Delhivery Limited

Sahil

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Sahil

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Sahil

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Sahil

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Sahil

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Sahil

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Sahil

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Pulkit

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Sahil

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Sahil

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We recorded 20% quarter-on-quarter growth from quarter 1 when we had seen our decline in volumes vs.

— Sahil

And we continue to also see strong growth in our cross-border, express and freight businesses, despite a global slowdown and a decline in air and ocean freight yields.

— Sahil

The decline from quarter 1 to quarter 2 in the FTL and Supply Chain Services business is a reflection of seasonality in our underlying customers’ businesses.

— Sahil

In today’s funding environment you’ll have some cycles on individual players feeling some pressure and things like that.

— Aditya

of that market excess form the in So the risk that you’re pointing out, we actually think of as the fundamental opportunity at Delhivery.

— Sahil

QoQ we have seen a decline in revenues, about a miss about 20/25 odd percent.

— Abhishek

We do expect over time the impact of this seasonality from a single customer to reduce.

— Sahil

I think the other thing and also Supply Chain Services is that revenue, while accounts begin, the full sort of impact of that new growth takes typically anywhere from about two to six months to reflect.

— Sahil

It’s hard seeing the revenue impact of that in quarter 3, quarter 4 and beyond.

— Sahil

How difficult it is now to get back those customers?

— Abhishek

But what we are seeing now is that the penetration as well as the growth, in US growth is coming down and our market is also showing signals of slowdown so it’s all connected?

— Abhijit

Will you like to consider that was indeed a COVID bump that is coming out of this and globally there’s a slowdown sort of in the overall market.

— Abhijit

Q

Thank you Rishi and thank you to the Citi team for organizing this. Just a quick check that I’m perfectly audible. Moderator: Yes sir, we can hear you.

Sahil

Excellent, thank you. Thank you all for joining our earnings presentation for quarter 2 fiscal ‘23 today. I’ll start with a quick 15 to 20 minute presentation on quarter 2 and then we’ll open the floor for questions. For those of you who’ve joined fresh, if we can move to the first slide, just a quick refresh on Delhivery. The aim of Delhivery is to build the operating system for commerce in India, which means we essentially provide the logistics infrastructure technology and services that enable buyers and sellers to transact with each other in the physical world. These buyers and sellers who

Q

Good evening and thank you for the opportunity. My first question is on the Express Parcel growth of 19% this quarter. Could you indicate some sense on how the industry has been? Have we maintained market share or have we gained market share? Or which range in market share are we there on the Express Parcel? Thanks Mukesh. We believe that we have continued to retain the market share that we had as of last year. I think our position as we look at each of our individual client accounts remains intact. Depending on which clients, obviously see different levels of growth over the year, our consoli

Mukesh

Alright, would you be able to comment on say a large eCommerce platform such as Meesho which have on media been kind of commenting that that growth has been significant, or much higher maybe than say 40-50% kind of number? Any wallet share shifts in such large accounts? Page 8 Delhivery Limited Earnings Call None that we have seen. We continue to maintain market share with each of our individual accounts. And overall, Mukesh as I’ve mentioned, we saw massive growth in volumes with seasonality. Right. Thanks for that. And secondly on the PTL business, we’ll see on average you’ve done probably a

Q

Hi, thank you for taking my question. First question again is on the Express Parcel business. How should we think about recovery from here, going by the commentary you made on the festive season it appears that we’re likely to be under 20% growth for the next two quarters. So how should we think about transition from 20% number to like 30% like we have been doing sustainably for last several, several years? How should we think about that? I think in the Express business it’s a pretty simple answer. We monitor our share of wallet with every single account that we work with. We also manage our o

Gaurav

Got it. Secondly… If I can add, we will periodically go back and look at what we believe is the market size and scale and what our share is with each player. And obviously we triangulate it through various sources. It’s not something that is given to us, or we don’t have a Nielsen in our industry as such. And as Sahil said, I think we will make adjustments. And if we feel like that there’s any account where we feel like our share position has changed, then we will actually do what we need to do to defend our share under any circumstance. That’s very helpful. You had given a number a couple of

Q

Thank you for taking my question. My first question is when I look at the slide where you talk about your key operating metrics; and between Q1 and Q2 we’ve seen some reduction in capacity. Now while this is clearly for better integration of SpotOn, just want to understand, does it in any way also indicate our thoughts about growth? Because for a company which is in a high growth sector to actually cut capacity at this stage, how should one look at this in terms of growth for us say over the next few quarters going forward? That would be my question, number one.

Sahil

Sure. You should not view this in any way as compromising our estimates of growth going forward. This is the number of freight service centers that we run. If you look at the overall infrastructure that we run as of the end of financial ’22, we had 18.15 million square feet of infrastructure. That has risen 18.46 as of quarter 2. On a growth team continuously re-evaluates the structure of the underlying network and decides what is best for us to consolidate. Let me give you an example Pulkit. As an example, even today, because of Delhivery and SpotOn having independent hubs in Pune, we continu

Q

Page 13 Delhivery Limited Earnings Call of whether we today are starting to offer more discounts which will become lesser over time or is that something else which is maybe more seasonal, associated with this QoQ movement?

Sahil

No, so we are not offering any additional discounts. The optical change in the yield that you can see per kg is due to one, there is an Ind-AS adjustment that we have made. The second is that first, SpotOn earlier, a certain percentage of the revenue was being recognized on pickup volumes. Delhivery, however, operates on a conservative approach where we recognize based on closures. And that has also led to a change in the overall yields. I think as you see quarter 3 and beyond, you will see yields normalize to where they were in the quarter 1 timeframe, which is somewhere between 10 and 11 rup

Q

Hi, am I audible?

Sahil

Yes Abhishek. Moderator: Yes you are. Hi, thanks for the opportunity. And just since we are on the Supply Chain business, I think just one observation. QoQ we have seen a decline in revenues, about a miss about 20/25 odd percent. Any change in accounting? Because we usually thought this is a seasonably strong quarter. How should we look at it, any thoughts there? Yeah sure. It’s basically just underlying seasonality for a couple of our customers for whom quarter 2 is not historically sort of a strong quarter. As an example, in consumer durables, one of our customers has significant seasonality

Q

Hi, am I audible? Moderator: Yes Abhijit, if you can speak up a bit, please. Thanks.

Abhijit

Yeah, sure, thanks. I have 3 questions. Based on the slide 5, the number of customers dropped by almost 1000-1100 on a QoQ basis. How do you sort of – I mean what are your thoughts on this and how do you see these numbers will likely move ahead? And that was question number one. Question number two is again on the supply chain slide. Dropping revenues is something which you can understand. But on quarterly basis if we look at revenue/sqft which you have reported, it is down QoQ. Why should square footage under management drop in a supply chain business QoQ? That was the second question. Page 2

Q

As you can see in the middle column, in quarter 2 fiscal ’23 total expenses were at 2,158 crores. This included 221 crores of non-cash recurring costs, which includes depreciation and amortization and ESOP expenses. These are the two costs that are excluded when calculating adjusted EBITDA. The ones that have made their impact. There are obviously minor adjustments which are for finance cost on borrowings and some adjustments due to Ind-As. Rishi, should I just read out the rest of the questions and answer them?

Management

Q

Page 26 Delhivery Limited Earnings Call

Sahil

Thank you Amit. The next question that I can see says what is the timeline for Delhivery to become EBITDA positive? As I’ve mentioned, the service EBITDA has seen a strong rebound from -0.3% to 4.8%. And adjusted EBITDA has improved from -12.5% to 7%. I think our incremental margins, as I’ve mentioned, to close to about 50%. Even if you don’t assume an improvement, I think it’s quite easy to model out what incremental revenues we’ll need to target EBITDA levels, and that are sort of based on volume recovery. My sense is that it’s quite easy to model out over the next couple of quarters when we

Q

Thank you. Thank you all for joining. Thank you Citi team for hosting us. END Page 29

Management