Good evening, everyone. This is Shaleen Kumar from UBS Securities. Welcome all to Just Dial third quarter results earnings call. From the management, we have Mr. V.S.S. Mani, Promoter, MD and CEO of the organization. We have Mr. Abhishek Bansal, CFO of the Just Dial. I now hand over the call to Abhishek for his opening remarks and after that we can open the forum for Q&A. Abhishek, over to you.
Thanks, Shaleen. Hi, everyone. Welcome to Just Dial's earnings call for third quarter of fiscal 2022. Our operating revenue for the quarter stood at INR 158.9 crores, declining 6.3% on a year-on-year basis, and was up 1.9% quarter-on-quarter. Adjusted EBITDA, excluding ESOP expenses, stood at INR 10 crores, a margin of 6.3%. Other income, which was partly affected due to increase in bond yields during the quarter, stood at INR 28.6 crores. Overall, net profit after taxes stood at INR 19.5 crores for the quarter. In a nutshell, current quarterly numbers obviously reflect the impact our business has witnessed over past few quarters on account of COVID impacting SMEs. B2C service-oriented categories contribute almost 2/3 of our revenue, and SMEs in these categories have been the most affected during these COVID times.
However, while macro environment and pandemic situation will keep evolving, we have taken certain measures recently which are yielding good results in recent months, and likely our monetization shall be back on track in coming quarters. Firstly, on monetization, we have implemented firm pricing and withdrawn almost all discounts that we had been offering during various phases of the pandemic. Along with firmer pricing, we have started focusing aggressively on monthly payment plans, which helps us sign higher number of customers and also gets us a better monthly ticket size. During November and December months, we signed almost 65% of our customers in those months on monthly plan basis, and this was just about 8% in preceding quarter.
As a result of this strategy, it has helped us improve sign-ups, which is also partly visible in uptick in paid campaigns, which grew sequentially by about 6,600 campaigns to 437,000 paid campaigns at the end of the quarter. It will likely aid our future revenue growth as well. Due to change in mix of upfront versus monthly plans, near-term collections do get affected since lesser customers are paying us full money upfront. However, over the tenure of the contract, which is typically a year, we expect to gain from future collections that will come via monthly installments. On operating expenses, employee expenses saw about 16% YoY and about 9% sequential increase. We added almost 1,250 employees during the quarter, majorly in sales. While employee costs have upfront impacted P&L, revenue generation from newly added sales force should aid future margins.
We have also been hiring talent across our product technology, content and marketing teams. Advertising spend stood at about INR 3.5 crores for the quarter. Overall, cash and investments stood at INR 3,769 crores as on quarter end. Coming to other operational highlights, traffic stood at 142.7 million unique users for the quarter. 84% of the traffic now comes from mobile platforms. Database strength has now grown to about 31.4 million listings. Overall, going forward, the focus is to get our core business back on a healthy growth trajectory as soon as possible, and early signs of the same already seem to be visible. Plus, we are working to roll out new initiatives which are currently under various stages of content building, product development, user experience optimization.
With this brief update, we shall now open the floor for questions for further detailed discussion. Thank you.
Thanks. Thanks, Abhishek. AJ, can we please open the forum for Q&A?
Sure. Hi, thanks for joining, everyone. If you have question, can we use the feature raise hand, which is available to you on the bottom part of your Zoom screen? Or if you are dialing from the telephone, please press star nine to raise your hand, and we'll be assisting you with the Q&A. Thank you. Over to you, Mr. Abhishek. Thank you.
Abhishek, till the time we get a question, you know, from the participants, possible to provide some more updates on the different platforms as well? Maybe you can start with our B2B platform. Any update over there?
Shaleen, at this point of time, we are sort of looking at our business in two parts. The first, obviously the core business, which, as I mentioned, got affected primarily due to first and second wave of COVID. There the focus is to get that particular piece back on a healthy growth path as soon as possible. On newer initiatives, ultimately, the way we look at it is that more and more consumers are going online, wanting to do things online, be it in terms of booking any appointments, doing any transactions. On the other hand, as far as SMEs or businesses are concerned, they also want to be present online to get discovered, to get new users.
Our newer initiatives, be it via JD Mart, JD Xperts, and other platforms that we are working on, the idea is to mainly add a transaction layer to all those categories where we have, in many cases, been dominating via search and discovery. JD Xperts, for example, we are currently testing with one category, pest control services. Some of these particular more services will go live in this particular quarter. JD Xperts will have a dedicated app as well, which should get rolled out sometime this particular quarter. The idea of this particular beta phase launch is to optimize user experience, and then scale up as and when user experience is optimal.
Similarly, on JD Mart, at this point of time, we have almost 1.2 million catalogs specific to B2B businesses. Overall, there are about 8 million businesses on JD Mart for search. Out of the 1.2 million catalogs that we have, about half a million are quite rich catalogs. There is work happening on content, etc., on JD Mart. Apart from that, there are certain other initiatives. As I mentioned, the idea is to be able to add a transaction layer to services as well as other categories on the platform.
Sure. Thanks.
Also everyone, if you have question, please press raise hand button, which can be found at the bottom of the Zoom interface. If you are dialed in via telephone, please press star nine to raise your hand. Thank you. Hi, Shaleen, we don't see any raised hand out as of now. Thank you.
Sure. I think I'll use the opportunity then. Abhishek, obviously, you know, the big question in everyone's mind, like, you know, historically how Reliance is a promoter over here, and historically we haven't seen a lot coming out post-acquisition, what has happened in the past. I just want to pick your brain here, like, you know, how the new management is aligned and what kind of discussions are happening and, you know, in terms of the business plan going forward strategy, because there's a lot of cash also sitting on the books, right? How you intend to utilize it.
Any color you can give both in terms of the alignment with the strategy, how actively they are involved with you guys, and maybe future use of cash, et cetera, which you will be using.
Okay. Firstly, Shaleen, on the management, there is no new management at this point of time. It's the same strong management experienced team that is running the show.
Yes.
Definitely, RRVL's presence on the board is there, and we actively engage with RRVL and RIL's leadership team for our particular future e-business plans. At this point of time, while we did this particular strategic transaction, both parties realized that there is a great asset in terms of 31 million listings, active vendor relationships, and there is a lot that can be done in terms of enabling SMEs, going forward. As I mentioned, at this point of time, as far as usage of cash is concerned, cash is already getting deployed in a manner to, in terms of hiring talent to build our particular product, to augment our particular initiatives in terms of addition to sales force, et cetera.
As and when our particular existing and new businesses would require marketing spends, advertising support, there will be aggressive spends on those as well.
Okay. I think we have some questions from the participants.
Sure.
P.J., can you moderate?
Sure. Hi, Sahil. You're the first participant. Kindly, unmute yourself and ask your question.
Hi, Abhishek. My question is, with the Reliance coming in the board, okay, what kind of changes. It's similar lines to the previous question. What kind of changes happened? Second thing, there is a lot of rumors circulating around in market that JD is planning to launch e-commerce platform. Is there anything which you are thinking on those lines? What kind of future growth prospects which we can, as an investor, look at it?
Okay. See, first of all, with the Reliance coming on board in terms of changes, definitely, they are now present on our board. There are active strategic discussions that happen between both sides. Operationally also, our teams are actively engaging with them to see what all synergies can be utilized at both ends. One key benefit, even more compared to synergies, is the learnings that you can draw from a strategic partner such as Reliance. For example, they have strong expertise in even manpower intensive, say, businesses.
While we are looking to aggressively increase our manpower to aid our core business, some of those learnings can be deployed, as well. I think, over coming months and quarters, we will be able to leverage on these particular synergies learnings, and that should be visible in our performance as well. To your second question regarding any foray into e-commerce bit. As I mentioned in my opening remarks, it is very clear that the way things are evolving, both users as well as SMEs do want to do things more and more online. Keeping that in mind, we had initiated projects such as JD Xperts, JD Mart on the B2B side. As and when some of these initiatives start taking more color, we would be in a better shape to share.
In any case, most of these particular platforms are user facing platforms. Whenever they are getting launched, you will obviously be the first ones to be able to witness those.
Okay, got it. Thank you.
Thank you.
Hi, Ankur. You are next. Kindly go ahead and ask your question, please.
Thanks so much. My question is, I don't know whether Abhishek or Mani, whosoever answers. I have two questions. One, as an individual investor, I've been, you know, closely watching Just Dial and been participating into all the investor meetings for four quarters now. I started last December, and here again we are the next December. JD Mart seemed to be the biggest initiative, a game-changing one. I know that the app has been launched. It was launched. There was a lot of advertisement done during the IPL first phase, and then it has continued. What I see in your investor deck and in your commentary is, one or two bullet points of how many listings you've had.
As an investor who's playing long and, you know, really wants to understand what's going on, there's nothing much shared. It would be great if you can elaborate where we are on JD Mart. Maybe it's quite a while before JD starts competing with, let's say, IndiaMART. Still, I'm sure all the investors, and especially me, would like to know a lot more about what JD Mart is doing right now and its capabilities. Number two, it was a little worrying to hear that on the search side of it, we had to move to a monthly subscription model.
Is it really a sign of changing times that search as a business, the advertisement bit of as a business is becoming tougher with the Googles of the world and lot of things coming on the internet, and it's almost a survival mode? Is that something, as an investor, I would like to understand why I should not be concerned about? These are the two questions.
Okay. Ankur, on the first question on JD Mart. See, one thing we have to remember is JD Mart primarily is catered towards, say, B2B categories. In B2B categories, we used to monetize about 20%-22% of our revenue, which even today is around 22%-23%. As an SME does not really bother about whether they are getting inquiries, traffic, visibility on JD or JD Mart. Ultimately, it is about JD's platform, be it visibility on JD or JD Mart. Now, over last three to four quarters, what has also happened is that, like first quarter of this particular fiscal year, we were very severely impacted by second wave of COVID. Now, that particular impact was not just restricted to this 22%-23% of the business.
We have to ensure that the rest of the 77% of the business also stays on its particular growth path. Those are some of the reasons that this particular JD Mart related active update, so to say, you might find it to be missing. On your second question, why have we shifted on a monthly plan basis? First of all, during our IPO days, when we were growing top line at about 25%-30% each year, at that point of time, we were about 45% of our customers used to pay us on a monthly basis. A couple of years were as high as north of 50%, 55% as well. It's not that at this point of time because customers are not willing to pay upfront, that is why we are shifting to monthly plan basis.
The way ecosystem is evolving, in most cases, people are actually wanting to pay in small tickets. They might be okay subscribing, taking subscription on a monthly basis. That is why we said that, okay, if we can remove any sort of friction from our sales process, that will help. There might be a customer who might be thinking twice that, okay, whether I should spend INR 22,000 in one shot, whereas they might start with INR 2,000 a month subscription. Later, they might even be willing to go for a annual plan thinking that they will get some 10%-12% upfront cash discount, et cetera. The shift to a monthly plan is mainly to say that, okay, we are okay not locking in customers for a longer tenure.
We want customers to sort of come in at their particular will. That is the only thought process. Which is what we are seeing that we are able to sign up more customers and the estimated revenue from these particular signups is also seeing a growth path. Ultimately, we have to see that total revenue sort of should get maximized. All your digital products, for example, whether you do advertising on a Google, Facebook or any other such global platform, you can sort of recharge your wallet for X rupees. You can run campaigns for five days, pause it for two days, and that is how the ecosystem is.
How does that payment happen on the platform? Because, for example, these RBI impending guidelines about, you know, creating issues auto-renewal makes it tougher for subscription services like yours, and if I may compare with Netflix's of the world, difficult to renew. Renewal process becomes even more challenging and needs solution.
No. On that front, we haven't faced much of a challenge. These particular. First of all, these monthly subscriptions, the new RBI guidelines primarily affect whatever subscriptions are set on your credit card or a debit card. In our case, majority of these particular monthly payments are set directly on the bank account. Even in cases where they are set on a credit card or a debit card, those stricter rules apply for transactions over INR 5,000 a month, whereas our ticket size at this point of time is much lower. We are not really worried on that front. In fact, these days it is much easier to set up a ECS or a monthly standing instruction on your bank account.
Most of the banks these days provide that particular e-mandate facility which allows monthly payments to be directly deducted from your bank account.
Listen, do we as investors expect that you will maybe next quarter start sharing the mix of the subscriptions that you have? Because I still see a decent number of deferred revenue sitting in the balance sheet. Now maybe you started this plan recently, but maybe from next quarter onwards, will you be willing to share the mix and so that we get much clarity of
Maybe we can look at sharing realizable value as a trend, you know, which is indicative versus past track record. That may give, because when there's not much of deferred revenue, rather, deferred revenue reducing, there could be panic among investors. If we share the realizable value part. I don't know. Abhishek, you have to think it over.
Sure. We can take a look at that. As I mentioned during my opening remarks, in last quarter our monthly payment plans were at about on an average 55%, with November, December at about 65%. The previous quarter was at about 8%. In fact, in deferred revenue, the one reason why that has sequentially declined is because of this adoption of a monthly plan strategy. In monthly plans, as I mentioned, that's while upfront collections will be lower, but over the period of next, say, 12 months, those particular collections should more than offset the upfront impact.
The monthly plan should be read more like how does EMI plans to buy goods and services. Basically if you have an equated monthly installment, then there are more number of people being able to afford it. In our case, it's like earn, you know, and pay because you're paying on a monthly basis. They're able to spend and commit more larger sums of money, you know, since it is an equated monthly installment.
It's a trade-off. The renewal process is a challenging.
It's auto-renewal.
Okay. Okay.
All these are literally perpetual contracts till the customer stops his payment. It's auto-debited to his account.
Yeah. I think that's a good sign for the business.
Yes, yes.
Numbers could be maintained and that, those will be really important to track as well, I would say. Yeah. Yeah.
Right. Just to give some flavor on that, pre-pandemic we used to get about INR 23 crore-INR 24 crore a month of collections from these particular monthly deductions directly from bank accounts. That INR 23 crore-INR 24 crore went down to about INR 13 crore in September month. That INR 13 crore has already bounced back to about INR 18 crore in December. The current month run rate is already about INR 20 crore-INR 21 crore. This particular monthly plan strategy, while we have adopted it just for last two months, it is actually giving us this particular growth. Overall, if we are able to maintain this particular momentum, we should be definitely back in, back on track in terms of overall collections and overall revenue, P&L revenue as well.
I think that's very encouraging, Abhishek and Mani. Thanks so much for that update. I shall really look forward to more traction on JD Mart and more updates as well, and maybe more segment especially. Look forward to that, and all the best to yourself and myself as well as an investor.
Thank you.
Thank you so much.
Hi. We have a question from Mr. Vivekanand. Please unmute yourself and introduce yourself and to ask your question. Please go ahead.
Hi. Thank you. Thank you for the opportunity. I'm Vivekanand Subbaraman from Ambit Capital. My two questions, the first one is on the KPIs by the geographic split. What would be the split of our campaigns in the top 11 markets and revenues from the top 11 markets?
Outside top eleven contributes about 57% to campaigns and about 35% to revenue. Top eleven, say 43% to campaigns and about 65% to revenue contribution.
Okay. Which of the, I mean, the recovery appears to be better in the markets outside top eleven, right? Is that correct? Is that assessment correct?
That is partly correct. See, that is also because whenever these COVID waves have impacted, the top metros are the ones that see the first set of restrictions. For example, in this particular current wave of COVID as well, our geographies such as Delhi went into night curfews, weekend lockdowns, et cetera. That is why those particular geographies tend to get affected a bit more, and recovery in tier two, tier three cities is faster versus tier one.
Okay, got it. My second question is on the manpower intensity point you made. So we are ramping up headcount again in anticipation of growth. Should we look at the gross margins of the business differently now versus earlier? Because now you are focused on getting closer to the transaction, and also the intensity, sales intensity might be higher for monthly renewals versus, say, contract ones and bill over two years or one year, right? How should we think about the gross margins in this scenario?
See, once we get into transactions, those will have to be evaluated separately, in my view. In fact, in case of transactions, most likely we would be charging, say, a certain percentage on the value of the transaction. Once a particular vendor is onboarded, there is not really much of an effort in terms of renewal, et cetera. That set of business will have its own margin profile. It might have lesser sort of gross margin, but volumes would more than take care of it. As far as the core business is concerned, gross margin, I mean, historically we have been a sort of 60% gross margin business, and hopefully we would be able to sort of even improve on that in coming quarters.
For example, last year, while our top line was affected about 28%, still we were able to pull levers to deliver 25%+ EBITDA margin. To that extent, I think gross margin is quite healthy and, that is, that should be sort of maintained or be even improved going forward.
Okay. Just pressing on the manpower intensity point, we are ramping up headcount of the feet on street as well as telecallers. Is it largely to do with the legacy business or is it hiring related to JD Mart? You know, is it hiring for the smaller towns where your position seems to be getting stronger? Where is the hiring happening and where do you think the future hiring will be directed?
Two years back, say around eight quarters back, at our peak when we had about 12.5, 13,000 overall employees, we had about 10,000 employees in sales. In September quarter, that number dropped to about 6,800 employees. About, whatever, 30%, 32% drop, primarily because we were seeing that on the ground COVID had impacted SME so much. For us, the focus was primarily on consolidating our sales force, getting better productivity from existing resources. Now that we realize that we would be in a position to sort of grow back our particular core revenues, we have got the 6,800 back to about 8,100. This particular hiring is happening across geographies, across feet on street, telemarketing, et cetera.
The idea is that in a couple of quarters we would want to go back to that particular 10,000 mark as well. At the same time, not compromise on productivity as well as our gross margins.
Right. Abhishek, in your comments you also mentioned that you are learning a lot from Reliance in running a manpower-intensive business. Could you elaborate that and explain to us how that is benefiting Just Dial?
Exchange of ideas, that's all. I mean, they have a large retail and even in Jio, they have more like an interesting reseller model, which is freelancers who are working for them. We're learning a bit about that because that will help us because that will not have any cost till you get the revenues. We're working on some of those ideas. It's just that we are just telling you that what all kind of exchange of ideas and you know, synergies that we are working on between the two companies.
Okay. Understood. Thank you very much, and all the best.
Thank you.
Ashish, we are unable to hear you.
Hello.
Yes, Ashish, please go ahead.
Very good evening to all of you. See, I have two questions I have for you. The first thing is, as a small investor, we need to know when do you plan to put the INR 3,700 crores of the cash that you have in your books? The second thing is that why, in this quarter, the treasury income from other sources was very little as compared to last quarter when you had INR 3,700 crores in your books.
Okay, Ashish, to your first question regarding deployment of INR 3,700 crores. See, the thought process is that, yes, we are very well capitalized, and this particular money would be put to good use as and when required. Fortunately, our core business also generates very healthy free cash flows. So this particular INR 3,700 crores, we'll see as to what stage and which products require this particular financial support. Coming to your second question, yes, you are right that sequentially Treasury has grown from INR 1,500 crores- INR 3,700 crores. However, in last quarter, on a sequential basis, there was about 30 basis points increase in bond yields on a, say, India 10 year bond yields. In fact, for a three year paper, which is what forms bulk of our portfolio, the increase was as high as about 45 basis points-50 basis points.
Since we deploy in debt mutual funds which get mark-to-market every quarter, that is why this particular quarter saw about INR 28 crores-INR 29 crores of other income. Overall, the way to look at it would be that the embedded yield to maturity of the entire treasury would be about 5.25% or so. On INR 3,700 crores treasury about whatever 5.25% is what we should be earning at current interest rates over the long term. Say over four to six quarters, that is how it should be, though there could be quarterly fluctuations.
Okay. Hi. We have next question from Mr. Naman. Please unmute and introduce yourself to ask your question. Please go ahead, Mr. Naman.
Hi, am I audible?
Yes, Naman, you are.
Yeah. Good evening, everyone. Mr. Mani, I have a question for you. This is maybe a repetition of the past two questions, but it is intriguing to know that, you know, we have such a large cash sitting on balance sheet. In the last quarter, we also mentioned that we will not be really interested in distributing the cash back to the shareholders in terms of buybacks or dividends or whatever, like we used to do in the past. Instead, we want to use the cash for the business. While I understand that, you know, the manpower increase and some products may demand cash, but still INR 3,700 crores is a huge chunk of cash, especially when you have existing business generating free cash flows as well.
What also, you know, amazes me is that we spoke about e-commerce portals like Amazon, Flipkart. It's such a big opportunity in India that, you know, our portal is designed to list SME businesses. But can't it be scaled up to, you know, to counter these kind of businesses? Because you already have a basic portal in place. You have cash on books, so why can't we look at, you know, investing in those lines? Your views on that, sir.
Absolutely. Our main focus area is going to be what we call a 3P marketplace, you know, which is third-party marketplace, purely allowing all kinds of businesses to sell their products through our platform. The focus is from a customer experience point of view, the differentiator will be like instant delivery. There'll be obviously competitive pricing and an after-sales service available also on dialing the number at 10 8's, just in case. We have a product that's getting launched which is at a very large scale when it comes to any kind of product, whether it's B2B or B2C, can be sold online through our platform.
The pilot run for the consumer B2C version will be somewhere in February, which is when we'll start signing up businesses, which is all the neighborhood stores, all kinds of businesses that you see in any city which have brick-and-mortar presence. We'll be their online platform, which will fetch them business which they can execute instantly. On the services front, as Abhishek said, we're launching something called JD Xperts, which is something like equivalent to Urban Company or any of those where you can actually book it online with Just Dial without bothering about who the vendor is. You can expect a high standard of user experience, you know, in terms of the service as well as the tariff and other things. All these things take a time. Unfortunately, we've been affected by COVID waves.
If you see the first, it was quite a jinx experience for us. We spent huge amount of money in IPO to launch JD Mart. Entire 45 days was a washout because of second COVID wave. We've been a bit unlucky too, in that sense, in the past. Now that we have a huge solid partner, it's like kind of, a very, feeling that, you know, it's, we are invincible as such with this kind of a partner. If we focus on execution and keep our heads on our shoulder and look at day to day, week to week, month to month, and quarter to quarter, I think this company will be worth a lot more than what it is today.
We don't want to give promises right now, because in the past we have spoken very bullish about products and somewhere it's, we have lacked in execution, or we didn't have the courage to go and spend a lot of money to make it happen. Example was Omni. Now that we have a great partner, and there is a bit of de-risking yours truly has also done. There is no reason that we should apply any brake. We should just go all out aggressively pursue things. How quickly we can do that, all the timing issues, we cannot comment. All I can say is the steps that we have taken in the last couple of months have been fantastic, and they've been yielding great results. We continue to take similar steps and keep looking for better future.
Hi. We have next question coming from Mr. Pranav Kshatriya. Please unmute and introduce yourself to ask question.
Thanks for the opportunity. I'm Pranav Kshatriya from Edelweiss. My first question is, you know, this quarter, there was, you know, quarter-on-quarter revenue dip, although, you know, last quarter we had a fairly decent jump in the non-core revenue. Considering this tends to be a festive quarter, I was expecting a bit of a, you know, bump up in the revenue, but it did not pan out. Can you highlight, you know, any of the reasons for, you know, not only the deceleration in the revenue but also deceleration in the traffic on a quarter-on-quarter basis? That's my first question. Secondly, can you point out, you know, what exactly is the advertisement spend in this quarter, and what percentage of traffic is paid traffic for the quarter?
Thank you.
Pranav, on a sequential basis, traffic had a slight impact, which typically happens during festive months. That particular week, 10 days closer to Diwali, Dussehra, those are the days when traffic tends to sort of get affected. On a sequential basis, revenue has marginally grown. There has not been a degrowth. Obviously, it has not grown to the extent that we would have ideally wanted it to be. As far as ad spends are concerned, they were about INR 3.5 crores for the quarter. Out of the total traffic of about 143 million quarterly users, about 6%-7% came from paid initiatives. The rest all was organic.
Hi, we have next question coming from audio dial-in. Please unmute and introduce yourself to ask question. Kindly use star six to unmute yourself, please. Hi. Kindly go ahead and ask the-
This is Rajan Levo from Prudent Investment Advisors, and this question is actually directed to Mr. Mani. You know, historically, you know, you have always focused on profitable growth, you know, free cash flow, et cetera. The cash, you know, war chest that you really have now, will that strategy really change, where you'll be more aggressive, like you said, and, you know, you'll focus more on growth, even if it means in the short term, you know, compensating on, you know, your free cash flow, you know, sort of, you know, strategy that you had in the past? Number one.
Number two, if you look at the INR 3,700 crores war chest that you have, if you can just, you know, give us the top three areas of spend and over what timeframe would you intend to spend in those areas?
To answer your first question, this whole transaction with Reliance Retail was done only to keep that in mind, that we want to grow aggressively and not look at being a nice, cute, profitable company. This partnership will help us actually ramp up on our growth, and we have identified the right kind of verticals, which one is going to be JD Mart, other is JD Shopping, JD Xperts, and there is an initiative on real estate. Our hands are full with lots of things in hand. It's basically one go-to place where you can get many things done. There'll be cross-promotion, cross-incentivizing users. There'll be a lot of interesting things happening. In the next few quarters, you will learn a lot more. You will see us, you know, aggressively pursuing growth for sure.
At the same time, there's no harm in having decent cash flow. Why not?
Okay. Hi. We have next question from Mr. Vijit Jain. Vijit, kindly unmute yourself and ask your question.
Thank you. Hi. Thank you for the opportunity. This is Vijit Jain from Citi. Just a few questions. First off, last quarter, I think you had mentioned that the JD Mart team was about 150 odd people dedicated to JD Mart. Can you give a comparable number to that figure for as of date? That's the first question. The second question is related to your partnership with Jio. Now, obviously, Jio and Reliance put together have a, what you could call probably a constellation of services in various categories of e-commerce, right? So is there any conversation around reference from your website, given that you do have decent level of traffic to their properties? Any discussions around those lines with Jio is, I guess, my second question. Thank you.
Vijit, on the first question, the B2B team strength, which basically focuses on primarily B2B categories, is about 180-200 employees, which includes a combination of both telecallers as well as feet on street team. On your second question regarding referrals from our platform, et cetera. As I mentioned, both set of teams actively engaged to see what best can be done in terms of either referrals from our platforms to theirs or leveraging their platforms. For example, Jio business users are a huge consumer base. At the same time, JD's 30 million businesses can be tapped into for some of their particular products and services as well. Those are some of the, I think, ongoing initiatives which or ongoing synergies which will get explored over the next few months and quarters.
Got it. Thanks. One final question from my side, if I can. When Mani, I think, mentioned that, you know, JD Xperts will start off with pest control and then add more categories, I'm just curious as to the thought process here. Is it that pest control is what you see as an established use case category in India because of maybe some competitors doing it and you think it's an attractive play to get into, or do you see a fair bit of pest control, you know, queries coming into your website still in major cities, let's say like Bombay and Delhi, for example, and that's why you think that there's significant opportunity that still remains to be tapped? I'm just trying to understand what your category selection process is like,
You may see all categories launched very soon. It's just that a pilot is being practiced on pest control. You know what? I've shared this information also. It's just that it will be no different from any other such platform, you know. Because across the board, we have vendors who cater to all kinds of services, and we have to cherry-pick these vendors who are the top-rated ones to give that wow experience in JD Xperts that we are talking about. This pilot is being done just to see that it's all well-oiled, if it's smooth, and then you can just expand it to multiple geographies and multiple categories.
Got it. Mani, the initiative on real estate that you spoke about a little bit,
Yeah.
Can you elaborate on that a little bit more?
We have taken a pie from our revenue. We have taken this, looked at the pie and look at how what are the contributions from each vertical segment. We realized that merely giving information about a builder or information about estate agents is not sufficient enough, although those categories contribute a significant amount of revenue for us. If we really want to grow the revenue 10x-15x, 20x, then we have to go all along like any other international real estate site, which is like finding apartments, villas, farmlands, factories, able to see them, view photographs, view videos, and allowing agents to post their listings, allowing builders to sell their properties through our portal, post their you know listings and all that.
You will see a complete, robust real estate experience within Just Dial as well as a dedicated site which will be for Just Dial. The JD Prop.
Thanks, Mani.
Yeah.
Got it. Sanjeev, I have a few more questions, but I guess I'll just jump back into the
You can carry on.
Question and answer session.
Please.
Oh, okay.
Just carry on since you're online.
My last question actually really is that, can you give me a sense of what your gross campaign addition was in this quarter? The net was obviously 6,600. What the gross figure was.
Vijat, we do not specifically track gross versus net. The way this particular number is evaluated is that as on quarter end, how many customers were active on the platform. Because as I said, there might be a customer, after one year they might be up for renewal. They did not renew for a month, but they renewed one month later. There is no way to be able to exactly say that it is a fresh customer, renewal customer, et cetera. We track active campaigns.
Okay. Got it. Yeah, sure. Finally, are you seeing any kind of impact since the onset of Omicron this quarter?
On third wave, there has been minor impact. Fortunately, overall, at this point of time, impact seems muted, and impact seems restricted primarily to tier-one cities. Considering cases have started going down in metros, I think next week, 10 days would be critical. Compared to the impact that we had during the second wave, et cetera, third wave impact seems to be much muted.
All right, great. Thanks. When you say you know that the plan now to use a partnership with Jio, sorry, Reliance, and with the cash flow position you have and with the free cash flow generating business you have, the plan is to grow more aggressively. I think you mentioned earlier your intention to go back to 10,000 salespeople. I guess, looking at the core business specifically, do you think going forward, the focus will be to, you know, more aggressively push for new campaigns in tier-one cities and get some of them back, and that's how you will grow the core business?
When you look at growth aggressively, you're looking at the entirety of all the things you're doing, and especially focusing on the newer, you know, focus areas like JD Xperts, B2B and the real estate venture and those kinds of things. I'm just trying to understand where the growth or where the aggression is going to be more focused on, the newer areas or the, you know, core areas.
See, both things at this point of time are being pursued simultaneously. In the core business, which is a well-oiled machinery, we realize that we need to ensure that our pricing is optimal. We need to ensure that we hire and scale up at the right time. There, as I've mentioned in the past, we are not obsessed with growth coming from campaign additions or it is coming from ticket size. Overall revenue per sales employee, that is what should be optimized, which is what will ensure that my top line grows at reasonably healthy margins. As far as new initiatives are concerned, they are from the perspective that, okay, what will be Just Dial's growth drivers five years, 10 years down the line.
Some of those particular products are in pipeline, and as in when they start showing traction, firstly in terms of users, followed by in terms of for revenue profitability, et cetera, we will sort of evaluate them at that point of time.
Hi. We have next question coming from Mr. Harshal Parekh. Please unmute and introduce yourself to ask your question. Mr. Parekh.
Hi, Abhishek. This is Amar here this side. I have a question on B2B business. If you can give us some understanding, like B2B business which was around INR 200 crore business, I think in FY 2022. What would be the B2B size in 2022? Basically, now is that B2B whole business is consolidated into JD Mart, or we are still doing the B2B business separately and JD Mart is run separately? How it is.
B2B currently is about 20%-23% of our revenues.
Okay.
Whatever vendors that get signed up on Just Dial are visible and their products and digital catalogs are visible on JD as well as JD Mart. JD, since it is a well-established search engine, we already draw a lot of traffic for B2B related categories. A customer doesn't have to take two separate sort of subscriptions. Whenever they do take a subscription, that is for all Just Dial platforms put together. In this case, visibility on Just Dial as well as JD Mart.
Okay. Now currently, how many subscribers, let's say, in the B2B business?
B2B business, I think, there should be around 80,000 odd subscribers, about. 20% of 437,000. That is broadly, I think, should be the B2B campaign base.
Average realization would be around INR 20,000 crores?
Yeah, INR 20,000 crores annually.
Yeah. In this, like, you know, what would be the fixed cost in this?
In our case, fixed cost, I mean, in terms of, you have the sales cost that is there, you have the sales team, and then you have the corporate overheads in terms of whatever, support functions, et cetera, that we have. Fixed cost is primarily the salaries that we have to pay for either the sales team or other technology, content and support teams.
Basically, in percentage term, let's say 30%, 33% would be your fixed cost?
We look at it more as a gross margin basis. For example, on overall Just Dial, pre-COVID, we used to have about 60% gross margin. Against that, business used to make overall about 25%-30% EBITDA margin, which essentially means that another about 30%-35% used to go in other support functions related to product, content, technology, advertising, et cetera.
Okay.
We do not directly look at that, okay, this much percentage is fixed cost versus non-fixed.
Okay.
For example, while we were a 25%-28% margin business in FY 2020, in FY 2021, our top line dropped by about 28% due to COVID impact. Still we were able to optimize our cost structure such that business still delivered about 28% EBITDA margin. That is how it is.
Okay. Let's say in this nine months
Harshal, can I request you to please join the queue? Please, there's a long queue of participants who are
Sure. Okay. Thank you.
Hi. Requesting you all to please restrict yourself to only two questions. We have next question coming from an audio dial-in. Please unmute yourself and ask question by hitting star six. Yes, please go ahead.
Hello. Yeah, good evening. This is Prateek from Antique Stock Broking. I have two questions. Firstly, when you say we have withdrawn, like, all the discounts and implemented firm pricing, so is this something which also can impact your paid campaign? Secondly, how do you see business turn or any market share changes in B2C category from new and old competition in general?
Prateek, on the first question, when we say withdrawn discounts, when this particular COVID first wave hit us, at that point of time, in order to assist SMEs, we rolled out certain discounted plans. We rolled out certain schemes such as late activation. You pay today, but your campaign can get activated about, say, a month later or two months later, whenever you want. All those flexibilities, et cetera, we have sort of withdrawn. The idea is to say that, okay, there is a same pricing which will be sort of be implemented and that since it coincides with withdrawal of sort of COVID second wave, and as I mentioned, the third wave impact seems muted at this point of time.
This is sort of working out, well for us at this point of time. On your question around market share, so there aren't any formal sort of, stats around, market share. In fact, in local search, where we operate, there aren't any sort of, direct competitors, so to say, though there are obviously a lot of, indirect, competitors. Going forward, as we mentioned that the way things are evolving, that people want to do more and more stuff online, we would be wanting to evolve into that particular transaction cum, search engine.
Thank you. Can I ask one more question or I shall get back to the queue?
Go ahead.
Go ahead.
Sure. Thank you. Also, in the last call.
Yeah, I think our caller got dropped. We have next question coming from Mr. Anuj Sahilgal. Please unmute and introduce yourself to ask your question. Please go ahead.
Yeah, hello. Can you hear me?
Yes, Anuj, we are able to hear you.
Yeah. No, I just want you to understand. You know, you talked about transaction model, which will obviously have revenue as a percentage of value of transaction and will have a different margin profile from the core business. What I want to understand is what are the categories that you think will be, you know, suitable for this transaction-driven model, and what kind of a business or how will your overall revenue change, let's say over the next three to five years, with this whole transaction model shift that you are anticipating?
Anuj, on this, I think it'll be too early for us to be honestly able to comment that how will our revenue profile, et cetera, change. As we mentioned that the idea is to add a transaction layer in both service and product-related categories. We would want to pick, say, low-hanging, categories first, optimize them for user experience and then gradually scale up to other categories. At this point of time, platform is getting built, there'll be pilots that will be done. We will work towards growing the user base, at the same time work on monetization, et cetera. I think, it will be some time before we can be in a good position to be able to comment on this.
Maybe if I ask in a different way, can you give us a sense of how you are thinking about this? Maybe give some examples of what kind of categories would you be, if not targeting, but what are the kind of categories which are suitable for such a business model, and how should we think about that? I mean, I know it's early days, but at least just want to understand your thought process of how you are going about building this business.
For example, on the services side, as part of JD Xperts, it would be, say, home service-related categories. For example, your pest control services, your categories such as any kind of appliances repairs. Then it could be extended to, say, carpenter, plumber, electricians, even could be extended to yoga trainer, fitness trainer, et cetera. These would typically be on-demand home services. On the product side, it could be any sort of consumer durables such as, say, mobile phones, your
Can I add to this?
Please go ahead.
Let us take shopping. Shopping will be no different from what you see in Amazon, Flipkart. The difference is the partners are located. It's a hyperlocal sourcing mechanism, so ensuring that the person matching the consumer buyer to the seller to the nearest PIN code and ensure faster delivery. We have a larger inventory base in terms of, say, 1 million businesses being our partners. We're able to cater to products on demand at any time because of such a large inventory base. When you extend this to any other product which is, let's say, B2B in nature, bulk in nature, wholesale in nature, there too, again, the similar strategy. Basically, all those listings on Just Dial are doing nothing but they are playing a part in the economy. They're all playing their role as retailers, wholesalers, distributors or whatever.
We're bringing them to our platform and allowing them to sell exactly the way they sell it. That includes JD Shopping and JD Mart. This will be what we will be doing. This is a platform which will facilitate for that. On the JD Xperts side, our idea is that now consumers are more into kind of Uberized type of experience, where they would probably want to book with one, a brand like Just Dial or a platform like Just Dial and would want that e-execution of that work. It could be any kind of repairs and services at home. It can be any type of services which are rendered at home, like cleaning services or beauty salon services and things like that. What do we do here? Do we employ any of these people? No, we.
We go to our partners, and we locally source them according to the same PIN code, geocode strategy and try to cater to it on time, ensure that it's a high standard of service experience, and there are certain formats, methods that they have to follow, all the service providers. Similarly, you can go dissect healthcare, doctors. What could happen in doctors? Doctors could be online consulting. Doctors can be fixing an appointment, finding the type of specialist, you know, specialty hospitals, you know, various things. So can you go deep dive into it? Of course, we can. So that's where the investment getting in. Real estate, I already explained that if we get into real estate, it's going to be much deeper content, allowing every agent and builder to publish their content for free and sell their inventories.
Obviously, there'll be a preference to the sponsored listings, whose products and services postings will be showcased right on top. Like, accordingly, like we would have something to do with groceries, insurance, loans. What we did was we looked at the JD revenue pie and where is our revenue coming from. Our revenues were coming from, let's say, insurance agents, people who are facilitating for loans, people who are retailers. We looked at how is it happening in modern day. In modern day, it's happening differently. Can we play an important role? Can we provide a platform for that? This is what we're going to work on. You will see we'll roll out one by one each of these. As you go to the same Just Dial also, you will see a much superior and richer experience.
That's what our goal is. Let's see how much of it we can execute. It may seem like a lot, like we are trying to overachieve instead of going after one or two verticals, but that's not the DNA of Just Dial. The DNA of Just Dial is a horizontal. We cater to all kinds of products and services. What we did was we started hiring people who were working in certain expert verticals, you know, online verticals, which they have been there for years. They know a good knowledge about, you know, how it operates. We may take them as leaders, and these leaders are going to execute it. Of course, in the differentiated way that we want to do it.
Okay. No, this is very helpful, Mani. Just one clarification. On the B2C side, you know, it is very clear you will go hyperlocal, try to connect the customer with either an expert or, you know, a shop. On the B2B side, you know, that is not necessarily a hyperlocal business, right? How should we think about that part of the business?
Even in B2B, if you look at a good example, Alibaba, you know, if you look at them, you know, how they go about. Here you allow manufacturers and sellers to publish their products and obviously sell online, have discussions online, get quotations online, request for quotation online, and all of those. We provide as a platform whatever is required, you know, there. We are also willing to lend our help, or rather we call it JD Xperts services, through which if you place an order, your product is reaching you securely, and we kind of release your payment only after the receipt of the goods according to satisfaction, and such type of services that we're going to package along with it.
You have an option to go offline, transact with the same vendor after discovering the vendor online at Just Dial's JD Mart or Just Dial itself.
Got it. This is very clear. Is it fair to say that, like, your current mix is about 77% B2C, 22% B2B? Is that similarly how this business will evolve, or is it gonna be much different?
Well, we are very interested to know that, you know, honestly speaking, currently a large percentage of our revenues come from services sector. The small percentage comes from B2C JD B2C products, okay? 22%, 20% is coming from B2B. I think the B2B numbers may grow considerably. See, it is for both B2B and B2C, it's getting indispensable to, you know, internet as such and being part of any platform. I'm sure vendors realize that, and hence we will have more members, more people subscribing to our services. As we give a proper shape to our product, we start advertising and all that. It's also possible that all sections are growing at the same time, so probably the percentages may remain constant.
My guess is on the JD B2C products, probably the revenue share could increase because we didn't have any such thing done over a long period of time. The shopping will obviously is really powerful. If you can have instant delivery and a wow experience and great price discovery and all that, obviously that also has huge potential to grow.
Okay. Thank you very much. This is very helpful.
Yep. I think we have the next question from Resham Jain.
Yeah.
Hi, Resham.
Hi, sir. Good evening. I've just one question on JD Mart. You have built a large catalog, and I think a lot of vendors are also there in terms of listing. In terms of indexing them on a search engine like Google, how are we currently progressing over there? Because a large part of traffic comes from Google. In terms of indexing, how are we progressing?
Indexing part, we're doing, growing better and better day by day. I mean, probably there could be some early movers who are now visible, very much prominent there. It's only a matter of time. Once you have rich content, Google has the bias towards good content. That will. You'll see that. Since the period of existence of the site also matters, you know. What we have done is trying to kind of capitalize on the Just Dial's popularity on SEO. If we could leverage that for traffic to JD Mart, something tactically worked on that by our team. We'll get to know the results in next two, three months, how that has helped us.
Any specific category where you think your indexing is now much more powerful than, let's say, just to give as an example, you might be strategizing based on specific sector first. So any example you can give?
No, SEO works on content enrichment and our content enrichment is getting done across all categories, you know. Irrespective of whether search engine traffic or not, we need to have that enrichment for a better user experience. Eventually, you know, you got to less depend on SEO and get traffic directly to as a first preference, you know. That's going to be our ultimate goal, you know, to how to get users directly use our app, or you come to our site directly, and there has to be a compelling reason or proposition for them, and then you achieve it.
Okay. Got it, sir. Thank you very much, and all the best. Thank you.
I think, given the time constraint, that was our last question. I think we can end up the call, and I'd like to thank all the participants and the management. Any last comments from your side, Abhishek?
Thanks everyone for joining us. In case you have any further queries, please do reach out. We'll do our best to address. That's it from our side. Thank you.
Thanks, everyone.