JUST DIAL LTD (JUSTDIAL) Q3 FY22 Earnings Concall Transcript

JUST DIAL LTD (NSE: JUSTDIAL) Q3 FY22 Earnings Concall dated Jan. 19, 2022

Corporate Participants:

Abhishek Bansal — Just Dial Limited

VSS Mani — Founder & Managing Director

Analysts:

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Vivekanand Subbaraman — Ambit Capital — Analyst

Pranav Kshatriya — Edelweiss — Analyst

Alroy Lobo — Kotak Investment Advisors — Analyst

Abhijeet Jain — Citigroup — Analyst

Prateek Kumar — Antique Stock Broking — Analyst

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Presentation:

Good evening, everyone. This is Shaleen Kumar from UBS Securities. Welcome all to Just Dial third quarter results earning call. From the management, we have Mr. V.S.S. Mani, Promoter, MD and CEO of the organization and we have Mr. Abhishek Bansal, CFO of Just Dial.

So I now hand over the call to Abhishek for his opening remarks and post that we can open the floor for Q&A. Abhishek, over to you.

Abhishek Bansal — Just Dial Limited

Thanks Shaleen. Hi, everyone. Welcome to Just Dial’s earnings call for third quarter of fiscal 2022. Our operating revenue for the quarter stood at INR158.9 crores, declining 6.3% on a year-on-year basis and was up 1.9% quarter-on-quarter. Adjusted EBITDA, excluding ESOP expenses stood at INR10 crores, a margin of 6.3%. Other income, which was partly affected due to increase in bond yields during the quarter stood at INR28.6 crores. Overall, net profit after taxes stood at INR19.5 crores for the quarter.

In a nutshell, current quarterly numbers obviously reflect the impact our business has witnessed over past few quarters on account of COVID impacting SMEs. B2C service-oriented categories contribute almost two-third of our revenue. And SMEs in these categories have been the most affected during these COVID times. However, while macro environment and pandemic situation will keep evolving, we have taken certain measures recently which are yielding good results in recent months, and likely our monetization shall be back on track in coming quarters.

Firstly on monetization; we have implemented firm pricing and withdrawn almost all discounts that we had been offering during various phases of the pandemic. Along with firmer pricing, we have started focusing aggressively on monthly payment plans, which helps us sign higher number of customers and also gets us a better monthly ticket size. During November and December months, we signed almost 65% of our customers in those months on monthly plan basis and this was just about 8% in preceding quarter.

As a result of this strategy, it has helped us improve sign-ups, which is also partly visible in up tick in paid campaigns, which grew sequentially by about 6,600 campaigns to 437,000 paid campaigns at the end of the quarter. And it will likely aid our future revenue growth as well. Due to change in mix of upfront versus some monthly plans, near-term collections do get affected, since lesser customers are paying us full money upfront. However, over the tenure of the contract, which is typically a year, we expect to gain from future collections that will come via monthly installments.

On operating expenses, employee expenses saw about 16% Y-o-Y and about 9% sequential increase. We added almost 1,250 employees during the quarter majorly in sales. While employee costs have upfront impacted P&L revenue generation form newly added salesforce should aid future margins. We have also been hiring talent across our product, technology, content and marketing teams. Advertising spends stood at about INR3.5 crores for the quarter. Overall, cash and investments stood at INR3,769 crores as on quarter-end.

Coming to other operational highlights; traffic stood at 142.7 million unique users for the quarter. 84% of the traffic now comes from mobile platforms. Database strength has now grown to about 31.4 million listings. Overall, going forward, the focus is to get our core business back on a healthy growth trajectory as soon as possible and early signs of the same already seem to be visible, plus we are working to roll-out new initiatives, which are currently under various stages of content building, product development, user experience, optimization.

So with this brief update, we shall now open the floor for questions for further detailed discussion. Thank you.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Thanks, Abhishek. Can we please open the forum for Q&A.

Questions and Answers:

Operator

Hi. Thanks for joining everyone. [Operator Instructions] Thank you. Over to you Mr. Abhishek. Thank you.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

So Abhishek, till the time we get a question from the participants. Possible to provide some more — some updates on the different platforms as well, maybe you can start with our B2B platform. Any update over there?

Abhishek Bansal — Just Dial Limited

So, Shaleen, at this point of time, we are sort of looking at our business in two parts. The first, obviously the core business, which as I mentioned, got affected due to — primarily due to first and second wave of COVID. So there the focus is to get that particular piece back on a healthy growth path, as soon as possible. On newer initiatives, ultimately, the way we look at it is that more and more consumers are going online wanting to do things online, be it in terms of booking any appointments, doing any transactions.

On the other hand, as far as SMEs or businesses are concerned, they also want to be present online to get discovered to get new users. So our newer initiatives be it via JD Mart, JD Experts and other platforms that we’re working on, the idea is to mainly add a transaction layer to all those categories where we have in any case been dominating via search and discovery.

So JD Experts, for example, we have — we are currently testing with one category pest control services, some of these particular — more services will go live in this particular quarter. JD Experts will have a dedicated app as well, which should get rolled out sometime this particular quarter. The idea of this particular beta phase launch is to optimize user experience and then scale up as and when user experience is optimal.

Similarly on JD Mart, at this point of time, we have almost 1.2 million catalogs specific to B2B businesses. Overall, there are about 8-odd-million businesses on our JD Mart for search, and out of the 1.2 million catalogs that we have about 0.5 million are quite rich catalogs. So there is work happening on content etc, on JD Mart. And apart from that, there are certain other initiatives. As I mentioned, the idea is to be able to add a transaction layer to services, as well as other categories on the platform.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Sure. Thanks.

Operator

[Operator Instructions] Shaleen, we don’t see any raise hand as of now. Thank you.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Sure. So I think I’ll use the opportunity then. Abhishek, obviously we know the big question in everyone’s mind, like when we talk about is like historically Reliance is a promotor over here, and historically we haven’t seen a lot coming out post-acquisition, what has happened in the past. So just want to pick your mind here, like, how the management — new management is aligned, and what kind of discussions are happening?

And in terms of the business plan going forward strategy, because, there’s a lot of cash also sitting on the books, right. So how you intend to utilize it? So, any color you can give on both in terms of your alignment with the strategy, how actively they are involved with you guys and maybe future use of cash, etc., which you will be using?

Abhishek Bansal — Just Dial Limited

Okay. So firstly, Shaleen on the management, this is no new management at this point of time, it’s the same strong management, experienced team that is running the show. Definitely, RRVL’s presence on the Board is there, and we actively engage with RRVL and RRVL’s leadership team for our particular future business plans. So at this point of time, while we did this particular strategic transaction both parties realize that there is a great asset in terms of 30 million, 31 million listings, active vendor relationships. And there is a lot that can be done in terms of enabling SMEs going forward.

So as I mentioned, at this point of time, as far as usage of cash is concerned, cash will definitely — cash is already getting deployed in a manner to — in terms of hiring talent to build our particular product to augment our particular initiatives in terms of addition to salesforce etc. As and when our particular existing and new businesses would require marketing spends, advertising support, there will be aggressive spends on those as well.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Okay. I think we have some questions from the participants. So — Abhijeet [Phonetic] can you moderate?

Operator

Sure. Hi Sai, [Phonetic] you are the first participant, kindly unmute yourself and ask your question.

Analyst — — Analyst

Hi Abhishek. My question is with the Reliance coming in the Board, what kind of changes — in similar lines to the previous question, what kind of changes happened? And second thing, there is lot of rumors circulating around in market that JD is planning to launch a e-commerce platform. Is there anything which you are thinking on those lines? So what kind of future growth prospects which we can as a investor look at it?

Abhishek Bansal — Just Dial Limited

Okay. See, first of all with Reliance coming on-board in terms of changes, definitely they have — they are now present on our Board. There are active strategic discussions that happened between both sides. Operationally also our teams are actively engaging with them to see what all synergies can be utilized at both ends. One key benefit even more compared to synergies is the learnings that you can draw from our strategic partner such as Reliance.

For example, they have strong expertise in even manpower, intensive, say businesses. So while we are looking to aggressively increase our manpower to aid our core business, so some of those learnings can be deployed as well. So I think over coming months and quarters, we will be able to leverage on these particular synergies, learnings and that should be visible in our performance as well.

To your second question regarding any foray into e-commerce. So as I mentioned in my opening remarks, it is very clear that the way things are evolving, both users as well as SMEs do want to do things more and more online. Keeping that in mind, we had initiated projects such as JD Experts, JD Mart on the B2B side. So as and when some of these initiatives start ticking more color, we would be in a better shape to share. And in any case, most of these particular platforms are user-facing platforms. So whenever they are getting launched, you will obviously be the first ones to be able to witness those.

Analyst — — Analyst

Okay, got it. Thank you.

Abhishek Bansal — Just Dial Limited

Thank you.

Operator

Hi, Ankur [Phonetic], you are next. Kindly go ahead and ask your question, please.

Analyst — — Analyst

Thanks so much. So my question is — so I don’t know whether Abhishek or Mani, whoever answers it. Two questions. One, so as an individual investor, I mean closely watching Just Dial and being participating into all the investor meetings for four quarters now. So I started last December and here again we are at the next December. And JD Mart seem to be the biggest initiative, a game-changing wherein — I know that the app has been launched, it was launched, there was lot of advertisement done during the IPL first phase and then it has continued.

And what I see in your investor deck, in your commentary is a one or two bullet points of how many listings we’ve had. But as an investor who is playing long and really wants to understand what’s going on, there is nothing much here. So it will be great if you can elaborate where we are on JD Mart? Maybe it’s quite a while before JD starts competing with, let’s say IndiaMART, but still I’m sure all the investors and especially, we would like to know a lot, lot more about what JD Mart is doing right now and its capabilities?

Number two, it was a little worrying to hear that on the search side of it, we had to move to monthly subscription model. So is it really a sign of changing times that search as a business, the advertisement bit of — as a business is becoming tougher with the Googles of the world and lot of things coming on the Internet? And it’s almost a survival mode, is that something as an investor, I would like to understand why I should not be concerned about. So these are the two questions.

Abhishek Bansal — Just Dial Limited

Okay. So Ankur on the first question on JD Mart, see one thing we have to remember is JD Mart primarily is catered towards say B2B categories. In B2B categories, we use to monetize about 20%, 22% of our revenue, which even today is around 22%, 23%. So as a SME, SME does not really bother about whether they are getting enquiries, traffic visibility on JD or JD Mart, ultimately it is about JD’s platform, be it visibility on JD or JD Mart.

Now over last three, four quarters what has also happened is that, like first quarter of this particular fiscal year, we were very severely impacted by second wave of COVID. Now that particular impact was not just restricted to this 22%, 23% of the business. So we have to ensure that the rest of the 77% of the business also stays on its particular growth path. Those are some of the reasons that this particular JD Mart related active update, so to say, you might find it to be missing.

On your second question, why have we shifted on a monthly plan basis. First of all, during our IPO days when we were growing top line at about 25% to 30% each year. At that point of time, we were about 45% of our customers used to pay us on a monthly basis, and a couple of years were as high as north of 50%, 55% as well. So it’s not that at this point of time because customers are not willing to pay upfront, that is why we are shifting to monthly plan basis. The way ecosystem is evolving, in most cases people are actually wanting to pay in small tickets, they might be okay subscribing, taking a subscription on a monthly basis. That is why we said that, okay, if you can remove any sort of friction from our sales process that will help.

So there might be a customer who might be thinking twice that, okay, whether I should spend INR20,000, INR22,000 in one shot, whereas they might start with INR2,000 rupees a month subscription, later they might even be willing to go for a annual plan thinking that they will get some 10%, 12% upfront cash discount, etc. So the shift to a monthly plan is mainly to say that, okay, we are okay not locking in customers for a longer tenure, we want customers to sort of come in at their particular will. So that is only thought process.

And which is what we are seeing that we are able to sign up more customers and estimated revenue from these particular sign ups has also seen a growth path. So ultimately, we have to see that total revenue sort of get maximized. All your digital products, for example, whether you do advertising on a Google, Facebook or any other such global platform, you can sort of recharge your wallet for X rupees, you can run campaigns for five days, pause it for two days and that is how the ecosystem is.

Analyst — — Analyst

How doess the payment happen in the platform because, for example, these RBI impending guidelines about creating issues at auto-renewal makes it tougher for subscription services like yours and if I may compare with Netflixes of the world difficult to renew. So renewal process becomes even more challenging and.

Abhishek Bansal — Just Dial Limited

No. So on that front, we haven’t faced much of a challenge. These particular — first of all these monthly subscriptions, the new RBI guidelines primarily affect whatever subscriptions are set on your credit card or a debit card. In our case, majority of these particular monthly payments are set directly on the bank account. And even in cases where they are set on a credit card or a debit card, those stricter rules apply for transactions over INR5,000 a month, whereas our ticket size at this point of time is much lower.

So we are not really worried on that front. In fact, these days, it is much easier to set up a ECS or a monthly standing instruction on your bank account. Most of the banks these days provide that particular eNACH facility, which allows monthly payments to be directly deducted from your bank account.

Analyst — — Analyst

Do we as an investor expect that it was — maybe in the next quarters start sharing the mix of the subscriptions, if you have because I still see a decent number of revenue sitting in the balance sheet. So now, maybe you started this plan recently with maybe from next quarter onwards, will you be willing to share the mix and so that we get much clarity of.

VSS Mani — Founder & Managing Director

Maybe we can look at sharing realizable value as a trend, which is indicative versus past track record, that may give — because when there is not much of deferred revenue reducing, there could be panic among investors. So if we share the realizable value part, I don’t know Abhishek, you have to think about it.

Abhishek Bansal — Just Dial Limited

Sure. We can take a look at that. As I mentioned during my opening remarks in last quarter, our monthly payment plans were at about on an average 55% with November, December at about 65% and previous quarter was at about 8%. In fact, in deferred revenue, the one reason why that has sequentially declined is because of this adoption of our monthly plan strategy. So in monthly plans, as I mentioned that while upfront collections will be lower but over the period of next say 12 months, those particular collections should more than offset the upfront impact.

VSS Mani — Founder & Managing Director

The monthly plan, should we read more like how there is EMI plans to buy goods and services. So basically if you have it equated monthly installment that there are more number of people being able to afford it, some in our case, it’s like earn and pay, because you’re paying on a monthly basis, and they’re able to spend and commit more larger sums of money, since it is equated monthly installment.

Analyst — — Analyst

[Indecipherable] renewal process is a challenge.

VSS Mani — Founder & Managing Director

It’s auto renewal.

Analyst — — Analyst

Okay, okay.

VSS Mani — Founder & Managing Director

All these are literally perpetual contracts till the customer stops his payment. It’s auto debited to his account.

Analyst — — Analyst

Yeah. So I think that’s a good sign for this.

VSS Mani — Founder & Managing Director

Yes, yes.

Analyst — — Analyst

[Indecipherable] could be maintained and that — those will be very important to track as well. But yeah.

Abhishek Bansal — Just Dial Limited

All right. So just to give some flavor on that. Pre-pandemic, we used to get about INR23 crores, INR24 crores a month of collections from these particular monthly deductions directly from bank account. That INR23 crores, INR24 went down to about INR13 crores in September month, and that INR13 crores has already bounced back to about INR18 crores in December, the current month run rate is already about INR20 crores, INR21 crores. So this particular monthly plan strategy, while we have adopted it just for last two months, it is actually giving us this particular growth. And overall, if we are able to maintain this particular momentum, we should be definitely back on track in terms of overall collections and overall revenue — P&L revenue as well.

Analyst — — Analyst

I think that’s very encouraging, Abhishek and Mani, sir. Thanks so much for that update and I shall really look forward to more traction on JD Mart and more updates as well and it will be more a segment especially. So look forward to that and all the best to yourself and myself as well, as an investor.

VSS Mani — Founder & Managing Director

Thank you.

Abhishek Bansal — Just Dial Limited

Thank you so much.

Operator

We have question from Mr. Vivekanand. Please unmute yourself and introduce yourself to ask your question. Please go ahead.

Vivekanand Subbaraman — Ambit Capital — Analyst

Yeah, hi. Thank you. Thank you for the opportunity. I’m Vivekanand Subbaraman from Ambit Capital. My two questions, the first one is on the KPIs by the geographic split. So what would be the split of our campaigns in the top 11 markets and revenues from the top 11 markets?

Abhishek Bansal — Just Dial Limited

So outside top 11 contributes about 57% to campaigns and about 35% to revenue. So top 11, say 43% to campaigns and about 65% to revenue contribution.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. And which of the — I mean the recovery appears to be better in the market outside top 11, right? Is that correct? Is that assessment correct?

Abhishek Bansal — Just Dial Limited

That is partly correct. See, that is also because that whenever these COVID waves have impacted, the top metros are the ones that see the first set of restrictions, for example, in this particular current wave of COVID as well, our geographies such as Delhi went into night curfew, weekend lockdowns, etc. So that is why those particular geographies tend to get affected a bit more. And recovery in Tier 2, Tier 3 cities is faster versus Tier 1.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. Got it. And my second question is on the manpower intensity point you made. So we are ramping up headcount again in anticipation of growth. Should we look at the gross margins of the business differently now versus earlier, because now you are focused on getting closer to the transaction, and also the intensity — sales intensity might be higher for monthly renewals of let’s say correct ones and below two years or one year, right? So how should we think about the gross margins in this scenario?

Abhishek Bansal — Just Dial Limited

See, once we get into transactions, those will have to be evaluated separately, in my view. In fact, in case of transactions, most likely, we would be charging say, a certain percentage on the value of the transaction and once a particular vendor is on-boarded, there is not really much of an effort in terms of renewal, etc. So that set of business will have — it will have its own margin profile, it might have lesser sort of gross margin, but volumes would more than take care of it.

And as far as core business is concerned, their gross margin, I mean, historically we have been sort of 60% gross margin business, and hopefully, we would be able to sort of even improve on that in coming quarters, for example, last year, while our top line was affected about 28%, still, we were able to pull levers to deliver 25% plus EBITDA margin. So to that extent, I think gross margin is quite healthy. And that is — that should be sort of maintained or be even improve going forward.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. Just pressing on the manpower intensity point. We are ramping up headcount of the feet on street, as well as telecallers. So is it largely to do with the legacy business, or is it hiring related to JD Mart or is it hiring for the smaller towns where your position seems to be getting stronger, where is the hiring happening? And where do you think the future hiring will be directed?

Abhishek Bansal — Just Dial Limited

So two years back, say around eight quarters back at our peak when we had about 12,500, 13,000 overall employees. We had about 10,000 employees in sales. In September quarter that number dropped to about 6,800 employees. So about whatever 30%, 32% drop, primarily because we were seeing that on the ground COVID had impacted SME so much. For us the focus was primarily on consolidating our salesforce, getting better productivity from existing resources. But now that we realize that we would be in a position to sort of grow back our particular core revenues, we have got this 6,800 back to about 8,100.

So this particular hiring is happening across geographies, across feet on street, telemarketing etc. So the idea is that in couple of quarters, we would want to go back to that particular 10,000 mark as well. At the same time not compromise on productivity as well as our gross margins.

Vivekanand Subbaraman — Ambit Capital — Analyst

Right. And Abhishek, in your comments you also mentioned that you are learning a lot from Reliance in running a manpower intensive business. Could you elaborate that and explain to us how that is benefiting Just Dial?

VSS Mani — Founder & Managing Director

Exchange of ideas, that’s all. I mean they have a large retail, and even in Jio, they have more like an interesting reseller model, which is freelancers who are working for them, and we are learning a bit about that, because that will help us, because that will not have any cost till you get the revenues. So we’re working on some of those ideas. It’s just that we are just telling you that what all kinds of exchange of ideas in synergies that we’re working on between the two companies.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay, understood. Thank you very much, and all the best.

Abhishek Bansal — Just Dial Limited

Thank you.

Operator

Ashish [Phonetic], we are unable to hear you.

Analyst — — Analyst

Hello.

Operator

Yes, Ashish [Phonetic]. Please go ahead.

Analyst — — Analyst

Very good evening to all of you. See I have very — two questions I have for you. The first thing is, as a small investor we need to know, when do you plan to put the INR3,700 crores odd that you have cash in your books? And the second thing is, that via this — in this quarter, the treasury income from other sources was very little as compared to last quarter, when you had INR3,700 crores in your books.

Abhishek Bansal — Just Dial Limited

Okay, Ashish. To your first question regarding deployment of INR3,700 crores. See, the thought process is that, yes, we are very well capitalized and this particular money would be put to good use as and when required. Fortunately, our core business also generates very healthy free cash flows. So this particular INR3,700 crores, we’ll see at what stage and which products require this particular financial support.

Coming to your second question, yes you are right that sequentially treasury has grown from INR1,500 crores to INR3,700 crores. However, in the last quarter on a sequential basis, there was about 30 basis point increase in bond yields on a say India 10 year bond yields. In fact for three-year paper, which is what forms bulk of our portfolio. The increase was as high as about 45 basis points to 50 basis points. Since we deploy in debt mutual funds, which get mark-to-market every quarter, that is why this particular quarter saw about INR28 crores, INR29 crores of other income.

Overall, the way to look at it would be that the embedded yield to maturity of the entire treasury would be about 5% to 5.25% or so. So on INR3,700 crore treasury about whatever 5% to 5.25% is what we should be earnings at current interest rates over the long-term. Say over four to six quarters, that is how it should be, though, there could be quarterly fluctuations.

Operator

Okay. Hi, we have next question from Mr. Naman [Phonetic]. Please unmute and introduce yourself to ask your question. Please go ahead, Mr. Naman.

Analyst — — Analyst

Hi, am I audible?

Operator

Yes, Naman. You are.

Analyst — — Analyst

Yeah. Good evening, everyone. Mr. Mani, I have a question for you. This is maybe a repetition of the past few questions, but it is intriguing to know that we have such a large cash sitting on balance sheet. In the last quarter, we also mentioned that we will not be really interested in distributing the cash back to the shareholder in terms of buybacks or dividends or whatever likely you should do in the past. Instead, we want to use the cash for the business. While I understand that the manpower increase and some products may demand cash, but still INR3,700 crores is a huge chunk of cash, especially when you have existing business generating free cash flows as well. So what also amazes me is that, we spoke about e-commerce portals like Amazon, Flipkart, it’s such a big opportunity in India that our portal is designed to list SME businesses, but can’t it be scaled up to counter these kind of businesses? Because you already have a basic portal in place, you have cash on books. So why can’t we look at investing at — in those lines? Your views on that, sir.

VSS Mani — Founder & Managing Director

Absolutely. So our main focus area is going to be what we call as 3P marketplace, which is third-party marketplace, purely allowing all kinds of businesses to sell their products through our platform. And the focus is, from a customer experience point of view, the differentiator will be like instant delivery. There will be obviously e-competitive pricing and aftersales was available also on dialing the number at ten times eight, just in case. So we have a product that’s getting launched, which is at a very large scale when it comes to any kind of product whether it’s B2B or B2C, can be sold online through our platform.

The pilot run for the consumer B2C version will be somewhere in February, which is when we’d start signing up businesses, which is all the neighborhood stores, all kinds of businesses that you see in any city which have brick and mortar presence. So we will be their online platform, which will fetch them business, which they can execute instantly.

On the services front, as Abhishek said, we’re launching something called JD Experts, which is something like equivalent to urban company or any of those where you can actually book it online with Just Dial without bothering about who the vendor is. And you will — you can expect high standard of user experience in terms of the services, as well as the tariff and other things. All these things take a time. See, unfortunately, we have been affected by COVID waves, if you see the first, it was quite jinx experience for us. We spend huge amount of money in IPO to launch JD Mart, that entire 45 days was a washout because of second COVID wave.

So we have been a bit unlucky too, in that sense in the past. Now that we have a huge solid partner, it’s like, kind of a very feeling that it’s invincible as such with this kind of a partner. If we focus on execution and keep our heads on the shoulder and look at day-to-day, week-to-week, month-to-month and quarter-to-quarter, I think this company will be worth a lot, lot more than what it is today.

We don’t want to do — give promises right now, because in the past we have spoken very bullish about products and somewhere we have lacked in execution or we didn’t have the courage to go and spend a lot of money to make it happen, the example was Omni. So now that we have a great partner and there is a bit of de-risking yours truly as also done. So there is no reason that we should apply any brake, we should just go all out aggressively pursue things. How quickly we can do that? All the timing issues, I cannot comment. But all I can say is, the steps that we have taken in the last couple of months have been fantastic and they’ve been yielding great results, and we continue to do — take some less steps and keep looking for better future.

Operator

Hi, we have next question coming from Mr. Pranav Kshatriya. Please unmute and introduce yourself to ask question.

Pranav Kshatriya — Edelweiss — Analyst

Yeah, thanks. I’m Pranav Kshatriya from Edelweiss. My first question is, this quarter there was quarter-on-quarter revenue dip although last quarter we had a fairly decent jump in the unearned revenue, and considering this tends to be a festive quarter, I was expecting a bit of a bump up in the revenue, but it did not pan out. Can you highlight any of the reasons for not only the deceleration in the revenue, but also deceleration in the traffic on a quarter-on-quarter basis? That’s my first question. And secondly, can you point out, what exactly is that advertisement spend in this quarter? And what percentage of traffic is — paid traffic for the quarter? Thank you.

Abhishek Bansal — Just Dial Limited

So Pranav on a sequential basis, traffic had a slight impact, which typically happens during festive months. So that particular week, 10 days closer to Diwali, Dussehra, those are the days when traffic tends to sort of get affected. On a sequential basis, revenue has marginally grown, there has not been a de-growth. But obviously it has not grown to the extent we would have ideally wanted it to be. As far as ad spends are concerned, we were about INR3.5 crores for the quarter, and out of the total traffic of about 143 million quarterly users, about 6% to 7% came from paid initiatives, rest all was organic.

Operator

Hi, we have next question coming from audio dial-in. Please unmute and introduce yourself to ask question. [Operator Instructions]. Hi. Kindly go ahead and ask.

Alroy Lobo — Kotak Investment Advisors — Analyst

Hi, this is Alroy Lobo from Kotak Investment Advisors. And this question has been directed to Mr. Mani. Historically, you have always focused on profitable growth, free cash flow, etc. With the cash [Indecipherable] when you have now, will that strategy really change, where you will be more aggressive like you said on — you will focus more on growth even if it is used in the short-term compensating on your free cash flow for optimized strategy that you had in the past? Number one. And number two, if you look at this INR3,700 crores of [Indecipherable] that you have, if you can just give us the top three areas of spend, and over what timeframe you intend to spend in those areas?

VSS Mani — Founder & Managing Director

So to answer your first question, this whole transaction with Reliance Retail was done only to keep that in mind, that we want to grow aggressively and not look at being a nice, cute profitable company. So this partnership will help us actually ramp up on our growth and we have identified the right kind of verticals, which one is going to be JD Mart, other is JD Shopping, JD Experts and there is an initiative on real estate. We are hands up full with lots of things in hand, it’s predictively one go-to-place where you can get many things done, will be cross-promotion, cross-incentivizing, users, there’ll be lot of interesting things happening. So as the quarters — next few quarters, you will learn lot more. You will see us aggressively pursuing growth for sure. And at the same time, if there is no harm in having decent cash flow, why not.

Operator

Hi, we have next question from Mr. Abhijeet Jain. Abhijeet, kindly unmute yourself and ask your question.

Abhijeet Jain — Citigroup — Analyst

Thank you. Hi, thank you for the opportunity. This is Abhijeet Jain from Citi. Just a few questions. First off, last quarter, I think you had mentioned that the JD Mart being worth about 150 odd people dedicated to JD Mart, can you give a comparison numbers to that figures for as of date. That’s first question.

And the second question is, related to your partnership with Jio now, obviously Jio and Reliance put together have a what you could call probably a conciliation of services in various categories look e-commerce, right. So is there any conversation around reference from your website, given that you do have decent level of traffic through their properties? Any discussions around those lines with Jio is I guess my second question? Thank you.

Abhishek Bansal — Just Dial Limited

So Abhijeet, on the first question, the B2B team strength, which basically focuses on primarily B2B categories is about 180 to 200 employees, which includes a combination of both telecallers as well as feet on street team. On your second question regarding referrals from our platform, etc. So as I mentioned, both set of teams actively engaged to see what best can be done in terms of either referral from our platforms to theirs or leveraging their platforms, for example, Jio business users are huge consumer base, at the same time JD’s 30 million businesses can be tapped into for some of their particular products and services as well. So those are some of the, I think ongoing initiatives which — are ongoing synergies which will get explored over next few months and quarters.

Abhijeet Jain — Citigroup — Analyst

Got it. Thanks. And one final question from my side, if I can. So when you mentioned, I mean, Mani, I think mentioned that JD Experts will start off with pest control and then add more categories. I’m just curious as to the thought process here. Is it that pest control is what you see as an established use case category in India because of maybe some competitors doing it, and you think it’s an attractive way to get into or do you see a fair bit of pest control queries coming into your website still in major cities, let’s say like Bombay and Delhi, for example, and that’s why you think that there is significant opportunity that still remains to be tackled. I’m just trying to understand what your category selection process is like.

VSS Mani — Founder & Managing Director

You will see all — you may see all categories launched very soon, it’s just that a pilot is being practiced on pest control and then we do not have shared this information also, it’s just that it will be no different from any other such platform, because across the board, we have vendors who cater to all kinds of services, and we have to cherry-pick these vendors who are the top-rated ones to give that wow experience in JD Experts that we are talking about. So this pilot is being done just to see that it’s all well oiled, if it’s smooth, and then you can just expand it to multiple geographies and multiple categories.

Abhijeet Jain — Citigroup — Analyst

And Mani, then initiative on real estate that you spoke about a little bit, can you elaborate on that a little bit more?

VSS Mani — Founder & Managing Director

So we have taken a pie from our revenue, we have taken this, look at the pie and look at what are the contributions from each vertical segment and we realize that merely giving information about a builder or information about estate agents is not sufficient enough, although those categories contribute significant amount of revenue for us. If you really want to grow the revenue 10 times to 15 times, 20 times, then we have to go all whole log like any other international real estate site, which is like finding apartments, villas, farmlands, factories, able to see them view photographs, view videos and allowing agents to pose their listings, allowing builders to sell their properties through our portal, post ad in our listings and all that. So you will see a complete robust real estate experience, within just time as well as a dedicated site which would be for Just Dial — JD Property.

Abhijeet Jain — Citigroup — Analyst

Thanks, Mani. Got it. So I have a few more questions, but I’ll — I guess, I’ll just jump back into the queue for other questions.

VSS Mani — Founder & Managing Director

Great, carry on. Just carry on. Since you are online.

Abhijeet Jain — Citigroup — Analyst

Sure, sure. Okay, sure. Great. So my last question actually really is that, can you give me a sense of what your gross campaign additions was in this quarter, since the net was obviously 6,600, what’s the gross figure was?

Abhishek Bansal — Just Dial Limited

So Abhijeet, we do not specifically track gross versus net. So the way this particular number is evaluated is that, as on quarter-end, how many customers were active on the platform, because as I said, there might be a customer after one year, they might be up for renewal, they did not renew for a month, but they renewed one month later. So there is no way to be able to exactly say that it is a fresh customer, renewal customers, etc. So we track active campaigns.

Abhijeet Jain — Citigroup — Analyst

Okay, got it. Yeah, sure. And finally on — are you seeing any kind of impact since the onset of Omicron this quarter?

Abhishek Bansal — Just Dial Limited

So on third wave, there has been minor impact, fortunately overall at this point of time impact seems muted, and impact seems restricted primarily to Tier 1 cities, considering cases have started going down in metros. I think next week, 10 days would be critical, but compared to the impact that we had during the second wave etc., third wave impact seems to be much muted.

Abhijeet Jain — Citigroup — Analyst

All right. Great. Thanks. And when you say below that the plan now to use a partnership with Jio — sorry Reliance, and with the cash flow position you have and with the free cash flow relating business you have, the plan is to grow more aggressively. And I think you mentioned earlier, your intention to go back to 10,000 sales feet — sales people.

So I guess looking at the core business specifically, do you think going forward, the focus will be to more aggressively push for new campaigns in Tier 1 cities and get some of them back and that’s how you will grow the core business? Or when you look at growth aggressively, you’re looking at the entirety of all the things you’re doing and especially focusing on the newer focus areas like JD Experts, B2B and the real estate pension and those kind of things. So I’m just trying to understand where the growth — where the aggression is going to be more focused on the newer areas or the poor areas?

Abhishek Bansal — Just Dial Limited

See both things at this point of time are being pursued simultaneously. In the core business which is a well-oiled machinery, we realize that we need to ensure that our pricing is optimal, we need to ensure that we are higher-end scale up at the right time. And there, as I’ve mentioned in the past, we are not obsessed with growth coming from campaign additions or it is coming from ticket size.

Overall revenue, revenue per sales employee, that is what should be optimized, which is what will ensure that my top-line growth is at reasonably healthy margins. And as far as new initiatives are concerned, they are from the perspective that, okay, what will be Just Dial’s growth drivers five years, 10 years down the line. So some of those particular products are in pipeline and as and when they start showing traction firstly in terms of users, followed by in terms of revenue, profitability, etc., we will sort of evaluate them at that point of time.

Operator

Hi, we have next question coming from Mr. Harshal Parikh [Phonetic]. Please unmute and introduce yourself to ask question, Mr. Parik.

Analyst — — Analyst

Hi Abhishek, this is Amar [Phonetic] here this side. So I have a question on B2B business. If you can give us some understanding like B2B business which was around INR200 crore business I think in FY ’22, what would be the B2B size in ’22? And basically now is that B2B whole business is consolidated into JD Mart or we are still doing the B2B business separately and JD Mart is doing separately, how it is?

Abhishek Bansal — Just Dial Limited

So B2B currently is about 22%, 23% of our revenues. So whatever vendors that get signed up on Just Dial, vendors are visible and their products and digital catalogs are visible on JD as well as JD Mart. So JD since it is a well-established search engine, we already draw a lot of traffic for B2B-related categories. So customer doesn’t have to take two separate sort of subscriptions. Whenever they do — take a subscription, that is for all Just Dial platforms put together. So in this case visibility on Just Dial, as well as JD Mart.

Analyst — — Analyst

Okay. And now currently, how many subscribers, let’s say, in the B2B business?

Abhishek Bansal — Just Dial Limited

So B2B business, I think there should be around 80,000 odd subscribers about 20% of 437,000, that is broadly I think should be the B2B campaign base.

Analyst — — Analyst

And average realization would be around 20,000?

Abhishek Bansal — Just Dial Limited

Yeah, 20,000 annually.

Analyst — — Analyst

Yeah. And in this like — so what would be the fixed cost in this?

Abhishek Bansal — Just Dial Limited

So in our case fixed cost, I mean one you — in terms of you have the sales cost that is there, you have the sales team. And then you have the corporate overheads in terms of whatever support functions etc., that we have. So I mean, fixed costs is primarily the salaries that we have to pay for either the sales team or other technology content and support teams.

Analyst — — Analyst

So basically in percentage term, let’s say 30%, 33% would be our fixed cost?

Abhishek Bansal — Just Dial Limited

So we look at it more as a gross margin basis, so for example on overall Just Dial pre-COVID we used to have about 60% gross margin and against that business used to make overall about 25% to 30% EBITDA margin, which essentially means that another about 30%, 35% used to go in other support functions related to product, content, technology, advertising, etc. So we do not directly look at that, okay, this much percentage is fixed cost versus non-fixed. For example, while we were at 25%, 28% margin business in FY ’20, in FY ’21, our top line dropped by about 28% due to COVID impact, but still we were able to optimize our cost structure, such that business still delivered about 28% EBITDA margin. So that is how it is.

Analyst — — Analyst

Okay, okay. And let’s say in this.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Harshal, can I request you to please join the queue, there is a long queue of participants to ask questions.

Analyst — — Analyst

Sure, okay.

Operator

[Operator Instructions] And we have next question coming from an audio dial-in. Please unmute yourself and ask question by hitting star six. Yes, please go ahead.

Prateek Kumar — Antique Stock Broking — Analyst

Hello. Yeah, good evening. This is Prateek [Phonetic] from Antique Stock Broking. My question is — I have two questions. Firstly, do you say we have withdrawn like all the discounts and [Technical Issues]? So is this something which also can impact your paid campaigns? Secondly, how do you business streamlining [Phonetic] market share changes in B2C category from new and old competitions in general?

Abhishek Bansal — Just Dial Limited

So Prateek, on the first question, when we say withdrawn discount, so when this particular COVID first wave hit us at that point of time, in order to assist SMEs, we rolled out certain discounted plans, we rolled out certain schemes such as late activation, you paid today but your campaign can be activated about say a month later or two months later, whenever you want.

So all those flexibilities etc. we have sort of withdrawn. So the idea is to say that, okay, there is same pricing, which will be sort of be implemented. And that since it coincides with the withdrawal of sort of COVID second wave. So — and as I mentioned that third wave impact seems muted at this point of time. So this is sort of working out well for us at this point of time.

On your question around market share, so there aren’t any formal sort of stats around market share. In fact, in local search where we operate, there aren’t any sort of direct competitors so to say, though there are obviously a lot of indirect competitors. And going forward, as we mentioned that the way things are evolving that people want to do more and more stuff online, we would be wanting to evolve into that particular transaction come search engine.

Prateek Kumar — Antique Stock Broking — Analyst

Thank you. Can I ask one more question or I shall get back to the queue?

Abhishek Bansal — Just Dial Limited

Go ahead.

VSS Mani — Founder & Managing Director

Go ahead.

Prateek Kumar — Antique Stock Broking — Analyst

Sure. Thank you. So in the last call [Technical Issues].

Operator

Yeah, I think caller got dropped. So we have next question coming from Mr. Anuj Sehgal [Phonetic]. Please unmute and introduce yourself to ask your question. Please go ahead.

Analyst — — Analyst

Yeah, hello. Can you hear me?

Operator

Yes, Anuj, we are able to hear you.

Analyst — — Analyst

Yeah. No, I just wanted to understand sir, you talked about transaction model which you will obviously have revenue as a percentage of value of transaction and will have a different margin profile from the core business. So what I want to understand is, what are the categories that you think will be suitable for this transaction driven model? And what kind of a business or how will your overall revenue change let’s say over the next three to five years that this whole transaction model shift that you were anticipating?

Abhishek Bansal — Just Dial Limited

So Anuj, on this I think it’ll be too early for us to be honestly able to comment that how will our revenue profile etc. change. As we mentioned that idea is to add a transaction layer in both service and product related categories. We would want to pick say low hanging categories first, optimize them for user experience and then gradually scale up to other categories. So at this point of time platform is getting built, there’ll be pilots that will be done. We will work towards growing the user base, at the same time work on monetization etc. So I think it will be some time before we can be in our good position to be able to comment on this.

Analyst — — Analyst

Maybe if I ask in a different way, can you give us a sense of how you’re thinking about this like — or maybe give some examples of what kind of categories would you be, if not targeting, but what are the kind of categories which are suitable for such a business model and how should we think about that? I mean, I know it’s early days, but at least, just want to understand your thought process of how we are going about building this business.

Abhishek Bansal — Just Dial Limited

So, for example on the services side, as part of JD Experts, it would be say home service related categories, for example, your pest control services, your categories such as any kind of appliances, repairs, then it could be extended to say carpenter, plumber, electricians, even could be extended to yoga trainer, fitness trainer etc., so, these would typically be on-demand home services. On the product side, it could be any sort of consumer durables such as say mobile phones, your…

VSS Mani — Founder & Managing Director

So can I add to this?

Abhishek Bansal — Just Dial Limited

Please go ahead.

VSS Mani — Founder & Managing Director

So let us take shopping. Shopping will be no different from what you see in Amazon, Flipkart. The difference is the partners are located, it’s a hyper local sourcing mechanism. So, ensuring that the person matching the consumer buyer to the seller to the nearest pin code and ensure faster delivery. And we have a larger inventory base in terms of say 1 million businesses being able — being our partners, we’re able to cater to products at on-demand at any time, because of such a large inventory base.

So in — so when you extend this to any other product, which is, let’s say, B2B in nature, bulk in nature, wholesale in nature, there too — again the similar strategy, basically all those listings on Just Dial are doing nothing but they are playing a part in the economy. They’re all playing their role as retailers, wholesalers, distributors or whatever. We’re bringing them to our platform and allowing them to sell exactly the way they sell, that includes shopping and at JD Mart, this will be what we will be doing, these are the platform, which we’ll facilitate for that.

On the Expert side, our idea is that now consumers are more into kind of uberized type of experience, where they would probably want to book with one, a brand like Just Dial or a platform like Just Dial and would want that — execution of that work, it could be any kind of repairs and services at home, it can be any type of services which are rendered at home, like cleaning services or a beauty salon services and things like that. What do we do here?

Do we employ any of these people? No way. We go to our partners and we locally source them, according to the same pin code, geocode strategy and try to cater to it on time, ensure that it’s a high standard of service experience, and there are certain formats, methods that they have to follow, all the service providers.

Similarly, you can go dissect healthcare, doctors, what could happen in doctors? Doctors could be online consulting, doctors can be fixing an appointment, finding the type of specialist, specialty hospitals various things. So can you go deep dive into it, of course, we can. So that’s where the investment is getting in.

Real estate I’ve already explained, that if we get into real estate, it’s going to be much deeper content, allowing every agent and builder to publish their content for free and sell their inventories and obviously there’ll be preference to the sponsored listings, which — who’s products and who’s thing will be — postings will be showcased right on top.

Like accordingly, like we would have something to do with groceries, insurance, loan. So what we did was we looked at the JD revenue pie and where is our revenue coming from. Our revenues were coming from, let’s say insurance agents, people who are facilitating for launch, people who are retailers, then we looked at how is it happening in modern day, modern day it’s happening differently.

So can we play an important role, can we provide a platform for that. And this is what we’re going to work on. So you will see bill roll out one by one each of this as you go to the same Just Dial also, you will see a much superior and mature experience, and that’s what our goal is, let’s see how much of it we can execute.

It may seem like a lot like we are trying to overachieve instead of going after one or two verticals, but that’s not the DNA of Just Dial. DNA of Just Dial is the horizontal. So we cater to all kinds of products and services. So what we did was, we started hiring people who were working in certain expert verticals, online verticals in which they have been there for years, [Indecipherable] they know a good knowledge about the — how it operates, so we may take that — taken them as leaders and these leaders are going to execute it, of course, in the differentiated way that we want to do it.

Analyst — — Analyst

Okay. This is very helpful, Mani. Just one clarification. So on the B2C side, it is very clear you will go hyper local, try to connect the customer with either an expert or a shop. But on the B2B side, that is not necessarily a hyper local business, right. So how we think about that part of the business?

VSS Mani — Founder & Managing Director

So even in B2B, if we look at a good example Alibaba, if you look at them, how they go about. So here you allow manufacturers and sellers to publish their products and obviously sell online, have discussions online, get quotations online, request for quotation online, and all of those. So we provide as a platform, whatever is required there.

We are also willing to lend our help or rather we call it as JD escrow services, through which if you place an order your product is reaching you securely, and we kind of release your payment only after the visit of the goods, according to satisfaction. And such type of services that we are going to package along with it. You have an option to go offline transact with the same vendor after discovering the vendor online at Just Dial’s JD Mart or Just Dial itself.

Analyst — — Analyst

Got it. This is very clear. And is it fair to say that like your current mix is about 77% B2C, 22% B2B? Is that similarly how this business will evolve, or is it going to be much different?

VSS Mani — Founder & Managing Director

Well, we are very interested to know that, honestly speaking, currently a large percentage of our revenues come from services sector, the small, small percentage comes from JD B2C products, okay. And 22% is — 22% 23%-odd is coming from B2B. I think the B2B numbers may grow considerably both in — see it’s — for both B2B and B2C, it’s getting indispensable to Internet as such and being part of any platform. So I’m sure vendors realize that.

And so we will have more members, most — the more people subscribed to our services as we give a proper ship to our product, we start advertising and all that. It’s also possible that all sections are growing at the same time, so broadly the percentages may remain constant, by — my guess is on the JD, we do see products probably the revenue share could increase, because we didn’t have any such thing done over a long period of time, and the shopping will obviously — is really powerful. And if you can have instant delivery and a wow experience and great price discounting all that, obviously that’s — that also adds huge potential to growth.

Analyst — — Analyst

Okay, thank you very much. This is very helpful.

Operator

Yeah, I think we have a next question from [Indecipherable].

VSS Mani — Founder & Managing Director

Hi, Resham [Phonetic].

Analyst — — Analyst

Yeah. Hi, sir, good evening. So I’ve just one question on JD Mart, you have built a large catalog and I think a lot of vendors are also there in terms of listing. But in terms of indexing them on search engine like Google, how are we currently progressing over there? Because large part of traffic comes from Google. So in terms of indexing, how are we progressing?

VSS Mani — Founder & Managing Director

So indexing part we’re doing — growing better and better day by day. I mean, probably there could be some early movers who are now visible very much prominent there. But it’s only a matter of time, once you have rich content, Google has the bias towards good content. So that — we’ll see that.

And since — the period of existence of the site also matters. So what we have done is, trying to kind of capitalize on the Just Dial’s popularity on SEO. So if we could leverage that for traffic to JD Mart, so something tactically worked on that by our teams. We’ll get to know the results in the next two, three months, all that has helped us.

Analyst — — Analyst

Any specific category where you think your indexing is now much more powerful than, let’s say — just to give us an example, you might be strategizing based on specific sector first. So any example it can be?

VSS Mani — Founder & Managing Director

No, SEO works on content enrichment and our content enrichment is getting done across all categories irrespective of whether search engine traffic or not, we need to have that enrichment for a better user experience. Eventually, you go to less depend on SEO and get traffic directly to, as a first preference, and that’s going to be our ultimate goal to how to get users directly use our app or come to our site directly. And there has to be a compelling reason proposition for them, and then you achieved it.

Analyst — — Analyst

Okay. Got it, sir. Thank you very much, and all the best. Thank you.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

I think given the time constrain, that was our last question. And I think we can end up the call. And I’d like to thank all the participants and the management. Any last comments from your side, Abhishek?

Abhishek Bansal — Just Dial Limited

Thanks everyone for joining us. In case you have any further queries please do reach out, we’ll do our best to address. And that’s it from our side. Thank you.

Shaleen Kumar — UBS Securities Co., Ltd — Analyst

Thanks, everyone.

VSS Mani — Founder & Managing Director

Thank you.