Info Edge owned Real estate company 99Acres reported net sales of Rs 23 crore, up 20% year on year, for the three month period ending 31st December 2014. The company reported an EBITDA loss of Rs 14.4 crores in Q3, owing to “continued investments in sales expansion, service, product and technology and branding”. On the Info Edge concall, CEO Hitesh Oberoi warned that the loss may increase, depending on the kind of investments the company incurs going forward, but also pointed out that growth has slowed down, which is impacting cost. Growth has slowed down “due to the uncertain market conditions”, Oberoi said on the company concall, “specially in certain markets but we hope to continue to invest in the business and we expect to grow to come back in a couple of quarters.”


Business is also becoming more expensive for the company, because there are fewer real estate buyers in the market. “I think increasingly what is happening is that transactions are slowing down and there are therefore, limited number of buyers. There is a lot of competition to get those buyers on to the site, and it is getting more and more expensive. So irrationality creeps in because people are willing to pay a lot to get those buyers on the platform. Somewhere we have to take a call to what extent are we willing to sort of go to acquire this traffic,” Oberoi said. He added that costs are increasing for everybody, and “whether we can pass on the cost increases in the form of higher prices and higher realization from customers remains to be seen, a lot will depend on what happens to pricing as a result of competition.”

The proportion of paid listings has been reducing on 99 Acres, because of two reasons: firstly, the company is focusing a lot more on owner listings and owner listings are free, but they “add to the quality of listing on the site and many people want to get in touch with the owners directly so they improve the user experience for the people who visit the site.” The owner listings have been growing at a fast pace, which is why the ratio of paid to total listings has fallen. Secondly, Oberoi added, “we are not so much focused on getting more and more listings, we have I think enough listings from every part of the country. Increasingly our focus is to get better quality, to cut spam, to sort of reduce junk and so this may result in listings moving south also going forward as we tighten the screws on the site.”

Paid transactions grew by 37%, but the slowdown in collections for Info Edge, is largely due to 99Acres. Oberoi sounded cautious about how Q4 might be: “It is hard to predict what is going to happen in Q4 in 99Acres, if the market starts to recover, if we execute well… like I said we have put a good solid team in place, we have got a new business head, we are confident as we go into this quarter but if the competition continues to be irrational we will have to see how we want to shape this business going forward.”

Cost has increased for 99Acres, because the company is spending on branding (“you know we released a new ad film, we were on television last quarter, we are on television again this quarter”) and are investing aggressively in product development. Oberoi  said that “we have doubled the size of the tech team, we have doubled the size of the product development team to launch new features and functionalities.” In addition, “We have launched a lot of effort to improve the data quality, so like as I said we have a verification team which sort of goes to houses of customers and takes photographs. This team does not generate any revenue but it will improve the user experience on the site. We have over 300 working in that division so that’s a cost that we are incurring right now.” 99Acres has around 1300 people, and the headcount has doubled over the last year.

Two major developments at Info Edge in the recent past: The company has appointed Narasimha Jayakumar, previously the COO-ecommerce at Homeshop18 (where things aren’t particularly great) as its Chief Business Officer for 99Acres, and it has raised Rs 750 crores for further investments, given that competition is heating up in the online real estate sector in India.

Other notes from the concall


– Paid listings in Q3 were at 5.8 lakhs versus 5.4 lakhs in Q3 of last year.
– Mobile traffic is around 33% of total traffic, and a third of the mobile traffic is from the app.

– What 99Acres monitors: resale traffic, traffic of people interested in buying new homes, rentals, traffic by city, number of unique who visit the site, the frequency of their visit, number of inquiries, number of unique inquiries, quality of inquires. “We as an operating team looking at 30-40 different metrics to track business on a daily basis.”