According to Info Edge‘s management, the company has restructured its top management so that former CEO & MD, now Vice Chairman Sanjeev Bikhchandani can spend more time on looking at external strategic investments and acquisitions for the company. On the earnings call, Bikhchandani said that the market is expanding, and there are opportunities out there, though more for investments than acquisition. Info Edge is going to look at all areas of investments in the Internet space – Automobiles (classifieds), e-commerce, e-learning and content creation, not necessarily at the classifieds business alone.
“We see external investment opportunities in a variety of areas, which we constantly look at. As I move full time into that role, we can expect more external investments than we have done in the last two years,” Bikchandani said on the call. However, he assured investors that the troika of Bikchandani, newly promoted CEO & MD Hitesh Oberoi and Group President Finance and Chief Financial Officer Ambarish Raghuvanshi will continue to work very closely and all strategic issues will be discussed, even though execution will be led by Oberoi for interal, and Bikhchandani for external decisions.
While the market may be improving, and Info Edge is performing better, one should keep in mind that there is significant competition for investments – especially early stage – which is likely to drive up valuations once again. Info Edge has investments in Applect (MeritNation) in e-learning, Etech Aces (PolicyBazaar), and lost money on their investment in StudyPlaces. From this year onwards, EtechAces will qualify as subsidiary of Info Edge; Applect already does.
This decision to focus on investments comes on the back of an improved performance from the company, with deferred sales revenue up 34% year on year (YoY) and 15% quarter on quarter (QoQ). This clearly indicates an improvement in the revenue expected over the next few quarters. Usually, Q4 is the best quarter of the year for Info Edge, since hiring budgets are exhausted in Q4. For the comapny, its Operating Income was up 24.5% year on year (YoY), Operating PAT up 72% YoY at Rs. 12.6 crores (compared to Rs. 7.3 crores for the same quarter last year). Interestingly, Other income was lower 27% YoY, due to lower interest rate for fixed deposits.
Operating EBITDA in Q1 was Rs. 20.4 crores, compared to Rs. 12.9 crores for Q1-10. Operating EBITDA margin also improved, at 31% versus 24.3% last year. The company said that advertising expenses in Q1 quarter were lower than expected, and they plan to significantly increase advertising spends, particularly on TV in the coming quarters. More on the companys financial results here.
Segment-wise notes from Info Edge’s earnings conference call:
Recruitment
– Financial Performance: Naukri, Naukrigulf, Quadrangle, and jobseeker services accounted for 83% of operating topline, compared to 82% last year, and 84% last quarter. Q1 topline for recruitment grew 23.7% to Rs. 54.8 crores. Naukri topline grew 22.5%, candidate services by 13%, and quadrangle grew at 70%. EBITDA margins in recruitment were 41.9%, compared with 39% in Q1 last year. In Naukri, the EBITDA margins were 44.8%, up from 41.8% a year ago.
– Resumes: Number of resumes 21.9 vs 17.7 million, with 13000 new resumes added every day in Q1 (compared with 11,300 in Q4 last fiscal), and 70,000 modified daily, compared with 68,000 last fiscal.
– Customers: Had 20,900 customers paying in Q1, vs 17700 last year. Share of IT moved up to 26.6% vs 24.8% in Q1 last year. Share of recruitment consultants was 25%, vs 24.6% in Q1 last year. Share of infrastructure was 21% vs 21.5% in Q1 last year.
– Traffic Share: According to Comscore (which may not be a reliable measure) Naukri managed to maintain trafficshare more than 60% for the last 14 months.
– “Discounting is going down, we’re able to get higher prices, and clients are upgrading.”
– On the Rs. 15 lakh+ CTC vertical launched last quarter: “only been a quarter, we’re getting some feedback from customers. We are looking to improve the user experience. It may take another 2-3 quarters before we see results.”
– Naukri gulf: recovery lagging in gulf compared to India by a couple of quarters.
– FirstNaukri: early days. Fresher hiring has picked up, and this is the right time to test the product out.
Non-Recruitment Verticals
Jeevansathi, 99Acres, Shiksha account for 17% of Info Edge topline, compared to 18% last year
Net sales in other verticals 28.6% year on year to Rs. 11 crores. 99Acres grew by 60%, Jeevansathi was flat, while Shiksha grew 100% on a smaller base. EBITDA losses in other businesses reduced 42% to Rs. 2.5 crore helped substantially by reduction in losses in 99Acres.
99Acres: topline grew 80% year on year, the EBITDA loss reduced by 90%. 99Acres made a loss of Rs. 14 lakhs. Oberoi said that they are seeing a lot of traction in Real Estate now, with projects being launched at almost all price points in almost all cities. The company claims its (Comscore) traffic share has been in the mid 40% for several months now, while it was 34% before the slowdown.
Jeevansathi: Net Sales was flat, the EBITDA loss is down 45% year on year. Jeevansathi made a loss of Rs. 33 lakh for the quarter. Info Edge is looking to increase investments in Jeevansathi going forward, so expect an increase in losses. The number of profiles ever added on jeevansathi increased to 3.8 million, vs 3.12 million as of June 30th 2009. According to Info Edge, the competition for Jeevansathi continues to be challenged for cash and capital. There are no plans of creating an international site for Jeevansathi. We’re focusing on north India and west India. We’re committed to investing in this business for a while.
Brijj: has 3.3 million profiles, growing at 3000 per day. Info Edge is not expecting any revenues from Brijj in the short term. On LinkedIn, which Brijj has tried to emulate, Bikhchandani said that LinkedIn and Naukri.com are solving different problems: “We’ve never encountered a situation where a client says I’m using LinkedIn, so I don’t need you. LinkedIn solves the passive candidate problem and some headhunting problems better than we do, but we’re looking at hiring in volumes, and in large numbers. We don’t see LinkedIn eating into our revenues in the near future.” Brijj is supposed to address the challenge posed by LinkedIn, but according to Info Edge, despite adding profiles, the challenge lies in increasing interactivity.
AllCheckDeals: closed 780 deals in Q1. Business is growing, especially in NCR and Mumbai.
Download: Info Edge Data Sheet, July 2010