Matrimony.com Limited (MATRIMONY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Matrimony.com Limited Q2 FY '20 Results Conference Call hosted by AMBIT Capital. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivekanand Subbaraman from AMBIT's capital. Thank you, and over to you.

Thank you, Zed. Good evening, everyone. I hope everyone is safe and healthy And on behalf of AMBIT Capital, I welcome the management of Matrimony represented by Mr. Murugavel Janakiraman, Chairman and Managing Director; and Mr. Sushanth Pai, Chief Financial Officer. I hand over the call to Mr. Muruga and Sushanth for their opening remarks, and then we shall move to the Q&A.

Thank you, Vivekanand, and good evening, everyone. I hope all of you are continuing to stay safe and healthy. I'm very happy to report yet another good quarter for Matrimony with an all-round performance and delivering of 5 consecutive quarters of double-digit year-on-year growth. With a new footprint in Bangladesh and a new vernacular app in Tamil called Jodii, J-O-D-I-I, in Matchmaking, and also the integration of ShaadiSaga into wedding services businesses, we are opening new frontier for our growth. These new initiatives, combined with other ongoing improvements, will help us to have a better quarter 4. This initiative also demonstrate our focus towards executing our strategic priorities efficiently and accelerate our growth. In quarter 2, on a consolidated basis, we have achieved a billing of INR 106.8 crores, a growth of 1.6 percentage quarter-over-quarter and 100 -- 10.5 percentage year-on-year. Revenue was at INR 110 crores, a growth of 4.3 percentage quarter-over-quarter and 17.9 percentage year-on-year. For Matchmaking, the key highlights are as follows: In quarter 2, billing was at INR 106.1 crores, a growth of 1.3 percentage quarter-over-quarter and growth of 10.3 percentage year-on-year. Revenue at INR 109.2 crores, a growth of 4.1 percentage quarter-over-quarter and a 17.8% percentage year-on-year. We added 2.2 lakhs paid subscriptions during the quarter, a growth of 4.4 percentage year-on-year. The average transaction value for the Matchmaking business was flat quarter-over-quarter, but increased 5.7 percentage year-on-year. We continue to track the impact we create for our customers. We are happy to state we have created 28,000 plus success stories in quarter 2. Now coming to the Marriage Services business. On September 15th, we completed the acquisition of Boatman Tech Private Limited, promoters of brand, ShaadiSaga. We are now working on integration to enable the brands to become a #1 in wedding service brands pan-India. Revenue for the quarter was INR 0.8 crores, a growth of 41.2 percentage quarter-over-quarter and 35.1 percentage year-on-year. The loss in the quarter was INR 1.5 crores as against INR 2.1 crores in quarter 1. Since the consolidation was only for 15 days in this quarter, ShaadiSaga contribution was significant in the last quarter. On the billing and revenue outlook for quarter 3, Matchmaking billing maybe touch and go of double-digit year-on-year growth due to some bit of seasonality, but however, we expect a double-digit year-on-year growth on revenue. Wedding Services is expect to grow triple digit year-on-year, but on a smaller basis, and due to ShaadiSaga's consolidation taking efforts for the full quarter. Loss will increase from quarter 2 levels due to ShaadiSaga integration. Now let me pass it to Sushanth to comment on the key profitability highlights. Sushanth, over to you.

Thanks, Muruga. Our EBITDA margin for the Matchmaking business in Q2 has improved strongly to 29% from 27.7% in quarter 1 and 23.7% a year ago. Marketing expenses are at INR 39.9 crores as compared to INR 37.3 crores in quarter 1. Excluding marketing expenses, our margins in Matchmaking are at 66% quarter on -- 66% in quarter 2 as compared to 63% in quarter 1 and 60% a year ago. On a consolidated basis, our EBITDA margins in quarter 2 are at 24% as compared to 21.6% in quarter 1 and 18.8% a year ago. On an absolute basis, EBITDA has grown by 15.5% quarter-on-quarter and 14.5% year-on-year. Tax rate is at 24.5% for the quarter. PAT, profit after tax, excluding Astro, which is our associate company, is at INR 16.8 crores, a growth of 19% quarter-on-quarter and 59.3% year-on-year. Share of loss from Astro is INR 19.9 lakhs. Our operating cash generation for the quarter has been robust at INR 21.6 crores, and our cash balance is at INR 304 crores. ROCE is at 28%. On the outlook for quarter 3 margins, we expect EBITDA and PAT to grow double digit on a year-on-year basis, but expect it to decline on a quarter-on-quarter basis due to seasonality, newer expansion and increase in marriage services losses due to ShaadiSaga integration. I would like to end with the customary safe harbor statement. Certain statements during this call could be forward-looking statements on our business. These involve a number of risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. We do not undertake to update any such forward-looking statements that may be made from time to time by or on behalf of the company, unless it is required by law. Over to you, Vivek, for Q&A.

[Operator Instructions] First question is from the line of Akash [ Prakash ] Kapadia from Anived PMS.

This is Prakash Kapadia. I had 2 questions. As we are seeing vaccination and unlock happening across the country, how do we look at some of the OpEx cost in the second half of the year? Obviously, ad spend with revenue growth has come down as a percentage of sales. Can you give some color on the other operating costs? And secondly, if you could highlight some of the productivity measures where are we in the journey on the employees? What kind of targets have we set in, in terms of revenue per employee or profit per employee? And one directional question. In India, the matchmaking -- online matchmaking market is such -- is at such a nascent stage. So what's the intention of scaling that outside India as of now?

Okay. So let me respond to the questions. One is on operation cost. The OpEx costs for us are primarily that the office infrastructure and some of the running cost. And it seems that the country has kind of opened up and the associates started coming to office. So as far the rental and the employee cost is concerned, whether if people are working from home or other ways also, that continues. Even the [indiscernible] and all, that started hitting from quarter 2 onwards because we started functioning because we had a second wave of COVID in the April, May, June, but Q2 is more or less, you can assume that the costs are sort of almost back to normal. Maybe some increase may happen in the Q3, but however, those things may be marginal because of -- we've been operating sort of more on a full-fledge basis from quarter 2 onwards, except tech and other people who continued to work from home. So we don't see that coming back full-fledge from this quarter, that may happen possibly next quarter because that, however, those numbers are very marginal. So in terms of OpEx cost, maybe only slight increase can happen on account of people coming back to office. However, we may expect some costs going up on account of migrating the cloud -- Amazon Cloud, that means some costs may increase in quarter 3. But again, we expect some -- the full fledge costs happening from quarter 4 onwards. And of course, the ongoing operations, the impact is only marginal in this quarter. When it comes to the productivity per employee, again, we don't show the specific per employee target. However, because we have various the calling segments because we don't -- it's not that a telecaller or relationship manager working on a single segment. We have various segments, we have various benchmarking. So we continue to drive those benchmarking productivity. So just to give an example, we have a first ready customer -- first-type payment as well as renewal. So we have various benchmarking for these segments, and we continue to try those benchmarks. There's more on the conversion side rather than absolute number because we continue to also look at increasing ARPU also. So far as internally that we continue to look at the way to enhance the productivity in terms of conversions moving up. And in terms of the growth plans beyond India, definitely, we are looking at outside of India as a growth opportunity. We have Bangladeshi Matrimony, which we started the operations. So we have the team and everything in place. We have not commenced a full-fledged operation on account of some of the payment gateway integration, those things are happening. We expect the full-fledged operation to start probably maybe sometime maybe next month. With respect to other countries, we're looking at Sri Lanka as an opportunity. We are working on setting of operations there. Beyond the Sri Lanka and Bangladesh, we're also looking at the Muslim match. We have muslimmatch.com, matchmaking service for the global Muslims. And that has been -- which is we're trying to grow that revenue as well. So we continue to look for opportunity beyond India, both in matrimony space and some niche segment, which I told you -- which we are looking at those opportunities as well. So we are not only looking at India. We're also looking at outside of India, both in the matchmaking space as well as in the matrimony space.

Right, right. And if you could just give some color on any change in consumer behavior because COVID was one-off kind of an event. So are we seeing more traction? Is it now easier for conversion? Is it more difficult now? Things are mobile and people are moving out. Any major change at our consumer level in the Southern market?

We are not seeing any significant change. And however, during the COVID time, we saw an increase of number of people signing up. We have sort of become sort of top 10 because when people are at home and people who are otherwise focused on the professional priorities know to kind of to get married. We saw the spike in the registration. I don't think that will come to a regular level. So I think we will see that happening.

Next question is from the line of Mohit Motwani from HDFC Securities.

I have 2 questions. One is on the employee expenses, which have come down from about INR 34 crores in the first quarter to about INR 31 crores. So what was the reason for this decline? That is my first question. And second question is on the paid subscription profile. So they have remained almost flattish compared to the last quarter, and we are doing about INR 40 crores of advertising expenses, right? We are running at an annualized run rate of about INR 150 crores to INR 160 crores, and that has been a target. So do you feel that you'll be planning to increase these advertising expenses in order to chase growth? Or the focus will be always on profitability, the advertising growth. So what I -- just wanted to know your thoughts on that.

With respect to the employee cost, yes, that's come down in quarter 2. But however, we expect that employee cost to start moving up from quarter 3. In Q2, because of some reduction on the people side, some efficiency and some reduction has happened. However, that -- we expect that to change from quarter 3 onwards. With respect to the marketing costs, marketing costs will continue to move up, while we are at almost INR 40 crores, will continue to move up because one thing that we are opening a new growth frontier as well as also the competition in 10 cities continues to remain high. However, the growth will be only marginal, INR 40 crore level, slightly move up and all. We are not seeing any substantial increase in marketing costs. The marketing costs is not going to come down, maybe slightly increase in marketing costs may happen on a quarter-to-quarter basis.

Mohit, this is Sushanth here. Just like to add on the people cost. One more addition that will happen next quarter is due to ShaadiSaga. In the quarter 2, we only had 15 days of consolidation. In quarter 3, you will have the full quarter. So therefore, people costs will increase because of that as well.

Next question is from the line of Prateek Kumar from Antique Stockbroking.

My first question is, on your -- billing or I mean, I think you've partly answered in prior question, but billing and subscription numbers or paid subscription, all of these numbers seem to be a very flattish in the past 4 quarters, while it was a big jump prior to that or relatively could jump prior to that. There seems to be fattening in past 4 quarters, and that is showing up in deferred revenues also probably softening while your revenue growth is there. So how should we look at another step jump from here? Is it something which will happen or it will be a -- I mean, as you also already mentioned that billing growth in 3Q might be touching double digits because the base will catch up. But what happens after like now we are at INR 100 crores and INR 105 crores kind of billing quarterly. So what is the growth outlook there?

Yes. Specifically, the way we see that -- so quarter 4, normally the better quarter thus set the trend for the entire year. So whatever you we see in quarter 4, we try to more or less -- because after that, the Q2, there is some reduction side to it; Q3 also festival and other things impact the business. Once again -- so basically, we set a new benchmark on quarter 4 and try to maintain that -- the number more or less or try to grow the number on a quarter-over-quarter basis. So did the big jump happen on a quarter-over-quarter basis? No. But between quarter 3 and quarter 4, definitely, we see that move to the next level. So we see that in the quarter 4, we've moved from on the thing that from -- we see the jump that happens. We expect a similar kind of growth happening from Q3 to Q4. However, we continue to maintain year-on-year double-digit basis. Again, based on October number you're talking about, it may be a touch and go double-digit growth. But post-Diwali, we see the increase in number happening. So I just want to remind, based on October, we had a subject of seasonality and IPL and other things had some kind of impact. But however, I still hope that it will be able to have that double digit. But, however, revenue side you will have a double-digit growth on the margin. So basically, this business about Q4 will have a better benchmark and try to maintain that number or try to grow that number for the rest of the quarter. That's the way. But we still look at year-on-year basis to have a double-digit growth. For the last 5 quarters, we had a year-on-year double-digit growth, which is our own 10 plus percentage mix of the two ones -- obviously, in one of the quarters, we had a good growth because the last Q1 was COVID quarter and all that. Basically, we're working on various initiatives, taking steps to grow from the 10 plus percentage to a 15 percentage or 20 percentage. We have initiated a lot of the new things. We talked about Bangladesh, our launch of vernacular app wedding services. So at the enterprise level, the plan is to move to from 10-plus percentage to -- even this quarter, also at enterprise level, Q3 had double-digit growth on the billing and we are accelerating on that. Yes, we are looking at various initiatives taking us from the 10 plus or 11 percentage growth into 15 percentage on the billing side of the immediate period, which we're working. Hope that it's happened if not at the Q3 level, probably Q4. So basically, some of the initiatives would take time to yield us and all those things. So basically to answer your question, Q4 is a benchmark, try to emulate that number or try to grow the number marginally for the rest of the quarter, once again to set a new benchmark in Q4. That way by and large dependent on...

And is there something which we should learn like over as the COVID situation seems to normalize? How is the competition -- competitive activity in terms of marketing spend? Has it increased or is it remaining at the same level or going down because expenses -- all corporates are doing higher expenses now, so -- yes.

So, in terms of competitors, the marketing spend, it's competitive, remains high. However, what do you see is that, definitely, we're able to widen the gap between us and the competitors, that we definitely see that's happening. If you look at absolute basis on the revenue side, if you look at it quarter-on-quarter basis, we're able to widen the gaps. So overall as a leader, we are not able to grow because as a large player if we're able to grow, we're able to widen the gap between the players. So it's not that instead of increasing competitors spend and all. It's not that the competitors are able to grow much better and all that. So in fact, we are having that higher base and growing better. So definitely, as a company, we're able to execute well. We're able to standardize and able to prioritize our things. So basically, we are widening that gap on an absolute basis. So -- but again, however, the competitive intensity, that remains high and the spending is continuing. So we don't know how long it is going to continue. Actually, the thing that what you're focusing on, we're focusing on our strategic priorities, we are focusing on launching new initiatives, we are focusing on achieving growth and all that. So we continue to widen the gap kind of hopefully soon in the future probably that when the competitor realizes that they are fighting a losing battle probably that may change and all that.

And sir, just one last question. You said the normalization of employee expense and ShaadiSaga led employees essentially hit Q3. So this will take our INR 31 crores spend to more than 1Q number of INR 34 crores? Or it should come back to that number?

The employee cost you're talking about, employee costs won't level at least the INR 34 crore and all. And so it could definitely move up from compared to Q2 level. And -- yes. So maybe adding some INR 1.5 crores sort of things. So Sushanth, do you want to comment on that?

Yes, it will be higher than Q2 levels, yes.

Yes, definitely, higher than Q2 levels.

Maybe close to a couple of crores higher than Q2.

Okay. So we'll still not cross 1Q level of cost, despite integration on...

Sorry, you're not audible. Can you repeat your question, please?

I was just saying so still in spite of integration of the other company, we'll still not cross 1Q level of employee costs in Q3?

You're talking about quarter 1, is it?

So Q3...

That will be less...

Cost will still remain lower with Q1 because Q1 costs was quite high.

Yes, yes. Costs will be -- I think more or less, it will be similar level at Q1, okay? And because the Q2 has taken a hit, and we expect probably the cost will move back to close to Q1 level.

Yes. So yes, Q1 was -- the employee benefit was -- at the consolidated level was INR 33.7 crores or INR 33.8 crores, right?

Yes.

Yes. So it will not exceed that level.

Next question is from the line of Nilesh Shah from Envision Capital.

I just wanted -- I was curious to know why the vernacular app that we have launched, we're calling it Jodii and it's not like Matrimony or something like that. Any specific reason for a very separate and a distinct brand?

See, there are matrimonies by and large known for people looking for life partners. And again, it's pretty much targeting the people who are certain level of, what is that, the socioeconomic status or the people who are by and large degree holders, people who can be able to use the app in English language. We don't know the matrimony -- the people who know the matrimony today, they're not able to use the matrimony site for the obvious reason that it pushes them towards the segment of the population. So we believe that we thought it's better to have a new name because we are targeting a completely different segment and completely different audience base that have been going to matrimony. We don't want the people to see or to get one of the matrimony service. So that's the reason -- one of the reasons we put it as -- I think also we have the name thought, spot name, so we were able to coin the name J-O-D-I-I, which is sort of -- it's the name we thought, could be able to connect really to the segment of the population we are looking at targeting. So basically, the primary reason is we don't want the people to choose the matrimony site because there are kind of the players and so that's the reason.

Fair enough. And is this -- will this app itself become a pan-India theme in the sense I probably -- I don't know if I've understood correctly, but this is currently restricted to the Tamil language. Will this essentially kind of become a pan-India vernacular app?

Nilesh, yes. Currently, it's in very early stage. It just -- it's 20 days since we launched. So it's too early to comment. Yes, we launched it in one market just to get some kind of understanding and insight and to figure out how this center segment behaves, whether it's kind of -- if it progresses as per our plan. While there is an opportunity, still in nascent stage. However, if we're able to get our strategy right, we're able to get our play right, yes, launching in other languages, it will happen. So at this point of time, the focus to get the strategy and execution right in one market before we venture to other things. Yes, in the future, will you take it to the other languages if it works well? Yes, that's the easy thing to do.

Okay. Could you share some perspective on the competitive scenario in Bangladesh? Are there other players who are already there? What's the nature of the market? How competitive it is and things of that kind?

It's completely virgin market in our view. And so we don't -- we just started operations recently. But in terms of the metrics and other things, we are a #1 player. So we are not launching any TV campaign. Operating out of India, we are able to reach a certain scale in terms of number of people coming on to the platform on a daily basis. However, we are not able to maximize or not able to drive the revenue because in the absence of payment gateway. Since we set up operations, we have the local payment gateway, we believe that we're able to kind of convert better. Plus now with the team in place, with the TV campaign and other things, we're able to grow that market. Plus it probably -- this part of the market probably 10 years ago like how India was 10 years ago, that's the way it is. So no competition, serious competition. And so we believe that we have good opportunities in front of us. However, again, it's a very, very early stage. So -- but as for the competition is concerned, no any serious competition, which we need to worry about and all that. We are a #1 player. So we are very small at this point in time. We hope we're able to maximize or capitalize on the opportunities being the player with the good reach, the local operations, and the market is at the state probably in our view probably 10 years begin compared to India.

And lastly on ShaadiSaga. Now that we've done the acquisition and we started the integration process, what is essentially the outlook on ShaadiSaga in the sense that any key milestones that we intend to achieve in terms of number of listings? And probably today, we are in select cities. How soon do we want to kind of spread to other cities and things of that kind, if you can share in terms of what's the outlook there on ShaadiSaga?

Yes. Basically, with the ShaadiSaga integration, we have become a pan-India #1 player. We have a strong reach in South India in terms of number of listings. ShaadiSaga has a very good reach in terms of number of listings in the North and West. So combining both entities, we have a -- on a pan-India basis, we are #1 in the listing side because in the true side of marketplace, listing is very, very important because we also build a good platform. So what we are looking at actually, one, on the listing side will be the largest player, both on WeddingBazaar.com as well as Mandap.com. That's the first thing. And also the other thing is about increase in the number of people because it's a subscription-based business model. Increase in the number of people signing up for our paid subscription because some of the categories, ShaadiSaga has a good penetration, the things like of photography, make-up parties. Another on, WeddingBazaar has a good reach in some other categories like jewelers and some other categories. So basically, there is a strong synergy between North and South under different categories plus some other things ShaadiSaga has done a great job in terms of the insight base, the selling and all. Basically, what we're you looking at is a key metrics, listing is one thing and driving the free to paid subscription that is driving more people going for the subscription package. And third is about delivering the value for the vendors because it's important that the vendors are signing up, getting the number of leads. So for us, it's the number of leads, listings and also revenue. These are the 3 things we're looking at currently. And again, we'll be strong #1 in both the categories. So we're definitely quite excited. As I said, starting this quarter, we expect wedding services combining both the entities to move on a triple digit basis. So on the basis of that, again, we expect not only for this quarter, but for the years to come, we expect on a year-on-year basis, we can grow at triple digit because it's large opportunities. With the combining, we definitely are getting some important leadership bandwidth and we could -- we believe that we could able to drive the business well without losing too much of money. I think that's important thing.

I mean I assume that given that the opportunity is larger, the revenues for us at Matrimony from Marriage services, which is ShaadiSaga would be a lot higher at some point of time in the future versus the Matchmaking services. Is that a fair assumption to make? And if so, how long would it take for Marriage services to basically become as big as the Matchmaking side in terms of revenues?

We don't see because Matchmaking, we are INR 400-plus crores. So we expect that to INR 500-plus crores of doing on Matchmaking. See Wedding services, for us, that immediate milestone probably next couple of years reaching another INR 100 crores, that's a company we're looking at. So that's an immediate goal, 2 years goal, which hope we can achieve probably sooner than later also. So that's goal one, yes. However, when the wedding services can become a larger as whether it can go to INR 500 crores like Matchmaking, so I don't know, maybe it will take -- maybe probably a little longer. But again, let us first get to the milestone of INR 100 crores and probably we'll have a better clarity of when we can reach that kind of number so. But opportunity actually you said that it's definitely humongous. As far as the critical milestone is reaching INR 100 crores and then we can work on the next phase of growth strategies or opportunities there.

Next question is from the line of [ Kush Goswami ] from InCred AMC.

I just wanted to understand how is the competitive intensity? Are the players getting more aggressive post the second lockdown? Or are we seeing some signs of receding?

No, it's remaining at the similar level. It's not either going higher or not going down. It remained at the similar level as it was earlier, so -- but still remained at -- the spend wise, it's still up, it's high.

So do you foresee in near future they can come down or they would stay elevated as well?

It's very difficult to say how competitors will behave. But the thing is that, as I said, we continue to focus on our growth -- strategic growth initiatives. So I don't know how long it's going to continue. But however, we continue to invest and to grow our business. So yes, it's difficult to say what will be competitors move over there. Will they do the marketing spend. But at this point in time, yes, marketing spend is at higher level. It's much more than what is really required, I would say that and all.

So if the competition -- if the intensity stays elevated or increases from here, are we willing to spend more than INR 150 crores on advertising?

So beyond the point, well, if the need is there, there is an opportunity to invest and grow, we'll continue to invest. Like some other markets, yes, northern market, our investment can further move up. You know the same, quarter-on-quarter, we have been investing in the marketing and growing the business. So is there is a need to invest, yes, we can invest because we are the only profit-making company. Look at the Matchmaking, if you look at our -- excluding marketing, our gross margin on Matchmaking in Q2, we're operating at almost 60% gross margin. And including marketing, Matchmaking is almost 80 -- 79 percentage. So we still have -- the question is, do you want to? So I mean, we are trying to balance between to invest meaningfully, manage the competition and grow the business. Yes, again, there are new initiatives as well. So we continue to invest to grow the business. Would there be a further increase in marketing spend to the competitor? If that happens, what will be the reaction? So beyond a point, it doesn't make sense to invest so much of money on ads. We're just only kind of putting money for the sake of putting and all that. We're trying to balance between managing at a certain level and [indiscernible] and manage the growth. So we are trying to balance on all these aspects. Just for the sake of putting, we do not want to put the money.

Okay. Sure, sir. And in terms of investment, how much investment is going to the Bangladesh venture? And does it impact our margins?

No, it's going to be only a gradual thing. So it won't be significantly impacted. Yes, there'll be some kind of investment. But again, that's a -- it's a very early stage. It won't be substantial at this point of time.

Okay, okay. Sure. And in terms of Wedding Services, how are we seeing things now that we are seeing the revenue growth picking up as well and losses also coming down. So what is -- any guide -- any particular milestone that you would like to highlight other than the INR 100 crores you just pointed out?

Yes. INR 100 crores, we want to achieve in next few years. But at this point of time, we expect to starting this quarter, we want it to be triple digit growth combining both the entities. So again, this quarter, the cost will move up on account of the integration that's happening. And we'll probably have better clarity on Q4 what is the thing outlook and kind of -- yes, this quarter, the revenue is triple digit, but the losses will increase. So yes, probably can -- exchange of a couple of crores of revenue on a quarterly basis. That's what we see. But again, still it's very small. We need to have a growth partner. And we have the better thing because integration is happening. By next call, we'll have better clarity on growth prospect for Wedding Services. But, however, as I said, we have double-digit growth for the quarters to come. We see definitely that visibility for the years to come. What kind of percentage and the other things and all because once the integration is done, we'll have a better clarity on that.

Next question is from the line of Vivekanand Subbaraman from AMBIT Capital.

So the question I had was basically the strategy that we had pivoted to the strategy of customizing our pricing to drive the volume of transactions. And therefore, that was resulting in demand elasticity. We saw this for the last 4, 5 quarters. So was there any change in the current quarter that resulted in transactions not growing so sharply in the current quarter? I mean I also see that the ATV has gone up in the current quarter after many quarters of decline. Any thoughts on that? And how should one look at this -- the billing growth in the online Matchmaking segment?

Yes. Thanks, Vivekanand. The volume grew by 4-plus percentage year-on-year. So it's not a double-digit basis. However, if we look at the ARPU from -- it was at INR 4,400, grew to INR 4,700. Again, if we look at compared to Q1, the ARPU is at a similar level. So what we are having, in one hand, we are trying to grow the volume. At the same time, we also think that ARPU also can be driven. So basically, we are trying to balance between the volume growth as well as on the ARPU growth, so that's what I was saying we're trying to do. And that's why we have the mix of both ARPU growth as well as on the volume growth. So we're just kind of trying to do this, and we sort of expect it will be a mix of volume growth and ARPU growth. However, probably the early bit of Q4 when we probably will have kind of big share in the better side in terms of whether the volume or things. I think going forward, the ARPU reach at certain level, we expect the volume -- because if you look at it from year, last year, it was INR 4,300, we moved to INR 4,700 levels over the last couple of quarters. We want to maintain at this level. Then from this level, we are trying to kind of continue to grow the volume also. So because last year, we taken a hit on the ARPU. If you look at it yearly it was INR 5,000 ARPU that come down to INR 4,300 level. We want to slightly move the ARPU as well. So basically, the strategy is to drive both.

Okay. And Muruga, is it possible to give us some color on how your ARPU would be for the various markets? Is it at a very significant discount in the competitive Northern market versus your pricing in the South? And how have the trends moved in the last 6, 9 months in these key markets?

Yes. So definitely, the ARPU wise, Vivekanand, it -- definitely, the South is definitely much higher than compared to Northern market. You know that North is one of the highly competitive market, so -- and there's a lot of discounts taking place in that market. We also try to play accordingly. So ARPU wise, yes, definitely, it vary from market to market. We play to our strength in some other markets and try to compete in some other markets. So that's way the ARPU is kind of playing out. But again, within this segment, we still try to see, maximize the ARPU, the segment of the customer, which try to do that across the market. However, I believe South is a very strong market, the ARPU is definitely much higher.

Okay. And my last question is with respect to some of the premium services that you have, which have much higher ARPU levels. Is that seeing traction now that the economic activity and the unlocking is now underway because if I remember correctly, some quarters ago, you had mentioned that assisted services, [ Vedanjali ] Matchmaking Services were impacted because of the lack of travel restrictions due to COVID.

Yes. Vivekanand, we see that personalized services started to move up and started to grow well.

The next question is from the line of [ Shubh Joshi ] from Pile of Wealth.

Hello?

Yes. Mr. Shubh.

Actually, sir, my question is, what kind of competition we are getting for the Northern Indian? And what are the hedges we are doing for -- to getting -- because Northern part is very competitive and we have a very large part of stake in the Northern India?

Yes. You know, see, North is the only market where we are not a strong #1 there. We are definitely -- we are one of the leaders, not a strong leader as the rest of the market. And so we are looking at various things, continue to improve our marketing spend and the continued launch of new offerings. So sometime this year, we launched Rajasthani Matrimony, we launched Bihari Matrimony. We are looking at penetrating on market wise. We will continue to execute our strategies, continue to execute our plan. However, the market in terms of -- we have 2 players in the market, Shaadi and Jeevan Sathi. So it's going to be a little longer for us to kind of become a strong player because we have 2 players and both are investing a lot in that market. But as I said, we are continuing to increase our marketing spend, continuing to launch our strategies -- continuing to execute our strategies to kind of further improve our things. We have been sort of growing, but still we have kind of a couple of years to go out, maybe longer also to kind of -- to further increase our market and try to become a strong player or strong #1 in that market, at least not on a definitely basis, at the end of -- yes.

And the second question is, sir, so our -- what are the expenses, that will be much more interior? Or it will be segment? Or it will be consolidated, our market expenses?

In the marketing spend, what we're sharing is a consolidated marketing expenses. However, if the marketing spend on a quarterly basis is continually going to grow quarter-over-quarter slightly, again, it depends on how the other things going to work out. But at this point of time, the marketing spend will be around INR 40-plus crores level, that will continue to increase on a quarter-on-quarter basis, so the marketing as a consolidated basis.

Okay. And the third question is so actually, we had started a Marriage Services. Can you tell me what type of margins we are getting in the -- what type of under penetration we are doing on the Marriage Services? So it's like B2B services. So we are hiring, so the vendors are coming in our platforms and they are selling their products. IS it kind of this or it's like IndiaMART kind of...

No, it's like IndiaMART is like a subscription business model. We will take a vendor from photograph, make-up artists, jewelers, apparels and other service providers. We have various packages based on the different categories. So it's not one single price for the vendor because the make-up artists, they won't pay -- that revenue per customer is much lower compared to the caterer, the revenue per customer they make a lot of money. So it depends on the cities, it depends on the category, we have different subscription models. So we are looking that there are multiple packages. So -- yes, it's likes of IndiaMART theme, okay? So yes, there are customers that are paying money. But when you want to get it's mainly from the subscription vendors in the wedding services paying for it. The thing is that we have to increase the number of vendors paying for it. So with the appreciation, we believe that we'll able to increase the number of overall listings and also able to increase that number of leads, which you could able to deliver for the paid vendors. So we believe that, that growth things will get better on the Wedding Services. But this is the model -- effective business model like what is it...

And sir, what kind of margins we are expected from these services?

Yes. So margins, it's very scale because -- this is going to be in the loss-making business because still very nascent because once in the business, we usually sit on the typical benchmark or milestone, then it will start growing the profits. So when a business today will run at the core level, definitely, it'll be profitable. When we reach at the INR 300 crores level, its margin can be 30%, 40% because, see, when the subscription business model is that unless matchmaking -- look at your Matchmaking, instead of being a customer don't say beyond 1 year, till on the Matchmaking business at the scale, we're able to operate at 60% gross margin and with almost 30% on the -- in the marketing, which is instead of don't have a repeated customer. The advantage of subscription business model is that once we reach a certain scale and velocity and you get to continue the existing customers paying for the subscription and the subscription revenue also, and they're paying better ARPU also because it keep increasing the revenue per customer by adding more services or keep increasing the price also. So you have the customers who are able to deliver value. We can have their lifelong customers also. So at the scale and level, the margins can be much higher because that's one of the reasons that today, the subscription business model based company and all, they're trading much better because they are long tenure with the customer. Throughout their wedding service, they want to reach a scale and size. The margin can be very heavy, 30%, 40%, it can have very heavy margin. But at this point in time, it's very, very nascent stage. I don't know at what level become profitable, probably I'm taking the benchmark on the core level, it can become profitable. It will be early that also. But whether you want to stop at that level of taking order because I want to continue to invest because you're not investing kind of -- there's so much investment that can happen in this category. So first and foremost, we want to sort of the reach a critical milestone in terms of listing, et cetera, revenue and ensure that it's going in the right direction. Then we're able to show that it's growing and kind of scaling up, then we want to invest big in the wedding services growth and get to the initial milestone of INR 100 crores in the next couple of years. And then you look at how to take it further from there. So basically to answer question, growth margin can be very high, it can kind of scale. At INR 500 crores level, the margin can be 40%, 50% in and out.

Okay. Sir -- and the last question -- sir, actually, we are opening our matrimony offices. So these offices are only on the -- their Tier 1 city? Or it will be on Tier 2, Tier 3 city? Or it's only in metropolitan city, so we are opening only, all over the India?

No, it's -- we call it it's a Tier 1 and Tier 2 cities. And again, we just opened a couple of outlets, one in Chennai and one in Pune recently. So by and large in Tier 1 cities and probably good Tier 2 cities so -- yes, not because [ retail ] has too many outlets getting opened, but it will be better to see the opportunity when we open some more outlets.

Next question is from the line of Nikhil Chowdhary from Kriis Portfolio.

Sir, my question was with respect to the ShaadiSaga platform, I was actually going through the platform. And I wanted to understand what would be our strategy on strengthening the platform? Because I happen to come across other players like, say WedMeGood, Weddingplz or 7Vachan, who also provide similar type of aggregator platform where vendors are listed. So do we have some strategy there? We have, say, for example, a famous photographer, who has exclusive tie-up with ShaadiSaga or, say, for example, we have some premium services because I happen to come across one start-up who is providing a total distribution service through facial recognition where you just put your selfie, and wherever you are there in the entire wedding, your photo gets -- all the photos come to your mobile through that just 1 selfie. So just wanted to understand what type of differentiation strategy we are trying to implement so that we become the go-to platform where we are having the services that probably customer is actually seeking? Or else it would be another case of competitive platform where we are just competing for the market share?

See, a couple of things. One is that any two-sided marketplace, so whoever has a large number of -- in terms of traffic, whether people are coming for the services and also whoever has the large number of listings. So both are very, very important because any B2B whether be it -- so that's why the B2B depends on these 2 things. So the advantage of the Matrimony.com is that compared to other players, while they can have that similar kind of business model and they can even try to work on the listings, the strength of Matrimony.com is the richness of the numbers what we have or the millions of members what we have. So today, Matrimony.com has million of members. So when the people find their life partner, this can be matched -- can be integrated effectively with wedding services, we could be able to generate the leads, which is difficult for other players because for them the kind of the cost of listings is okay, they may be able to get it already. But the cost of acquiring customers, it's quite challenging. For us, we already have the customer, it's more like forward integration. How effectively we're able to integrate, yes, we have done the integration, we're able to generate good number of leads coming from the existing customers. So the advantage of Matrimony.com is the millions of members looking for life partner who are already with us. If they want to find a life partner, we'll come to know because if a person deletes a profile, we know that so and so is getting married. If we're able to effectively integrate, we are -- the cost of acquiring customers is almost negligent, okay? Yes, we may continue to spend money on some digital and other things may be required. But however, majority of things come from the internal matchmaking database. So that is the strength we have compared to other players. And obviously, pan-India operations, strength wise and all, so this is kind of difficult for other players. However, platform wise, yes, they may kind of have the similar kind of platform. But again, we continue to work on what kind of differentiation other things, what we kind of -- while, the WeddingBazaar competing with other players in this space like we have Mandap.com. Mandap.com in a way that is very unique, and we don't see any competitors in this space that -- we are the India's largest venue discovery platform, continue to strengthen that one. So with the leadership team in place, we believe these segments can continue to find traction and continue to kind of grow both on the listing side as well as on the leads and all. So -- which is difficult for other players to do because of the single platform plus their constraints what they have and all those things. However, we can't rule out any competition. As we see the current outlook, we don't see anybody can come close to our wedding service.

Understood, understood. And sir, like probably once again, so why don't we probably look for some premium services, which the other players are not having? Say, for example, just like I mentioned, the photo distribution company that I happened to come out across, there are a few players in the market, why don't we look to acquire because they are very small and probably we acquire them at an early stage and try to get their services or integrated with the ShaadiSaga? And I guess the utility of these services are very high because I happen to see them in a few weddings where people are using their -- uploading their selfie and getting the images directly like wherever they were in the wedding, they were getting the images of -- for them. They need not actually go through the folder or gallery and something like that.

Yes. I understand. We'll continue to look for opportunities, which can strengthen our core offerings. So we invested in Astro-Vision, and we bought ShaadiSaga. We continue to look for opportunities. Anything that kind of -- to help our customers, help our offering, we continue you to -- we'll look into those opportunities.

[Operator Instructions] Next question is from the line of [ Abhimanyu Olla ] from Growthx Capital.

Am I audible?

Yes. You're Abhimanyu, you're audible.

My first question was actually, can you sort of give a ratio as to how much you aim to grow with respect to your advertising costs? So if I look at your advertising cost, this quarter, it grew about 7%, but the billings have only grown by 4%. And secondly, do you track as to what amount of growth is organic?

So look at the -- again, it vary from quarter-to-quarter, but gradually, there'll be some increase in marketing. So some quarter maybe for Q1, we're marketing sort of -- compared to the plan, we have sort of reduced it because based on the outlook what we saw. However, the marketing is on a spend basis, it continued to grow. So in terms of -- so that ways that -- the marketing spend is. Sorry, I've just kind of lost the second question, sorry, my apologies kind of.

Yes, yes. What percentage of this growth would be organic? Is this...

Yes, yes. Sorry. Got it, got it. See, the thing is that I think the strength of Matrimony.com is that -- so almost majority of the profile acquisitions are organic because the brands what we've built over a period of time. So a good percentage of the -- like almost like over 80% of the profile acquisitions are organic for us. So but however, you need to continue to invest again in the marketing because of the -- we wanted to get big in the consummated category because while the market has been -- may not be at this level, if not for the heightened competitor activity. So yes, as I said, good percentage of profiles are organic. So today, only probably around less than 20 percentage of profiles come through other means which are digital and other things, but majority of the profile acquisitions are intended directly to the brand.

Okay. And what is the primary aim for these international acquisitions? Is this -- are you trying to grab basically your South Indian diaspora in other countries?

Look, that has been always that because, today, the NRIs, whether South Indians or Indians across the world, they use our matrimony services. That's always been part of our growth. So yes, with the expansion in other countries, we are looking at targeting other nationalities. But targeting Indians across the world, we continue to target, particularly NRI -- it's a good segment of revenue coming from the NRI. However, overall level, India is a big opportunity compared to the NRI.

The next question is from the line of Nilesh Jethani from BOI AXA Mutual Fund.

So my first question was on the engagement side on the ShaadiSaga.com. So I wanted to understand, so what are we doing to basically engage with the prospective vendor, say, a photographer or a mandap guy. How will we come to know whether we are an integrated part now, you would be able to get more number of leads? So what are we doing on the ground level to basically educate the prospective vendors and as well as drive the number of vendors? So I believe there are around 40,000 vendors on ShaadiSaga. So how are you planning to grow that number?

Yes. So basically, we are working on integration, Nilesh. And once the integration at the right point of time, we'll communicate, educate the vendors, and make it as integrated platform. And that effort we are taking. So when we're able to -- once we integrate, we'll become the single largest player in the wedding services space. We are looking at a series of communications that will happen over a period. So the way we'll communicate either through the e-mail or other forms of communication calling out and communicating, all this will happen.

So that is -- how are you planning to actually engage with them? So one is email. So are we planning to open some offices at local levels, adding staff? So what is your thought process over there?

Yes, it's -- we are opening office and all in terms of reaching out to customers because we know there's feet on street, still we will go and communicate to customers, like also we'll call and communicate. We are looking at series of communication. I think that's the easiest thing to do because [indiscernible] SMS or WhatsApp or e-mail. There are -- multiple forms of communications are possible. So the thing about communicating is the easiest part. Again, since we're working on integration, at right stage, we'll communicate to customers, make it an integrated platform. We don't see tht as a problem. And still it is about -- we are looking at how do we integrate the platform, going to enhance value for the customer that, again, we're able to -- we should -- once we integrate, we'll able to demonstrate. The customers are seeing enhanced value because 2 platforms coming together with the strength of Matrimony.com, we will be able to deliver a better value for the people who have taken the paid subscriptions. The thing is that we need to look at accelerating the number of the free vendors into a paid vendor. That requires -- we have a freelancer -- we are looking at both the feet on street and also the telecalling, so looking at leveraging both the sales channels to increase the number of people to go for a paid subscription.

Okay. Like if we ask in this way, say, FY '21 ShaadiSaga did around INR 2.1 crores top line. So we are envisaging to reach a revenue of around INR 100 crores in the next couple of years from the Marriage Services business. So what are the typical low-hanging fruits you think are available for that kind of INR 100 crores revenue in the next couple of years?

No, it's simple. We have to convert the free vendors into paid ones, okay, across the categories, be it the photographer, make-up artist, jeweler, apparels and so to get opportunity when to -- if you look at ARPU, it vary from the different categories from INR 10,000 to INR 50,000 on. So it's a simple thing about increase the number of customers and increase ARPU. So even if it is present -- yes, please go ahead.

Of 40,000, how much would be paid?

No with -- I don't know the exact number of ShaadiSaga assume that -- but again, it's combining. Again, we're not looking only 40,000. We are thinking about -- while there are certain listings are there, our goal is the combine entity will probably become a -- probably 50,000 or 60,000 plus listings. I don't know because once the integration, we know how many duplicate convert. We don't see much duplicate because our listings are in South or West and East. And however, it's not about that the combining entity become a 50,000 or 60,000 listing. We continue to work on increase the number of listing as well because Tamil Nadu as one market alone, call it, our 20,000 plus listing because the wedding as a category has a large number of vendors. So we're going to work on both the things. One end, we'll increase the number of the vendors into the platform. At the same time, accelerate the number of free vendors with paid vendor, both has to happen in parallel.

Got it. And one last clarification. So you said if that business increase a revenue of around INR 500 crores, the margins could be easily 30% to 40%. And what could be a typical margin if the business reaches INR 100 crores revenue?

No. Again, it's too early for us to say that. So INR 100 crores level, yes, it can be profitable. And what percentage? No. I'm not in a position to say at this point of time.

Next question is from the line of Swapna Kamat from Narotam Sekhsaria Family Office.

My question is on paid subscriptions. Seeing a nice trend of growth over the last 4 -- around 6 quarters. And though our average transaction value, I can see has gone down and again -- in first half, again, it has started spiking up. And we have reported nice growth in H1. So I wanted to understand that, clearly, it seems that our strategy of discounting in regions like North, et cetera, is enabling us to gain the market share. So what is our strategy going ahead in terms of this growth in paid subscription? Should we see this trend of the average transaction value growth going ahead sustaining and the full year numbers looking into nice double-digit growth over the next -- this year and a couple -- I mean, going ahead, how do we see this?

Yes. Actually, that's the strategy Swapna, and we are looking at driving both ATV as well as paid transaction. We expect ATV to kind of remain at this level or further to move up because one thing we see that personalized services operating at higher ARPU are also moving up. So possibly, the ARPU may also go up from this level also because we used to operate around INR 5,000 ARPU, and seriously our strategy is about discount that is required in some segments of market, at the same time trying to maximize that ARPU in some segments. So basically the combination of driving ARPU and at the same time, drive volume is what we are working on it. With respect to the growth, yes, we over the last 5 quarters had double-digit growth. We expect them to continue. With various strategies and steps what we are taking, at the end of this level, we definitely could move to the double-digit growth. Now we're looking at taking the Matchmaking to sort of the new initiative and other things, hoping, the plan is to take it to sort of 15% growth, and I hope that happens soon.

Okay. And sir, our paid subscriptions, is my understanding correct that the double-digit growth is also because of this COVID that -- I mean, the adoption of the Internet and the Matchmaking services has improved and that has also helped us in terms of achieving this? Or is it more related to our discounting strategy, which has helped us capture that market share? Is that a trend more accelerating now, and we should see it more sustainable going ahead in terms of the adoption of this where we can see the numbers meaningfully more sustainable going ahead in terms of the paid subscription conversion related to -- relative to your listings on the portal?

I think trend wise, we continue to see the double-digit growth, and we are looking at the steps and the initiative what we are taking. The plan is to kind of move from the 10 or -- 10% growth to whether we can move to a much higher growth. So that is what we're working on. So as far as the COVID, during the COVID period, we saw the spike, but that's not a sustainable level because the people who otherwise should have come at a regular -- I would say, regular trend. People are -- when they reach a certain threshold, [indiscernible] Matrimony.com, that actuation happened because of the otherwise delayed registration on the platform. So now we see that it's become more like a regular trend. So I think today, what is the growth happening on accounted at the -- you move to a regular level of the profile registration. So we expect this to become sort of normalized from -- onwards to grow at a certain pace. So however, the combination of the initiatives what we're taking plus strategies and other things, discounting is not only thing. Discounting in some segments is one of the plans and all that. However, doing a lot on the product side, a lot on the business side, the combination of all these factors is helping us to grow and we expect the growth should further move up. So the thing is about the enterprise level, yes, move to now with combination of Matchmaking and Wedding Services move to the 10 plus percentage growth. But we hope that with all the things kind of start yielding results in the coming quarters, we can hopefully move to a growth level better than the kind of growth what we have been having.

Thank you very much. As there are no further questions, I now hand the conference over to Mr. Janakiraman for closing comments. Over to you, sir.

Thank you very much, Vivekanand. And thank you, everyone, for participating in the conference call and asking questions, and thanks for your interest in Matrimony.com. I look forward to staying in touch. However, if there are any questions, anything, please free to reach over to me or to our CFO, Sushanth Pai. Thank you, Sushanth.

Yes, thanks, Vivekanand. Thanks, Murugavel. Thank you all for joining, and stay safe.

Thank you very much, Mr. Janakiraman and Mr. Pai. Ladies and gentlemen, on behalf of AMBIT Capital, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.