POLICYBZR — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

we have with us,

 Yashish Dahiya, Chairman & CEO, PB Fintech  Alok Bansal, Executive Vice Chairman, PB Fintech  Sarbvir Singh, Joint Group CEO, PB Fintech  Naveen, Kukreja, Co-founder & CEO, Paisabazaar  Mandeep Mehta, Group CFO, PB Fintech  Rasleen Kaur, Head, Corporate Strategy & Investor relations I will now request Yashish for the introductory address.

Thank you very much! · Coming to the results, we had aimed for a full year PAT break-even in the FY 2023-24, and very

Coming to the results, we had aimed for a full year PAT break-even in the FY 2023-24, and very happy to announce that we've already achieved that within the first 3 quarters, with the strongest quarter yet to follow.

This quarter PAT is at ₹ 37Cr +, which is a 4% margin, up from a loss of ₹ 87Cr same period last year.

That's a ₹125Cr delta.

For the year till date, that makes us PAT positive, about ₹ 4Cr of PAT, a swing of ₹482Cr from last year PAT for the same period with the seasonally strongest

quarter yet to come. · Our revenue for Q3 was 871 Cr. Now for the core business, the online marketplaces Policybazaar and

Our revenue for Q3 was 871 Cr. Now for the core business, the online marketplaces Policybazaar and Paisabazaar which we refer to as core businesses, our growth is 39%.

And we've grown to ₹ 593 Cr in revenue, our adjusted EBITDA has improved by ₹ 50Cr for Q3 2024 YoY.

This is very much in line with the guidance that we provided just after IPO.

That our adjusted EBITDA will keep growing ₹ 150- 200Cr every year.

For the last 6 to 7 quarters now, we have every quarter grown by more than ₹ 50 Cr. That means overall adjusted EBITDA is growing at more than ₹ 200Cr every year and that happened at the back of revenue growth.

So just to share on that, as I look at for the first 9 months, the incremental revenue growth is about ₹ 500 Cr, of which almost ₹ 170 Cr flew down to the adjusted EBITDA.

And I think that's the strength of the business, that with scale, there is operating leverage and there's a renewal piece with obviously much higher margins.

We are very pleased that our health and term insurance businesses, which are the bulk of the long term value, we witnessed a 44% YoY growth and I just wanted to clarify, within this, health is almost 20% higher than this.

So health has shown a much higher growth than term.

Our total insurance premium for the quarter was ₹ 4,261 Cr, which is now at a ₹ 17,000 Cr ARR, which has started to give us good scale.

If you recollect, our view was that when the year FY27 hits, we should be about ₹ 35,000 Cr. At that time, we were much smaller, so it looked like a large number.

But now it's starting to look very real.

Our growth over the last 2 years is about 2.5x, over the next 3 years getting to 2x does not seem like a very big task.

Out of ₹ 593 Cr of revenue for the core online business, credit linked revenue is ₹ 145 Cr. Our renewal or trail revenue ARR is now ₹ 454Cr up from ₹ 317 Cr, and this is the part that operates at a very high margin.

And obviously contributes towards adjusted EBITDA.

We continue to improve our customer on-boarding and claim support services and maintain insurance CSAT of 88%.

While we disclose 88%, we actually measure this in decimals, and do appreciate us, it is very difficult to change this in decimals; it’s now from 88.4 to 88.7.

Credit business growth has sustained well.

However, we are expecting a 10% lower growth rate.

If we were expecting 40%, we now expect 30% growth in this business for perhaps the next quarter.

And we expect it to come back to normal growth after that.

This is to do with the unsecured credit part where RBI has put in some guidance.

Credit business has been adjusted EBITDA positive since December 2022.

Now, I just wanted to clarify that we don't have a credit risk issue.

However, suppliers have tightened their logics, and getting new suppliers in their place does take a bit of time.

That's why the 10% growth delta.

We're now at an ARR of ₹ 14,000 Cr Disbursal, and about 5.6 lac Cr issuance on an annualized basis.

Total credit consumer base is now 41 million.

This accounts for 75% of the sales because it's mostly on, communication with these 41 million people.

75% of cards have been processed end to end digitally.

We continue to strengthen our leadership.

If you recollect, after IPO, we really started investing in our new initiatives, we continue to strengthen our leadership there.

Our new initiatives are now break even on a contribution basis for the last quarter.

PB Partners, our agent aggregation platform, which is the bulk of new initiatives, continues to lead the market and scale and efficiency of operations.

We have moved the business increasingly towards smaller and higher quality advisors with 56% jump in number of advisors using our platform.

It has the highest proportion of non-motor business, and is present in more than 17,000 PIN codes across the country, which is more than 90% of the PIN codes in the country.

And we continue to see improving efficiencies in the business.

In fact, I'm very confident; we will see profitability in that business in the near term.

However, in the same breath, I would say that profitability or loss will always remain dwarfed.

Going forward what we will realize is that the core business profitability will totally dwarf both the profits and loss of the new initiatives.

Our UAE premiums have grown at 2.4x and happy to take questions now.

Salgaonkar, Sachin: · But still, overall EBITDA or adjusted EBITDA. You see a big delta right at the

Thanks Rasleen.

Good day everyone, and congratulations for a good set of numbers.

I have 3 questions.

First question is on your cost.

Just wanted to understand should we look at this cost as a new normal, or is this something one-off?

And I'm generally asking from selling and marketing expenses which are down on a QoQ & YoY basis, and so are your employee expenses.

I presume it's a factor of ESOPs going down.

So that's where your employee expense have gone down.

Is there anything else which is largely reducing the total employee benefit expense?

Got it, Yashish.

Ad and promotion expenses are here to stay.

But still, overall EBITDA or adjusted EBITDA.

You see a big delta right at the

Thank you, Yashish.

Pretty clear on that.

My second question is when I look at your Core Policybazaar business and generally look at how insurance business has grown on a QoQ basis.

Clearly, your fresh business has grown much faster than what industry has shown growth.

So any color you could give in terms of - Is it health, Is it Term, Is it ULIP?

Something specific which is growing better as compared to industry?

Thank you, very, very clear, and my last question is on Paisabazaar.

Yashish, well taken your comments in opening remarks with suppliers have tightened, and we could see a 10% slower growth delta.

But the key question is, how do you guys look at it?

I mean, is there something where you guys need to think that this is structurally different in the business now, what it was few years back.

And given how, let's say, Policybazaar has scaled up in a meaningful manner, any general thoughts in terms of, if you want to look to revisit some of the parts of the business from the next 5 to 10 years perspective?

Got it, thanks, we'll wait for further updates as and how you guys provide.

Thank you so much.

quarter yet to come. · Our revenue for Q3 was 871 Cr. Now for the core business, the online marketplaces Policybazaar and

Hi, yeah, Yashish.

Congratulations on a great set of numbers.

Yashish, this is on POSP itself.

So just want to understand that if a particular POSP agent comes on our platform, but he leaves after, say, one year, then whatever business he did in that one year, that will still be on our books in the sense that if it's a motor business, then I'm not sure, renewal revenue is an advantage.

But in all other business we'll have that renewal advantage.

That's true.

The reason I asked this was to ensure that, is there a way to improve the stickiness of that retail agent which we are sourcing right now, because if, for example, in a business like health, if it is more that the code in which the business has been registered is through PB.

I'm just trying the code PB Partners, just the Code in which the business is registered so, and he knows that he has done a lot of business in the first year, second year.

Then he would be more willing to stay with us if that is a clause.

So just from that perspective.

Got it, fair point, and I think.

One thing you repeated this number, if you can just tell me again the new and renewal premium for this quarter.

Sorry to just ask again.

fair thanks.

Thanks a lot.