Updated with information from Rediff’s investor conference call.

Rediff.com reported a loss of $1.20 million for the quarter ending 31st December 2011 (Q3-FY12), a decrease compared to Q3-FY11′s loss of $1.80 million. At the closing of the quarter, the company’s cash balance stood at $25 million, and it intends to continue to spend $2-$2.5 million per quarter for the next few quarters for investments in product development, sales diversification and the entrance into new markets. The company’s revenue decreased about 18% from $5.90 million in Q3-FY11 to $4.81 million in the present quarter.

Compared to the same quarter last year, Rediff’s revenues from India Online decreased 7% closing at $3.89 million while its U.S. Publishing business decline marginally at $0.92 million.

Financial Highlights

– According to Ajit Balakrishnan, CEO of the company, revenues were adversely affected due to slow growth in advertising in the quarter, specially on account of sectors such as financial services, insurance, and telecom curbing their ad spends. However, some part of the loss was substituted by sectors such as FMCG and e-commerce. He also mentioned that a significant portion of the cost resulting in negative EBITDA was attributed to investments for supporting online services like paid mail, daily deals and local tv, in terms of man power, infrastructure and marketing costs. The company expects these businesses to contribute to revenue in topline as well as bottomline in the next 2-3 quarters.

– During the quarter the company recorded a one time gain of $0.75 million since it exited from one of its equity investments.

– Responding to a question on why the company’s gross margin witnessed a decline of 6 full points on a YoY basis, Balakrishnan said that the larger component inside Rediff’s cost of sales was the fixed cost for maintaining content including managing people and infrastructure and that when the company’s revenue dips a little, the fixed component remains the same which shows up as a reduction in growth margin. The company blamed currency translation for the quarterly loss in cash since it maintains cash in Indian Rupee.

Active users: Balakrishnan claims that Rediff has 16 million active users with a 34% reach across 47 million connected homes and offices, growing at the rate of 14%.

 

The company has added 65 employees to expand its reach across 42 cities for key businesses including online media sales, ecommerce and deals, hosting solutions and local TV advertising. It now has a team of 164 employees.

Highlights:

Deals Business: Rediff says that its strengthening its market position with limited investments by focusing efforts on service, delivery and operational process improvements. It says that its striving to improve delivery time and pan-India coverage – the branded products are now visible upfront and discoverable through search and suggest features, and it has activated a toll free number for shopping customers. Vendor Performance metrics have been implemented based on critical parameters of customer satisfaction, according to the company.

Rediff says that it showcases six to eight deals in each of the 42 cities that it operates in. Of the 72 categories, deals in key categories like restaurants, travel, hobby and personal care are grouped together upfront to aide discovery. The deals offered are priced in the Rs.1000 to Rs.3000 range and provide 30% to 70% discounts on a wide range of services in each city and at a locality level in some of the larger metros, according to the company. Merchants carry the risk of their own inventory, as it operates like a marketplace model.

The company is also working toward integrating deals into its in-house maps platform.

Paid mail & web service for SMEs: Rediff introduced a new product for SMEs which it says would enable them to create a website for their business with a domain name of their choice without any IT support. Additionally, customers can offer email on mobile for their employees while retaining administrative controls, get the email on their business domain and many other useful features like photo sharing, ecommerce enabled site with payment gateway and logistic support. The service would be priced at $50 for a 3 year period.

It is also in talks with telecom operators for strategic tie-ups for its paid mail service and inked an agreement with Loop Mobile.

Vubites: According to the company, Rediff Local TV ad network is now live across three TV channels and across 12 MSOs in 7 cities, namely – Mumbai, Delhi, Pune, Ahmedabad, Surat, Bangalore and Baroda – with an average coverage of 70% in these cities.

Rediff Real Time News: The  company launched Rediff Real Time News service in Beta. The service, according to the company, will deliver fresh, recent results relating to news, people, and events as it happens, within minutes of the actual news event taking place and within milliseconds of a query made. Rediff says that the service complements its core online news offering, thus providing consumers a single destination for all news, which in recent times has been one of the fastest growing categories in terms of reach.

 

Earnings Release