Matrimony.Com Limited (MATRIMONY) Q1 FY23 Earnings Concall Transcript

Matrimony.Com Limited  (NSE:MATRIMONY) Q1 FY23 Earnings Concall dated Aug. 12, 2022

Corporate Participants:

Murugavel Janakiraman — Promoter and Marketing Director

Sushanth Pai — Chief Financial Officer

Analysts:

Amit Chandra — HDFC Securities — Analyst

Deep Shah — B&K Securities — Analyst

Prakash Kapadia — Anived Portfolio — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Matrimony.com Q1 FY 2023 Earnings Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Chandra from HDFC Institutional Equities. Thank you, and over to you, sir.

Amit Chandra — HDFC Securities — Analyst

Thank you, operator. Good evening, everyone. On behalf of HDFC Securities, I would like to welcome you all to the Matrimony.com quarter one FY23 earnings call. We have with us today Mr. Murugavel Janakiraman, Promoter and Marketing Director; and Mr. Sushanth Pai, Chief Financial Officer. So without further delay, I would like to hand over the call to Mr. Murugavel to provide a brief overview of the quarter gone by and then we can open the floor for question-and-answer session. Thank you, and over to you, sir.

Murugavel Janakiraman — Promoter and Marketing Director

Thank you, Amit. Good evening everyone. I hope all of you are continuing to stay safe and healthy. I take this opportunity to wish advance wishes for the Independence Day, 75th year of Indian Independence Day. [Indecipherable] our purpose is to build a better [Indecipherable] marriages. The last year, in FY22, we reported double-digit billings growth in billings and revenue. Continuing with the trend, I’m happy to report another quarter of double-digit billings and revenue growth. [Indecipherable] to see that our paid subscriptions grew by 13.8% and have reached 2.5 lakhs in the quarter, and taking it to an annual run rate of million paid subscriptions. This also signifies that we are making good progress with our strategic priority.

Now let me come to the results. In quarter one, on a consolidated basis, we have achieved INR116.5 crores in billings, which is a 10.8% year-on-year growth. Revenues were INR116 crores, which is 10% year-on-year growth. Let me start with key highlights for the matchmaking business which are as follows. In quarter one, billing was at INR104.6 crore, a growth of 1.2% quarter — INR114.6 crore, I’m sorry, a growth of 1.2% quarter-over-quarter and 9.4% year-on-year, [Indecipherable] double-digit growth; revenue at INR114.2 crore, a growth of 4.5% quarter-over-quarter and 8.9% year-on-year. We had a INR2.5 lakhs income from subscriptions during the quarter, a good growth of 7.2% quarter-over-quarter and 13.8% year-on-year.

Average transaction value for the matchmaking business declined 5.6% quarter-over-quarter and 4% year-on-year and this is in line with our paid subscription acquisition strategy. We continue to track the impact that it creates on our customers and we are happy to state that we have created about 23,000 success stories in quarter one.

Now coming to the marriage services business, the revenues was INR1.8 crores, a growth of 26% quarter-over-quarter and 227% year-on-year. The loss in the quarter was INR3.4 crore compared to INR3.1 crore in the previous quarter. We have completed the integration with [Indecipherable] and we expect the growth momentum with this service to further enhance. I’m happy to state we have launched the Be Choosy, a new TV campaign that explores the bias against women who want to be choosy when it comes to finding their right life partner and that has been received very well.

At the recent Kyoorius Creative Awards, BharatMatrimony’s Pehle Padhai Phir Shaadi, a social initiative which empowers girls to choose education over marriage, bagged 14 awards. The awards are a celebration of the most outstanding and innovative work in advertising and marketing communications. On the billing and revenue outlook for quarter two, as Q2 is seasonally a weak quarter, due to this, on a consolidated basis, we expect that we may fall slightly short of double-digit year-on-year growth. On wedding service the momentum is expect to continue and lastly we get to a similar level of Q1.

Let me pass on to Sushanth to comment on the [Indecipherable]. Sushanth, over to you.

Sushanth Pai — Chief Financial Officer

Thanks, Muruga. EBITDA margin for the matchmaking business in quarter one is at 23.5% as compared to 22.7% in quarter four and 27.7% a year ago. Marketing expenses are at INR43.5 crores as compared to INR42.7 crores in quarter four and INR37.3 crores a year ago. Excluding marketing expenses, our margins in matchmaking are stable at 62%. In this quarter we had salary increments for people. Average salary increment was in the range of 9% to 10%. On a consolidated basis, our EBITDA margins in quarter one are at 17.6% as compared to 18.1% in quarter four and 21.6% a year ago.

The tax rate in the quarter is at 21% as compared to 26% in quarter four. The tax rate is reduced due to lower tax on realized gains on mutual funds, which were redeemed to fund the initial buyback amount of INR18.75 crores. PAT, excluding Astro, is at INR12.1 crores, an increase of 2.1% quarter-on-quarter and decline of 14% year-on-year. Share of loss from Astro is INR16.3 lakhs. Net profit margin has been stable at 10% plus levels for the last three quarters. Our free cash generation has been robust at about INR22 crores for the quarter, signifying free cash flow conversion from EBITDA at 1.6. Return on capital employed for the quarter is at 15.7%.

On the outlook for Q2 margins, based on what Muruga said about the revenue and billing achievement, we expect EBITDA and PAT to be slightly lower than Q1 levels as it is a seasonal quarter.

I would like to end with the customary Safe Harbor statement. Certain statements during this call could be forward-looking statements on our business. These involve a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. We do not undertake to update any such forward-looking statements that may be made from time to time by or on behalf of the company, unless it’s required by law.

Over to you, Amit.

Operator

Sir, would you like to begin with, the question-and-answer session?

Murugavel Janakiraman — Promoter and Marketing Director

Yes, we can.

Questions and Answers:

Operator

Sure. Thank you. [Operator Instructions] We have the first question from the line of Deep Shah from B&K Securities. Please go ahead.

Deep Shah — B&K Securities — Analyst

Thanks, sir. Sir, my first question is around the ATV. So it’s actually very heartening to see paid subscription going up. Now this ATV, would you say is a function of increasing competitive intensity, we saw some concession offerings being introduced, or is it just a function of this quarter being generally a soft quarter and therefore we have given reduced prices, so that was my first question. Sir, second question was, if you could give us some more update on your new initiatives, how have they panned out and what is the traction there. Yeah, thank you.

Murugavel Janakiraman — Promoter and Marketing Director

Thanks, Deep Shah. ATV, it’s a function of various things. It’s a combination of pricing strategy which you deploy for various segments, so answering this is continuing to grow in various segments, continue to offer different pricing strategies to increase the monetization. So that’s one of the reasons. Another also, we launched new initiatives. It’s a combination of all these factors that contributed to the reduction in our ATV, however that has contributed increase in the volume growth. So we do expect that ATV be at a similar level as [Indecipherable] continue to figure out — continue to employ various strategies, our pricing strategies to drive the growth.

So in terms of the new initiatives, we are still in the early stages, nothing significant to comment at this point of time. So, both the new initiative, what we launched truly a vernacular matchmaking app, launched with the global matchmaking initiative.

Deep Shah — B&K Securities — Analyst

Okay. And sir, just as a follow-up, so including — so we see that our investments is gradually increasing in ShaadiSaga. So, if I compare the — even the marketing spend, it’s gradually improving, so have we now fully integrated ShaadiSaga and what is the traction there? Have you introduced differentiated plans there? Any update on that would be very helpful.

Murugavel Janakiraman — Promoter and Marketing Director

Thanks, Deep. Yeah, we’ve fully integrated the ShaadiSaga platform into WeddingBazaar.com and not only the platform, listings everything are being integrated. Today that makes us the largest player in the wedding services space where [Indecipherable] over 100% listings, even [Indecipherable] has around 40,000 plus listings. We are the largest player in terms of wedding services in terms of listing or we could able to leverage some of the good things of ShaadiSaga in terms of the value delivery platform and and large social media followers and everything have been successfully integrated to WeddingBazaar. In terms of pricing, yes, we have the pricing strategies and again it is a subscription business model and our objective is to get more number of listing and try to get more people to go for a paid subscription. We see the traction is happening. Again, our business — this business is still in the early stages, but good to see that this business is growing at a faster pace. We expect the growth momentum to continue.

In terms of pricing, again, there are multiple segments, we have multiple categories, photographer, make-up artist, various categories; Various categories, we have various pricing because of the pricing is not same for across categories, it vary from category to category and there are multiple packages, there’s no one standard package. So to respond to — single price, it’s different prices and the different pricing starting because the category has — the business has a multiple categories, the nature of the business is multiple categories. We have multiple — what is charge for photographer is not the case of makeup artists. Again, it’s very — packages, various product for categories and also based on cities and other things.

Deep Shah — B&K Securities — Analyst

Right, sir. This is very helpful, thanks a lot.

Murugavel Janakiraman — Promoter and Marketing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Prakash Kapadia from Anived Portfolio. Please go ahead.

Prakash Kapadia — Anived Portfolio — Analyst

Yeah, thanks for the opportunity. Couple of questions from my end. One of our competitors, the number 3 player, had mentioned about a change in business model in terms of giving free listings and maybe reducing ad spends on a going forward basis. So in that context, we see ad spends being lower for us for the coming quarters because currently they don’t seem to be trending down per se. Any thoughts on how will ad spend shape up for us and the industry?

Murugavel Janakiraman — Promoter and Marketing Director

Thank you, Prakash Kapadia. At this point of time, we continue to see increased competitor spend as we speak also, we see that the market has been under — at a higher rate, at elevated level. If you see that on a steady basis the marketing spend coming down, then — at the industry level, then we definitely look at lower marketing cost because I see committed in — obviously we are spending much more than what is required because of the increased competitor activity that’s and the — and the marketing at the elevated level. The industry sort of has realized that the increased marketing spend [Indecipherable], maybe there is some kind of reduction in marketing spend, yeah, we will definitely take a look into it and take necessary steps [Indecipherable] still at elevated level.

Prakash Kapadia — Anived Portfolio — Analyst

Okay. And despite a three-player market, the growth trajectory, the online matchmaking doesn’t seem to be inching at a higher pace. So is it some of the pricing issues, is it conversion because given the base and the industry size growth doesn’t seem to be being faster on a lower base also. So what is really affecting the growth because we are just three players and the market itself is so small. So just wondering what is still affecting the growth because now that everything seems to be opening up, things are normal, so I would have expected maybe the industry as well as us would have grown at a faster pace. So, any thoughts on that?

Murugavel Janakiraman — Promoter and Marketing Director

Yes, there’s a combination of multiple things. One is that the increased marketing spend and discounting and all these factors also contribute to the connection to growth also. So because it’s only the acquiring of free member and conducted a free to [Indecipherable]. And so yes, probably that would have contributed to the growth of connection. However, while we continue to working on our strategy, we had a less than double-digit growth, now we moved to double-digit growth. We continue to work on our strategy to take the growth to the better than the 10% growth and a higher level.

And we continue working on our strategy [Indecipherable] strategy. Hope you have seen progress we could be able to move at the better growth rate. So again, as I said, it’s a combination of pricing, also in a way played that, the growth in all things so discounting, higher marketing, pricing.

Prakash Kapadia — Anived Portfolio — Analyst

And typically, is Q3 the best quarter for us from a seasonality perspective?

Murugavel Janakiraman — Promoter and Marketing Director

Typically, we see that Q4 is the quarter where normally the growth is better over the previous quarter because the Q1 — Q4 is normally — and Q2 is seasonally the weak quarter. Q3 bouncing back and Q4 [Indecipherable]. We always say Q4 move to next level then the set off more or less operate from the level and then move to the Q4 in this number, normally.

So at this point of time we will be sort of at the double-digit growth and more or less — and we expect to even complete the year with a double-digit growth. But as I said we are kind of working on our strategy and — to get the growth to a better level.

Prakash Kapadia — Anived Portfolio — Analyst

Understood. And lastly, what was the final buyback subscription number if you have it handy, Sushanth?

Sushanth Pai — Chief Financial Officer

The final subscription number was about 763% somewhere in that range; 763%, something like that.

Prakash Kapadia — Anived Portfolio — Analyst

Understood. Thanks. I’ll join back if I have more questions. Thank you.

Murugavel Janakiraman — Promoter and Marketing Director

Thank you.

Operator

Thank you. We have the next question from the line of Amit Chandra. Please go ahead.

Amit Chandra — HDFC Securities — Analyst

Yeah, sir, thanks for the opportunity. So my first question is on the market share. So as we all are aware that there is an increase in the competitive intensity and the competitor is providing strategies for free. So are we seeing any loss of market share in the south market, which is our dominant market? And also, if you can throw some light on what our plans to increase our share in the north market. So on the market share, how we are seeing it mostly on an — geographical basis? And also on the ATV decline that we are seeing for the last two quarters, is it because of pricing discounts which are similar to what the competition is giving in the north market? Or is it because of change in mix, as you mentioned, because the packages prices around the base prices have not come down. But is there a significant change in mix that is happening that is kind of bringing the ATV down?

Murugavel Janakiraman — Promoter and Marketing Director

Yes. Thanks, Amit. In terms of adding our market share, we continue to remain strong, we have strong market. We continue to remain strong and continue to grow. In terms of the strategy to grow north and again, it’s more of product improvements and kind of marketing, stepping up marketing. You know, we continue to spend less compared to other players in north, continue to increase marketing. And the third is that, again, various product and pricing strategy as well.

So ATV is a combination of the various packages and our discount offered to multiple segments. And also, we’ve also launched new products. The combination of all these factors have contributed less in ATV. We expect ATV sort of remain at this level or may go down also. And again, we are looking at how to get more people to go for paid subscriptions and grow the [Indecipherable].

Amit Chandra — HDFC Securities — Analyst

Sir, on the ATV, the decline is because of the mix change. So maybe people get a little lower — like a little lower duration, lower value contracts are higher in the mix versus historically? Or how — is there any change in trend that we are seeing?

Murugavel Janakiraman — Promoter and Marketing Director

No, it’s not that we’re not any significant change in the mix and all that because most of the people go for [Indecipherable] package. That contributes the main — level. And as I told, within three months — there are multiple segments, the multiple DGMs and so the operating strategy [Indecipherable] — all these factors lowered the ATV, but no significant change in the mix and all.

Amit Chandra — HDFC Securities — Analyst

And sir, in terms of our advertising expenses, as you mentioned that obviously it’s going to continue. So what will actually make us think on our advertising expenses. So maybe we are seeing good growth in profiles. So what are the three to four main parameters that you track in terms of benefit that we are achieving from the marketing spend. So, obviously one is the profile growth. But apart from that, are you seeing some increase in the addressable market or maybe more investments into technology which can drive more penetration, maybe converging from free to paid profiles. So if you can throw some light also in terms of technology, what we are doing.

Murugavel Janakiraman — Promoter and Marketing Director

Yes. See only the marketing, I mean, it’s a combination of our strategy to grow the profile and also in a way that there is increased competitor activities, and we also need to step our marketing to defend our market share or grow our market share. So the company is our strategy and also how it’s getting played in the market. That’s the marketing thing. And in terms of the technology thing, we migrated to the cloud platform early this year, that’s one thing that happened. And we also in kind of making on the technology front, we are [Indecipherable] kind of working to integrate all our applications on the platform that will help us to — little good faster. So these are some of the technology things that are also happening.

I would say progress is due a better capability to execute our product priorities and other things in a better manner or in a faster manner. So these are some of technologies that is happening. And so we expect once all this has been done, we will probably need to — probably our execution maybe probably will get better.

Amit Chandra — HDFC Securities — Analyst

Okay. And sir, obviously, the offline everything is open now. So in terms of online versus offline, in terms of our offline retail stores, are we seeing some traction there? Or how you’re seeing the online versus offline mix? So — and like what are our expansion plans on the offline side, if you can elaborate on that.

Murugavel Janakiraman — Promoter and Marketing Director

It’s predominantly online, where retail is sort of complement in core markets. And so this is not having any significant traction especially on retail, but again it complements well for us. And it’s a small percentage of our business. And so at this point of time, we are not taking any significant additional growth on that.

Amit Chandra — HDFC Securities — Analyst

Okay, thank you, sir, and all the best for the future.

Murugavel Janakiraman — Promoter and Marketing Director

Thank you, Amit.

Operator

Thank you. [Operator Instructions]

Murugavel Janakiraman — Promoter and Marketing Director

Now if there are no questions we have summary.

Operator

[Operator Instructions] Actually there is one person who has just entered the queue.

Murugavel Janakiraman — Promoter and Marketing Director

Sure. Go ahead.

Operator

We have the next question from the line of Sonal from Precision. Please go ahead.

Unidentified Participant — — Analyst

Hi, sir. Am I audible?

Murugavel Janakiraman — Promoter and Marketing Director

Yes, Sonal. Please go ahead.

Unidentified Participant — — Analyst

I’ve been on the call, so not that I joined, but I just wanted to understand from a little longer-term perspective sir, the way the incremental marketing burn and the way the incremental topline moves in sync, is there — like I understand the competition is intense. And maybe at times, they’re not caring about the P&L. But when you do and when you make your plans, is there like a — like a topline incremental number you have in mind? And you say like if I want to put INR1 extra on marketing, I expect so much of sales or else in the next quarter I will not do or try what I wanted to try this — or what I have tried this quarter. So typically, in marketing, the people say, if I put INR1 in marketing, expect, let’s say, 4 to 5 times of that in incremental sales. So just trying to understand that, sir. Like what is the internal metrics for that?

Murugavel Janakiraman — Promoter and Marketing Director

Thank you, Sonal. The marketing is a tricky question, there is a performance marketing, there is brand marketing. Performance marketing, obviously there are multiple performance marketing, Google and various other marketing tools, social media marketing. With online marketing, I believe we are able to measure the ROI. When it comes to brand marketing, I want to quote one of the famous marketers, I forgot the name. He said, I know the marketing work. I know 50% marketing works, I don’t know which 50%. So if I come to the brand marketing, we definitely look at how it’s contributing to our profile and other things. However today, marketing is, I believe it’s a combination of multiple things, our strategy, what’s going on the market and also it’s the consumer intent category. Again, we don’t have kind of something like a permanent customer.

So, [Indecipherable] marketing is necessary. But today, the [Indecipherable] market because sometimes when they competitors are spending more than what is required, so it’s where you can do with INR1. If the competitor is spending INR3, we are forced the marketing spend. Was it required? Sometimes we have — necessary share of visibility also, we can’t go down on visibility to beyond limit. And it is a combination of multiple things. So in that way when you come to brand marketing, they know it is — again as I said, in the current dollar market on recur, no, it is not the case it on the — look at the marketing spend prior to our IPO or maybe at — we are doing INR50 crore marketing. Now we are doing INR150 crore because marketing spend is [Indecipherable] for the category.

Now the marketing spend is gone up INR400 crores in four years. So when the marketing is gone up INR100 crore, INR400, obviously we need to increase the marketing spend in different assets and also grow because we are a leading player and as I said that we continue to defend well, continue to grow and continue to widen the gap with other players. So we are here for long term. We continue to do what is the right thing and so — maybe I will see progress, maybe [Indecipherable] really comes to normal, then we may get the benefit of that at that point of time. But at this point of time I don’t know how long we will continue. Having said that we are a leading player and we continue to invest, continue to — and do what is right for us.

Unidentified Participant — — Analyst

Sure, sir. I think that explains. Just trying to — and this is more a theoretical question, just trying to understand the adoption of the category by customers in the end. So let’s say, hypothetically, if you were — I think you roughly spent INR45 crore this quarter. If this number was, let’s say, INR50 crores or maybe 10% higher, the point I’m trying to make, would your topline would have gone in a commensurate manner or is it at a better point, where there is no elasticity in demand and it will be rather a wasted marketing burn than actually adding to the topline. So just trying to understand whether we in terms of — does stretching the marketing up and down a little bit to understand the demand in the market.

Murugavel Janakiraman — Promoter and Marketing Director

If you look at, Sonal, there is digital marketing, as I told you. It is a necessary marketing, there are brand marketing, the messaging marketing largely on the business side and again, we get large number of profiles, [Indecipherable] brand and create by profile. So obviously, today, we need to defend our brands there. So that when people are looking for a brand, so this becomes [Indecipherable] with the category. And people will just see the BharatMatrimony or Tamil Matrimony, Marathi Matrimony, we have to ensure that we advertize for those brands. So it’s a trademark and then [Indecipherable] you have to bid and put it into a brand. And a large number of registrations on business side, mainly [Indecipherable].

When it comes to brand marketing, digital is yes, you can look up on anything. When you invest in digital, look at ROI and ensure that we’re doing the right investest. So that the question is [Indecipherable] marketing, will it — can you see the growth, yes this in fact INR45 crores and INR60 crores, there will be some additional income, what is the incremental cost of the incremental sales. Even today, our marketing spend is at a much more than what it is the current level of the revenue in all those.

So putting more money, yes, we can look it up, but I think the incremental rate of benefit. Today, we spend what is required, there are some markets we are spending less also because obviously we want to operate at a threshold and in all this. But those things can up incrementally. So today, there is a market spend. I think what happened in the short term on the brand market. But our strength the [Indecipherable] it is possible in all so don’t do any [Indecipherable]. So — some amount as I said — some amounts are brand marketing required and all that. But today, the brand marketing [Indecipherable].

Unidentified Participant — — Analyst

That is a fixed number. So with topline growth, that should come down — that’s like a fixed cost, basically, which should taper off over time as you grow, essentially.

Murugavel Janakiraman — Promoter and Marketing Director

Right.

Unidentified Participant — — Analyst

And sir, may I just sneak in another question. How are you doing in non-Indian markets, Bangladesh, just trying to take an update from you on that one?

Murugavel Janakiraman — Promoter and Marketing Director

Bangladesh is a long term for us. We are number 1 player there. And however it’s kind of many ways like in India. So we are leading player, number 1 player. And again it’s a small market for us at this point of time. We started investing in the market and small — started advertizing and we are seeing the traction in our very early stage. So — but yes, it’s going in the right direction. But again, Bangladesh per capita income level of — even better, it’s become better than India, it’s one-sixth of India population. We see this as long term and it may play out in the long term. So some of the initiatives are long-term initiatives for us.

Unidentified Participant — — Analyst

Got it. Thanks a lot, sir. That’s it from my side.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Swapna [Indecipherable] from NSFO. Please go ahead.

Unidentified Participant — — Analyst

Yeah, hi sir. I have a question on marketing expense only. So I mean now our run rate of marketing expense has gone up significantly, so I just wanted to understand that at what — I mean, where will be the tipping point where the marketing expenses start looking like — it will stagnate as a percentage of the sales and where it will be like — become like an operating leverage for us that we don’t have to spend more on marketing expense. So you think it’s too early now and this will continue because of the competitive intensity?

Murugavel Janakiraman — Promoter and Marketing Director

Thanks, Swapna. And at this point of time, it’s difficult to say because we see that increased marketing spend, the competition is there. And whether it can — it’s difficult to say whether it could be operated at this level. So it depends on how we kind of — it’s coming to tell you what happened in the market, our strategy. So yes, it may go up also, and it may come down, depends on how the environment gets played out. So — but I can’t say at this point, I am not in a position to say that we have reached the threshold and we operate at the threshold.

So probably, I don’t know, maybe I see progress the other clarity that when we are the position to say that we’ll commit it. But at this point of time, not in a position to clearly say that the marketing has reached the level or not. But however the thing is that today the marketing — most of the marketing is brand marketing. So that is a good thing. And so that when there is a leverage [Technical Issues].

Operator

I’m sorry about that. Please go ahead.

Murugavel Janakiraman — Promoter and Marketing Director

No, no problem. So at that point of time, it is a marketing spend that can flow in the bottom line for us. So that’s — basically that’s a good thing with brands and the things going on in the brand market.

Unidentified Participant — — Analyst

So you are saying it’s not on discounting, it’s more on branding?

Murugavel Janakiraman — Promoter and Marketing Director

Yes. The marketing is there, when you say marketing expense, the subject is the marketing, not a discounting rather, as we are all completely excluding all the discount and all that because in factoring the ATV — don’t look at discounting the marketing — the other marketing spend is TV advertizing and digital advertisement. So nothing on the — the discounting is coming to the [Indecipherable].

Unidentified Participant — — Analyst

Okay. Understood. And sir, I mean, if we had to look at the company like a little longer from 2, 3 or 5 years perspective, then I mean, what is your internal target as to what kind of penetration levels or numbers, if you could just give us an idea about how this ATV will look like or how subscriptions will look like in terms of the overall company? I mean, where are we — what are we targeting as a CAGR or —

Murugavel Janakiraman — Promoter and Marketing Director

See our thing is about in next 3, 4 years, we want to become a INR1,000 crore company. I think that’s the next milestone and the immediate milestone is that we are kind of getting closer to INR500 crores run rate. So once we reach the INR500 crore run rate, when we start working towards INR1,000 crore milestone, it will happen with four years or kind of three years or kind of something we are working towards it. And in terms of paid transaction, for the first time we reached 1 million plus of paid transaction volumes for the year. I think that’s a good milestone. But probably next milestone to reach 1.5 million paid transaction.

I think we may get to the second — mover closer to that INR1,000 crore benchmark. And ATV, it’s sort of difficult to stay at this level or go down or — again it depends on a — I don’t — that’s kind of forward-looking in what we found because many things contribute to ATV. It depends on how some of the things going to play out our initiatives and our pricing strategies. But on the revenue side, yes we are [Indecipherable] milestone of [Indecipherable] first hitting the INR500 crore runrate and then working towards INR1,000 crores benchmark.

Unidentified Participant — — Analyst

And with similar profitability or a better profitability?

Murugavel Janakiraman — Promoter and Marketing Director

Obviously, then that level, look at even today, we’re operating at a 62% gross margin on the matchmaking business. So at this level, obviously we have a strong leverage because consumer business like us, we have a very limited capital expenses and EBITDA margin continue to get better. So when I — that’s kind of definitely have a INR300 crores of EBITDA [Indecipherable] PAT also possible.

Unidentified Participant — — Analyst

At INR1,000 crores?

Murugavel Janakiraman — Promoter and Marketing Director

Yes.

Unidentified Participant — — Analyst

Okay, thanks.

Operator

Thank you. [Operator Instructions] As there are no further questions, I would like to hand the conference back to the management for closing comments. Please go ahead.

Murugavel Janakiraman — Promoter and Marketing Director

Thanks, Melissa, thanks to Amit and HDFC for hosting us. If you have any further questions, please do write to us and we’ll be happy to answer them. Have a good weekend, and have a good 75th Independence Day. Thank you all for joining.

Sushanth Pai — Chief Financial Officer

Thank you so much. Thanks for your interest in matrimony.com.

Operator

[Operator Closing Remarks]