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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.

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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:

Non Recruitment
— Grew at 70%
— Losses/Investment: At the EBITDA level, Rs. 8.6 crores, up from Rs. 2.9 crores a year back.
— Invested around Rs. 3.9 crores in businesses other than recruitment, 99 Acres and Jeevansathi. Investment in Shiksha was high.

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99 Acres
— Grew at 98%, but the losses in the ebidta level were up to Rs. 3.2 crores from 1.5 crores
— Invested around Rs. 3.2 crores in the business
— Hope to break even by Q4 of this year, or Q1 of next fiscal
— 150 people in sales
— 99Acres
— Listings: Rs. 1.53 lakhs, peaked at 2 lakhs.
— Paid listings: 1.28 lakhs
— Paid transactions – 5000
— Unique paid customers were 3900
— “Total listings may look like they’re coming off, because we’ve reduced free trials. Paid listings are climbing.”

— Invested Rs. 1.8 crores in the business
— Paid users – 23886
— Sales grew at 37%
— Total profiles ever added is 2.47 million
— Average Revenue Per User – 1636
— Offline centres: 9. Investment has increased, and break even will get pushed back.
— Break even will go into next year
— Not going to spend foolishly in this environment to gain market share.
— The lifetime value of the customer is not very high. Our sense is that on a larger revenue base than us, they are making losses.
— “We’re trying to find the right model to scale up.”
— Other platforms (DTH, Mobile): “We don’t believe that the mobile can add too much value. We keep people informed through SMS etc. We don’t think these will make any different to any business in the short term.

— Around 1.2 million profiles, growing at about 5000 per day. Challenge is in getting people to come back. Not enough of that happening.
— closed about 300 deals over the last year

The cost of private companies stayed up for a while but now they’re headed south. It may take a few months more for them to come to a level where we would consider acquiring but several of the entrepreneurs may want to raise venture capital in the companies rather than getting acquired by us. So we’ll be competing with the venture capitalists and we’re not sure they’ll prefer us right now. But 6 or 9 months from now, it will be a different story.
— Too early to talk about eTechAces
— Evaluating other investment opportunities, but are cautious.

Q2-09 Details: Financials | Analysis/Report
From Q1-09:
Financials, Earnings Call | Analysis/Report

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

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