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    Indiamart Inter.

    INDIAMARTMixed
    Consumer Services·21 Jan 2025
    Management Summary

    IndiaMART reported a quarter of steady revenue growth but faced a notable decline in its paying supplier base. Management is intentionally slowing aggressive acquisition to focus on 'high-quality' businesses and fixing churn issues in the silver bucket. While margins remain high due to reduced sales spending, the company is guiding for a more conservative 10% collection growth in the near term.

    Highlights

    8

    • Consolidated revenue from operations reached ₹354 crores, a 16% YoY growth.

    • Consolidated collections grew 10% YoY to ₹363 crores, while standalone collections grew 8%.

    • Total paying suppliers declined by 3,500 to 214,000 as the company pivoted toward high-quality onboarding.

    • Standalone EBITDA margin remained elevated at 43% (₹144 crores) due to lower subscriber acquisition costs.

    • Consolidated net profit for the quarter stood at ₹121 crores.

    • Deferred revenue grew by 17% YoY to ₹1,492 crores.

    • Unique business enquiries grew to 27 million, up 17% YoY.

    • Cash and treasury balance stood robust at ₹2,606 crores as of December 31, 2024.

    Concerns

    2

    • Elevated Churn in Silver Bucket

    • Negative Net Subscriber Growth

    What Changed2

    vs Q4 FY25

    Tone shiftGood → MixedGuidance items4 → 3 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹354 Cr+16%YoY
    2. 02EBITDA Margin43%
    3. 03Net Profit₹121 Cr
    4. 04Collections₹363 Cr+10%YoY
    5. 05Paying Suppliers2,14,000 count-1.6%QoQ

    Segment breakdown

    • IndiaMART Standalone₹337 Cr95.4%
    • Busy Infotech₹16.3 Cr4.6%
    Donut· Share of Revenue

    Guidance & targets

    3
    CategoryTargetPriority
    Revenue
    Collection Growth
    10%
    		Medium
    Other
    Churn Fix Timeline
    1-2 quarters
    		Medium
    Margin
    Operating Margin Alignment
    Gradual alignment with operating leverage
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Elevated Churn in Silver Bucket

    Management admits to 'blind spots' in the product that are causing high churn among smaller, less digitally savvy suppliers. — Both acknowledged

    high

    Negative Net Subscriber Growth

    The loss of 3,500 paying suppliers in a single quarter is a significant reversal from historical trends. — Analyst acknowledged

    high

    Macroeconomic Headwinds

    Specific industry bans (single-use plastics) and regional construction bans (Delhi NCR) are impacting certain supplier categories. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Specific futuristic collection numbers for Q4
    • The exact impact of execution challenges vs. macro factors

    Q&A highlights

    3

    “There's no point trying to get 1,000 or 2,000 customer addition per quarter or whether it is 1,000 or 2,000 less... we are trying to restrict our investment until we are able to get a very positive hang on churn.”

    Confirms a strategic shift from volume-led growth to retention-led growth, acknowledging that previous acquisition strategies were inefficient.

    asked by Abhishek Bhandari, Nomura

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Pivot to Quality Onboarding

    IndiaMART is intentionally slowing down its gross supplier additions to focus on higher-quality businesses with better retention potential. This resulted in a net decline of 3,500 paying suppliers, bringing the total to 214,000. Management noted that smaller businesses (under ₹40 Lakhs turnover) and those with less than one year of GST registration exhibit 'naturally high' churn, leading to a decision to restrict investment in these segments until the platform experience is simplified.

    02

    ARPU Growth as the Primary Revenue Driver

    With subscriber growth turning negative, revenue growth is now heavily reliant on ARPU expansion. The top 10% of customers (approximately 21,000-22,000 suppliers) now account for 49% of total revenue and continue to see rapid ARPU growth. Management highlighted that while overall ARPU growth is 13-14%, the premium 'Platinum' and 'Gold' segments remain the 'sacrosanct' core of the business with very low churn.

    03

    Busy Infotech and Subsidiary Performance

    Busy Infotech showed strong momentum with net billing of ₹20.4 crores, representing 42% YoY growth. The segment sold 7,000 new licenses in Q3, bringing the total to 388,000. While EBITDA margins for Busy are currently low at 7% (₹1.1 crores), management remains committed to the 100% acquisition and is satisfied with the integration and retention of Busy's customer base.

    04

    Addressing the 'Fat Middle' and Churn Blind Spots

    Management admitted that despite multiple initiatives over 5-6 quarters, churn in the 'silver' bucket remains a challenge. They identified a 'blind spot' where the platform has become too sophisticated or complex for non-digitally savvy suppliers. To counter this, they are testing 'multiple intent confirmation' on mobile to improve lead quality, with 90% of buyers now completing these journeys accurately.

    05

    Capital Allocation and Investee Exits

    The company exited its investment in Shipway following its acquisition by Unicommerce. IndiaMART continues to increase stakes in strategic partners, raising its ownership in Bizom to 31.3% and SuperProcure to 35%. With a cash balance of ₹2,606 crores, management indicated they would decide on further shareholder distributions (buybacks/dividends) or strategic investments after the financial year ends.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.