Unicommerce eSolutions (NSE:UNIECOM) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Unicommerce Esolutions Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr.

0:45 Kapil Makhija, Managing Director and CEO of Unicommerce Esolutions Limited. Thank you, and over to you, Mr. Makhija. Thank you. Good morning, everyone, and thank you for joining us for the quarter two FY 'twenty seven earnings call. I am joined today by Anurag Mitchell, our Chief Financial Officer along with our Investor Relations Adviser, Strategic Growth Adviser. Let me begin with a brief update on our performance. We continue to build on the growth momentum of the past few quarters. Both Unicommerce and ShipPay delivered double digit year on year growth in quarter two FY 'twenty seven, supported by continued progress on our growth initiatives.

1:31 At the consolidated level, our revenue grew 15% year on year to INR59.1 crore during quarter two FY twenty twenty seven. There are three developments from this quarter that I would particularly like to highlight. First, ship pay has crossed INR 100 crores in annualized revenue run rate. The business grew 15.7% year on year. Second, our newer offerings within UNIEWARE are beginning to save and contribute to revenue growth even at an early stage, contributing nearly 2.5% of UNIEWARE revenues. And third, we demonstrated nearly 65% growth to end the quarter at INR 104.4 crore of cash balance.

2:20 I'll now spend some time explaining how we intend to drive organic growth in our business. We have been working on three key levers and are continuing to deepen our efforts across each of them. The first is acquiring new clients across all our platforms. We continue to strengthen our sales and marketing capabilities and improve go to market efficiency to reach more clients. The second is expanding our relationships with existing clients by increasing adoption of additional products. This includes upselling numerous Unireco and Unicapture modules and cross selling ship based offerings to our existing client base. And the third is increasing client value and usage through AI led product innovation.

3:10 Our objective is to make our products more comprehensive, help clients operate more efficiently and expand the range of business problems we can solve for them. These three drivers complement each other. A larger client base creates more opportunities for product adoption, while broader offerings help us deepen client relationships and increase revenue. Let me now take you through how these initiatives are progressing across UniWARE and Shipwit. Starting with UniWARE, we continue to see an improvement in UniWARE's growth trajectory supported by new client acquisitions and higher revenue from our existing client base. During quarter two FY 'twenty seven, we added 121 enterprise clients compared with 103 clients in the same quarter last year, representing a growth of 17.5%.

4:09 These additions included both traditional enterprises and digital first brands across multiple categories, including United Colors of Benetton or UCB, Amul Macho, Polanco, Push Masale, JK Meni by Raymond and Nishare to name a few. Beyond India, our international business continues to grow. International market now contributes approximately 6% of Unicommerce revenue compared with around 3% at the time of our listing couple of years ago. Its revenue contribution has doubled over two years and the business remains profitable while growing faster than our domestic business. Coming to our existing client base, we are focused on increasing the adoption of newer products and modules through upsell.

5:00 Historically, much of Universe growth came from acquiring new clients and increasing transaction volumes as those clients scale. With newer modules and products, we have an additional opportunity to grow revenue from the same client. UNIECO and Unicompure have crossed an annualized revenue run rate of over INR 3 crore representing around 2.5% of UniWARE revenue. During quarter two FY 'twenty seven, more than 150 clients were using these products. Currently, 7% to 8% of UniWARE enterprise clients use Unicommerce, while 5% to 6% use Unicompter. We see significant headroom to grow this contribution through higher adoption and new offerings.

5:49 As I mentioned in our previous call, enterprise software products typically require sustained development, client feedback and refinement before they reach maturity. As our newer products mature and adoption increases, we see the potential for their contribution to increase to more than 10% of Unicommerce revenue over the next two to three years. Moving to ShipPay. The business grew more than 15% year on year. With this growth, ShipPay had crossed INR 100 crore rupees in annualized revenue run rate. Last three quarters, we were focused on building a strong foundation and investment to ensure sustainable growth, which is expected to be visible in the coming quarters.

6:35 When we acquired Shipfit, we saw an opportunity to build a much larger logistics technology business by combining its product capabilities with our client relationships, technology and go to market strength. During FY 'twenty six, we focused on improving business fundamentals and building a sustainable operating model. Having established that foundation, we stepped up our investment in FY 'twenty seven to support faster growth and greater scale. Looking ahead, we see two complementary opportunities to grow Shipway. The first is cross selling Shipway services into our existing Univerr client base. Today, there is approximately 10% client overlap between Univar and ShipPay.

7:23 However, almost 20% to 25% of ShipPay shipment volumes are already generated by clients who use Univar. This provides significant headroom to increase cross selling within the Univar ecosystem. The second is independent growth in the broader market. Shiftpay addresses a much larger client delivered than Univar alone. Based on our internal estimates, we currently have less than 5% market share, leaving substantial room for growth. Our strategy is to pursue both opportunities in parallel, leverage our established UNIEWARE relationships to accelerate cross selling, while continuing to acquire new clients independently. Together, these provide us with two complementary avenues to scale Shipwet over the coming years.

8:16 Beyond client acquisition, upselling and cross selling, AI led product innovation is the third important driver of our growth. Our approach is to expand our product capabilities in two directions. The first is increasing the breadth of our offerings. We are developing new products and adding features within our existing products to address a wider range of client use cases. This allows us to solve more problems for our clients and offer more services, strengthening client stickiness. The second is increasing the depth of our existing products. As our clients grow, their operations become more complex. They manage more sales channels, higher transaction volumes, larger warehouse networks and more complex business processes.

9:07 We are enhancing our products to support these increasingly complex large scale operations. AI is an important enabler of both these efforts, helping us develop capabilities that was previously difficult to deliver, while also speeding up product development. Our earnings presentation for quarter two FY 'twenty seven covers several of these announcements, but I will highlight one important launch. Within UniWARE, we have launched DNA, our second generation AI companion. Traditionally, our system executed workflows and served as a system of record. DNA takes this further by identifying signals and potential anomalies early, helping client teams shift their focus from daily operations to faster decision making.

9:59 It also enables automated corrective actions either independently or with human intervention based on client preferences. As we define DNA through client feedback, we see the potential to transform how operations are managed and optimized, moving our software from a system of record towards a system of action. Let me now conclude with our outlook for the remainder of FY 'twenty seven. We remain confident of delivering more than 15% year on year revenue growth in Unicommerce from quarter four FY 'twenty seven onwards. For Shiftway, we continue to expect year on year revenue growth to accelerate to more than 20% from quarter four FY 'twenty seven onwards.

10:50 On profitability, we expect the pace of incremental investments to moderate in the second half of the year. For Ship Waste specifically, we expect the business to achieve adjusted EBITDA profitability starting quarter three FY 'twenty seven followed by a fat profitability starting quarter four FY 'twenty seven. Due to this, at the consolidated level, we expect profitability and margins to improve during the second half of FY 'twenty seven, supported by continued revenue growth and increasing operating leverage. To summarize, we entered the second half of the financial year with multiple avenues for organic growth and have cleared our path towards improving profitability.

11:38 Our focus remains on disciplined execution and building a larger, more profitable Unicommerce. With that, I'll now hand it over to Anurag to take you through the details of our financial performance for the quarter and first half of the financial year. Thank you. Thank you, Kapil. Good morning, everyone. I will now take you through our financial performance for quarter two F 'twenty seven. Our revenue stood at INR 59.1 crore, representing growth of 15% year on year compared with INR 51.4 crore in quarter two FY 'twenty six.

12:27 This was supported by continued double digit growth across Uniwear and ShiftPay. Adjusted EBITDA stood at INR 10 crore compared with INR 11.4 crore in the corresponding quarter last year. Our adjusted EBITDA margin was 17% compared with 22.2% in quarter two FY 'twenty six. As we have indicated at the beginning of the year, profitability during the first half reflects the planned investment in product development, talent, sales and marketing.

13:15 Profit after tax for the quarter stood at INR 6.4 crore compared with INR 5.8 crore in quarter two FY 'twenty six. For the first half of FY 'twenty seven, our consolidated revenue stood at INR 110.4 crore compared with INR 96.3 crore in H1 FY 'twenty six, representing year on year growth of 14.7%. Adjusted EBITDA for H1 FY 'twenty seven stood at 18.1 crore with adjusted EBITDA margin of 16.4%.

14:06 Profit after tax for the first half stood at INR 11.1 crore. Unicommerce remained a strong contributor to revenue, while Shipwreck continued to scale and increased its share of the overall business. Couple has already described our positive traction on new acquisition and progress across our upsell and cross sell initiatives that will help us scale further going forward. Our AI led product innovation to increase the breadth and depth of our platforms will enable both additional opportunities for revenue and to increase our client stickiness with a differentiated product offering.

15:01 A combination of these three levers with focused execution will enable us to grow sustainably. Coming to profitability. The investments made during H1 FY 'twenty seven have resulted in higher operating expenses during the period. We funded this investment through a portion of our operating cash flows. With incremental investment expected to moderate from quarter three, Continued revenue growth should support improving adjusted EBITDA and operating leverage during H2 FY 'twenty seven. Our balance sheet remains strong, supported by continued cash generation.

15:55 Cash and bank balances stood at 104.4 crore as of the end of quarter two FY 'twenty seven compared with INR 96.34 crore as of quarter two FY 'twenty six compared with repeating again, compared with INR 63.4 crore as of quarter two FY 'twenty six. Cash flow from operations grew 20.6% year on year to INR 11.6 crore during the quarter, reflecting continued strength in our cash generation. Our focus for the remainder of the year will be on sustaining revenue momentum, improving operating leverage and building a larger and a more profitable business.

16:51 With that, we would now like to open the floor for questions. Thank you. Thank you. We will now begin the question and answer The first question comes from the line of Puneet with SG Investments. Please go ahead. Sir. Thank you for the opportunity. So for the same, I wanted to understand great work, but I wanted to understand in terms of the average realization per order.

17:41 We have not been very well. I think it's coming down over the last few quarters. Could you explain why that is? Because we are growing in enterprise clients, but the revenue is not growing as fast. Could you explain why that is that we're not able to grow the average realization per order? Sure. Steve, compared to last year, we have not been able to get the business back on track to get to double digit growth. We have seen five quarters of consistent improvement in our growth over the last five quarters. This is on the back of strong from the client acquisitions. We continue to compare to when we exited, we were onboarding 85 to 90 clients a quarter to now we are onboarding anywhere between 120 to 150 clients a quarter. So we've seen a healthy improvement in the number of clients being acquired.

18:29 On top of that, the investments we made in FY 'twenty four and 'twenty five in building the new product, which is Unicommerce and Unicommerce. We are now seeing a healthy adoption of those solutions also now 150 plus of our clients are actually using these products. And these products within less than a year of their launch are now contributing to 2.5% of Unicommerce revenue. Having said that, in terms of our rate per transaction, even we listed our transaction necessary homogeneous, where we were only getting to B2C transactions. But as QuickCommerce started to gain scale, we expanded our offering to B2B and QuickCommerce as well. Today, B2B and QuickCommerce offerings of ours are being used by 45% to 50% of our client base, which meant that our transaction mix became heterogeneous.

19:25 So hence, rate for transaction is not a metric that we any way we're proactively tracking within our business. The three ways to model our business are growth of our existing clients for which we report a metric called NRR acquisition of new clients, which we report every quarter and the profits that we're delivering in the business. These are the three metrics that we use to track our business, and we are honestly not really tracking these great quarter transactions. And anyway, it's not a like to like comparison anymore ever since the contribution of B2B plus GoodCommerce has increased in our transaction mix. Could you give us like a number in terms of what contribution is this B2B transaction in QuickCommerce doing right now? So about 45% to 50% of the client base is using B2B and QuickCommerce.

20:13 So in terms of transaction volumes, it is a reasonable contributor. But given that in B2B and QuickCommerce items move in well, the realization per item is far lower compared to a B2C transaction. Our realization on B2C continues to be stable. But since the transaction mix has changed over the last two years, and you may see a drop in the rate per transaction, that's typically not a drop because as we added between GoodCommercial capability, we have effectively opened a new revenue line. And as I said, it's not a like to like comparison if you just look at rate per item that's processed for our platform. Got it, sir. Understood. Coming to the employee spend, we start I think the last quarter has been a step up since the last year in terms of investing on a new product.

21:04 So was this investment overdue? Or was this investment proactive? Because there has been commentary that Unicommerce not been up to the mark for a while. So I just wanted to understand that sense. Sorry, could you repeat the line about what's not been up to the mark? The Unicommerce tech stack. Okay. We continue to be a gold standard in the market, which is represented by the market share that we currently have in the market. We are more than double the size of the next year and are a preferred platform when it comes to managing the e commerce operations. So not sure where the comment about the tech stack not being up to the mark came from. To your first part of the question, where these investments were proactive because as AI change the landscape of the ecosystem, we wanted to be proactive because we time for a superior experience that we offer to our brand and their end customers.

22:05 Brands trust us to ensure that their e commerce operations run smoothly. We are a very mission critical software, a minute of downtime in a software like ours impacts the operations of any brand significantly. And that's why we continue to enjoy a premium in the market. We get 50% we are 50% more expensive than any other player in the market. And hence, our DNA has always been to invest in R and D to make sure that our product is always ahead of the curve. With AI becoming the center stage, we saw this as an opportunity to grow the platform by leaps and bounds. That is how you see our opportunities in terms of us investing in AI. So we not only got AI native talent, we built AI native platform. We've launched DNA, which is our AI powered platform this quarter. So we continue to invest in products where we're increasing both the test and breadth of the products.

23:05 We've now got multiple products under our umbrella. Hence, a lot of these investments are proactive, and we have announced about it at the end of quarter three that the next three quarters, we are going to invest in the business to make sure that it's steady and it continues to be a market leader in terms of the tech stack this offers. Just to give you a sense of the scale of what the platform today caters to. 60 lakh transactions were processed on a single day, this will peak this Diwali season, and there were no issues. And we've seen a 2x increase in food commerce processing. So this will hopefully give you a sense of the scale that we can handle and the investments that we're making are making the platform even more robust.

23:52 Understood, sir. Got it. So one more understanding I wanted to do, understand the strategy. Can international be a larger part of our focus? And how do we see international scaling as a company? Because international probably the average order for transaction will be higher and it's much larger sizes, right? So I just wanted to understand that sense. So for us, international is about being sort of the first mover in these markets. Southeast, we are carefully chosen the markets of Middle East and Southeast Asia because the e commerce evolution in these markets is slightly behind India. So the tech stack that we built for Indian e commerce operations, which is a lot more complex, becomes readily usable in the Middle East and Southeast Asian markets. We have seen considerable growth in our international business.

24:40 As I mentioned, it's growing faster than the domestic business and the related contribution has doubled over the years. While you're right that the average order realization may be higher, but at the same time, the scale of these markets in terms of e commerce transactions is far lower compared to earlier. So in terms of our ARPU or like ARPA, average revenue per account continues to be broadly similar. For us, international is more a diversification strategy and one of the growth levers for us. The idea is to keep going deeper in these geographies. Once we are able to hit a certain scale in Middle East and Southeast Asian markets, that is when we look at going after other geographies. If you ask me in terms of our focus, India continues to be a big focus of our because of the different solutions that we're launching. India continues to be a dominant portion or revenue contributor for us. Internationally, it may get to early double digits. We are not looking at, let's say, a 40%, 50% contribution coming from international markets. India will continue to be a larger contributor to our revenue.

25:47 Additionally, when we listed the contribution from the international business was in the range of 2% to 3%. As Praveen mentioned, now it turns to 6%. At the same time, the international business was loss making at a time of listing. But now in our time frame of two years itself, we turned this business as profitable. So the momentum on the international business is going completely well and is on track as per our expectation. Thank you. Mr. Puneet, please rejoin the queue for more questions. Next question comes from the line of Rajesh Shah with BDH Capital.

26:38 On the strong set of growth. First question is that if you look at the first half of FY 'twenty seven, UNIECOM's average revenue per client decreased by about 5% year on year despite the increased adoption of new modules. Can you please explain what is driving this degrowth? And what is your outlook for average revenue per client going forward? Sure. That's all. As we mentioned in a few of the earnings calls, new clients that we require take about six to nine months to ramp up. You have seen that we have significantly ramped up the number of clients that we require every or onboard every quarter. So when they come on board, the relative share of long tail customers continues to increase. That's why you see a slight drop in the ARPA, but it broadly stays similar. And if you look at our sequential ARPA, it continues to be in the similar ballpark.

27:44 We don't foresee this to be a declining strategy. It continues to be in similar ballpark. Like for quarter two FY 'twenty seven, it's about the quarterly average of INR 2.4 lakh, while quarter twenty six was about INR 2.9 lakh. So it continues to be in the ballpark range of about 80 ks to INR 1 lakh with our new modules getting more traction, this should stabilize even further. But all of this is to ensure that we continue to see a consistent growth in the business. As I mentioned, we are forecasting a 15% growth in the Unicommerce business from quarter four FY 'twenty seven onwards. We are confident of that on the back of stronger client acquisition and higher adoption of newer launches, which is Unicommerce.

28:37 Got it. My next question is that tax expense in the first half on a consolidated basis is much lower. Can you please explain this the reason for this? Sorry, I just your voice wasn't clear. Could you repeat the question, please? Yes. Yes. Expense in the first half on a constant basis was much lower. What is the reason for this? So tax expenses are much lower. That's the right question. And the reason for the same is that we have considered certain tax benefits on account of certain benefits we are looking in terms of turning our Shippey business profitable from quarter three. And that is the reason we have recognized deferred tax in the financial statements at a consolidated level.

29:32 That's the key reason for the same. Got it. Super helpful. Thank you. Thank you. You. Next question comes from the line of Patti Pantia with Fermi three twenty five Investment Advisors. Please go ahead. Yes. Hi. Thanks for the opportunity. Great to see the continued cash generation of the business. I had two questions. First was on the line of you acquiring a customer like JPMA. So I just wanted to understand what is the kind of engagement that we are having with them? What problems were they facing at an industrial company came to Unicommerce, which is generally known for its B2C brands that we operate in. So what was the kind of problem that we are solving for them?

30:31 Sorry, could you please repeat the name of the customer that you were referring to? JK Mining. JK Mining. Okay. See, while it's a bit hard for me to disclose the headwinds for a particular customer, but a lot of these traditional businesses are also looking to get online for both on B2C and market basis. Typical engagement starts from us offering an order management system for them to manage their e commerce business across multiple marketplaces. As the scale greatly increases, the engagement deepens by looking at a warehouse management system, which is deeply integrated with the ERP, which could be the likes of SAP, Oracle, Microsoft, anyone because we are deeply partnered with all of these ERP. So that's the typical use case of the journey for any brand that on both in Unicommerce.

31:19 And now with UNIECOMPUTER, they end up as the scale increases, they end up taking these solutions as well so that they are able to manage this end to end. And as their D2C volume scale, they also look for logistics solution that is when chip pay or marketing solution that is in chip pay and convert pay effectively become relevant. So now a brand knows that they can start with an order management system with the managed e commerce orders and inventory, but soon they can expand into warehouse, logistics, marketing, deconciliation and video and image capturing. And that's why large brands like many and many others who onboarded on us, We continue to demonstrate strong customer acquisition logos every quarter. They have the comfort that they can start small with us, but they know that as they scale, their needs will evolve and Unicommerce will be able to offer solutions for all their needs as far as e commerce enablement is concerned.

32:18 Okay. My second question is the base UniWARE subscription, if that is x, when we combine, let's say, a UniWARE, a Unicommerce with them, how... And does it... What kind of number do we get? Like, 1.05 x or what have? With the advent of DNA, the new product that you have, for customers subscribing to all these modules, what could be the kind of, you know, realization increase that we see from, let's say, 1x to 1.15x, 1.2x from the customer? That would get a sense of that. Sure. So right now, unit liquidity has been six to nine months of their launch and hence the pricing discovery continues to happen. As of now, combination of these can actually take us the realization to anywhere between 1.5 to 1.7 times, if both these modules are adopted by the customer, which is using Unicommerce.

33:11 But we anticipate the pricing and the realization to stabilize anywhere between, let's say, 1.2x to 1.3x. These two modules in the infrastructure are actually relevant for anybody selling on marketplaces. So it is applicable to majority of our customer base. And hence, we have guided that over the next two to three years as these products mature, we are anticipating a 10% plus revenue contribution from these two modules. We continue to get feedback on these modules. We launched with a certain set of features, both generic and manufacturer. We continue to incorporate that feedback and making these solutions more comprehensive, which is when we will be able to expand the attach rate of these solutions to a larger portion of our base. Today, Unicommerce is being used by 78% of our client base and Unicompter for 5% to 6% of the client base. As the retail attach rate continues to improve, the relative realization of these solutions will continue to scale.

34:15 DNA is a beta launch as of now. It's been rolled out to about 10 to 15 customers. We are getting their feedback. And as of now, we are offering this for free. But as we can as we make it more comprehensive in terms of the use cases that different customers share their feedback with, we will take it out a monetization strategy for today. Thank you. Next question comes from the line of Arun Arora with GK Capital. Please go ahead. Hello. Congratulations, Kapil. Numbers are pretty much in line with your guidance.

35:06 My first question is from three to five years perspective. What's our plan? Like if you can throw some light on that part? And when can we reach EBITDA margin of 20%? In terms of long term, I think we had mentioned that what we've done over the last five years, we've grown the business 5x. And more importantly, our EBITDA we delivered EBITDA, which is higher than our revenue five years ago. We want to replicate a similar story and want to grow the business 5x from here, ensuring that our EBITDAs are actually larger than what our revenue is today. And today, our EBITDA margins we had mentioned since last quarter broadly turns to be at 15%.

35:55 The idea is that steady state, it should go back to 20% -plus levels. We had the last few quarters, we had set up our investments in people, product and market reach. As these investments translate into results, we anticipate increasing operating leverage demonstrating increasing operating leverage and increasing profitability in the coming quarters. So you could gradually see our journey back to 20%. And at steady state, that is the EBITDA margin that we plan to deliver. Additionally, as Praful also explained, I also wanted to highlight that Unicommerce is reporting 36% of adjusted EBITDA margin in quarter two hundred and twenty seven percent. Even at a consumer level, despite of the investments we have made to the business, as we mentioned that we have contributed most of the investments towards A and E product development, talent, sales and marketing. In spite of that, our adjusted EBITDA margins are 17%.

36:58 So it's not too far from the 20% of currency investments. And we have also guided that, Chippewa will return adjusted EBITDA positive, breakeven from quarter three onwards because last part of the investments are already done. So we are still sticking to the guidance we have given on 20% plus So is it like from quarter four onward, our EBITDA margin will improve drastically? It will improve because OshiPay becomes quite profitable from quarter four onwards, we anticipate the EBITDA margins and margins to improve. We had already guided a couple of quarters ago that second half of the year generally sees higher operating leverage. So we are on track to deliver that in the coming quarters.

37:52 Understood. And Anurag, if I look at the balance sheet, so it looks like certain investments are moving to current investments. So is it like due to maturity, it's moving to current investment? Or are we having some plans for M and A? Like we are actively looking for M and A or something like that. That's a good question. M and A is a different dictation altogether, but as you are seeing only the current investment, I think you should see current and non current both put together. The large part of the difference between the current and noncurrent are on account of the fixed deposits paid within period of twelve months. That's only a reclassification matter because of that, you are looking current versus noncurrent slightly different. But I think you should see this number adding up both the numbers together.

38:47 And on the M and A front, Praveen, you can talk about. Yes. So Steve, one of the best utilizations of the cash that we've been adding on our balance sheet is to do M and A. We continue to look at opportunities which are adjacent to what we offer today. For us, M and A will be a lot about adding new product capabilities that makes sense for our existing customer base. We have talked about the framework that we use to evaluate candidates for M and A, which is that it should make sense for existing customers. It should be a good product, good team. It should either be profitable or should have a part of profitability and should be at a reasonable valuation. So we continue to be in touch with many startups and figure out what's the right fit and the company that fits all the four criteria, which is which when we feel that we are at an advanced stages of discussion, we'll be happy to share the details. But one of the best utilization we feel for cash is to actually look at strategic M and A, which can accelerate our journey even further.

39:48 Any tentative timeline or anything where you want to highlight? Because we are hearing this from last three quarters that company is planning, but nothing concrete is coming out. We are actually very patient when it comes to doing M and A. We want to do it right. We are there's no mandate in the letter to do M and A every quarter or every year. We want to wait for the right opportunity, right valuation, right team, right product, and that is when we want to look at acquiring because we spent the last three to four quarters actually integrating Shiftry well. And now we feel that we have been able to lay a firm foundations with all the investments that we've done, with all the deep integration that we have done with Shiftry. Now I think we would be open to actually looking at more M and A. But at the same time, we don't want to rush into it.

40:38 This is a very important decision for the company and impact of future journey for the company and our shareholders as well. So we want to be we want to continue to be thoughtful about such deals. So while we continue to add that to the balance sheet and continue to scope for opportunities, we will look at doing one only when we feel that all the full criteria that are laid out meet the bar for us. As Praveen mentioned that we wanted to follow a patient approach here. I we keep adding good cash in the balance sheet. As you can see, our cash balance also grew 65% on a Y on Y basis, and now our cash balance has crossed 100% road map itself. So let's wait and see how MTA will turn up.

41:28 Thank you. Mr. Arora, please rejoin the queue for more questions. Next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Sir, you for the opportunity. Sir, firstly, wanted to understand how we read our desired gross margin levels in Shiptree and the operating level would be sufficient enough to move to the positive EBITDA levels? Yes. So our gross margins continue to be comparable to the industry benchmark. We are comparable to what the market leader operates at. A lot of these investments that we're making in chip build are below the gross margin level. So we are confident that we will deliver a distributor profitability quarter three and back up in quarter four onwards.

42:21 At any point of time, we have the option of making profits in the Shipta business, as we had mentioned right in the beginning, that we want to continue to invest for growth. So we when we turn the business profitable in quarter three and quarter four, we want to continue to invest for the growth. So we will whatever profits we generate, we'll reinvest back for growth because it's a big growth engine ship to operation of 4,000 crore market, where we have a modest share of less than 5%. So we see a significant headroom for growth for us. And that's where the plan is to whatever profit we generate in the business, we'll reinvest them back for growth, largely in sales and marketing and product. Additionally, what Kapil mentioned, while as we have explained earlier also that our Unicommerce business gross margin trends around 80% and ship build gross margin trends around 30%, which is as per the industry benchmark.

43:17 The most important point here is that a large part of the investments, what we have done so far are below the gross margin. And as in the earlier discussion, we have highlighted that we have done largely with the investments. And now from quarter three, quarter three onwards, as these investors investments will taper down, our profitability will increase, and we are very hopeful that we'll be able to deliver breakeven adjusted EBITDA in ship business from quarter three onwards and keep investing in the business. At the same time, our behavior adjusted EBITDA margin is already trending at 36%, what we delivered in quarter two of FY 'twenty seven. Got it. And sir, on our core product offering of UniWARE and the additional model that you're offering, sir, so the vision that we have of scaling our business, like, the past five years, are the current models or the offerings like Unicomture and Unireco sufficient for us to improve our average revenue per account, or do we think that there is some white space that we would like to address because this five x...

44:29 Multiplying our revenue again by five x for the next five years will take some amount of incremental revenue that should come from our existing clients. So where should that come from, if you can help us understand? Yes. So there continues to be many white spaces, and that's why I've mentioned that M and A continues to be an important lever for our growth. So while UNIECOM, UNIECOMPUTER, Shift plus ConvertWave will add and improve our ARPA significantly. But for our vision of becoming of a top shopper e commerce enablement, there are more white spaces both in pre purchase and post purchase that we continue to actively evaluate. And as I mentioned, we find the right opportunity, we will be acquiring some of those solutions.

45:14 So the short answer to your question is, yes, we will need more solutions to improve our ARPU further and to embark on the five x journey that we're talking about. And for that, we will be looking at both organic build as well as M and A. Our product development, R and D will continue to be an important focus for us because that's what we stand for in the ecosystem. It not only improves our ARPU, it also improves the stickiness of the customers, so further strengthens our lifetime. So hence, we will continue to add new solutions to improve our RPI even further and accelerate our journey to the five gs growth. Got it. So just one final question from my end, sir. Is our TAM getting squeezed somewhere because of because of this third party logistics here who might be performing functions like processing more orders, making sure of returns where the branch might be taking the only o... O m s from us and the rest product offerings, they might be just outsourcing out to the third party logistic. So is there a...

46:25 Is that a pain point for us right now, or that is not a mean so if you can just address on that? No. So brands continue to work with multiple providers, so multiple physician partners. What ends up happening is that typically what we've seen a brand, we choose one Brazilian partner for the North region, someone else for West, someone else for South because different Brazilian partners have strengthened particular regions. But they want a single unified staff to manage their operations. So they mandate the business partners that you have to use the OMS and WMS of Unicommerce so that they get full visibility at a single place on what's happening with their inventory. And they have the confidence that this is a best in class solution. So it will lead to better outcomes in terms of materialization of inventory, faster dispatches, etcetera. And hence, it is in the today's ecosystem, it's the brand mandate to the personal partner. So we don't see them as being competitive. They actually become a partner. Many times, actually partner with some of these personal partners. And when our brand is talking to personal partner, that is when they actually recommend saying that you can use an e commerce as a solution.

47:35 So hence, we have now seen this as a tight knit ecosystem where the brain lies with the tech, which is the OMF and the Plymouth. The hands and legs are offered by the Plymouth part. You. Mr. Rathi, please return the queue for more questions. Next question comes from the line of Vivek Kumar with Geometric Securities. Please go ahead. Hello. Is it am I audible? Yes, you are audible. Sir, you mentioned that your comment of improving your market share in Shibvei. So if you can throw more light in that market, how many players, why do we think we have the right to survive and grow profitably, and whatever kind of GTM more would be required and our right to serve apart from our current customers and if you can throw more light on what what gives us the right to survive and grow and how much the end market that end market is growing?

48:30 Sure. The overall market for project aggregation is about INR 4,000 crores. The basic market is structured is that there is one market leader, which has got about 25% market share, 20%, 25% market share. The remaining market is fragmented across 45 plus players, which are ranging anywhere between the size of, let's say, 10 crores to INR 15 to INR 80 crores to 100 crores sort of a revenue. When we acquired Chippewa, Chippewa was also one among these 45 players. So there is no credible number two in the space, and that's where we saw this as an opportunity. We feel we strongly believe that any space deserves at least two, if not more players, credible players to be offered to the market. So we saw this opportunity of becoming a credible number two and eventually, hopefully, number one as well. And that's when we acquired Shiptree.

49:18 The right to win for us is one with Unicommerce plus Shiptree combination. We are actually the only player which has had comprehensive of product fees that a brand can get from us in the there, even the market leader could include applications that does not have as comprehensive of product suite as we have. Second, Unicommerce is a market leader in the respective space, has a very sticky solution called OMS and WMS, where a brand adopts this task, then it's sort of managed for lifetime. With a sticky solution, for us, the upsell cross sell of a ship where typically a brand ends up working with multiple courier aggregators, the entry becomes a lot easier, where the sitting costs are not very high. And hence, a brand is willing to try Shipway as well when they're using some other aggregators.

50:06 So that becomes our second right to win that we have a very easy solution where the brand is dependent on our solution. And hence, they actually prefer having everything under a single umbrella. The third is that if you look at the ecosystem today, most brands are not happy with the current service levels that the existing solution providers are offering. We are bringing a very fresh tech first service first approach in the ecosystem. Because of it, we are actually seeing a lot of players, a lot of brands actually shifting or trying this out while they're using some existing kind of for their aggregator solutions. So because of these three, our comprehensive product solutions are sticky product suite to which upselling becomes a lot easier and very tech first, service first approach, where we are aiming to become the best product out there in the market. These three are becoming a clear right to win for us because of which we are steadily growing the business and have now INR 100 crores in annualized revenue run rate.

51:04 So your comment of greater than 20% growth basis because of you said to 45% or 25? 45%. So you're very confident of gaining market. And the end market would be growing at 1520% or much greater than that? See the B2C market, this market is relevant for the brand selling on their website. That market is growing faster than the overall e commerce market, which is growing in double digit. For us to be able to deliver 20% growth rate from quarter four FY 'twenty seven onwards, we feel that we are a challenger in the market and for and with a significant headroom for growth, we are very confident of being able to deliver that growth from quarter four FY 'twenty seven onwards. So then just last question. So in terms of we go into 5x in five years, we should definitely have an M and A, right? Or because and two, because of A and our development cost going down, how do we think about it? Are we going develop more in house and add additional fees or we need that M and A to take up to five years?

52:12 See, M and A will be a contributor for the five years, at the same time organic growth will play a much larger role there. So both UNIE and ship based growth will cover a large portion of that five gs growth, but a portion of that five gs growth will come from M and A as well. While we ensure that the shipping speed is a lot faster, we are able to ship a lot more, and that's why we're able to launch Unicommerce, which are organically built. But at the same time, we have been able to add shipping and convertors, which is ensured that our ARPU grows even further. So it will continue to be mix of organic and inorganic. We also hope that with what's happening in the overall SaaS ecosystem, the valuation multiples will also correct. So we will get a lot more deals at an attractive valuation in time to come, and that's why we are also being patient in our M and A strategy and looking at the right solution available at the right price to be able to add to our portfolio.

53:14 You. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I now hand the conference over to the management for closing comments. Okay. Thank you, everyone, for joining the call today. We hope we have been able to address your queries. Should you have any further queries or clarifications, please feel free to reach out to us, our strategic growth advisers, our Investor Relations advisers. Thank you once again, and have a good day. Wishing everyone a very happy Diwali in advance. Thank you. On behalf of Unicommerce Esolutions Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.