Info Edge (India) Ltd

NSE:NAUKRI

Earnings Call Transcript 2022-Q1

[Anand Prakash Bansal]

Good afternoon, everyone. This is Anand Bansal. Welcome to Info Edge conference call, along with my Vivek Aggarwal, who will run this conference. Vivek, you can start.

[Vivek Aggarwal, Former Executive Vice President of Finance]

Sure. Thank, Anand. Everyone. Good evening, and welcome to Info da Q1 2020 Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. Joining us today from the management side, we have Mr. Sanjeev Bikhchandani, Founder and Vice Chairman; Mr. Hitesh Oberoi, Co-Promoter and Managing Director; and Mr. Chintan Thakkar, Chief Financial Officer.Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide #2 of investor presentations for disputed disclaimer.Now I would like to hand over the conference to Mr. Hitesh age for his opening remarks. Thank you, and over to you, Hitesh.

[Hitesh Oberoi, MD, CEO & Director]

Thank you, Vivek, and a very good evening to everyone, and welcome to our Q1 financial year 2022 earnings conference call. I trust you and your loans are safe and in good health. As we come out of the second wave of the pandemic, we would like to express our heartfelt condolences to all the info Edge stakeholders who lost a family member, friend or colleague. I hope the coming days are better for everyone.Over the past 1.5 years, Info Edge has stepped up and has not left any stone unturned to support the health and overall well-being of our employees and their MD members. We continue with the COVID relief work and help our employees with oxygen support and emergency supply of basic and advanced medicines, hospital beds, ambulance support, health care services at home and other health care needs. Despite all this, we lost 4 of our employees to the pandemic. Our thoughts and prayers are with them and their family members.We continue to offer COVID leaves and enhanced medical insurance coverage to all. We also recognize the emotional toll on employees and initiated mention health -- mental well-being programs for all employees of our company. Also realizing that vaccination is the only way to return to normalcy, Info Edge carried out of vaccination drive for the -- for all our employees and their family members. We also extended the reach or the vacation drive to our partners and clients, especially in 99acres.We will remember this challenging time in [indiscernible] -- turning point at asserted as out of our comfort zone and pressed us towards a different future. We will now move -- We will now talk about the financial -- quarterly financial performance of the company. We'll start with the overall financials as always, and then cover each business financials in more detail. And then, of course, we'll have Q&A.The audited financial statements and other schedules on segmental billing, revenue, et cetera, along with the data sheet, have been uploaded on our website, import. Let's begin with the summary of key numbers in the stand-alone financials.Billings in Q1 are INR 314.2 crores, up by 6.6% year-on-year. Revenue in Q1 is INR 319.7 crores, up by 14.1% year-on-year. Operating expenses for the quarter, excluding depreciation and amortization, are INR 220 crores, up 25.3%. And operating EBITDA stood at INR 99.7 crores versus INR 104.6 crores last year, a drop of 4.7% year-on-year.And operating EBITDA margins for the quarter stood at 31.2% compared to 37.3% last year. And cash EBITDA for the quarter stood at INR 94.1 crores compared to INR 13.7 crores last year for the same quarter. Deferred sales revenue stood at INR [ 506.61 ] crores as of June 30, 2021 versus INR 371.7 crores as of June 30, 2020, an increase of 36.2% year-on-year. The cash balance of Info, including the whole on subsidiary, stands at INR 356 crores as of June 30, 2021, as against INR 1,425 crores on June 30, 2020.As one can see from the above numbers, the companies with this are a remarkable recovery in buildings in Q1 over Q1 of the previous year. The billings for the -- The year-over-year growth in Q1 billings is across all the business verticals, but with different -- we saw different growth in different -- to different degrees in different verticals. The recruitment business has shown a sharp rebound in the equities of the platform with the June 21 JobSpeak index reflecting almost 100% year -- growth year-on-year and ITS and -- IT and ITeS showing positive trends in hiring. The recruitment business is poised for a high-growth phase -- to enter a high growth phase.In 99acres, the drop in traffic on the site was about 30% in April compared to the previous month due to the second day of the pandemic, started recovering month-over-month. The monetization of 99acres was severely impacted, particularly in the month of May, which is at the peak of the second wave. Since then, we have witnessed a recovery in both traffic and monetization. And the external environment on the real estate business has also turned more benign.In Jeevansathi, we continue with our strategy to invest in brand and improvements in user experience. We continue to focus on the Hindi-speaking belt in North and West India. During the peak of the second wave of the pandemic, the subdued sentiment didn't hamper the steady progress of the growing number of users and billings staff. Double digit billings in the quarter compared to Q1 of FY '21 compared to the prepandemic year of FY '20 also, it showed a growth of about 25%. Clearly, this -- the portal continues to gain acceptance in -- with the student community and with colleges and universities. The Naukri distribution muscle was, of -- course, was leveraged by IM jobs and Harris, and they both grew in terms of number of clients, billings and cash profits. During the profit -- during the quarter, we also completed our acquisition of the Bangalore-based SaaS company and which has the bank-based SaaS companies actually has some marquee customers for the SaaS product. We along with RMS, which strengthens Naukri's offerings in the enterprise segment going forward.In early Jeevansathi, we also announced the signing of definitive agreements to acquire Select, it's sort of bot to abount company in the assessment space, to select would add breadth and depth with an ociproduct stack in the cute space.As a result of the accelerate digitization in the companies in, not just in India but globally, the talent market has become very, very competitive, particularly in the technology and digital value space. This gets reflected in our higher personnel cost during the quarter as well. I mean it's becoming almost impossible to hire talent in this market.We are watchful of discretionary expenses, balancing the long-term investment in the business with short-term goals. As a company, we continue to work from home. All our employees have been working from home for the last almost 17, 18 months now without any impact on productivity. And the total headcount of the company remains at around 4,500 as of June 30, 2021, up by about 2 -- 2.5% from March 31 2021.Moving on to the financial and other highlights of the recruitment segment. In Q1 of February of '22, the recruitment segment billings were INR 243.5 crores, up 73.6% year-on-year, while revenues were INR 222.6 crores, up 11.2% year-on-year. Operating EBITDA stood at INR 123.6 crores, up 2.5% from Q1 of 2021. Margins were at 55.6% versus 6.3% in Q1 of FY '21. Cash EBITDA for recruitment during the quarter stood at INR 144.8 crores, up from INR 60.8 crores reported for Q1 of 2021.The cash EBITDA margins are at 59.5% of the billings compared to 43.4% in Q1 of 2021. iimjobs and [indiscernible] saw [indiscernible] billing. The billing for the quarter stood at INR 8.6 crores, up by 17% from Q1 of 2021. Pending the final legal process, the merger, these numbers are excluded from the stand-alone numbers above.So we saw a recovery in both segments. The IT and ITeS segment was the most significant contributor to the overall numbers. We also have witnessed high growth across geographies in terms of new customers added and billings per customer. We had a very high renewal rate. We saw a very high renewal rate for [indiscernible] subscriptions during the quarter.We also see a significant uplift in market sentiment a few customers buying higher volumes in anticipation of an uplift in hiring demand in the near future.The important point I want to make is that last year and particularly in the first half of last year, due to lockdowns and COVID the annual -- a lot of companies deferred their annual renewals. As a result, the renewal base has shifted for many companies, right? So the point I'm trying to make is that, while we can -- we are sort of okay comparing this year with last year, but comparisons with last to last year may not be appropriate because the renewal base has shifted for a lot of companies.So we are -- we expect Q2, for example, and Q3 to sort of show higher growth if this trend continues vis-a-vis Q2 and Q3 of '19, '20 because the basis have shifted. I hope I'm able to get my point across clearly. A lot of companies were supposed to renew in Q1 of last year did not renew in Q1. Many of them went on to renew in Q2 and Q3 and some in Q4. And therefore, their renewals will now come in Q2, Q3 and Q4 of this year and not in Q1 or Q4, right?The new approach we are following in Naukri, because we've added a lot -- acquired a lot of new businesses and added increases and functionality, we're now offering the whole suite of products, starting with campus hiring, talent assessment, recruitment software, to sourcing, to service through ehire to our clients to meet all their hiring needs. And this strategy is beginning to get higher acceptance with our -- with some customers. Early days still, but it's beginning to get high acceptance with some customers.And the acquisition of Zwayam and DoSelect will further enhance our product offering over time. Our tech and product team also successfully launched -- has 3 new products in the last 3 or 4 months. Resdex Enterprise, for example, the new -- next-generation talent are planning and sorting platform equipped with AI/ML-based personal search and CV recommendations. This -- it also has advanced data analytics to closely track recruiters' performance and productivity tools to save hiring time.We also launched Talent Pulse, a comprehensive talent planning tool that helps organizations shape their hiring strategy through real-time insights on talent distributions, hiring trends, competitive benchmarking and more. And lastly, we also launched mobile branding solutions.Today until recent -- very recently, we used to offer by branding solutions only on desktop. But now we have started offering mobile branding solutions to companies as well, which will help companies showcase their brand to an untapped pool of mobile talent with company page and targeted ads on Naukri's JobSeeker app. Early results for these new products are in encouraging, but it's still early days.AmbitionBox, which is our career platform, which helps job seekers discover best places to work, which host a lot of reviews and creating software companies, also launched as best place to work in India awards, which showcase top places, work place based on more than 1 million reviews from 2,500 locations across the country. These awards were also received well by our customers.Moving on to our operational sort of metrics. This quarter saw a significant uplift in terms of new CV registrations on the platform. On the average, we added 6,202 CVs per day, up 93% compared to Q1 of 2021. Average CV modifications were also up to 40 -- 489,000 per day, up 51% year-on-year. And our traffic share in the top pods continues to be in the high 70s.Moving over to 99acres, billings in Q1 in 99acres grew by 9.6% year-on-year to INR 22.4 crores, while revenue grew 15.8% to INR 49.2 crores. EBITDA for the quarter stood at INR 10 lakh against an EBITDA of INR 4.41 crores reported in Q1 of 2021. Cash loss for the quarter was INR 26.9 crores against a cash loss of INR 24.5 crores last year.We saw solid recovery in Q4 in 99acres, but Q1 was again hit due to the second wave of COVID. While billings grew 60% year-on-year, it was on a small base. We were expecting to do much better till the second wave hit us. Unlike hiring, which has moved totally online and has become very digital, and companies are willing to sort of interview people and make offers without meeting them, homes are a very high involvement category, and most people don't -- would not buy a home without sort of check -- visiting or sort of seeing a few places, which is why this business was hit in Q1.We saw a modest recovery in June. And traffic is now back. All our metrics are at an all-time high in 99acres. And even July was a very, very good month. So we are hopeful and confident that unless and until we get hit by another wave of COVID, things should quickly get on back -- get back on track in 99acres, and across all segments, new homes, resale venture and commercial.Daily listings on the platform grew 49% year-on-year in Q1, with both owners and broker listings, registering strong growth Y-o-Y. Our branch share continued to be in the high 50s with our nearest competitor.Overall, inquiries and responses on the platform also grew very strongly in Q1 in all categories, 60% year-on-year. On the back of a group platform experience and the new sort of research activity in real estate. People are still searching. They were not sort of going out and checking out this. Better spam detection, new solutions for advertising and discovery free lease commercial properties and a new rental agreement service were also rolled out during the quarter.Reviews and locality in sizes were further scaled up in the quarter to help buyers and tenants make an informed choice in 99acres. Going forward, in 99acres, we expect the share of online medium in the overall spend of advertisers to increase as advertisers realize inherent cost efficiency of digital versus print and media and holdings. We saw strong upward trends in listing traffic inquiries and revenues in July month and expect this to continue for the rest of Q2 as well.Both pent-up demand and improved platform experience are driving this upward trend. We continue to invest aggressively in improving our core platform experience in all the verticals within 99acres varices, we sail new home rental, commercial and in marketing our brand and to further strengthen our competitive position.On the whole, also the real estate market is maybe likely to sort of be in a better place than it was for the last 5 years going forward because of the lower home loan rates, real estate becoming more affordable and their desire to own bigger homes after COVID.Jeevansathi business, Jeevansathi billings grew 10.2% year-on-year in Q1 to INR 25.1 crores. Revenue grew 11.9% year-on-year to INR 25.2 crores. Operating EBITDA losses stood at INR 23.2 crores in Q1 of FY '22, up from a loss of INR 13.3 crores last year. Cash loss for Jeevansathi during the quarter stood at INR 23.6 crores against a cash loss of INR 13.3 crores in Q1 of 2021.In Q1, growth momentum slowed down slightly due to rising COVID cases, particularly in the northern part of the country, but we saw a slight recovery in the month of May and June. Key differentiating features on the platform like online verification, video calling and video-based online leaders, capitalizing the engagement and the app rating on the group pace for continues to be the best in the category.Moving on to the Education business. In Shiksha, Q1 billings grew 101.9% year-on-year to INR 23.2 crores, while revenue grew 52.4% year-on-year to INR [ 22.8 ] crores. We made an EBITDA profit of INR 7.7 crores in Q1 in Shiksha versus an EBITDA of INR 2.1 crores in Q1 of last year. Cash profit for the quarter stood at INR 8.2 crores against a cash loss of INR 1.3 crores in Q1.Shiksha exhibited strong growth in billing and collections in Q1, stronger competitive position focused on student-centric content and product improvements have helped take our traffic and help us increase our growth in Shiksha. We continue to invest in making our content more comprehensive and more student friendly in building deep domain expertise in this space. This should help us in generating even more responses for our customers going forward.At the consolidated level, the net sales of the company stood at INR 37.3 crores during Q1 of 2022 versus INR 285 crores for Q1 of 2021. For the consolidated entity at the total comprehensive income level, there is a profit of INR [ 155.9 ] crores versus a profit of INR 94.4 crores for the previous quarter ending June 30 2020. Adjusted for the exceptional items, PAT stood at INR 4.9 crores in Q1 of 2022 versus a loss of INR 7.6 crores in Q1 of 2020.Moving on to our strategic investments. Zomato had a stellar performance of its IPO during the quarter. The issue was subscribed over 2.38x. And the stock price is currently about 160% of the issue price. Our other investee company Policybazaar has filed [ DRSP ] study seeking approval for our proposed IPO. And we continue to, of course, evaluate new investment and acquisition opportunities.Thank you. We are now ready to take any questions that you may have.[Operator Instructions]

[Anand Prakash Bansal]

First question comes from Mukul Garg from Motilal Oswal.

[Mukul Garg, Research Analyst]

So Hitesh, first, a quick comment on the personnel cost. And I know you mentioned that the cost is increasing quite a bit. How should we see this going forward? In the last quarter, you had substantial wage hike. Do you expect it to remain around this level, given that the overall billing and revenues are also moving up? So you will get some cushion from operating leverage? Or is the increase in employee retention going to cross that even after the growth?

[Hitesh Oberoi, MD, CEO & Director]

So listen, so the wage bill is, of course, going to go up because of the pressure on tech talent, especially, right? So which is -- so there are -- we have 4,500 employees in the company, about 700, 800 what [ we can take and related ] roads. So there, of course, the pressure on the [indiscernible] will be high. It's not that bad for the -- with the other [ 3,700, 3,600 ] people there, you should see normal increases.Now unless, of course, the market changes, and it's an evolving situation, every 3 months the salaries go up. right? So we are forced to look at them again. So it's going to be hard -- it's hard for me to predict what will happen with tech salaries going forward. But the rest of the company, the salary sort of increase should be modest. But let's see what happens going forward.As far as operating leverage goes, see [indiscernible] we expect the Naukri business to do very well this year, given what we're seeing in the talent market. So if you are able to get anywhere close to the kind of growth kind of targets we have in mind, then of course, you will see a massive improvement in EBITDA and margins in Naukri especially.In Shiksha, we are doing well. So this growth continues, we should be fine as we expect costs to surge in Shiksha. Jeevansathi, a lot will depend on how much we spend on advertising. The was special on Jeevansathi will be -- [indiscernible] is a small part of Jeevansathi total bill.As far as 99acres is concerned. Again, a lot will depend on what happens to the housing market going forward. We saw -- we had a terrible Q1 because of COVID 2. But we had a weirdly good July. So we are hoping that -- and we had a really great Q4 as well. So unless something goes wrong once again, things should be okay on the 99acres front also as far as operating margins, et cetera, go.Of course, the wage bill of 99acres will also go up, especially on the tech side. But that's only about maybe only about 10% or 15% of our workforce in the 99acres. And so I mean, fingers crosses, but if we have a good year and all signs are that we might, in fact, the kind of attrition we are seeing in companies that kind of stories we are hearing in the market, I mean we've not heard these kind of stories for -- in the last 15 years.So it's -- the talent market is -- especially in IT, not in an IT so much. But on the IT side is the best we've seen in 15 years, right? There are so many opportunities. And people are almost impossible to find. It makes it harder for us on the operating side. We also need to hire and sort of retain people.But if this market continues, then the Naukri business should have a very, very healthy year. And if the non-IT market also comes back, which we're hoping that it will in the second half of the year, then that will sort of give us further boost.

[Mukul Garg, Research Analyst]

Sure. And 1 quick 1 on Naukri and 1 on 99acres. So just a clarification on the Naukri side, the number of unique customers in Q1, the only time we have seen that was last year's Q1. So was that on account of the lockdown? Or was there some other factor at play say there?And on 99acres, given that the overall environment seems a bit better from July onwards, do you expect a pickup in your advertisement spends because they kind of came down quite sharply this quarter?

[Hitesh Oberoi, MD, CEO & Director]

So in Naukri, what happened last year was because of COVID, because of the lockdown because companies have scrambled to get their act together, work from home, et cetera, et cetera, many companies go there, right? Because the markets are unpredictable. If you recall, we were also sort of unsure what would happen. We actually did a QIP in the first half of last year.In the end -- so what happened as a result is a lot of companies did not renew in Q1, right? So we have a renewal business. A lot of our clients are clients who've been clients for years and they renew every year at the same time. So a lot of clients were not renewed in Q1 of last year. Some of them came back and renewed in Q2. Some of them came back and renewed in Q3. Some of then came back and renewed only in Q4.So our bases have shifted. So no -- so the comparison with '19/'20 is no longer a fair comparison. You can, of course, compare with last year, but comparison of '19 and '20 is no longer the right comparison because bases have shifted. Right? So we are hoping to do better vis-a-vis '19, '20 in the coming quarters, right? So in this quarter, for example, while we grew massively over last year same quarter, we did not grow over '19-'20 Q1, right? Because bases are shifted.And a lot of the clients who renewed -- who sort of gave us business in '19, '20 Q1 will now give us business in Q2 and Q3 of this year, right? So we are hoping to see higher growth vis-a-vis '19 and '20 in Q2 and Q3 this year, right?And as far as 99acres is concerned, yes, ad spend was muted this quarter because there was no activity in the hiring market -- in the property market. So it did not make a lot of sense to advertise at a time when nobody was venturing out of their homes to look at property. And we've started upping our ad spend in 99acres. And because the market is coming back, like I said, real estate, at a very macro level, real estate is more affordable.Real estate is -- home loan interest rates are lower and people want bigger houses. So we are seeing massive activity on our platform once again in terms of inquiries and terms of -- anecdotally, also, there are -- we are hearing stories of people buying property now, which was not the case a year ago, 1.5 years ago. And therefore, it may make sense for us to upper advertising spend going forward in 99acres. But again, we'll be watching you'll see how the market works.

[Anand Prakash Bansal]

Next question is from Pankaj Kapoor from CLSA.

[Pankaj Kapoor, Research Analyst]

So I have 2 questions. So first is, I just wanted to understand, was there any impact of the wave 2 on the bookings in this quarter, especially in the 99acres? And if you can give some sense of that? And also, how much would be IT, ITeS of the bookings that we have done in the recruitment business?

[Hitesh Oberoi, MD, CEO & Director]

Yes. 99acres bookings were impacted massively by COVID. See in Q4 of -- last quarter, which is Q4, we, I think, built INR 72 crores in 99acres. And Q4 is normally our best quarter. So -- but we were expecting or hoping to be at INR 60 crores in Q1, but we ended at INR 22 crores because the market was massively hit by COVID 2. All sort of property buying activity came to a virtual halt in most markets.I mean brokers, see, we make a lot of money from propers. They just did not open the shutters, right? They were sort of close of business. Now they're coming back, and we expect this quarter to be a lot better. I don't know if we can give July numbers, but July numbers were pretty decent in 99acres from a billing standpoint. Your -- so what was the question regarding...

[Pankaj Kapoor, Research Analyst]

Yes. On the recruitment business, can you give a sense how much would be the billing from the IT, ITeS as a vertical?

[Hitesh Oberoi, MD, CEO & Director]

Okay. So if you look at recruiter activity on our platform, what kind of CVs are recruiters viewing, right? One is, of course, how much we make from IT services companies, how much we make from internet companies and so on, which is 1 way of looking at how much we make from placement firms, so who sort of hire for IT -- hire IT talent, and that number, I think, would be close to 50%, 55% north, I'm not mistaken, if you were to sort of -- because of the way -- but if I were to look at activity, what are recruiters searching for, who are they -- what CVs are being used end close to 57%, 58% in some -- on some an 60% of all hiring sort of all searches and hiring activity is for IT talent on our competition.

[Pankaj Kapoor, Research Analyst]

Understood. And, Hitesh, slightly longer term, but you have traditionally been very prudent in your approach to valuations, whether it is for investing or for making acquisitions. So I was just wondering, do you now see a need to maybe rethink there given the kind of currently the levels what we are seeing are fairly elevated?So if you want to really do a scale acquisition in the different segments, which I think you have been going to do, but have not been successful in the last few quarters. So are you looking at maybe having a rethink on there?And related to that is that now since we have Zomato and probably Policybazaar are also being tested. So we now have these stocks as currency. Will that change your approach in terms of how you look at the valuations?

[Hitesh Oberoi, MD, CEO & Director]

So listen, valuations are what they are. I mean they've -- for certain companies, they have definitely gone through the roof. For many other companies, they actually haven't moved too much, right? So if you look at some of the other sort of players in the segments we operate in, it's not as the valuations have moved that much, right? They have, of course, improved over what they were 1 year ago.So will we be -- so would we be willing to pay more? Of course, if it makes sense for us to pay more, if the business -- if by consolidation or through some acquisition, which allows us to do things, which we are ordered today, we are able to create a lot more value for our users or for our investors, we would be more than happy to sort of revisit valuations, right?Because, at the end of the day, so the investors are looking at the company in a certain way. We are also being rewarded. Our valuations have also gone up. There are some -- interest rates are low, et cetera, et cetera, et cetera, which has an impact. So we would definitely be willing to consider paying the right price, which -- in our view, for assets, which makes sense for us to own in the long run, right?So -- but having said so, I mean, like I said, valuation lies in the -- like beauty lies in the eye of the beholder, valuation is in the eye of the valuer. So it has to sort of -- it has to be a sensible valuation. It can't be something which is [indiscernible].

[Anand Prakash Bansal]

Our next question is from Pranav from Edelweiss. Sorry, it is from Pranav? Pranav you are there? Pranav has gone. Next question is from Manik from JM Financial. Manik is also not here. So maybe we'll take the next question.

[Hitesh Oberoi, MD, CEO & Director]

There are some questions in the chatbox. Do you want us to answer them.

[Unknown Executive]

already started responding to some.

[Hitesh Oberoi, MD, CEO & Director]

Okay. Good.

[Anand Prakash Bansal]

The next person is Rishit from Nomura.

[Rishit Parikh, Associate]

Am I audible?

[Anand Prakash Bansal]

Yes, Rishit. Go ahead.

[Rishit Parikh, Associate]

Okay, perfect. So just one question from my side, right? I think we've -- there was a news article we've recently sort of invested into [indiscernible], which is more or less filed for an IPO. So the point that I wanted to check is, are we sort of looking at late stage larger ticket size investments as well versus compared to early stage, more smaller tickets earlier than we've largely focused on. Is there a clear change in strategy or this could be termed as a one-off?

[Vivek Aggarwal, Former Executive Vice President of Finance]

Yes, I'll take that question. I'm Vivek. So look, in the AIF to, as per the sort of agreements and the charter, roughly 10% of the funds can go into as first -- our first check into growth in later-stage companies. So it's not as it is a massive shift in strategy, at least not now. It is from back profit. And that profit has been $10 million, okay? And that's about it. Now any further change in the strategy, we'll have to sort of evaluate the data as we go along. But as of now, there's nothing out there. But this is from that small profit.

[Rishit Parikh, Associate]

Okay. Fair enough. And one question on Naukri. If you could just provide color. So you've seen a lot of the renewals, which has typically come to us in 4Q and 1Q, right? I mean that's typically been the seasonality. So you would expect that will be more like a 2Q, 3Q phenomenon and then it could be a substantial -- it could be a very similar improvement that we've seen in the past or it could be much higher given the momentum is much stronger in the Naukri business because of the demand in the IT services piece?

[Hitesh Oberoi, MD, CEO & Director]

Right? The renewal sort of cycle has changed because the basis has shifted. And a lot of companies did not renew in Q1, some not even renew in Q4 of last year. In order to -- because when COVID hit us in the last 2 weeks of March. So we saw some deferral at that time also in Q1 of -- Q4 of '19, '20. And then we saw a lot of companies deferring their purchases in Q1 of 2021 as well. And so some of these companies came back and renewed in Q2 and some came back and renewed in Q3. So the business shifted, and therefore, unlike previous years, when Q4 and Q1 used to be our biggest quarters, we are more likely to see a more sort of balanced year, right? Will growth rates grow further going forward? I mean who knows. I mean the IT market, like I said, is super hot, and it could become hotter. And what happens in a hot market, as you all know, is that companies don't ask a lot of discounts, volumes also go up, we were able to attract new customers. So -- and if the non-IT market comes back, then that could provide a further boost because, all said and done, 30%, 40% of our hiring is still 35%, 40% still non-IT folks. And there, we are not seeing. We are just seeing a modest recovery that could respond to that.But if that market also recovers, manufacturing sort of starts to pick up or infra investments start to pick up and -- or it just because COVID starts to subside and companies sort of start to opening and start hiring the team confidence, then of course, growth rates could get even better going forward.

[Anand Prakash Bansal]

The next question is Manik from JM Financial.

[Manik Taneja, Research Analyst]

Am I audible now?

[Anand Prakash Bansal]

Yes, Manik, go ahead.

[Manik Taneja, Research Analyst]

I had a few questions. The first question was with regards to our Naukri business. While Hitesh has said that, we expect Naukri to do quite well this year due to the solid hiring environment in the IT, ITeS space. Just wanted to understand, is there a leverage for our revenues to the level or the volume of hiring in the market because our sense was that the business is largely sufficient. And does it also give us some leverage to increase pension? And I have a few follow-up questions as well.

[Hitesh Oberoi, MD, CEO & Director]

Yes. See, what happens is see in a normal year, we end up giving a lot of discount, especially bulk of discounts. So in a good market, one doesn't have to extend those discounts, number one. Number two, in a growth market, companies want to grow, they want to add. One, they need to sort of stay at the same place because attrition levels go up, they need to hire more people, right? And then on top of that, they want to grow because they want to -- there is business coming there, they want to increase their headcount. So that means they want to post -- people want to post more jobs, they will want to do more series, they will want to send more e-mails. So you get some volume growth as well. And a lot of companies stand out they want their brand to sort of -- they would spend a little more on branding also, right? So all this will result in us getting more volume as well from a lot of our customers, not just IT. And then in a good year, in a good market, what happens with a lot of new people also set up shops. So there is more companies that have become active. And some companies may be sometimes go to AllMet, sometimes new players set up shop. So we are likely to have more customers as well. So let's see how this plays out. But right now, the signs are that we should be able to upper our prices or at least our realized prices. We are getting all our lost accounts back. Our renewal rates are at an all-time time, right? So it should be a good year.

[Manik Taneja, Research Analyst]

So I had a couple of questions for Sanjeev as well. So while momentum has already got lifted, Policybazaar is on the way to getting share. Could you talk about the 3 portfolio case within our existing portfolio that you think one should be watchful of in terms of making a lot of headway over the next 2, 3 years? And secondly, how -- just wanted to get your thoughts around how do we compete against the new aggression in that space right now? People closing deals in the span of days, which will be quite contrary to the influence has thought about making the investments over the last decade or so?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

Okay. So as far as some of the younger companies in the old portfolio companies, people like [indiscernible] business. I mean we are quite hopeful of many of them, they are 24/7. They're much younger, they're much newer investments as compared to Zomato and [indiscernible], which are 11 and 14 years old, 13 years old. So investments do take time to become valuable in India. But look, we are hopefully are confident. We are supporting them further. There's external investors coming in some of them. And it's overall looking good, but it takes a while before they really become -- we move the needle on our own valuation or our own market, right? And before they come even close to where the market [indiscernible]. As far as competition is concerned, look, I mean, we've got to live with it, right? We compete. We get some deals, we miss some deals. We are deals that we can't do in third you. We miss them and try -- The deals we can do in 5 days, 7 days, sometimes, and sometimes we can't because it's -- we have to go through a process, right? And I don't think you should be investing out of a sense of hurt mentality or compulsion at recorded investment obviously in part that you want to close in a few days. It's okay. We'll live with it. It's a small fund $10 million. We can miss some, it's okay, we'll get some more.

[Manik Taneja, Research Analyst]

So that's quite helpful. And last one, given the shift in terms of billing that is encountered in the past 12 months, would it be more prudent to look at our billing performance on an LTM basis?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

So yes, good question. Hitesh?

[Hitesh Oberoi, MD, CEO & Director]

Yes. right.

[Manik Taneja, Research Analyst]

LTA, what is the LTA, sorry?

[Hitesh Oberoi, MD, CEO & Director]

Last 12 months. Chintan, what do you think?

[Chintan Arvind Thakkar, CFO & Whole Time Director]

You think because basis have shifted, does it make more sense to look at LTM, last 12-month billing as opposed to year-on-year or...

[Hitesh Oberoi, MD, CEO & Director]

Yes. I think I can look at that and as we progress and we kind of get a better understanding of how the deals have moved and how we should be able to go with them. Now we can look at this and we can look at the last 12 months as a kind of a comparison. I still think that if you look at -- right now, last 12 months probably because of the pandemic may not be also cannot give you a correct picture, but as we go forward, I think, the bank may make sense. Because when we can compare to normal stable year with an almost stable year with the shifting view.

[Anand Prakash Bansal]

So any more questions, there were a couple of people who also raise hand, right now not visible. We have some questions in queue. Pranav is here on the line.

[Pranav Kshatriya, Research Analyst]

Am I audible?

[Anand Prakash Bansal]

Yes, Pranav, go ahead.

[Pranav Kshatriya, Research Analyst]

Yes. So my question is regarding other expenses. So how should we see the marketing expenses are trending in the next 3 to 4 quarters because that has been sort of curtailed for some time during the pandemic.

[Hitesh Oberoi, MD, CEO & Director]

So listen, we don't expect to spend a lot of money on marketing in Naukri unless something changes dramatically in the market. In 99acres -- in Jeevansathi, we've been spending a lot of money. It's not as if we have not been spending for the last for 8 quarters. So marketing spend in Jeevansathi will continue to be high going forward as well. In 99acres, we've not spent a lot of money in the last few quarters because the real estate market is impacted because of COVID. Now if we don't see a third wave coming and like -- and if we continue to sort of see the kind of action we saw in 99acres in Q4 of last year and in July of this year, then, of course, spend will go up a little bit in 99acres going forward.

[Pranav Kshatriya, Research Analyst]

My second question is regarding the M&A. I mean, you had raise capital for some M&A in the related sectors. So far, there has been very little action. Is it largely due to the valuation expectations or the targets that you're finding are too small at this point of time. And that's why those are the smaller companies, which we are ending up investing. I mean the large acquisitions have not really happened. So how should we see this? And what is the reason for those not happening?

[Hitesh Oberoi, MD, CEO & Director]

Yes. So a little bit of both. So one, there aren't too many sort of targets we are sort of excited about given the spaces we operate in, there aren't many large companies to acquire in jobs, for example. Shiksha was a small business for us. In 99acres and Jeevansathi we've been looking mostly in '20 and real estate. And the number of companies we can acquire possibly call count on the fingers of 1 out, maybe 2 hands at max. So it's partly that. There aren't any sort of acquirable companies or companies, which would love to acquire. And partly, it's the ones which are the valuations have been -- valuations have been going up every quarter. So every time it looks like Adeel is doable at working price. doing values it's partly that there aren't any sort of you see the balances have been going up every quarter, right? Every time we look -- it looks like a deal is doable at a certain price, things change and then you go back to the drawing both. So it's a harder market to acquire also because valuations have been sort of going up and up and up and that general -- and like I said, even though valuations has not gone up for everybody. But even then, when you had of some company going public or some IPO pipeline building out the market is sort of rewarding a lot of companies very differently, expectations go up. So that's also making a real harder. So let's see, I mean, we are not high, like -- like I said. We are happy to pay the right price, but we don't want to pay -- we don't want to sort of -- I don't think we will acquire a company which is losing $200 million a year in to $1 billion. That's not going to happen.

[Anand Prakash Bansal]

Next question is from [indiscernible].

[Unknown Analyst]

I had a couple of questions. One was, it will be great if you can give some color on First Naukri and Job Hai at India and we'll report on First Naukri, you mentioned this is at a nascent stage. It would be good to get a sense how do you see it in the 3- to 5-year length. And same for Job Hai? And then the second question was around the recent investment in [share pocket ], I think Sanjeev just mentioned that you're looking at late stage, but only to a certain threshold of the overall amount. So it would be great to get some color on [share pocket ] investment and also on Job Hai and First Naukri?

[Hitesh Oberoi, MD, CEO & Director]

So First Naukri and Job Hai are both very tiny businesses to us. First Naukri, a small business. Of course, we've been in the space for a while and we've been figuring things out slowly. And we've now supplemented the offering with 2 Select, which is the talent assessment platform we just acquired in the month of July. So previously, we had a tie-up with another platform. Now we have our own platform for assessment. Now is -- do we expect the business to become a very large business going forward? The answer is no. But it does supplement and complement our main Naukri offering and help to complete the hiring suite when we go to customers. So when we go to customers as we say, listen, we have been in campus hiring to recruitment software to premium hiring products like iimjobs and hirist and mass hiring products like Naukri and so. So it's part of that booking, and we continue to invest behind that business. And we expect it to sort of grow at a reasonably healthy rate going forward. Job Hai is start-up inside in squares, we've been added for about 18 months or so. And of course, then we had COVID in between. We have test's market launched in Delhi and we've got reasonably good success, and we are now going to roll it out nationally as a platform to sort of -- but we're still not monetizing it. It's still a long way -- long term away from that. So I think Job Hai more has of a 3- to 5-year play, not as a 1- or 2-year play. And again, only if you get good results, will we sort of invest aggressively behind the business. The chances are that -- are that the market is now beginning to sort of -- early it's very hard to make a blue collar business succeed in India for various reasons, but now it does look like all the trends are in favor of blue collar hiring moving online. And it maybe -- it should be possible to sort of build a viable business in this space over the next 4, 5 years. So if we get the right response, we will definitely up our investment in this space going forward. Sanjeev, you want to take the one ship project?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

Yes. Sorry, I -- can you repeat that question, please on share pocket?

[Unknown Analyst]

The question was Saiprecently mentioned that you're looking at late-stage investments to certain threshold, will ship pocket fall in that? Or you will say...

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

yes, profits from that.

[Unknown Analyst]

Okay. So -- and could you like quantify if possible to share what number of this total of that tool you've invested even in terms of percentage?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

No. As of now our pocket allocated for first checks into growth listed company is 10%. In exceptional circumstances, we may go to the committee to approval, it will change and posted a bit, but it's not a significant chunk of the fund as of now.

[Anand Prakash Bansal]

Next question is from Gaurav [indiscernible] from Deutsche Bank.

[Unknown Analyst]

Am I audible?

[Anand Prakash Bansal]

Yes. Gaurav, go ahead.

[Unknown Analyst]

One question I had is that we have been talking about like Naukri and Shiksha and other segments. And what I wanted to know is that any other area niche area that we are actually looking down the line for future prospects?

[Hitesh Oberoi, MD, CEO & Director]

See, inside the company as far as operating businesses grow, we are focused on these big sort of categories, jobs, recruitment, real estate and matrimonies for singles. And most of our investments, most of the paying acquisitions, most of the new business we try and build inside the company will be in these spaces. Now these places are vast, and we see a lot of opportunity. I just mentioned Naukri is not just the main Naukri business, we have a Naukri Gulf business, FirstNaukri business. We have Zwayam business. We have a hirist and iimjobs business. We're doing JobHire. We are doing a BigShyft, which is a dance platform for hiring. So there are a bunch of activities we are doing in jobs other than not. -- right? And that's where a lot of our investment is going today. Similarly, in Shiksha, we sort of have a Shiksha domestic business. We are trying to build an online sort of market marketplace for online courses as well as is today called Naukri Learning. We are experimenting -- we've sort of started the study abroad business, right? We have started trending students overseas all online. Really in 99acres, we started as a resale platform that over time we went into new homes. And now we are focusing a lot more than earlier on rentals and commercial as well. So these are large spaces. There's a lot to do in each of these spaces. Unlikely that we will enter a fifth category. We will continue to make investments, strategic investments. We invested in at least 3 education companies, NoPaperForms, it's an education software provider; coding in India, which is in tech, they teach coding. So we'll make -- we've invested in GreytHR, which is our HR services, HR software company. So we continue to make these investments outside. We've invested in a nobroker broker network and real estate. So in adjacent areas, we will also continue to invest outside. We will continue to acquire in these areas. We will continue to see more and more sort of opportunities inside the company in these areas. But we are likely to limit ourselves to these 4 large categories in the near term.

[Anand Prakash Bansal]

The next question is from Aurora from JPMorgan.

[Unknown Analyst]

can you hear me now?

[Anand Prakash Bansal]

Yes, go ahead.

[Unknown Analyst]

Just 1 question on Naukri. Could you -- if it's possible to disagree it all -- How should we think about growth adjusting for the base shift in renewals that you saw? Is it possible to disaggregate that to see what is the true like-for-like or pro forma growth trending at right now compared to '20.

[Hitesh Oberoi, MD, CEO & Director]

Chintan do you have to do that or me?

[Chintan Arvind Thakkar, CFO & Whole Time Director]

[indiscernible].

[Hitesh Oberoi, MD, CEO & Director]

Chintan the question was if you -- Is it possible to sort of adjust for the base shifting on the renewal side, on the Naukri billings to see what is the growth over F'20 that you're currently trending at?

[Chintan Arvind Thakkar, CFO & Whole Time Director]

Get into [general analysis] for that. But like you just said that maybe you can get comfort from the fact that the renewals -- the rates have kind of gone up. So maybe there is a shift and obviously, the shift is in leaning towards the later quarter because like after we started the COVID, the Q1 kind of went into Q2, Q3, Q4, right? So there has been -- obviously, there is the trend, now you can see that it's going towards latter quarter. And latter has remained in the quarter the subscription, the renewal rates are all that high. So this there's an inherent growth, but forwards, it would have changed.

[Hitesh Oberoi, MD, CEO & Director]

Okay. So perhaps over the next 2 quarters, we'll probably get a better sense, I guess?

[Unknown Analyst]

The second thing on Naukri was, is it possible to give us a flavor of how the billings or revenue breaks up now across the various parts of the business side. As you highlighted, answered the previous question, between India, FirstNaukri iimjobs. What I'm going to understand is how the trends different across these businesses now?

[Hitesh Oberoi, MD, CEO & Director]

So because the Gulf business is not on a roll because it's a -- it's not indexed to IT. So Gulf recovery is modest, right? And if Gulf revenues, I think out of the total sort of business we do in recruitment of INR 50 crores, INR 60 crores comes from that, INR 55 crores something, right? So that's not on a role. FirstNaukri is tiny. It's doing well, but it's tiny. It doesn't move on. iimjobs, like I think you mentioned it grew by 170% in Q1. Of course, not very tiny base because last year, if you want to be impacted by COVID. So we build about [ INR 8.5 crores ] from iimjobs in this quarter, Inland hires, which is not in our stand-alone, I think, rightly so because it's a separate company, or be merged with info. So now I don't know how to look at it. But July, for example, the year previous growth was very, very tense. Now will it sustain going forward? I don't know in Naukri.

[Unknown Analyst]

Okay. Appreciate that. In terms of, as you said, the growth in Naukri appears to be very, very strong. And typically, we see a significant operating average payout whenever that happened in the past. How are you thinking about it this time? Are you thinking of investing some of that back into the business because you strongly should be getting a lot of leverage going forward?

[Hitesh Oberoi, MD, CEO & Director]

Yes. So if things play out as expected, of course, Naukri will just generate a record cash, at least this year. And of course, not all of that can be invested back in the recruitment business, right? But we'll continue to invest like we have in -- we continue to make financial investments and continue to invest more in Jeevansathi, we will sort of be our spending 99acres in that market response positively. We have continued to look for acquisitions, interesting sort of companies to acquire in the spaces we operate. So all that will continue.

[Unknown Analyst]

So Naukri margins should expand on that. in terms of how you've seen Q1 this time play out, have you seen this time versus last time? Any impact on user behavior in your portfolio companies -- sorry, not portfolio other non-Naukri businesses, in 99acres, Jeevansathi or Shiksha, which has moved in any 1 directional, the other beyond obviously impact of not using them during lockdown?

[Hitesh Oberoi, MD, CEO & Director]

In general, we are seeing -- see, we saw -- for us, at least, I don't know whether it was -- it happened for the category as a whole. We saw this -- the Jeevansathi business was impacted negatively this time, during COVID. I think the April and May wave was just too much to bear for -- and we get most of our business in the Hindi belt, I think the Hindi belt was the worst sort of impacted by COVID. So we saw a decline in activity. I mean, it still grew was still better than last year, but not -- it did not sort of do to the extent we would have expected it to grow. I think people took a pause, marriages got delayed. And I think even now actually is only slowly getting coming back into that market. In all the other, of course in 99acres it was impacted by COVID, like I said, but it bounced back very, very strongly after COVID. So we are again seeing record activity on our platform. And we are seeing recorded activity on the rental side as well, not just on the buyer side, right? In the first wave, rental was massively impacted. Rental activity on the platform was impacted because now we are seeing rental activity also done spike after COVID 2. In Naukri, there's a core activity in the platform, both on the recruiter side and on the job seeker side because there are just too many jobs out there are not enough job seekers, lots of opportunities, right? Shiksha also, we continue to see a lot of activity on our platform, again, all-time high in terms of numbers.

[Unknown Analyst]

Understand. Just lastly, in terms of -- on a broader basis, given the success of Zomato's listings, any thoughts about changing of the size or volume of your investments either via the AIF or otherwise?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

I mean we'll take it company by company. The AIF is, of course, $100 billion fund. -- naturally keep evaluating obese follow-on fund. There's not a plan right now, but in a there, but should we do it. It's a question to be discussed. But look, our first priority is to get the $100 million fund right. And as we are convinced it getting right, we will evaluate opportunities as they arise. Now from the balance sheet investment companies, yes, we have the flexibility going larger because that's in the balance sheet and that we keep evaluating. So this couple like Gramophone, Shopkirana, Adda247, Shipsea, Ustraa from the balance sheet.

[Anand Prakash Bansal]

The next question comes from Seminario.

[Ruchi Burde, Research Analyst]

This is Ruchi from Bank of Baroda Capital. I have a question for Sanjeev. So Zomato listing and more to join soon. We have seen a very encouraging response from investors despite operational losses at these companies. Do you think this can increase the possibility of fast-track IPO for some more of your invested companies?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

We don't think it's a good idea for a company to go public before it is ready. It has to deal with the listing afterwards. It has to deal the scrutiny, deal with the reporting compliances. It has to be answerable to analysts. Management gets distracted, very often. So we believe that we should not exceed any IPOs and do them any -- sooner than advisable. So I don't think we'd be actuating any IPO. Yes, policy are fine, but there be others when they are net ready.

[Anand Prakash Bansal]

Next question comes from Adient.

[Unknown Analyst]

Can you just go ahead and ask your question. I have A question about the overall business. How would you like to see yourself as an investment management company or Internet business management company. I mean I would just like to see your views on that.

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

Yes. Can I go first? Hitesh, can I go?

[Hitesh Oberoi, MD, CEO & Director]

Yes, please.

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

Look, we are primarily an operating company. The company has 4,500 people. approximately, of that 400 -- only 6 working investments in financial investments, another 2 or 3 working in trade investments. So fewer than 10 people out of 4,500 work on investments. And so we are primarily an operating company, surplus enter from there and some of the surpluses we deployed into making investments to create greater value for our shareholders. So we are primarily an operating company, and that's right.

[Unknown Analyst]

Can I make a follow-up question?

[Anand Prakash Bansal]

Yes. Go ahead.

[Unknown Analyst]

So I agree that, that is the scenario as it is today. However, if you were to look out -- bit far out into the future, what would be your guidance to investors on this front?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

So look -- I mean you heard Hitesh. He's expecting good growth coming back to the operating businesses going forward unless the third wave of COVID. And so there will be some businesses that are growing faster than others and sometimes the operating business are going faster. So we're reasonably well diversified. And yes, we do have ownership of some other good Internet business, but we are primarily an operating company.

[Anand Prakash Bansal]

Next question comes from Charles Chanani.

[Unknown Analyst]

Hello, am i audible?

[Anand Prakash Bansal]

Yes, go ahead, Charlie.

[Unknown Analyst]

Congratulations to everyone of course, it is an incredible IPO. I got the old slide or a sense of sizing having the margin on the SEC listings. My question is the report on a. Is the market impacting any time of split in the coming periods?

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

The starts that you're talking about, a bonus?

[Unknown Analyst]

Yes. So yes.

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

I don't think we have even able for the discussion. I'll tell you why she wanted to do a bonus in some predictability. And given what's happened last 15 months on COVID, I don't think anybody has had the courage to recede bonus because we don't know what will happen after 6 months. When we estimate the environment, maybe we could consider. Chintan, do you want to add to this, you are the boss of this topic.

[Chintan Arvind Thakkar, CFO & Whole Time Director]

Yes. No, I think in the past also Board has looked at it and many retail shareholders do come and suggest that retail shareholding is low. The share price value has gone up. and there's some maritime plate. But look, eventually, it is the board's decision, and we would have a comprehensive debate before any such decision is taken. And some of the considerations like Sanjeev mentioned, that we also need to look at that would we be able to service the higher base with dividend and things like that. And then based on that, we will take a call on that..

[Anand Prakash Bansal]

That was the last question we had until now. [Operator Instructions] Vivek, i think we are done for the moment.

[Vivek Aggarwal, Former Executive Vice President of Finance]

So thank you, ladies and gentlemen. I'll now hand over the conference to Hitesh for his closing comments.

[Hitesh Oberoi, MD, CEO & Director]

Well, thank you, everyone, for taking time out for this call and have a great evening and stay safe. See you next quarter.

[Sanjeev Bikhchandani, Founder & Executive Vice Chairman]

Thank you everyone.

[Chintan Arvind Thakkar, CFO & Whole Time Director]

Thank you.

[Anand Prakash Bansal]

Thanks, everyone. Thank you so much.