Info Edge (India) Limited (NAUKRI) Earnings Call Transcript & Summary

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Thank you, Anand. Hi, everyone. Good evening, and welcome to Info Edge India Limited Q3 '24 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. Joining us from the management side, we have Mr. Sanjeev Bikhchandani, Promoter and Vice Chairman; Mr. Hitesh Oberoi, Co-Promoter and Managing Director; and Mr. Chintan Thakkar, Chief Financial Officer. Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer to Slide #2 of investor presentation for a detailed disclaimer. The audited financial statement, other schedules of segmental billing, revenues along with data sheet have been uploaded on our website, www.infoedge.in. Now I would like to hand over the conference to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.

Thank you, Vivek. And a very good evening, everyone, and welcome to our Q3 '24 earnings call. We will start with an update on stand-alone financials, and then we'll cover the segmental financials along with the commentary on each business, and then we'll have time for Q&A. Starting with a summary of stand-alone financials for the quarter ended December '23 and for the first 9 months of FY '24. The third quarter of the fiscal year '24 witnessed moderate growth in both revenue and billings on a stand-alone basis backed by a strong performance in the non-recruitment businesses. In Q3 of FY '24, our stand-alone revenue was INR 595 crores, a year-on-year growth of 7%; and billings were INR 577 crores, a year-on-year growth of 5%. Deferred sales revenue at the end of Q3 was INR 925 crores, a year-on-year growth of 11%. For the first 9 months of FY '24, revenue and billings were INR 1,773 crores and INR 1,669 crores, a Y-o-Y growth of 11% and 3%, respectively. Revenue and billings for stand-alone business, including Zwayam and DoSelect, were INR 614 crores and INR 596 crores, a year-on-year growth of 7% and 5%, respectively. 9-month FY '24 revenue and billings, including Zwayam and DoSelect, stood at INR 1,819 crores and INR 1,715 crores, a growth of 11% and 3%, respectively. Operating expenses for Q3 grew by 7%. And for the first 9 months of FY '24, operating expenses grew by 6%. For the stand-alone business, operating profit was INR 219 crores in Q3 of FY '24, a year-on-year growth of 7% and was INR 646 crores in the first 9 months of FY '24, a year-on-year growth of 22%. The operating profit margin for the quarter was -- for Q3 were 36.7%, in line with Q3 of last year. And for the first 9 months of FY '23-'24, the profit margin improved by 328 basis points year-on-year and was 36.5%. EPS before exceptional items for 9-month FY '24 stood at INR 49, a year-on-year growth of 23%. We generated an operating cash of INR 272 crores in Q3 of FY '24, a year-on-year growth of 13%. The cash balance of Info Edge, including wholly owned subsidiaries, at the end of December '23 stood at INR 3,724 crores. And the headcount as of December 31, 2023, was 5,602. Moving on to segmental performance, and we will start with the Recruitment business. In Q3 of FY '24, revenue for the Recruitment solutions business was INR 451 crores, a year-on-year growth of 3%; and billings of INR 429 crores, a nominal degrowth of 1% year-on-year. For the first 9 months of FY '24, revenue was INR 1,353 crores, a year-on-year growth of 9%; and billings were INR 1,258 crores, a Y-o-Y degrowth of 1%. Operating expenses for the quarter grew by 14%. And for 9-month FY '24, expenses grew by 14% -- grew by 12%. PBT for the quarter was lower by 3% year-on-year to INR 259 crores, and PBT margin was 57.6%. Over the first 9 months of FY '24, PBT grew at 7% year-on-year to INR 793 crores, and PBT margin was 58.6%. The business generated operating cash of INR 277 crores in Q3 FY '24 and INR 751 crores during the first 9 months of FY '24. The JobSpeak Index -- overall, the average JobSpeak Index for Q3 was down 14% year-on-year. The softness in IT hiring continued in Q3, and it also impacted our consultant business. Non-IT hiring continued to grow during the quarter, particularly in segments like health care, pharmaceutical, manufacturing and BFSI sectors. The Recruitment business witnessed sound renewal rates during the quarter. The Naukri Gulf business, on the other hand, reported a growth of 28% during the quarter, primarily led by growth in new customers added to the platform. Other verticals like Naukri FastForward and iimjobs witnessed healthy billing growths of 19% and 22% year-on-year, respectively. The Naukri database now comprises 95 million resumes and continues to grow 9% year-on-year. Daily app installs on the Android platform grew by 10% and on IOS by 29% year-on-year. The overall app installed base stands at 14 million. We continue to make investments in AI and machine learning to improve the user experience on our platform. And we continue to focus on developing strong product offerings like JobHai and AmbitionBox to supplement and complement the Naukri business. And we are looking -- we are actually already sort of opening new branches as we speak in Tier 2 and Tier 3 cities to expand our coverage to more towns and cities. Moving over to the Real Estate segment. In Q3 of FY '24, revenue was INR 89 crores, a Y-o-Y growth of 22%; and billings for the period stood at INR 88 crores, a Y-o-Y growth of 34%. For the first 9 months of FY '24, revenue was INR 259 crores, a Y-o-Y growth of 24%; while the billings were INR 254 crores, a Y-o-Y growth of 22%. Operating expenses for the quarter in our 99acres business were up 5% year-on-year. And for the first 9 months of FY '24, expenses grew by 2% year-on-year. Y-o-Y operating losses were down 44% from INR 26 crores in Q3 of FY '23 to INR 15 crores in Q3 of FY '24. For the first 9 months of the year, operating loss was down to INR 54 crores versus INR 96 crores in the first 9 months of FY '23. The operating cash loss was lower in Q3 of FY '24 and stood at INR 7 crores versus INR 20 crores in Q3 of FY '23. Cash costs for the first 9 months of FY '24 was INR 43 crores. Growth momentum in Real Estate continued in Q3 on both the primary and the secondary side. Despite a considerable Y-o-Y increase in home prices, the demand from end users remained strong. Unsold inventory levels continue to remain low in the top 8 cities of the country and many developers continue to launch new projects. Of late, we are seeing more and more business move from -- towards channel partners for new project sales. And demand continues to surpass supply in resale and rental markets across major metros. Monthly rentals reached record highs in specific metro markets such as Bangalore, Pune and NCR. Billing growth in 99acres was primarily led by increase in broker engagement on the platform. With an increased focus on creating value adds and gradual price rationalization of platform services, our listing realization has improved quarter-on-quarter. Overall daily active users improved by 25% year-on-year during the quarter, and responses from the platform grew more than 25% across different categories in 99acres. We will continue our investments to expand our user base, enhance the platform experience, create unique content and drive monetization. Additionally, we will deploy more AI and machine learning to augment user experience, fraud/spam detection and improve search results on the platform. Moving over to the Matrimony business. In Q3 of FY '24, revenue from Jeevansathi business was INR 22 crores, a Y-o-Y growth of 23%; and billings were INR 20 crores, a Y-o-Y growth of 19%. 9-month FY '24 revenue was INR 61 crores, a Y-o-Y growth of 4%; and billings were INR 59 crores, a Y-o-Y growth of 14%. We continued our focus on optimizing marketing expenses and reduced the same by 39% year-on-year in FY '24 -- in Q3 of FY '24. Consequently, our total expenses for the quarter were down 19%. For the first 9 months of the year, expenses were down 22% year-on-year. Y-o-Y operating losses were down by 48% from INR 26 crores to INR 14 crores in FY '24. For the first 9 months, operating loss was down to INR 49 crores versus INR 83 crores in the first 9 months of FY '23. The operating cash loss was lower in Q3 FY '24 at INR 11 crores versus INR 27 crores in Q3 of FY '23. Cash costs during the first 9 months was INR 46 crores. We continue to maintain our focus on improving monetization and reducing burn in this business quarter-on-quarter. Moving on to our Education business, Shiksha.com. In Q3 of FY '24, revenue for the quarter was INR 34 crores, a year-on-year growth of 23%; and billings were INR 39 crores, a year-on-year growth of 41%. The first 9 months FY '24 revenue was INR 100 crores, a year-on-year growth of 18%; and billings were INR 98 crores, a year-on-year growth of 18%. Operating expenses for the quarter were up 22% year-on-year and for the first 9 months of FY '24 were up by 26% year-on-year. The business for the quarter reported breakeven with a nominal profit of INR 10 lakhs. For the first 9 months of FY '24, the operating loss in Shiksha was INR 3.6 crores. The business generated operating cash of INR 15 crores in FY '23-'24 and INR 10 crores during the first 9 months of FY '24. Higher billings during the quarter were propelled by early campaigns from some domestic customers, and the impact may be transitionary in nature. We continued to make investments in this business to improve our user experience and to create high-quality, student-friendly content. Moving on to the consolidated financial highlights of the quarter. At the consolidated level, the net sales of the company stood at INR 627 crores in Q3 of FY '24 versus INR 590 crores for Q3 of FY '23. At the consolidated entity level, the total comprehensive income stands at INR 2,624 crores compared to a loss of INR 400 crores in the corresponding quarter ending December '23. After adjusting for exceptional items, the profit before tax in Q3 of FY '24 was INR 185 crores compared to a profit of INR 511 crores in Q3 of FY '23. Thank you, and that's all from us. And now we're ready to take any questions that you may have.

Thanks, Hitesh. We'll now begin the Q&A session. [Operator Instructions]

So the first question is from Vivekanand from AMBIT Capital.

Hitesh, 2 questions here. The first one is on the Recruitment business. So you saw 1% decline in billing, but I also heard you mentioned about renewal rates. So could you elaborate a bit on how you are seeing this -- the growth in this segment? And also, if you could help us understand Naukri India versus overall billing and perhaps give us some thoughts on the fourth quarter given that there is an element of seasonality in the business, 4Q is generally very strong. So trying to understand how to think about the base here and growth trajectory for 4Q as well as the recovery that you are seeing now.

So we didn't see any recovery in Q3. Q3 was -- IT hiring was slow in Q3 as well. What we've been seeing for the last 3 quarters now is a serious slowdown in IT hiring and also in our consultant business because a lot of the consultants we have on our platform also hire or used to hire for IT companies. So this business has been hit because IT companies, one, attrition rate is down as far as IT companies go. Two, they've not been hiring new people. In many cases, they've been letting people go. So this has impacted our IT business. Of course, we had a very good 2 years before this, and the IT business grew up by more than 100% back then. But in the process, I suspect, IT companies also over-hired. And now because demand is soft, they sort of have some extra sort of manpower. The good news from our standpoint is that from what we hear, utilization at IT -- rates at IT companies have started improving, and they're now where they used to be pre-COVID. So let's see what happens going forward. The non-IT business continues to grow. But within non-IT also, there are certain sectors that are doing better than other sectors, sectors like health care, BFSI, pharma, manufacturing, engineering, construction. So now what will happen in -- now the Naukri India business, the Naukri India B2B business, I think almost -- if I exclude the candidates of services business and if take out Naukri Gulf, it's maybe 90% of our revenue -- of our recruitment revenue, including Zwayam, including iimjobs, including AmbitionBox and so on. So that business, of course, the overall business degrew by 1%. So the Naukri India business must have, I don't have the exact number, it must have degrown by 2%, 3% at least over last year because Naukri Gulf grew and candidate services also grew by over 15%. Now what will happen next quarter or what is likely to happen in Q4, hard for me to say. It's our biggest quarter, you're right. There's a big base. IT growth has started moderating by Q4 of last year. So I think we grew by 80% in Q1. Last year, our billing grew by 80% in Q1; 55% in Q2; maybe 25%, 26% in Q3; and 15%, 17% in Q4. So growth has started moderating by Q4. And by Q1, we were flat, even of this year, we were flat. So the base is modest, but I don't know how things are going to play out going forward. A lot will also depend on what happens to non-IT hiring. We have also -- we are also sensing that attrition rate in a lot of the non-IT companies are also lower this year than last year, not in all sectors, but at least in some sectors. So fingers crossed here, I mean, we'll know only by quarter-end because what happens in our business is it's a renewal-led business, and a lot of the renewals happen around quarter-end. And what we are able to collect at that time will end up determining what happens to billing growth this quarter. I mean we have set a target of -- internally, we've set a target of growing over the last year, but can't say.

Okay. Hitesh, I appreciate the detailed commentary. From a non-IT growth perspective, was there any impact that you felt of the impending Lok Sabha elections on hiring intent of the non-IT companies? Because it seems that by looking at the JobSpeak, it seems that the hiring intensity or at least job posting intensity of the non-IT companies is also moderating.

You're right, it's moderating. But like I said, some sectors continue -- some non-IT sectors continue to do better than other non-IT sectors. So we saw reasonable growth in sectors like health care, travel, tourism, BFSI, pharma, manufacturing, construction, engineering. So that's -- and the other sectors have been slower. But is it linked to Lok Sabha elections? Hard for us to say, we don't know. I mean, maybe it's just linked to the fact that because IT companies are not hiring as many numbers as earlier, it's easier to get talent at junior level because talent at that level is often fungible, especially talent from Tier 2, Tier 3 universities. It's -- like I remember last year, we were approached by a couple of players who hire for banks and they were like, listen, there is so much demand for IT talent that we are not able to get people who we used to train for banking jobs earlier, and a lot of our trainees used to be actually engineers from Tier 2, Tier 3 companies. Now maybe it's easier for them to hire also.

I see. That's an interesting perspective. Okay. My last question is on the real estate market. At last quarter, you had alluded to -- you had mentioned one thing that if the market is growing at a very fast pace on its own, then obviously that doesn't bode very well for intermediaries like you. So -- but still, you have delivered very healthy growth in 99acres. So what's really marking for you here? And growth seems to be accelerating now. So could you spend some time explaining to us what's going right for you in this business?

I think what you are referring to is the fact that, I had said this once, that if it's very easy to sell, then we're not required. I mean, in fact, nobody is required. So if when you -- so if your inventory gets booked even at prelaunch time, forget about -- you don't even need to launch, then no intermediary is required, no broker is required, no platform like ours is required. So -- but the real estate market is a large market and we operate in every segment. So we have a -- so there's a new launch market, which is where I think where some of this action is when you hear projects getting launched and large builders collecting a lot of checks very quickly. That's mostly with very top-end builders and in sort of the new launch market, right? We have a very tiny share of that market. It doesn't really contribute much to our revenue today. We primarily operate in the under-construction sort of segment. So once the project is under construction, there's -- some of the project was sold at launch time and then it's sold over a period of time. So that's when we become very important for developers and channel partners. And of course, we operate in the secondary market. Most of the secondary sales go through platforms like ours. So our secondary business is also doing well this year. By the way, it's a small -- it's smaller than the primary business for us. But it's almost as big if you include rental, commercial, resale. And that business has been growing much faster than our primary business. In the new launch, there's a business -- there's a lot of action, business activity, but we don't really play a big role, and that's something we want to correct going forward. That's an opportunity for us. A lot of that revenue today goes to the Facebooks and Googles of the world. The under-construction business has been growing at a healthy pace because what's happening is that demand had been solid and there was not enough supply, which hit the market during COVID. And as a result, the unsold inventory in most markets is at a decade low, and that's also resulting in higher prices in some pockets. And in general, people want to upgrade after COVID. So all these sort of factors seem to be resulting in a reasonably solid real estate market. And you have to remember, see, even when we were hit by COVID, even when we were hit by GST, RERA, demonetization, we were able to grow our business at 12%, 14% per annum. So we would like to grow it much faster going forward in a good market. So -- and the team has been executing well. So that's the good news. We are happy with the way the team has been executing. But let's see if this sustains. If it's real estate, I've learned it's very hard to make forecasts.

The next question is from Nitin Jain from FairView Investment.

Congratulations on good execution in this tough environment. So regarding the Recruitment business, I just wanted a clarification first that in the past, management has guided that contribution of IT/ITES to revenue is around 50%. But in the presentation, like if you look at the last 3, 4 years data, it's somewhere in the ballpark of 35%. So can you help me reconcile that?

Yes. So Nitin, you see direct revenue from IT companies is in that ballpark. But a lot of recruitment firms also work for IT companies. So if you add -- so our recruitment -- revenue from recruitment consultants is also about 30% of our revenue. So if you proportionately sort of -- if you do the math and you sort of -- yes, half -- maybe half of that is also or maybe slightly more than half of that is also IT, connected to IT hiring.

Okay. So the 3 buckets that you have shown, the consultants are outside those 3 buckets, is it?

Which are the 3?

The BFSI and Infra.

No, no, no. See, I don't know which slide you're referring to.

So there is a slide on -- hold on.

So there's IT, there's non-IT and there's consultant. So these are the 3 buckets you're looking at?

No. So there is IT, ITES and then there's BFSI and then there's Infra.

That data seems to be the 3 buckets, one is IT, one non-IT and...

Yes, I think the buckets to look at are IT, non-IT and recruitment consultants. That's how we -- because the other bucket you're looking at is not -- I mean, there are 40 different sectors in which we operate.

Nitin, I think you should look at our presentation, Slide #26, that will be a better breakup of the numbers.

Okay, okay. Okay, so...

Recruitment firms is 26% and 27%, so broadly half of it would be coming from IT businesses. So that will add up to around 50%.

Okay. Okay, got it. That's perfect. So -- and one more thing. So if I add up IT, BFSI and Infra, together, they are about 50% of the revenue. So what is in the remaining 50%?

Nitin, maybe you can refer that slide, you will get complete details.

Yes. See, we have -- there are 45, 50, 40 different sectors there. There's BFSI and education, FMCG, durables, travel, tourism, hospitality, infrastructure, engineering. So all that will add up to 100%.

Okay, okay. Okay. And what has been our traffic share for the December quarter, like for Naukri?

Similar. I mean, we don't -- we haven't -- I don't think there's much that has changed on that front.

Okay. Just asking because I think earlier, the company used to disclose that with the presentation, but I can't seem to find it...

So it is still there, Nitin. We have been trailing at around 70% plus. There had been certain issues we are facing with SimilarWeb because the app traffic that we are getting from SimilarWeb doesn't match us with our internal sources. But broadly, you can assume the traffic right now remains at the range of around 70%, 70% plus for now.

Okay. Great. And I just wanted to understand like how pricing behaves in this kind of an environment, given that we are probably close to the bottom for the IT sector downturn, hopefully.

I hope so too.

Yes. So how does the pricing behave in this environment? Like do we give any kind of discounts or...

You see, it's very hard to take price hikes. It's in a soft demand environment, it's hard to take price hikes. So -- and it's hard to get volume growth as well. So it's like -- I mean, we don't get price hikes in this environment. I mean, we are adding new customers in non-IT. We are expanding to small towns on the non-IT side to acquire more customers. And there, if demand picks up, we should be able to get a price increase, but not on the IT side and certainly not with consultants because consultants are the most impacted when there is a slowdown.

Right. So do we even provide any kind of discounts or something in this environment?

Yes, it's a negotiation. At the end of the day, it's a negotiation. So while there's a rate card, there is some discounting which happens. And we try and understand how much value we create for the customer, and we equip the sales team with these tools, and then they use them to negotiate with customers.

Right, right. So regarding the real estate business, I missed your comment on improved pricing realizations. Can you please elaborate once again?

For our business?

Yes. For real estate?

Yes. So no -- so 2 things, 1 is what I may have mentioned is that real estate prices are going up nationally because the market is hot. So there is more demand than supply right now. And therefore, real estate prices are going up nationally. Of course, in some markets, it's a very local business. There are lots of micro markets. In some real estate markets, prices may be up 100% over last year. At the same time, some markets are up 20%. But in general, prices are going up everywhere. And we have also been able to realize better prices for our listing products in real estate from our customers.

Okay. And would that be from brokers or like individuals as well?

See, we have a very tiny B2C business. We work mostly with brokers and channel partners. Yes.

Okay. Great. And just one more thing regarding real estate. So the paid listings seem to have declined from last year, but the revenue has seen -- so okay, so I think this ties in with the pricing realization improvement comment, I guess.

Correct.

Right. Okay. Great. And just one last question. So at the overall business level, you have seen a good margin improvement in the first 9 months. So what has led to this improvement? Like have we cut down on marketing expenses significantly, like the cash...

See, our burn in both 99acres and Jeevansathi is down over last year, right? And this is primarily because, one, in 99acres, our sales are up 23%, 24% over last year, costs are up only 5%. We have spent less money on advertising than last year, but it's not that much less. It's just that we've kept our costs under control, and we are now seeing operating leverage play out. In the Jeevansathi business, we've cut marketing spend substantially because marketing was a big chunk of Jeevansathi expenses. And we started monetizing more aggressively. If you remember, we actually changed our business model. We went freemium, we took a hit on revenue. We tried to use -- gain market share through this route. And now we think we're at a point where we can slowly start turning the screws on monetization, and that is resulting in higher revenue growth than previous quarters. And at the same time, the market is not as irrational as it was earlier. So we've also managed to bring down our marketing spend. So that has led to lower burn in Jeevansathi vis-a-vis last year. So while in Naukri, billing growth has been slow -- low and costs are up, so -- but overall, because of the improvement in Jeevansathi and in the 99acres business, our margins are perhaps still holding or looking better. It may not continue if the Naukri business does not recover in subsequent quarters.

Okay. And just one last one, if I may. So regarding Shiksha, I think the business model seems to be relatively fine-tuned now compared to how it was 3, 4 years ago when we were at a nascent stage. So what would it take to scale up this model rapidly now?

I think we need to do a lot of work in the Shiksha business. It is not, in our view, it is not at a stage where we can predict what's going to happen next year or the year after that. I think it requires a lot more work. We are comfortable. We are sort of breaking even. We are growing a little bit. But if we really want to ramp it up, I think we need to do some more homework, go back to the drawing board. So that's on the agenda, but not for the next few months, maybe after that.

Next question is from Vijit Jain from Citi.

So my first question is on Recruitment. So last time, I think you guys talked about a little bit about giving more color on the GCC side, what trends are already visible in your numbers and how you look at them. So I'm just wondering if you can shed a little bit more color on that front, on the Recruitment business? That's my first question.

Yes. See, our sense of what's happening in the GCC market is that the number of GCCs are growing. But you know what happened -- but the bigger GCCs actually perhaps are not doing as much. So in every market, you have an 80-20 sort of thing. So while there may be 1,500, 1,700 GCCs of the ground, when you start a new GCC, typically, the new GCC starts small. They start by hiring 20 people, 50 people, 100 people. And when they start, they normally don't use a site like Naukri for hiring. They sort of give the contract to somebody, and that's how they set up their first sort of team. Only when they hit 300, 400, 500 people, sites like us become relevant because that's when they start having attrition, they need to grow, add more people, et cetera, et cetera. So our sense of what's happening in the GCC market is that while the number of GCCs in India is growing, the newer GCCs are small. They will take time to ramp up. The bigger GCC, on the other hand, the ones that employ a few thousand people, did not grow this year because they're -- these are GCCs which are owned by -- which are captives of larger firms. And some of these firms -- and these are large U.S. companies or U.S. retailers or U.S. utility companies or U.S. BFSI giants and so on. And they have not been hiring aggressively this year. That is our own take.

Got it. And my second question is, I think, kind of to both to you and Sanjeev because I saw a tweet from Sanjeev today where he mentioned about the number of start-ups, which are now hitting sustainable profits, is higher than what he thought 16 months back. And I'm just trying to get a sense, is that something you're seeing in spaces where the non-Recruitment business for you also compete? So in 99acres, for example, I do note that Housing.com seems to have grown a little less this quarter versus you guys. This is, I think, first time in a few quarters. And I'm wondering if you're seeing the same kind of trend for where Shiksha operates and maybe even Jeevansathi operates. I don't know if it ties in as neatly there as well.

Yes, Sanjeev should be able to comment on the broader start-up ecosystem. But our general sense of what's happening out there is that because of the -- because raising capital is not as easy as it was earlier, a lot of businesses are behaving more rationally than they were behaving earlier. That's all. I mean that's what is happening everywhere in my view. And maybe Sanjeev can add to that.

Yes, I think Hitesh has summed it up perfectly. [Foreign Language] When there is a shortage of money, you have to break even. And I think we're seeing that, enough companies are doing that. And more are doing it than I think I had anticipated 16 months ago, and I have tweeted that. And in our own portfolio across our funds, we are seeing at least close to double-digit start-ups that are breaking even, making money or perhaps getting very close to it. If that is what is happening in our own funds, I would imagine what's happening across the ecosystem who is running into 100 or 200 or 300.

Got it. Perfect. And my last question, just a clarification. On the Shiksha business, you mentioned billings surged by 41% propelled by early campaigns from domestic clients. So I'm just wondering, is this seasonality shifting or something? Or is it that you've gotten some more business from domestic clients versus earlier? I'm just trying to understand what you mean when you said that.

Yes, I would not read too much into this. A couple of clients, if they start early, it sort of changes our billing growth. A lot depends on the education season. So if JEE Mains, for example, is earlier this year, then clients start early, if -- stuff like that. So I would not read too much into it. It's not as if Shiksha is going to start growing at 40% from hereon.

Next question is from [ Jaideep ] from Ascent Capital.

So my question is particularly in the real estate business, 99acres. So the earlier speaker asked around the listings trend as well. So I just want to double-click on the point. So the listings growth, if I were to tabulate, the growth has been fairly tepid in the last 1, 1.5 years, free plus paid. And on top of that, the share of paid listings has also come off from its peak. So just wanted your comments on that, and then I will ask my second question.

So you see, first think, listing growth is a reflection of the secondary market, okay? And within listing, there are rental listings, there are resale listings, there are commercial listings. And the situation could be different in different cities. In general, in a hot market, real estate tends to move faster, right? So in a slow market, a listing could be on the site for 6 months, 8 months because it takes a long time to sell. In a hotter market, you may be able to post and you may be able to sell in 2 months or 1 month. So there are these factors at work. So this is a hotter market than what we've seen over the last few years.

Basically, what you're trying to say is the velocity of listings has kind of improved significantly, and hence, you see the number come off. And your point on the share of paid listings, I understand that the pricing has improved. But is that taking a toll on the volume of paid listings by any chance, if my understanding is correct on that front?

See, we have a freemium model for owners, and we charge brokers. So all broker listings on the platform are paid listings unless we give some -- we may be giving some free trials here and there, but that's a very tiny number, while most owner listings are free listings. So the number of brokers we are working with have actually grown over last year substantially. It's just that what may be happening is that at any point in time, there are fewer listings because property is moving faster, that's all.

And since 4Q is typically the strongest quarter for real estate and particularly because we are operating in the under-construction and all the space, so just wanted to get your sense how -- because since we are already halfway there, so how are the early trends looking like for the quarter?

See, what happens in our business is that it's a subscription model. There are renewals. A lot of these renewals are around quarter-end. Sales teams have targets. And what I see, how they work is that they do a lot of BD -- new BD in the first 2 months of the quarter, and they focus on collection in the last month of the quarter, right? Now -- so normally, if the market is good, they do well. And -- but it's hard for me to predict how things will play out. We have some internal sort of modeling, which we do. But a lot depends on what happens on the last 4, 5 days of the month -- of the quarter, actually, not the month.

Sure. And on the reduction of losses, how much has operating leverage aided? Because top line grew by high teens, right, 22%, 23%. How much of that is operating leverage? And how much of that is cost optimizing, basically, the marketing bit?

So in Jeevansathi, we...

No, I'm talking about 99acres.

Okay, 99acres. So we've -- our marketing has become more efficient. Compared to last year, we've done -- made a few changes to our media mix, to our -- the mix between branding and performance and stuff like that, and we've optimized our marketing spend. And the optimized marketing spend is actually -- the ROI on it is actually higher than -- on the higher spend last year, right? So that's helped. And I'm sure marketing costs are down by how much, I don't know, but maybe by 15% year-on-year in 99acres or maybe 10%, I don't know exactly. We can get back to you. And otherwise, costs are up in single digits and revenues are 22%.

Marketing expenses are down by 10% year-on-year for this business.

Next question is from Aditya from Macquarie.

Just 2 questions. One was in terms of Naukri. Naukri typically sees a big quarter in March. Any kind of indications here in the March quarter, how billings are shaping up?

I wish I knew. I have no idea, no idea at all. I mean -- and I checked with Pawan also. He said, listen, we will have a better idea by March 15. It's very hard to say.

Because the March quarter has been -- you have seen this big kind of like 35%, 40% kind of bump-ups in that quarter. So I was just wondering if...

No, for Q-on-Q, definitely we'll grow. That's a given. But whether how much we will grow over last year or whether we will decline over last year, et cetera, that is unclear to us. I mean, we can't predict right now.

Got it. And are you able to kind of triangulate towards, okay, what the current rate of billings kind of really implies for your revenue growth for Naukri next year, even if that's a range which you can point to?

See, a lot will depend on what happens to IT hiring. If our IT hiring business grows by even 10%, then, of course, it will be a very different story. But right now, our IT growth is negative. It's down maybe 5%, 6% year-on-year. Our non-IT business is up maybe 7%, 8%, 10% year-on-year. So we are at flat or slightly or minus 1%. So a lot will happen. It depends on what happens to IT hiring next year. So if IT companies bounce back, if they start hiring like they used to hire even pre-COVID, I mean that's very good news for us. And if we are able to grow our IT business by 10%, 12% and if we are able to grow our non-IT business by 14%, 15%, we can aspire to grow it. And if we can push our new products faster, we can still aspire to grow it in double digits. But if IT growth does not recover, if IT companies' demand doesn't pick up, and then it will be a challenge.

And as this dynamic kind of plays out, would it be a fair expectation to say that, and we've discussed this previously also, that your operating expenses would largely be steady, so there could be a period of margin erosion to the extent that your volume is soft or your revenue is soft in Naukri?

Actually, we want to continue to invest in the new emerging sort of businesses that we are building. Like JobHai, we would want to continue to actually invest more in JobHai. That's a blue-collar job board we're building. We would continue to sort of make brand marketing investments in Naukri. We are opening new offices. We are hiring more salespeople as we spread to Tier 2, Tier 3 towns. So these are investments we would like to continue to make, we would want to continue with irrespective of whether business recovers next quarter or not. So if business recovers, we will be able to maintain margin. I mean, if we're able to get to double-digit growth, we might be able to maintain margin. But if growth continues to be slow, our cost will rise next year in Naukri because we don't want to delay these investments. They're important for the long run.

And Sanjeev, maybe one for you was that within the investment book, are you seeing any kind of -- yes, any areas of optimism which you can maybe call out or speak about?

I think by and large, most founders are now a lot more frugal, a lot more cost conscious, a lot more conscious of good unit economics. And that's a broad-based trend. Now having said that, there will be a few companies who are unable to make the switch and pivot because they got committed to the wrong kind of unit economics and costs early on and may have a challenge getting out of it, but even they are making an effort. But by and large, I think a little shortage of capital is good for discipline, and that's what is happening. So you'll see the fruits of this in the next year or 2.

Next question is from Nitin Sharma from MC Pro Research.

First of all, with your losses already coming down, competitive intensity seems to be easing. Is there a time line for the Jeevansathi business to turn profitable?

There's no time line as such. I mean we are, like I said, working hard on monetizing. We have moved to a freemium model. So we are experimenting with a bunch of things. Some of them will work, some of them may not work. We saw -- some of our experiments paid off last quarter, so we saw healthy growth. Now of course, we have internal targets, and we are working hard to get there. And we would like to break even as quickly as possible. But a lot will depend on, one, competitive intensity number; and number two, whether these experiments we are working on start yielding results.

Okay. And is it fair to assume that your advertisement and the promotion cost would be remaining somewhere where they have been this year for first 9 months?

It will depend on what happens to competition. But yes, I mean, we would not want to up them significantly at least.

Next question is from Vikrant Gupta from ICICI Prudential.

So I was wondering if you could provide some commentary on how you are seeing the attrition levels at the IT companies. So at least the publicly available data is more a last 12-months sort of number. So I was wondering if you could provide some color of how maybe attrition is in Jan, Feb versus December or something like that. What's the latest read that we have?

No, no, we don't have access to attrition data. What is available to the public is what is available to us, everything else is anecdotal. So I would not bank on it.

So anecdotally, what is your sense? Is Jan, Feb lower than December? Or is attrition bottoming out or picking up?

My sense is right, Jan was similar, but I could be wrong.

Next question is from Nikhil Choudhary from Nuvama.

My first question is regarding the losses we have, especially in Jeevansathi and 99acres. What you mentioned that competitive intensity is shifting and because of the dearth in capital, which is leading to industry behaving more maturely and moving to breakeven or even profitable. Is it fair to assume, at least near term or we have some time line when can we achieve breakeven basically in 99acres and Jeevansathi?

So listen, so see, we would like to breakeven as early as possible and make a profit. I mean, Q4 is normally our best quarter. If we have a good quarter, you may see us generate cash and break even in Q4 in 99acres depending on where we end up. But see, we would be very happy to break even next year in 99acres, but a lot will depend on competitive intensity. A lot would depend on whether some of the projects we are working on to improve our monetization or to increase our traffic yield the results we expect them to yield. So we don't want to be irrational. We would like the business to break even as early as possible, but we would not sacrifice growth. So if required, we would spend. If that's where the market is headed, then we will not want to give our market share either. So that's how we're thinking about this right now.

Sure. Second is, just in case a scenario, IT do not pick up meaningfully, let's say, in a hypothetical scenario, and non-IT continue to do well, what we are already seeing, right, can we still grow in double digit on the back of some improvement in pricing, plus non-IT being very good, given you're already investing in Tier 2, Tier 3 cities as well as what we were seeing in Naukri Gulf doing better? Can that happen or it will be very difficult?

No, we want -- so IT, right now, IT growth is perhaps minus 6%, 7%. Consultants are at minus 8%, 10%. We need to at least get IT back to base here. So we need to get to a situation where IT companies at least start growing a little bit over last year, at least 3%, 4%, 5% over the last year. So while they seem like they are distinct markets, they are somewhere also connected because at the junior level, talent supply is often fungible. People want jobs. If they're not able to get jobs in IT companies, they take up non-IT jobs. That's how it works. And so our sense right now is that IT attrition rates are low. So if there's a spike in attrition, of course, it benefits our business. Attrition rates are lower than perhaps they've ever been in the last 7, 8 years for IT companies. If they go back to even COVID levels, we'll get a double-digit growth. And if IT hiring picks up, it will also impact non-IT attrition in some businesses and in some companies, and that will also lead to a spike in non-IT growth, right? And actually, when companies start doing well and they look -- and things look good, it's actually good for our new products also. So they spend more money on branding, they will want to buy software, they will want to do more assessment. So somewhere, they're all connected. Our sense is that if IT companies recover, then our business will, of course, do very well, assuming, of course, that the economy continues to grow at whatever it is growing. And on the other hand, if IT continues to be very, very sluggish, it will be hard for us to hit even double-digit growth.

Next question is from Salil Desai.

Hitesh, I just want to make sure I understood Jeevansathi right. So based on all your responses, is it fair to assume that you figured out what the model is and this is the way to go? It's been about a year since you've been trying this...

Yes, yes, so we're not going back to the old model. This is the model we are continuing with. We are just sort of now trying to figure out how to monetize better because we went free, right? And therefore -- and as a result, we lost 30% of our revenue on top line. And now we're just sort of trying to figure out what should remain free, what should we start charging for, how can we sort of leverage the traffic we have to get 30% growth, 25% growth over last year. The team is experimenting with a bunch of things. Let's see how this plays out.

And here, again, if I understand this right, it is not something so difficult that the competition cannot replicate, right? So I mean, how are you seeing their response to...

No, they can replicate it, it's just that they will have to take a 30% dip in revenue.

Right. So you think it's a kind of psychological barrier to -- for somebody to...

And what is in it for them? See, we did this because we wanted more profiles. We wanted the network effect to sort of start working for us. We were a #3 player. So we were getting maybe only 50% of the profiles in the market, and we wanted to go to 70% or, say, 65%. They're already getting 70%, 80% of the profiles in the market, right, because they are leaders in the markets they operate. So is there -- and the cost benefit analysis may not necessarily work out for them.

Understood. Perfect. Great. Second question I had was the commitments that you have made to IEVF, I'm not sure if you disclosed this number, but how much of it is actually deployed and given to them?

To whom, sorry?

Venture fund.

Venture funds. AIFs.

Oh, AIFs.

The AIFs, there's a commitment, right? And there must be some drawdown. So is there a number where this is what you actually invested in then?

Do we make it public? The commitment was announced earlier. And there was -- there are 4 funds totally. One was INR 750 crores -- Fund 1 was INR 750 crores. Fund 2 was INR 150 million into whatever the exchange was then. And then there was a Capital 2B of INR 75 million. And then a third LP joined and committed some more money across all 3 funds. But if you look at what we have committed, it's INR 37.5 million plus INR 75 million plus INR 100 million.

INR 212.5 million.

And that is still a commitment. That is not what you would have actually...

Well, a lot of it is drawn down and some of it is made.

Okay. Great. And Sanjeev, again, going back to what you were talking about. So on one hand, there is -- the capital is becoming a little more scarce for start-ups to -- I mean, it's not too so easy to raise money. And then we are seeing that now the secondary markets seem to be a little more willing to take risks with loss-making start-ups. Do you think now the...

When you say secondary market, what do you mean?

I mean, public markets, I'm saying, not the -- public markets, sorry. So you think the route to IPO kind of shortens for most people that if the private markets aren't as attractive enough?

My submission is that after 2022, the market correction, while technically loss-making company can go public, I think that -- I'm doubtful as to how receptive public markets will be for loss-making companies, unless there's very clear visibility of profit in the next year or 2. But I'm not sure that people will be willing to really give loss-making companies the kind of valuations that these companies hope and expect. But I could be wrong. You are public market investors, I mean, you tell me, would you invest in a loss-making?

No. Like I said, there seems to be -- people seem to be more receptive now, right? There's one...

I think that window is there for a while, but with the correction in 2022, I'm not sure how many people will still be willing. I mean, if you look at the sort of rise in the share price of Zomato and a PolicyBazaar, in the last 6, 8 months, 10 months, 12 months, it's coincided with the improvement on the bottom line. Maybe there's a cause and effect there.

Vivek from AMBIT Capital is back.

Just following up on Salil's questions. So Sanjeev, it's been almost 2 years since the new money was earmarked for the AIFs. At that time, you had said that you will deploy the funds in 3 years. Has anything changed? So will you end up deploying?

We are investing a lot slower than we initially went. We are writing smaller first checks. We are taking our time. We are investing a slightly lower valuation than earlier. And that, I think, is consistent with market conditions. And we think it's a smart thing to do or more prudent thing to do. So yes, it may not happen in 3 years, it may take a little longer. But listen, when you say 3 years deployment, it meant we will give our first checks into company in 3 years. Obviously, the follow-on checks will go in over the next 4, 5, 6 years.

Okay. And when you said that, you meant that the follow-on checks would also be coming from the same AIFs? Or what would that entail?

Yes, yes, that's right, same AIFs. We don't want any conflict of interest with having 2 different funds under our stable investing in the same company.

Understood, sir. And just one more follow-up. Recently, the government permitted overseas listings in GIFT City. Do you think that will be a game-changer in any way as far as Indian start-ups are concerned in any sector or any segment?

Too early to say. Too early to say, but what has emerged is that while there was a lot of clamor, say, 4, 5 years ago, to be allowed to list in the U.S., even though you are domiciled in India, what has seemed to have emerged is that the Indian markets have been giving better IPOs to Indian start-ups than the U.S. markets because I think the threshold turnover size valuation requirement for U.S. listings is much higher than India. It's harder to get research coverage. And therefore, I think only one company went public in the U.S. as compared to, I think, more than a dozen in India. So it's pretty clearly clear that even if you allow overseas listings, Indian start-ups might prefer listings in India because that's where the investors are for their companies.

Okay. That's a great perspective. And do you...

And if you list through GIFT City, I think the rules are such that you are cutting out the Indian investors. I think so, I'm not sure. And if you do that, I think you may have a bigger challenge getting your IPO to succeed.

Okay. Understood. And Sanjeev, you had mentioned about 5 companies that you had invested in during the 2016 to '19 period. Have any of them...

There are more than 5, but there are -- the promising ones are Shipsy, Adda247, ShopKirana, a couple of others. But yes, look, there will be a while before they sort of get to go public or make profit.

Thanks, Vivek. Vivek, this was the last question for the day.

Okay. So thanks, everyone. On behalf of Info Edge, we conclude this conference. You may disconnect your lines now.

Thank you, everyone. Have a great evening.

Thank you.

Thank you, everyone.

Bye.