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Info Edge earnings call: Naukri’s billings grew 14% but revenue grew just 6%

Info Edge’s recruitment segment had billings of Rs 146 crore during the September quarter (Q2FY18). This was an increase of 14% year-on-year (YoY). However, the recruitment revenue was at Rs.164.8 crores, growth of 6% (YoY). “While the billing growth was strong during the quarter, the revenue growth lacked primarily for two reasons – One, because of larger duration subscription sales and two because of a skew in billing towards the quarter end,” CEO Hitesh Oberoi explained in a call with analysts.

As a consequence, deferred sales revenue has increased to Rs 335 crores during the quarter, an increase of 22% YoY. “So basically what happened was we sold slightly longer-term subscriptions and the billing sort of was mostly skewed towards the quarter end. So now there could be a recovery in the offering because clients buy long-term subscriptions and it basically shows they have confidence in the fact that they (clients) will continue to hire,” Oberoi added.

He added that the recruitment segment was impacted by the slowdown in hiring by the IT sector and the transition to GST and this extended to July and August as well but billings picked up in September. “However, we need to see if this growth is sustained going forward,” he said.

“Sectors like banking, financial services, insurance, travel, hospitality, tourism, healthcare, teaching, are doing well for a while now, but sectors like Real Estate, Engineering, Construction, Infrastructure have been in the dump for a while. IT had negative growth while back, it is still negative but is a lot less negative than it was a few months back,” he added.

Oberoi also gave some colour on why clients were opting for long-term subscriptions when an analyst asked if the clients were buying a longer subscription to get a discounted package. “We have enough clients who buy for the year and especially the new clients who try us out for a quarter and then sort of depending on the response they get, they sort of renew for a year or six months, then there are some who say, this time we do not too many requirements, we want to hire only three or four people, we do not want to buy a long-term subscription right now,” he said.

“Normally, in the past, what we have seen is that when the economy starts to slow down, people start sort of deferring purchases and they do not want to commit long-term, but like I said, we do not have enough data right now to sort of say what is going to happen going forward,” he added.

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Recruitment tools

Info Edge’s recruitment segment includes online portal Naukri and a number of products associated with it. The solutions pertain to applicant tracking and referral hiring has now been rebranded as a Naukri Recruitment Management System (RMS).

“We continue to make reasonable progress in our Recruitment Tools and Systems business and continue to add new customers. While strategically the business is very important for us in the long run, the size of the business is still small and is unlikely to move the needle on top line significantly in the next four-five quarters,” Oberoi said. He said that the company expects these solutions will add a percentage or two to the revenue mix and more than 3500 customers for these products.

He added that the company is seeing a growth of 70-80% revenue growth for these solutions. “Strategically it is very important for us because the more customers we have on our platform the better it is for us in the long run, there is a
higher lock-in,” he explained.

Naukri’s operational numbers

  • In Q2 Naukri added an average of 17,500 fresh CVs everyday Vs 15,000 last year
  • The Naukri database grew to around 54 million CVs.
  • The number of CV modifications stood at 287,000 per day Vs 248,000 per day last year.
  • In Q2 of this year, Naukri serviced 47,000 unique customers Vs 44,000 plus customers in Q2 of last financial year.

On staffing companies and Randstad-Monster deal

Oberoi also commented on if there was overlap between staffing companies and Recruitment Process Outsourcing (RPO) companies and Naukri’s business.

“Staffing is a little different from RPOs. Staffing companies are not a threat to us at all because most companies have most people on their payroll, they only sort of outsource a small chunk to staffing companies, but there are some companies which are trying out the RPO model and they are also clients of us, but it is very early days for that model,” he explained.

“The value of a job portal like Naukri lies in aggregation, 70,000 clients, but staffing company may be having 20 clients. Because you have 70,000 clients and many lakh jobs any point in time is why you get the traffic. One, we are growing in the traffic and that is why traffic starts,” vice chairman Sanjeev Bikchandani chimed in. “If a company has got 20 clients or 30 clients and say 500 jobs, it simply will not have enough jobs to sort of attract traffic organically or beat traffic. Therefore, as a proposition, probably it will be difficult.”

In August 2016, Recruitment platform Monster was acquired by the Netherlands based human resources (HR) consulting network Randstad for $429 million. “My sense is they are two very-very different businesses. The DNA required to build is very different,” Oberoi commented on the deal. “One is the technology product marketing consumer type of business, the other is staffing business. Just like it is going to be very hard for us to start a staffing company and succeed,” he said.

On Jeevansathi

In the Jeevansathi business, billings grew 19% Y-o-Y in Q2 FY’18 to Rs.17.2 crores while net sales grew 24% Y-o-Y and reached Rs.17.7 crores. The operating EBITDA loss in Jeevansathi increased to Rs.3.9 crores in Q2FY18 Vs loss of Rs.90 lakhs in Q2FY17.

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“In the Hindi belt, our share continues to grow, and our position is getting stronger as Jeevansathi has now grown at an average of 24% over the last nine quarters in a market which is growing at 10%. Mobile traffic in Jeevansathi is close to 90% and the Jeevansathi Mobile App continues to be the best in the category,” Oberoi said.

He added that Info Edge is still bullish in the space and internally the company decided that it would keep aside maybe Rs.150-200 crores for Jeevansathi.

“As far as the industry structure is concerned, like I said, there is no dominant player, but there are people who are dominant in certain segments like Bharat Matrimony is dominant in a few southern communities,” he added. Oberoi added that the matrimonial space is fractured between three services and that between them they generate more than Rs 500 crore revenue.

On Zomato

Bikchandani said that it was a strategic choice if Zomato wanted to break even or raise more money and invest more in the online ordering segment. “It is an open discussion on whether we should grow through internal accruals only or should we be investing further behind the growth in the online ordering business,” Bikchandani commented.

The restaurant listing and food delivery platform has turned profitable throughout the 24 countries it operates, across all its businesses, Zomato announced in a blogpost.

For the month of July, the company surpassed 3 million online orders, it had announced it in a blogpost. Also, the company had reported food ordering revenues of $9 million for the financial year ended 31st March 2017 (FY17), around 8 times of FY16.  Swiggy’s claims stand ahead of Zomato with  4 million orders per month.

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Also read: Zomato’s Deepinder Goyal says its food delivery competitors have only 6-9 months left


In Shiksha, billings degrew at 30% YoY during the quarter to Rs.5.6 crores while net sales grew 7% YoY and reached Rs.10.1 crore. Shiksha made a profit of Rs.1 crore on the EBITDA level.

“The key reason for low billing growth were – some deal closures, which happened last year in September, got pushed to Q3 and some clients are making split payments this year. That said, all clients are happy and we are confident of delivering a better Q3,” Oberoi said.

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