Info Edge (India) Ltd

NSE:NAUKRI

Earnings Call Transcript 2023-Q1

[Vivek Aggarwal, executive]

Hi, everyone. Good evening, and welcome to Info Edge (India) Limited Q1 '23 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, CFO.

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 presentation for detail disclaimer.

Now I would hand over the call to Mr. Hitesh for his opening remarks. Thank you, and over to you, Hitesh.

[Hitesh Oberoi, executive]

Thank you, Vivek and good evening, everyone, and welcome to our first quarter earnings call. As always, we will start with an update on stand-alone financials, market conditions for each of our operating verticals and then cover each business financials in more detail to be followed by Q&A. The audited financial statements and other schedules on segmental billing, revenues, et cetera, along with the data sheet, have been uploaded on our website, infoedge.in.

Talking about our Q1 stand-alone financials. Overall billings in Q1 grew to INR 524.2 crores, up 62.4% over Q1 of last year. Revenue in Q1 stood at INR 507.7 crores, up 54.6% from Q1 of last year. Billing and revenues along with acquired businesses like Zwayam and DoSelect stood at INR 537 crores and INR 521 crores, respectively.

Operating expenses for the quarter, excluding depreciation and amortization, were INR 344.5 crores, up 53.6% over Q1 of last year. And operating EBITDA for the quarter stood at INR 163.1 crore versus INR 104 crores last year, a growth of 56.8% over Q1 of last year. And operating EBITDA margin for the quarter stood at 32.1% compared to 31.7% for the same quarter last year. And operating EBITDA for Info Edge including acquired businesses stood at INR 165.4 crores, a year-on-year growth of 59%. Cash from operations for standalone business for the quarter stood at INR 164.5 crores compared to INR 110.4 crores for Q1 of last year.

Deferred sales revenue grew to INR 825.4 crores as of June 30, 2022 versus INR 506.9 crores as of June 30, 2021, a year-on-year growth of 62.8%. And the cash balance of Info Edge including the wholly owned subsidiaries stands at INR 3,439 crores as of June 30, 2022 versus INR 345 -- INR 3,561 crores as of June 30, 2021.

Talking about the recruitment space. Hiring sentiment across sectors remained strong. The Naukri JobSpeak index for the quarter was up 32%. Amongst the IT clients, we continue to see strong momentum. High attrition and a strong pipeline continue to drive recruitment in this vertical. Increased focus on fresher hearing was also noticed during the quarter.

As far as non-IT customers go, we saw a revival of hiring in sectors like retail, education, insurance, real estate, travel and tourism in the last 2 quarters. There seems to be a strong manpower demand across sectors and that is also driving up engagement of headhunters on the platform. The demand for talent continues to be high in both the metros and non-metros across skill levels.

Moving on to the real estate vertical. We witnessed a good momentum in new home sales across top cities in Q1. While home prices are on an upward trend in most markets, affordability continues to be solid. We expect reasonable number of new launches to continue in the residential buy segment despite a recent increase in repo stroke home loan rates. Rental supply also saw fast offtake in the market as more offices opened up to work from office or hybrid working models. Commercial spaces also sort of saw faster uptick with negligible stroke, no impact of the third way of COVID.

The matchmaking category recovered from last year's slowdown caused by multiple sort of COVID waves. Users are back and engagement levels are up, higher than what sort of we were -- they were doing pre-COVID times. We also experienced a change in our target sort of audience in the last couple of quarters with more prospects now increasingly taking the charge of the matrimony search process [ install-base ] parents or guardians. This is more prevalent in the top metro cities where high intent dating space is also fast emerging.

Moving on to the quarterly financial of the recruitment business. In Q1 of 2021 -- '22/'23, the recruitment segment billings were INR 415 crores, up 64.6% from Q1 of last year. While revenues were INR 387.1 crores, up 67.5% from Q1 of last year. Operating EBITDA stood at INR 230.6 crores, up 80.2% from Q1 of last year. Margins stood at 59.6% versus 55.4% in Q1 of last year. Cash flow from operations for the recruitment vertical during the quarter stood at INR 235.4 crores, up from INR 148 crores reported in Q1 of last year.

Billings for Naukri India for the quarter stood at INR 354 crores, up 72.3% year-on-year. While revenue for the quarter for Naukri India stood at INR 326.8 crores, up 76.3% year-on-year. Recruitment segment billings include acquired businesses like Zwayam -- including acquired businesses like Zwayam and DoSelect stood at INR 427.9 crores, a growth of 69.7% year-on-year for this quarter. iimjobs and hirist also has reported strong 64.8% Y-o-Y growth in their billing numbers, closing at INR 15.3 crores, up from INR 9.3 crores reported in Q1 of last year. A well-integrated GTM, go-to-market with Naukri India team worked well for Zwayam and DoSelect with both these businesses closing the quarter with billings of INR 6.25 crores and INR 6.59 crores, respectively.

The Naukri business, as you can see, continues to sort of grow strongly, and this is -- and it's been now 6 quarters. Naukri India witnessed higher recruiter and job seeker activity during the quarter. On the job seeker side, we saw 28,365 new registrations per day last quarter and we crossed 1 million plus active installed base on the Android app. Our sales strategy for the quarter focused on creating awareness of value proposition of our products to drive value optimization with our customers. The quarter also witnessed 49% year-on-year growth in new client acquisition.

The other sort of vertical we have AmbitionBox, which is our play in the career sort of reviews and rating space, grew handsomely to overtake our sort of the leading competitors in this space and AmbitionBox reported 6.29 million unique visitors in Q1 2023, making it the largest sort of careers and review and ratings platform in India. Our marketing team recently launched a series of new digital video campaigns, [ #mynaukri ] targeting the Gen-Z audience. This would further cement Naukri's leadership in traffic share and improve its top of mind recall amongst new generations of jobseekers, that's the idea.

Moving on to the Shiksha business. In Q1, Shiksha billings grew 30.7% year-on-year and stood at INR 30.4 crores, while revenue grew 37.4% year-on-year to INR 31.3 crores. The Shiksha business made an EBITDA of INR 6.2 crores during the quarter versus INR 7.7 crores in Q1 of last year. Cash from operations for the quarter stood at INR 5.3 crores against INR 8 crores reported in Q1 of last year. The Shiksha business has now delivered strong and consistent revenue growth for the last 7 quarters and has been generating cash.

The delayed closure of academic year 2022 had an impact on new students registering on the platform. As the concerns regarding COVID subside, we expect that trend to normalize in a few quarters. The new sort of private universities in India, we believe, will offer an opportunity to Shiksha to expand its footprint further. We also saw our study abroad business, which is relatively new, saw strong recovery in students opting to study in the U.S. -- in the U.K. and the U.S. And we continue to invest in making our content more comprehensive and more student-friendly and in building deep domain expertise in this space.

Moving on to the 99acres business. Billings in 99acres grew 173.2% year-on-year on a COVID-impacted Q1, and stood at INR 61.1 crores, while revenue grew from INR 49.2 crores in Q1 of last year to INR 66.3 crores in Q1 of this year. The operating loss for the quarter stood at INR 35.4 crores against a profit of INR 10 lakh reported in Q1 of last year. The business reported a cash outflow from operations of INR 46.6 crores for the quarter against a cash outflow of INR 36.4 crores in the same quarter of last year.

In 99acres, we recorded revenue growth across all major categories, resale, rental, commercial and new homes. Concerted efforts were put in during the quarter to increase and improve the quality of listings on the platform. Owner listings grew 7% year-on-year, while broker listings grew 9% year-on-year. Premium listings continue to see good adoption from brokers. The review from residents and recent transaction prices were further scaled up to help buyers and owners get more insights about the real estate market on the platform. And we continue to invest on platform content, client delivery and marketing in this business.

Moving on to the matrimony business. Given certain free offerings launched in March 2022, billings in Q1 declined by 29.8% year-on-year to INR 17.6 crores, and revenue declined 9.1% year-on-year to INR 22.9 crores. The operating EBITDA loss stood at INR 27.6 crores for the quarter against a loss of INR 23.2 crores in the same quarter of last year. Cash outflow from operations for the quarter stood at INR 49.8 crores against an outflow of INR 18.4 crores in Q1 of last year.

As we discussed in our last call, Jeevansathi has made chat for users free on the platform. The platform is seeing strong traction in this feature as user are taking more chat engagements on the platform. In addition, several TV celebrities and influencers across communities we're opting to drive the chat in free -- is free on Jeevansathi message to our users. In addition to this, the business continued to focus on improving the platform experience and building brand salience in the year ahead.

As far as consolidated financial highlights of the company go, at the consolidated level the net sales for the company stood at INR 547.3 crores during Q1 versus INR 328.6 crores for Q1 of last year. The consolidated entity and the total comprehensive income level, there is a loss of INR 3,342 crores versus an income of INR 158.2 crores for the corresponding previous year quarter ending June 30, 2021. Adjusted for the exceptional items, PBT stood at a profit of INR 339.4 crores in Q1 '23 versus INR 45 crores in Q1 of last year.

Thank you. That's all from us. We are now happy to take questions.

[Vivek Aggarwal, executive]

Thank you, Hitesh. We'll now move to begin our Q&A session. [Operator Instructions]

[Anand Bansal, executive]

So we have first question from Vivekanand from AMBIT Capital.

[Vivekanand Subbaraman, analyst]

Sanjeev, now that we have instituted a clearcut structure of making financial investments via AIFs and the Zomato lock-in is now behind us. Why not recycle capital by monetizing your stake? I mean we have taken great pride in being early-stage investors and having a solid track record of great returns there. So that's question one.

Second one is for Hitesh. You now had a chance to work with strategic investments like NoPaperForms, Univariety for several years now, 3 years almost. So did these investments contribute to Shiksha's revenue scaleup? Those 2x of -- I think more than 2x of pre-COVID levels. This question is more in the context of investments made in the last 12 to 18 months like Zwayam, DoSelect and more recently, 4B Networks and iimjobs.

[Sanjeev Bikhchandani, executive]

Yes. Should I answer the Zomato question first, Hitesh?

[Hitesh Oberoi, executive]

Yes, yes. Please.

[Sanjeev Bikhchandani, executive]

So look, we don't need to sell Zomato stock in order to invest in startups. We have funds in place. We have enough money on the balance sheet to put into those funds, we have half the money that comes from Temasek. And the truth is that it's not easy to sort of find a Zomato or a Policybazaar, right? You invest today, hopefully, in 5, 7 years, 1 or 2 become highly successful. And while we can exit from these investments, both Zomato and Policybazaar, maybe Policybazaar in a couple of months later. The truth is, if you ask us to deploy that amount of money productively into early-stage companies within 2, 3 years, we will end up making some optimal investments in all likelihood, right?

Now we could sell and keep cash, we could sell and give cash back to shareholders. But what I'd like to believe is that if the business has got legs, why not stay for a while. Now this is just my sort of belief. Obviously, the Board will decide. So we are in no -- caring hurry to sell [ ivory ] stocks. We will -- but -- it's not as if we have been sort of vowed to sell a company the moment it was published.

If the business has got legs, perhaps you should hold on. And this is an ongoing conversation with the Board all the time. It's not written in stone. It's up for review periodically. But what I also believe is that if the business has got legs and you hold on, you have a future, right? If you sell, you only have cash. And cash is valued at 1x, the future is valued at a multiple of whatever the future is. Yes. So we'd like to hold on if we believe the business has got legs.

Hitesh, you want to answer the second question?

[Hitesh Oberoi, executive]

Yes. I guess your question was around whether the strategic investments we made in companies like Univariety and NoPaperForms helped us sort of scale up the Shiksha business over the last 2 years. Is that correct?

[Vivekanand Subbaraman, analyst]

Yes, yes. And the extension to that was the aspiration that you have across your operating businesses to make strategic investments and either enhance your revenue or bring down costs, right?

[Hitesh Oberoi, executive]

Yes. So listen, there are 2 or 3 types of strategic investments we are sort of making. One is, of course, outright acquisitions. So AmbitionBox, which I sort of spoke about was an acquisition we made a few years ago, iimjobs is a company we acquired 100% a few years ago. Zwayam was 100% acquisition. So DoSelect is 100% acquisition. Now in these cases, of course, we are deriving tremendous value from the Naukri network because we are taking these businesses in and the hope is that we'll scale them up massively because of our distribution and other capabilities.

Now then there are companies where we are investors, but we don't really run the operation, like Univariety, like NoPaperForms, like GreytHR. Now here, right now, it's not as if our internal businesses are cooperating or collaborating with these companies on a regular basis. There is an actually periodically exchange ideas. But there is no sort of business cooperation between these businesses. The idea here is that we sort of -- we are in these companies, we like them, and if they continue to scale up, we would like to invest. If they continue to scale and perform then we would like to sort of own more and more of these companies over time. If the entrepreneurs are okay with it.

So that's the nature of these sort of investments. Now -- so let's see how this plays out because where we are very -- Aisle is somewhere in the middle where in Aisle we own 76% now, and there is a pass to getting to 100%, but we want the entrepreneur to run the show for some time because we believe that's the best way to scale the business.

And we don't think we can take on that business internally and do a better job of what maybe that team can do right now. So that's the third type of investment that sort of we made where we own majority, we are working very closely with the entrepreneur. Ultimately, we would want to go to 100%. But we would like the entrepreneurs to run the show for some time. I don't know whether I was able to answer your question.

[Vivekanand Subbaraman, analyst]

No, no, this made a lot of sense. I guess what you're saying is Shiksha scale up versus pre-COVID levels primarily happened internally rather than collaborating with new startups.

[Hitesh Oberoi, executive]

Yes. Yes. Yes.

[Vivekanand Subbaraman, analyst]

So Sanjeev, just one small follow-up. So you said that, sure, you can exit Zomato, PB. But deploying money -- this kind of money in start-ups may lead you to not be that prudent if it has to be done in...

[Sanjeev Bikhchandani, executive]

It almost certainly will lead us to be not that prudent.

[Vivekanand Subbaraman, analyst]

So is that because of the perhaps the shallow nature of the start-up universe still in India? Or is it something else? I'm just trying to understand this space.

[Sanjeev Bikhchandani, executive]

No, no, let me put it this way. See, you -- typically, when you have a fund, right, you will say, okay, fine, from 3 years of close of the fund, you will need to write all your first cheques. Now if you are going to invest INR 10,000 crores, let's say, which if you exit from both these companies, you want to invest INR 10,000 crores -- you're approximately investing INR 3,000 crores within 3 years, right, as first cheques. And the remaining goes in follow on cheques.

Now that's a tough ask. Because we like go to early stage. Early stage, if you are an investor INR 3,000 crores as the first instituted cheque into a company with the average cheque size of say INR 10 crores, you're talking about 300 investments. 300 investments is a lot for -- from a team management perspective, right? And sooner or later, you will [indiscernible] or you have to have a very large number of people working with you. And these are -- they are tough things to manage and INR 10,000 crores in early-stage companies, perhaps the risk level will also be different.

[Anand Bansal, executive]

The next question is from Ruchi Mukhija from Elara Capital. Ruchi are you there?

Maybe we'll go to the next question. The next question is from [ Jaydeep Choraria CIO from Advent Securities. ]

[Unknown Analyst]

So Hitesh, my question was specific to 99acres. So 99acres we have mentioned in our investor deck saying that owing to higher A&P spends for this quarter, EBITDA loss is INR 35 crores. So I want to know if this is a one-off, will this sustain in Q2 of this year, and hence, is the going forward trajectory of this business? We are burning close to INR 50 crores of cash per quarter here. So I want to know how long will this sustain? And if it will not be for this A&P spend, what would this number be for, the INR 35 crores of EBITDA loss?

[Hitesh Oberoi, executive]

See, right now, there's -- actually, for a while now, this space has been very competitive. And a lot of our competitors have been spending a lot of money, and there's a lot of new money which has come into the space. And therefore, we've been forced to respond. And also, we've been out of media for a while last year because we were post-COVID, we didn't spend as much money as we spend normally.

Now going forward, the A&P spend will continue, it might moderate a little if the competitive intensity eases. And hopefully, our revenue will also look up over time. Our billings will also hopefully increase over time. But it's hard to say how this will play out at this point in time. Is this -- I mean, of course, internally, we will target to sort of reduce our burn in the coming quarters, but one can't be sure.

So I can't give you a number and say, listen, this is what burn is likely to be going forward. All I can say is we will try and optimize our costs, and we will try and grow revenue. And hopefully, the burn will sort of over time go down. But if competitive intensity increases all hell breaks loose, then we'll be forced to sort of respond to maintain our share.

The space has become a lot more competitive than it was a couple of years ago. At the same time, the real estate market is also bouncing back. So the market was in the dumps for many years for various reasons. But for the first time, it looks like the real estate is sort of back, prices are going up, the number of transactions have gone up in the last few quarters. So we're hoping that the real estate market will continue to boil for some more time.

[Unknown Analyst]

Yes. Sure, that's helpful. Only point that I wanted to have a follow-up on was, what was the absolute marketing spend that we incurred for this campaign that we have been doing for quite some time. I've been seeing the ads coming on CNBC and all of that.

[Hitesh Oberoi, executive]

So it's good to hear that you've been seeing these ads because you are our [ DG ], but how much do we exactly spend? Chintan, did we give out that breakup?

[Chintan Thakkar, executive]

I don't think we don't give out at the business segment level.

[Sanjeev Bikhchandani, executive]

But it was substantially higher than...

[Unknown Analyst]

See the idea is just to know how much of this will wither away with time? So how do I look at this business going forward in terms of EBITDA and all of that?

[Hitesh Oberoi, executive]

See whether it will weather away with time, I don't know because we -- like I said, we continue to -- we intend to continue to spend on advertising and promotion, at least for some more time, right? And then a lot will depend on what sort of competition does in this space. But just to give you a sense, this number will be at least in around INR 30 crores, INR 35 crores a quarter.

[Unknown Analyst]

Okay. That's very helpful. And did we see any tangible impact on sales because of the campaign, because it's been going around for quite some time?

[Hitesh Oberoi, executive]

See, like I said earlier, we are seeing a lot of competition in this space. So our competitors are spending a lot of money, and that is beginning to hurt us. And we had to respond to get our track and share back. Now sales will follow over time. Sales want -- because we sell subscriptions and clients sort of like to watch -- and see what happens to response and then the basis of the response they get on the platform, they sort of renew and upgrade over time. So whether this will result in more sale or not, will be known to us only after a couple of quarters.

[Operator]

Next question is from was Mohit Motwani from Edelweiss.

[Mohit Motwani, analyst]

Congratulations for a great set of numbers. My first question is on the ad spends for Jeevansathi. So we have seen a quarter-on-quarter decline in ad spends. And you have mentioned that you will maintain high expense because the competitive intensity is quite high. So does this decline in quarterly ad spend aligned with the fact that you are providing most of the services in Jeevansathi for free?

[Hitesh Oberoi, executive]

You're right. So we have changed the model in Jeevansathi and we're experimenting with the new model. We've gone free on -- a lot of services which were paid earlier are now available for free and that's helping us acquire more users. Our hope in the long run is that if this model works for us, then we will not have to spend as much money on marketing as we used to spend earlier, right? And that's the go.

Of course, revenue is going to take a beating. But if we believe that if we are able to get more traffic and the we are able to make more matches and have more marriages happening through the platform, ultimately, we'll be able to figure out a way to monetize that traffic. But for a few quarters, revenue will go down, and it's already down 30% over last year, but the hope is that our spend will also go down over time. And after a few quarters, we should be in a much healthier position with a lot more users, a lot more traffic and a lot more engagement on the platform. And then hopefully, we'll figure out a way to monetize at some point in time.

[Mohit Motwani, analyst]

So how long do you plan to continue the freemium model for Jeevansathi and what leads us to believe that once we start monetizing this after the free service, then we start charging, they'll stick with the platform? What leaves us to believe that? Is it because they'll be well accustomed with the features? And what is the thought behind that?

[Hitesh Oberoi, executive]

So this model as far as we are concerned at this point in time, this model is here to stay. We are not -- we are looking to stay free for a long time. And when we start charging, it is not as we will sort of go paid again. We will probably figure out other services to charge for and other features and functionalities to charge for over time. But like I said, it's early days, our hope right now is that this change in strategy will help us get more traffic, more engagement, will enable us to sort of get the network effect going for us. And will hopefully make us the largest player in this space after a while in terms of users and traffic and engagement. And once that happens, then monetization will follow.

[Mohit Motwani, analyst]

That's helpful. One other question on recruitment rate. So we are clocking on great set of numbers on growth front, and this is definitely because of how digitization has become a must today for the enterprises, right? So your normalized -- on the 10 years if I see, it has grown at 16%, 17% of component at a growth rate. So do you expect this -- the current high growth pace to normalize in the next few years? Or you expect these high growth levels to continue for a foreseeable future?

[Hitesh Oberoi, executive]

It's very hard to say and depend on 2, 3 things. One, of course, the IT market. So IT, [indiscernible] in our sense now close to more than half our sort of revenue. And if the IT market continues to do well, then the business will continue to grow fast, that part of the business. And right now -- and IT sort of drove our growth, was responsible for our high growth rates last year and continues to be -- I mean, the IT hiring slowed down a little bit in the last 1 or 2 quarters, but it continues to be strong. So that's one.

The second, of course, the thing which impacts our growth is the economy and how fast the economy grows. Now when we went into COVID the economy had started slowing down for the last couple of years before COVID and during COVID also. We didn't see much growth because the economy was growing at 4%, 5% per annum. So if the economy sort of -- right now, we are seeing a surge in growth in non-IT as well because the market is opening up, the businesses were shut because of COVID. Now they're back to sort of operating like they used to earlier. But if the economy starts growing faster than it was growing earlier, then that should also help.

The third thing, of course, which I spoke about is that we are driving better price realization for ourselves because we are sort of helping our clients understand the value that we're delivering to them. And that will be helping us realize better prices. And also because the economy is sort of doing well and you mentioned digitization, everyone is going digital, we are adding more customers than we were adding earlier.

And lastly, we got these new sort of set of products, like I mentioned, Zwayam, DoSelect, iimjobs, hirist. So we have a much bigger portfolio of products today than we had earlier. And we are hoping and expecting that these new products in our portfolio will continue to grow at a fast rate going forward. Today, they are, of course, a very tiny proportion of our business. But hopefully, they'll grow much faster than the rest of the business, even if there is a slowdown tomorrow.

[Operator]

Next question is from Srinath V. from Bellwether.

[Srinath V., analyst]

Sanjeev, just wanted to ask you what are your views on the ESOPs that have been issued by the newer tech companies in and around listing? And subsequently, these ESOPs have seen large write-offs that kick in. Of course, there's an accounting angle to it, but they're front-ended. But from a good governance practice -- in the context of good governance practice and in the context of our ownership in this space, how should one look at these larger ESOP issuances?

[Sanjeev Bikhchandani, executive]

Yes. So I think it's important to look at each case separately, okay? So each case is individual. I would not like to generalize. But a couple of things, see if -- first of all, was there a disclosure prior to the IPO or doing the IPO document and the road shows are different. This is the situation. This is going to happen or this has happened, has been. It's a prior disclosure, it's one thing. If there was no prior disclosure it's quite another. And no prior disclosure is a problem, okay.

The second thing I'd like to point out is that if founders have been diluted too much, will they have an incentive to stay for 3, 5 years post the IPO, 7 years post the IPO to actually run the ship. And if we had [indiscernible] maybe some amount of ESOP is justified and this may not be just in tens or thousands of shares, it could run to 1% to 3%, 4% of the company.

And if the dilution was forced upon them simply because of the competitive environment and the competition is raising so much money and you had to raise in response, then perhaps a more sympathetic view can be taken, which is what has happened in a couple of cases that we were involved in.

The third is, was the right process followed in ramping the ESOP. Did the founder run himself the ESOP or the self ESOP or was there an NRC, accomplishing committee, where there were no executive directors involved. And it was either independents or investor directors, but the NEDs who were involved and not related to the promoter. Now those are the touchstones I would use to determine what is excessive and what is not.

[Srinath V., analyst]

Thanks, Sanjeev. That was really useful given the confusion. As in the listed analysts are finding it a bit difficult to make the bridge because of the concept of adjusted EBITDA is kind of new to us. So it's nice for you to share your view.

Hitesh, I wanted to kind of get an understanding of impact of the tech sector to us now including tech hiring by tech companies as well as tech hiring by non-tech companies like banks and so on. So where is that now? And how is that broadly growing?

[Hitesh Oberoi, executive]

Bank hiring was on fire for the last 5 or -- 4 or 5 quarters and attrition rates at most companies peaked and talent is hard to get, offers are getting with active left-right-center, all kinds of stories around people getting double, triple salary they were getting earlier. So -- now of course, the start-up hiring market has slowed down because of what we're seeing around us, but start-ups are not a big part of our revenue sort of stream. Now are we -- anecdotally we'll say -- what we are hearing from our sales team is that tech hiring has slowed down a little bit.

Having said so, attrition rates are still reasonably higher in most companies and talent is still hard to get, right? So it's not as crazy as it was maybe 3 quarters back where companies were -- attrition rates were running at 40%, 50% in most companies and offer sort of rejection rates were 70%, 80%, 90%, but it's still very, very hard to hire in tech, and there are still enough jobs in the market for people who are looking. And so -- but has it slowed down over the last 2, 3, 4 months, maybe it has a little bit.

Will it -- is it likely to slow down going further, going forward? I suspect it's going to be a function of what happens in the U.S. There's a lot of -- there is some talk of a recession in the U.S. and companies became cautious as a result. I don't know whether we are seeing business slowdown, but because of the talk, sort of companies became a little careful. If the U.S. market turns and if the U.S. starts going once again, then who knows, I mean, we may go back to the market we had 2 quarters back. Very difficult to say what is going to happen going forward.

Clearly, in the U.S., there's no slowdown in hiring on the non-tech side. So I was in the U.S. for a couple of weeks, and there are so many people who I've met who sort of been to the U.S. recently. There's a huge shortage of talent in at least areas like retail, hospitality, travel, there's a complete shortage. IT hiring did slow down a -- I mean there was some talk of recession and because the Nasdaq went down by 30% and startups corrected by 70%, 80%, there was this sort of whole thing around tech hirings going down. But my sense is that if the U.S. goes back to sort of growing like it was growing earlier, then the stop will go away and companies which have become careful we'll start hearing once again, as aggressively. But even right now, like I said, it's not as it's hiring in tech is easy. It's still very, very hard.

[Srinath V., analyst]

Got it. And it's still about 60% of our revenues, in tech and non-tech also?

[Hitesh Oberoi, executive]

If you include the tech guys who are getting higher in non-tech companies.

[Srinath V., analyst]

It's still about 60%?

[Hitesh Oberoi, executive]

Yes, it's still about 60%. If you include the tech guys who are getting hired in non-tech companies.

[Srinath V., analyst]

Got it. My last question is on 99acres. So after some understanding of the Policybazaar business model, won't a business model similar to that -- how do you see that kind of fitting in the real estate space where there's a lead generation and then subsequently, a call center, off-line feet on street where we do our own kind of transactions, subsequently build an ancillary landscape in real estate with other tech products that we could sell builders and kind of take a much more ecosystem approach to this.

Of course, the burns will be significantly probably 5, 6x higher than where it is now. But would that also translate into us kind of having a significant better pie of the real estate space? Any idea on how one should kind of look at completely holistic approach of working on the industry or just looking at a listings platform, Hitesh, Sanjeev, whoever, just curious.

[Hitesh Oberoi, executive]

No, that's a very good question. And you see there are all kinds of players who exist in the real estate space, overseas and in India as well. There are brokerages. There are marketplaces like ours. We've invested in a company called 4B Networks, they are trying the aggregation model, which is very different from any of these models.

See, we've toyed -- we actually experimented to the brokerage model many years ago. We had set up a company called Allcheckdeals, and we run that business for a while and then we shut it down. See, our -- while you are right in saying that if we go end-to-end and sort of do the transaction, we can monetize a lot better. But then it's also more expensive. If you go down that path, you have to invest in the sales team, you have to do transactions, you have to sort of -- so it's a different business, a different model.

Our believe so far has been that perhaps it is possible to create more value in the marketplace model. But then the thing with these models and especially marketplace models is that you have to be the #1 player, you have to sort of be a leader in the market. If you're a #3 player, you won't be of value. And so you have to break away from the rest of the pack to be able to create disproportionate value.

As a brokerage, perhaps many brokers can survive in the market and do well. But if you want to be a marketplace then you can create disproportional value but then you have to be leader like we are in Naukri. So also, the 2 models compete with each other. So you -- it's very difficult to do both. So for example, if we become a brokerage ourselves, our clients may sort of not like it and they may not want to advertise at us. So it's a choice.

So far, we are of the view that we should perhaps continue to sort of invest behind the model we have sort of been working on for the last few years. If we have to do anything in -- if you have -- so we could make investments in sort of other models like we have invested in 4B Networks. But inside the company, we would like to persist with what we've been doing for years. It may not be a good idea now to sort of give up on this model and start something from scratch. So that's -- and we do believe that it's going to be very difficult to be able to do both.

[Srinath V., analyst]

Thanks, Hitesh, and thanks, Sanjeev, for taking your time off and giving a very detailed answer to all my questions. Thanks a lot.

[Anand Bansal, executive]

The next person we have is Aditya Suresh from Macquarie.

[Aditya Suresh, analyst]

Thank you so much for the presentation for your candid responses and also for the great numbers this quarter. So I have 2 questions. So first on the Naukri business. And I guess, the question really is about the sustenance of the strong growth, right? And based on kind of what you're showing as billings and deferred revenue and the likes, would it be fair to conclude that what you're showing as sales, that momentum probably sustains at least over the next few quarters?

And if so, therefore, your margins also kind of sustain. And I guess the context of what is the question really is that your EBITDA margin has really been between 50% to 60%. And today, we're closer to the peak of your Naukri business. And so I'm just wondering about the sustenance of that EBITDA margin in response to where you're seeing revenues at. So that's the first question. I have a second question as well.

[Hitesh Oberoi, executive]

Yes. So listen, we've had great 6 quarters in Naukri. Last year, it was primarily because of IT hiring. This year, what we have -- I mean, in Q1 of this year, our Naukri India B2B business, billings grew by 80% actually, right, which -- so even the billing growth has accelerated. We were growing at 60%, 70%. And now last quarter, we grew at 80%. Will this sustain? I don't know.

See what we are seeing is non-IT hiring pickup. But there are some murmurs around IT hiring slowing down. In Q1, we saw IT hiring also peaked, non-IT hiring also peaked, which is why our billing grew by 80%. I don't know what is going to happen to IT hiring going forward. If IT hiring sustains, if it continues to be as strong as it was last year, then maybe we can maintain these growth rates. But it's a wait-and-watch situation.

So margins, a lot will depend on how much we want to -- given that we're making so much money in Naukri, I mean, last quarter, I think we generated -- last to last quarter, we generated about INR 300 crores of cash in the Naukri business in this last quarter, which is our weakest quarter actually. Our smallest quarter, we generated INR 230 crores of cash in the Naukri business. So clearly, we can invest a lot more in Naukri. We are, for example, impacting media after a long time, not because we have to be in media, but we think it's a good idea to sort of be in media and sort of continue to be top of mind in the market.

We're investing behind new verticals like JobHai and BigShyft, which we are building in-house. These verticals don't make any money. AmbitionBox, we're investing where AmbitionBox does not make any money. We are investing behind Zwayam. We are investing behind FirstNaukri. We are investing behind DoSelect. These are tiny businesses right now. We're investing behind hirist, again a tiny business.

So there are lots of new sort of verticals, adjacent verticals we are investing behind inside Info Edge, so that -- when the market slows down, you continue to sort of -- and these new products continue to sort of get us growth going forward. So the margins, we can improve our margins substantially. We can go to even 70% EBITDA margin if you stop investing in these businesses. But we've taken a call to invest more, but at the same time, we don't want to sort of compromise too much on margin. We would like to maintain the margin in a certain range so that -- so there we are sort of discipline about it also.

[Aditya Suresh, analyst]

Thanks, Hitesh, that's very clear. And I guess in terms of the other verticals, do you have any updated kind of a plan in terms of if there's any kind of upper limit in term [ CMR ], the losses you might be able to fund here? Or does the position remain that, I guess we'll see how it goes and we kind of wait for the consolidation to happen?

[Hitesh Oberoi, executive]

So I think you should -- let's take the Jeevansathi business. So I think we should give it another 2, 3 quarters to play out because we just changed our model. If this model succeeds, then our take on the business is that it may not require the kind of marketing spend we've been doing in this space going forward because -- but it's a wait and watch.

I mean, we don't know whether it's goes straight or not. We'll have to give it another 2 quarters to see how it goes. We are okay with losing revenue, sacrificing revenue as long as we get the net effect going, we get traffic, we get engagement on the platform, we'll figure out a way to monetize later. So we're trying to change the game here, but a lot will depend on how competition responds, what happens over the next 2, 3 quarters. So let's wait and watch. Clearly, we don't want to invest much more than what we were investing last year, right? So the idea here is to change the game so that we don't have to make those kind of investments in the business to do it. So that's the Jeevansathi vertical.

Now 99acres, the truth is we lost some ground in 90 acres over the last 2 years because of COVID, and we want to regain that ground. The space has become a lot more competitive. There are many more new -- many new players in this space. There's NoBroker, there's Housing, there's Square Yards, there are a bunch of other people who are trying. The market is looking good after a long time. So -- and we've got some things we're working on. And if some of those sort of things work out as planned, then we are hoping that our burn will go down with every sort of passing quarter, but those things have to work out. So again, I think we'll have a much clearer answer on what will happen in this business, perhaps maybe 3 quarters from now.

[Anand Bansal, executive]

Next, we have Vivekanand from AMBIT Capital.

[Vivekanand Subbaraman, analyst]

Yes. So Hitesh, you said that you will persist with this strategy in Jeevansathi. So what's your take on the time it takes for this model to scale up traffic without the kind of intensity of A&P that you were doing in the past? I'm asking this question in context of similar web traffic data, which doesn't really mitigate that much of a change in the Jeevansathi domain. I understand that the mobile app data isn't captured here, but if you could just help us understand how patient you will be with respect to this figure.

[Hitesh Oberoi, executive]

You are from Avendus, right?

[Vivekanand Subbaraman, analyst]

No, no. I'm from AMBIT.

[Hitesh Oberoi, executive]

AMBIT, sorry. Okay. Okay. So listen, so 90% of the traffic in Jeevansathi is on the app. So the similar web data has no relevance. So now we went free about 3 months -- 3.5, 4 months back, and we have seen an increase in traffic on the app. We are seeing more registrations. There is reasonably good word of mouth around the fact that we are free. We are seeing more matches happen on the platform. Now is it enough to change the game? It's hard for me to say, it's only been 3, 4 months. Have we cut down our ad spend? A little bit, right, from where we were a few months ago.

But we want to give it a good shot. We want to sort of keep ad spend high for a while. We want to sort of be free for a while and we want to see what happens. Now this may never work out as this could fail. So there's a caveat. It's not as if we are sort of 100% sure that this model is going to succeed, it could fail. But we want to give it a good shot. If it starts to succeed, at least on the traffic front, we'll have a clear answer 2 quarters from now, right? On the revenue front, it could take longer because we'll have to figure out new ways of monetizing this traffic because if it start to succeed, we would not want to go paid once again. We would like to keep the charge free.

[Vivekanand Subbaraman, analyst]

That's pretty useful. Just one additional question in this context. So until now, we have only explored a model of subscription for this service. Is it possible to think about, say, alternative, perhaps advertising or transaction business models here? Or is it too early to even talk about this?

[Hitesh Oberoi, executive]

See, our team has started thinking about it, and there are sort of other models around -- if you sort of look at what's happening in China and sort of other markets. There are some other models. So we are starting those models, and we are trying to figure out what we can do here. But like I said, see the short-term focus. Focus for the next 2, 3 quarters is traffic growth, more engagement, more matches, more registrations, more monthly active users on the platform. The idea is that -- and like I said, we'll start worrying about revenue later. And we -- hope is that once we get to that point, we won't have to spend as much money on marketing as we are spending right now.

[Vivekanand Subbaraman, analyst]

Okay. Okay. That part is clear. So just to understand this better, do you think that you will reach a stage where you will not have to spend as much in advertising on a sustainable basis? Is that what you mean when you say...

[Hitesh Oberoi, executive]

That's the hope we're here for free. If we're free, that's a strong value proposition, and that should drive a lot of sort of traffic on the platform. Once there is word of mouth, right? So we have to get the word of mouth going. We have to have -- get more traffic, get more matches happening through our platform, then that creates word of mouth and that automatically gets more users. So now whether that will play out like we expect it to play out and whether it will play out in 1 quarter or 3 or 6, it is hard for me to say right now. What I can tell you is that we are seeing more traction than we were seeing 3 months back. And we don't have -- and we're not spending as much money as we were spending earlier already.

[Anand Bansal, executive]

The next question is from Vijit Jain from Citi.

[Vijit Jain, analyst]

My question is on the education business. Just trying to understand with this new business model that you're trying in there. Is there going to be a lot of seasonality here around college recruitment seasons? And overall, you're 2 cents on how that is evolving?

[Hitesh Oberoi, executive]

So there's no new business model in Shiksha, we are following the same model we had, we were following earlier. It's just that because of COVID, the education sort of -- seasons have changed. So because of delay in sort of board exams and delay in JE exams and so many other things have been happening. The seasonality has shifted a little bit, right? So -- and hopefully, things will be back to normal by next year on that front.

What has changed a little bit in the Shiksha business is that we are slowly and steadily scaling up our study abroad business, which was a tiny part of our business till sometime back. And we are investing a lot more behind that sort of vertical. And in that vertical, the model is end-to-end transaction, right? So we actually come to students and we sort of send them overseas. We hand own them and send them overseas. Unlike the Shiksha domestic business, which is primarily a lead-gen business, where we sort of generate leads and sell them to customers. And then the customers sort of close on their own, like the 99acres business. So I hope that answers your question.

[Vijit Jain, analyst]

Yes, sure. Hitesh, my second question is in the recruitment business out -- you did mention the non-IT sectors are starting to come back, mainly contact-based services post opening up. I'm just wondering among the bigger non-IT sectors non-tech hiring, which are the ones where you think the momentum is fairly strong even when you adjust for the low base of last few years? So is it financial services? Is it infrastructure services? Which are the categories are you're seeing growth even versus, say, in FY '19 or FY '20.

[Hitesh Oberoi, executive]

So some non-IT sectors have done really well over the last few years for us. But tiny sectors on our platform to start with, but I don't know whether it's because the sectors are doing well or because there's more digitization and more and more people are moving online. Our sectors like education, sectors like health services. So these 2 sectors, for example, our JobSpeak index has gone through the roof for the last 2, 3 years, right? There are some other sectors also which are doing okay, like banking, financial services, insurance, but we're not like on fire. I mean -- and if you adjust for COVID, et cetera, maybe they're okay. They're like they were earlier. But some of these sectors have done very well over the last 2, 3 years.

[Anand Bansal, executive]

[Operator Instructions] Vivek, that was the last question we had.

[Vivek Aggarwal, executive]

Thanks, everyone. On behalf of Info Edge, we conclude this call. Thanks. You may disconnect the call now.

[Hitesh Oberoi, executive]

Thank you.

[Vivek Aggarwal, executive]

Thanks, Hitesh.

[Sanjeev Bikhchandani, executive]

Thanks everyone, Have a good evening.