INDIAMART - IndiaMART InterMESH Limited Share Price

Management's outlook emphasizes focusing on improving platform quality and user experience to reduce customer churn, particularly in the lower-tier "silver" segment, while leveraging stable retention in high-value "platinum" and "gold" customers (50% of base, 75% of revenue). Key points:

1. Growth Strategy: Prioritizing higher-quality supplier onboarding over quantity, leading to a slight decline in paying suppliers (214K vs. prior quarter). Collections grew 10% YoY (Rs.363 crore), driven by ARPU improvements rather than subscriber growth.
2. Churn Mitigation: Initiatives include enhancing buyer-supplier matchmaking, geographic relevance, and RFQ quality. Management aims to stabilize churn trends before resuming aggressive customer acquisition.
3. Financials: Consolidated revenue rose 16% YoY (Rs.354 crore), with EBITDA margins at 43% (standalone) due to cost optimization. Margins may normalize as customer growth rebounds.
4. Segment Focus: Exploring vertical-specific opportunities (e.g., pharma, packaging) and hiring industry experts to deepen category insights.
5. Busy Infotech (Subsidiary): Strong growth (42% YoY billing; Rs.20.4 crore) driven by license sales and deferred revenue (Rs.57.3 crore, +43% YoY).
6. Investments & Capital Allocation: Exited Shipway (sold to Unicommerce), increased stakes in strategic ventures (e.g., Bizom, SuperProcure). Open to buybacks but prioritizes annual decisions post-FY results.
7. Near-Term Guidance: Collections/revenue growth likely to remain subdued (single-digit to low double-digits) until churn improves. ARPU growth (14% YoY) expected to offset weak subscriber additions temporarily.
   Management remains confident in India's SME digital adoption long-term but acknowledges execution challenges in fixing churn.

Question 1: "I just had this question on surprise paying subscriber number, minus 3.7%. Even in the worst of the last few quarters, you were at a positive number of around Rs. 2,000 odd. So, what surprised you negatively? And by when do you think we'll again go back to a positive number, if at all? And sustaining this collection growth rate in double-digit, is it possible sans the net subscriber addition for you?"
Answer: The decline in paying suppliers resulted from reduced gross additions due to a focus on onboarding higher-quality businesses and fewer working days during festive seasons. Management expects to address churn through platform improvements and anticipates collection growth to remain around 10% until customer acquisition resumes.

Question 2: "My question is on collection growth remaining below 10%. Last quarter, we highlighted there were some execution challenges, right? And that basically impacted your collection growth last time, but still collection growth remains below 10%, and you're also guiding less than 10%. So, I just wanted to get some colour on what's happening? and is the impact of execution challenges continue to remain?"
Answer: Execution challenges persist, but the decline in collection growth largely stems from reduced customer additions rather than operational inefficiencies. Management emphasizes improving product relevance and matchmaking to stabilize churn, which will take time, but remains confident in long-term growth prospects.

Question 3: "We have been seeing these churn-related issues since the time we increased our pricing on the silver category. Have we considered going back to previous pricing, trying out something different?"
Answer: Pricing adjustments for silver-tier customers (post-COVID) contributed to higher churn, but management attributes this to broader platform challenges. Reverting pricing is under consideration if churn persists, but efforts are focused on improving product-market fit and onboarding processes instead.

Question 4: "My question is on your categories which are getting impacted in a meaningful way. Are there any specific categories that are getting impacted due to macro challenges?"
Answer: Macro factors like construction bans or regulatory shifts temporarily affect specific industries (e.g., plastics, pharmaceuticals). However, IndiaMART's diversification mitigates risks. Management plans to deepen vertical-specific strategies and hire industry experts to drive growth in high-potential sectors.

Question 5: "Are we planning to change anything in our customer acquisition strategy? What do you think is not working?"
Answer: Customer acquisition has shifted toward targeting higher-value businesses (e.g., Rs.1.5 crore+ turnover) and reducing focus on low-retention segments (newly registered SMEs). Sales incentives are being tweaked to prioritize annual subscriptions and quality over volume.

Question 6: "What percentage of business enquiries are delivered to free suppliers? Any thoughts on monetizing free suppliers?"
Answer: Less than 20% of enquiries go to free suppliers, primarily in underserved categories/regions. Monetization efforts include selling individual leads (Rs.299+) to free users, generating ~Rs.4 crore annually. No plans to broadly charge free suppliers, as buyer experience remains the priority.

Question 7: "Considering robust cash flows, what are your thoughts on buying back stock?"
Answer: Shareholder returns (e.g., Rs.120 crore distributed in FY25) and strategic investments (e.g., Busy, Livekeeping) are balanced annually. Buybacks are evaluated yearly, with decisions post-FY25 results likely.

Question 8: "How can ARPU growth offset weak subscriber additions?"
Answer: ARPU growth (14% YoY) is driven by upselling premium plans (platinum/gold tiers), which constitute 50% of revenue. Differential pricing for high-demand categories/cities and renewals of existing customers support this trend, but sustainable growth requires resolving churn to restart subscriber additions.