INDIAMART - IndiaMART InterMESH Limited Share Price

In the Q4 FY2025 earnings webinar, IndiaMART's management provided a cautiously optimistic outlook. The consolidated revenue from operations stood at Rs. 355 crores for Q4 and Rs. 1,388 crores for FY2025, marking a 13% and 16% year-on-year growth, respectively. Collections from customers grew to Rs. 541 crores in Q4 (12% growth) and Rs. 1,626 crores for the full year (10% growth).

Management highlighted a focus on enhancing lead quality, aiming to reduce churn among silver customers. Notably, the churn rate for platinum and gold subscribers is around 1%, while silver monthly churn is at 6-7% and annual churn at 3-4%. There was a net addition of 2,139 suppliers in Q4, raising the total to 217,000, although net additions have been steady around 2,000 for several quarters.

Key forward-looking points included:

1. Anticipated consolidation of EBITDA margins around 38-40%, which may normalize to 33-35% as growth accelerates.
2. Management emphasized a target of maintaining collection growth at around 10%, with future improvements expected once churn is addressed and supplier acquisitions are optimized.
3. The ARPU for top customers has increased by 17%, suggesting stronger revenue potential from premium subscribers.
4. They expressed commitment to enhancing product offerings and user experience while experimenting with advertising strategies to drive traffic.

Looking ahead, management recognized the complexity of market conditions but maintained a belief in returning to growth, with expectations set for gradual improvement in both customer additions and revenue.

Major Questions and Their Detailed Answers

1. Question: "What steps have you taken to reduce customer churn and when can we expect improvements in net customer additions and revenue?" Answer: We identified that focusing solely on service levels didn't yield results. We've made substantial product improvements, such as refining buyer-supplier introductions and improving enquiry quality. Currently, around 80% of our RFQs are well-defined. We haven't resolved churn within our silver segment yet, and this will take more time"”likely a few quarters. We are seeing a gradual improvement in renewal rates among gold and platinum customers and have increased repeat buyer rates to 57.5%.

2. Question: "What is your outlook on margins given the recent customer additions?" Answer: Our margins are currently around 40%, and we're guiding for a normalized margin of around 33-35% once we ramp up customer additions. If we can address churn and scale gross additions, we do anticipate margins will shift towards that sustainable range over the upcoming quarters.

3. Question: "Have you noticed an improvement in conversion rates with the reduced unique business enquiries?" Answer: Anecdotal feedback suggests improvement, as suppliers are experiencing more meaningful engagements, although they miss the quantity. Our indicators point towards satisfaction in renewal rates. We'll continue monitoring these developments closely but ensure we maintain the quality of enquiries over sheer volume.

4. Question: "What adjustments are you considering regarding advertising to boost traffic and site visits?" Answer: We're piloting multiple advertising strategies, including online and affiliate marketing. While these won't impact this quarter's results significantly, we're optimistic that if any of these yield positive unit economics, we will scale up efforts.

5. Question: "Can you provide insights on churn rates among different supplier categories?" Answer: Our monthly churn rates stand at approximately 1% for gold and platinum customers and around 6-7% for silver monthly customers. The churn among silver annual customers is between 3-4%. We continue to work on reducing these rates as we focus on product-market fit.

6. Question: "Are you considering acquisitions or returning capital to shareholders?" Answer: We have a prudent capital allocation strategy, maintaining about Rs. 1,100 crores for investments or returns. This year, the Board has approved dividends of Rs. 50 per share, a continuation of our policy to distribute cash to shareholders while ensuring we have reserves for future investments.