Indiamart Intermesh Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : So my question is on the collections trajectory. I think till last quarter till 1Q, collections growth was in the range of around 15% to 20%. Now it has dramatically slowed down to only 5% on the standalone business. I understand that you are facing very high churn at silver level, and that's been the case for a while now. So why is it that collections got impacted so adversely this quarter even though it was holding up strongly in prior periods, was there anything specific this quarter that weighed on collections? And if you can give us some more insights into how to project collections? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 11:00AM, INMR.NS - Q2 2025 Indiamart Intermesh Ltd Earnings Call Or how do you yourself look at collections here on, given that churn appears to be a chronic problem rather than something that you can address? That's question one, very lengthy one. So I'll ask my second one only after the answer to this question.

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay, thanks. My second question is on the -- again, on collections, but a different one. So what proportion of your collections are coming from silver monthly and gold and platinum. Is it possible for you to explain that? And is there any color you can give on the growth in the collections bucket across these three tiers? Thank you.

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay. So does this mean that the ARPU increase that you are seeing on a collection basis, I know that the ARPU you report in that slide pack, slide number 31.

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : That is on a revenue basis, right? So on collection basis, this does seem to suggest that you maxed out potentially increase prices from gold and platinum. Is that correct inference? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 11:00AM, INMR.NS - Q2 2025 Indiamart Intermesh Ltd Earnings Call

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay. No, what seems odd to me is that the prior quarters, you had collections growing fast despite your net adds being under pressure, and this quarter, it seems like your collections growth appears to be more impacted by upgrades perhaps getting affected due to persistent churn being elevated. Anyway --

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : No. I mean it is very perplexing to us because all of us had a certain view of this business, the earnings multiple that we assign to the business is based on certain trajectory, now it has turned out very differently.

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : My question is pertaining to the previous participant's question, where you mentioned that 5% collections growth could be a one-off and there could be some improvement going ahead. I would want to go back in history and ask you and because we have limited history since FY20, right, on a quarterly basis, and this is the slowest growth during that -- since your listing ex of COVID. Have you experienced a similar growth trajectory in the past? And have you been able to reverse that trajectory? And how long did it take for you? If you can give some precedence of similar growth rates in the past, barring maybe 2008 crisis, I mean, when the economy was stable.

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Sure. So the next question would be on your churn rate. If you can just break it down, the way you have been doing off let on a category basis. If you could help us like how that has moved this quarter, has there been any increase in churn rates, especially in the upper tier categories?

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Will it be possible for you to give it in absolute percentage terms?

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Got it. And the other question is with respect to your traffic growth. Now obviously, different metrics have played differently this quarter. unique business inquiries appear to be okay. But then if you look at the total business inquiries delivered, they are down 7%. Then your overall traffic growth itself is flattish. I mean, how should we read this? I mean --

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : But to put it this way, if you -- while I get your logic why you're reducing your inquiries to a limited number of suppliers, will not that affect the actual inquiries that a typical supplier would get? I mean on an absolute basis and that --

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Got it. And any chance of your A&P spends going up now that we are facing challenges on collections as well as suppliers, both, any remedial measures have you thought about that?

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Increasing your A&P spends. Maybe that could be the one that could help you.

Question: Swapnil Potdukhe - JM Financial Ltd - Analyst : Got it. If you can just answer my first question, that will be helpful.

Question: Sachin Salgaonkar - BofA Securities India Limited - Analyst : Two questions. First, I wanted to understand a bit more on margins. Given that perhaps there's no near-term visibility on churn control, the net adds remained low. And on back of operational leverage, cost control, clearly, we're seeing quarter-after-quarter EBITDA margins going up. So is it fair to assume that margin should stabilize at 38%, 39% in the foreseeable future till we see all these issues getting resolved?

Question: Sachin Salgaonkar - BofA Securities India Limited - Analyst : Okay. But let me flip that question around a bit. I mean during COVID your margins were as high a 50% to 52%, what stops the margins are only at 36%, 38%. Why can't we at 40%, 45% in the near term? And even the normalized margins, I mean, the way cost control is happening, why should it be at 34% and not higher than that?

Question: Sachin Salgaonkar - BofA Securities India Limited - Analyst : Thanks you. Very clear. And my first question -- second question is actually on some of the points you said answer to this question or to some of the earlier participants. When -- and one of the statements, perhaps you said that until we fix these issues structurally, so I just wanted to understand, sir, what needs to be done from a management perspective to fix these issues structurally?

Question: Nikhil Choudhary - Nuvama Group - Analyst : Just want to understand the collection number a little better. So collection growth for us was 5% YoY this time. And while you are attributing it to lower subscriber addition, even the subscriber count, total subscriber grew 4% YoY, right? So subscriber is not the only reason, which impacted collection. Correct me if I'm wrong because at least what we can sense is that revenue per paying supplier must have gone down as well, so collection to be at 5%. So can you give color what happened behind the scene? And why, let's say, revenue per paying supplier has grown down at such a pace in between the two quarters?

Question: Nikhil Choudhary - Nuvama Group - Analyst : Yes, sir. So why there is decline in average collection per customer? Any reason for that?

Question: Nikhil Choudhary - Nuvama Group - Analyst : Sure, sir. Second thing, given the churn continued to remain elevated and since last many quarters, you have highlighted some of the initiatives you are taking, any update, anything which has changed on ground or we should assume this remains the case even in coming quarter?

Question: Nikhil Choudhary - Nuvama Group - Analyst : Sure, sir. The last one is on unique business inquiry, 14% jump. I think, first decent jump after many quarters. So any color what is leading to the uptick in quarter two?

Question: Kushagra Bhattar - Old Bridge Capital Management Pvt. Ltd. - Analyst : Just two questions. Sorry to hop on the collections again. I'm just trying to understand your response in a better way. So given that gold and platinum are 70% to 80% of the collections, so the lower growth in collections actually has to come from lower growth in collections from the same gold and platinum customers, right? So I'm trying to understand one of the reasons, which you laid out was more of a one-off and you mentioned some lapses in the sales execution. So maybe if you can give some more light as to what those lapses were and what are you trying to do about it, so that they don't happen again. That's my first question.

Question: Kushagra Bhattar - Old Bridge Capital Management Pvt. Ltd. - Analyst : Sure, all right. Second question is on a different note, basically, you generally don't fall out this metric, but do you sort of track your revenues or the money you are able to realize per unique business inquiry like if we do the rough math, basically, it shows that it has trended up. But given all these challenges, where do you think the money which you're able to realize per unique business inquiry is headed in the future? Like is there a threat how much you can monetize or how much you can make per unique business inquiry going forward for all the challenges, which you have laid out and which we have been facing since the last seven, eight quarters. Yeah, that was my second question. Thank you.

Question: Anmol Garg - DAM Capital Advisors Limited - Analyst : So a couple of things from my end. Firstly, you have talked about that you're not seeing much competition from Just Dial or TradeIndia, Exporters India. So is there any other channel which is from where we are seeing larger competition for example, B2B, e-commerce, or Facebook per se?

Question: Anmol Garg - DAM Capital Advisors Limited - Analyst : Sure. Secondly if I have to break up our paid supply additions between gross additions and churn in this quarter, then would you say that on a

Question: Anmol Garg - DAM Capital Advisors Limited - Analyst : Right. And as you have indicated that churn is more or less the same as the last couple of quarters. So from that perspective, for now, should we assume that the gross supplier additions would remain in the 2,000-odd range in terms of the additions on a quarter-on-quarter basis?

Question: Anmol Garg - DAM Capital Advisors Limited - Analyst : Sorry, net supplier additions.

Question: Anmol Garg - DAM Capital Advisors Limited - Analyst : Right. And one last thing from my end. So if you can talk about ratio of inquiry to conversion for a supplier, then how has it changed over last few quarters? And just wanted to understand here the quality of inquiries that we are having right now. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 11:00AM, INMR.NS - Q2 2025 Indiamart Intermesh Ltd Earnings Call