Brainbees Solutions Ltd (NSE: FIRSTCRY) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Anish Arora — Investor Relations
Supam Maheshwari — Managing Director, Chief Executive Officer
Gautam Sharma — Group Chief Financial Officer
Analysts:
Garima — Analyst
Sheela — Analyst
Tejpal — Analyst
Anamitra — Analyst
Sachin Salgaonkar — Analyst
Ankit — Analyst
Presentation:
Anish Arora — Investor Relations
Good evening, everyone. Welcome to Brainbee Solutions Limited Q2 and H1 FY25 earnings call. This is Anish Arora and I have with me Mr. Supam Maheshwari, Managing Director and CEO of the company, and Mr. Gautam Sharma, Group Chief Financial Officer of the company. Kindly note that this call is meant for analysts and investors of the company. We wish to highlight that the call is being recorded and by participating in this event you consent to such recording, distribution and publication. All participants have been muted as per the default mode and participants will be unmuted once we open the Q&A forum for the members to ask questions after the presentation from the management concludes, we’ll be covering the presentation in the beginning of the call and will thereafter open for the Q&A forum. We would like to point that some of the statements made in today’s call may be forward looking in nature and the disclaimer to this effect has been included in the investor presentation shared with you. With this I request Mr. Supam Maheshwari to take it over.
Supam Maheshwari — Managing Director, Chief Executive Officer
Good evening, friends. First of all, would like to say Happy Children’s Day to all of you who have kids or or have kids in your families or near ones, dear ones. So Happy Children’s Day. Welcome again to our second quarter’s earnings call. So we’ll just go through a few slides that this presentation has been uploaded. You may have already seen it, but we’ll just go through it to take you through our performance for the quarter two as well as for the first half of the 25th fiscal year. Some of the slides might be you might find it repetitive, but it is for the reason that some of our friends who have joined first time over this call just to give them a little bit of a feel of our business.
Otherwise, we’ll stick to our quarter two performance. These are the five broad segments that we will be covering. The fifth one is more for our extra information. So we’ll be covering the first for the quarter two snapshot Business Overview, Segmental Performance and Financial Summary. On the quarter two financial performance snapshot. Yeah, so if you look at it we have continued to deliver growth momentum with improved profitability and overall if you will see our annual unique transacting customers have improved increased from 16.5% from September 23rd to September 24th ending this is and this as well from a GMV window it’s increase of 21% to INR2528 crores for quarter two, net revenue from operations at a console level is around close to INR1,904 crores which is 26% growth over quarter two of last year. Overall, while our growth has been fairly robust, all of this has also been able to deliver bottom line performance. Our console adjusted EBITDA has delivered around INR80 crore and this has been 66% increase over our last year quarter two and India Multi channel which is our core business which is the largest segment business segment that we have has delivered 38% increase in adjusted EBITDA which is yielding to INR110 crore rupees of adjusted EBITDA over quarter two, 38% over quarter two last year. This has also resulted in overall cash profit after tax to INR27.9 crores which is a 209% increase over the last quarter. The same quarter last year of Q2 FY ’24. So with that would like to sort of give you a brief snapshot segment wise. If you look at overall at a console level, I just mentioned we have grown 26% year on year revenue growth for the consolidated business for Q2. If you look at our segment wise performance it’s right here, India Multi channel grew at 19% Q2 same period international grew 25% which is Middle East operation. Globalbees D2C foray has grown 55% and we’ll speak about it during the segmental performance as well.
Both the top line performance as well as the bottom-line performance, how it has stacked up and others which is primarily our education business has also demonstrated a very significant growth of 44% on quarter two year on year. So all our four segments business segment continue to demonstrate meaningful growth and in the subsequent slide you will be able to see our bottom-line performance as well. Moving further, this is just a summary of what all I have spoken about. This is more for people who may probably read this presentation later. It is also uploaded on the stock exchange file. So it’s just a summary of what I’ve just spoken about of overall console growth of 26% with an adjusted EBITDA growth of 66% year on year and a cash profit growth of 209% for the quarter over the last same quarter last year. India multi-channel grew 38% on adjusted EBITDA and 19% on revenue growth.
International grew 25% year on year with adjusted EBITDA growth of lesser losses which is 18.9%, 390 basis point we have improved year on year for quarter two from 22.8% to 18.9%. GlobalBees also delivered a strong performance of 55% and 154% growth in adjusted EBITDA over a same quarter. So overall if you look at it, the performance in the profitability at a console level has been led by a gross margin expansion of 101 bps year on year from at a console level and a bit of an operating leverage leading to 4.2% adjusted EBITDA margin for quarter two over from 3.2% in the last year quarter two. So that’s the overall sort of a summary of our consolidated performance even segment wise that you have been able to see at a meta level. We’ll go further down, requesting Anish to change the slide please. Yeah, so we’ll go through the business review some of these sections. Some of these points might be repetitive for some of you who have been in our earlier calls or were there in our roadshows or prior, but for the new friends who have joined this call first time, I’ll just give a brief summary and then quickly rush to the segmental performance.
So this is our overall ecosystem for FirstCry platform we are driving fundamental parenting needs of shopping, content, community and education, built a capability around data technology, deep understanding for customers, array of home brands and great partnership with 7,000 plus third party brands and we have deepened our modes with manufacturing as well as logistics and supply chain and manifested all these capabilities that we have built in form of four business segments which is India Multi Channel which is our largest core business segment which constitute modern stores and online platform and general retail trade distribution and then second is International which is our Middle East for it completely online as of quarter two. And the third is GlobalBees which is House of brands and fourth is our others which we call others in our segmental performance but essentially it is education, preschool, business. These are the four segments that just wanted to refresh.
Moving further these are this is a data point that as of quarter two our online GMV split and offline GMV split in India multi-channel has been 77% versus 23%. We have added as we discussed 9.4 million annual unit transacting customers and total store count that we have including all Modern Stores is 1,124 as of 30th September of this year. Our community continues to do very well and overall, we have close to now out of 1,124; 498 FirstCry and Babyhug COCO stores as well. So our overall approach of multi-channel which is online, offline and distribution continues to do very well where customers can purchase in a multi-channel way, can shop at our own store as well as can research online and can do either way vice versa as well where they get the benefit of doing touch and feel on our stores as well. Moving further this is our sort of overall breadth of our product range that we are addressing. All kinds of babies and kids need including expecting mothers right from her when she gets pregnant to up to a 12-year age kid. We continue to operate across 1.8 million square feet [Phonetic] offering from almost close to 7,900 brands on our entire platform. We have one of the widest and the most curated product range that we have and within that we have also built a very robust portfolio of home brands.
If you will recall some of you that we had in our RHP Redseer Industry report, made a statement around we BabyHug which is one of our oldest and the largest home brand is incidentally also has been the largest mothers, baby and kids multi category product brand in terms of GMV and also and also it has been in terms of the product assortment largest in Asia Pacific excluding China. We continue to believe that it has. We have continued to maintain that leadership from FY ’24 to quarter two September ending September 24th, and as I mentioned BabyHug is available across we have now 307 BabyHug COCO stores as well as of September 30th.
This is for our international foray. This is very important to sort of we wanted to highlight While India we all know is the world’s capital of mothers, babies and kids, we make 25, 26 million babies a year. While international market in the UAE, UAE and KSA has a very meaningful birth rate as well as spend per child is meaningfully higher than India and overall childcare market is per capita sort of spend as well as market size is very meaningful for us and our AOV in international business is almost roughly 3.9 times that of AOV of India business and we continue to successfully replicate our India playbook to our international Middle east market UAE and KSA. With that I come to the last segment on GlobalBees. We continue to operate amongst our four broad categories which is Home utilities, Premium appliances, Fashion lifestyle and home personal care and continue to deliver superior performance through our GlobalBees platform that we have built in terms of getting customer insights and able to build products as per the new developments that we are able to get insights from not just the third party market platforms but also from the social sort of fabric of the country that we are able to get insights and replicate that into the products and therefore being able to drive our growth. So with all of that I think numbers will speak more than some of the subjective points that we have talked about. So I’ll hand over now Gautam to talk about the segmental performance across our all four business segments.
Gautam Sharma — Group Chief Financial Officer
Thanks, Supam. So we will now talk about the four business segments. The first one being the India Multi Channel business which is the core business segment for us. After that we’ll talk about the international business performance and then we will move on to the GlobalBees performance before we talk about the console performance for Q2 and H1. So this is for the India Multi Channel business. So if you see the AUT — so these are the, three important KPIs which are also disclosed in our prospectus that is annual unique transacting customers, orders, GMVs. You can see a very healthy growth in all the three important KPIs. AUTC grown by 16%, orders in Q2 has grown by 19% and so is GMV. GMV has grown by 21% in Q2 on a year-on-year basis. And for H1 it has grown by 19% on a year-on-year basis.
Next slide. So net revenue growth, the Q2 growth over the last year Q2 is 19% for the Indian multi-channel business and for the H1 the growth is 18%. This growth in Q1 was around 16%. So we are able to increase the growth rate for the India multi-channel business. Adjusted EBITDA. It’s improving year on year from 7.4% in Q2 FY ’24 we have reached to 8.6% in Q2 FY ’25 which is a 38% year on year growth. Similarly, if you talk about the H1 performance from 7.6% in H1 FY ’24, we have reached to 8.5% in H1 FY ’25 which represents a 31% year on year growth. Important thing to mention here is that generally if we talk about the last year Q2 performance, the margins, the EBITDA margins are slightly lower than the Q1 margins. However, given the strong growth and core focus on the improvement of margins, we were able to improve the gross margins in Q2 as well over Q1. This is about the international business again, the three important KPIs annual unique transacting customers GMV win orders. So while the growth in H1 clearly has an impact of the floods in UAE and the advancement of festivities, we were able to post a very healthy growth in all the three important KPIs in international business for Q2. Next slide revenue growth — so the revenue growth in Q2 FY ’24 over Q2 FY ’25, ’25 work FY ’24 is 25%. So from INR165 crores in Q2 FY ’24 we have reached to a revenue of INR208 crore in Q2 FY ’25. Similarly, for H1 FY ’24 which also has an impact of a lower growth in Q1, we were able to grow this by 16% on a year on a year basis.
EBITDA performance, it’s on a year-on-year basis this is clearly improving from 22.8% negative in Q2 FY ’24 we have brought this down to 18.9% in Q2 FY ’25. Similarly, from a negative 22.8% in H1 FY ’24 we were able to bring this down to negative 17.8% in H1 FY ’25. We move on to the GlobalBees performance. Very strong growth in GlobalBees. A 55% year on year growth in Q2. One of the important reason of this strong growth is also an advancement of some seasonal sales by the platforms on which the GlobalBees sell their products. So that was an advancement in September. Last year, it has happened in October. So we got the benefit of the advancement of seasonal sales. On a H1 basis, the growth is 41% year on year. EBITDA performance is it’s — it’s improving quarter on quarter and year on year from 1.2% in Q2 FY ’24. So it’s 2.5 times jump in EBITDA in Q2 FY ’25. So from 1.2% we have improved this to 2% in Q2 FY ’25. Similarly, if we talk about the H1 performance it has grown by 14.4 times from 0.2% in H1 FY ’24 we have taken the EBITDA to 1.7% in H1 FY ’25. Moving on to the next slide. So this is about the consol performance. So while we don’t have additional slide on the performance of education business, Supam talked about the growth in the education business which is classified in others. So the growth in revenue on a year-on-year basis is 46% and similarly the EBITDA if I talk about for H1 again this used to be somewhere around 16% in H1 FY ’24 which has now improved to 23% for H1 FY ’25. So there is a strong growth in all the business segment and a very good improvement in profitability as well in all the four business segments on a year-on-year basis.
This is the consol performance. We will start with the green box on the left-hand side. That’s basically the trend on the gross margins. Gross margins in Q2 it has improved by 100 basis points from 36.3% to 37.3%. And further for H1 it has improved from 36% to 37.5%. Similarly on the net revenue consol net revenue given the strong growth in all the business segments we were able to post a year-on-year growth of 26% in Q2 FY ’25. Similarly, for H1 FY ’25 we — we have posted a growth of 22% on a year-on-year basis. Consol EBITDA as well it’s improving every year from 3.2% in Q2 FY ’24 we have improved this by 100 basis point to 4.2% which is a growth of 66% on a year-on-year basis. Similarly, for H1 we have improved the EBITDA performance from 2.9% in H1 FY ’24 to 4.3% in H1 FY ’25. This ends our presentation. Anish over to you.
Anish Arora — Investor Relations
Thank you, Supam and Gautam. I would like to hand it over to Gautam back in case he wants to highlight say something before we move on to the Q&A forum.
Gautam Sharma — Group Chief Financial Officer
Yeah, so one of the important things which I would like to talk about is there is a recent search and seizure operation done by the GST authorities of in Maharashtra in our corporate office in Pune as well as the warehouse in Pune. We have given this information to the stock exchange. So, this started on 6th of November and this ended on 10th of November. On the findings — so the search and seizure was all about two points. One is the mismatch in 2B and 3, that is, what the vendor filed for us and what we show in our returns. So that’s a mismatch. And the GST, availability of GST credit for the IPO expenses which is attributable to the shares issued by the company.
So on this we have paid a total amount of INR1.74 crore to the GST authorities which includes the mismatch amount as well as the interest component for four years which is ’18-’19, ’19-’20 and ’20-’21 and ’22-’23. So these are the four years and necessary information in this regard has already been shared with the stock exchanges.
Questions and Answers:
Anish Arora
Thank you, Gautam. We can now open for the Q&A forum. [Operator Instructions] Again, we have first question from Garima. Garima [Phonetic] we will unmute you.
Garima
Yeah. Thank you so much for the opportunity and my first question is on GlobalBees. Exceptionally strong metrics both revenue as well as EBITDA, anything particular you want to call out here which worked well during the quarter. You did mention seasonality, but anything apart from that and any of the constituent companies here which have sort of delivered a great quarter.
Supam Maheshwari
So Garima, I will just take you down a little bit memory lane here. And I think this is a favorite question for all investors as well, that this industry has been probably painted by the Thrasio [Phonetic] sort of a — sort of a, I would say I won’t call it a play but it’s just a bad sort of a nomenclature. But look, I think India for us FirstCry itself is a great example that a business model like FirstCry doesn’t probably exist anywhere in the world. At least what we have learned during our roadshows as well. So, we have demonstrated what we have built and I think similarly GlobalBees with its consumer insights and ability to be able to innovate products based on those consumer insights which it gets from third party platforms as well as from social platforms converted into products is what it has resulted into, and then of course a great execution and great supply chain that we have built all of that has resulted into a great performance. While the performance has been extraordinarily good because of seasonality being advanced, but overall industry continues to grow at — if you look at our industry report which we had a couple of quarters back that Redseer had published, it is 30% plus. So we will strive our best our hard to ensure that we continue to beat that. So I think that’s where we are.
Gautam Sharma
On a full year basis. And just to add that the growth of Global bees for Q2 which is 55% is a complete organic growth.
Garima
Got it. Good to know. Thank you. Gautam, my second question is actually to you. So there’s this slide in the presentation which is reconciliation of loss profit after tax to cash profit after tax. Right. There are two-line items here. One is IndAS 116 cost and then a cash outflow for these rentals. If I was to look at this number for 1H FY ’25, should I just assume that your real rent is INR100 crores? You are booking INR119 crores in the P&L and hence you know your P&L is understated by let’s say INR19 odd crores.
Gautam Sharma
That’s the right interpretation, Garima.
Garima
All right. Okay, perfect. That answers my question. If I have anything else I will come back. Thank you so much.
Gautam Sharma
Thank you.
Operator
Thank you Garima. Up next we have question from Sheela [Phonetic].
Sheela
Hi, thanks for taking my questions. And Hi Supam. Hi Gautam. So, my question again was on GlobalBees. I understand there was seasonality this quarter but if you could just tell us how should we think about the growth rate, and which are the strong quarters in general for GlobalBees, going into future also, how should we think about it? And again, I think Garima also asked that question. Is there any particular category which stood out for us in this particular season or which has scaled up to a certain level where we would want to talk about it.
Supam Maheshwari
So Garima, I mean the season — so as I just alluded a couple of minutes back, the overall industry report states that the D2C sector and the categories that we are operating will continue to demonstrate a 30% plus CAGR for a few years. So we are in pretty much line with that on an annual basis. However, some quarters because of the festive season as GlobalBees operates and sells its products on a couple of third-party marketplaces and therefore does have an impact on seasonality or some of those sale periods and there are few of them, few of such sale period during the year. So it does have an impact. But on an annual basis, we should be able to be around what we just talked about as what industry report says.
Sheela
And with respect to the profitability, Supam. Is this going to — I mean we have delivered 2% EBITDA margin. So should we think of this to improve going ahead or again, this had some seasonality to it?
Supam Maheshwari
No, no, there is no — okay. So as some of our businesses are fairly, I would say not very mature. This is a three and a half year — three year plus just business three-year-old. We are in our fourth year of our operation. We started in May ’21. So, this has a very sort of a long life where we can continue to — and we will continue to strive hard to demonstrate both top line growth as well as bottom line expansion. It is just the beginning. I mean it just we have started.
Sheela
Okay, understood. Thank you.
Operator
Thank you. Sheela. The next question is from Sanidhya [Phonetic]. Sanidhya, you can go ahead.
Supam Maheshwari
I think she is probably logged out or something. Maybe you can start with someone else.
Operator
Sure. Next question from Tejpal [Phonetic]. Tejpal, please unmute yourself and ask the question.
Tejpal
Hi sir. Hello?
Supam Maheshwari
Yes, yes.
Tejpal
So sir my question is that from five years now where we are seeing ourselves in the Indian markets or as a company? What is the five-year plan? Where we are seeing in the revenue terms, in the profitability terms.
And the second question is that in the product line, what we are selling [Foreign Speech] in terms of the — what we are getting to the which age most?
Supam Maheshwari
Sorry I got your first question, but I did not get your second question.
Tejpal
Okay so. So in the age category where we are getting — till the 12-year-old age, but I just want to ask which age category we are catering to the most.
Supam Maheshwari
Okay, sure. So, the first questions answer Tejpal is actually we are operating in you know next four to five years our overall TAM will be close to $120 billion. So we have a significant headroom. Even in our India Multichannel core business, which is the largest and 14 years in sort of play. We are very small although we are the largest multi-channel, multi you know channel player in the mothers, baby and kids domain. But we are very, very small. So therefore, — in this India in childcare market itself will become a $64 billion in over next four years or five years. So therefore, I mean I would say it will take us, we will continue to compound all our top line across all four business segments — our other two businesses are fairly new, both international especially in that Saudi Arabia that’s a new business and GlobalBees I just spoke about is a three, three-and-a-half-year-old business. So, they’ll continue to grow. So from a growth perspective I think we should be able to see sustained growth because our TAM is fairly large as I just spoke about, and we are very small.
To answer your second question, the largest segment obviously our six to 12 business was launched just a few quarters back. So it will take us some time to actually build on that. So our large part of our business is zero to six because that’s how we started our business 14 years back. And are — So it will take us a bit of a time to be able to get to balance this as our cohorts gets built up over a period of time. So the focus right. Our large part of our business comes from zero to six both online and offline, while six to 12 will continue to build as those customers who are at five- or six-years old kids, they’ll continue to transact with us over a longer period of their life cycle. I hope I’ve answered.
Tejpal
Sir, okay sir, thank you. My next question is that sir, in the education — education segment where we are? What is our strategy, like we are seeing as ourselves as a DPS as established itself or we have another strategy or just want to know your thought process.
Supam Maheshwari
We largely run a franchised model which is an asset light building preschool which is catering to kids from two and half years old to somewhere around six years old. So it’s before they go to a K12 proper school. This is where we operate in. We have business partners who we work with and we provide all kind of curriculum, technology, help and facilitate the admissions and so on so forth to be able to and the brand. All of that is being leveraged with our business partners to be able to provide. This is a very big market. Again, it’s very unorganized. Within that it’s very unbranded. So millions of parents want to actually give a lot more organized and a lot more branded and quality education to their young ones. And that’s where we are coming into the place. So we have a huge headroom to build our sort of, model within the preschool sort of a market. That’s what we will continue to do in an asset light way.
Tejpal
Okay, so any guidance for the like in the two-three years, how many schools we are going to operate or in the franchisee-based model.
Supam Maheshwari
As I said, we are very small, Tejpal. The market is 50,000 plus sort of preschools in the country and 80% of them, a large part of them actually is unbranded. So you can imagine, I mean — we are less than, you know, sort of, we are very small. I mean although we are growing quite meaningfully as you can see in our numbers of 44% growth. So we will continue to demonstrate that growth as we go along. We are insignificant as far as overall preschool market is concerned. So the overall branded segment is small. So the branded segment is growing and within that we are probably growing in a very, in a fast way.
Gautam Sharma
I think the revenue growth is an indication of the number of schools that we are opening and plus, you know, it’s a very high profit business as well.
Tejpal
Sir, just wanted to quantify the number like we are — is there any plan to operate at 200, 300 schools like.
Gautam Sharma
End of September we are already sitting on a — the number of schools are already 300 plus.
Tejpal
Okay, sir, thank you. Thank you from my — this side and best of luck for the future.
Supam Maheshwari
Thank you.
Operator
Thank you, Tejpal. The next question is from Anamitra [Phonetic].
Anamitra
Congrats on the great set of numbers. Two pointers. For H1, we have a mix of 23% offline with 77% online. So what would be our steady state mix? Any target that we have, we have in mind offline versus online.
Gautam Sharma
Anamitra, if you see the historical trends as well, if you see the disclosure we have made in the prospectus also, last three, four years, the mix between online and offline, it remains in the same trajectory. Probably 1% here and there. 76 could become 75 or 76 become, could become 77. So we don’t expect this number to — to change significantly.
Supam Maheshwari
And we have a lot of headroom to grow even in offline because being, there are no — we are the largest organized sort of in terms of, you know, the First Cry is the largest organized player in the country. We have 1,100 stores today and in some of the other brands that you think of in the other categories, whether it is like categories like Bata or Raymond or other brands, they have significantly higher number of stores, 1,600-2,000 and even more we continue to believe and we are already there in only 500 plus cities as of today. So not only we will continue to add FirstCry stores, we will continue to add baby hug stores which can coexist in the same vicinity. So therefore, we believe this, our offline platform or offline stores will continue to improve our overall multi-channel story as we go along, and it will continue to demonstrate growth as a multi-channel while this percentage may not, as Gautam said, significantly change because both online offline will continue to grow. That’s the beauty of our — the convenience and all the benefits of online offline that we want to proliferate and give it to our audience, young parents. And that’s what we believe is something that nobody can give and probably what we have delivered and what we continue to deliver will be very, very — good for our audience to give their largest wallet share to us.
Anamitra
Sure, of course. One related point is in terms of so on an overall basis for the India multi-channel segment we are at 8.5 EBITDA margin, right. So on at a store level, what would be the EBITDA margin? Any, any, any indications on that?
Supam Maheshwari
So, Anamitra don’t. I would sincerely request that you should not look at our business, you know, further segment wise in terms of offline or online. During our Q1 call as well I talked about it. Our customers transact both online as well as offline. There’s a huge amount of overlap of our customers that they transact on both the channels. And now we have also started a distribution channel as well which is growing as well where the — and within that we only sell largely BabyHug and our home brands only. So essentially the customer can get penetrated through our distribution platform through lakh plus retailers that are selling our BabyHug products. And then they can also, if they want to buy extended categories or product types, subcategories, they can come to our offline channel which is our COCO or FOFO stores, our FirstCry or BabyHug stores and then they can also come to our online. So, as the trust builds, different set of customers which are I would say e-commerce savvy or they want to have a convenience of buying in offline with a touch and feel, with instant gratification and having sort of an experience of buying offline taking their family out. So, some of all of those that we provide. So please look at our business in a multi-channel way and that is what we believe that with more stores and with this current approach of a multi-channel, we’ll continue to improve post marketing CM2 and thereby over a period of time continue to improve our EBITDA as well. And that’s what has happened in the past as well.
Anamitra
Yeah, yeah, got it. Sir, my last question would be on the international business. So, I think the Landmark Group is also planning to launch in India which is also there in KSA, right. Do you see the competition intensifying in both of these geographies where we are operating in?
Supam Maheshwari
Both of these geographies you mean?
Anamitra
Both India and international.
Supam Maheshwari
See, Landmark is already there in sort of Middle East, right?
Anamitra
Yeah.
Supam Maheshwari
In India, they have, they have open few stores and there are, there is, there is no depth of competition in India. So I don’t think that’s a little, you know. See if you look at our tenant which is building a multichannel experience to the customer, so if a customer can buy offline and can remember and build that trust with the product as well as with the platform, then they come online and also buy the same brand, same product which is not available. So BabyHug, today, today is not available and some of our brand partners, you know, have also products which are with us alone and some of our home brands. So all of these make us, I would say a very differentiated platform with our curation, with our personalization, with the convenience of faster deliveries and so on so forth. With our 80-warehouse supply chain network of 40 cities same day delivery, 1,000 plus cities next day delivery. All of this to provide to a new player, to a new young parent. Only in online will not cut the ice. That’s our view.
Anamitra
All right, thanks a lot and all the best.
Supam Maheshwari
Thank you.
Operator
Thank you. The next is from Sachin Salgaonkar [Phonetic].
Sachin Salgaonkar
Hi. Thank you for the opportunity. My first question is just wanted to understand more on ad and promo expenses which have increased to 9.1 as a percentage of revenues, slightly higher than what you’ve seen in the past. Question out here is what is spending more on India multichannel or international or any other business and how should we look at the spend going ahead?
Supam Maheshwari
Sure, Sachin. So Sachin, I would like to draw your attention to our AUTC. If you look at our AUTC in just India multi-channel, we were at sort of 1 million addition for FY24 and then for Q1 for annualized basis it was 1.1 million. Now it is 1.3 million. So we have been continuously increasing our AUTC sort of a rate. So that’s number one. Number two, if you look at our mix of the business, India is — India multi-channel is a, I would say still a fairly decent maturity stage compared to our International and GlobalBees business which are fairly new and within that KSA is even more newer. So as the mix will change so you will probably be able to see percentage wise increase while we will continue to optimize and our overall spend in a way that we ensure that the CM2 which is contribution margin post marketing we continue to improve. So that’s what we have been able to deliver even in this quarter and we will tackle our deliver that even if we improve that percentage might look higher. But at a CM2 level which is post marketing contribution margin we are still accretive. We are still better off than the quarter two last year or H1 of last year versus H1 of this year. So we have demonstrated that already in our numbers.
With that I think we feel very comfortable going forward that with that thesis in mind, with that discipline in mind, we’ll be able to continue to steer both top line growth as well as bottom line growth.
Sachin Salgaonkar
Thank you, Supam. Very clear. Second question, we are hearing multiple comments from multiple consumer companies about an impact on some kind of a consumption slowdown now in urban areas also. Wanted to understand if you guys are seeing any impact especially on your same store growth on the back of that.
Supam Maheshwari
So, Sachin, as this particular question came in the last time around, I think we don’t look at our business from a same store basis. We look at our business in a multi-channel way because the same customer, we would like that customer and that has happened in the past for many years and will continue to happen for many years to come. I don’t think the behavior will change significantly and that’s why we feel we are fairly unique that our customers who join our platform first time either offline, they continue to go to online for multiple transactions or they continue to first come online they also go back to stores in the vicinity of their homes to do transaction offline. So with that basis, looking at an SSG is not the right metric to look at our business. The best metric to look for our multi-channel is CM1, CM2 kind of a data point which is there in our supplementary sheet, a data point although it’s at a console level but large part of our business is multichannel, so you can assume it is reflecting and coming from the India multi-channel.
So we’ll continue to demonstrate that we would like to add more stores over a longer period of time because that’s what we have stated in our RHP as well and we have added close to around 40 stores in quarter two over last quarter period. And we’ll continue to add that because we believe we will be able to add a large number of stores in next four to five years because we are the — as I just said, some of the other categories have a large number of stores and our stores give lot of benefit to us even in online and online gives benefit to offline. So together it becomes a strength. So we look at our business in a more, totality to arrive at a unit economics and that’s why we invest our energies like that. So that’s how we believe we have been successful in the past and will continue to demonstrate even more success going forward.
Sachin Salgaonkar
So to clarify, not much of an impact on consumption slowdown on your business, right?
Supam Maheshwari
Well, consumption slowdown is something that, at least Q2 numbers is what you are. It’s visible to you. So I don’t have to say much on that. Rest, I think we are in a category, we are 16% — I would say only organized a lot of industries, getting from unorganized to organized, and we are the largest player, so we’ll continue to gain and benefit from that. So that’s how I will put it. I don’t think we should look at one or two or three months, one or two quarter maybe these are things that we haven’t experienced in past because we were small. Now we become of a certain size, but I think we’re still small compared to where we want to reach. So over a longer period of time some of these things probably will not matter.
Sachin Salgaonkar
Got it. And the last question, and I know that you got this question, regularly in the past as well, but you know, every month the quick commerce platforms are getting bigger and bigger. So, as we speak today, any impact on quick call from quick commerce platforms, because there are certain standardized products, for example diapers which could be eventually bought and sold on those platforms.
Supam Maheshwari
Sure, Sachin. So Sachin, first of all, you know I think you must understand FirstCry as a platform which is we are at the e-commerce level available Pan India across thousands of pin codes. On our stores, we have 500 plus cities covering Tier 2, Tier 3, Tier 4 cities as well, 500 cities is where we are present. So whereas quick commerce is present probably in metros or probably top eight, 10 cities or over a period of time they may get to it state capitals but I think they’re largely and broadly present in top 10 cities or 12 cities. Having said this, if you look at the categories we deliver, as you know already and you would have seen in our RHP as well, we deliver 40 plus cities same day delivery and 1,000 plus cities next day delivery. And we have not been doing it in last six months or nine months. We have been doing it for many, many years. Probably we were the first, you know, original company or long back we built this model to you know, we never called it dark stores and stuff like that, but we have built this model long, long time back. So we’ve been delivering this kind of customer experience for a fairly long period of time.
Although we’ll continue to improve as we’ll build more proximity to our customers to be able to give better experience. But with our Pan India, with our, you know, offline 500 cities approach, with our already a large network of SDD and NDD, and on top the category overlap is very minimal. It’s just probably diapers where and it’s not as significant. So therefore, we are solving for mothers who are looking for trust looking for products. So we believe that these are very planned purchases. There will be some sort of young parents or mothers who may want to buy but what they probably feel comfortable buying with us along with other products and the kind of assortment that they can get from us is probably. Usually, a mother’s purchase is very planned, but that’s how we believe that it’s not been a very material sort of impact even today or going forward. That’s what we assume, we believe. But we’ll continue to improve as we go along in our giving, getting more proximity to the customer. So that’s what we’ll continue to do. So that’s where we are placed for the majority of our business. We remember is as we, I think as we have discussed in past is, is fashion.
Sachin Salgaonkar
Yeah, got it. Thank you and all the best.
Supam Maheshwari
Thank you.
Operator
Thank you, Sachin. We’ll now take the last question. Ankit [Phonetic], please go ahead. Ankit, please unmute yourself and ask the question.
Ankit
Hello, can you hear me?
Supam Maheshwari
Yes, yes.
Ankit
Hi. Just on GlobalBees, you know, just to probe more which company actually in GlobalBees is leading to this turnaround? Is it Frootle, Kuber Mart? Because these are profitable before also. And on the sales side, Merhaki Foods has grown exponentially in last couple of years. So if you can give us more granular data, it will help us analyze because it becomes difficult for us to look at the consult 22 company level.
Supam Maheshwari
Sure. So Ankit, just look at that from a window of — there is no brand concentration in the business. Don’t look at a company because that’s not how you should look at it. Because what as a, from an investor perspective, from a, as an operator perspective, from our perspective or GlobalBees perspective, it is how we look at it is at a brand level, no brand is one single brand is, dominant or even more than 20% or more than I would say 15% of the overall sales. So I think from that window we are quite, I would distribute it from a — at a brand level. So it’s quite fairly, I would say distributed. And that is what the beauty of the model that we have built as a DTC platform which enables us to continue to get more insights, continue to from the third party platforms, from the social networks and being able to deliver and internally all the tech platforms that we have built to be able to come up with more product innovation based on those insights and being able to quickly use our — our internal capabilities from sourcing to a supply chain, being able to deliver on the ground to, to deliver growth. So that’s how we have been able to demonstrate growth.
Ankit
Sure. And from the investments from the fund raised from the standalone entity to GlobalBees, when does that happen and how will our stake change in GlobalBees once that investment happens?
Supam Maheshwari
So we have already invested. So we have agreed to utilize around INR170 crores in GlobalBees either in the form of investment or by way of loan for to help GlobalBees acquire additional stake and those are committed stake in three of its subsidiaries. Out of that INR170 crore, we have already invested around INR85 crore in GlobalBees for them to increase their stake as per what we have agreed in prospectus. In terms of our scheduling GlobalBees, today we hold around 50.73% shrouding in GlobalBees.
Ankit
So the investment is form of debt and not equity.
Supam Maheshwari
No, it is in the equity now. So what we have agreed in the prospectus is will be in the form of convertible equity.
Ankit
Okay, my second question is — sure. My second question is what’s leading to this gross margin expansion? Are we seeing any mix change in product where the apparel share is increasing significantly or is this gross margin sustainable?
Gautam Sharma
Yeah Ankit, I think over a period of time as there are multiple levers for our, across our businesses, business segments in our India multi-channel which is the largest core business segment, if I talk about it, we have multiple levers to continue to improve our gross margins. One is simply our, sort of a category mix changes. Second is home brand sort of a mix. Third is scale and size of our home brand itself leads to a cogs reduction. And fourth is our third-party brands where we will continue to as over scale be able to get better margins. So I think with those four levers over a longer period of time we should be able to continue to improve our gross margin. As you have demonstrated in the past for many years in a row. We should be able to continue to demonstrate that over longer period of time. In fact, from FY ’23, you know we have improved our gross margin by almost 400 basis points. It used to be 33% in FY ’23 and it is hovering around 37% as we speak.
Supam Maheshwari
And some of our other new businesses like international, I mean yet to sort of improve and so on so forth. So there is. Yeah, sorry you…
Ankit
So this quarter, if I could just point out from a quarterly basis of the three levers which you called out for gross margin expansion how many dips came from each of those levers?
Supam Maheshwari
All the levers have, have contributed to the improvement in gross margins, Ankit. We think this will be a continuous process across all levers. There is no like single lever. As a management team or as a team we will never leave anything unturned to continue to expand our gross margin. Because as an execution machine that as a team we are continuously after both top line expansion as well as bottom line expansion led through a gross margin expansion and some operating levers.
Ankit
My last question is on the EBU expansion for the international market. When do we start seeing that happen?
Supam Maheshwari
Sure. So we have as an update we have hired the Head of the Business for our offline foray and the team is getting further team is getting hired. I think you should see couple of stores in the next year.
Ankit
And will the unit economics remain the same? These are COCO stores?
Supam Maheshwari
Unit economics. You will have to look at a multi-channel basis. That’s how we would look at the unit economics. Because the same customer as I was talking about for the India business. Similarly, it will — we would like it to. I mean we will experiment with the first few stores and then before we scale it up but yet to open. But we believe that it will follow somewhere what India trajectory is.
Ankit
Thank you everyone.
Anish Arora
I’ll — Supam. I’ll hand it over to you again for any closing remarks.
Supam Maheshwari
No, I think. Thank you very much all of you for giving your time on a evening. With that I think we will continue to strive hard for delivering performance as what we have delivered this quarter over a longer period of time. So thank you for joining us and listening to us and our story. Thank you.
Gautam Sharma
Thank you everyone.