Vivek, we have 70 people with us. We can start the call now.
Thanks, Anand. Hi, everyone. Good evening, and welcome to Info Edge (India) Limited Q3 2024 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 any assistance during the conference call, please raise your hand on your screen. Please note that this conference is being recorded. Joining us from the management side, we have Mr. Sanjeev Bikhchandani, Promoter and Vice Chairman, Mr. Hitesh Oberoi, Co-Promoter and Managing Director, and Mr. Chintan Thakkar, Chief Financial Officer. Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties.
Kindly refer to slide number two of investor presentation for detailed disclaimer. The audited financial statement, other schedules on segmental billing, revenues, along with data sheets, have been uploaded on our website, www.infoedge.in. Now, I would like to hand over the conference to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.
Thank you, Vivek, and a very good evening, everyone, and welcome to our Q3 2024 earnings call. We will start with an update on standalone financials, and then we'll cover the segmental financials along with the commentary business, and then we'll have time for Q&A. Starting with a summary of standalone financials for the quarter ended December 2023 and for the first nine months of FY 2024, the third quarter of the fiscal year 2024 witnessed moderate growth in both revenue and billings on a standalone basis, backed by a strong performance in the non-recruitment businesses. In Q3 of FY 2024, our standalone revenue was INR 595 crore, a year-on-year growth of 7%, and billings were INR 577 crore, a year-on-year growth of 5%.
Deferred sales revenue at the end of Q3 was INR 925 crore, a year-on-year growth of 11%. For the first nine months of FY 2024, revenue and billings were INR 1,773 crore and INR 1,669 crore, a YOY growth of 11% and 3% respectively. Revenue and billings for standalone business, including Zwayam and DoSelect, were INR 614 crore and INR 596 crore, a year-on-year growth of 7% and 5% respectively. Nine-month FY 2024 revenue and billings, including Zwayam and DoSelect, stood at INR 1,819 crore and INR 1,715 crore, a growth of 11% and 3% respectively. Operating expenses for Q3 grew by 7%, and for the first nine months of FY 2024, operating expenses grew by 6%.
For the standalone business, operating profit was INR 219 crore in Q3 of FY 2024, a year-on-year growth of 7%, and was INR 646 crore in the first nine months of FY 2024, a year-on-year growth of 22%. The operating profit margin for the quarter for Q3 was 36.7%, in line with Q3 of last year. For the first nine months of FY 2023-24, the profit margin improved by 328 basis points year-on-year and was 36.5%. EPS before exceptional items for nine-month FY 2024 stood at INR 49 crore, a year-on-year growth of 23%. We generated operating cash of INR 272 crore in Q3 of FY 2024, a year-on-year growth of 13%.
The cash balance of Info Edge, including wholly owned subsidiaries at the end of December 2023, stood at INR 3,724 crore, and the headcount as of December 31, 2023, was 5,602. Moving on to segmental performance, and we'll start with the recruitment business. In Q3 of FY 2024, revenue for the recruitment solutions business was INR 451 crore, a year-on-year growth of 3%, and billings were INR 429 crore, a nominal degrowth of 1% year-on-year. For the first nine months of FY 2024, revenue was INR 1,353 crore, a year-on-year growth of 9%, and billings were INR 1,258 crore, a year-on-year degrowth of 1%. Operating expenses for the quarter grew by 14%, and for nine-month FY 2024, expenses grew by 14% or by twelve, grew by 12%.
PBT for the quarter was lower by 3% year-on-year to INR 259 crore, and PBT margin was 57.6%. For the first nine months of FY 2024, PBT grew at 7% year-on-year to INR 793 crore, and PBT margin was 58.6%. The business generated operating cash of INR 277 crore in the Q3 FY 2024, and INR 751 crore during the first nine months of FY 2024. The JobSpeak Index. Overall, the average JobSpeak Index for Q3 was down 14% year-on-year. The softness in IT hiring continued in Q3, and it also impacted our consultant business. Non-IT hiring continued to grow during the quarter, particularly in segments like healthcare, pharmaceutical, manufacturing, and BFSI sectors.
The recruitment business witnessed sound renewal rates during the quarter. The Naukrigulf.com business, on the other hand, reported a growth of 28% during the quarter, primarily led by growth in new customers added to the platform. Other verticals like Naukri FastForward and iimjobs.com witnessed healthy billing growth of 19% and 22% year-on-year, respectively. The Naukri database now comprises 95 million resumes and continues to grow 9% year-on-year. Daily app installs on the Android platform grew by 10% and on iOS by 29% year-on-year. The overall app install base stands at 14 million. We continue to make investments in AI and machine learning to augment user to, you know, improve the user experience on our platform.
We continue to focus on developing strong product offerings on you know like Job Hai and AmbitionBox to supplement and complement the Naukri business. We are looking, we are actually already, sort of, opening new branches as we speak in tier two and tier three cities to expand our coverage to more, say, more towns and cities. Moving over to the real estate segment. In Q3 of FY 2024, revenue was INR 89 crore, a YOY growth of 22%, and billings for the period stood at INR 88 crore, a YOY growth of 34%. For the first nine months of FY 2024, revenue was INR 259 crore, a YOY growth of 24%, while the billings were INR 254 crore, a YOY growth of 22%.
Operating expenses for the quarter in our 99acres business were up 5% year-on-year, and for the first nine months of FY 2024, expenses grew by 2% year-on-year. YOY operating losses were down 44% from INR 26 crore in Q3 of FY 2023 to INR 15 crore in Q3 of FY 2024. For the first nine months of the year, operating loss was down to INR 554 crore, versus INR 96 crore in the first nine months of FY 2023. The operating cash loss was lower in Q3 of FY 2024, and stood at INR 7 crore, versus INR 20 crore in Q3 of FY 2023. Cash loss for the first nine months of FY 2024 was INR 43 crore. Growth momentum in real estate continued in Q3 on both the primary and the secondary side.
Despite a considerable YOY increase in home prices, the demand from end users remains strong. Unsold inventory levels continue to remain low in the top cities of the country, and many developers continue to launch new projects. Of late, we are seeing more and more business move from towards channel partners for new project sales. Demand continues to surpass supply in resale and rental markets across major metros. Monthly rentals reached record highs in specific metro markets such as Bangalore, Pune, and NCR. Billing growth in 99acres was primarily led by increased broker engagement on the platform. With an increased focus on creating value adds and gradual price rationalization of platform services, our listing realization has improved quarter-over-quarter.
Overall, daily active users improved by 25% year-on-year during the quarter, and responses from the platform grew more than 20% across different categories, 99acres. We will continue to continue our investments to expand our user base, enhance the platform experience, create unique content, and drive monetization. Additionally, we will deploy more AI and machine learning to augment user experience, fraud, spam detection, and improve search results on the platform. Moving over to the matrimony business. In Q3 of FY 2024, revenue from Jeevansathi business was INR 22 crore, a YOY growth of 23%, and billings were INR 20 crore, a YOY growth of 19%. Nine-month FY 2024 revenue was INR 61 crore, a YOY growth of 4%, and billings were INR 59 crore, a YOY growth of 14%.
We continued our focus on optimizing marketing expenses and reduced the same by 39% year-on-year in FY 2024 in Q3 of FY 2024. Consequently, our total expenses for the quarter were down 19%. For the first nine months of the year, expenses were down 22% year-on-year. YOY operating losses were down by 48% from INR 26 crore to INR 14 crore in FY 2024. For the first nine months, operating loss was down to INR 49 crore versus INR 83 crore in the first nine months of FY 2023. The operating cash loss was lower in FY Q3 of FY 2024, at INR 11 crore, versus INR 27 crore in Q3 of FY 2023. Cash loss during the first nine months was INR 46 crore. We continue to maintain our focus on improving monetization and reducing burn in this business quarter-on-quarter.
Moving on to our education business, Shiksha.com. In Q3 of FY 2024, revenue for the quarter was INR 34 crore, a year-on-year growth of 23%, and billings were INR 39 crore, a year-on-year growth of 41%. For the first nine months, FY 2024 revenue was INR 100 crore, a year-on-year growth of 18%, and billings were INR 98 crore, a year-on-year growth of 18%. Operating expenses for the quarter were up 22% year-on-year, and for the first nine months of FY 2024, were up by 26% year-on-year. The business for the quarter reported breakeven, with a nominal profit of INR 10 lakh. The first nine months of FY 2024, the operating loss in Shiksha was INR 3.6 crore.
The business generated operating cash of INR 15 crore in FY 2023-2024, and INR 10 crore during the first nine months of FY 2024. Higher billings during the quarter were propelled by early campaigns from some domestic customers, and the impact may be transitional in nature. We continue to make investments in this business to improve our user experience and to create high quality, student-friendly content. Moving on to the consolidated financial highlights of the quarter. At the consolidated level, the net sales for the company stood at INR 627 crore in Q3 of FY 2024, versus INR 590 crore for Q3 of FY 2023. At the consolidated entity level, the total comprehensive income stands at INR 2,624 crore, compared to a loss of INR 400 crore in the corresponding quarter ending December 2023.
After adjusting for exceptional items, the profit before tax in Q3 of FY 2024 was INR 185 crore, compared to a profit of INR 511 crore in Q3 of FY 2023. Thank you, and that's all from us, and now we're ready to take any questions that you may have.
Thanks, Hitesh. We'll now begin the Q&A session. Anyone who wishes to ask questions may raise hand on the screen. We'll take your name and announce your turn in the question queue.
Yeah. So the first question is from Vivekanand from Ambit Capital. Vivek, go ahead and ask your question.
Thank you for the opportunity. Hitesh, two questions here. The first one is on the recruitment business. So, you saw a 1% decline in billing, but I also heard you mention about renewal rates. So, could you elaborate a bit on how you are seeing the growth in this segment? And also, if you could help us understand Naukri India versus overall billing, and perhaps give some thoughts on the fourth quarter, given that there is an element of seasonality in the business. Q4 is generally very strong. We're trying to understand how to think about the base here and growth trajectory for Q4, as well as the recovery that you're seeing now.
So, you know, we didn't see any recovery in Q3. Q3 was, IT hiring was slow in Q3 as well. What we've been seeing for the last three quarters now is a serious slowdown in IT hiring and also in our consulting business, because a lot of the consultants we have on our platform also, you know, hire or used to hire for IT companies. So, this business has been hit because IT companies, you know, one, attrition rate is down as far as IT companies go. Two, you know, they've not been hiring new people. In many cases, they've been letting people go. So, this has impacted our IT business. Of course, we had a very good two years before this, and the IT business grew by more than 100% back then.
But in the process, I suspect IT companies also over hired, and now because demand is soft, they sort of, you know, have some extra sort of manpower. The good news from our standpoint is that from what we hear, you know, rates at IT companies have started improving, and they're now where they used to be pre-COVID. So, let's see what happens going forward. The non-IT business continues to grow, but within non-IT also there are certain sectors that are doing better than other sectors. Sectors like healthcare, BFSI, pharma, manufacturing, you know, engineering, construction. So, you know, so now, what will happen in Q4?
Now, the Naukri India B2B business is, I think, almost, if I exclude the candidate services business, and if I take out Naukri Gulf, you know, it's maybe 90%, of our revenue, you know, of our recruitment revenue, including Zwayam, including iimjobs.com, including, you know, AmbitionBox, and so on. So, that business, of course, the overall business de-grew by 1%, so the Naukri India business must have, don't have the exact number, it must have de-grown by 2%-3% at least over last year, because Naukri Gulf grew and candidate services also grew by over 15%. Now, what will happen next quarter? What is likely to happen in Q4? Hard for me to say. It's our biggest quarter, you're right. There's a big base.
IT growth had started moderating by Q4 of last year, so, you know, I think we grew by 80% in Q1 last year. Our billing grew by 80% in Q1, 55% in Q2, maybe 25%-26% in Q3, and 15%-17% in Q4. You know, so, growth has started moderating by Q4, and by Q1 we were flat. Q1 of this year, we were flat. So the base is modest, but, you know, I don't know how things are going to play out going forward. A lot will also depend on what happens to non-IT hiring. We are also sensing that attrition rate in a lot of the non-IT companies are also lower this year than last year. Not in all sectors, but at least in some sectors. So, fingers crossed here.
I mean, we'll know only by quarter end, because what happens in our business is it's a new renewal-led business, and a lot of the renewals happen around quarter end. And what we are able to collect at that time will end up determining what happens to billing growth this quarter. I mean, we have set a target of i nternally, we set a target of growing over last year but can't say.
Okay. Hitesh, appreciate the detailed commentary. From a non-IT growth perspective, was there any impact that you felt of the impending Lok Sabha elections on hiring intent of the non-IT companies? Because it seems that, by looking at the JobSpeak, it seems that the hiring intensity, or at least job posting intensity of the non-IT companies, is also moderating.
You're right, it's moderating. But like I said, some sectors continue. Some non-IT sectors continue to do better than other non-IT sectors. So, we saw reasonable growth in sectors like healthcare, travel, tourism, BFSI, pharma, manufacturing, construction, engineering. And the other sectors have been slower. But is it linked to Lok Sabha election? Hard for us to say. We don't know. I mean, maybe it's just linked to the fact that because IT companies are not hiring as many numbers as earlier, it's easier to get talent at junior level, because talent at that level is often fungible, especially, you know, talent from tier two, tier three universities.
Like, I remember last year, you know, we were approached by a couple of players who hire for banks, and they were like, "Listen, there is so much demand for IT talent, that we're not able to get people who we used to train for banking jobs earlier." And a lot of our trainees used to be actually engineers from tier two, tier three companies. Now, maybe it's easier for them to hire also.
I see. That's an interesting perspective. Okay, my last question is on the real estate market. Last quarter, you had mentioned one thing, that if the market is growing at a very fast pace on its own, then obviously that doesn't bode very well for intermediaries like you. So, but still, you have delivered a very healthy growth in 99 acres.
Yeah.
What's really working for you here? Growth seems to be accelerating now. Could you spend some time explaining to us what's going right for you in this business?
So, I think, what you are referring to is the fact that, you know, I've said this once, that if it's very easy to sell, then we are not required. I mean, in fact, nobody's required, you know. So, if, you know, your inventory gets booked, even, you know, at pre-launch time, forget about it, you don't even need to launch, you know, then no intermediary is required, no broker is required, no, you know, platform like ours is required. So, you know, so but the real estate market is a large market, and we operate in every segment. So, there's a new launch market, which is where I think, where some of this action is.
When you hear of projects getting launched and, you know, large builders collecting a lot of checks very quickly, that's mostly with very top, you know, end builders and in sort of the new launch market, right? We have a very tiny share of that market. It doesn't really contribute much to our revenue today. We primarily operate in the under construction sort of segment. So, once a project is under construction, you know, there's a lot of. Some of the projects are sold at launch time, and then it's sold over a period of time. So, that's when we become very important for developers and channel partners. And of course, we operate in the secondary market. Most of the secondary sales go through platforms like ours. So ,our secondary business is also doing well this year.
By the way, it's smaller than the primary business for us, but it's almost as big if you include rental, commercial, resale. And that business has been growing much faster than our primary business. In the new launch, there's a business, there's a lot of action, business activity, but we don't really play a big role, and that's something we want to correct going forward. That's an opportunity for us. A lot of that revenue today goes to the Facebooks and Googles of the world. The under construction business has been growing at a healthy pace because, you know, because what's happening is that demand has been solid, and there was not enough supply which hit the market during COVID.
As a result, the unsold inventory in most markets is at a decade low, and that's also resulting in higher prices in some pockets. And in general, people want to upgrade after COVID. So, all these sorts of factors seem to be resulting in a reasonably solid real estate market. And you know, you have to remember, see, even when we were hit by COVID, even when we were hit by GST, you know, RERA demonetization , we were able to grow our business at 12%-14% per annum. So, we would like to grow it much faster going forward in a good market. So, the team has been executing well, so that's the good news. We are happy with the way the team has been executing, but let's see if this sustains, you know. With real estate, I've learned it's very hard to make forecasts.
Fair enough. Thanks for the elaborate commentary. I'll rejoin the queue.
Thank you, Vivek. The next question is from Nitin Jain, from FairConnect Investment. Nitin, go ahead and ask your question. Nitin, you're there? Nitin, Nitin's on mute.
Hello, can you hear me now?
Yeah, go ahead.
Yeah. Thanks, and congratulations on good execution in this tough environment. So, regarding the recruitment business, I just wanted a clarification first that, you know, in the past, management has guided that contribution of IT, ITES to revenue is around 50%. But, in the presentation, like, if you look at the last 3 years-4 years' data, it's somewhere in the ballpark of 35%. So can you help me reconcile that?
Yeah, you see, direct revenue from IT companies is in that ballpark, but a lot of recruitment firms also work for IT companies. So, recruitment revenue from recruitment consultants is also about 30% of our revenue. So, if you know, proportionately sort of. If you do the math and you sort of. Yeah, maybe half of that is also, or maybe slightly more than half of that is also IT, connected to IT hiring.
Okay, so the three buckets that you have shown, the consultants are outside those three buckets, is it?
Which are the.
BFSI and infra.
No. See, I don't know which slide you're referring to.
So, there is a slide on. Hold on.
So, there's IT, there's non-IT, and there's consultants. So, if these are the three buckets you're looking at?
No. So, there is IT, ITES, and then there's BFSI, and then there's BFSI, infra. That's a data sheet, so there are three buckets. There's IT, one for IT.
Yeah, I think the buckets to look at are IT, non-IT, and recruitment consultants.
Okay.
Because, you know, that the other bucket you're looking at is not, I mean, there are 40 different sectors in which we operate.
Copy that. Okay.
Nitin, I think you should look at our presentation, slide number 26.
Yeah.
That will give you a better breakup of the numbers.
Okay.
Recruitment firms is 26%.
Yeah.
27%, so broadly, half of it would be coming from IT businesses. So, that will add up to around 50%.
Okay, got it. That's perfect. Thank you. So, and one more thing: so if I add up IT, BFSI, and infra, together, they are about 50% of the revenue. So, what is in the remaining 50%?
Nitin, maybe you can refer that slide. You'll get complete details.
Okay. Yeah, see, we work, we have, you know, there are 45, 50, 40, 50 different sectors there. There's BFSI.
Okay.
Education, FMCG, durables, travel, tourism, hospitality, infrastructure, engineering. So, you know, if you add all that, we'll add up to 100%.
Okay. And what has been our traffic share for the December quarter, like, for Naukri?
Similar. I mean, us, we don't, we haven't. I don't think there's much that has changed on that front.
Okay. Just asking because I think earlier the company used to disclose that with the presentation, but it is-
It is still there, Nitin. We have been trading at around 70% plus.
Okay.
There had been certain issues we are facing with Similarweb, because the app traffic that we are getting from Similarweb doesn't matches with our internal sources. But broadly, you can assume the traffic right now remains at the range of around 70% plus for now.
Okay, great. And I just wanted to understand, like, you know, how pricing behaves in this kind of an environment, given that, you know, we are probably close to the bottom for the IT sector downturn. Hopefully.
I hope so, too.
Yeah. So how does the pricing behave in this environment? Like, do we give any kind of discounts.
It's very hard to take price. It's in a soft demand environment, it's hard to take price hikes. So, you know, and it's hard to get volume growth as well. So, you know, it's like, you do your best. We don't get price hikes in this environment. I mean, we are adding new customers in non-IT. We're expanding to small time, small towns in the non-IT, on the non-IT side to acquire more customers. And there if the, you know, if demand picks up, we should be able to get a price increase, but not on the IT side, and not, certainly not with consultants. Because consultants are the most impacted when there is a slowdown.
Right. So, do we even provide any kind of discounts or something in this environment?
Yeah, it's a negotiation. At the end of the day, it's a negotiation, you know. While there is a trade card, there is some discounting which happens. We try and understand how much, you know, value we create for the customer, and we equip the sales team with these tools, and then they use them to negotiate with customers.
Right. So, regarding the real estate business, I missed your comment on improved pricing realizations. Can you please elaborate once again?
For our business?
Yeah, for real estate.
Yeah. So now, so two things. One is, what I may have mentioned is that real estate prices are going up nationally, you know, because the market is hot, so there is more demand than supply right now, and therefore, real estate prices are going up nationally. Of course, in some markets, it's a very local business. There are lots of micro markets. In some real estate markets, prices may be up 100% over last year. Same time, some markets, they're up 20%. But in general, prices are going up everywhere. And we have also been able to realize, you know, better prices for our listing products in real estate from our customers.
Okay. And would that be from brokers or, like, individuals as well?
See, we have a very tiny, you know, B2C business. We work mostly with brokers and channel partners.
Okay.
Yeah.
Great. And just one more thing regarding real estate. So, the paid listings seem to have declined from last year, but the revenue has seen . So, okay, so I think, this ties in with the pricing realization improvement comment, I guess.
Correct.
Right. Okay, great. And just one last question: so at the overall business level, we have seen a good margin improvement in the first nine months. So, what has led to this, improvement? Like, have we cut down on, marketing expenses, significantly, like, the cash burn .
Yeah, see, our burn in both 99acres and Jeevansathi is down over last year, right? You know, and this is primarily because, one, in 99acres the sales are up 23%-24% over last year. Costs are up only 5%. We have spent less money on advertising than last year, but it's not that much less. It's just that we've kept our costs under control, and we are now seeing operating leverage play out. In the Jeevansathi business, we've cut marketing spend substantially, because marketing was a big chunk of Jeevansathi expenses. And we've started monetizing more aggressively. If you remember, you know, we actually changed our business model. We went premium. We took a hit on revenue.
We tried to use gain market share through this route, and now we think we are at a point where we can slowly start, you know, turning the screws on monetization, and that is resulting in higher revenue growth than previous quarters. And at the same time, the market is not as irrational as it was earlier, so we've also managed to bring down our marketing spend. So, that has led to lower burn in Jeevansathi vis-à-vis last year. So, while in Naukri, you know, billing growth has been, you know, slow low, and our costs are up, so. But overall, because of the improvement in Jeevansathi and in the 99acres business, our margins are perhaps still holding or looking better. May not continue, you know, if the Naukri division does not recover in some quarters.
Okay. Thanks for the clarification. Just one last one, if I may. Regarding Shiksha, I think the business model seems to be relatively fine-tuned now compared to, you know, how it was 3 years, 4 years ago when we were nascent, at a nascent stage. What would it take to scale up this model rapidly now?
I think we need to do a lot more work in the Shiksha business. It is not, in our view, at a stage where we can predict what's going to happen next year or the year after that. I think it requires a lot more work. We are comfortable. We are sort of breaking even, you know, we are growing a little bit. But if we really want to ramp it up, I think we need to do some more homework, go back to the drawing board. You know, so that's on the agenda, but not for the next few months, maybe after that.
Okay. That, that's it for me. Thank you so much.
Yeah. Thanks, Nithin. Next question is from Vijit Jain from Citi. Vijit, go ahead and ask your question.
Thank you. Hi. So, my first question is on recruitment. So last time, I think you guys talked about a little bit about, you know, giving more color on the GCC side, what trends are already visible in your numbers and how you look at them. So, I'm just wondering if you can shed a little bit more color on that front, on the recruitment business. That's my first question.
Yeah. See, our sense of what's happening in the GCC market is that the number of GCCs are growing. But you know what, what happened, but the bigger GCCs actually were perhaps not growing as much. So, you know, in every market you have an 80/20 sort of thing. So, while there may be 1,500-1,700 GCCs on the ground, then when you start a new GCC, typically the new GCC starts small. They start by adding 20 people, 50 people, 100 people. And when they start, they normally don't use a site like Naukri for hiring. They, you know, they sort of give the contract to somebody, and that's how they set up their first sort of team.
Only when they hit, you know, 300, 400, 500 people, do sites like us become relevant, because that's when they start having attrition, where they need to grow, add more people, et cetera. So, our sense of what's happening in the GCC market is that while the number of GCCs in India is growing, the newer GCCs are small. They will take time to ramp up. The bigger GCCs, on the other hand, the ones that employ a few thousand people did not grow this year because they are. You know, these are GCCs that are owned by, which are captives of larger firms. And some of these firms, and these are large U.S. companies and, or U.S. retailers, or U.S. utility companies, or U.S. BFSI giants and so on, and they've not been hiring aggressively, this year. That is our take.
Got it. Thanks, Hitesh. My second question is, I think, kind of, you know, to both you and Sanjeev, because I saw a tweet from Sanjeev today where he mentioned about, you know, the number of startups which are now hitting sustainable profits is higher than what he thought 16 months back. And I'm just trying to get a sense, is that something you're seeing in spaces where the non-recruitment business for you also competes? So, in 99acres, for example, I do note that Housing.com seems to have grown a little less this quarter versus you guys. This is, I think, first time in a few quarters. And I'm wondering if you're seeing the same kind of trend for where Shiksha.com operates and maybe even Jeevansathi.com operates. I don't know if it ties in as neatly there as well.
Well, Sanjeev should be able to comment on the broader startup ecosystem, but our general sense of what's happening out there is that because of the, you know, because, raising capital is not as easy as it was earlier, you know, a lot of businesses, are behaving more rationally than they were behaving earlier. That's all. I mean, that's what is happening everywhere, in my view. And maybe Sanjeev can add to that.
Yeah, I think Hitesh has summed it up perfectly. You know, "[Foreign language]". When there is a shortage of money, you have to break even. I think we are seeing that. Enough, enough companies are doing that, and more are doing it than I think, I had anticipated 16 months ago when I tweeted that. In our own portfolio across our, you know, funds, you know, we are seeing at least close to double-digit startups that are breaking even, making money or perhaps getting very close to it.
Okay, that's good to hear.
So, if that is what is happening in our own funds, I would imagine what's happening across the ecosystem is, you know, running into 100 or 200 or 300.
Got it. Perfect. Thanks, Sanjeev. And my last question, just a clarification, on the Shiksha business. You mentioned billing surged by 41%, propelled by early campaigns from domestic clients. So, I'm just wondering, is this, you know, seasonality shifting or something? Or is it, that, you know, you've gotten some more business from domestic clients versus earlier? I'm just trying to understand.
Yeah. No, I would not read too much into this. You know, a couple of clients, if they start early, it sort of changes our billing growth.
Okay.
A lot depends on the education season. So, if JEE Main, for example, is earlier this year, then clients start early. You know, stuff like that. So, you know, I would not read too much into. It's not as if Shiksha is going to start growing at 40% from here on, you know?
Oh, okay. Got it. Thanks, Hitesh. Those were my questions.
Thanks, Vijit. Next question is from Jaideep, from Axis Capital. Jaideep, go ahead and ask your question.
Hi. So, my question is, particularly in the real estate business, 99a cres. So, the earlier speaker asked around the listings trend as well. So, I just want to double-click on the point. So, the listings growth, if I were to tabulate, the growth has been fairly tepid in the last 1 year-1.5 years, free plus paid. And on top of that, the share of paid listings has also come off from its peak. So, just wanted your comments on that, and then I will ask my second question.
So, you see, firstly, listing growth is a reflection of the secondary market. Okay, and within listing, there are rental listings, there are resale listings, there are commercial listings, and the situation could be different in different cities. In general, in a hot market, real estate tends to move faster, right? So, in a slow market, you know, a listing could be on the site for six months, eight months, because it takes a long time to sell. In a hotter market, you know, you may be able to post and, you know, you may be able to sell in two months or one month. So, there are these factors at work. And so, this is a hotter market than what we've seen over the last few years.
Basically, what you're trying to say is the velocity of l istings has kind of, you know, improved significantly, and hence you see the number come off. And your point on the share of paid listings, I understand that the pricing has improved, but is that taking a toll on the, you know, volume of paid listings by any chance? If my understanding is correct on that front.
See, we have a pr,emium model for owners.
Yes.
Right? And we charge brokers. So, all broker listings on the platform are paid listings. Unless we give some, we may be giving some free trials here and there, but that's a very tiny number. While most owner listings are free listings. So, the number of brokers we are working with has actually grown over last year, substantially.
Okay.
It's just that, you know, what may be happening is that at any point in time they have fewer listings because, you know, property is moving faster, that's all.
Sure. And since Q4 is typically the strongest quarter for real estate, and particularly because we are operating in the under construction and all this space, so just wanted to get your sense how, because since we are already halfway there, so how are the early trends looking like for the quarter?
Yeah, what happens in our business is that it's a subscription model. There are renewals. A lot of these renewals are around quarter end. Sales teams have targets, and what I see, how they work is that they do a lot of BD, new BD, in the first two months of the quarter, and they focus on collection of the last month of the quarter. Right? Now, you know, so normally, you know, if the market is good, they do well, and but it's hard for me to predict how things will play out. It's, you know, we have some internal sort of modeling, which we do, but, you know, a lot depends on what happens on the last 4 days, 5 days of the month, yeah. Of the quarter, actually, not the month.
Sure. And, on the reduction of losses, how much has operating leverage aided? Because the top line grew by high teens, right? 22%-23%. How much of that is operating leverage, and how much of that is cost optimization, basically the marketing bit?
So, in Jeevansathi.
No, I'm talking about 99acres.
Okay, 99acres. So, we've our marketing has become more efficient compared to last year. We've done made a few changes to our media mix, to our the mix between branding and performance and, you know, stuff like that, and we've optimized our marketing spend. The optimized marketing spend is actually, you know, the ROI on it is actually higher than on the higher spend last year. Right? So, that's helped. I'm sure marketing costs are down. By how much, I don't know, but maybe by 15% year-on-year in 99acres, or maybe 10%, I don't know exactly. We can get back to you. And, you know, otherwise, costs are up in single digits and revenues are up 20%.
Sure. That helps, Hitesh. Thank you.
Marketing expenses are down by 10% year-over-year for this business.
Thanks, Vivek, for that clarification.
Thanks, Jaideep. Next question from Aditya, from Macquarie. Aditya, please go ahead and ask your question.
Hi, Hitesh. Good afternoon—good evening. Just two questions. So, one was in terms of Naukri. Naukri typically sees a big quarter in March. Any kind of indications here in the March quarter how billings are shaping up?
I wish I knew. I had no idea. No idea at all. I mean, and I checked with Pawan also. You know, he said, "Listen, we will have a better idea by fifteenth March." So, very hard to say, yeah.
Because the March quarter has been, you've seen this big, like 35%-40% kind of bump ups, in that quarter. So, I was just wondering .
No, so Q- on- Q definitely will grow, you know, that's a given. But whether, how much we will grow over last year or whether we will decline over last year, et cetera, that is unclear to us. I mean, we can't predict right now.
Got it. Are you able to kind of triangulate towards, okay, what the current rate of billings kind of really implies for your revenue growth for Naukri next year? Even if that's a range which you can point to.
See, a lot will depend on what happens to IT hiring. If our IT hiring business grows by even 10%, you know, then of course it'll be a very different story. But right now, our IT growth is negative. You know, it's down maybe 5%, 6% year-on-year. Our non-IT business is up maybe, you know, 7%, 8%, 10% year-on-year. So, we are at, you know, flat or slightly, or minus 1%. So, a lot will happen, depend on what happens to IT hiring, next year. So, if IT companies bounce back, if they start hiring like they used to hire even pre-COVID, I mean, that's very good news for us.
You know, and if we are able to grow our IT business by 10%-12%, and if we are able to grow our non-IT business by 14%-15%, we can aspire to grow at. And if we, you know, can push our new products faster, we can still aspire to grow at in double digits. But if IT growth does not recover, if IT companies demand doesn't pick up and, you know, then it'll be a challenge.
Thanks, Hitesh. As this dynamic kind of plays out, would it be a fair expectation to say that then, we've discussed this previously also, that your operating expenses would largely be steady, so there could be a period of margin erosion to the extent that your volume is soft or your revenue is soft in Naukri?
Actually, you know, we want to continue to invest in the new emerging sort of businesses that we are building. Like Job Hai, we would want to continue to actually invest more in Job Hai. That's a blue-collar job portal we're building. You know, we would continue to sort of make brand marketing investments in Naukri. We are opening new offices, we are hiring more salespeople, as we spread to tier two, tier three towns. So, these are investments we would like to continue to make. We would want to continue with, irrespective of whether business recovers next quarter or not. So, if business recovers, you know, we will be able to maintain margin.
I f we're able to get to double-digit growth, we might be able to maintain margin, but if growth continues to be slow, our costs will rise next year in Naukri because we've already made these investments. They're important for the long run.
Thanks, Hitesh. Thanks for being so candid. Sanjeev, maybe one for you is that, within the investment book, are you seeing any kind of any areas of optimism which you can maybe call out or speak about?
I think, by and large, most founders are now a lot more frugal, a lot more cost conscious, a lot more conscious of, good unit economics. And that's a broad-based trend. Now, having said that, there will be a few companies who are unable to make the switch and pivot because they got committed to the wrong kind of unit economics and costs, early on, and may have a challenge getting out of it, but even they are making an effort. But by and large, I think, a little shortage of capital is good for discipline, and that's what is happening. So, you'll see the fruits of this in the next year or two.
Thanks, Sanjeev. Thank you.
Thanks, Aditya. Next question is from Nitin Sharma from Moneycontrol Pro Research. Nithin, go ahead and ask your question. Nithin, you are there?
Hello.
Yeah. Go ahead.
Yeah. So, thank you for taking my question. First of all, with your losses already coming down, competitive intensity seems to be easing. Is there a timeline for the Jeevansathi business to turn profitable?
There's no timeline as such. I mean, you know, we are, like I said, working hard on monetizing. You know, we've had moved to a freemium model, so, we are experimenting with a bunch of things. Some of them will work, some of them may not work. We saw, you know, some of our experiments paid off, last quarter, so we saw healthy growth. Now, of course, we have internal targets, and we are working hard to get there, and we would like to break even as quickly as possible, but a lot will depend on, one, competitive intensity, number, and number two, you know, whether these experiments we are working on start yielding results.
Okay. Is it fair to assume that your advertisement and promotion costs would be remaining somewhere where they have been this year for first nine months?
It'll depend on what happens with competition, but yes, I mean, we would not want to, you know, up them significantly, at least.
Understood. Thank you.
Thanks, Nithin. Next question is from Vikrant Gupta, from ICICI Prudential. Vikrant, go ahead and ask your question.
Yeah, hi. Thanks for the opportunity. So, I was wondering if you could provide some commentary on how you are seeing the attrition levels at the IT companies. So, at least the publicly available data is more a last 12-month sort of number. So, I was wondering if you could provide some color of how maybe attrition is in January, February versus, you know, December or something like that. What's the latest read that you have?
No, we don't have access to attrition data. What is available to the public is what is available to us. Everything else is anecdotal, so I would not bank on it.
So, anecdotally, what is your sense? Is January, February lower than December, or is attrition bottoming out or picking up so?
My sense is like January was similar, but I could be wrong.
Okay, thank you.
Yeah. Thanks, Vikrant. Next question is from Nikhil Choudhary from Nuvama. Nikhil, go ahead and ask your question.
Hey, hi. Thanks for the opportunity. My first question is regarding the losses we have, especially in Jeevansathi and 99a cres. What you mentioned that competitive intensity is shifting and, you know, because of the dearth in capital, and which is leading to industry behaving more maturely and moving to, you know, breakeven or even profitable. Is it fair to assume, at least near term or we have some timeline, when can we achieve breakeven basically in 99a cres and Jeevansathi?
Listen, see, we would like to break even as early as possible, you know, and make a profit. I mean, Q4 is normally our best quarter. If we have a good quarter, you know, you may see us generate cash in breaking Q4 and 99acres, depending on where we end up. But, you know, see, we would be very happy to break even next year in 99acres, but a lot would depend on competitive intensity. A lot would depend on whether some of the projects we are working on to improve our monetization to, you know, or to increase our traffic, yield the results we expect them to yield. So, you know, we don't want to be irrational.
We would like the business to break even as early as possible, but we would not sacrifice growth. You know, so if required, we would spend. You know, if that's where the market is headed, then, you know, we will not want to give up market share either. So, that's how we are thinking about this right now.
Sure, Hitesh. Second is, just in case a scenario, IT do not pick up meaningfully, let's say, in a hypothetical scenario, and non-IT continue to do well, what we are already seeing, right? Can we still grow in double digit, on the back of some improvement in pricing, plus non-IT being very good, given, you know, you're already investing in tier two, tier three cities, as well as, what we were seeing in off recall doing, better. Can that happen, or it will be very difficult?
No, we want. You know, so IT right now, IT growth is perhaps -6%,7%. Consultants are at -8%,10%. You know, we need to at least get IT back to base year. You know, so we need to get to a situation where IT companies at least start growing a little bit over last year. You know, at least 3%, 4%, 5% over last year.
So, you know, while they seem like they are distinct markets, they are somewhere also connected. You know, because at the junior level, talent supply is often flexible. You know, people want jobs. If they're not able to get jobs in IT companies, they take up non-IT jobs. That's how it works, you know. Our sense right now is that IT attrition rates are low. So, if there's a spike in attrition, of course, it benefits our business. Attrition rates are lower than perhaps they've ever been in the last 7 years-8 years- or IT companies. If they go back to even COVID levels, you know, we'll get our double-digit growth. And if IT hiring picks up, it'll also impact non-IT attrition, you know, in some businesses and in some companies. That will also lead to a spike in non-IT growth, right?
Actually, when companies start doing well and they look and, you know, things look good, you know, it's actually good for our new products also. So, they spend more money on branding, they will want to buy software, they will want to do more assessment. You know, so, somewhere we are all connected. Our sense is that if IT companies recover, then our business will of course do very well. Assuming, of course, that the economy continues to grow at whatever it is growing. And, on the other hand, if IT continues to be very, very sluggish, it will be hard for us to hit even double-digit growth.
Sure, Hitesh. Understood. Very helpful. Thank you.
Thanks, Nikhil. Next question is from Salil Desai. Salil, go ahead and ask your question.
Thanks, Anand. Hitesh, I just want to make sure I understood Jeevansathi right. So, based on all your responses, is it fair to assume that you figured out what the model is and this is the way to go? It's been about, you know, a year since you've been trying this experiment.
Yeah, yeah. So, we're not going back to the old model. This is the model we are continuing with. We are, you know, just sort of now trying to figure out how to monetize better because we went free, right? Therefore, as a result, we lost 30% of our revenue, our top line. Now we're just sort of trying to figure out what should we. What should remain free, what should we start charging for, how can we sort of leverage the traffic we have to, you know, get 30% growth, 25% growth over last year? The team is experimenting with a bunch of things. Let's see how this plays out.
Right. And here, you know, again, if I understand this right, it is not something so difficult that the competition cannot replicate, right? So, I mean, how are you seeing the their response.
No, they can replicate it. It's just that they will have to t ake a 30% dip in their revenue.
Right. So, you're saying it's a kind of psychological barrier to, for somebody .
And what is in it for them? See, we did this because we wanted more profiles. We wanted the network effect to sort of start working for us. We were a number three player, so we were getting maybe only 50% of the profiles in the market, and we wanted to go to 70% or say, 65%. They're already getting 70%-80% of the profiles in the market, right? Because they're leaders in the markets they operate. The cost-benefit analysis may not necessarily work out for them.
Understood. Perfect. Great. Second question I had was, you know, the commitments that you have made to IEVF. I'm not sure if you disclosed this number, that how much of it is actually deployed and given to them?
To whom, sorry?
Venture fund.
To the venture fund?
AIFs.
Oh, AIFs.
The AIFs, there's a commitment, right? And there must be some drawdown. So, is there a number where you say this is what you actually invested in them?
Do we make it public? The commitment was announced earlier, and there are four funds totally. Fund one was INR 750 crore. Fund two, fund one for INR 750 crore. Fund two was INR 150 million into whatever the exchange rate was then. And then there was a Capital 2B was INR 75 million, and then a third LP joined and committed some more money across all three funds. But if you look at what we have committed, it's you know INR 37.5 million, plus INR 75 million, plus you know plus INR 100 million.
INR 212.5 million.
Right. And that is still a commitment. That is not what you would have actually, you know, taken.
Well, some, a lot of it is drawn down, and some of it is remaining.
Okay, great. And Sanjeev, again, you know, going back to what you were talking about. So, on one hand, there is, the capital is becoming a little more scarce for startups to. I mean, it's not so easy to raise money. And on the other hand, we are seeing that, you know, now the secondary markets seem to be a little more willing to take, you know, risks with with loss-making startups. Do you think now.
When you say secondary market, what do you mean?
I mean, public markets, I'm saying.
Public markets.
Public markets. Sorry.
Yeah.
So, you think, you know, the route to IPO kind of shortens for most people that, you know, if the private markets aren't as.
My submission.
Charitable.
My submission is that, you know, after 2022, the market correction, while technically loss-making company can go public, I think, I'm doubtful as to how receptive public markets will be for loss-making companies. Unless there's very clear visibility of profit in the next year or two. But, you know, I'm not sure that, you know, people will be willing to really give loss-making companies the kind of valuations that these companies hope and expect.
Understood. Thank you so much.
But I could be wrong. You know, I mean, markets, you guys know better. You're public market investors. I mean, you tell me, would you invest in a loss-making?
No. Like I said, you know, there seems to be people seem to be more receptive now, right?
I think that window was there for a while, but with the correction in 2022, I'm not sure, you know, how many people will still be willing. I mean, if you look at the sort of rise in the share price of Zomato and Policybazaar. In the last 6 months, 8 months, 10 months, 12 months, it's coincided with the improvement in the bottom line.
Absolutely.
Maybe there's a causal effect there.
Got it. Thanks, Sanjeev.
Thank you, Salil. Vivek from Ambit Capital is back. So, Vivek, go ahead and ask your question.
Hey, just following up on Salil's questions. Sanjeev, i t's been almost two years since the new money was earmarked for the AIFs.
Yes.
At that time, you had said that you will deploy the funds in three years. Has anything changed? So, will you end up deploying?
We are investing a lot slower than we initially imagined. We are writing smaller first checks. We are taking our time. We are investing at a slightly lower valuation than early, and that, I think, is consistent with market conditions, and we think it's a smart thing to do, a more prudent thing to do. So yeah, it may not happen in three years, may take a little longer. But listen, when you say three years deployment, it meant we will give our first checks into companies in three years. Obviously, there'll be the follow-on checks will go in over the next four, five, six years.
Okay. And when you said that you meant that the follow-on checks would also be coming from the same AIFs?
Yeah.
What would that entail? Okay.
Same AIFs. We don't want any conflict of interest with having two different funds under in our stable investing in the same company.
Understood, sir. And just one more follow-up. Recently, the government permitted overseas listings in GIFT City. Do you think that will be a game changer in any way as far as Indian startups are concerned, in any sector or any segment?
Too early to say, but you know what has emerged is that while there was a lot of clamor, say, 4 years, 5 years ago, to be allowed to list in the U.S., even though you're domiciled in India, what has seemed to have emerged is that the Indian markets have been giving better IPOs to Indian startups than the U.S. markets. Because I think that threshold turnover, size, valuation requirement for U.S. listings is much higher than India. It's harder to get research coverage and therefore you know, I think only one company went public in the U.S., as compared to, I think more than a dozen in India. So, it's pretty clear that even if you allow overseas listings, Indian startups might prefer Indian listings in India, because that's where the investors are for their companies.
Okay. Thank you. That's, a great perspective.
You know, if you list through GIFT City, I think the rules are such that you are cutting out the Indian investors.
Oh, I see.
I think, so I'm not sure. And you know, if you do that, I think you may have a bigger challenge, you know, getting your IPO to succeed.
Okay, understood. And, Sanjeev, you had mentioned about five companies that you had invested in during the 2016-2019 period. Have any of them?
They're more than five, but there the promising ones are, you know, Shipsy, Adda247, you know, Shopkirana and a couple of others. But yeah, look, there'll be a while before they sort of get to go public or make profit.
Understood. Thank you so much, and all the best.
Thank you.
Thanks, Vivek. Vivek, this was the last question for the day.
Okay. So, thanks, everyone. On behalf of Info Edge, we conclude this conference. You may disconnect your lines now.
Thank you, everyone. Have a great evening.
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