Ecommerce and online classifieds company InfoEdge reported a net profit after tax (on a standalone basis) of Rs 21.73 crore for the quarter ended December 31, 2015 (Q3 FY15), down 43.75% from Rs 38.64 crore profit in the same quarter last year and down 35.91% from Rs 33.91 crore profit in the previous quarter. In a call with analysts, InfoEdge’s top management explained the company’s performance. Here are some of the highlights:
– In Q3 Recruitment top line grew 19% Y-o-Y to Rs129 crores.
– Naukri Corporate sales EBITDA margin was at 58% vs 62% in Q2, a slight decline is on account of the charge on account of bonus.
– In Q3, Naukri added an average of 10,600 fresh Cvs every day vs 9,400 in Q3 of 2014
– Naukri Database grew to about 45 million Cvs. Average CV modifications were at 163,000 per day vs 124,000 per day in Q3 of 2014.
– In Q3 it serviced 31,000 unique customers versus 27,000 in Q3 of 2014. In the 9 months of 2015, it serviced 49,000 unique customers vs 43,000 in the 9- months of 2014 financial year.
– Naukri India Domestic Corporate sales business are picking up faster in the South.
– Traffic share continues to be over 70% and Mobile Traffic now close to 60% of its total traffic.
– We will continue to invest more aggressively in this business mainly in areas like product development to strengthen our leadership position. As and when the economy gets better we expect more and more jobs to open up in various non-IT sectors as well.
– Hitesh Oberoi: On unique customers going down in Q3 in Naukri, “.. Q3 is seasonally a weak quarter for us. So if you compare with last year, numbers have grown both for the quarter and for the year for the first three quarters as a whole.”
– Hitesh Oberoi: On Naukri, we have been growing at 15-20% for the last 4 or 5 quarters… So one is hopeful that as the financial services sector picks up next year with new sort of license being given out for payment banks as the infra sector picks up, then the non-IT markets will also start doing well…”
– 99acres top line grew by 13% Y-o-Y in Q3 to Rs 26 crores, markets in Bangalore, Pune and Bombay continue to be relatively good, while markets like Noida and Gurgaon have taken a big hit.
– EBITDA level loss in was mainly because increased investments in the platform, data quality and advertising.
– The competitive intensity reduced but the company does not expect the market for real estate transactions to recover any time soon.
– Transactions are down Y-o-Y in most markets, new launches in many markets are down 50% to 60% and unsold inventory at current sale rate in most cities is averaging between 2-4 years.
– 99acres traffic share by comScore has been averaging about 40% to 43%, for the last 2 or 3-months, which is about 40% to 50% higher than Naukri’s closest competitor.
– Mobile sessions are about 45% to 50% of its total sessions.
– Net sales grew 20% Y-o-Y in Q3 to Rs 11.7 crores.
– It added an average of 2,241 profiles per day in Q3, an increase of 20% Y-o-Y.
– Paid customers were at 37,435, up 36% Y-o-Y.
– EBITDA level loss in Q3 was at Rs 2 crores vs Rs 92 lakh in Q3 of 2014.
– Net sales grew 41% Y-o-Y and reached Rs 6.4 crore.
– EBITDA level losses were at Rs 2 crores vs Rs 2.6 crores in Q3 of 2014.
– During Q3 InfoEdge invested an additional Rs 15 crores in Canvera at a pre-money company valuation of Rs 75 crores, growing InfoEdge’s stake to 49%.
– Sanjeev Bikhchandani: “Online ordering actually is a very small fraction of the business, the main business is the traditional model which is advertising by restaurants and therefore search and discovery of restaurants and it is a ramp up in that revenue, that is going to help Zomato achieve break even and not the ramp up in revenue in the next 12 to 18 months…
The second is the commercial practices followed by Zomato. Their average bill or their ticket size is higher than other players in the Online Ordering space leading us to believe that this is a much healthier business online ordering business than other online ordering businesses…”
– Sanjeev Bikhchandani: “They are not going to break even by March ’16, certainly not.. So it will obviously have to be in the next financial year and how revenue moves then that will tell us how fast they are going to break even.. I think the cost rationalization by and large has been done between August and December, most costs that need to rationalize have been recognized. There has been significant revenue ramp up as well since August. Now, the next phase of cutting the burn and going towards breakeven will come more from revenue ramp up than cost rationalization.”
– Capital gains of Rs 34 crores on account of a gain from the PolicyBazaar stake transfer which we had mentioned in our October 2015 Call and Rs 2.9 crores hit on account of additional provision for bonus for FY-’14-’15 due to retrospective amendment to the payment of Bonus Act 1965. Due to this amendment, there is an additional cost of Rs 2.6 crores in the Q3 wage number as well for the last three quarters.
– Operating PAT was at Rs 23 crores, up 12% Y-o-Y and 29% Q-o-Q. Operating PAT margin was at 13.5% vs 14% in Q3 of last year and vs 10% in Q2 of this year.
– It made a new investment of Rs 7.4 crores in Rare Media (looking to develop mobile-based applications) and acquired 35% stake.
On Rare Media: Sanjeev Bikhchandani: “We got 35% of the company…Really we have invested in this company because there is a certain sort of dependency that 99acres has on this company because the apps and the applications or the stuff that 99acres uses for management of its data verification force, data verification operation is using this product…”
– The total amount invested in investee companies as of January 20th, 2016 is now Rs 797 crore.
– Sanjeev Bikhchandani: “Looking at investee company portfolios and the environment, things have changed substantially in the venture funding, private company funding market in India since August and competitive companies are having to make a pivot towards revenue, profitability margin and we think that is healthy for our investee companies, the industry, and for the investors including us.
We expect that the worst is over in terms of how much companies will burn on a month-on-month basis and as they try and move towards profitability… I think over the next 6 to 9-months you will see companies clawing their way to perhaps lower losses possibly even break even about may be in 12 to 24-months some of that..”
– On investments by InfoEdge: Sanjeev Bikhchandani: In the last 7-8-years since we (InfoEdge) we have invested in a very diverse range of companies, it has not just been limited to classifieds or one or two sectors alone. We have got to a point where we are converging and focusing…
– On Canvera: Chintan Thakkar: “…Given the fact that we are the one who are investing and the others are not, we have negotiated the deal very well and also the management has changed; we have new CEO also who is now taking care of the company.. On the flip side since we have done a good deal we had to kind of take this impairment in our books of account and that is the consequence of the investment .. We also believe that if there are any pain points in any investee company it is much better to take it upfront and hence immediately after having done the investment, we have chosen to take the impairment.”