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

Good evening, everyone. I'm Anand Bansal, joined today by my colleague, Vineet Ranjan. Thank you for joining us. We'll wait for a couple of minutes to allow participants to log in. Over to you to get us started.

Thank you, Anand. Good evening, everyone. Welcome to Info Edge (India) Limited Earnings Conference Call for Quarter 1 FY '27. Joining us today from management, we have Mr. Sanjeev Bikhchandani, Founder and Vice Chairman; Mr. Hitesh Oberoi, Corp Promoter and Managing Director; and Mr. Ambarish Raghuvanshi, Chief Financial Officer. Before we begin, I would like to draw you our attention to a retail disclaimer included in the presentation for good order sake. Kindly note that this conference call is being recorded. [Operator Instructions] Now I'll hand over to Hitesh for his opening remarks. Thank you, and over to you, Hitesh.

Thank you, Vineet, and very good evening to all of you, and thank you for joining us for Info Edge earnings call for the first quarter of FY '27. Before I cover the individual businesses, let me give you our overall read of the quarter. This was a better quarter than the ones we saw through FY '26. Stand-alone billings grew by over 14%, driven primarily by recruitment and 99acres, our two largest businesses, which together account for around 90% of our billings. Both businesses delivered healthy growth during the quarter, while -- given at was profitable, and Shiksha remained under pressure as user behavior continues to evolve. With that backdrop, let me briefly touch upon the financials before discussing each business in more detail. The detailed numbers are available in the earnings deck. At the stand-alone InfoAge level, revenue grew 12% Y-o-Y to INR 824 crores. Operating profit grew 33% to INR 334 crores. And -- at an operating margin, PBT margin of over 40%. Cash generated from operations grew by 25% to INR 225 crores and cash balance at the end of Q1 was INR 5,034 crores. Now let's cover each business in a little more detail. Starting with the Recruitment business. Recruitment billings grew by over 17% in Q1. Revenue grew by 13%. Operating profit grew by 25% at an operating PBT margin of 58%. Cash from operations grew by 36%. As discussed in the previous quarter as well, the quarterly billings can be influenced by the timing of customer renewals. Some clients choose to renew earlier by others defer renewals into subsequent quarters. Adjusting for these timing differences, we estimate the underlying billings growth in Q1 at around 15%, representing a relatively better outcome than the growth trajectory seen over the previous few quarters. Now what drove this improvement. We believe the following key themes stood out in the recruitment business this quarter. one, growth in our core India B2B recruitment business improved during the quarter, supported by better enterprise renewal rates. Hiring activity remained largely stable, led primarily by replacement hiring with some improvement in incremental hiring. The Premium segment continued to perform relatively better than the broader market. The improvement was broad-based rather than concentrated in any one segment. Tech, IT and BPM grew by 15%, TCCs by 31% and other sectors combined grew by 12%, while growth of the Recruitment Consultants remained under pressure at 1%. Billings growth was supported by both volume improvement and pricing improvements. Additionally, newer monetization levers such as AI REX, talent pulls and other value-added offerings contributed to significantly higher ARPU and expanded our revenue opportunity per customer. Job Seeker, the Job Seeker business, Naukri360, continued to outperform with billings growing by over 35%. The paid subscribers as a percentage of monthly active users improved from 1.3% to 2.6% over the last 6 quarters, supported by increasing adoption of our AI-powered offerings, such as our Job Seeker agent, new, our AI mock interview offerings and our AR resume builder offerings. The business also operated at a healthy PBT margin of 63%, aided by the increasing share of self-serve offerings. Jobhai, although operating on a much smaller base, doubled its revenue while maintaining a similar level of investment. We continue to see encouraging traction in this business. Finally, NaukriGulf grew by 12%, below the 20% growth trajectory it had maintained before the recent geopolitical disruptions in the Middle East. We believe the long-term opportunity remains intact. Over the past few years, the business has improved from being a breakeven business to operating margins of over 35%, and we believe there is an opportunity for growth to improve once the regional environment stabilizes. Platform activity in Naukri remained healthy. Our database now contains approximately 118 million resumes with over 25,000 new profiles being added every day, alongside 850,000 daily profile modifications and millions of other behavior interactions across the platform. These data assets remain one of our biggest competitive advantages. Every new resume, every profile update and user interaction on both the job seekers and side and the recruiter side improves our matching capabilities, recommendations and AI models while further strengthening the network effects of the platform. AI is now deeply embedded across the recruitment platform. There is improving candidate matching and recommendations, recruiter productivity and customer experience while also enabling new workflows such as JD creation and CV summarization. AI is also creating new monetization opportunities through products such as and Talent Pulse. Commercial adoption of our AI [indiscernible] offering for recruiters continues to accelerate. As of the end of June, AI REX was live across more than 4,000 enterprise customers and recruitment firms with over 10% already converted into paying customers. adoptions pan sectors, including IT, BFSI, sales, finance, health care, BPO and core engineering. Our AI powered talent intelligence, talent and salary intelligence platform, talent Pulse now serves more than 600 paid customers, ranging from large enterprises to smaller organizations. Encouraged by the early traction, we are now scaling both AI REX and Talent several thousand more customers over the next few quarters. The Naukri platform is now steadily evolving from being a job bot into a more comprehensive recruitment operating ecosystem, spanning sourcing solutions across the premium, mid-market and value segments salary and talent planning tools, AI recruiter productivity capabilities, employer branding, assisted hiring services and assessments. Our growth strategy is built around hiring volumes, our share of hiring and our revenue per higher. Hiring volumes depend on the broader macroeconomic environment. So our focus remains on expanding market share and revenue per hire. In the Premium segment, we continue to deepen our presence through the Naukri top-tier PremiumX, Iimjobs and Hirist offerings. We believe there is meaningful headroom to monetize these further since several capabilities are currently offered at no additional cost. We are also expanding employer branding solutions to increase monetizations within existing relationships. In the mid-market segment, where we are a clear leader, our focus is on improving recruiter productivity through AI-led sourcing automation while expanding adjacent offerings such as job marketing, talent intelligence, data products and assisted hiring services. Jobhai remains a medium-term strategic opportunity in the value segment. We are building a simple AI-enabled platform to serve three large and growing segments, SMEs enterprises hiring full-time and gig workers and recruitment firms with the aim of creating a scalable marketplace for India's value hiring ecosystem. On the Job Seeker side, we see a similar evolution from job search and discovery towards a broader set of offerings including career insights, personalized advice, upskilling and interview preparation, delivered through Naukri360 or [indiscernible] and AI-powered agents such as [indiscernible], these self-serve AI-enabled offerings typically carry high margins and acquisition [indiscernible] should help us expand further into upskilling. We believe this is a meaningful opportunity enabled by AI capabilities and data assets. More broadly, the drivers of growth in our B2B recruitment business continue to diversify. Organic hiring growth and pricing remain important, but AI REX, TalentPulse, employer branding and Premium offerings are steadily becoming incremental contributors. Over time, these levers should help us grow faster than the underlying heating markets. Moving over to the real estate segment. 99acres delivered a strong quarter, validating the investments we have made over the past 18 to 24 months. Billings grew by around 17%. Revenue also increased by 17% operating PBT losses reduced significantly by 89% and the business moved close to breakeven during the quarter. We continued to strengthen our leadership position across every key operating metric. Consumer traffic leadership remained firmly impact. Intact, with [indiscernible] share at 49%, app time share at 55% and IOS time shares reaching 69% as per similar web. App traffic need their strong growth trajectory growing 38% year-on-year. On the supply side, live retail and rental listings from brokers grew 30% year-on-year. Live new project listings increased 27% year-on-year, while owner listings grew 23% year-on-year during the quarter. Strong traffic leadership, expanding supply and platform experience improvements translated into higher customer engagement, property inquiries across all categories combined grew by more than 38% year-on-year, reflecting healthy demand and improving marketplace activity. AI-powered recommendations, enhanced property discovery through our proprietary data-driven discovery engine. Further, conversational AI simplifies listing creation of the platform. Perhaps the most incurring aspect of the quarter was that we delivered this role while optimizing our overall expenses, including marketing investments, strong billings growth alongside disciplined marketing spend, demonstrates the benefit of market leadership and gives us greater confidence that 99acres is on the right path towards sustainable profitability and growth. In the Real Estate business, we continue to see a significant opportunity in the new project segment, which we estimate to be over INR 5,000 crore market. Expanding our presence in this segment remains an important strategic priority in the medium term. 99acres shots which we launched in a last year is an important initiative in this journey. Early customer engagement gives us confidence of its utility to buyers. We now plan to expand the offering to more cities. Through FY '26, we deliberately invested behind the business to convert a strong competitive position into clear market leadership. Much of that investment phase is now behind us and the business is beginning to demonstrate meaningful operating leverage. With leadership established across traffic, supply and customer engagement, significant headroom for monetization and disciplined marketing investment, we believe 99acres is well positioned to sustain healthy growth while becoming cash relative during FY '27. Moving over to the Matchmaking segment. Our Matchmaking portfolio comprising Jeevansathi and [indiscernible] delivered billings growth of 20% year-on-year. Jeevansathi grew by 14%, while [indiscernible] continued its strong momentum with billings growth of 44%, the portfolio also operated at near breakeven on an operating PBT basis. We continue to hold more than 45% profile share in the end-speaking markets and still lead those markets on users logged in daily. The business continued to focus on driving more monetization levers on the platform by experimenting with new paywalls and launching new offerings to drive value, convenience and affordability. The business made some improvements in its recommendation engines through AI investments and we'll continue to make them for the foreseeable future. [indiscernible] and Arike continue to grow aggressively in the quarter, driven by better conversions and the launch of new value propositions for users. Our focus remains on strengthening our position where we already did and improving monetization. Moving on to the Shiksha business. Shiksha's billings declined by 23%. Revenue declined by 12%, and the business managed to maintain operating PBT profitability. Pay-driven changes in service behavior have been affecting Shiksha's traffic for several quarters, in line with expectations. This is translating into a billing impact as reduced refers traffic from Google affected client delivery outcomes. We expect this had these headwinds to persist over the near term. To navigate this and sustained growth, Shiksha is investing in domestic accounting capabilities and AI-driven voice bots to scale and complement these efforts. As adoption and monetization of these services improve, we expect them to offset the ALT impact progressively. The study of road segments saw softness in certain markets, particularly the U.S. and Canada, driven by wallet preferences and broader macro factors in these geographies. We are actively broadening our destination coverage with increased focus in the U.K., UAE and Continental Europe to better align with where student demand is moving. A few points related to AI. I've already covered business specific use cases of AI. At a company level, AI has also changing how we operate, driving efficiencies of 15% to 30% across some functions. It is increasingly being used across marketing, pricing, eat qualification, telecalling and customer engagement while accelerating content creation, experimentation and product development. One question we are often asked is whether AI posted a disintermediation risk to our business. In our view, it does not across recruitment, real estate and matchmaking. We built strong positions over many years. We have proprietary data from both sides of the marketplace, millions of user attractions every day and over two decades of dominate, we believe these trends become even more valuable in an AI-driven world. Take Naukri as an example, we not only try to understand what a job seeker is looking for, but also what an employer needs, how urgent the requirement is and which candidates are most relevant. That understanding comes from years of proprietary data and continues to earning and cannot be replicated easily. In fact, it improves as the platform gets used more and more. Shiksha is different. The challenge there was never our matching capability. A large part of user traffic came through a distribution channel that we did not own. As AI change our users actual information that dependency became a disadvantage. That is an important distinction, where we own both side to marketplace, AI strengthens our business by improving matching recommendations and customer outcomes. When we lie more on third-party distribution, AI revenue changes and user discovery and search behavior created headwinds for the business. This is how we think about AI risk across our portfolio. This also explains why we have continued to increase our investments in AI over the last 2 years. We have invested across infrastructure, talent and tools because we believe AI enhances the value of our data products and marketplace positions. Finally, our monetization, our approach is straightforward. Better AI-driven outcomes, improve customer experience, which drives adoption and overtime customer spending. In most cases, we are not charging separately for AI. We are using it to make our core products more. Where AI sold as a stand-alone offering such as AI REX enterprise sales cycles are naturally longer. We remain focused on delivering strong customer outcomes and the commercial traction we are seeing gives us confidence that we are moving in the right direction. Before I took a brief word on our investment portfolio, we continue to build a diversified portfolio of investment across artificial intelligence, deep tech and consumer tech. So far, we have invested over 135 companies with an invested value of approximately INR 5,000 crores through our balance sheet directly or through our AIF. The portfolio is performing well. A few companies have already listed on public markets and several others have gone on to raise follow-on funding from credible external investors. Our approach has been to identify a promising founders early invest ahead of consensus and stay invested for the long run rather than seeking quick exits. We believe this portfolio built predominantly over the last 5 or 6 years, will continue to create meaningful value for our shareholders over the medium to long term. With that, I'll stop, and we are now happy to take your questions.

Anand, we can start with questions. I guess we already have a few questions in the queue.

Our first question is from Sachin in Bank of America.

I have a few questions. First question is on -- when we look at the 13% Y-o-Y revenue growth, roughly 8% is coming on the back of higher realizations and 4% led by increase in billing customers. So I wanted to get a bit more clarity out of that. How much of that increase in realization is because, let's say, there is more hiring at the higher end? And how much is because of new initiatives like AIRx and others, which are sort of leading to ARPU increase. And in terms of, let's say, increase 4% increase in the billings customer, -- and I do understand how the overall billings growth has increased, but it would be great to have a sort of a broad understanding how much of that is largely led by GCC, how much is IT and how much is non-IT?

See, at a very high level about I think 1/3 of our revenue growth you could attribute to more renewals and higher volume from certain segments. Of course, premium hiring is growing at a faster clip. So premium CV views at Naukri are growing at more than 25%, but on a small base. So -- but we don't monetize them separately. So we monetize our database offering. But of course, we try and estimate the value we're delivering to all our customers. So Premium CV views on Naukri are growing at a faster -- much faster than overall volume growth. But overall, we saw higher enterprise renewals. We got some pricing growth, and we estimate about maybe 1/3 of our growth was a result of our newer offerings, which we are pushing more aggressively in the market like AI Rx and TalentPulse and so on. Was I able to answer -- now as far as your GCC and IT and non-IT. So GCC billing growth was 31% last quarter. I think I gave out the number IT companies, revenue from -- billing from IT companies grew by 15%, tech IT and BPM and the other sectors -- non-IT sectors combined grew by 12%. Growth -- recruitment consultants were flattish. So about 1/4 of our revenue, slightly more than 1/4 of our revenue comes from recruitment firms. And that revenue -- that billing growth there with them was like just 1%.

Pretty clear. Second question is on the, let's say, the outlook for the billings growth. Now from what you're seeing, these trends appear to be sustainable, which is premium hiring picking up GCC and IT growth remaining strong. So is it fair to say that gone are the days of billings growth of 10% to 11%, but directionally, no real reason why billings growth increase? And I'm saying that because this as a team is also seeing in other markets like Japan and the U.S. where we do see premium hiring picking up and on the back of it, the incremental realization of ARPUs in that market are also moving up.

The joker in the pack is the middle segment. A large chunk of our revenue comes from mid-tier hiring. And their volume growth has not been what we would want it to be. Of course, we are seeing more Premium hiring. There's a lot of hiring happening in pockets, the AI, machine learning, data science, data engineering, higher intelligent demand. And there are early signs, early signs but very, very early signs. I don't know if they will -- if the market turning a little bit, okay? Now whether we'll grow at 10% or 15% or 8%, I don't know, going forward. We had one good quarter. We are very bullish on our new offerings. So at least the initial response in the market seems to be very encouraging. We've managed to sell AI REX to over 400 clients in Q1. In July, we were able to sell to another maybe 300-odd customers. So AI REX penetration is growing at a rapid pace. And of course -- but these are early days. Customers are going to try it out. If they like it, they'll come back and buy more. They don't like it. They may not renew. So early days, but the initial response is encouraging. We are also happy with the response we're getting for our TalentPulse offering and our SalaryPulse offering. So on the new products, we are more confident than we were 6 months ago. Premium hiring again continues to grow at a rapid clip. But Premium hiring in terms of volume is a very small fraction of the hiring which happened on Naukri, but it's growing at like 25%, 30%, and that's where the market also seems to be moving to -- so we are confident. And we are not monetizing all our assets very aggressively right now. So a lot of the stuff we still give out for free on Iimjobs, Hirist, Premium X tool is also free, for example, right now. So if this trend continues and if you continue to be in ground, then there will be more modern monetization opportunities on the premium fronting forward. Value I think, again, we are very confident because -- but it's a small job is still small for us, but it's doubling year-on-year. So again, from a medium-term standpoint, I think this will become a reasonable sort of business for us. Middle segment is where there's some volume pressure, right? So let's see how that plays out. Consultants, again, were flattish for us. But we've launched some new offerings for consultants as well. So let's see what kind of response we get to those offerings. Now if they -- GCC they continue to sort of hire and there's a reasonable activity on that front. And there -- our sense is that over time, more and more high values, you also moved to India.

Got it. Hitesh, you did mention 1/3 of your growth is coming from new initiatives. And you also mentioned that these are all incremental. So is it fair to say that incremental EBITDA margins on all these businesses should be high and hence, directional margins should start improving in the Naukri business?

See, we are still investing very aggressively in AI. So we don't want to slow down our investments in AI. So a lot will depend on -- if you see if customers like these offerings and if they come back for more and growth accelerates, margins should get better. Our investments in AI will continue. So let's hope that plays out. On the Job Seeker side also, we've seen a massive -- we've already seen a massive improvement in margins. So our Job Seeker business used to have an EBITDA margin of 35%, 40%. And and so grow at 18%, 20% for the last couple of quarters now, it's been growing at 35%. And the EBITDA margins have improved to 62%, mostly because of two reasons: one, because of our AI offerings, new AI offerings. And two, because we made the model more self-serve. So on the Job seeker front, also the Job Seeker front, actually, a lot of the revenue Actually, our revenue run rate on the Job Seeker side is closer to INR 7 crores, INR 8 crores a month now.

And last question is on 99acres. I completely get your point that if this is a business with a 50% plus traffic market share directly margin should improve. But okay, we have seen some fluctuations in PBT. Last quarter, it was profitable this quarter loss-making. Anything to read too much into the 1Q PBT for 99acres? Is it more seasonal? And should directionally margins be strong going ahead?

So see, we see, last quarter, we -- our billing growth was was, I think, flattish or low single digit. And we've been grappling with some internal sales issues. I think slowly 1 by one, we are fixing them. So this last quarter, we saw 17% billing growth, costs were kept under control. Now our, of course, our internal effort is to try and accelerate billing growth. So see if we can push billing growth beyond 20%, let's see when that happens. And also because there is less competitive activity, our -- one of our competitors' housing was sold or recently, and they were burning INR 250 crores a year. We are hoping that they'll try and cut their burn. And so there's less pressure on cost for that. So now if you are able to continue to grow revenue at 18%, 20% per annum or more. And if you are able to -- and if there's not enough -- there's not a a lot of pressure from competition and cost should also stay under control.

Sachin, just to clarify, last quarter profit that you're talking about, there was a one-off accounting adjustment which led to the profit. So last quarter, profit numbers was INR 3 crores and there was an accounting adjustment of INR 20 crores. If you take that out, the losses were actually INR 17 crores. That's the right number to look at. So last quarter, business delivered INR 17 crore loss that sequentially became minus INR 2 crore this quarter.

Yes.

Next question from Vivek from AMBIT Capital.

My first question is on the 15% normalized number you mentioned. Does it also take into account the favorable base of 1Q FY '26 where you had, at that time, cited that deal closures were delayed because of regional tensions? So that is just from a bookkeeping perspective? And related one is on -- you have a GCC share and growth mentioned in two different slides of your investor deck. Slide 9 and Slide 36. So Slide 9 mentions billing growth of 31%. And the data pack, which is mentions the GCC share in billing distribution jumping sharply to 23% from 17%, 18%. So if I look at the disclosure in the second part, which is Slide 36, it seems that your billing has grown from GCCs at 50% plus rate. If you can explain the difference to us, it will be very helpful. Those are my bookkeeping ones, and then I have another two questions, which I'll ask after you answer these.

Hitesh, maybe I can take this one. please. -- so on the GCC, if you recall, last quarter, the GCC growth was minus 1% that we had announced. At that time, we had mentioned that there are a few large DCCs who deferred with renewal that time that did not happen by March. But eventually, that renewal happened in April. So therefore, in quarter 1, you see a higher growth number. And therefore, you see a higher -- so 31% is the growth number on Slide 9 that you see. And Slide 36, 23% that you see is the billing distribution, right? So that's the 2.5% one-off timing difference that Hitesh called out in his script earlier. So if you normalize for that, then GCC broadly been growing 15%, 17% and is around 17% to 18% of all distribution.

Okay. And on the first part related to the last year's base being benign. Was that adjusted when you highlighted the 15% number?

So a quarter, there are some clients who renew early there are always some clients who defer renewal, and there are some clients who will come in early. So this is -- this happens every quarter, right? So normalizing for that net trend, what was the difference? That is what we called out. So that exactly to your point, it takes into account what happened last year in the base.

Right. Just to drill down a bit on the AI monetization strategy. I think you mentioned that 1/3 of your incremental growth was driven by some of these new initiatives, AIX being 1 of them, perhaps most significant of them. So just Hitesh to understand this better. Our clients aware that they are paying separately for AIRx or is it bundled with the code?

No, there's -- we charge a mandate. So we are selling Rx at a rate card of INR 3,500 per mandate to recruit two companies, and we recently launched AI REX constant as well, which is at a lower price point. So yes, clients are buying AI REX separately in many cases. I mean, they know what they're buying and they're paying for it separately.

Okay. So just to understand the sales architecture here, are the same salespeople who handle the client billing for your respect. Are they the ones who have the conversation for EIX as well? Or is architecture any different?

No, it's the same sales team, but we have a team of specialists sometimes to support that.

Okay. So you are convinced that there is no cannibalization, right? Because previously, we saw that you had a product suite called -- Nuakri RMS. And then that's our initial focus, but then it faded later. So are you confident that this is ...

It's still very early days. So a lot of the sales right now are small sales and we see first an how we went to market. We have a free trial. So at the beginning of the quarter, we rolled out a free trial to 4,000 customers on our platform, and we've got some usage going. And then we started following up with customers who are using it. And then we went to them and said, listen, maybe to, of course, we went to some of them and also we went to clients over due for renewal and said this is our new offering. And this is our agentic offering, and this can help you save time, et cetera. So it may be a good idea for you will try this out. Now enough clients -- now out of the 4,000 free trials to 400 sort of beta, something per AI REX. Now it is possible that there was some cannibalization. Hard for me to say what exactly happened on the field. But most of them are aware that they're buying AI REX, and they're paying for them paying for it separately right now. And in most cases, where we're selling AI REX, we are able to get upgrades right now. That's what happened in Q1. Now in Q2, we've rolled it out for 10,000 clients, the free trial. And in July, we were -- we saw a further increase in AI REX sales. So let's see how this plays out. There could be some cannibalization, I'm not saying because like I said, the consultants were flattish last quarter, many consultants downgraded volume growth is actually the biggest concern with consultants right now because what happens in a slow market is clients in-source don't outsource to consultants. And consultants business gets hit first because they're the most expensive to hire. Now it is possible that in many cases, some consultants would have downgraded. But because of AI REX, they are at least giving us what they gave us last year or giving us a little more than last year. So -- but there is genuine demand and usage and trend for the product right now.

All right. That commentary helps. My last question is on the TAM that you see for candidate offerings and premium hiring. How big are you in terms of percentage market share within these two subsegments? Who are you competing with right now? And how big do you think these segments can become for you, let's say, in 3 years, 5 years if you execute well?

So on the Job Seeker side, we don't know. I mean the frankly. We've been surprised by the growth that we've got ourselves. So this business used to for the longest time, grew at 18%, 20% per year for the last couple of quarters, it's grown at over 30% and growth seems to be accelerating right now. And one reason for that is we made it more self-serve. And the second reason for that is our AI offerings. So our sense is, previously, maybe 1%, 1.5% of what people are -- or monthly active users on Naukri used to pay for some paid offering, that number has, over the last few quarters moved to around 2.5%. So there is still -- technically, there is still a lot of headroom for growth. And so let's see, we are also excited about upscaling and we've completed our acquisition of [indiscernible] just some time back. We believe in this market, where so much is changing and AI are walling very rapidly, everyone needs to upskill, but not everybody has a time to go to school. And nobody wants to take a lot of time off from work. So if we are able to launch -- my [indiscernible] has been doing a good -- has done a good job of launching long-form courses for working professionals. We believe even short-form courses may work. So we are trying to see what else we can do in upskilling. And at a very high level, we see I did make this point about Naukri transforming. It used to be a job bot and the job search platform. We are making -- on the recruiter side, we are doing a whole bunch of things to look like the recruitment operating system for all companies. And on the Jobseeker side also, we want to be seen as a career platform. So we want to help jobseekers understand what skills they should be acquiring, how they should be preparing for interviews, how they should create their resume, what possible career trajectories that career could take. Now a lot of this is now possible because of our enhanced AI data capabilities. We have data, nobody else has, right? And if you can leverage the data and use it to add value to job seekers, nothing like it. And some of these services will be free -- some stuff will be free, some will be paid for. So that's where we see Naukri going. So I don't know there's -- depending on how we execute, this could be a very large market. And bit on the recruiter side. Like our AI REX offering is positioning -- positioned is turning recruiters into super recruiters. So what used to take a few days to do earlier can be done within 24 hours with the AI REX and that can help recruiters release recruiter time to do other things, more value-added stuff. Similarly, our salary and talent planning tools are being used by a lot of companies for salary benchmarking and talent planning. Now again, this is data only we have, there's [indiscernible] else has. So only we can offer these tools. and these products to customers. Now -- so we already have about close to 600, 700 customers for our TalentPulse and Salary Pulse offering. And the response is very encouraging. So basically, we are using AI to offer new products to innovate to offer not just improve features and functionalities and on our platform, which is -- and not just to improve our own productivity. But now we are beginning to innovate and offer products which were not possible to offer it without AI and which can create new revenue streams for us and help us grow our TAM.

Next question from Vijit Jain, from Citi.

My question, similar to what you just mentioned a little while ago on GCC's underlying growth rate in that mid- to high teens, Y-o-Y, if you strip out all the various adjustments, where would you say Tech-IT and BPM is? Because that also seems to have accelerated pretty meaningfully here, right, Y-o-Y. So would be good to know where that is when you strip out all the timing-related issues there? That's my first question, and then I'll just come back for 1 more.

Vineet, do you want to take that?

Yes. So there's nothing material to call out in that segment. It was largely in the GCC that I already called out. So I don't think there's much to read into the IT segment.

Got it. And then related to all the comments that Hitesh, you made on AI REX, it looks to me like if I understand it right, there is a contribution from AI REX that you have on direct monetization, which is a mandate, that is still relatively early, but you are seeing pretty notable impact of it in your ARR retention or better conversion of existing customers. And that part is what is driving the 1/3 extra growth that you...

That along lot with Talent Pulse, and some employment branding offerings like [indiscernible], et cetera.

Got it. Perfect. And my last question is on the B2C side. So two things that you mentioned here on that growth is predominantly online and that you've gotten your paid conversions up to 2.5%. And so my question is twofold. In general a, because it is predominantly online, so most of the growth here, even the acceleration that you see right now should be directly flowing through into the margins. So that margin, 63% can go up to even 80% in that sense?

So we've already seen an improvement in our Job Seeker business margins. We used to be operated at an EBITDA margin of 35%, 40% until about a year back. And our operating margin in that business, EBITDA margin is close to 60%, by 65% last quarter.

Got it. And in general, where can that conversion go, do you need new products for it to go up to 5% or 10%, you think or -- as you mentioned acceleration right? I'm just wondering where ...

Yes. I don't know partly it could also be driven by the fact that the job market is a little tight right now. and partly is because of our new offerings and parties to call self-serve and therefore price points right, at these are able to become customers. And we continue to believe that we can enhance our offering suite. So upskilling, I mentioned that is 1 other sort of area we are sort of experimenting with offering short-form short 1-month upskilling sort of course is at a low price point and [ $5,000, $7,000, ] -- but early days, and codingninjas help us sort of do that. So -- and we are also sort of building some career advisory and career planning offerings for job seekers. Now we'll figure out how much we should give away for free [indiscernible] we should charge what we should charge for over time. But yes, we won't want to offer more and more services to job seeker overtime.

Correct. So Hitesh, your comment on coding -- in 1 sense, does that mean that some of these short-form lessons and offerings, become introduced to the candidate directly on Naukri platform, that may not have been the case so far?

Yes. Yes.

Next question from Gaurav from Axis Capital.

I just wanted to again double like or the Naukri billing growth. So from -- so basically, there are 3 elements of this growth rate. There is one your volume growth, right, from higher billing customers. Then there is premiumization, which is essentially either through AI REX more premium hiring. And then there is obviously an absolute price increase, which you would have probably taken, right? So if I can just see that your build customer growth is roughly around 5%. And you're basically mentioning that AI REX is still relatively -- it started monetization, I think so in the mid to -- during the quarter sometime, so it will still be relatively less. So maybe the premiumization is more from a higher, better, but more premium sort of hiring activity. And then the price hike will be the remaining sort of 5-ish percent. So, is this sort of math roughly the way -- is this math correct from what I just mentioned?

Yes, Vineet, do you want to say something?

Yes, I don't think one should look at this customer growth of 4%, 5% direct contribution to billings because generally, new customers you add necessarily -- they don't sign up on the same ARPU. The new customers that we are adding, so they generally are in Tier 2, Tier 3 markets, more on the SMB side. and their ARPUs are lower than what other customers pay. So that is not a material contributor to billings growth. The way we will look at it is 1/3 broadly, like I mentioned, came from volume. A small subset of that is customer account growth, right? Another 1/3 came from price increase. And third is new offerings, which Hitesh already highlighted. That's how one should look at the mix of the group.

New offerings are not just AI REX, TalentPulse, branding offerings, 3 or 4 of them.

And this is assuming that 15% adjusted gross number, not the 17%. And so now the next point is that AI REX the salience will only keep increasing. So we should expect more support from this segment going into, say, some quarters on the billing growth is -- would that be a fair statement to make?

Yes, I really want to see the thing we are worried about is volume growth because volume growth is a function of net hiring in the economy. And if, for some reason, hiring slows down, then volume growth takes it. So AI REX, Talentpulse, at least for some time, there is a lot of headroom because we have just started selling them into the market. right? So as we get better at setting them, if the products are successful, and you know only after one renewal cycle, they're very successful or not. But in the beginning, I'm sure a lot of customers will want try them out. So we got a pricing model in place now. And at this price point and then through this with this go-to-market motion, it seems to be sick. So there, we'll continue to do well for some time at least. Pricing -- premium hiring will continue because we believe that in the economy, we will see more premium hiring going forward. There's a -- that's the trend. That's a shift. Every company after a while, we want to hire a talent machine learning talent, coders who get AI, content creators who get AI, marketers who get AI, HR Managers who get AI. I think that is going to -- that trend is only going to accelerate. They may hire fewer people, but they will add better quality people over time, and that should help us where their wages will be much higher. Now volume growth is where the real challenges. Will companies continue to hire as many people as earlier. Now that is going to be a function of two things, in my view. One is whether the economy can continue to grow fast. -- because if the economy continues to grow fast, it will create jobs. And two, whether more and more jobs get outsourced with GCC in India, right? Right now, it looks like GCCs are growing faster. They're adding more jobs than IT services companies, net jobs. And if that trend continues, it should benefit us. And again, GCC is also do more premium hiring than IT services companies.

And how should we -- obviously, the next year is -- it's just a lot of bank for next year. But assuming that the volume growth sort of sustains that this would you be comfortable taking another quantum of this hike or the next hike will be some sort of predicated on what happened to the volume growth in the coming few quarters?

See, we are working on a bunch of things. Now things will become clearer with time. It will -- a lot will depend on what kind of response we get from our customers and what kind of response are new offerings. For example, if our new offering are very successful. And if they actually -- if recruiters see a lot of value in them and if they feel, then over time, our take rate should go up.