- Consolidated Collection from Customers: INR484 crores in Q4; INR1,474 crores for FY 2024 (YoY growth of 16% and 21%, respectively).
- Deferred Revenue: INR1,440 crores (YoY growth of 24%).
- Consolidated Revenue from Operations: INR315 crores in Q4; INR1,197 crores for FY 2024 (YoY growth of 17% and 21%, respectively).
- Unique Business Inquiries: 24 million (YoY growth of 14%).
- Total Paying Suppliers: 214,000; net addition of 2,700 suppliers in Q4.
- Busy Infotech Net Billing: INR18.1 crores in Q4; INR69.7 crores for FY 2024 (YoY growth of 29% and 45%, respectively).
- Busy Infotech Revenue from Operations: INR14.4 crores in Q4; INR53.3 crores for FY 2024 (YoY growth of 24% and 23%, respectively).
- Busy Infotech Deferred Revenue: INR43.5 crores (YoY growth of 59%).
- Busy Infotech Cash Flow from Operations: INR6.1 crores in Q4; INR24 crores for FY 2024.
- Busy Infotech New Licenses Sold: 9,500 in Q4; 33,000 for FY 2024.
- Standalone Collection from Customers: INR465 crores in Q4; INR1,399 crores for FY 2024 (YoY growth of 16% and 20%, respectively).
- Standalone Revenue from Operations: INR299 crores in Q4; INR1,139 crores for FY 2024 (YoY growth of 17% and 21%, respectively).
- Standalone EBITDA: INR90 crores in Q4; INR334 crores for FY 2024 (margin of 30% and 29%, respectively).
- Consolidated EBITDA: INR84 crores in Q4; INR331 crores for FY 2024 (margin of 28% for both periods).
- Consolidated Net Profit: INR100 crores in Q4 (includes one-time net fair value gain of INR29 crores).
- Consolidated Cash Generated from Operations: INR260 crores in Q4; INR559 crores for FY 2024.
- Consolidated Cash and Treasury Balance: INR2,340 crores as of March 31, 2024.
- Final Dividend: INR20 per equity share for FY 2024 (subject to shareholder approval).
Release Date: April 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, Financial) reported a consolidated collection from customers of INR484 crores in Q4 and INR1,474 crores for the full year, representing a year-on-year growth of 16% and 21%, respectively.
- Deferred revenue grew by 24% to INR1,440 crores on a consolidated basis.
- Total paying suppliers increased to 214,000, with a net addition of 2,700 suppliers in Q4, an improvement from 1,800 suppliers in the previous quarter.
- Busy Infotech, a subsidiary, reported a net billing growth of 29% in Q4 and 45% for the full year, with positive cash flows from operations of INR6.1 crores during the quarter and INR24 crores for the full year.
- The Board of Directors recommended a final dividend of INR20 per equity share for FY 2024, subject to shareholder approval at the AGM.
Negative Points
- The churn rate for first-year Silver customers remains high, with monthly churn at 7-8% and annual churn at approximately 40%, impacting overall customer retention.
- Standalone collections growth has slowed to 16% year-on-year, below the company's aspiration of 20%-30% CAGR, primarily due to higher churn rates.
- Despite efforts, the net customer addition has been low for the past four quarters, affecting the growth trajectory.
- The company faces challenges in converting Silver customers to higher-value packages, impacting ARPU growth.
- There was a one-time impairment charge of INR3.5 crores on right of use of land, affecting the quarterly financials.
Q & A Highlights
Q: The last two quarters, we have seen stand-alone collections growing at 16% year-on-year, which is below the 20%-plus trajectory. What are your thoughts on this slowdown and the margin trajectory for the next two to three years?
A: (Dinesh Agarwal, CEO) The slowdown is primarily due to higher churn rates among first-year Silver customers. We are focusing on improving net customer additions, which should help us return to a 20%-25% growth trajectory. Regarding margins, we are confident of maintaining 30%-plus margins and expect to improve by 1% annually.
Q: How confident are you in resolving the churn issue, and could you provide churn levels in percentage terms across key customer buckets?
A: (Dinesh Agarwal, CEO) Platinum customers have a churn rate of 6%-8% annually, Gold customers 12%-14%, and Silver customers 40% annually. We are working on improving these metrics and hope to see positive results in the next quarter.
Q: Given the collection slowdown, what are your guidelines for FY25?
A: (Dinesh Agarwal, CEO) We aim to return to a 20%-25% growth in collections. The slowdown is partly due to lower-than-expected ARPU growth. We are focusing on improving net customer additions and ARPU to achieve our targets.
Q: Can you explain the impact of customer churn on collections growth?
A: (Dinesh Agarwal, CEO) The churn among Silver customers affects our ability to upsell to Gold and Platinum tiers, impacting overall collections growth. We are working on improving customer retention to enhance our growth trajectory.
Q: What is the strategy for monetizing the non-paying supplier base?
A: (Dinesh Agarwal, CEO) We have tried various approaches in the past, but the cost of sales for low-value offerings is high. We will explore new strategies to monetize this segment effectively.
Q: What is the growth in the number of Gold and Platinum customers for FY24?
A: (Dinesh Agarwal, CEO) Gold and Platinum customers now constitute 49% of our total customer base, up from 47.5% at the beginning of the year. These customers contribute significantly to our revenue growth.
Q: How has the shift from outsourced to in-house sales impacted margins?
A: (Prateek Chandra, CFO) The shift has not materially impacted margins yet. However, it is expected to reduce attrition and improve productivity, which will benefit margins in the medium to long term.
Q: What is the outlook for manpower costs and outsourced sales costs?
A: (Prateek Chandra, CFO) We are reducing dependence on outsourced sales staff and building our in-house team. This shift will help us manage costs better and improve overall efficiency.
Q: What are the key levers for improving gross profit margins?
A: (Dinesh Agarwal, CEO) We expect gross profit margins to improve by 0.5% annually. The main improvements will come from better sales and marketing efficiency and technology investments.
Q: What is the impact of the impairment charge on right of use of land on this quarter's results?
A: (Prateek Chandra, CFO) We took a one-time impairment charge of INR3.5 crores due to a cancellation notice for land in Noida. This is a conservative measure, and we have filed an appeal against the order.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
