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Ladies and gentlemen, good day, and welcome to CarTrade Tech Limited Q1 FY '25 Earnings Conference Call. This call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to the Chairman and the Managing Director of CarTrade Tech Limited, Mr. Vinay Sanghi. Thank you, and over to you, sir.
Good afternoon, everybody, and thank you for joining CarTrade's quarterly earnings call. It's been a very good quarter for the company. If we go to Slide #5, the company has shown of 64% in operating revenue growth and 46% growth in overall revenue, and the profit after tax is low at 3% in Q1. .
CarTrade Tech continues the #1 automotive platform in India, the #1 used car platform, the #1 vehicle auction platform and also the #1 horizontal classified platform. More than 70 million unique visitors or unique customers visit our various platforms, CarTrade, CarWale, BikeWale, OLX every month. What is more important is that 95% of them come organically or come because of brand or organic search and affinity to these platforms, giving us a very low cost of customer acquisition.
We have more than 400 physical locations, which include auto malls, car outlets, OLX India outlets. We auction a rate of more than 1 million vehicles a year. Revenue is the highest ever in the Q1, in any quarter 1 ever in history at INR 156.4 crores. Adjusted EBITDA, which is INR 43 crores or close to INR 43 crores, is also highest ever in any Q1. And PAT is INR 22.9 crores for the quarter.
We are obviously a debt-free company and carrying a cash balance of INR 782 crores. If you look at Slide #6 of the presentation, it shows the revenue growth of 64% from operations, which is up to the total income, including other income is INR 256 crores. The EBITDA, which shows in our business, as we've spoken repeatedly, incremental revenue growth needs to disproportionate increase in margins. And you can see, the EBITDA is 295% or 300%. Operating margins and EBITDA margins have gone from 6% to 15% Q-on-Q, I mean, year-on-year, sorry, which shows again the leverage in the business.
Revenues increased at a far greater rate than cost. Within the profit for the year at the bottom in a consolidated accounts to 69% up to INR 23 crores. And adjusted EBITDA, as we calculate, is up at INR 43 crores from INR 30 crores last year. If we go into the standalone accounts, which is Slide #7, which is really a proxy for our consumer group business, CarWale, BikeWale, the operating revenue is up 18%. The other income is down because of the OLX acquisition last year, and therefore, there's a reduction in the cash balance, which has led to reduction in the other income on treasury income. But operating revenue up 18%.
And again, here, you can see the leverage in the business. Costs have gone up just the costs actually down by 2% for standalone accounts, which has shown a 700% increase in our EBITDA. It was actually negative INR 1.25 crores last year to this year, a positive INR 7.23 crores of EBITDA. And again, it resulted in a minus 3% margin, 14%, again, shows an increase in revenue that will disproportional increase our operating profits and profits.
PET is at 13 -- PBT at about INR 13.76 crores, PAT is up to INR 12.87 crores. And it's on the standalone accounts slightly -- growth was slightly lower just because of reduction in the other income and treasury income. On an operating basis, as you can see, EBITDA is up almost from 1 point -- negative INR 1.25 crores to positive INR 7.23 crores.
In Slide #8 is a remarketing results. I think this is the 1 area where we would, of course, like to do a lot better from a position of most of the vehicles being repossessed to almost 42% of it now being retail supplier vehicles. This has enabled us to get to a flattish to plus positive 4% revenue growth, but a 12% increase in profits.
We continue to work hard in this business to grow revenues and -- but it's been a difficult 12 to 14 months for this company. And we feel committed -- we feel fully committed to it, as well as we're optimistic about the next 12 to 24 months. But at this point, this is the 1 area where we've been difficult for us to grow considering the for repossession of vehicles and increase in retail supply retail vehicles.
We'll get Slide #9, which is the results of our OLX classified business. Total income is up Q-on-Q. We don't have a year comparison because we acquired this in August last year. But Q1, Q up by about 10%. EBITDA is Up from INR 7.25 crores to INR 8.05 crores for the quarter. Profit for the -- profit for the year is up to INR 8.57 crores as of June end. Adjusted EBITDA, which a proxy for our operating performance, is up from 24% margin to 27% margin for the quarter.
If you look at Slide #11 shows, again, Google trends on car value versus competitors and by quality competitors, and we clearly still saw a big difference between our competition in terms of brand facility. Slide #12 talks about OLX with other competitors. And as you see here, OLX is much, much stronger.
And as [indiscernible] competition or is under classified side. So this is what I had on the presentation, a brief summary of the quarter and the financials and a few operating metrics. I'll be happy to go into a detailed question and answer. We feel very optimistic about the quarter. And we feel in OLX and CarWale have had a very good quarter. SAMIL has had a flattish revenue quarter, but a little bit of profit growth. And we're very, very optimistic about the next few quarters coming. Thank you, and happy to answer your questions at this point.
[Operator Instructions] The first question is from the line of Siddhartha Bera from Nomura.
Congrats on a good set of numbers. Sir, first, on the consumer business. If you can give some more color on the growth, how has been the used car and the new car segment growth? Any mix, if you can share? And generally, going ahead, how do we look at further areas of monetization in terms of growth drivers for us -- for this business going ahead?
Yes, the consumer group, as you can see, has grown by 18% operating revenue, the profit growth as well as the 18% growth. The mix is pretty much the same, and I say not covered. It is pretty much the same across quarters. 85% of the business is new cars and new 2-wheelers. So we feel that -- look at the industry itself, there has been a 3% to 4% growth in the car industry. The 2-year industry growth has been stronger. But we feel very optimistic about the business itself.
If you see the consumer group in a single quarter, it's highest ever performance as well, even though 18% is highest ever quarter performance ever. We feel very optimistic about the business. The drivers continue to be the same. I think it's about more of a dealer and manufacturer listings and advertising. And we feel pretty good about not only the growth of the growth rate, which are at, but also the fact that the leverage in the business is starting to show where you can now evidently see that with revenue growth, there's a big, big profit growth coming in these businesses as well.
Sir, as we look at the marketing expenses, it has been as a percentage of revenue, been coming down for the last few quarters. Do you think -- I mean, in case if we try to push more, there is a possibility of stronger, like 20%-plus growth by sort of raising a lot of spend on the marketing side? Or do you think this is the level of profitability we will try to achieve going ahead?
There are 2 things in this, the marketing, obviously, marketing numbers, something 10% revenue for the revenue is increasing. So that's coming down as a percentage. So once you keep in mind also that the traffic is [indiscernible] going. It's not as the traffic the platform is not growing.
So we feel an increase in marketing expenditure is not necessary at this stage. The traffic in the consumer group is almost 40 million users a month, which is reasonable growth there as well. So -- and if you look at the brand affinity versus its direct competitor, it's again very, very strong. So we feel the marketing expense is okay.
Obviously, we keep trying and think this in [indiscernible] 18%, which is in Q1, we're growing at a stronger rate or not, and that's what we're working on. But we feel it would not be at this point necessary to increase the marketing expense in the business.
Got it, sir. Sir, lastly, on the OLX side, if you can talk a bit about -- we have been now working on this for the last few quarters. So how do we look at a step-up in the growth? What are the monetization areas you have already capitalized and which all the other areas you are working on? And does this current financials reflect full impact of all of the core initiatives you have taken? Or do you think we should expect more costs to come or we should expect more margin expansion on a sustainable basis? .
Yes. I think the first question is it's been about a year since the acquisition. The first few months, maybe first 5, 6 months were really spent on technology transition, moving to our environment, product development, team stability, many types of things which normal M&A takes. I think it's in the summer January that we've been able to look at the business and start focusing on growing the business.
And you see now over the Jan-to-March quarter and the April to June quarter, the consistency and stability in the business across whether it is revenues or margins. And we feel this is not different from any other business we run where revenue growth will lead to margin expansion. You can already see that in a very small way. It's gone 24% to 27% Q-on-Q, last quarter this quarter.
And this nature of the business very similar costs are fully baked in. In fact, costs are a little inflated because in the first quarter, we took increments to in this business, which will not come to the next 9 months now. So the costs are slightly higher in the first quarter on account of increments. And now you see the benefit of costs remaining stable over the next 9 months, but revenue is growing.
As you know, in all companies, the increment cycle for April are more this Q1 for us across our businesses, even consumer group is carrying increments in them. And as actually in July to March, these costs will not go up, whereas we believe the revenues can grow from here. So yes, there should be margin expansion in the Consumer Group business.
I mean, as you know, [indiscernible] the consumer good business. And in all our business, actually, it's pretty similar. It's not offset different.
The next question is from the line of Natraj Shankar from DSP Mutual Fund. .
I just want to understand the OLX part build-out over the next couple of years. How does that -- what is the TAM? How does it look like? And what will it take to get there from investment and back end and front end point of view?
Sure. So [indiscernible] got different verticals. I mean the 1 vertical, which is very associated connected with our overall the use a classified part, which is about 45% of OLX India's revenue, which is clearly in the entire used car market with dealers advertising and consumer buying. So it's very, very strong in that segment, and 45% revenues come from there.
The TAM for that is, in our opinion, extremely high. There are almost more than 5 million used cars we have sold in India. And obviously, we are catering to -- OLX is a very, very strong enabler for dealers to sell used cars in India. It is the #1 used car platform in India and thousands of dealers, advertiser in OLX to sell their cars to consumers. We obviously feel very optimistic about the size of market and the TAM in the segment.
The second segment for OLX is a non-auto business, which carries classifieds for homes, jobs, electronics, 2-wheelers, et cetera. That TAM is really catering to all consumers who want to sell a used product or buy a used product. It is the largest used product listing platform in the country. It's also the largest platform for people to buy used products in this country.
So obviously, in a country like India, where there are more than 1.5 billion people, the need for most Indians is to buy us a used product, right? And we feel that the time of that is also limitless. Obviously, for us, as a group, we -- in the first few months of the acquisition, a little more focus on the used car side because that's what we understood better. And obviously, our plans are to grow in the medium term to used car side. But we are also making strong plans for the non used car side, which is homes jobs, electronics, household items, 2-wheelers, et cetera, et cetera.
And you see that time could really be the future growth driver for the company over the next few years.
Okay. On the non-used cars part of it, what kind of investments would you need over the next 2 to 3 years from an OpEx point of view to get there? And would that -- how would that play out in your balance sheet and P&L?
Yes. So there's obviously a lot of tech and product investment as well as investment in the processes like sales and other operations, et cetera, et cetera. But the non-auto, the non-used car part is profitable as well today. We don't see further cash going into it. I think the investment is really in the sources more than cash.
As I said, it's already profitable, the non-auto part. So we don't see that issue. But we do see a lot of investment going from our side on various other things.
The next question is from the line of Ankit Konodia from Smart Sync Services.
Congratulations on a good set of numbers. My first question is related to the OLX business. So I know that we don't have numbers to compare for the previous 2023 quarter. But if I look at the August to March 2024 period, so broadly, it will be a monthly run rate of around INR 13 crores. And in this quarter, we have done more than INR 50 crores.
I think we missed your question. .
Mr. Konodia, you are muted.
Am I audible?
Now you're audible.
Shall I repeat the question?
Yes, we didn't get the last part because -- yes, could you repeat the question? I mean we didn't get the first question.
Yes. So what I was saying that in the August to March year, we had INR 110 crores in all of India. And out of that, INR 13 crores was the monthly run rate. So if you could divide it by 8 months, it would come to INR 13 crores. And it also included -- I'm seaming it also included -- it doesn't lead to any of the discontinued business.
That is correct.
Yes. So now in this quarter, when we see the monthly revenue run rate comes to about 15.3. So is this a seasonal jump? Or do we expect this to continue -- to the level to continue going forward as well.
Yes. Thank you. I think actually, the season is actually weaker now than it is normally the order or nonautomotive season in India for shopping is mostly from October to March, and April to June is normally the weakest quarter of the year in terms of revenues normally across auto and non-auto for us.
But we do feel there's some revenue growth, but I think a lot of this is just us getting more focused on the efficiencies of both the auto and nonautomotive business. And actually, we do expect -- and we are working towards stronger revenues in the coming months. It's not a seasonal jump in April to June, if that is the question.
Great. So that's very helpful. Second question is related to the expense. In the last quarter also, I asked this question, and I think you mentioned that the current level of expenses in the OLX business will continue. We don't have any one-off anymore. So INR 36 crores was the total expense last quarter. In this quarter, it will be INR 38 crores. Do we expect a similar kind of run rate?
Yes, we don't see much change. I think the costs are fully baked in, as we answered earlier. I think, in fact, as I said again, this carries increments in April for OLX [indiscernible] 13 of OLX, which, of course, is now fully baked in here as well. Every company has increment cycle and as of April, and that's also been factored in here.
So definitely, in the next 9 months, we should see a very stable cost environment.
So other expenses here includes the marketing and the agreement costs?
It's only operating costs. There's almost more marketing in this company. It's a very, very [indiscernible] OLX, as you know, it's a very, very strong brand. It gets almost 31 million customers a money, unique customers, which comes almost brand-related apps on which people have on their phones. The marketing expense is almost 0 in this company, and this is really operating expenditure. Operating spend, including technology infrastructure as well.
Yes. Got it. So technology-wise, we have already done all the expenses, we don't expect [indiscernible]?
No, there are obviously monthly costs in server cost, et cetera, we incur, but these are fully factored in this result.
Okay. Sir, my last question would be related to our remarketing business or [indiscernible] business, which I think in the last 4 to 6 quarters has been very, very, very difficult. And in the last quarter, I think we all get to the point that we are trying to focus more on the retail than the reposition side. So any color as to how we are progress...
Yes. I think unfortunately, the same thing, repossession continues to be -- repossession supplier for us continues to challenge and that speaks well of the Indian economy, I would say, the fact that [indiscernible] are lower in banks and NBFCs for automotive, automotive lending is a result of repossession being lower. The reality is the team out there focused very, very strongly in the last 3, 4 years on building and alternative supply segment, which is retail, which is almost equal to deposition supplier. So that is a recent results or marginally up because of that effort.
But repossession is still not showing any uptake for [indiscernible], actually.
I just want to clarify question. You mentioned that retail is almost equal to repossession.
In terms of volume supply for us. Yes, correct. Yes.
The next question is from the line of Vijit Jain from Citi. .
First off, congratulations. This looks like a pretty decently good set of numbers across all 3 businesses to me. My first question is on the OLX side, growth looks pretty solid in the quarter, right? I mean the only way to look at growth, I guess, is Q-o-Q, and it's about 8%. And you guys had called out that growth should start to pick up from this quarter onwards. So congratulations on that.
And I'm just wondering, how should 1 look at this Q-o-Q number from a going-forward perspective? And related to that, any thoughts on additional disclosures on user metrics on OLX?
Yes, obviously, the ideas to keep these revenues growing. I mean, obviously, I'm not able to give guidance on whether it will be 8 or Q-on-Q or what the rates could be. But for us, in the last quarter, we're heavily focused on getting the operations of the company and your process in the company in place. I think the first 6 months, spend on technology transition and other things. And obviously in the last 3 months from April, we got heavily focused on the automotive and automotive processes and started the company.
And it takes time, but we're pretty confident looking at the TAM on the use common nonautomotive side, we should have a strong event growth in this business. A lot of efforts are on, and this was affecting partly in the first quarter. But it's very early days. I think the auto workers still be done in the company. And I said the TAM is just limitless as far as we think, in both the auto and on automotive side. So optimistic place to be in, but a lot of work to be done by the team as yet, I would say.
In terms of user metrics, I think the big ones are for us have always been traffic, which we talked about in the business. The other big metric for us is the revenue split by auto or nonauto. But is there some specific metric you want if you tell us what they are then Europe, maybe we can consider them start giving it out.
Yes. So SP1 Just a quick clarification, the traffic metric that you shared, the 40 million unique visits, that doesn't include OLX properties, right?
No, 40 million is only consumer, CarWale, BikeWale, more or less another I think 31 million last month.
Yes, I think to start off, I think that metric would be useful, I suppose. And also transaction activities.
We will do that. We'd do that separately.
Great. And then my next question is, in general, now OLX is also hitting that comparable to standalone business margins and obviously, the growth seems to be a bit higher. So where does the margins grow from here? I guess, you are already at 24% adjusted EBITDA, margin at 17%, 18% if we include ESOP costs. So with this -- and this looks like it's growing ahead of the stand-alone business, right?
So I'm just trying to get a sense of where do you things go from here? And will that be a function mainly you think of growth or you have further cost savings to achieve here?
No. It was -- I think margins in both OE or the consumer group were better in April, June and will rise with increase in revenue. As revenue goes up, as we always said, margins will go up and profits will go at a much larger rate, which you saw obvious from the first quarter results.
In fact, the first quarter results carries an increment at the rate of growth have been faster. I mean it's a profitable.
Yes. I mean it's pretty -- yes, it's well above what I would have thought.
Exactly. So that is an easy business [indiscernible]. So that's a finite business will continue. There was no change. I don't think cost reduction, there may be some minimal cost reduction, but I don't think cost reduction is now. I think we've done a lot of optimization of cost across the group in the last 6 months. So I can't see cost being the driver of margin growth, it has to be revenue as a margin growth driver.
Got it. And the last question on the remarketing side. So thanks on the earlier comment on retail and reposition and metrics around that. In general, if I see your revenue. And the way I look at it is remarketing revenues per vehicle auction and that number seems to be up decently on a Y-o-Y basis. So even with seasonality, it seems to be a pretty decent number.
So I'm wondering, is that driven by used car prices going up?
No, it's a little driven by supply chain mix because the more retail goes up. it does have our margins a bit. It's harder to grow retail, but it does help our margins a bit. I think the challenge here is that if half the business is growing and half is not or degrowing, half is be growing, that becomes a challenge at times, the action is actually going be going for like some time now over 12- to 16-month period or 15-month period. So that's been the challenge, retail continues to be strong and margin growth is coming a little bit from retail. .
Got it. And sir, if I can ask a last question related to it. Within the OLX business, since nearly half of its revenues comes from used vehicles. So in general, when you have this revenue number for June quarter, right? And if I, let's say, just for comparison, say, compare it to March, are you -- this growth mainly come because of more transactions on the platform? Or was there better monetization because of the same dynamics at play here? Basically auto industry dynamics, whatever they might be.
No. So we don't -- OLX used cars is a classified platform. Dealers pay subscriptions to be on the platform. It's a little like CarWale used cars and also dealers to subscription for on the platform. It does not actually monetize a used car transaction, right? Or dealers don't do the transactions. They pay for buying packages to list on OLX car.
So the revenue growth is coming from more dealers or higher ARPUs from existing dealers, right? It doesn't come from transactions specifically. In fact, April, June is actually a sluggish period for the -- for car industry in general, I mean, compared to the rest of the year. If not the automotive cycles have now become less evident. But then still April, June is normally the worst quarter of the whole year for the automotive industry, right, normally?
But yes, so I don't think it's being driven by doing transactions. It's just about more dealers or high ARPU to existing dealers. That's what comes in this particular model. And we keep working on adding to the platform, renewing existing dealers, upgrading, how would you charge existing leaders through you providing more value to them. So that's a continuous, continuous effort for us over the next many years is how do existing dealers renew faster, renew on time? How do we upgrade them to given more services and so they pay more money to us. And the third part is, how do we keep adding new dealers to the platform?
This is a price on applies to CarWale as well. The only difference is used cars in CarWale is 85% new. OLX is 45% used. And OLX is the #1 used car platform in the country as well.
Got it. So I guess this also helps me answer your earlier question to me better. Because if you could share more metrics around how many dealers subscribe to packages and the yields on those packages that you get and so we can better gauge whether you are seeing growth in -- what amount of growth is coming from adding new dealers versus upgrading them adding new services.
If it's relevant to include details around how many services and what kind of packages dealers are failing so we could really track how those things...
That kind of package, of course, is completely public information already because we will buy those packages.
In terms of mix and your revenues, and that's it. But some of the metrics, we are still ourselves because it's a new acquisition. We're still maturing, reviewing, getting into the details, actuating. But we will, at appropriate time, absolutely share some of the data as well.
[Operator Instructions] The next question is from the line of Jeetu Panjabi from EM Capital Advisers.
So on this whole OLX thing, I just want to be clear. Everything that was in OLX, auto, nonauto, technology, cars, everything is folded into this number and the INR 8 crore is an outcome of that. Is that a fair [indiscernible].
That is correct. And Which means that's the bar called cars OLX India, which is basically classified for used cars assets for home, jobs, electronics, 2-wheelers and also lighten the items as well. And all its associated of technology or people or anything else. It's a standalone. It's 100% subsidiary, and the accounts are reflected in that.
So the question linked to that early is that you had 2 parts of the business fundamentally. One was the non-auto 1 was the auto and then you have the tech cost around, which is a separate line you guys paid for, right? The idea was to cut the auto losses, consolidate on the profits coming out of the OLX classifieds and then where the tech costs can come out of the number is there more to cut on the auto side losses?
First of all, the 2 businesses we bought, one was the classified business. The classified business carries in automotive, non-automotive side, which is what is reflected in all our accounts now.
There was an automotive transaction business, the C2B asset-heavy business at the board vehicles and sold vehicles, which was reflected in us discontinuing operations last year, which we discontinued. So what you have seen in the last 2 quarters is what is left after discontinuing the asset-heavy business.
And the continuing operation, which we've seen in the accounts, as a used car classified business, which is 45% of its business and has a nonautomotive side is a 55% of its business -- and all the costs related is moved to our environment on 1st January this year, about 8, 9 months ago, which are completely reflected and all those costs reflected in accounts now. So they had been in fact for the last 2 quarters actually, not just but for a -- yes, yes.
Okay. So sorry, my bad.
These are a full reflection of the company is classified business, automotive and nonautomotive, these current accounts.
Okay. The second question is really around -- I mean the chitchat out there is a lot of TV inventory, passenger vehicle inventory sitting out from the OEMs in the system. The system is heavy, whatever. Now can you just take us analytically through whether that's an advantage or a disadvantage for you guys? How do you play that out? And what are the implications on car trade over the next year because of that?
Yes, sure. You can see the PV, the passenger vehicle industry is at 3%, 4% in the first quarter. And normally, for companies like ours, where manufacturing dealers spend money to sell vehicles or advertise, it is favorable that applies more and demand.
So normally, a market which is growing, but supply exceeds demand is better than when demand exceeds supply. Because if demand exceeds supplies, dealers and manufacturers tend to mute or control their advertising, which happened in the past 2, 3 years ago, when we had the supply chain issues around semiconductors, et cetera, et cetera.
But clearly, an environment where the market is stable and growing and supplies more than demand, or manufacturers want to sell more vehicles, or dealers grew, it's a little better or a better market situation for companies like us.
Yes. So you'd expect that there will be a positive outcome?
And that's why you see this big growth, 18% growth as well as this big profit growth, which is coming in the first quarter in the consumer group.
The next question is from the line of Akshay Jay from Exponent Stripe.
I want to focus on the OLX side of the business. First question I have here is that on the cellular platform, I mean my broader understanding is that our platform should probably be also compared to Facebook Marketplace, given that the way people sell there is also similar. So have you got a chance to compare how the seller side of the platform looks there versus here? And what are the areas in which we can improve the targeting capabilities that we give to sellers?
Yes, we've looked at all similar kind of site costs, and our product and tech teams continues to do that. I mean, obviously, the scale of OLX on the used side is very, very strong, whether it's someone missing other said cars or 2 wheelers or electronics, houses or even household items, we obviously feel there's a tremendous product.
And response strength with OLX has done in terms of share usage of these products by consumers who list all buy compared to any other platform in this country. I mean, we've always looked at Facebook Marketplace and other than to a competitive benchmark.
I'm sorry, what I meant is that which are the areas in which we can kind of improve because when I use -- as a seller, I use it, it seems like there is very few things that could do as a seller. And so could for example, target, I mean, there was at least I couldn't see a single capability target my ad better.
So as an individual seller of a product, like we have 2 types of sellers. We have dealers who sell and consumers who sell. Consumers like me and you, who sell a car or a 2-wheeler or a phone, or any other item, can list the product and bias for these products can sort and find these products in the geography and where you are.
So if you are selling it in 1 area or 1 location or 1 pin code in Delhi someone can target you from that PIN code and find you and find out, right? OLX is best-in-class in the sponsors for listing, which means if you list -- and you have 2 options in this, you get a free of a pain as you list obviously, the user has a chance to look at your listing and then pick and choose and see where they want to buy this product or not.
But just to tell you, the consumer response to listings is probably the highest best-in-class in OLX, maybe across the world even, not just in India response rate.
Sure, sure. And second question was on the real. I'm sorry, just on the revenue how much of our revenue would be coming from people paying for ads versus coming from Google delivering ads on our landing business?
You're saying how much consumer saying for listing, what do you mean, right?
Merchants paying for their own ad on the product?
Be less than -- I'll just speak about the a percentage, consumer pain, not businesses paying maybe about maybe 10 or less. I'm just guessing a bit, but maybe 10 or less.
Okay. No, sir, what I meant is from the Google ads or the biggest open Internet ads that get delivered on a landing page, right, which are not our ad?
Sorry, what is the question?
So what part of revenue comes from ads that are not from consumer or businesses, but from the open Internet?
Or you mean just to Google Ad Networks or any ad network?
Yes.
It's about just a little more than 10%.
Okay. And do you see scope there?
Yes, we see -- that's kind of a little core traffic. Of course, increase, but kind of codeine amount of traffic we get.
The next question is from the line of Sachin Dixit from JM Financial. .
I had a few questions, some of them have already been covered. Question basically on the auto, obviously, that 18% growth is good. But I just wanted to understand from your angle, how much growth is achievable in this business? Is this a 15% on an average sort of level growth story? Or this is a 20, 22-odd percentage story? Where do you think is roughly the sort of steady-state growth for this business?
Very hard. We don't -- very hard to get exact guidance, whether it's 15% or 22% or some other number on it. But we've got to look at the fact that the new passenger car market [indiscernible] it's hard for me to predict what the market will grow in the next 9 months, the new car market.
But I would think we would outpace that by a big number, right? And we -- as you've seen here, when we do -- whether we do 15% or 22% or whatever the number is, our profits will grow multiple times. And I think as the consumer, I think that is very, very clear. But it's hard for us to go around guidance exactly what that percentage of growth might be.
Got it. And my...
Just to add to that question, that the new car -- I mean, our new car, not only a new vehicle, the consumer group itself as a whole is achieving its highest ever quarter performance quarter after quarter, right? I think that 1 you keep in mind that every quarter, it delivers its highest ever number. I think that's 1 thing one should keep in mind. And even the numbers delivered this last quarter, even though April, June, this is not typically the biggest in terms of the seasonality or the cyclical nature of this business, it's still achieved highest ever number or its highest ever number a quarter.
So basically, that part it has done green before of last year, I think it already?
Yes. It is not normal for the automotive industry. It's not normal.
Yes. So that's it. Coming to basically on some pieces like in remarketing business. What we are seeing is that there seems to be a dip in employee expense, both on Y-o-Y as well as Q-o-Q basis. I understand that the business is not growing in term so you might not need more people, but are we getting rid of people or are they not filling in, people who leave?
No, we're not doing that. We're obviously very cautious about cost the business which is flattish. We're reallocating costs, right? Suppose the reposition business is degrowing and the retail business is growing. Obviously, we're allocating jobs. But we're very conscious of cost. In a business, it doesn't grow, right? It is not growing.
We do feel like we are not cutting investment potential if that's the question, whether it is technology or product or people or operations, et cetera, et cetera. But we are conscious of costs in that business to make sure that even in kind of grow it get contributes directly to our bottom line. But we are conscious of costs.
Just 1 final question for me. I mean this is more of a follow-on to [indiscernible] questions. But in case of one, we have gotten recent 7.5%, 8% of sequential growth. This growth is driven by more sort of businesses, obviously, more people getting listed on the platform and giving you listing as a subscription fee? Or this is also driven by price hikes? So I remember you were talking about lowering fruits and you acquired OLX, and price hikes was 1 of them. .
It's mostly -- it's a combination of it. But obviously, our temp right now is not so much right, but it's about really making sure we get more people onto the platform. I mean whether it's traffic on 1 side or it's dealers or advertiser on the other side, I mean it is important to increase liquidity on the platform. It's just healthy, and we obviously have very careful of just increasing prices.
It's more important to get more people onto the platform in the near term, right? So we're obviously focused heavily on it. But it's very early days, a lot of work to be done. I think it's, as I said, a year from the M&A. And in that period, we had to do many, many things in the first 5 months. We've got a very, very stable and is a good part of the business. Maybe in the last 2 quarters or even the last 3 quarters, you see a tremendous amount of stability to growth in the classified business and margin expansion and complete transfer of technology and other things. So -- and that was not coming out in this presentation, is really people stability.
I think in lots of M&A, you find that the challenge, which in this case, as I said earlier, almost all the [indiscernible] or the key management of the company, all of it impacts, the management investee. So it's probably things. There's lots and lots of work to be done on revenue growth with us starting our work, I would say it will take us.
And again said, I think the question asked earlier, the potential to grow on the used classified side or on auto side is just tremendous. And as I said, we feel very optimistic. But at the same time, we got a lot of work in the many quarters coming.
The next question is from the line of Sahil Doshi from Think Wise.
Definitely, my question pertains to like where if you can get some metric related to the paid lists that we have today? And how that number has grown over the last 1 year? And what will be the strategy in terms of bad because then you want to really like you alluded to the fact that you want to grow the number of transactions in the listing.
So are quite in August a reflection of growth in paid listings and the inflection of growth of the revenue of the company. And you can see in the company's revenue growth as earlier discussed has gone from INR 43 crores in the last quarter, opening revenue, 43.4% to 46.68% in this quarter. So that is the growth 7% or 8% quarter-on-quarter sequential.
And obviously, as we've won, our objective is to, as you discussed, to keep this increasing number of advertisers. And advertisers for us certain times, there are dealers for various products, cars, 2-wheelers, et cetera, et cetera. And then the consumer advertisers, people are you and me who come on the platform to sell products.But the, of course, to increase both these sets of paid listings or advertisers that we call.
Sure. Sir, would we be in a position to quantify some of the paid in?
We don't normally give guidance on the revenue and the number of payments, which will go up or light up in the future. but of the effort of the company is entirely to increase the paid listers that are the deal to consumers.
Sure, sir. And I think the past combination, you have said that you'll be reading out a team for developing the non-auto business. What are the journey? And how do you plan the investments in this for the rest of the year?
Sure. That's a good question. And we've actually, in the last few months, a head of our non-auto business, who's always taking charge of all our nonautomotive businesses. He was the CEO of OLX India. And obviously, the job is run homes, electronics jobs, household items and various other categories exist. He's also started building our atoms team and building out a strategy to grow this business. For us, in the first phase, obviously, used car classified came on actually it was on the group, and we focused heavily on that in the first few months but now we're starting to spend a lot more time on the nonautomotive side.
And the objective we start to keep doing that business as well in the next few months and quarters. But we have built out the CEO. But as I said earlier, the investments are in bandwidth and people and our own focus is not so what about money because this business is profitable. So whether we invest in field people or we invest in technology and product teams out here. it's not likely to cause any financial investment. It's more likely to be more bandwidth investment, actually because the business is already profitable.
Okay. Got it. So if I think Q-on-Q, we've seen at least on the OLX side. We've seen a sharp increase in the employee costs and also the [indiscernible] also increased. So just on account of the new hirings on the [indiscernible] also coming in place, and hopefully, they should stabilize going forward? Or how do we think about this?
OLX fast increase of manpower is mostly on account increments. There is some anti-rent and most recent account of increment cycle and increments are given a 1st April. We also acquired the company between the year, and the first thing will be given. So that's what's happened.
The ESOP products have not gone up. The ESOP cost was actually the same rate as the last quarter. It is last quarter. There's given -- I think it was in February. So the factor 2 months the previous quarter and us 3 months. So that's what it is.
The CEO, I was actually previously in the quarter. So it was not new to this quarter, if that's the question. Yes.
Okay. The question was you had 26% growth for this quarter [indiscernible] imply cost, right? So meaning that is slightly higher than the normal increment, which your classified business, so.
Yes. It is a count of a bit of an account of increments, and I would say some new hires during the quarter. The employee cost is up, yes. But otherwise, incremental costs actually, is it pectin, 13% to 16%? got Yes. It's been increment in high.
Understood, sir. Understood. And so really appreciate if you can incrementally share out more data points of value in a business are better, like how you do the operating metrics for the last point if you can possibly restart the number of payer things you have or any other metric which could give us a sense on how the business is doing. Is it helpful, not helpful, is it really helpful, sir..
Yes, we will come back on this. I think it's an earlier spike as well on some of the metrics for our like valuation.
Sure. And just the last question...
May we request you that you return to the question queue for follow-up questions.
Okay. I think if we just [indiscernible]. Go ahead.
Yes, sir. Just related to the cash balance, we have a plan on buyback or something of that, sir? Aneesha, you want to answer the question?
Yes. So on the buyback after comes compliance, unfortunately, we're not able to do a buyback right now. But the question, I think, is also to say that we -- because we have the INR 72 crores of filing, we will buy back then from the company's tackles to do so. [indiscernible] all the forward losses. .
The next question is from the line of Akshay Satija from Alpha Invesco.
Sir, I actually wanted to understand a little more on the actual side of the business. I believe we all mentioned that we are operating INR 400-plus crores, and I believe the OLX store also included in that portion. And these closings seem to be business for OLX.
So I just wanted to understand, I had a little confusion like what's happening on the OLX stores fund? And secondly, if you could throw some light on what sort of revenues come in from the actual business? What's the take rate for us or, yes, slightly less than there?
Yes. So we got in CarWale because we're at signature outlet as well as OLX, and we acquired the company and OLX franchise stores. These OLX franchise stores have got nothing to do with the B2BB transaction business that we shut was more a transaction operating business for a different kind of business. The OLX franchise stores continue to be there.
I think collectively, between ashore and signature stores, plus OLX franchise stores will be more than 200, 220 -- I mean probably 225 share was the number, but 225 to 230 stores. Obviously, our objective is to keep growing this. It's a big part of our focus. It's part of our used car classified businesses on both CarWale as well as OLX. And a lot of discussions happened the last 2, 3 months on taking this franchise network of OLX India stores and short plus signature stores of CarWale and growing this out.
And we feel committed to this to establish a very differentiated retail network. So that's the objective here. I think the total, as I say, the total number of stores are close to over to 50 stores between OLX and CarWale Abshares signature.
Okay. Sir, if you could throw some light on the -- so we believe all these retailment are entry in the remarketing business. If you could throw some light on what's the volume between retail and tonalite B2B business, what will be the take rate for us in retail and B2B business?
The retail is about 42% of our business, and the B2B repossession, the plan repossession about 46% of our business. So this is a rough ratios of the percentages of revenue. The margins, we don't have a cut right now on the different margins, but we did disclose -- I mean, we did indicate the previous speaker as well then obviously, the margins from retail are higher than the margins on reporters just from the nature of supply commitment individual sac or single source versus bulk supply coming from corporates or big banks and NBFCs.
So the margins are higher here. But we are not, at this point, got a margin cut in the financials between the 2.
Okay. So my understanding was we roughly get -- so in terms of revenue, if I just simply look at the marketing revenue and the number of staff that we saw, it shows we will get roughly INR 10,000 revenue per car. So I just wanted to understand, would it be somewhere around INR 12,000 for a retail car and probably INR 8,000 for...
I can't give the exact margin, but the margin retail are higher. that's the part. I can't -- I don't know [indiscernible], but the margins are retail, that is correct. .
Okay. If you could also just throw some light in terms of what -- so I believe India sells 5 million used cars. What would be our percentage in terms of market share? Because I believe the 2.5 million flat cars additional every year, it also increases maybe some commercial vehicles. It's not just passenger vehicle.
From [indiscernible] point of view or from our platform point of view. I think the different things -- the different way we address the market. If there are 5 million -- more than 5 used cars sold every year, about -- I mean, there are some estimates given that about 25%, 30% of the consumers or consumer-to-consumer transaction, which is like me and you selling a friend or somebody we know OLX caters to that in a very big way.
The consumers listen, consumers buy. So we address the used car market across the group in different manners. So OLX completely is the strongest C2C platform in this country for consumers buying and selling. So that's one part of the used car market.
The second part of the used car market is goes B2C, which is dealers selling to consumers, right? And again, OLX and CarWale are dominant there where a large, large percentage of the dealers who sell 70% of India's used car sales advertise on OLX and CarWale. And obviously, OneCompany big, big contributors to that balance part of market, right?
So it's just, as I said, and then comes the auction side where some part of India's market is of retail consumers or big businesses, taking used cars and selling them across, or used vehicle selling across an auction. So there are different even segments. I think [indiscernible] caters to 1 of that segment. OLX is another one. CarWale is some of the segments. So different ways we're addressing that 5 million used car market across the different businesses.
The next question is from the line of Gunit Singh from Counter Cyclical PMS.
I just want to understand certain basic things about the business. So in OLX, our main revenue stream is from the listing fees that the people listing on the platform providers. Is that correct?
Yes, then the people include people like you and me who is products and dealers in India for dealers, for car users, electronics, brokers for real estate, expect, et cetera. .
All it. So one because would be dealers selling to consumers, one would be consumer selling to consumers.
That's right.
And sir, I mean, what does the remarketing business basically constitute?
The remarketing business is about 2 different segment or 2 main segments, I would say, where it's a physical and online auction platform, where if you're a big bank, like any big bank in India or a nonbanking finance company, and you repossess what you call, use platform to sell them. So these big banks keep the vehicles with us, in some cases, and they do an online sale on our platform to dealers. So there's a B2B side, and that's 1 part of our business.
The second part is retail users. It could be a taxi owner to a truck owner to a car owner saying, listen, I want to sell my vehicle to a dealer. So they come in, put up an online sale for these vehicles on our platform to dealers. So it's a B2B, C2B transaction system. That's every marketing.
Got it. And sir, what about the retail stores that we have? I mean, what part of business do they...
That's part of our classified B2C platform. So if you're a dealer in India selling used cars to consumers on OLX or on CarWale. As a dealer, you can also say, listen, I want to be a franchisee of your brand, CarWale or OLX. And I'll take a brand and our processes and a technology and a product and I will in a way being just from a retailer and become a car Vale curated store which is operated by the dealer and owned by the dealer, but operated under a car value OLX brand plus the software elements of that brand, which is technology product, et cetera, et cetera.
So all of our outlets are basically all franchise. We don't own any stores. We don't -- we're a complete and asset-light company.
So sir, what is the margin difference between selling by ourselves and selling with cars, say, from the franchise?
We don't sell cars ourselves. So we don't buy sell cars in any 1 of our businesses. We are a platform where they are a marketplace. We're a little like the buyers and sales come and sell cars and buy cars. We don't dealers, list and consumer buyer.
Involving the franchise versus selling this from a platform.
Obviously, the margin on franchisees are obviously higher, the more value-added services provider of franchisees that we stand. Even the standalone dealer selling on CarWale on OLX, or a franchisee doing it. Obviously, our margin of franchisees and our fees are much higher on a franchise store than a normal store.
All right. Sir, I also understand that we also benefit from sale of new cars. Is that correct?
That's true. 85% of CarWale business is new. The manufacturer and dealer product products for sale to consumers. CarWale is both, that is yes. .
How does this new car, I mean, business work? And my understanding what I understood was that -- I mean you cars just bought from, say, if I wanted to go to Toyota and I go to Toyota dealership and I buy a car from there.
Well, I think consumers come to CarWale because to find out which car to buy, which is a titan any car. And then they do all their work on CarWale and eventually connect to a dealer through CarWale. That's how it works -- or manufacturer to CarWale.
So I mean does this happen online? Or is it from some physical stores?
It happens completely online. The stores which advertise are physical or the dealer advertise on CarWale.
All right, sir. So I mean, what kind of revenue do we [indiscernible].
I think what we can do because this is more into detail, I think what we can do in the earnings call. What we can do is maybe offline if you contact us, we will spend time and explain this impacting because we're going into LSI's earnings call. So we should better stick to the earnings in the later quarter performance. We're getting in the very core of the business and the strategy of the background of the business. It's probably better to do it in a separate conversation.
Ladies and gentlemen, that is the last question for today's call. I would now like to hand the conference over to the management for closing comments.
Thank you, everybody, for joining the call and going through this earnings performance update from the company. As I said, we're going to be excited about the company's future and also excited about the results for the last quarter and look forward to seeing you again. Thank you so much. Bye-bye.
On behalf CarTrade Tech Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.