IndiaMART InterMESH Limited (INDIAMART) Earnings Call Transcript & Summary

Good evening, everyone. I am Avijit Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Quarter 1 FY '26 Earnings Webinar. [Operator Instructions] Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer; Mr. Brijesh Agrawal, Whole-Time Director; Mr. Jitin Diwan, Chief Financial Officer; and Mr. Prateek Chandra, Chief Strategy Officer. Before we begin, I would like to remind you that some of the statements made in today's 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.

Thank you, Avijit. Good evening, everyone, and welcome to IndiaMART's Quarter 1 FY '26 Earnings Webinar. We have circulated our earnings presentation, which is available on our own website as well as the stock exchange websites. We are sure you would have gone through the same. And we would be happy to take any questions afterwards. IndiaMART has delivered a consolidated revenue from operations of INR 372 crores in the quarter 1, representing a year-on-year growth of about 12%. Collections from the customers have -- grew to INR 432 crores -- INR 430 crores, representing about 17% Y-on-Y growth. And deferred revenue grew to INR 1,735 crores, representing a Y-on-Y growth of about 17%, 18%. In quarter 1, unique business inquiries were 29 million for the stand-alone business, IndiaMART, representing a year-on-year growth of about 17%. Total number of paying suppliers stood at 218,000. Net paying subscribers in the quarter 1 was about 1,500 addition. Our platinum and gold customers, which constitute approximately 50% of our customer base and about 75% of our revenue continues to have very good upsell and retention rates. We are committed to improving the platform through product enhancement, better interface, better customer service and onboarding quality of the suppliers. We are also leveraging generative AI and machine learning to address key issues and use cases to enhance our offerings and make it easier to do business on IndiaMART. Our focus remains on consistently raising quality standards and optimizing the user experience to maximize the value delivered by our platform. Now I will hand over the call to Brijesh to update about Busy Infotech. Thank you, and over to you, Brijesh.

Good evening, everyone. Busy has done a net billing of INR 50 crores in Q1. As we had shared in the previous calls, we had implemented a change in the payout structure for our partners, and this was done in Q3 of FY '25. The impact because of this billing change that you see in this quarter is about INR 15 crores. And therefore, the normalized year-on-year growth will be 64% in the net billing. The revenue from operations stood at about INR 25 crores, and the deferred revenue is at INR 101 crores at the end of Q1. And again, the normalized rate of growth year-on-year basis is 29% and 61%, respectively. The cash flow from operations in Q1 is INR 21 crores. During this quarter, we also sold 12,000 new licenses, taking the total count of licenses sold to about 409,000. Looking ahead, we continue to focus on enhancing the product, enhancing the user experience and increasing our growth rates. With this, I will hand over the call to Jitin to discuss the financial performance.

Thank you, Brijesh. Good evening, everyone. I'll take you through the financial performance for the quarter ending June 2025. Reported consolidated collection from customers was INR 430 crores, representing a Y-on-Y growth of 17%. Excluding the reclassification impact of Busy, which we talked about, the normalized growth stand out to be 13%. Consolidated deferred revenue stood at INR 1,735 crores, an increase of 18% on a Y-on-Y basis. On a normalized basis, Y-on-Y growth stood at 16%. IndiaMART stand-alone collection from customers for the quarter was INR 374 crores, registering Y-on-Y growth of 10%. Stand-alone revenue from operations stood at INR 346 crores, registering a Y-on-Y growth of 10%. Our growth in revenue was primarily driven by improvement in realization from paying suppliers. EBITDA of IndiaMART stand-alone business stood at INR 135 crores, representing margin of 39%. Consolidated net profit for the quarter was INR 154 crores, and consolidated cash netted from operations was INR 161 crores. Consolidated cash and treasury balance stood at INR 2,762 crores as on June 30, 2025. Thank you very much. Now we are ready to take questions. Over to you, Avijit.

We will now begin the Q&A session. [Operator Instructions] We will wait for a couple of seconds while the question queue assembles.

First question is from the line of Sachin from BofA.

Can you hear me guys?

Yes, we can.

Okay. Great. So I have two questions. First question, would be great to get a bit more clarity in terms of online advertisement, how IndiaMART is looking at it, what is the budget? How much of that is actually spent? And what is the time frame you guys are looking? And more frankly, the output of that, should we see net adds, for example, accelerating as we come out of this spending on online advertisement? And second question is on genAI, what you guys mentioned. Clearly, we're seeing companies globally who are adopting genAI seeing some benefits, either in terms of the revenue growth or in terms of cost control. Anything you could talk from a medium term or a near-term perspective for IndiaMART, how they could benefit by adopting genAI?

As informed in the last quarterly con call, we had started doing some experimentation with the advertising performance marketing and some experimentation on the affiliate marketing on YouTube and Meta also. These are early days. I think in this entire quarter, we have spent close to INR 5 crores, INR 6 crores as against INR 1-odd crore that we spend in the JFM quarter. And the results are -- early results are encouraging. However, a lot of optimization needs to be done in order to derive full benefit as well as go at the scale. So currently, we are keeping this budget around INR 6 crores to INR 10 crores per quarter so that we can do a better optimization and utilize that. If you see the early impacts of that, we used to grow unique business inquiry at 10-odd percent, 11-odd percent, 12-odd percent in the previous quarters. That has shown some jump of about 16%, 17%. So that 5%, 6% additional growth in the unique business inquiries this particular quarter is showing up in the additional buyers that we could gather. Having said that, I don't think these numbers are -- first of all, these are too early to make any larger impact on the overall net add or net retention. Once we do consistent advertising over the 3 quarters or so, then I can come back and tell you that, okay, it is working or not working. On the second question on the AI side, in the last 6, 7 years, I think we have been using AI, the traditional machine learning AI to do a lot of automation and cost optimization. If you remember, last year, I had informed in the JFM quarter that we have started to use WhatsApp chatbot for our buyer side lead confirmation as against the call center earlier. And that had two different benefits. One, a lot of buyers were not expecting calls from IndiaMART for their lead confirmation. Secondly, at the time of call, the buyers were probably not ready to pick up the call. So that chatbot has been scaled. And I think that led to almost $1 million space -- $1 million savings in the last year alone. Apart from that, we have been using in the product categorization and in the buy lead recommendation system, photo search, voice search, a lot of restricted content detection. I've been telling about Indic language and misspelled searches. So you can try that many of these traditional AI/ML things that we have been using. Now with this agentic AI system, hopefully, we will get a lot more audit capability and a lot more classification capability that we were trying to build in-house now because these models are trained on world knowledge and they can be given context, which is a lot of data, which is very, very proprietary to IndiaMART. So for example, the buyer-seller calls, the customer to us calls, they have a lot of proprietary information which is not available to even these AI models to be able to train on. I think we have a lot of data that is only and only available to IndiaMART. And we could use some of that data to probably do further automation and all that. On the B2B side, I'm yet to see revenue opportunities using AI. I think with the -- a lot more young people coming in, whether it is at our Board level or whether you are seeing some of the people joining at next-generation level at IndiaMART, I think they will find -- I'm sure they will definitely find revenue opportunities over the time. But as of now, I think cost opportunities and automation opportunities and as well as better effectiveness and better customer experience opportunities are definitely coming, and they have been happening since 2018, '19 itself. Thank you.

Sir, any way you could quantify the benefits at the cost side would be in the medium term?

So as I said, a lot of benefit that we have accrued, about INR 4 crores, INR 5 crores every year kind of a benefit that has accrued to us in the last 4, 5 years. So you can see our margins improving from 25-odd percent in 2018 to almost like 35% now, despite the fact that there has been a run-up in the salaries very heavily in 2021 time frame -- '21-'22 time frame. Going forward also, I think it will accrue slowly and slowly, but I think we are not really worried at the cost side of it. For us, revenue growth is and the experience is quite important. And we will continue to invest more and more in the experimentation. So if you are trying to get any hang on the bottom line, I think let's go with our traditional guidance, 30%, 35% margin guidance. Let us not build upon that.

Got it, sir. And sorry, a quick follow-up, sir. Clearly, the focus is to spend on advertisement for a couple of quarters. The question out here is, what if we don't see the intended benefit? Is there an intention to continue to spend on advertisement? Or are there any other measures where -- the company intends to take to further accelerate the net adds from these levels?

I mean, a lot of guys have been suggesting for the last many, many quarters that we should start spending on the advertising. And I have been saying that first, we will correct the product market fit that we find. And we -- I myself personally went to almost 50-plus customers and noted down things. Most of our team members went to so many customers to find out the small, small things. And we have corrected the quality of leads, the intent of the buyers, the localization search. So many of the blind spots that we found, that we have corrected over the time. And that gave us some confidence that we can now spend on advertising. Since we haven't spent on advertising for the last 10-odd years, I don't think we have a DNA in the company ready-made which is optimized for large-scale diversified industry and diversified location-based advertising, which we are trying to optimize on that. If it will not yield the benefit, we will slow that down. But I'm saying at INR 10 crores per quarter here and there, I think another 3, 4 quarters of experimentation is required.

Next question is from the line of Anirudh from Solidarity Advisors.

Hello?

Yes, Anirudh, you are audible. Please go ahead.

Just to clarify, so I see that step-up in your sales and marketing from 14% to 16%. So is this primarily the ad-related spend that we just spoke about? Or are there any other investments that we are making? And in terms of the progress that we're seeing in terms of silver customers, I think the last time you spoke, you felt that you were somewhere around 60% kind of -- solved the problem, per se. Anything -- any progress from there since we last spoke?

So Anirudh, Jitin this side. On the first question, the increase from INR 47 crores to INR 55 crores is majorly the performance marketing, which we have been doing, which Dinesh just talked about. So about INR 6 crores of performance marketing we spend against INR 1.5 crores, so incrementally about INR 5 crores, INR 6 crores of performance marketing. So that is why you are seeing this swelling over here in this line item. The gross adds, majorly the acquisition, it remains the same, what we have been doing in the last few quarters.

Okay. And in terms of -- just qualitatively in terms of how much of the issues that, say, a silver customer was facing, say, 3 months back, have you made any progress there, maybe some qualitative input...

Yes, so -- I think let me clarify. It is not a silver customer what is facing -- the silver customer face multiple other problems which are related to [Foreign Language] or I don't have a person to follow up, or the price they are asking is too difficult, or the inquiry that they are looking for is very local set of inquiries. So what we tried to correct is the general problems that were being highlighted by silver, gold and platinum, all of them together. And we found that many of them highlighted towards the incompleteness of the lead quality. Many of them had highlighted the weaker intent on the lead quality. And I think we have addressed some of those things. And many of them had highlighted the why am I seeing nonlocal business inquiry, whether it is buyer or seller. So we have corrected those things. And I think it is too early because if we started to correct them about 9 months ago or 11 months ago, the benefits of that started to accrue about 4, 5 months ago. And we continue to make minor adjustments here and there on that. Expecting a clearly step function jump on any renewal or retention would be probably too early to expect. Because if it was a sales and service problem, I think that can clearly give you a result in 2, 3 quarters. But if it is a product and perception thing, then I think it may take a little more longer than expected. And that is what we are trying to do. The good part is that the noise in the market when you go to many, many customers, if there were five different complaints, they have reduced generally. And they are now very customer-specific complaints that we are seeing. The three, four common complaints that people were generally asking for, I think we have reduced. One common complaint that has increased is that now the inquiries are so good, I am unable to find one. How can I get many more of that? So let's see how do we solve for that.

Got it. No, that's heartening to see, sir. And just one final question is in terms of our pricing power with our gold, platinum customers, just if I look at the ARPU for the top customers, top 10 customers -- 10% customer as a proxy, are we seeing a bit of pushbacks over there? Or the price hikes that you've taken in the past, we think we can kind of maintain that going forward as well?

I think we have always guided that if we were growing on the customer base also and the -- then typically, the -- anywhere up to 10% of the growth comes from ARPU and anywhere up to 10% growth comes from the customers. Currently, since there is no customer growth, then ARPU is doing all the heavy lifting and also, it is getting the benefit of the denominator being not growing. So both these things are looking at double-digit ARPU growth. Otherwise, it should have been anywhere between 5% to 9%.

Next question is from the line of Prashant from Pictet Asset Manager (sic) [ Pictet Asset Management ].

Can you hear me?

Yes. Please go ahead.

Okay. Yes. Sorry. A few questions here. One is, if you can tell us what has been the churn now? Or how does it kind of compare to the past?

So there is no change in the churn. So churn remains elevated for silver monthly and silver annual customers, and churn remains well under control for gold and platinum customers. On the silver side, as I said, on the annual side, 4%; on the monthly side, 7%. And gold and platinum remains at about 1% plus/minus on the monthly side.

And why the churn is not coming down, sir, if they are making such good changes on the products?

I mean, I'm only saying probably, let's wait for 2 quarters and see once I have -- because there are two kinds of customers in our business. One is the monthly customers. Monthly customers have their own -- because they have put in only INR 3,000 -- or second month, INR 3,000. So while they have an intent to do Internet marketing, they have much lesser intent than those who are paying INR 30,000. The second part is they themselves have affordability issues. So they're -- in the monthly customer base, typically, most of the customers are less than INR 4,000,000 turnover. Third, since they have committed lesser money, they are also committed lesser resources to do the digital marketing -- handling of the digital marketing versus somebody who has paid INR 30,000. And so only the newer last 3 months customers who have paid INR 30,000 are probably experiencing this new way of doing things. Their renewals will come up sometimes starting from February or March next year. So that's why maybe we are not experiencing that. While in the monthly system, we have yet not got much benefit, maybe another quarter, we should get some green shoots on the monthly side or at least on the gold and platinum side.

Okay. Okay. Understood. And sir, in this inquiry growth that you're seeing now, like are there any important categories where you're seeing this increased traction?

So we divide our 100,000 categories into four different segments. One is the -- based upon our internal brackets. One are the categories where the seller demand or the seller traction is higher. And if we divide them into top quartile, second quartile, third quartile and bottom quartile, most of the advertising effort that we do or most of the improvement that we keep doing is doing on the second quartile or first quartile only. We try and let the bottom quartiles build up on its own. Once they reach to the third quartile or so from bottom, then we start working on them. So most of the work that we do is to reduce the bottom quartile and to increase the top quartile.

Okay. Okay. Interesting. And sir, when I look at your ratio of total inquiries to the unique inquiries, that has come down to 3.3x, which is way lower than what we've ever seen. And our expectation was that when this ratio becomes like less than 4, that is when you will probably look to step up on the addition of new paid sellers as well. Is that kind of going to start now? Or do you think you still need time to improve the quality of the business?

One is, our expectation is that when it goes down to 4 or 3, that's when probably is a good time to say that, okay, competition side, for a seller to compete against many other sellers is better. But however, these numbers are across all the four quartiles. I'm not going to give you the numbers of each of those quartiles. But for each of those quartiles, the numbers are still very, very different. For the bottom quartile, it could be 2, and for the top quartile, it could be 6. So we are still -- where most of the business is happening, we are still introducing 6. And that is still good from 9 or 10 that we were doing earlier. And we believe that as soon as this starts to show up in the churn or retention, and that's when we will press the pedal on the sales and marketing.

Okay. Because the only concern would be whether the buyers are now maybe getting less satisfied if their inquiries are not reaching appropriate number of sellers.

In fact, repeat buyers are highest ever. So repeat percentage is the highest. Our internal NPS is also highest. If you see 58% repeat buyer, this is the highest since the COVID shortage time. When the COVID shortage was there, everybody was just coming every day and checking if there is a mask available or if there is a sanitizer available or if there is oxygen available. Ever since then, 58% is the highest repeat buyer. And is also seen in the Play Store rating, if you see our -- is also gone to highest ever at 4.8. And you can read all the positive comments and as well as critical comments, these are publicly available on the Google Play Store. Most of our users are Android users. They are not iPhone users. So you'll find a lot of comments, positive and negative, on Android, while you will find very little traction on the iPhone. Our internal metrics are also showing that buyers are also equally satisfied better. However, when will that start to result into very, very frequent repeat, that we don't know. So we are doing multiple things like advertising, like correcting the buyer experience. See, seller experience was the easiest low-hanging fruit because we could go and talk to our paying customers, which were in thousands or 200,000, and quickly gather what are the top 2, 3 KPIs that they are looking at. While the buyers are a lot more variety and a lot more experiential. Somebody is a retail buyer, somebody is a SME buyer, somebody is a large buyer. And each one of them have a very different persona of what IndiaMART can help me with. Somebody thinks of it as can IndiaMART become my sourcing agent? Somebody thinks of it why can't IndiaMART deliver me one single product in the same manner as Amazon and Flipkart does? So I think the buyer side problem is a lot more difficult. And in the past 30 years, we have been mostly solving for price and variety for buyers. On the experience side, I think there is a lot more work that can be done on the buyer side, which we are continuously working to see what will click for a very large platform like this, which is very similar to what Google does or what Meta does.

Interesting, sir. And just one last question is, sir, when we look at the associates, the losses from associates has been continuously going up over years. And even in this quarter also, it's higher. Would this cash burn kind of continue? How should we think about that and where it is mostly kind of going?

So Prashant, losses has not increased this time. So there was one investment which we had made in Fleetx, by -- which by virtue of it, now it has become the associate. And therefore, little loss from Fleetx also has started getting added into these metrics. And therefore, you're looking at a INR 2 crore has been added. Otherwise, the loss has remained more or less same what it was in the last quarter.

So it was -- 17% of the Fleetx now has become 22%.

Correct.

So Fleetx got classified from a...

Strategic investment to now associate.

So actually, Prashant, the Fleetx loss till last quarter was not there, the associate -- pre share of loss of associates because it was being recorded as an [ FVTPL ] investment. So since it has become associate with 20% plus, now we are recording their share of loss also, which is resulting in this increase.

Okay. I understood on the last quarter, but in general, the longer-term trend has been of increasing associate losses. How do you think about that?

I mean, longer term is like -- so Vyapar was one, then Fleetx is another one. Then Bizom is another one. So every time we end up investing in a company which is going to become profitable over the next 3 to 5 years' time frame, their loss also keeps coming back. Also, in Vyapar, we have increased our shareholding from 26% to now 29-odd percent. Similarly, in the Bizom, we increased our shareholding over the last 2, 3 years from 22-odd percent to now, 31-odd percent. So that is why you are seeing a little bit of increase in the losses from associates.

And also, Prashant, I mean when we invested in these companies, they were at slightly early stage. Now as they are also achieving scale overall, on the each company basis, you would see still companies moving towards the line of profitability or -- but yes, in the aggregate number will be a function of how many investments and how many new investments that we would have for every quarter.

So now we have a question from the chat box. The question is from Mr. [ Aditya Parik ]. Your unique business inquiries by paying supplier metric has been showing improvement. Is this a relevant metric to look at?

Yes, that's a very relevant metric. That's a very relevant metric because that is the number of unique buyers available between all of these paying suppliers. And that is why we started measuring from a business inquiries delivered per seller because the seller himself sees only the business inquiries delivered to him, while we can see how many unique buyers that we are distributing. So this number is slowly and slowly improving, and which is a good thing. Highest of that number was in FY '21-'22, when there was COVID shortages. And then as the markets opened up, a lot of that went back to doing business offline. However, with the product and improvement -- service improvement, I think slowly and slowly, we have seen some uptick in that. Also, with the advertising, now I think 29 million is the highest ever that we have touched.

Yes, Vikas, we can take the next question.

Next question is from the line of Nikhil from Nuvama.

Can you guys hear me?

Yes.

Sir, first question on the churn part, what you highlighted, 7% churn, especially for monthly subscriber. So while I understand your thesis, especially on annual subscriber, given those are the ones who are experiencing these changes for the first time and maybe using the platform much more frequently, but why this logic do not apply to monthly subscriber? Given -- I mean, we have been investing for some time now. I mean, you highlighted INR 1 crore in JFM and then INR 6 crore in April, May, June. So shouldn't the improving unique business inquiries or unique ratio or improving some internal KPI should ideally reflect in lower churn, especially for monthly?

Yes. So it should, but it is taking time, maybe another quarter or so. Otherwise, probably we need to find more such levers.

Got it, sir. But basically, just to confirm, we haven't seen improvement, even, let's say, between Jan to June.

Yes, that I confirmed, over 40,000, 50,000 customers that we have in the monthly, and you are right, at least 10,000 of them or 20,000 of them have came in the last 6 months, they should be seeing some positive -- so there should be some early churn advantages, but we are not yet seeing any of that.

Got it, sir. Next one on the correction side, the consolidated collection grew to 17%. You also highlighted that adjusted for Busy billing, it is 13%. So just want to understand from collection to revenue growth perspective, is 17% collection growth makes more sense while projecting revenue growth or 13% going forward?

So Nikhil, 17% is a reported number. And as Brijesh explained that there was a change in payout structure and therefore, the normalized number looks like 13%. But for the projection of revenue, it would be 17% reported only because that will convert into the revenue from deferred revenue perspective.

Got it. Then the next question for Brijesh, how the suppliers or users of Busy are reacting to this change in policy? Have you seen any change there? And also, you have previously you talked about that the margin in Busy, the intent is to keep it low. But clearly, we have seen a significant improvement during the last 3 quarters. So is it going to be the new run rate going forward?

So when we did the change in the billing, we started making this change from Q3 of last year. So the implementation has been done over 2 quarters. And therefore, the acceptance levels of our partners to whom we've been doing this billing and to our customers, that has been absolutely in line. We haven't seen anything negative essentially coming in from any side. And therefore, we hope that when this entire financial year gets completed, we would see normalization of the reported numbers also. On the increase in the margin side of it, if you look at -- when we are saying margins will be under pressure, it is because when we start to accelerate the overall number of customer acquisition at a much faster pace than the growth that we get in the renewals and upgrades from the customers. And currently, what we are doing is there is an exercise on customer win back, which is being done. Because of which we continue to see strong revenues coming in even because of renewals and upgrades. In the long run, however, we do foresee that customer acquisition will start to see higher investments. And that is the time when the margins may not continue to be as high. And our priority will remain on increasing the overall customer base, adding more new customers so that we continue to see higher growth.

As well as ARPU.

Got it. Got it. Got it, sir. The next one on the marketing spend, especially digital marketing spend. Are we tracking some internal targets for this investment? I know you guys have just started and are doing it for the first time. But what kind of return you are expecting or target you have? Is it more on unique business inquiry? Is it more linked to churn? Something -- some color there in terms of linking those investments with some targets internally?

So leading indicators are, first one is the traffic. Second one is the unique business inquiry. And the third one is the business in inquiries delivered, how many times the RFQ gets consumed. So these are the leading indicator because they are immediately there. Because you are advertising, somebody is clicking and coming back to your platform. So if he's coming to your platform, every click is a traffic. Every conversion is a unique business inquiry. And every transaction after that in the RFQ level is the business inquiry delivered. So these are the leading indicators. At the end of the day, the lagging indicators are churn and ARPU. And maybe reduced COCA. But -- so the leading indicators we are trying to get, we believe that in the last 3 months. And it is a lot more complicated than a pure, simple e-commerce advertising. We have to advertise every product in every geography separately than -- because we are not the sellers, and we don't switch the sellers from behind the scene. We are directly connecting buyers and sellers with each other. So it's a lot more programmatic effort across hundreds of cities and across thousands and thousands of categories and across millions of products. We believe that the top line of that to be optimized, it is going to itself take a couple of months. And that is why the internal budget has been taken at, I mean, INR 2 crores, INR 3 crores every month and probably INR 9 crores, INR 10 crores every quarter. The good part is that the early indicators are correct. Whether they will result into the lagging indicator of churn and revenue and lower CAC, that is to be seen. And I mean, for that, you need to go past for a size of this kind of a business, at least INR 100 crores, INR 200 crores to be spent to be seen any greater impact in the market on the brand visibility or on the retention or on the ARPU.

Just last one on margin. How should we think about margin going ahead? Is the investment is going to pick up? And what would be normalized margin?

For this particular year, I mean, you can safely assume -- until and unless we come back and announce you, you can safely assume INR 5 crore to INR 10 crore per quarter kind of investment. It is not going to go heavily above the 10-quarter mark -- INR 10 crore mark per quarter...

Got it, sir -- yes.

No, no. So you were asking on the margin, I was just saying that INR 10 crores in a quarter translates to about 3%. So our margin at this point of time, our EBITDA is hovering around 38%, 39%. With the end, as we have said that when we believe that the retention problem now has been solved, all the product things have now started converting into the renewals of seller, we will also push the pedal on the gross adds. So you should assume 32%, 33% of the margin as the sustainable margin.

Next question is from the line of Anmol Garg.

Am I audible?

Yes, you're audible.

So a couple of things from my end. Firstly, any plans for going into transaction-based structure? So do you believe that the classified-plus model that we are operating at, the size of that is kind of limited to 200,000, 250,000 paid suppliers? And to maybe grow further, we have to kind of switch to a transaction-based model where we provide logistics and complete end-to-end transactions, at least in a few of the cases?

See, it's not that we are completely averse to that. We have done -- tried doing that between 2014 and 2017. So for 4 years, and to launch at 2014, I think we started working in late 2012, '13. So 4, 5 years, we did Tolexo, in the name of Tolexo, transactional platform for B2B industrial products and B2B product. It didn't succeed at that point of time, probably our DNA, probably the market readiness and probably the ability to pay. Then also, we did not stay behind once the MonotaRO, who is the industry leader in Japan. And -- which is the joint venture of -- which was the joint venture of Grainger and Sumitomo Corporation in Japan, and Grainger is the big daddy of B2B transactional business. So when they acquired a similar business called Tolexo -- called Industrybuying, then we again invested another INR 100-plus crores in that business. And we continue to work with them to see if that succeeds. Hopefully, that answers your question. So we are not averse, but are we going to change the IndiaMART into a transactional model? Suddenly, I don't think so.

Understood. Understood. Just one more thing that I wanted to understand is, see, our unique business inquiries have increased because of the ad expenses that we have done in this quarter. However, what confidence do we have that this will result in an increase in the paid suppliers? I mean, particularly when the main issue remains the churn and the ad expenses, my guess is that will only help in the gross additions, which anyways remains healthy for us. So do you believe that this...

We are only doing buyer-side advertising, and buyer-side advertising help us only and only reduce churn and increase ARPU. It doesn't help increase gross addition.

Sure. So sir, according to you, how many quarters would it take as a best guesstimate that this will start resulting in positive results on the churn side?

I mean, I have taken an internal target that at least 9 months of work is required, 3 months has only happened. At least 6 to 9 months more work should be done. Then only this should be measured at the churn level. On the leading indicator side, I think it is already giving us buyer -- unique buyer inquiries.

So we have a question on the chat box. The question is from Mr. [ Rehan Sayyed ]. With INR 2,762 crores cash on books and 19% Y-o-Y growth in reserves, do we have any immediate or medium-term capital deployment plans whether for platform upgrades, acquisitions or return to shareholders?

So thanks, [ Rehan. ] So from a shareholder return perspective, we have just returned in the last quarter itself, INR 300 crores of dividend, what we have done. So on the overall capital allocation perspective, how we think as a management is that we keep the safety cash, which is the advance which we have received from the customer. And then we see that if we need to invest in any business, and of course, we go to the Board and take the approval from that, and it should be in sync with what we are doing, whether it should be in the Internet business, it should be something related to B2B and it should be related to the MSME. So as and when we get the right opportunity, we go to the Board for the approval, we do that. As for the -- like whenever it comes, the right time comes, we'll report that as well. And distributed, I have already talked about that we have given the dividends. Hope that answers your question.

Next question is from the line of Abhisek Banerjee from ICICI Securities.

Am I audible?

Yes, you're audible.

So sir, my question would be with regards to -- I mean, would you be able to give a sense of what is the business inquiries delivered to the areas or segment of suppliers that you have vis-a-vis the top 10% customers, and then the remaining paying customers? And what proportion of business inquiries delivered actually goes to the nonpaying customers? And also wanted to kind of understand...

Your voice is not clear. Your voice is having a lot of echo, or a very high-frequency voice, maybe -- there's some echo on the voice.

Okay. Is it better now?

Yes, maybe you can try speaking a little slower and then we can probably note down.

Right. Okay. So what is the proportion of business inquiries delivered to the different classes of sellers on our platform, that is, your top 10% paying customers, the remaining paying customers and the customers who do not pay. I mean, the suppliers who do not pay. If you could give a proportion of that, that would be really helpful. And also wanted to understand, sir, what is happening with regards to adding new categories that you have spoken of in the past? Are you being really able to create more categories which can potentially bring in more paying suppliers in the medium term? If you could speak on these two points.

Yes. So on the inquiry side, between 80%, 85% of the inquiries go to the paying set of customers. And anywhere between 13%, 14% to 17%, 18% inquiries are typically delivered or goes to free suppliers. Now within that gold and platinum, I don't have the number in this manner in terms of the percentage. But I know that on an average, approximately 70-odd inquiries go to silver and then -- so I can come back with those numbers. I don't have those numbers handy with silver, gold, platinum that I can tell you what is the percentage of inquiries that are delivered. I must be having in the data book, but I will take some time to figure that out. I'll come back on that, and my IR team will send you that number. Coming on to the second part, expanding on the category side. So our top 10% customers used to contribute about 40% of the revenue about 5 years ago and when our revenue itself was much lower. Today, our top 10% of the customer contribute about 50% of the revenue. And if you remember, from 5 years ago, we used to say that platinum customer base and about 10% are same. We no longer say that. So platinum customer count has exceeded far more than top 10%. So the number of categories have also expanded. If I remember, most of our business used to happen into top 20% to 25% of the categories earlier. Today, almost 40%, 50% of the categories, we have a good amount of business happening. So if you see the number of total paying suppliers, if you compare this one with the -- with a 5-year-old screenshot or a 6-year-old screenshot, the first time we put it in 2020 or so then you can very well see that this 2%, 3% numbers at that particular time and that 2%, 3% number at this particular time. So a lot more categories have become a high-moving category. And that's a very core KPI that we measure internally, and our category team measures internally, and works to bring a similar bottom-of-pyramid kind of a category moving them upwards towards that.

Understood, sir. Understood. So have you ever tried to evaluate the feasibility of charging something like platform fees across the board, as in -- I mean with UPI, is it even possible to charge something to the guys who are not paying anything?

There are not many examples of classified websites charging for a consumer on the consumer side or on a buyer side fee. However, there are recent experimentation by Twitter or by Instagram to buy a blue tick by consumer. So we keep contemplating every now and then, what could be equivalent to Amazon Prime in a classified business, but not yet. I think we are -- that's a long moonshot.

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

Thank you, ladies and gentlemen, for joining our Quarter 1 FY '26 Conference Call. We have tried to address your queries in the time available. And we have also given a detailed information in our presentation. Detailed financials are also uploaded on our website as well as the stock exchange website. If you still have any questions, please free to connect with our Investor Relations team. Their e-mail ID is available on the website. And thank you very much. Have a nice weekend.

Thank you.

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