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Just Dial to launch a dedicated B2B website, app

Although the COVID-19 lockdown severely affected business, Just Dial intends to shortly launch a separate website and app focused on B2B vendors and products, CFO Abhishek Bansal revealed during the earnings call on May 26. The company used the downtime during the lockdown to “create enriched content” for their B2B listings”, he said. The company is banking on “optimization and efforts on the B2B side” to improve its traffic and revenue in coming quarters, Bansal said.

Growth affected by lockdown, lack of ad spend: Just Dial CFO Abhishek Bansal attributed the impact on growth to COVID-19 lockdown in March, and the fact that Just Dial spent lower on advertising. “For the quarter, we spent about ₹12.6 crore on advertising, verses about ₹18 to ₹19 crore a quarter, which we were spending during the first half of the year,” Bansal said, a cut of almost 90%.

COVID-19 severely affected traffic, revenue, customers

As soon as the lockdown started, Just Dial saw a 55%-60% drop in traffic. Bansal specified that in April, Just Dial’s average daily traffic dropped about 49% from December to February levels. They have seen some recovery in May and traffic was back to about 65%-68% of pre-COVID-19 levels. This was because of cut in advertising expenditure which they directed towards categories that monetise better. As things improve, Just Dial will step up its advertising.

  • Most indirect traffic is free for Just Dial: Bansal said that 20% of all traffic comes to Just Dial directly while of the remaining 80%, that comes indirectly, about two-thirds does not cost the company any money. For the remaining one-third, Just Dial does digital advertising including paid search.

Revenue affected: New revenue was affected almost 80% compared to pre-COVID-19 levels in April, and overall collections were 35% of pre-COVID-19 levels, he said. In May, new revenue is picking up. However, this pick up will be gradual since all geographies and offices are operating at a limited capacity, Bansal said. Just Dial’s revenue comes from existing monthly payment customers, and from new customers who pay for listings on the website and app.

SMEs were already affected prior to lockdown: Just as IndiaMART said in its earnings call for the quarter, Bansal also said that SMEs were “already facing pressures for last few quarters”. And just as IndiaMART observed, Bansal also said that for SMEs, listings on Just Dial are a discretionary spend and thus fell down. However, he expects this “pen up demand” to come back fairly quickly as customers “realise that this particular spend should be essential for their particular business to get back customers”.

  • Shift to monthly payment plans: As a result, Just Dial, prior to the lockdown, had already started focussing on monthly plans in its sales instead of upfront payment plans, Bansal said. Monthly payment plans make up 25-30% of Just Dial’s overall paid campaigns, Bansal said. But in February and first half of March, this had gone up as high as 70% because the company was “aggressively offering monthly payment plans”. Thus, for February, Just Dial’s run rate of signing up customers grew by 15-20% compared to Q3.
  • Just Dial offered customers discounts and other options: Like IndiaMART, Just Dial also reworked its pricing and focussed on retaining customers by giving them more discounts. They also let customers skip one particular payment and resume cycle post lockdown. This was about 8-10% of monthly payment customers. For annual customers who had already paid for the year, the company allowed them to pause services. For new customers, the platform onboarded them at discounted prices, but gave them the option to activate their contact after the lockdown.
  • Customers want to talk only after the lockdown ends: Although the company made a complete transition to interacting with customers online or via phone, most customers want to have conversations only after the lockdown ends.

Cut down discretionary spending such as advertising: The company also renegotiated other expenses such as rentals, “implemented measures to rationalise our employee costs”, Bansal said. This included reducing revenue-linked incentives, but it is not clear if this means there were layoffs at the company. The company held back on “particular hiring” in Q4 and is looking at ways to have “similar monetization by having say 10-15% lesser workforce”, Bansal said.

On competition

In response to a question about how IndiaMART’s performance is “dramatically better” than Just Dial’s, Bansal did not comment on the specific company, but said that 80% of Just Dial’s revenue came from B2C categories which had seen “massive disruption” in the last five to six years. He acquiesced that “unprecedented events such as COVID-19” had exposed weaknesses in certain business models, but it is good that some competitors were opening up the market. It will take the company a few years to get its “particular top line growth, traffic growth” back to levels of previous years.

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And although the company is open to mergers and acquisitions, but it is right now focussing on itself, Bansal said.

Start-ups should conserve funds

Bansal advised well-funded start-ups to conserve “whatever funds they have in their kitty” so that it can be invested in workforce once the crisis is over. He also warned that this event shows that “a business model which works on solely gathering users by giving discounts, cash backs, those particular business models will face issues going forward”. 

Operational Numbers

  • Visitors: 138.9 million quarterly unique visitors, 11.5% QoQ decrease from 157 million in Q3FY20 and 0.1% YoY decrease from 139.1 million in Q4FY19; app visitors saw the most QoQ loss this quarter
    • Mobile site and app (80%): 111.2 million, 13% fall QoQ decrease from 127.9 million; 0.8% YoY increase from 110.4 million
    • Desktop/PC (15%): 21.1 million, 2% QoQ decrease from 21.6 million; 2.5% YoY increase from 20.6 million
    • Voice (5%): 6.6 million, 13.4% QoQ decrease from 7.6 million in Q3FY20 and 18.6% YoY decrease from 8.1 million in Q4FY19, in line with a general historical decline in terms of phone service
  • Cumulative app downloads: 26.6 million, 1.9% QoQ from 26.1 million in Q3FY20 and 12.2% increase from 23.7 million in Q4FY19.
    • App downloads per day: 10,120, 19.6% QoQ decrease from 12,588 in Q3FY20 and 15% YoY decrease from 11,912 in Q4FY19
  • Active listings: 29.4 million, 2.7% QoQ increase from 28.6 million in Q3FY20 and 14.1 YoY increase from 25.7 million in Q4FY19

Financial Numbers

  • Operating Revenue: ₹234.9 crore, 0.2% QoQ decrease from ₹235.4 crore in Q3FY20, and 1.1% YoY increase from ₹232.3 crore in Q4FY19.
  • Net Profit: ₹76.1 crore (32.4% margin), 22.6% QoQ increase from ₹62 crore (26.4% margin), and 21.6% YoY increase from ₹62.5 crore (26.9% margin) in Q4FY19.

Download: Results | Press Release | Presentation | Earnings Call Transcript

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