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Edited Transcript of NAUKRI.NSE earnings conference call or presentation 12-Nov-19 12:00pm GMT

Q2 2020 Info Edge (India) Ltd Earnings Call

New Delhi Nov 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Info Edge (India) Ltd earnings conference call or presentation Tuesday, November 12, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Chintan Arvind Thakkar

Info Edge (India) Limited - CFO & Whole Time Director

* Hitesh Oberoi

Info Edge (India) Limited - Co-Promoter, MD, CEO & Director

* Sanjeev Bikhchandani

Info Edge (India) Limited - Founder & Executive Vice Chairman

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Conference Call Participants

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* Devvrat Himatsingka;Bajoria Financial Services Pvt Ltd.,Direct Equity Portfolio Manager

* Dheeresh Pathak

Goldman Sachs Asset Management (India) Private Limited - Executive Director

* Kuldeep Koul

ICICI Securities Limited, Research Division - Senior Research Analyst

* Kunal Sharma;Perfect Research;Equity Research Analyst

* Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst

* Mukul Garg

Haitong International Research Limited - Research Analyst

* Parag Gupta

Morgan Stanley, Research Division - Executive Director

* Prince Poddar

JM Financial Institutional Securities Limited, Research Division - Analyst

* Ritesh Bhagwati;Rockstud Capital LLP;Assistant Vice President

* Shaleen Kumar

UBS Investment Bank, Research Division - Associate Director and Analyst

* Vimal Gohil;Union Mutual Fund;Research Analyst

* Vivekanand Subbaraman

AMBIT Capital Private Limited, Research Division - Media Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day and welcome to the Info Edge Limited Q2 FY '20 Results Conference Call. Joining us on the call today are Mr. Hitesh Oberoi, Managing Director and CEO; Mr. Chintan Thakkar, CFO; and Mr. Sanjeev Bikhchandani, Vice Chairman. (Operator Instructions)

I would now like to hand the conference over to Mr. Hitesh Oberoi. Thank you, and over to you, sir.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [2]

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Thank you, and a very happy Gurpurb to everybody. Good evening, and welcome to our second quarter FY '19/'20 results conference call. As always, we should -- we will start with the overall financials and then cover each business financials in more details.

As you would recall, we had briefed you about the application of Ind AS 116 to our financials in our last quarter results call. For the sake of comparison with our last year's financials, we would be calling out the respective numbers without adjusting for IND-AS impact in this call as well.

The audited financial statements filed and the other schedule on segmental billing, revenue, et cetera, along with the data sheet, have been uploaded on our website, www.infoedge.in.

So let's move on to the stand-alone financials. Billings in Q2 were INR 300.5 crores, up 15.3% year-on-year. Revenue in Q2 was INR 316.6 crores, up 19.5% year-on-year. Operating expenses, excluding depreciation for the quarter were INR 217.3 crores, up 19.1% year-on-year. And operating expenses readjusted for Ind AS 116 stood at INR 223.5 crores, up 22.5% year-on-year.

Operating EBITDA stood at INR 99.3 crores versus INR 82.5 crores last year, having increased 20.3% year-on-year, and operating EBITDA readjusted for Ind AS 116 stood at INR 93.1 crores, up 12.9% year-on-year.

Operating EBITDA margin for the quarter stood at 31.4%. Operating EBITDA readjusted for Ind AS 116 stood at 29.4%, down from 31.1% last year. And EBITDA readjusted for ESOP noncash charges and Ind AS 116 stood at INR 98.6 crores versus INR 83.9 crores in Q2 of last financial year. EBITDA margin readjusted for ESOP and Ind AS 116 for the quarter stood at 31.1%. Cash EBITDA for the quarter stood at INR 82.5 -- INR 82.4 crores, up INR 3.6 crores -- up 3.6% year-on-year.

Deferred sales revenue stood at INR 480.7 crores as of September 30, 2019, versus INR 414.6 crores as of September 30, 2019 (sic) [2018,] a strong growth of 16% year-on-year. The cash balance in Info Edge and its 100% subsidiaries stands at INR 1,500 crores as of September 30, 2019. This was at INR 1,878 crores on 30th September 2018.

PBT for H1 '20 stands at INR 225 crores before exceptional items, impact of deferred tax asset reversal is INR 12 crores due to the change in the tax rate. The tax provision for H1 is INR 53 crores. The effective tax rate for the business for H1 stands at 23.8% of PBT, before exceptional items. [The same] in FY '19 was 28.3% and in FY '18 was 28.2%.

All 3 of our businesses, Naukri, 99acres and -- 3 of our businesses, 99acres, Naukri and Jeevansathi exhibited strong performance during the quarter, with the billing growth in the high teens, despite a slowdown in several parts of the economy. We continue to increase our spend on marketing in Jeevansathi as part of our strategy to gain market share, and this has started showing up in our billing growth for the quarter. Overall though, spend on marketing for the quarter was maintained at INR 51 crores, which was in line with our Q1 marketing spend.

We continue to invest aggressively in multiple new areas in all our verticals, brand building, data science, new products and strategic acquisitions, [to stoke] investments for the future. We have also [seeded] 2 new businesses inside the company, one in the premium hiring space and another in the blue-collar jobs space.

At the consolidated level, the net sales of the company stood at INR 329.5 crores versus INR 280 crores from -- in September 2018. For the consolidated entity at the PAT level, there is a loss of INR 111.8 crores versus a loss of INR 40.7 crores from the corresponding quarter -- in the corresponding quarter of 2018. Adjusted for exceptional items, PAT stood at a loss of INR 113.4 crores in the quarter ended September '19 versus a loss of INR 95.3 crores in the same quarter last year.

Now we will talk about the recruitment segment in a little more detail. In Q2 of 2019/'20, recruitment segment billings were INR 209.8 crores, up 14% year-on-year, while revenues were at INR 226.4 crores, a growth of 18.7% year-on-year. Operating EBITDA stood at INR 123.9 crores, up 19.3% year-on-year. EBITDA margins were at 54.7% versus 54.5% in Q2 of FY '18/'19. And EBITDA readjusted for Ind AS 116 stood at INR 120.85 crores with a margin of 53.4%. And EBITDA adjusted for -- readjusted for ESOP noncash charges and Ind AS 116 stood at INR 123.4 crores at 54.5% versus 54.8% in Q2 of '19. Cash EBITDA for recruitment during the quarter stood at INR 106.8 crores, up 9% year-on-year.

In Naukri, in Q1 of -- in Naukri in Q2 of FY '20, we added an average of 20,000 CVs -- new CVs every day, and the Naukri database grew to over 66 million CVs. Average CV modifications are also at -- were at 430,000-plus per day. We continue to be a market leader amongst our [conventional] domestic peers with our traffic share increasing to 88%. As indicated by our JobSpeak index, we are beginning to see a slowdown in the non-IT market, a strong customer base in the IT and ITeS segments, which have been unaffected by the slowdown till now, has so far helped us drive growth in the Naukri business. We continue to explore avenues for future long-term growth in our Naukri business. However, in the short term, a slowing economy could be a challenge.

Our app usage, resume registration, site engagement metrics continue to see healthy growth. Our branding campaigns have also helped us [boost] our traffic share in recent months.

Iimjobs reported a billing of INR 4.60 crores for Q2 of '19/'20. This is a growth of 15% over last year. The business operated at breakeven levels during the quarter, barring some onetime payoff.

Moving to the 99acres business. Billings in Q2 in 99acres grew 20.8% year-on-year to INR 60.5 crores, while revenue grew 26.2% to INR 57 crores. EBITDA for the quarter stood at INR 4.3 crores. EBITDA profit for the quarter stood at INR 4.3 crores. EBITDA adjusted for Ind AS 116 stands at a profit of INR 2.4 crores against a loss of INR 4.6 crores in Q2 '19. And EBITDA adjusted for ESOP and Ind AS 116 expenses stood at a profit of INR 3.3 crores versus a loss of INR [4.4] crores last year in the same quarter. Cash EBITDA for 99acres during the quarter stood at INR [6.8] crores against INR 57 lakhs last year.

The overall business in that environment in the real estate business continues to be tough. We are focused on getting to clear leadership position in the big cities, and at the same time driving deeper penetration into the smaller towns and cities. The broker segment continues -- contributes more than 53% of our overall revenue and has been a key growth driver of the business in both the primary and the secondary market.

The key areas of focus and investment in 99acres will continue to be brand building, the improvement in the core platform experience and improvement in the data quality of our listings on the platform.

Moving on to the Jeevansathi business. Billings in Jeevansathi grew 16% year-on-year in Q2 to INR 20.8 crores, while revenue grew 13.1% year-on-year to INR 20.8 crores. Operating EBITDA losses stood at INR 16.5 crores in Q2 of FY '20, up from INR 7.2 crores last year. EBITDA adjusted for Ind AS 116 stood at a loss of INR 17.3 crores. EBITDA readjusted for ESOP and Ind AS 116 stood at a loss of INR 17 crores in Q2 versus a loss of INR [37.1] crores last year. Cash loss for Jeevansathi during the quarter stood at INR 17 crores.

This strategy of high marketing spend should get more revenue share in the Jeevansathi [match] vertical. Internationally, vertical seems to be working well for us and will continue.

Moving on to the Shiksha business. In Q2, billings in Shiksha grew 9.5% year-on-year to INR 9.4 crores, while revenue grew 16% year-on-year to INR 12.5 crores. We made an EBITDA profit of INR 20 lakhs. EBITDA adjusted for Ind AS 116 stood at a loss of INR 30 lakhs. EBITDA readjusted for ESOP and Ind AS 116 for the quarter stood at INR 6 lakhs versus a loss of INR 22 lakhs last year. Cash loss for the quarter, which is a lean quarter in the education space, stood at INR 3.0 crores.

Moving on to our strategic investments. Zomato continues to drive efficiency across the organization. Burn in Zomato is down from a peak of $45 million to less than about -- to about $20 million a month now. Zomato is focusing on both increasing the take rates from restaurants as well as reducing the cost per delivery.

Both Policybazaar and Paisabazaar also continue to grow well. Policybazaar has been focusing on developing exclusive products for their users with insurance companies. The secondary sale transfer deal between Tencent and Tiger Global is also closed and was executed recently.

Based on revised revenue forecast for Meritnation, we have provisioned for INR 79.6 crores during the quarter. And recently, we also announced investments in a few startups, like Legit Quest, Greyt -- GreytHR, Adda 247 and TEAL. We also did follow-up rounds in ShopKirana, ShoeKonnect, Happily Unmarried during the quarter.

We continue to evaluate both -- new investment opportunities, both financial and strategic, and we'll sort of continue -- and will -- from time-to-time, yes.

Thank you so much. We are now ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Sharma, Kunal from Perfect Research.

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Kunal Sharma;Perfect Research;Equity Research Analyst, [2]

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Sir, I just have a few questions. So I'm listing down them together. Okay. So for at least, your majority revenue is coming from subscription to recruitment database. So what steps are we taking to diversify it? The second on Jeevansathi.com. It is the service which a customer will not use it repeatedly, and thus, having very low lifetime value. So does it make sense to invest behind such platform where every day you have to find new customers? Third, lifetime, the U.S. economy went in recession in 2008 and '09. There was a big dip in consequent hiring in IT and our revenue. So what steps are we taking to diversify this dependency on this sector? The fourth, what risk do you see for the Amazon entry in the food delivery market on Zomato? And the lastly, what threat do you see from the Jio money and Paytm coming in insurance segment for Policybazaar?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [3]

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Okay. Though that's 5 questions, we'll try and answer all of them. Recruitment, you said database and a lot of our revenue comes from the database, what are our plans for diversification? You're absolutely right. Database sales are a large part of our revenue. Over time, we [built] many other sort of offerings. In our recruitment business, we sell job lifting, we sell branding solution. We sell e-hire services to certain companies. We also have an ETF product, RMS, which sort of has a few thousand customers now. So together, all these sort of products are now maybe about 35% to 40% of our revenue in Naukri, and some of them are growing faster than the database products. But the database product also continues to be a large part of our revenue and continues to be in big demand.

With Jeevansathi, so the question was whether the low life sort of time value of a customer makes it -- not a good -- it makes -- doesn't make it a great business to have invested. What we've seen is that -- and one of the companies in our space is listed, Bharat Matrimony, over time, they've sort of managed to get to a reasonable EBITDA margin. So what we've realized is, once you build the brand, your customer acquisition costs go down. And a marriage is a very sort of important life event in the -- life of any sort of human being. And often, it takes -- it's not as if you get on to a portal and you get married in 2 months. Sometimes, it could take a year or 2 for you to find the right match. And what we've realized is that sort of many people in our platform continued in our platform for a long time to get the right match. So even if they get a lot of contacts, they sort of continue, sort of, for a while -- till the time they find a right match. And they're also willing to pay a lot for a service like this.

So we believe that if one can get to clear leadership in this vertical in the markets in which we operate, over time the EBITDA margins can actually be fairly healthy. Right? Because once the brand gets built, customer acquisition costs go down, and you can still monetize well.

IT dependency, that seems to be the nature of the market. About 40% of our revenue comes from IT and IT-related companies. What has happened over the last few years is that this -- earlier, it used to be only the software services company, which were sort of [body] shopping or getting work from the U.S. [as] offshore to them. Now this vertical -- it's fairly -- and it's IT, what we call as IT, has sort of grown over time. There are product development companies. There are MNC, back offices, which are included in this sort of segment. There are start-ups who hire IT, sort of, folks. They are also a part of this segment. So the truth is, there's a lot of activity in this space still. IT companies are still hiring, they are still growing. Started the hiring, they are growing. More and more MNCs are setting up back offices in India. So this part of our business continues to grow well. About 60% of our business is from non-IT -- from the non-IT space. And here, we've seen a slowdown, which I'm sure is temporary. Once the economy recovers, this part of the business will also start doing well. But the truth is that a lot of the white-collar job creation is in the services sort of space. And within that, IT companies tend to be the large hirers. And unless and until that changes, our, sort of, dependence on IT will continue to be high, right?

Sanjeev, you want to want to answer (inaudible)

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [4]

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Yes. So on Zomato and Amazon, naturally, when a company, Amazon, indicates that they might be entering the food delivery space, obviously, you'll watch it with great interest, correct? But one thing I want to say, this is -- that food delivery is very different from product delivery because you want food delivered in 30 minutes, from placing the order, which is very, very different sort of delivery -- speed delivery and logistics organization as of -- when you're saying I'll deliver in 24 hours or 48 hours or by the evening, right? And that's a whole new kind of organization. So while, obviously, we are watching with interest. We have confidence Zomato [will do] , continue to grow and defend itself.

Yes. Now the second question was about Policybazaar. And Policybazaar has reached a place where it can -- it has [can] (inaudible) moats. It has got good defenses. It got a -- first of all, it's got a brand. Most of its traffic is organic, which means customers prefer the brand. It's got deep relationship with the insurance companies. It is launching exclusive products with insurance companies. So we don't see Policybazaar also being threatened by new entrants, in a hurry. So we are -- as of now, we are watching, obviously, all we are [worried] about competition all the time, and we're watching competition all the time and so are the managements of these 2 companies, the founders and other people there. But they are confident of -- in defending the terms (inaudible).

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Operator [5]

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The next question is from the line of Dheeresh Pathak from Goldman Sachs.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [6]

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On Jeevansathi, the growth that you've mentioned, revenue growth, can you provide more color in terms of how is it driven by the [paying] subscribers versus realizations for paying subscribers? Can you give some more color on that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [7]

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No. See, this is what we are comfortable revealing, that basically, Jeevansathi revenue is a function of how many free users you can get on to the platform and then how many of those convert into, sort of, paid users? And what you are able to get from them when they pay to you? And how much you sort of have to spend to acquire those users, right? So what we've seen over time is that our, sort of, market share in the markets we operate, which is mostly the Northern and Western parts of the country has been growing, thanks to our higher, sort of, marketing spend, which has resulted in higher top of mind recall and more customer -- and more, sort of, profile acquisition for us. So revenue growth...

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [8]

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(inaudible) that number, can you provide a comment, in terms of, say, are you doing a large trade-off between very low realization versus large revenue growth coming from paying subscribers? And have you materially dropped your realizations?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [9]

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Well, we haven't materially dropped the realizations from what they were 1 or 2 quarters back. But yes, we are aggressive, both on marketing and pricing in the market.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [10]

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Okay. And losses have increased quarter-over-quarter. So last year, we saw one step increase in marketing spend in Jeevansathi. So this quarter, is there a further step increase? And how do you see that going forward?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [11]

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Yes, yes. We've upped our marketing spend in Jeevansathi this quarter. The industry is -- right now is very competitive. All the other players have also upped their market spend, both Matrimony and Shaadi are spending a lot more than they were spending at the same time last year, and so are we. So it's a very competitive market. And -- so -- and we continue to aggressive within this market.

We are also spending a lot more than we were spending 1 quarter back or at the same time last year.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [12]

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So this run rate is expected to continue, is it? Or this is just like a one-off quarter? This...

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [13]

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No, no. This is expected to continue for a while.

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Operator [14]

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The next question is from the line of Parag Gupta from Morgan Stanley.

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Parag Gupta, Morgan Stanley, Research Division - Executive Director [15]

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My first question is on 99acres. So your deferred revenue growth on that segment has been under 10% now. When do you think that starts reflecting in the revenue growth, which has been in the 20s? And the second related question to that is, while there has been a small breakeven profit in 99acres in this quarter, how should we think about this for second half?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [16]

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Yes. We should not read too much into the quarterly numbers in 99acres, I mean, because the truth is, the market is still a very tough market. New launches are, sort of, not happening like at the same rate at which they were happening maybe a couple of years ago. There is a financial crunch out there. New home sales are sort of flattish or down in [most] markets. The reason we are sort of -- we've shown a small profit this quarter is because we've cut our marketing spend a little bit, but this could change going forward depending on competition and a bunch of other things.

So we -- right now, we are okay. We know we are growing at 21%. We -- billings were 21%. Revenue grew even faster. But like I said, the market is tight. And it's still very competitive. So this could change very quickly even going forward. So this is -- so we're not saying that we're going to continue to grow at this rate going forward. I mean, growth rate could improve or even fall. It's hard to predict in this market.

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Parag Gupta, Morgan Stanley, Research Division - Executive Director [17]

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Got it. And on the recruitment, you have been talking about blue-collared segment for some time now. So what is the progress there? Is the product ready? What are your market findings suggesting with respect to the opportunity set? And who your competitors could be on that front?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [18]

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Still very early days. I mean, we see it as a big opportunity in the long term. And when I say long term, I mean, 5 to 10 years, I don't mean a year or 2, or 3 years from now. We are just getting started. We have built a couple of apps, which we're testing in the market with our -- both job seekers and customers. Once we have confidence in what we have built, we would roll that -- the product out to more geographies. So we are very early in this game. Just like I said, we have sort of a small team working on this at this point in time. And we are seeing this as -- we think of this as a long-term play, it's not something that we have to sort of win or invest substantially behind in the next 12, 8 -- 12 to 15 months. But yes, over a 10-year period, this could be a large business.

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Operator [19]

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The next question is from the line of Devvrat Himatsingka from Bajoria Financial Services.

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Devvrat Himatsingka;Bajoria Financial Services Pvt Ltd.,Direct Equity Portfolio Manager, [20]

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So I just have one quick question. It consists about how you see things going forward, like what would you say -- like what kind of acquisitions do you plan to make in -- within the next 6 months? And I mean, are you currently working on any kind of deals where we can potentially see some new acquisitions happening over, say, the next quarter or 2 quarters? If you could throw some light on that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [21]

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We just acquired iimjobs a few months back. We have a long list of companies, which would -- we would have liked to acquire at the right price. But these are not things you can make happen in [between] 3 months or 6 months. So many of these things are opportunistic.

Are we open to acquisitions in the spaces in which we operate? Absolutely, right? If something right should happen in the next 1 or 2 months, how can you say we keep talking to companies, we keep talking to founders, we sort of keep analyzing information. So we are -- we are sort of at it, but some of these things happen when they are supposed to happen, they happen.

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Devvrat Himatsingka;Bajoria Financial Services Pvt Ltd.,Direct Equity Portfolio Manager, [22]

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Right. And I just had one more question on Zomato like, there have been articles floating around the news that say that there is a possibility that Zomato might be a breakeven by next year. Is that actually viable? Do you think that, that can happen?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [23]

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So in March, the burn was USD 45 million. October, it is down USD 20 million. We have a clear agenda and program (inaudible), while still growing order value, (inaudible) orders. [They're strictly] month-on-month, is it possible? The answer is yes. Will it happen? Fingers crossed, wait and watch.

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Operator [24]

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The next question is from the line of Mayank Babla from Dalal & Broacha.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [25]

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Congratulations on a good set of numbers. Sir, actually, I had a few questions. One was -- could you throw some light on this diminishing [in] carrying value of investments in start-up investments in Applect. Could you explain what was the reason for that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [26]

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So basically, in the Applect, which is running the site Meritnation, we have taken the [diminution] . So this is more to follow up the accounting standards that we follow, that we usually carry the investment at cost or market value, whichever is lower. So I think there are certain revenue concerns on Meritnation. And because of that, auditors felt that we should take such kind of an impairment in this asset, and we have followed that, and we have taken the impairment on that.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [27]

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Okay. And sir, start-up investments, that is the same reason? Or it...

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [28]

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No. So start-up investments is a vehicle where most of our new investments have been -- it's 100% subsidiary company and most of our new investments has happened through start-up investments.

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [29]

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Does that answer your question? I mean...

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [30]

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No, sir. If there is...

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [31]

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If there is diminution in their underlying asset, the start-up investment also will be impact.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [32]

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Okay. So this is in relation to Policybazaar or via that new one investment in startup?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [33]

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No. No. No. Policybazaar has not been --

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [34]

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No. Policybazaar has not been impaired.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [35]

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It's Meritnation, we impaired.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [36]

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Sir, and second was, sir, we -- like in the last quarter, we've seen hiring in the IT space, like if you see TCS, Infosys, they hired north of 10,000 headcount, most of which -- majority of which are [freshers.] Sir, considering that our growth in recruitment solutions has been 19%, which is more or less same -- at the same run rate. So don't you think that is less? Or how does it impact us?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [37]

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No. See, we work with over 8,000 IT companies -- so -- number one. Number two, mostly sort of we send -- sell annual subscriptions to them, so they renew at year-end. Number three, the IT business, for us, actually, while the overall sort of revenue may have grown or billings may have grown at 15%, 16%, the IT revenue grew at a much faster rate than that. The non-IT markets grew at a slower rate. So you -- and this has been the case for now 3 or 4 quarters. So the IT, sort of, markets, for us, like Bangalore, Chennai, Hyderabad, the IT segment has been growing north of [more than] 20%. The non-IT markets have been sold, which is why the average has been more like 17%, 18% for us.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [38]

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Okay. And sir, as far as you spoke about the slowdown in the -- now real estate in 99acres, so could we see that coming down to single digits? Or you will maintain 15%, sort of -- 25% -- 20%-plus growth there?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [39]

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See, it's very hard to say what is going to happen in real estate. See -- it's -- the real estate market is very unpredictable, and things can change very quickly in this market. Sometimes, you feel you're going to grow at 40% anyhow, but you end up at 20% because something happens during the quarter which, sort of, takes you back. In some cases, we've also had where we -- when we thought we would grow at 20%, but we've grown at 30% or 40% also. So it's a little sort of unpredictable. We don't have a very large renewal business like we have in Naukri. So a lot of the business every year is fresh sales or every quarter is fresh sale. And sentiment can change from quarter-to-quarter. So actually, it's harder for us to predict what growth and/or what revenue will be like next quarter. A lot, like I said, depends on the economy. It will depend on fund availability to developers, it will depend on new launches. It will depend on whether people are willing to sort of invest in property or not, next quarter. So we are still hopeful that we will -- obviously hoping and the targets we have set for our team are, of course, in that range. But we don't -- we can't be sure.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [40]

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Okay. And sir, just my last question was, on this, there were a lot of news flows -- I know it's been previously asked also, but lot of news flows that Amazon OFD might -- it was supposed to be launched by Diwali, but there's no news as such. But in your interactions, have you witnessed something -- or if you could help us with some guidance that if when -- if at all and when are they going to launch or something like that? Because I believe there -- if they launch, there will be a lot of pressure on ad spend on Zomato also, which will lead [that] into an already squeezed margins?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [41]

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Actually, Zomato, like I said, is very confident of defending its stuff and without [trading] its economics very much. And like I said, that it's a very different logistics operation as opposed to delivering other products because food and meals are highly perishable. If you order something at 12:30, you want it to be delivered at 1 p.m., half-an-hour. It's a totally different delivery operation. So it's like setting up a whole new company.

Zomato -- Amazon, of course, has got -- is very well resourced and has got plenty of money. And they do know how to deliver. And they do know how to handle logistics and -- on top of that. But food, you do not warehouse. Food, you pick up from a restaurant and deliver. And you pick up from maybe 30,000, 40,000, maybe 25,000 restaurants in Delhi NCR and deliver in Delhi (inaudible). You deliver within a 5, 7, 8-kilometer radius, and you deliver it in half-an-hour. So it's a very, very different operation. So -- even for Amazon, it will be a fresh new challenge. It will not be a -- kind of thing.

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Operator [42]

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The next question is from the line of Shaleen Kumar from UBS.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [43]

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First of all, I just missed 2 data points. One is your billing growth in 99acres, and your comment about losses in Zomato. Have you given a monthly run rate of loss in Zomato?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [44]

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October was about USD 20 million...

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [45]

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USD 20 million?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [46]

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March -- down from USD 45 million, in March. So every month, they're reducing burn.

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [47]

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And billing growth in 99acres was 20.8%.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [48]

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Billing growth, okay, okay, okay. Sir, do we -- in 99acres, do we track something like churn rate, or something like that? Yes, because brokers [are] customers, and I believe that churn rate could be potentially higher on that side. And as you also mentioned, the predictability is bit low in this business because it depends a lot on the confidence. So do you think that because that segment requires a lot of handholding or pushing as well? Is my understanding correct?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [49]

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So you are absolutely right. See, we work with all kinds of customers. We work with developers. We work with owners. We work with large channel partners. We work with retail brokers. We work with people in the rental business. Churn is always very high with the smaller customers. So the customers who run mom-and-pop shops, who have -- are one-man shows -- many of these businesses have also shut down over time, sometimes. So churn is very high. The smaller the customer, the higher the churn. There is less churn at the good customers who pay us a lot more, so who are being in the business for many years, who are sort of senior players, who have large positions and so on. But yes, we track all these metrics, and we monitor them closely.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [50]

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Sir, unless and until we see a real uptick in the underlying market, and we see builders coming up in, this segment is likely to be volatile. And we may require [builder] investing in terms of either marketing or so?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [51]

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You're absolutely right. What -- this is -- the real estate market has, I think, peaked in 2010/'11, and has been going downward since then. But the good news is that despite all this, our business has been growing every year. So irrespective of what happens in the real estate market, we've been growing at 15%, 20%, 30% every year. We have now reached a point where we are averaging about INR 20 crores a month in terms of revenue, and we are sort of either breaking even or making a little bit of money. Sometimes, you lose a little bit of money, but it's not a business which is [tucking] up a lot of money.

Having said -- but the market -- but you are absolutely right, the market continues to be tight. People are buying fewer homes. I mean, compared to the peak, I think, sales are down to -- by 50%, even 10 years later, a strong -- the real estate [primes] haven't gone up in most markets for many years. Having said so, we believe there are still many opportunities in this space. It's a very large category. We are so far -- we have so far focused mostly on the new home sites. There's a lot more we can do on -- in new homes. There's a lot more we can do in (inaudible). There's a lot more we can do in rentals. Commercial property is something we haven't even touched. Yes, we don't do too much business in commercial.

So in the long term, I think, it's a very big opportunity. Short term, there'll be hiccups, there'll be ups and downs. There will be years in which do well. There'll be years in which we don't do well, but I think the trend is very clear. It's a INR [250] crores or INR [20] crores a month business, breaking even, growing year-on-year. It's only a matter of time before it becomes large and profitable.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [52]

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For sure, for sure. I agree with you. In -- I also noticed that your employee costs have gone up a bit high in this quarter. Any special reasons for that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [53]

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No. In general, sort of we've been in -- we've been, of course, one, [hiring] more people; and two, be upping the quality of talent we have in every area. We are investing a lot more in platform development. We're investing a lot more in data science, design, improving the customer experience on our platform. Like I said, we've also seeded a couple of new products, which are not going to generate revenue for a while, but we will spend on them for the next 2, 3 years before they start, sort of, get anywhere. So we're making a lot of new investments, and most of these investments are in the -- require us to hire people. And some of these people are very expensive, but -- and there's no revenue. But hopefully, over time, as a result of these investments we will be in much better shape, and -- but it will take a couple of years.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [54]

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Sure, sir. So the most of the hiring is on a mid-segment kind of -- or more on a tech segment rather than on a feet-on-street kind of a marketing [site] ?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [55]

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Yes. And mostly, a lot of high-value hires. So there is some volume hiring. As business grows, you would tend to hire a few more people in customer service, a few more people in sales, a few more people in operations, and so on, but that's not very large. And these resources are not very expensive. A lot of high-value hiring is, like I said, product, data science, technology, marketing and some of the new businesses, which we're building for the future -- which we are investing in for the future.

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Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [56]

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Sure. And just a last bit, if I can squeeze in. Any comments on competition, like your marketing cost is high, related because of the Jeevansathi. But is there element of competition related to Naukri as well as 99acres as well in that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [57]

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See, Naukri, we were -- we have not spent a lot of money on marketing and brand building for many years. We felt that we have been out of media for a long time. So this year, we were a lot more aggressive in Naukri in the first half this year. And that paid rich dividends because we went out of media for the long time, we went back into media, and we can see the result in terms of the number of app downloads and the number of resume registrations and modifications in our platforms has really worked well. It's not something which -- I mean, of course, in general, we've upped the level of market spend a little bit, but some of these spends are sporadic. We may spend in one quarter, not spend in the next quarter and let's see how things phase out. In 99acres, actually, we have cut our ad spending in the first half of this year. We do not spend as much as we, I think, probably spend in the second -- in the first half of last year. We are investing in some other areas, which we think, it deserved more investment right now. But this could change. Once again, a lot will depend on what competition does in the market.

In Jeevansathi, we're aggressive. In the Jeevansathi space, in the matrimony space, what has happened is, the ad spend of all the players in the -- used -- maybe 3 years ago, was about INR 100 crores between us and Shaadi and Matrimony. Now it's INR 300 crores. So every player has upped their ad spend and so have we. And for us, it's working. It's paying rich dividends. We are gaining share. We're gaining volume. Our top of mind recall is improving in most of the geographies we operate in. And our modeling is telling us that if we continue to do this for the next 2, 3 years, we will get -- we will become a very serious player in this market.

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Operator [58]

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The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.

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Vivekanand Subbaraman, AMBIT Capital Private Limited, Research Division - Media Analyst [59]

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I have 3 questions. So one is on the recruitment billings. I see that it has moderated this quarter compared to the last 4, 5 quarters. So is this moderation led by IT [becoming] IT billing moderating? Or is it the non-IT part of the billing that has slowed down further? Secondly, on -- in the matchmaking segment, you are doing phenomenally well compared to Matrimony. How is it that your billings growth is so good compared to their billing growth? What are the factors in your view? Is it something to do with your markets or strong presence and competition thereof versus sales [or market?]

Or is there something else? My last question is with respect to the investees. We saw the secondary transaction in Policybazaar. Did you also have an opportunity to either buy or sell stake here? What are your thoughts on your stake in Policybazaar? Would you be keen on increasing your stake, decreasing it? Or are you happy with your stake? And a related question on the investees. Do you foresee any potential for secondary transactions in Zomato?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [60]

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So Policybazaar, I think, our thinking right now for the moment, we said, we [would] increase, we [won't] decrease. We've got a substantial exposure there, and we think that's more than adequate.

As far as Zomato was concerned, look, we -- as of now, are not looking for a second [line]. We are quite happy with where the company is going. And once it goes -- if it does go to [margin] breaking even [or market later. So we think the world will be different.]

Yes. To ask your questions on IT versus non-IT. So like I said, our overall billing growth of 15%, it was much higher for -- in the IT markets a lot lower than the non-IT markets. So billing growth has slowed down. And a lot of it is because of the non-IT hiring, especially markets like Mumbai, et cetera, which have been impacted the most, I guess, by the financial services sort of slowdown.

The other question was about -- our sort of growing faster than Matrimony. See, I don't really -- I can't really comment on the Matrimony business. But basically, we are spending a lot more on customer acquisition today than these whenever. And that's resulting in us sort of getting a lot of registration and a lot of profiles, especially to the Northern and Western parts of the country. And our market share in these markets, is improving every month, right? And potentially happen in these businesses is that once your market share tends to improve --starts improving, then your conversion rate also start to improve.

So as a result, because we had more profiles, so people find matches on our site, and therefore, more people are willing to move from free to paid subscriptions on our platform. So our conversion rates are maybe -- I don't have the matrimony numbers, catching up because we were always behind with our competitors. And maybe some of our competitors are losing grounds in the markets in which we operate because in the markets which we operate, we are probably paying the most right now and that's [how we are gaining shares.]

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Vivekanand Subbaraman, AMBIT Capital Private Limited, Research Division - Media Analyst [61]

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So just one small follow-up. So you are suggesting that the market share you are focused on, you are spending the most, whether it is on marketing or say on customer acquisition. Is that assessment correct?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [62]

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Yes. So -- and therefore, we're gaining share in these markets, and therefore, others are losing shares in these markets.

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Operator [63]

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The next question is from the line of Vimal Gohil from UTI Mutual Fund.

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Vimal Gohil;Union Mutual Fund;Research Analyst, [64]

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I'm Vimal Gohil from Union Mutual Fund, that stands to be corrected. Sir, I just have 3 data points. The rest of the questions have been answered. Could you just tell me what was Jeevansathi's revenue? I'm missed out on that. And could you just give me a recruitment businesses and 99acres businesses EBITDA numbers, please?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [65]

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Jeevansathi revenue growth was 16%, and billing growth was -- sorry, billing growth was 16%, revenue growth was about 13.1%. Billing was INR 20.8 crores and so was revenue.

Now recruitment -- operating EBITDA in the recruitment segment stood at INR 123.9 crores, up 19.3% until September last year. And EBITDA readjusted for Ind AS 116 stood at INR [125] crores. And EBITDA readjusted for use of noncash charge in Ind AS 116 stood at INR 123.4 crores versus -- and EBITDA margins were around 54.7% or so.

In the real estate space, EBITDA for the quarter stood at INR [2.3] crores. EBITDA adjusted for Ind AS 116 stood at INR 22.4 crores versus a loss of INR 4.6 crores last year. And EBITDA -- cash EBITDA for 99acres during the quarter were INR 6.8 crores, against the INR 57 lakhs EBITDA profit last year. And EBITDA adjusted for ESOP in Ind AS 116 stood at INR 3.3 crores versus a loss of INR [4.2] crores last year within the quarter.

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Vimal Gohil;Union Mutual Fund;Research Analyst, [66]

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Just to make sure, your recruitment EBITDA, you said adjusted for Ind-AS was INR [124] crores, right?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [67]

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Yes, that's correct.

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Vimal Gohil;Union Mutual Fund;Research Analyst, [68]

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Okay, okay. And what was it last quarter, adjusted for Ind-AS?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [69]

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Sorry, adjusted for Ind-AS were INR 120.85 crores.

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Vimal Gohil;Union Mutual Fund;Research Analyst, [70]

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INR 120.85 crores?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [71]

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Yes. Adjusted, meaning, actually, was at INR 123.9 crores as for the new norms. But adjusted for Ind-AS 116 so that INR 120.85 crores.

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Vimal Gohil;Union Mutual Fund;Research Analyst, [72]

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Okay. So actual EBITDA is INR 123.9 crores?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [73]

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Yes. What is reported is INR 123.9 crores now.

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Operator [74]

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The next question is from (inaudible) the line of JM Financial.

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Prince Poddar, JM Financial Institutional Securities Limited, Research Division - Analyst [75]

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This is Prince Poddar, actually. So -- just 2 questions from my side. One, there has been a good 2.5-odd percent margin improvement in Naukri on a Q-on-Q basis. I'm just trying to understand does this have to do with lower marketing spend in Naukri for this quarter? And the second bit on will the technology spend continue in Naukri as you had planned, and we've been doing for the last 4, 5 quarters?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [76]

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To answer your second question, yes, we will continue to [address] aggressively, invest aggressively in all the products that we're building, all the platform changes we are making, all the new (inaudible) that we're developing and so on. So that will continue.

Now why has the margin improved by 2.4%? Maybe -- I mean, we'll have to sort of get back to you on this one. Maybe on account of higher revenue yes, I think marketing costs has been kind of consistent. So it would be some other costs too. It's just one [factor] .

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Prince Poddar, JM Financial Institutional Securities Limited, Research Division - Analyst [77]

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Okay. Okay. And secondly, sir, on Zomato, the company has done phenomenally well to expand operations as well as decrease its burn simultaneously. But it's a bit [confusing] -- by how they are able to do that even while expanding into Tier 2, 3, 4 cities, expanding to 400, 500 cities, now? How have they been actually able to reduce burn rates? I'm not sure (inaudible) .

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [78]

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See when you grow very, very fast and you focus to your top line growth, very often, you don't keep your eye on cost of growth. Right?

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Prince Poddar, JM Financial Institutional Securities Limited, Research Division - Analyst [79]

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Right.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [80]

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So a number of cost innovation is creeping. And then when you say, okay, (inaudible), you start examining those costs and you figure out ways to do the same thing at a lower cost. Right? So -- and so for example, they are cutting discounts and they're cutting marketing at the bottom end on small orders, [they're cutting abuse and misuse] people breaking up orders into 2 or 3 to get discounts, more discounts and so on. And just by doing that, we are able to -- we've been able to cut the burn.

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Prince Poddar, JM Financial Institutional Securities Limited, Research Division - Analyst [81]

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Okay. And maybe things like -- I think there's no more Piggybank now, I think, things like that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [82]

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No, Piggybank is not [raining] money.

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Operator [83]

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The next question is from the line of Mukul Garg from Haitong Securities.

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Mukul Garg, Haitong International Research Limited - Research Analyst [84]

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Hitesh, first on, on the Naukri business, can you help us visibility in other industry except for the IT? Where are you seeing a slowdown, particularly or is it a cause of both? And also, if you can share the traffic share versus Indeed for the most recent period?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [85]

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Yes. So we produced a monthly job seek index, and that has data by industry, and that's reasonably sort of accurate. So what we are seeing is that the slowdown is steady to more sectors. So earlier, it was limited to sectors like infrastructure and telecom and real estate. Now banking and Financial services have also been impacted. We are seeing a slight slowdown in exports in sort of travel and tourism and also [the gas] as well.

It's not very pronounced, but things seem to be slowing down a bit in some of those sectors. In terms like health care, education are still okay. IT services is still okay. But the other sort of manufacturing, exports, infrastructure, real estate, telecom, financial services, banking, some of these sectors seem to have been hit by the slowdown.

And sorry, what was your second question?

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Mukul Garg, Haitong International Research Limited - Research Analyst [86]

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What is the online user purchase share, which you have [subsite] of the quarter or the month mostly [Indeed]?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [87]

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Yes. So it's been -- for the last 3 months, I think, we've been averaging about 66%. If you include Indeed in our competitor sort of list. Excluding, Indeed, we are currently at about 88%. And this is when you take the market to be just us and Monster and Timesjobs and Shine and Indeed.

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Mukul Garg, Haitong International Research Limited - Research Analyst [88]

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And what was the number if you include Indeed a year back (inaudible) ?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [89]

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No, we had -- like I mentioned earlier, we have been out [of there for] a long time. So our market share had dropped a little bit. I mean, if you would include Indeed, along with the other players. We have maybe recovered about 4 to 5 points in the last 2, 3, 4 months.

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Mukul Garg, Haitong International Research Limited - Research Analyst [90]

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Right. So, you mentioned earlier on the call that you have cut your marketing spend on the Naukri business. And you're kind of thinking about whether they can going forward. Given the business, which you are seeing in other sectors on dependency, high dependency in the IT. Is there something which is going to be a big focus for next few quarters? Can you help us understand how you're planning the marketing spend on the Naukri business?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [91]

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Well, actually, we decide on some of these things at the beginning of the quarter. So depending on how the market is, what kind of activity you see in our platform, what kind of competitive activity we see or foresee, we take these calls. We were out of media as in mainstream media, TV -- [stuff] like that for a long time. And when we went back to media, the results we got were very encouraging. You may notice that the numbers CVs we acquired last quarter actually went up to 20,000 a day. The [model] also went up. Traffic on the platform is very healthy.

Now if the market starts to slow down, (inaudible) these strategies. What also [generally] happens on market is that you generally have more sort of activity in your platform because there are more people looking for jobs. Unless the market is very, very slow in which -- because if that happens, people actually give up on finding a job. But -- so we kind of look at all these things every quarter, and depending on a quarter a bigger quarter where we should be spending and how much we should be spending on marketing. It's hard for me to say what's going to happen going forward.

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Mukul Garg, Haitong International Research Limited - Research Analyst [92]

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Got it. And then one question for Sanjeev. Sanjeev, on Zomato side, almost, I think, for last 1 year, there are new items which are coming out about the market [especially up around.] We have not seen that happen [in awhile]. So in a kind of (inaudible). So can you help us with the visibility that we -- is Zomato looking out for funds? Or are they happy with their current cash position? And the second part is, is there a requirement for [U. S.] to participate [if we found any] new entrant, would you be participating? Or you would like to stay away?

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Sanjeev Bikhchandani, Info Edge (India) Limited - Founder & Executive Vice Chairman [93]

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So on the first one, I think, there is enough investor interest in Zomato, that should they need money, they will get it when they when they want it, right? But they're not launching anything right now, so we can't say anything right now.

As far as [Zomato] we are always supporting our good companies. Having said that, it's quite apparent to us in Zomato -- it's perhaps a little bigger than our balance sheet can accommodate in terms of [an investment], the kind of [around size] , this business will require, full requirement. So (inaudible) there is substantial interest (inaudible) invest in Zomato if they need the money.

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Operator [94]

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The next question is from the line of Ritesh Bhagwati from Rockstud Capital.

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Ritesh Bhagwati;Rockstud Capital LLP;Assistant Vice President, [95]

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Sir, could you just repeat in regards to the impairment that we have recorded under the startup Investment Holding limited under this quarter, like which company was it pertaining to? And why did we take that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [96]

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So we only take impairment in Meritnation (inaudible). And as a consequence, there was an impairment in Meritnation happening.

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Ritesh Bhagwati;Rockstud Capital LLP;Assistant Vice President, [97]

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So that was 8.3%, but what about other start-up investment holding limited? Which companies will be pertaining?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [98]

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So there are variety of assets under start-up investment. It's another (inaudible). So we can as soon as possible. That is some places, the investments have gone up, some places, the investments have come down. So it will get segregated. There are some part of Meritnation which was held by startup investments and which would have an impact. But there is also some part of investment which are held directly by (inaudible). So it's a standalone as well.

So when you're looking at this particular number, it's mostly a number around startup investment. But I think in quarter 1, also, there was certain impairment was taken in some of our companies. And that 83 number was a combined number of that.

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Operator [99]

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The next question is from the line of (inaudible) from [Marcellus].

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Unidentified Analyst, [100]

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On Meritnation, [after this in provision indemnation, how do you look at the business area] any changes in strategy approach?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [101]

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Well, look, Meritnation has been impaired because, I mean, obviously, the business is under some stress, which we might [have been.] I mean, so we are still evaluating all options on this. Can't say anything more right now.

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Operator [102]

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The next question is from the line of [Sanjay Ladha] from Concept [Investwell.]

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Unidentified Analyst, [103]

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First, how do you see the regulation for the start up as they are [last meeting telecom] and a very expensive valuation? And we see the example of our WeWork and [RERA] -- and now the valuation substantially corrected in [WeWork] . What is our view and we are sort of start-up company now? And the second is, how you see yourselves growing for larger than -- longer-term horizon say 3 to 5 years? Can we see growth rate going forward? Or it can be improved from here?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [104]

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So sales growth rate in Info Edge or growth rate in what?

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Unidentified Analyst, [105]

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Growth rate in our [committee] . In the revenue and profit on profit [dumps.]

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [106]

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Info Edge?

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Unidentified Analyst, [107]

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Yes.

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Unidentified Company Representative, [108]

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Yes. So I'll ask -- so I'll answer the first part of the question. And what's happened with startup evaluations. And maybe Hitesh can answer the second part.

So look, we typically go into our startups early on, right? Before valuation has been bid up really. We sometimes do follow-ons. And those will be largely will depend [on operator,] sometimes even more. But essentially, we are not -- we don't pay a terribly high valuations in most cases. Right? So we are conservative as well our investor side is concerned on valuation.

Having said that, look, it's pretty obvious that -- look, there has been a kind of divorce between public market valuations and private market valuations for a while. And essentially, that's what happened with WeWork. [If we (inaudible) else and the [formality of valuation,] right?

But as long as you're conservative and you're going early, we believe our investments will be okay. So long as it's a complete company. So long as the operations are good.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [109]

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Yes, growth. So a couple of [key things]. In both Naukri and real estate, a lot will depend on what happens to the economy. We are very, very tightly sort of indexed to the GDP growth rate, for example. So the Indian economy starts -- keeps growing at 5% per annum or 6% per annum. Then of course, it's going to be hard for us to grow at more than 15%, 20%.

But on the other hand, if the economic growth picks up and IT companies continue to hire like they'll be hiring for the last 4, 5 quarters, then who knows, you know, 7% to 8% GDP growth, we could also grow at 25%, 30%, time will tell, but that's possible. That's what's been true in the past. And nothing much has changed. Our market share continues to be high. So -- and we're working on a bunch of new things. We brought out [Infotec].

Similarly, real estate markets have been down for many years now. If growth were to come back. If the problems in the real estate industry get sorted out, over the next 1 or 2 years, then who knows, if more homes start selling, if more -- if real estate becomes more affordable. If buyer interest comes back, if builders are better capitalized. We may grow much faster than what we're doing today.

On the other hand, if things slow down, even further, then our growth rate could suffer. So and -- so the -- so one is, of course, like I said, we continue to invest aggressively in [auto] -- and we will try very hard to sort of offer better services, improve our customer experience, try and gain share from our competitors, try and win. Two, there's a natural trend. The revenue is going to move from offline to online, and that will only continue (inaudible) you are present. And three, we can -- if it only picks up from here on, then, of course, our group can also move into the next [project].

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Unidentified Analyst, [110]

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So just want to follow-up this -- so apart from [more] verticals, other parts of the business are lasting or how you are looking forward? Or how you're actually -- sort of will be profitable at net level at any -- at [I could] use some guidance? I'm [not long term] the short-term and [over 5 years?]

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [111]

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Yes. So it's not as though we're losing a ton of money, 99acres has been floating a breakeven for us every quarter, now in some quarter they make money and in some quarters we lose money. But it's (inaudible) money (inaudible). (inaudible) has also been like a breakeven business for a couple of years now.

Do we need to invest more to get the business? Do we see more opportunities? We see a lot of opportunities, and we will continue to invest aggressively in these verticals. And like I said, even though in that area, real estate, as an example, as a case study. Volumes are -- have fallen maybe 50% over the last 5, 7 years in real estate. Offhand I think spends have shrunk, maybe by 50%, 70% over the last 5, 7 years.

The total market (inaudible) has shrunk by maybe 30%, 40%, 50% over the last 5, 7 years. But our revenue has been growing at 20% per annum for the last 4, 5 years. So if this continues, even if you continue to -- this market continues to be the market it is today for the next 5 years, we will still level out over the next 5 years at the very minimum.

On the other hand, if you get better at executing and improve experience further and if sort of growth comes back to real estate, we could grow even faster, right? And a lot of the investments -- we sort of needed to make in building our technology and our brand and our platform has been made. Yet, some more investments will have to be made as we [put the business grows,] but maybe not to the same extent as we have been doing in the past.

So therefore, our margins that [have to take] a final period, our margins should also sort of become a lot better than they are today in real estate, if we are able to double, triple our revenue over this period.

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Operator [112]

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(Operator Instructions) The next question is from the line of Mayank Babla from Dalal & Broacha.

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Mayank Babla;Dalal & Broacha Stock Broking Pvt Ltd.;Analyst, [113]

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So just one question on the accounting side. In the consol balance sheet, sir, I've seen that investment have come down from INR 340 crores to INR 198 crores. So could you explain that to us?

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Chintan Arvind Thakkar, Info Edge (India) Limited - CFO & Whole Time Director [114]

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I would guess that it must be the impairment that we have taken, and that could be resulting in the [reduction in the PPL].

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Operator [115]

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(Operator Instructions) The next question is from the line of [Mayuresh,] an individual investor.

(Operator Instructions)

The next question is from the line of [Kuldeep Koul] from ICICI Direct.

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Kuldeep Koul, ICICI Securities Limited, Research Division - Senior Research Analyst [116]

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I just wanted to know about your standalone balance sheet, there has been increase in your noncurrent investments, from INR 1,000 crores to INR 59 crores. Can you help me with that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [117]

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It is in one investment noncurrrent.

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Kuldeep Koul, ICICI Securities Limited, Research Division - Senior Research Analyst [118]

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Noncurrrent.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [119]

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It is in noncurrent investment.

[that happened in Policybazaar] Primarily, it is the investment that went in the month of [April] .

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Kuldeep Koul, ICICI Securities Limited, Research Division - Senior Research Analyst [120]

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I didn't get you, sir.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [121]

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Primarily because of the investment that happened in Policybazaar in -- in the month of April.

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Kuldeep Koul, ICICI Securities Limited, Research Division - Senior Research Analyst [122]

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Okay. And that is the reason that your current investment has declined from INR 339 crores to INR 64 crores?

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Operator [123]

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Mr. [Koul], do you have any further questions?

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Kuldeep Koul, ICICI Securities Limited, Research Division - Senior Research Analyst [124]

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No. And I just wanted a clarification, is that the reason that the standalone current investment has declined from the INR 339 crores to INR 64 crores? Because of that investment is being funded from the current investment, some part of that?

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [125]

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Current investment would be because of the reduction of our we've grown money from the mutual fund. As we [sometimes gone] from that, and then we have invested in (inaudible)

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Operator [126]

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Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Hitesh Oberoi for closing comments.

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Hitesh Oberoi, Info Edge (India) Limited - Co-Promoter, MD, CEO & Director [127]

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Thank you, everyone, for taking time out on a holiday to be on this call, and have a good evening.

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Operator [128]

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Thank you very much, sir. Ladies and gentlemen, on behalf of Info Edge (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.