Thank you very much, sir. We will now begin the question-and -answer session. The first question is from Aditya Soman. Please introduce yourself and proceed with your questions.

This is Aditya from CLSA. So, two questions. Firstly, can you throw some more light on the economic arrangement between you and Nike? And if that's not possible, just the type of contract that you would typically have or financial arrangement you will have here? Second, again,

related to Nike, how do you use the customer data? Does that reside with you? Or does it stay with Nike?

Right. So let me answer both questions. Thank you for the question. So, as I said, the partnership with Nike is in 2 parts. One is a standard marketplace partnership where we list Nike on the marketplace platform just like we list many other brands, and that's one part of the partnership. The second is where we completely end-to-end operate their D2C customer platforms, which is across web and app. So Nike.in as well as the consumer -facing apps, which are the app on iOS and Android, are built and operated 100% by Nykaa Fashion. So it's a much deeper integration on that side and end-to -end, including fulfillment and everything that goes into running those platforms, which is done by us. I will not go into financial contractual details because that's not relevant. But the arrangement is very different. Marketplace is just listing Nike on the platform as we do with many other brands. The other one is us operating a different sales channel for them, completely end-to-end.

Just in terms of running the, say, Nike.in platform. So I just wanted to understand, would you get a percentage of the sales? I mean, even if, obviously, you can't share the exact numbers, but just to try and understand what type of arrangement this would be? Or, I mean, how does it work between you and Nike?

So we don't go into those details. But when I say we operate the entire platform, we sell everything that's sold on Nike.in as part of the fashion vertical, as part of the numbers we report.

Yes. But I think, Abhijeet, what they may be looking for is it's like a retailer -like arrangement where we get commission-like numbers and some other service numbers based on the sales that we achieve. And we are protected against inventory. I mean, there are similar arrangements like a retailer.

Yes. I think on Nike.in side, on the D2C side, it's an arrangement. On the marketplace side, it's a standard marketplace arrangement. If that further answers your question.

We'll take the next question from Videesha Sheth. Kindly introduce yourself and proceed with your questions, please.

This is Videesha from Ambit Capital. My first question was on Nykaa Now. So with this Nykaa Now aspiration to reach 25- odd cities, how do you expect the EBITDA drag from this Nykaa proposition to trend going forward? It might be early days, but at what point does Nykaa Now's overall contribution turn margin accretive?

Yes. So maybe I'll take that question. So look, I think we've already been live with Nykaa Now for almost a year, and it is now at critical mass in the metros in which it is live. Those, as you can imagine, tend to be the larger metros where a significant amount of our demand is currently coming from. And as you can see from our results, there is no EBITDA margin dilution even

though Nykaa Now has reached a certain size and scale, whereby it is already meaningful in the cities in which it is present. So our early read is that we don't think this will be dilutive if at all. In fact, we are currently seeing that the frequency of purchase from customers who are now engaging with Nykaa Now is increasing. That was always our hypothesis that if Nykaa Now became a destination for customers to make those last -minute unplanned purchases on Nykaa, which maybe in the past was being fulfilled by other platforms because Nykaa did not have this quick delivery capability. So there are new use cases which are now being fulfilled through Nykaa Now, which were not being done earlier. So net-net, we see this as accretive from an LTV perspective. The AOVs for the Nykaa Now orders are not meaningfully different from the mainline orders either. So the only cost which we are currently keeping an eye on is the fulfillment cost, whereby point -to- point fulfillment of a Nykaa Now order, on a cost per orde r basis, naturally would be more expensive. But again, the benefit is the increase in frequency of purchase, and the average order value staying consistent. I think these things are all offsetting some of that increase in fulfillment. That's why you're seeing that despite Nykaa Now having become meaningful in the past several quarters, we've still shown EBITDA improvement this quarter. I hope that answers the question.

Sure. Just a small follow-up to this. In terms of the category mix in Nykaa Now versus Nykaa, if you could call out some trends that you're seeing over there?

Currently, it's not looking very different; we're seeing a lot of I mean, ultimately, we are not a horizontal quick commerce player. We are a beauty player. So naturally, it's all beauty categories that are doing well. And our business does revolve around 4 or 5 key categories, and those are makeup, skin care, hair care, bath and body, and fragrance. Those are the same categories that we're seeing obviously do well on Nykaa Now as well. I think what's interesting on Nykaa Now is, of course, new subcategories, which are starting to see some incremental growth, such as certain personal care type categories that you need in a hurry. So things like low ASP face washes and cleansers and bath gels, et cetera. So those are also pure incremental business for us because those are categories in which historically Nykaa never had a big role to play.

And my second question was on Superstore. So when does the GMV growth normalize here towards the 40%, 45% CAGR ambition called out during the analyst meet? Because even when we compare it to the GST-led shift, the gap in growth seems to be a little higher.

Yes, yes. So let me answer in two ways. Firstly, the GST impact will start normalizing from Q3 onwards. So you will see very close numbers between NSV growth and GMV growth. So that's one. Secondly, yes, we had called out, and the CAGR was 35% plus, which is a small gap versus the 28% NSV that you see. And there are 3 pronged things that we are doing, which will take us to that 35%.

We continue expanding our retailer network, number one. Number two, we are also, like I had shown in my brand partnership chart, we are expanding our category footprint and adding more wellness categories, which will give us more throughput, and leveraging data science and technology to drive more brands in more stores, basically leveraging our network more. So I think with that, we will be able to be on our guidance by FY 2030.

The next question is from Kapil Singh. Please introduce yourself and proceed with your questions.

Yes. Firstly, just wanted to understand top down. We are seeing a growth acceleration for the last few quarters. Are we still on that trajectory? And what is really contributing to it? If you can articulate a bit in terms of whether the market conditions are also improving or across the platform, and some actions you have been taking? Just some more details here would help.

Sorry, is this for any particular segment of the business

I think each of the businesses, if they want to add, would be helpful. But generally, the observation is that growth is accelerating across segments, both for Beauty and Fashion. So maybe we would like to hear from both Anchit and Abhijeet, if possible.

Yes. Maybe I'll start, but I'll just caution you that that's a very, very long conversation. There's not 1 or 2 things that we can point to. And in fact, we try to cover this in our Investor Day, which I assume you are a part of. We try to cover this every quarter on these calls by giving you as much of an update on the business as we can. So there's no single thing. Yes, the market has been strong, and I'm sure you follow other consumer companies, so you know that generally results were good. So the market has held up nicely. And of course, there are aspects of our business where we have executed well. We've executed, we've performed. We've delivered for our brand partners. We've acquired customers well. On the beauty side, every quarter, I talk about penetration and premiumization. So you're seeing that play out in the growth. We continue to acquire new customers to the platform. We continue to hold an appeal for younger Gen Z consumers through all of the work we do on college campuses, onboarding new brands, building new stores. So it's difficult for me to really try to, in a short answer, summarize exactly what it is, but it's a multitude of factors. And it's a combination of a good market, strong execution, a very high- quality customer base that Nykaa has and continues to build, the right platform, the right marketing, and the right technology to service a very unique consumer. So yes, I mean, if anyone else would like to add, please feel free, but I think that's it for me.

No, I will add on top of it. I think, Anchit, you captured it well. Indeed, at the Investor Day, we had the opportunity to cover this in more detail. I think, on one hand, there is this consistent execution- just quality of execution across many aspects which go into making a retail business, which is just keep on adding great brands, work with the brands to bring the best merchandise to customers, use technology more and more to elevate the shopping experience for customers

to personalize. And through that, improved metrics like conversion, retention, so on and so forth, which we don't share in as much detail here, but that's just the very nuts and bolts of execution. In the case of both businesses, I mean, I think you also asked a question: is there something wider in the industry which is going on? Irrespective of which source you refer to, it's fair to say that both businesses have consistently grown faster than the industry. And in case of fashion, in addition to what Anchit already shared, rigor of execution aside, I think there are also structural improvements and step change improvements we have made in the last couple of years on assortment addition, and we called this out in maybe the previous call that just over the last year, we added more than 1,200 brands, and we have continued to do that every quarter. And these are many of the marquee brands that we can think of were on that list, H&M, Nike, more recently. So those are just step -change improvements. The platform assortment is more holistic. Addition of brands has happened not just in women's, which has been the core strength for Nykaa Fashion always, but also men's, kids, increasing the home and so on. We've also continued to add more business lines. The D2C partnership with Nike, the enterprise business line, is an example. So we continue to execute on the known facets of a retail business while also adding step-change improvements in the form of new business lines. And all of that put together leads to outsized growth versus the industry. That's what I would say.

We've talked a few times about marketing efficiency. So what really is happening over there? And how much more scope is there? Whatever color you can share there would be helpful.

I think I'll come in here. Actually, I was going to add to this that from our financial numbers, you can see that the growth and improvement in EBITDA margin is coming at least in the last 1 year, where fulfillment costs have gone up slightly. So obviously, we are prioritizing faster delivery, better customer experience. And similarly, marketing costs have not come down significantly. We've protected them at a similar level. So obviously, in fashion, there's been improvement in marketing costs. There's a sea-change improvement, but I'm talking about beauty. So what has happened is that we are seeing efficiency in marketing, but we are pushing the pedal on acquisition, customer acquisition. And that's not just for beauty.com, but that's similar for all our house of brands. It's similar for fashion, every business of ours. So marketing continues to be an investment that we make. And through that, we are seeing growth momentum also being supported. Like if you see Superstore, in Superstore, most of the growth has come without adding any feet on street. So in many ways, we were trying to improve the productivity and get to better unit cost economics. But to our growth, if we were to add additional distribution through feet on street that helps us roll out further addition of retail network, then there could be additional growth added to the mix. AI benefit, we are seeing better ability, productivity in marketing remains good, and we are investing that through reaching out and getting more customers on board.

Yes. And I think it's also worth highlighting that one thing we've always said for many years is that as the business matures, the share of business coming from existing buyers starts to become a larger percent of the overall revenue mix. As you know, a lot of marketing cost goes towards new customer acquisition. And that amount of money, even if you're growing that in absolute terms year-over-year, is now being spread over a larger base of shoppers and of revenue. So that is the leverage that you get as you continue to mature and you continue to have a larger number of cohorts, customer cohorts shopping on the platform. And that's been a large part of the reason why the Beauty business has managed to get to the EBITDA margin it has. We've always guided that fashion was just several years behind Beauty on its own journey of building a very meaningful base of repeat buyers. And I think you're seeing a similar story play out with the kind of marketing spend reduction in percentage terms that fashion has managed to show year-over-year. But again, Abhijeet can add more.

I'll just add one more layer on that. That is exactly right that we are now seeing a higher share of revenue come from repeat customers. And like I said, for us to be able to retain the customers that we acquire, and it's all very well to acquire customers. But as a platform, we need to be able to retain them for efficiencies to improve. And that's what we see happening, just like we saw first in beauty and fashion; that's one aspect. The second is I want to draw attention back to what I shared on the customer funnel slide in the fashion section that even the customer acquisition costs even the new customer acquisition costs are actually increasingly better. That's as a result of many things that we do behind the scenes. One is just a more robust assortment, which leads to conversion rates on acquiring customers improving, but then also being able to target with the use of technology the right product to the right customers. A whole lot of things go into making the customer acquisition cost itself better, which allows us to acquire customers still at a very high percentage; we're 44% higher year -on-year on new customer acquisition, but at healthier CACs. That has led to a step -change improvement in fashion. We have not slowed down customer acquisition, but that's happening at better CACs, significantly better CACs. Increasingly, we have a much higher cumulative customer base, and both of those are showing up in the sizable improvement in marketing efficiency.

The next question is from Swapnil Potdukhe. Please introduce yourself and proceed with your questions.

This is Swapnil Potdukhe from JM Financial. My first question is in the BPC segment. So if I were to look at your order volume numbers on a Q -on-Q basis, it seems there was a certain dip of 1% Q-on-Q. Can you please explain that? What is the reason behind that? Is it seasonality or something else?

Can we go to the slide where you're seeing that deflation

You're saying sequentially?

Sequentially, Q-on-Q.

Yes. I mean, it's relatively similar. As we always say, ultimately, this business does have certain quarters in certain seasons that naturally have more demand. As we always say, Q3 is our best quarter because of the festive season, weddings as well as certain large flagship sales that we do. And Q4 last year was probably a strong quarter. So I think it's quite similar. I don't see it as being very meaningfully different quarter-on-quarter. But I would encourage you to look at a more apples -to-apples comparison, which is the year - on-year comparison of the number of orders. And I think that's where we're showing close to 20% growth on the beauty side. And that's really how we track that: are we growing the business both on a volume and value basis by making the comparison slightly more apples-to-apples.

The other question is with respect to the pricing difference between your core platform and the Nykaa Now platform. Is there any pricing difference that you typically have? That adjusts for your cost of fulfillment in some?

No, because as you might be aware, all of the discounts that are passed on to the consumer on the MRP are funded by the brand. So Nykaa, as a retailer, does not do retailer-funded discounting as a policy. So that's a cost that the brand has chosen to bear. And that price at which the brand is choosing to sell to the customer is offered across both Nykaa Now as well as the mainline. So currently, there is no differential pricing on Nykaa Now versus the mainline.

And the other question is on your fashion business. Now the business obviously is growing at a very healthy pace and partly aided by your Nike partnership. But that partnership will come in your base numbers somewhere in mid-4Q FY27. So if I were to look at your numbers beyond this partnership, how should one look at the growth that you're looking at? Because unless you get some other partner that too of the size of Nike, the growth numbers thereafter may see some adjustment. Is that the right way to look at it? Or like something is on the cards there as well?

Okay. Let me address the question. Firstly, just anchoring to the long term, we still guide to what we shared in the Investor Day just a couple of weeks ago, which is 3 to 3.5x growth over a 4- to 5-year period, and we still retain that. At the same time, I think the engines we are building and the Nykaa Fashion core platform, the enterprise business, other business lines that we run within the fashion vertical, we do everything to do even better than what we guided. The numbers you're see ing are a result of that. Without going into too many details, I think it's still very early days for the Nike partnership, the D2C partnership, particularly. And that may seem like, of course, it's a new business line which gets added to the numbers reported here.

But the numbers here are actually largely reflective of the underlying platform's growth in a very big way. And we are fairly confident that, that itself will continue to be quite healthy, irrespective of us adding other potential partners such as Nike. I hope that answers your question.

So just the last one. There will be some shift in festivities this time around. So how to look at the numbers from a 2Q and 3Q perspective, given that the base would be different from last year?

Sorry, is that a question for Fashion? Or is that overall, a question on seasonality?

It's a question for both BPC and Fashion because last year, festives came in early. And this time around, the festives will get pushed out to the 3Q quarter.

Yes. So I think as we've always said, there is some amount of business that for us comes from the festive period. But we're not so overly dependent on the festive. Our categories, especially on the beauty side, are a lot of our categories are everyday use categories, and a lot of it is for personal consumption. So I don't think that business will be affected too much. But whatever festive demand we do capitalize on, which we do, and we've always said that, that benefit tends to accrue in Q3. I think you will continue to see that play out in a similar way. So I think still a lot of the dates are in Q3 this year, and that is generally when we tend to have our best quarter. And you can look at our past several reported years, and you'll see Q3 generally tends to be the highest in terms of absolute revenue that the business does. I think if there are dates that are being pushed into Q4, then some of that benefit might accrue in Q4 as well. But to me, it seems most of the dates are falling in Q3.

The next question is from Sachin Salgaonkar. Please introduce yourself and proceed with your questions.

This is Sachin Salgaonkar from BofA Securities. I have 3 questions. First question on Beauty. When we look at repeat rates, are these repeat rates equally across mass, premium, and luxury? Or is there a concentration in any specific category? And I'm asking that because your AOV improved 5% on a Y-o-Y basis. So is that a trend we should continue to expect going ahead as well because of a bit more premiumization or mix of change?

On Beauty, we've always said that premiumization can happen in many forms. One is the ASP premiumization, which is where customers will buy a higher ASP product. And that's one form of premiumization. But even the frequency of purchase increasing is for us a form of premiumization, as well as consumers educating themselves and being more, I would say, up to speed and more comfortable with the category and therefore buying a wider assortment, so increasi ng their items per transaction or average basket size. So there is an ABS premiumization, FOP premiumization, and an AOV premiumization on the back of ASP or on the back of ABS. So we are investing behind driving premiumization across all those 3 variables.

A part of that premiumization you're seeing flow through onto AOV. And some of that is coming from selling higher ASP products, and some of it is coming from an expansion in the basket size. The expansion of the basket size is something that takes some time to start to show in the numbers because the education has to be done over a long period of time to influence the customer to change their buying behavior, which ultimately can only be alter ed if the consumption behavior has changed. So we try to change the consumption behavior that ultimately will result in a positive outcome on the buying behavior. So I don't know if that answered your question, but yes, that's why you're seeing. Even though we continue to acquire many new customers whose AOV tends to be lower than the weighted average AOV that you're currently seeing on this slide, despite acquiring new customers, the fact that we're able to grow the average order value at the aggregate level should tell you that we are able to meaningfully influence our existing shoppers' buying behavior on the platform.

And a quick follow -up out there is, I presume, safe to say that this trend could be sustainable because of the multiple levers you mentioned for the improvement in AOV.

Yes. I think repeat customer AOV growth is something which we are working on. We work on it day in, day out, and that is sustainable. Even on new customers, we feel that ultimately, the per capita consumption of beauty in India is so low that as affordability, awareness, and availability increase, you'll start to see new customers coming into the beauty category at higher average order value. So in our opinion, given all the work we are doing as Nykaa as well as the macro outlook on rising penetration and rising consumption, I think the average order value moving in the right direction is definitely our base case at this point in time.

Second question is on fashion for Abhijit. Abhijit, obviously, agreements like Nike and H&M, in a way, allow you guys to move away from a marketplace model partly towards an inventory- led model. So assuming there are similar such partnerships in the future also, how should we think about the mix between marketplace and inventory for the fashion business? And a related question is, is there a thought process to open stores for fashion just the way you guys have stores for beauty?

Yes. Sachin, thanks for the question. I think, firstly, on the likes of H&M and Nike, for the large part, barring the Nike D2C partnership, which we've spoken adequately about. The rest of the multi-brand retail business is still and continues to be predominantly marketplace, and that's how it will be going forward. Inventory-based business is a very small portion. Partnerships such as the Nike D2C partnerships will also be selective in nature. So it will be predominantly a marketplace business. And that's how we want to build it. We believe that's the right, healthy way of building a multi -brand fashion retail business anyway. You mentioned H&M is actually not an inventory-based business. It's a standard marketplace agreement where they list products on us just like so many other brands. So that's on that question. Just to also maybe clear the confusion a little bit because H&M

is not an inventory partnership at all. On the second one, not for now. I mean, we are focused on just building out digitally with partners. So not for the moment.

And the last question is mainly on buying behavior, and Anchit did elaborate a lot in terms of how Nykaa is focused in terms of changing buying behavior. So the question out here is, thanks to Nykaa Now and your ability to deliver things faster to consumers, are you actually seeing new -- what you call- use cases unlocked because the customer behavior is changing on the back of rapid delivery? And anything particular which is getting sold better than your expectations, particularly on replenishment-led categories?

I think the hypothesis, it would improve the repeat frequency of purchase, and it would give us the ability to continue to build personal care. As you are aware, Nykaa is a big leader in the beauty category, which is makeup and high-end skin care. And of course, we play in hair and bath and body and many of the personal care categories to a significant extent. But like if you look at, say, toothpaste, we may not be doing much business. So with Nykaa Now and as it plays out more and as we roll it out, I do feel we all feel that over time, customers can increase the frequency of purchase on Nykaa and buy more of personal care. So that's an assumption that we are working on.

Yes. Sorry, I had a little bit of a lag on my end on the computer. But I think FN has summarized it well. Ultimately, as we've discussed in the past, this is an opportunity for us to drive incremental demand in categories where we have had low penetration in the past. And that continues to be the hypothesis, and that's what we're working to build the Nykaa Now experience around. So yes, I think what you will see is, given where our strengths lie, that will continue to be in core beauty subcategories that will also continue to be fulfilled through Nykaa Now. And that's what really differentiates us from some of the other platforms that are selling beauty or through quick commerce capabilities. But this gives us a chance to also start getting into categories where we've been relatively underpenetrated in the past. We have a right to win because we're delivering at competitive speed, but giving the customer a much, much wider assortment available through Nykaa Now, and also the fact that Nykaa is a platform that is very much trusted for delivering authentic products to the consumers, we believe, should help us to really identify new areas of growth. New subcategories of growth through Nykaa Now.

The next question is from Percy Panthaki from IIFL Securities. Please go ahead.

Yes. So, I just wanted to understand the target market for the beauty products in terms of number of customers. You've already reached close to 20 million plus. If I look at urban women in the age group of 15 to 50, that's about 150 million. And this is before applying an income filter or anything of that sort. So just wanted to understand, in like a medium term over a 5- year kind of a view, what do you think is your total target audience after you apply an income filter? And also, typically, how

these things work out is that when the headroom is very high, the Y -o-Y growth also is high. And as the headroom gets lower, the Y-o-Y growth comes off. So just from that point of view, because right now, your total growth is largely led by AUTC. So how do you look at the AUTC growth beyond, let's say, a 2-3 -year period, total 5 -year horizon? Do you think you can maintain this kind of a run rate? And also, what is the target market in terms of AUTC in your calculation over, let's say, a 5-year kind of horizon?

So in our Annual Day, we had deep dives on this in a very detailed manner, and it's all there on the exchange and website. So I would urge you to do that, or even our investor teams can share with you. But I think the answer definitely lies that fashion online has been as big as, like, 55 million to 65 million consumers who have bought fashion online. Fashion online is a serious consumer. So in many ways, we always believed that much of a headroom was available to us. And on top of that, now, if you see, we believe that the way the income levels are shifting, that number itself will be about $100 million going forward in 5 years. So yes, we believe that somewhere between $65 million and $100 million will be the relevant TAM for Nykaa. And also, we are servicing men, though predominantly women, but increasingly, we're adding men to our mix. So we are not restricted only to women customers, both fashion as well, and we have a platform, Nykaa Man. And even in beauty, there is a certain percentage of consumption towards men, especially in the personal care category and grooming categories.

Yes. And just to add to that, again, I keep repeating that even the existing- as we said, we were 60 million shoppers who have ever bought on Nykaa, of which 20 million are buying in the last 12 months or on an annual basis. So one, there is a huge opportunity to get the buyers who are infrequently transacting on the platform, who have shopped on Nykaa in the past, which is a very large number of consumers to start engaging and transacting on the platform more. That's one. The second is the frequency of purchase of our existing 20.8 million annual unique transacting buyers is x. And as I said, the frequency of purchase is very low when compared to global averages. And the ticket size is also small compared to global averages. So there is so much still to be done with the 60 million shoppers who have ever shopped on Nykaa, increasing their frequency of purchase, increasing their average order values. And therefore, a lot of growth to be had from the annual consumption value that is yet to come from the base of shoppers already on the platform. On top of that, there is still a very long way to go when you -- as you mentioned, in terms of the total addressable market of urban households that are relevant to us. In terms of a price filter, we don't really see ourselves as needing to apply a price filter because we have assortment available at all price points across the spectrum. So we sell everything from the most, I would say, mass, masstige FMCG type SKUs all the way to the most premium products. So we have something for everybody. We are also now catering to building

communication in vernacular languages, enabling voice-based search. So we are also definitely an option for a much wider audience than you might be thinking.

Thank you, sir, for answering those questions. That was the last question we can take today. You may reach out to Nykaa's Investor Relations team for any additional queries. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, ma'am.

Yes. Thank you very much. I'd just like to thank each one of you for participating in the call today and discussing with us about the performance. So thank you very much, and look forward to continuing to see you guys.

Thank you.

Thank you, members of the management.

Thank you.

Thank you, members of the management. Ladies and gentlemen, on behalf of FSN E-Commerce Ventures Limited, that concludes this conference. We thank you for joining us and you may exit the meeting now. Thank you.