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JustDial earnings call: headcount reduction, vernacular languages, messaging etc

Online classifieds company and local search company JustDial reported a net profit of Rs 37.5 crore for the quarter ended September (Q2FY18), an increase of 26.5% YoY. This quarter, the company reduced its headcount from 11,262 last quarter to 10,892, a decline of 3%. JustDial’s management discussed the reasons for the same and its future plans.

Employee headcount

The number of employees the company has in sales is crucial for its operations. In Q2 FY16, the company said that said revenue growth was hit as it did not hire adequately for its sales team. CFO Abhishek Bansal explained the drop in headcount this quarter was due to the reduction of its voice department. He explained that this was due the reduction in the number of voice calls which are coming on JustDial’s platform. This quarter, traffic from voice stood at 9.6 million, down 3.3% YoY and 3.1% QoQ and accounted for 9.1% of the total traffic share.

Bansal also gave an explanation on how its sales team is organized. “On employees, I would bifurcate into two domains, sales and non-sales. In terms of sales of employees further, we have two sets of employees, feet-on-street, and our tele-sales. Feet-on-street definitely is an area which is growing for us because our product is now more of a ‘show-and-tell’ product. In this particular department over last two to three quarters, what we have ensured is, a good management is in place right from senior-most branch sales managers to team leaders. Going forward we intend to expand actual customer-facing executives in this particular department,” he said.

He added that in the non-sales teams, the company will be rationalizing headcount in its customer support base as it has been able to better automate these processes. As a result, JustDial was also able to reduce its employee cost to around 50% of its total expenses. “In employee costs, mainly what we have done is in certain departments where we have been able to automate certain functions that is what has actually helped us with these particular employee cost savings in terms of how much room further employee cost has. See, beyond a point, obviously, your employee cost reductions would start affecting revenue as well. What we are trying to do is ensure that across departments, we have proper performance management systems in place and efficiency is in place,” Bansal explained.

Ad spends

For the quarter, JustDial spent around 18.3 crore on advertising and the company said that this has helped increase the number of app installs and traffic share. “So in current quarter out of about 18.3 crores, 11 crores was primarily on to mass media, TV ads, another about 5-5.5 crores was on digital advertising. The rest would be towards multiplex ads and some other initiatives,” Bansal said. For the quarter:

  • Unique Visitors for the quarter stood at 105 million, up 37.1% YoY and 4.5% QoQ.
  • Traffic from Mobile stood at 69 million, up 66.3% and 10% QoQ. This accounted for 65.7% of the total traffic share.

Analysts also wanted to understand if the increased ad spends were leading to better monetization through paid campaigns, and Bansal said that there were some issues with the GST rollout. JustDial had conducted 439,700 paid campaigns for advertisers during the quarter, up 7.6% YoY and up 0.9% QoQ. Divide the operating revenue by the number of campaigns, and it appears JustDial made Rs 4435 per paid campaign, up from Rs 4410 per paid campaign in the same quarter last year.

“So for two quarters we have seen good 30-35% year-on-year growth and, however, one thing to note is that the same period also coincided with some of the macro headwinds that we have been facing. So, SMEs have been the worst impacted even as large corporates’ time and effort is going into ensuring that GST-related compliances are done in the right manner. And, any such particular traffic growth it’s not very just one or two quarters that we see that particular direct impact into the number of campaigns, et cetera….  So I think subsequently in a few quarters from now this particular higher usage of the product should definitely start showing up into better signups and better monetization,” Bansal explained.

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App retention and messaging capabilities

JustDial’s management said that its app has a retention of in the range of 28-30% and that out of 17 million downloads, around 30% are using the ap actively. CEO VSS Mani also gave the company’s plans for increasing retention in the app.

“Recently we have launched products such as JD Social in our app wherein, in fact, we have integrated news feed as well. You see a lot more curated content so that particular social engagement we are trying to bring in this particular time. But, one thing we need to understand is JustDial is a need-based product, right? So, when you need a dentist, you
quickly want to search for dentist. So you would take that particular information about the dentist and you would get going. So incrementally through these particular initiatives such as JD Social that should help in improving usage,” Mani said.

In the coming months, the JustDial app will be adding messaging chat capabilities between the buyer and the seller. “So, what we want to do is that real-time get SMEs and users to interact with each other. Most importantly, we shall be keeping user’s privacy in mind. So whenever a user will chat with a particular, say, packers and movers asking for a quotation or something, vendor will be able to respond to that user without actually knowing user’s mobile number,” Mani explained.

Vernacular languages

To a question on how JustDial will be expanding to new territories in the country which does not speak English, Mani spoke about JustDial’s plans for adding vernacular languages in the app and said that the company will be using Artifical Intelligence (AI) technology for the same.

“We are exploring the possibility of reading it in different vernacular languages. The search will be basically either voice search or search in English, but the rest of the text can come in, you know, vernacular language that will be the first step. Then we will see how the response is and accordingly come to actually even typing in vernacular language. Our effort is right now more on voice. We feel that voice is going to be the future. So if you can crack it for vernacular languages in voice, that should actually satisfy the user,” Mani explained.

Traffic from Google

Bansal said that around 27-28% of the overall traffic comes directly and that the rest of the traffic comes from Google and other referral means. Last quarter, Mani said that the direct traffic share was at 15% that JustDial’s dependency on Google is also reducing and that it is focusing on increasing it organic reach. “We do have certain sort of, say, digital campaigns on Facebook as well, but a large portion is intent-oriented search ad which we advertise or which have on Google adwords,” Bansal explained.

Also read: JustDial denies that it is in acquisition talks with Google

Tier 2 and tier 3 cities

Tier 2 and tier 3 cities contributed to 18.5-19% in terms of revenue and about 40-42% to JustDial’s campaigns. Mani explained that tier 2 and tier 3 cities will have lower average ticket realizations and is expected to be on a downward trend. He added that the company has hiked prices in tier 1 cities to compensate for the lower realizations from tier 2 and tier 3 cities.

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“Now, two key things that are playing out; one, we had taken certain price hikes when we commenced our advertising campaigns, so those particular price hikes have helped in terms of realizations. Secondly, since we have started selling some of these products on a bundled basis, earlier, suppose, Mainland China (the restaurant chain) was signing up with JustDial, they were taking a premium listing and 6 months later they were also taking a website banner, then another 3 months later we were able to cross-sell, say, a rating certificate to them. Now, when they take up bundled offering, obviously it would get counted as one campaign, but value per customer obviously increases. So that also helped realizations to some extent in this particular quarter,” Mani explained.

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