Hi, everyone. Good evening, and welcome to Info Edge (India) Limited Q2 2023 financial results conference call. As a reminder, all participant lines will be in listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please raise your hand on your screen. Please note that this conference is being recorded.
Joining us today from the management side, we have Mr. Sanjeev Bikhchandani, Founder and Vice Chairman, Mr. Hitesh Oberoi, Co-promoter and Managing Director, and Mrs. Chintan Thakkar, CFO. Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer slide number two of the investor presentations for detailed disclaimer. Now I would like to hand over the call to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.
Thank you, Vivek, and good evening, everyone. Hope you're all doing well, and welcome once again to our second quarter earnings call. As always, we'll start by giving you an update on the standalone financials, and we'll talk about the market conditions in each of our operating verticals and then cover the financials of each business in more detail.
Of course, we'll have time for Q&A in the end. The audited financial statements and other schedules on the segmental billing, revenues, et cetera, along with the data sheet, have been uploaded on our website, infoedge.in. Overall billings in Q2 grew to INR 542.9 crores, up by 31.4% from Q2 of last year. Billing for H1 2023 stood at INR 1,067 crores and year-on-year growth of 45%.
Revenue in Q2 stood at INR 531.8 crores, up by 46.7% from Q2 of last year. Revenues for H1 2023 stood at INR 1,039.5 crores and year-on-year growth of 50.5%. Billings and revenues, along with acquired businesses like Zwayam and DoSelect, stood at INR 559.5 and 549.5 crores respectively. Operating expenses for the quarter, excluding depreciation and amortization, were INR 347.8 crores, up by 38.2% from Q2 of 2022. Operating EBITDA for the quarter stood at INR 184 crores versus INR 110.8 crores last year, an increase of 66.1% from Q2 of last year. EBITDA for H1 2023 stood at INR 347 crores.
Operating EBITDA margins for the quarter stood at 34.6% compared to 30.6% for the same quarter last year. EBITDA margin for H1 stood at 33.5% to 4%. Operating EBITDA, including acquired businesses, stood at INR 189.6 crores, a year-on-year increase of 79%. Cash from operations for the quarter stood at INR 299.9 crores compared to INR 171 crore last year for the same quarter. The business generated INR 383.8 crores of cash from operations in H1 of 2023. Deferred sales revenue stood at INR 840.9 crores as of September 30, 2022 versus INR 562 crores as of September 30, 2021, an increase of 49.6% year-on-year.
The cash balance of Info Edge, including the wholly owned subsidiaries, stands at INR 3,250 crores as of September 30, 2022. It stood at INR 3,800 crores as of September 30, 2021. The JobSpeak index for the month of September was up 12%. However, hiring slowed down in IT and ITES segments September onwards.
This trend continued in the month of October with a negative growth of 18% in IT and telecom sector. However, an early festive season also impacted the index for the month of October as it closed 3% down year-on-year. However, hiring in Q2 remained upbeat with high growth in non-IT sectors like banking, real estate, insurance, travel, tourism, hospitality, retail, etc.
The quarter saw demand for low to mid-management profiles gaining momentum across industries. We also experienced a vibrant real estate market during the last quarter. Strong momentum and new growth sales continued across top cities in Q2.
We noticed an upward trend in property prices. We expect the unit sales momentum to continue in near term despite steep hike in home loan interest rates announced recently. We also expect builder clients to launch more new residential projects in the second half of the current financial year. University and college admissions are a little delayed this year. We expect the academic season to return to normal from next year. Moving on to our financials for the recruitment business.
In Q2 of 2023, the recruitment segment billings were INR 425.6 crores, up 41% from Q2 of 2022, while revenues were INR 418.1 crores, up 56.4% from Q2 of 2022. Billings for H1 2023 stood at INR 840.6 crores, a year-on-year growth of 51.7%, while revenues stood at INR 805.2 crores for H1, a growth of 61.5%. Operating EBITDA stood at INR 254 crores for the recruitment business, up 61.3% from Q2 of last year. Margins stood at 60.8% versus 58.9% in Q2 of last year.
EBITDA margins for H1 2023 stood at 60.2%. Cash from operations for the recruitment business during the quarter stood at INR 280.4 crores, up from INR 1.6 crores in Q2 of last year. The business generated INR 515.8 crores of cash from operations in H1 2023. Cash from operations as a percentage of billing for the business stood at 66% for the quarter.
Billings for Naukri India for the quarter stood at INR 356.2 crores, up 46.3% year-on-year, while revenues for the quarter stood at INR 352 crores, up 63.6% year-on-year. Recruitment selling segment billing, including acquired businesses like Zomato and DoSelect, stood at INR 402.3 crores, a growth of 44.8% YOY for this quarter. iimjobs and Hirist had a YOY growth of 47.3% in their billing numbers for this quarter, and Zomato and DoSelect also reported similar growth in Q2 of this year over Q2 of last year.
The Naukri business continued its growth momentum and the platform, on the platform side, registered increased jobseeker traffic and recruiter access during the quarter. Around 22,000 new CVs were registered per day during the quarter, a year-on-year growth of 12%. The active base for our mobile app is also continues to increase significantly month-on-month.
The sales team continued with their strategy of creating more awareness around the value generated from our products to drive deeper value optimized realization during the quarter. We increased our marketing spend during the quarter as we continue our sort of to invest behind our recently launched My Kind of Naukri campaign, which targets the Gen Z audience. We also upped our stake in Coding Ninjas from 26.1% to 51% this quarter. We invested INR 135 crores.
The investment shall help our recruitment business to explore and maximize business synergies in the learning space and take us towards our long-term goal of transforming Naukri from a jobs portal into a careers platform. The AmbitionBox platform launched the second edition of AmbitionBox Best Places to Work in India awards in Q2.
In the education business, Shiksha Q2 billings grew 31.3% year-on-year and stood at INR 24.8 crore, while revenue grew 20.1% to INR 25.9 crore. Billings for H1 2023 stood at INR 55.1 crore, a year-on-year growth of 30.9%, while revenue stood at 57.2 crore with a year-on-year growth of 29%.
The business, the Shiksha business made an EBITDA loss of INR 1.8 crores during the quarter versus a profit of INR 5.1 crores in Q2 of 2022. Cash outflow from operations for the quarter stood at INR 1.7 crores against an inflow of INR 1.4 crore reported in Q2 of 2022. Moving on to the 99acres business. Billings in Q2 grew by 11.1% year-on-year and stood at INR 75.7 crores, while revenue grew from INR 48.3 crores in Q2 of 2022 to INR 69.7 crores in Q2 of 2023. Billings for H1 of 2023 stood at INR 136.8 crores, a year-on-year growth of 51.2%, while revenue stood at INR 136.1 crore, a year-on-year growth of 39.6%.
The operating loss for the quarter in 99acres stood at INR 29.6 crore against a loss of INR 21.9 crore in Q2 of last year. The business reported a cash outflow from operations of INR 19.1 crore for the quarter against a cash inflow of INR 4.4 crore in the same quarter of last year. In 99acres, we are seeing more higher sort of revenue growth across all categories, resale, rentals, commercial, new homes. Responses from the platform continued to grow year-on-year. We were able to significantly increase inquiries for our clients with both increase in traffic growth and other multiple client delivery initiatives.
We further increased our focus to improve reviews from residents and to get more transaction prices on the platform to help buyers and owners get more insights about the real estate market. We will continue to invest on platform content, client delivery and marketing in the months ahead as well. Moving on to the Matrimony business, Jeevansathi. Billings in Q2 declined by 30%, 30.4% year-on-year to INR 16.9 crore, and revenue declined by 28.7% year-on-year to INR 18.1 crore. Billing for H1 of 2023 stood at INR 34.5 crore, a year-on-year decline of 30.1%, while revenue stood at INR 41 crore, a year-on-year decline of 18.9%.
Operating EBITDA losses for the quarter stood at INR 26.6 crores for the quarter against a loss of INR 21.2 crores in the same quarter of last year. Cash outflow from operations for the quarter stood at INR 29.8 crores against an outflow of INR 27.7 crores in Q2 of last year. Jeevansathi's chat for free model has helped us accelerate has helped in accelerated growth of platform engagement metrics.
Degrowth in billings bottomed out in July and since then has been steadily improving. Jeevansathi team has continued to focus on improving the recommendation experience on the platform in addition to building brand salience in the category. Our dating platform, Aisle, witnessed a growth of 152.5% during the quarter and registered revenues of INR 7.9 crores.
The business continues to evaluate new growth paths and accordingly, all four vernacular apps were redesigned to make them more user-friendly. At a consolidated level for the company as a whole, net sales for the company stood at INR 604.1 crore versus INR 366.1 crore in Q2 of last year. For the consolidated entity at the total comprehensive income level, there is a gain of INR 470.7 crores against INR 13,808.5 crores for the corresponding quarter in the previous year.
The gain for Q2 FY23 includes mark-to-market gain of INR 394.5 crores on investments held in Zomato and Policybazaar, listed companies being the difference between share price as at end and beginning of the quarter. The gain of Q2 FY22 had included INR 13,607.9 crore arising from the listing of Zomato in that quarter, and the mark-to-market gain therefore on the share price at that quarter end. Adjusted for the exceptional items, PBT stood at a profit of INR 148.7 crore in Q2 of 2023 versus INR 69.9 crore in Q2 of 2022. Thank you. We are now ready to take any questions that you may have.
Thanks, Hitesh. We'll now begin the Q&A session. Anyone who wishes to ask a question, raise your hand on the screen. We'll take your name and announce your turn in the question queue. The first question is from Deep from BNK. You can go ahead and ask question, Deep.
Yeah, hi. Thanks for the opportunity. Hitesh, first question is actually around 99acres.com. What we've seen is there's a mixed trend there. Billings have only grown 11%. At the same time, our losses have remained. If you could just help us understand better, what's happening in that segment and how should we think about this segment going forward, especially that we are investing a lot more for brokers now. How should we think about 99acres.com as a whole?
Yeah. You know, see, what we are seeing in the market is that the real estate service segment is back. You know, property prices are going up. More real estate is being bought and sold than was the case earlier. The real estate market was in the doldrums for many years, but it's now sort of slowly and steadily bouncing back.
There seems to be a shortage of supply because not enough projects were launched over the last couple of years due to COVID. At the same time demand has picked up, so therefore prices are going up in several pockets. As far as our business is concerned, our business was hit very badly because of COVID last year, which is why you're seeing a solid growth in the first half in terms of revenue, because of the low base.
I think the way to look at 99acres.com is, you know, how are we trending month-on-month, quarter-on-quarter. We are now at a point where we've hit a rate of perhaps a hit of monthly run rate of about INR 25 crore a month. At the same, you know, yes, our losses have gone up because we're investing a lot more in product development, we're investing a lot more in marketing than was the case earlier.
Partially it's also because of the increase in competitive intensity in the space. There are many more players who are active and they are spending a ton of money right now and therefore we are sort of being forced to respond to keep our share.
How will things shape up going forward will to a large extent depend on how well we execute on the ground, number one. It'll depend on how fast and how well we are able to execute as a team on some of the initiatives that we are pursuing inside the company. Two, it'll depend on how competition sort of behaves in the market. If they continue to invest aggressively, then for a while, you know, we may be forced to up our marketing investments to counter them.
On the other hand, if competitive intensity starts to decrease, then you know that will be a different ballgame. The overall market looks decent. Now, we don't want the market to, you know, become unaffordable for real estate buyers. We don't want prices to go through the roof also.
We don't want it to be a market where people launch projects and they get sold immediately because of certain surge in activity, because then or you know, then we're not required. At the same time, we don't want a very poor market also where, you know, nothing sells. Fingers crossed, but after a long time it looks like, you know, there is a buoyancy in the market and that should be good news in the medium term at least.
Right. Thanks for that. Also, if you could help us understand a bit more about Broker Network. I see we invested a lot of money there. You know, if you can help us understand what is it and any chance we are getting back into transactions or that is still not a place we want to explore?
Yeah. Broker Network is an investment. You know, we don't run the company. But yes, we have invested in the company, and the company was pursuing a very aggressive model, you know, till recently. You know they are basically in two different businesses. They enable site visits for new projects for developers, and they charge per site visit. That's one model.
Then they also sort of help, you know, organize home loans and they take a cut on that. That's the second model. You know, sort of, the second business they are in. You know now they're not, you know, they want to make a transaction cut from developers. You know, they've launched something in that area, early days still.
Right. Perfect. That's it from my side. Thank you so much.
Thanks. Vivek, you are not audible.
Sorry. Next question is from Jay. She's from Julius Baer. Jay, you can go and go ahead and ask your question, please. Jay, you're on mute right now.
Hi. Am I audible?
Yes.
Yes, you are.
Yeah. Hi, Hitesh. A quick question. Could you comment on the IT sector and the demand in that space, please?
Yeah. See, for the last 7 quarters, you know, the IT sector was on fire. Attrition rates were very high. There was massive wage inflation, tremendous hiring. Again, mismatch of supply and demand, not enough supply, but you know, certain surge in demand. That was great for our business. Now anecdotally, what we're hearing from people in the market right now and what we are witnessing in our company also is that attrition rates have come down a bit and things are normalizing.
Therefore I suspect, you know, growth in IT hiring will moderate going forward. Now how much will it slow down by? Very hard for me to say at this stage. Will it slow down? Definitely. Will it crash? I don't know. For how long will it slow down? No idea.
Again, it'll come. It might depend on what happens in the U.S. because the IT sector is more sensitive to what happens in the U.S. than to what happens in India. That's where we are as far as IT is concerned at this point in time.
Thanks, Hitesh. Got it. Thanks.
Next question is from Raghav. Raghav is from Citi. Raghav, please go ahead. Raghav, you're not audible.
Hi.
Now you're audible now.
Hello, can you hear me?
Yes, we can.
Oh, sorry. This is Vijit. So my question is, first off on IT hiring, Hitesh, when you said, also in the TV and in the press release that IT hiring is now normalizing, just wondering, A, does normalizing mean back to pre-COVID kind of levels? Is that the definition of normalizing here at the moment? A related question in the overall recruitment space, can you talk about any future investment plans in the other company that you invested in there, right? Coding Ninjas. That's a learning space, right? So how should we think about that going forward?
Yeah. Again, very, you know, early days, too early for me to comment on how this IT hiring will sort of shape up going forward. You know, October is also a little misleading because of the festival season. Many companies sort of slowed down their operation in the festival season. What I said earlier on the call is that, you know, certainly attrition rates are trending south in IT.
It was a crazy market till some time back. It is a more normal market now. Now that may not be the case with all companies, okay. You know, maybe some companies are doing better than others, some are not. So that's what I meant by things are beginning to normalize. It's not as if IT companies are laying off workers.
We haven't come across any such sort of case at this point in time. Certainly, they're negotiating harder. They're taking more time. You know, they are not under as much pressure as they were earlier, at least some of them. You know, attrition rates seem to be slowing down. By how much, I guess, depends on the company.
Got it. Thanks, Hitesh. My second question was on Coding Ninjas investment plans there. How should we think about that going forward from both-
Yeah.
Cash perspective?
Yeah. We've been an investor in Coding Ninjas for a while, and they've made good progress, and which is why we've increased our stake from, you know, 25-26% earlier to now 51%. The idea is to sort of deeply integrate with Naukri going forward. Till now, they were mostly focused on, you know, providing education solutions to students on campuses, undergrad students.
Increasingly they are looking to offer more and more courses, upskilling courses for working professionals as well. Over time, we will sort of integrate their offerings with the Naukri platform. It's part of our overall sort of vision, long-term vision, you know, to transform Naukri from just being a job board into a more sort of holistic careers platform.
Right.
Where sort of, you know, we help people, not just find jobs, but we also help prepare them to sort of find the right jobs for themselves. We inform them and prepare them and sort of teach them as well. That's the long-term game plan. Of course, a lot will depend on how the business sort of shapes up over time.
Right. Hitesh, I guess, sorry, one last question around that. Is that more around the lines of online learning or there's offline learning component there as well?
No, it's more. Right now it's only online learning.
Got it. Great. Thanks. Sorry, if I can have one last question from my side just on the recruitment side. The non-IT recruitment sector you've called out as some of those spaces are picking up pace. From a more, you know, removing the whole low base of the last few years perspective, how do you think that non-IT sector, shaping up from here, given that IT sector is normalizing? Should you or do you think, the share of non-IT goes up from whatever 40% odd, of your billings or revenues to somewhere more closer to 50+, or how should one think about that?
Well, you know, the non-IT hiring is more indexed to the Indian economy and how the
Right.
You know how GDP growth in India. Now, partly what we are seeing is a surge in hiring on the non-IT side because non-IT companies are pretty much, you know, sort of because of COVID, they were shut for business.
Right.
For some time. They had laid off workers. Business had contracted. Now they're bouncing back. You know, there's revenge travel, revenge shopping, revenge everything, right?
Right.
Therefore, we are seeing a massive surge in demand for talent in spaces like retail, travel, hospitality, you know, banking, financial services, insurance, telecom because of 5G sort of, and so on and so forth. We are seeing. There's more demand for sales professionals, finance professionals, marketing professionals, customer service reps, you know, and. Now what had happened over the last 7 quarters was at least for the last four or five quarters, was that IT demand had picked up and there was a surge in demand, and which is why the share of IT in our overall mix perhaps went up by about 5-7 percentage points.
Now, if IT hiring slows down and non-IT companies continue to ramp up, then of course, you know, we might go back to how things used to be pre-COVID for us. That will depend on whether this IT, non-IT, boom in the non-IT space is sustainable and how sustainable it is. If it's gonna be like this for a while, then of course, you know, the share of non-IT in total hiring may pick up.
Got it. Thanks. Thanks a lot, Hitesh.
We have someone from, Laburnum Capital, who had raised their hand. I would request them to please ask their question.
Yeah, hi, this is Amit Kirtan from Laburnum Capital. Good evening, and thanks for the opportunity. I had a question on the matrimony business. We've had a change in strategy, I guess, over the last six months or so, if I'm not wrong. How is that playing out?
Can you share some metrics, either in terms of market share or traffic share like you do for other verticals? Because otherwise, we cannot make sense of what's really going on here. Second, related to that is, how much are we spending on marketing on a quarterly basis, and has that gone down post our new strategy or gone up? Just some numbers, broad numbers would be really helpful.
Yeah, no. I can't share all the metrics for competitive reasons, but we are very happy with the progress that we're making. We have gained substantial traffic share, in our view, over the last few quarters, especially in the communities where we are reasonable players. You know, more people are registering with us, people are spending more time on the platform.
We are getting more matches, and hopefully more and more marriages are also happening through us. You know, so we are very happy with the gains in traffic share. This is despite us slowly, you know, we've cut down marketing spends also. It's not as if we are spending crazy money on marketing.
Our revenue is down 30%, you know, our collection is down 30%, billing is down 30%. Despite that, we are perhaps losing only as much money as we were losing earlier. If the numbers continue trending in the right direction, then losses in the matrimony business, going forward will be much lower than what losses were in Q3 and Q4 of last year. In Q3 and Q4 of last year, we had upped our spend on marketing significantly in our matrimony vertical.
Since then, the marketing spend has been slowly trending down. Now we don't want to, you know, sort of cut marketing overnight also because we need to sort of, get the word out that we are free, right? Because people need to know that we are free. For some time, this marketing spending will continue. At the same time, we are working on, new models and new ways and means to monetize our audiences. You know, early days on that front. Wait and watch for the next few months. Let's see how it goes.
Got it. Any sense of have we lost or have we gained market share in terms of number of users?
Yeah, absolutely. Like I said, we've been gaining traffic share on the user side, in all the communities where we are present. While we have lost market share as a revenue market share, we have certainly gained on user market share.
Got it. Thank you.
We have next question from the line of Vimal Goel. Vimal, can you go ahead and ask your question, please?
Yeah, thanks. Thank you for the opportunity, sir. So my first question was on the Naukri business. I just wanted to get a sense on, you know, the slowness that we've seen in the unique user. I do understand that partly it is because of the IT hiring slowing down. But should that essentially lead to a decline in user base for us? That is point number one. The related point would be that you have more than made it up by increasing the revenue per unique user.
By unique user, what do you mean? I mean, customer or on the recruitment side or on the job seeker?
Yeah, on the recruitment side, on the number of unique users, unique customers.
Unique customers.
Yeah.
Which number are you referring to? Because as far as we're concerned, we're not seeing any decline in unique customers. Wait, quarter-over-quarter or year-over-year?
Yeah. It's a sequential decline on the.
Uh-huh.
unique customer side.
Yeah. See, a lot of these customers are at the bottom, you know, so they don't generate too much revenue for us. Often it's a function of how many holidays fall in that quarter, you know, et cetera. I would not read too much into that number. In general, you know, when the market slows down, then new customer addition d oes slow down a bit.
Got it, sir. Sir, just wanted to get, again, you know, you sort of more than made it up on the average revenue that you've generated.
Yeah.
per unique user.
Yeah.
That was my second point. I mean, how much of that would you relate to, you know, more, a better mix and the addition of your other services like DoSelect, Zwayam, et cetera?
We don't give the breakup, but, you know, when we sort of build more from a customer, it's mostly on account of, one, you know, sometimes they buy more services, as in we have launched so many new products and services, so a lot of customers end up buying some of these new services that we've taken to market.
Two, you know, we've seen seriously good pricing gains over the last few years, last few quarters. You know, and so that's been across the board. We realized better prices than we used to realize earlier. When we went into COVID, we were discounting heavily, you know, because the economy was slowing down. After and during COVID also, we had to discount heavily to sort of retain because companies were not hiring.
Therefore, our pricing had gone down substantially over the last two to three years. That has now gone back to normal levels. In fact, we are working hard so that customers see the value that we are creating for them through some of the tools we've launched, these analytics tools and customer analytics tools. That's helping us realize better prices. Thirdly, also what happens in a good market is, you know, customers need to hire more people, so they buy more volume. It's perhaps, you know, so ARPU has gone up. It's a mix of all three.
Right. Just to understand that, you made a pertinent point. What is the share of our customers who are using these add-on services that we have? Is the penetration up there? I mean, do we have some low-hanging fruits there? Or you have almost all of your large customers using your services already?
No. We have a long way to go. Of course, there is more competition in some of these new spaces, and there are other players we're competing with. Penetration levels are nowhere close to even, you know, 20, 30, 40%, you know, in different for different products, but they are very low.
Understood.
There is more competition as well.
Understood. Lastly, sir, just one question on Coding Ninjas. I think you made a point on finding some synergies with the core Naukri platform. My belief is that Coding Ninjas would be a direct B2C sort of a model, and our platform is more B2B. How are you sort of looking at synergies then? Are you looking to sort of cross-sell Coding Ninjas to your existing enterprise customers, or how will that transition play out?
You see, our platform is not B2B. Our revenue is mostly B2B, right? We have a B2C part of the business, so we have millions of job seekers who visit our platform every month. They spend a lot of time on the platform. They register on the platform. They apply for jobs on the platform. There's no shortage of users on the platform. Revenue generation is mostly on the B2B side.
About 70% of our revenue comes from job seekers as well. Even today, you know, we have this Naukri FastForward business where we sell services to job seekers. That's not the primary focus. We get about 5%-6% of our revenue from job seekers today. You are right, Coding Ninjas is a B2C offering right now.
There is no plan to take Coding Ninjas to recruiters at the moment. Therefore, what we will do is integrate the Coding Ninjas offerings with our Naukri platform more and more going forward. In the process, hopefully we will break down the cost of customer acquisition for Coding Ninjas.
Got it, sir. Sounds interesting. Thank you so much, sir, and all the very best. Thanks.
Next question is from Vivek Anand from Ambit Capital. Vivek, you can go ahead and ask your question, please.
Yeah, thank you for the opportunity. Hitesh, you said that the increased billing, you highlighted the three factors. Were they in order of importance in terms of contribution to the increased billing or was it just in you know no specific sequence?
No. In no particular sequence. No specific sequence.
Okay. As far as the commentary on IT is concerned, you did mention that things are now normalizing. Would a sharp decline in attrition rate meaningfully weigh on the volumes right now? Is there a possibility that we might be looking at a potential decline in billing for recruitment if this were to play out? Let's say attrition declines by, say, 5%, industry-wide. Would this meaningfully result in a sharp, you know, cut in the billing? Or are we looking at a situation where things. This is like the new base where all the discounts have been withdrawn and all the pricing is back to normal levels?
See, very hard for me to say. I don't know how it's gonna play out. You know, we don't know for sure whether there is likely. I mean, there is a fall in attrition, but how much will attrition fall by is hard for me to say. Whether attrition will fall for one quarter or whether this will be a sustained slowdown, unclear at this point in time. Have companies overhired?
You know, a lot will depend on that also, right? Or were they still scrambling to get talent and suddenly now things are getting better. And I guess the situation will be different for different companies. It's very hard for me to say. What I can tell you for sure is that attrition rates seem to be trending south. Now, how much south? God knows.
Where will this finally stabilize? Unclear to me. We have seen a sharp fall in attrition in our company, but that's because many of our employees used to, you know, leave to join startups. Startups, as you know, are in big trouble. But we don't make a lot of revenue from startups. We make mostly sort of, you know, make our money from IT services companies and from captives. In the past, we have also seen that whenever there is a slowdown or a recession in the U.S., the Indian IT industry gets hit for a quarter or two, but in the end they benefit because a lot of jobs are outsourced to India.
I don't know whether that will happen this time around, but if for that to happen, then, you know, business will start picking up again in a couple of quarters. Demand should for IT services companies start picking up again. Early days, very difficult for me to say how it's going to play out.
Okay, just one follow-up with respect to the billing trends. When we look at the growth today, right? The Naukri India 46 billing, 46% year-on-year billing growth. Is the trend meaningfully different for IT versus non-IT? Secondly, on the billing side, would the segments of IT hiring, which is IT services, captives and let's say the domestic firms hiring for their IT needs, is the billing trend very different on that count also?
Not very different from Q2, right? What I said is that listen, what we're picking up, you know, is some stories around IT hiring slowing down, going forward. It could change going forward, right? Not very different from Q2.
Okay. You are saying that even this quarter, the billing growth for IT versus non-IT was on a similar tangent, is it?
In fact, non-IT was pretty solid even in Q2. Sorry, even IT hiring growth for us was pretty solid in Q2 as well.
Okay, fair enough. Second question is on 99acres. Initially you mentioned quite a bit about, you know, how you are seeing that the market is in a sweet spot for your, you know, for your platform. And of course, you feel that this momentum is here to stay. Just trying to understand this better, you know, you had a couple of years ago, I believe you had done a reorganization, focusing on specific verticals, you know, new launches, resale, rentals, commercial. Would it be possible for you to give an update on that, on where this is progressing? You know, maybe segment-wise commenting. Thank you.
Internally, this is how we are organized. We have, you know, teams which work on resale. We have a team which works on new homes. We have a team which works on rentals. We have a team which works on commercial. Of course, the commercial and rental parts of the business are small. You know, it's mostly new homes and resale where we get our revenue.
Almost all sectors are sort of have bounced back, so there's a lot more commercial activity in the market as companies go back to working from office. There's a lot more rental activity in the market because a lot of people have, you know, sort of left their the cities in which they were working and gone back home.
They're all coming back, and therefore there is a surge in demand for bigger houses, for more houses to rent. Suddenly we are also seeing real estate prices go up, and that has brought a lot of buyers back into the market also. You know, of course, people have seen, at least in IT, seen very good salary increases over the last couple of years.
Suddenly there is a demand for more Housing.com as well. At the same time, supply of new homes has gone down. There's less inventory because there were not enough new projects which were started, you know, during COVID. On the whole, the whole market is looking attractive and prices have gone up.
At the same time, we worry about the fact that, you know, prices go up too much and real estate will become unaffordable, and that will result in a lot of buyers sort of getting priced out of the market. A market in the middle is perhaps what works best for us.
Okay. My last question is on the number of customers that you report. That number, both on the builder and the broker side, has gone up significantly. Are we-
Compared to last year?
Compared to last year. Actually, the last couple of quarters this number has been quite elevated compared to, let's say, the trends that were there in all four quarters of fiscal 2022. Are the benefits of the billing completely in the base now in terms of the pricing interventions or multiple products that we would have sold to these customers or is there more scope to extract billing from these customers till we start looking for new customers to add? I'm asking because between fiscal 2019 and, let's say, till 2Q or 3Q fiscal 2022, the number of broker and builder customers were pretty similar, and now they seem to be 50% higher.
Are you sure of that? Because I hope you're not including owners, as well.
No, no. I'm just talking about the 32,700 broker and 6,400 builder customers. This is on your slide pack, slide number 42.
Okay. No, maybe we can get back to you on this offline. We have seen, of course, our customer base went down during COVID, and H1 last year was impacted because of COVID. Compared to, of course, H1 of last year, we must have seen a strong, you know, recovery on the number of customers. But let me get back to you on how much the numbers have actually gone up by. Let me just sort of recheck and get back to you. Vivek, can we do that?
Sure. Of course. Sure. Thanks a lot, Hitesh. All the best.
Thanks.
Next question is from Mohit from Rama Capital. Mohit, you can go ahead and ask your question.
Hi. Thanks for the opportunity. I wanted to ask on the recruitment business, like, you know, IT as we have already spoken about that, you know, the attrition rates are going down, that might moderate the growth. Just wanted to get your thoughts on other verticals like BFSI, you know, which are also one of the hot white-collar markets in India.
Do you have any ambition, you know, to scale up on that front so that, you know, you can have elevated growth rates in the future? Because their contribution, if I look at the contribution, it has remained at around 6-7% right throughout the last so many quarters. Is there any, do you have any plans, you know, or you think you can increase your contribution share from BFSI sector?
See, our share is, you know, what is what it is because it's a much smaller segment when it comes to hiring compared to IT, right? There are maybe 10,000 IT companies or 8,000 IT companies you work with. The number of BFSI players in the market is much fewer, and they don't employ as many people as IT companies do.
Of course, you know, we would want to up our market share from all BFSI clients, and we can, we are working on that. It's unlikely that, you know, their sort of, you know, their share in our overall mix will change significantly over the next couple of quarters. It'll grow, that segment may grow faster than other segments if the market is doing well. It's unlikely that 6%-7% can become 10%, 12%, 14% overnight. It's not likely there.
Sure. That's all. Thank you so much.
Next question is from Rohan. Rohan, kindly go ahead and ask your question, please.
Yeah. Hi. My question is towards, you know, 99acres side. Basically, I have just started following your company and, you know, while on the Naukri front, you are market leader and the numbers are also, you know, improving quarter-on-quarter and there are some really great numbers. From 99acres point of view, what I understand is that in the last annual report of yours, there was a, you mentioned that some ESOPs have been issued, right?
So that expenses would have included ESOPs. Basically what I want to understand is that why we compare the, you know, Q on Q losses of this quarter and this half with the previous quarter and previous half year. Is there any component of ESOPs also in that? You know, because just to understand what the, you know, apples-to-apples comparison would look like.
Nitin, you have it.
Yeah. Both would include the ESOP charge as well. Although I don't think that it will be significantly different, you know. On a consistent basis, we keep on giving, you know, ESOPs and we charge it off as per the amount. When you are looking at the EBITDA numbers, you know, they are like that includes the charge for.
Okay. Second question is towards your marketing spend now. In the previous quarter call, you said that you are looking at a marketing spend of like INR 30 crores-INR 40 crores on a quarter-on-quarter basis. You know, going forward, do you still hold that number or you expect it to increase or decrease?
Yeah. It'll depend on competitive activity, which is what I said earlier in the call also. It could be INR 25 crores, could be INR 35 crores, could be INR 40 crores, could be INR 20 crores. It'll depend on whatever we need, what we need to do to sort of defend our share in this market. You know, we decide on our sort of marketing spend on a quarter-over-quarter basis.
Okay. Thanks. That's from our side.
Next question is from Pranav. Pranav, kindly go ahead and ask your question.
Yeah. Thanks for the opportunity. My first question is regarding 99acres.com. If I look at the market share, the traffic market share, you know, that has been sort of trending down. If I look at, you know, there's only one player that takes Housing.com which has gained market share. Is it purely because of the advertising budget, what they are having or you think there is something else to it?
Because the gains what they have done on the market share are quite significant. You know, if they are sort of sticking around then, you know, we are not looking at a sort of a duopoly kind of market. Maybe there are three very strong player which can emerge. How do you see that?
You know, my second question is on the margins of Info Edge. I mean, you think 63 odd % margin, you know, historically they've been slightly lower. You know, how should we see this in the medium to longer term? Thank you.
Yeah. See, the traffic share, see this just traffic share business in real estate you should take with a pinch of salt because, you know, there are different types of users on our platform. There are people who are looking to buy new homes, there are people who are looking to buy resale properties, there are people who are looking to buy, you know, rentals.
They're looking to sort of rent properties, you know, and so on and so forth. Now, there are people looking to buy high-end properties, there are people who are looking to buy low-end properties. Now, every user is not the same. A rental user, for example, is very hard to monetize. On the other hand, you know, by spending on marketing you can get a ton of rental users on your platform.
This market share or traffic share business has to be sort of, you know, diced and sliced, the traffic has to be diced and sliced in different ways to understand what's really happening in the market. Yes, you are absolutely right in saying that Housing.com has gained traffic share over the last few quarters.
We would like, at least our team believes it's mostly because on account of their higher marketing spend. They are splurging right now as we speak. Yes, there are more than two players which are sort of aggressive in the market at this point in time. Now of course it'll take a while for the dust to settle down.
Yes, right now there are many players competing for the market which is also growing rapidly, but there are many more players. Let's see how this plays out. All traffic's not the same. As far as margins of Info Edge go or recruitment margins of the recruitment business go, see, if our recruitment business continues to grow at you know even 18%-20% per annum, these margins should be easy to maintain. In fact we can be even better than you know going forward. If growth slows down considerably, then of course margins will take a bit of a hit.
We don't expect the kind of wage pressure we saw in the last one or two years to continue going forward, because we've seen a slowdown in our attrition also. Unless things change again on that front. If things change on that front, then of course our billing growth will also start moving up once again.
Sure. One small follow-up on 99acres. You said that, you know, all traffic is not the same. Can you give some color on that? I mean.
Yeah. I mean, for example, let's say we get 10 million users, let's say, I mean, just taking a number. If 5 million of those are rental users, then a rental user is not as valuable as a resale buyer, you know. On a resale buyer you can make 10x than what you can from a rental user, right? As a platform. In fact, if the rental user is looking to rent property at less than INR 10,000 a month, for example, I mean, nobody can make money from that rental user. So all users are not the same.
Sure. I mean, you know, can you give some color on, you know, does that mean that Housing.com could potentially have a larger share coming from the rental or, you know, some player who's stronger in the rental segment, you know, and you are stronger on the resale or, you know, and some other player is stronger in the builder. Is that the case or?
I haven't looked at the Housing.com numbers very closely, but yes, I can say for sure that, you know, a buy user is much more monetizable than a rental user.
Sure. Thank you so much. That's it from my side.
Next question is from the line of Seema. Seema, you can go ahead.
Hi, this is Ruchi from Elara Capital. I have a couple of questions. First, post-pandemic, we have seen that digital intensity of enterprises has increased. Even if I look at the Naukri platform, your unique number of clients are up about like 26%. Could you highlight us, have you seen change in the behavior of, let's say
Our strategy called Beyond, so to say large or mature user. Has the lower base of customers shown some changes in terms of consumption pattern or usages?
No, absolutely. For example, you know, we have a small blue-collar platform, Jobhai.com. We've been seeing significant traction on that platform. We don't monetize right now. We are still, you know, getting more and more users to use the platform. These are mostly blue-collar workers who make INR 15,000 a month, INR 14,000 a month, INR 22,000 a month.
You know, technicians, delivery boys, you know, data entry operators, you know, salon workers, you know, and the traffic is growing month-on-month. Unquestionably, without doubt, I mean, you know, everybody's now on the Internet, and everybody's becoming more and more comfortable using the Internet. Even small businesses. You know, earlier it used to be very hard to get small businesses to use the Internet. Now everybody's used to smartphones.
They're buying grocery online, they're ordering food online, they're buying insurance online, they are, you know, shopping online. So now it's, they're making payments online. So I think pretty much, you know, everybody sort of now used to sort of I mean, they know how to operate a phone, they know how to make payments, they know how to post jobs. They know how to take pictures, they know how to take videos. So it's getting easier and easier with every passing month.
My question was trying to understand is Naukri.com able to monetize that behavior?
You see, we monetize businesses and we have a sales team and we have a telesales team, and we have people sort of making e-commerce-led payments on the platform. Our telesales slash e-commerce business has been growing rapidly, and that's mostly the business we get from small enterprises. These are mostly people who buy online.
We don't have sales people who reach out to them, train them, et cetera. But they're mostly small customers. You know, they're not a big part of our revenue, okay, but they are to our customer base, and they get us volume growth. But we certainly benefit from this trend.
Like I said, in our Jobhai.com business, we are continuing to sort of add more users, and these users are not on Naukri, and we haven't started monetizing them as yet, but we will monetize them at an appropriate time.
Understood. One more question for Naukri platform. IT hiring on Naukri platform was down 3% YOY September quarter as per the JobSpeak, but yet we saw 55% growth. Could you help us understand what drives this contrast? Is it completely explained by better hiring in IT? Or how do you see, I mean, IT metrics in September quarter compared to the JobSpeak Index minus 3% YOY growth in the quarter?
Two things. See, one, you know, everything is not correlated to JobSpeak. JobSpeak measures the number of job listings on our platform, right?
Yeah.
A lot of the hiring on Naukri happens through our database product, right? You know, it is possible that database hiring was not hit as much as hiring through job postings, right? That's one. The second thing is, see, when companies buy Naukri products, mostly the big customers, they buy for a year, right? Even if there's a temporary lull in hiring and they expect hiring to pick up going forward, they buy for the year.
It's you know, one of those. They're more likely to cut down hiring through recruitment consultants. They're more likely to cut down hiring through other expensive channels first than through Naukri, right? I suspect companies, you know, perhaps many companies have not experienced.
I mean, while they're seeing attrition slow down, they hope that or they believe that, you know, it'll still be tough to hire going forward. Too, you know, like I said, our database activity was not hit as much as job posting activity last quarter.
Understood. One last question. This is for 99acres. On the 99acres platform, if I look at your quarterly revenue per paid listing, it shows quite a stark jump, about 93% YOY. In tandem, if I compare your ad mix between broker and the builder, it hasn't changed much. It's kind of there. Can you help us understand what's driving this? Is it price increases that we effected or the new services, analytics and kind of mix change? How to read it?
Price, the revenue per paid listing has gone up 90%, is it?
It shows, yes.
See, what I can tell you at a very macro level, we had launched a premium listing product, right? Over the last few months, we've upgraded many of our customers to premium listings. As a result of that, our average revenue per listing has moved up substantially in 99acres. I suspect it's mostly that, but if there's anything else, we'll get back to you.
Okay. It's largely pricing increases. Thank you.
Right.
Thank you, and all the best.
Thanks, Seema. Sony, next question you can please put forward.
Hey, thanks for the opportunity. First question is on Naukri. Just wanted to understand your previous comment that the pricing in the past has gone up decently well. Now, if I were to look at your average billing per unique customer, that is around INR 75,000 odd number. Going ahead, how should we think about it, like if there is a decline in number of unique clients, how would this number trend, basically your realizations, how would they trend going ahead, assuming that there is a slowdown in IT.
Well, it'll also depend on, you know, how well the IT non-IT segment continues to perform for us. Certainly if the IT sort of, you know, if IT hiring slows down, then we will not be able to effect major price increases with our customers in IT. Our realizations may not grow as much as they grew last year. It'll depend on, you know, what happens to IT hiring. On the non-IT hiring, we expect our realizations to improve going forward. Where we will end up as a company will depend on, you know, how much, how fast the non-IT business grows.
Okay. Secondly, clicking on Naukri, recruitment side, your, if I were to look at your operating expenses for the segment, they have moved up from INR 110 crore last year to INR 164 crore this year. Now, that is significant jump of 15%. May I know, like, where are these expenses going? Because we don't do a lot of marketing there, right? What is the other moving part over there?
There are three things happening here. One is, you know, we had to effect, you know, major sort of salary increases last year, because, you know, because of high attrition and because that's what the market was like outside. In fact, in many parts of the company, we had to give a salary increase twice last year. That is one. The other is, we've also sort of added more people over time because we have, sort of, moved into adjacent areas. We acquired companies, we have launched new verticals. And you know, we have added a lot of people, for example, in the AmbitionBox vertical. We've added a lot of people in the Jobhai vertical.
We've added a lot of people in Zwayam, which we acquired some time back, DoSelect and so on. In many of these new areas we are investing and investing aggressively. We added headcount and a lot of this headcount is tech product headcount. It's expensive headcount, design headcount. I guess it's a combination of these two or three things which has led to, you know, operating costs going up. We've also been investing more in marketing for the last few months.
We've launched a new campaign to target, to reach out to the Gen Z audience, "My Kind of Naukri." While our marketing spend is not a big part of our overall spend, it is likely to be substantially higher than
Is this related to the employee additions in the verticals that you just mentioned or like is it somewhere else?
Mostly in the newer verticals. In all our businesses. Like I said, in Jobhai, in AmbitionBox, in Zwayam, in the Shiksha.com Study Abroad vertical. We've also built up our headcount in tech and product in 99acres. In the faster growing parts of the business, we've added more people. In the newer verticals, we've added more people. Some of these verticals we are likely to monetize. You know, like Jobhai we're not monetizing right now. BigShyft we have added people. That's another platform that we're, you know, sort of trying to build in-house. So the BigShyft team has also grown to some 80-90 people over time.
We have a lot of these new areas we are investing in where we are adding a lot of people because we're building new products. We are trying to innovate a lot more than we were innovating earlier. We've acquired some companies, so their headcount has also moved on to our books.
Will that addition slow down in case your billings also slow down? Or will you continue to invest and so there will be pressure on margin also?
See, it'll depend on, you know, what kind of opportunity we see in these verticals. If these verticals start responding well, you know, and we see opportunity for growth, then, you know, we're not gonna worry about, you know, the margins moving up or down by a couple of percentage points. On the other hand, if these verticals require a lot more work and we feel that we haven't got the product market fit right, and that we need to tinker with them a little more to sort of get our act together, then of course, you know, we will slow down investments in these verticals.
Right.
Yeah.
One thing I'll just highlight, I think that's an anomaly in your presentation. Your sales, servicing and client facing staff, last quarter it was showing 37%, now it is showing 63%. Historically, it has been around 60%-62%. I think that's an anomaly there. Just wanted to get a sense on that.
We made a note of that. We'll get back to you. David, can you make a note of that please? Thanks.
Sure. Sure. Thanks.
Next question is from Ankur Upadhyay from J.P. Morgan. Ankur Upadhyay and Masood Khan with you.
Hey, thank you. Just first question. You know, Hitesh, you've highlighted several times that I think IT hiring is heading back to normalcy. Could you define what is normalcy? Is this sub 10, 15% growth? Is it 15, 20%? What's in your mind is normalcy?
I wish I could tell you because, see till last quarter, you know, even the IT part of our business did really well, right? I'm beginning to pick up some noise in the market that, okay, you know, companies are saying, "Listen, hiring is slowing down. Our business is not as it could. We know we're not likely to grow at 30%-40% or whatever.
You know, so growth may moderate going forward." They are negotiating a little harder than they were earlier. That's what I'm picking up from our sales team. October is also a very different month because, see, this year Diwali was in October. Last year Diwali was in November, so you know, activity slows down at this time.
We will know in the weeks to come as to what shape or form this sort of thing will take. Overall, yes, we are sensing that, you know, there's a slowdown in IT hiring.
Okay. In
I don't know how much. Very hard for me to say.
Sure. Right. No, no, that's fine. I mean, I don't have an issue with slowdown.
I was just curious about structurally what do you think is normal growth for your business given if IT goes back to, let's say, sub 10% growth or 8%-10% growth?
I don't know. I mean, if they're growing, they will still need to add more people and, overall growth is gonna be a function of, sort of gross additions, right?
Yeah.
Minus campus hiring. That's one. Of course, you know, like I said, we've been working on our products and services to ensure that we get more wallet share from our customers and we can help them hire more people. It'll be a combination of two, three factors. I mean, would you know the long-term sort of number be 20%, 15%, 25%? Hard for me to say.
Understood. In IT, just, you know, how much of your business momentum depends on attrition versus underlying market growth?
See, attrition is a big part of the whole story because attrition, you know, if attrition rates grow by 50%, for example, if a company had 10% attrition earlier, now it has 15%, they need to hire 15% more people to stay at the same place, right? You know, attrition makes a huge sort of difference to our business. Attrition also results in wage pressure.
When there's wage pressure and, you know, also results in a lot of noise inside the company because, you know, there's business people who want to service customers and they want people onboarded quickly. At that time, you know, when that happens, companies won't think twice about whether they're getting a 10% discount from Naukri or a 30% discount from Naukri, right?
Because you know, at the end of the day, we are a very small part of what they spend. You know, companies who have billions of dollars of revenue in IT spend less than $1 million with us or less than half a million dollars with us.
They would rather sort of give us whatever we want than you know. On the other hand, of course, if demand picks up, that also helps. You know, if a company needs to hire 10% more people than earlier, that's okay, it's just 10% more people. If attrition rates go up by 30% or 40%, that's 40% more people than.
Understood.
Yeah.
I mean, your comment that, you know, growth is generally quite strong both in IT and non-IT suggests that non-IT growth is extremely strong.
Exactly.
Because it's at least, I mean, close to 50% if not higher. That is very surprising to me, because in the past we've really struggled to grow non-IT. I mean, this is like pre-COVID. Could you maybe highlight if there's any industry driving this or are these just tech profiles in non-IT industries that are driving it?
Well, it's perhaps a bit of both. You see, a lot of non-IT companies had not hired for a while. You know, now things are getting back to normal, their business is growing much faster. If you look at our JobSpeak index, you know, you'll get a sense. Some of these industries, jobs from them on our platform were up 70%, 60%, 80% over last year.
Of course it's different for different industries. See, these companies had pretty much... They had actually shrunk in terms of headcount, many of them, over the last couple of years because of COVID. Partly it is sort of, you know, they're getting back to their normal, pre-COVID normal. Partly it is also, you know, the disruption which COVID caused, right?
Some people have quit jobs. Many people did not for a long time want to go back to high contact sectors of the economy. You know, partly it is also, like you said, you know, many of these companies want to digitize faster, right, than earlier, and therefore they're hiring more digital talent. So that's also happening. Now we may also go through a phase where this sort of continues to be the case for maybe another couple of quarters and then things go back to normal in non-IT. A lot will depend on what happens to GDP growth. In the past, we've seen, you know, at 6% GDP growth in India, people are very difficult to get.
You know, you start seeing wage pressure, you start seeing high attrition, you know, hiring costs go up, retention is difficult. At 5%, 5.5%, you're somewhere in the middle. At 4%, things start to slow down. You know, companies come under pressure. A lot will also depend on, for a couple of quarters, you know, like I said, maybe revenge hiring because they laid off earlier. After that, a lot will depend on what happens to the economy and what the new normal GDP growth is.
Got it. No, appreciate that comment.
Yeah.
Finally, in terms of the investment environment, how has that evolved for your investee firms? From your perspective, we've seen slightly bigger checks this time in existing investments. Have you recalibrated your investment style given the current, you know, investment/business environment? Are you stepping up versus other investors at this time?
Sanjeev, are you there? You wanna take that?
Yeah, I'll take it.
I think two things have happened in our conduct and in the conduct of other investors. Number one is we are of course seeing many more deals because, you know, if funding is a little scarce, more and more companies will reach out to us. Right? That's only good because then you get greater choice, then you get a benchmark. The second is we are going a little slow.
If you look at our fund one, I think we deployed it in double quick time because that was market was booming. We went in early, got our up rounds. That fund, you know, is looking good at least on paper, given the follow-on rounds that have happened externally. You know, posts are going in.
In this fund we're going slower. We will take probably a full three years to deploy first checks. We are taking our time, and we are going with smaller rounds, initially and then doubling down. We are less trigger-happy, I'd say. That is the case for the market. You know, one big risk thing that's happened is that you wanna start worrying a little bit more about where this company will get its next round from. You wanna think long and hard about that before you go in. Because, you know, all people can't Google yourself if you have that much conviction. You know, in fund one.
Understood.
You reasonably assume that a half-decent company will get its next round pretty easily from other investors.
Understood. No, this time because you did, you know, cross 50% in a couple of your investments, which showed either you were very confident or-
No. Those are strategic investments. That is Coding Ninjas. That is strategic. There obviously we're very confident. We've been with the company for a while.
Do you think you expect them to merge with your existing business over time, or will this remain independent in the medium to long term?
Chintan, Hitesh?
You know, like I said, I think Coding Ninjas especially, we are likely to sort of work very closely with them going forward. We see them as a big part of our overall strategy of, you know, transforming Naukri into a careers platform over time. We will deeply integrate their offerings with the Naukri platform over time. Now, if we get a good response, then, you know, we'll see what to do after that.
Okay, at this time, if that's the reality, why stop at whatever this is, 50%, 60%? Why not go the whole hog?
I mean, you know, if we get a good response, then and it makes sense for both companies to sort of work even more closely together, then we'll see.
Listen, I mean, you know, part of it is out of the deal also, yeah. You know, if you wanna take out the founders, right? They'll ask for a certain valuation right now, which we may or may not be comfortable giving, given where the company is today. At the same time, if you take out the founders completely, then they won't have an upside in the future, which will motivate them to stay. You know, it's, I mean, online business, a lot of other people running it, and you've got to retain the people, keep them motivated and make sure they have a reasonable upside going forward.
Understood.
Also, it depends on the maturity level of the business. You know, these businesses, at the end of the day, both Aisle actually and Coding Ninjas are still tiny businesses, right? You know, and we don't think we can sort of take them in right now and scale them 10x or 20x from here, right? Because I don't think we have the management bandwidth to do that. Therefore, we would want the founders to stay motivated and keep working on these verticals for a while at least.
Appreciate the color. Thank you so much.
Thanks, Ankur. Next question is from Abhishek Bhandari from Nomura.
Thank you, Vivek. Hitesh, if I look at the Shiksha slide in the presentation, you know, I see an EBITDA loss, you know, compared to the usual, you know, quarterly profits. Also the, you know, sequential drop in revenue seems to be very high, you know, compared to your prior periods. Maybe you could even explain what's happening in that business.
2, 3 things. See, partly, you know, the education season has been moving for the last 2 years because of COVID. A lot of Shiksha.com revenue depends on when sort of universities take in students, and that may be shifting a little bit. Partly it's also that we are investing a little more than we were earlier in our study abroad business.
We are ramping up headcount in the study abroad business. You know, that period has a cycle, certain sort of. You know, you first hire people, then you counsel people. They are counselors. Mostly you hire counselors. Students are counseled over a few months, and then they end up in a foreign university. After a while you realize that, you know, revenue. Partly it's that as well.
Do you expect this to come back to EBITDA positive in the coming quarters? Or do you think this trend could continue with your investment for some more time?
See, we were making a tiny profit. It's not as if we were making a lot of money. I think our focus right now on Shiksha.com is to grow the business, and to add sort of more verticals to the business. We are not so fussed about making a profit in Shiksha.com in the short term.
Sure. Thank you, Hitesh. Hitesh, I think this question was asked, but, could you give us some markers around, you know, your progress on your new strategy around the matrimony business? You spoke about traffic improving.
Yeah.
has the user engagement increased? Are there recent metric to, you know, really verify, you know, those higher traffic is eventually going to, you know, help us?
Yeah, on the traffic side, we're not complaining. We've seen serious gains. We've increased our share in almost all the markets we operate in. We have many more, you know, sort of, people registering on our platform. They are spending more time on the platform. They are, you know, we are enabling more matches, and hopefully therefore more marriages.
We are very happy with the progress we are seeing on these metrics. Revenues are down by design. Our belief is long term, you know, user share converts will ultimately sort of convert into revenue market share as well. Of course, we may have to discover new ways of monetizing going forward.
We also believe that in the long run, you know, the proposition may help us sort of lower our marketing costs as well, right? I mean, it has to be seen how this plays out. We'll probably have a much clearer picture to present to you maybe in March, by March, April.
Sure. Thanks, Hitesh. Hitesh, my last question, you know, is on your core recruitment business. You know, we have already proven the business very well in India. You know, we understand the IT, ITES market very well.
Do you think time has come for us now to start thinking about, you know, maybe expanding to similar labor supply zones, maybe like, you know, Eastern Europe? Not now, but maybe from a medium-term perspective or some other, you know, countries, where we could, you know, use our relationship with the existing, you know, IT companies and help them recruit there.
Honestly, that's not our focus at this point in time. We think India is a large enough market, and the Indian market is likely to grow well going forward. Strategically, we've been adding more services to our offering so that we can take a larger suite of products for our clients in India. We are still a very small share of the work.
We still get a very tiny proportion of what they spend on recruitment as a whole. As far as going international, sort of international, you see, what we've also learned over time, it's very hard to displace number one player in any market, no matter how small or large the market. Therefore, if you have to go overseas, you know, we'll have to do acquisition. You know. Would we go overseas just to sort of help Indian IT services companies hire more IT professionals? Unlikely.
Got it. Thank you, Hitesh, and all the best.
Thanks.
Thanks, Abhishek. Next question is from the line of Ritesh Anand. Ritesh, can you kindly go ahead?
Yeah, hi. Couple of questions from my side. Firstly, on the recruitment business, I think you had mentioned this in a previous question, but just to understand better, can you give some color on how these contracts are structured in terms of the time period, et cetera?
Because just to understand what kind of a lag we can expect, for example, if IT hiring slows down now, it's not like IT companies are going to immediately modify or cancel a one-year contract, as you mentioned earlier. Just to get a sense of what kind of lag we can expect if there is a slowdown. Is it on an average a six-month contract or it more skewed towards one year? Just to get some sense on that.
Chintan, you wanna take that?
Yeah, sure. We follow subscription model, and actually, just to clarify that we really don't have cancellation type of clauses inside the contract. Most of the contracts, the collection is for the entire, you know, tenure has been kind of collected in advance. Yeah, I think clients who are, you know, require us, you know, throughout the year, they renew year-over-year.
These are all the clients who kind of typically subscribe for 12 months. We would have more clients, you know, with 12 months at the higher end. At the bottom, you know, you will have clients who, you know, who may need us for, let's say a month or 2 months or 3 months for some short-term hiring. They may not come back also on the platform for quite some time. Most of them are, you know, on the 12 type of contracts collected in advance. There are no real cancellation clauses in there.
It's not like companies make very quick short-term decisions, right? Even if there's a slowdown for a couple of quarters, they probably just let the contracts go on.
Yeah. That's been the behavior in the past.
Got it. Secondly, just a very top-down kind of your view on what you think is the end game on the property side and the matrimony side. Is the end game consolidation or to kind of bring maybe two strong players? Or you think these are markets that can support three or four players, maybe each focusing on a niche market or maybe a particular geography each? Like, how do you see this kind of shaping up? Because competitive intensity does seem high and everyone's spending on marketing. Where does it all lead to finally? Just your top-down, kind of how you think about it. Yeah.
See, you know, of course, you know, there is consolidation. It is likely to result in better pricing and lower marketing costs. There are just a handful of players in every market, and a lot will depend on how the people at the top of these companies think. Clearly there is, you know, in the past we've seen if there is one dominant player, it's like, you know, there is, it's possible to make a lot of money in the, in any market. If there are three or four or five players, then ultimately, that results in consolidation. You know, no market can support three or four or five players for a very long time.
Anything on the horizon or it's difficult to kind of say in terms of consolidation? Nothing seems
Nothing is on the horizon. There's nothing which is likely to happen in the next 2-3 months as far as we know. I mean, what shape or form things will take in the next 2-3 years, hard for me to say at this stage.
Got it. Okay. Thank you and all the best.
Thanks.
Thank you. Next question is again from Vivek Anand. Vivek, you can go ahead.
Yeah, thank you for the follow-up opportunity. So, Sanjeev and Hitesh, just a couple of questions on the investments. Do you have a earmarked amount for the strategic investments that you are doing and follow-on rounds for your investees that are there on the balance sheet, like ShopKirana or Ustraa? That's question one. Second one, Sanjeev, any update on the conditions under which you would consider part monetization of Zomato, Policybazaar? You know, the lock-ins are not there anymore. Thank you.
Yeah. I'll answer the second question first. I think, first of all, why would we sell? We would sell if we need the money for some other purpose. We would sell if we wanted to give it back to shareholders immediately. We would sell if we believe the future is not bright. Right? I would imagine we would sell under these three circumstances. While this issue is constantly open at our board level.
There's nothing that currently gives us the indication that either of any of these three conditions are operating, right? Like I said, it's always open to discussion, and we are flexible. Okay? Now as far as budgets is concerned, you know, we sort of keep on estimating how much money we will need going forward, but opportunities keep arising.
Okay? As of now, compared to what our treasury is, it's not putting a strain on it, either the strategic investments or the follow-on rounds in the financial investments from the balance sheet. The real issue is what is the need of the company and whether it's worthwhile backing it further. Do we have this watertight budget?
You see, the one danger of having a budget, and I've seen this in other companies where I have observed or worked, a budget becomes an entitlement, right? That is not a great thing. We will obviously be open. We will look at opportunities. You know, our willingness to go up to the slightly higher number in strategic opportunities, because they're strategic, may be slightly higher.
Sure. Sanjeev, actually the question was in the context of the earmarked amounts that you have kept for the AIF. I was asking more from that standpoint that,
The AIF, we don't want to. We've got a lot of money in treasury compared to how much we're actually investing, right? The truth also is that if you earmark too much money to invest, you know, you end up burning a hole in your pocket. Because you are tempted to deploy too much because every opportunity looks good. If I look at you know, the kind of funds.
We see funds that have delivered great returns, even in the U.S., they usually are not very large funds, $150 million, $200 million, $100 million, you know. To go beyond that, right now at least, I am personally a little uncomfortable.
Okay. Fair enough.
It's good to be a little tight for money as far as, you know, the investing team is concerned.
Makes sense. Thank you so much for the detail.
Now, this is our current thinking. Of course, things will change, but this is our current thinking.
Sure. Thanks.
Hitesh, is there anything you want to add?
That's it.
Next question is from the line of, Amit Chandra. Amit, you may go ahead.
Yeah. Hi, sir, and thanks for the opportunity. All the questions have been answered. Just I have one question is on the recruitment business. You know, we have seen the recruitment margins expanding, you know, consistently from 55% to now 61% roughly. In the context of, you know, the slowdown seen in the IT side, can we you know, see the, you know, the margins heading back towards the pre-COVID levels, or is it more sustainable at current levels, the, you know, the margins in the recruitment business?
No. See, what I've said in the past and, you know, now that the market is getting back to normal. See, if we can continue to grow our Naukri billings by 15%-17% per annum or 15%-20% per annum, it should be possible to sustain these margins. If there is a serious slowdown and, you know, billing contracts or for some reason we have single-digit billing growth, then of course margins may shrink going forward. It'll all depend on how things play out in the next few quarters. How sort of revenue growth, billing growth plays out in the next few quarters.
Any color you can provide on, you know, the margins or maybe realizations in IT and, you know, like non-IT, and how it has panned out in the last, you know, like few quarters?
Sorry, can you repeat that? How margins have panned out?
Yes. You know, the margin differentially, you know, between IT and non-IT.
See, we don't track and report margins by a segment right now. I suspect IT margins are better than non-IT margins because our billing per customer in IT is higher.
Okay, sir. Thank you.
Non-IT. Yeah.
This was the last question, Hitesh. With this, we would like to conclude this conference. Thank you, everyone, and you may disconnect your line, please.
Thank you, everyone, and have a great evening.
Thanks. Good night.
Thanks.