, we understand, it can theoretically be even higher margin than the core business at some stage. How do one think about the omni-channel business, omni-business, you know, from a longer term perspective? Thanks.

Speaker 7

So, yeah, so power, there are two interesting things happening. One is that you see that while we have been consistently adding to the funnel, which is, you know, in terms of growth in the count of oral mortals we have, you would also notice that the R2 isn't ending up significantly. Now, I've got... So, that's what we influence, right? So, we add merchants, and as the business of the merchants grow, they become power, right? So, yes, there was a fluctuation. I think, I don't know if it could be one quarter, two quarter, or whatever, for a very, very short period. Because we are looking at, you know, trading 12 months numbers, you could, you may not see a effective power, but I think the entire funnel growing, the fact that the RP is growing, the power count, you will see it ramping up. That is how we've seen this before. So this is, we are going to continue. Number two on the... On the overall checkout market, yes, there is a little bit on the basis and so on, of a very small base and so on, but largely, you know, the kind of growth that you're seeing now is something that we see, it's something that, you know, It's not difficult to sustain, right? So that's, in the market, throughout the omni-canal, omni-canal, our customer is the merchant. Right? It's not, we're not monetizing from the quick commerce process. So, our leader of the company is very different. So, this is Sahil Ikunal, just to kind of share what we do there. Basically, we work with VTC brands who need slotted deliveries into certain quick commerce outputs, and we do integrations with their CO system. So, the brands pay us for a consolidated on-time appointment delivery, And we are able to hit SLAs of, you know, 97 to 97%, which are the best in the market, which continues to give us a very rapid business, right? So it's our same, like, G2C customers who we were doing last mile in their websites for and then started doing checkouts and other things for them. Now it is their kind of quick commerce channel fulfillment replenishment, which is becoming a big part because quick commerce continues to have high changes. You know, I think like a third, maybe, I'm guessing is D2C, and that is growing as a share. Quick commerce is growing, and hence the need for sort of digital replenishment and reconciliation and kind of integration with the marketplace so that everyone is more efficient. That is sort of the proposition. So the margins are indexed to, you know, what we are able to, what we have to pay our suppliers to move the goods and what the brand is paying us. So they are healthy margins, you know, similar to us, other logistics-style businesses.

Kunal Thunbi, Analyst — NMT Advisors

Very clear. So basically, in this business, one should expect that, you know, the trajectory in terms of profitability and, you know, the way you charge will be similar to what you do in this call. Yes, sir. Okay. Can you also talk more about the power merchants? I'm not able to understand because, like, I understand that you're, you know, adding a lot of merchants, but why should that lead to our power merchants kind of, you know, degrowing? How do one read it? Is it like too much reading into it? Or like, I don't get still, you know, what's the reason for that big growth?

Speaker 7

So Kunal, I think Tanmay G.C. tried to explain this. Basically, here's how we run our company, right? We want to add more paying customers first, correct? Because as they become paying customers, they grow. And as they grow, they become power merchants, they become large merchants and so on. Now, in periods where the market goes to rapid growth. The growth of our cohort itself will create more power merchants. In periods where the market is like, you know, all the merchants are going through different cycles, our base becomes bigger, bigger, bigger. In certain periods, you might see that customers, you know, for example, if a company focuses heavily on acquiring new customers, and all of their marketing dollars are going towards getting new customers into the base. I'm building my base to be able to then funnel them up. Over the quarter, as some of these newly acquired customers become larger, many of them will end up converting into power merchants. So if you think over three years, our paying active merchant base has gone from, I think, like 1.5 lakh, 1.4 lakh, something like that, to now 2.2, 2.3 lakh this quarter. So the base has gotten added now, right, in the last 18 months. And now people from here will graduate up into becoming power merchants. Other than that, you can look at average R2 and total customers. That's another way to look at what's happening, because as you've rolled out multiple emerging businesses, multiple units, there's multiple funnels happening at the same time. So you have to take a slightly longer term drive into this, but in no way will I guide you to say that it is capped or anything. It's not like that. It's a matter of time, right? As people graduate and they grow, more people will be in the power bucket or whatever, right? As the overall market.

Kunal Thunbi, Analyst — NMT Advisors

Sure. And like Martek, like as Damna said, this kind of runway is...

Operator

I'm sorry to interrupt you, sir, but this will be the last question for today. Thank you so much, sir. Ladies and gentlemen, that was the last question for today's call. On behalf of Shiprocket, that concludes the Q2FY27 earnings conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.