NAUKRI - Info Edge(India) Ltd. Share Price

Management of Info Edge (India) Limited provided an optimistic outlook during the earnings call for Q4 FY25. They reported a 19% year-over-year growth in billings, amounting to Rs. 984 crores, and a revenue increase of 13%, reaching Rs. 687 crores. The company's operating profit rose by 3% to Rs. 231 crores, with margins stabilized at 34%. For the fiscal year, total billings reached Rs. 2,882 crores, reflecting a 15% increase, while revenue climbed 11% to Rs. 2,654 crores.

Some key forward-looking points highlighted by management include:

1. Sustained Growth Expectations: Management anticipates that if the economy continues to grow at 6-6.5%, they expect to maintain robust billing growth, potentially in the mid-20s percentage range.

2. Segment Diversification: The recruitment segment's growth was driven across various sectors, with tech and IT services showing resilience despite broader market uncertainties. GCCs contributed approximately 16-17% of recruitment billings.

3. Focus on Non-Recruitment Businesses: The non-recruitment segments have started generating cash, with 99Acres becoming cash positive for the first time, generating Rs. 2 crores in FY25.

4. Investment in AI and Marketing: Management emphasized aggressive investment in AI, enhancing existing products, developing new features, and improving operational efficiencies, which led to a 15-20% improvement in key metrics. They also noted increased marketing expenditures, aimed at capturing market share and engaging new job seekers.

5. Continued Commitment to Shareholder Value: The board proposed a final dividend of Rs. 18 per share (pre-split) for FY25, reflecting a 36% increase in total dividend payout year-on-year, as they maintain a robust cash balance of Rs. 4,786 crores.

Overall, management conveyed a strong sense of confidence in meeting future challenges while capitalizing on growth opportunities across various verticals.

Question 1: "Could you provide clarity on the marketing expenses in this quarter, their allocation, and your spending strategy going forward?"

Answer: We experienced higher marketing expenses due to increased spending in both Naukri and 99Acres. We ramped up to capture market share without a direct response to competition. Specifically, Naukri needed greater visibility, while 99Acres has gained traction, prompting enhanced spend to foster further growth. Marketing decisions are taken quarterly"”we'll assess future expenditures based on performance metrics and market response.

Question 2: "What factors are specifically driving growth in Naukri, and can you pinpoint the segments contributing the most?"

Answer: Our growth is attributed to the gradual improvement in the hiring environment, alongside a focus on adjacent sectors and new product launches. Despite modest conditions, segments like Tech, IT services, and GCCs are recovering, contributing significantly. We anticipate continued growth if economic conditions remain stable, and we've optimized our offerings and AI capabilities, enhancing our market position.

Question 3: "Can you discuss the anticipated billings growth for the current fiscal year, especially considering recent performance trends?"

Answer: Future growth will depend heavily on the hiring environment and overall economic conditions. We aim for sustainable growth driven by ongoing improvements and expansion efforts. If current trends persist, mid-20s growth in billings is achievable, but it's contingent on the absence of major disruptions in the market.

Question 4: "Regarding 99Acres, you've previously indicated near breakeven. Will the increased marketing efforts impact that timeline?"

Answer: While we achieved a cash generation of Rs. 2 crores this past year, our ambition is to accelerate growth further through this marketing investment. If we respond positively, breakeven could be on the horizon, but it ultimately hinges on revenue performance. Market share gains are priority, and we aim for improved outcomes this fiscal year.

Question 5: "Could you elaborate on your investment strategy and cash allocation, given the significant reserves available?"

Answer: We maintain a strategic view on our cash reserves, balancing it against investments in operating businesses and potential acquisition opportunities. As we evaluate our cash post dividends, ongoing operational needs and strategic investment avenues will determine future distributions. Increased dividends are possible if we see no immediate investment requirements.

Question 6: "What's the profitability forecast for 99Acres and Jeevansathi based on recent strategic marketing shifts?"

Answer: Our strategies focus on enhancing market share while moving toward profitability. We aim for Jeevansathi to break even while maintaining 20-25% growth. If we identify opportunities that warrant increased investment for market positioning, we may forgo short-term profitability to achieve long-term gains. This is a balanced approach we will continue to evaluate.