Ladies and gentlemen, good day and welcome to Matrimony.com's Q3 FY 2023 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhisek Banerjee from ICICI Securities. Thank you. Over to you, sir. Yeah. Hello, everyone. On behalf of ICICI Securities, I am pleased to invite you to the Q3 FY 2023 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, who is the chief financial officer. We will have a brief presentation from management followed by a Q&A session. Over to you, sir, for your opening comments. Thank you, Abhisek Banerjee. Good afternoon, everyone. Hope, all of you are continuing to stay safe and healthy. In quarter three, on a consolidated basis, we achieved billing at INR 111.4 crores, a growth of 2.1% quarter-over-quarter and 3.8% year-over-year. Revenues were INR 110.4 crores, a decline of 3.9% quarter-over-quarter and a growth of 1.7% year-on-year. The lower revenues were on account of subdued billing in quarter two. Key highlights of the matchmaking business in quarter three are as follows. Billing at INR 108.3 crores, a growth of 1.6% quarter-over-quarter and 2.1% year-on-year. Revenue at INR 107.8 crore, decline of 4.2% quarter-over-quarter and a growth of 0.5% year-on-year. We added INR 2.3 lakh paid subscriptions during the quarter, a decline of 1.7% quarter-over-quarter and a growth of 10.7% year-on-year. ATV for the matchmaking business increased 3.2% quarter-over-quarter and a decline 7.8% year-on-year. In line with our customer acquisition strategies. We continue to track the impact we create for our customers. We're happy to state that we have created about 20,678 success stories in quarter three. Coming to the marriage services business. Billings were INR 3.1 crore, a growth of 22.2% quarter-over-quarter and 139.1% year-on-year. Revenue was INR 2.6 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 six quarters in a row. Inter-industry share has been progressing well. Loss in the quarter was INR 3.1 crore compared to INR 3.3 crore in the previous quarter. On the billing and revenue outlook for quarter four, it's as follows. Matchmaking billing growth in quarter four will be better than the growth rate achieved in quarter three. On wedding services, we expect a steady state growth to continue, and the losses will be slightly less than the quarter three. Let me pass on to Sushanth to comment on the key profitability areas. Sushanth over to you. Thanks, Muruga. Our EBITDA margin for the matchmaking business during Q3 is at 17.8% as compared to 23.1% in quarter two and 24.5% a year ago. Marketing expenses are at INR 45.2 crores as compared to INR 44.4 crores in quarter two and INR 41.6 crores a year ago. The main reason for the margin decline is due to the subdued billings 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. In this quarter, we completed the sale of land, and that has been accounted in this quarter. Tax rate in the quarter is at 14.8% as compared to 14.3% in quarter two. Profit after tax is at INR 11.6 crores. It's 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%+ levels for the last five 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. This, along with the sale of land, has taken our cash balance to INR 309 crore. 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 four of FY 2022. We expect quarter four PAT to be at the same levels as quarter three. Just one point to note that even though we had a one-time profit of sale of land in quarter three, even though we will not have that one-time profit in quarter four, we expect the quarter four PAT to come back or bounce back and to be at the same levels of quarter three. I'd like to end with a 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 can now open for the Q&A. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead. Hi, thanks for the opportunity. Couple of questions from my end. You know, if I look at our ad spend over a slightly longer term period, you know, 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. This quarter ad spends are, you know, more than 40%. What has, you know, changed so significantly that ad spends as percentage of revenues continues, you know, to grow from us? Despite these ad spends being elevated, growth in terms of, you know, overall sales or customers is not coming. As we step into FY 2024, what are the budgets for ad spends? You know, lastly, what is the rationale for, you know, a proposal to utilize the sale of land proceeds on ad spends and marketing? Those were my three questions. Sushanth, why don't you respond on the on the sale of land? Yeah. If you can recollect on the sale of land, you know, we have made a gain of about INR 5.8 crores, and the total collection or rather total sale consideration is INR 49.41 crores. 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 one year. Whatever is our regular marketing expenses, this amount will be used towards that. Now with respect to other questions, Mr. Prakash Kapadia, one is that the marketing spend, yes, it's at, it's at elevated level, because during the COVID time, because we had optimized the marketing spend because there was uncertainty and the whole industry, the marketing spend also had come down. Obviously it has gone back to the item levels. Today at this point of time, the marketing is one of our large cost. If you look it without marketing or margins in the healthy 60%. For the next year, we expect that at this point, our outlook is that the marketing spend may be at the similar level. However, we expect that the business to bounce back, the growth to bounce back. That will help our EBITDA margin or building and everything to move up actually. The thing is that, yeah, the current level of marketing spend we expect at this point of time, to continue with the current performance and value level. This, you know, ad spend is coming on the back of no change in competitive intensity. That is why, you know, we think they'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, you know, get better with even at the current level of marketing spend. I'm talking about actually the actual. Not in absolute terms, I meant in actual value terms. We expect a similar level of, well, the spend to continue because of the increase in billing and the system, both, the marketing result, in compared to the billing and revenue to improve and also it will contribute to the increase in EBITDA margin as well as the profit margin. The current level of marketing spend necessary because of the increase level of competitive activities and the marketing spend by the other players forcing us to spend more than what is required at this point of time. Just want to add, the percentage of revenue, if you see the last, five quarters, it's been in a range-bound thing. It's about 38%-40% of our revenues. Compared to COVID, it is COVID and it was, yeah, it's been stable in the last one year plus. Okay. Okay. You know, in terms of the incremental, you know, ad spend you mentioned, you know, it's been in a range of 38%-40% last five quarters. If I look at, you know, incremental revenue earned or, you know, incremental benefit translating to us in terms of top line, that is actually not really happening. My question was more from that perspective. What, what is, you know, driving this increase in ad spend? At the end, you know, you call it customer acquisition cost or you know, try and call it ad spends for building the business or competitive intensity. You know, all of this has to, you know, translate to higher revenues for us. If, you know, this is going to be the kind of revenue growth which we are seeing despite these elevated ad spends, then don't we think we should relook at the kind of ad spend we are doing to get incremental growth, is what I was trying to understand, Muruga? Yeah. Basically, I think that we're looking at our media spend is on the TV advertisement. So we have to operate at a certain level of visibility and compared to what other players are doing. If not for that, the increased competition, there's a TV spend that can be much less than what we are spending. There are two kind of model, efficient digital marketing versus TV marketing. Coming to TV marketing, where, you know, where there's, you know, most of our, the budget will spend. It currently is also being at a level much more than what is required. It was just again necessary at this point in time because of the, you know, we're looking at it long term and it's equal to our level of marketing spend, because while short-term, you need to record it and reduce it also, it will definitely cause some long-term implications. For this point in time like to continue, though it's definitely just a standalone basis, we may not need that level of marketing. When you see the other players are spending that kind of money, and we think that is sometime necessary to spend the level of marketing spend. Okay. Yeah, when tomorrow or in the future if the, if that level of intensity reduces, then that time we'll be able to reduce our the TV marketing spend. I don't know when that's gonna happen. At this point in time, this level of marketing, we think it's necessary in order to perform. Understood. Thank you. I'll join back if I have more questions. Thank you. Thank you. The next question is from the line of Sonal from Prescient Capital. Please go ahead. Hi, sir. Am I audible? Yeah, yes, you are. 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 bouncing back? That's question number one. What is the growth outlook for top line or any guidance for the next financial year? Some ballpark there would be helpful. Thank you. One is that actually post-COVID, we've seen that there is a sort of some drop in the profile acquisition. We see that now that the profiles have come back to sort of the earlier levels of acquisition what we used to have. Based on the value spend, we are all done. The second week of February, we've seen how they trend in January and February. Based on the trend what we have seen up to February, then, that gives us confidence that we are definitely bouncing back on growth. The outlook for next year definitely the next year will be definitely much better than the year what we are going through, because not only that the profiles are coming back, but we're also taking some steps, and we see the early signs of those yielding the results. We believe the next year growth will be definitely much better year. Probably it will be a much better question to talk about the next year, maybe during the next analyst call. However, we definitely feel that the next year will definitely a much better year than the current year. Understand. Sir, could you share what is your current customer acquisition cost online, offline combined, if at all there is a combination there? Basically, Yeah. No. The thing is that the majority acquisitions are organic, and, you know, we can't put that cost to it. Again, if you're looking at the digital acquisition, because the TV advertisement is a brand-building type acquisition, so we can't put the cost of acquisition on the brand building and on the TV marketing spend. Digital, yeah, there is a cost per acquisition if you look at ROI and all, but again, we don't spell it out for competitive reasons. Okay. Is it for an analyst community, is it fair for us to just divide your marketing, the entire marketing costs you're reporting your P&L by the number of customers you're acquiring in that particular quarter? That should be the cost of acquisition for that particular period. Is that fair? No. No. If you're looking at, if at majority we acquire a number of, you know, the number of profiles getting acquired on a quarterly basis. Majority, the profile acquisitions are the people simply typing our brand name and, you know, and creating a profile, be it on the. Again, majority acquisition happens through Play Store. Basically, brand in a way for large part of the market is expanding with the category. Mm-hmm. That way, you know, the brand is very strong. majority profiles are, you know, we are not investing money. The TV marketing is something, you know, it's not, you can, you know, accord it for a particular quarter. The brand building over a period of time, we continuously work on the brand. That is not, you know, you just put the money, you know, and you're going to get a return or getting a return of marketing spend that is happening at that quarter. If you want to go on the market, if you even completely turn off the TV advertisement, there will be some impact, there'll be limited impact. We are doing this because of keeping long-term interest in mind. Yeah, if you turn off the entire market, TV budget this month, impact will be some minimum impact will be there. That way it's not that everything attributed this quarter. In fact, majority is not attributed this quarter at all. It's a long-term brand building, and it's impacting also on short-term, impacting also because of the TV advertisement. At digital, some spending required because we ensure that we are getting the, on the, you know, when people are searching our brand, we should be there. Otherwise, you know, kind of any other competitors kind of coming on the top of the keywords. To avoid those things, we need to have a bid for, you know, brand awareness as such. Understand that. Okay. Thank you. That's it from my side. Thank you. Thank you. The next question is from the line of Anurag Purohit from Anived PMS. Please go ahead. Yeah. Hi. My question is regarding the outlook given for fourth quarter. You mentioned that both EBITDA margin would be same as similar to what Q4 was last year, and PAT would be similar to what Q3 was even after including the one-time gains. Just trying to understand where that positive leverage would come in, primarily because the billings are indicating to a kind of flat quarter-on-quarter for 4Q. Would there be a leverage in OpEx and from where it would be? Basically what you mentioned was that if you look at last quarter four on matchmaking EBITDA margin, it's around, you know. Quarter four. Yeah, quarter four. 22 + percent. 7%. See the Q3, it was 17.8, which including, you're talking about. Yeah, sorry. That include that one-time gain and all that. Yeah. Basically, we are moving back to the earlier level, which is the 22+ or 23%. That's the level the margin would move back in quarter four. Without having that, The land sale does not affect matchmaking. It only affects the enterprise level EBITDA. What we have set as guidance is our matchmaking will come back to the quarter four level, which was approximately INR 24.8 crores last year, which is 22.7% approximately. The land sale does not affect that. What is driving that is, if you just refresh what we told earlier, is that in quarter two, you know, the billing was lower for us, and that had an impact on revenue in quarter three. What is happening is based on the quarter three achievement as well as the quarter four billing estimate, we believe the revenue will be much better, you know, which affects the P&L in quarter four. That is going to help the margin overall. Basically, you know, matchmaking is going to improve. That will negate that one-time impact of the land sale. Okay. Already from January and whatever sales we have seen, that gives us a certain amount of confidence on revenue side. Yes. Absolutely, yeah. Yeah. Second on the subscription and the ATV. Again, subscription has consistently shown a good growth, double-digit growth if I were to take it, take the nine-month figure. ATV on YOY basis has been quite down, around 7% or so. Any particular reason for this? Is it purely of competitive intensity difference? It's a combination of the reasons. One is that, we have obviously second market, they're offering a, you know, discounted price, we also have the new offerings, like Jodii, which is at a much lower price. There's a combination of these factors, that put the ATV to go down. We expect that, you know, the ATV, you know, it will be at this level or maybe start to go down as well, but we expect that the paid subscription to continue to grow at a double digits. We are focusing on the customer acquisition strategy and, so that will drive that, the paid subscription volume. That is also focus. While that may come at, some bit of drop in ATV, we think that will help us to, gain or grow, in certain markets. Sure. Thank you, and all the best. Thank you. Thank you. We have the next question from the line of Shyamsunder Iyer from MICA. Please go ahead. Hi. Yes, Shyamsunder. Please go ahead. Hi. Hi. Thank you so much for this opportunity, sir. My question is about the revenue growth. So while we have seen that Matrimony has been doing quite well in the southern part of the country, I think Malayalam and all these places, Kerala, Tamil Nadu and all these places. Are you seeing any growth in the markets where Matrimony is relatively weaker as compared to the competition, which most likely is the northern belt? Also, this is another question. How is Jodii doing as a business? There's no mention of Jodii on the call. Like, how is it contributing to the expenses or revenue building? These are my two questions. Thank you. In terms of. So Matrimony. It's not only, we are definitely we are a very strong player in South. Not only South, we are also a strong player in East and also to a certain extent we are a strong player in the West as well. The only market where we seem to be, you know, sort of fighting out there among the other players is that the northern belt. That's where we are, you know, not really done. That's a long-term strategy for us as well. With respect to, I mean, the level of dominance varies from or our strength varies from market to market. With respect to Jodii, it's still a small part of the business. We are at this point of time, we are not giving the breakup of various entities. We're still in very early stage, we are continuing to figure out, you know, you know, it's a new, completely newer segment, trying to figure out, trying to maximize. Still at this point of time, nothing specific to talk about. You know, it's a small part of business. We're continuing to figure out and continue to explore various thing to grow that segment as well. But I mean, as I said, for competitive reason, we sort of, we normally don't give a breakup of individual data. Sure. Just coming back to my first question. When you're saying that West, East are strong-North is a place that you're saying that is something that is being kind of a place where 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 be looked forward to? Yeah. North, again, we have not been any significant progress and while we've been operating at a similar level, because anyway, look at last quarter anyway, overall, you know, we are also at a challenge because post COVID, we had some challenge with the profile acquisition. We see that now just coming back to our earlier levels. We expect now things to get better. The way, you know, the value stand, looking at value stand, we definitely see things are bouncing back. I think, keeping the marketing cost at a level and with the revenue, we see that, you know, uptake is happening. We see that, you know, we're able to, you know, grow in all the market. Again, it's relative because it's not that you're going to see percent growth. We're not going to significantly alter the presence in other after market. We don't have the primary company information about the competitor as well. Overall, we are growing across the market, but it's not to the level where you can say that we are making significant inroads in the north and all that. North is definitely long term, so nothing's going to significantly change in the short term or nothing significant happen in the last couple of quarters. It's more of a similar level of reach and market share that similar recent market share at this point in time compared to what it was one, two, three quarter earlier. Okay. Okay. Okay. Thank you so much for the opportunity. Thank you. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one on your touch-tone phones. The next question is from the line of Sohil Rozani from SV Rozani. Please go ahead. Hello, sir. A very good afternoon. There have been the contact form which you are confident about the digital building thing, right? What are the other initiatives you are taking for the next financial year? Are there any specific initiatives you are taking or something which you can put a light on? Sorry, I think the line was not clear. If you could, please repeat it again because I think, I missed some part of your question. Sure. I'll Sure. I'll do that. Yeah. What I would like to understand is what are the initiatives which you are taking other than that because we are confident about quarter four. Are there any other initiatives which you are taking as a company for your financial year 2024? Any specific things which you could put a light on? Yeah. Yeah. Thank you. Thank you. Okay. One is that, as I said, the full profile is one of the things. You know, we see that the profiles are coming back to the earlier level, and that's also helping us to grow. Also we continue to, you know, to work on various strategies to drive the conversions. All these things are seem to be helping. It's more of on a product improvement and the process improvement combined with the with another profile associations, seem to be getting better. These are factors, helping us to grow in the current quarter. In terms of next year, we definitely have plans and probably it kind of be better positioned to talk during the next call year. Thank you. The next question is from the line of Deep from B&K Securities. Please go ahead. Hi, sir. Thanks for the opportunity. My questions were around our international plans. Those markets don't have a lot of competition is what I understand. Is there any plan to scale up those investments significantly given that the competitive intensity is not reducing in the Indian market? It would be great if you could explain a bit more on what are your plans. In terms of your international market, international market is quite spread and, you know, there's multiple countries. It's while definitely U.S. is one of the important market, again, we continue to figure out how to, you know, to grow various markets, including international market as well. International market in terms of, you know, the user base, that user base is not that growing substantially at all. That way it's more of the market where there is a good number of Indians across the world. However, that market is not growing at substantial pace. Also the complexity of the market is multiple countries, multiple things, and it's not a one homogeneous part to. Some other countries become quite challenging to reach out Indians separately. Again, there are things we do to reach out to another audience. We continue to figure out and continue to work on ways to reach out more Indian looking for right partner. I would say that in a, at this point in time, that's not a market that we're seeing a significant growth at this point in time. That way international market too is important market. We'll continue to work on the way to get better on those markets. I would say that it's not something that kind of we can do something quickly be able to gain some the market share and all. Within India, the audience to reach out is fairly there, which is some of the market become a little complex because let's say from U.S., Canada, Australia, I think there were so many countries. There are some challenges as well to reach out this market in a effective way. There are also the people that the media consulting pattern brought us with that, so that it's really difficult. We are continuing to progress on market, but whether we're able to grow substantially with the market strategy at this point of time, it doesn't appear so. However, we continue to, as I told you, it's one of the important market for us. Our marketing continue to work on ways to reach out more in that area. I wouldn't say that at this point that we have something which helps us to make significant progress in this market. Thanks for that detailed explanation. Would it be possible 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 discussions? I think, normally we don't give a breakup geography-wise, and so I would reference from including a deeper on those parts. That's what it is. The second question is, if you can give maybe not numbers, but some qualitative idea on how is the Elite Matrimony segment doing for us? Are we seeing a slowdown there? If I understand right, we don't have a lot of competition there, relative to the competition we have in our three-monthly or six-monthly plans, Elite Matrimony is somewhat of a forte. Is there a slowdown there, what you are seeing right now, which is leading to these benign numbers? If you could just give some idea of segmental growth, maybe just qualitative would still be helpful. One thing that, you know, Elite is a small part of our business, so because we are talking about, when the people at top of the pyramid is a very small percentage, but obviously ARPU is very good in that segment. However, you know, there are some challenges in Elite. You know, one of the challenge is that, obviously, you know, Elite, we get a lot of, female, members to, who enroll. Elite, the challenge for us is that, you know, kind of getting a male member to enroll. We're working on some, you know, some plans and, some strategies. While, as I told you, the segment doesn't need... It's high ARPU, but a number of users, a limited number of users. The challenge is like, you know, not having a sufficient number of male members. We try to figure out how to get more male members. We are there are plans to grow that market. Again, that's something we are working on it. In terms of overall Elite contribution, it's a small part of the business. Right, sir. This is very helpful. Thanks a lot. Yeah. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one at this time. The next question is from the line of Heenal Gada from ICICI Securities. Please go ahead. Hi. So, just one question on your capital allocation. Like, are we looking to, you know, maybe return any, you know, money to the shareholders, given that we have such robust cash flows or, you know, maybe anything in the inorganic space? Hi, Heenal. Sushanth here. We just concluded with a buyback, you know, couple of months back, we have returned INR 75 crores back to the shareholders. We also paid a, you know, increase in dividend last year as well. In line with that capital allocation policy, whatever is relevant and whatever call the board takes, we will do that as per whatever is required, you know, from that perspective. That's why I said so recently, you know, the giving back to shareholders was taken care of in the last year. In terms of inorganic, we continue to evaluate any opportunities that come by. Last year, you know, more than a year back, we did an acquisition called ShaadiSaga, which is in the marriage services space. Anything that comes that is interesting, we'll continue to evaluate. Right. In the inorganic space, are we, like, kind of looking at it actively or, you know, 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? Only there is. As and when anything comes, we will look at it. Okay, understood. Thanks a lot, sir. Thank you. The next question is from the line of Manish from XYZ Associates. Please go ahead. Hi. Thank you for the opportunity. You spoke about how the focus will be on growing the customer base, customer acquisition and driving conversions. I'm guessing in the process, we will be resort counting. 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? ARPU, you know, I think sort of coming down because it's based on the customer acquisition strategy. We expect that trend to be at a similar level or maybe slightly come down as well. We are working on how to get the more people to go to paid membership. That way that, ARPU may come down also. Okay, understood. Yeah. Very difficult to, you know, predict on these things because we have multiple customer segment, multiple the brand. That way, I think for us that, you know, the focus always being there how to get more people to enroll. Even that has an impact on ARPU. We think that, maybe right thing to do. However, it cannot give that, you know, kind of how that going in the next quarter. Sure. I understand that you might be focusing on slightly weaker markets where ARPUs might come. How are the ARPUs sort of trending in your stronger markets themselves? Yes, stronger market will continue to operate at higher ARPU as well. Okay. Okay, understood. Thank you. Thank you so much. Thank you. Participants who wish to ask a question may press star and one at this time. Ladies and gentlemen, if you wish to ask a question, please press star and one. Yeah, if there are no more questions, we can end the call. Sure, sir. There are no further questions. I now hand the call conference to the management for closing comments. Over to you, sir. Thank you, ICICI Securities, for hosting us. Thank you everyone for joining this call. If you have any questions, please write to us. We'll be happy to interact with you. Thank you, Abhisek Banerjee and ICICI Securities. Thanks for everyone joining the call. I look forward to having you in 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.