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Just Dial Ltd
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Good evening ladies and gentlemen. I'm [indiscernible] your moderator for this session. Thank you for standing by. And welcome to the Just Dial post results conference call. For the duration of presentation, all participants' lines will be in the listen-only more. We will have a Q&A session after the presentation. I would now like to hand over the conference to Mr. Ashwin Mehta. Thank you and now over to you sir.
Thank you. On behalf of Nomura, we'd like to welcome you all to the 1Q Earnings call of Just Dial. We have with us Mr. VSS Mani, the Managing Director and key executive officer of Just Dial. We also have Mr. Abhishek Bansal, the Chief Financial Officer of the company. So without further delay, let me hand it over to the management.
Hi everyone, welcome to Just Dial's earnings call for first quarter FY19. I shall quickly run you through financial and operational highlights for the quarter. Operating revenues stood at INR 211.4 crores, which grew 11.3% year-on-year. Operating EBITDA stood at a healthy INR 57.4 crores, witnessing strong 77% year-on-year growth and about 25% sequentially. Adjusted operating EBITDA margin, excluding ESOP expenses, stood at a very healthy 29.5% for the quarter. Now we have transitioned to revised accounting standards, Ind AS 115, which are required to be adopted from 1st April 2018. In our case, application of this standard has impacted the way sales-linked incentives are expensed in our P&L. There are no major other changes. The new standard requires that whatever costs that are directly linked to acquisition of revenue should be expensed in line with revenue recognition. So for example, if a contract was, say, INR 10,000 was acquired and INR 1,000 was paid out as incentives. Earlier, entire INR 1,000 was expensed in the quarter the payment was made. Now it will be expensed in P&L as and when regular revenue recognition for that particular contract takes place, which obviously is up there with our presentation. As a result, employee cost for the quarter is lower by about INR 2.7 crores versus the cost that would have shown up if older standards were applicable. Full tax impact on PAT for the same was about INR 1.75 crores for the quarter. Net profit for the quarter stood at INR 38.5 crores, which was almost flat year-on-year. However, key to note is that we had lower other income during the quarter. Other income stood at about INR 8.2 crores versus INR 16.6 crores in previous quarter and INR 26.6 crores same quarter last year, primarily due to increasing bond yields resulting in MTM losses on long maturity tax-free bonds in our portfolio. Unearned revenue stood at INR 371 crores as on June end, witnessing strong 28% year-on-year growth and 11.5% sequentially. Cash and investments stood at about INR 1,288 crores as on June end, which was an increase of about INR 88 crores quarter-on-quarter, out of which approximately INR 80 crores accretion was due to operating free cash flows. Coming to operating highlights. Despite a high base of 100 million quarterly unique users, we were able to grow our user base at 25% year-on-year to about 125 million users. You would recall that we were at approximately 75 million unique users 8 quarters back. And within the last 2 years, we have added 50 million users, which I think is great as far as business is concerned. We continued healthy trend of new listings addition. And we now have about 22.7 million active listings in our database, which was 21% year-on-year increase. 52% of the database is now geocoded. And there are about 48 million images in our database. Paid campaigns at the end of the quarter stood at approximately 453,000, addition of about 7,800 campaigns during the quarter. As we have mentioned in the past, we expect overall revenue growth this year to partly materialize from volumes and partly due to realizations going up. And the same is panning out as well. Overall, in a nutshell, I think it was a great first quarter. Revenue growth was highest in last 9 quarters, strong user growth, strong margins on the back of efficiencies that we have brought over the last 4 quarters. During the quarter, our new mobile site was released, which helped cut page load time by about 40%. It's superfast now. The new iOS app was released this week, which is not only blazing fast, it has a very sleek design loaded with curated content, chat messenger and other user-friendly features. Further, the board has approved a proposal to return INR 220 crores back to shareholders via our tender offer buyback route. Overall, as a business, focus continues on growing usage of our product, chasing profitable growth and building on to current growth rate level. We shall now open the floor for our questions.
[Operator Instructions] Ladies and gentlemen, we open up the first line coming up from Jefferies.
From Jefferies. Firstly, Abhishek, if you could share the advertising expense for this quarter.
Arya, ad expenses for the quarter were about INR 10 crores.
Yes. This is Arya from Jefferies. Did you get the question? Or do you want me to repeat?
Yes, Arya, ad expenses for the quarter were about INR 10 crores.
Okay. And that was lower, right? I mean, what would be the full year? Last year, you indicated some INR 65 crores of spend go up this coming full year, right?
Last full year, we had spent about INR 65 crores. On a full year basis, definitely we would be spending higher than last year. As we have mentioned earlier, 8% to 9% of the top line is what we are looking to spend to promote the products. On a quarterly basis, definitely there can be fluctuations. So in a particular quarter, where we have a mass media campaign coming in or any other large-scale promotional activities, this particular number should ideally jump up.
Understood. Secondly, the sales incentive, so is there -- is it lumpy in nature? Was there a lot of it this particular quarter? Is it similar number expected in coming quarters as well?
Sales incentives recognition in P&L now would be linked to revenues. So if you see for last couple of quarters, if you include the INR 2.7 crores for this particular quarter, there was a substantial increase due to higher incentives payout. And higher incentives were primarily a result of higher money that was coming in, so -- but now since Ind AS 115 mandates that sales-linked incentives should be in line with revenue recognition, so whatever incentives are paid, a part of it would get expensed into P&L and the rest would be deferred and would sit as prepaid incentives on the balance sheet. So from a P&L recognition perspective, this standard would bring in more smoothness, so to say.
Right. So that is well understood. But what I am asking is that will there be more positive impacts in the next 2 quarters as well? Or is it largely done in the first quarter itself in terms of how you report it?
It will depend on -- if I get -- this particular quarter, we had, say, around INR 211 crores as top line. If collections actually increase substantially, then there will be this particular delta of positive impact. But in case there is such particular delta coming in, that would primarily be due to higher collections, which obviously is positive on the long run.
And is it fair to assume that this would -- this INR 2.7 crores of impact this quarter, for instance, will get recognized, by and large, over the next 4 quarters? Or is it even longer?
No, it will get recognized largely over the next 4 quarters.
Okay. And lastly, I think in the last call, you had mentioned something about the way you are recognizing the number of paid campaigns. I believe now you're looking at unique customers whereas earlier, you were -- your customer who enter into multiple campaigns through the year was getting recognized separately. So just wanted a sense if that exercise is now completely done and what is the like-for-like growth in the paid campaign number, if it's possible to share that.
Prepaid campaigns, the 4% year-on-year growth that you see, if you were to see in terms of paid listings, that would broadly be a couple of percentage points higher. So unique paid listings corresponding to current campaigns would be broadly about 368,000 or so.
We take the next question, which is coming up from Mr. Pranav from Edelweiss.
My question is, firstly, can you quantify or at least qualitatively give us any sense of how the growth is panning out in terms of the geography? I mean, Tier 1 versus Tier 2 and Tier 3, how the growth is panning out there? That's my first question.
See, in terms of Tier 2, Tier 3 cities, currently they contribute about 44% by campaign and about 22.5% by revenue. So definitely, Tier 2, Tier 3 cities are growing at a much faster rate. And hence, they are gaining more share in terms of volume. But considering that ticket size is lower, Tier 1 contributes -- continues to contribute about 77% to revenues.
Okay. My second question is related to the revenue growth profile. We have seen a very strong growth in unearned revenues. And we have seen improving revenue growth trajectory for last quite a few quarters. So should we expect this improving growth trajectory to sustain and to what level you think we can go? Can we reach to 15% to 20% kind of a revenue growth number in a few quarters from now?
See, definitely, unearned revenue is growing primarily because there is a good amount of money or collections that is coming into the business. On a long-term basis, if this particular percentage growth continues in deferred revenue, that in turn implies that similar is the growth rate in collections. And obviously, if collections are growing at that particular rate over a period of time, that should reflect into P&L revenue growth as well. So definitely, current trend of collections is at north of about 20% year-on-year. So there is a good amount of visibility that business can actually achieve revenue recognition as well on similar growth rates.
Okay. And so should we continue to expect EBITDA margin improvement, given there is a healthy operating leverage in the business?
See, on EBITDA margins, 2 factors into play, first, being the advertising spend. So advertising spend this particular quarter, if you were to say that was on a lower [indiscernible] end, should have been, say, INR 17 crores, INR 18 crores or so. That would mean that adjusted EBITDA margin would have been around 25%, 26%. On the other side, the positive side is there is an inherent operating leverage in the business, which is resulting into margin expansion. So as I see it, 25%, 26% is definitely a sustainable margin. Plus if revenue growth accelerates in line with what we are expecting, there could be margin expansion as well.
[Operator Instructions] We take the next question, which is from Aejas Lakhani from Edelweiss.
If you could just give me a break, paid listing, how much of the business comes from new clients? And how much comes from the older clients?
See, any revenue that is brought in actually gets recognized over a period of 4 quarters. So it would be difficult to quantify that how much of the revenue actually came in from new clients versus old clients.
So if I were to say that -- assume that your 4-quarter revenue is certain from one client, just a composition breakout. Approximately of how much is coming in from new guys were first time taking the package to the old guys?
Maybe next quarter, we can give that data.
Yes, surely, we'll try to work that out, that what's the composition of folks who have come in, in the last 4 quarters versus folks who had been with us for longer. I unfortunately don't have that composition ready.
Fair enough. Second is can you tell me how do you come up to this number of unique visitors? What does that really concur to? Like, is this a -- if you could just throw color on that.
See, unique visitors, this is a composition of users that can come across 3 properties that we have. Firstly, the mobile. Within mobile, we have the mobile site as well as the mobile app. So whenever a user comes to Just Dial, we drop a cookie on the user's device. So whenever this particular user comes again, we are able to identify that it's the same user that is actually visiting us the second time. Similar way, uniqueness is identified for our desktop website as well. And thirdly, we have the voice service. In case of voice service, we simply see what is the unique mobile and landline numbers that have actually called us during this particular period. Now if Abhishek as a user comes to Just Dial on his desktop or a laptop and then later comes through mobile site as well, it is not practically possible for us to identify that it's the same user. So there could be some duplication to that extent. But considering wireless sales contributes 74%, that level of duplication would be relatively lower.
So what you mentioned is quite obvious. My query is that if I have come on to your mobile site and I have come, say, once now, once after 5 days and once after 10 days, am I recorded as a unique visitor just once or 3 times in the system?
You are recorded as once.
So okay, so...
So in quarterly unique users that we say, within that particular quarter, if you visit n number of times, we shall count you once.
Okay.
So that is how we actually identify this particular quarterly unique users.
Okay. And so if I come now again in the next quarter, that is a -- you'll still count me as a unique visitor in the next quarter?
Yes. You will still be a new unique visitor for that quarter. At the end of the year, if we were to do a calculation of annual unique, that means annual unique users, you will be counted as one.
Okay. And currently, do we do annual unique visitors?
No, I would not have that particular stat ready. But what I can briefly give you is that these 125 million unique users, they actually did about 750 million to 800 million searches during that period. So we track 2 things: how many users are coming and what's the number of searches these users are doing on our platform.
Okay, that's fair. Just one last question. What do you have to say in light of Google and the competitive intensity that is taking place?
See, in terms of competition, on one hand, we can possibly say that there is significant competition from vertical players. On the other hand, it is right to say that there is no direct competition. No single vertical contributes more than 3% to 4% of our revenues. So to that extent, we are extremely well diversified. Over last 4 to 6 quarters, as you would have seen that we have focused on getting our particular product right, making improvements such that number of users increase, user engagement increases. So that continues to be the focus.
We take the next question from Shaleen from UBS.
So my first question is, see, regarding your unearned revenue. This was pretty strong. So considering the guidance you guys are giving on unearned revenue of around 10% to 15% kind of growth, can you explain what has led this to, that kind of amount of 20% kind of unearned revenue?
See, growth in unearned revenue is obviously driven by healthy growth in collections. Now the question becomes that what is driving this particular healthy growth in collections? So as we have mentioned in the past, 3 -- 2 or 3 factors. Firstly, over the last 4 quarters, key challenge in our business possibly started with our particular SME customers saying that, okay, for renewals or for new particular sign-ups, they were primarily looking at what's the number of leads that they were getting or tangible inquiries that they were getting. We have spent some 4, 5 quarters, first of all, educating our sales force and in turn, educating these particular SMEs that in this particular Internet era, they need to evaluate not just the number of inquiries that they're getting but also visibility that they are getting through various tools that we provide them that these are the searches, these are the searches that happen for their particular listing on Just Dial. So that particular, I think, factor is helping us. Say, about 3 quarters back, we used to get some feedback from our sales team saying that, "This particular XYZ client, who has been with us for a long term, is actually postponing his investment decision with Just Dial, owing to GST compliances." But considering GST now obviously is a reality, that particular feedback has sort of come down. So these SMEs are now coming back into the paid ecosystem. Secondly, it also had to do with certain internal processes, internal efficiencies that we have brought in, which has sort of helped us. So overall, these particular factors combined have helped us get healthier collections, which is what is partly reflecting in improving revenue growth trajectory. And the rest is sitting as unearned revenues.
So effectively, one bit I understand is you're talking about kind of improvement in efficiencies/productivity of your sales team. Is it right ?[indiscernible]
Yes, definitely.
And is there an increasing -- so we've been asking the question that you guys have been spending a lot in terms of marketing. But you were not seeing, I would say, tangible growth in the paid. Is it the point where you'll start seeing some [indiscernible] coming out of that?
See, [indiscernible]. So as we have mentioned earlier as well that, first of all, user growth has to come in. And the monetization growth will come with a lag because in our case, it's a indirect correlation, Just Dial advertisers, Just Dial [indiscernible] users. Over time, SMEs realize they get more visibility by investing in Just Dial. That makes more SMEs come to Just Dial. And that makes the existing SME pay more to Just Dial. So that particular [Audio Gap] I think is playing out. So we do also get feedback from our sales team saying that there were customers who had paused their particular campaigns for a few quarters in between, now they are willing to come back. So those particular signs do indicate that business is on an improving trajectory.
Sure. So the counterquestion here is, Abhishek, that if I see your user metrics even pretty strong even in this quarter despite your lower marketing spend. So one can argue that there's not necessarily a direct correlation because the time factor can play. But do you think that you need to maintain that 8% to 9% of marketing spend or you just hope to reduce it?
See, the [indiscernible] processes that be prudent in doing advertising spend. So at every point of time, whatever spend that we do, we keep evaluating what is the return that we get in terms of user growth, in terms of user engagement going up. So it's not that if we are getting 25% with just 5%, 6% of revenue being spent on advertising, we would want to stop there. I believe we would want to grow our user base as soon as possible. But at the same time, we will be conscious at whatever spend that we do, we do get adequate returns on that. This particular quarter or last couple of quarters, advertising spend was lower primarily because we were in the process of revamping our mobile site, which got released in May, revamping our apps. iOS app got released 1 week back. Android app is on its way soon. So the idea was that once these particular newer versions are released, which are much more user-friendly, if we do our advertising blitz after that, that will be more useful.
[Operator Instructions] Next caller, we have Mr. Akshay from Fidelity.
Abhishek, just wanted to get a sense on when we look at revenue per campaign...
Akshay, sorry, your voice is a bit lower.
Hello? Is this audible?
Yes, this is better.
Okay, great. So if you look at revenue per campaign, that's been trending up. And I think you've been -- you mentioned in the last couple of calls that you've been getting better renewal rates and mix is getting -- is impacting this. So currently, my calculation of revenue per campaign is around [ INR 18,800 ]. When you look at your book of unearned revenue, would they have come at a realization on a blended basis just higher than this? Or you think this is a level that we should think about? Or you think it can go higher or lower? That was question one. You answer that, and I'll go to the next question after that.
So see, on revenue per campaign, it is slightly difficult to predict what will be the realization going forward primarily because we adopt 2 strategies. Firstly, we obviously want that at entry level, we want as many SMEs to come into the paid ecosystem as possible. Second, once a particular SME is into the paid ecosystem and is happy with the services, we would want to upgrade that SME to a higher value as much as possible. Now one question that obviously I get is that what [Audio Gap] pricing or realization to go up. One point I want to clarify, see, in our particular business, the realization is not that if it is going up, I am charging higher price for the same product. Like in a typical FMCG company, you might argue that for a particular product, pricing will have a limited headroom. But in our case, what I tell a particular SME is, "If you were investing INR 1,000 per month with me, why don't you invest INR 1,100? And corresponding to INR 1,100, you will get proportionately higher visibility. Not only that, if you were to add a banner or a rating certificate or any other such add-on products, which otherwise if you were to buy on a standalone basis would cost you x. But if you add it today itself, you will get it at 20% discount." So the realization per customer increase is in line with additional services that I provide to this particular customer. And since it's a digital product, it doesn't actually cost me to provide those particular additional services. So yes, there is headroom for [Audio Gap] as well. But for the full year, obviously we would be happy to see both realization growth and campaign growth to be key drivers for overall revenue growth.
Okay. And then in terms of campaign -- because if you keep the current run rate of realization that you get to around 6%, 7% growth in revenue per campaign. So if you have to get to your -- maintain sort of a growth number even at back half, you're looking at campaign growth being close to double digits. How realistic is that based on what you are seeing in unearned revenue?
See, definitely, like for the full year, for mid-teens, if, say, 6%, 7% comes out of campaign growth, another 6%, 7%, 8% comes out of pricing. So both seem to be practically possible. So this quarter, like 7% due to realization and 4% due to campaign. So difficult to say what is the embedded realization in the deferred revenue because deferred revenue obviously covers only part of the revenue that will be recognized. There is a major chunk of revenue that is yet to come in future. So at what realization I get that particular revenue, that will determine the mix between campaign and pricing in subsequent quarters.
We have the next question coming up from Mr. Ashwin.
I had one question. In terms of sales force additions, we've had close to 600 people being added across feet on the street and telemarketing. And in the past, we've been largely squeezing efficiencies from our sales force. So would you think there is further room in terms of squeezing efficiencies from the existing sales force or now we are at a stage where we'll possibly have to start to continue to add incremental salespeople?
See, in terms of squeezing efficiencies, that's an ongoing process. So even currently, I would say that there are -- like the productivity can be enhanced further. Now productivity being enhanced also has 2 components. One, if I take certain price hikes or I launch some bundled products, that itself could lead to productivity gain for that particular employee. Second, that employee itself is able to sell a higher value on more number of contracts, that can give improvement. So last 4 quarters, we have put in systems, processes in place to ensure that we don't hire blindly, but we ensure that productivity levels are maintained. We have recently expanded aggressively in our feet on street cold-calling team since that particular team has been growing at a very healthy rate. But [ at the same time ] we would remain conscious that productivity levels should remain intact.
And in terms of a follow-up, we've [indiscernible] that employee cost materially. We had closer to almost 53% of sales. So is there a range in terms of where you want to kind of maintain your employee cost as a percentage of sales, assuming double-digit kind of growth continues?
See, during our good, olden days, say, about 3, 4 years back, we used to be at about 50% of revenue being the employee cost, right? Ideally, we would want that this particular 53% also over time should go down further. But it's not a specific percentage that we target. For example, in case if we are able to launch certain alternate avenues, for example, over next few years, if we are able to increase the online contribution such that customers themselves sign up, this particular employee cost obviously can go down. Or if we launch a reseller program, where we have resellers selling Just Dial products purely on a commission basis, that can bring that down. So the idea is to ensure that whatever additional sales resources are being hired, we extract optimal productivity out of them. And if we are keeping good controls over cost and maintaining productivity, this employee cost as a percentage of revenue, that will automatically fall in place.
[Operator Instructions] We take the next question, which is coming up from Rakhi Prasad from Alder Capital. We move on to the next question, which comes from Vijit Jain from Citibank. [Operator Instructions] Can we take the question from Rakhi Prasad from Alder Capital?
Hello? Hello?
Yes, please go ahead. We can hear you.
Okay. Sorry, somehow, something is going wrong with the call. Okay. So I had a couple of questions. One was on the other income part. So as we understand, there was some mark-to-market losses on your tax-free bonds in the portfolio. Could you give us a sense in terms of how much of our investment portfolio would be in these [ tax free ] bonds? And would it be impacted as yields tighten?
See, the overall investment in tax-free bonds should be in the range of about INR 320 crores or so. So these particular tax-free bonds, we had invested 3, 4 years back when bond yields were quite high. So we get 8% to 8.5% tax-free coupon on these particular bonds. And they have maturities of another about 15 to 20 years left. So considering accounting requires them to be mark-to-market, there tends to be MTM gains or losses whenever bond yields swing either ways. But over a longer-term period, I think portfolio will actually deliver returns in line with the market. Secondly, considering bond yields went up substantially during the last couple of quarters, that also give us a good opportunity to deploy incremental funds at higher yields of 7.7% to 8.2%, 8.3%, which we have been able to lock in for next 3 to 4 years. So in case yields remain at current levels or even soften a bit, you would see other income benefiting significantly in coming quarters.
Okay. And also on -- just following up on that employee question from another participant, so we did see an increase -- a substantial increase in this quarter in the number of employees. Do we see this trend going forward? Or are we going to be a bit more prudent with terms of number of employees for the full year?
If you see the feet on street cold-calling team, which is the team where we have always wanted to expand, so the last couple of quarters, we have done significant additions there. As I mentioned, at the same time, we are being conscious that the new batches which have joined should actually achieve their threshold productivity levels as soon as possible. Once that happens, then obviously hiring can accelerate further. This particular feet on street cold-calling team is the one which we would want to expand over the next 4 to 6 quarters. But whether it would happen over the next 1 or 2 quarters, a bit difficult to say.
Okay. And besides employees and the ad expense, do we see further leverage in the operating expense going forward?
See, other operating expenses, excluding advertising, they have already been optimized significantly. So if you see over the last 4 to 6 quarters, there has been a significant decline in [indiscernible] those expenses. Going forward, I would presume that bulk of the optimization is done, so these expenses should grow in line with inflation trends also.
We take the next question, which is coming up from Vijit Jain from Citibank.
Sorry, I missed the first couple of minutes of the call. Could you talk a little again about those sales in terms of you're talking about? And I heard a number, INR 2.7 crores, and I didn't get the context of it.
So as I mentioned during the beginning of the call, that this particular quarter onwards, we have transitioned to new accounting standard, Ind AS 115. Ind AS 115 mandates that whatever cost that [Audio Gap] to your revenue acquisition, they should be expensed in line with revenue recognition. So suppose I picked up a contract of INR 1 lakh and, say, 10% of that, INR 10,000, was paid as incentive. Earlier, the entire INR 10,000 was expensed in the quarter, we were paying out that incentive. Now Ind AS 115 recognizes that this INR 1 lakh, if it is getting approved over next 4 quarters, your incentive should also get accrued over next 4 quarters. So whatever incentive that gets recognized in P&L obviously comes as part of employee cost. The rest would fit as prepaid incentives on the balance sheet and would come in next quarters. For this quarter, this particular Ind AS 115 application resulted in incentive cost in P&L being lower by about INR 2.7 crores.
We take the next question, which is a follow-up from Akshay from Fidelity.
The question got answered. But just to clarify on the other income part, the -- so okay, get the point conceptually that you're [indiscernible] to mark-to-market losses. But when you look at it for a full year basis, does the hit remain through the year? Or do you think through -- so basically, going forward, do you have a steady other income now going forward on whatever your cash balance is, which assumes 7%, 8% on that? Is that the right way to look at it?
See, June end, the 10-year G-Sec closed at about 7.9%. And [indiscernible], it was about 7.4%. If this 7.9% stays at these levels, then I think there should be steady other income. But if this 7.9% were to go to 8.5%, then that there could be impact on other income. But again in our case, considering the business generates healthy free operating cash flow every month, these higher yields are an opportunity for us to deploy incremental cash flows at those yields. Currently, G-Sec 10-year is at about 7.78%. So, so far for this particular quarter, already other income is at healthier levels.
The next question comes from Mr. Vivekanand from Just Dial (sic) [AMBIT].
This is Vivekanand from AMBIT. Two questions. One, can you help us understand how your traffic grew so sharply despite the ad campaign being very, very moderate? Secondly, can you update us on the plans of acquiring new technologies and any specific areas that you are looking to address for future growth?
[indiscernible] traffic, see, summer quarter, June quarter tends to be a sequentially stronger quarter for us. So that is what actually played out in this particular quarter as well. This also coincided with launch of our new mobile site, which was -- which is now extremely fast. As I mentioned, the page load time has been cut by 40%. So if you go to our new mobile site and navigate through some of the searches, you will find that the experience is much faster. What that results in, users who were actually coming to our particular mobile site earlier, but due to slower Internet connectivity, they were dropping off, they were not getting captured as traffic. So now that was actually -- that particular user gets recognized as a user. So that sort of helped in absence of substantial ad spend during this particular quarter. Secondly, on your question on plans for new technologies, most of the technology that we use so far is in-house technology. So we have our 250, 300 member-strong tech team, which actually does all these particular implementations. In order to reduce time-to-market, we do look out for certain opportunities, for example, the real-time chat messenger that we recently launched. So in case there are any technologies which could help us reduce time-to-market, we could look out for that. But by and large, as we have seen, both in terms of -- for time-to-market as well as cost efficiency, we have found that working in-house has been -- has worked well for us so far.
I have a couple of other questions, if time permits. Can I ask now?
Sure, please go ahead.
Yes. You speak a lot about the bouquet of services that you are able to up-sell. So is there a metric, like the number of products that you sell to your SMEs? Or how should we see this up-selling effort of yours resulting in improving realizations?
See, in terms of bouquet of products, we have like the core product obviously is the premium and non-premium listings. Then there are certain additional products that we sell, such as a banner. Then we also give [Audio Gap] particular SMEs. So all these particular products add. And we have various packages that we form for SMEs. So these are the key -- all our products obviously are digital in nature. So essentially, [Audio Gap] have much visibility as possible.
Sure. And my last question is on one specific other expense, which you disclose annually, which is database and content charges. Can you help us understand how this has moved in FY18 and progressively in 1Q also?
Database and content charges for this particular quarter, as I see, was only about, I think, INR 24 lakhs. So it wasn't that high for this particular quarter.
Okay. And this cost has come down very meaningfully, is it, over the last 6, 8 quarters?
For last year, same quarter, cost was about INR 38 lakhs. And automation has helped us bring down this cost. But as you would see, this particular quarter is only about INR 25 lakhs to INR 35 lakhs a quarter. That's not that high. In database, we have taken certain initiatives, which have definitely helped us reduce employee cost for this particular department. So still about 5, 6 quarters back, we had about 440-odd employees in database. But today, we have about 390 employees which are curating and adding much more data versus 4 quarters back. So automation has indeed helped us bring down overall cost for database, so to say.
Next in line, we have Mr. Ashwin.
Abhishek, just one question. In terms of the bundling of products, so what proportion of our client base we would be selling the multiple products? Is there something like an index in terms of out of the 4 or 5 products that you sell, what proportion would you already have targeted versus what is remaining?
See, difficult to look at it that way because it's not that the bundled products on a standalone basis were not being sold earlier. Just that we have now created offerings, which are higher value for money for these particular SMEs. So earlier, our SME would say that, okay, they would take an entry-level, non-premium listing. And maybe we would approach that particular SME after a period of 6 months for this particular add-on product. Today, we can still approach after 6 months, but we do give an option at the beginning itself whether the SME wants to opt for these listings. So some of those particular SMEs do end up opting for such particular bundled offerings.
Okay. And in terms of we had earlier taken entry-level price hikes, in terms of the realization improvement, how much of it is bundling of products versus there would have been a like-to-like pricing increase that we might have taken?
See, honestly, very difficult to quantify. Because if you see, I believe realizations should be on a downward trajectory, considering the share of Tier 2, Tier 3 cities is growing, right? But this particular realization that you see is actually a blended mix of all different types of campaigns and geographical split that we have. So in order to quantify that how much it is coming due to entry-level price hikes versus bundled products, I think would be a bit difficult.
[Operator Instructions] Next in line, we have [indiscernible] from HDFC Mutual Fund.
You mentioned that over time, the growth rate in deferred revenue and on unearned revenue and the growth that you report in our actual revenues should converge. It's been a couple of quarters and still you've been having very high growth in deferred revenues. Is that convergence a 4-quarter phenomenon? Or you think the way we have sold, it should take longer than 4 quarters for the [indiscernible] to converge?
See, okay, this particular deferred revenue that you see, it is actually a outcome of the money that we collect, less money that we can use. The growth rate that you see out of that, about [indiscernible], I would say, 90%, 92% should get recognized over next 4 quarters itself. So this particular like convergence or I would say that revenue growth should, I believe, start inching towards deferred revenue growth rate over next [indiscernible]. Quarter-on-quarter, it should start going towards that.
Because the acceleration so far that we have seen in reported revenue is now lagging the deferred revenue quite meaningfully. That's why the question.
See, the key reason for that is the acceleration in deferred revenue started primarily like March quarter-end, right? So March tends to be a very healthier month for us, followed by this particular June quarter. Whatever money that we collect, in most of the cases, that gets recognized over a period of 12 months. So there is a part of revenue which is getting recognized right now, which came out of collections that happens like 2 or 3 quarters back, when collection growth was not that strong. So it will take slight bit of time for revenue growth to catch up. But yes, it should happen if collection trends continue to remain healthy as they are.
Okay. Do you want to earmark certain costs over and above branding for any new initiatives? Or as of now, you don't really have any plans to do that?
See, in terms of any incremental spend, there could be some spend that could be made on the technology front to augment our capacity, considering traffic trends are very healthy, et cetera. Second, obviously, would be on promoting the product. So those are the only 2 key areas as I see. I don't think there should be any other costs that should come in apart from these -- significant cost [indiscernible]
Next in line, we have [indiscernible] from [indiscernible] Investments.
[indiscernible] been answered.
[Operator Instructions] Next in line, we have [ Mr. Suresh ], who is an individual investor.
I have a broad question. Over the next 3 years, how do you see the business evolving? There's a lot of competition coming from all the big firms, like Google, Facebook, et cetera. And there's a lot of new technology also coming, like AI and machine learning. So in this context, how do you see the business evolving over the next 3 years?
So, so far, we have seen that with growth in Internet, we have benefited a lot. And improvement and enhancement in our product has been benefited even further. You must check out our new iOS app, and you'll get a fair idea in what direction we are moving. Our goal is to have users engage with us on a more regular basis than what it is still today. So the new iOS app will give you a flavor of that. And that will be the kind of strategy going forward. There is enough room and scope for multiple players to be in. And Just Dial, being a purely a local search engine, can curate content and make it much more customized than others who have kind of an identity as a generic destination or a social destination. So we are pretty confident that with our quality of product improving, our users are going to use more and more. And not just that, they're going to use it more often. And as far as AI and other things are concerned, we have integrated it very well in our new product. You can use our voice search feature, which has lot of AI in it. And we are also -- at some point in time, we'll have our own version of a home-based kind of a gadget where you can speak and you can get information on demand. We are constantly in touch with technology and bringing in that constant improvement.
Okay. One particular question, say, if you take a particular category, like restaurant, how has the number of users using that particular category evolved over the years, say, last 3 years, when vertical players, like Zomato or Swiggy, have come up? So what kind of trends have you seen in terms of usage of Just Dial vis-à-vis these vertical apps?
See, searches for restaurants have grown. Searches for not only restaurants have grown, the number of restaurants paying us money has also grown. The market is so huge that a specific vertical player will maybe cater to a very crème de la crème segment. But large population of Indian masses are not that lifestyle-oriented. Therefore, then the frequency over a strong lookup is much less. For them, they'll settle with Just Dial. And they're pretty happy with it. In addition to this, the gap between the vertical products and Just Dial will seem narrow -- it's already narrowed quite a bit. And now as we move forward will get -- there will be hardly any difference between vertical and a local search engine like us. So it is -- at some point, the users want to kind of converge and use one platform to do multiple things. And that's what we see happening. And so other than that, the market is so large, there's enough scope for everybody to play. And the users in the future are going to simplify things for themselves and converge -- use a product which converges many services in one place. [indiscernible] key verticals as complementary. We do send a lot of traffic to these verticals also when they are specifically good in a certain area. For example, restaurant food delivery, we're not doing any more of our own initiative. We are actually sending it to the best of the best, whether it's Uber Eats, Swiggy or any other player in the market. We're trying to send the traffic to them because users' experience is paramount interest to us, not like obsessively trying to own every piece of business. We want to be the go-to destination to find things, find things particularly which are local, which are products, services which are city-specific. And the fulfillment can be done by the vendors or could be done by an intermediary, who could be a specialist vertical.
Okay. But do we charge them for giving the leads?
So all that is secondary thing for us. Right now, we focus on user experience. And when we have to charge, whether we have to charge, all that will be decided later. You must download our iOS app. And I recommend -- and I would also really appreciate that you all can give us feedback to us. You can share your experience, your suggestions to us.
Yes. So just one last question...
Sorry to interrupt here, but we have participants waiting in the queue. [Operator Instructions] We take the next question, which is coming up from [ Mr. Rajesh ] from Credit Suisse.
Hello? Can you hear me?
Yes, we can hear you pretty clear.
I wanted to understand what's the Just Dial view on forming partnerships. And how do you see Jio, which has sort of accelerated the number of Internet users in India? And clearly, that's been growing at a fairly rapid pace. Do you see a partnership with someone like Jio or getting the Just Dial app on a Jio phone as a possible area of growth in the future?
We are always opportunistic and collaborative. And we have been talking to some operators already. And we will see as it moves forward. It has to be a win-win kind of a collaboration. And so when such a kind of opportunity arises, we will definitely grab that. And obviously, getting easy traffic by way of such type of distribution is definitely a smarter way and a must-way to do.
At this point of time, I would like to turn the program back to you, speakers, for final remarks.
Thank you, everyone, for joining us. As I mentioned earlier, last 4 quarters have laid a strong foundation for coming years for us. The business did go through certain challenges, which were partly internal, partly due to changing ecosystem. However, we have been successful in pulling it back on the right track. Our focus continues on building on current growth levels, both in top line and bottom line. In case you have any further queries, do reach out to us. We will do our best to address. Apart from that, any feedback that you have on our new mobile site, new app, that would be very helpful to get. That's it from our side. Thank you.
Thank you, speakers. Thank you, participants. That does conclude the conference for today. Thank you for your participation. You may all disconnect now. Thank you, and have a great evening ahead.