Earlier this week, Matrimony.com,which runs online match-making portals such as Bharatmatrimony.com, said it is looking to raise Rs 350 crore via an initial public offering (IPO), reports Reuters. The Chennai-based company has filed its papers for an IPO with the Securities and Exchange Board of India. Here is a quick lowdown of what we could find about the company from its draft red herring prospectus (DRHP). Download here.
Matrimony has sustained losses in four of the last five fiscal years
The company has posted losses of Rs 1.67 crore in FY 11, Rs 3.79 crore in FY12, Rs 9.16 crore in FY14 and Rs 2.93 crore in FY15. For the fiscal year ended March 2013, Matrimony posted a profit of Rs 10.41 crore. The company mentions that the losses in fiscal 2014 and 2015 resulted from the impact of exceptional expenses incurred in defending Matrimony, its promoter and certain investors in connection with the Desai et al. v. Infonauts, Inc.,et. al litigation. The legal costs in FY 15 were Rs 14.18 crore and Rs 18.90 crore in FY14.
Matrimony.com reported revenues of Rs 242.85 crore for the FY15. Majority of the company’s revenues came from its match making services (Rs 231.99 crore) followed by marriage services (Rs 7.35 crore) and sale of products (Rs 2.07 crore). A look at the company’s revenues over the last five years:
Number of users and average transaction value
– In fiscal 2015, 2.57 million free profiles were registered through Matrimony’s websites, mobile sites and mobile apps and the company had 647,000 paid subscriptions. The company had 568,000 paid subscriptions in fiscal 2013 and 571,000 in fiscal 2014.
– As of March 31, 2015, Matrimony has a database comprising 2.65 million active profiles. The company defines active profiles profiles that have been published or logged in at least once during the prior 180-day period.
– The DRHP also mentions 20.89 million profiles were added to its database since January 2006.
– Average transaction value at the websites were Rs 3,325, Rs 3,551 and Rs 3,655 for fiscal 2013, fiscal 2014 and fiscal 2015 respectively.
Mobile app install and traffic
As of March 11, 2015, the BharatMatrimony Android mobile app achieved one million installs according to www.androidrank.org. A significant number of its members currently utilize our mobile sites and mobile apps for online matchmaking.
According to the Key Business Metrics Report, in June 2015, 67.00% of profile views, 55.00% of “Express Interest” messages, 35.00% of personalized messages sent and received and 38.00% of phone numbers were viewed on BharatMatrimony portals were on mobile sites and mobile apps. Registrations through mobile sites and mobile apps accounted for 44.00% of the total number of free profiles registered on its database.
Number of employees and retail centres
Matrimony’s head count has grown to 4,106 employees as of March 2015 from 3,629 employees in March 2013. As of March 31, 2015, Matrimony has 193 retail centers located across India representing regional markets and service delivery centers in 12 cities with a number of service executives who support its doorstep collection network. The company also mentions that in the past it has engaged with third party collection agents for doorstep collection of subscription amounts from customers in certain cities.
Matrimony mentions that it has spent 21.93% of its consolidated revenue on advertisement and business promotions in fiscal 2015. The number was 24.9% and 23.22% in fiscal 2013 and fiscal 2104 respectively. In absolute terms the company has spent Rs 46.240 crore, Rs 48.14 crore and Rs 53.25 crore during Fiscals 2013, 2014 and 2015, respectively.
“We will continue to spend a significant portion of our revenue on promotional and marketing activities. We believe that such efforts will enhance the visibility of our brands, drive registration levels and result in increased conversion to paid subscriptions, which will consequently enable us to retain our leading position in the online matchmaking services market in India,” the company added.
Revenue seasonality: low period in “inauspicious” months
Matrimony says that the company experiences seasonal fluctuations in the second quarter of every year.
Our business experiences seasonal fluctuations. We tend to experience lower revenue from our business during the second quarter of each year, which are considered inauspicious by our members. As a result, subscription revenues during such quarter would register a slight dip which could in turn affect the price of our Equity Shares, and quarter-to-quarter comparisons of our results may not be meaningful.
Majority of the shares (79.63%) at the company are held by Matrimony CEO Murugavel Janakiraman followed by Bessemer India Capital holdings (9.89%), Mayfield Mauritius (5.19%) and CMDB II (2.92%). The company mentions Canaan VII Mauritius sold its investment in the company and same was taken up by CMDB II.
Objects of the issue
The company intends to raise Rs 350 crore from the IPO and will deploy the funds for the following reasons:
- Advertising and business promotion activities
- Purchase and development of office premises in Chennai for use by our product development team
- Repayment of our overdraft facilities
- Procurement of hardware and software requirements for a centrally controlled contact centre
- General corporate purposes
The company has also given a breakdown of how it will use the net proceeds: