Infoedge Q3FY17 Concall Summary

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Recruitment Busines

Performance overview

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  • Revenue increased by 14% y-o-y to Rs.147 crore
  • EBITDA margins were flat at 55%, while for Naukri, EBITDA margins improved to 56% vs 52% in Q3 FY16
  • Total no of CVs increased to 49.8 million with an average addition of 12,900 fresh CVs per day
  • Average CV modifications decreased to 11,000 per day compared to 163,000 per day in Q3 FY16
  • No of unique customers increased to 38,800 from 33,900 in Q3 FY16 – amounting to 56,900 unique
    customers in 9M FY17 vs 52,400 in 9M FY16

Impact of Demonetization

  • Revenue collection decreased by almost Rs.8-10 crore due to demonetization
  • Naukri services close to 10,000 businesses, many of them being small and medium enterprises, which were
    hit bigger compared to larger firms due to demonetization
  • The structural changes happening in US  also affected the IT businesses which hit the revenue growth. BPO,
    Insurance, Banking and few service sectors were better in Q3 and compensated for slowdown in IT

New Sales and Incentives Policy

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  • Transition to new sales and incentives policy which began in Q1 has been smooth
  • The policy was frame with an objective to reduce the incentive for sales team to promote aggressively
    through discounting and rather make them hold on to a price point. This has been giving upfront hit on
    revenue prospects in FY17
  1. As Q4 is traditionally the largest quarter(15% higher revenue than other 3 quarters) and also as many large
    customers come for renewal of the deals in Q4, the deferment of sales due to accounts upgradation is
    expected to show impact on collection growth by Rs.15-20 crore. However, this is expected to be
    compensated by accelerated growth from Q1 FY18

Revenue per Customer

  •  ARPU has declined for the first time since FY14
  •  This is primarily because many large customers who generate more revenues than ARPU are in upgradation
    process resulting in deferment of Sales. Also, new customer additions generally happen with shorter duration and smaller revenue generating packages bringing the ARPU down
  • With the business fundamentally doing well, once the structural changes get stabilized, ARPU is expected to
    grow again

Market Share

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  • Market share based on traffic currently stands at 80% from Desktop and 75% from mobile application
    INFOEDGE

99 ACRES BUSINESS

Performance overview

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  • Revenue increased by 9% y-o-y to Rs.28 crore
  • EBITDA loss stood at Rs.12 crore compared to Rs.20 crore in Q3 FY16 – overall EBITDA loss at Rs.39 crore vs
    Rs.80 crore in Q3 FY16
  • The company is focusing more on the top 10,000-15,000 customers and trying to upgrade them

Impact of Demonetization

  • Revenue collection decreased by almost Rs.10-11 crore due to demonetization
  • Collections growth which was growing at 23% q-o-q suddenly saw a negative growth due to demonetization
  • There was almost 40-45% overnight dip in traffic post demonetization and has also caused a significant drop
    in demand

Effect of RERA

  • RERA is expected to come into effect in various states soon, which will cleanup the industry affecting the
    business in short-run, but in the long-term it is expected to reap benefits
  • Also, this will lead to consolidation in the industry, on which 99 Acres has to be cautious about in facing stiff
    competition

Competitors performance

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  • 99 Acres has shown lesser growth than Magic Bricks in the first 9M FY17, probably due to the following
    reasons:
  • No collection in old currency unlike Magic Bricks
  • A shopping festival run by Magic Bricks in which 99 Acres doesn’t believe as a quality revenue
  • Any partner deals that might have been included in revenue
  • It is difficult to estimate the impact on Commonfloor’s less focus on real estate business anymore after
    getting part of Quikr, as it was primarily a big player only in Bangalore
    Market Share
  • Market share based on traffic currently stands at 45-46% from Desktop and 46-47% from mobile application

JEEVANSATHI BUSINESS

Performance overview

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  • Revenue increased by 19% y-o-y to Rs.43 crore
  • EBITDA loss stood at Rs.2 crore


SHIKSHA BUSINESS

Performance overview

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  • Revenue increased by 6% y-o-y to Rs.7 crore
  • EBITDA loss stood at Rs.3 crore compared to Rs.2 crore in Q3 FY16
    Plans on cash utilization and acquisitions
  • There is a huge amount of cash lying in the balance sheet, although a part of it is in the form of advances
    due to subscription based business model
  • 99 Acres due to demonetization and Naukri due to IT industry slowdown have been facing headwinds and
    the company choses to conserve cash in such tough time for the major businesses as they do want to see
    any backfiring with respect to investments

About Buyback

  • The company is not in favor of buyback anytime soon and prefers to stay cautious keeping in mind the cash
    requirement that might come up in times of catastrophic events or any other cause

Performance of past investments

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  • Zomato, has built a great brand franchise generating great traffic without too much advertising. The burN rate has come down to almost $1 mn per month and with cash built in the last 2-2.5 years, the company is in a comfortable position
  • Meritnation continues to get 6000-8000 free registrations per day with tremendous engagement and the company has significanlt invested in Sales and Marketing burning cash, hence the business is expected to grow further and the company is carving out a profitable model now
  • For Canvera, the cash burn has decreased with lot of sales improvements and automation

On Margins

  • Advertisement and Promotional costs were low (9.9% of sales) in Q3 compared to over 12% earlier due to slowdown in demand and hence a cut down in advertising costs
  • The company doesn’t expect any further cut in these costs after recovery from demonetization and the margins may not improve