Internet company Info Edge, which runs Naukri.com, 99Acres and JeevanSathi, reported a net profit of Rs 47.4 crore for the quarter ended June 30, 2016 (Q1 FY17), up 65% from Rs 28.63 crore profit in the same quarter last year.
Hitesh Oberoi, managing director of the company, spoke to analysts about the quarter’s results. Naukri continued to hold its traffic share, while 99Acres continues to be depressed. Although, he attributed that to the general slowdown in the real estate market. Notes from the call:
1. Naukri’s performance: In the June quarter, recruitment Solution (including Naukri) reported Rs 143.79 crore in revenues down 3.36 % q-o-q. Recruitment solutions posted a Rs 70.8 crore in profit.
– Average of 14,600 fresh CVs were added every day in Q1
– Naukri’s data base grew to 47 million CVs
– Number of CV modifications averaged at 238,000 per day
– In Q1, Naukri serviced 37,000 unique customers versus 33,700 unique customers in Q1 of last year.
– Career Site Manager product has 1,700-1,800 customers.
Oberoi added that the company was getting anecdotal data on some slowdown in Bangalore and Hyderabad due to decreased hiring activity by startups.”Markets like Bengaluru which actually grew at a much higher rate than our sales growth of last year, so if the business grows at 18, 19%, markets like Bengaluru grew at 25, 26% last year, there could be some slowdowns I think in there and partly because of IT and partly because the start-up market is also seeing a slowdown,” he said.
“We do not take a lot of revenue from start-up. But what happens, when there is a lot of start-up activity the attrition rates go up across companies. So, if attrition rates go up, we make more company from every company,” he added.
2. Competition from LinkedIn: An analyst pointed out the LinkedIn’s second largest market was India with 35 million users. Oberoi had this to say:
“In the internet space, India is always a top three market for every country from a consumer standpoint and from a user standpoint, but maybe in the bottom-three for every company from a revenue standpoint because the ARPUs of Indian users are very-very low. So, yes, from a user standpoint, India maybe very big for LinkedIn but not from a revenue standpoint.”
3.Competition from Nobroker and Grabhouse to 99Acres: Oberoi said that it was very difficult for companies such as Nobroker and Grabhouse to operate which lets users buy and rent properties without brokers and puts them in touch with owners directly.
“So our view is that it is very hard to sell a home in India without having a broker and fee. So as far as the sale part of the business goes, Resale and New Homes sale, we think either a builder needs to have his own sales team to sell or we need a channel partner or a broker in between to make a transaction happen. There is so much people work involved, so much negotiation which goes into closing the deal. It is very hard to do a sale transaction without a broker,”
“As far as Rentals go, yes, there is an optionality to sort of eliminate brokers, many rental transaction happen on without brokers being involved. But on our platform also, owner can list a property for free, they do not really have to pay to list on our platform. So these models to my mind are subsets of what we do and it is going to be difficult for them to survive and sustain in the long run,” he added.
4. Want to dominate Northern markets with Jeevansathi: Oberoi said that Jeevansathi is currently number 3 in matrimonial websites. However, he said that they are particularly strong in the North and West but not at all in the South.
“The marriage market in India it is not one market, most arrange marriages often within the same religion, mostly they happen within the same community and often they happen within the same caste. So Jeevansathi has always been a strong player in the north. We would actually do almost 0% in the south. So most of our revenue come from north and west. While we are #3 player nationally, we believe that we maybe actually #2 player in the north and west and definitely in the north. That is one reason why even on revenue of Rs.15 crores a quarter we are actually breaking even and making a small profit,” Oberoi explained.
5. Advertising spends for 99acres: Oberoi said that advertising spends for 99acres wil bearound Rs 10-11 crore. Last year it had increased advertising spends to Rs 30 crore in Q1. “We saw a lot of competitive activity last year – thanks to companies like Housing and Commonfloor,” Oberoi said.