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InfoEdge Q2-FY13 Conference Call: On Investments, Slowdown


During the company’s conference call announcing its Q2-FY13 results, Info Edge CEO Hitesh Oberoi informed that  on a standalone basis net sales in Q2 grew to Rs. 106 crores versus Rs. 91 crores in the same quarter last year, an increase of about 17%. Sequentially however net sales were flat. Total Profit After Tax (PAT) for the quarter was at 33.3 crores up 18% YoY. Operating PAT was at 24 crores up 13% YoY.  Operating PAT margin was at 22.8% versus 23.5% in the same quarter last year.

Operating EBITDA for Q2 was at 36 crores, up 13% year on year. Operating EBITDA margin was at 34.5% versus 36.4% in Q2 last year. Deferred sales revenue has decreased from Rs. 111 crores to Rs. 102 crores this quarter. It was 119 crores on 31st March. Oberoi informed that the job market continues to be tight resulting in almost zero collection growth in Naukri corporate sales last quarter, however, its other verticals including 99acres and Shiksha grew rapidly. The company has a cash balance of Rs 475 Crore.

On Investments: The company made a new investment of Rs 35 crores in Canvera this quarter. Additionally, the company also invested further 12.8 crores in Zomato and 5 crores in 99labels. Info Edge also acquired Toostep, and Oberoi informed that they are working at integrating the Toostep offering with Naukri. It should be noted that during the Q1-FY13 concall, Oberoi said that Oberoi said that Naukri sees no short term threat from social hiring platforms, which makes the Toostep acquisition more interesting given the companies ability to leverage on social media.Speaking with MediaNama, Info Edge CEO Hitesh Oberoi said that Naukri acquired TooStep because of its recruitment management solutions product.

On slowdown: Sanjeev Bhikchandani, Vice Chairman & Founder, Info Edge Ltd, predicts that slowdown in real estate and Shiksha vertical might not last and informed that Info Edge will continue to invest gradually in those verticals. “Because formally we are investing in growth and just to give you a perspective in 2008-2009 period Naukri corporate sales has negative collection growth of close to minus 30% for two or three quarters in a row. And that is when we cut investments in other verticals. And at that time our competition cut even more. So just going in perspective situation right now is no way close to 2008-09.” Oberoi noted that the entire recruitment firms segment has been hit very badly because of the slow down in hiring resulting into a slowdown in their recruitment segment as well.

On Advertising Spends: Oberoi noted that as a result of the slowdown competition does not spend as much as they used to spend earlier. Thus Naukri too saw a decline in advertisement and promotional spending. He also hinted at a big campaign for the next quarter.

Vertical specific results:

Recruitment Solutions(Include Naukri.com, Naukri Gulf, Job Seeker Services, FirstNaukri, Quadrangle) :
- The recruitment business grew its top line by about 12% to 83 crores this quarter.
- Naukri corporate sales top line grew about 12% year on year.
- Quadrangle sales were better than Q1 but still declined by 12% YoY.
- The EBITDA margins the recruitment continues to remain steady at about 50%.
- Naukri corporate sales EBITDA margins were stable at 55%.
- During the quarter, Naukri added an average of 11,000 fresh CV’s every day and the Naukri database grew to over 31 million CVs.
- Naukri CV modifications were at 1,29,000 per day.
Naukri job-seek index was flat at around 1131 in June.
- During the quarter, Naukri serviced 25,000 new customers versus 23,500 customers in Q2 of last year, an increase of over 6%.
- Business from Naukri premium has been sluggish.
- Naukri has gained 60% traffic share i.e. unique visitors multiplied by average page views per visitor, according to comScore Metrics.

Business in the recruitment segment has been sluggish, and flat compared with last year. Some companies spent more, some are downgrading spends. Banner ad sales and homepage solution trades have not been impacted.

Other Verticals (Jeevansathi, 99Acres, AllcheckDeals) :

99Acres:
- During the quarter, 99acres grew by 52% year on year to 11.6 crores.
-At the EBITDA level the business made a loss of Rs. 12 million on account of higher investments in brand building and expanding the sales operation.
- The total number of listings on the 99acres site increased to 4.8 lakhs from 3.1 lakhs last year.
- Paid listings increased from 2.6 lakhs to 4.1 lakhs.
- Pockets such as Bombay have seen a slowdown

Jeevansathi:
- During the quarter, net sales in Jeevansaathi grew by about 25%.
- Losses in this vertical increased to about Rs 2.1 crore which the company attributed to investment in brand building.

Shiksha:
- The Shiksha business continued to grow although on a small base.
- Net sales in Shiksha grew by 46% in Q2.
- In terms of seasonality, for Shiksha, Q2 is always small, but Q3 and Q4 are very big for Shiksha because that is when enrollment happens in most institutes.

AllCheckDeals:
- AllCheckDeals had 400 transactions for this quarter.
- AllCheckDeals now has coverage in Coverage in 12 cities.