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Informist, Wednesday, Feb. 5, 2025

 

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--Info Edge: Cash balance INR 42.90 billion as of Dec 31
--CONTEXT: Comments by Info Edge mgnt in post-earnings investor concall
--Info Edge: Billings growth in Oct-Dec broad based across verticals
--Info Edge: To focus on growing client base in 99acres segment
--Info Edge: 19,500 resumes added daily on naukri.com in Oct-Dec
--Info Edge:To make further invest in matchmaking algorithms in Jeevansaathi
--Info Edge: Seeing improvement in Naukri segment post subdued past qtrs
--Info Edge: If IT hirings gather momentum, recruitment firms will benefit
--Info Edge: Replacement hiring has started, campus hiring picking up
--Info Edge: Lot of unknowns in IT hirings going ahead
--Info Edge: 99Acres may break even this year if competition is reasonable
--Info Edge: Will need to capitalise on AI opportunity to prevent disruption
--Info Edge: So far no AI-driven impact on Naukri business
--Info Edge: Non-IT customers' revenue share 50-55% in recruitment business
--Info Edge:Unlike IT hiring, non-IT hiring more indexed to domestic economy
--Info Edge: Will take price hike in Naukri only if hiring market hot CY25
--Info Edge: Hiring remains stable compared with three months back
--Info Edge: Going forward, hiring market is unpredictable
--Info Edge: Apr-Dec Naukri pricing growth modest
--Info Edge: Apr-Dec Naukri volume, client numbers saw good growth
--Info Edge: High operating leverage aiding 99Acres profitability growth

 

By Rajesh Gajra

 

NEW DELHI – Info Edge (India) Ltd. saw billings growth across all verticals in its recruitment business and the revenue grew in double-digits in the December quarter, but the hiring market will stay unpredictable going forward, the management of the company said Wednesday in an earnings conference call with investors and analysts. Currently, as compared to three months back, the hiring level in the Naukri.com segment has neither moved up nor down, and stayed stable, the management said.

 

To a question on whether the improved growth momentum in the recruitment business will lead to the company effecting price increases, the management said this can only happen if the hiring market stays hot for the whole of 2025.

 

According to the Info Edge management, the company will focus on higher customer acquisition and higher penetration of products in the core Naukri business. "If the job market becomes hotter than it is today and talent becomes hard to get," then it will become easy for the company to take price hikes, the management said.

 

The IT hiring which makes up for 45-50% of Naukri's revenue has been showing signs of improvement with replacement hiring having started and campus hiring having picked up, the management said. But there were "lot of unknowns" in IT hiring going forward, the management said. "For example, for the first three weeks of this quarter (Jan-Mar) IT, all hiring was slow but the last two weeks have been good," the management said.

 

The management said the company was seeing a good revenue improvement in its Naukri segment in last couple of quarters following several quarters of subdued quarters. In the current financial year, the segment has seen customer numbers and volume grow strongly but the pricing growth has stayed modest, the management said. In the December quarter, 19,500 resumes were added on an average per day on the Naukri portal, Info Edge's management said.

 

Recruitment consultant clients of Naukri will benefit if the IT hiring gathers momentum, the management said. According to the company's earnings presentation, around half of the recruitment consultants, which contributed nearly 27% of the segment revenue in 2024, serve the IT and IT-enabled services industry, resulting in that industry contributing 45-50% of the total revenue during the 12-month period.

 

Excluding recruitment consultants, IT and IT-enabled services had a 31% revenue share in 2024. This meant that non-IT sectors contributed 50-55% to total revenues, including that half of the recruitment consultants which catered to these sectors. Infrastructure sector had a standalone revenue share of 10.6% while the banking, financial services, and insurance industry contributed nearly 9% of total revenues on a standalone basis.

 

The management said that unlike hiring in IT and IT-enabled services industry, which is based on what happens globally, the hiring in other sectors is indexed to the domestic economy. "Whenever the economy grows sustainably at 6.0-6.5% for a prolonged period, we have been able to grow our revenue at 20%-plus from the non-IT sectors" in the recruitment business, the management said.

 

In the December quarter, Info Edge's real estate business, under 99Acres, saw billings rising 16% on a year-on-year basis, revenue rising 17%, and operating loss narrowing substantially to INR 48 million from INR 147 million in the year ago quarter. The management said the profitability improvement in 99Acres was on account of high operating leverage, with "big platform already done, and investments already made."

 

Further, staff costs for 99Acres were under control due to stable headcount, the company said. According to the management, in the next few quarters the focus for the segment will be on growing the user and client base, and "deliver a superior platform experience to help the users make the right real estate buying decisions."

 

The 99Acres segment may come close to break-even on a cash basis in 2025 if the competitive intensity in the real estate market "remains reasonable" and "we continue to execute well", the management said. The segment witnessed good traction in property rentals and resale transactions in the December quarter.

 

On the company's matrimony business under the Jeevansaathi brand, the management said the company plans to make further investments in enhancing the match-making algorithms to deliver better outcomes for users. "Key metrics such as acceptances and two-way chats on the platform continue to grow and demonstrated strong performance," the management said.

 

Responding to a question on whether artificial intelligence or large language model-based machine learning software will be disruptive for the company's recruitment business, the management said that "so far we haven't seen anything which worries us". But if the company does not capitalise on opportunities to use AI tools itself "somebody else does a better job, then, you know, existing business models would get disrupted," the management said.

 

Info Edge announced its earnings for the December quarter Wednesday. The company's consolidated revenue was up 15% on year and 2% sequentially to INR 7.22 billion, while its consolidated net profit rose 61% on year and 10.4 times sequentially to INR 2.43 billion. According to the management the cash balance at the end of the quarter was INR 42.90 billion, reflecting a strong financial position.

 

Wednesday, shares of the company ended 3% higher at INR 7,941.15 on the NSE.  End

 

Edited by Akul Nishant Akhoury

 

 

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