Info Edge (India) Ltd
NSE:NAUKRI
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Info Edge (India) Ltd
Earnings Call Analysis
Q2-2024 Analysis
Info Edge (India) Ltd
The company reported a robust financial performance for the second quarter of the 2024 fiscal year with revenue reaching INR 593 crores, marking a year-on-year growth of 11.5%. The improvement was even more impressive for the first half of the fiscal year, with revenue increasing by 13.3% to INR 1,177.3 crores. Operating profit for Q2 spiked by 26.8%, reaching INR 218.9 crores, and profit before tax for the same period grew by 24.7%. The company’s disciplined approach to marketing spending kept operating expenses in check, growing only 4.9% for the first half of the fiscal year.
A deep dive into the company’s various segments reveals differing fortunes. The Recruitment Solutions segment grew 9.1% year-on-year to INR 456 crores in revenue, maintaining stable operating margins of around 59.2%. Naukri India, a notable part of this segment, observed a softer growth in revenue at 7.7% year-on-year. JobSpeak index, a measure of job listings, declined by 8.6% year-on-year, hinting at a challenging recruitment environment.
The hiring activity within non-IT sectors like healthcare, infrastructure, and real estate has demonstrated healthier performance. This diversification in hiring away from IT has underpinned the company's revenue growth. Monthly active users on the platform reached a new high of over 10 million in Q2, indicating strong user engagement.
Despite an increase in property prices, strong end-user demand has fueled a 22% year-on-year rise in billings for the company’s real estate segment. In the education sector, Shiksha witnessed a billing growth of 3.7% and a revenue increase of 15.9% year-on-year, reflecting considerable growth albeit at a slower pace compared to other segments.
As salary levels of hires have reportedly increased by about 10-15%, the company has managed to leverage this to realize greater value from its client negotiations, despite a general slowdown in the IT sector. The company is optimistic that an eventual recovery in IT hiring could provide a significant boost, especially if market conditions lead to increased attrition and necessitate just-in-time hiring.
Looking ahead, the company does not provide explicit numerical guidance; however, there are several indicators for potential growth. These include the aggressive hiring in certain non-IT sectors and the possibility of IT sector recovery leading to increased billing opportunities. The management remains cautious but has laid out a clear strategy to capitalize on market uptrends as they arise.
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Good evening, and welcome to Info Edge Q2 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. From the management side, we have Mr. Sanjeev Bikhchandani, Promoter and Vice Chairman; Mr. Hitesh Oberoi, Co-promoter and Managing Director and Mr. Chintan Thakkar, Chief Financial Officer.
Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer to Slide #2 of the investor presentation for a detailed disclaimer. The audited financial statement and other schedules on segmental revenue transcript, et cetera, along with the data sheet have been uploaded our website, www.infoedge.in. Now I would like to hand over the conference to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, .
Yes. Thank you, Vivek, and good evening, everyone, and welcome to our Q2 '24 earnings call. And as always, we will start with an update on stand-alone financials, then cover segmental financials along with the business commentary in each business, and then we'll have time for Q&A. Starting with stand-alone financials for the quarter and for the first half of 2024. On an overall basis, revenues registered moderate growth. While billings, which are a lead indicator have grown slower -- have grown in low single digits as compared to the same period in the previous year. Revenue for the second quarter of FY '24 was at INR 593 crores, a year-on-year growth of 11.5%.
For the first half of FY '24, revenue was at INR 1,177.3 crores, a year-on-year growth of 13.3%. Billings for the second quarter of FY '24 were at INR 569 crores, a Y-o-Y growth of 4.8%. For the first half of FY '24, billings were at INR 1,092.1 crores, a Y-o-Y growth of 2.3%. If we include acquired businesses Zwayam and DoSelect for the quarter in the stand-alone operating results, the billings and revenue were at INR 580.9 crores and INR 604.9 crores, respectively, a year-on-year growth of 3.8% and 10.1%.
For the first half of FY '24 billings, including the acquired businesses was Zwayam and DoSelect were at INR 1,120 crores, a year-on-year growth of 2.1% and revenue stood at INR 1,204.9 crores, a Y-o-Y growth of 12.6%. Because of a disciplined approach to marketing spending, the operating expenses have remained in line with the growth in billings. For the quarter, the operating expenses were at INR 374.2 crores, a Y-o-Y growth of 4.1%. For the first half of FY '24, operating expenses were at INR 749.5 crores, a Y-o-Y growth of 4.9%.
Operating profit for Q2 was at INR 218.9 crores, an increase of 26.8% as compared to the same period the previous year. For the first half of FY '24, the operating profit grew 31.7% year-on-year to INR 427.8 crores from INR 324.8 crores reported last year. Operating profit margin for the quarter was at 36.9% compared to 32.4%, a 450 basis point rise as compared to the same period of the previous year. For H1 '24, the operating profit margin was at 36% compared to 31%, a jump of 500 basis points. Profit before tax for Q2 stood at INR 277.4 crores, a Y-o-Y growth of 24.7%. For H1 '24 profit before tax stood at INR 544.1 crores, a Y-o-Y growth of 30.6%.
EPS for the quarter was 16.1%, a Y-o-Y growth of 24.1%. For H1' '24, EPS stood at INR 31.55, a Y-o-Y growth of 29%. Cash from operations for the quarter was INR 250 crores compared to INR 219 crores in Q2 of '23, a Y-o-Y growth of 13.9%.
For H1 '24, cash generated from operations was at INR 394.7 crores, a Y-o-Y growth of 2.8%. Deferred sales revenue at the end of Q2 was INR 936.2 crores versus INR 840.9 crores as of September 30, 2022, a Y-o-Y growth of 11.3%. Cash balance of Info Edge including the wholly owned subsidiary stands at INR 3,649 crores as of 30th September 2023. It was at INR 3,250 crore rates as of 30th September 2022. Head count as of 30 September is 5,594, up from 5,282 as of September 30, 2022.
Let me walk you through the segmental results in a little more detail. Starting with the recruitment solutions business, the continued softness in tech hiring was partially moderated by reasonable growth on the non-IT hiring front. For the second quarter of FY '24, the recruitment Solutions segment revenue were INR 456 crores, a Y-o-Y growth of 9.1% and billings were at INR 431 crores, a Y-o-Y growth of 1.4%. For the first half of FY '24, the revenue was INR 902.4 crores, a YoY growth of 12.1% and billings were at INR 828.9 crores, a decline of 1.4% compared to first half of FY '23. The quarterly operating profit was at INR 270.1 crores, a Y-o-Y growth of 8.8% and the operating margins were almost steady at 59.2%. For H1 '24, operating profit was at INR 533.6 crores, a Y-o-Y growth of 12.7% and operating margins remained steady at 59.1%. Cash from operations for the recruitment solutions business during the quarter was INR 267.9 crores, down from INR 280.4 crores in Q2 of '23. The business generated INR 474 crores of cash from operations in H1 '24 down from INR 515.8 crores generated in H1 of '23.
Revenue for Naukri India was INR 396.4 crores, a growth of 7.7% year-on-year. However, billings for Naukri India for the quarter were steady at INR 370.6 crores. The billings for Naukri India for the first half for FY '24 were INR 716.6 crores, a decline of 3.5% compared to last year. Recruitment segment billings, including acquired businesses Zwayam and DoSelect for the quarter were INR 443.3 crores. For the first half of FY '24 Naukri India billings including acquired businesses DoSelect and Zwayam were INR 856.8 crores. The Naukri JobSpeak index for the month of September was up 6.3% sequentially, but down 8.6% year-on-year. We witnessed a slight recovery in client retention, renewals and new customer acquisition in the quarter. However, our IT customer and consulting business continued to be slow due to declining attrition and slow business growth in this space.
Hiring in health care, infrastructure, transport and real estate sectors showed better performance during the quarter. Billing growth in the non-IT segment was in double digits. The billing growth from strategic businesses like Iimjobs, DoSelect, et cetera, was also reasonably encouraging during the quarter. Job secure engagement with the platform was intact with 9% growth in active users, a 495,000 daily modifications and 58,000 Android installed -- app installs per day. Monthly active users attained a new high with more than 10 million monthly active users on the average in Q2 '24. Average monthly job applies were also at an all-time high during the quarter. Our blue collar job platform JobHai had reported 27% growth of user traffic and 41% growth in job seeker registration sequentially over last quarter. And we continue to make investments in platforms like JobHai, AmbitionBox and areas like data science and machine learning in Naukri.
Moving over to the 99acres segment or to the Real Estate segment. Growth momentum continued in new home, both new home and secondary sales across the country in Q2 despite increased property prices end user demand was reasonably robust, and we expect this trend to continue at least for some more time. Billings maintained growth trend -- billings growth trend continued this quarter. Billings were up 22% year-on-year and stood at INR 92.2 crores, while revenue grew from INR 69.7 crores in Q2 of '23 to INR 87.3 crores in Q2 of '24, a Y-o-Y growth of 25.2%. For H1 '24, billings were at INR 165.6 crores, a Y-o-Y growth of 21.1%, while revenues were INR 169.9 crores, a Y-o-Y growth of 24.9%.
The operating loss for the quarter was INR 16.5 crores against a loss of INR 32.4 crores reported last year. Our H1 '24 operating loss in 99acres was INR 39 crores against a loss of INR 70.4 crores in H1 of '23. The 99acres business reported a cash inflow from operations of INR 5.2 crores for the quarter against a cash loss of INR 19.1 crores in the same quarter of the previous year. The cash loss from operations in the first half of FY '21 was INR 35.3 crores, down by 46% vis-a-vis a cash loss of INR 65.8 crores in the first half of last year.
Growth in Q2 billing was led -- primarily led by increased broker and owner spending on the platform. The platform also increased -- also witnessed an increase in the number of new projects and broker listings and in the resale and rental categories. The user activity on the platform also is on an increasing trend with traffic numbers up 24% Y-o-Y and 13% quarter-on-quarter. The App daily active user base also grew to 33% year-on-year in Q2 and 13% sequentially. Overall responses from the platform also grew 28% year-on-year in Q2, supported by a healthy demand environment, improved customer experience. The business continues to sort of deploy more machine learning algorithms to improve the platform experience, continues to focus on improving data quality and creating differentiated content and reducing spam on the platform.
In the education business, Shiksha, Q2 billings were INR 25.7 crores, a Y-o-Y growth of 3.7%, while revenue was INR 30 crores, a Y-o-Y growth of 15.9%. For H1 '24, billings were INR 59 crores, a Y-o-Y growth of 7%, while the revenues were INR 65.9 crores a Y-o-Y growth of 15.2%. The business incurred an operating loss of INR 2.75 crores during the quarter against a loss of INR 2.8 crores in Q2 of last year. For H1 '24, the business reported an operating loss of INR 3.7 crores against a profit of INR 2.5 crores in H1 of last year. The cash loss from operations for the quarter were INR 5.6 crores against a loss of INR 1.7 crores in Q2 of last year. For H1 '24, cash loss from operations were at INR 5.3 crores.
Hiring slowdown delayed joining dates and few companies missing on campus placements has impacted student sentiment. While traffic and student responses on the platform maintain reasonable momentum, domestic clients reported a decline in conversions of student inquiries into applications and admissions. Despite the current phase of low growth, the study abroad business continues to be a business which we are focused on for the long term. We will keep working on strengthening our platform and our ability to deliver counseling services to more students in the study abroad business.
Moving on to the Matrimony business, Jeevansathi. We continued with our strategy to gain traffic share through our free chat offering and when we worked hard and we worked on launching new products to monetize our traffic growth. The products launch -- the new products launched in the last few quarters are now helping us grow our business a little faster. We are trying to basically monetize the traffic a little better. Billings in Q2 grew by 16.7% year-on-year to INR 19.7 crores and revenue grew by 8.6% year-on-year to INR 19.7 crores. For H1 '24, billings were INR 38.5 crores, a growth of 11.5% year-on-year while revenues of INR 39 crores, a decline of 4.8% from H1 of last year. Operating losses for the quarter were INR 17.5 crores against a loss of INR 27.6 crores in Q2 of last year.
Operating loss for H1 '24 was INR 35.6 crores against an operating loss of INR 56.3 crores in H1 of last year. Cash loss from operations for the quarter was INR 14.4 crores against a cash loss of INR 29.8 crores in Q2 of last year. Cash loss for H1 is down 55.4%, and stood at INR 35.5 crores.
Marketing spends in Jeevansathi were down 39.1% year-on-year and 6.1% sequentially. Moving on to the consolidated financials. At the consolidated level, the net sales for the company stood at [ INR 625.8 ]crores versus INR 604.1 crores last year. For the consolidated entity at the total comprehensive income level, there is an income of INR 3,399.4 crores versus a loss of INR 470.7 crores for the corresponding quarter last year. Adjusted for the exceptional items, PBT stood at INR 262.3 crores in Q2 versus a profit of INR 148.7 crores in Q2 of last year. Thank you. and we are now ready to take any questions that you may have.
Thanks, Hitesh. We'll now begin the Q&A session. [Operator Instructions] So the first question is from Vivek from AMBIT Capital.
Thank you for giving me this opportunity. First question is, if you could give us a bit more color on the IT versus non-IT billing for the quarter, a broad sense of the decline on IT and perhaps a bit more color than double-digit growth on the non-IT would help us understand better. Second question that I have is your JobSpeak index, the IT services job postings have been declining since January. But basis your past commentary, recruitment billing from IT customers declined only from the June quarter. Why is that so? Is that because of long duration nature of contracts? Here, if you can give us some direction on the duration of contracts, 3, 6, 12 months. The reason for this question is mainly to correlate JobSpeak data with billing trends.
Last one is on the non-IT side. To me, it appears that the number of branches that Naukri has increased in the recent months. So what kind of response are you getting on the non-IT side? Are you signing up more customers? And is that helping you service non-IT customers better through these branch expansions. Any color on how to look at the sustainability of non-IT growth and the investments needed -- that will be very helpful.
So at a very macro level, about half of our business comes from IT companies/recruitment firms, which work with IT companies, maybe 55% of our business is IT or IT related, so to speak, and about 45% is non-IT related. Now overall, our billing growth was flattish for the recruitment business as a whole and with the non-IT business, it's not as if we are able to do a 100% job of sort of segmenting our business between IT and non-IT, because there are lots of small customers we don't really know what percentage of their hiring is IT hiring. But from what we can tell, as far as we can tell, our non-IT business continued to grow in double digits, so maybe about 14%, 15%, 16% growth in that range. While our non-IT business must have declined by a similar amount for billings to have remained flattish.
Now -- because we are seeing growth in non-IT and within non-IT, there are some sectors that are doing quite well. There are others that are not doing as well. We are investing more on the non-IT side of the business right now, so to speak, which means -- and what we are seeing in non-IT is a lot more growth in small towns than was the case a few years ago, which is why there are focus on sort of opening new branches.
The focus -- our non-IT customers don't -- are not as Internet-savvy sometimes as our IT customers, and therefore, it makes sense to reach them face-to-face, makes sense to sort of make sales calls on them physically, especially in the small towns. So you will see us opening more branches going forward. We already opened a few. In the markets we already operate, also we need to improve our coverage, go after the smaller customers a little more than we've been going and we have been doing in the past.
Also for about a long time because of COVID, a lot of our sales guys were operating from home and now is the time -- and therefore, our customer interactions were fewer, I think this is the time to sort of go all out and meet customers face today. So we'll be focusing a lot more on that going forward. As far as correlation with JobSpeak is concerned, Jobspeak is index of job listings mostly. And we are now trying to incorporate Resdex activity, which is our database hiring equity into JobSpeak. But you must understand that 70% of our revenue is from the database, and that's the primary source of hiring for a lot of companies. A lot of these companies also post jobs. So there is -- while there is a lot of -- there is -- I mean, there is correlation between JobSpeak and billing growth, it's not like a 1:1 correlation because a lot of the hiring happens through the database offering as well. Was I able to answer all your queries?
Yes. Just one follow-up, and thank you so much for the explanation on the non-IT side, helps us understand the strategy better. As far as the IT billing is concerned, I just wanted to get your sense on how much longer do you think the slowdown is likely to last? And given that a material percentage of your billing -- recruitment billing comes from the fourth quarter, is there a real risk that the billing trends in that quarter might reflect some of the pain that the IT companies are facing and perhaps some of that has not yet manifested in your numbers. Is that a sense you are getting? Or am I just reading the situation very wrongly?
Genuine answer is we don't know when IT is going to recover. As of now, we are not seeing any recovery on the ground. So things are like they were 3 months ago. There's not much has changed over the last 3 months. Anecdotally, what we can -- all I can tell you is that a lot of companies are going slow. They perhaps overhired last year, and they are slowly getting rid of the additional head count on their roles. Now once they get rid of the additional headcount, and a lot of them are actually postponing campus hiring, they're not going to campus to hire this year. So they're not going to build a bench. Now once they get rid of the extra headcount and if demand comes back, then of course, IT hiring will come back, and it may come back with a bang who knows. But when will that happen is hard for us to say, right? Now from our standpoint, you're right, Q4 is our biggest quarter. But things have started slowing down by Q4 last year. Right? So it's not as if we had a fantastic Q4 last year. We saw growth in Q4 last year, but it was tepid compared to the growth we saw in Q1, Q2 and Q3. So the base is high. .
And -- but things that had already started slowing down a little bit by Q4 of last year. So the base effect will not be as pronounced as it was perhaps in the first and second quarter of this year. But -- like I said, we don't know. I mean how this is going to pan out, time will tell. In the past, of course, we've seen recovery -- slowdowns were seldom last year for more than 4 quarters. And business bounced back spectacularly after every slowdown. But each time is different. I don't know what is going to happen this time around. Hard for us to say.
Thank you so much for the elaborate explanation.
Thank you, Vivek. And the next question is from Nikhil.
Hitesh, my first question is on recruitment business only, basically what Vivek asked, just continuing that. Basically, you delivered positive revenue growth on Y-o-Y basis and that happened despite of we are seeing at least top 10 IT companies reporting headcount decline similar to last quarter. And even JobSpeak is like down about 8% to 9% on Y-o-Y. So what I want to understand is, is there some element of, let's say, even on Q-on-Q basis, IT headwinds are a bit relatively lower or maybe non-IT is delivering much more better than, let's say, last quarter's growth.
So non-IT, like I said, certain sectors continue to sort of hire aggressively. And we can see that. I mean so our IT markets hit a lot more than our non-IT markets. Sectors like banking, financial services, insurance, travel, tourism, hospitality, construction, deals, et cetera, they continue to sort of hire a lot of people. So that's the good news. And on the IT side also, we are what we are sensing -- what we are seeing on our platform is that salaries have gone up. So the kind of people which are being hired through the platform, perhaps their salary level is about 10% or 15% higher than what it was last year, right? Maybe there's a lot less entry level hiring happening, but there is a little more experience happening. We haven't gone into the details. But -- so there's some more -- so while volumes have actually gone down a little more because that's what you're perhaps seeing in JobSpeak, salary levels have gone up. So that still helps us realize more value from our customers when we negotiate with them. But it's not as if we are seeing any major sort of recovery on the ground on IT area yet.
Sure. Second thing, again, what we are seeing on IT services company, what you mentioned also that initially, they hired or maybe overhired. There as well utilization has started to increase, right? And the headcount count, you must all aware that it has declined quite a bit. And what even Chintan mentioned during a CNBC interview that we expect second half to be better than first half, and even some benefit from the base effect as well. So is it fair to say, let's say, not recovery, but at least attrition backfilling part can start maybe a quarter or two. Is it what you see?
Attrition rate starts going up at IT companies, that is a good sign for us for our business. So attrition rates have corrected significantly from 20%, 22% or whatever they were last year same time, now they're down to 13% or 12%, 13% levels for many companies. A lot of companies are not replacing the people who are leaving.
So because they are over hired, like I said, many are postponing campus hiring. So if for some reason, the market comes back and they haven't hired from campus, and they will be forced on lateral hiring. So -- now I don't know, see, we work with a few thousand companies in the IT space and big and small, all types. But in some clients, we managed to still get upgrades. So it's not as if all the companies are badly hit. It's not as if every IT company is struggling. Some companies have actually paid us a lot more than what they paid us last year at renewal time. But overall, the mood is what it is.
And is -- I don't know whether it will take them 3 months to get ahead of the bench or another 6 months to get ahead of the bench. It will depend on what policies they adopt. You're right. Once they get rid of the bench and once they sort of -- then there will be a force to backfill, they will be at least forced to people -- replace the people who start leaving. And if the market starts to look up, then attrition rates will also go up. And if they haven't hired from campus, then they'll be forced to hire just in time, which is good for our business.
Hitesh, just last one from my side. Last time, you mentioned about how the July went lower than expected. Any comment on how October shaped up, how was the last month basically from Q1 for the quarter 3?
I would not read too much into October for the simple reason that what happens in October, November depends a lot on when Diwali is? And this year, Diwali is a little delayed.
Vivek is again there, so Vivek, you have a follow-up question? Go ahead and ask your question.
Anand, maybe you can let other people in -- I can come back later also, no problem. But since you gave me the chance, I wanted to double-click on the Naukri India billing trend versus the overall recruitment trend. So it, did I hear it correctly that the Naukri India billing was INR 387.2 crore this quarter?
Just 1 second here. Naukri India billing for the quarter? It was INR 370.6 crores?
Yes. That's correct, INR 370.6 crores.
Okay. So Naukri India has done better than overall recruitment. Okay. Got it. So I just wanted to understand...
That's not true. Naukri India, did I say that?
So last year, it was INR 356.2 crores billing, right? .
Vivek you need to add. Vivek, I'll speak to you offline, it includes Iimjobs also now, so the business is not consolidated.
I see Okay. Okay. Yes, that's the clarification I needed. I'll circle back with you offline.
So the next question is from Srinath V. from Bellwether Capital.
I'm just out so may have some disturbance. So I wanted to understand in the JobSpeak index, there's a particular segment called recruiters, and that number has come off significantly almost going back to COVID lows, is that a data anomaly? Or are we seeing third-party recruiters significantly come off their services because they may be the variable parts for IT hiring in that sense. So any views on why that number has come off significantly?
Yes. So if you're referring to recruitment firms, see recruitment firms are the ones who were hit first, when there is a slowdown. So it's very likely that business from a job posted by recruitment firm and business from recruitment firm is down a lot because of what we're seeing in IT. A lot of these recruitment firms are actually hired by IT companies, as you know.
Got it. Got it. So it's a real reading that recruitment firms are down 70% -- 60%, 70% in terms of business acquisition?
We'll have to look at the exact numbers and confirm to you. But if the report says recruitment firms then yes.
Sanjeev, I just wanted to have some understanding from you, the listed technology companies have been -- the consumer neotech companies have pivoted towards profitability and there's been a significant improvement in contribution margin across the board. How does this change the whole unlisted space where we largely operate in? Are you seeing a cultural shift in promoters towards unit economics and ability to...
That's been going on for a year now where maybe exactly more than a year where everybody has been told by the investors and they realize themselves that, listen, the party is over. You want to move to profit. And if you can't, you are in trouble, unless you're very well funded and have a lot of money in the bank, in which case, you just postpone the trouble.
You ultimately have to get a profit.
And is this trend happening across even in companies which are, say, in the seventh, eighth year of their journey, while what we see is in the more 10-plus year of their journey...
Everybody is conscious of the fact that money is less likely to be as easily available as it was earlier. Therefore, we've got to manage what you have. And maybe you can raise some -- but you're going to raise some on the back of very good performance.
Got it. And I would wanted to also understand opportunities in DeepTech. You had mentioned in an earlier call that you were running some pilots and especially with generative AI coming in, so on and so forth. And this being a kind of large opportunity where we...
Are you talking about pilots within the company that [indiscernible].
No, no. You have spoken about making investments in the DeepTech space.
Yes, yes. So we have -- we keep on evaluating companies, and we've got a separate fund, which is for DeepTech AI in techish kind of investments. and we invest from there. But the truth also is in our other fund, almost every company now has a flavor of AI. So I know there's a bit of AI going on everywhere.
But as such, do you think India or the founders that you are meeting have kind of the ability or the product range to start a company where you basically are multinationals from day 1, you are having -- unlike the -- most of the more mature companies, again, in the digital space are very India-centric but could this be a much more global kind of a space in DeepTech?
So in theory, yes, in actual practice, getting revenue and business in customers from overseas is not easy, especially from the developed markets of Europe and U.S. So that's not easy. So many people try, but it takes a long, long time to succeed to get business. So I always believe that it's useful to have a home base where you have a home market and that's large enough to sustain you. And then you can foray overseas, if you wish.
The next question is from [ Abhishek Varadi ] from ICIC Securities.
Abhishek go ahead and ask your question?
My first question is with regards to 99acres. The reduction in losses seems to have been actually higher than the improvement in revenue on a quarter-to-quarter basis. So what exactly is happening there? Are we really looking at, say, breakeven here in the next 2 to 3 quarters?
So see the business has been executing well for the last 5, 7 quarters now. The market has also been very supportive. We have managed to keep our costs in control, and we have managed to up our revenue significantly over last year. We are working on a lot of interesting new initiatives. Now at the same time, the space is hot, there's a lot of competition. It's not a dominant player. 99Acres is not a down in player like Naukri is as yet. So we don't have a target to breakeven inside the company.
But we are basically just doing what we think makes sense. We are focused on executing in -- we've identified 5, 6 areas where we think there is scope to execute better, and that's what the team is focusing on right now. If we actually start feeling that we are doing well, and there is a lot of potential in the market, then we would actually like to spend more money in this space to gain share. But we're going step by step and let's see what happens. So there's no target to breakeven. But if we continue to do well and the market is supportive, then we would actually want to invest a little more in this vertical going forward.
Understood. But that investment might not necessarily be at the cost of an EBITDA breakeven, right? You could be at the margin of breakeven and then push incremental investments into growth.
Yes. It will depend on whether we're able to get top line growth as well. So if you are able to grow our top line by, let's say, 25%, 30% going forward also, then there's a very high probability that we might sort of do well in the second half. But that's going to be a function of our top line growth more than anything else. We are very clear that we have to make certain investments, and we don't want to slow down on that front, we don't want to cut corners there.
And if market continues to be supportive and if our sales execution continues to be like it's been for the last few quarters, and we are able to get to 25%, 27% growth, then we should broadly be okay.
Understood. Understood. In terms of the consolidated numbers, the employee expenses have gone down on a Y-o-Y basis. What would be the reason for that? I mean the stand-alone has gone up, but overall, the employee expenses have gone down.
Last year, it included 4B numbers also. This year, it did not because it will be fully impaired.
Okay. Just that, right?
And in terms of the portfolio companies that we have right now, any update on any 1 or 2 companies which you could call out, which you are seeing right at an inflection point as of now?
No, [indiscernible] ask you to measure. We continue to work with companies, and they progress by and while. There's nothing that's really breaking out and becoming a rocket ship suddenly.
The next question is from Vijit Jain from Citi.
My question is on the recruitment business. Have GCC hiring trends been more steady through this calendar year versus last year? And if you could give a broad sense of what GCC's or global capability centers of global companies, their share is in your overall recruitment business, a broad sense there would be helpful. And overall, how do you see that? Does the divergence continue? Do they continue to be steady if they are, in fact, steady?
See, while we work with a lot of GCCs, our sense of the GCC space right now is -- and we've only started recently deep diving into this data. The bigger GCCs are also impacted. So there are all kinds of GCCs in this country. There are GCC employed 25 people, and there are others which employ 25,000. So the bigger once have also been impacted by this slowdown to some extent. On the whole, GCCs are perhaps less impacted than Indian IT services companies. And maybe the smaller GCCs are not at all impacted because they are still growing. The bigger ones are impacting more than the smaller ones. .
What -- how big are they as far as our business goes, maybe they are -- I don't have the exact numbers, we need to do a better job of our categorizations internally. But I suspect they may not be more than maybe -- I mean, I don't have the exact number. I don't want to sort of having a guess, but maybe in the 15%, 20% of all IT hiring right now. But we'll have to get back to you with the exact numbers. But for that, we need to do a better job of categorizing them internally. I'm just giving you a sense of what I think is.
No, that's helpful, Hitesh. That was my question.
The next question is from Pankaj from Renaissance investment.
My question, Sanjeev, in both 99acres and Jeevansathi, we've been active in terms of investing now for quite some time. Clearly, meaning there is competitive intensity in the market place unlike and as I think Hitesh revealed in the previous question, we don't have dominance there versus what we have with Naukri, and which is obviously delaying the path to profitability and probably some of these competitors have learned their lessons, right? Meaning last time, TimesJob probably did not do as great the job in execution, but they've learned the lesson. They are resourceful -- so how does this whole all play out, meaning -- and how does one think about both these investments? I understand that you will keep executing. And -- but if none of the players is on relent, then meaning how does this whole shape up from a business perspective in terms of cash flows, profitability for all the players for that matter.
You want to know about 99acres and Jeevansathi, right?
No, that's right.
So I think Hitesh is best suited to answer that. Hitesh, do you want to take that?
I guess the question is not -- is about -- if I understood it correctly, what you're saying is, these are 2-3 payer markets and the players have all learned and they may not -- they are also executing as well as we are executing. And therefore, how will it all end, right? I mean is that who will any one player get to a dominant position?
Yes, which looks unlikely. So -- and we've been investing in these businesses for now quite some time. So how does one think about these businesses now?
Yes. So firstly, I think we must differentiate between the 2 verticals. In Jeevansathi, we are actually the #3 player. And while in the real estate business, we think we are the #1 player. So while we may not be dominant, we are a leader and which is not the case in Matrimony.
In matrimony, we are the #3 player. We may be the #2 player in the Hindi belt and so on and in some communities. But overall, we are #3 player. We are at 1/4 the size, actually not even 1/4, we are today, in terms of revenue, 1/6 the size of the #1 player, maybe 1/5 the size of the #2 player. So we are tiny in the grand things. There, what we try to do was to disrupt the model. We tried multiple things over the last few years. But every time we did something different, competition was able to catch up within a year or two.
So last time around, we changed the model, we went premium with chat being free. And again, let's see what happens. Now we are trying to cut burn and get to breakeven; whether we get there in 6 months or 12, time will tell. So that's a very different situation. And -- but the goal there is to also try and get to breakeven or at least reduce the burn significantly over the next 6 to 12 months in Jeevansathi and also try and get the revenue to grow because we went premium and that resulted in a different revenue, but now we're trying to get our revenue to grow again.
we have actually gained traffic share in the last 4 quarters because we went premium. So we are a strong player in the segments we operate. We don't operate in the entire country, but where we operate, we are a strong player.
How will it all end? In Matrimony, hard to say; it will all depend -- if you are able to get consolidation to happen, then of course, the economics of the category will change. On the other hand, if it continues to be a small 3-player market, and it continues to grow at the pace that it is growing, which is not at a very high pace, it's growing at 10% year-on-year as a category, then it's not going to be easy for anybody.
Real estate is a very different ball game. One, we are a leader, number one. Number two, the market is growing -- has started growing rapidly. It was down in the dumps for 7, 8 years because of various things which happen to real estate. But after a long time, real restate has bounced back. And it's a large market. It's a much larger category than matrimony. Our real competition in real estate is actually not the other portals. It's actually players like Facebook and Google who have a large chunk of the real estate advertising spend. So if we get our products right, if we are able to execute well, we can actually -- one, on the one, on hand, digital will take share away from off-line and two, within digital, we can take share away from Facebook and Google if we execute well.
So it's a much bigger opportunity. It's a category in which we are a leader. The last 7, 8 were very bad. But despite that, all the players grew -- so I think the real game in real estate is going to be over the next 2, 3 years, when -- so if the market were to double, for example, over the next 3 years. And if some of -- 1 of these players were to get their act together and move ahead, then the game gets changed. So it's not a stalemate as yet. It's still wide open and the team which executes well could still sort of surprise others. At the very minimum, the category will grow handsomely over the next few years, unlike matrimony.
So then you think -- are you saying that real estate now probably we should be on a path to breakeven in profitability with respect to the market share?
Like I said, see earlier on the call, see, we don't have a breakeven target. We have a few ideas we're working on. We are trying to execute a lot better than we were executing earlier. For the last 5, 7 quarters, the market has been supportive and we've grown well. We managed to keep our costs under control. We would not want to lose share in this market. And if that requires us to invest more in the short term, we are prepared to do that. We have a few interesting ideas. But the key is going to be the quality of the execution more than anything else. So if you are able to execute well and the market continues to grow rapidly, we may breakeven also, who knows. Let's see what happens.
But to some extent, also in that, it may depend on competitive behavior obviously.
So if everybody behaves rationally, then it's easier. But if you get a lot of -- if competitive activity actually flares up, then, of course, we'll also be forced to respond.
And that's what the point is that -- and as much as we are going to relent, I think the competition is also unwilling to relent. So then meaning that's what we have seen, right, over so many years. At the same size and scale of revenue, Naukri was far more profitable than where we are in real estate. So I understand...
[indiscernible] kind of monthly leading share, traffic share that Naukri had at that time, and it continues to have -- so it's about market share also.
Maybe okay, so let me put it other way around. If 1 or 2 step back, meaning which is -- from a business perspective, which is the nonlinear growth opportunity in our form of business point of view across our strategic businesses or strategic investments? Where is the nonlinear growth opportunity for a company like us?
Yes, I don't think we have anything in our portfolio, which can grow 100% year-on-year. We are not -- but can we -- once the recruitment market bounces back, once IT hiring comes back, and we -- and the Indian economy starts growing at 6%, 6.5%, can we aim to grow Naukri at more than 20% year-on-year. We can certainly aspire to do that.
If the market in 99acres remains reasonably good and if you execute well, can we aspire to grow 99acres at more than 25% per annum? We should attempt to do that. Jeevansathi, we had gone premium. Now we are trying to sort of monetize a little better. Can we aim to grow that business at 20%, 25% year-on-year? We can aspire to do that; whether it will be successful or not, time will tell. Right?
So I don't think we have anything in our portfolio that is going to grow 100% year-on-year. But can we aim to, once the markets will become a little normal, get back to, as a company, 20% plus revenue growth, I think we should try to do that. That's the [ range it offer ]. I mean there's nothing -- the smaller -- we have a lot of tiny businesses in the company, which we have seeded over the last few years which can grow at 500% but as I said, they tiny yet, so they do not really move the needle on the -- on our INR 2,500 crore topline.
The next question is from Aditya from UBS.
Just a very quick question from my side. Just wanted to hear your thoughts on your stake in Zomato and Policy Bazaar. I mean, you said in the past that you have no plans to monetize as of now, but just wanted to understand your thought process on how you look at it. Do you think there's more value to be unlocked or what would you consider a trigger to kind of start thinking about trimming the stake there? Is it maybe some kind of consolidation opportunities in 99 -- in real estate or in matrimony? Or do you think that you just need to hold on to a kind of unlock some more value in these stakes? Thank you.
Sanjeev, you are on mute.
No. So the question is, when do you think we will be willing to trim some stake in Zomato and Policy Bazaar. As of now, our thinking is that if we don't need the money, and there's growth left in these 2 companies, we should hold on. So there's not an answer to your main thing. But obviously, this is -- it comes up every quarter in board meetings just as an update. But as of now, there are no plans.
Just to follow up. I know you mentioned that consolidation is probably the end game in some of these sectors. Are you seeing any signs or indication that, that could happen kind of sooner than later? Or it's still kind of uncertain as of now?
You're talking about real estate?
Real estate and matrimony.
Hitesh, do you want to answer that?
So real estate, like I said, see, the market has come back after many years. And I think everybody is going to take a shot at it for some time. Matrimony is a little more mature as a category and players have been added for a while. And as a category, the category is not taking a lot of money. So there's a higher probability of some consolidation in matrimony than in real estate in the short term, at least. But with these things, you never know, so you can never predict what's going to happen.
Thanks, Aditya. Vivek is back with the follow-up question.
So Sanjeev, it appears that the public market investors are getting interested in Internet companies again with the share prices of Zomato, Policy Bazaar and even Mamaearth at getting listed. Do you see any of your financial investees, especially names like Bijnis, Shipsy or Shopkirana getting ready for a listing, say, in the medium term? So that's the first question.
Second one is for Hitesh on recruitment margins. So in the first half, despite revenue growth being only around 12% the PBT margins have expanded. And this is quite -- at odds with your historic commentary that margins go down if revenue growth is less than 15%. And this year, you've also added branches. So just wanted to understand, is there any change in the new business investments? I remember you mentioned last time INR 20 crores, INR 25 crores per quarter being spent on projects that don't generate any revenue like JobHai and AmbitionBox?
Yes, Sanjeev, you want to answer.
Yes. First thing, look, is it possible that somebody can go public in 3 to 4 years? Answer is yes. But how likely is it, I don't know because it's still early days yet. Now we are talking about -- we encourage companies to go public after -- and especially in this environment after they're profitable, after achieving a certain scale and they still have enough growth left in them. So these companies, the names you mentioned are not yet profitable. And they're not at the size or scale when they go public. Can they get there in 3-4 years? Maybe, but maybe not. We will have to wait and watch.
See, you're right. We continue to invest INR 20 crores, INR 25 crores a quarter in some of these verticals, JobHai, AmbitionBox, Bigshyft, et cetera. And most of them are free revenue or we don't actually expect to monetize them in the short term, at least. Why have our margins gotten a little better? It's just that like some of our competitors -- some of our clients, we also perhaps -- we had over hired last year because attrition rates for us were also very high and we also went all out to acquire talent at that time. And so we have gone a little slow on hiring this year in Info Edge.
Okay. That's useful. Just one last comment or another question from me on recruitment. There are still businesses where you don't hold 100% stake, which are strategic in nature, like Coding Ninjas. And then there are a couple of them, which -- where you have 100% shareholding like Zwayam and DoSelect. So previously, you had consolidated Iimjobs and Hirist. Is there any plan to maybe integrate these two 100% owned companies into the stand-alone operations and get your salespeople to perhaps offer them to your clients. So that's one. And of course, if you could give us an update on where your thoughts are on Coding Ninjas? And how is that useful to your business? Is there any change that has happened in the last quarter or so?
So as far as DoSelect and Zwayam go, operationally, they have been integrated. Now from an accounting standpoint, for various reasons, we may still be reporting them separately but operationally, Naukri teams is fully involved, and they are working very closely with our -- both with our sales team and our engineering teams and our product teams. So that's done. As far as Coding Ninjas goes, of course, that's -- we are 51% shareholders. And but that company is run by the founding team. And there, we have started integrating the Naukri, integrating some products of Naukri, right?
And early days still, not much to report on that front. That is a startup and that company has long way to go and we would want the founding team to run that operation for a long time. The pilots with Naukri started. We have started seeding some content on Naukri, we're trying to get more leads of them through Naukri. Early days on that front, not much to report it.
The next question is from Bhavik Mehta from JPMorgan.
Hi, this is Ankur. First question from my side is on the sequential momentum you've seen in billings and recruitment, right? So could you elaborate, Hitesh, this trend? Is it specific only in the non-IT segment? Or did you also see IT begin to bottom out and sequentially grow? And how should we read that?
I will not reach too much in this 2%, 3%, whatever swing that you're seeing. See, IT hiring continues to be slow. And it's not easy to get upgrades to IT customers right now. And yes, in some cases, we've seen the upgrades as well. The situation on the ground continues to be like it was 3 months ago, not much to report on that front. Non-IT hiring continues to be reasonably solid. And it's, of course, not as hard as it was during the period of the [ great resonation ] and so on. But continues to be solid at least in some sectors. Could -- have things bottomed out, I hope they have, but we will know only after a couple of months.
Okay. Understood. In terms of the pricing, Hitesh, I mean, obviously, you guys have taken some price increases, including because of adding switch functionality over the last 2 or 3 years. In customer conversation on an average, is that something that comes up that people ask for pricing discounts as opposed to bringing volumes down from a consumption perspective?
Actually, pricing, we've managed to -- so basically, what's happening is attrition rates have gone down, company -- I think companies are hiring a lot less than they were hiring earlier. They are not using the platform as much as they were using 1 year ago. Volumes have shrunk considerably. And that's really -- and therefore, we are sort of -- many of them are downgrading. That's -- and the same is happening with the recruitment firms because a lot of these recruitment firms are higher-quality companies. Pricing is not such a big challenge right now. It's just that demand has taken a big hit.
So when you say they are downgrading, they are reducing the number of...
So I think by the number of CVs they view, the number of e-mails they send...
Okay. And in terms of just kind of trying to understand when you do see a beginning of a recovery, what would be the sign of that from your perspective? You -- I mean, obviously, you're in billing, but within the billing side, will you start seeing more short duration activity first? I mean just looking at previous cycles, or would you start seeing people looking for longer duration, accessing more seats? I mean generally, what would be the type of sign if you look for, number one?
Actually, even before billing, we'll see usage go up on the platform, right? And we track usage. So we'll see more jobs being posted. We will see more CVs being viewed by companies, we will see. So I mean, if that starts to happen, then we know that activity is being -- I mean -- because it's an annual subscription, the company may renew 1 year later, 6 months later, et cetera, But if users start to go up, then that's a very good sign.
The JobSpeak index would indicate on that actually, that is on job-listing activity.
Okay. So we keep tracking that. Okay. Helpful. And a question is on the cost side as well. I mean given the challenges and given a lot of global tech companies are also taking [ very seriously ], they think about how to drive efficiency within the platforms. How are you thinking about that? I know you mentioned attrition is going up and you're sort of looking at that as well. So both maybe from a technology cost perspective, labor cost and AMP costs?
So how are we looking at our costs?
Yes, your cost base and how you're thinking -- are you rethinking of the investments you made in the last 2 or 3 years, if this remains slow, let's say, for the next 12 to 18 months?
Well, there are some areas where we would not want to sort of cut corners. So for example, we continue to invest very aggressively in our machine learning and AI capabilities across the company, okay? So that's not something we want to cut down on -- like I mentioned earlier, we are seeing opportunities in non-IT. So we want to expand the number of offices, hire some more sales people both in Naukri and 99acres. So we would not want to sort of -- unless demand slows down further, we will not want to sort of compromise on that.
In other areas, perhaps we can get a little bit more efficient. So -- but it's not -- we're not looking to lay off people. We think -- so we also have some attrition. What we will not do is where we have some extra people, we will not backfill and we'll also go slow on campus hiring over the next -- for the next few months in areas like engineering and QA. We continue to invest in some of our newer verticals like JobHai. They require investment. We are actually hiring as we speak in JobHai.
So some of these long-term investments, which are more strategic in nature, we'll sort of not want to cut counters on. Where there is scope for more efficiencies and where we think we can get higher productivity by using some -- by organizing ourselves better or by focusing ourselves a little more on what matters in the short term and by making our people more productive, there we will do whatever we can without laying off people.
Understood. Quick question on real estate. How is the incremental competitive intensity moving, especially with respect to housing?
So it's a competitive market. Everybody sees a big opportunity in the medium term in real estate. It's come back after a long time. Everybody is trying, we are also trying. But I think if you ask me, I think it's a little more rational than it was last year. But you never know how things are going to play out going forward. I mean some of these things can change [indiscernible]
Thanks, Ankur. Just small thing, system showed your name as Bhavik Mehta just to mention that. Yes.
And Hitesh, that is the last question we had.
Great. Thanks, everyone. With this, we conclude the call.
Sorry to interrupt.
I think Nitin Jain has a question, maybe can take this last one.
Nitin. Go ahead and ask your question. .
So just 2 quick questions. So in terms of the Naukri portal, I just wanted to understand what new developments or functionalities or new features we have introduced on the portal in, say, the last 2 quarters or so or are you planning to make? And the other question is, given the good amount of cash that we have on the balance sheet, and the cash that we are generating every quarter, can we expect any meaningful change in the payout ratio going forward?
See, features on Naukri, there's a lot of stuff which we do at the back end, which you would not get to see. Like I said, we've been investing very aggressively in our machine learning capabilities. We've been working on our recommendation engines. We've been working on our search. We've introduced some branding products on the platform.
So we had a lot of changes to the app. We are working on our content. We've done some integrations with Coding Ninja. So there's a bunch of whole a lot of things we've done and we are trying to now working on integrating First Naukri with Naukri. We are -- we've been working on JobHai a lot. I mean, that platform is growing very rapidly. We have integrated AmbitionBox very deeply with Naukri over the last year or so.
So I mean, a bunch of them, we can take this offline. I can take you through what we are doing and what we are planning, Similarly, we've been working on Iimjobs and Hirist as well. So yes, I mean, we have a 300 strong team or maybe even more in Naukri, which is constantly and they have long product pipeline, and there is something which goes live every week or maybe a few things go live every week on Naukri.
Okay. And on the payout ratio?
Chintan, you want to take?
Sorry. What is the question? Can you just repeat that?
No. So it's basically -- we have a good amount of cash on the balance sheet and the business is also generating significant amounts of cash every quarter. So going forward, can we expect any meaningful change in the payout ratio?
Yes. Well, today, we declared our INR 10 dividend, interim dividend, which is in line with what we had done in [indiscernible] last year. But it's a constant discussion on the Board about what the cash requirements are and what should we do for the long term -- we also look at what the current cash position that we have, compare it against what the deferred revenue we have, which is almost like an advance received from customers. We also look at the next 12 to 18 months type of expenses. If something like pandemic type of situation -- like an event happens. So we take all that into consideration, and we look at what cash position we have.
As such the dividend policy that we have is like 15% to 40% of adjusted back, and that's what we follow as of now. but the policy also has certain -- but possibility is that in certain situations, we can do some special dividend. So we're looking to it on a quarter-to-quarter basis.
I think that was the last question. Thank you, everyone. With this, we conclude this conference. Thank you, and wishing you all a very happy Diwali. You may disconnect your lines now.
Thank you, everyone and a very happy Diwali to all of you.
Thank you so much, everyone. Happy Diwali to all of you.