Info Edge (India) Ltd (NAUKRI) Q4 FY22 Earnings Concall Transcript

Info Edge (India) Ltd (NSE: NAUKRI) Q4 FY22 Earnings Concall dated May 30, 2022

Corporate Participants:

Vivek Aggarwal — Senior Vice President, Finance

Hitesh Oberoi — Managing Director and Chief Executive Officer

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Chintan Arvind Thakkar — Chief Financial Officer

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Analysts:

Vivekanand Subbaraman — Ambit Capital — Analyst

Pranav Kshatriya — Edelweiss — Analyst

Vijit Jain — Citi — Analyst

Geeth Vaz — Lagori — Analyst

Mohit Motwani — Edelweiss — Analyst

Aditya Suresh — Macquarie — Analyst

Mukul Garg — Motilal Oswal — Analyst

Swapnil Potdukhe — JM Financial — Analyst

Abhishek Bhandari — Nomura — Analyst

Aatman Ajmera — Nordea — Analyst

Presentation:

Vivek Aggarwal — Senior Vice President, Finance

Hi, everyone. Good evening. I welcome you to Info Edge India Limited Q4 ’22 and Financial Year ’22 Financial Results conference call. [Operator Instructions] Please note that this call is being recorded.

Joining us today from the management side, we have Mr. Sanjeev Bikhchandani, Founder and Chairman; Mr. Hitesh Oberoi, Co-Promoter and Managing Director; and Mr. Chintan Thakkar, Chief Financial Officer.

Before we begin today, I would like to remind you that some of the statements made in today’s conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to slide number 2 of investor presentation for detailed disclaimer.

Now, I would like to hand over the conference to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thank you, Vivek. Good evening, everyone. I hope you’re all doing well. Welcome to our Fourth Quarter Earnings Call. We take the privilege of announcing our Q4 ’22 and FY21/22 financial performance of the company. We will start with overall financials and then cover each business vertical in more detail. And then, of course, we have time for Q&A. The audited financial statements and other schedules on segmental billing, revenues, et cetera, along with the data sheet, have been uploaded on our website, infoedge.in.

I’ll first take you through our standalone financials. Billings in Q4 were up 52.5% year-on-year at INR649.3 crores. FY22 billings stood at INR1,866 crores, a year-on-year growth of 58.7%. Revenues in Q4 were INR455.5 crores, a year-on-year growth of 51.6%. FY22 revenues stood at INR1,562.5 crores, an increase of 38.5% year-on-year. Operating expenses, excluding depreciation, for the quarter grew 35.5% year-on-year and stood at INR327.5 crores. For FY22, operating expenses were INR1,098.7 crores, a growth of 30.8%.

EBITDA for the quarter stood at INR128 crores versus INR58.8 crores in Q4 of last year, a growth of 117.6% year-on-year. FY22 EBITDA grew 61% to INR463.7 crores from INR288.1 crores reported last year. EBITDA margins for the quarter stood at 28.1%, compared to 19.6% in Q4 of last year. For FY22, EBITDA margin stood at 29.7% versus 25.5% last year.

Cash EBITDA for the quarter grew 84.8% year-on-year and stood at INR341.7 crores. Cash EBITDA for the full year stood at INR811.6 crores, a year-on-year growth of 140.2%. Deferred sales revenue stood at INR819.6 crores as of March 31, 2022 versus INR521.6 crores as of March 31, 2021, an increase of 57% year-on-year. The cash balance at the IEIL level — overall level stands at INR3,759 crores as of March 31, 2022. The balance stood at INR3,558 crores as of March 31, 2021.

During this quarter, NCLT also approved the merger of iimjobs and Info Edge. Accordingly, the numbers of the stand-alone business and the recruitment business that we will discuss in the later part of the call will be inclusive of iimjobs financials for current, as well as previous periods.

We will now talk you through what we’re seeing in the market in our different verticals and then we will discuss financials for each vertical. Starting with recruitment, the hiring market continues to be strong. Our IT customers continues to — continue to see increased hiring pressure on account of high attrition and the increasing gap between demand and supply of IT talent, thanks to the digital transformation story that is playing out globally. We also saw an increase in demand of freshers on our platform last year and also in the last quarter of last year. In the last two quarters, we have started seeing demand for non-IT talent also come back as the economy continues to open post pandemic.

Q4 saw an average increase of 30% in the Naukri JobSpeak Index. Non-IT sectors like BFSI, retail, hospitality, pharma and telecom also demonstrated healthy growth as concerns related to COVID reduced drastically during the quarter. The JobSpeak Index for the month of April grew 38% year-on-year, with sectors like travel and hospitality growing over 100%. We are watchful of — and — of recessionary trends in the US, which could impact IT hiring in the coming months; fingers crossed on this one.

Moving on to the real estate vertical. Well-known builders are seeing a strong revival of demand for nearly ready to move in homes. There is an escalation in cost of construction of new homes, which could result in higher priceable new homes going forward. Real estate prices have started moving up in some pockets and while it seems like after a long time, affordable real estate prices combined with rising incomes, low home loan rates, and a demand for bigger homes post COVID are likely to lead to the real estate market picking up in the months to come.

The matrimony market continues to grow at 5%,10% per annum. We are beginning to see the emergence of small serious dating category in addition to casual dating now. The EdTech segment continues — remains vibrant and education search and research traffic for Shiksha continues to grow well.

Moving on to financials, we will discuss the recruitment business first. In Q4 of ’21/’22, recruitment segment billings grew 66.6% year-on-year and stood at INR513.3 crores, while revenues were INR344.4 crores. Revenue grew at about 64.7% year-on-year. For FY22, recruitment billings are up 72.6% year-on-year to INR1,436.4 crores, while revenue grew year-on-year by 44.2% to INR1,154.2 crores.

EBITDA for Q4 stood at INR206.9 crores, compared to INR104.9 crores in Q4 of ’21, a growth of 97.2%. EBITDA for the full year for the recruitment vertical stood at INR679.8 crores, a year-on-year growth of 55.4%. Margins at the business grew 10% from 50.2% in Q4 of ’21 to 60.1% in Q4 of ’22. EBITDA for the full year stood at — EBITDA margin for the full year stood at 58.9%, compared to 54.7% in FY21. Cash EBITDA for Q4 in the recruitment vertical grew 89% year-on-year to INR386.2 crores, and cash EBITDA for FY22 for the full year for the recruitment vertical stood at INR987 crores, a year-on-year growth of 110.1%.

New CV registrations in Q4 stood at rupees — at 21,000 per day, while CV modifications were — per day stood at INR417,000. Traffic share remained stable and daily active users are at an all-time high on the platform. During the year, we took several steps in our recruitment business to keep up our offerings to cater to changing consumer and customer requirements. We saw an increase in hiring of freshers through our FirstNaukri platform. Accordingly, the product was revamped to attract and handle more traffic.

We continue to invest behind our AmbitionBox offering to help job seekers find the right place to work and to research salaries, et cetera. We also augmented our assessment services for job seekers on a wider scale to our platform, DoSelect. In these times of high attrition and growth, Naukri has emerged as a high value recruitment tool for most recruitment firms and companies. This helped us in driving value selling proposition in most of our sales discussions and helped us rationalize discounts. There is also an increasing focus on adding new customers on the platform. Most of our new customers are now being acquired through the online mode.

A little bit on DoSelect and Zwayam, our two recent acquisitions. DoSelect, our recent acquisition in the assessment space, generated a revenue of INR16.2 crores for FY21/22. The business had reported revenue of INR4.2 crores in FY21. We saw similar growth in Zwayam this financial year, with revenues growing from INR6.5 crores in FY2021 to INR11.6 crores last year.

Moving on to the real estate vertical 99acres. Billings in Q4 in the 99acres business stood at INR79.3 crores, a year-on-year growth of 10.6%, while revenue stood at INR61.3 crores, a year-on-year growth of 22.3% from INR50.1 crores Q4 of last year. For FY22, billing grew 25.1% year-on-year to INR231 crores, while revenue grew 25.1% and stood at INR217.3 crores.

EBITDA for the quarter stood at loss of INR33.8 crores. EBITDA for full year stood at a loss of INR78 crores against a loss of INR22 crores booked in the last financial year. Cash loss during the quarter stood at INR11.2 crores against a cash profit of INR5.7 crores in Q4 of last year. And cash loss for FY22 stood at INR54 crores against a cash loss of INR12 crores in FY21.

Seeing growth in the real estate sector and an aggressive stance by our competitors, we increased our marketing expense by almost 44% Q-on-Q in 99acres last quarter. We launched premium listings. This product has received encouraging response from the advertisers during the quarter. With market recovery now back on track, we are slowly seeing old broker and builder clients return to the platform and with reduced inventory level, we expect increase in new project launches in the sector going forward. Growth of unique users and traffic on the platform shall be priority for the next few quarters. We will continue to invest in both operations and marketing.

During the quarter, we also announced an investment of INR137 crores in — into 4B Network. This venture aims at providing a tech platform to connect agents, brokers, and builders on the one hand and track and aggregate new home site visits and home loans on the other to make it easier for all participants in the market.

Moving on to the matrimony vertical, Jeevansathi. Billings grew 5% year-on-year in Q4 to INR28.1 crores and revenue for the quarter stood at INR25.4 crores, down 1.9% compared to Q4 of last year. FY22 billing grew by 1.5% year-on-year to INR101.9 crores and revenue grew to INR100.2 crores of INR96.9 crores in FY21, a year-on-year growth of 3.4%.

EBITDA losses stood at INR38.8 crores in Q4. FY22 EBITDA loss stood at a loss of INR120 crores against a loss of INR95.6 crores in FY21. Cash loss for Jeevansathi during the quarter stood at INR34.8 crores, up from a cash loss of INR20.9 crores in the same quarter of last year.

Growth in Jeevansathi stabilized in Q4 and, like we mentioned in the last — in our last earnings call, we have reworked our strategy. We have introduced several free offerings this quarter. This will result in revenue taking a hit for the next two or three quarters. We are still evaluating the impact of these changes. We hope that they will help us gain serious traffic share in this category going forward. During the quarter, we also announced acquisition of 76% of Aisle Network Private Limited. Aisle is engaged in the business of running multiple serious dating platforms on the web via its mobile apps. For FY21, Aisle reported a revenue of INR7.56 crores. We are quite optimistic of this space and expect the business to grow well going forward.

Moving on to our education vertical, Shiksha. In Q4, Shiksha billings grew by 48.2% year-on-year INR28.7 crores, while revenue grew 58.8% year-on-year to INR24.4 crores. FY22 billing and revenue grew 64.5% and 59.2%, respectively, and stood at INR96.5 crores and INR90.7 crores, respectively. EBITDA for the quarter stood at INR4.8 crores, compared to an EBITDA of INR28 lakhs in Q4 of last year.

FY22 operating profit stood at INR19.5 crores against a profit of INR4.1 crores in FY21. Cash profit for the quarter stood at INR10.6 crores, up from INR4.3 crores in Q4 of last year. Cash profit for FY22 stood at INR28.7 crores, up from INR5.8 crores reported in Q4 of 2021. We continue to invest more in the Shiksha Study Abroad business and aggregating more useful content for our users on our platform.

Moving on to our financial investments. In January 2020, we launched the Info Edge Venture Fund, with the fund size of $100 million in partnership with MacRitchie Investments Private Limited, an indirect wholly owned subsidiary of Temasek Holdings Private Limited. By March 31, 2022, the fund has been able to successfully invest 80% of its purpose. Of the 28 investments made through the fund, 10 have been able to raise a follow-on round from marquee investors at a higher valuation.

The company now proposes to set up three AIF schemes, already approved by SEBI, with a target corpus of $325 million. Info Edge and MacRitchie Investments Private Limited have committed to approximately 50% each of the total corpus of the schemes. The relevant approval from the shareholders as per SEBI listing regulations and MCA circulars have been secured through a postal ballot on May 21, 2022. These funds will have a life of 12 years and further extendable by two years as per SEBI regulations.

At the consolidated level, the net sales for the Group stood at INR472.9 crores versus INR300.5 crores the same quarter of last year. The consolidated entity at the total comprehensive income level, there is a loss of INR6,420.8 crores versus a gain of INR311.9 crores from the corresponding quarter of March 2021. Adjusted for the exceptional items, PAT stood at a gain of INR245 crores in the quarter ended March 2022 versus a loss of INR39.6 crores in the corresponding quarter of last year.

Thank you. This is all from us. We are now ready to take any questions that you may have.

Questions and Answers:

Vivek Aggarwal — Senior Vice President, Finance

Thanks, Hitesh. We’ll now begin the Q&A session. Anyone who wishes to ask a question, may raise your hand on the screen. We’ll take your name and announce your turn in the question queue.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Vivek. We have couple of questions. So, the first question is from Vivekanand Subbaraman from Ambit Capital. Vivek, go ahead and ask your question.

Vivekanand Subbaraman — Ambit Capital — Analyst

[Technical Issues] the opportunity. My couple of questions are on Naukri. So, Hitesh, I thought that you mentioned about the — your watchful stance on the US recession. Can you elaborate a bit further on this and how it has been in the past for you, because — I mean, it has been a very long time since the US went into recession. So, that’s question one.

And secondly, what is your best guess of the proportion of IT hiring that happens through Naukri.com, and how has this rate moved in the last few years?

Hitesh Oberoi — Managing Director and Chief Executive Officer

US, we are not forecasting the US recession, okay? I was just sort of reacting to the various news items in various sort of media, which I have been reading for the last few weeks. As far as we are concerned, we are not seeing any slowdown as yet in the market. Q4 was our best quarter ever in the last 15 years. IT hiring, it’s still very, very hard. Salaries are going up, attrition rates are high, companies are looking to hire more fresh talent to control costs, because lateral hiring is just also hard. So, at the moment, we are not seeing any slowdown in IT hiring. But I don’t know what is likely to happen going forward, given inflation, given the geopolitical situation, and so on and so forth.

So, in our history, we’ve seen two, three sort of serious slowdowns. There was a serious slowdown in 2008 and then there was, of course, COVID. What we’ve seen so far is, if there is a serious recession — even serious recessions don’t last for more than two, three quarters, and then life goes back to normal. If it’s not a recession, just a temporary slowdown, like, if an Indian — it’s a slight slowdown in economic growth, then that one can take in one’s stride. That may not impact anybody too much. Only a serious recession is something you need to worry about.

So, I don’t know if that answers your question. You had another question, right?

Vivekanand Subbaraman — Ambit Capital — Analyst

Yes. So my — the second question was on the proportion of IT hiring.

Hitesh Oberoi — Managing Director and Chief Executive Officer

IT hiring through Naukri?

Vivekanand Subbaraman — Ambit Capital — Analyst

I believe happens through Naukri, and how has it trended over the last few months?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Well, it’s different for different companies. The services companies, I suspect, end up doing at least 30%, 40% of their lateral hiring through Naukri, if not more. For product companies, it maybe 25%, 30%. In certain cases, it could be as high as of 50%, 60% as well for customers. I — if I were put a — take a number and sort of give an — as an average for the industry as a whole, I would take a number of more like 35%, 40%. That is what is probably the share of Naukri in all hiring at some of these companies.

How has it changed in the last two, three years? Maybe it’s gone up by a couple of percentage points. It tends to sort of be very high in a slow market, because in a slow market, companies can take their time to hire and they’re not in a hurry. In a fast-moving market or in the — in a hot market, companies are under tremendous pressure to hire. It’s very, very difficult to hire. So, they activate almost every channel to hire people. So, probably goes on a little bit in sort of hot markets; goes up in slow markets.

Vivekanand Subbaraman — Ambit Capital — Analyst

Thanks. That was useful. Just one follow-up. You have been looking to build adjacencies on recruitment through acquisitions and also through your own products. So, what are the measures or, say, segments of recruitment where you think Info Edge is lacking and where will the investments be focused?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Yeah. So, we’ve already signaled that through our acquisitions and the various sort of new initiatives that we’re pursuing in-house. So, premium hiring or hiring a premium talent was a weak area for us, which is why we acquired iimjobs a few years ago, and we are now trying to sort of build that — take that business to — product to more customers in our sort of portfolio.

AmbitionBox is a startup we had acquired many years ago. AmbitionBox is now as big as Glassdoor in India. So, if you want to research companies, you want to research salaries, you want to research interview questions, AmbitionBox is where you go today. So, that business has really grown. That site has really grown in terms of usage and traffic over the last three years for us. It’s fairly sort of big now. FirstNaukri is something we’ve been investing behind for the last few years. That business grew at more than 100% last year, because campus having really moved — picked up last year, and is likely to stay strong this year as well.

Then we acquired DoSelect. So, we think skill-based hiring will sort of increase going forward, and companies will need platform to sort of assess skills and that’s where DoSelect sort of fits in. That business grew to INR16 crores last year. Again, it’s a very good product, very good team. All we are doing is using our sales just to take the product to more customers. And then, of course, Zwayam, which is our applicant tracking and management system or a recruitment management software, which, last year, became a part of our portfolio. Our long-term plan is to add more machine learning to their offerings. And again, like, use our sort of sales force to take that product to more customers.

Internally, we are also investing behind Job Hai which is a blue-collar platform, early days. But that is scaling up nicely in terms of traffic, in terms of listing, in terms of usage. We are also experimenting with BigShyft, again, a premium platform for end-to-end hiring. So, that — they focus on closing transactions for tech companies, early days. It’s a startup inside the company, but that is something we have been sort of playing around with for the last couple of years as well. So, these are all the adjacent different sort of areas where — to start with, the verticals may be small, the business may be small, but they hold tremendous potential for the next five, seven years.

Vivekanand Subbaraman — Ambit Capital — Analyst

Thanks, Hitesh. Just one last question on recruitment, which is on the billing. So, the number that we see in the current quarter, does it have any lumpy year-end renewals that came through, or is it fair to assume that this is the run rate that will percolate into revenues in fiscal ’23?

Hitesh Oberoi — Managing Director and Chief Executive Officer

No, this is — I would not call it the run rate, because Q4 is our biggest quarter, and there are lot of renewals, which are due in Q4. And so, there is seasonality in our business was of the — was successful business. And Q4 is always our biggest quarter. So, the growth rate in Q4 is, of course, you can — maybe — if market stays the same, then you can extrapolate that for future quarters. But that is, of course, a big if. But the base for every quarter will change. Q1 last year, for example, was moderate than Q4 the year before last. So, you can’t say that that is the annual run rate. That’s it.

Vivekanand Subbaraman — Ambit Capital — Analyst

All right. Thanks. I’ll come back in the queue.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Vivek. Next question is from Pranav. Pranav, go ahead and ask your question, from Edelweiss.

Pranav Kshatriya — Edelweiss — Analyst

Hi, thanks for the opportunity. I have a couple of questions. My first question is regarding the slowdown in hiring, especially in the startup world. I mean, this has implication on the — on two sides. One is, somewhat your employee cost is also linked to it. So, how should we see this? And secondly, on the recruitment business side, that you will have some revenue, which can potentially slow down. So, how do you see this impacting in the current scenario.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Well, if the slowdown is only in startup hiring, that is actually a positive for us, because we don’t make a lot of revenue from startups. They are a very tiny part of our revenue. On the other hand, we lose a lot of people to startups and big tech companies. So, if startups and big tech hiring, as in the internet kind of hiring, slows down, then that may actually be a benefit to us, because it will help us control our costs and wages. On the other hand, it may not affect our revenue so much.

On the other hand, if there is a slowdown in IT services hiring, in product companies hiring, back offices hiring, traditional — tech centers hiring, that is likely to hurt us, because a large part of our revenue comes from some 8,000, 10,000 companies in the IT space we sort of work with. And that, I guess, is more indexed — is going to be more indexed to what happens to the US market and — than anything else.

Pranav Kshatriya — Edelweiss — Analyst

Sure. My second question is, the — can you please elaborate, how do you see the philosophy on the investment in the listed space? So, for example, you have a large investment in Zomato and Policybazaar. So how should we see this in the longer term? That’s what I would like to know.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Do you want take that, Chintan?

Chintan Arvind Thakkar — Chief Financial Officer

You are talking about Zomato and Policybazaar, right? See — So, look, we are still figuring it out. We are locked in till July in Zomato and we are locked in till, I think, a few months later, I think November in Policybazaar. We have some — still have some time. We’ll figure it out. But we haven’t a view on it yet. But look, as long as there is enough growth left in the companies, and there is — we don’t have a competing use for the cash, we — there may be substantial value to be built by staying on. But on the other hand, if you believe there isn’t growth left or we have competing use for the cash, maybe we’ll look at an exit, but we have taken a call yet.

Pranav Kshatriya — Edelweiss — Analyst

Sure. If I can just ask one follow-up on this, I mean, the valuation in the startup world seems to be correcting. In that sense, are you looking to accelerate your deployment of the cash in the AIF in the current period, or how are you seeing this space [Speech Overlap].

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

So, the first one has invested in 28 companies. It won’t do any new companies. Whatever money is left there will be used for follow-ons in the current companies. There are follow-on fund, which will be used further for follow-ons in the current companies. And there are two new AIFs, which will be for new companies.

Now, we are being a little careful discerning should we get out. You see, a few things have changed in the last two, three, four months. You’ve got to go for companies where if you believe it’s going be heavily cash consumptive over the next few years. There is a serious risk of it not getting a external investor. And therefore, we’ll be a little careful. I think we won’t invest in a hurry. We will be very, very discerning.

Pranav Kshatriya — Edelweiss — Analyst

Sure. Thank you so much from my side, wish you all the very best.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Sure. Thanks, Pranav. Next question is from Vijit Jain from Citi. Vijit, go ahead and ask your question.

Vijit Jain — Citi — Analyst

Thank you, Anand. Part of my question was answered in the previous. But just a follow-up on that investment strategy, Sanjeev. Is there any change in views regarding which stage of companies you would invest in, given that, now, maybe in the private space, a lot of companies will come in at more reasonable valuations? That’s part one.

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Yes. Shall I answer that?

Vijit Jain — Citi — Analyst

No. Yes. So, my question was, is there any change in views regarding —

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

There is a change, we will still go early stage. We’ll still be, like, we’re first institutional check-in. The thing about growth in late-stage investments is that if the valuation is lower, there’s a reason. And if the company is still burning cash, it’s going to consume a lot of cash. And we are not in the big money game. Our fund sizes are modest, right? $100 million, $150 million, $75 million, they are not large funds. So, if somebody is raising $50 million, $60 million, $70 million, there is no way we can support that kind of round for a small ownership. And for a — and it’s — and when the market is corrected even at a lower valuation, if the operating risk is high, it’s still a very risky investment.

Vijit Jain — Citi — Analyst

Right. Thanks, Sanjeev. And my second question is to you, Hitesh. If you can talk about the A&P spend outlook into FY23, and also, are — any views on your own hiring for your own team in FY23? Is that going to continue to go up because of product investments, or how should we think about that?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Yes. So, let’s start with A&P. So, see — look, we look at advertising and marketing expenses quarter by quarter. We don’t have a budget for the year. We spend money, evaluate the impact of that spend, and then course-correct and fine-tune and refine as we go along. Now, what I can tell you for sure is that Jeevansathi, high ad spend will continue, because that’s the nature of the beast. Our competition is also spending aggressively. We also need to spend aggressively to stay in the game. 99acres also, we’re likely to spend more money than last year, because, again, that market has also become very competitive. There is a lot of competitiveness in that market.

We may spend a little more in Naukri, because that business is growing well and — I mean, we just sort of did some brand recon. We’ve been out of movie about a while, we may spend a little more in Naukri as well. But like I said, it will be quarter-on-quarter. We’ll see how it sort of — how the market sort of shapes up and plan accordingly.

As far as hiring goes, see, we will continue to hire in our newer verticals; so, verticals, which are small, but likely to grow in the long run. These are our investment modes. So, whether it’s the Study Abroad vertical in Shiksha, or whether it’s Job Hai, the blue-collar vertical that we’re building, which generates no revenue, or whether it’s the BigShyft, or whether it’s the AmbitionBox, or Zwayam, or DoSelect. In these verticals, we will continue to sort of invest more and more with — and again, like I said, we are watchful. We’ll invest for six months, see the impact, and then again, review and so on.

In our regular verticals, we may hire a few people more in functions like sales, operations, customers service, as business progresses. We are unlikely to seriously — or sort of invest a lot more in technology and product, and in terms of the number of people in our traditional core operation, because I think that is adequately staffed for the moment.

Vijit Jain — Citi — Analyst

Got it. Thanks, Hitesh. Those are my questions.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Vijit. Next question is from Geeth Vaz from Lagori. Geeth go ahead and ask your question.

Geeth Vaz — Lagori — Analyst

Hi, Hitesh. Congratulations on a great set of numbers.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thank you.

Geeth Vaz — Lagori — Analyst

And this is specifically from the Shiksha point of view. Just wanted to understand the breakup of revenue. What — how much — what is the percentage of penetration that you’ve gotten already from free and paid listings over there? That was the first question that I had.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Actually, penetration levels are very low. But I would not read too much into them, because, see, we have all kinds of listings on our platform, a lot of government colleges are also listed on our site, and they are unlikely to pay ever. So, while most of our revenue comes from maybe 700, 800 colleges and universities — and we may have 40,000 or some very large number on our platform. It is unlikely that many of them will pay ever, right?

Geeth Vaz — Lagori — Analyst

Like, just trying to estimate the growth potential over there and how much do you think there is — I mean, it’s been growing at like, above 50% for a long time. So, how long can that sustain?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Very difficult to say. See, in the Shiksha business, our revenue is a function of the number of leads we are able to generate for our customers and the price we charge per lead, right? So, now, if we’re able to keep growing at this rate, if we’re able to keep growing our traffic, improve conversion rate on our platforms, we have to be able to monetize these at a higher price. It’s not possible to sort of do this year-on-year every year for a long time.

So, let’s see. I mean, I — hard to say whether we will be to scale a traffic at this rate going forward also, right? Can we add new — some more customers? Yes. Can we look at different revenue models? May be, yes. For example, we’re already experimenting — we are already sort of doing a lot on the Study Abroad side.

Now, Study Abroad, we are following a very different model. We’ve gone full stack; as in, we are doing end-to-end transaction, and the Study Abroad business did a reasonable job last year. We generated about INR20 crores of revenue from the Study Abroad business and started from zero three, four years ago. So, it’s a startup inside Shiksha. We plan to invest behind that business and grow it faster going forward. Let’s see what happens. The domestic business, can it continue to grow at 50% year-on-year for a long time? It’s going to be very difficult, unless we’re able to track some new sort of model of growth.

Geeth Vaz — Lagori — Analyst

Got it. Also, one last question is, what is the breakup between agency hiring and direct hiring on the platform right now from Naukri? Companies hiring directly versus —

Hitesh Oberoi — Managing Director and Chief Executive Officer

Agencies — I think — I mean, I don’t have the latest number. But used to be around 25% of our revenue. Maybe we can dig out the number and send it to you separately.

Geeth Vaz — Lagori — Analyst

Sure. Thank you so much, and congrats again on the numbers.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thank you.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Geeth. Next question is from Mohit Motwani from Edelweiss. Mohit, go ahead and ask your question.

Mohit Motwani — Edelweiss — Analyst

Hi, thanks for the opportunity. I have two questions. One is on the paid listings in 99acres. If you see that the paid listings have come down in the last two quarters, but the billings have significantly increased. So, can you give some insight on what has led to the increase in billings? That’s my first question.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Well, see, billings have gone up because — billing per price — we upped our prices, we’ve sort of cut discounts. So, that’s the reason you are seeing more monetization per listing. Our response has also gone up over the last few months. So, we’re delivering a lot more to our customers. Now, why have paid listings gone down? See, there are two, three reasons. One, what happened in a — see, paid listings are often put up by brokers and often, brokers used to put up multiple listings for the same property, right? And then prices go up, they probably sort of become a little more careful about how many listings they post, because they don’t want to be pay much more by — for posting the same listing again and again. That’s one.

Secondly, I suspect, in the business — just my suspicion right now that the market has become a lot better than it was and properties are moving a lot faster. So, earlier, it used to take maybe four months, five months, six months to sell a property. Now, because the market has become a little better than it used to be, maybe you can — you put up a property, you start getting the response, you can maybe get out in two, three months on the average. So, it’s a faster moving market as well.

Mohit Motwani — Edelweiss — Analyst

Sure. That’s helpful. Thanks. And my second question, Hitesh, is on the matrimony business. So, I know that you have been very bullish on the matrimony space.

Hitesh Oberoi — Managing Director and Chief Executive Officer

We’re not bullish. Anyway, carry on.

Mohit Motwani — Edelweiss — Analyst

Yes, sure. So, in the last, like, five years, I think, it has been making losses at the EBITDA level. So, I believe the — what you’re betting on is the number of paid profiles will come up in the matrimony space, right? But there are no repeat use cases. If you look at the matrimony segment, there won’t be any repeat use cases. So, what — how are you seeing the future of this matrimony space? Are you expecting more paid profiles or — because the pricing power may not be there, considering the competition. So, see, we’ve done badly in the matrimony space for the last few years for only — for the simple reason that we are a number three player nationally and that we have only 15% share of the market. And it’s hard for a number three player in any market to make money. It’s not a market where one player dominates, like Naukri does in jobs. So, what we have tried to do over the last four, five years is gain at least in terms of profile share, traffic share, matchmaking share, with the hope that revenue will follow once we gain share. So, three — four years ago, we implemented a heavy sort of discounting, variable discounting strategy. For a while, that got us a lot of traffic, it got us a lot of paid users, it resulted in more matches happening on the platform. It increased our share of matches, if not — and not necessarily, revenue in this space. But then competition caught on. It took them about — we also sort of supplemented and complemented it with more advertising to get more traffic, more profiles registered to start with. The strategy yielded good gains for about by five, six, seven quarters, but then competition caught on. They also upped their advertising spend. They also sort of discounting very, very aggressively. And then, of course, we ran into COVID. And lately, the strategy has stopped working for us, because everybody is doing the same thing. And we — again, we are a number three player. Lately, what we’ve done is, we’ve changed our strategy once again. We have in fact become [Indecipherable] more aggressive. Instead of giving heavy discounts, we’ve actually gone free for a lot of our paid services, right. We — again, the intention is to, like I said, gain traffic share, gain profile share, enable more matchmaking on our platform and, hopefully, as a result, a little more word of mouth and we’ll be able to sort of garner a larger share of the matrimony market. Once that happens, then over a year or two, you can sort of play around with monetization as well. So, that’s the idea. It’s early days. We are happy with what we’re seeing. Now, what this strategy — as a result of this strategy, we will — our revenues will take a beating for at least two, three, four quarters. But we are also hoping and — that our marketing costs will also come down. Early days in that one, because if Jeevansathi is free, it helps us differentiate ourselves from our competition. So, let’s see how this plays out over the next two, three, four quarters. We are hopeful and bullish that it will help us gain share. But again, it’s also going to be a function of what happens in the market, how our competition reacts, and so on and so forth. So, fingers crossed, let’s see how this plays out. Sure. So, just if I can follow up with a last question. So, the new AIF schemes, which you’re setting up, so those will also have investments similar to how you had with the first AIF fund? Like in similar areas like AI, machine learning, and those kind of areas?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Yes. So, there’s a follow-on fund, invest only in the emerging winners from Fund I. That’s $100 million. There is Fund II, which will basically invest in new companies, which we’re not invested in earlier, on the same strategy as Fund I. And that wasn’t a lot of AI/ML, right? That was more consumer, Internet, mobile app and so on, which, of course, you — nowadays, you can’t avoid AI/ML is there in everything. But pure tech companies, very few. And then there is Fund IIB, Capital IIB, which is going to be a more product tech-ish, deep-tech-ish kind of investments. It will be more AI/ML type. But there will be some overlap, but we’ll figure it out.

Mohit Motwani — Edelweiss — Analyst

Sure. Thank you for all the answers. Thank you so much.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Mohit. Next question is from Aditya from Macquarie. Aditya, go ahead and ask your question.

Aditya Suresh — Macquarie — Analyst

Thank you. Good afternoon. So, a few questions. First was more on kind of real estate and matrimony. I guess, it’s a long game here. You mentioned in the past, consolidation is game. Last year, we had a $30 million loss. The year before, the loss was a bit lower than that. So, I guess, in terms of fiscal ’23, maybe any thoughts in terms of how much of losses you’re will need to fund here at the upper bound? And then I had a few more questions.

Hitesh Oberoi — Managing Director and Chief Executive Officer

There is no upper bound. But in matrimony, like I said, we lost about INR120 crores last year. So, now, we are hoping that it will sort of — we’ll be able to make serious gains in terms of traffic share and if you do that, then the rest of the stuff follows from there.

Now, whether we’ll end up with a INR100 crore loss or a INR150 crore loss is difficult for me to say at this point in time, because like I said, we’ve changed our model. It’s very, very early days. No revenue for the next three, four quarters. So, we did INR100 crores last year. We will see a drop at least for two, three quarters. And then only if you gain market share and traffic share and if we’re able to figure out new ways of monetizing, will revenue grow back. We are also looking to cut our marketing spend slightly. But again, like I said, it will be one quarter a time. We’ll play around, experiment, see what happens, refine and fine-tune as we go along.

In real estate also, again, it’s become very competitive. There are many more players in the market than was the case two, three years ago. Some of them are very heavily funded. Market is also showing signs of making a comeback. So, again, it will be like one quarter at time. But needless to sort of say, we will sort of — if we have to stay competitive, if we have to stay in the game, we will have to respond to competition. We cannot sort of let competition sort of take the game away from us, if you want to stay in the game. And if that means making — taking extra losses for a couple of years, we’ll have to — we should be prepared for it.

Aditya Suresh — Macquarie — Analyst

Excellent answer, Hitesh. I guess, second question was more on your Naukri business right now. Here, clearly, in a kind of very strong demand environment, your margins have expanded as well. So, in the prior years, your EBITDA margin was about 55%. I understand that there are levers, which you can pull, but, I guess, into fiscal ’23, do you see a downside to where your current margins are in Naukri?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Well, it’ll depend on what happens to demand and revenue. See, if revenues continue to — or if billings continue to grow at 25%, 30% or more, I don’t think margins in fact could improve from here on, right? On the other hand, if there’s a slowdown in the second half of the year, if IT hiring takes a hit, if there’s a recession and so on and so forth, then it’s hard for me. So, if — and — but like I said, we manage quarter by quarter. So, pre — in the past, I’ve always said, listen, at 15%, 20% growth also we can maintain our margins.

But this year, we are being aggressive in terms of the salary increases that are ruling out in terms of investments to the — in adjacent verticals, right? I mentioned most of them inside the company. They are not going to generate a lot of revenue in the short term. But we think it’s important to keep investing in them, to invest in them for the medium term. So, we don’t want to cut down on those investments. Recessions, in the past, we’ve seen, normally don’t last for more than two or three quarters.

Aditya Suresh — Macquarie — Analyst

Yeah. Can I ask one more question, Hitesh?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Yes.

Aditya Suresh — Macquarie — Analyst

So, just on your investee companies, maybe just a quick update there on some of your larger carrying value investments, whether these ShopKirana business, et cetera? And also, I guess, related to the AIF, I mean, are you increasingly facing a more challenging environment in terms of capital and having to kind of go down the risk curve as you’re kind of competing with some of the larger kind of PE, VC firms?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Well, I’ll take that. See, actually, what’s happened last two, three months is that people have been very careful, even other investors. So, it’s not as if it’s a very competitive situation where we are having to fight to get into investments. That’s not the case. We — I think everybody is being been and, therefore, the risk of the other side, what if your current companies can’t get the next rounds, and you’re dealing with that and you’re figuring out how much cash they have, how much runway they have and so on.

So, if somebody has got two years of cash, it’s — he’s okay. But if he’s got six months of cash, he better start raising now, immediately and pretty quickly, right? So, it’s not as if it’s really competitive in getting into deals right now. And you should actually be very careful what deals you want to get into, right? Now, as far as ShopKirana business are concerned, I mean, they’re both reasonably well capitalized right now. But yes, they will need more capital. They will need at least one round more. But the business is scaling up nice, but they’re not making money. So, obviously, over the next few months or so, they will — we will have to look at capitalization options there.

Aditya Suresh — Macquarie — Analyst

Thanks, Sanjeev.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thank you so much, Aditya. Next question is from Bhavik Mehta from JP Morgan. Bhavik, go ahead and ask your question. Bhavik, you’re there? We’ll take next question while he joins back. The next question is from Vivekanand from Ambit Capital. Vivek, go ahead and ask your question.

Vivekanand Subbaraman — Ambit Capital — Analyst

Hello. Thank you for the follow-up opportunity. First one is for Sanjeev. So, we saw that in the past, Zomato and PB Fintech, you invested almost close to INR1,000 crores in these two companies. In fact, in PB, you invested around INR400 crores in one round itself. Now, given the new AIF structure, does this imply that you are no longer able to cut such large checks in follow-on rounds for your investments?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

That is substantially correct. The truth is that — we — in our earlier sort of capital allocation, in our portfolio, we cut some large checks, which would never have passed muster actually in the AIF structure, because even SEBI does not allow more than X amount of your fund going into one company, right? And you’ve got third-party capital now and, therefore, you’ve got to have — you’ve got to follow norms of commercial prudence. Now, it worked out for us, since it’s a modern policy. The fact that we cut large checks and given out these kind of options we’ve done, but it is also adding risk.

So, therefore, yes, we will be more commercially prudent than we were earlier and yes, we won’t take bet the fund kind of investments, where you have invested a very large percentage of your fund into any one company. So, you can’t invest INR400 crores, you’re absolutely right, in one check in one company.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay, that was very useful. Just one follow-up, Sanjeev. So, does this mean that for deploying the same amount of capital or perhaps now 3x the capital that we deployed in the first AIF, we will potentially have the investment around 100 companies?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

No, it doesn’t mean that. You see, $100 million of this $325 million is going into a follow-on fund, which we’ll only invest in the emerging winners of Fund I. So, that doesn’t go into new companies at all, right? What — you will have $75 million and $150 million, $225 million. Yes, you will have maybe 2x to the companies, maybe. We are still doing around.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. And some of these startups that are listed here, the Unbox robotics, the IoT company, are these also a earmarked for the deep-tech AIFs, or is it part of the previous?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

So, listen, we had a — we have a small sort of pool of capital we had put, right, in the company balance sheet to invest in very early stage deep-tech companies, and this was done through a subsidiary called Redstart, right? And this is — those companies in kind of them, we’ll have to figure out where you put them. That’s still being worked out.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. Last one is for Hitesh. So, now that Shiksha’s billing is higher than that of Jeevansathi, does this mean that your business priorities also change in tandem with the higher billing of Shiksha over Jeevansathi?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Well, see, we — internally, we have a business unit structure. So, every business has a business head and they sort of make a case for their business, they build business plans and then they execute. They are empowered to sort of hire people, invest in marketing, et cetera, et cetera.

Now, why — yes, of course, Shiksha has done well for the last two years and we are going to be sort of increasing our investment in Shiksha going forward. Like I said, we are looking to invest behind the Study Abroad sort of section in — vertical in Shiksha. And so — but in Jeevansathi, it’s been one bad year. We expected to grow at 15%, 20%. We’ve grown it only maybe 2%, 3%, 4%. But now, we have again sort of revamped our strategy. Now, if the strategy starts to yield results, we’ll continue to invest more behind Jeevansathi too.

Vivekanand Subbaraman — Ambit Capital — Analyst

All right. Understood. Thanks, and all the best.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Vivek. Next question is from Mukul Garg from Motilal Oswal. Mukul, go ahead and ask your question.

Mukul Garg — Motilal Oswal — Analyst

Thanks. Hi, Hitesh. Good evening. Hitesh, couple of questions from my side. First one was, on the — just a bit of a clarification on the recruitment side. There is a difference of about INR75 crores between the recruitment and Naukri billing. Is this purely due to iimjobs, and can you just help break out how much growth iimjobs has done?

Hitesh Oberoi — Managing Director and Chief Executive Officer

I just want to clarify. See, recruitment for us includes Quadrangle. It also includes Naukrigulf. It also includes — of course, we won’t get — it’s almost zero revenue from Job Hai and BigShyft, but it also includes those verticals. It includes AmbitionBox. It includes the candidate services business in Info Edge. And now, I don’t know whether our — Chintan, can you just clarify whether what have we reported includes iimjobs and Zwayam and DoSelect as well or –?

Chintan Arvind Thakkar — Chief Financial Officer

Yea. The recruitment solutions numbers include iimjobs number, because that merger is complete. It won’t include Zwayam and DoSelect. I think those numbers, we have given it out separately. But broadly that then explains that Naukri is just one subset of recruitments [Indecipherable]. Of course, that’s the big part of it, but there are other small, small, small brands also. And that’s — everything kind of accumulates into the overall recruitment solution numbers.

Mukul Garg — Motilal Oswal — Analyst

Right. So, Chintan, is it fair to assume that there is no major change in last few quarters because of these smaller businesses, their overall share in the recruitment billing, or has something grown quite rapidly?

Chintan Arvind Thakkar — Chief Financial Officer

Actually, I mean, I don’t think they gave out the numbers, but our core Naukri business — original business grew the fastest, so nothing [Speech Overlap] more than anything else.

Mukul Garg — Motilal Oswal — Analyst

Right. And also, the second part was a follow-up to earlier question on 99acres, Hitesh. If you look at the paid listing drop, is it fair to assume that this was partially due to market share loss, as you increase prices and if you look at the number of paid listing, it is probably lowest in recent history, excluding, obviously, the Q1 disruption. Now, I have to go back to — all the way to FY15 to get a lower number. And also, if you can just kind of break it up was the impact more on the rental side versus the developer side, how is the mix shaping up?

Hitesh Oberoi — Managing Director and Chief Executive Officer

So, the fall in paid listing, like I said, is — can be attributed to two, three things. One is, of course, higher prices and, therefore, brokers putting up fewer of the same listings. Two is, the market being a little better than it used to be. Three, maybe there is more — like I mentioned earlier, there is more competitive intensity as well. Yes, we have lost some customers at the bottom, because that was by design in the beginning at least, because a lot of the customers were paying us very little money. So, we didn’t feel it was sort of important to sort of service them. Also, there was a slowdown. So, many sort of our clients went out of business, especially in the first half of last year. They’re all — slowly and steadily, they’re all coming back. But — so, let’s see, what happens going forward.

Mukul Garg — Motilal Oswal — Analyst

Understood. The third was on the — while, obviously, there are concerns on the IT side going forward in FY23, but how should we think about the normal IT position, the remaining 50% of the Naukri business that went to a deep compression in last two years? How should we see the growth, especially compared to what it was in FY20, pre-pandemic? Is it something, which can really see a fast catch-up next year?

Hitesh Oberoi — Managing Director and Chief Executive Officer

So, again, the non-IT sort of piece, I would break up into two parts. One is, the sectors like travel, tourism, hospitality, retail, which were massively impacted by the pandemic. And then there are the other non-IT sectors like education, pharmaceuticals, FMCG, et cetera. So, we seen — so, the second sort of segment, they — that — we serve that — seeing hiring in these sectors pick up in the second half of last year itself. So, some of these companies are hiring very aggressively towards the second half of last year.

But lately, what we are seeing is the other segment also come back, the hospitality, travel, tourism, retail, these kind of sort of sectors, because they have started opening up post pandemic. Now, I suspect — and what we’re also seeing in the ground, in fact, even in our company, is till last year, we were worried about tech attrition and, therefore, we had to get massive increases to people in our product development sort of organization.

But this year, we are having to sort of pay a lot more to people in functions like customer service and operations and sales and finance and accounts and — as well, because demand for these professions is also [Indecipherable]. Now, will this continue for another two quarters, four quarters, one quarter is hard for me to say. Things are opening up. Many of these companies had — they let off people, they have shut — they have downsized over the last two, three years. They are beginning to see hire once again, for how — and that is resulting in higher attrition in other sectors as well, not just in these sectors, because — but for how long will this continue is hard for me to say.

Mukul Garg — Motilal Oswal — Analyst

That’s fair. The last one was —

Hitesh Oberoi — Managing Director and Chief Executive Officer

One more point I want to make, see, many of these people — sort of many of these workers also went back home, right, and a lot of them are working from homes. So, as companies encourage them and — to get back to work, that could also lead to some attrition in some places.

Mukul Garg — Motilal Oswal — Analyst

Sure. If I could ask one question to Sanjeev, if he’s there, the — if you look at the last fundraise, there was a discussion about scaling or acquisition in the non-Naukri vertical in the stand-alone entity. With funding drying up and, obviously, peers kind of struggling, can that be an opportunity for a direct acquisition, because that will not be possible through AIFs?

Chintan Arvind Thakkar — Chief Financial Officer

No. So, acquisition is not happening with AIF. But there is enough money on the balance sheet. But I’ll let Hitesh answer that question, because that really comes under him.

Hitesh Oberoi — Managing Director and Chief Executive Officer

No, no. See, like, when we raise money also, we’ve said that we are looking to, one, of course, invest in our operating businesses in adjacent areas; two, we said we would sort of do more investing in companies outside also, do some tuck-in acquisitions. And the third thing we had said is that we have sort of hoping to sort of do a big acquisition at some point in time in the next two, three years. But big acquisitions, as we have learned, are, one, of course, they’re opportunistic. There are just a handful of companies you can acquire. And what also happened over the last two, three years is that valuation sort of out went out of whack. Now — and therefore, everything looks very, very pricey.

Could things on the front change going forward? Maybe, maybe not. Time will tell. But big acquisitions will — you’ll probably see we’ll probably do one — maybe one in the next couple of years, if we get opportunity. Hard to predict what’s going to happen on that one. We’ll continue to do the smaller ones, we’ll continue to sort of invest in our internal businesses. Those are easier.

Mukul Garg — Motilal Oswal — Analyst

Sure. No, that’s fair. Thanks for taking my questions, and best of luck for 2022. Thank you.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thank you.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Mukul. Next question is from Swapnil from JM Financial. Swapnil, go ahead and ask your question.

Swapnil Potdukhe — JM Financial — Analyst

Yes. Hi, thanks for taking my questions. So, a couple of them. First one, Naukri. So, given that we have a high billings base this year, I would presume your revenue would grow significantly well next year. And you mentioned that you will be doing some investments within Naukri itself. So, how should we think about margins for Naukri in the near term, at least? If you could give some sense on that?

Hitesh Oberoi — Managing Director and Chief Executive Officer

See, the investments are not going to be very, very substantial. Like I said, we look at things quarter-on-quarter. We make some investments, see results. If it’s working, you sort of scale up. So, we will continue to invest in our newer verticals. But if revenue growth continues to be — if billing growth continues to be solid and I’m — by solid, I don’t mean 60%, 70%, which is what we got last year. By solid, I mean, even if you are able to grow at 25%, 30% this year, I think our margins should continue to be very, very healthy.

Swapnil Potdukhe — JM Financial — Analyst

Okay. And second question is on Jeevansathi. You mentioned that you’re not charging customers, as a change in strategy. Now, should we assume that — theoretically speaking, can it — can the billings go to zero, or is it like — is it for partially, you’re charging some customers and not the other part of it? And just a follow-up on that, like, what would be your fixed expenses in Jeevansathi and what was — very much part of it, so that that would help us model?

Hitesh Oberoi — Managing Director and Chief Executive Officer

No, you’re right. Theoretically, billings can go to zero, because a substantial part of what we were sort of charging for is now free. Having said so, there are some value-added services just in paid, and we expect revenues to fall substantially, but not go to zero. But we were — maybe a 30%, 40% correction is very like — could happen, drop in revenue could happen easily. We are hoping, like I said, in the long run, to make it up through more registrations, more matchmaking, more activity, and more engagement on the platform, but that’s a big if.

In — we billed about — our revenue in Jeevansathi was INR100 crores last year. We spent about INR220 crores. We lost INR120 crores at the EBITDA level. I think, at least half of this, if not more, was advertising and marketing cost. So, the other costs would have been maybe closer to INR80 crores, INR90 crores, but I can — we can get back to you with the exact number.

Swapnil Potdukhe — JM Financial — Analyst

Right. Thanks a lot for taking the questions.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Swapnil. Next question is from Vijit Jain from Citi. Vijit, go ahead and ask your question.

Vijit Jain — Citi — Analyst

Thank you for the follow-up opportunity. I have just two questions. One, with Study Abroad, Hitesh, is there a change in approach with that, given that you’ve talked about it as a new initiative versus other classifieds business? Is there going to be more marketplace type of offerings, more value-added services, if you will, that you can monetize effectively? That’s one.

And my second question is on the IT and the recruitment business. Is there an overlap between the kind of resumes you think are sought by the new-age Internet companies, so to say, the ones where a lot of funding has been raised in the last few years and the conventional IT services companies, that is the core of your business? Those are the two questions.

Hitesh Oberoi — Managing Director and Chief Executive Officer

So — listen, so, the Shiksha Study Abroad thing started off an experiment and you know in the past, we’ve flirted with these assisted services. In Naukri, we have an e-Hire service, which is — even gets INR370 crores revenue. We have assisted services in 99acres, we have an assisted service in Jeevansathi, we’ve never gone the full hog — whole hog on, and said, okay, we’ll do the transaction.

Shiksha — Study Abroad is actually the first, as far as we are concerned, where we are actually seeing — we actually get paid on closure. We will send these kids overseas to these universities, we will hand over them, counsel them, get them a visa and so on and so forth. Now, we’ve been surprised by the fact that we’ve been able to execute reasonably well, given that this is not a skill we had in the company so far.

Now, if it scales up nicely and we are able to develop this new competency, then over time, we could experiment in other verticals as well. I’ve already mentioned BigShyft. There is a experiment going on inside the company where we’re looking at an end-to-end sort of play in premium tech hiring. But it’s early days of BigShyft. BigShyft is just about at the platform. They haven’t even started monetizing as well as yet. So, let’s see how this plays out. But it could open up new sort of avenues for the company in the medium term for these one or two experiments — if these one or two experiments were to succeed.

As far as your — as yours — as far as your second question goes, is there a big overlap between the kind of people IT services companies hire and these startups, which are heavily funded hire? I don’t think so, because IT services companies traditionally hire from Tier 2, Tier 3 campuses. Their starting salaries on campus are more like INR3 lakhs, INR4 lakhs, INR5 lakhs, INR6 lakhs for annum. And they hire in thousands and in hundreds of thousands, in fact.

On the other hand, these innovative tech startups, which are heavily funded, don’t hire as many people as IT services companies. But they like to hire sort of from Tier 1 campuses. Their starting salaries are often double or triple or what IT services companies offer on campus, and they hire very few numbers. So, between, I think all the startups put together, if you were to look at the total tech workforce, it could be smaller than perhaps a Wipro or an Infosys, right. So, that’s the — so they are not big in terms of size, but they hire higher quality, they hire from more premium — premier institutions, and they pay a lot more.

Vijit Jain — Citi — Analyst

Right. Thank you, Hitesh.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Vijit. Next question is from Abhishek Bhandari from Nomura. Abhishek, go ahead and ask your question.

Abhishek Bhandari — Nomura — Analyst

Yes, hi. Thank you. Hi, Hitesh. I hope you are doing well. Hitesh, I just had one basic question. If I look at your billing, which is an indicator of your market size. Your recruitment is almost around INR1,450 crores odd kind of business. What do you think could be the bucket size for your remaining three key verticals, whether you look at real estate or education or matrimony in next five years’ time?

Hitesh Oberoi — Managing Director and Chief Executive Officer

So, actually, recruitment has become a very large market. We do INR1,450 crores, and there’s LinkedIn. They do a few hundred crores. Then there are recruitment firms and there is referral hiring. So, I wouldn’t be surprised if companies are spending at least $1 billion or close to that much on recruitment in India, if not more. And this is not including the cost of their internal HR or recruitment team and so on, right. So, that’s one.

Now, as far as the other verticals go, the 99acres now, if you look at, it depends on how you define the market. So, if you just look at the advertising market for real estate, right, 10 years ago or 14 — 12, 14 years ago, we used to do INR2,500 crores, right? And one what — all of it used to go newspapers and hoardings and so on. Then the real estate advertising market shrunk, because real estate went through a rough time, starting with RERA, then demonetization, GST, NBFC crisis, COVID, et cetera, et cetera, et cetera. The market actually shrunk to maybe a two-thirds of the size, even though after 10 — so, 10 years later, the market was maybe two-thirds the size.

Now, the nature of the advertising has — spend has, of course, changed. Most of it now goes to online, right? It doesn’t go to newspapers and hoardings anymore. But within online also, a large part of it now goes to Google and Facebook, right? So, there’s Google and Facebook and then are the real estate portals, and then there is newspaper advertising. And so, if you want to look at the spend on real estate portals and Facebook and Google, to date, it’s probably close to INR1,000 crores, if not more, already, right? And real estate is now entering a growth phase and then there is newspaper advertising, et cetera, which will slowly, again, keep migrating to online.

So, it’s very likely that 10 years from now, the real estate advertising market in India, right, could be INR5,000 crores, INR7,000 crores. Who knows, right? And this does not include transactions, it does not include brokerage, it does not include some — so, over time, some of these sorts of markets will also be up for grabs, depending on what models people develop and so on, right? So, it’s not a tiny market by any standards. The — it’s just that it was, like, screwed for the last seven to eight, 10 years, right?

If you look at matrimony, now, again, depends on how you define the market. If you look at traditional matrimony, which is basically cost and community-based matrimony link, like sites what — Jeevansathi, Shaadi and BharatMatrimony, today itself that market is close to $100 million, right? But growing at maybe, 7%, 8%, 10% per annum. If the reason — one reason why it’s $100 million and why even real estate is at INR1,000 crores and not INR1,500 crores, INR2,000 crores, because a lot of competition.

What happens when you have a lot of competition is that prices are driven down, unlike what you’re seeing in recruitment. Recruitment, because there isn’t a lot of competition. We are able to command the price we deserve to get in that vertical here, because there’s a lot of competition in both matrimony and real estate. There’s aggressive discounting from all players, which has led to lower realizations.

Now, if you want to do — through this matrimony market add, the dating market because the dating market did not exist a few years ago and the dating market is also evolving. So, there’s casual dating, which is Tinder, and then serious dating, which is IL, which is something we invested in, and then that market is also now — I don’t have the numbers — exact numbers, but maybe it’s a INR250 crores, INR300 crores already, right, and growing much faster. So, these are not small markets by any standard and over the next 5, 10 years, it could become fairly large, especially — and especially, if there is consolidation.

Abhishek Bhandari — Nomura — Analyst

Got it. My second question, Hitesh, is that now that jobs classified business, core Naukri, is a cash cow, and we are a clear dominant market share, has it occurred to you that we should actually –?

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Sorry, may I take that? Cash cow is not the correct calculation of Naukri. It is growing very fast. So, it’s highly profitable, growing very fast, I do not know what you’d call it. But it doesn’t fit into obviously [Indecipherable].

Hitesh Oberoi — Managing Director and Chief Executive Officer

Star. It’s called a star.

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

No, but star is a — this is a mature business that’s growing fast. So, it doesn’t fit into your traditional [Indecipherable] basically. But yes, sorry. Yeah.

Abhishek Bhandari — Nomura — Analyst

No problem. Sanjeev, I didn’t mean it’s growing slow by any standard. What I meant that, it’s a fast-growing engine throwing cash. Has it ever occurred to you that it should go up the value chain and probably start targeting more premium? Now, I know the investments in iimjobs and all are there. But more like — probably like a LinkedIn kind of approach, where you start building communities and it becomes probably one of its own kind, given the wide network you have. And I think the effects of network can actually be realized very quickly over there. If any thought there, would be helpful.

Hitesh Oberoi — Managing Director and Chief Executive Officer

See, what we’ve seen over time is that it’s very hard for any two players succeed in any market, right? So, you have to have a differentiated strategy. You have to have a differentiated offering. If you try and do what somebody else is doing and if that somebody else is already very strong, very powerful, has a lot of resources, it’s unlikely that you will succeed, which is why we are doing what we’re doing in Jeevansathi also. We have to have differentiate ourselves.

Now, so, should we do another professional networking site? I doubt it, whether that approach will work. But what are we doing? We’re doing iimjobs. We’re doing vertical sites. We have — we are also experimenting with what you call high risk, in the iimjobs stable, which is premium tech hiring. We are trying to do BigShyft, which is — like I said, we are flirting with the idea of doing end-to-end sort of transactions, end-to-end on a platform using technology, maybe in a small area.

So, maybe the right approach to premium hiring or to sort of entering that market is this niche sort of vertical approach, as opposed to trying to build another sort of network to compete head-on with Microsoft. So, that’s our thinking at this point in time. But like I said, some of these things change and they’ve — tomorrow, if we see an aggressive startup, which is sort of likely to succeed in this space and it’s making great progress, then none of this will matter.

Abhishek Bhandari — Nomura — Analyst

Thanks, Hitesh and Sanjeev. Really helpful. Thank you.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Abhishek. Next question is from of Aatman Ajmera from Nordea Asset. Aatman, go ahead and ask the question.

Aatman Ajmera — Nordea — Analyst

Hi, good evening. This is Aatman from Nordea. Firstly, congratulations on Naukri’s performance. I mean, business has done really well. Over last two years, business is a lot bigger and virtually, a flat employee base, clear testament to the sort of scalability of this — of the platform.

My question, Hitesh, is more on 99acres and Jeevansathi. Most questions have been answered, but just one question I was curious about is, so, what are you really optimizing for when you incentivize your business heads? So, are they going after traffic share? Is it — is someone in the organization penalized for a high marketing spend? What — how do you measure a successful outcome in these two businesses when the market is what it is, but some things you can do internally as well? So, what do you really incentivize your business heads for? What’s a good outcome?

Hitesh Oberoi — Managing Director and Chief Executive Officer

So, the number one thing we focus on in almost every vertical we operate in is our traffic, right, how many users sort of end up on our platform, what is the amount of time they spend in our platform, how engaged are they with our platform. So, that’s the number one thing. So, whether it’s Naukri or 99acres or Shiksha, we have many alliances to track what’s happening, right.

The number two thing we focus on, because we have a matchmaking platform is matchmaking, right. So, you may get a — you can get a lot of traffic, but it may bounce and it may not spend too much time, it may not end up sort of — in Naukri, they may not end up with right jobs, not get shortlisted and not get hired. In Jeevansathi, they may not find the right sort of matches and they may sort of just disengage after a while. So, the number two thing we sort of focus on in — on our sort of verticals — almost all our verticals is matchmaking; how many matches are we able to enable through our platform. And we, again, like I said, we have dashboards, we have analytics, et cetera, et cetera. We report stuff like this on a daily basis.

The number three thing and — which we focus on is traffic share, right, which is how we’re doing versus our competition. So, are you reasonably growing, our visitors will be growing 20% per annum, our matchmaking will be growing at 30% for annum, if our competition is growing 50%, yeah, we’re profitable right?

So, because as you know, in the Internet space, it’s often been a day call, especially in the kind of markets we operate. And if you’re not a strong contender or if you’re not a strong number two or a strong — or a number one player, it’s very, very hard after a while, which is why I mentioned recently just now on the — I mean, that — this new approach in Jeevansathi, because what we did three years ago started working for us, worked for us for sometime, we gained share, we gained in terms of the number of matches we had in opening and so on. But then competition followed. And then we are now sort of forced to things, again, very differently if we have to win share.

So, these are the top three. And then, of course, there’s revenue, because the proof of the pudding ultimately is in the eating and often, monetization is not easy, to be able to think of smart ways to monetize, because you can do all this and — but if you monetization model is not in sync with what you’re doing, then you may not be able to reap the benefits of all these changes that you made to your platform, right? So, we have to constantly sort of reinvent or reimagine monetization also on all our platforms.

So, these are the four sort of big things we focus on. Like I said, in the long run, traffic share is the most important, but also our UVs, because you may have very high traffic share, but if you’re on a tiny market, you won’t have too many visitors, it doesn’t matter, right? And in the end, the proof of the pudding is in the eating. So, you have to be able to monetize and you have to be able to command the right price, especially if you’re a leader, because that is what ultimately leads to good margins.

Aatman Ajmera — Nordea — Analyst

Right. So, thanks for that. Just a follow-up there. So, Hitesh, a lot of the things you mentioned can be achieved through marketing spends, right? I mean, you can invest higher to get traffic. So, are the business heads given X budget, this is what you spend, and do your best that you can in terms of traffic, or is this sort of — is there a pool that the business heads are fighting for and — or is there a constant combat saying, we need more to sort of grow traffic?

Hitesh Oberoi — Managing Director and Chief Executive Officer

Yes and no. See, marketing is not a panacea for all in. So, in the sense that, if you spend more money on marketing and your competition also spends — starts spending more money on marketing, you’re back to square one, right? So, marketing works up to a point. It works especially when competition does not respond. It often does not work — it works to grow the market, expand the market, but it does not work beyond a point to get you share, right, if your competition is also as aggressive as you are.

Now, therefore, a lot of the focus is also on doing smart things on the platform. So, in many — some of verticals, we need to invest more in operations. We — like I said, we need to invest in smart algorithms to enable good matchmaking. They have a data science team. They’re sort of constantly sort of focused on that. We sometimes need to launch new features, get into newer areas to sort of just get a higher share of the funnel at the top.

And so, it’s a combination of things. Marketing is not the — I mean, marketing is required from time to time and it’s important, especially if competition is advertising and you’re not, to be able to respond. But it’s not as if you can get — all that actually only from marketing. Now, is there a budget? Is there — so, like I said, every business prepares — it has a business head, they prepare business plans. They survey the environment, they understand what competition is doing, they understand — they — we have a lot of positives on how effective marketing has been for us, right, because the good thing about Internet marketing is that you can track everything. You know what happened when you spent last time. So, they look at all of that and then they sort of arrive at a plan and they prepare a budget, which is then sort of approved.

Now that — budget is not cast in stone, because in our space, unlike in mature setups, where things won’t change too much, things change every month, right? Earlier, it used to be only because of competition and because startups, but now it also the environment, which changes every quarter. So, once you have given a budget, they implement it quarter by quarter, and review and evaluate, and then — that’s how it works.

Aatman Ajmera — Nordea — Analyst

Understood. Just to wrap this up, would — let’s say, if this quarterly loss was — instead of INR35 crores, it was, let’s say, INR100 crores this quarter, hypothetically. Would someone be penalized in the organization for that?

Hitesh Oberoi — Managing Director and Chief Executive Officer

In which vertical? Sorry. So, they want — I mean, it’s unlikely that that happens, because we track, like I said, things on a daily basis. So, we have data coming in on revenue, on costs, on — all this on a daily basis. End of the month also, there is a review. At the end of the second month also, there will be a review. At the end of the quarter also, there will be a review. So, it’s not — while — when I say quarter by quarter, it is — I mean, at my level, it’s quarter by quarter. But at the business heads and the sales heads and the product heads review stuff every week.

Abhishek Bhandari — Nomura — Analyst

Understood.

Hitesh Oberoi — Managing Director and Chief Executive Officer

And they will [Indecipherable] required.

Aatman Ajmera — Nordea — Analyst

Right. Very clear. Thanks, Hitesh, for that.

Anand Prakash Bansal — Senior Vice President, Administration & Facilities

Thanks, Aatman. So, that was the last question for the day. We may wait for some time. If there are anymore questions, please raise your hand. Vivek, no more questions. So, we may conclude the call.

Vivek Aggarwal — Senior Vice President, Finance

Thanks, everyone. On behalf of Info Edge, we conclude this conference. Thank you, and you may now disconnect your lines.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thank you, everyone. Have a nice evening.

Sanjeev Bikhchandani — Founder and Executive Vice Chairman

Thank you, and bye-bye. Bye.

Hitesh Oberoi — Managing Director and Chief Executive Officer

Thanks. Bye.