CARTRADENSEQ1FY23August 04, 2022

Cartrade Tech Limited

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Management on call

Vinay Vinod Sanghi

CHAIRMAN, MANAGING

Aneesha Menon

CHIEF FINANCIAL OFFICER & DIRECTOR, CARTRADE TECH LIMITED

Vikram Alva

CHIEF STRATEGY OFFICER - CARTRADE TECH LIMITED

Key numbers — 40 extracted

1.1 million

malls and the rest are abSure outlets. Number of vehicles we have auctioned is at the run rate of 1.1 million in Q1 in quarter one, we also hit 31 million unique visitors on CarWale, CarTrade, BikeWale pla

31 million

of vehicles we have auctioned is at the run rate of 1.1 million in Q1 in quarter one, we also hit 31 million unique visitors on CarWale, CarTrade, BikeWale platforms. 84% of the 31 million unique visitors c

84%

n quarter one, we also hit 31 million unique visitors on CarWale, CarTrade, BikeWale platforms. 84% of the 31 million unique visitors came organically which is the strength and health of the compan

93 Crore

s came organically which is the strength and health of the company. Quarter one revenue was about 93 Crores which grew by about 47%, Adjusted EBITDA was about close to 18 Crores 17.7 which grew by about 1

47%

strength and health of the company. Quarter one revenue was about 93 Crores which grew by about 47%, Adjusted EBITDA was about close to 18 Crores 17.7 which grew by about 100% and the company made

18 Crore

arter one revenue was about 93 Crores which grew by about 47%, Adjusted EBITDA was about close to 18 Crores 17.7 which grew by about 100% and the company made a profit after tax of approximately 33 millio

100%

es which grew by about 47%, Adjusted EBITDA was about close to 18 Crores 17.7 which grew by about 100% and the company made a profit after tax of approximately 33 million or 3.3 Crores during the ye

33 million

18 Crores 17.7 which grew by about 100% and the company made a profit after tax of approximately 33 million or 3.3 Crores during the year. As you know the company is completely debt free and there is stron

3.3 Crore

7 which grew by about 100% and the company made a profit after tax of approximately 33 million or 3.3 Crores during the year. As you know the company is completely debt free and there is strong cash balanc

1000 Crore

year. As you know the company is completely debt free and there is strong cash balance of almost 1000 Crores. If you go to slide #4 in the presentation and this is the consolidated financials for three m

63 Crore

about. 93 Crores is the total income or revenue which grew at 47% it is last year same period of 63 Crores having said that last year was a COVID year so the growth of 47% is taking them into account. Ad

25%

djusted EBITDA is about close to 18 Crores there has been some cost escalation on employees about 25% which has gone up and if you look at the adjusted PAT which is really the profit before ESOPS and

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Guidance — 7 items

Nikhil Kale

“So going forward what kind of quarterly run rate should we be taking at and this is for the standalone business.”

Nikhil Kale

“Just again on the standalone business if I look at the other expenses right so you said the marketing expenses the other expenses there has been a sharp cut sequentially from 8, 9 Crores to around maybe 5, 6 Crores so any items here and again do you expect it going forward there could be some normalization on these other expenses or they should continue at least further.”

Vinay Vinod Sanghi

“So, there is really no plan to change that strategy at this point of time first point.”

Siddhartha Bera

“And second is on the margin side so like we have seen a couple of cost remaining largely stable in the last couple of quarters except these employees so now with revenues cutting up by how soon can we expect to touch double digit margins which we use to probably have some time in the past.”

Rahul Ranade

“Lastly just on the abSure side of it like the initial stores that we would have opened are any of those stores, kind of in your view reached a maturity stage or are they still ramping up and is there any of the stores have reached maturity just wanted to understand the throughput in terms of number of vehicles where are they in terms of breakeven just broad sense on that will be helpful.”

Vinay Vinod Sanghi

“Yes, many of them would be profitable we in fact now in our monthly review we calculate or we review the profitability chart for dealers so the initial one would be profitable I mean as I said again there will be some profitable some getting the profitability but we feel pretty comfortable?”

Vinay Vinod Sanghi

“Yes, even if you look at 34.8 and 36.4 even that is about like 7%, 8% fall normally it will be much, much steeper between last Q4 and Q1 it has been a better Q1 for that business but the traffic in this are not pretty correlated is what I would say.”

Risks & concerns — 2 flagged

So if I see the auction listings I see a clear trend that probably Q1 and Q2 are your weak quarters and Q3 and Q4 are strong quarter is that correct.

— Ankit Kanodia

The hardest kind are the one’s which are in zero to four months and zero to three months where the volumes will start from zero and I think the challenge there buying a vehicle and then stocking it and then selling so it is a process by itself we have almost have got 60 days cycle itself to buy a vehicle, refurbish and sell it.

— Vinay Vinod Sanghi

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Q&A — 13 exchanges

Thank you for taking my question and congratulations on good set of numbers. I have two questions; number one is on auction listing. So if I see the auction listings I see a clear trend that probably Q1 and Q2 are your weak quarters and Q3 and Q4 are strong quarter is that correct.

Vinay Vinod Sanghi

That is correct thank you for asking the question that is correct as I said Q1 is normally the most, the lowest and there is some seasonality as I said it is not very significant but there is some signals the last year Q1 was extremely low also because of COVID but generally Q3, Q4 are better quarters for us. So is it fair to assume that we have chance of crossing 3.5 lakh volumes in Q3 and Q4 this year. Our effort is of course continuously work on more and more supply coming to the platform but that as I said Q1 is normally a tough quarter and there is some seasonality effect of Q1. So, my se

Thank you for taking my questions. So, Vinay my first question was on the standalone business so you talked about that the employee costs have kind of gone up. So if you could just throw some color on that also in the employee cost is there any variable component. So going forward what kind of quarterly run rate should we be taking at and this is for the standalone business.

Vinay Vinod Sanghi

Yes, it is a good question Nikhil and I think it is employee cost has gone up and I think the first quarter is factoring increments which have gone in which is the increase of incremental cost about if you see the March employee cost increasing, if it is June employee cost with differential is basically the increment which come across in the business, our employee cost mostly is not variable so we do not see at this point a significant jump in employee cost in the next few quarters but it has gone up and I think it has gone up over last quarter which is the incremental differential but also ye

Thanks for the opportunity and congratulations on a great set of numbers. Just two questions, one is can you give me some outlook on your marketing plans for FY23 is there any change in your outlook towards performance marketing and second your acquisition outlook given this environment change that we are seeing for startups in general. That is my first question, and my second question is on abSure now you will have had some dealerships which are nearly a year old if you could give a sense of what kind of volumes you are seeing in these relatively more mature dealerships that would be great.

Vinay Vinod Sanghi

Sure, Vijit this question did you want to know about the acquisition of customers you want the acquisition as on business acquisition what do you want to know. No business acquisitions because you had those plans earlier right. Correct, so on the customer acquisition front of the marketing side as you have seen on the Google Trend slide one is our traffic is up to 31 million compared to previous year same quarter and we have seen the Google Trend slide what has happened is when competition spends have come down the gaps between our brand or a digital brand and then becomes more stock and then

Hi! Sir, thanks for the opportunity. My first question is again on the standalone part of your business in terms of the new car ad spend so we started seeing in terms of supply normalizing and the production picking up from the OEMs so because this obviously had a impact on base growth is probably not correct but just on your perspective how to look at the revenue ramp up growth given that now things are pretty back to normal level.

Vinay Vinod Sanghi

See I usually talk about the car industry. The car industry sold in the last quarter 900000 vehicles which is similar to quarter four I think you are right the fact that supply chain seems to be getting better semiconductor seems to be getting better I do not think it is fully recovered but probably over the next again people are saying over the next three to six months the supply constraints I mean supply should be available this definitely helps us so if we see that supply chain getting better or you see supply getting better is definitely a benefit to our business on the new car side so we

Congratulations on a great set of numbers. I had a couple of questions the first one is like was saying that abSure business was being in operation for some time now is it possible for you to layout a quick used cars landscape how are the used cars sales tracking and if like between the inventory led models and the franchise models which cause the initial debate and when you launch this business like how are the different models tracking like are you see franchise models ramping up faster inventory led models getting stuck with there with cash becoming critical.

Vinay Vinod Sanghi

So we of course never had inventory led model we as a company stay at asset light we find that when we run a franchise driven model and the inventories held by the franchisee or the infrastructures held by the franchise it definitely scale faster I think the big challenge is now whether it scales up so the big challenge was whether you can deliver the same customer experience by not owning the whole stack which has been increase the physical infrastructure and everything we said we will own the product right which as we known the technology the software which we enables to be book online we wi

Hi! Thanks for the opportunity I just have few question from my side. On the remarketing slide if I was even just look at numbers from March quarter to June quarter perspective for the expenses broadly they have remained flat right employee cost is the same marketing if the same other expenses are the same. So is there no element of variable cost built into the model as such and that is why we have seen the EBITDA margin drop to let us say 18 versus 33 is that a fair understanding.

Vinay Vinod Sanghi

Yes, the variable elements are very small I think it is not completely correlated when revenue jumps up in a quarter if you see the 60 Crores in the previous quarter and 51 Crores now is not necessary that cost jump in the same proportion I think what you see over the last year same period is 30% up on manpower cost I think that is coming from increment this year increment last year and last year, as I said , because of COVID there was a lot of cost reduction across the board which is taking place and I think but I would tend to say that the variable elements are very limited across businesses

Vinay thanks for taking my questions. Sir, few questions actually firstly on the standalone business so if I look at sequentially the monthly average unique visitors has actually gone up from 30 million to about 31 million right so but on a sequential basis the revenues have kind of like gone down by 5% so just wanted to get your sense on this so does that mean that they are not getting converted or something or the ad revenues are not up to the mark as or there is no correlation between the two.

Vinay Vinod Sanghi

No, there is not much correlation you are talking about Q4 and Q1 this year. Yes, correct. The Q4 normally part of our revenues in the standalone business come from I mean that is come from manufacturer and dealer spending more money on us and that is completely coming from their budget, their volume, their sales right. So, I think it is a factor of all of that in fact if you see the business, the standalone business normally you would find some quarter four to quarter one is a drop. This time actually you find in the standalone that from Q4 to Q1 there has been a very marginal 8%, 9% drop 42

Hi Sir, Congratulations on a great set of numbers. Just wanted to know that how has the manufacturers and dealers spending been in this quarter? Is the trend showing upwards, given that the last year was a Covid year and manufacturers and dealers were not spending much on getting leads and all. So how has that trend been? I’ll come back with my next question

Vinay Vinod Sanghi

Yes, the OEM business as I said earlier in this quarter grew by 51% so it has been a positive trend. One would debate whether it could be better but it will grew by 51% we feel that when supply chain is an issue and supply is an issue, manufacturers anybody would spend that money in advertising so if a particular product have a shortage it is hard to convince manufacturers who spend money on it and advertise it so that becomes a challenge but in spite of that we have done about 51% as we said earlier on the call as supply eases up over the next few quarters, it would actually help our business

My question is on – there have been a few vehicle launches. So, I was just asking about there have been a few launches from some OEMs like Citroen and even Maruti has launched a new SUV, so just wondering are you seeing any increase in engagement from new OEMs and established OEMs, as the take a fresh view on where to spend their budgets on?

Vinay Vinod Sanghi

We definitely are seeing across established on new OEMs in general view to digital I mean or let us say a different or focus to our business without the Citroen or whether it is any established player so that is clear. I think one of the factors is that you are seeing a lot of launches coming out this year and the next year because for two years of COVID a lot of manufacturers have not been able to do it and obviously you will do it so that should help us I think when you have new launches coming out it does help us and we are hoping that over the next two, three four quarters that will start

Thanks. I have a couple of questions on the remarketing business, so just going back to the average commission per vehicle in the remarketing side, so specifically wanted to understand that the QoQ increase, is that a function of value added services? So, I remember that you were mentioning that last year the parking charges. The parking charges have also kind of normalized now?

Vinay Vinod Sanghi

I think it is a good point and it is a little better because if you get last year’s margins than this year when you had COVID the physical aspects on the new vehicles we do we could not do but it is mostly completely online and digital, when COVID gone back I think we can provide lot more physical services to customers and if our take rates do go up but I would think that the fact of fear is that it is a range it is 7500 and 8000 odd is not that much of a difference, it is really in this range. I would still bet that the focus we’ve got is not that the take rates going up but really the focus

Good evening, thanks for the opportunity. Couple of things, one is in terms of take rates you mentioned that retail tends to be more profitable than corporate I am also curious whether the vehicle mix make a difference and could you share the vehicle mix for the quarter in terms of auctions?

Vinay Vinod Sanghi

Yes, what definitely matters is one biggest suppliers obviously the margins are lower number one the more online and digital, also the margins are lower obviously we have physical services as well as the online sales those margins are better so I think and the third is if you have supply coming from single users that is obviously the highest margins we have had in the business one of our biggest focus areas in Shriram Automall is to bring more single user supply is roughly as I said 20%, 25% of our supply today but that is the focus on the 1.2 million vehicle roughly 20%, 25% comes from single

My question is like I want to know the full year employee benefit expenses for the full year.

Vinay Vinod Sanghi

The first quarter was roughly about 5 or 4 crores. I think you mean the ESOP side or you mean the salary what did you mean? ESOP side. So, the ESOP is about 5.3 Crores in the first quarter, three maybe some marginal increase in quarter-to-quarter quarter three, quarter four but Aneesha would you say the end of year we should be somewhere about 25 to 30 Crores in that range. Yes, Vinay. Thanks a lot.

I just want to thank everybody for joining the call. It has been a very eventful quarter for us and in this quarter we have clearly been able to demonstrate a reasonable growth over the last year same quarter also you have seen that our profitability returning to the company which has really been a track record of over many years over the last three, four years. And mainly thank you again for joining in and happy at a later day to also clarify any doubts or questions you might have. Thank you everybody. Thank you.

Management

Speaking time

Vinay Vinod Sanghi

Moderator

Sagar Parekh

Karthi

Aneesha Menon

Nikhil Kale

Siddhartha Bera

Rahul Ranade

Vijit Jain

Sachin Dixit

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Opening remarks

Vinay Vinod Sanghi

Good evening, everybody and thank you for taking the time out to attend this earnings call in the evening and it is quite late in the day, but thank you for that. Just want to go straight to highlight slide which is slide #3 on your presentation and take out a few numbers from here. We are the number one automotive two-wheeler, four-wheeler portal in India. We have now 180 locations, about 126 auto malls and the rest are abSure outlets. Number of vehicles we have auctioned is at the run rate of 1.1 million in Q1 in quarter one, we also hit 31 million unique visitors on CarWale, CarTrade, BikeWale platforms. 84% of the 31 million unique visitors came organically which is the strength and health of the company. Quarter one revenue was about 93 Crores which grew by about 47%, Adjusted EBITDA was about close to 18 Crores 17.7 which grew by about 100% and the company made a profit after tax of approximately 33 million or 3.3 Crores during the year. As you know the company is completely debt

Aneesha Menon

Sure, Vinay. This is another slide which we have been giving quarterly consistently this is the average monthly UVs. As Vinay just mentioned UVs for Q1 has been about 31 million and we continue to enjoy 84% of that being organic the rest of it is gives us growth quarter- on-quarter and year-on-year. The next slide is very important slide for is the Google trend slide. It continues to demonstrate the dominance that we have as a brand the high recall values at CarWale and BikeWale continue to enjoy over its competition giving in a way head and shoulders over our competition in terms of brand value. The next slide out there which is slide #9 talks about the key metrics on the auction side of the business. Our listings for this quarter was about 2.7 lakh with a 57000 volumes which transits to about 21% of conversion. Auction listing grew by about 28% quarter-on-quarter and about 92% in terms of the auction volumes that are transact on the platform. Vinay, that’s about it.

Vinay Vinod Sanghi

Yes, I just want to add one more thing that as I said the first quarter for us is the 47% growth one should take in account the last year was COVID as well and normally I will again repeat the first quarter normally is the lows for us for the industry as well. Although the industry also had a healthy growth of the last year same period the car industry as well as two-wheeler industry and that is coming from again a COVID base last year. So, and this is what we had to say we are happy to go into question and answers, etc., etc. and I will clarify any doubts you might have.

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