Ladies and gentlemen, good day and welcome to the Info Edge (India) Limited Q2 FY 2020 results conference call. Joining us on the call today are Mr. Hitesh Oberoi, Managing Director and CEO; Mr. Chintan Thakkar, CFO; and Mr. Sanjeev Bikhchandani, Vice Chairman. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I would now like to hand the conference over to Mr. Hitesh Oberoi. Thank you. Over to you, sir.
Thank you, and a very Happy Guru Purnima to everybody. Good evening, and welcome to our second quarter FY 2019-2020 results conference call. As always, we will start with the overall financials and then cover each business financials in more detail. As you would recall, we had briefed you about the application of Ind AS 116 to our financials in our last quarter results call. For the sake of comparison with our last year financials, we would be calling out the respective numbers without adjusting for Ind AS impact in this call as well. The audited financial statements filed and the other schedules on segmental billing, revenues, et cetera, along with the data sheet, have been uploaded on our website, www.infoedge.in. Let's move on to the standalone financials. Billings in Q2 were INR 300.5 crores, up 15.3% year-on-year. Revenue in Q2 was INR 316.6 crores, up 19.5% year-on-year.
Operating expenses, excluding depreciation for the quarter, were INR 217.3 crores, up 19.1% year-on-year, and operating expenses to be adjusted for Ind AS 116 stood at INR 223.5 crores, up 22.5% year-on-year. Operating EBITDA stood at INR 99.3 crores versus INR 82.5 crores last year, having increased 20.3% year-on-year, and operating EBITDA readjusted for Ind AS 116 stood at INR 93.1 crores, up 12.9% year-on-year. Operating EBITDA margins for the quarter stood at 31.4%. Operating EBITDA readjusted for Ind AS 116 stood at 29.4%, down from 31.1% last year. EBITDA readjusted for ESOP non-cash charges and Ind AS 116 stood at INR 98.6 crores versus INR 83.9 crores in Q2 of last financial year. EBITDA margin readjusted for ESOP and Ind AS 116 for the quarter stood at 31.1%.
Cash EBITDA for the quarter stood at INR 82.4 crores, up 3.6% year-on-year. Deferred sales revenue stood at INR 480.7 crores as of September 30, 2019, versus INR 414.6 crores as of September 30, 2018, a strong growth of 16% year-on-year. The cash balance in Info Edge and its 100% subsidiaries stand at INR 1,500 crores as of 30th September 2019. This was at INR 1,878 crores on 30th September 2018. PBT for H1 2020 stands at INR 225 crores before exceptional items. Impact of deferred tax as its reversal is INR 12 crores due to change in the tax rate. The tax provision for H1 is INR 63 crores. The effective tax rate for the business for H1 stands at 23.8% of PBT before exceptional items. The same in FY 2019 was 38.3%, and in FY 2018 was 28.2%.
All three of our businesses, 99acres, Naukri, and Jeevansathi, exhibited strong performance during the quarter, with a billing growth in the high teens despite a slowdown in several parts of the economy. We continue to increase our spend on marketing in Jeevansathi as part of our strategy to gain market share. It has started showing up in our billing growth for the quarter. Overall, though, spend on marketing for the quarter was maintained at INR 51 crores, which was in line with Q1 marketing spend. We continue to invest aggressively in multiple new areas in all our verticals, brand building, data science, new products, and strategic acquisitions to make investments for the future. We have also seeded two new businesses inside the company, one in the premium hiring space and another in the blue-collar jobs space. At the consolidated level, the net sales for the company stood at INR 329.5 crores versus INR 280 crores in September 2018.
For the consolidated entity at the PAT level, there is a loss of INR 111.8 crores versus a loss of INR 40.7 crores in the corresponding quarter of 2018. Adjusted for exceptional items, PAT stood at a loss of INR 113.4 crores in the quarter end of September 2019 versus a loss of INR 75.3 crores in the same quarter last year. Now we'll talk about the recruitment segment in a little more detail. In Q2 of 2019-2020, recruitment segment billings were INR 209.8 crores, up 14% year-on-year, while revenues were at INR 226.4 crores, a growth of 18.7% year-on-year. Operating EBITDA stood at INR 123.9 crores, up 19.3% year-on-year. EBITDA margins were at 54.7% versus 54.5% in Q2 of FY 2018-2019, and EBITDA readjusted for Ind AS 116 stood at INR 120.85 crores, with a margin of 60.4%.
EBITDA readjusted for ESOP non-cash charges and Ind AS 116 stood at INR 123.4 crores at 54.5% versus 54.8% in Q2 of 2019. Cash EBITDA for recruitment during the quarter stood at INR 376.8 crores, up 9% year-on-year. In Naukri, in Q2 of FY 2020, we added an average of 20,000 new CVs every day, and the Naukri database grew to over 66 million CVs. Average CV modifications are also at 430,000+ per day. We continue to be a market leader amongst our conventional domestic peers, with our traffic share increasing to 88%. As indicated by our JobSpeak Index, we are beginning to see a slowdown in the non-IT market. A strong customer base in the IT and ITES segment, which has been unaffected by the slowdown till now, has so far helped us drive growth in the Naukri business.
We continue to explore avenues of future long-term growth in our Naukri business. However, in the short term, a slowing economy could be a challenge. Our app usage, resume registration, site engagement metrics continue to see healthy growth. Our branding campaigns have also helped us grow our traffic share in recent months. iimjobs reported a billing of INR 4.63 crores for Q2 of 2019-2020. This is a growth of 15% over last year. The business operated at breakeven levels during the quarter, barring some one-time payoffs. Moving to the 99acres business. Billings in Q2 on 99acres grew 20.8% year-on-year to INR 60.5 crores, while revenue grew 26.2% to INR 57 crores. EBITDA for the quarter stood at INR 4.3 crores. EBITDA profits for the quarter stood at INR 4.3 crores.
EBITDA adjusted for Ind AS 116 stands at a profit of INR 2.4 crores against a loss of INR 4.6 crores in Q2 of 2019. EBITDA adjusted for ESOP and Ind AS 116 expenses stood at a profit of INR 3.3 crores versus a loss of INR 4.4 crores last year in the same quarter. Cash EBITDA for 99acres during the quarter stood at INR 6.8 crores against INR 57 lakhs last year. The overall business environment in the real estate business continues to be tough. We are focused on getting to clear leadership position in the big cities and at the same time, driving deeper penetration into the smaller towns and cities. The broker segment contributes more than 53% of our overall revenue and has been a key growth driver of the business in both the primary and the secondary markets.
The key areas of focus and investment in 99acres will continue to be brand building, the improvement of the core platform experience, and improvement in the data quality of our listings on the platform. Moving on to the Jeevansathi business. Billings in Jeevansathi grew 16% year-on-year in Q2 to INR 20.8 crores, while revenue grew 13.1% year-on-year to INR 20.8 crores. Operating EBITDA losses stood at INR 16.5 crores in Q2 of FY 2020, up from INR 7.2 crores last year. EBITDA adjusted for Ind AS 116 stood at a loss of INR 17.3 crores. EBITDA readjusted for ESOP and Ind AS 116 stood at a loss of INR 17 crores for Q2 versus a loss of INR 7.1 crores last year. Cash loss for Jeevansathi during the quarter stood at INR 17 crores.
This strategy of high marketing spends to get more revenue share in the Jeevansathi match vertical seems to be working well for us and will continue. Moving on to the Shiksha business. In Q2, billings in Shiksha grew 9.5% year-on-year to INR 9.4 crores, while revenue grew 16% year-on-year to INR 12.5 crores. We made an EBITDA profit of INR 20 lakhs. EBITDA adjusted for Ind AS 116 stood at a loss of INR 30 lakhs. EBITDA readjusted for ESOP and Ind AS 116 for the quarter stood at INR 6 lakhs, versus a loss of INR 22 lakhs last year. Cash loss for the quarter, which is a lean quarter in the education space, stood at INR 3.0 crores. Moving on to our strategic investments. Zomato continues to drive efficiency across the organization.
Burn in Zomato is down from a peak of $45 million to about $20 million a month now. Zomato is focusing on both increasing the take rate from restaurants as well as reducing the cost per delivery. Both Policybazaar and Paisabazaar also continue to grow well. Policybazaar has been focusing on developing exclusive products for their users with insurance companies. The secondary sale transfer deal between Temasek and Tiger Global is also closed and was executed recently. Based on revised revenue forecast for Meritnation, we have provision for INR 79.6 crore during the quarter. Recently, we also announced investment in a few startups like LegitQuest, GreytHR, Adda247, and TEAL. We also did follow-up rounds in ShopKirana, ShoeKonnect, Happily Unmarried during the quarter. We continue to evaluate both new investment opportunities, both financial and strategic, and will continue from time to time. Thank you so much.
We are now ready to take questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may please press star then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, please press star then one. The first question is from the line of Kunal Sharma from Perfect Research. Please go ahead.
Hello?
Yes, go ahead, please.
Good evening, sir. Thank you for the opportunity. I have a few questions, I'm listing down them together. Firstly, your majority revenue is coming from subscription to recruitment database. What steps are you taking to diversify it? Second, on Jeevansathi.com is a service which a customer will not use repeatedly and thus having very low lifetime value. Does it make sense to invest behind such platform where every day you have to find new customers? Third, last time the U.S. economy went in recession in 2008 and 2009, there was a big dip in consequent hiring in IT and our revenue. What steps are you taking to diversify this dependency on this sector? Fourth, what risks do you see for the Amazon entry in the food delivery market on Zomato?
Lastly, what threat do you see from JioMoney and Paytm coming in insurance segment for Policybazaar? Thank you.
That's five questions. We'll try and answer all of them.
Yes.
Recruitment, you said database, and a lot of our revenue comes from the database. What are our plans for diversification? You're absolutely right. Database sales are a large part of our revenue. Over time, we built many other sorts of offerings. In our recruitment business, we sell job listings, we sell branding solutions, we sell e-hire services to certain companies. We also have an ATS product, RMS, which sort of has a few thousand customers now. Together, all these sort of products are now maybe about 35%-40% of our revenue in Naukri, and some of them are growing faster than the database product. The database product also continues to be a large part of our revenue and continues to be in big demand.
The Jeevansathi question was whether the low life sort of time value of a customer makes it not a good business, doesn't make it a great business to invest in. And one of the companies in our space is listed, BharatMatrimony. Over time, they've sort of managed to get to a reasonable EBITDA margin. What we've realized is, once you build a brand, your customer acquisition costs go down. A marriage is a very important event in the life of any human being. It's not as if you get onto a portal and you get married in two months. Sometimes, it could take a year or two for you to find the right match. What we've realized is that many people on our platform have been on our platform for a long time to get the right match.
Even if they get a lot of contacts, they continue for a while till they can find the right match. They're often willing to pay a lot for a service like this. We believe that if one can get to clear leadership in this vertical, in the markets in which they operate, over time, the EBITDA margins can actually be fairly healthy. Because once the brand gets built, customer acquisition costs go down, and you can still monetize well. IT dependency, that speaks to the nature of the market. About 40% of our revenue comes from IT and IT-related companies. What has happened over the last few years is that earlier it used to be only the software services companies, which were sort of body shopping or getting work from the U.S. which is offshore to them.
What we call as IT has sort of grown over time. There are product development companies, there are MNC back offices, which are interested in this sort of segment. There are startups who hire IT sort of folks. They are also a part of this segment. The truth is, there's a lot of activity in this space still. IT companies are still hiring, they're still growing. Startups are hiring, they are growing. More and more MNCs are setting up back offices in India. This part of our business continues to grow well. About 60% of our business is from non-IT space. Here, we've seen a slowdown, which I'm sure is temporary. Once the economy recovers, this part of the business will also start doing well.
The truth is that a lot of the white-collar job creation is in the services sort of space. Within that, IT companies tend to be the large hirers. Unless and until that changes, our sort of dependence on IT will continue to be high. Sanjeev, you want to answer the last two?
On Zomato and Amazon. O ne thing I want to say, food delivery is very different from other product delivery because you want food delivered in 30 minutes from placing the order. It's a very, very different sort of speed, delivery, and logistics organization, when you think I can deliver in 24 hours or 48 hours over the evening.
That's a whole new kind of organization. While obviously we are watching with interest, we are confident Zomato will be able to continue to grow and defend itself.
The second question was about Policybazaar. Policybazaar has reached a place where it has built serious moats. It has got good defenses. First of all, it's got a brand. Most of its traffic is organic. It means customers prefer the brand. It's got deep relationships with insurance companies. It is launching exclusive products with insurance companies. We don't see Policybazaar also being threatened by new entrants in a hurry. As of now, we are watching. Obviously, you're probably paranoid about competition all the time, and we're watching competition all the time, and so are the managements of these two companies, the founders, and other people there. We are confident of defending the turf and growing.
Understood. Thank you, sir.
Thank you. The next question is from the line of Dheeresh Pathak from Goldman Sachs. Please go ahead.
Thank you. On Jeevansathi, the growth that you mentioned, revenue growth, can you provide more color in terms of how is it driven by the paying subscribers versus realization for paying subscribers? Can you give some more color here?
See, this is what we are comfortable revealing. Basically, Jeevansathi revenue is a function of how many free users you can get onto the platform, and then how many of those converted to such as paid users, and what you're able to get from them when they pay to you, and h ow much you sort of have to spend to acquire those users. What we've seen over time is that our sort of market share in the markets we operate, which is mostly the northern, western parts of the country, has been growing, thanks to our higher sort of marketing spend, which has resulted in higher top-of-mind recall and more sort of profile acquisition for us. Our revenue growth is-
That number, can you provide some insight? A re you doing a large trade-off between very low realization versus large revenue growth coming from paying subscribers? Have you materially dropped your realization?
Well, we haven't materially dropped our realizations from what they were one or two quarters back. But, yes, we are aggressive both on marketing and pricing in the market.
Losses have increased quarter-over-quarter. Last year we saw one step increase in marketing spend in Jeevansathi. This quarter, is there a further step increase, and how do you see that going forward?
Yes, w e bumped our marketing spend in Jeevansathi this quarter. The industry, right now, is very competitive. All the other players have also upped their marketing spend, both BharatMatrimony and Shaadi are spending a lot more than they were spending at the same time last year, and so are we. It's a very competitive market, and so we continue to get aggressive in this market.
We are also spending a lot more than what we were spending one quarter back, or at the same time last year.
This run rate is expected to continue, is it, or this is just like a one-off quarter?
No, this is expected to continue for a while.
All right. Thank you.
Thank you. The next question is from the line of Parag Gupta from Morgan Stanley. Please go ahead.
Hi, Hitesh. My first questions are on 99acres. Your deferred revenue growth on that segment has been under 10% now. When do you think that starts reflecting in the revenue growth, which has been in the 20% range? The second related question to that is, while there has been a small breakeven profit in 99acres in this quarter, how should we think about this for second half?
We should not read too much into the quarterly numbers in 99acres, because the truth is the market is still a very tough market. New launches are sort of not happening at the same rate as which they were happening maybe a couple of years ago. There is a financial crunch out there. New home sales are sort of flattish or down in most markets. The reason we have shown a small profit this quarter is because we've cut our marketing spend a little bit. This could change going forward, depending on competition and a bunch of other things. Right now we are okay. Billings were 21%, revenue grew even faster, but like I said, the market is tight and it's still very competitive, this could change very quickly even going forward.
We're not saying that we're going to continue to grow at this rate going forward. Growth rate could improve or it could fall. It's hard to predict in this market.
Got it. On the recruitment, you have been talking about blue-collar segment for some time now. What is the progress there? Is the product ready? What are your market findings suggesting with respect to the opportunity set and who your competitors could be on that front?
Still very early days. We see it as a big opportunity in the long term. When I say long term, I mean 5 to 10 years. I don't mean a year or two or three years from now. We are just getting started. We have built a couple of apps which we are testing in the market with both job seekers and customers. Once we have confidence in what we have built, we will roll the products out to more geography. We are very early in this game. Just like I said, we have sort of a small team working on this at this point in time. We think of this as a long-term play, it's not something that we have to sort of win or invest substantially behind in the next 12 to 15 months.
But, yes, over a 10-year period, this could be a large business.
Got it. Thanks, Hitesh.
Thank you. The next question is from the line of Devvrat Himatsingka from Bajoria Financial Services. Please go ahead.
Hello.
Hello.
Can you hear me?
Yeah, we can hear you.
I just have one quick question. It's just about how you see things going forward. What kind of acquisitions do you plan to make within the next six months? Are you currently working on any kind of deals where we can potentially see some new acquisitions happening over, say, the next quarter or two quarters? If you could shed some light on that.
We just acquired iimjobs a few months back.
We have a long list of companies which I didn't like to acquire at the right price. These are not things you can make happen in three months or six months. Many of these things are opportunistic. Are we open to acquisitions in the spaces which we operate? Absolutely. Is something likely to happen in the next one or two months? It's hard for me to say. We keep talking to companies. We keep talking to founders. We sort of keep analyzing information. We are sort of at it, but some of these things happen. When they are supposed to happen, they happen.
Right. I just had one more question on Zomato. There have been articles floating around the news that say that there is a possibility that Zomato might be break even by next year. Is that actually viable? Do you think that that can happen?
In March, the burn was $45 million.
October, it was around $20 million. We have a clear agenda and program of cutting burn while still growing order value, t otal in orders. We are taking in month-on-month. Is it possible? Answer is yes. Will it happen? Fingers crossed. Wait and watch.
Thank you so much.
Thank you. The next question is from the line of Mayank Babla from Dalal & Broacha. Please go ahead.
Thank you for taking my question, and congratulations on a good set of numbers. Actually, I had a few questions. One was, could you throw some light on this diminution in carrying value of investment in Startup Investments in Applect? Could you explain what was the reason for that?
Basically, in this Applect, which is running this like Meritnation, we have taken the diminution. This is more to follow the accounting standard that we follow, that we usually carry the investment at cost or market value, whichever is lower. I think there were certain prevailing concerns on Meritnation, and because of that, auditors felt that we should take some kind of an impairment in the process. We have followed that, and we have taken the impairment on that one.
The Startup Investments, that is the same reason?
No. Startup Investments is a vehicle where most of our new investments have been made, and it's a 100% subsidiary company. And most of— G ive us a minute.
Sorry about this. Most of our new investments have gone through Startup Investments. Does that answer your question?
If there's a diminution in the underlying asset, the value of Startup Investments also will be impacted.
This is in relation to Policybazaar, or these are the new investments in Startup?
No. Policybazaar has not been impaired.
Policybazaar not been impact?
It is Meritnation impaired.
Second was, sir, in the last quarter, we've seen hiring in the IT space. If you see TCS, Infosys, they've hired north of 10,000 headcounts, majority of which are freshers. Sir, considering that our growth in recruitment solutions has been 19%, which is more or less at the same run rate, d on't you think that is less, or how does that impact us?
See, we work with over 8,000 IT companies, n umber one. Number two, mostly, we sell annual subscriptions to them, they renew at year-end. Number three, the IT business for us, actually, while the overall revenue may have grown, or billings may have grown at 15%-16%, the IT revenue grew at a much faster rate than that. The non-IT market grew at a slower rate. This has been the case for now three or four quarters. The IT market for us, like Bangalore, Chennai, Hyderabad, the IT segment has been growing north of more than 20%. The non-IT markets have been slower, which is why the average has been more like 17%-18% for us.
Sir, as far as you spoke about that slowdown in the real estate in 99acres, could we see that coming down to single- digits, or you will maintain 15%, sort of 20% + growth there?
It's very hard to say what is going to happen in real estate. The real estate market is very unpredictable, and things change very quickly in this market. Sometimes we feel we're going to grow at 40%, but you end up at 20% because something happened during the quarter which sort of sets you back. In some cases, we've also had where we thought we would grow at 20%, but we've grown at 30% or 40% also. It's a little sort of unpredictable. We don't have a very large renewal business like we have in Naukri. A lot of the business every year is fresh sales or every quarter is fresh sales, and sentiment can change from quarter to quarter. Actually, it's harder for us to predict what growth or what revenue will be like next quarter.
A lot, like I said, depends on the economy, will depend on fund availability to developers, will depend on new launches, will depend on whether people are willing to invest in property or not next quarter. We are still hoping, and the targets we have set for our team are, of course, in that range. We can't be sure.
Sir, just my last question , there were a lot of news flows. I know it's been previously asked also, but a lot of news flows as Amazon OFD, it was supposed to be launched by Diwali, but there's no news as such. In your interactions, have you witnessed something? If you could help us with some guidance that if at all, and when are they going to launch or something like that? I believe if they launch, there'll be a lot of pressure on ad spend on Zomato also, which will eat into an already squeezed margin.
Actually, Zomato, like I said, is very confident of defending its turf without changing its economics very much. Like I said, that it's a very different logistics operation as opposed to delivering other products because food and meals are highly perishable. If you order something at 12:30 P.M., you want it delivered at 1:00 P.M., half an hour. It's a totally different delivery operation. It's like setting up a whole new company. Amazon, of course, is very well-resourced and has got plenty of money. They do know how to deliver, and they do know how to handle logistics and stuff like that. Food, you do not warehouse. Food, you pick up from a restaurant and deliver, and you pick up from maybe 30,000, 40,000, maybe 25,000 restaurants in Delhi NCR and deliver in Delhi alone.
You deliver within a 5-km, 7-km, 8-km radius, and you deliver in half an hour. It's a very, very different operation. Even for Amazon, it'll be a fresh new challenge. It will not be an easy thing.
That's all from my side. Thank you so much.
Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead.
Thanks for the opportunity. Good evening, everyone. First of all, I just missed two data points. One is your billing growth in 99acres and your comment about losses in Zomato. Have you given a monthly run rate of loss in Zomato?
October was $20 million. It's down from $45 million in March. Every month they're reducing slowly.
Billing growth in 99acres was 20.8%.
In 99acres, do you track something like a churn rate or something like that? Because brokers are our customers, and I believe the churn rate could be potentially higher on that side. As you also mentioned, the predictability is a bit low in this business because it depends a lot on the confidence. Do you think that because that segment requires a lot of hand-holding or pushing as well? Is my understanding correct?
You're absolutely right. We work with all kinds of customers. We work with developers, we work with owners, we work with large channel partners, we work with retail brokers, we work with people in the rental business. Churn is always very high with the smaller customers. The customers who run mom-and-pop shops, who are one-man shows. Many of these businesses sort of shut down over time sometimes. Churn is very high. The smaller the customer the higher the churn. There is less churn with customers who pay us a lot more, w ho have been in the business for many years, who are sort of serious players, who have large operations and so on. We track all these metrics, and we monitor them closely.
Unless and until we see a real uptick in the underlying market and we see builders coming up in, this segment is likely to be volatile, and we may require a good investing in terms of real marketing also.
You're absolutely right. T he real estate market has, I think, peaked in 2010 and 2011, and it's been going downward since then. The good news is that despite all this, our business has been growing every year. Irrespective of what happens in the real estate market, we've been growing at 15%, 20%, 30% every year. We've now reached a point where we are averaging about INR 20 crores a month in terms of revenue, and we are sort of either breaking even or making a little bit of money. Sometimes we lose a little bit of money, but it's not the business which is sucking up a lot of money. Y ou're absolutely right, the market conditions remain tight. People are buying fewer homes. Compared to the peak, I think sales are down by 50%, even 10 years later.
R eal estate prices haven't gone up in most markets for many years. Having said so, we believe there are still many opportunities in this space. It's a very large category. We are so far focused mostly on the new home side. There's a lot more we can do on new homes. There's a lot more we can do in resale. There's a lot more we can do in rentals. Commercial property is something we haven't even touched. We don't do too much business in commercial. Long term, I think it's a very big opportunity. Short term, there'll be hiccups. There'll be ups and downs. There'll be years in which we do well, there'll be years in which we don't do well. I think the trend is very clear. It's INR 20 crore a month business, breaking even, growing year-on-year.
It's only a matter of time before it becomes large and profitable.
For sure. I agree with you. I also noticed that your employee cost has gone up a bit high in this quarter. Any specific reason for that?
In general, we've been, of course, one, hiring more people, and two, we've been upping the quality of talent we have in every area. We are investing a lot more in platform development. We are investing a lot more in data science, design, improving the customer experience on our platform. Like I said, we've also seeded a couple of new products, which are not going to generate revenue for a while, but we are going to spend on them for the next two, three years before they start to get anywhere. We're making a lot of new investments, and most of these investments require us to hire people, and some of these people are very expensive, and t here's no revenue. Hopefully, over time, as a result of these investments, we'll be in much better shape. It'll take a couple of years.
Sure. Most of the hiring is more on a tech segment rather than on a feet-on-street kind of a marketing side.
Mostly a lot of high- value hires. There is some volume hiring. As business grows, you tend to hire a few more people in customer service, a few more people in sales, a few more people in operations, and so on. They're not very large, and these resources are not very expensive. A lot of our high- value hiring is, like I said, in product data science, technology, marketing, and some of the new businesses which we are building for the future, which we're investing in for the future.
Sure. Just a last bit, if I can squeeze in. Any comment on competition? Your marketing cost is high because of Jeevansathi, but is there an element of competition related to Naukri as well as 99acres in that?
See, Naukri, we had not spent a lot of money on marketing and brand building for many years. We felt that we had been out of media for a long time. This year, we were a lot more aggressive in Naukri in the first half of this year. That paid rich dividends because we were out of media for a long time. We went back into media, and we can see the difference in terms of the number of app downloads and the number of resume registrations and modifications on our platforms. It's really worked well. Of course, in general, we've upped the level of market spend a little bit, but some of these spends are sporadic. We may spend in one quarter, not spend in the next quarter. Let's see how it plays out.
In 99acres, actually, we have cut our ad spending in the first half of this year. We've not spent as much as we, I think, probably spent in the first half of last year. We are investing in some other areas which we think deserve more investment right now. This could change once again. A lot will depend on what competition does in the market. In Jeevansathi, we are aggressive . In the Jeevansathi space, in the Matrimony space, what has happened is the ad spend of all the players, maybe three years ago, was about INR 100 crores between us and Shaadi and Matrimony. Now, it's INR 300 crores. Every player has upped their ad spend, and so have we. For us, it's working. It's paying rich dividends. We are gaining share. We're gaining volume.
Our top of mind recall is improving in most of the geographies we operate in. Our modeling is telling us that if we continue to do this for the next two, three years, we'll become a very serious player in this market.
Sure. Thank you so much for this. That's it from my side.
Thank you. The next question is from the line of Vivekanand Subbaraman from Ambit Capital. Please go ahead.
Hi. Thanks for the opportunity. I have three questions. One is on the recruitment billing. I see that it has moderated this quarter compared to the last four, five quarters. Is this moderation led by IT billing moderating, or is it the non-IT part of the billing that has slowed down further? Secondly, in the matchmaking segment, you're doing phenomenally well compared to Matrimony. How is it that your billing growth is so good compared to their billing growth? What are the factors in your view? Is it something to do with your markets foray or strong presence and competition thereof versus, say, the south markets, or is there something else? My last question is with respect to the investees. We saw this secondary transaction in Policybazaar. Did you also have an opportunity to either buy or sell stakes here?
What are your thoughts on your stake in Policybazaar? Would you be keen on increasing your stake, decreasing it, or are you happy with your stake? A related question on the investees is, do you foresee any potential for secondary transactions in Zomato? Thank you.
On Policybazaar, I think our thinking right now is for the moment we stay put. We won't increase, we won't decrease. We've got a substantial exposure there, and we think that's more than adequate. As far as Zomato is concerned, we, as of now, are not looking for a second IPO. We are quite happy with the way the company is going. If it does go to break even by March or April, or even later, we think the world will be different.
To answer your questions on IT versus non-IT. Like I said, our overall billing growth of 15%, it was much higher in the IT markets, a lot lower in the non-IT markets. Billing growth has slowed down, and a lot of it is because of the slowdown in non-IT hiring, especially in markets like Mumbai, et cetera, which have been impacted the most, I guess, by the financial services sort of slowdown. The other question was about us sort of growing faster than Matrimony. I cannot really comment on the Matrimony business. B asically, we are spending a lot more on customer acquisition today than ever. That's resulting in us sort of getting a lot of registrations and a lot of profiles, especially from the north and western parts of the country. Our market share in these markets is improving every month.
What tends to happen in these businesses is that once your market share starts improving, then your conversion rate also starts to improve. As a result, because we have more profiles, more people find matches on our site, and therefore, more people are willing to move from free to paid subscriptions on our platform. O ur conversion rates are maybe— I don't have the Matrimony numbers— catching up, because we were always behind with our competitors. Maybe some of our competitors are losing ground in the markets in which we operate. In the markets which we operate, we are probably spending the most right now, and that's resulting in us gaining shares. We are the most aggressive.
Understood. Just one small follow-up. You are suggesting that the markets where you are focused on, you are spending the most, whether it is on marketing or, say, on customer acquisition. Is that assessment correct?
Yes. Therefore, we're gaining share in these markets. Therefore, others are losing share in these markets.
Got it. Thank you. All the best.
Thank you. The next question is from the line of Vimal Gohil from Union Mutual Fund. Please go ahead.
Thank you for the opportunity. I'm Vimal Gohil from Union Mutual Fund, if that stands to be corrected. Sir, I just have three data points. Rest of the questions have been answered. Could you just tell me what was Jeevansathi's revenue? I missed out on that bit. Could you just give me recruitment business' and 99acres business' EBITDA numbers, please?
Jeevansathi billing growth was 16%, revenue growth was about 13.1%. Billing was INR 20.8 crores, so was revenue. O perating EBITDA in the recruitment segment stood at INR 123.9 crores, up 19.3% from September last year. EBITDA readjusted for Ind AS 116 stood at INR 120.85 crores. EBITDA readjusted for the lease of non-cash charge in Ind AS 116 stood at INR 123.4 crores. EBITDA margins were around 54.7% or so. In the real estate space, EBITDA for the quarter stood at INR 4.3 crores. EBITDA adjusted for Ind AS, et cetera, stood at INR 22.4 crores versus a loss of INR 4.6 crores last year. Cash EBITDA for 99acres during the quarter was INR 6.8 crores against INR 57 lakh EBITDA profit last year.
EBITDA adjusted for ESOP and Ind AS 116 stood at INR 3.3 crore versus a loss of INR 4.4 crore last year in the same quarter.
Just to make sure, your recruitment EBITDA, you said, adjusted for Ind AS was INR 124 crores, right?
Yes, that's correct.
What was it last quarter, adjusted for Ind AS?
Sorry, adjusted for Ind AS was INR 120.85 crores.
INR 120.85 crores?
Yeah. Adjusted, meaning actual EBITDA is INR 123.9 crores as per the new norms, but adjusted for Ind AS 116, stood at INR 120.85 crores.
Actual EBITDA is INR 123.9 crores?
What is reported is INR 123.9 crores .
Thank you so much, and all the very best.
Thank you.
Thank you. The next question is from the line of Swapnil from JM Financial. Please go ahead.
Hi. Hello?
Yes, please go ahead. We can hear you.
Hi, this is Prince Poddar, actually. Just two questions from my side. One, there has been a good 2.5% odd margin improvement in Naukri on a Q-on-Q basis. I'm just trying to understand, is this primarily to do with lower marketing spend in Naukri for this quarter? The second bit, will the technology spends continue in Naukri as we had planned, and we've been doing for the last four, five quarters?
To answer your second question, yes, we will continue to aggressively invest in all the products that we are building, all the platform changes we are making, all the new algorithms that we're developing, and so on. That will continue. Now, why has the margin improved by 2.4%? We'll have to sort of get back to you on this one. Maybe on account of higher revenue. I think marketing cost has been kind of consistent. I t could be some other cost. It's a small move.
Secondly, sir, on Zomato, the company has done phenomenally well to expand operations as well as decrease its burn rate simultaneously. It's a bit intriguing how they are able to do that even while expanding into Tier 2, 3, 4 cities, expanding to 400, 500 cities now. How have they been actually able to reduce burn rates? I'm not sure if you can say.
I'll tell you. See, when you grow very fast and you focus totally on top-line growth, very often you don't keep your eye on cost of growth.
A number of cost inefficiencies are creeping. Then when you say, okay, now is the time to focus on burn, you start examining those costs and you figure out ways to do the same thing at a lower cost. For example, they're cutting discounts, and they're cutting marketing at the bottom end. On small orders, they're cutting misuse and abuse, like people breaking up orders into two or three to get more discounts, and so on. Just by doing that, they're being able to cut the burn.
Maybe things like, I think there is no more Piggyb ank now, things like that.
The Piggyb ank was not draining money.
Thanks, sir. That's all from my side.
Thank you. The next question is from the line of Mukul Garg from Haitong Securities. Please go ahead.
Thank you for taking my question. I have two for Hitesh. Hitesh , first one, on the Naukri business. C an you help us with the sectoral visibility in other industries except for the IT? Where are you seeing the slowdown particularly, or is it across the board? Also, if you can share the traffic share versus Indeed for the most recent period.
We produce a monthly JobSpeak Index, and that has data by industry, and that's reasonably sort of accurate. What we are seeing is that the slowdown is spreading to more sectors. Earlier it was limited to sectors like infrastructure and telecom and real estate. Now, banking and financial services have also been impacted. We are seeing a slight slowdown in exports, in sort of travel and tourism, and some of those areas as well. It's not very pronounced, but things seem to be slowing down a bit in some of those sectors. Sectors like healthcare, education are still okay. IT services are still okay. The other sort of manufacturing exports, infrastructure, real estate, telecom, financial services, banking, some of these sectors seem to have been hit by the slowdown. Sorry, what was your second question?
What is the online user traffic share which you have for the recent quarter or the month versus Indeed?
For the last three months, I think we've been averaging about 56%, if you include Indeed in our competitor sort of list. Excluding Indeed, we are currently at about 88%. This is when you take the market to be just us and Monster and TimesJobs and Shine and Indeed.
What is the number, if you include Indeed a year back? Was it around the same, 62%, 63% ?
Like I mentioned earlier, we had been out of media for a long time, so our market share had dropped a little bit. If you were to include Indeed along with the other players, we have maybe recovered about 4 points or 5 points in the last two, three, four months.
Again, you mentioned earlier on the call that you have cut your marketing spend on the Naukri business, and you are kind of thinking about whether to take it up going forward. Given the weakness which you are seeing in other sectors, and high dependence on the IT, is that something which is going to be a big focus for next few quarters? Can you help us understand a bit how you are planning the marketing spend on the Naukri business?
Well, actually, we decide on some of these things at the beginning of the quarter. Depending on how the market is, what kind of activities we see on our platform, what kind of competitor activity we see or foresee, we take these calls. We were out of media, as in mainstream media, TV, and stuff like that for a long time. When we went back to media, the results we got were very encouraging. You may have noticed that the number of CVs we acquired last quarter actually went up to 20,000 a day. Our mods also went up. The traffic on the platform is very healthy. Now if the market starts to slow down, we may revisit some of these strategies.
What also tends to happen in a slow market is that you generally have more sort of activity on your platform, because there are more people looking for jobs. Unless the market is very slow, because when that happens, people actually give up hope of finding a job, so they stop looking. We sort of look at some of these things every quarter and then take a call at the beginning of the quarter on whether we should be spending and how much we should be spending on marketing. It's far too early to say what's going to happen going forward.
Got it. One question for Sanjeev. Sanjeev, on the Zomato side, almost I think for the last one year, there are new items which are coming out about fund raise, especially an up- round. We have not seen that, perhaps we have seen the stake sale and kind of fund raise at the same thing. Can you help us with any visibility exactly, is Zomato looking out for funds or are they happy with their current cash position? The second part is, if there is a requirement for you guys to participate from any new entrant, would you be participating or you would like to stay away?
On the first one, I think there is enough investor interest in Zomato that should they need money, they will get it when they want it. They're not announcing anything right now, so we can't say anything right now. As far as our participation is concerned, we are always supportive of our good companies. Having said that, it's quite apparent to us that, Zomato is perhaps a little bigger than our balance sheet can accommodate in terms of further investment, the kind of round sizes that this business will require should it require money. While we have an open mind, there is substantial interest from other investors to invest in Zomato should they need the money.
Got it. Thanks for taking my questions.
Thank you. The next question is from the line of Ritesh Bhagwati from Rockstud Capital. Please go ahead.
Thanks for taking my question. Could you just repeat in regards to the impairment which we have recorded under the Startup Investments (Holding) Limited under this quarter? W hich company was it pertaining to and why did we take that?
There was impairment in Meritnation, Applect.
As a consequence, there was impairment in Startup Investments, which is 100% subsidiary of ours, and which is just largely a HoldCo for some of our investments. Basically, it was Meritnation, Applect.
Which is an underlying asset that was impaired.
That was INR 83 crores. What about under Startup Investments (Holding) Limited? Which companies were we pertaining to?
There are a variety of assets under Startup Investments. It's another type of subsidiary. It's possible that at some places the investments have gone up, some places the investments have come down.
It gets segregated. There was some part of Meritnation which was held by Startup Investments and which would have been impaired. There was also some part of investment which were held directly by Info Edge. It's in standalone as well. When you're looking at the INR 83 crore number, it's mostly around Startup Investments. I think in quarter one also, there were certain impairment taken in some other companies, and that INR 83 crore is a combined number of that.
Fair enough. Thanks a lot. Thanks for taking my question.
Thank you. The next question is from the line of Salil Desai from Marcellus. Please go ahead.
On Meritnation, after this provision , how do you look at the business? Any changes in strategy or approach potentially?
Well, Meritnation has been impaired because, obviously the business is under some stress, which is why it is happening. We are still evaluating all options on that. We cannot say anything more right now.
Thank you.
Thank you. The next question is from the line of Sanjay Ladha from Concept Investwell. Please go ahead.
Thank you. I have two questions. Firstly, how you see the valuation for the startup as their loss is still commanding a very expensive valuation? We see the example of WeWork and ITW, now the valuation substantially corrected in WeWork. What is our view as we are sort of startup company now? The second is, how you see yourself going for longer-term horizon, say three to five years? Can we see same growth rate going forward or it can be improved from here? Thank you.
Sir, same growth rate in Info Edge or growth rate in what?
Growth rate in other company. In the revenue and profit terms.
Of Info Edge?
Yeah.
I'll answer the first part of the question, and what's happening with startup valuations, and maybe Hitesh can answer the second part. W e typically go into our startups early on, b efore valuations have been bid up really. We sometimes do follow-ons, and those would be largely to defend our pro rata, sometimes even more. Essentially, we don't pay terribly high valuations in most cases. We are conservative as far as our investing style is concerned on valuation. Having said that, it's pretty obvious that there has been a kind of divorce between public market valuations and private market valuations for a while. Essentially, that's what happened to WeWork. The private market valuation was something else and the public market only willing to give a certain valuation.
As long as you're conservative and you go in early, we believe our investments will be okay, so long as the business operations are good. Hitesh, you want to talk about growth?
A couple of things.
In both Naukri and real estate, a lot will depend on what happens to the economy. We are very tightly indexed to the GDP growth rates, for example. If the Indian economy keeps growing at 5% per annum or 6% per annum, then of course, it's going to be hard for us to grow at more than 15%-20%. On the other hand, if economic growth picks up and IT companies continue to hire like they've been hiring for the last four or five quarters, then who knows? At 7%-8% GDP growth, we could also grow at 25%-30%. Time will tell, but that's possible. That's doable. We've done it in the past, and nothing much has changed. Our market share continues to be high, and we're working on a bunch of new things, new products, like I said. Similarly, real estate.
The real estate market has been down for many years now. If growth were to come back, if the problems in the real estate industry get sorted out over the next one or two years, who knows? If more homes start selling, if real estate becomes more affordable, if buyer interest comes back, if builders are better capitalized, we may grow much faster than what we're growing today. On the other hand, if things slow down even further, our growth rate could suffer. One is, of course, like I said, we continue to invest aggressively in all our verticals, and we will try very hard to offer better services, improve our customer experience, try and gain share from our competitors. Two, there's a natural trend.
Revenue is going to move from offline to online, that will only continue in all the verticals we have and which we are present. Three, if the economy picks up from here on, then of course our growth can also move into the next orbit.
Just want to follow up . Apart from Naukri verticals, other parts of the business are loss-making. How you are looking forward, or how you are saying these sort of companies will be profitable at net level? If you give some guidance. I'm not talking about the short term, I'm talking about upwards of five years.
It's not as if our businesses are losing a ton of money. 99acres has been flirting with breakeven for several quarters now. In some quarters we make money, in some quarters we lose money, but it's not as if we are burning a lot of money in 99acres. Ditto in Shiksha. Shiksha has also been a breakeven business for a couple of years now. Do we see more opportunity in it? We see a lot of opportunity, and we will continue to invest aggressively in these verticals. L et's take real estate as an example, as a case study. Volumes have fallen maybe 50% over the last five, seven years in real estate. Offline advertising spends have shrunk maybe by 50%-70% over the last five, seven years.
The total market for advertising has shrunk by maybe 30%, 40%, 50% over the last five, seven years. Our revenue has been growing at 20% per annum for the last four, five years. If this continues, if this market continues to be the market it is today for the next five years, hopefully we'll still double our revenue over the next five years at the very minimum. On the other hand, if we get better at executing, and if we improve the experience further, and if growth comes back to real estate, we could grow even faster. A lot of the investments we needed to make in building our technology and our brand and our platform have been made.
Yes, some more investments will have to be made as the business grows, but maybe not to the same extent as we have been doing in the past. Therefore, if you take a five-year period, our margins should also become a lot better than they are today in the real estate space. We are able to double, triple our revenue over this period.
Thank you very much.
Thank you. Participants who would like to ask questions, please press star then one. The next question is on the line of Mayank Babla from Dalal & Broacha. Please go ahead.
Sir, thank you for taking my question again. Just one query on the accounting side. In the consolidated balance sheet, I've seen that investments have come down from INR 340 crores to INR 198 crores. Could you explain that to us?
I would guess that it must be the impairment that we have taken, and that could be resulting into the reduction in the investment amount.
That will be it.
Thanks.
Thank you. Participants, to ask a question, please press star then one. The next question is from the line of [Mayuresh], an individual investor. Please go ahead. [Mayuresh], your line is unmuted. Please unmute the line from your side and go ahead.
[inaudible]
[Mayuresh], individual investor, your line is unmuted. Please unmute the line from your side to go ahead. T here is no response. For participants to ask a question, please press star then one. The next question is from the line of Devang Bhatt from ICICI Direct. Please go ahead.
Thank you for taking my question. I just wanted to know, in your standalone balance sheet, there has been increase in your non-current investments, from INR 1,000 crores to INR 1,500 crores. Can you help me with that?
Increase in what investment?
Non-current.
Non-current.
Non-current investments.
Yeah.
Increase in non-current investments.
Consol, standalone. How much is it? Are those valued markets?
Primarily, it is the investment that went in the month of February in Policybazaar.
I didn't get you, sir.
Primarily because of the investment that happened in Policybazaar in the month of February.
That is the reason that your current investment has declined from INR 339 crores to INR 64 crores.
Mr. Bhatt, do you have any further questions?
No. I just wanted a clarification. Is that the reason that the standalone current investment has declined from INR 339 crores to INR 64 crores, because some part of that investment is being funded from the current investment?
Current investment would be because of the reduction that we would have withdrawn money from mutual funds.
After we took some mutual funds, we withdrew from that, and then we have invested in Policybazaar.
Thank you.
It is in non-current investment.
Thank you.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Hitesh Oberoi for closing comments.
Thank you everyone for taking time out on a holiday to be on this call, and have a great evening.
Thank you very much, sir. Ladies and gentlemen, on behalf of Info Edge (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.