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Subdued operating performance on weak seasonality

Result Synopsis

Matrimony.com (MATRIM) reported weak financial performance for the quarter. Both, sequential revenue growth and EBITDA margin were below with estimates. Revenue declined by 1% QoQ, led by decrease in Matchmaking services business (down 1.5% Q-oQ). Consolidated Billing stood at Rs. 1,091 Mn (down 6.3% Q-o-Q). There was sequential decline in EBITDA margin(down 88 bps QoQ) on account of higher A&P expense. Average transaction value was down 4.4% QoQ to Rs 4,396.

The dip in average transaction value in the quarter points towards pressure on pricing as its key competitor, Jeevansathi, has started offering certain features free to its users. Rising penetration and shift from unorganized to organized players would continue to drive revenue growth; while positive operating leverage would drive EBITDA margin in medium term. Online matchmaking accounts for just 6% marriages in India and expected to grow going ahead. Also arranged marriages still account for 80% of marriages in India. Marriage services in India is Rs 3500 bn in size, but is highly fragmented currently, and offers long term growth opportunity for the company. We estimate revenue CAGR of 11.2% over FY22?24E with average EBITDA margin of 19.2% over the period. We maintain our NEUTRAL rating on the stock with revised target price of Rs 670/share based on DCF methodology. The stock trades at P/E of 27.3x/21.5x on FY23E/FY24E.

Result Highlights

* Reported revenue of Rs. 1,149 million. (up 4.5% Y-o-Y, down 1.0% Q-o-Q). The dip in revenue was led by decrease in Matchmaking services business (down 1.5% Q-o-Q).

* EBITDA margin dipped by 88 bps to 16.1% Q-o-Q due to increase in advertisement and business promotion expenses (up 2.0% Q-o-Q).

* PAT decreased to Rs. 117 Mn (down 1.7% Q-o-Q) due to decrease in Other Income (down 11.2% Q-o-Q).

* Paid subscriptions during the quarter were 0.24mn (up 8.3% Y-o-Y, down 3.5% Qo-Q). Average transaction value was down 4.4% QoQ to Rs 4,396.

* Consolidated Billing stood at Rs. 1,091 Mn (down 6.3% Q-o-Q), and Matchmaking Billing stood at 1,066 Mn (down 7.0% Q-o-Q).

* Launched RainbowLuv matchmaking app for LGBTQIA+ community, to help them find a meaningful relationship. Launched TechieMatrimony, an exclusive matchmaking service for the IT, software, and technology professionals, to help them find a match from the same profession.

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