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Info Edge Q3 Earnings Call: Worries Over Slow Growth; 99Acres Registers Small Profit

On the company’s conference call, Info Edge CEO Hitesh Oberoi informed that the company’s stand alone net sales in quarter ended 31st December 2011 were at Rs 92 crore , a 22% increase YoY. However, sales were flat sequentially. Its operating EBITDA was Rs 35 crore up 26% YoY and 5% QoQ, operating EBITDA margin was at 38% vs 37% in the same quarter, last year. PAT was at Rs 29 crore compared to Rs 25 crore in q3 last year, a 32% increase. Operating PAT was at Rs 22.5 crore up 32% YoY, while operating PAT margin was at 24.5% vs 22.6% in Q3FY10. The company’s deferred sales revenue increased to Rs 92.4 crores as on 31 December vs Rs 91.7 crore recorded in the last quarter.

Worries over slow growth rate in Naukri: Oberoi said that while business was still growing, the growth rate has been coming down gradually due to deceleration in the recruitment market. He added that the company’s growth is dependent on the growth of the Indian economy and although there is a slow down specially affecting high-end products with big clients cutting on spending, existing clients are renewing products. Q3 was a little slow even in terms of IT clients, according to him. He said that “margins could come off a little bit if Naukri doesn’t grow at more than 20% in the coming year.” The last 9 months were particularly not good in terms of business from clients of insurance, telecom and financal services segments.

Naukri’s marketshare remains at 60%. According to Oberoi, if competition gets hurt more than Naukri due to the slow down, there’s an opportunity, and the company intends to increase ad spends in Q4 to take advantage of the situation.

On 99acres: The company feels 99acres is under penetrated in the segment. 99acres contributes 5%-7% to the topline. Info Edge has managed to bring around 10,000 real estate dealers on the site but estimates the total number of dealers in the market at 200,000, so feels that there’s scope for more growth. But even in a slowdown, the company expects the property to grow at a healthy rate of 50%. In phase 1 of growth, the company is focusing on expanding penetration in existing cities and plans to target tier 3 cities only in phase 2.Info Edge intends to invest further to drive growth in the company.

After implementing tagging on 99acres, the unique visitors grew from 650,000 to 1200,000 every month taking comScore’s methodology. Traffic was in the range of 30%.

On LinekedIn being a threat: The company does perceive LinkedIn as a threat but wants to capitalise on the social media opportunity. It feels that LinkedIn will still be niche, however it’s also trying something new with Brij and Naukri’s premium service offering.

Investee Companies: According to unaudited management estimates Info Edge’s six external Investee companies have done a topline of Rs 35 crore. According to its own estimate, the share of Info Edge’s loss at post PAT level would be Rs 30 crore in all companies put together. The company has not made any additional commitments in the quarter but said that further money will be going into current companies and even if it doesn’t lead the funding rounds, it intends to support them in the  rounds and will co-invest. Over the next 6-9 months, its current investments will absorb another Rs 30-40 crore, according to the company. According to Sanjeev Bhikchandani, founder of the company, e-commerce valuations have peaked and are coming off now.

Vertical Specific Results:

Recruitment Solutions(Include Naukri.com, Naukri Gulf, Job Seeker Services, FirstNaukri, Quadrangle) :
– Net Sales Up 20% to Rs. 75 crores
– Naukri corporate sales & profit grew by about 23%
– Quadrangle sales declined by 20%
– EBITDA margins in recruitment were at 50.6% versus 47%
– Naukri EBITDA margin was at 56% up from 54% YoY
– Naukri added 10,500 fresh CVs every day, total database at 28 billion.
– Naukri CV modifications were average 86,000 per day
– In 9 months of this year the company has served 38,700 unique clients

– Job Speak Index closed at 1072 in December

Other Verticals ( Jeevansathi, 99Acres, AllcheckDeals) :
– net sales grew 14% YoY

– The company is the number 3 player and pricing is 20-30% lower than competition.

– top-line was up 50%
– Small profit of Rs 50 lakh
– “real estate sector constitutes to be impacted because of higher interest rates and because of slow down in the economy
– The company plans to keep investing in this business.
– Competition mainly with Magicbricks

– net sales grew by about 52%.
– “shiksha is still in startup mode. We have taken time to figure out the model.Not too much competition so remains a huge opportunity.”

– 492 transactions in Q3 versus 370 in Q2


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