B2B marketplace IndiaMART reported a 9% YoY growth in traffic in Q3FY20, going from 173 million visitors in Q3FY19 to 188 million in Q3FY20. However, it saw a 4% QoQ decline partly due to slowdown in the economy. The company has also reported a 23% YoY growth in total revenue from operations, taking it to Rs 165 crore from Rs 134 crore in Q3FY19 due to growth in paid subscribers and higher realisation from existing customers.

The Numbers

Operational Highlights

  • Traffic on website and mobile app: 188 million; A 9% YoY growth from 173 million in Q3FY19, but a 4% QoQ decline from 196 million in Q2FY20
    • Traffic from mobile website and app: 77%
  • Business enquiries: 112 million, a 6% YoY decline from 120 million in Q3FY19, and an 8.94% QoQ decline from 123 million in Q2FY20
  • Average business enquiries: 37 million/month and 1 million/day; 19 million unique enquiries/quarter
    • During the earnings call, MD and CEO Dinesh Agarwal said that enquiries have been “pretty much constant” in the last 3-4 quarters, but “there could be a marginal internet shutdown related or a holiday related effect, however, those are very smaller, but at a 90-day average I do not think they matter much”. Between FY16 and FY19, their buyer base, traffic and business enquiries grew at a rate of 80-100%.
  • Registered buyers: 98 million; a 26% YoY growth from 78 million buyers in Q3FY19, and a 5.37% QoQ growth from 93 million in Q2FY20
    • 54% of these are repeat buyers, 36% of the suppliers are also buyers.
  • Paying subscription suppliers: 142,000; s 15% YoY growth from 124,000 in Q3FY19, and a 3.64% QoQ from 137,000 in Q2FY20.
  • Indian supplier storefronts: 5.9 million; an 8% YoY growth from 5.4 million in Q3FY19, and a 3.5% QoQ growth from 5.7 million in Q2FY20
Number of registered buyers IndiaMart- screenshot

The number of registered buyers. Source: IndiaMART

Financial Highlights

  • Total Income: Rs 181 crore; a 23% YoY growth from Rs 147 crore in Q3FY19, and a 3% QoQ growth from Rs 177 crore in Q2FY20
  • Revenue from operations: Rs 165 crore; a 23% YoY growth from Rs 134 crore in Q3FY19, and a 5% QoQ growth from Rs 157 crore in Q2FY20
  • Annualised revenue per paying subscriber: Rs 45,300; 7% YoY growth from Rs 42,300 in Q3FY19, and a 1.6% QoQ growth from Rs 44,600 in Q2FY20
    • The figures are calculated by dividing the revenue from operations of the period by the number of paying subscription suppliers at the end of the period end
  • Approximately 40% of revenue was contributed by the top 10% of paying subscription suppliers.
  • Net profit: Rs 62 crore; a 124% YoY growth from Rs 28 crore in Q3FY19, and a 615% QoQ growth from 9 crore in Q2FY20
  • Approximately 97% of revenue came from the IndiaMart standalone business. A more detailed distribution of revenue from operations is given in the chart below:

Source: IndiaMART

Weak economy led to lower customer additions, market demand: IndiaMART’s net customer additions have been “slightly” lower than the long term average of 5,000+ customers per quarter due to weak economic environment, Agarwal said. He also said that economic slowdown has reduced market demand and led to cash flow and credit crunches. ARPU growth also dropped from historical trends of 5%-10% to 7% in Q3FY20.

Looking to move to differential pricing: CFO Prateek Chandra said that the company is trying to do differential pricing as currently, all pricing on the platform is standard, irrespective of the location or value of the category. This might take longer time to launch because of the economic scenario, Chandra said.

Experimenting with credit services, but not interested in B2B logistics: IndiaMART is experimenting with credit services and if its pilots projects are successful, it will increase penetration in the space, Agarwal revealed. He also said that the company did not see “a large value add by our experimentation in Tolexo in B2B logistics” and is not interested in the space.

On possible competition from Amazon, Flipkart: The company’s main advantages are the huge amount of behavioural data that it has on its suppliers and the fact that it deals with more customised products than Amazon and Flipkart, Agarwal said. Also, since IndiaMART does not run on a transaction-based model, discount-led incentives do not work..

Download: Q3FY20 Financials | Presentation | Earnings Call | Press Release