Brainbees Solutions Limited (FIRSTCRY) Earnings Call Transcript & Summary

Good evening, everyone. Welcome to Brainbees Solutions Limited Q3 and 9-month FY '25 Earnings Call. This is Anish Arora, and I have with me, Mr. Supam Maheshwari, Managing Director and CEO of the company; and Mr. Gautam Sharma, Group Chief Financial Officer of the company. Kindly note that this call is meant for analysts and investors of the company. We wish to highlight that the call is being recorded. [Operator Instructions] We would like to point out that some of the statements made in today's call may be forward-looking in nature and the disclaimer to this effect has been included in the investor presentation shared with you. Also, there was some delay in uploading the presentation from our side due to some technical reasons, apologies for the same. With this, I request Mr. Supam Maheshwari to take it over.

Good evening, everyone.

Good evening, everyone.

And welcome again to our Q3 performance review earnings call. Appreciate your time on the Saturday. So we'll take you quickly through some of the numbers and the qualitative journey of our OND quarter. We will now move to our first sort of a slide which talks about -- we have been very delighted to highlight that this has been our best quarter in terms of profitability in last 4 years. We are happy to report a consolidated profit before tax of INR 69 million in Q3 and INR 941 million consolidated cash profit after tax, and best ever India multichannel adjusted EBITDA, adjusted for ESOP cost at 11.2%, and consolidated adjusted EBITDA as well at 6.4%. These all are our all-time high numbers, the best ever quarter in last 4 years for all of us. And overall, our adjusted EBITDA for the consolidated business has increased by 54% for the 9-month basis compared to the 9 months for FY '24. We will continue to work hard, and we remain very optimistic for our journey forward to continue to improve both our top line as well as bottom line. Before we dive into our Q3 performance, I would like to take you through our 9-month snapshot as well. And so this is a slide which talks about our 9-month snapshot, continued growth momentum with improvement in profitability across our business segments. This is a consol performance. Annual unique transacting customers in India and Middle East, 17% increase for the period ending December '24 vis-a-vis period ending December '23 annual unique transacting customers. Likewise, our GMV grew over last 9 months 17%, and net revenue from operations 19% to INR 5,729 crores, and consolidated adjusted EBITDA grew 54% over 9-month December ending from 9 months of FY '24, December '23 to INR 293 crores. And India multichannel as well grew 26% for the same 9-month period, resulting into overall cash profit after tax of 47% increase for the similar 9 months to INR 139.7 crores. This is the 9-month performance. And now we'll take you through our journey for the Q3 performance, and then we'll go into the segment-wise approach as well. In the Q3 OND performance, our overall growth, we'll give you a little more color and summary over our business segment-wise, but at a broad level, we have seen advancement of seasonal spends, both in India multichannel as well as in GlobalBees. And therefore, you have seen some of our annual unique transacting customers continue to be robust, 17%. This is sort of an increase. If you look at our prior period, for FY '24, Q1, Q2, Q3, it has been continuously increasing from 12%, which became 14% in Q1, then 16% in Q2. Now it has become 17%. GMV increase in Q3 is 13%. Revenue, net revenue from operations has increased 14% on Q3 over last Q3 of '24. And consolidated adjusted EBITDA increased by 30% Q3 over Q3, again to INR 138.5 crores. And at an India multichannel level, we grew by 20%, resulting roughly around INR 169 crores, and a cash profit of around close to INR 94.1 crores, which is a 25% increase from a Q3 to Q3 window. Now we'll take you through a little bit more deeper dive into our segmental performance. First of all, the key updates on India multichannel. The growth in Q3 was moderated, primarily because of advancement of festivals. Dussehra and Durga Puja, which was in early October in '24, while in the prior period, it was in late October in '23, and which essentially meant that we had some advancement in Q2 of this year, and you should see our business in a Q2, Q3 way or a 9-month way. That will give you a true reflection. We also witnessed a delayed winter, which resulted in moderation of some winter sales for us. And we also, first time in our history, we have done some cleanup of a few COCO stores that we have closed. And this is the first time since we have started expanding into our COCO stores, and we'll give you a lot more color as we sort of go along, but these are the key updates that really happened from India multichannel, which is our core business, which resulted into a little bit of a moderation of growth in the Q3.

In terms of growth in annual unique transacting customers, as Supam mentioned, it's continuously improving from 12% in FY '24, improved to 14%, then 16%. And for 9 months, the growth is 17%. Orders and GMV in Q3, there is a slight -- lesser growth because of the reasons Supam just explained, which is advancement of festivals, moderation of winter wear, and closure of few COCO stores. However, if you see the growth for the 9 months, in terms of orders, it has grown by 17% year-on-year. And on the GMV, it has grown by, again, 17% on a year-on-year basis. Similarly, net revenue, a similar impact in the net revenue in Q3 for the 3 reasons mentioned earlier. But revenue for the 9 months, again, it's 17% year-on-year. We continue to improve our adjusted EBITDA from 10.7% in Q3 FY '24. We have improved this by 50 bps to 11.2%, which is an increase of 20% year-on-year for Q3. Similarly, talking about the 9 months adjusted EBITDA performance, we have increased this to 9.5% from 8.8% in 9 months last year, which is an absolute increase of 26% year-on-year. This is a snapshot of our journey of EBITDA margins, which you can see a clear improvement in the EBITDA margins, 6.2% in FY '23, improving to 8.8% in FY '24 and further to 9.5% for the 9 months FY '25.

So now we'll move to the international business. International business, there were some key updates there. In Q3 OND specific period, November typically is our biggest month typically for the year, as well as we have 2 -- the industry has 2 sales, which is Singles' Day and Black Friday. And in that, there were 2 new horizontal entrants into the market, which have recently entered into the Middle Eastern market. And they had some elevated promotional activities by these 2 horizontal e-commerce players. And we consciously stayed away from this elevated promotional activities, and we wanted to continue to focus on our achieving sustainable growth by improving our margins through our moats that we have built, and we continue to build as we have done in India. So for the shorter duration, it has definitely impacted some of our growth, especially in the key month of November, which witnesses 2 big events in the region. So that's what we wanted to highlight for the key update for the Middle East.

So again, in this business, which is KSA and UAE, annual unique transacting customers continue to grow, a 17% growth end of December '24 over end of December '23. Orders, Q3, as Supam mentioned, because of the promotional activities by the 2 new entrants, it has slightly impacted the growth in orders and the GMV. So the growth in orders in Q3 is 9%. Similarly, the GMV growth for the Q3 is 11%. 9 months, if you see, the growth in orders is 8%, while the GMV growth is 15%. Again, I would like to mention here is that there is also an impact of Q1 here in the international business. As mentioned in the earlier calls, the Q1 also got impacted because of advancement of festivals and the floods in UAE. This is the revenue growth, 13% revenue growth in Q3 and 15% revenue growth for the 9 months on a year-on-year basis. Adjusted EBITDA, you can see, we continue to focus on -- while the growth is lesser in Q3, we continue to focus on improving our EBITDA performance. You can see a clear improvement year-on-year, quarter-on-quarter. From 16% negative EBITDA in Q3 FY '24 end of December, we have improved this to minus 15%. And if I talk about the 9 months performance, it is down from 20% in 9 months FY '24 to 17% in 9 months FY '25.

On the GlobalBees front, the key highlight for this is, as you will remember, this business is generative a lot on the marketplace platforms, where again, the impact of the advancement of marketplace sales, promotions that happen on an annual basis during around the festivities, and which was impacted in Q2. In Q2, if you remember, we had a growth of around close to 55% because of the advancement of those promotional festivities by the platforms. And in the Q3, we were expected to be moderating on that. And if you look at on a 9-month window, it is on 29%.

Similarly, a continuous improvement in EBITDA performance for GlobalBees. From 0.6% in Q3 FY '24, we have improved this to 1.4% in Q3 FY '25, a jump of 2.6x. For the 9 months performance, we have improved this to 1.6% in 9 months FY '25 compared to 0.4% in 9 months FY '24, again a jump of 5.9x. So this is continuously improving. Before we talk about the consol financial performance, there is a fourth business segment which largely consists of our franchisee preschool business. So as of today, we have close to 350 franchisee preschools with more than 16,000 students. We started this journey 2 years back only -- 2.5 years back. In terms of their performance, the growth in 9 months is around 35% on a year-on-year basis, and the growth for Q3 is around 33%. EBITDA for the 9 months is around 23%. EBITDA for Q3 is around 22%. So 9 months EBITDA is a 71% year-on-year increase compared to 9 months in FY '24. On the consol performance, the revenue growth is 19% for the 9 months and the revenue growth for Q3 for the reasons mentioned earlier for GlobalBees, international and India multichannel business, the growth in Q3 is 14%. You can see a continuous improvement in the gross margins. From 34.5% in Q3 FY '24, we have improved this to 37% in Q3 FY '25. Similarly, for the 9 months, the gross margins has improved to 37.3% compared to 35.4% in 9 months FY '24. This is also reflected in our consol EBITDA performance, 5.6% improving to 6.4% in Q3 FY '25, a jump of 30% year-on-year. And the 4% consol EBITDA in 9 months FY '24 has increased to 5.1% for the 9 months FY '25, which is an increase of 54% year-on-year. This is again the EBITDA journey on a consol basis. A significant improvement in EBITDA as a result of the improvement in EBITDA in all the 4 business segments. India multichannel business continuously improving; GlobalBees business becoming profitable; then education business profit continuously improving; and international business, the loss is continuously going down. So as a result, 1.5% adjusted EBITDA in FY '23 has now reached to 5.1% for the 9 months FY '25.

Thank you, Supam and Gautam. We can open the Q&A for now. [Operator Instructions] First question is from Mr. Sachin Dixit.

Congrats on turning PBT positive. My first question is with regards to gross margins. So, obviously, on a consol level, we are seeing a decent jump. Can you provide some color on gross margins on India multichannel business and the parts of it?

So Sachin, gross margin in all the 4 business segments continues to improve. India multichannel business is our core business, which is 70% of the total revenue. So the gross margin in the core business has to improve to improve the overall gross margin in the consol business. So it's improving in all the business segments, Sachin.

And the reasons remain the same, Sachin, which is improvement in our home brand sort of a share, improvement in COGS reduction in our home brand, negotiation with third-party brands, improvement in our category mix, and the share of the COCO sales as well. This is just for the India multichannel. And likewise, same story and same playbook is being reflected in the Middle East as well from a gross margin expansion window. And as we have mentioned in the past, GlobalBees is also a young company. So there is also a gross margin expansion there as well. So while our education business anyway doesn't have much -- so it's a small revenue, so not worth talking about it from that perspective. But all our businesses have been expanding our gross margins. And as Gautam said, largely impact of our core India multichannel business.

And we have not reached steady state, as we have been saying in the past. We will continue to improve our gross margins even going forward.

Got it. Got it. Fair enough. Coming to Middle East or international business side. Obviously, Q1, we saw floods, which were unfortunate. Q3, we see some horizontals becoming aggressive. And it continues to, I mean, more or less being a laggard compared to the overall sort of thesis, how we should have envisioned playing it out. Do you still feel that this is a battle worth fighting for? Do you have a right to win considering the impact that we are seeing so far?

Sure, Sachin. Fair question. Look, this is the same story that we have played out in India, where we had sort of multiple sort of horizontals. It's just 2 new recent entrants that have come, horizontal ones, not a focused baby and kids sort of a player. It's very hard for a horizontal to play their mothers, baby and kids sort of a vertical play with all kinds of moats that one has to build. So it is just -- the competitive intensity has definitely increased. So we will continue to play out our game even more in a fine-tuned way, but this is a very long journey. And we will continue to improve -- play out with our moats, and we'll continue to improve our sort of bottom line performance as we go along. But we can't just take a view just because of 1 or 2 quarters' performance, because we have exactly played out that in India, and we feel very confident of playing out that in the entire region over a slightly longer journey. So we remain confident about it.

Got it. Just a quick follow-up on this one, if I can squeeze that in. Have you proactively launched your home brands in Middle East region, or they are still in a nascent stage? That's the last question.

So we definitely have our -- I mean, the home brands that we have in India, and we have launched special home brands for the Middle East market as well. So there will be a mix of both that we have launched in the Middle East, and that story will pan out over a period of time as consumer -- young parents adapt and use those brands, and as the network effect of the word of mouth sort of goes around and more and more usage of those brands across categories and subcategories and product types, they continue to buy more and more. So this is exactly how that story played out in India. It is what will play out in the Middle East as well.

Next question is from Percy.

So sir, on the India margins, although there is an expansion there, I think our ambition was to expand about 150 basis points plus per year for the next few years. We are tracking below that level. So what is the reason that we are tracking below that? And also what would be required, or why do you think that we will come back to that level and by when?

Sure. Percy, I think if you look at it, the reasons that we had talked about in Q3, we believe that we could have grown a little higher than what we grew in Q3. And if you would have got -- because of the winter sale got -- we had a delayed winter in the country. And usually, that would have actually led to a slightly, I would say, a higher proportion of even fashion as a category for us and winter sale, which would have meant more growth and given us more operating leverage and more bang for our buck for our marketing spend. And also, we had a few COCO stores that we cleaned up. And because of some of these reasons, we believe that we have left out some expansion that we could have had been able to pocket, which is not reflective in our numbers. I'm hoping that in the subsequent quarters and in the coming quarters, we'll be able to recoup that. But in a long journey of next 4 to 5 years, you will continue to see our margin expansion, because our levers for margin expansion pretty much remain the same. If you look at our AUTC growth, it is the highest ever. We were at 12% for the FY '24, became 14% for Q1, 16% for Q2, and now 17% for Q3. Had we not had this winter sort of an impact, maybe we would have had a higher sort of a cohort leading to more higher sales and more growth, given us more operating leverage, more bang for our sort of the marketing cost. And therefore, you would have seen a little higher impact on the bottom line as well. So that's what I would summarize it's more of, I would say, a short-term impact. But we still have grown 90 bps on a 9-month basis. And we will continue to improve our gross margin, marketing efficiency, operating leverage, resulting into our core India multichannel adjusted EBITDA over a long period of time.

Supam, would you say that over a 3-year period, 500 basis points EBITDA margin expansion in India is a reasonable sort of number for us to go with?

While I'll not be able to specifically point out any specific number, would that be 500 bps or x number of bps, but you should continue to see us performing every quarter-on-quarter on a year-on-year basis here when we meet every quarter, and you should be able to see that performance improvement.

Sure. My second question is...

[indiscernible] we feel comfortable that we have not reached to a steady state adjusted EBITDA.

Got it. Got it. My second question is on the international business. With the increase in competition, do you think it needs us to revise our assumptions of what the medium-term growth rate can be and how long we take to breakeven in this business? Or this is just something pertaining to 1 quarter and it doesn't require a revision in our sort of 3-year forecast of either top line or profitability?

Percy, it's a difficult question because we don't know that heightened sort of competitive activity, we mean how long they will operate at that level. In India, over a prolonged period of time, we have seen everything becomes sober beyond a point in time, everyone becomes capital efficient, everyone tries to sort of become thinner on that front. This was definitely a recent 2 new entrants, which, of course, plunged and created a lot of promotional activity. How long it will continue, we'll have to see it as we go along. But we believe that the moats that we have created being a niche mothers, baby and kids vertical player, that will remain, that will continue to deliver superior value to young parents, like it does in India, to the Middle Eastern market as well. So while it is very difficult for us to forecast in terms of exact impact of this competitive intensity, but we believe that our moats will play out in the longer run. So very difficult to sort of really give you a very specific answer of time frame, but we feel very confident about our moats and how it will play out as we go along.

These new players, are they sort of just adding the child care category to existing product portfolio that they have or they are completely new sort of players in all respects?

Completely new in all respects.

I see, I see.

And Percy, we believe in consistent growth. So we will continue to grow consistently and keep on improving our margins.

For us, bottom line is more important, Percy. We want to be ensuring our bottom line performance improvement is not being compromised. While we will have an eye on as well on the top line in terms of how we have to manage, to bring a balance between the 2, but you should continue to see an improvement.

And last question from my side. What is the number of stores that we have closed? And what are the net store openings, both on a 9-month basis, if you can give that?

We had close to 508 stores as of December '24 in terms of COCO, out of which we have closed 38 stores. This is the first time that we have done this cleanup, because we have never ever closed even a single store prior to this. We believe that -- and the reason for sort of closing these as well, we see the metric at an omnichannel way, where 2 things are important for us. One is the footfall and second is the wallet share of the customer in that catchment. We have a certain expectation at a multichannel level, the wallet share of the customer as well as the footfall. We had reasons and data to believe that in those 38 stores, we were not to the level that we would have wished. And we are not exiting any particular city or location per se, but we will be sort of -- we had to close down to be able to optimize our location or our size and so on and so forth to be able to optimize the performance of those at a multichannel way, so that we -- it solves our objective. Obviously, it will indirectly help to improve our profitability as well.

Got it. 38 stores have closed down, and have there been any additions in the 9 months of the year?

Of course. So Percy, on a net basis, we have added around 73 stores, 73 COCO stores in last 9 months. which effectively means roughly around 115 stores have been added in the last 9 months on a gross basis.

Next question is from Videesha.

Just 2 small questions from my side. One is on the growth of home brands. If you could just elaborate on that? How has that been versus the overall India business growth of 17%, even any indicative sense whether it's materially higher or just marginally?

Videesha, can you introduce yourself? Sorry, we could not...

Yes. I'm sorry. This is Videesha Sheth from AMBIT Capital. Shall I repeat my question?

No, no, no. Question was very clear. So Videesha, as we have mentioned in our prior calls as well, our home brand share is quite material in our business because of very fragmented brands out there in the mothers, baby and child category. Although we have 8,000 brands on our platform, but most of the brands are not that big and fairly fragmented in terms of size. So our home brand share is quite meaningful. And it has been growing on a year-on-year basis at a much higher clip than our overall India multichannel, if I talk about, and India multichannel growth, our home brand share has been growing at a higher CAGR than the India multichannel CAGR for many, many years in the past. So that has been compounding higher sort of a share. And we have multiple brands that we have shared in the RHP. If you will recall, we have brands that are catering BabyHug likes. It is the India's largest mothers, baby and kids product brand by GMV that was shared in the RHP. We believe that it continues to be the leading and the top mother, baby, and kids multi-category product brand. It also happens to be, as was stated in the RHP, the largest product assortment brand in Asia Pacific, excluding China. We continue to believe it is the case even now, but as per the factual statement, it was stated in the RHP. So we believe with that, we will continue to increase our assortment, what we can deliver better to our customers, as we continue to learn from our analytics, to be able to find the products that, with customer behaviors and customer changing trends and patterns, what we need to bring. And we continue to innovate in our in-house team, which develop these products and who design and develop all of these products domestically and abroad, and that's how we will continue to do. So our home brand share will continue to improve, and that's for India. And even for the Middle East, as someone asked, I think this was a question asked by Sachin, we continue to deliver. We have built specific home brands even for the Middle East market. We will continue to -- this is a journey. It will take us time, because in the prior period before us -- like in KSA, we have been there for only 2.5 years now. So it takes time for a consumer to change patterns, change behavior and build comfort and trust with the brand. So as we go along on a longer time frame, as we have built our product range, while our India home brands have gone to Middle East and the specific home brands catering to that market also will continue to deliver in that market. So over a longer period of time, our home brand share will continue to improve. And that is why it gives us great confidence that we will continue to improve our overall gross margin, one of the key factors to improve our gross margin as an overall India multichannel and even in Middle East market.

And Videesha, the growth in our home brands historically has always been disproportionate to the growth in the India multichannel business, and that will continue to happen. This is what we believe.

Sure, sure. And the second question was if you can just talk about how is the response for the older age segment of 6 to 12 years or 8 to 12 years? And how many stores are you looking to open there?

So Videesha, we have a very handful of stores. We have not opened any stores in 6 to 12 in the last, I would say, quarter or so or last sort of couple of quarters. We have a few handful of stores that we had opened. We are fine-tuning our merchandise from an offline perspective. But online, I think we are doing fairly well. That assortment has turned out quite nice as we've expanded our assortment. And the cohort of the customers actually is quite nicely compounding there as we progress from 6 months -- 6 years to 7th year and 8th year and 9th year. This tail will get formed over a longer period of time, because as customers move from 6th year to 7th, 7th to 8th, 8th to 9th. So this funnel will be complete in another couple of years when there will be a fully loaded segment sort of a base of customers who would have transacted from 6 to 12. So this is a work in progress, but it has turned out quite well. We're quite happy with the progress of Pine Kids, which is our home brand, and several other third-party brands that we sell through our brand partners, we're doing quite well on 6 to 12.

Got it. So net-net growth for each cohort would be led by the online channel?

Yes, yes. Of course.

Next question is from Mr. Sudheer.

This is Sudheer from Kotak Mahindra AMC. Congrats on decent set of numbers. So first question, you mentioned 38 COCO stores shutdown. So I mean, while you said that the customer wallet share expectations are not being met, can you elaborate what has led to this? Is it these 38 stores are more impacted by, let's say, competition from quick commerce plays or the unorganized players being more aggressive in those micro markets? And if you can give some color on where are these 38 stores? Are they in the top cities or Tier 2, Tier 3 towns? Some color and slicing and dicing of that data will help.

Sure. So Sudheer, I appreciate your question. So first of all, we have our internal benchmark. I would outrightly clarify that for our offline stores, quick commerce is not like sort of a -- I would say, not a right comparison because, I mean, we have a very different assortment. And this is largely set of BabyHug stores out of the 38 stores that we are talking about. And the reasons are multiple-fold. The footfalls get impacted sometimes also by the impact of a lot of construction activity happening in the country, which goes on for 2, 2 years, 3, 3 years in terms of sort of the metros that are getting constructed and which impacts the footfall. And at the same time, sometimes, while we get the data from online that this is the pin code that is the most suited in terms of opening up a store, and that's how the science that we have built in terms of opening a store. But at the same time, a pin code in India is actually quite wide in terms of the physical territory of a particular town or a city. And the availability of the right catchment sometimes becomes also a challenge, and within that constraint, the size of the store as well. So some of these things has led to a suboptimal outcome in terms of the footfall expectations that we had from the stores from our online data source that told us like in this particular pin code, you can open comfortably a store. And usually, I would say, 95% of the time, we will be bang on. But this particular 38 stores, we felt that we had a suboptimal outcome in terms of both footfall as well as the wallet share of the customer that we expect, both from an online/offline perspective, the offline customers going online or an online customer going offline had not resulted into an enhanced sort of a wallet share and leading us to believe that we should nail this and not coming -- so this is not a representative that we will -- as I mentioned earlier, that we will come out of those cities or those towns. That's not what we are saying. It is just maybe we don't want to call it replace -- relocation and all of that, but we will ultimately find a new -- fresh sort of -- we are not exiting any particular territory or a location or a city, not at all. And this is not one territory or one region, one South, North, West, East or one city or one town where we have exited all of this. So this is not an impact of local store. This is not like one phenomenon. This is just an internal benchmark that we have had, which has resulted in for us to take this decision. And going forward, I can just sort of share that this is not like -- we hope that our churn rate even for a COCO store will be lower than our FOFO sort of a churn rate that we have demonstrated in the past for so many years. So we are very comfortable on that. It will only mean it will improve our customer experience, our expectation of footfall, our wallet share, leading to an optimum outcome on the profitability as well as top line.

Sure, Supam. So if I understand your response right, you're essentially saying the real estate suitability in a particular catchment or micro market is the bigger reason than any competition or sort of an angle?

Absolutely.

Fair enough. And in the overseas business, right, you mentioned about the 2 horizontal players impacting in this quarter. So what is our strategy of defense here? I'm assuming because they are newly entered horizontals, might be private equity funded, don't care about profitability, have a lot of cash to burn, while we have to be defensive on the profitability front also in line with your stated objective. So how do you ensure that you don't lose big market share to these horizontals, at least in the next 1, 2, 3 quarters?

No, very relevant question, Sudheer. Look, it is a balance of growth and our laser focus on our improvement on profitability to reduce the burn. So we will try and balance out through the moats that we have built, specifically our moats on enhancing quality of the customers that we acquire, quality of our home brands that we are delivering out and expansion of those home brands as quickly as we can, get out there to the consumers, proliferating that and improving the network effect of that to all our audiences, both in the UAE and the KSA, and overall improving our merchandising and our sort of a tech platform operational leverage in terms of personalization. So I think some of these things will enable us to deliver a superior sort of a performance from a discerning customer view, and we believe both UAE and KSA have as discerning customers as in India. And while we have been able to battle it out in our initial journey of maybe 5, 7 years back when we had a lot of these horizontals in 2013 to 2016 in India, and like we will be able to battle it out in a very balanced approach of sort of a burn prudence while balancing the growth and the market share. But it's yet to play out. We'll be very focused, balanced, monitor situation on a day-to-day basis. It will play out as it will play out. Most horizontal players are decently funded, decent backgrounds with a lot of capital. But I think over a period of time, they all have their way of showing performance to their end sort of investors or shareholders as well. So this will all balance out. Maybe we'll have some rough ride for maybe a few quarters is what probably it might mean. But again, as I said, we will ride it out in a very, I would say, prudent way as we have done in the past.

Next question is from P.S. Rohit.

This is Rohit from Claypond Capital. So my first question is that I noticed that both the GMV and the order growth for 9 months year-on-year has been 17%, which could indicate that the order values are sort of stagnant. Any levers that could be at play there to improve them in the future?

So Rohit, I think we would -- we believe that there were a couple of reasons why our expectation on Q3 internally was slightly higher than what we delivered. And we could have done better. As I said, there are a couple of reasons. One reason being we had -- of course, the festive environment had, which is a Q2 and Q3 is a balanced way that you should see. But more importantly, winter was delayed in the country. Usually, in mothers, baby and kids, because of the size issue, every child or every family literally has to change their winter garments every year, because your children will grow and you have to buy, which had a delayed impact of winter. So order frequency could have been slightly better. Even AOVs could have been slightly better, which could have led to a higher growth in the Q3, which could have meant that 9 months growth could have been slightly sort of better. So that's how we believe -- and even also the COCO stores, sort of the closure also had a minor impact as well. So if all of these reasons would have played out positively, which is just in this particular quarter, I don't think it's a natural phenomenon. We believe over a longer period of our journey, our moats remain absolutely strong. AUTC growth is absolutely strong, which we have been growing only 12% FY '24 to 14%, 16% and 17%, Q1, Q2 and now Q3, so which will result into a superior growth and it should reflect in the coming quarters or in the subsequent quarters. And as we've taken some corrective actions in the COCO as well. So all of this will mean our core business, India multichannel should continue to deliver a strong outcome. So you should be able to see some of these numbers subsequently over a longer period of time. Here and there, 1 or 2 quarters does happen, because some of these things like winter is not in our control and this cleanup exercise was just onetime. I hope, Rohit, that gives you comfort in terms of...

Yes, yes, it does. Just one more follow-up question. We have seen that the GM for this particular quarter has sort of gone down slightly over Q2. While that's a phenomenon that typically happens over the previous years as well, where Q3 GMs are slightly lower than Q2, would that mean that you would see like a meaningful jump going into Q4, where some of the prior quarters reversed and then some added?

So Rohit, you should not see actually quarter-on-quarter GMs. You should see GMs year-on-year only, because there is certain seasonality in our business. So like Q2 and Q3 typically, because of this Diwali, Dussehra and Durga Puja festivities, a lot of there is a fashion sale and fashion gives us a slightly higher gross margin than other categories. And therefore, some of these -- this particular -- so quarter-on-quarter, you should not really see that. You should see year-on-year basis. And if you look at our year-on-year gross margin, we have improved by 250 bps from the last year at a consol level. Obviously, India multichannel, which is our core business, has to deliver a very meaningful steep higher number to be able to deliver 250 bps increase at a consol level.

So trend remains more or less same between the margin difference in Q2 versus Q3 for both the years. And we'll continue to improve the gross margins going forward.

Next question is from Raj.

I'm Raj Vyas from TM Investment Technologies Private Limited. So I have a question regarding like how do you plan to sustain and further accelerate the profitability? Like as we can see, the losses have narrowed down. So how do you plan to improve the profitability going ahead for the consolidated business and the India multichannel segment in the upcoming quarters, especially in the terms of cost efficiency, revenue generation and market expansion?

So Raj, if you see our first slide of the presentation -- first, second, third slide of our presentation, you will see we have been able to report sort of the best sort of a quarter or a best performance, both in terms of your adjusted EBITDA performance at a consol level, which has gone to 6.2%, and also at India multichannel, which has gone to 11.2%, which is, in the last 4 years, the best ever. And year-on-year basis as well, it has continued to increase. We believe, as we have been saying it, and Gautam mentioned that our -- if you just see our business in 4 segments, India multichannel business hasn't reached to a steady state across different parts of our -- if you look at our business from a gross margin perspective, our operating efficiency, our marketing efficiency, our operating leverage, all of these levers will continue to deliver outcome to optimize and increase our EBITDA -- adjusted EBITDA for India multichannel meaningfully going forward in many quarters and years to come. Our international business obviously has to turn profitable as we are improving and reducing our sort of negative EBITDA. And there's a journey there as well, which will overall impact our consol sort of performance -- bottom line performance. And GlobalBees is a very young business and less than a 3.5-year sort of a track record. Right from inception, the company has delivered quite a meaningful performance both on the top line and bottom line. And as I said, it's a young business. So there is a lot more to happen in terms of the steady state, both top line growth as well as adjusted EBITDA. So overall -- and preschool business is still very young. Again, it's an asset-light model, although at a 22% adjusted EBITDA. But if you look at our first 3 businesses, all of them will improve. On a longer period, you should be able to see improvement across all our businesses, therefore, leading to more superior outcome across different metrics that you would want to see and resulting into more capital efficiency, marketing efficiency, operating leverage, gross margin improvement, which will remain in the business for a longer period of time. So those are not like onetime sort of performance indicators, which will vanish. So we feel very confident about that.

In fact, while this is our third earnings call after listing, we have published the segment-wise number from FY '22 in our prospectus, if you see. And you will see that we have improved our margin performance in all the 4 business segments year-on-year. '23 is better than '22, '24 is better than '23, and so is 9 months FY '25. So you will see a continuous improvement both in gross margins as well as the EBITDA performance. And that we believe that it should continue to happen going forward.

So any ballpark number that we are looking for in terms of revenue or margins or profitability, because some bit of any like -- that we can like put the numbers in our mind as well going forward?

We really admire companies like Page Industries. That's something that we believe that is a very admirable company from a management perspective to aim, aspire to be at the bottom line level.

And any sort of challenges -- to make FirstCry as Page industries, any sort of challenges that you will be looking? And how can you overcome those challenges?

Just focused execution, not much strategy work is required. It's more of very, very, I would say, detailed execution on a -- focused execution by the entire FirstCry team and the GlobalBees team together. All of us have to really continue to be at it to be able to deliver. There are no -- and obviously, there are certain factors that are not in our control like winter -- so some of these factors that come into play or general sort of narrative around this slowdown and all of that, although we don't believe that as much, there is a little bit of a -- so many factors are there, which macros will make a difference, but we believe we have enough internal moats to continue to focus to be able to deliver the superior performance. But yes, we got to be lucky as we go along in some of the external environment situations. And we always have believed that as long as you are in the game and you are doing your best and you're delivering the best in the industry, luck will be your side as well when facing external situations and thereby reaching to your goalpost, as I just mentioned.

Next question is from Mr. Chintan. Please note that this will be the last question.

This is Chintan here from JM Financial Family Office. So I had 2 questions. So one is on growth. So if you look at on a 9-month basis, we have delivered a growth of around, say, 17% Y-o-Y. So my question is, there is this organized growth and the key thesis for us has been the shift from unorganized to organized for a player like us. So I wanted to understand slightly from a longer-term perspective, this number of 17%, does it indicate that the shift that really we expect to happen from unorganized to organized is not happening? And if that's the case, then could you highlight what would be the few reasons for it to play out? Is it the price points? Or is it just the customer behavior? That is my first question. And second one, I would say, is more so from an online platform perspective. If you could help us with a few variables like the repeat purchase in terms of customers, how many repeat purchases happening, if you can throw that number, that would be helpful to gauge the performance. Those are my 2 questions.

Sure, Chintan. So I think the first question answer is actually very simple, Chintan. If you look at our industry report, which was part of the RHP, the unorganized industry is roughly around close to 84% at the time of listing that we had, the industry report had mentioned. And the overall industry is growing between 13% to 14%. And this is also -- you must remember, this is a CAGR for next 4 to 5 years. There can always be certain sort of blips in between. So this 13% to 14% is the industry growth as stated in the industry report by Redseer. And we have been compounding at a far higher clip than that. And our internal, obviously, aim is slightly higher than even what we have, but it just -- I mean, we have gone through the reasons, so I won't sort of go through them again. But relatively speaking, we are obviously converting unorganized to organized. And as India -- as, I would quote, our Finance Minister has said, over the next 4 to 5 years, as our per capita income sort of will double up over a period of next few years. So growth of the unorganized to organized has to happen, and being the largest sort of a multichannel, multi-category mothers, baby and kids sort of a player, we believe that we will be the biggest beneficiary in that journey. So I think that's how I would put it that so far we have been tracking nicely. Whether it will compound faster, slower, I would say we have seen the environment around us in that, which is where we are, but it is compounding far more better than the industry growth, which is also a little longer horizon. You can't say 13%, 14% every quarter industry report. This is over a 4-, 5-year CAGR. That is exactly what will happen to us as well that our CAGR might be slightly superior and over a longer -- if you look at our 4 years CAGR past and going forward, it definitely can be different than what we have just shown for the 9 months, which is 17%, 18%. So that's the answer to your sort of first question.

Supam, just if I may, just one follow-up on this. So the message that I'm getting from this is clearly 2 points. One is we don't see any factor, say, in terms of price point and customer behavior that is stopping the shift from unorganized to organized. That is one. And secondly, the growth where we are looking at is much higher than the 17% that we have delivered in the 9 months. Is that the right understanding?

So the Q3 was impacted, I would say, for us because of the delayed winter. We've gone through the reasons. And you should see our business in Q2, Q3. I would not try to say that you should benchmark like a very steep growth curve from where do we stand. You should see in the backdrop of the overall industry -- retail industry as well. While there will be a conversion from unorganized to organized without doubt. And that's happening in the market. And being a very large online domination in our multi-category approach, as you can see, it's almost 78% of our multichannel business -- online is 70 sort of -- it's a significant part. And there, if you will see as well, AUTC growth has been stronger. So you will be able to see a superior sort of a performance as we sort of go along. But industry is 13%, 14%. We are compounding at a much higher clip, gives us the confidence that we are doing the right things. Yes, as management, we remain hungry, we remain unhappy, we want to deliver more, but we don't want to promise more. So we will deliver more is how I would sort of put it.

And being the largest demand aggregator in terms of the largest platform retail destination in India and being the largest supply aggregator, which is BabyHug is the largest home brand in India. I think both these factors put together should give anyone a sufficient comfort that we'll continue to grow better than the industry growth.

Our long-term moats are absolutely intact and compounding. All the key moats that we have built in the business, they're all compounding and generating a strong defensibility, strong foundation for our future growth. I think you should be able to see it over a period of next couple of years.

That was the last question. I hand it over back to Supam and Gautam for any closing remarks.

No, I would like to thank you, everyone, for all of you taking time out on a Saturday, and we really appreciate and looking forward to seeing you in our next quarter, which will be a completion of the annual fiscal year.

Thank you so much, everyone.

Thank you once again.

Thank you.