Job Listings On Naukri.com Decline By 22.4% Since July; On Revenue Implications

Update: According to Naukri.com the number of job listings on the site cannot be correlated with revenues:

a. The Revenue model for Naukri.com is largely subscription based which varies from annual to quarterly periods. A large proportion of these are annual contracts. Therefore a reduction in the number of posting does not necessarily translate into a corresponding drop in revenues.

b. Individual listings are just a small component of the Revenues for Naukri. Our other products include Resdex – The database, Branding solutions etc which are not directly impacted by job listing activity.

Original Story: According to JobSpeak, a report released by Info Edge India, the number of new job listings on their portal Naukri.com have been on the decline since July 2008. 

JobSpeak claims to to highlight job industry trends, but since it draws its data only from listings on Naukri.com, we see it as an indicator of the performance of Naukri.com. Historically, the recruitment business (Naukri.com and Quadrangle) contributes to over 85% of Info Edges revenues, a significant majority of which is from Naukri.com. Therefore this study by the company takes on even more significance from an earnings perspective.

The Decline In Listings

While absolute numbers have not been shared, the index indicates that for every 1000 jobs per sector that were listed at Naukri.com in July, how many were listed in the subsequent months - hence, a percentage change, rather than absolutes. According to our calculations, the decline since September has been as follows:

Keep in mind that during the Diwali season, recruitment declines. We’re now in the final quarter of the 2008-09 fiscal, which has historically been the best quarter for the company.

Possible Impact On Revenue

It is key to remember that IT Services was among Naukri’s key sectors - contributing around 25.4% to its revenues, so even a 9.65% decline in listings is significant. Banking has contributed to 5% of revenues, so a 40% decline in listings will also have a significant impact on revenues from that segment. 

Traditionally, Naukri has depended on large IT clients - the top 10% of their client base (total - 18356 recruiters) contributes 62% of revenues (based on the Q209 Earnings Call), but since the beginning of 2008, they have been working on reducing their dependency on large clients. Info Edge had constituted at Small Accounts Team, looking to increase their client base and reduce dependency. We’ve also heard that they have been fairly aggressive with their sales in the past couple of months - introducing different packages to retain clients. Whether they have dropped rates - we don’t know, but will find out soon during the Q3 earnings call.

Download Jobspeak: Nov 2008, Oct 2008

Q2-09 Call: Info Edge Plans Senior Mgt Job Portal; IT Contribution To Jobs Down To 25.4%

BSE listed Info Edge India (Naukri.com) is considering a senior management portal, the company disclosed during an analysts call on Friday. Details of the portal are not know - it’s just at a concept stage and they’ve not yet started work on it. Earlier this month, Info Edge had also announced another job portal targeting freshers, called FirstNaukri.

FirstNaukri will be sold to the same customer base through the same sales team for Naukri. Revenue will recruiters and campuses for branding and marketing their students to the corporates; students will not be charged. In the near term, there may be an softening in fresher recruitment, but Naukri is looking at it as a long term play.

On Competition And Market Scenario
According to Info Edge, the situation is dire for competitors - who are being hit harder. “We believe that one of our competitors may actually grow negatively, and marketshare will go up as a natural consequence. Client budgets are slashed in the following pecking order: Placement Consultants –> Print –> TimesJobs –> Monster –> Naukri

However, at 24 percent growth, Info Edge revenues grew less than previously indicated. The company feels that growth may decline even further in Q3 and Q4, though they refused to give a guidance, citing a volatile market scenario.

Pressure on Rates?
Client are asking not asking for lower prices, but they may downgrade to save on costs. The branding solutions will be hit first - downgrading from a panel to a homepage link, or take it for 3 months instead of a year. The company doesn’t see logins moving south, unless the number of recruiters in a company goes down. “The database is a bread and butter product for our clients. They’re probably going to drop competition logins first.” Info Edge is also planning to give bulk discounts, but not lower prices.

Decline In IT Hiring & The Small Accounts Team
The key concern has been the decline in IT hiring: from 29.7% in Q2 last year, to 27.16% last quarter, and 25.16% in Q2 this year. “IT is slowing down fastest, and it is an area of concern, and we expect the slowdown will last through this financial year.”

The company believes they’ll have to launch new products and look at sectors outside IT. Last quarter, the contribution from Infrastructure clients grew at 24%, though banking remained stagnant at 5% of revenues. What’s interesting is that the second rung accounts are growing faster in terms of revenue, and though larger clients have reduced spends, the company claims to have made it up by adding new customers, and more revenue from the smaller accounts team. There’s lots of churn at the bottom of the pyramid in terms of clients. To cut costs, Info Edge itself intends to go slow on hiring - at present, the sales team headcount is around the same compared to Q1. They spent around Rs. 13.7 crores across all businesses on advertising, and are also not cutting marketing expenditure.

Statistics related to specific verticals:
Naukri.com & Quadrangle

– Share of recruitment solutions - 86%
– Growth is slow, but margins have expanded.
– Naukri Revenue from recruiters grew at about 15%, while candidate services grew at 43%
– Main recruitment business grew by 19 percent, of this 15 percent growth was in databases and corporate business.
– 9% revenue is from candidate resume services
– Quadrangle grew at about 38%
– Share of IT: 25.4%, from 27.16 last quarter, 29.7% in the same quarter last year.
– Share of Banking: stagnant at 5% of revenues, same as last year
– Job posts on Naukri: 87,000 (steady above 80,000)
– Number of recruiters: 18600, up from 15400
– Top 10 percent of clients - upwards of 62 percent
– EBITDA margins in recruitment were up to 43% percfrom 41% a year ago
– Total resume database is at 15 million, adding 16500 resumes per day
– Resume updates: 37,000 per day
– Client base: 18600, up from 15400 last year.

Other verticals and Investments:

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Q2-09: Info Edge Records Net Profit of Rs. 15.67 crores; Revenues Increase By 24% To 72.31 Crores, As Indicated

(Updated)

Readers may remember that Info Edge (Naukri) had mentioned in the press a few weeks ago that revenues will not increase as per expectations - and in a way, offered a revised guidance of 20-25 percent. The second quarter results (Q2-09) are in, and not surprisingly, within the revised guidance. Revenues for Q2 have increased to Rs. 72.31 crores ($14,53 million) - a growth of by 24 percent year on year. Of this amount, Rs. 65.41 crores was the Sales Income.

Info Edge has reported a net profit of Rs. 15.67 crores, which is marginally up year-on-year from Rs. 15.14 crores, and not in line with revenue growth. According to Sanjeev Bikhchandani, MD of Info Edge, this is largely due to the Education business - the portal Shiksha.com - which has taken up significant investment. This is reflected in a  significant increase in employee costs as well, which have increased year-on-year to Rs. 25.41 crores, from 17.46 crores in Q2 last year, and Rs. 24.34 crores last quarter. According to Bikhchandani:

“We invested Rs. 8.6 crores at the EBITDA level in our new businesses (Jeevansathi, 99acres, Shiksha, Brijj and Allcheckdeals) in July-Sept 2008. This number was at Rs. 2.9 crores in the same period the last year. This represents an increase of Rs. 5.7 crores in investments in new businesses. If we had maintained investments in new businesses at the same level as last year then operating EBITDA in July–Sept this year would have been Rs. 21.4 crores as compared to Rs. 16.4 crores the previous year - a growth of 30%.”

The company spent Rs. 13.67 crores on advertising and promotion this quarter, up from Rs. 12.14 crores last quarter. In all, for the half year, Info Edge has spent Rs. 25.81 crores on advertising and promotions. During the second half of the year, last year, the company spent significantly more than the first: Given the current market situations, let’s see if that’s the case.

Ambarish Raghuvanshi, CFO of Info Edge has said that there has been a downturn in hiring levels, and the operating environment is “difficult”, adding that 99acres.com has grown appreciably - a revenue growth of 98.9 percent.

Info Edge has, so far, spent Rs. 6.98 crores in Acquisitions and Strategic alliances. This is up from Rs. 5.023 crores from the last financial year. Remember that the company had raised Rs. 30 crores from its IPO for acquisitions. So far, they’ve invested in Study Places Inc, Applect Learning Systems and eTechAces. Our coverage of the eTechAces investment here and here.

Jeevansathi has recorded a revenue growth of 40.3 percent. Percentages don’t matter unless we have a base figure for the revenues, so readers should take that into account. Info Edge has also reported an increase in other income by 18.95 percent - up at Rs. 6.89 crores, up from Rs. 5.79 crores.

Q2-09 Details: Financials

From Q1-09: Financials, Earnings Call | Analysis/Report

(Updates: added details from financials, inputs from Info Edge MD, corrected revised guidance)

Related:

– Info Edge Tries To Lower Expectations, With Q2 Results Nearing

Disclosure: I own an inconsequential number of shares of Info Edge

ValueFirst To Raise $5-8 Million Says CEO Vishwadeep Bajaj; Apurva Kumar Joins From Naukri As COO

Update: I spoke to Valuefirst CEO Vishwadeep Bajaj, who confirmed Kumars appointment. Kumar is joining with a stake in the company, but Bajaj declined to elaborate on the details. Kumars mandate will be to “scale the business, and launch new verticals, particularly given his experience with Shiksha.”

Bajaj has said that Valuefirst will be announcing their funding - of between $5-8 million, within a couple of weeks. Our sources had told us otherwise, and we stand corrected. He declined to disclose the investors (yet). The funding will be used to expand the company to new domains, in particular - to Voice and the Internet. ValueFirst had revenues of around $10 million last fiscal, and have set themselves an ambitious targest of $25 million this fiscal.

Bajaj said that they don’t see ValueFirst as just a bulk SMS company, but an Enterprise Mobility company - “We mobile-enable the process. We don’t just sell a pipe, but integrate with the CRM app and SAP, whatever the legacy, and move data over the mobile network.” The company will invest the money into internal processes and IT systems. The company has an international presense in the Middle East, UK, Nepal, Bhutan and Pakistan, and intends to expand into developing markets where Internet penetration is low, and mobile is the base.

Original story: Apurva Kumar, VP & National Head for Mobility, Ad Sales and Investments has left Info Edge (Naukri.com) to join ValueFirst, a Mobile Data Services, company Chief Operating Officer. Kumar will be reporting to CEO Vishwadeep Bajaj. Kumar was with Info Edge for around 3 years, during which period the company went in for a public listing.  (Right: Apurva Kumar at the MediaNama Launch Seminar & Mixer)

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Info Edge Tries To Lower Expectations, With Q2 Results Nearing

Info Edge (Naukri), one of the few public-listed Internet companies, appears to be trying to lower investor expectations: in an interview with Reuters, CFO Ambarish Raghuvanshi has said that the second quarter (Q209) revenue growth may be 20-25 percent, with a half-yearly growth of 28-30 percent. This is compared to 55-60 percent year on year growth in Q2 last fiscal.

The impact is obviously being felt most on its job site - Naukri.com, which, alongwith their Quadrangle business, accounted for 88 percent of revenues last quarter. Raghuvanshi has said that the biggest challenge will be to be able to grow Naukri.com over the next 18-24 months.

During Q2 last year (Q207), Info Edge had recorded revenues of Rs. 58.5 crores, up from Rs. 32.5 crores for Q206. A 28-30 percent year-on-year increase would mean revenues of between Rs. 74 - 77 crores for Q209. Last quarter, the company reported revenues of Rs. 67.14 crores.

Info Edge had been rather bullish on Q309 (October to December 2008), so it’ll be interesting to see if the guidance is changed when the Q2 results are formally announced. Meanwhile, the company’s stock price has been hammered down - currently trading at Rs. 460, down from a 52 week high of Rs. 1688.

Some stats on Info Edge from our coverage of Q1:

Recruitment (Naukri + Quadrangle)
– 88 percent of operating revenue is recruitment
– grew at around 31 percent in Q1, over same quarter previous year
– IT Revenue growth in this quarter is 16 percent
– Dependence on IT down to 27 percent of Naukri corporate sales
Non Recruitment
– 12 percent of operating income
– EBITDA losses - Rs. 7.4 crores in Q1, opposed to 4.2 crores in Q1 last year
– Grew 71 percent over same quarter previous year

More on Info Edge (Naukri)
Q109: Financial Results, Conference Call | Analysis/Report
Articles related to Info Edge

Disclosure: I own an inconsequential number of shares of Info Edge

Info Edge To Launch FirstNaukri.com For Freshers

In the year-end earnings call in April, Info Edge MD Sanjeev Bikhchandani had said that they’re evaluating the freshers segment, and may be launching a site within 6-9 months. With the Q2 having ended, and no earnings results yet, Info Edge has announced that they’re launching a job site called FirstNaukri targeting freshers segment, reports FE.

The site isn’t live yet, but what’s interesting is that they acquired the domain name from FirstNaukri Solutions Pvt Ltd, around 6-9 months ago. Here’s a screenshot of the old site (via Sitereviewboard)

While one may argue that they are just carving one particular segment out of their main jobs site Naukri, this is a segment that requires separate focus: most jobs on job sites seek those with work experience. A separate site for freshers will allow them to have a separate team focusing on this segment, and effectively keep the same users within the Naukri ecosystem from the time they seek admissions (Shiksha) to when they’re looking for their first job (FirstNaukri), and finally, job switching (Naukri).

This is by no means a new segment: JAM Magazine, a youth-centric magazine had launched a job site called JobOKPlease last year. Rajiv Dingra of WATBlog had a job site called jobs4freshers, but that now appears to be defunct. Any others?

Update: other sites targeting freshers include Hello Intern, Freshers World, …

What Naukri Can Do Differently

At present, Naukri lists only 3967 jobs for Freshers and Trainees, though I suppose freshers would also apply for jobs that require only 1-2 years of work experience. I also think that Naukri should approach this segment a little differently; they already are in touch with colleges for their educational portal Shiksha.

They can allow colleges to host portfolios of their students online; remember, private colleges like Amity, Wigan & Leigh and IIPM pitch their placements to students in order to get admissions, and this would address a pain point for their placement committees, by allowing recruiters to go through the profiles online. That, however, will require a regular interface with colleges, and getting all the colleges to put up student profiles will be quite a pain. They might just go in for a simple marketplace model.

Disclosure: I own an inconsequential number of shares of Info Edge (India) Ltd

Car & Health Insurance Will Be 50-60% Of The Online Lead Generation Business In India - Yashish Dahiya, CEO, PolicyBazaar

eTech Aces yesterday announced that they’ve raised 49 percent stake from Info Edge India (Naukri), for Rs. 20 crores. Yashish Dahiya, CEO of eTech Aces (PolicyBazaar) has been in the online insurance business before - he was the CEO of First Europa, a Global Online Insurance Broker with operations in 9 countries, prior to which, he was the MD of ebookers Plc. MediaNama spoke to Dahiya about eTech Aces’ fund raising and growth plans:

Why did PolicyBazaar raise money from a strategic investor, instead of a financial investment from VCs? Wouldn’t it have been better to take financial investment now, and then a strategic investment at higher valuations?
For a few reasons - over time we will be applying for our own insurance brokerage license. There are restrictions on foreign investment there - that was one reason for going for a domestic company. Number two - I’ve been a manager all my life. I think an investor has a very different view to things, than an executing entrepreneur. When we started looking for an investor, within a week we had narrowed down on Naukri. They have a lot of experience, and we’ve already gained from the discussions with them.
But you’ve sold them a very high stake - wouldn’t selling 49 percent hinder further fund-raising? Does Info Edge have an option to acquire 100 percent?
I envisage taking this company public over the next 5 years, and I don’t think we’ll need more funding than the amount we’ve raised already.
Why take funding at all?
We’re not yet a profitable entity, and we needed a larger investment. We’re going to have physical offices in around 12 cities by the middle of next year. First we’re after NCR, and then southern cities. All that will require operating cost funding.
What kind of revenues does the company have? How many policies do you sell in a month?
I’d prefer not to talk about those details at this point in time.
Are you looking at only a lead generation model, or will there be more revenue streams?
We’re looking primarily at lead generation. However, eTech Aces also passes leads to brokers. We’re not the brokers, and do not close the transaction, and we never get the insurance premium. We will focus on the insurance business for now. My view on the lead generation business is that over the next 5 years or so, we will see car and health insurance emerging as 50-60 percent of the lead generation business. This is based on what takes place in the UK and the US markets. In UK, cars are a very large segment, and health in the US. For example, MoneySupermarket is a site for all products, but 50 percent of their sales is car insurance. We will also get into loans, but later.
What is your biggest challenge?
Volume is the toughest bit. This is an industry shift, so online will take time.
How do you get the volumes?
We’re starting a radio campaign, followed by certain offline activities. We do a lot of search marketing. The global trend is that the online Insurance business is lagging the online travel business by around 2 years. So we are partnering with travel websites, for setting up insurance segments. These will be white labeled deals.
What are your margins on online marketing?
At present, revenue generated through online marketing is about 3-4 times the marketing cost. That’s given us confidence to get behind this model. There is an offline component to this business: Companies contact us for insurance comparison, for quotations, and we pass the leads on to companies. But in the end it’s all web generated, even though the fulfillment happens offline.

Disclosure: I own an inconsequential number of shares of Info Edge India