With easing lockdown restrictions in emerging markets, Naukri and 99Acres are back to “minus 20% to minus 15% levels from before the lockdown”, InfoEdge Managing Director Hitesh Oberoi revealed during the company’s earnings call on June 23.
“Q1 [of FY21] has been terribly impacted by the lockdown,” Oberoi said. “Most of April and May were shut for business. … We saw our traffic dip by almost 80% in April on 99Acres, and by 60%-70% dip on Naukri,” he said. Naukri’s job seeker index was down 60% in April and May and may “degrow” billings by close to 50% in Q1FY21, he said. 99Acres saw billings decline by 86% in April and by 72% in May. While Q1 will be bad, it is difficult to estimate for Q2 since it will depend on how restrictions will ease up, he said.
InfoEdge’s classified businesses include Naukri.com, 99Acres.com, Jeevansathi.com, and Shiksha. In addition, it owns a 22.71% stake in Zomato, 15.1% stake in PolicyBazaar.com, 42.3% stake in Ustraa, the men’s grooming portal owned by Happily Unmarried, and has investments in a host of other technology companies. Impact of COVID-19 on InfoEdge’s investments, including on Zomato, is discussed here.
Impact of COVID-19
Naukri and 99Acres more affected than Jeevansathi and Shiksha: Hitesh Oberoi, managing director, said that since B2B markets, such as the job and property markets, “which are both directly indexed to the economy”, Naukri.com and 99Acres.com will witness greater stress compared to B2C businesses such as Jeevansathi and Shiksha which are in matrimony and education, respectively. The financial numbers for the quarter, along with number released for April and May 2020 also show that. After the 2008 recession, Naukri saw 25% decline in “three or four quarters” but the subsequent year saw 45% growth in billings, he said.
Oberoi explained that Naukri is critical when companies want to hire. Since companies are not hiring right now and have postponed their hiring plans, and attrition rates have fallen, “we are not so essential,” he said. Once the market opens up, attrition rates will start going up, “we become even more critical,” he said.
It said that it did not face any disruption from supply chain or continuity standpoint since most of its vendors continued to provide essential goods and services during the lockdown.
- Cut marketing costs, but not for Jeevansathi: Restrained discretionary spending such as in marketing for Naukri and 99Acres in Q1 but aggressive marketing in Jeevansathi helped with higher sales, Oberoi said. For Jeevansathi, the company will spend “considerably more on marketing” to strengthen its brand presence, he said.
- Reduce operating costs, moratorium on expanding workforce: Considering reducing operating costs, but Oberoi did not specify how. However, the company is not expanding its workforce right now, nor is it laying off people, but it has frozen people’s salaries. InfoEdge will not announce any major increments this year, but that could be revised if situation improves, Oberoi said. However, the company ill fo strategic hiring to fill important positions that have been open for a while. The company will honour campus hires, but will not replace people who leave right now.
- Raising money, divesting stakes: May monetise investments in start-ups and other companies if need be. Its board of directors has allowed the company to raise up to ₹1,875 crore subject to shareholder approval, Oberoi said.
- Future investments, funding: The company is open to investing in “strategic areas” for its core business, Bhikchandani. Outside of its four core business areas (jobs, real estate, matrimony and education classifieds), it InfoEdge wants to expand into a fifth vertical, it will happen through acquisition where they are sure they can run the business, but that “is less likely to happen”, founder and Vice Chairperson Sanjeev Bhikchandani. He also said that the funding environment will change post-COVID-19.
“I think with Chinese investments being constrained I do believe we will get enough inorganic opportunities to expand and if we see a good one we’d like to be prepared and ready for it. We are expecting some of these in the months ahead.” — Sanjeev Bhikchandani
- Write-offs: CFO Chintan Thakkar revealed that “three or four companies” have been written off through subsidiary companies which would have affected InfoEdge’s standalone financial results. Three of these have been completely written off, while the fourth “[we] have taken apart to know what kind of a write off”. He didn’t give the names of the companies.
Q4 is generally best quarter: Even though the lockdown was contained in the last two weeks of March, it significantly affected the billings for Naukri and 99Acres, Oberoi said. Q4 is generally the best quarter for billings with a bulk of them booked in March.
Zoom may mean no more branch offices: Since everybody is working from home and using Zoom, if Zoom becomes the new normal, “you don’t need branch offices everywhere,” Oberoid said.
Competition from Indeed, LinkedIn: Oberoi said that Indeed and LinkedIn are huge in the US now and coexist, but “for a certain type of hiring, our platform works better than other platforms”, he said. In most cases, companies do about 30%-50% of their hiring from Naukri while the rest is sourced from other companies, he said. This is where Naukri can improve, he said.
Premium hiring not happening on Naukri, hence acquired IIMJobs.com: Oberoi said that a lot of the premium hiring doesn’t happen on Naukri which is why they are improving their experience and platform, and acquired IIMJobs.com for premium hiring in non-tech space. IIMJobs.com’s revenue was ₹21.8 crore in FY20. Naukri is also experimenting with BigShyft which is a platform for hiring high-end technical talent.
Cost per résumé: An investor pointed out that the cost of a résumé on Naukri is about ₹8/résumé while on competitors such as Monster, Shine, or Times, it is ₹1. Oberoi said that the pricing, on a normal day, is not concern for clients since data available on Naukri isn’t available elsewhere, but in every slowdown, client requirements go down since they are not in a hurry to hire.
Customer profile: The company has received sporadic and few requests for subscription extensions from customers but they haven’t had a material impact so far. The company offers different kinds of products where users can buy subscriptions for a week, a month, 3 months, 6 months and a year. When clients know that business will be good for a year, they buy a year-long subscription, but in times of uncertainty, they buy for three months. This is what Oberoi expects will happen this time too, especially with smaller customers.
Experimenting with a blue-collar portal JobHai.com: Oberoi said that the company is experimenting with JobHai.com within the company that is directed towards people who are not net savvy. For this platform, users will not need a résumé, only a profile will suffice. The company will test it in NCR first, but it will play out over 8-10 years.
- Job listings: 540,000
- New résumés added: 13,000
- Daily résumé searches: 699,000
- Number of unique clients: 59,500+
- Premium services’ users: 48,000
All business verticals — rental, sale, resale — of InfoEdge’s real estate portal were affected because of the lockdown, Oberoi revealed. In FY20, resale and rental businesses grew slightly faster than new house business. Traffic growth stuttered to single digits in Q4, Oberoi said.
Business to remain affected: Oberoi envisages the buyer demand to remain muted for the next 3-6 months even as emerging markets have been the first to bounce back as lockdown restrictions have eased. Bangalore has seen traffic bounce back slowly, but Delhi, Mumbai Pune remain affected due to the locksown and rising number of COVID-19 cases in the cities, he said.
- Total projects (as of March 31): 160,633+
- Total listings (as of March 31): 941,850
- Residential listings: 786,067
- Commercial listings: 155,783
- Number of customers in FY20: 26,600
- Brokers: 21,6000 (accounted for 52% of billings), grew at 15% YoY
- Builders: 5,000 (accounted for 42% of billings)
- Owners accounted for 6% of overall billings
Of the three biggest players in the market — Shaadi, BharatMatrimony, Jeevansaathi — InfoEdge’s Jeevansathi accounts for less than 10% of the company’s revenue. Oberoi said that while that is true, all the revenue comes from North and West India where their market share is close to 35%-40% and 25%, respectively. Jeevansathi does not have any business from South India, and since marriages in India happen “within the same case and community and linguistic groups”, it is possible to build a business in North India without building a business in South India, unlike with jobs, he said.
Open to acquiring new companies: Since InfoEdge sees opportunity in Jeevansathi, it is open to acquiring companies who can create value for them and increase their market share, Oberoi said. If acquisition does not happen, they will focus on growing the business organically, especially because it will cost less than acquiring another company.
Focus on core business, not on allied services like weddings: Since the main aim of the business is to capture market share at the moment, Oberoi said that they were not looking at allied/adjacent services such as weddings.
Since admission season has been delayed by three to four months, ad spend has been affected, Oberoi said. Leads are generated when potential student details are bought by colleges and their agents who advertise on the website. Both Indian and foreign universities advertise here.
- Indian colleges: 30,000
- Foreign universities: 1,864
Only Naukri and Jeevansathi are ISO27001 certified as per company presentation
Strangely enough, as per the company presentation, only Naukri and Jeevansathi are ISO27001 certified and compliant with Payment Card Industry Data Security Standard (PCIDSS). The ISO27001 is an industry standard for information security management compliance to which is common for big companies. It is surprising that 99Acres and Shiksha were not listed as ISO27001 compliant.
- Billing: ₹331.9 crore, 8% YoY decrease from ₹360.8 crore, 10.7% QoQ increase from ₹299.9 crore
- Naukri: ₹244 crore, 6% YoY decrease from ₹259.7 crore, 16.2% QoQ increase from ₹210 crore
- 99Acres: ₹50.7 crore, 24% YoY decrease from ₹66.7 crore, 6.6% QoQ decrease from ₹54.3 crore
- com: ₹23.8 crore, 20.4% YoY increase from ₹19.8 crore, 6.3% QoQ increase from ₹22.4 crore
- Shiksha: ₹13.4 crore, 8.5% YoY decrease from ₹14.6 crore; 0.8% QoQ increase from ₹13.3 crore
- Net sales (revenue): ₹322.8 crore, 10.3% YoY increase from ₹292.6 crore
- Naukri: ₹230.7 crore,10.3% YoY increase from ₹207.3 crore, 0.2% QoQ increase from ₹230.3 crore
- 99Acres: ₹56.3 crore, 11.3% YoY increase from ₹54.4 crore, 3.3% QoQ decrease from ₹58.2 crore
- com: ₹22.6 crore, 25.3% YoY increase from ₹18.1 crore, 5.6% QoQ increase from ₹21.4 crore
- Shiksha: ₹13.2 crore, 2.8% YoY decrease from ₹12.9 crore; 23.4% QoQ increase from ₹20.7 crore
- Deferred sales revenue (amount collected in advance): ₹465.6 crore, 1.9% YoY decrease
- Billing: ₹1268.7 crore, 7.8% increase over FY19
- Naukri: ₹916 crore, 8% increase over FY19
- 99Acres: ₹214 crore, 3.5% increase over FY19
- Net sales (revenue): ₹1272.7 crore, 15.9% increase over FY19
- Naukri: ₹907 crore, 15.4% increase over FY19
- 99Acres: 228 crore: 18.8% increase over FY19