Indiamart Intermesh Ltd

NSE:INDIAMART

Earnings Call Analysis

IndiaMART Reports 18% Revenue Growth Despite Customer Churn Challenges

In the second quarter of FY25, IndiaMART recorded revenues of INR 348 crores, an 18% increase year-on-year, with deferred revenue rising 19% to INR 1,483 crores. Collections from customers grew by just 6%, reflecting challenges from elevated customer churn, particularly in the silver category. The company added 2,400 customers this quarter, improving slightly from previous periods. While EBITDA margins are at 36%, management anticipates stabilization at around 34-35% as customer acquisition ramps up and costs normalize. Looking ahead, recovery in collections is expected to reach at least double-digit growth if churn issues are addressed.

A Mixed Quarter: Growth Challenges in Collections

In the latest earnings call for IndiaMART, the company reported consolidated collections from customers for the quarter ended September 2024, reaching INR 356 crore, representing a year-on-year growth of about 6%. However, this marked a significant decline compared to previous quarters where collections were growing between 15% and 20%. IndiaMART's standalone collections totaled around INR 337 crore, showing a modest growth of only 5%. Such a slowdown is concerning, especially as it comes despite a respectable 18% growth in standalone revenue from operations, which stood at INR 332 crore. The focus for investors should be on this apparent discrepancy between revenue growth and collection performance.

Revenue Drivers: Realizations and Expanding Supplier Base

The company attributed the revenue growth primarily to a 14% improvement in the realization from paying suppliers, along with an increase in the number of paying suppliers, which now totals 218,000. The deferred revenue also showed a robust increase of 19% year-on-year to INR 1,483 crore. This indicates that while the front-end collection metrics may falter, the underlying business growth—reflected in deferred revenue—remains strong. Investors should monitor how these deferred revenues convert in the coming quarters.

EBITDA Margins: A Temporary Upsurge?

IndiaMART's standalone business reported an EBITDA of INR 120 crore, yielding a margin of 36%. Management explained that the current margin expansion is primarily due to cost optimizations and lower customer acquisition costs. However, with anticipated increases in customer growth, they expect margins to realign with the historical averages. Management suggested a potential stabilization of margins at around 34-35%, reflecting operational leverage as customer additions resume.

Churn Issues: An Impediment to Growth

A significant portion of the conversation during the call revolved around the elevated churn rates within their customer base, specifically at the silver bucket level. There was an addition of 2,400 customers within the quarter, which was an improvement from the prior quarter's 1,500 net additions. Despite this, the management acknowledged that customer churn remains a structural challenge, indicating a need for focused efforts to rectify this issue. Until structural changes are enacted to address churn effectively, collection growth is expected to be capped at 10-15% in future quarters.

Forward Guidance: Cautious Optimism Ahead

While the company expressed confidence in recovering to double-digit collection growth rates, the management suggested that without alleviating churn-related issues, they would be cautious in future projections. They have set the expectation of the collections aligning between 10-15% in the near term. Specific margins for future quarters are suggested to hover around 34-35%, indicating some return to normalcy but acknowledging potential volatility stemming from changes in customer acquisition strategies.

Strategic Initiatives and Future Outlook

Management highlighted the ongoing efforts to improve the user experience and engage customers through enhanced matchmaking strategies. There's a focus on leveraging new technology to bolster transaction efficiencies. Despite current operational challenges, management remains optimistic and views the structural changes underway as vital for long-term growth potential. The upcoming quarters will be critical to validate if these strategies begin to yield positive traction.

Market Context: A Broader Perspective

IndiaMART operates in a competitive landscape, and their recent performance highlights the challenges of sustaining high growth amidst market conditions. The company’s historical performance trajectories and changes in the external environment should be carefully monitored as they may affect long-term valuation and growth outlook. With potential steps taken to refine operational efficiency, investors may find value if the positive trends in market metrics continue to develop.

Earnings Call Transcript 2025-Q2

[Avijit Vikram, executive]

Good evening, ladies and gentlemen. I am Avijit Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the Company's Quarter 2 FY 2025 Earnings Webinar. [Operator Instructions]

Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer; Mr. Brijesh Agrawal, Whole-Time Director; Mr. Jitin Diwan, Chief Financial Officer; and Mr. Prateek Chandra, Chief Strategy Officer.

Before we begin, I would like to remind you that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide #3 of the earnings presentation for the detailed disclaimer.

Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you, and over to you, sir.

[Dinesh Agarwal, executive]

Thank you, Avijit. Good evening, everyone, and welcome to the IndiaMART's Quarter 2 FY '25 Earnings Webinar. We have circulated our earnings presentation, which is available on our own website as well as both the Stock Exchange websites. We are sure you would have gone through the presentation, and we would be happy to take any questions afterwards.

IndiaMART has delivered consolidated revenue from operations at around INR 348 crores in quarter 2, representing a year-on-year growth of 18%. Collections from customers have grown by 6% to INR 356 crores on a consolidated basis, whereas the deferred revenue grew by 19% to INR 1,483 crores on consolidated basis.

Unique business inquiries grew to 28 million, representing year-on-year growth of about 14%. Our total paying suppliers have grown to 218,000. We continue to see more than anticipated churn on the customer base in the silver bucket. As a result, we have added 2,400 customers this quarter, which is a slight improvement over the 1,500-odd customers that we added in the last quarter. However, as I said, the anticipated churn continued to be elevated and we are working on that.

Our platinum and gold customers base, which constitutes about 50% of our customer base and 75% of revenue continue to have a very low churn and continue to be very stable. We continue to take measures to refine the matchmaking and enhance the overall user experience and engagement on the platform.

Now I will hand over the call to Brijesh to update about Busy Infotech. Thank you, and over to you, Brijesh.

[Brijesh Agrawal, executive]

Good evening, everyone. Busy has done a net billing of INR 17.1 crores in this quarter. This represents a Y-o-Y growth rate of 17%. The revenue from operations has grown by 19% Y-o-Y to INR 15.3 crores. The deferred revenue has grown by 40% to INR 53.3 crores. The net profit for the quarter was INR 2.5 crores.

During this quarter, we've sold 8,000 new licenses and the closing count of total licenses is about 381,000 licenses. This is at the end of September '24. The overall performance has been in line, and we are focused on increasing our growth rate in the coming quarters.

With this, I'll hand over the call to Jitin to discuss the financial performance.

[Jitin Diwan, executive]

Thank you, Brijesh. Good evening, everyone. I'll take you through the financial performance for the quarter ended September 2024. Consolidated collection from customers was of INR 356 crore in the quarter, representing Y-on-Y growth of about 6%. IndiaMART stand-alone collections from customers from the quarter were around INR 337 crores, registering Y-on-Y growth of 5%. The stand-alone revenue from operations stood at INR 332 crores, registering Y-o-Y growth of 18%. Our growth in revenue was primarily driven by around 14% improvement in realization from paying suppliers and remaining by increasing number of paying suppliers.

Deferred revenue stood at INR 1,483 crores, an increase of 19% on Y-on-Y basis. EBITDA of IndiaMART stand-alone business stood at INR 120 crore, representing a margin of 36%. As we mentioned in our last call, current expansion in margins is primarily due to saving arising from lower customer acquisitions, certain cost optimizations and operating leverage. As and when there is an increase in customer growth, we anticipate that margin will align with the gradual operating leverage inherent in the business.

Consolidated net profit for the quarter was about INR 135 crores. Consolidated cash relating from operations was about INR 103 crores. Consolidated cash and treasury balance stood at INR 2,449 crores as on September 30, 2024.

Thank you very much, and now we're ready to take any questions.

[Avijit Vikram, executive]

[Operator Instructions] First question is from the line of Vivekanand from AMBIT Capital.

[Vivekanand Subbaraman, analyst]

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 stand-alone business. I understand that you are facing very high churn at silver bucket 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? 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.

[Dinesh Agarwal, executive]

Vivekanand, so as I have been telling in the last couple of quarters that if the customer -- increase in the net customer base continues to be flattish over a longer period of time, it will start to reflect in the collections as well as in the revenue. However, this particular quarter, even we have been taken a little surprised negatively on the only 5%, 6% collection growth. We still tend to believe that this is one-off some of our execution issues, some of our sales execution issues. And we believe that we will probably bounce back, if not towards 15%, 20%, at least try to be in the double-digit plus collection growth going forward. But until and unless we fix the churn position structurally, I think we must not accept -- anticipate more than 10%, 15% of the collection growth in the times to come.

[Vivekanand Subbaraman, analyst]

Okay. 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 3 tiers?

[Dinesh Agarwal, executive]

So as I said, gold and platinum on the revenue side, they contribute about 50% of the customer base and 75% of the revenue realized. On the collection front, though we internally do track on every segment of the customer what is the collection and what is the average collection per customer per month, but we have not been releasing that data publicly. But in general, if you see our revenue and collection today, if you take 6 months' moving average period, they are mostly in line. So you can safely assume that even the collection from customers, from gold and platinum, would be in the range of between 70% to 80% from these 50% customers because the customer set for the collection and for the revenue will remain the same.

[Vivekanand Subbaraman, 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, right, Slide #31, that is on...

[Dinesh Agarwal, executive]

That is on revenue basis.

[Vivekanand Subbaraman, analyst]

That is on a revenue basis, right? So on collection basis, this does seem to suggest that you maxed out potentially increased prices from gold and platinum. Is that a correct inference or...

[Dinesh Agarwal, executive]

I would not tend to believe that immediately based upon just one single quarter of performance. I think it could be a few clients here and there where the overall -- and obviously, the average collection per customer, if the overall collection itself is 5%, 6% growth and total number of customers have grown by 4%, you can assume that the average collection per customer has grown only by 2%. But that simply does not mean that this is the maxed out and this is the trend. So I refuse to believe on that. And we will -- if this is the similar trend for the 3 quarters in a row, then yes, but I think we will try to reverse that next quarter onwards.

[Vivekanand Subbaraman, 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 you -- your collections growth appears to be more impacted by upgrades perhaps getting affected due to persistent churn being elevated. Anyway...

[Dinesh Agarwal, executive]

Vivekanand, asking the same question again and again will not...

[Vivekanand Subbaraman, analyst]

No, 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. It has turned out very differently.

[Operator]

Next question is from the line of Swapnil from JM Financials.

[Swapnil Potdukhe, 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 FY '20, right, on a quarterly basis, and we -- 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, on a stable -- when the economy was stable.

[Dinesh Agarwal, executive]

Yes, I am giving you. Okay, we'll come back to your answer. I'll give you that answer, but please go ahead with your next question, yes. I'll come back at the end, because this is a very interesting question, and I definitely want to answer that.

[Swapnil Potdukhe, analyst]

Sure. So the next question would be on your churn rates. If you can just break it down the way you have been doing of late 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?

[Dinesh Agarwal, executive]

No. I think we have actually rather improved. So if you really see last quarter, we had dropped -- so quarter 4 is generally very good on the gross as well as renewal. The quarter 1 last year, I mean, last quarter, which was April, May, June, we came down to about 1,600 customer -- net customer adds. This quarter, it is about 2,400. One day here and there could make a difference of maybe 200, 300. So on a very fractional basis, I think we have improved. But that number is not really significant enough to talk about until we see permanent 2, 3 quarters in a row improvement on that. So the churn continues to be stable, but maybe a few basis point, it has improved.

[Swapnil Potdukhe, analyst]

Will it be possible for you to give it in absolute percentage terms?

[Dinesh Agarwal, executive]

I've been giving you the same numbers. So on the platinum and gold, we continue to be healthy approximately at 1%; on the silver annual, about 4%; on the silver monthly, about 6% to 7%.

[Swapnil Potdukhe, analyst]

Got it. 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...

[Dinesh Agarwal, executive]

So I've given this answer earlier also. So one is this traffic growth. Over the time, we have realized that the way traffic is being calculated in the era of web components and a lot of web crawling happening and search engines and ChatGPT and others, I think the web traffic to differentiate the real user traffic versus that, that accuracy number is going down and down and down. I mean while we try to represent as much as possible the real user number, but the number of bots have suddenly increased and the number of scrapers have suddenly increased. That is why the reliance purely on the traffic number or purely on the registered user number is very difficult. The -- that is where, if you remember, about a couple of years ago, we started to report this active buyer in the last 12 months, that number. So to give you more realistic picture, what is the real people who are actually making inquiries.

Similarly, the unique business inquiry. On the business inquiries delivered side, I have always been saying that we continue to make changes. Earlier, we used to share a buyer's detail with almost like 6 suppliers on an average. While we tried to reduce that towards 5, 5.5, now we believe that since the churn is very heavily stubborn, maybe there is a room for reduction of the competition and reduction of the number of suppliers per buyer and that is why we are moving more towards 4 suppliers per buyer. So the number of inquiries -- business inquiries delivered will continue to decline in a shorter period of time. So these are the 3 numbers that we give you, 4 numbers, to be able to navigate what is right and what is wrong.

[Swapnil Potdukhe, 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, I mean that...

[Dinesh Agarwal, executive]

In the short run, it will, but it should improve his conversion. It should improve his effort to ROI, currently what might be happening. And this is a hypothesis based upon certain people that we have met. They are saying that don't give us 100 inquiries, give us maybe 50, but give us the ones which are more relevant and more converting for me.

[Swapnil Potdukhe, 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?

[Dinesh Agarwal, executive]

Any chance of?

[Swapnil Potdukhe, analyst]

Increasing your A&P spends. Maybe that could be the one that could help you...

[Dinesh Agarwal, executive]

Yes, we are working on that. As soon as we are ready, we'll come back and let you know.

[Swapnil Potdukhe, analyst]

Got it. If you can just answer my first question, that will be...

[Dinesh Agarwal, executive]

Yes, I think I'm not able to find handy. I definitely remember in FY '19, we were actually at about 15% odd growth rate, 12%, 15% odd growth rate. On a quarter-on-quarter, I think we have faced this challenge at least third or fourth time in the history. And this is probably one of the longest 8 quarters that it has taken us to -- because the size has also become bigger. But otherwise, we have always found ways and means. Maybe we'll take one step back to find way back because so many categories and so many -- such a large business and such a great future ahead of us.

If we won't grow, I mean, even Google should not grow, I mean, if there is a strategic issue, because strategically, we are almost a small replica in our own world for Google. So from that perspective, I don't think finding the right niche is important, but I think we will recover and we are quite confident of recovering. So in FY '17, our collections over FY '16 was only 13%. And I don't have the real quarter-on-quarter data. But I think if the overall year was 13%, I'm sure the -- there was one quarter which was single-digit growth percentage. Similarly, some time around FY '19 also, '19 or '20, FY '20 was 10% growth rate, whereas only last 15 days of the FY '20 were pandemic-oriented. While even the quarter-on-quarter, I do remember that third quarter of FY '19 was also similarly single-digit quarter. So I think we have faced this, and he is saying that other than pandemic. And even if I remember the entire FY '12 and FY '13, we were less than -- and that time, we were still trying to find the product-Market fit. So we will recover, for sure.

[Operator]

Next question is from the line of Sachin from Bank of America.

[Sachin Salgaonkar, 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 remain low. And on back of operational leverage, cost control, clearly, we're seeing quarter-after-quarter EBITDA margins moving 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?

[Dinesh Agarwal, executive]

Yes, we have been telling, I think these are more to do with the numbers -- timing of numbers. Jitin, can you highlight?

[Jitin Diwan, executive]

So thanks, Sachin. So as you rightly mentioned that margins are elevated for the last 2 quarters. Because of the slowdown in growth, we are not able to add much of net adds and this quarter collection is also on the lower side and that's how it is looking elevated. So once we go back to adding customers and collection will also picks up, we will be back to our normal margins. Having said that, sustainable margin, what we said, we believe that it should be in the range of 34%, 35% and not 37%, 38%. So next quarter also, we will have our salary appraisals, which will have impact on margins as well.

[Sachin Salgaonkar, analyst]

Okay. But let me flip that question around a bit. I mean during COVID, your margins were as high as 50% to 52%. What stops the margins are only at 36%, 38%. Why can't be 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?

[Dinesh Agarwal, executive]

We always say that one should take the collection to cash flow margin and that would be the long-term trending margin would be for the revenue to EBITDA. It cannot be different, so collection to cash flow has been trending at between 35% and 40%. This particular quarter, collection to cash flow is hardly 33% or so. So collection to cash flow is the leading indicator of the margin.

What you see currently here, the revenue coming from the past, while the cost is current, so since the -- currently, the revenue is at 18%, while the collection is at 5%, even during the COVID, I've been telling everybody that this is the worst ever quarter, but everybody said margins are doubling. So -- and in COVID, a lot of costs were also cut down because rent were reduced by half, no transportation, no hiring, so they were like that. But these are not the times where we are going to cut cost to sustain the margin.

So as I said, we would be happy to report margins at around 33%, plus/minus 1%. But in the interim, while we try to do -- find the growth lever, until and unless we find the healthy growth lever, there is no point of spending money. So that is what I'm saying. If we find the handle on churn, I think we will go whole hog aggressive on the gross addition as well and that will increase our cost a bit [ then ]. So since we are not able to find the handle on churn, we are also going slow on the gross.

[Sachin Salgaonkar, analyst]

Very clear. And my first question -- second question is actually on some of the points you said, I've got answer to this question or to some of the earlier participants. When -- in one of the statements, perhaps you said that until we fix these issues structurally. So just wanted to understand, sir, what needs to be done from a management perspective to fix these issues structurally?

[Dinesh Agarwal, executive]

So one is the execution side, which is the people and process side. The other could be product and product expectation and product outcome side. What is it that will bring the buyers back again and again? What is it that will improve the word of mouth? What is it that will improve the inquiry to conversion for suppliers? What is it that will improve the fulfillment for buyers? And that is something which we found the product-market fit in FY '18 and then from then on, we have been doing minor, minor tweaks.

There may be possibilities that while doing the minor, minor tweaks, there could be something that we missed probably. And one of the things that we realize is that we have been always working on increasing supplier responsiveness and which is so high today that it may be acting against the buyer's interest or against the suppliers' own interest in terms of his getting inquiry, but he's not getting conversion. And we have heard this by going to multiple suppliers that inquiries are there, but I think it is difficult to become -- to mature the inquiries. Buyers are also saying that the suppliers are there, but probably it is difficult to decide which supplier to settle with, so this is one of the things. And that structural finding is sometimes in front of your eyes, but you just keep struggling to find the right one.

[Avijit Vikram, executive]

So now we'll take a question from the chat box. The question is from Mr. [ Dhiren Babaria ]. So how do you see exports-oriented suppliers and buyers for adding growth to business as China Plus One theme comes to fruition? And how -- or what are our plans to capitalize on these trends?

[Dinesh Agarwal, executive]

Thank you very much. So we -- just for the context, IndiaMART was an export-import business to business marketplace since 1999 until 2009 and most of our -- 80% of our focus used to be exports. Sometime during 2007, '08, '09, we realized that India has become uncompetitive or less competitive in the world market as against China.

And we would probably like to focus on the domestic market. It took us some time between 2009 and 2013, '14 to find the product-market fit for the domestic buyers and sellers. Ever since, we have not been focusing on the export market.

Only in 2020, post the COVID pandemic hit, we found that still there is nobody else who is serving the export market well. And so we created a smaller initiative called IndiaMART Verified Exporter program. And that has done well. But do I see a TAM of hundreds of thousands of crores there? I still do not see such a large TAM. While -- I mean if you really compare the growth in the export market, that still has been single-digit CAGR over the last 10-odd years or 15-odd years. So while there is an opportunity to build maybe INR 100 crores, INR 200 crores, INR 300 crores business and out of that, maybe we are already doing INR 50 crores, INR 60 crores, INR 70 crores of business, but will that become a INR 500 crores or INR 1,500 crores business? That is not something that we see immediately.

So I hope that answers your question that we are -- we now have an export offering ever since late 2020 or early 2021, and it is probably upwards of INR 50 crores and below INR 100 crores of revenue contribution to our business, but will it grow as rapidly as the domestic business, I'm not too sure.

[Operator]

Next question is from the line of Kaushik Suresh from Generation Investment Managers.

Next question is from the line of Nikhil Choudhary from Nuvama.

[Nikhil Choudhary, analyst]

Just want to understand the collection number a little better. So collection growth for us was 5% Y-o-Y this time. And while you are attributing it to lower subscriber addition, even the subscriber count, total subscriber grew 4% Y-o-Y, right? So not -- 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 for 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 2 quarters?

[Dinesh Agarwal, executive]

Yes. If you see the Slide #31, so let's understand the collection -- difference in collection and difference in the revenue. So if you see the revenue side, revenue is 4% growth in paying supplier and 14% growth in average revenue per supplier. Total revenue is 18% growth. So there is no calculation difference. On the collection side, 4% growth in customer and only 1% growth in average collection per customer, which is resulting into 5%.

[Nikhil Choudhary, analyst]

Yes, sir. So why there is decline in average collection per customer? Any reason for that?

[Dinesh Agarwal, executive]

I mean as I said, we have been growing at about 15-odd percent in the past, despite the fact that the number of paying suppliers have been growing at 5-odd percent. In this particular quarter, we believe that there could be execution challenges in the pockets. We do not know if this is something that we can say that the average collection per customer will continue to remain muted. We will see if we can recover that back in the current quarter or next quarter. If that is not the case, then we can assume that this is a structural problem.

[Nikhil Choudhary, analyst]

Sure, sir. Second thing, given the churn continue 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?

[Dinesh Agarwal, executive]

So coming quarter, I don't think you will see a significant change. But because the amount of changes that we have done around 2, 3 quarters, 4 quarters ago, they have not yet resulted into anything significant. So I think newer initiatives that we are trying to take on the -- reducing the customer competition or the buyer side competition, buyer-seller side competition as well as maybe putting some additional checks on spending our time, money and energy in terms of acquiring the customers, which are the more vintage customers or more evolved set of customers, that will take another 2 quarters or so to say if there is any significant result happening on that. Other than that, I do not have any other information to share with you.

[Nikhil Choudhary, 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 2?

[Dinesh Agarwal, executive]

I would say that there has been some effect of the -- if you would have noticed, we have started to collect inquiries also using WhatsApp on our mobile website. So that has given us maybe 1% or 2%. And so the conversion from the traffic to unique buyer, that has improved a little. We have also -- we used to call the buyers whenever there was a half intent or a dropped intent buyer, that process also we have moved towards to WhatsApp and RCS. That has lower cost and higher ROI. So that has resulted into some of this. But this is too small a number to say because otherwise, if you really see, it used to be in the range of 25 million, 26 million and moved to 28 million, whether it will remain 27 million or 28 million, but I'm sure at least 1 million per quarter growth has come because of the WhatsApp-led implementation.

[Avijit Vikram, executive]

So we have another question from the chat box. The question is from Mr. Jigar Shah. We are seeing Justdial being very aggressive in customer acquisition. Also, we see more activity by Tradeindia, your initial competitors. Is competitive intensity hurting our growth?

[Dinesh Agarwal, executive]

On the Justdial side, I think if you really see the number of customer declined during the COVID time and the recovery, I think they declined for a long period of time during the -- both the COVID period, while we kind of remain more or less flattish during the entire COVID period. Only for the first quarter, we declined. So I think they recovered that post COVID. While at IndiaMART, we moved from 1.5 lakh suppliers to almost 2 lakh suppliers quickly. And in the last 5, 6 quarters, we are now stagnating. I would say they woke up a little late. Whether they will face the similar challenge that time will tell. But we are happy with whatever we have been doing and wish all the best to Justdial for their own endeavor.

We haven't heard much about Tradeindia. Tradeindia remains our distantly respected competition, whether it is ExporterIndia or Tradeindia, but no significant change that we have observed from them.

[Operator]

Next question is from the line of Kushagra from Old Bridge Capital.

[Kushagra Bhattar, analyst]

Just 2 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. Yes, that's my first question.

[Dinesh Agarwal, executive]

So as I said, in terms of improvement of sales efficiency to improve the collections, on the shorter term, some of those things where we were not able to fill in the vacancies, some of them are related to even the churn moment that we are having from silver to gold to platinum. I think the gold side, the lower part of the gold, which we call steel customer, there, I think we are having certain set of challenges.

I would still say that please wait for next quarter or so to be able to really say that what execution challenges have we been able to fix because this 5% growth rate that is coming, some of that could also be the regional decentralization that we have been working on. We now have a regional structure, which is reporting into the central structure with each vertical of acquisition and customer support and the key client division, but none of that should have resulted into such a sharp drop. 5% growth coming from the customer and 10% growth coming from the collection. Together, they should have been plus/minus, anywhere plus/minus 15%. This 5% is definitely not acceptable, but we would only know if this is one-off because the number of months that we have had is only 2 months so far.

[Kushagra Bhattar, analyst]

Sure, all right. Second question is on a different note, basically, you generally don't follow 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 in the last 7, 8 quarters? Yes, that was my second question.

[Dinesh Agarwal, executive]

So I think on the monetization side, the day we decide that now we have to maximize the monetization for every category, for every location, for every inquiry. Currently, we have been operating very largely as a horizontal marketplace with flattish pricing across the category, across the location, across the quantities. The only thing that we have implemented in the last year, 1.5 years is all the newer sales in the platinum segment is being sold in 2-tier pricing with the normal and premium, where the premium has been assigned to certain 2%, 3% of the categories and the top-tier cities.

I think there is enough room for a B2B marketplace or for a B2C marketplace once it comes to maximize the revenue per inquiry in different segments. So if you really look at 1688 example, between 2005 and '15, their customer base grew from almost 100,000 to almost 1 million, close to 1 million. And between '15 and '25, their ARPUs have grown considerably. But I don't think we at IndiaMART have reached that level of saturation that we need to optimize on every location, every category. I think we are still in a growth phase, and we will continue to do that.

Just like in Google, if you look at the ad words, every category, you can do a bidding and do a demand-supply based matchmaking, whereas in the beginning on the Amazon, whenever a new category is introduced, is introduced at a flat pricing of 5% or so. But over the time, when you -- when the competition heats up, you try to maximize the return per category or sales per category. And then on top of that, you make revenue from advertisement. So I don't think the monetization is per unique business inquiry is a problem. I think the top of the mind recall and the Net Promoter Score of buyer and seller, that is the key metric for us in the midlife of IndiaMART.

[Avijit Vikram, executive]

So we have another question from the chat box. The question is from Mr. Amrish Kakkar. Can you share what is the current thinking on the strategic investments, either in terms of adding as a service or potential sales, specifically for existing integrated services like Livekeeping, can you provide some color on what the plan is?

[Dinesh Agarwal, executive]

Prateek, do you want to answer that accounting as a segment?

[Prateek Chandra, executive]

So on the strategic investments, as we've stated that our core business proposition that was around the matchmakings and a little bit on the conversation side. And the business software enablement for the different SMEs becomes an integral part for the SME ecosystem. And in order to enhance the value proposition there, we've been trying to explore different, different softwares and invested in the different softwares.

Accounting being one wherein we have a very high conviction and we have taken huge bets on the accounting segment, one investment is Busy and the other investment has been Livekeeping. So it's been roughly around 3 years that since we made these investments -- 2.5 years that since we made these investments. And both of these investments are moving in the right direction.

In the terms of Livekeeping specifically, when we acquired them, it was just a product that was just created. Over the years, we have worked on the scalability of the product. And now, it is being used by more than 10,000-plus customers in total. So from 0 to 10,000 customers is what we've been able to achieve. However, we still think that in the larger scheme of things, it still continues to be small. As and when it kind of continues to grow well and becomes a little scalable, we would explore a lot more synergistic opportunities with the IndiaMART, which would become visible.

[Dinesh Agarwal, executive]

Yes. Currently, for Vyapar, Busy and Livekeeping, all 3 of them, we are currently using IndiaMART as a channel for sales lead generation. I think it is in the near future that we would start to do a reverse as well whereas Busy customers or Livekeeping customers can generate leads for IndiaMART as well.

On the Vyapar side, we have also integrated on the buyer side, where from within Vyapar, you can submit a buy lead or an RFQ to IndiaMART for inquiry. Similarly, from Shopify, we have an app where you can submit an RFQ on IndiaMART. So this gives a holistic view on about INR 600 crores, 700 crores that we have invested in the accounting software side.

On the minority investment side, Prateek can also give you some color where we -- I think if you read the annual report that was released in the last quarter, that has a good section on that. But Prateek can elaborate more on -- as a strategy on that side.

[Prateek Chandra, executive]

On the sectors other than the accounting, you still kind of continue to explore. Certainly, if you look at -- we've invested in the logistic SaaS that we had the 3 investments there. Distribution management, Bizom is the another one that's been kind of doing well, been progressing well. EasyEcom had been more about the e-com universe of the suppliers who want to do e-commerce, enabling their order management system, their warehouse management systems is what EasyEcom does. And M1xchange is the other one, which has been doing well on the invoice discounting side. So these are -- again, if you see very, very different, different areas that we are trying to explore. And as and when -- as I said, look, they continue to be small. As and when they grow bigger, we would see a much better synergies opportunities with them.

[Dinesh Agarwal, executive]

I think 4, 5 of them within last 2.5 years have raised multiple rounds of subsequent capital after raising money from IndiaMART as well. So they are continuing to do well on that side as well.

[Operator]

Next question is from the line of Anmol Garg from DAM Capital.

[Anmol Garg, analyst]

So a couple of things from my end. Firstly, you have talked about that you're not seeing much competition from Justdial Or Tradeindia, ExportersIndia. So is there any other channel which is from where we are seeing larger competition for example, B2B e-commerce or Facebook per se?

[Dinesh Agarwal, executive]

So I don't think we have faced any bigger challenge from -- or any bigger competition from any of the smaller Indian players that keep getting funded time to time. I'm sure each one of them are trying to solve very unique and very different problem for a specific industry or for a specific geography. And we continue to study them and see what we can learn from them, how we can partner with them. But as of now, we have not seen any particular customer who is mentioning that I left you because of XYZ competition.

On your other question, whether Meta or Facebook or Instagram or WhatsApp, similarly, whether Amazon or Flipkart or Zepto or Blinkit and thirdly, whether Google -- these 3 continue to remain the bigger daddy under which we try to find our own niche. So they are always a competition to anybody and everybody, all these 3 people. And we continue to find a niche, the kind of problem that they are not willing to or able to solve. And B2B is one such thing that neither Amazon nor Google and nor Facebook as a company has solved in a longer period of time. And it is not only in India. Even worldwide, if you really see, very little they have been able to gain. So I think they continue to be a threat and opportunity, whereas looking at their revenues, you can find that if their B2C revenue is so high, how can you do B2B. But if you really look at the other smaller ones, they're all trying to generate some business, but still nothing has become anything to worry about us as a competition.

[Anmol Garg, analyst]

Sure. Sure. Secondly, if I have to break up our paid supplier additions between gross additions and churn in this quarter, then would you say that on quarter-on-quarter basis, you have seen some improvement in gross addition or churn has reduced from that perspective?

[Dinesh Agarwal, executive]

So from the gross side, as I said, ever since almost like 7, 8 quarters, we have remained at 90%, 95% of the gross addition and I have not pressed the pedal, specifically, to meet short-term net customer requirement by pressing pedal on the gross. My thing has been that try to improve the churn first before we go to 120% of our best ever gross addition. So as I said last time also, we continue to remain at 90%, 95% of our gross addition. Whatever deterioration or improvement that you are seeing, it is because -- purely and purely because of churn.

[Anmol Garg, 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 quarter-on-quarter basis?

[Dinesh Agarwal, executive]

Net supplier addition, yes.

[Anmol Garg, analyst]

Net supplier addition.

[Dinesh Agarwal, executive]

Yes. Currently, it doesn't look like we have broken out of that 2,000- to 3,000-range-bound figure. If you really look at the last 5, 6 quarters, it has remained range bound between 2,000 to 3,000. I would love to go past 5,000, but we have not been able to. And until and unless we go past 5,000 on a consistent basis, we will not be unnecessarily putting a lot of money in acquiring new customers to increase our gross addition.

[Anmol Garg, analyst]

Right, right, 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.

[Dinesh Agarwal, executive]

That varies significantly from customer to customer, industry to industry, location to location. Certain customers are with very large order value, like large machines and large projects are happier with 1% or 2% conversion and certain customers, which are able to do even 20% conversion. So I think that varies significantly across different industries and geographies.

I think the NPS that we measure, buyer fulfillment rates that we measure has remained at 40%, 45% of the buyers who respond back to our feedback. That is something as an indicator that it has plateaued over the last 2, 3 years. It used to be 30-odd years -- 30-odd percent, 25-30-odd percent pre-COVID. It moved to 40%, 45% -- 40-odd percent post-COVID and now trending at 45%. But in the last 3 years, it has not really made further improvement. And also people's expectation might have changed. So we can clearly say that the importance of conversion is very subjective to each industry and each particular customer.

[Operator]

Thank you, ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. Dinesh Agarwal for closing comments. Over to you, sir.

[Dinesh Agarwal, executive]

Thank you very much, ladies and gentlemen, for joining our quarter 2 FY '25 conference call. We have tried to address your queries in the time available. But if you still have any questions, please feel free to contact us with our Investor Relations team, and we will try our level best to give you answers of whatever we could not answer today. Thank you. Have a nice weekend and happy Diwali to all of you.

[Operator]

Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you for joining us, and you may now disconnect your lines.