Dinesh Agarwal, Founder & CEO, IndiaMart, says “in the last two years, we have added some 60,000 net customers from 150,000 to 210,000 and that many of them have upgraded to gold and platinum and many of them have opted for higher packages, which is resulting in a better collection growth. We are looking forward to collection growth in the range of 22% to 24% going forward also and in line with the recognition of the revenue as well.”
Customer additions were at multi-quarter low of 2,000 versus normally what you have in the range of 6,000 to 8,000. Is this mainly because of the price hikes you have taken or what is the factor coming in for this?
No, not only price hike. We took a price hike in the middle of May. So, it has only been three-four months. Generally, four-five months should be okay for recovering on the gross customer addition, but due to holidays and little acceptance issues, it is taking longer. But the other bigger issue is that our first-year churn on the silver customers is causing this net addition to be lower. While 75% of our customers are from gold and platinum categories, where there is no problem of churn, the other 50% of the customers which are silver and lower ARPU customers are seeing higher churn.
We will go back to our drawing board and see what all we need to do to contain this churn. While we expect the gross customer additions to come back in this quarter or so, the churn is going to be a little longer to solve.
Any sense in terms of what the timeline could be going forward of the recovery because 6,000 to 8,000 was the intended number earlier? When do we get back to that?
The pricing on the silver side, we had only revived back to our pre-Covid prices. So, it was not even a price hike. During Covid, we had given certain discounts and that we recovered for the silver customers. On the gold and platinum, our normal strategy of the 5% price hike over a longer period of time continues and that is visible in the top 10% ARPU also.
What we also want to understand is that despite this low addition, you have managed to keep the collection strong. What are the expectations on realisation and collection going forward as well now?
In the last two years we have added some 60,000 net customers from 150,000 to 210,000 now and that many of them have upgraded to gold and platinum and many of them have opted for higher packages, which is resulting in a better collection growth. As I have guided earlier also, we are looking forward to collection growth in the range of 22% to 24% going forward also and in line with the recognition of the revenue as well.Are you also confident of maintaining your margin bandwidth which was around 28% to 30% earlier?
Yes, we are at 29% standalone margin this quarter, given 1% here and there, but I think we will be in the line of that 28% to 30%.
Also, the traffic was quite strong, 10% YoY jump at 210 million after many quarters of decline. What is the outlook now in terms of the traffic?
We have seen a good traffic recovery and traffic outlook cannot be predicted easily because a lot of macro conditions play on that and a lot of technology conditions also play on that. As we have added these many customers in the past, probably some of that is contributing to increased traffic. But let it sustain for a few quarters and we can give further guidance on that.