Analyzing...
Hi! Good evening. Congratulations on a good set of numbers. Your contribution margin has been lower. But if I look at your adjusted EBITDA margin for the existing business that has improved so there has been a pretty good control over cost. The indirect cost.
Don't say that. You're making my life harder.
But and this is despite you telling us that you mentioned 1,200 to 1,500 vacant seats. So , I wanted to understand what is really driving this and
, when do we see either we eliminating some of these seats, or we filling up these seats for.
Don't take it too seriously. We've already given the notice to the real estate Guy, that we are getting rid of those seats. So the offices will get emptied by April. Notices are playing out. And , financing costs coming down hopefully. Don't take them too seriously. Yes, it'll have some impact, and you'll see it by April. We did over plan a bit, and the requirement was much lower. Finally, so that's what I would say, and no our OFC (other fixed costs) are not low. Please don't get that wrong.
Our revenue has increased by the percentage OFC will look low. Of course, if your revenue is going 45%. Thank God, our OFC is not growing at 45% there. But I just want to explain to you that our marketing, actually, our television in Q3 was higher, significantly higher than last year, because we were on air all 3 months, many times in Diwali we don't. That month we reduce our spend significantly, but this time we were on air 3 months, so I would say that , whatever be Yashish's view on the cost. But as far as the numbers reflect, the fact is that this quarter, we were able to leverage our fixed cost quite effectively.
Yes, because, , when I look at when I back out the fixed costs or indirect cost between, , contribution and adjusted EBITDA margin for 6 months, there's a growth of about 12.5%. But for 9 months there's actually a decline, on a year over year basis. Is this sustainable? Because then , that could lead to a higher margin expansion. Q4. And beyond. So how should we think about this, and what is driving this.
Yes, I would look at it more on a long-term basis. Yes, we try to maintain, as we've always mentioned, that we would like to keep our fixed cost growing, , significantly slower than our revenue. And again, I would say, 3 months is not the right way to look at it. But yes, over a period of time that should happen, and we'll see how it goes.
Got it. And also coming back to this, whole thing by the regulator of , accounting for long term policies on 1/n basis, are we changing our strategy in in any way?
We are not so small there like, honestly, we're not. We're not so small that we would change our strategy basis, some commission payout or something of that sort. No, not at all. We want to be big in health. We will continue to be big in health. We will continue to do 3 year plans, 2 year plans, one year plan everything. In fact, if I was to say from a
competitive perspective, it is a huge advantage to Policybazaar, right?
Because as a player, we are very keen to go down that direction of investing in our growth. Not everybody can invest in growth.
And as an insurance broker, I would tend to believe that it's always better for you to sell a 3 year plan over a 1 year plan right? Because it guarantees you persistency upfront or reduces lapse rats.
When you look at a 10-year view and because we have the data thankfully of the last 10 years, the numbers, it basically becomes Even Stevens. There are lots of factors. And, it's a more detailed conversation. There are lots and lots of factors that go into this this decision. But over a 10 year period of the same story, whether you sell one Year Plan or 10 Year Plan becomes the same thing. A 3-Year Plan will have one decision point at the end of 3 years, which will have a higher drop than, a continuous drop that there'll be. There'll be lots of complexity. It's a long conversation.
Okay, got it. And can you just give me your renewal premium for the platform business and for the new initiative separately.
Our core business on renewals is about about ₹2,050 Cr.
That's our renewal premium. ₹2,042 Cr. That's only core.
And all the new businesses put together about ₹500 Cr more.
Which means we had an ARR of about 24,000 Cr about half is fresh. A little more than half is fresh. About 50, 57% is fresh. 43% is renewals, which is a great place to be. If your new business is more than your renewals, because that means you're really growing fast. Understood. Thank you, all the best.
Thank you, Madhukar. We'll take the last question from Rina Mehta, Trident Capital. Reena, please unmute yourself.
Congratulations for the good set of numbers and thank you for providing this opportunity. So, I have basically 3 questions, what is your market share in the incremental life business within the industry; another is like, how big is your saving business for you now in terms of premium. And the 3rd is, what is your agent productivity like? If you break down your growth between your agent, product, agent, growth and productivity growth.
We don't discuss market share, as you would have heard on the call. I think it's not a necessarily a very relevant metric. Obviously, our term market share is more than our I would say, savings market share. We are obviously a big source of term business for the industry. So, I think that will be a disproportionately high share for us as compared to the overall industry, and I think the last point you asked was about agent productivity. And thing I would say, this varies by quarter because we build scale for the season. So, what happens is that the 1st 2 quarters typically, we build agents size and numbers and etc, etc. And then we try to convert. Obviously, the back half of the year. We tend to do better in terms of productivity. So, I would say in Q3, it was similar that yes, productivity was not as good as we would have hoped to be. Because, like you said, we had just set very ambitious growth targets but other than that, I would say largely it would be 50 50 in Q3 and in Q4. I think it will be higher on the productivity side than on the growth side, because we will not add capacity in Q4.
Okay. So, then it is better to assume like, if you expect to grow 30, then you will be adding 30% more agents or employees will bring business for you, or there will be the existing agent who will be more productive and can bring 30% more business.
I think it's a mixture of both. It's not an exact science in that sense, because what also happens - it depends. If you're opening a new center, it's a different geography versus existing geography. So overall we look at, we assume a certain productivity growth of existing people. And then we do our capacity planning and typically we are not aiming for 30% growth. We are aiming for much higher growth. So, there is an element of always having to add capacity as we go along.
Okay? And if you can say that, how big is the saving business in terms of percentage of total premium right now. We don't discuss that.
Okay. Okay, sure. No problem. Thank you.
Thank you. Thank you very much. Everyone. I really appreciate your patience. Listening in until quite late. And once again apologies for the late start. Take care. Have a good evening.