Info Edge (India) Ltd

NSE:NAUKRI

Earnings Call Analysis

Info Edge Sees Revenue and Profit Growth

In the first quarter of FY '25, Info Edge reported standalone billings of INR 579 crores, growing 11% year-on-year, with revenue of INR 639 crores, up 9%. The recruitment segment's billings rose by 9%, to INR 431 crores, while revenue increased 6% to INR 472 crores. Cash generation in non-recruitment businesses saw a significant turnaround, reducing cash losses by 73%, from INR 61 crores to INR 17 crores. The company's consolidated net sales reached INR 677 crores, compared to INR 626 crores in the same quarter last year, with profit before tax rising from INR 217 crores to INR 329 crores.

Solid Financial Performance

In the first quarter of FY 2025, Info Edge India Limited demonstrated a commendable financial performance. Standalone billings rose by 11% year-over-year to INR 579 crores, while revenue increased by 9% to INR 639 crores. The standalone operating profit saw a 9% year-over-year growth, reaching INR 227 crores, and the operating margin stood at 36%. Cash from operations was robust, with a 20% year-over-year increase to INR 174 crores. The company’s EPS before exceptional items also saw a healthy rise of 16% to INR 18. The total cash balance, including wholly-owned subsidiaries, was a substantial INR 4,255 crores at the end of June 2024.

Recruitment Segment Growth

The recruitment business continued its solid performance, with billings growing by 9% year-over-year to INR 431 crores and revenue increasing by 6% to INR 472 crores. This growth was slightly lower than billing growth due to slower billings in mid-FY 2024. Despite rising operating expenses by 19% year-over-year due to IPL campaigns and strategic business initiatives, the segment generated an impressive cash flow of INR 190 crores. Notably, niche and adjacent business verticals such as iimjobs, Naukri Gulf, and Naukri Fast Forward saw year-over-year billing increases of 26%, 25%, and 29% respectively. Initiatives like AmbitionBox and JobHai, although small, showed promising growth and are strategically valuable in the long term.

Real Estate and Matrimonial Segments

In the real estate segment, 99acres witnessed a mixed performance. Billing grew by 10% to INR 81 crores, while revenue surged by 20% to INR 99 crores. Operating losses in this segment reduced significantly by 39% to INR 14 crores, and cash losses from operations saw a 54% year-over-year reduction. The company’s focus on enhancing user experiences and expanding its broker base contributed to these improvements. On the other hand, the matrimonial business, Jeevansathi, showed remarkable progress. Billings and revenue both increased by 35% year-over-year to INR 25 crores and INR 26 crores, respectively. The segment is nearing breakeven, significantly reducing its operating losses by 88% year-over-year to INR 2 crores, driven by strategic cost reductions and improved monetization efforts.

Investment in Strategic Initiatives

Info Edge continued to invest in strategic initiatives across various segments. For example, in the recruitment segment, substantial investment was made in AmbitionBox, JobHai, and other verticals aiming for long-term value creation. The real estate segment, 99acres, also saw increased advertising spend to bolster its market share, despite short-term impacts on profitability. The company's strategic focus on expanding its non-IT recruitment markets in Tier 2 and 3 cities has also yielded positive results as reflected in improved billings growth in those areas. Additionally, the company is leveraging artificial intelligence and machine learning to enhance user engagement and operational efficiency across its platforms, demonstrating a forward-looking approach.

Mid-to-Long-Term Outlook

The management remains optimistic about the mid-to-long-term prospects across all business verticals. The IT sector, despite recent volatility, is showing signs of recovery, with promising figures in the July 2024 JobSpeak report. The company is also strengthening its presence in the GCC and non-IT segments, which are expected to drive future growth. Non-recruitment businesses such as 99acres and Jeevansathi are approaching breakeven points, with 99acres showing a robust value proposition and Jeevansathi's premium model beginning to yield results. Meanwhile, Shiksha continues to perform well, staying profitable. Overall, Info Edge is poised for sustainable growth, backed by strong cash reserves and strategic investments.

Earnings Call Transcript 2025-Q1

[Anand Bansal, executive]

[Audio Gap]

We have 70 people with us. And I'm handing over to my colleague, unit, and we'll start the call now.

[Vineet Ranjan, executive]

Thank you Anand, Good evening, everyone. Welcome to Info Edge India Limited Q1 FY '25 Earnings Conference Call. Joining us from management today, we have Mr. Sanjeev Bikhchandani, Promoter and Vice Chairman; Mr. Hitesh Oberoi, Co-Promoter and Managing Director; and Mr. Chintan Thakkar, Director and CFO.

Before we begin, I would like to draw your attention to the detailed disclaimer in the presentation for good order sake. Kindly note that this conference is being recorded. [Operator Instructions].

Now I'll hand over to -- the call to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.

[Hitesh Oberoi, executive]

Good evening, everyone. Welcome -- a big welcome to all of you for -- to the Info Edge Earnings Call for the first quarter of '24-'25. We will start, as always, with an update on our stand-alone financial performance and then we will cover each segment performance along with the commentary of -- on each business. And then, of course, we'll have time for Q&A in the end.

In Q1 of FY '25, our standalone billings were INR 579 crores, a Y-o-Y growth of 11% and revenue was INR 639 crores, a Y-o-Y growth of 9%. Billings and revenue including Zwayam and DoSelect were INR 596 crores and INR 655 crores, respectively, a Y-o-Y growth of 11% and 9%. Operating profit at a standalone level grew by 9% year-on-year to INR 227 crores and the operating margin was 36%. The standalone business generated cash from operations of INR 174 crores in Q1 of 25%, a Y-o-Y growth of 20%.

The recruitment business continued to generate healthy cash. The cash losses in non-recruitment businesses reduced significantly by 73% from a cash loss of INR 61 crores in Q1 of FY '24 to INR 17 crores in Q1 of FY '25. EPS before exceptional items for Q1 of FY '25 stood at INR 18, a Y-o-Y growth of 16%. The cash balance of Info Edge including wholly owned subsidiaries at the end of June '24 stood at INR 4,255 crores, and the headcount as of June '24 end was 5,817.

Moving on to segment price performance and starting with the recruitment business. In Q1 of FY '25 billing, recruitment billings grew by 9% to INR 431 crores and revenue grew by 6% to INR 472 crores. Revenue growth lagged behind billing growth due to the slower billing growth observed in mid-FY '24. Operating expenses rose by 19% year-on-year in Q1 of '25, led by costs from IPL campaigns as discussed in our previous call. We also continue to invest in our strategic business initiatives like AmbitionBox, JobHai et cetera, which are aimed at driving long-term value creation in the recruitment business.

Consequently, the operating profits were lower by 3% year-on-year at INR 255 crores and the operating profit margin was 54%. Cash generated from the recruitment operation was INR 190 crores. I'll spend some time on the operating highlights of last quarter in the recruitment business. There was a slight improvement in Y-o-Y billings growth in Q1 of FY '24-'25 of 9% compared to a Y-o-Y growth of 7% in Q4 of last year.

Growth momentum in the non-IT segment continued with billings may get 14% year-on-year. This was largely driven by sectors such as health care and life sciences, infrastructure, transport, real estate and media and telecom. After a continuous decline in billings for 4 quarters in a row, the recruitment consulting segments, we saw a slight improvement in billings with low single-digit billing growth, but after several quarters. Billing growth in the IT segment also continued this quarter, though the growth rate has actually moderated compared to the previous quarters and was in mid-single digits.

Our niche and adjacent business verticals, including iimjobs, Naukri Gulf, Naukri Fast Forward also maintained healthy billings growth with Y-o-Y increases of 26%, 25% and 29%, respectively. AmbitionBox and JobHai, which began monetization in the previous quarter continued to grow and showed some improved performance in the quarter as well. These are relatively small businesses and do not -- will not move them medially until the short term, but are strategically important to us over the next -- for the next 5, 6 years.

Employer branding offerings across our portfolio including Naukri, iimjobs, Hirist, AmbitionBox have been well received by customers. We are further strengthening these offerings and focusing on increasing our market penetration. The recently launched career platform for students Naukricampus is slowly gaining traction with an increasing number of students signing up and utilizing our offerings to become more industry ready.

On the platform metric side, our Naukri database now comprises over 100 million resumes. App installs stand at 14 million and the average number of resumes added daily was 22,000 in Q1 of FY '25. Lastly, as mentioned in the previous call, we will continue to monitor overall growth over the next 1 or 2 quarters, while growth rates particularly in IT are positive, the trends have not yet stabilized.

Moving over to the real estate segment. In 99acres, billing growth moderated to 10% to INR 81 crores, while revenue grew by 20% to INR 99 crores. Operating losses reduced by 39% to INR 14 crores, and cash losses for operations were INR 19 crores, a Y-o-Y reduction of 54%. In terms of broad industry trends in the real estate segment, new project sales moderated in Q1.

Overall, new project sales in the top 8 cities were flat sequentially in Q1 and up approximately 10% year-on-year. Sequential price increases appear to be tapering off in most cities for both new projects and in the resell segment.

Unsold new project inventory levels remain at reasonably healthy levels in the most -- in the top 8 cities. As a result, developers continue to launch new projects at similar levels to Q4 in more cities. There was uncertainty during the election period, which may -- some uncertainty during the election period, which may smooth it out in subsequent quarters.

For 99acres, billings growth in Q1 was driven by improvements in both the number of build customers and in the average billing per customer. Broker billings for us, broker and channel partner billings grew faster than developer or builder billings. Our listing realization continued to increase year-on-year and Q-on-Q as well, driven by successful premiumization through product upgrades. We continue to invest in getting new users and further increasing our lead in brand recall, overall traffic -- user traffic on the user side.

On the buyer side, in 99acres grew by 23% year-on-year driven by growth in new projects, both new projects and resale traffic. Our app use -- daily active users on the app grew by 33% year-on-year in Q1. 99acres remains focused on investing in growing its user base delivering -- and delivering a superior platform experience and provide and differentiated content to help users base informed real estate buying decisions.

Moving on to the Matrimonial business. In Jeevansathi, billings growth momentum continued, billings grew by 35% to INR 25 crores, and revenue also grew by 35% to INR 26 crores. Operating expenses were reduced, actually 25% year-on-year driven by a huge reduction in marketing costs, which is down 45% year-on-year. Business is now nearing breakeven. Operating losses were reduced by 88% year-on-year to INR 2 crore, cash loss was INR 4 crores and year-on-year improvement of 79%.

The business continues to focus on monetization. We have gone -- we have made several features in the app free a couple of years ago. But now we are back to focusing on monetization with new features launched in Q1, such as super interests and handpicked matches gaining good traction. Marketing expense rationalization continued with cost -- marketing cost down 45% year-on-year while maintaining growth momentum. Competition intensity remained similar to last year. There was no change on that front. Paid products launched a few quarters back following the free chart implementation have been gaining traction as users see value in these offerings. Some gains in Q1 were also achieved through better realizations. Offering a high-quality matchmaking experience remains our core focus, and we plan to further invest in matchmaking -- improving matching recommendations to improve user outcomes.

Key metrics like acceptances and 2-way chats in the platform continue to show healthy growth. The business will continue to launch new products in the coming quarters and try and offer different value propositions to different users. Some of these new products will feature exclusive new functionalities for paying users and the chat function -- chat functionality will continue to remain free on the platform.

Moving on to the education business, Shiksha. In Q1 of FY '25, billings grew by 25% to INR 42 crores while revenue grew by 18% to INR 42 crores. Operating profit was -- we made an operating profit of INR 4 crores last quarter versus a loss of INR 1 crore in the same quarter last year. Cash generation from operations grew to INR 7 crores versus INR 30 lakhs in the same quarter of last year.

The emergence of -- in the Shiksha business, at a macro level, the emergence of new private universities in India presents an opportunity for Shiksha to expand its huge -- its footprint. Shiksha makes most of its money from private colleges and private universities and not from government colleges. We continue to invest in making our content more comprehensive and student-friendly and in building deep domain expertise in this space. Shiksha's traffic share in fact reached an all-time high of 51% in April of 2024.

Student interest in studying abroad for the fall '24 season. The study abroad business is a small part of the Shiksha business has been affected by the weak external environment. We remain committed to making long-term investments in strengthening our study abroad platform, improving the productivity of our counseling team.

Moving on to the consolidated financial highlights for the company as a whole. At the consolidated level, the net sales for the company stood at INR 677 crores in Q1 of FY '25 versus INR 626 crores in Q1 of FY '24. The total comprehensive income stood at INR 3,583 crores in Q1 of '25 compared to INR 3,002 crores in Q1 of '24. Profit before tax without exceptional items in Q1 of '25 was INR 329 crores compared to INR 217 crores in Q1 of FY '24.

To summarize and reiterate our midterm to long-term outlook, we are truly excited about the growth opportunities across all our businesses. The IT dependent segment of our recruitment business has been volatile but it is recovering from the lows with positive signs emerging in the last 2 quarters. The July '24 JobSpeak report has also been very encouraging. And JobSpeak -- the JobSpeak index grew by 12% year-on-year in July and 11% -- month-on-month, it grew by 11%. Fingers crossed, we let's see how this plays out over the next couple of months as well.

We have been expanding and strengthening our GCC and non-IT segments by improving our go-to-market offerings and adding more clients, particularly by penetrating further in Tier 2 and Tier 3 cities. Our niche and adjacent businesses such as iimjobs, Naukri Gulf, Fast Forward, AmbitionBox and JobHai have been delivering decent results and expanding the opportunities for future growth of the recruitment business.

Our non-recruitment businesses are showing reasonably healthy growth and are all nearing or see approaching breakeven. 99acres has established a strong value proposition and is on the right track to grow market share through given favorable market conditions, improved new sort of offerings and better realizations. Jeevansathi shift to a premium model has started now -- has now started yielding results. We are accelerating top line growth and reducing losses.

Shiksha continues to grow well and is already profitable. We have also been making reasonably good progress in deploying AI and machine learning across all our businesses. As a result, we are seeing benefits in terms of higher user engagement on the platform. And we're also trying to boost both productivity and efficiency inside the company. A key strength in navigating these cycles, which we go through periodically as a business, has been a strong cash generation and our healthy sort of bank cash balance. And we continue to evaluate the best possible ways of deploying our cash to maximize shareholder returns.

Thank you. I'll stop here, and we are now ready to take any questions that you may have.

[Vineet Ranjan, executive]

Thank you, Hitesh. We will now begin the question-answer session. [Operator Instructions]

Anand, over to you.

[Anand Bansal, executive]

Thank you, Vineet. The first question is from Vivekanand from Ambit Capital.

[Vivekanand Subbaraman, analyst]

Yes. First set of questions pertain to Naukri and recruitment. So Hitesh, could you explain to us how non-IT as a segmented. You've been expanding the presence of Naukri across Tier 2 and 3 markets. On your job speak also, you are disclosing a lot more number of cities.

So clearly, you're focused on Tier 2 and 3 cities. And mostly, these cities are non-IT centric. So could you help us understand how non-IT is doing for you? And what's the pricing proposition like for non-IT customers versus current billing trends for IT? And how you think about the scalability of non-IT billing?

[Hitesh Oberoi, executive]

Yes. We've done a bunch of things over the last 3, 4 quarters to accelerate our non-IT growth -- sales growth and also to improve the experience on the platform for both non-IT job seekers and customers. We've opened new offices in existing cities. So cities like Delhi, for example, NCR, we used to have 3 offices earlier but the cities have grown over time.

So now we have 6 offices, for example, in NCR to service our customers better and to grow coverage. So we have an office in Ghaziabad. We have an office in Faridabad. We have an office in Greater Noida. We have an office in Manesar. We were perhaps not covering these markets adequately earlier and cities have grown over time.

We've also opened new offices in cities where we did not have offices earlier. We are -- I think our goal is to get to 100 cities in maybe a couple of years, we perhaps already in more than 70 cities. And that's where we have a lot of non-IT growth, right? Because as the cities grow, they are creating jobs. And IT is not everywhere. So -- and many of these companies start small and it's important to get them on to the platform early, right?

On the product side also, IT experience is always very good and on the job seeker -- both on the job seeker side and on the customer side. We have been working very hard to improve our experience for non-IT users, job seekers and recruiters harder problem and IT because there are so many industries, so many segments, all kinds of job seekers in the market. There are -- so segment by segment, we've been trying to improve the experience. We've taken, of course, taken peers targeting -- looking at the bigger segments first and we're growing a lot of AI and machine learning to improve the experience.

We do a really well with the bigger customers, even in the non-IT space. And now we are trying to make more inroads into the smaller SME space as well. The SME customer is very different from the enterprise customer, often SME customers are small in size, they don't have HR departments. They don't have a lot of time to go through our database and post jobs. So we're trying to see how we can help them and use the platform better.

Also, we must understand that the non-IT market was -- there was a supply overhang in this market because not much hiring happened during COVID, but a lot of people hit the market, looking for jobs. And that supply is totally getting absorbed that overhang will hopefully go away with time. And if that happens and the economy continues to grow at 6%, 7%, then actually the non-IT segment should be grow even faster for us going forward. But fingers crossed on that one.

So that's really -- so again, our sizing in non-IT also is more modest compared to IT because the hiring needs of customers of every company, and IT companies hire in large numbers, while here, they are sort of don't hire that many people, but we have worked with many more companies, right? So it's also more aggressive. So all in all, we are happy with the progress on the non-IT side.

[Vivekanand Subbaraman, analyst]

This is helpful. Just one more on recruitment. JobHai seems to have now expanded to, I think around 60 cities and you seem to be getting a lot of traction in terms of number of job seekers on the portal. How should we think about the revenue contribution here? It seems like there is an explosion in the number of profiles that you are adding here. I mean, year-on-year, I think you've expanded to so many new cities, so many new job seekers. I think you're doubling there and perhaps from a low base, I understand. But how to think about the monetization of this segment, you seem to clearly have critical mass.

[Hitesh Oberoi, executive]

You're absolutely right. We've worked very hard on the product for the last 3 years. And we seem to have got product market fit. There's a lot of traction. We're getting a lot of job seekers. We're getting a lot of jobs. We're getting a lot of re-recruiters advertising on the platform. And it's a freemium model. So anybody can actually post a job for free to start with.

And it's all -- it's mobile first. It's vernacular, it's local. So it's a very different platform from Naukri targeted at a very different user segment. If the JobHai has to be successful, I mean, Naukri may grow -- Naukri today works with 120,000 customers perhaps. If we do a good job, you may end up working with 200,000 -- 250,000 customers in the next 5, 6 years.

On the other hand, if JobHai to be successful, then we would want JobHai to work with 1 million customers 5, 7 years from now. It should be the platform of choice for SMEs as well, not just enterprises. And that's how we've been thinking about our JobHai. We were not monetizing because we wanted to get the market -- the product market fit right.

And we started pressing the pedal on monetization only a few months back. And we are getting a reasonable response. We will -- we don't want to compromise on the freemium elements of JobHai. So we don't want to force people to pay to list -- customers who pay and list in JobHai, but we are launching more on more features to just like in Jeevansathi to see how we can monetize our heavy users better. But this is a 5-, 6-year play. This is not something which is going to move the needle on top. It may move the needle on bottom line, but it may not move the needle on top line for the next 2, 3 years.

But long term, it's a big opportunity because the truth is the blue collar job market in terms of volumes is perhaps 4 or 5, maybe 7 or 8 times the size of the white collar market. ARPUs will, however, be lower, unit economics will have to be figured out with time so that we want this market to be as self-serve as possible. So fingers crossed, but good traction, a lot of job seekers, a lot of pledges in. I won't be surprised if in a couple of years, we have more jobs or maybe even a year, we have more jobs in JobHai than on Naukri and we start getting more daily registrations on JobHai than on Naukri. But that will be good problem to have.

[Vivekanand Subbaraman, analyst]

But you already do seem to have a lot more jobs there, right? If I look at the job listings number, the live jobs on Naukri around 4 lakhs, 5 lakhs here, you have like 1.5 million or something. Correct me if I'm wrong.

[Hitesh Oberoi, executive]

No, those maybe vacancies, not listings. I was referring to listings. So against every job there may be like somebody wants to have delivery boys and they may want to have 100, 200, 500, right? But I was referring to the number of job listings.

[Vivekanand Subbaraman, analyst]

Understood. Understood. Great. Great. Sanjeev, one question. Thank you, Hitesh. Great answers, very detailed as usual. Thanks a lot. And Sanjeev, just one question for you. We get to interact with you very infrequently. So I'm taking the liberty to ask questions from the annual report as well. So this year, you invested in 20 more companies through the AIF, right, all 3 AIFs.

And you seem to have pressed the pedal on capital deployment in fiscal '24. And we are seeing that your investees seem to have had a very high interest from external stakeholders in terms of wanting to fund them. So -- how are you thinking about exits and monetization in the AIF? We saw recently that there was some transaction announced where Apax Digital came in. How do you think about the exits here? Or is it too early and how to think about...

[Sanjeev Bikhchandani, executive]

A little early. See, we have a 12-plus 2-year fund, right? We believe that, look, past experience and evidence tells us that in India, if you were early stage you have to be patient, I mean if you look at Zomato, you mentioned in 2010, PolicyBazaar went in 2008, we are still there. And the big value has come in the last 3, 4 years, which basically means if you exit in 7, 8 years, you want -- you need to be there for a long, long time before you really get the value.

So which is why we have 12 plus 2-year fund because most funds are of shorter duration than that. We deliberately went for 12 plus 2 years. So it's a little early. Our first fund, our first AIF was 2019. So if you start looking at getting your exits 8 years or 9 years out, then you're talking about 2027, '28 -- of course, there will be some exits that may happen earlier.

If something blows up, you'll obviously exit earlier. If there is a great acquisition offer that comes along and the founder wants to pick it. You can't really block that because you have to back the founder because you can't really run the company without the founder or the founders. And if some -- if our investors at a later-stage company, like we did with Ixigo, it goes public.

Now we haven't exited Ixigo, but we have the option to whenever we want. So we are patient. We're not even thinking about exit right now actually.

[Anand Bansal, executive]

The next question is from Nikhil Choudhary from Nuvama.

[Nikhil Choudhary, analyst]

Hitesh, first on recruitment side. While overall billing growth had been improving since last 2 quarters, but underlying growth, especially in IT has changed growth trajectory from double digit to now mid-single digit. Despite quarter 4, I suppose, was a high base year compared to quarter 1, right? In same kind of while swing happened in Jobspeak as well, right? June we saw the dip. In July, very sharp upswing. So any color there, what's happening, what would be the trend going ahead?

[Hitesh Oberoi, executive]

Difficult to say, see, we were -- actually April and May were good months. But in June, we saw sort of negative -- we saw a decline in jobs being pushed on the platform. Now while to our sales team maybe it had to do with the uncertainty around the elections, but we can't be sure.

I mean in July, we've seen a bounce back, will sustain hard to say right now, as things stand, the sales team is more bullish than they were but all the function of what happened in the last month more than anything else, moods change basis that. So it's a wait-and-watch situation. Like we have said last time also, we would want this to maybe comment on these 2 quarters Nikhil from now.

I mean there's a recession in the U.S. now according to some people that may impact things in India. In the past, recessions have also been good in the medium term for IT companies because recession lead to -- in the U.S. lead to cost cards and ultimately, more people that had in India as a result, but we don't know how this is going to play out this time. So fingers crossed. I mean, in our company, at least I can tell you, attrition has moved up a little bit. So that's worry us but let's see this sustain there. Hard to say what's going to happen.

[Nikhil Choudhary, analyst]

Sure Hitesh. Second, on margin side, we have seen improvement in profitability, especially on the known recruitment side and many of the businesses almost reaching breakeven. So I just want to understand what's the strategy going ahead? We have reached some of the milestones, which we targeted. Are we planning to increase the profitability further? Or no, we would like to invest back in the business?

[Hitesh Oberoi, executive]

So in Jeevansathi, we are targeting breakeven this year. So we would like to get as close to breakeven as possible. At the same time, we're targeting high growth because we've started monetizing more aggressively. We have gone 3 for a couple of years. I mean, we continue to be freemium, chat is free, but we have launched more features and more functionalities to help monetize better.

So we would want to get as close to breakeven as possible this year in Jeevansathi.

In Shiksha, can we continue to sort of be profitable, the domestic business grew very well in Q1. Study abroad is struggling a little bit because of what we're seeing are happening around the world. So at least even in Shiksha, we would want to at least target breakeven or at least make some profit this year. But we will want to continue to invest in growing our platform and improving the quality of content, the quantity of content, the richness of the content on the platform.

We are investing a lot more behind the app. We are -- wherever possible, we are trying to use generative AI and data science and machine learning to improve the experience. So that -- 99acres is a little tricky. We had great 5 or 6 quarters. But this quarter, growth was a little lower than what we expected.

And on deeper analysis, we saw, we realized that in certain markets, we grew really well. And in some markets, we struggled. Now again, anecdotally, what I can tell you, the business took a hit in June, maybe again, it had to do with some uncertainty around the elections. And often when state governments change and so on and all these things happen in real estate, some of the projects get delayed. I mean, improves take longer as people adjust to the new environment.

So we would want 99acres to grow faster. Going forward, we are doing whatever we can. And if that requires us to invest a lot more in the business and if that means taking a loss of some more time, I mean, that's fine with us. We see this as a good opportunity in the long run.

[Nikhil Choudhary, analyst]

Sure Hitesh. You have mentioned now the investment in the known recruitment side. In past, you have mentioned that FY '25 will be where you want to invest in recruitment side as well. So is it fair to assume that FY '25 will be the year of investment, where the focus will be on growth or maybe building the capability rather than profitability improvement?

[Hitesh Oberoi, executive]

Even in recruitment, see we continue to invest in our geography business. We continue to invest behind the Ambition box platform. We continue to invest behind iimjobs and hirist. Even our Naukri Gulf business has been doing well. We continue to invest in the Naukri Gulf business. We spend, for example -- even though our business is growing slowly, we were on IPL in Q1. That's why our marketing spend went up in Naukri because we were out of media for a long time. And it's never good to be sort of outer media for a long time.

I mean there is -- so it's normally slowdowns don't last for a very long time and business always bounces back. And it's important to keep investing even when the market is slow because that's how you get share and so that's what our philosophy has been, and we will continue to invest, like I said, because we are thinking more medium term and more long term, it's a huge opportunity.

And we would not want to slow down investing just because of a couple of bad quarters.

[Nikhil Choudhary, analyst]

In any of our verticals.

[Hitesh Oberoi, executive]

In all our verticals not just in jobs.

[Nikhil Choudhary, analyst]

Just last one from my side. Just understanding GreytHR transaction in more detail by the name GreytHR was a strategic transaction, right? And now we are letting a private equity acquire it. So what's the thinking behind it?

[Hitesh Oberoi, executive]

Yes, yes. So you're absolutely right. So when we went into GreytHR in our heads, it was strategic, but over time, we've realized that we would rather sort of invest more in sourcing and recruitment and automation than in getting into an HR services sort of play. So very nearly over time, we -- in our heads, we turn of financial instead of strategic in GreytHR. And therefore -- but of course, the company is doing very well. The founders are executing brilliantly and we see a long-term sort of -- we are confident that business will do well in the long run.

And some of the early investors wanted to exit. And that gave an opportunity for us to get another investor in. It's not as the company needs a lot of money. The company is breaking even and growing well. But because some of the investors wanted to exit, Apax was very bullish on the company and they wanted to come in and we allowed them. And the founders are very keen.

And so -- but we continue to be bullish, and we continue to be investors in the company. And we are hoping that the company will perhaps IPO in a few years from now, if all goes well.

[Sanjeev Bikhchandani, executive]

You see Nikhil, it's like this. If earlier investors want to exit, whether we buy them out or somebody else buys them out because they want to exit. And if we are no longer regarding as strategic as we thought earlier, then do we want to [indiscernible] more money to buy them out or let somebody else. And that is a choice. And I think we've made this choice for reasons that -- it's no longer strategic.

[Anand Bansal, executive]

The next question is from Nitin Sharma from MC Pro Research.

Maybe we'll take the next question.

Next, we have Vivekanand from Ambit Capital, a follow-up question.

[Vivekanand Subbaraman, analyst]

Thanks for the follow-up opportunity. Hitesh just extending previous participants' question on investments in recruitment verticals. You had previously quantified around INR 20 crores, INR 25 crores per quarter investment. And even now, while answering my JobHai, query, you said that it will have a bottom line impact. So I presume a negative impact. So could you help us understand how much of a drag are these gestation projects causing -- clearly, they are not monetizing to their potential currently. So how much loss are you absorbing in the P&L from some of these projects which are very long gestation?

[Hitesh Oberoi, executive]

INR 20 crores, INR 25 crores a quarter, around that much.

[Vivekanand Subbaraman, analyst]

Okay. So that's pretty similar despite new coming.

[Hitesh Oberoi, executive]

Yes. Yes.

[Vivekanand Subbaraman, analyst]

Understood. Understood. And secondly, on 99acres, the competitive environment, like you said, there's some back and forth there. I mean there are some aggressors plus you may have gained some market share -- so how to think about the investments there.

In your annual report, you shouldn't disclose the segment-wise advertising this time last year. I mean in fiscal '23, you had. So just to understand the ad spends here and how to think about the OpEx for 99acres I mean, revenue, you addressed that quite well. I wanted to understand the OpEx on 99acres along with the ad trends envisaged?

[Hitesh Oberoi, executive]

How much did -- so ad spend, we are actually spending more than we spent last year. I don't know exactly how much right now as we speak, we have a higher budget than we spent last year. On the other hand, manpower costs, et cetera, are under control. So those are not growing a lot. But we are spending a lot more on advertising than we spent last year.

[Vivekanand Subbaraman, analyst]

So in that, in effect, you're saying that even if you see, let's say, a 20% revenue growth, it may not necessarily lead to a very sharp production in losses. Is that how to infer it on 99acres?

[Hitesh Oberoi, executive]

Yes, you're right.

[Operator]

[Operator Instructions]

So the next question is from Swapnil.

[Swapnil Potdukhe, analyst]

I just wanted to understand the spends that you ended during the IPL. If you can just quantify that? And will be continued such spends going ahead? And how often would that be?

[Hitesh Oberoi, executive]

We will not be able to give you the numbers. But -- so IPL was -- is, of course, once a year, and the team was out of media, I mean now Naukri has been out of media for a long time, which is why we went aggressive on IPL in Q1.

We don't intend to spend as much money in Q2. Q3 is also normally a lean quarter for advertising. But in general, I mean, we will spend a lot more on advertising this year than we spent last year on Naukri.

[Swapnil Potdukhe, analyst]

If I can just probe you a bit more on that. So on a Q-on-Q basis, your Naukri spend seems to have grown around INR 22 crores. I would presume a majority of that would be related to market.

[Hitesh Oberoi, executive]

Related to -- yes, because of IPL.

[Swapnil Potdukhe, analyst]

Because of IPL, yes.

[Hitesh Oberoi, executive]

A lot of it is because of IPL.

[Swapnil Potdukhe, analyst]

And the second question is with respect to your 99acres business. So we have seen your revenue growth coming mainly from the broker segment of it. The developer segment seems to -- the revenue share has been declining quite a bit. Any color on that as to what would drive that growth going ahead, if at all?

And if that is not going to happen, would it not be fair enough for us to invest on the B2C side directly go to the current customer and try to monetize that even more than what we are doing right now.

[Hitesh Oberoi, executive]

Two points. One, see the market is also moving more and more towards channel partners. So on the resale side, all our revenue comes from brokers, right? There are no developers there. On the new home and new launch side of things in the primary market, we make money from both channel partners and developers.

Our sense of the market also is that it's moving more and more to our channel partners. So there are more channel partners an earlier, more and more homes are being sold through channel partners in more and more cities. In the north, for example, NCR, maybe 90% of all homes are sold through channel partners. By city like Bangalore, maybe 40%, 50% of all homes are sold through channel partners.

But the share of channel partners and home sales is increasing in every city with every passing year. And that's showing in our numbers as well to some extent. Two, we believe our platform also delivers better for channel partners and for developers. And we are trying to see how we can fix that. We may have to launch some offerings, which work for -- better for developers. Maybe our pricing is also a little off on that front, and we're trying to see how we can fix that.

But long term, our sense is -- I mean, if we were to fast forward 5 years, most homes in the country will be sold through channel partners and not directly by builders, especially in the affordable and those kind of segments. And especially when the market is a regular market. See in a hot market, anything happen, developers don't even need -- don't need us and don't need channel partners to sell.

You may have heard of DLF launching, everything getting sold in 2 days. Nobody is required if that is the case. But in a regular market, more and more transactions are likely to happen through channel partners than through direct -- developer sales teams over time. That's our sense.

[Swapnil Potdukhe, analyst]

And on the B2C part, any plans to go aggressive on that side.

[Hitesh Oberoi, executive]

Monetizing orders, you mean and buyers.

[Swapnil Potdukhe, analyst]

Yes, both.

[Hitesh Oberoi, executive]

We don't intend to monetize buyers. That's not in our plan. We have some offerings on owners. While any owner can list their property for free on 99acres. We offer some value-added services and a small percentage of owners available services about 7% or 8% of our revenue is from owners in 99acres.

[Swapnil Potdukhe, analyst]

But by any chance, do you want to increase that share if the developer share is not going...

[Hitesh Oberoi, executive]

No, no. Of course, I mean, we would want to grow our revenue from owners and -- but it's not a very big part of our strategy. We would rather grow revenue from brokers, channel partners and developers first.

[Anand Bansal, executive]

The next question is from [indiscernible] Small investment.

[Unknown Analyst]

Hitesh, this question was for you. So has there been a material change in the outlook for IT hiring from the last quarter, per se.

[Hitesh Oberoi, executive]

See July jobs peak was very positive. And all I can say is that we've got -- some of our clients have renewed and upgraded. But whether this will sustain or not, I don't know. We should wait and watch for maybe another 3, 4 months.

[Unknown Analyst]

Okay. And this upgradation you were talking it [indiscernible] for the IT clients only?

[Hitesh Oberoi, executive]

Yes, about IT client. I was referring to IT, some large IT clients. And like I said, our consultant hiring recruitment, we get about 27%, 28% of our revenue from recruitment firms, and they were negative for at least 4 quarters. We saw a slight improvement there. They moved into positive territory.

A lot of these recruitment firms also work for IT customers. So -- but let's see how this -- whether this sustains in. I don't know what you are seeing. I mean now your IT companies may be telling you whether their attrition rates are going up or not?

[Unknown Analyst]

So from IT companies, what we understand is the utilizations have started to kick out right now. Though attrition numbers to be moving on the downward trend. So just wanted to understand if that is juxtaposing before you guys.

[Hitesh Oberoi, executive]

Yes. So that's what I had said last time as well, right, that a lot of these IT companies are overhired during good times, and they have built up in bench. And solely -- and as a result, the utilization rates have fallen. And because they did not hire for a long time, they are now back to peak over utilization levels in most cases.

And therefore, if they have to maintain headcount, they will now at least have to replace the people who are leaving. So at least that part of the market should come back. Now are they going to be hiring for growth? I don't know. Are they going to grow headcount aggressively from there on? I don't know. Will attrition rates go up? I don't know. I can also tell you that GCC have started hiring, so some of the larger GCCs were had shut down hiring. The larger ones, the smaller ones were hiring, but they were small. So the larger ones have stopped hiring.

Now there are some green shoots there as well. Some of the larger GCCs have started hiring in small numbers. Let's see how this plays out. Once they -- if they start hiring a large number, then that may lead to higher attrition in IT services companies as well, but let's wait and watch and see what happens.

[Anand Bansal, executive]

So Vineet, that was the last question we had for the day. There is one question just came. So Abhisek Banerjee from ICICI Securities.

[Abhisek Banerjee, analyst]

Yes. Hitesh sir, just one question. You just mentioned that the captives are starting to hire. Now last time, you had said that captives when they just formed, you do not get any revenues from them. But after a year, they also start contributing to your revenues. So given that the number of captives have gone up quite a bit in the last 1 year, do you see the revenue contribution from that increasing going ahead?

[Hitesh Oberoi, executive]

Again, even here, there's an 80%-20% principal at work. There may be [indiscernible] captives, but the bulk of our revenue comes to the big ones. The big ones are maybe 100 in number. And they had all sort of -- most of them had sort of frozen hiring because of what was happening in the U.S. and so on. Now if they start hiring in large numbers, then of course, you will see we will benefit immensely. The smaller ones, of course, once they -- like I said last time, in year 1, they may just hire 50 people, they don't need anybody they go through recruitment firms and hire because they need to hire senior management and middle management.

But once they start hitting 200 to 300, headcount of 200 to 300, they have attrition, they need to replace people. They need to hire for growth and that's when they use start using platforms like Naukri. So that will continue. And yes, over time, as a number of captives, which have a headcount of more than 200, 300 in the country start growing, it will also -- it will help us. But for the needle to move, the big ones have to start hiring. And we are seeing early signs of that, but let's see if that sustains.

[Abhisek Banerjee, analyst]

Understood. Understood. And in the Matrimony business, if you could give some thought process on what is happening there? And is there any likelihood of the revenue growth kind of starting to look up?

[Hitesh Oberoi, executive]

Revenue growth is 35%, right now for us, and we want to sustain this kind of growth for at least 2 more quarters. And at the same time, cut burn and reduce our costs so that we can get to breakeven for the year or near breakeven, maybe plus/minus INR 810 crores. That's our internal goal and that's what we are focused on right now.

As far as the overall recruitment market is concerned, I really don't know much. Maybe it continues to grow at 7% to 10% per annum like it has for many years.

[Abhisek Banerjee, analyst]

Yes. So actually, when I asked about revenue growth, I meant above -- I mean, beyond the number which you should do before you decided to discount on the pricing basis. So do you see you yourself breaching that level any time in the...

[Hitesh Oberoi, executive]

No, if we continue to grow at 35% for the next 2, 3 couple of quarters. And for the year as a whole, we'll cross INR 100 crores, right? I think we were around this number. I don't remember the exact number, but perhaps around this number 2 years ago. I remember are billings were hit by 30% when we moved to this model.

So we perhaps will inch back to where we were 2 years ago, but with much lower marketing spend and therefore, improve profitability and higher share of overall matches since the number of people on the platform has grown. So let's see, I mean, the -- now the real test will be the year after this. How fast are we able to grow once we get to INR 100 crores, INR 110 crores sort of top line. And after that, will we start growing at 10% or will we grow at 20% or 30%. Let's see what happens.

[Abhisek Banerjee, analyst]

Understood. And are you looking at monetizing the new edge products which have developed in that front?

[Hitesh Oberoi, executive]

Was the rating platform. So there we are sort of still learning, and we are bullish on 1 or 2 products, but early days, a lot of work to be done as far as those platforms grow. But of course, there are a long-term opportunity for us.

[Abhisek Banerjee, analyst]

And one last one to Chintan Sir. Any update on the Google issue with regards to how much they're charging you for in-app billings?

[Chintan Thakkar, executive]

See, there are no further updates. I mean all is okay on that front right now. Nothing to worry about at this point in time.

[Anand Bansal, executive]

There is a question from Nitin Jain.

[Nitin Jain, analyst]

Yes. So first of all, congrats on the good quarter. So I have a little long-term question on the 99acres business. So given that the real estate cycle has turned for good for quite some time now, but we are not yet in the mode of reporting operating profits, although we have consistently reduced losses there.

So my question is, what would we need to do to take the business to a level where it reports profit on a consistent basis, like whether we need pricing changes or strategic changes or product changes if you can throw some light on that?

And my second question is for Sanjeev. Given that some of the investments, especially Zomato, PolicyBazaar. Their stocks have done pretty well in the last few years. So -- and we've been invested there for a long time as well. So would you be -- like is it on the table at least evaluating whether we can book at least a partial profit and pay out as a special dividend or something along those lines.

[Hitesh Oberoi, executive]

To answer your question on 99acres, the short answer is that we need to gain more share. We are -- it's very strong in some cities. In some cities, we need to work harder. In the end, revenue is a function of supply share, traffic share on the platform and which translates into higher pricing and therefore, more profit. So -- that's -- I mean -- and to do that, we need to, of course, we are working on the product and we're improving -- working on improving the experience on the platform.

We are trying to fix our pricing wherever it needs to be fixed. And we are working hard to get more and more supply on the platform. So that becomes a one-stop shop for all things real estate. And at the same time, we also need -- in the new home segment, we actually are not competing with real estate portals, we end up. We are competing with Facebook and Google. And there, we need superior offerings to sort of get people to engage with the platform a lot more. And the thing that we are working on, but let's see how this plays out.

[Sanjeev Bikhchandani, executive]

On the Zomato and PolicyBazar shareholding. Look, this is obviously constantly discussed with the Board. But we have taken a slightly longer-term view that where will these businesses be 3 years from now, 5 years from now, 10 years from now? And if there is -- if we believe there is substantial growth and consequent value creation left, we think it's better in our -- and we think it's better for our long-term value creation for our shareholders. We'll probably stay. But yes, this is constantly discussed. As of now, there is no plan to exit. .

[Anand Bansal, executive]

[Operator Instructions]

So Vineet, there are no more questions for the day.

[Vineet Ranjan, executive]

Thank you, everyone. We may now conclude this call. Thank you for joining in. You may now disconnect the lines.

[Hitesh Oberoi, executive]

Thank you all, and have a great evening.

[Sanjeev Bikhchandani, executive]

Thank you very much, bye.

[Anand Bansal, executive]

Thanks, everyone.