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Ladies and gentlemen, good day, and welcome to matrimony.com's Q3 FY 2020 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] I now hand the conference over to Mr. Abhisek Banerjee from ICICI Securities. Thank you. Over to you, sir.
On behalf of ICICI Securities, [indiscernible] you to the Q3 FY '20 results conference call of matrimony.com Limited. We have with us from the management, Mr. Murugavel Janakiraman, who's the Chairman and Managing Director; and Mr. Sushanth Pai, Regan Chief Financial Officer. We will have a brief present-- from management followed by a question and answer session. Over to you, sir, for your opening comments.
Thank you, Abhisek Banerjee. Good afternoon, everyone. All of you are continuing to stay an -- in quarter 3, on a consolidated basis, we are should building at INR 111.4 crores, the growth of 2.1% postage quarter-over-quarter and 38% year-over-year. Revenues are INR 110.4 crores, a decline of 0.9% quarter-over-quarter and the growth of 1.7% year-on-year. The lower revenue per an account of subdued billing in quarter 2. [indiscernible] of the matchmaking business in quarter 3 are as follows. -- building at INR 108.3 crores, a growth of 1.6% quarter-over-quarter and 2.1% year-on-year. Revenue at INR 12.8 crores decano 4.2% quarter-over-quarter and a growth of 0.5% year-on-year. We added 2.3 class-based subscriptions during the quarter, a decline of 1.7% quarter-over-quarter and a growth of 10.7% year-on-year. at for the matchmaking business increased 3.2% quarter-over-quarter and between 1.8% year-on-year, in line with our customer appreciation strategy. We continue to target the impact we create for our customers. We rapidly state that we have created about 20,628 cease in quarter 3. Now coming to the Maria Services business, building there INR 3.1 crores, a growth of 22.2% quarter-over-quarter, and under 9% year-on-year. Revenue was INR 2 crore, a growth of 9.4% quarter-over-quarter and 97.4% year-on-year. We are growing on a steady basis for the last 6 quarters in a row, and integrated Caase been progressing that. Lost in the quarter was INR 3.1 crores compared to INR 3.3 crores in the previous quarter. On the binding and revenue outlook for the quarter 4, which as follows: Mataki building growth in quarter 4 will be better than the growth rate voting services we have got a credit growth to company and the last of becomes than the quarter 3. Let me pass on to Sushanth to comment on the key pro.
Thanks, Maruga. Our EBITDA margin for the Match mounting business during Q3 is at 17.8% as compared to 23.1% in quarter 2 and 24.5% a year ago. Marketing expenses are at INR 45.2 crores as compared to INR 44.4 crores in quarter 2 and INR 41.6 crores a year ago. The main reason for the margin decline is due to the subdued buildings of Q2 that impacted the revenue of Q3. Excluding marketing expenses, our margins in matchmaking are at 60%. In other income in this quarter, it includes the profit of INR 5.8 crores on sale of land. So, in this quarter, we completed the sale of land, and that has been accounted from this does. Tax rate in the quarter is up 14.8% as compared to 14.3% in quarter 2. Profit after tax is at INR 11.6 crores is flattish quarter-on-quarter and year-on-year. Share of loss from ASTRO, which is our associate company, is at INR 1.5 lakhs. Net profit margin has been stable at 10% plus level for the last 5 quarters. Our operating cash generation has been good at about INR 16 crores for the quarter, signifying operating cash flow conversion from EBITDA at 0.85 billion This, along with the sale of land, has taken our cash balance to INR 309 crores. Return on capital employed annualized for the quarter is at 18.4%. On the outlook for Q4 margins, we expect matchmaking EBITDA to bounce back to the levels of quarter 4 of FY '22, and we expect quarter port to be at the same levels of quarter 3. Just one point to note that even though we had a onetime profit of sale of land in quarter 3 and even though we will not have that onetime profit in quarter 4, we expect the quarter 4 PAT to come back or bounce back and to be at the same level of quarter 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. We are now open for Q&A.
We will now begin the question-and-answer session and the touch on telephone. [Operator Instructions] Ladies and gentlemen, we will wait for a moment when the question queue assembles. The first question is from the line of Prakash Kapadia from Anived Portfolio Managers.
Yes. A couple of questions from my end. If I look at our ad spend over a slightly longer-term period, pre-covid for every INR 1 of ad spend, we were generating around INR 4.5 of revenues. Now that has come down to INR 2.5, and this quarter at spends are more than 40%. So, what has changed so significantly that ad spend as a percentage of revenues continues to grow from us? And despite these ad spend being elevated growth in terms of overall sales or customers is not coming. And as we step into FY '24, what are the budgets for ad spend? And lastly, what is the rationale for a proposal to utilize the sale of land proceeds on expense and marketing? Those were my 3 questions.
On the Yes. So, if you recollect on the sale of plan, we have made a gain of about INR 5.8 crores, and the total collection or other profit sale consideration is INR 49.41 crores. So, we have put this into a separate bank account as approved by the Board of Directors and shareholders of the company. And this will be monitored by a monitoring agency, and this amount will be spent towards marketing, and it has to be utilized within a period of 1 year. So, whatever is a regular marketing expenses, this amount will be used to a start. –
Refer to other questions, Mr. Prakash Kapadia. One is that the marketing spend. Yes, it's at an elevated level. We are doing the coveting because we have optimized the market extent because there is uncertainty and the whole industry -- the marketing spend also has come down. has gone back to the IT level. So today, on a time the marketing is one of our large costs. And if you look at the PD marketing or our margins still at a healthy 60 percentage. For the next year, we expect that there's an outlook is that the marketing spend may be at the similar level. However, you expect that the business to bounce start to grow to bond stack that will help our EBITDA margin or building and everything to do move up actually. So the thing is that the current dollar market is then we expect at this sometime to continue the current net value in event.
And these ad spend is coming on the that of no change in competitive intensity. That is why we think we'll remain same, and we are expecting some bit of leverage in terms of some additional sales growth?
No, we expect definitely sales growth, it's happening we expect that to get that up. But even at the current level of marketing spend, I talked about that will not impact low term and not in actual value terms. So, we set a similar level of the center companies because of the increase in billing and the income, both the marketing you compared to the building and revenue to improve. And also, it will continue to margin. That's a lower profit margin at the current dollar market has been netted because of the [ into ] of commodities and that the market expander player crossing to send out more than what is it. First, I want to ask, so the percentage of revenues in the last 5 quarters, it's been in a range downstream. It's about 38% to 40% of our revenues. -- compared to Core it's been stable observed... Okay. Okay.
And in terms of the incremental ad spend, you mentioned it's been in the range of 30% to 40% last 5 quarters. But if I look at incremental revenue on -- or your incremental benefit translating to us in terms of top line, that is actually not really happening. So my question was more from that perspective. What is driving this increase in ad spend? Because at the end, you call it customer acquisition cost or you try and call it ad spends for building the business or competitive intensity. All of this has to translate to higher revenues for us. So if you -- this is going to be the kind of revenue growth, which you are seeing, despite the elevated ad spends, then don't we think we should relook at the kind of expense we are doing to get incremental growth is what I was trying to understand, what is that...
On the italics we look at Magadan is on the 2-year replacement. And so we have to operate a certain level of visibility and compared to what other players are doing. So it's not for the increased combination the thing is coming that can be much less than what we are spending. So they're kind of a bit the marketing of marketing. So Samat -- but marketing where there are most of the budget being spent because currently is operating at a level much more than what we call it is again state product and because of the -- looking at it long term, and we could have a market expense because while sharpening if you record it and reduce also the take some long-term implications. [indiscernible] likes to continue to definitely, as a stand-alone basis, we may not be better on marketing. But when you see the other players are pending better money, and we think that will come efficient level of market in okay. So yes, when it tomorrow, [indiscernible] the level of tit reduces, then decile to reduce or the 2 market expense. So I don't know when that [ onhand ] with dollar marketing, we think it's necessary in our portfolio.
Understood. I'll join back or 5 more questions.
The next question is from the line of Sonar from Prescient Capital.
Order? Yes, that's a... Sir, I wanted to understand what on the ground are you seeing, which helps you some signals, which basically help you believe that the demand is on in that? That's question number one. And what is the growth outlook for top line or any guidance for the next financial year? Some ballpark there would be helpful.
One is that at a post-covid we've seen that there's sort of some drop in the profile appreciation. We see that now that the profits have come back to sort of the aloof acquisition what we used to have. And also based on the value standalone sales of the brow we've seen out the trend in January and February. So began the end what we have seen up to over and that is a confidence that we are definitely going to back on growth. The outlook for next year on next year will be definitely much better than we are what you are going through because not only that profits are coming back, but we're not taking some tests, and we see the early terms of those yielding results. So we believe the next year growth will be definitely much better there. Probably be a much better question to talk about the next year, maybe during the next analyst call. But however, we definitely see that the next year be ugly, much better than the current year.
Understand. And sir, could you share what is your current customer acquisition cost online, off-line combined, if at all, there is a convention this...
Yes. Now in got [indiscernible] were organic. And so we can't put that cost to it. And again, if we're looking at the asbestos is branding appreciation. So we can't put the cost depreciation on the brand building and on the TV market spend. Tier cost boost on that. But again, we don't pollute out of our competitors on the...
Okay. So is it for an analyst community, is it fair for us to just divide your marketing, the entire marketing cost, you're reporting your P&L by the number of customers you're acquiring in that particular quarter. And that should be the cost of acquisition for that particular period that...
So we're looking at Major in a number of the number of profile getting accrued on a quarterly basis. And [indiscernible] people simply taking our brand name and including our profile but on the -- I did maturities place to typically brands in a way for a large part of the market, it's a standing at category. So, the way the brand is very strong. Matarese are not investing money. The marketing is something it's not -- you can't codefendant brand will be the brand is over time we're considering us on the brand. So that is not just put the money and we're going to get everything I'm getting on our containing in that is happening at that quarter. If we undergo the market a complete turn of a month. there is some impact, the related impact. But we are doing this because of the long-term interesting amount. So yes, if you turn out the entire market, it gets. In fact, there is a minimum impact in beta. So that way, it's not everything at this quarter in metastatic quarter -- it's a long-term brand will be and that it cannot uncertainty because of the clear is. But at digital, some spending recurred because we ensure that we are getting on the card. We should be bad and a other competitors coming on the top of the key ways. -- then we did call out and at too.
I understand that... That's it from my...
The next question is from the line of Anurag Purohit Anived PMS.
So my question is regarding the outlook given for fourth quarter. You mentioned that both EBITDA margin would be similar to what Q4 was last year and that would be similar to what Q3 was even after including the onetime gains. So just trying to understand where the positive leverage would come in primarily because the billings are indicating to a kind of flat quarter-on-quarter for 4Q. So, would the year leverage in OpEx and from where it would be?
So basically, what we mentioned was that if you look at the last quarter 4 on maximal margin, it's around not counting quarter 22 plus 5% Q3 or counting on is including -- you're talking about yes, sorry, that is true that over the 10 amino Obviously, we are moving up to the year level, which is 2 plus 3 customers. That's the level of the margin growth moved back in quarter 4. But without having the see the NAND sale does not affect matchmaking. It only affects the enterprise level EBITDA. So what we have set a guidance is, our matchmaking will come back to the quarter 4 levels, which was approximately INR 24.8 crores last year, which is 22.7% approximately. So the land sale does not affect us. But what is driving that is, if you just refresh what we told earlier is that in quarter 2, the building was lower for us, and that had an impact on revenue in However, what is happening is based on the quarter 3 achievement as well as the quarter 4 building estimates, we believe the revenue will be much better, which affects the P&L in quarter 4. So that is going to help the margin overall. But -- so basically, to go in to matchmaking is going to improve, that will negate that onetime impact of the long sale.
Okay. So already from January and whatever fact we have seen, that gives us a certain amount of confidence on revenue far Yes. And second on the subscription and the ATV. I think subscription has consistently shown a good growth, double-digit growth, if I were to take a -- take the 9-month figure. But ATV on Y-o-Y basis has been quite down around 7% or so. Any particular reason for this? Is it purely or competitive intention?
It's a combination of the reasons. One is that we have obviously second market. We're offering a discounted price. And we also have the new offerings like Jodi, which is at a much lower price. There's a combination of these faster on the ATV can. We expect that the item be at this level or to quote on a well, but we expect that to pay subscription, the continued growth at double digit. -- because we are focusing on the customer acquisition strategy, and so that, that would give the patent that's the focus. While that may come at some bit of drop in Italy. We think that will help us to obtain our growth in certain markets. Sure.
Thank you and all the rest.
We have the next question from the line of Shyam Sundari from MICA...
My question is about the revenue growth. So while we have seen that mantra money has been doing quite well in the southern part of the country, I think Malala and all these places, Kerala, Tamela and other cases, are you seeing any growth in the markets where Matrimony is relatively weaker as compared to the competition, it's most lily the northern be -- and also, just one other question. How is Jodie doing as a business? There's no mention of Jodie the call. So like how is it contributing to the expenses or [ revenuing ] Yes, these are my 2 questions.
So in terms of -- it's a main definitely, we have a very strong player in South not only cloud, which we are also a strong player in our East and also to an extent, we are a strong player in oversteering market where we seem to be sort of fighting the amount of other players that [ can not ] in okay, that's why we are not to be done. So that's a long-term strategy as far as well. So with respect to -- I mean, the level of dominant story from our voice market to market. reportorial small part of business, and we titanate not giving the break over at entity, which is in a very early stage, and we are continue to figure out it's a new complete new segment, trying to figure out trying to maximize. Sustain, nothing specific to talk about. And I say it's a small product difference. We continue to sit and continue to export various pie to grow that times. So -- but again, as I said of our competitive normally don't do a breakup of into...
Sure. Just coming back to my first question. So when you're saying that West East is a place that you're saying that is something that is being kind of you're trying to tackle some issues and trying to grow. Has there been any inroads over the last few months or quarters that is something that can we look forward to?
Yes. Last, again, we have not made any significant progress. And while we've been operating at a similar level because when we look at the last couple of quarters and overall BRO set of talent because a before, we have some challenge in the profile appreciate and we see that now that's coming back to our yearly level, we expect now things to get better. But the way where you stand as far as we're looking at were stand, we definitely see things are bouncing back. And I think keeping the marketing cost at the level and with the revenue, we see that uptick is happening, we see that we'll be able to grow in other markets. Again, it relates to because it's now that you want to see customer growth, we're not going to significantly alter the patient in on aftermarket. Again, we don't have the final company interest the competitor as well. So that being the case, overall, we are growing across the market, but it's not to the level where we can say that we are making significant inroads in the math and orders. The cannot definitely long term. There nothing could be significantly savior nothing significant happened in the last couple of quarters, is more of a similar level of routes and markets that the recent market artist compared to what it was 2 quarters... Okay.
[Operator Instructions] The next question is from the line of Sohail Rajani from S.B. Rajani.
Very good afternoon. So there have been -- the contract for which you are confident about the aiming, right? But what are the other initiatives you are taking for the next financial year. Are there any specific cities you are taking or something which you can put a bit on...
Sorry, I think line was not clear. It could please repeat it again because I think at least some poor corn do that.
So what I would like to understand is what are the initiatives which we are taking the days because we are confident about quarter 4. Are there any other initiatives which we are taking as a company for financial year '24 -- any specific things which you could put a light on...
Yes, Yes, -- so one is that, as I said, the profile is one of the things we see that the profits coming back to the other level, and that's also been a to group. But also, we continue to work on with our strategies to tell the conversions. So all the 2 are seem to be sent. So it's more of a product improvement and the cost improvement combined a lot of profit appreciation seem to getting better. These are factors that are helping us to grow in the current quarter. And in terms of next year, we are definitely a plan and that probably we kind of better pushing during the next call...
Thank you. The next question is from the line of Deep from B&K Securities.
Sir, my questions were around our international plan. So those markets don't have a lot of competition is what I understand. So is there any plan to stay up those investments significantly given that the competitive intensity is not reducing in the Indian market. So if we could explain a bit more on what are our plans...
In terms of your intent market, the inter market is quite right and there's multiple countries -- and so it's -- while the other important markets. Again, we continue to figure out how to grow various markets, including carmaker as well. But in the market in terms of the user base that is base is not a growing substantially now. So the way it's more of the market where there is a good number of the Indians across the world. Our that market is not growing at tubes. Also that the commentator market is a multiple countries, multiple things and the other one homogeneous to some other countries become quite challenging to report Indian separate. But age, there are things we do to rest in our audience. We continue to figure out and continue to work on the way to record more Indian loiter. And so I would say that meantime, that's not a market we see a significant growth at this point of time. So that says impact market to its important market. We'll continue to work on the way to get that contest market. But I would say that it's not something like kind of we can do something quickly log to going from the market area. Paramont India, the avenues to toward, which is some of the market with a colocate from U.S. and that there were so many countries. And so there are some challenges as well. So it's not this market in a new effective -- we are after people at the newer concertinaed auto shift. So that is being let difficult over. We continue to progress on the market, but whether we'll ever grow substantially the biomarket strategy. At this point in time, it doesn't appear so, but however, we continue to, as I told it's one of the important market for us. The market will continue to work on the way to reach more in. But I wouldn't say that this part that we are something which we use to make significant progress in that market. So that flat detailed estimation. But –
So would it be able to give any KPIs or any numbers around those markets, maybe investments in the profiles that we have or it's too premature for those [ instations ]?
Yes. I think in normally, we don't give a breakup adoraphy-wise, and that's why I would refer from getting a deeper on those parts. That's what...
Sir, the second question is -- so if you can give maybe not numbers but some qualitative idea on how was the -- animation segment doing for us? Do we -- are we seeing a slowdown there? Because if I understand right, we don't have a lot of competition there relative to the competition we have in our 3 months or 6 months plans, there maximal somewhat of a 4K. So is there a slowdown there? What you are seeing right now, which is heading to the benign numbers. If it just gives some idea of segmental growth, maybe just what they would still be helpful...
The one thing that lies smart part of our business. So it's because we are asking about, say, when people are top of the it's a very small buses, but obviously, the ARPU is very good in that segment. However, there are some challenges it. One of our challenges with that, obviously, unit, we get a lot of selling number to endo. So let retain for is a think of getting adeno. -- working on some plans and some strategies. So while as I told you, it's equipment doesn't be its high ARPU, but the number of users -- a limited number of users all the calendar like not having secretion urate number we try to figure out how to get more in numbers. So we are -- there are plans to grow that market. But I mean that that's something that we are working on it. But in terms of overall unit contribution, small for other business.
Right, sir. This is the way you can about...
[Operator Instructions] The next question is from the line of Heenal Gada from ICICI Securities.
So just one question on your capital allocation. Like are we looking to maybe return any money to the shareholders given that we have such robust cash flows or maybe anything in the inorganic space. Sushanth, sir.
We just concluded a buyback a couple of months back, and we have written INR 25 crores back to the shareholders. And we also paid a increase in dividend last year as well -- so in line with the capital allocation policy, whatever is relevant and whatever call the board takes, we will do that as whatever is required from that perspective. So that's why -- so recently, giving back to shareholders was taken care of in the last year. In terms of organic, we continue to evaluate any opportunities that come by. Last year, more than a year back, we did an acquisition called Sabisa, which is in the Maric services space. Anything that comes that is interesting, we'll continue to evaluate...
Right. So in the inorganic space, are we like kind of looking at it actively? Or is that just something that's there on the back of the mind and we're just kind of looking at it as and when some opportunity comes in?
There is -- as anything coming, we will look at it.
The next question is from the line of Manish from XYZ Associates.
You spoke about how the focus will be on growing the customer base, customer acquisition and driving conversions. So I'm guessing in the process, we will be accounting. So just wanted to understand how ARPU has been trending over the last couple of quarters? And how do you foresee it playing out in the quarters to come.
We see the ARPU as we sort of coming down because there's other customer acquisition strategy. We expect that trend to be at the similar level maybe on slate come down as well. So we are working on to get the most into an to pay the test. So the way that the ARPU may come to now... Okay. Industry... As some very difficult to predict on these things because we have a music customers multiple the brand. So that is a product that the focus at is being that out against more tango. So even that has an impact on ARPU. So we think that may be happy to do. However, it cannot do that now and credit the next quarter...
Sure. And I understand that you might be focusing on slightly weaker markets that ARPUs might come. How are the ARPU sort of trending in your stronger market on?
Yes, Pandamart will continue to operate at Rose...
Okay. Okay. Understood. Thank you. Thank you so much...
At this time – [Operator Instructions] Yes.
If there are no more questions, we can end the call.
Sure. There are no further questions. I now hand the conference to the management for closing comments. Over to you, sir.
Thank you. Thank you, everyone, for joining this call. If you have any questions, please write to us, and we'll be happy to interpret it. Thank you, ICICI Securities, and thanks for you one joining the call. I look forward to your the next call. Thank you so much.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.