IndiaMART InterMESH Limited (INDIAMART) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I am Avijit Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's quarter 3 FY 2025 earnings webinar. [Operator Instructions] Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer; Mr. Brijesh Agarwal, Whole-Time Director; Mr. Jitin Diwan, Chief Financial Officer; and Mr. Prateek Chandra, Chief Strategy Officer. Before we begin, I would like to remind you that some of the statements during today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide #3 of the earnings presentation for the detailed disclaimer. Now, I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you, and over to you, sir.

Good evening, everybody, and welcome to IndiaMART's Quarter 3 FY '25 earnings webinar. We have circulated our earnings presentation, which is available on our website as well as on the website of the stock exchanges. We are sure you would have gone through the same and we would be happy to take any questions afterwards. IndiaMART has delivered consolidated revenue from operations of INR 354 crores in quarter 3, representing a year-on-year growth of 16%. Collections from customers grew about 10% to INR 363 crores on a consolidated basis. Deferred revenue grew by 17% to INR 1,492 crores on consolidated basis. Unique business inquiries have grown to INR 27 million, representing a year-on-year growth of about 17%. Total number of paying suppliers has declined slightly by 3,500 to 214,000. This decrease is primarily attributed to the reduction in gross supplier addition during the quarter as we have been increasingly focusing on onboarding higher quality businesses as paying supplier. Additionally, lesser number of working days due to festive season has also contributed to the decline. The churn rates within the customer base in the silver bucket remain largely consistent with the trends observed in the recent quarter. Our platinum and gold customers, which constitute approximately 50% of our customer base and 75% of revenue, continue to have low churn. We are focusing on enhancing quality and simplifying the platform to improve the overall user experience and engagement. We have further strengthened our leadership by onboarding Mr. Saurabh Deep Singla as new chief HRO. Now I will hand over the call to Brijesh to update about Busy Infotech. Thank you, and over to you, Brijesh.

Hi. Good evening, everyone. Busy has done a net billing of INR 20.4 crores in the quarter, and this represents a Y-o-Y growth of about 42%. This billing also includes an impact of approximately INR 2 crores, which has come in because of a change in the overall payout structure for the channel partners. The revenue from operations have grown by 30% year-on-year basis to INR 16.3 crores, and the deferred revenue has grown by 43% to INR 57.3 crores. The EBITDA for the quarter is at INR 1.1 crores. This is a margin of 7%. And the net profit was INR 1.9 crores. The cash flows from operations stood at INR 4.9 crores. During this quarter, we've sold an additional 7,000 new licenses, and this takes our total licenses sold up to about 388,000 overall licenses at the end of December '24. With this, I'll hand over the call to Jitin so that he can discuss the financial performance.

Thank you, Brijesh. Good evening, everyone. I'll take you through the financial performance for the quarter ending December 2024. Consolidated collection from customers was INR 363 crores in the quarter, representing year-on-year growth of 10%. IndiaMART's stand-alone collections from customers for the quarter were at INR 341 crores, registering Y-o-Y growth of 8%. Standalone revenue from operations stood at INR 337 crores, registering Y-o-Y growth of 16%. Our growth in revenue was primarily driven by improvement in realization from paying suppliers. Consolidated deferred revenue stood at INR 1,492 crores, increase of about 17% on Y-o-Y basis. EBITDA of IndiaMART stand-alone business stood at about INR 144 crores, representing a margin of 43%. The margins continued to be elevated on account of savings arising from lower subscriber acquisitions and operating leverage. As and when customer growth increases in future, we anticipate the margins will align with the gradual operating leverage. Consolidated net profit for the quarter was at INR 121 crores. Consolidated cash generated from operations was at INR 114 crores. Consolidated cash and treasury balance stood at INR 2,606 crores as of 31st December 2024. During the quarter, we exited one of our investee companies, Shipway, as it was fully acquired by Unicommerce listed on stock exchanges. Thank you very much. We are now ready to take any questions.

[Operator Instructions]

First question is from the line of Abhishek Bhandari from Nomura.

Sir, I just had this question on surprise subscriber, paying subscriber number minus 3.7%. Now even in the worst of the last few quarters, you were at a positive number of around 2,000-odd. So what surprised you negatively? And do you think -- by when do you think we'll again go back to a positive number, if at all? And sustaining this collection growth rate in double digit, is it possible sans the net subscriber addition for you?

Thank you, Abhishek. See, last quarter also, I mean I've been guiding in the last 2 quarters or -- that while we are working on improving the churn and for the purpose of improving the churn, we have taken 2, 3 initiatives: one, which you can see is the number of inquiries -- unique inquiries to the number of inquiries delivered. That ratio has come down from 5.5 to now 4. Secondly, we are trying to improve the relevancy in terms of geographical matchmaking and in terms of the -- by lead or RFQ quality. So those things that we are taking and they are taking much longer than our anticipation. So we are -- in the meantime, what we are doing is not aggressively investing in gross additions. Rather, we are doing segment-by-segment analysis, which are the customers, which are the high churn customers for whom -- which kind of customers the platform is not working at all. And we are trying to identify those segments one by one, whether it is the Tier 3, Tier 4 geographies or whether it is some of the industries where it is not working. And we are trying to restrict our investment until we are able to get a very positive hang on churn because there's no point trying to get 1,000 or 2,000 customer additions per quarter or whether it is 1,000 or 2,000 less. So if you go to our functional P&L side, you will see that investment in sales and marketing, which used to be typically at about 15-odd percent or 50 -- plus/minus that, it ranges between 12% to 18%, is at the lower side of the thing. Now, we are at 13% only. So we are consciously not investing going aggressively to increase the number of supplier base. We know we have supplier base. We are getting certain supplier base. And two, there may be some seasonal effect of the Dussehra, Diwali, Christmas, New Year. But other than that, I think, let's wait for a quarter or 2 when I can give you a really good news about the churn. And then we can -- we have all the money and all the resources to go back and press the peddle on the new customer acquisition.

And sir, my question on whether you can sustain this double-digit customer collection growth in the fact that addition is negative?

It's the right question because if we are not doing the gross addition, so even if those customers were staying for, let's say, 3 months, 6 months, 9 months, they were adding to the collection. So this particular thing that if the net customer addition is going to be even 0 or plus minus, then whether the collection will remain in the 5% to 10% range or whether it will remain in the 10% to 15% range, you are right. I think let us not have an expectation of over 10% as of now. If we can surprise you, we'll come back, but I'm -- I would not increase my expectation beyond 10%.

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

My question is on collection growth remaining below 10%. Last quarter, we highlighted there were some execution challenges, right? And that basically impacted your collection growth last time, but still collection growth remained below 10%, and you're also guiding less than 10%. So I just wanted to get some color on what's happening? And is the impact of execution challenges continue to remain?

So I mean, last quarter, suddenly, we came down from that 14-odd percent to 4-odd percent or 5-odd percent. And there were 2 things. One is that the number of customer addition was not happening. So we were slowly and slowly coming down in our collection growth coming from 20% to 15%, 16% to 14%, 13% and -- so I think we would have been happier if the last quarter was 12-odd percent, but we actually fell down to 4%. So there were some execution challenges. I think there is always an execution challenge, but by and large, I think the team has done a good job with 8%, 9%. And mostly, if you see the ARPU growth or the collection per customer growth, the team has been able to do a decently good job. So I would not say that the collection is now reflecting bad execution. 1%, 2% plus/minus here and there possible, but because we have not been adding customers, so there is a problem with the collection. And that is why I'm saying that let us wait for a quarter or 2 more when we can give you a better color on the churn.

Sure, sir. Second one, just want to understand your thinking behind it. So we have been trying to or reduce the churn basically during the last 5 to 6 quarters, right? We have made various initiatives, including changing the matchmaking enabling overall easier contact between the seller plugging WhatsApp is now available on your website and your app. So just want to understand, despite so much initiative, if we are seeing the elevated churn continue to remain a problem, why don't we fundamentally think that elevated churn is now maybe a base case and we should focus on gross addition rather than cutting our sales and marketing, which is impacting our growth further.

I mean that can only help you in maybe 1 or 2 more quarters. But after that, again, it will come back and bite you. So there is a -- there's a concept of cap to LTV, the customer acquisition cost that we should pay -- long-term value that we can drive. And while it is highly profitable for us for the second year, third year, fourth year customers, for the first year customers if the retention are going to be so low, I think it will become a problem in times to come. So I think it is better that we connect our main engine right now and be able to do a better job. Otherwise, we will get into the pure ARPU growth mode for many, many years. I think it will take some time. I am still not pessimistic on the India growth story or Internet growth story or lead gen story or any of that. That is what I suggested, I think last to last quarter in one of the questions, that let us not yet question the business model of Google itself because if the Google, as a business model, is a purely, purely advertising lead gen business model for SMEs and for our businesses, I think IndiaMART is slightly more refined version of that with a slightly lesser TAM. So I'm still confident that structurally, there is a whole lot of opportunity available in front of us. We are trying to find that blind spot, which we can fix doing too many different experiments. Yes, you are right that it has taken 5, 6 quarters and nothing has resulted so far. But I think we have done it time and again in the past many, many years over the last 2, 3 decades. I think we will be able to fix this. If we are not able to fix this 2, 3, 4 quarters, I think we can always go back to the ARPU-led growth or customer acquisition-led growth at a lower profitability.

Sure, sir. Makes sense. The last one, if I can squeeze in, is on your buyer side. So we have seen a decent improvement in metrics, both on LTM active buyer as well as daily unique business inquiry, right? Any color, any initiatives you have taken which is resulting that? And just some color out there.

I think this is a function of too many things, whether lesser number of supplier causing lesser irritation to the buyer because at the end of the day, we sell buyer information to the sellers and multiple sellers do call you. So has that resulted into a significant repeat buyer? You can see a little bit of improvement in repeat buyer coming to at about 55% highest ever kind. But that's just one quarter. Some improvement is possibly the search engine optimization because the last year, most of the searches were driven from the Google desktop and now Google has become mobile-first indexing. So -- but I would still say that let's wait for another quarter when this can become a sustainable trend because these are the only 2 quarters of good growth. I would still wait for another quarter to say that this is a sustainable trend. Frankly, we are running at almost all-time high unique business inquiries per quarter.

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

So I have 2 questions. The first one is, see, we have been seeing this churn-related issues since the time we increased our pricing on the silver category, right, the last year, sometime in May. And that is when we have been seeing this kind of high-churn rates, especially in the silver category and that has sustained. Have we considered going back to a previous pricing, trying out something different rather than just saying that this is low margin growth and it may not get converted into upsells going ahead. But just for the time being, just going back to the previous pricing and -- or just to bring something new to the table rather than -- I'm just coming from that thought process, if you can just...

Yes. I think it's a valid suggestion now because while the price is same as what 2019, '20 just before COVID we had price, and so there was no rationale to even think while the inflation has run up so heavily in these many years that INR 500 per month would have such an impact. But given that it's been 5, 6 quarters, if another 2, 3 quarters, that doesn't change, we will definitely look at your suggestions, and I think we internally also keep debating on this. I think I'm still hopeful that we should be able to find the real reason of it rather than the INR 500 reason because gross addition has not been slowed -- has been slowed only in the last 3, 4 quarters, not in the first 2, 3 quarters, as publicized. It was only for that one quarter glitch. Otherwise, the gross addition that I see my own number internally, and if you go back to again the functional P&L, the sales and marketing, for the entire year of FY '24, it was 18% and then if you look at the quarter-on-quarter that number, it has slowly and slowly come down. So we have meaningfully not really investing heavily on going after the market. And there are opportunities which we -- if I want to acquire customers at INR 2,000, but at the end of the day, if I'm not able to retain the customer and upsell this customer, it will slowly and slowly become a deteriorating business. So, give us another 2 quarters. If not, then we will see.

Okay. The second question is with respect to your categories which are getting impacted in a meaningful way. Now there has been some spending-related slowdown, especially government spend is not increasing in a meaningful way. Are there any specific categories that are getting impacted? And, a part of the problem could be this macro challenges rather than just on the churn side. I mean just trying to extrapolate a few things. Plus, sorry, just to conclude that point. And, yes, if that is the thing, have you started working the thought process from a vertical perspective, right, focusing on certain categories where opportunities can be big, even today, right, despite the kind of penetration could have happened and rather focus on those categories far more than those categories where chances of incremental supply growth could be lower? Have you thought on those lines also?

Yes, sir. So on the macro side, I continue to say that every quarter or so, there are some or the other macro challenges in some or the other categories or geographies. So, for example, sometimes, there is a ban on single-use plastics. Plastic is a huge industry. Packaging is a huge industry. But it evolves into something newer product like green products and all that. Sometimes, I mean there's a construction ban. Past 2, 3 months has been bad for Delhi-NCR. So I think there are always macros -- small, small segments of macro negatives, whether it is state-wise or whether it is industry-wise. The good part about IndiaMART or any large horizontal, diversified business like IndiaMART is that while there are always 1% or 2% headwinds, there are some tailwinds also available in some or the other sectors. So -- and coming to your second question, yes, I think it is very imperative for us that we should start thinking about our business also now as verticals within horizontal and be able to cultivate certain verticals much more speedily or much more profitably. We have done that in the past. I remember apparel and handicraft used to be the first few verticals when we were doing export-related business. When we came to domestic business, I think the engineering goods was one of the very, very important business. As the advent of e-commerce happened, packaging material became very, very big. Similarly now, pharmaceutical and health care became very, very big. So I think there are at least top 10 industries where we can choose to go double down on vertical-wise and find growth. We are working on that. We have started -- as I said, we have started to invest a lot more on category-specific insights than a couple of years ago. And I think we will come back with more solid options on that soon.

Just to get that point a bit more, have you started hiring a specific vertical focused employees who can better extract value for you within certain categories? I mean, is that the thought process?

Yes, it is the thought process. We have -- we will start to hire a couple of industry-specific people to focus on that vertical. Currently, we have in-house category management people, and we have a large team working on that. But you are right, now we should be looking more at industry insider experts.

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

A couple of things from my end. Firstly, if you can indicate that are we planning to change anything in our customer acquisition strategy and what do you think is not working? Is it the channel partners or the customer acquisitions through our own employees, if you can share a bit of light on that?

Equally, I think, when in the beginning of the year -- beginning of the last year, I think we first cut down on our tele-based Tier 4 centers. So I think that was the first thing that we did in January, December last year, I mean, 2023 and January 2024. And then wherever we operate field sales force, I think we started to look at the cost of customer acquisition very closely. And we found that there were certain geographies as well as the certain places. I mean, I can give you an example, if you go to Surat and you want to buy an IndiaMART subscription, you will not be able to buy it in the monthly mode, the only mode available, because it is found that apparel is -- while it is one of the large industry, it has that look and feel and high churn in nature. Similarly, the Jaipur as a handicraft place has a very similar -- so we have taken individual steps to reduce the investment in where it was getting wasted completely while focusing on categories or while focusing on segment of suppliers, which are better useful. So, for example, we're trying to find how can we create a specific channel, which can work on maybe INR 1.5 crore plus turnover company because that is where we see a better retention than less than INR 30 lakh or less than 6 months or less than 1 year GST registration. Because a lot of these new businesses who come -- who get registered and want to try Internet for their own growth, their natural churn is unnecessary high, which end up creating a bad mouth for us also. So I think we are -- but those execution challenges set apart, I would say if I can fix the basic matchmaking and the basic back the plan thing, where buyer starts to increase systematically again and thereby impacting better -- even better retention for our gold and platinum customers, then I think the silver will automatically fall in place. So we tried fixing silver training and onboarding and those things, which are anyway we should be doing and I think Dinesh Gulati and his team is doing a fantastic job on that side. But there are certain blind spots that must be there in the product that we are not able to find because I'm pretty fully convinced about the overall opportunity size. The overall opportunity is massive. Customers want to give you money, and we need to fix the large multi-geography, multi-industry engine. I think we should be able to fix that, so give us 1 or 2 more quarters on that.

Right. Just on the continuation of the same, are we also planning somewhere to change the payout structures for our channel partners or for our sales employees who are bringing in more quality-based customers to us where the churn might be lower for those particular customers?

We keep doing these minor, minor changes on the incentive policies and, as I said, where we have to promote annual acquisition, we incentivize the annual acquisition, wherever we have to promote any particular segment of -- so we do incentivize. For disincentivization purpose, we have a control in our own hand where we do not assign those leads. So we -- a lot of these things we can do centrally as well for the purpose of incentivization, we do, and we continue to tweak them day in day out. So don't worry on that side, we will do enough experiments. I think let us first fix the basic nature of churn and then come back on that again.

Secondly, I wanted to understand if we intend to acquire majority stake in any of the investee companies. The basis of this question is just wanted to understand if we are also looking to enter full fledgedly into any of the newer businesses which we have acquired or in associated manner.

So if you look at the accounting as a segment, we started Livekeeping with 51%. Currently, we have 66%. I think as per our agreement, we will end up doing 100% acquisition of that. On Vyapar also, we started from 26% -- right now, we are about 29% there. Busy, we have already taken 100%. So on the accounting side, we are fully committed. And in the first 3 years of Busy, we have been able to increase the growth rate as well as retain every customer. Nothing has gone wrong on that side. So I think this side is well sorted. Now coming to the second side, which is the minority investments into various things, couple of companies we have, I think, increased our stake. Prateek, can you give more details on that?

Yes, sure. So all these investments that we've done in the spaces which are strategic purpose because our going-in thesis is that we should be able to get some kind of synergies, either in the near term or in the longer term while making the investments. So if you see, for example, Bizom, when we started, we started with a 10% stake. Now we own roughly around 31.3% stake here. Similarly, SuperProcure, we started with roughly around 26%, now we have a 35% stake here. EasyEcom is another one, where we started with 26%. We've put in some other cash in the convertible position. So we'll come to know as to what the stakes would be. But there are follow-ons that we have done in our investee companies wherever the opportunity has arisen. So to answer your question, we are okay increasing our stakes in the investee companies because these are the strategic spaces. However, whether to take majority, we are very patient investor, and we'll wait for the right opportunity to decide as to whether we need to take majority or we don't need to take majority in. But as and when the opportunity comes, we will continue backing these companies in the further rounds.

Understood, understood. And just one last thing from my end. Are we somewhere planning to enter into the e-commerce, B2B e-commerce business as well? And are we seeing any kind of competition from that particular set of companies right now?

We are already into B2B commerce. If you look at industry buying, industry buying is -- and Propmart also, industry buying and Propmart, both of them are purely, purely what has been the normal media parlance B2B commerce is called. Propmart is more like a wholesale B2B commerce and industry buying is more like SME or corporate MRO kind of B2B commerce. So we have invested in both. However, if we look at the profitability of any of them, it looks quite elusive as of now. So while we have been investing on B2B commerce since 2014, from '14 to '17, we were invested in Tolexo, and then again in 2021 or so, we invested in [ Industry Buying ], between 2016 and '20, we invested in Propmart but -- and Propmart has done handsomely well. So we continue to be looking for any of these. Anything which is good enough and has a better unit economics, we would be looking at. Nothing to say any competition has come back and hurt any of our customers or any of our people. So I think -- in fact, whatever noise was there, was there between 2021 and 2022, is no longer even there. So none of the competition.

So we have a question from the chat box. The question is from Mr. [ Yasser Lakdawala ]. Considering the fact that we generate operating cash flows of INR 500 crores plus, and that we have a robust balance sheet, what are your thoughts on buying back stock?

I think this year, this financial year, around August, September, we had returned about INR 120 crores back to the shareholders. And we have also done about INR 84 crores of strategic investment in these 9 months. So -- and if you look at the historical number, we have been able to return either money to the shareholders or doing a strategic investment. So as the time will come and as the Board will decide, we try to do it once in a year, not multiple times in a year. So after the financial year ends, whenever the Board meeting happens at the -- before the AGM, we will decide how much to distribute back to the shareholders, how much to invest in this strategic investment. Thank you.

Next question is from the line of Amit Chandra from HDFC Securities.

So sir, in terms of the trend that we're seeing in terms of the divergent trend, in terms of the pressure that we're seeing on the suppliers and increasing the ARPU, that actually suggests, very simple terms, I'm trying to understand, that suggest that the lower end of the pyramid is notable to derive value from the platform, whereas the higher end or the top paying suppliers are able to derive much better value from the platform. And the ARPUs increasing is like suggesting that. And also, people are moving from like lower plan to higher plan. So what explains this divergence? And is it -- are we going to continue in this manner for a while? Obviously, you have explained it in different form. But just from the relevance of the platform for the lower end, is it you need some kind of more innovation there? Or the platform has to be in terms of offerings has to be like reconsidered in terms of what we're offering to the lower end?

Yes. Thank you very much. I think a very important question. So there are 3, 4 kinds of suppliers that use IndiaMART. Okay. One, who are very highly native, digital savvy kind of customers. And they are able to find value because they are investing not only money, but they are also investing enough time on the IndiaMART app or on the IndiaMART seller panel. They are digitally more savvier and -- with product type. The second kind of customers are those who themselves have not found their own business model or have started a new business or recently trying to scale, have taken, because a lot of our customers have seen come for less than 1 year GST registration, I mean, who have recently got their GST number registered. And the third ones are those who have understood the value initially being digitally savvy or they have found few. And they have invested 1 or 2 persons who can properly deal with the IndiaMART leads and IndiaMART system, and are able to do a daily, weekly monitoring of those people. So these are the people who invest higher. And the fourth kind of customers are those who are newer, which is a large market, large off-line market, who is looking for a digital -- easy digital option. While at IndiaMART, we started at a very smaller, simple system, over the time, I think we have won more sophisticated or complex for that new genuine customer, who is 1 to 5 years in business, or 1 to 50 years in business, has good online business and trying to go digital, but is not digitally savvy. For him, I think it is difficult, and we have to make it easier and more full proof for him to be able to succeed. I think that is where the bigger opportunity is and if we are able to handle these 2 separately, how to serve the Gold and Platinum by acquiring -- see, Gold and Platinum bring you a lot of spillover effect because they are the ambassadors that in every market, in every mohalla, few of those guys make a lot of money through IndiaMART. And their word of mouth actually spreads down, which helps us acquire a lot of these newer customers. So I think the middle fact we have to fix and we are working on that. Let us not assume that we will not be able to fix that.

Okay. And sir, lastly, on the collections. Obviously, we had the collections better than what we did last quarter, but considering 4Q is the most important quarter for us in terms of collections. So how is the progress for 4Q because if I take at least 10% Y-o-Y growth also for 4Q, then also we are hitting, say, 9% to 10% growth for the full year. So the full year grew -- the collections growth is still like muted because like what happened in the first half. So still the ask rate for that is still high for the fourth quarter. So what like -- what you would like to suggest what is happening till now? And what kind of collections we can see for the fourth quarter?

So I mean if you go to the net customer addition slide, I think customer growth has been slower for almost 6 quarters now -- 6, 7 quarters, and that is resulting into slower collection growth. Until we are able to fix that, I don't think we should expect anything miraculous on the -- so whether it remains 8%, whether it remains 10%, 12%, I would say, any of that is maybe hard work or extra work that we might do. But, we have to fix the churn, and then we have to start acquiring customers so that we can naturally start to grow collection and thereby revenue. So I would say please wait for another quarter or 2.

So like put it simply, so collections of INR 500 crores or more in fourth quarter requires some fix? Or is it achievable at the current status?

I can't comment on any specific numbers or the futuristic numbers.

So we have another question from the chat box. The question is from Mr. [ Manish Gupta ]. What percentage of business inquiries are delivered through free suppliers. Any thoughts on whether we can charge small amounts to free suppliers who have stayed on the platform or more broadly, are there any other levers of monetization of supplier base?

So if you -- less than 20% of our total inquiries are delivered to the free suppliers. And why? It is only in the absence of the paid supplier of that particular category or city, what buyer is looking for is not available. So if I am, as a buyer come to the platform, and I'm looking for a product from a specific geography, and if IndiaMART does not have a paying customer, the buyer doesn't care whether IndiaMART as a platform makes money or not, they want to get their search fulfilled. So from the buyer side, IndiaMART is 100% free, just like you go to Google and Google -- you expect Google to give you all the answers, whether or not Google makes money from that category or from that geography. In the same manner, it is for IndiaMART. Now coming to the monetization of those free suppliers or suppliers in a free manner, if you go and see it on the IndiaMART, there are individual RFQs or by leads that supplier can purchase, which are available for INR 299 and upwards for each individual leads. And if I remember correctly, that generates about almost INR 3 crores, INR 4 crores a year coming into collection. And that -- not only that generates, it also generates a good number of hot leads for those suppliers to get converted into regular paying suppliers. And their conversion rates are also much higher than the hot leads of the suppliers who come and add products versus the ones who go and try and purchase an RFQ or purchase a buy lead. So we already continue to do that. Any more ideas or any more suggestions, I think we will -- we are always open to that. But currently, the major problem that we are trying to fix is the fat middle, where we should be holding on to the customer, customer is willing to invest money, it is not a new business. So where all the check boxes are right check boxes, the customer is willing, the customer -- it's not only that the customer doesn't have enough time to be able to play fastest finger first. I mean, so I think there we need to fix.

Next question is from the line of Rahul Jain from Dolat Capital.

I just wanted to understand that what are the initiatives we are undertaking to ensure that our core domain trend continues to trend faster than the usual base so that we could mitigate the medium-term challenges on the subscriber add, any which way the subscriber adds during a year 1 contribute very small portion of total incremental revenue. So is it possible to mitigate that by ensuring much better outcome from digitally savvy supplier base that we have to get to the aspired growth range?

So ever since -- if you see, ever since about 2 years ago now, we started selling platinum customer base by way of differential pricing of the category and city, I think we have seen a systematic increase in the ARPU. Currently, about 4% or 4,000 of these categories command about 50% premium to the regular customers. And as and when those customers, older customers are coming up for a renewal, and as the newer customers are being signed up, that is what is driving the ARPU if you see. So I think systematically for many quarters in the coming month, I think the top 10% ARPU continues to grow rapidly. And that top 10% is now accounting for almost 50% of the revenue, 49% to be precise. So I think 50% of the revenue is poised to grow rapidly -- has been growing rapidly over the last 6, 8 quarters and will continue to grow rapidly over the next 6, 8 quarters. On the overall side, I think the ARPU has 13%, 14% growth. But the top 10% ARPU has been growing consistently, which is the 50% of the size. I think I'm pretty confident that if we can solve the churn issue and the customer growth issue over the next 2, 3 quarters, I think we will be able to stay clear of any negative growth.

Last 4, 5 quarters, essentially, the ARPU growth has been in double digits.

I mean there's also a denominator factor. But in general, the top 10% of the customer side, that denominator factor is not there. In the overall ARPU, the denominator factor plays a lot more larger role because of 3,000 customers. But on the top of the end, top 10% customer is only 21,000 or 22,000 customers. So the denominator factor is not there. The top 10% ARPU is sacrosanct there.

Yes. Dinesh ji, just a slight clarification to the last part of the -- your response. So you're saying if we continue on this path, we can mitigate the situation of a weak revenue performance. And there was another comment which you made earlier that for time being 10% benchmark for collection growth is a good number to look at it. So can you just clarify on these 2?

Yes. I mean given the customer growth being either 0% or 1% or 2%, I think all of the growth has to come from ARPU only. And on the ARPU side, if we can -- historically, if you see 6% CAGR, recently, if you see 14% CAGR, I don't think the 14% is a good enough ask because what you are saying in the ARPU growth is what collection growth we had in the past because the collections flow into the deferred revenue and then it flows into revenue. So now if the collection growth is about 8% in this particular quarter and the supplier growth is 0% -- or 1% supplier growth, so affectability ARPU growth -- I mean, the average collection per customer growth is only 6%. So I would say that 5% to 10% collection growth per customer expectation is a reasonable expectation. Rest has to be built up from the customer growth only. Hope that explains.

Yes, right, right. only one part, which we missed is that, are we doing anything new. Of course, you said you've been doing a lot of things there. But is there anything newer initiative that we have taken, given that digital adoption in general is much better? So are we seeing that behavior? Or are we trying to do far better key word monetization or something like that?

Yes. I mean, one small thing that I can tell, if you -- if the product -- if it is not too complex for the broader audience. See, around 2018, '19, '21, '22, the buyers -- we were assuming that the buyer is not very savvy on digital, and the mobile was a new device that the buyers have gotten. And our own category-by-category specification definition was also building up and our own understanding that where quantity is important, quantity is not important, which categories, and we were more like a very, very horizontal platform. During the COVID, we learned a few things about categories. Now I think we have 2 things have happened. One, the buyers or the visitors of the IndiaMART in general are not that novice, they at least know how to operate and how to select options in terms of what is it that they are looking for. So while we had made a lower-intent buying much more easier because earlier, we were saying that let us capture the intent of the buyer. And we will be able to do the qualification or the seller would be able to do qualification. I think over last 90 days or so, I think we have gone back to the drawing board and say, that why not do the multiple intent confirmation on the buyer -- on the mobile website itself or the mobile app itself. And I was happy enough to see that 90% buyers actually completed those journeys and completed -- 90% of those completed accurately, which was not the case 2 years down -- earlier. So I think the lead quality that you would -- that the suppliers would see would also increase significantly over the next quarter or so. So this is a new thing that we have done -- we have found a gap or as an opportunity that we have fixed. Hopefully, that should be able to fix the -- this apart from the competition that we have fixed. So these are the 2, 3 things that we are working on. And this is the third thing that we have found in the last 90 days.

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

Thank you, ladies and gentlemen, for joining our Q3 FY '25 conference call. And thanks for being so patient an investor. We have tried to address all your queries in the time available. But if you still have any questions, please feel free to connect with our Investor Relationship and they will be more than happy to answer you one-on-one or publish your questions on the website. Thank you. Thank you very much.

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