GuruFocus -
- Consolidated Revenue from Operations: INR348 crore, 18% YoY growth.
- Collections from Customers: INR356 crore, 6% YoY growth.
- Deferred Revenue: INR1,483 crore, 19% YoY growth.
- Unique Business Inquiries: 28 million, 14% YoY growth.
- Total Paying Suppliers: 2,18,000.
- Net Billing for Busy Infotech: INR17.1 crore, 17% YoY growth.
- Busy Infotech Revenue from Operations: INR15.3 crore, 19% YoY growth.
- Busy Infotech Deferred Revenue: INR53.3 crore, 40% YoY growth.
- Busy Infotech Net Profit: INR2.5 crore.
- Standalone Revenue from Operations: INR332 crore, 18% YoY growth.
- Standalone EBITDA: INR120 crore, 36% margin.
- Consolidated Net Profit: INR135 crore.
- Consolidated Cash Generated from Operations: INR103 crore.
- Consolidated Cash and Treasury Balance: INR2,449 crore as of September 30, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IndiaMART InterMESH Ltd (BOM:542726) reported a consolidated revenue from operations of INR348 crore for Q2 FY2025, marking an 18% year-on-year growth.
- The company saw a 14% year-on-year increase in unique business inquiries, reaching 28 million.
- Deferred revenue grew by 19% year-on-year to INR1,483 crore, indicating strong future revenue potential.
- The platinum and gold customer base, which constitutes about 50% of the customer base and 75% of revenue, continues to have very low churn and remains stable.
- Busy Infotech, a subsidiary, reported a 19% year-on-year growth in revenue from operations, with a 40% increase in deferred revenue.
- Collections growth slowed significantly to 5% year-on-year for the standalone business, attributed to high churn in the silver customer segment.
- The company is experiencing elevated churn rates, particularly in the silver monthly category, which remains a persistent issue.
- Despite efforts, the net addition of paying suppliers remains low, with only 2,400 new customers added this quarter.
- Traffic growth is flattish, and total business inquiries delivered decreased by 7%, raising concerns about engagement levels.
- There are execution challenges in sales and customer acquisition, which have impacted collection growth and need structural fixes.
A: Dinesh Agarwal, CEO, explained that the slowdown in collections growth was unexpected and attributed it to execution issues. He believes this is a one-off situation and expects to bounce back to double-digit growth. However, until structural issues are resolved, collections growth may remain between 10% and 15%.
Q: Can you provide insights into the proportion of collections from silver, gold, and platinum customers?
A: Dinesh Agarwal stated that gold and platinum customers contribute about 50% of the customer base and 75% of the revenue. Although specific collection data is not publicly released, it is assumed that collections from gold and platinum customers are between 70% and 80%.
Q: What are the current churn rates across different customer tiers, and have there been any changes this quarter?
A: Dinesh Agarwal noted that churn rates have remained stable, with platinum and gold customers experiencing about 1% churn, silver annual at 4%, and silver monthly at 6% to 7%. There has been a slight improvement, but it is not significant enough to report.
Q: Given the challenges in collections and churn, are there plans to increase advertising and promotion (A&P) spending?
A: Dinesh Agarwal mentioned that they are considering increasing A&P spending and will provide updates once plans are finalized.
Q: How is IndiaMART addressing the competitive intensity from companies like Just Dial and TradeIndia?
A: Dinesh Agarwal acknowledged the competition but noted that IndiaMART has not seen significant impact from these companies. He emphasized that IndiaMART remains focused on its growth strategy and is confident in its market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.