Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 50% and profit after tax increased by 43% in Q4 FY24.
- CarTrade Tech Ltd (BOM:543333, Financial) remains the number one automotive platform in India with the largest used car classified business and vehicle auction platform.
- 17 million unique customers use their platforms monthly, with 90% of traffic coming organically.
- Highest ever quarterly revenue at INR161 crores and adjusted EBITDA at INR49.1 crores.
- Strong cash balance of almost INR750 crores, providing a solid financial foundation.
Negative Points
- Remarketing business revenues remained flat, with only an 8% increase in adjusted EBITDA.
- OLX India traffic metrics showed a slight decline from 35 million to 30 million monthly active users.
- Trade receivables jumped by 50% compared to last year, indicating potential collection issues.
- Increased lease and finance costs due to the OLX acquisition, impacting overall profitability.
- ESOP costs remain high at INR6 crores per quarter, expected to continue at this level.
Q & A Highlights
Q: Congratulations on a pretty terrific results here that we can see across the three businesses. My first question is for the OLX India classifieds business, are we looking at what will now be the recurring cost structure for this business now? And also if you can talk a little bit about growth in this segment because since you acquired this company, it seems to be somewhere around INR43 crores a quarter revenue business pretty steady at that. So your thoughts on that. That's my first question. Thank you.
A: Thanks. The OLX, the costs are fully now. This is what the costs are, I think the continuing operation is probably steady state. The reflection of the finance in Q4 are the reflections of steady state for this business. Obviously our attempt is to grow this INR44 crore quarter revenue from here. And it is a typical classified marketplace where as revenue grow, costs don't grow in relation with the revenues. And you see that now in the next few quarters that our revenue continues to grow here, that profitability will rise at double the pace, which is, as you see, even in the consumer group, I mean, as revenues grow, our profits tend to go 1.5 to 2 times the speed of revenue is growing. And we want to have the same dynamics here where increase in revenue, increase multiply growth in profits. So I think just the leverage we have on our cost. Again, here, there's very low marketing cost, almost zero marketing cost and reasonably high leverage to profitability with revenue growth.
Q: Got it. And any thoughts on sharing more metrics around OLX India traffic trends, category-wise mix, those kinds of things now that this business is on a recurring basis?
A: Yeah, sure. We will -- and I think the traffic tends to be about INR30-odd million a month. As I said, a large part of it is on an -- app on a phone, almost all of it is -- there's no marketing cost to this revenue to this traffic, sorry, which is making it -- giving the OLX business, strong margins. We'll start sharing the traffic metrics with you. I mean very soon. I mean now that there's some stability that's something we'll start doing. If you look at the segmentation also, automotive tends to be about 45%, 50%. The rest is non-automotive. That's the other segmentation of the classified revenues, which also, over time, we'll start sharing in the breakup of automotive and nonautomotive.
Q: And then my next question is on the remarketing business. Fair to say that overall, this business seems to have bottomed out here. I mean I see the volumes are still down on a Y-o-Y basis, but the decline seems to have reduced and revenues are flattish YoY now, so declining for three, four quarters. So that's my first question on the remarketing business. And is this coming from continuing growth in the retail side? Or has the repo business also bottomed out?
A: The repo are flattish now. So it's bottom to flattish. The repo -- and actually till last quarter to going down, but we're hoping that it is flat now from this year. Actually, last year, it has degrown, and we're hoping that a flat this year. But it's hard to predict. I think what's driving even the flattish nature of this business is the retail growth. I mean, clearly, which we're putting tremendous efforts to continue to grow. That doesn't change how we're consuming the business. So we need to continue to grow and what we have control on, which is the retail business. The repo business will bounce back as and when it does. So we are hoping that it flattened out, and it's bottomed out on a fact note. We're hoping it bottomed out. But we thought that last year and it still went down. So we're just looking and saying, what's in our control is doing all the other stuffs super sources and focus on that. But we do believe it should have bottomed out, yeah.
Q: Got it. And my last question is for Aneesha, just on this. If I just look at the costs below EBITDA line, right? And the balance sheet and the cash flow statement. If you can just talk about the lease cost trends, the financing costs and the working capital intensity for the full year '24 versus '23. And if there's anything to understand over there, that will be helpful.
A: Sure, Vijit. So I think a way to consolidate a set of accounts because it has OLX in it, it looks like a jump. But if you go independently, these are static costs barely moved because we don't have data companies, so we don't have any finance costs. So the only increase you see is on account of lease accounting.
Q: Right. And why have the lease costs gone up so much? Is that all related to OLX itself? Or there are lease cost increases related to the remarketing business as well?
A: So it's just the stores independently in each of the slides Vijit. So if you look at the stand-alone entities. There, the total finance cost itself INR16 lakhs and including depreciation, that cost has increased only by about [INR5.6] crores in the quarter, which includes locatoin and finance costs. So majority of the increase is on account of the OLX acquisition. But stand-alone and remarketing have also marginally increased on account of additional leases that we have taken, mainly remarketing and stand-alone business on new property that we have added or one new store that we have added in the business.
Q: Okay great, those are my initial questions. I'll get back into the queue. Thank you.
A: Thank you.
Q: Yeah thanks for the opportunity and congrats on great set of numbers. Sir, first question on the OLX side, again, I mean, would it be possible to share some insights into what can help improve the run rate from current levels? Which are the areas you plan to target in the first year and when can we see that benefit coming in the revenues? It can be both on monetization or other segments that you think can help us scale up faster?
A: What's the question on how we do revenue I mean?
Q: Yeah. OLX, right.
A: Yeah, OLX, we got two sides, we brought auto and nonauto. That's a 45%, 50% is auto. This is an auto. It's used cars basically. And obviously, we believe that the used car classified business with lots of runway to grow. And OLX is obviously focused on growing used car classified revenues by adding more dealers by increasing ARPU per dealer, providing more value to the dealers, increasing traffic and
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
