CarTrade Tech Limited (CARTRADE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call of CarTrade Tech Limited. This conference call may be forward-looking -- may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of the future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Sanghi, the Chairman and Founder of CarTrade Tech Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everybody, and welcome to the Q3 earnings call. It's been a really strong quarter for the company. And in the next few minutes, I'll try and run you through some of the key highlights. We have circulated the presentation in advance. If you look at Slide 3 and the first part of the presentation is, of course, as you know, we've had record-breaking revenue and profits. Our quarter 3 revenue stood at a record INR 193 crores and the profit after tax of INR 46 crores. We've had exceptional growth from all 3 business verticals and all our verticals have delivered the highest ever revenues and profits and margins. For the 9 months for the year, the revenue surged by 32%, EBITDA grew by 100%. And profit after tax zoomed to INR 99 crores. Our Q3 versus Q2, which is consecutive quarters, the profit rose sharply by 48%. What's driving this growth? Our consumer group, which is CarWale and BikeWale, revenue increased 38% year-on-year, resulting in a profit after tax growth of 172%. We achieved a 35% margin in this quarter in our Consumer Group business, which is now getting to be a benchmark of excellence in the industry. Our remarketing business, which has been -- where growth has been challenged in the last few quarters has delivered a 28% growth in revenue in the quarter and also 178% profit after tax growth. And OLX, where on a quarter-by-quarter basis, we've seen continuous growth. We have had 80% surge in our profits. In OLX you remember, from the date of us acquiring it last year, we've always had a growth quarter with every consecutive quarter has done better than the previous. So there's a lot of work to be done there, but we obviously feel very optimistic about OLX India's future. If you look at Slide 4, it talks about our first 3 quarters of the year. As you can see from the first quarter to the third quarter, we've added 23% growth in revenue within the same year. The EBITDA has grown 28 -- 132% from INR 21.58 crores in the first quarter to INR 50 crores in quarter 3, which mean 132% rise in EBITDA within 2 quarters. Margins have -- overall margins have increased 28% on a consolidated basis for EBITDA. Profit after tax from INR 22.90 crores -- INR 22 crores 90 lakhs in quarter 1 has gone to INR 45.53 crores in quarter 3. So it's shown not only strong Y-on-Y growth, but our business has shown strong Q-on-Q growth in revenues, EBITDA and profitability. If you look at the next slide, Slide 5, we are continuing the #1 automotive platform in the country, the #1 used classified platform in the country, the #1 vehicle auction platform in the country. If you look at traffic, we've achieved 79 million monthly active unique visitors across all our 3 platforms. As we as we have shared earlier, we have 3 platforms, CarWale, BikeWale and OLX India, which get more than 115 million customers per year, which is more than 10% of India's population comes to 3 different platforms within our group, which is a very, very strong -- which gives you a very strong sense of the brands, CarWale, BikeWale and OLX. 95% of these users come organically, which means we don't pay for the traffic and that reflects in our strong EBITDA and profit margins. We are now out of 450 plus physical locations for our Shriram AutoMall outlets, our abSure outlets as well as OLX India outlets. The auction volume went up, and we are auctioning at the rate of 1.5 million vehicles a year now. As I've already covered revenue is INR 193 crores. Adjusted EBITDA, which is takes into account ESOPs as well as interest income is upto INR 70.2 crores, which is almost like a cash proxy for us. Profit after tax that we disclosed is INR 45.5 crores and our cash balance has increased to INR 885 crores. If you look at Slide 6, which is a consolidated results, the revenues down 27% year-on-year to INR 193 crores, 32% growth for 9 months at INR 521 crores; EBITDA surged 98% for the quarter at INR 50 crores and INR 104 crores for the 9 months, which is at 100% growth. As I have again said, EBITDA margin was 28% versus last year, 18% in the same quarter, which is up 10 basis points -- is almost 10 basis points in the quarter to last year -- compared to last year. Profit stands at INR 46 crores versus the loss the previous year and INR 99 crores for 9 months versus, of course, a small loss in the previous year. If you look at Slide 7, which is our stand-alone results, you will see highest ever revenues, of course on the stand-alone accounts, 38% growth in revenue for the 3 months, 27% growth in revenue for 9 months, which, of course, has had a massive growth in profitability; 237% growth in EBITDA for the 3 months of the quarter in the Consumer Group business; 442% growth in EBITDA for the 9 months ended, which is INR 42 crores EBITDA. PAT stands at INR 170 crores up in the in our stand-alone accounts and PAT for 9 months stands at a growth of 70%. As again, as I said, 35% margin in a stand-alone business is now getting best-in-class. Many of you had asked for the last many quarters, will our margins ever get best-in-class? And at least one of our business is now getting there. Let me also highlight that even though the group margin at 28% and the consumer group is 35%, almost -- in fact, all our businesses, the margins are more than -- or excess of 20% now. If you look at Slide 8, the remarketing business, which has had a few sluggish quarters has come back to the growth trajectory. And again, here, you can see the levers of the business working. We have 28% growth at INR 63.64 crores of revenue in the quarter, lead to a [ 73% ] growth in EBITDA and 178% growth in profits. So we believe that it's something we've been talking through in the last few quarters, the repossession business is slightly has improved and is reflecting in the accounts for the quarter. If you look at Slide 9, which is OLX. As I've said earlier, OLX in every consecutive quarter has grown from the time we've acquired the company. Margins have grown, revenues have grown and profits have grown every consecutive quarter. Revenue has grown 16% at INR 52 crores -- INR 51.97 crores, EBITDA is up 24% and PAT is up to INR 14.68 crores versus the loss of last year. But here again, the margins are up to 26% from 24% last year and 18% last quarter. The rest of the presentation covers segmental results, our Google trend numbers and some of our organic traffic and listing -- auction listing numbers. So I want to stop here, and I'm happy to take some of the questions and answers from you. Let me again once highlight that it's been a strong quarter performance built on a strong fundamental business. We feel pretty good about the situation of the industry and the business itself. And yes, I'm happy to take any questions you might have for me.

[Operator Instructions] The first question is from the line of Vijit Jain from Citi.

Congratulations on a comprehensively spectacular results here. So my first question on the consumer group business. If you can comment on the growth rate that you're now seeing in the business. I mean this is a pretty decent acceleration, pretty sharp acceleration versus what you've seen in the last many, many quarters. So is this what we should expect in the near term ahead as well? And broadly, if you can talk about whether you think you've taken wallet share from competition across OEM ad budget wallet share and across major dealers ad budget wallet share? That's my first question.

Sure. Yes, I think the one thing is that the industry has seen a very minor growth in the first 9 months. As we've discussed many times, supply is higher than demand, and that makes a little more favorable market condition for our consumer group businesses where OEMs and dealers depend a lot more on our platforms for sale of vehicles. So these are reasonably favorable market conditions at this point. And we've also seen a small growth in industry, but supply is more than demand. So we've always highlighted that these are -- and there's normally the situation in most markets where supply is more than demand, and there is some growth in the industry. So we expect that to continue in the next few quarters. I don't think we are seeing any real change in market conditions at all at this point. I think the industry growth rates are probably what they're going to be at this point. I think supply will exceed demand for the next year. So I think from an industry standpoint, we don't see much change. Clearly, CarWale, BikeWale have grown in terms of traffic, in terms of user experience in terms of their deliverance to car manufacturers and dealers consistently, right? And if you see the traffic growth is also pretty significant. And therefore, we feel good about the business. Whether we've taken wallet share, it's too early to tell, my sense is that if you see the advertising numbers, generally, we would have taken some share. But generally, we -- spends have also gone up, which is also affecting or helping our business, right? It's a combination of wallet share as well as spends having gone up as well. But our traffic growth numbers are pretty sharp, if you see as well.

And on the remarketing business, I can see that there's a pretty solid, again, 30% odd growth in auctions listing volume. So most of the growth seems to have come from this side. I know in your opening remarks, you mentioned repossession business has slightly improved, but this looks a little bit more broad based than that. Or is that base effect in play here? Again, just looking at broader ecosystem, are you seeing repossession coming back just to normal? Or is there more to it?

Yes, we see repossession having definitely grown in the quarter, and it is a driver for us because about almost half of our volume comes from repossession. It's about half now. It's about 42% as low. It's back to 50%. So it's clearly growing. Whether it also seems likely these are not 1 quarter phenomenon. So it seems likely that it could be trend for a while. But it's hard for us to predict beyond that. But it generally seems that these volumes from here should sustain itself or grow from here, it seems like that, and it is a factor which is driving part of the growth.

Got it. My last question on the OLX business. So OLX business since you have acquired -- focus has been on integration and reducing some of the costs and those things were achieved earlier. I think this is the first quarter where we're seeing meaningful jump in the absolute revenues also collected. So if you can throw some color on where growth is coming from more recently? And if I look at the number on a Y-o-Y basis, you are maybe at around -- maybe somewhere around 15% Y-o-Y versus the first full quarter after your acquisition, do you see enough to believe that the growth should stay here or improve from here? Any color on that would be helpful.

You're right. In the first year, we spent a lot of time on stability in the platform, technology transition, stability of the team, putting our product teams together, technology teams together. A lot of those things work took the first year, I would say. A lot of the initiatives we've been running in the last 6 months on sales, product marketing, traffic, et cetera, are things we've had very little time to work on. Some of these things are in a small, small way starting to play out. In no way do we think they've played out. So it's still, to me, a lot of -- whatever the growth coming is coming from a lot of the early initiatives. There a lot of long-term fundamental initiatives being taken. And we're hopeful that in the coming quarters, we'd ideally like this to grow a lot faster. So that's revenue metrics, profit metrics, all of it. The margins have got better. We have a better handle on margins. But we would like the revenues to grow stronger in the coming quarters and years for sure. We believe there's tremendous opportunity both on the used auto side at OLX and the used non-auto side at OLX, both. Both are almost going at the same rate. Just that's another question you had almost at the same rate. But it's important that to know that the potential of both is equally large. And in no -- I mean this is very early stages of that -- of really catering to that potential which exists. It's very early days.

Got it. I have just one last question, and I'll jump back in the queue. Is there a collaboration or a partnership that you have with the likes of CARS24 or Spinny in the works? I think you saw something...

We continuously to work with them, I mean, over a period of time. I mean, a lot of people confuse what our relationship with them is. CARS24 and Spinny offer like full stack companies, which buy vehicles, refurbish them and sell them to consumers, but they tend to be full stack. We tend to be very market -- we are completely a marketplace. In both CarWale and OLX, we tend to work with them pretty closely because there are companies that list vehicles our platform CarWale as well as OLX. So we tend to work very closely with them, and they actually complement our marketplace model and add value to our users as well. So yes, we tend to do very closely with them actually.

Next question is from the line of Sachin Dixit from JM Mutual Funds.

Congratulations on a good set of results. I had a couple of questions. The first one with regards to growth rate, right? So if I look at the growth rates in consumer business, they have spiked up sharply. Obviously, some of it was driven by the fact that OEMs were not spending a lot earlier and those spends have started to come back now. But do you see this 38-odd-percent growth rate likely to sustain? I mean, I'm sure like next few years, not, but even in the next quarter, do you believe such a growth rate can sustain?

We don't give guidance, Sachin, around revenue growth rate, but we do feel that market conditions are reasonable. And although October, December tends to be a little high -- bit of a high in terms of a quarter for the consumer group always I mean, generally, we don't -- we just feel comfortable that where the market is right now and CarWale, BikeWale positioning is. So we don't feel -- I don't want to comment on the growth rate, but we feel confident about the business.

Understood. Understood. And coming to OLX right. Obviously, a lot of things are still in the works at the time of IPO, and we discussed there was some understanding that the business is likely a 20%-odd growth business, which is where it has grown in the past. I think that growth rate should revert at some point. But what is happening on the cost side there? We noticed that there is a sharp drop in employee expense in this quarter. Is it just because of one single senior person leaving? Or there is more to it?

There is some cost [ ration ] because of that, absolutely on the employee side. but it takes us time because after M&A, it takes us time to balance tech costs, employee costs, organization charts. So we understand everything. And now we've reached to a very stable -- we've seen a stable margin basis, right, where we can think the margins will only improve in revenues. And that's across -- it's not just in OLX, we've also seen Shriram AutoMall as well as CarWale where we -- the nature of our company is almost at we want to grow, but we want to keep our unit economics growing with it, right? And we want leverage in our business. And I think OLX is no different there with the increase in revenue, we have a very marginal increase in costs. This is typically demonstrated in the consumer group, and you can see it now play over the last few quarters. You can see in [ SAML ] in a quarter which has grown. And OLX is no different where we want to see margins growing with -- and the way we are trying to structure the company OLX or any of the others is that, revenue should grow as we increase our value to our consumers or dealers or all listers in OLXs case but not necessarily that we have to increase costs in relation to that. A large part of revenue for OLX is an online collection method. It's paid online. So it doesn't mean that manpower other costs go up in revenues. And I think that's the methodology we've used for all our businesses and that's the architecture of how we build products in these companies. So it's playing out now as you can see the first time in the last quarter for OLX or the other businesses. But that's the nature that we worked on for the last 3 years or 4 years or 5 years to get this basic DNA of this leverage of revenue growth not increasing costs -- and not increasing costs.

Completely fair enough. Just one final question on the remarketing side. Basically, we do not notice that there was any sharp jump in NPAs for some of the vehicle finances. So the growth rate that we got even on a sequential basis, is it a function of our investments in to retain or there is -- or repossessions have finally bottomed out for good?

No, no, I definitely think the growth is coming from reposition. Of course, our numbers compared to the industry are much smaller. So even though the industry may not be showing it, repossession has definitely been a factor in the growth of Shriram AutoMall. Other segments have grown to, but repossession has definitely grown as well. I'm not sure -- I'm not added the numbers of various banks NBFCs to NPAs going up or not. But definitely here, we find that repossession is contributing.

The next question is from the line of Siddhartha Bera from Nomura.

Congrats on a good set of numbers again. Sir, first on the consumer business, if you just can share the mix for the quarter between old and new and used and...

Aneesha, you want to take that up quickly to share the various metrics of consumer [indiscernible] the breakup.

Sure. It's pretty similar to what we've declared in the past. The used versus new continues to be that 85% to 15% or 86% to 14%. The dealer OEM also mix is pretty similar to [indiscernible]. Any other ratio that you would like to know, okay?

Okay. So the growth basically is coming across both OEM and dealers. There is no specific segment, which is growing faster than others? Is that the right assumption?

No, yes, it's similar. Actually, the OEMs itself has grown sharply. Earlier the dealers was even stronger, but the OEMs has started to grow. And I think there's a factor in the last about maybe 18, 20. If you've seen in the last 2.5 years -- I mean, 2 years, 9 months, the consumer group is continuously growing. It's not just been last quarter. If you take the previous year financial in the year before that. the consumer group has grown continuously actually. So it's still -- as I said, I still feel we are at the phase of an early stage of digital advertising and you're seeing the growth of -- it's been 2 years 9 months actually, it continues to be growing the consumer group. It's not a 1 quarter thing. The sharp increase in this quarter, you've seen the margins, et cetera, because the leverage in the business. But the growth -- if you see this business has actually been continuously growing.

Got it. And how has been the performance in the abSure business? How are we looking at ramping up there?

Yes, it got stronger. We've got 2 sides of it now. We got abSure/signature outlets for CarWale, which is I think, 180-odd stores now. And when we acquired OLX. We got another, I think, about 170, 180 stores there as well. So there are -- if I'm not right -- if I am right Aneesha about 375 to 400 such used car franchise stores now in the group. So it's become a very strong business model for both OLX and CarWale. I mean, again, very early days, as I said, but it's become a reasonably strong business model for both.

Got it. And if I look at again the consumer overall growth, will it be fair to say that, I mean, digital advertisement overall industry would have grown in that case or we would have gained probably some market share from some of the other digital segments like Facebook, Google and all. So any sense you have there?

It would be both I would say. Actually what happens is when manufacturers are having a little more of [ stream ] selling vehicles, they tend to choose a little more direct form of advertising, which is us, which is the very performance driven in a way. So if you spend money on CarWale or is just a car on CarWale. It is almost -- you're [ directing ] to the most, I would say, serious customer or the most relevant customer. If you put money on a Star Sports or Star TV or I don't know, Times of india or whatever some newspaper, it's a little more brand advertising. So when sales are strained, you tend to go to the most direct source for sales. I think that is one factor. The other factor you have to see, if you look at the traffic itself, I think we've gone from -- if we look at Q3 last year, we were 38 million in Consumer Group, we've gone to 49 million. So on our 38 million per month, we have gone to 49 million a month, which is a tremendous increase in consumer traffic itself as you see. So I think these are multiple factors we look at in the growth of CarWale.

Got it. Sir, lastly, in slightly longer term now, like if you look at the annual numbers in the consumer business, we probably are closer to that 30%, 31% EBITDA margins and OLX we are at close to 26%, 27%. So do you think over the longer term the margin potential for both of these businesses will be similar or any particular business where the potential of increase will be much higher compared to other? Any thoughts there?

No, no. We feel like these are typical businesses where the margins only go up with increase in revenue. We don't see any major cost escalation and we don't see -- so therefore, we see what we said always that with revenue increasing, margins will continue to grow. So these are early days of these companies or these businesses as we grow in the next 1, 2, 3, 4 years, margin will continuously grow. And we'll get even better with our margins as they stand now. I think the consumer was 35% today, so in last quarter, and it will get even better as revenue grows.

The next question is from the line of Aman Saifee from I-Wealth Management.

Congrats on a good set of numbers. Sir, what I notice is that in our consumer business, what you have delivered the high growth of 38%.

Okay. I think we can't hear very clearly. I think it's [indiscernible] a bit.

So what I was noticing is that in the passenger vehicle industry, the inventory levels were at the highest in October at 80 to 85 days. Then it went down to 65 days and further down in December. So sir, is it right to assume that the high growth which has been came in this quarter is due to high industry high inventory level in this quarter?

I won't actually -- high industry inventory level. One is that October, November, December tends to be -- at least October, November tend to be high selling months anyway. So it does help us. But otherwise, also, I think that the inventory is 3 months or 1 month or 6 months, generally, if wherever there's a supply availability, I think we get better. So the inventory may not be high, but if there's supply available and dealer the manufacturers want to sell more vehicles is generally the more favorable market condition for us.

So basically, is this inventory level is getting rationalized in the industry, so the contribution which has came from that particular new OEMs and in your consumer business will get down eventually?

No, I don't look at it that way. I feel like consumers come to buy vehicles on CarWale. The inventory is one factor, but the reason consumers come is because they want to buy it. So it's many, many factors, I would say. The fact that the industry is growing, the fact that the markets are growing -- the automotive markets are growing, the fact that inventories... [Technical Difficulty]

Hello, sir. You are not audible. Can you hear me? Mr. Sanghi, can you hear me?

Can you hear me now?

We can hear you. You lost from between where you were explaining about the spend.

Yes, I don't think -- I don't mean the spend of that business has been related to 1 or 10 manufacturers having excessive inventory. That's the question. I think it's related to the fact that people find -- they want to come a platform like us people find that you get all the inventory they want here, they get the selection they want here. People also find that they want to buy cars in that month or 2 wheelers in that month. So it's a multiple factor thing. It's not about high inventory, if that's the question.

Next question is from the line of Nishit Jalan from Axis Capital.

Congrats on a good set of numbers. So I have 3 questions. First question on the consumer business. See, yes, I think you said rightly that when supplies higher than demand, it's very good for your business. So just wanted to understand when this is a scenario, growth is coming more -- in terms of your lease cost per vehicle, you are charging higher to the dealers, your advertisement rates have gone up? Or is it simply that more and more vehicles are getting sold through lead generation. So just wanted to understand the drivers of the growth here how much because of...

It's actually all the above. One is the manufacturer spend more money. Second is, as I gave the figures a little earlier, the traffic itself is up substantially year-on-year in CarWale and BikeWale. I think the third is platform selling obviously more vehicles. So all of it, I would say. It's not one of these things, it's all of them.

Okay. So there's nothing one factor which is impacting?

Yes, I think that, Nitesh, that's one of the reasons we feel good about the business is because we don't think that there's a reason why any specific reason where we've seen this growth. As I said earlier, the Consumer Group business has grown over many, many quarters. It's not a one-off. And I think that's why we feel good about the business because it's not a one-off. It's just been consistent growth over many quarters actually.

Correct. So that's why I think the only factor here is the growth has picked up substantially. Yes, this business was growing earlier, but it was growing more in mid-teens earlier. But in the last couple of quarters, we have seen growth picking up substantially. So the idea is to understand whether -- what is the more sustainable growth basically? That's what we have to understand. And obviously, there will not be data available for this. But as per your experience or as per your understanding, right, see, what we understand, we know the advertisement budgets of the OEMs or at least they tell us how it has grown, not grown, right? And it has not grown at 30% or 20% the way your top line has grown. So does that mean that these verticals basically domain CarWale, Car Decor all these domains are getting more and more traffic now more and more share of OEMs wallet? Or any sense around these numbers or anything you can talk about as to any other structural changes that are happening or these changes are supposed to happen anyways, but now I think it looks like we are starting to see that pick up happening. So any sense on what is driving this or exactly what is the wallet share now, where it can go in the next 3 years, 5 years?

Yes, it is correct that one is OEM that has spent more money. That's one. You may be right that OEMs have not spent 30% more money. That is also correct, probably. But the reality is they are spending money more money on digital. I think that change does take place when you want more direct results or very quick results, we spend money on digital or more measurable results. All the required digital spend. So it would be -- I mean, we don't have complete data yet for the last 3, 4 months, but it would be correct to assume that some share would have been gained by platforms like CarWale or BikeWale. It would be fair to assume. But it's also fair to assume that there is a slight shift in the pattern of OEM spending to digital. There's also -- part of it is that advertising expense OEMs are growing. It's all those factors. The fact that share is growing is also true. I would again put it all the 3 factors that are actually taking place. We're seeing the first signs of all of this happening actually.

Okay. That's a good thing to hear. Vinay, you were taking a lot of other initiatives also in the consumer business lending through your portal, making lending platform through your portal or maybe some other things as well. Has any of these things started working out well or started leading to some revenue generation for you guys?

It's not leading to significant revenue generation, but it's leading to traction. I think the first signs or something working is how consumers react to products like financing, for example. As you can see in our platform today finance offers for new cars, new to wheelers, used cars, et cetera, et cetera, CarWale, BikeWale even on OLX has just gone live. And we find that -- some of these are starting adopted by consumers, getting instant approval for a loan for the 2-wheeler or a car. Some have scaled, especially in 2-wheeler, we find the volume is pretty high. So these are all products for the future. And eventually, people like you and me when we buy a car or a 2-wheeler, definitely a 2-wheeler if not a car will want 1 click like experience, click a button to get the bike home, right? It'll just come to your house. You want that sort of an experience. And obviously, a lot of these initiatives on our tech product side are trying to solve these problems for the future. Even if today, consumers don't want it, maybe in a year, 2, 3, 4 years, they will want to or some percentage of customers will want it. And that's what we're doing. We're building these products for ourselves for bikes and cars. We're also building this by the way for OEMs. Many of the OEMs are using these products on their websites. I mean today, many 2-wheeler and car manufacturers are using some of the technologies we created for their own customers on their own websites and their own showrooms. So I think -- I mean, part of our role is also trying to get the entire industry digitized. And then serving -- it just helps serves all our customers better and give them a better experience. So many of those initiatives are going on in parallel. They may not become big monetization tools immediately in the next 3 -- maybe 3, 4 months or 6 months. But there are definitely ways of changing consumer behavior. And there are also improved consumer experience. And that's one of the reasons you see CarWale and BikeWale's traffic, right, going up on a base of 38 million and 39 million a month last year. to go up from there to 49 million is -- like it's no mean achievement. I mean it's a tremendous achievement to increase traffic by that scale over a 12-month period. It is these kind of initiatives which get more consumers to come. And you got to remember, we are 95% organic still.

No, I understand that. Okay. Maybe I'll get into a separate discussion with you to discuss this in detail. Just one thing, which I've always been curious, right? Typically, if you look at in India, new car market is around 4.2 million, maybe used car market is around 5 million, right? So there are about 8 million to 10 million car buys and sales that happens new cars, used cars combined together. So when we see the traffic numbers coming out to be 38 million, 50 million, who are these people, right? If they're not...

There are also 2-wheelers here. But when you look at 2-wheelers, the numbers go a little more. But even if you look at cars alone, if there are 10 million probably buyers for cars, they're probably 80 million to 100 million looking for cars or shopping for cars, which may become in the next 12 months, 16 months, whatever. And then there are another 4 million, 5 million selling cars, right? So there are multiple sections of this data, right, which come around. And then there are almost like 4 million, 5 million many users of cars who just come and understand about their own car or want to know more about their car. So traffic has got all sorts of people, people who want us, people who are looking to buy new cars, used cars, if you're looking to sell cars all of that, right? Anybody who's been trying to do this for the next 6 months or 12 months will be there. And you got to remember also market share of CarWale is very high to car users, right? Like car owners or car looking or aspiring car owners, it's very, very high, the market share. Very few people buying a car and not coming to one of our platforms, very few people.

And the second question is on the used car side. I think when you -- when we bought OLX, we started -- had an existing used car business as well. So have you integrated those businesses? Any -- have you been able to offer a better deal to dealers, used car dealers and charge higher subscription revenues from them? So anything -- any of these steps you have taken on the OLX side because it's like essentially #1 and #2 player getting merged together, right, or becoming one. So what kind of benefits have you seen because of that? Or any strategic steps you have taken to improve your positioning or to expand the size of the industry, basically, right? Basically, you are the one who has to create opportunities for monetization. So what -- what have you done to do that?

We've got 2 used car businesses under CarWale and under OLX. OLX is almost 3.5x to 4x the size of CarWale in the used car space. For CarWale, 85% in new, 15% is used. OLX about 40%, 45% of its business is used cars. And it is 3x the size of CarWale. The customer profile, both platforms by the vehicle have over 150 million customers a year. So both are strong, both have independent brands, customers go for different reasons to both. What we found, I mean, what we find in the data is generally, we find that customers want to buy a car, let's say, 7 lakhs to 8 lakhs and over tend to come to CarWale little more, I would say, a big city, a little more probably buying a little more expensive car. In OLX, you find very strong coverage across all cities in India, especially B class, C class, D town -- D plus towns in India. And the ticket size seems to be more 0 to 8 lakhs. So it's almost like CarWale is in -- has very strong strength because of such a new platform on cars above 8 lakhs for used cars and OLX is strong up to 8 lakhs. It's almost how they complement each other -- of course there's a overlap between the 2 as well. We find that dealers and consumers come for different reasons to both. As I said, OLX is 3.5x the size. We find the dealers in OLX tend to advertise for cars or want to be there for all small towns very, very strong coverage in small towns and very, very strong coverage on cars up to INR 8 lakhs. And CarWale tends to be in the top 25 cities and up to 8 lakhs. So that's how it is. The question of merging, we thought originally whether we want 1 business rather than 2, we find that people come for different reasons. The brands are strong. Dealers have different reasons to come. Consumers come for different reasons. What we tend to merge always or tend to make it easy for people to do is the back end. So there's a dealer on OLX and CarWale, can we give them one simple tool to upload cars on both platforms, right? Can we do things, right? And that's the work we've been working on the technology side, where the back end is one, but the front end of the consumers and dealers are 2,right? So you as a consumer can go to either platform or you as a dealer can go to either platform. And I think that's how we tend to be running these businesses. It's -- we're still in process of completing that. I think we -- the first steps of that in this quarter where we'll have some functions of our back-end systems common, right? So I think those are the kind of things we have a road map towards on the tech side and synergy side at this point.

Sure, sure. And just one last question on the housekeeping question. If I look at Q3, this quarter's PBT, last year, auction volumes in remarketing is -- a [ share ] lower 300,000 units and auction volume is around [ 55,000 ] something. But if I look at the last year's PBT, right, these numbers were much higher, auction listing was 3 lakhs 55,000 and auction volume was 51,000. So has there been any restatement in the last year numbers on the auction volumes and auction sales because...

[ in SAML ]?

[ Yes, in SAML ]. Because this -- the numbers...

[indiscernible] statement or anything. Aneesha, anything? But I don't think there will be of any.

No. If you look at the [indiscernible] we've clarified these are all vehicle auction listings.

No, no, I understand that. Because Aneesha if you look at auction listing in current year PBT for last year, you have given 299,712. But in the Q3 FY '24 PBT for Q3 FY '24, the auction listing is 3 lakh 55,363. And similarly, the volume was auction volume was INR 50,925. But in this year's PBT last year number is 45,000 something. So there's a big difference.

Yes, which is what I was clarifying, Nishit, these are all vehicle auction listings. Previously, we have put all listings, which is why in the last couple of quarters, we have clearly called out only the vehicle auction listings.

Okay. So you have removed some nonvehicle things from that, and that is the reason it is happening.

Yes.

The next question is from the line of Arpit Shah from Stallion Asset.

Just superb results for sure. I just wanted to understand in terms of monetization, like given the strong platform that we have, be it on the used cars, also on the new cars, our monetization is a little underleveraged, right? So you believe that we are as a J-curve in terms of monetization and the revenue growth should be accelerating going ahead, given our position in used car and new cars?

We believe we've had a 32% growth in revenues, right? So we believe the growth drivers are in place, 32% growth over 9 months. So we believe definitely revenues drivers are in place. We also believe that there's a lot of potential in the industry itself. And most of that is around having more consumers coming into our platforms or having more dealers or more manufacturers on our platform, providing more services to our customers, like loans, et cetera, et cetera. So yes, of course, we believe we at early stage, the TAM is massive. The idea would be keep growing consumer experience as well as keep doing monetization with it. And that is why we're growing at 32%, right? So it's all of these things, I'll give you, to be honest.

Got it. So you think these numbers once all the steps that you have taken in the last couple of years and a couple of quarters, these all initiatives now will translate for you from going from a 20% growth come to being in a 30% growth company. Is that a thing that you are looking at?

I don't -- we're not giving guidance. We don't think about that. But to be honest, we've got -- if you see our growth rate in the first 9 months side, which is what should we look for, it's a 32% growth in the company, right, on a consolidated basis. Of course, the consumer group may be at 27% in different, different growth rates. But at the company, we've grown 32%. So our attempt is to obviously serve our consumers better, grow as fast as we can, but growth based on profitable growth, right, which is -- keep improving our margins as we grow. That's how we tend to be as an organization. And that's how the last few quarters have demonstrated our thought process around some of these things.

Got it. Got it. So let's say, now you are at INR 176 crores kind of a revenue INR 180 crores number, revenue run rate for the third quarter. You think this run rate, let's say, will move to INR 220 crores, INR 230 crores maybe by next year. And that's how we go on to become a INR 1,000 crore revenue company, where if costs would not escalate, but your margins will just keep accelerating, keep going ahead? How should we look at these costs going ahead once the revenue growth keeps coming in say [ '25, '26 ]

I can't obviously give guidance on excess revenue, but the -- but what you're saying is correct is that if our revenues to grow, our cost has not increased in relation to that. We always say that our costs grow marginally, but in compared to the revenue growth. If we did add some quantum of revenue to our current revenue, a large that will go to profit. That's -- and it's been demonstrated now over 5, 6 quarters. This is not a 1 quarter. It's been continuously happening. So you can see the margins quarter-by-quarter over the last 4 quarters, and you'll see that's true.

Got it. Just one last question on OLX. So on OLX, what steps are we taking to fire up the non-auto side of the business, like what are the things that we have been doing on the back end? And when should we start seeing great results on the non-auto side of the business?

Yes. So on the non-auto side, there are different segments as real estate to mobile phones, to bikes to electronics, household items, jobs, et cetera, et cetera. In each of these, we're working a lot on the product side to see what the offering of the -- for the consumer is. What changes me need to make on the front-end platform, how do we get the back-end tech, how do we get more consumers to pay, how do we get more businesses to pay? How do you enhance experience for them? How do we launch products for them, which enhance the experience? All of that is going on. Actually, we've been working for the last year. It takes a little bit of time to make such product changes. And some of it is coming in, some of it is still happening, but we do hope we are very excited with the non-auto side. So tremendous potential. It's probably the largest platform for bikes, mobile phones, electronics, household items, all of these. OLX probably has very, very strong dominance in India. If you're selling an old phone, or an old washing machine. If you didn't put on OLX, how would you sell it? And I think that's the strength of the platform. It has very, very high dominance. So there's probably no other way in India to sell it outside OLX either on a C2C basis or sell it to a dealer or if you wanted to buy one similarly, how would you buy it? How would you find used washing machine, except if it was on OLX. So there's tremendous potential here, where It's early days for us, as I said, it should provide growth for the next 10 years. It's not a 1 quarter, 2 quarter story. This is probably a 10-year story or 20-year story.

Got it. But do you think our expenses now will grow in line with inflation or there will be still some growth on that. So I think...

Yes. May not be inflation, but we see minimal incremental cost. If you see our cost even this year. The cost increase of a standard account is almost 0. So we don't see much cost -- much reason across the group for cost increase. I mean there will be increments. There will be some additions on manpower. First of all, the only real massive cost we have is manpower cost. So increment -- there'll be an increment factor, and there will be probably some addition or some people. But generally, our costs are not likely to go up significantly in the future.

Got it. Got it. And OLX business, do you think that this business from INR 50 crores can move to, let's say, INR 200 crores, INR 150 crores maybe in the next couple of years. there is a big optionality in the group owns right now and that needs to be leveraged going ahead.

I don't have want to put a number, but the limitless potential is absolutely limitless potential. As I said I don't want to a number to it, but there is -- we've just barely started -- just started working on it. So not said 2 years, 3 years, I think for 10 years we can have growth.

The next question is from the line of Harshit Nagpal from Yes Securities.

So one, if you could provide the breakdown of the remarketing business for this quarter the revenues between Shriram AutoMall [indiscernible]

Aneesha, you want to that? I think it must be the different companies.

Yes, there are 3 different legal entities [indiscernible].

Do we file that?

No, that's I was just saying we don't -- there's not [indiscernible].

And if you could give me the user breakup for the rural, urban and semi-urban both CarWale and OLX if that is possible. Like I mean if you...

We won't have those numbers. The user numbers we said. That the traffic numbers, right?

Yes. Yes.

No, we won't have that. We try and keep it, but we don't have it today available with us.

Okay. And the advertisement revenues from the OEMs between the -- and the dealers, the split between that, if you would have it for the CarWale.

[indiscernible] Aneesha said by 65-35, I think 65 the OEMs and 35 dealers in CarWale.

So 65 is OEMs, it's mostly advertisement, right?

It tends to be mostly either advertisement or leads -- it's not advertising is not -- the way we call advertising is not just display advertising, but it also leads or it could even be -- we are deeply become manufacturers now. So it could even be transaction in some cases.

The next question is from the line of [ Siddharth Purohit from InvesQ Investment Advisors Private Limited ]

Most of my questions have been answered. Just 2 clarifications. Sir, what would be our run rate of ESOP at consolidated level? Or if you can give...

ESOP, is it broken up, Aneesha? It's actually -- it's in a stand-alone is down by 37% to INR 2.79 crores a quarter. Is that correct, Aneesha?

Yes, Vinay.

That's correct.

So it will not be equally like now divided between the 2 entities, right?

No. It's in the respective deck, each of the entity is displayed separately. So the stand-alone reflects the consumer group. This is what Vinay called out to INR 2.79 crores.

That is a quarterly run rate you are saying?

That's the quarterly, and it's INR 8.36 crores for 3 months.

For 9 months.

For 9 months. Sorry, which is down 37% from last year.

So any specific like now, I mean, reason why it was lower this quarter, maybe it was not [ registered ]...

It's the way it is, a lot of ESOPs cost is related to stock issued earlier 2, 3 years ago. And as the company -- as [ vests, ] the costs keep coming down. So it's likely to keep coming down. If the question is, is like to keep coming on even next year.

Okay. And one more thing. On this auction side. If I say look at the realizations per auction, like -- is it seasonally, it is higher during this quarter? Or it is because of the product mix or the sales mix?

No, I think it's yes, it is a little bit -- normally Q3 is better than Q2 anyway. But it is also because of the repossession volume because it's much higher than last year as well at the same time. So the right way to look at it is 28% year-on-year, right, same period last year. So it can't be seasonal. It is also because of volume increase due to a little bit more repossession in the quarter.

The next question is from the line of [indiscernible] Advisors.

I have a few questions. My first question is to start with, you said that whenever our revenue increases and so that is directly going to impact the -- that's directly going to hit our bottom line, right? So that is across all the 3 segments, right, OLX, consumer and remarketing?

That's correct. Absolutely correct.

Okay. My actual question -- second question would be, sir, what would be the steady-state EBITDA margins you expect for the consumer business? The current margins, can we consider that as a stable one?

We actually think that as revenue increase should go up. So I don't know what steady means, but we actually think it should go up as revenue goes up. If revenue did come down, it will come down, too. But if revenue went up, it would go up.

Okay. So sir, currently, we were at approximately 30 approximately, right, EBITDA margin for...

Yes, 35.

Yes, 35. So if the revenue goes up, so we are expecting those margins...

It should go up. Yes, the margin should go up, we feel the other way around actually.

Okay. Got it. Sir, my third question is related to the remarketing segment. Sir, what happened in this quarter exactly? Is the growth mainly because last year quarter was so soften or something fundamentally has changed in the industry level?

I think it's both. We did have a weak previous year where the growth was minimal in the remarketing business. So there was a base effect there. But there is, as I said, some signs of repossession improving or increasing and us getting more vehicles from that segment. So it's both, I would think. But we did have a previous year, which is also weak. So it's a combination of both factors, I would say.

Got it. Sir, my last question would be what is the right to win in this marketing -- remarketing segment? And who are we competing with exactly?

So the first part is -- the second part is who we compete. We are generally competing with a very offline methodology of sales. So if a bank or an NBFC or an individual didn't sell vehicles in an auction format, a digital auction format, they would sell offline directly. And that's probably the competition for us is offline sales. What is the right to win is a very good question. It's a marketplace. So there are thousands and thousands of dealers which bid for inventory coming from consumers or businesses. 40% of our business or the supply which comes a single inventory, which is what we call retail, which means each individual vehicle comes there and is sold to thousands of dealers bidding for it. So it's an online digital marketplace, which is by itself a right to win because you have dealers coming because there are sellers or consumers or businesses selling -- and sellers come because there are businesses buying. It's a C2B, B2B business, that's one. So there's a network effect there, which feeds off each other. And I said these dealers are thousands of, no single buyer buy more than 0.5% on our platform. So it's a very, very large number of buyers who buy this inventory. We're probably the largest supplier of inventory to dealers in India, number one. Number two, there's a tremendous amount of physical infrastructure of Shriram AutoMall. That's one of the reason we acquired the company. We have 130 physical locations or AutoMalls as we call, each of them in a minimum of 5-acre properties, where we keep vehicles which are for sale. So if you're a bank or an NBFC and you want to sell your vehicles, you can physically keep it with us and then we can do a digital sale for you. So I think it's a combination. That also is a differentiation in India. So it's a physical business, mostly digital, but all these factors of network effects, marketplace dynamics, physical infrastructure, skill in technology and product are factors why we have a right to win.

The next question is from the line of Vijit Jain from Citibank.

So Vinay earlier in this call, you described your business to OEMs as performance market.

I think we lost Vijit.

Yes, I think we have lost Vijit. So ladies and gentlemen, that brings us to the last question for today. I would now like to hand the conference over to the management for the closing comments.

Thank you, everybody, for joining in today and taking this time out. We feel excited about the last quarter. And we also feel excited about the future of the company. So thank you once again, and look forward to hearing from you again soon. Thank you. Bye.

Thank you, ladies and gentlemen. On behalf of CarTrade Tech Limited, that concludes this conference. You may now disconnect your lines.