Indiamart Intermesh Ltd
NSE:INDIAMART
Indiamart Intermesh Ltd
NSE:INDIAMART
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Good evening, ladies and gentlemen. I'm Avijit Vikram, Head of Investor Relations. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Quarter 4 and FY 2025 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 call may be forward looking in nature and may involve risk and uncertainties. Kindly refer to Slide #3 of the earnings presentation for the detailed disclaimer.
Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you and over to you, sir.
Good evening, everybody, and welcome to IndiaMART Quarter 4 and FY 2025 Earnings Webinar. We have circulated our earnings presentation, which is available on our website as well as the stock exchange websites. We would be happy to take any question afterwards. And here are the highlights. IndiaMART has delivered a consolidated revenue from operation of INR 355 crores in quarter 4 and INR 1,388 crores for the full year representing a year-on-year growth of 13% and 16%, respectively. Collections from the customers have grown to INR 541 crores for the quarter representing about 12% year-on-year growth and INR 1,626 crores in FY '25 representing a year-on-year growth of 10% on the consolidated basis. In quarter 4, our unique business inquiries were 27 million representing about 10% yearly growth.
Total number of paying suppliers stood at 2.17 lakh. Net supplier addition in the quarter was 2,139, which is slightly better than the last quarter. We are continuing to take measures to reduce the elevated churn in the silver customer first year bucket and onboarding high quality businesses as paying customers. We continue to make changes in our products and services for the better quality of leads with better qualification of buyers. Our platinum and gold subscribers, which constitute about 50% of our customer base and about 75% of revenue, continues to have low churn and robust ARPU growth as well. We remain dedicated to continuously improving the quality and optimizing the user experience on our website and on our mobile platforms to maximize the value delivered by the 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. Firstly, I would like to share with you that Busy Infotech has amalgamated with the 2 other wholly-owned subsidiaries of IndiaMART, Tolexo Online Private Limited and Hello Trade Private Limited. This amalgamation is effective 1st April 2023 and the numbers therefore for the last 2 years have been restated. On the business front, Busy has done a net billing of INR 32.8 crores in quarter 4 and INR 94.3 crores in the entire financial year. These numbers also include an impact of approximately INR 7 crores and INR 10 crores, respectively, due to the change in the payout structure of the partners that we had shared last time. The normalized year-year growth for both of these, excluding the impact of this change, is 42% and 21%, respectively.
The revenue from operations stood at INR 18.4 crores for Q4 and INR 65.8 crores for the entire year. And if we were to normalize the numbers and calculate the growth rates, it would be an annual growth rate of 16% and 18%, respectively. Deferred revenue stands at INR 72.3 crores. Busy also generated cash flows of INR 8.8 crores in Q4 and about INR 23 crores in the entire year from operations. During this quarter, Busy also sold 8,000-plus licenses taking the total count of licenses sold at about 3.96 lakh. The new licenses sold in the entire year are approximately 33,000. We continue to enhance the product and increase our growth rates in the coming quarters and coming year.
With this, I will hand over the call to Jitin so that he can discuss about the financial performance.
Thank you, sir. Good evening, everyone. I will take you through the financial performance for the quarter and fiscal year ending March 2025. Consolidated collection from customers was INR 541 crores in the fourth quarter and INR 1,626 crores on a full year basis representing Y-o-Y growth of 12% and 10%, respectively. Consolidated deferred revenue stood at INR 1,678 crore, an increase of 17% on a Y-o-Y basis. IndiaMART stand-alone collection from customers for the quarter were INR 506 crores and full year were INR 1,526 crores, both registering Y-o-Y growth of 9%. Stand-alone revenue from operations stood at INR 336 crores for the quarter and INR 1,320 crores for the year registering Y-o-Y growth of 12% and 16%, respectively. Our growth in revenue was primarily driven by improvement in realization of paying suppliers.
EBITDA of IndiaMART standalone business stood at INR 133 crores for the quarter and INR 513 crores for the full year representing 40% and 39% of margin, respectively. Margin continued to be elevated on account of saving arising from lower customer acquisition and operating leverage. Margins are anticipated to gradually normalize in coming quarters as we focus on measures to increase growth. Consolidated net profit for the quarter was INR 181 crore, which includes a fair valuation gain of around INR 59 crore on account of revaluation of our investment in [ Emerald Exchange ]. Consolidated cash generated from operations was INR 271 crore in quarter 4 and INR 623 crore on a full year basis. Consolidated cash and treasury balance stood at INR 2,885 crores as on March 31, 2025. Also, Board of Directors have recommended a final dividend of INR 30 per share for FY '24-'25 and a special dividend of INR 20 per share aggregating to a total dividend of INR 50 per share subject to approval of shareholders.
Thank you very much and now we are ready to take any questions. Over to you, Avijit
We will now begin the Q&A session. If you wish to ask a question to the panelists, kindly raise your hand and allow camera and microphone access. Alternatively, you may type your question in the chat menu and we will revert on it. Please restrict to 2 questions so that we may be able to address questions from all the participants. We will wait for a couple of seconds while the question queue assembles.
First question is from the line of Sachin from BofA.
I have 2 questions. First question, this is regarding your net adds. Clearly your net adds addition is close to around 2,000 or lower for last 7-odd quarters. So wanted to understand some of the steps taken by you guys to reduce churn. Any time frame we should have in mind where we could start seeing an improvement in the overall net adds and hence revenue for you guys? Second question, I just wanted to understand the mix for platinum and gold users. What we are seeing for few quarters is clearly your churn being high and as a result of which collections growth slowing down, contribution from the smaller customers getting down. So why is the mix of platinum and gold not increasing in a proportion of total revenues? I presume it's range bound in the range of 75% to 80% only. So wanted to understand should we see this proportion increasing because the revenue from other set of users is going down?
Yes. So this is the easy one, let me take that first. I think when we started telling you about this, I think the first time we told you that what is the gold and platinum total contribution, it was about 72% if I remember correctly. And then it became to 74%-odd and now it is about 75%-odd. So I think slowly and slowly as the number of customers have not grown, but the percentage of gold and platinum revenue contribution is actually inching up quarter-on-quarter. So there is no issue on that side. And whatever growth in collection that you are seeing, largely all of that is coming from gold and platinum. Just to repeat, gold and platinum accounts for about 50% of our total customer base and 75% of our revenue now -- more than 75% of our revenue now.
Now coming to the 7 quarters of reduced net customer addition of about 2,000 plus/minus. Yes, I think the first few quarters -- about 4 quarters we initially focused on service levels, what kind of customer onboarding and those areas. However, that didn't really do any breakthrough. So then we started to look at the product market fit again at a deeper level and we have found certain changes to be done. In the last 2 quarters, we have done multiple changes. Few I have already told you. One where the number of times a buyer was being introduced to a supplier was about 6.5 or so. Now this has come down to 3.8 or so. The second part is earlier we used to make a lot of inquiries even if they were low intent buyers.
I mean if somebody said I'm interested in this product, but not really filled the quantity or not really filled the specification, then also we used to make that as an inquiry or RFQ. Now we are doing a double check either by WhatsApp or by call and then only making that as an RFQ and we're not -- by doing that, we are getting a lot more, almost 80% of our RFQs today have the quantity and specification well defined and filled by the buyer, which has started to show up anecdotally in our gold and platinum customers. However, this has resulted into lower number of unique business inquiries -- little lower number of unique business inquiries and that actually is showing up as a demand because now the good quality inquiries are much more in demand.
Finally, since most of these good quality inquiries are being consumed by gold and platinum, I think we continue to see a good healthy improvement in renewal rates on the gold and platinum side of the renewals and there has not been any decline further in the last 2, 3 quarters on that side. So I think we are doing enough things, but have we been able to fix the churn at the silver monthly or silver annual at the first level? We have not yet and it will take probably another few quarters before we can go to that. Some of the leading indicators that you can see if you look at the repeat rate of the buyers in this particular quarter has slowly inched up to almost 57.5% or so. So there are some leading indicators which are there that the product has started to improve well, but first year retention continues to be a challenge and we are fully committed to solving that out in the times to come.
Very clear. Just 1 quick follow-up out here. How should one think about your margins in the time frame where your net adds remains at these levels? Because when I look at the margins for last 7 quarters and I do get there is a quarterly seasonality, but they are anywhere between 29% all the way to 43%. So is there a sort of a range one needs to be aware about from a margin perspective?
Jitin, you can answer that.
Sure. Thanks, Sachin, for your question. So on margins, as you rightly said, it continues to be elevated at about 40% range plus/minus 1% or 2% here and there. So till the time we are confident on solving the churn and doubling down on the gross adds, it will be continue to look like 38%, 40% only. And once we do like the pushback on the gross adds and push the battle on gross adds, it will come down to a sustainable margin of about 33% to 35%, which we have been maintaining in the last few quarters.
Next question is from the line of Amit Chandra from HDFC Securities. We'll take next question from Swapnil from JM Financials.
So my first question is regarding your unique business inquiries delivered. Obviously they are down 8% to 9% Q-on-Q and you mentioned that you're delivering the inquiries to less number of suppliers right now compared to what you were doing earlier, right, 6.5 coming down to 3.8. But my question is like have you started getting any feedback from the suppliers as to better conversions now compared to the previous or is it still we are yet to see any meaningful results on this side? I understand that as a platform, you may not have the complete data, but certainly you will be discussing with your paying suppliers on this side.
So anecdotally, I think we are getting good feedback. Even at the platform, there are various feedback mechanisms that give us a leading indicator that customers are liking what we are doing. They are not liking the reduced number of inquiries because they cannot imagine the competition has been reduced for them. So for them, first comes the quantity. Whether the conversion has improved or not, that particular piece why anecdotally people are -- very few people are ready to admit that. Most people's behavior will tell us when they upgrade and renew that they are happier because in general nobody likes to really admit that the platform is working very, very good at least to us. To you, they will still tell you the truth. But our leading indicators tell us that whatever we have done in the last 4, 5 months since the October Board meeting has resulted into something meaningful and we still have few works in progress, which we should be able to do over the next couple of months. As I had asked in the month of October that give us 3, 4 quarters because now that we have started to focus purely on the product side; until I'm fixing that, I'm not going to invest any money on the customer acquisition or any kind of advertising.
Understood. But my question, just to extend that, will it be possible? I understand right now that may not be the focus. But going forward if there are better conversions for the suppliers when you deliver less -- when the competition is less for them, will you be able to pass on significant pricing to them? I mean would it be possible for you to take significant pricing hikes at least to those people who might be benefiting from this?
That's already visible. If you see in the financials, Top 10% ARPU is up 17%.
Okay. But what about the gold customers? I mean [indiscernible].
This is almost like a platinum customer. On a gold customer, whenever it comes up, we will let you know. Even the overall ARPU is up 11%. So we are working in that direction, but I mean it's too early for me to admit.
Okay. Understood. The second question is also on the traffic side. Now if you see the total traffic that you share, right, that number continues to remain weak. I mean for the full year itself, growth was hardly 1% or 2%. Now one, is like why that the number of hits that you are getting on your website or your mobile app are lukewarm? Secondly, are there any plans to invest on the A&P side to create more awareness about the platform or some other measures that would help you increase the number of hits on your platform?
Yes. I mean we have started to do certain experiments on the advertising side, whether it is online advertising or whether it is affiliate-based customer acquisition or whether it is some video based. So I think over the next 2 quarters or so, you will see some pilot projects going on on that side. While we speak, I'm still doing some pilot projects, but they are not significant enough for me to tell you at this point of time. Maybe next quarter.
Okay. But these projects will not have a meaningful impact on your margins per se because you just now said like your margins...
They will. But as of now, they are not going to have any meaningful impact on this particular quarter. If they are going to have -- if we are going to scale them significantly, then we will come back and tell you first before doing that.
Understood. And to check on the churn rates like can you just give a breakup of how the churn rates have been across the different types of supplier categories this quarter? And just to get a sense as to how they have moved over the last 3, 4 quarters.
Yes. So gold and platinum remains at around 1%. That used to be under 1%, now it is about 1% per month. Silver monthly is about 7%-odd, 6% to 7% and silver annual is about 3% to 4%.
Got it. And just something on the Busy side because I see that the number of licenses sold seem to have increased this quarter by a decent number. Earlier we used to do around 6,000 to 7,000 licenses per quarter. Now that number has increased to 8,000 plus I think there has been some increase in the realization side also. So any special efforts have you taken on that side or like something which is working on the Busy side? Would you like to call out something on that, sir?
When you look at the number of licenses sold, generally Q3 in any given year is a weak quarter for this business and Q4 and Q1 typically are the best performing quarter and therefore, we started to see an uptick in Q4 in terms of licenses sold. So this obviously is 1 factor which has resulted into an increase in overall licenses. Second, obviously there are efforts being placed on how do we grow sales and some of those efforts essentially have started to produce results overall. On the margin side or the ARPU going up, we've been able to improve the overall renewal rates within the business. Over the last 2 years, there has been a good ramp-up of percentage of customers renewing their subscription plus there have been minor updates or changes in the pricing and some bit of that has started to come into the overall ARPU that you get to see here.
Just to get a sense as to how we would -- our product will be priced compared to the competition? Any sense on the Busy side like Tally or Marg? So what will be the difference on that side and how much scope do you think we can see on the realizations?
So if we look at very like-to-like product comparisons so the difference -- and I'll benchmark this against Tally first, which is the market leader here. So we would be about 75% of the pricing that Tally typically offers and I'm just giving you a ballpark average on, let's say, the highest selling product that Tally would have versus highest selling product that Busy has. So that is how we are priced on the first-time license buy when you do in the first year. From the second year when you look at the renewal prices, we would be equal to or slightly higher in terms of the annual recurring prices at this point in time.
So do you see any scope for improvement on the realizations on a consistent basis for few more period or like since your -- especially on the renewal side if that is since you're already on part.
We think that there is scope for us to keep improving on both accounts of ARPU as well percentage.
We have a question from the chat box now from Mr. Pankul Sood. We have nearly INR 3,000 crores of cash plus invests on the book. Are we looking at any acquisitions? And if not, why not do a buyback or a bigger dividend?
I think we maintain a consistent position on our capital allocation policy. Out of the INR 3,000 crores, about INR 1,800 crores is -- INR 1,700 crores is deferred revenue and customer advances, which are our liability side. So that leaves us with about INR 1,100-odd crores. Out of the INR 1,100-odd crores, we typically maintain safety cash of about whatever INR 500 crores, INR 600 crores of safety cash. And then comes either we invest or acquire or we return back. So in the past also if you see over the last 4-year period or 5-year period, I think we have returned a fairly good amount of cash back to the shareholders, fairly good amount of the cash because year-on-year that number has changed based upon the buyback and the dividend. And this year also the Board has approved INR 20 special dividend and INR 30 final dividend, altogether about INR 50 per share dividend, which amounts for about INR 300-plus crores of dividend. So I think we are going as per our past performance and past stated policy as well as the same logic, either we invest or we return.
Next question is from the line of Nikhil Choudhary from Nuvama.
First question on supplier addition. Dinesh sir, we have again moved to net subscriber being positive after the last time we have seen decline. Is it fair to say that Q3 was anomaly and the subscriber addition trend will again go back to 1,000 to 3,000 between those ranges with ARPU growth of, let's say, high single digit? And do you maintain your guidance of collection growth being less than 10%, more or less mid-single to high single digit?
See, these are uncertain times. At 2,000, 3,000 plus/minus, I'm almost unable to really comment whether we'll be able to maintain plus 2,000 because every quarter there are some kind of seasonalities and we are doing lot of experiments to acquire this kind of customer, not to acquire this kind of customer. And in those experiments, there is possible mistakes and possible hiccups that are possible. So until and unless we really break the 5,000 barrier per quarter, I don't think we should be very fixated on plus 1,000 or plus 2,000 because if you really see for the entire year, we have been only able to do full of 2,000 only. So I'm really not confident to give you any answer as of now. I mean I'll take another few quarters when I can give you answer on that side. On the ARPU side, I think we are far more confident and we have been guiding that whatever collection growth or whatever revenue growth that we are getting and we continue to target around 10%. There you can say that quarter 2 was an anomaly where we were just 4%, 5%. But otherwise from the earlier 14%, 15% collection growth, I think we have denormalized or normalized to 9%, 10%; but that will continue to be our target until we fix the consistent customer growth and all of that is going to come from the ARPU only.
Got it, sir. Just a follow-up on the point you mentioned that we are now thinking on the type of supplier to acquire, right? Is the behavior of the suppliers is different from what we were acquiring earlier? While I understand the churn won't be visible now. But let's say in terms of behavior on the platform, how active they are, how responsive they are or any other internal metrics you are checking to differentiate between the newly acquired customer compared to what you were doing, let's say, 2, 3 quarters back?
Yes. I think supplier engagement on our platform continues to be almost in the best ever bracket. But whether -- so there is enough demand for good quality of buyers and good number of quantity of buyers. How we are able to deliver more and more of the same quality buyers because any good quality inquiry gets sold out on our platform in less than couple of minutes or couple of hours. So I think there is enough demand and enough market for good quality buyer. I think as soon as we crack the repeat buyer behavior, I think we should be good to go there.
Got it, sir. Second one, I just want to understand basic math behind it and sustainability of the Top 10% ARPU growth. This Top 10% ARPU growth had been, if I'm not wrong, more than 15% for quite a time with, let's say, unique business inquiry on an average being lower than the overall ARPU growth. Do you think this 15% plus type of ARPU growth at least for, let's say, gold and platinum is sustainable or you think there will be a ceding the way we have seen for, let's say, other category?
I mean it's a very future-looking answer that you're looking for. The past performance says that for the past 5 quarters we have been upwards of 10% ARPU growth for the Top 10%, whether it will be 15% or 16% I can't say. But if you remember, I gave you last year in the beginning of the year that we have now successfully implemented our variable pricing for the platinum customers, which works across the industries -- which differs across the industries and I think that has resulted into this consistent ARPU growth on the platinum customers. At that point of time, we did tell you that this should result into a multiyear 10% plus kind of an ARPU growth per platinum customer. But whether that will be 15% plus or not, I cannot really assure you. But for 10% plus, I think we are quite confident that for the next 1 year or so that should be upwards of 10% because we implemented the differential pricing sometimes around 1, 1.5 years back.
Next question is from the line of Amit Chandra from HDFC Securities.
Sir, my first question is on the collections growth that have slowed down. Obviously we have done slightly better in this quarter, but I'm saying from an overall year perspective, the collections have slowed down. So maybe you mentioned that obviously churn is one of the reasons for the slow growth in collections. But is it also because of the platinum and the gold customers are opting for more single year kind of renewals versus like multiyear earlier? And also if you can share what percentage of your Top 1 and Top 10 customers are going for single year versus like multiyear in this year versus last year?
So this single year and multiyear, you can go to that slide with deferred revenue being stand-alone deferred revenue. So that has not changed the 12 months. What gets recognized in 12 months and what gets recognized after 12 months remains consistent at 63%, 64% which means there's no change in the single year versus multiyear.
So saying that the number of customers who were opting for a 3 year versus 1 year remains same. There is no change in that, right?
Yes. As per financials also, that is proven that there is no change.
Okay. And so in terms of the mismatch between the ARPU growth versus the collections growth so obviously the ARPU growth is being fueled by the Top 1 and Top 10 customers. So if there is value like being derived from the platform, then what's the reason that it's not getting reflected in terms of the collections? Obviously churn is 1 reason, but churn now seems to be a permanent problem. So we have not seen any like progress on that front. So can we assume that this 8% to 10% growth is the new normal?
I refuse to assume that. I will continue to work my way back to the growth period. As I said, currently if you see all of that 10% growth is coming from ARPU because there is almost 0% growth coming from customer addition. And can we bring pure ARPU-led growth to 15%? Yes. Can we sustain that for a very long period? No. If we fix the product churn, can we sustain a 20% growth for a very long period? Yes, we have seen that in the past 7, 8, 9 years. Last 10 years we have grown from 50,000 customers to 225,000 customers or so. So in a media subscription business, I think our media advertising business, the number of customers and the ARPU goes hand in hand. If you really see the top heavy media like television, et cetera, even they will stagnate if there is not enough number of customers.
But if the classified platform, which becomes very, very small like CraigsList or something, even there the revenue is stagnate. So the healthier the mix is, we believe a very healthy mix of revenue and customer growth is -- I mean ARPU and customer growth is 10% and 10%. Whether you can do 15% plus 10% or 10% plus 15%, but I think 10% and 10% is a great mix that can give you a multiyear growth or a multidecade growth. So we will continue to try and achieve that. It is taking time. But every product market fit with every 5-year period in the current changing times of technology and customer expectation, I think the organization which are able to come back and fix that timely, they can do a multidecade growth. And we believe that we have done that for the last 30 years and will continue to do that over the next 30 years.
Okay. And in terms of the factors which are driving the ARPU growth, obviously one of the factors is on providing more premium services, pricing hikes and obviously we have also lowered the number of RFQs per supplier or we have increased the quality of RFQs. So how this change of strategy is actually being taken by the customers? And is it that we are prioritizing more to our higher paying suppliers to a larger extent, which is not in line with the strategy of improving our churn at the lower end. So how to maintain that balance so that is the question. So obviously you answered that.
I got it. So if you see, we are a 2-way marketplace. If you go to our 2-way marketplace discovery platform, we are a 2-way marketplace, okay? One-way marketplace where the buyers come and discover the suppliers. You are right, always the customers who pay higher, they are on the top. Okay? So the traditional way of the marketplace is the higher you pay, the higher share of the buyer visibility you get. However, there's the other side of the marketplace, which is the supplier-led RFQ consumption marketplace. That's an equal opportunity marketplace by in terms of the quality of the inquiry because the same quality of the inquiries are available to you as a silver customer or you as a platinum customer at the same time. There is no differentiation there. The only differentiation is in the number of the buy leads that you can access as a silver customer or as a platinum customer. So half of the marketplace is equal opportunity marketplace. Half of the marketplace is equal opportunity.
Now in fact some of the silver customers, which are self users where the proprietor himself is using the platform, we find that many times he is at a more advantageous situation because he himself handles all the inquiries and he has the mobile app and he gets the immediate notification. He is able to compete better with some of the larger suppliers. However, some of the larger suppliers actually have 2, 3 dedicated resources working on IndiaMART and sometimes they have auto refresher where somebody keep looking at their screen to make sure that no important buyer is missed from their side. So from our side, we don't differentiate. It is the supplier's ability and supplier's trust into the platform that he himself puts more effort or more money to whether deal it equally by himself or equally by deploying more permanent resource to handle IndiaMART inquiry. We don't differentiate. We only differentiate based upon the buyer side marketplace or seller side marketplace.
So we have a question from the chat box. The question is from Mr. Ankur Pant. Have we taken any pricing actions in quarter 4?
So on the silver side, we haven't taken any action. In fact if you really see our silver pricing from 2019, only time it went down was during the 2021 COVID time and then it went back to the same price. On the gold and platinum, we continue to take about 10%-odd hike every year or so, which is the normal thing that we typically do in the month of January or so. And that similar hikes are -- and the hikes that happen are no longer applied on the same day because some of the renewals have already been sent, some of the proposals have already been sent. So it takes care of as and when somebody's renewal will come and that is when new things will happen. So these are just lower injection of prices -- price hikes that we do about 10%-odd every year that continues to happen.
Next question is from the line of Abhishek Banerjee from ICICI Securities.
If we look at the traffic number so from FY '22 onwards till now, we would see a roughly 1% CAGR in terms of traffic growth, right? And if you kind of try to correlate that with the number of your -- I mean when you are paying suppliers, numbers also kind of started reducing the gross numbers that is from FY '23. So is it kind of time that we start advertising a little more to get the traffic higher and probably that can lead to some positive flywheel somewhere?
Yes. So we are aligned on that side. The only thing is that in the first root cause analysis, we found certain things to be fixed and which we found that they are anyway needs to be fixed, which we have tried to fix. As I said, this particular quarter we are doing multiple experiments and pilots on the online advertising as well as on the video side of the advertising, on affiliate advertising. And so this particular quarter I don't think there is going to be a significant impact either on the financials on the bottom line side or on the top line side. If there are any of those experiments found unit economics positive and worthy of scaling up, then we will come back to you and tell you about scaling up.
Got it. So any -- given we are at all-time high margins, what kind of -- how many basis points of revenues would you be willing to invest into advertising?
Come again, Abhishek, please.
So I mean what would be the quantum of advertising that you could roughly look at?
I mean depends. I think last time because we are very new to advertising again, I mean last time we did was 2016 and this is now 2025 so I think it's been 9 years since we have advertised. At that time we used to spend about INR 40 odd crores on an annual budget. About INR 15 crores into 3x. Things have changed dramatically, but I don't think they would have changed so dramatically that we will end up spending INR 300 odd crores or something. I think that INR 40 odd crores would have become maybe INR 80 odd crores or something like that. Beyond that, I don't have any idea as of now. So even if you take anywhere between INR 50 crores, INR 60 odd crores to INR 90 crores, INR 100 odd crores; it should on an annual basis should be around 5 basis point maybe.
Got it. So again just [indiscernible] on this one. So when you were last advertising say in FY '16, it was a very different world. Now you're talking about the performance marketing. Do we have the kind of team in place that can really deliver on these new digital platforms? So any thoughts on that, sir? Are you investing there?
That is why I'm saying we are doing pilots. So there are teams being assigned, new people being hired, existing people being trained for this new thing. We never had teams for mobile, but we developed teams for mobile. We never had teams for artificial intelligence, but we developed teams for artificial intelligence. We never had teams for accounting, we developed teams for accounting. So we develop and align resources as and when things are required.
Understood. So now if I just look at last line on this slide, which is the employee count. So even this year we have grown employee count by almost 13%. While I understand some of it will be to support these new initiatives, but I'm sure the bulk of it is still for servicing clients, right? Now given that the number of clients has not really gone up, are we at some sort of -- what is the outlook?
Abhishek, I mean this is only shifting of the outsourced sales cost to the on-role movement which started last year JFM, which was to be concluded this particular year in -- few every quarter. All of it has been concluded and I think now we will be returning back to the like-to-like members. And if there was any, if you really add the employee cost plus outsourced sales cost, actually we are 0 impact on cost in the last entire 1 year. So while this number looks like 13% up, there is a 0 impact on cost. Manpower cost plus outsourced sales cost put together remains same as last year.
Understood, sir. But what is the outlook going ahead? Do you think we can manage this at a mid-single-digit kind of a CAGR for the next 1 or 2 years at least we have no requisite visibility of revenue now?
No, I think because this 1 full year, I think we have had almost 0 expense growth. Next year within 6 months or so, I think expense will start to increase and even number of people will start to increase because as we crack the product market fit, we will go back to growth mode and then we will need good people again. People think we are so small a company that people think cannot be filled all the time. We go in expansion and consolidation kind of a mode. In FY '22, if you see FY '22-'23, we suddenly grew from 2,700 employees to 4,700 employees. So I guess this is the nature of our business. We are such a small company, we can't manage yet the growth and consolidation together. So we continue to focus on growth and then consolidate and then focus on growth and then consolidate until we become large enough to do both at the same time.
Understood. So when you were guiding for 35-odd percent margins, you are kind of building this also in.
Yes. That's why I said the long-term sustainable margins are 33% to 35%. And since these EBITDA margins are quite a bit of depends on revenue growth and collection growth and seasonality and that is why even I have to look at the leading indicators. I look at the collection and cash from operation and margin of the cash from operation. So if you go to cash from operation margin slide -- there is a graph cash from operation margin slide. So if you look at this slide, this will give you much more stable way of this 37%, 38% margin. This is the leading indicator and that will remain. Now we can take somebody else's question.
Okay. So I have a question from the chat box. The question is from Mr. Pratik Kothari. Have we already taken major part of the actions to bring down churn and we will wait and watch on how does it play out or more is left to be done on that?
I think 60% or 66% of what we have found till date to be changed has been done and about 33% is still work in progress. Having said that, as we work deeper into it, we find more to do actions. So I think by the time we are 80% or so, I think we will discover another 20% to do. So it's never work fully complete. But currently we feel that we are somewhere around 60% complete. We still have at least some 3, 4 months of work when we can say that now we are 80/20.
Thank you, ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. Dinesh Agarwal for closing comments. Over to you, sir.
Thank you, everybody, for listening patiently to us. And I really admire that you guys are trying to understand our business model and complicated business model. Hopefully, we will come back with the flying color soon. In case you have any queries or comments that are left, you can always reach out to our Investor Relationship team. Thank you and have a good day and a good weekend.
Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you for joining us and you may now disconnect your lines.