Ladies and gentlemen, good day, and welcome to the Just Dial Limited Q1 FY 2025 earnings call. At this moment, all participants are in the listen-only mode. Later, we will conduct a question and answer session. At that time, you may click on the Raise Hand icon to ask a live question. Please note that this conference is being recorded. We are joined by Mr. V.S.S. Mani, MD and CEO, and Mr. Abhishek Bansal, CFO from the management of Just Dial Limited. I now hand the conference over to Mr. Abhishek Bansal, CFO, Just Dial Limited. Thank you, and over to you.
Thank you, moderator. Hi, everyone. Welcome to Just Dial's earnings call for first quarter of fiscal '25. Our operating revenue for the quarter stood at INR 280.6 crore, witnessing 13.6% year-over-year growth and 3.8% on sequential basis. In terms of margins, we had a very healthy 28.7% EBITDA margin for the quarter, which represented 260 basis point sequential improvement and about 13.9 percentage points on year-over-year basis. Absolute EBITDA at INR 80.6 crore, more than doubled year-over-year, and grew 14.7 on sequential basis. Our total employee headcount now stands at about 13,112 employees, with a 2.2% sequential increase.
Overall, in last few quarters, we have focused on improving employee productivity across both sales and non-sales functions, which has helped us reduce our employee expenses by 5.3% on year-on-year basis, from about INR 183 crore in June quarter last year to INR 173 crore this quarter. Our other expenses continue to be tightly controlled, with about 2.5% year-on-year decline, led by optimization in our communication expenses. Advertising spend stood at about INR 5.8 crore for the quarter. Overall, benefits of operating leverage, which inherently exists in our business, coupled with cost controls, has helped in sequential margin improvement for now last several quarters. Operating PBT stood at INR 67 crore, growing 171.4% year-on-year. Since last year same time, margins were relatively suppressed and were recovering. Notably, operating PBT grew 19.6% on even sequential basis.
Other income stood at a normalized level of INR 86.9 crores for the quarter. There can be some fluctuations quarter-wise, basis how bond yields move in that respective quarter. But broadly, our treasury's embedded yield to maturity is around 7.2%. Profit before taxes stood at INR 153.9 crores, growing 45% year-on-year. Effective tax rate stood at 8.2%, which is lower in this fiscal due to reversal of deferred tax on part of our treasury, which is moving from short-term to long-term bucket in fiscal 2025. So about INR 2,900 crores is completing 3-year+ holding period in FY 2025, which is resulting in this reversal. Profit after taxes stood at INR 141.2 crores, growing 69.3% year-on-year. Deferred revenue stood at about INR 500 crores, growing 11.1% year-on-year.
Active paid campaigns at the end of the quarter stood at 591,600-odd, which was up about 8% year-on-year. Average realizations have grown about 5.7% on year-on-year basis. Overall, cash and investments stand at about INR 4,755 crores as on quarter end, growing 14.3% year-on-year. Coming to traffic trends, traffic trends have been quite healthy. We had about 10 million unique users addition during the quarter, resulting in overall 181.3 million quarterly unique visitors. Even for current ongoing quarter as well, traffic growth is holding up well so far, though it usually tends to moderate a bit post stronger summer months, so that's an encouraging trend overall. Total listings now stand at 44.9 million, growing 18%+ year-on-year.
Overall, as we look at the quarter, it was a very healthy quarter with top line growth, coupled with good margins. Our productivity enhancement initiatives have been helping us massively. Traffic is now 180 million plus users, so as we have been highlighting, for some time now, focus continues to be on core business, delivering steady growth in both top line as well as bottom line. With this, brief update, we shall now open the floor for questions and other discussion. Thank you.
Thank you very much. We will now begin the question and answer session. To ask a question, please click on the Raise Hand icon available on the toolbar, or you may click on Q&A icon to raise hand. The operator will announce your name when it is your turn to ask a question. Please accept the prompt on your screen and unmute your microphone while proceeding with your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from Vivekanand Subbaraman from Ambit Private Limited. Please go ahead.
Hello. Thank you so much for the opportunity. Couple of questions. So first of all, can you talk to us about the revenue and campaign split in top eleven cities versus rest of India? That's one. Secondly, I see that the collections growth trajectory has been moderating for the last several quarters. Abhishek, any thoughts here on why collections growth was only 5.4% year-on-year this quarter? And how to think about collections growth in subsequent periods. Do you also maintain a split of collections across top eleven and non-top eleven? If that is the case, then do give some thoughts there as well. Thank you.
Hi, Vivek. On your first query around the revenue and campaign split. Tier 1 cities, the top 11, contributed about 58% to our revenues and about 40% to campaigns. This split has not materially changed compared to last quarter, so that's the revenue and campaign split. Coming to your query around collections. You are right that this particular quarter, couple of things. One, our April, May months were bit slower, which is what led to some impact on collections. It partly also had some bit of impact due to prolonged elections period that we had. But the good part is that June month has seen very strong recovery. June collections were about INR 97-INR 98 crore for the month alone.
So that, if you look at on a quarterly basis, comes to about, whatever, INR 290-295 crores odd. So overall, the way we look at it is that collections should be looked at, overall, 3-4 quarter trend. There can be certain quarterly fluctuations. So I think with the sequential recovery that we have seen in, recent months, and how traffic trends are shaping up, which is, sequentially, 10 million user addition, ultimately, traffic tends to lead our monetization. So with that, I think collections should also catch up. And, as we are seeing, deferred anyway, has about 11%+ growth. So I'm not that worried about just one quarter, specific collection growth numbers. It should be looked at a more, relatively longer period.
Okay, understood. And Abhishek, extending this point a bit further, top 11 versus rest of the country. Even now, your top 11, rather, markets other than the top 11 cities, they are growing at a much faster pace than top 11 markets. Is that trend visible in collections also, the divergence in revenue growth that you see right now between top 11 and rest of India? Is that trend similar in collections also, or is there any sort of convergence? And, second related point, you have been highlighting that the campaign realizations in rest of India should catch up to top 11 realizations, and it's now almost at around 50%, right? So will this number go up even further in the quarters to come? Thank you.
So, Vivek, what we accrue as revenue in this quarter is largely coming from what we collected from our customers in past few quarters, right? So ultimately, my revenue trends are a reflection of what my collection trends in the past have been. So the way our particular campaigns and revenue split is, it would be something similar for collections as well. Just that due to time lag between accrual and collecting money, there could be minor variations. Coming to your query on non-top eleven realizations as percentage of top eleven. So the good part is, yes, they are now at about 48-49% of my Tier 1 realizations. And this number, just one year ago, was 45%. And if I go two, three years back, it was just 40-42%.
So Tier 2, Tier 3 cities, as I have mentioned that even now, I am only at about 1,100 odd INR per campaign per month, which is, very cheap. And even in Tier 1, my realizations, I'd say 2,000-2,300 INR a month. We do think that, definitely, Tier 2, Tier 3 can, over long run, catch up with Tier 1. And Tier 1, obviously, should grow at basis how traffic trends will pan out in those geographies.
Okay, understood. Thank you, and all the best.
Thank you.
Thank you. We have our next question from Priyank Chheda, from Vallum Capital. Please go ahead.
Hello. Hi, Abhishek. Just a question. I just have one question, with very broader thoughts, if you can answer: What would be the board of directors' thought process when it comes to, A, utilization of cash on the balance sheet, which is, you know, diluting the return ratios? Now, it has been more than 10, 15 quarters, minority shareholders keep asking you on this call for a better utilization of this huge cash pile that we have, right? B, apart from the cash pile that we have generated organically, the promoters did infuse INR 2,000 crore, during 2021, which also remains unutilized. So any thought process, what was the broader thoughts while infusing this cash capital, and what has not played out?
Given the annuity model, what should we think when it comes to redeployment or reinvestment of this INR 250 crore cash flow that we are generating every year? So, the broader three aspects, which is first, on the cash that we have organically generated, the utilization of that, the promoter infusion, utilization of that, and the reinvestment of the forward cash flows that we would be done doing it. Thank you.
So, Priyank, I, so your query is primarily on deployment and distribution of existing cash. So as you rightly mentioned, so we are in a situation where we have about INR 4,750 crores cash on our books, and the core business itself is in a healthy state to generate another, including our treasury gain, say INR 500-550 or even higher profits on a year-on-year basis. So at this point of time, we are having internal discussions on possibly having a healthy dividend policy. We are already discussing internally, along with the board as well. So as soon as we have crystallized our capital distribution policy, we would adequately communicate.
Our endeavor would be that at least 100% of the annual profits should be sort of distributed or even higher amount in a manner which is tax efficient for all shareholders combined.
Perfect. And the second question is again, to the follow-up on the previous participant on the pricing part. You did mention Tier 2 is yet to catch up. Now, any thoughts on what has been the pricing mix growth within the tier plans that in the top 11 cities, top 11 towns? And what should be the optimal price structure that we should think on a blended basis, of course, not on Tier 1 and Tier 2 on a separate, but on a blended basis, what should be the steady state pricing structure that we should think in the near term or maybe in a year or two, that Just Dial would be operating at? Thank you.
See, so my currently monthly revenue per campaign on a blended basis is about 1,580 rupees per campaign per month. So as I've stated in the past as well, this particular price point is very much similar to a healthy Wi-Fi connection that any particular business owner would possibly take to run their particular business. So from that perspective, I find that this particular amount is very affordable. So I don't think so we would be able to define any particular, specific, level of pricing, which would be steady state. The high affordability helps us, to possibly be able to justify, a particular SME coming in at, various, entry-level price points. And in Tier 2, Tier 3, there also it is just 1,100 rupees, a month, blended basis.
Definitely, it should keep going up to 1,500, 1,600 or even higher, ultimately coming closer to Tier 1 levels.
Got it. Got it.
In terms of around growth in Tier 2, Tier 3, pricing growth in Tier 2, Tier 3 obviously has been higher, so versus blended 5.7%, Tier 2, Tier 3 are at 10%+ year-on-year.
Yeah. Perfect. Perfect. And, if you can broadly elaborate on the new initiatives that which are the core focus ones. We have been into multiple new initiatives, be it Xperts or be it other B2B campaigns. Any, anything, any, any specific area which which we have been piloting and which we think requires now a clear, sharp attention, focus, which becomes also a growth driver? And broadly, if you can also elaborate on the integration benefits or maybe anything that with that we have to share on the business development part on the Jio side.
Sure. So firstly, coming to all our new initiatives, stroke core business growth initiatives. So we are very clear that ultimately what matters is healthy growth in free cash flows for the business, which will come via more value delivery to our particular SMEs as well as users. So two, three key areas where we are focusing on right now is, on the core business side, clearly is content enrichment, new features to sort of showcase that content. Just as an example, catalogs for service-oriented businesses. So two-thirds of our revenue comes from service-oriented categories. So for example, a wedding photographer, I want to be able to showcase that photographer's portfolios on my particular platform so that it aids the user's decision making. Second key focus is on SME side as well.
Now, on SME side, for me to be able to get that particular SME to pay a higher ticket size, one is quantity of leads, second is also quality of leads. So we are doing everything possible to be able to give them user-friendly tools so that they can manage their campaigns better. They can use their time well in managing the leads that they get through our platforms. And apart from this, to aid our sales team in monetization, we are working on several avenues to generate hot leads for them. So till some time back, we had a huge sales team which used to do cold calling in telesales.
Now, at this point of time, we have almost sort of eliminated that cold calling team. And the same team is now working on hot leads or data of those SMEs which have shown some interest to engage in our particular paid subscriptions. So these particular measures are the ones which are enabling us to operate in a cost-effective manner and grow our monetization as well. Coming to your query around integrations, so we are working closely with the Jio teams on especially on telecom services. So, for example, we have significant usage of messaging services to cater to both users as well as SMEs. So with Jio, we are already sort of having a good chunk of messaging services being routed via them. Then we are working for our internet connectivity related initiatives as well.
So overall, through their telecom services, that helps us a lot in much better service, dealing with one service provider instead of multiple, and even lower costs. And apart from that, wherever within the group, we can have opportunities of cross-selling, where either cross-selling directly or lead generation happens for our products or their products that are being worked upon.
Perfect. Thank you for answering all the questions. Thank you.
Thank you. We have our next question from Vijit Jain from Citi. Please go ahead.
Yeah, hi. Thank you. Can you hear me, Abhishek?
Yes, Vijit, go ahead.
Yeah, hi, Abhishek. Abhishek, a couple of questions. Just on your response to the previous question, and I know earlier in your commentary, you also mentioned that controlled communication costs were part of the lower YOY costs and other expenses. So is that the same thing, where you're talking about, you're partnering with Jio on telecom services? There are some efficiencies in services you're availing from them. Is that what it was alluding to? That is my first question.
Yes. So part of our communication costs have been brought down via, better, pricing that we have been able to engage with our, telecom service providers. So yes, part of the savings are due to, group-related, synergies as well.
Got it. Thanks, Abhishek. Could you give a sense of, you know, in the unique visitors growth number, which is about 6% YOY this year, and +7% again, QOQ, could you get a sense of what the traffic growth trend is in the top 11 cities versus outside those 11 cities?
So, Vijit, honestly, I don't have the growth number handy that way, but broadly, about 60-61% of the traffic comes in Tier 2, Tier 3 cities. About 40% of the traffic comes in Tier 1 cities.
Right.
I presume growth rates should not be that materially different in both.
Okay. Okay, thanks. And my next question is, you know, you've obviously kept the ad spend pretty reined in for some time now, materially lower than where it used to be earlier. Now, I know earlier it-- there used to be spends on, you know, TV ads and those kinds of things as well. I'm just wondering, are there areas, are there search words or, you know, other areas where you could probably spend on CPMs to kind of see good quality traffic coming to your platform? Or do you think, you know, traffic growth will not necessarily come from, you know, buying ads on Google or any other such platforms?
So, Vijit, as far as our advertising spends or traffic strategy is concerned, what we have found is that digital works best for us. Apart from traffic, buying traffic via, say, digital ads, a lot of work goes towards SEO as well.
Right.
So in last couple of years, one, content enrichment has helped us significantly. Second, optimization of the platform in terms of page speed, user experience, et cetera, that has helped us greatly to grow our traffic. So our current healthy levels of margins give us adequate cushions to advertise both to ramp up our advertising on digital front and even to do brand advertising. So we have recently-
Right
... been working on certain advertisements to cater to both users and merchants. So whatever advertising is needed, one, to grow our 180 million user base number, second, to assist our sales teams for their monetization, those will be adequately done.
Got it, Abhishek. Abhishek, I guess my question is, you know, I'm sure there are categories in micro markets, micro geographies, et cetera, where you probably can see that more of the traffic goes to, you know, not your website, but someone else. You know, do you, do you compete for that kind of traffic with, with these performance marketing initiatives? Is that what you're saying? Or do you think that all the content enrichment activity already gives you decent enough, traffic boost through SEO and stuff like that? Is that, is that interpretation right? I guess my question, broader question is, in the kind of traffic that you want, do you have a measure or a sense of whether you are, you know, losing some traffic to, websites which are perhaps paying for it?
Right. So actually, it's a very relevant question. Just to give you some flavor, see, two years back, the INR 5-6 crore or whatever crores that I was spending on a quarterly basis, the flavor of that is very different from what I have today, simply because in advertising, you can simply run a cost per click or cost per impression-based campaign. You will end up getting a lot of traffic, but how much of that traffic is adding value to your customers, no one knows. What we have done in last 4-6 quarters is, whatever spends that we are doing, those are highly optimized towards our top revenue-generating categories. At the same time, we do not insanely go after traffic to buy it at any cost.
If we find that my monetization is not adequate, then I don't obviously splurge on acquiring that traffic. So this 181 million user number, if I were running similar campaigns what I was running two years ago, would have been even 185, 190 plus as well. But consciously, it is our advertising spends are channelized towards more quality of traffic rather than quantity of traffic.
Got it. And so, in conjunction with that, one should expect... I know last time you mentioned that you believe growth over time should come from almost equally from both campaign growth and realization growth. So I suppose the quality of traffic improving should mean your realization growth should continue to improve, even if, you know, you start to get us a little bit more growth from the Tier 2, Tier 3 towns?
Right. So we do maintain internally, our endeavor is that half of the growth should come via volumes and half from pricing, because that particular balance is quite necessary. So ad campaigns are not specifically targeted that, okay, we want monetization growth to come from this aspect, because it's difficult to correlate one-on-one. I advertise, I optimize my SEO efforts, I get more traffic. Over time, people realize that they get better value for the money that they invest with us, and that makes them pay more, and that also makes more advertisers come to the platform.
Mm.
A combination of both volumes and pricing is what is ideal for growth.
Got it. So I guess, the last way of, I guess, understanding this better for me, you feel that the amount of advertising you're currently doing is the right level of advertising for the ROAS you want to get from those advertising spends, and it probably cannot go up further, without hurting your ROAS. Is that how one should look at it? That if you could spend more, but it wouldn't give you the good quality traffic in any case, and so you wouldn't spend more.
No, it will definitely. So, I think what we are saying is that our particular business needs a sustained level of advertising. If I were to suddenly pump in a huge amount of advertising in a particular quarter, not that it will result in commensurate monetization growth immediately. So to build the brand to deliver sustained value, we, that is how our advertising spends are optimized. At the same time, for the full year, I am actually budgeting in a bit of higher advertising spend itself. So very long term, 5%-6% of the top line is what we would be comfortable. At present, we are at about, whatever, 2%-2.5% or so. So as I said, like, right now, it's working well for us.
We will recalibrate as and when there is a need, and our margins currently give us that adequate cushion.
Got it. Yeah. Yeah, which is why I asked, Abhishek, I guess, because you're already at your target of 28%-30% EBITDA margins, which I believe you, you've been talking about for a few quarters, from about a couple of quarters back, I guess. So, yeah, thank you so much, Abhishek, and congratulations on a good set of numbers.
Thank you.
Thank you. We have our next question from Darshil Jhaveri, from Crown Capital. Please go ahead.
Yeah, hello. Good evening. Thank you so much for taking my question. Hope I'm audible?
Yes-
Yes, go ahead.
Please go ahead.
Yeah, yeah, yeah. Okay, okay. Thank you so much. So sir, a lot of my questions have already been answered. So just would like to be able to ask that current margins that we are doing, right now, I think those are majorly sustainable, right, sir? Like, we don't see any one-offs in terms of productivity or something, right? Or is it a seasonal effect?
So, Darshil, there are no one-offs, et cetera, so margins should be sustainable. Inherently, our business anyway has high operating leverage, so our gross margins tend to be around 55% or so. For every INR 100 revenue, the direct sales-related costs that I pay are around INR 45. That way, I think margins can be sustainable, subject to reasonable top-line growth coming in.
Okay, okay. Fair enough, sir. Sir, the top line growth for this year, we are targeting how much, sir?
There is no specific explicit guidance, so to say, we give, but at the same time, what we have been communicating, that internally we target a sort of mid-teens+ kind of top-line growth, coupled with 25%+ EBITDA margins. There could be quarters that particular metric might be overshadowing the other, but broadly, ballpark, that is the strategy that we are working with.
Okay. Okay, fair enough, sir. Yeah, that's it from my side, sir. All the best, sir. Thank you.
Thank you.
Thank you. We have our next question from Aditya Sen, from Robo Capital. Please go ahead.
Hi, thank you for the opportunity. Hope I'm audible.
Yes.
So, I was asking, we shared some EBITDA growth number in the last con call, it was around 30%. So, is it supposed to come from the improvement in the realization in the Tier 2 cities? Because there's a gap of approximately INR 400. So will that gap, plus the operating leverage that we will have, will help us get that EBITDA growth?
Aditya, I'm not clear which 30% are you specifically referring to?
I'm referring to 30% EBITDA growth that we saw in the last conf call, if I'm not wrong.
No, so in last con call, as I recall, we mentioned that EBITDA margin on a percentage basis should be 25%+, and last quarter, we were at 26%.
Yeah.
Last full year was 20.8% or so. In terms of absolute margin, I mean, our EBITDA at INR 80.6 crores has anyway more than doubled year-on-year.
True. Okay, so, going forward, what would be the components of increase in EBITDA? Will it be the improvement in realization in the Tier 2 cities, or is it something else also?
So by and large, I think, EBITDA growth going forward should be sort of, top-line driven. At the same time, expenses should continue to, stay controlled. This particular quarter, we had some increase in, employee count as well. So while we are working on maximizing, employee productivity, especially in sales, if there is, 3%-4% increase in sales headcount that we need to do, we would do at an appropriate time.
Okay. All right. Yeah, I got my answers. Thank you.
Thank you.
Thank you. Next question is from Swapnil Potdukhe, from JM Financial. Please go ahead.
Hi, Abhishek, I have two questions. First one is with respect to your B2B, B2C campaign split. If you can give some understanding on how that has changed, or has remained like it was in the previous quarters, both in terms of revenue as well as, you know, paid campaigns terms.
So, Swapnil, I have the revenue contribution handy. B2B contributed around 25.5% of our revenues. This particular B2B contribution has been sort of similar for now last 4, 5 quarters. Simply because the B2C side also has been seeing healthy growth. So as of now, B2B, B2C, both are going hand-in-hand with each other.
In terms of paid campaigns, that will be 22%, which was, I think, in the previous quarter as well?
Yeah, should be around that, because my realizations on B2B side are 10-15% higher, so campaign-wise, contribution should be around 21-22%.
Got it. Got it. The second question is more of a clarification. Earlier you mentioned that you intend to return back the entire profit that you make in a year to the shareholders. Were you talking about the net profit? You were talking about EBITDA? I mean, because if I were to just look at your annualized number this year, you would do around INR 550 crores of net profit. I'm just annualizing Q1 to FY 2025. And on a per share basis, that comes in around INR 63-INR 65, which is like 6% yield on the current market price. So just wanted to get a clarification on that. Also ma-
I'm sorry, Mr. Potdukhe, we are unable to hear you.
I was asking you with respect to the point that Abhishek made in the beginning. When he mentioned that the divi- they intend to return back the profit that they're making during the year to the shareholders. Would that... And if I were to just analyze those numbers, the current profit that they made in terms of PAT INR 140 crores, that is like INR 550 crores plus, on a per share basis, that becomes a 6% yield at current market price. So I'm just trying to triangulate those numbers and see if the understanding is correct, and Abhishek intended to mention those numbers.
Okay. So, Swapnil, I think the broader message that I was trying to communicate is that our intent is not to accumulate this particular cash that we have on a sort of perpetual basis. I was sharing that what are the possible avenues of distribution, our thought process internally of capital distribution out of, against which one of the avenues is possibly putting a healthy dividend or any other policy in place, so that at least 100% of incremental profits or incremental cash accretion at least gets shared out. Now, what would be the exact tools that the board will think are appropriate, etc., we will be able to communicate as and when we have more clarity. As you would know, that in past also, we have done several buybacks also to return money back to shareholders.
We'll see what is the best avenue, and accordingly take a decision.
Got it, Abhishek. Very clear. Thanks a lot.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please click on the Raise Hand icon tab available on the toolbar, or you may click on Q&A icon to raise hand. We'll take our next question from Hemal S., an individual investor. Please go ahead.
Hi, can you hear me?
Yes. Please go ahead.
Okay. Thank you for the opportunity. I just want to reconfirm couple of things. So last year, you had mentioned that your long-term vision is to grow the revenue between 15%-20% in one of the earnings call. Is that vision still intact with purely our current business model? Or because we have-- we rarely speak about our initiatives or investments you have done in the past, as to how they're going to contribute, whether it's Jio integration or with. You know, last time you were talking about some advertisements that you were trying to do with the SMEs, or even earlier, where you were trying to do data analytics, usage of that with the SMEs to support them.
We never know what are the plans and where are they going, and how are they going to contribute to the bottom line. Are these 15%-20% aspirational long-term growth vision is purely from an ad, and only ad campaigns?
So, Hemal, as you rightly pointed out, all our communication around, say, 15%+ top line growth, et cetera, they are primarily keeping growth of the core local search business itself in mind. Now, whatever tools that we roll out for either users or SMEs, ultimately, they contribute to our particular traffic in terms of quality and quantity both, which in turn basically aids our core local search business. Now, on the new initiatives where we have done expenditure in last couple of years, those are primarily transaction-led platforms. While those platforms are ready, but at this point of time, as we have communicated, we do not think that it is prudent for us to simply advertise, because we don't see adequate positive unit economics there at this point of time.
So the idea is to grow core business on a steady state at this point of time. And at an appropriate point of time, when we think that certain categories should definitely go in a sort of transactional mode, we would optimize those categories accordingly at that point of time.
In the last couple of calls you had mentioned on the Jio SME advertising support, the analytics that you were supporting. Are those initiatives working? Any projects in that direction happening? Maybe if you can share some of them, if there are any valuable insights that you are figuring out, if they are valuable to Just Dial as a business model.
Right. So as I mentioned, last quarter, we discussed about the possibility of Jio IPL Ads. So one discussion that we internally had was that since Just Dial has already connected with a lot of SMEs, and while SMEs so far do not advertise on big portals or big properties such as cricket or IPL, with mobile data connectivity, it is now possible to do local advertising there. So if users are consuming cricket on their mobile devices, we can actually run a campaign or possibly say, Viacom can possibly run a campaign, where a particular ad can be shown to a subset of users in a particular geography. So there we have been discussing that how can possibly we work together in terms of getting those SMEs on board.
For the recently concluded IPL, we could not sort of take it up because we started planning it a bit later. For next season or any other such properties, we could possibly explore what all synergies can be in place.
There are also-
There are also unit economics. Just to clarify, there also, unit economics matters for us. For example, my feet on street or my salesperson, I have to see what is the ultimate revenue and profit contribution that I get on a per-day basis from them. We would not do anything that would jeopardize that particular output via any initiative, be it ones that we take on our own or with the group.
Okay. Then on the revenue, because you say Q1 is always your strongest, so going forward in Q2, Q3 being the weakest, do we still expect a similar level of mid-teen, meaning 15% plus, kind of revenue growth for the full year? Should that be our expectation? And since you mentioned earlier to somebody else that this EBITDA margin is maintainable for the remaining of the year, or do we expect more, much better and go towards the aspirational 30%, 31% EBITDA margin by the end of the year? What should we expect as we go throughout the year?
Okay, so just to clarify, when I mentioned that Q1 is seasonally strong, that I mentioned primarily from the traffic perspective. Because in summer months, there tend to be several categories, for example, AC repairs and related categories, which tend to see strong traffic growth, which is what explains our sequential traffic jump. There tends to be some seasonality in our collections, wherein fourth quarter tends to be the strongest, and that also primarily is driven by historically we have had fourth quarter as strong, so a good bunch of renewals come up in that particular quarter. Revenue-wise, there tends to be no seasonality, because whatever money that we collect gets recognized as revenue over the period of the contract. And, aspiration-wise, definitely we would want to keep growing our top line better than where we are, and even having better margins.
But at appropriate time, we'll see whether it makes sense to deploy incremental margins back into advertising or maybe expanding our any specific teams, that we will see.
At this point, would it be fair to say then that EBITDA margins can be slightly volatile quarter to quarter going forward?
But volatility will not be so severe that a particular quarter should see some 300-400 basis point fluctuation. Volatility could be probably, if I say, advertise for a few INR crores higher, then there could be 1 or 2 percentage points fluctuation in EBITDA level. But at the same time, since my gross margin itself is quite healthy, I can afford to do higher advertising with even no impact on margins.
Correct. Correct. And the tax, absolutely the final. Thank you for the answering the question. The tax rate, which we had this quarter, because I don't know the roll-off for INR 2,900 crore, how it's coming, do we expect this tax rate to be very similar for the remaining one, two, or all the three quarters?
So yes, the way we provision for taxes is that we estimate our particular taxes for the full year basis, our assumptions, and that is what gets applied on quarterly basis. So second quarter or subsequent quarters, tax rate could still change depending on our estimates for full year. But yes, you are right that currently, the 8.2% is what our estimate for full year as well is.
Okay. Thank you for answering my question. Appreciate it.
Thank you.
Thank you. I now invite Mr. Nirmam Mehta from Unique PMS to go ahead with his question. Give me a moment, please. Mr. Mehta, please go ahead.
Abhishek, could you share some data on the renewals? So how many customers, say, would be with Just Dial for more than, say, one year, two years? Do you have some sense on that?
So, Nirmam, on retention rates currently, for every 100 customers that are signing in, approximately 60% of them are going into year 2. And, this particular number, till about 1.5 years ago or so, was at 55% levels. So our strategy of signing up more customers on monthly payment plans has helped us reduce this particular attrition by 400-500 basis points. And as I have highlighted in the past as well, in case of Just Dial, since we are dealing with SMEs, there tends to be this particular thought process by an SME that, "Okay, let me pause this campaign right now and see if there is any negative effect on my business." They might come back into the paid ecosystem 1 quarter, 2 quarters, 1 year down the line.
They might want to take premium listings versus non-premium. So in our case, it's not that our customer has, if they have not renewed, they have not renewed for life. Having said that, as I mentioned, that there is an improvement in retention rates due to shift towards monthly plans.
Okay. And any other initiatives apart from the monthly plans that you're doing to, you know, increase these retentions? So, like you said, you're providing other services also, but, so, any more insights here?
So one thing that we find is helping is that in last about four to six quarters, the campaign management tools that we have given to SMEs, that I think are helping us. They are able to much better appreciate the complete performance of their campaign. They are able to manage their leads much better. So earlier, what used to happen was, if a merchant is getting five leads in a day, then they would possibly just keep calling one after them. But now we also share them what are the various sources from which leads are coming in. So they are able to identify that, okay, these sources are having a bit higher quality, so a merchant short on time might want to just call up lesser number of leads, but that of higher quality.
So those particular, that the internal dashboard that we provide them, I think also helps in better retention.
Oh, yeah. Thank you for answering.
Thank you.
Thank you. We have our next question from Abhishek Banerjee from ICICI Securities. Please go ahead.
Yeah. Hi, Abhishek. Yeah, congratulations on good set of numbers. Again, going back to the margins that we have shown this quarter, if I analyze your employee expenses, it seems that you haven't even, you know, built in any year-on-year increments. So, isn't that due? What is your thought on that?
Okay, so Abhishek, on employee costs, two things. One, our increments currently are fairly spread out, the year. So certain departments are on a January to December cycle, certain are on April to March. So that way, one particular quarter doesn't significantly impact, one time sort of increase. Secondly, there were certain increments, obviously, that were rolled out for from this particular April month. However, we had certain few, 2-3 crores of excess employee costs, which are provisioned in previous quarter, so those sort of got offset against those particular increments that happened.
Got it. In terms of your this thing, in terms of your revenue growth, right? We are talking about 15% odd kind of a growth. But... So do you really think that, I mean, the B2C segment will continue to grow at that pace, given you already have a pretty high base that we have to now contend with? Or do you think that B2B will kind of step in and, you know, drive the growth higher by 100 or 200 basis points?
So, Abhishek, that is possible that, B2B, where there is a bigger leverage of pricing increase that is possible, might actually aid the monetization better going forward. But having said that, for our particular, sales teams, their particular target is obviously to grow the overall, revenue. And as we have discussed in the past, while the base is quite high, opportunity-wise, it's just only possibly, say, 1.5% of the population is, currently paying us, or even lesser. So I think both B2C, B2B have growth potential, but B2B definitely has more levers than the B2C side.
But see, this same thing with regards to monetization potential does not really pan out as easily as we think, right? So is there a scenario where you will consider probably, you know, creating another category which is probably below your existing categories, where you can bring in some new customers? Or, is the current pricing minimal where you will continue to operate at?
So, see, one reason obviously has been that our particular monetization has been sales force-assisted. Indian SMEs do require that hyper service handholding, and a particular feet on street obviously can do a certain number of presentations or meetings in a particular day.
Mm.
To your question on whether any incremental products are possible, definitely. You can have a listing which primarily just gives a sort of a verified status, but does not come with any specific leads, et cetera. In certain categories where you know the number of merchants are very high in the country, but we don't monetize that much, there, even a lower ticket size plan versus my current entry-level plan could be useful. So, it will be a sort of approach to monetize both B2C, B2B, and within those also, possibly monetizing with lower ticket size where there is merit in it.
Understood. Now, again, going back to the question with regards to the investments that you made in things like JD Xperts or the new platforms, right? So, see, digital investments, from what I understand, would require constant, you know, updation, right? Now, given you are not really monetizing those, so would it make sense for you to now mark them as losses? I mean, how do you kind of take the hit on that?
Okay. See, any particular business has to keep itself future-ready at any point of time. While some particular initiative might not be, say, it might not make sense to monetize it right away, but to not even think of undertaking that initiative would not be prudent. So the expenses, which is a very small amount at this point of time, which goes in upkeep and keeping those particular platforms up to date, those investments we are anyway making. And at some point of time in future, we might want to have certain categories shift to that particular model. And we, net-net, we are trying to ensure that those platforms are ready, and we switch to them at adequate time without cannibalizing my existing revenue and profits from those same categories.
Understood. But, do you have your tech teams intact, or have you let go of them?
Yeah, yeah, tech teams are very much. Tech teams are very much intact. See, the key effort while building a software essentially goes in the initial phase while you are building it from scratch. Once you have that particular platform ready, you can keep it operational and up-to-date with relatively lesser spends. The next leg of spends possibly will come in in next phase, when we decide that, okay, we need to add these particular features, et cetera, which we have decided we will undertake at a time when we have visibility that we want to actually start using these particular platforms for even monetization.
Understood. Okay, perfect. That was very helpful. And just one last comment. I think the idea of, you know, giving back to the shareholders, is going to be very well appreciated, but let's try to implement or clarify on that as soon as possible. Because obviously, given that has the potential to unlock a lot of value for a lot of investors.
Right. The point is, very, very well noted.
Thanks. Thanks, Abhishek.
Thank you.
Thank you. We'll take a last question from Shyam Garg from Ladderup Finance Limited. Please go ahead.
Thanks for the opportunity. Congratulations with... Question is with respect to customer retention ratio. As you have mentioned in the call, that your customers take a pause for 2, 3 quarters or a year, then come back. So can you share the numbers of customers who come in in year 1, and we retain it till year 3, so to have a better picture of it?
So, Shyam, right now, as I mentioned, that the way we evaluate is that if 100 customers signed up in current month, then how many go into year two in, say, 13th month? That ratio stands at around 60% or so. Within that particular segment, how many go into year three, et cetera? That we'll have to possibly evaluate.
Okay. And what is the number for customer retention ratio, particularly the top 11 cities, then non-11 cities?
So I will have to again check back on that, but I think top eleven should be slightly lower versus non-top eleven, simply because non-top eleven, the ticket size is much lower, half of top eleven. So it is natural to expect that Tier 2, Tier 3 should have bit better compared to the overall blended retention number.
Okay. And also, can you please put a little color on tax rate? I am not able to understand why we have percent of tax rate estimate 22%.
Okay, so I will explain this. So our particular regular operating profits from the core business, they get taxed at almost full tax rate of 25.2%. There are certain small deductions that are available. Effectively, that tax rate tends to be 24.5%-25% or so. Now, the second stream of income that we have is the treasury mark-to-market gains that we record every quarter. Now, within treasury, the way it works is that, if I am holding a treasury for less than three years, that treasury falls in short-term capital gains bucket, and those mark-to-market gains have to be provisioned for taxes at full corporate tax rate of 25.2%. The moment that treasury crosses three-year holding period, then long-term capital gains tax comes into picture, and the long-term capital gains tax was 20% with indexation benefit.
So in September 2021, we had deployed about 2,200 crore as part of primary infusion. That particular part of treasury, along with certain other past investments as well, about INR 2,800-INR 2,900 crore, will cross from short-term bucket to long-term bucket in September. Now, when that event happens, if I have provisioned taxes at higher rate in the past, then there is a reversal that happens to align with the long-term capital gains tax. Because now that treasury, whenever it will be sold, the long-term capital gains tax will be applicable, not the short term. Having said that, since March 31, 2023, tax particular provisions for debt mutual funds have changed. Now, whatever incremental money that I'm deploying, those will get taxed at full corporate tax rate.
So this particular year, fiscal 25, is a bit of aberration, where the blended tax rate is likely to be lower. Next year onwards, it will again be a combination of older treasury getting taxed at long-term rates, regular operating profits at full tax rate, and so on. But our estimate is that effective tax rate in long term should be 18%-20%, though it depends on the mix, which we will have to see at that point of time. Hope that clarifies.
Yeah, that clarifies. Thank you so much for answering my question.
Thank you.
Thank you. I would now like to hand the conference over to Mr. Abhishek Bansal for closing comments. Over to you, sir.
Thank you everyone for joining us. In case you have any further queries, please do reach out. We will do our best to address. That's it from our side. Thank you.
Thank you. On behalf of Just Dial Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.