PB Fintech : Transcript of Analysts/Institutional Investor Meet/Con. Call

August 15, 2022
To
National Stock Exchange of India Limited	BSE Limited
Exchange Plaza, 5th Floor,	Department of Corporate Services/ Listing
Plot No. C/1, G Block,	Phiroze Jeejeebhoy Towers,
Bandra-Kurla Complex,	Dalal Street, Fort,
Bandra (East), Mumbai - 400051	Mumbai - 400001
SYMBOL: POLICYBZR	SCRIP CODE: 543390

Sub: Transcript of the Earnings Call held on August 10, 2022

Dear Sir

In furtherance to our earlier communication dated August 08, 2022 and pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith Transcript of the Earnings Conference Call held on August 10, 2022.

The transcript of Earnings Conference Call will also be hosted on the website of the Company at https://www.pbfintech.in/investor-relations/.

You are requested to kindly take the same in your records.

Thanking you

"PB Fintech Limited Q1 FY'23 Earnings Conference Call"

August 10, 2022

MANAGEMENT: MR. YASHISH DAHIYA - CHAIRMAN & CHIEF

EXECUTIVE OFFICER, PB FINTECH LIMITED

MR. ALOK BANSAL - EXECUTIVE VICE CHAIRMAN &

WHOLE-TIMEDIRECTOR, PB FINTECH LIMITED

MR. SARBVIR SINGH - PRESIDENT, POLICYBAZAAR

MR. NAVEEN KUKREJA - CHIEF EXECUTIVE OFFICER,

PAIZABAZAAR

MR. MANDEEP MEHTA - CHIEF FINANCIAL OFFICER,

PB FINTECH LIMITED

MS. RASLEEN KAUR - HEAD, CORPORATE STRATEGY

• INVESTOR RELATIONS, PB FINTECH LIMITED
  Page 1 of 19

PB Fintech Limited

August 10, 2022

Moderator:Ladies and gentlemen, good day and welcome to the PB Fintech Limited Q1 FY'23 Earnings Conference Call. 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. Should you need assistance during the conference call, please signal an operator by pressing '*' and then '0' on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Ms. Rasleen Kaur. Thank you and over to you, ma'am.

Rasleen Kaur:Thank you for joining us today. We have with us Mr. Yashish Dahiya -- Chairman and CEO, PB Fintech; Mr. Alok Bansal -- Executive Vice Chairman and Whole-Time Director of PB Fintech; Mr. Sarbvir Singh - President, Policybazaar; Mr. Naveen Kukreja -- CEO, Paizabazaar; Mr. Mandeep Mehta -- CFO PB Fintech. Now I request Mr. Yashish Dahiya to give us a brief update about the Q1 FY'23 Results.

Yashish Dahiya:Hello, everyone. Before I get into the details on the way forward and the Q1 FY'23 Performance Metrics, I'd like to reiterate some facts about our business. There are four pillars that I believe we stand on. Firstly, a majority of health and life insurance consumers in India do their research on Policybazaar. This leads to a higher persistency for these consumers, because having done their research, they somewhat know what they are purchasing and hence their likelihood of churning is much lower.

Second, we have the best conversion engine for digital enquiry and continue to improve it, as demonstrated by the increased premium for enquiry of 32% over the last 12-months.

As a third leg, we continue to improve the platform in terms of consumer onboarding, service and claim capability, demonstrated by the CSAT which is at 83%, and the number of unprompted customer messages we receive every day on claim support as well as customer onboarding.

And lastly, but not the least, a higher customer disclosure, which is because the customer is filling out forms themselves, along with stronger data analytics, and fraud detection mechanisms, which lead to a better control on the claim ratios, which eventually also lead to higher claims settlement rates.

We continue to build on all four of these pillars, and we get stronger every day.

Our core businesses, the Insurance Marketplace Policybazaar and the Credit Marketplace Paisabazaar, grew at 59% year-on-year, and have now been adjusted EBITDA-positive for a second quarter running. Out of the total revenue, the credit linked revenue was ₹ 84 crores for the last quarter.

For our insurance business, we had an adjusted EBITDA of ₹ 18 crores positive for the last quarter.

Page 2 of 19

PB Fintech Limited

August 10, 2022

For complicated products like health and life insurance, we have been extending our customer connect beyond remote calling by giving consumers the convenience to have physical meetings at their home or office and in their local language. We are happy that customers have accepted this wholeheartedly and the results continue to encourage. We have also extended on- ground claims support in 114 cities as of date.

Our renewals revenue is now at ₹ 270 crores annual run rate, and as we have previously mentioned roughly 85% of this flows directly to the bottom line.

Paisabazaar, our credit marketplace continues to grow very well and has rebounded strongly from COVID. We are now at an annual run rate of ₹ 11,200 crores disbursal and 4.3 lakh credit cards issued. We have over 29.5 million customers who have accessed the credit score platform in 823 towns. This number represents 13% of India's active credit score consumers. 75% of these consumers are from non-metros. With increasing digitization, the digital marketplace like ours obviously stands to benefit.

Co-created product strategy is shaping up well with step up cards, duet credit cards, etc. Our contribution margins have improved significantly over the last two years. And I'm quite pleased to say, at this stage, we expect the credit business to turn adjusted EBITDA-positive by Q4 this year.

To update on new initiatives, PB partners our seller aggregator platform leads the market in scale, has the highest proportion of non-motor business, and has started increasing efficiency. We continue to be positive on all the other new initiatives as well.

Essentially, we have delivered two quarters of positive adjusted EBITDA on our core business now. Now onwards, the core business, in our best opinion, should continue to grow EBITDA by roughly ₹ 150 crores every passing year.

We are very comfortable supporting new initiatives at roughly ₹ 200 crores a year burn as of the present month.

Just to take you through seasonality, Q4 is easily the strongest quarter in our industry and Q1 is the weakest. However, our core revenues are roughly the same in both these quarters; if you notice Q1 revenue was 96% of Q4.

Last year Q1 was a COVID year and health and life insurance demand in terms of enquiries had peaked. The enquiries in the months of April and May this year were not at the same level as last year. However, we were still able to continue to grow, largely owing to higher premium per enquiry which we achieved due to our operations.

Enquiry growth has returned in the last few months, and we are confident of higher growth in the coming months and quarters.

Page 3 of 19

	PB Fintech Limited
	August 10, 2022
	We are a significant and growing contributor to the fresh retail term and health business, and in
	fact, even to the savings business now of our country, and have delivered two quarters of
	positive adjusted EBITDA in our core business. And we feel we could be adjusted EBITDA-
	positive as a group by Q4 of this year for the entire business. It is close enough and we have
	confidence enough and we are happy to take questions now.
Moderator:	Ladies and gentlemen, we will now begin the question-and-answer session. Our first question
	is from the line Sachin from Bank of America. Please go ahead.
Sachin:	I have a few questions. So first question I would actually like to understand how is the mix for
	your business change as we are recovering away from COVID in terms of health, motor, life,
	any specific changes we are seeing out there? And a related question is, hopefully, your
	business is not too impacted. But any impact on the back of inflation have we seen?
Sarbvir Singh:	Sachin, on the first part, we've seen a stronger growth in motor in Q1 than other businesses just
	because last year was very low. But otherwise, as Yashish mentioned, health and term, we
	were able to build despite the drop in enquiries from last year. So we're not seeing any major
	change in the mix of our business in the first quarter. The impact of inflation is also fairly
	subdued on our business so far. I think there is some general impact on the economy, but for
	our business has been fairly subdued.
Sachin:	Second question is, you guys mentioned on being close to adjusted EBITDA breakeven by 4Q.
	Any thoughts on how do you guys look at the steady state sustainable EBITDA margin, and
	how soon you should be able to reach that after being close to EBITDA breakeven?
Yashish Dahiya:	So I think we've given a very clear indication now that was really aimed at the analyst
	community that we believe we should be increasing our profitability by ₹ 150 crores from here
	onwards every passing year. So that should give you a pretty good steer, and I don't see that
	slowing down for the next three, four years at least. So that should give you a pretty clear steer
	on where we believe the profitability could reach over the next four or five years if one breaks
	even by Q4.
Alok Bansal:	Sachin, if we look at the core business, it's been profitable for last two quarters now and that
	should continue to build and as we get to the year end, that number should be big enough to
	cover for the experiments that we do. We would definitely want to invest behind the
	experiments to the extent we feel comfortable, and that number Yashish already given us about
	₹ 200 crores. By the way our core business continues to deliver efficiency. I think over next
	few years starting from next financial year itself, we will continue to see this EBITDA being
	positive. In fact, the ESOP charges also will come down quite substantially because of the way
	accounting happens. So from 2024, '25, I think ESOP charges will be quite miniscule
	compared to the sort of EBITDA we will provide.
Yashish Dahiya:	We'll have a third of what they are now.

Page 4 of 19