Key highlights from IndiaMART InterMESH Ltd (INDIAMART) Q2 FY23 Earnings Concall
Q&A Highlights:
- [00:08:31] Pranav Kshatriya from Nuvama Wealth enquired about the reason for sharp increase in Technology and Content cost being almost at 19.4% as a percentage of revenue. Prateek Chandra CFO said that most of the cost is due to manpower cost. The headcount in product and technology was 780 in 2Q23 vs. 685 in 1Q23 and 475 the previous year.
- [00:11:36] Pranav Kshatriya of Nuvama Wealth asked if the company expects Technology cost to increase or stabilize going forward. Prateek Chandra CFO replied that the headcount growth is expected to grow significantly for next two quarters and then stabilize, so the cost should increase.
- [00:12:41] Pranav Kshatriya from Nuvama Wealth also asked about the increase in cost of Busy. Dinesh Agarwal CEO said that here also the increase in cost in Busy has happened mainly due to addition of manpower.
- [00:13:53] Vivekanand with AMBIT Capital enquired about the paid supplier addition outlook for the next 12-18 months and what can be done to accelerate this from 9000 to 10,000-12,000 in FY24. Dinesh Agarwal CEO said that for next four quarters INDIAMART will maintain it at 8,000-9,000 and stabilize at that level and improve the churn back to pre-COVID levels.
- [00:14:19] Vivekanand with AMBIT Capital also asked about outlook of GM in Technology and Content for next couple of quarters. Dinesh Agarwal CEO replied that the company’s expectation for GM is at getting to 80% by sometime next year.
- [00:21:41] Anmol Garg of DAM Capital also enquired that if any ARPU increase can be expected next year given the higher customer additions. Dinesh Agarwal CEO answered that the company’s expectation is that it continues to grow the customer base by 20% or so and ARPU by 2-3%.
- [00:24:20] Anmol Garg from DAM Capital asked if there are any immediate plans to go on to the ONDC currently. Dinesh Agarwal CEO clarified that currently it is very limited and open to mostly B2C hyperlocal deliveries.
- [00:28:45] Deep Shah with B&K Securities asked how incentives are shaping up going forward. Dinesh Agarwal CEO said that in terms of incentives, nothing material has changed and no material change is required in the sales incentives. The cost structure and cost of customer acquisition has remained similar.
- [00:31:07] Deep Shah with B&K Securities asked about pricing improvement, if it will be product led or by increasing tariff of different plans. Dinesh Agarwal CEO answered that the Silver base level pricing the company doesn’t want to increase for now. On Platinum, top 10 have been increasing QonQ. The top slide ARPU will continue to increase on a healthy 5% rate.
- [00:34:24] Swapnil from JM Financial asked about collections growth going forward. Dinesh Agarwal CEO said that it will take 6-9 months to get repeat collections while adding customers. Currently INDIAMART is at 13% growth. The company believes that after October, collections should improve. Additionally, historically collections from customer on a standalone basis have been trending at 20% CAGR and it will be maintained.
- [00:38:47] Swapnil of JM Financial enquired if 2H23 margins will be weaker than 1H23 margins considering 4Q is the weakest for INDIAMART generally. Dinesh Agarwal CEO answered that with margins at 28%, 29% currently, margins will definitely have a 3% kind of a hit in Q4.
- [00:48:15] Vivekanand Subbaraman from AMBIT Capital asked about Silver Monthly customers upgrading and if it’s similar across categories. Dinesh Agarwal CEO said it’s a continuous process and approx. 2% of the customers upgrade every month.
- [00:54:46] Abhishek Banerjee of ICICI Securities enquired if the company is still sticking to the full year guidance of 28-30% EBITDA margin. Dinesh Agarwal CEO replied that the company might be 1-2% plus minus but as guided it will be 28% plus minus.