Online classifieds and e-commerce company Justdial reported a net profit of Rs 39 crore for the quarter ended 31st March 2018 (Q4 FY18). Net profit was up 53.6% on a year-on-year (YoY) basis and 36.3% on a quarter-on-quarter (QoQ) basis. It reported Operating revenue of Rs 200.5 crore, showing a growth of 10.3% YoY and 1.9% QoQ.
In its earnings call, JustDial’s management shared optimism about next fiscal year, as it said that FY19 has started pretty well for the company so far and FY18 laid a very strong foundation for FY19.
Answering an analyst’s question regarding what grounds the company is seeing optimism despite “pretty much the lowest reported” revenues, Abhishek Bansal, chief financial officer (CFO) of Just Dial, said that the company had gone all the way down till about 6.5% year-on-year revenue growth, and then improved to about 7.5%, and then to 10.3%. He added,
We have come from two or three key factors. One, since deferred revenue already has been a healthy growth, so we already know that our particular past quarter had very healthy trend of collections. Secondly, the controls we had put on productivity, those particular controls are paying off. Now we have also started adding to our manpower. So, if you see this particular quarter sequentially, we have added people in feet-on-street cold calling. That is the team that has been giving us very good growth in terms of revenue. So, that particular team is being expanded
Addition in sales team
Bansal said that employees are split it into two broad categories: Sales and non-sales. The company does not foresee major additions in non-sales, and sees automation as a means to reduce manpower. However, on the sales front, the company wants to hire more people for feet-on-street operations, cold calling roles, as these elements have helped revenue growth and provided traction. Bansal added, “subsequently, once that particular cold calling team is able to call a particular customer, the telemarketing team does a very good job of renewing that particular customer for the second year. So, there could be subsequent additions in telemarketing as well. So, sales is broadly where we would want to add. Non-sales is where we would ideally want to add as much automation as possible”.
Sales team is made up of 4,057 employees in telesales, 1,410 feet-on-street (marketing), and 2,663 feet-on-street (JDAs – Just Dial Ambassadors) as on Q4 FY18. Overall, JustDial’s employee count increased to 11,452 in Q4FY18 from 11,334 marginally up by 1% from the same quarter last year. Sequentially, increased by 4.6% from last quarter.
Higher realization compared to a paid campaign
On a question about what led to relatively higher improvement in the realization compared to growth driven by paid campaign, Bansal explained that the company tries to maximize revenue per client, revenue per sales employee.
Secondly, we had taken some price hike at the start of the year because when we launched our mass media advertising campaign, we said that the price hike that we had not taken for the last couple of years, it is the best time to take our visibility across the board would be high. So, those particular price hikes have sort of aided us. Third, earlier there was a certain particular product which might be getting sold to a customer at various points of time. So, if I approach a particular customer two times in a year, that would add two different campaigns. But now we are also encouraging our sales team to sell some of these products as bundle products. Why it helps us is that there is obviously a cost associated with approaching that particular client twice in a year. If that particular person is able to extract higher revenue for those particular bundle products, that might get counted as a single campaign and it would show up more into realization.
Tier 2 and tier 3 vs tier 1 cities
Tier 2 and tier 3 cities contributed about 21% in terms of revenue and about 43% to JustDial’s campaigns. Bansal added that the ticket size in tier 2 and tier 3 cities is lower. Tier 1 top 11 cities contributed about 79% in terms of revenue and about 57% to JustDial’s campaigns.
User engagement moving to transactions
In Q4, the company upgraded its mobile app with new features such as transactions, as well as messaging vendors. On a question about if engagement levels of users have not moved to the transaction level, JustDial CEO, V.S.S Mani said that the company is going to focus more on being the real finding place where you find things. “With the transaction, we don’t want to get into that activity at all for at least times to come. There will be some exceptions like probably flights and stuff like that for which we don’t have a choice. In fact, we are also working whether we can do that and aggregate where you can find out cheapest flight on one of the multiple travel portals,” he said.
Mani added that the main revenue comes from SME advertising and that would continue to remain so. “In the months to come you would see that this revenue per customer really growing particularly in tier 1 cities and even in tier 2 cities because we have got more things to offer now.”
Ad spend increase
Mani said that the company is spending much more than last year. Overall the company spent about Rs 60-65 crore on advertising across the full FY 2018, and in FY 2019 the company plans to spend some Rs 100 crore in advertising. “This year we would see somewhere close to 100 crores being spent on advertising. And we are also quite comfortable in doing advertisement growth also. And if we do get a better growth out of this spend, obviously we can step up more on advertising… advertising is a must for us and we would continue to spend more money. You would see more ads of Justdial this year than ever before.”
App Uninstall rate
Total app downloads at the end of 31st March 2018 stood at 19.8 million, up 49.7% YoY and 5.8% QoQ. Upon asking about uninstall rate of the mobile app, Bansal recalled that overall over a period of one year, about 30% to 32% of the apps remain. So, for that particular one year, uninstall rate would be about 68% to 70%, “which is better than the industry, as I believe,” he added.
Time spent on Justdial
On a question of time spent on the app, Bansal said that at the end of the day Justdial is a search engine, and what is important for the company is that user comes to the platform, takes the information and goes away. Explaining it further, Bansal said, “bounce rate for certain companies are high. It might mean that user is not getting the desired information or user is reluctant to spend more time on your website. But for a search engine, a high bounce rate might imply the user is getting information so quickly and for the very first page on which the user is landing, bounce rate could be high. So, the way we measure is in terms of what is the classic or unique users that are coming to our platform to take that particular information.”
Acquisitions of tech companies
About investing or acquiring companies, Mani said it’s not the right time because it’s high risk. “So, we don’t want to get into such space where we have less chance of making it successful. We like more of technology, something that will take us a long time to build, if we can buy such technology companies. We are talking to a couple of them.”
“No such threat from Google”
On possible competition, Mani said, “when we last did a study of our advertisers and if you see their advertising on Google, almost close to 90% of them don’t do it..We have a different market we are addressing. So, there is no such threat from Google or anybody.”
“JD is far simpler, easier to advertise. We still have people facilitating for you. Perhaps Google is slightly difficult for people to comprehend. It’s a click-through model. But, I think, there are merits in both the models. Each one caters to a different market,” he added.
Download: Call Transcript