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Thanks, Anand. Hi, everyone. Good evening. We welcome to the Info Edge (India) Limited Q1 '24 Results Conference Call. [Operator Instructions] Please note that this call is being recorded. From the management side, we have Mr. Sanjeev Bikhchandani, Founder and Vice Chairman; Mr. Hitesh Oberoi, Co-promoter and Managing Director; Mr. Chintan Thakkar, Chief Financial Officer and Whole-time Director.
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 #2 of Investor presentations for a detailed disclaimer. I would like to hand over the call to Mr. Hitesh Oberoi for his opening remarks. Thank you, and over to you, Hitesh.
Thank you, Vivek, and good evening, everyone, and welcome to our Q1 '24 earnings call. As always, we'll start with an update on stand-alone financials and then talk about the external environment and then cover each business financials in detail. 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.
Moving on to our stand-alone financial results. Revenue in Q1 stood at INR 584.3 crores or year-on-year growth of 15.1%. Overall, billings in Q1 stood at INR 523 crores, a nominal drop of 0.2% year-on-year. Billings and revenues, along with acquired businesses, Zwayam and DoSelect for the quarter stood at INR 539 crores and INR 600 crores, respectively, registering a year-on-year growth of 0.4% and 15.2%, respectively.
Operating expenses for the quarter were INR 375.4 crores, a year-on-year growth of 5.6%, and operating profit for the quarter stood at INR 208.9 crores versus INR 152.3 crores last year, a year-on-year growth of 37.2%. And operating profit margins for the quarter stood at 35.8% compared to 30% for the same quarter last year. And operating profit including acquired businesses stood at INR 210 crores, a year-on-year increase of 35.8%.
Cash from operations for the quarter stood at INR 144.7 crores compared to INR 164.5 crores in Q1 of '23, down 12% year-on-year and deferred sales revenue stood at INR 958.8 crores as of 30th of June 2023 versus INR 825.4 crores as of 30th of June 2022, a year-on-year growth of 16.2%.
The cash balance of Info Edge including the wholly-owned subsidiaries stands at INR 3,562 crores as on 30th of June 2023 versus INR 3,439 crores as of 30th of June 2022.
Talking about our Recruitment business, we continue to witness a challenging environment, especially for IT hiring. Slow growth and reduced discretionary spends for our IT customers has led to resource rationalization during the quarter. We also faced strong headwinds from our recruitment consultants, especially the ones who hire for IT companies. The Naukri JobSpeak index is on a declining trend. Index for the month of July was down 8% sequentially and 19% year-on-year, while for Q1 of '24, the index is down 3% year-on-year. The current phase of real estate market characterized by low inventories, stable interest rates and higher affordability and price corrections and residential rentals continue to rise and have peaked in most metro markets.
Moving on to the quarterly financials of the Recruitment business. In Q1 of '24, the Recruitment segment billings were down 4.2% year-on-year and stood at INR 397.5 crores, while revenue was INR 446.6 crores -- sorry, INR 446.4 crores, a year-on-year growth of 15.3%. Operating profit stood at INR 263.5 crores, a year-on-year growth of 17% from Q1 of last year. Margin stood at 59% against 58.2% last year.
Cash from operations for Recruitment during the quarter stood at INR 206.1 crores as compared to INR 235.4 crores in Q1 of last year. Billings for Naukri India for the quarter were down 7% year-on-year and stood at INR [indiscernible] crores, while revenues for the quarter stood at INR 372.3 crores, a year-on-year growth of 13.9% for Naukri India.
Recruitment segment billing including acquired businesses for the quarter were down 3.3% year-on-year and stood at INR 413.5 crores. Hiring from core IT clients can pose a challenge for -- to billing growth. However, the business witnessed positive momentum in a few pockets in this space, especially captive centers. Non-IT businesses maintained reasonable growth momentum during the quarter with growth in hiring reported by manufacturing, BFSI, healthcare, retail, hospitality and infra- sectors. While we maintained our pricing levels during the quarter, delayed renewal and volume reduction led to billing contraction with longer sales cycles and hiring being predominantly backfill, sales teams focused on ensuring timely renewals.
On the job seeker side, engagement of the platform was higher during the quarter with 6% growth in active user base, 7% growth in the users and 21% growth in daily modifications of CVs.
Moving on to the real estate business, 99acres. Billings in Q1 grew by 20% year-on-year and stood at INR 73.4 crores, while revenue grew from INR 66.3 crores in Q1 to INR 82.7 crores in Q1 of 2024, a year-on-year growth of 24.6%. Operating loss for the quarter stood at INR 22.5 crores against a loss of INR 38 crores reported in the same quarter of last year. The business reported a cash outflow from operations of INR 40 crores for the quarter against an outflow of INR 46.6 crores in the same quarter last year.
The billing growth in 99acres for the last 2 or 3 quarters has been good and reflects the positive sentiment in the underlying real estate market. The billing growth is also backed by strong traction of user activity on the platform. The traffic on the platform increase in mid-teens and the responses on the platforms increased over 25%. The user actions on the platform indicated a strong demand environment for Q2 of 2024 as well.
The quarter also witnessed an increase in the number of brokers and owner clients on the platform. A number of new projects and live listings are also on an increasing trend. Our listing realization continued to increase year-on-year on the back of price hikes, improved response rates and increase value-adds for our customers. 99acres will continue to invest on platform experience, differentiated content, client delivery and marketing to generate more traffic and leads for our customers.
In the Shiksha business, in Q1, billings stood at INR 33.3 crores, a year-on-year growth of 9.8%, while revenue stood at INR 35.8 crores, a year-on-year growth of 14.6%. The business in current operating loss of INR 1 crore during the quarter against a profit of INR 5.3 crores reported in Q1 of last year. The cash from operations for the quarter stood at INR 30 lakhs against an outflow of INR 5.3 crores in Q1 of last year.
While there was healthy growth in platform traffic and student responses, clients reported a delayed pickup in conversion of student inquiries into application and admissions. We continue to make long-term investments in the study abroad business and strengthening our platform, improving our counseling services in this space.
The Jeevansathi business, billings in Q1 grew by 6.4% year-on-year to INR 18.8 crores and revenue declined by 15.3% year-on-year to INR 19.4 crores. The operating loss for the quarter stood at INR 18 crores against a loss of INR 28.7 crores last year. Cash outflow from operations for the quarter stood at INR 21.1 crores against an outflow of INR 49.8 crores in Q1 of last year.
New products to monetize increased traffic from free chat have shown some positive results, and business plans to continue with this strategy for -- we'll continue with this strategy for the next few quarters. Spends and marketing were further moderated during the quarter. Spends are down 29% sequentially and 48% year-on-year. Intensive competition in the category [indiscernible] multiple players try to wipe our market share in this category.
As far as consolidated financial highlights go, at the consolidated level, the net sales of the company stood at INR 625.9 crores versus INR 547.3 crores in Q1 of last year. The consolidated entity at the total comprehensive income level, there is a gain of INR 3,001.9 crores versus a loss of INR 3,342 crores for the corresponding previous quarter ending in June 30, 2023. Consolidated PBT stood at INR 216.7 crores in Q1 versus INR 339.4 crores in Q1 of last year.
Thank you, and we are now ready to take any questions.
Thank you, Hitesh. We'll now begin Q&A session. [Operator Instructions].
So the first question we have from Vimal from Alchemy Capital management.
Sir, my question, Hitesh, is on, there is a lot of movement on GICs, a lot of companies, MNCs are setting up global capital centers in India. That opportunity clearly seems to be large, looking at the kind of talent that is available in India, et cetera. So how are we sort of participating over here? Do we see a chance of arresting some of the weakness in your normal IT services with our participation in GIC sector in India?
A lot of captives centers are our clients, and we've been working with them for many years. And of course, there is growth in hiring from captives, then Naukri will benefit as well. However, captive hiring as a percentage of total sort of IT hiring is still a small fraction. The IT sector employs over 5 million, 6 million workers, while captives are maybe 15%, 20% of that. So it will be difficult for -- to compensate for the loss in business from IT services companies from -- by just sort of focusing on captives. So we'll continue to do that. Like I said, they are all our customers. But the hope is that the non-IT sector will continue to do better going forward. And that's about half of our business as well. So let's see how this plays out.
Can you hear me?
Yes, we can hear, Nikhil, you can...
Yes, come on, Nikhil, yes.
So Hitesh, I just want to understand regarding the billing which declined 4% Y-o-Y. So which segment basically led to this decline given IT is under pressure since last 3 quarters, right? So given now we are finally in a negative trajectory. So was it a higher-than-expected decline in IT or non-IT actually was not able to more than compensate for the decline in IT. So some slowdown even in non-IT side?
Yes, no. So IT hiring has been slow for a few quarters now. And there is sort of -- yes, it's not clear whether the slowdown in IT hiring has bottomed out. We don't know whether we've hit the trough as yet. So the JobSpeak index on IT continues to trend south. On the non-IT side, Q1 was okay. But July, JobSpeak for even some of the non-IT sectors are not so good. So non-IT hiring also slowed down a bit in July, right? But we don't know whether it's because of the economy slowing down, whether it's just because of the rains or something else. Things will get clearer in a few weeks. So have we -- what we -- did IT hiring slowdown more than expected? Well, anecdotally, a lot of companies have been telling us that, see, we grew by over 80% last year for a few quarters. And anecdotally, what we've been hearing, what companies have been telling us is that some of them have [ override, ] attrition rates have come down and their bench has grown. And it will be -- it will take maybe a quarter or 2 before things start going back to normal.
Very helpful, Hitesh. Second part is what you mentioned about the pricing broadly stable on Y-o-Y basis, I believe. Last quarter, we have seen some increase in pricing, especially in non-IT. So is it like on a blended level, the pricing in IT decline, which basically more than compensate or offset the benefit in non-IT?
I don't have data on that, but we'll try and get back to you.
Sure. The last one is on the delayed renewal. Have you seen that basically closing ultimately in the month of July. And are we seeing some increase in delays or decision-making now compared to last quarter?
That always happens. See when the market slows down, companies take longer close deals. They have more time to negotiate. They're not under pressure to hire. They negotiate harder. So they sometimes buy for shorter periods, they won't buy for a year. So these are -- they downgrade in terms of the kind of products they buy. So this is normal during any slowdown. And what we are witnessing in IT is a slowdown. I mean -- so I'm sure all this is happening in the market.
The next question is from Jaydeep Choraria from [ Advance ] Securities.
Am I audible?
Yes, go ahead.
Hitesh, my question was with regard to 99acres, the robust performance that we've been witnessing quarter-on-quarter. And somewhere in your initial comments, you also talked about reduction in the operating cash burn of the vertical from INR 46 crores to INR 40 crores. Just wanted to get some color around what has led to this reduction in the cash burn? Is it totally driven by top line increase? Or there has been some cutback on the marketing spends as well?
So 3, 4 things. See, one, of course, top line growth is healthy. So we've been growing at 20% plus for a couple of quarters now. At the same time, manpower costs are under control, it's not as if we're adding people. At the same time, we've also optimized our marketing spend without compromising on anything.
So our marketing expenditure in 99acres has trended south, but at the same time, we managed to get more users on the platform, we're generating more responses, we're getting more inquiries. And that has helped us to sort of raise prices. And because the real estate market is buoyant, we are adding more customers as well. So it's a mix of everything. Market is good, and we've been executing well, and that's resulted in top line going up and cost sort of remaining in control. And that's why the burn has gone down substantially.
Any plans of -- Hitesh, just a follow-up. Any plans of kickstarting the marketing campaigns once again, given that there are some high-profile Cricket matches in and around the corner, so -- Asia Cup, World Cup, any plans around that?
So we sort of plan quarter-by-quarter, and a lot depends on what we are seeing in the market and how sort of competition is behaving in this space. Hard for me to say how this will play out going forward if the market remains solid and if we continue to grow at 25% or so year-on-year, we'll at least maintain this spend. I mean will we increase it going forward? Time will tell, it will be hard for me to say right now.
And has the competitive intensity kind of got normalized, has intensified? Just how do we understand the competitive environment of the real estate?
No, it's very competitive. There are a lot of players out there and they're all spending money. And it's a good time. And a lot of our -- so while there are portals and there are start-ups, a lot of our -- so the real competition in this space, if you ask me today, for us, is from the Googles and Facebooks of the world, which get a large chunk of advertising dollars from developers and large sort of channel partners. But yes, the space remains competitive. There is a lot of action still.
The next question is from Sachin from Bank of America.
I have 3 questions. First question, I just wanted to understand a bit more about the mix shift happening towards non-IT. Hitesh, is it fair to assume that if IT continues to remain the way it has you know one could see a sort of a mix shift more towards non-IT? And just wanted to understand the implications on that in terms of billing and margins and so on and so forth.
About 50% of our business is next to IT hiring. And if IT hiring continues to be slower, if non-IT hiring remains buoyant, then of course, this mix could change over the next few months. It may not change by a huge number. But from 50-50, it could become 48-52, 47-53, that kind of stuff. And now a lot will depend on what happens in the long run. If IT hiring continues to be slow and non-IT -- and the economy, the domestic economy continues to do well, then of course, the mix could change even more. Margins may not get impacted that much because it's not as if -- yes, the IT business is a little more profitable, but it's not as if the shift is going to be too much from IT to non-IT.
Got it. And on the long-term point, if we take a 3- to 5-year view, general thoughts about generative AI and the potential impact of that on IT hiring?
Hard to say, there are 2 schools of thought on this. One view is that every time there's a new technology, then it creates more opportunity to sort of build new products and create new businesses. And the services business around every technology -- any new technology is always larger than the technology business around that technology. And if that happens this time around as well, and if generative AI and the advances in machine learning and AI in general result in sort of more opportunity for Indian IT companies and for -- or for -- or if there is more outsourcing of jobs to India because people are hard to find in the U.S. and every company when the U.S. wants to leverage generative AI and they start opening their captives and so on and so forth. Then, of course, it could mean it could result in more hiring than normal in the Indian IT market.
The other view is that generative AI will -- could make developers more efficient, and therefore, there -- it may make them more productive and therefore, fewer developers will be required for the same work going forward. Let's see how this plays out. I mean in general, when there is new sort of -- when there are changes in technology, then people with new skills are required and that creates opportunity. And that creates movement and -- in the market, and that's good for us provided the legacy business doesn't get hurt too much.
Got it. Pretty clear. And last question is on, clearly, for the last 6 to 9 months, we are seeing a funding mentor. Just wanted to understand the implications on that on the kind of investment opportunities you guys are seeing. Clearly in India till date we have not seen massive down rounds. And there's ample capital around Series A and at that level. So I just wanted to understand your thoughts out here.
Sanjeev, you want to take that?
Can you repeat the question, please? Sorry.
So Sanjeev, the question was more from point of view about the funding mentor and the environment in India. What are we seeing right now at Series A and Series B and any good opportunities for you?
No, no. There are plenty of good opportunities. There are -- if deal flow remains strong, the valuations are more reasonable, round sizes are smaller. At the same time, we are taking our time and being cautious simply because there's a new risk, and that new risk is -- will this company be able to get next round of funding with other investors participating or not? And that's something -- therefore, are we convinced enough that if you've to -- next 2 or 3 around solo in this company that we did in Zomato, do we have that conviction and then do we have the money and so on. So therefore, we've been a little cautious. But having said that, we think this is a good time to invest. If you recall, we invested in PolicyBazaar in 2008 just before Lehman went down.
We invested in Zomato in 2010 during the global financial crisis. So we believe this -- because our investment time horizon is 7 years, 8 years, 10 years, but actually it's longer on the balance sheet because it's 17 years -- I mean it's 15 years since we went into PolicyBazaar, is still there. It's 13 years since we went into Zomato, we are still there. So if you have a long-term time horizon, we believe this is a good time to invest, but be careful.
Next question is from Mohit from Nuvama.
Can you hear me?
Yes, go ahead, Mohit.
So my question is on the Jeevansathi and the 99acres business. I know your ad spends have definitely come down, but you have -- multiple times, you have voiced that the competitive intensity is very high. Now Jeevansathi, you said you have got more users, right? But if you look at the major competitor that the realizations have come down there also. So can you give us a sense on how do we look at these ad spends going forward? Will you -- will there be a case where you will increase them further to gain more market share? Or is it that competitive intensity has tapered down a bit? Can you give some sense on that?
Yes. So right now, as things stand today, it's unlikely that these ad spends will go up in a hurry. Our model has changed and we are now a premium platform, and we offer chat for free and we have to using that -- this feature to sort of try, get more users on the platform. And we've seen this growth over the last few quarters. I think the real challenge for Jeevansathi is to now see how we can monetize these users who have joined the platform over the last few quarters. And that's what we're working on right now. We don't expect competitive intensity in the space to go up in a hurry. But who knows what could happen 3 quarters from now.
So, Hitesh, sir, can you say that you have been able to gain market share on the user -- capturing the users?
Yes, certainly, on the user side, we've gained traffic share, gained user share. But the challenge is to really monetize these additional users we've been able to get on the platform. We got them because we offer stuff for free, and that's good. And it's helped us cut the -- bring down our marketing cost. But now we need to work on -- we need to develop products and we need to sort of figure out how to monetize this new user base better.
Next question is from Vivekanand from Ambit Capital.
Two questions. So one, Hitesh, I think a couple of quarters ago, you mentioned that if the domestic economy does well and non-IT hiring remains buoyant, you might consider increasing your distribution and sales network to cater to this demand. Is that something you pursued? Or are you seeing any indications that the hiring is becoming more and more broad-based, given that previously, you had spoken about sectors like hospitality, travel and others that may have more distributed hiring than, say, IT, which is concentrated in a few cities. So that's question one. And based on this answer, I'll ask my subsequent...
Yes, yes, yes. So you're right, the non-IT market is broader, and you have non-IT companies in a lot of cities. We already operate in more than 40 cities. It's very likely that the number of cities we have physical offices in will go up over the next year or 2. We are already seeing more activity in smaller towns than was the case maybe 2 or 3 years ago. So very likely that Naukri will have field offices in 60, 70, 80 cities over the next year or 2.
We are pushing hard on that front. But it's not as if we are going to hire a lot of people. These new offices start with 1 or 2 salespeople each. And these spaces if they become profitable within a few months -- in the larger cities where we already have offices and we already have field sales team, we are unlikely to hire more salespeople to sell existing products. But some of the new products which we've launched over the last couple of years -- over the last few years, we may hire some people on the ground to push them harder, products like Zwayam and iimjobs and others. So let's see how this plays out. Now if the market continues to slow for a long time, then of course, we'll figure out a way to utilize the people we have more efficiently in the markets in which they are present. Right now, the hope is that the slowdown is temporary and the things will bounce back in a couple of quarters. So let's see how this play out.
Okay. That's helpful. Just one extension to this question. Since you mentioned that the growth seems to be broad based and you will perhaps open physical offices in more cities to cater to this demand for non-IT talent. Is 99acres also seeing something similar? Or is it -- is the action only concentrated in the top 5 to 8 cities?
See, the top 8 cities are a big part of the business. So most of the business does come from the top 7, 8 cities in both Naukri and 99acres. But we are seeing more activity even in 99acres in smaller towns. And it is very likely that even 99acres will open more offices going forward and expand to other cities. The contribution of these cities to revenue in the short term is not going to be large, but I think strategically important to cover each and every part of the country. And over a 3, 4, 5-year period, revenue from these cities will and can become substantial.
Okay. The other question I have is on the recruitment acquisitions that you have done, right? Zwayam, DoSelect, the more recent ones, right, and Coding Ninjas. So these acquisitions seem to be focused largely on the IT verticals. Is that assessment correct? Or are these solutions -- can you offer these solutions to customers across verticals?
See, some of these can be -- like iimjobs is actually meant for non-IT hiring. Zwayam is a recruitment management system, can be used by both IT and non-IT companies. Coding Ninja, we haven't acquired the business, but we own 51%. That's more IT -- upskilling for IT. But the IT companies actually employ a lot of people, and they have larger budgets. So a lot of the customers for many of these products end up being IT services companies. They are not the only customers. But often, a lot of the customers end up being the large IT services or large [ in beside ] IT companies, for the simple reason, they hire a lot of people, they have big budgets. They have large workforces, and they need the solutions more than the other companies.
But if the non-IT market continues to be buoyant for the next few years, if this is the start of a new cycle, if India continues to grow at 5.5%, 6% even for the next few years, then hopefully -- I mean we already have a lot of large non-IT customers, it's not as if we don't have them. But hopefully, the number will -- on the non-IT side will also grow over time.
Okay. And Hitesh, I think, you had spoken a couple of quarters ago about JobHai where, it started from Delhi, but I think you wanted to expand it into new markets as well, right? So is there something that we should know about that business now that you perhaps are taking it to more customers. And in terms of business development, are you working with any of the new companies that are setting up manufacturing facilities, perhaps capitalizing on the PLI schemes and maybe giving them any bespoke solutions through JobHai. Any updates that you can offer on the gray-collar workforce tools that you have?
You're right, JobHai, we started in Delhi. Now we've taken it to many more cities. It's growing nicely for us, the number of jobs are growing, the number of users are growing, engagement on the platform is growing. The number of recruiters on the platform is also growing. So we're very happy with the progress. We haven't started monetizing aggressively as yet. Strategically, this is very important for us from a long-term standpoint. It's unlikely that it will generate a lot of revenue in a hurry.
The unit economics will have to be worked out since it's not so easy to make money in the gray-collar space. We'll have to keep our cost of attrition lower. We have to figure out how to monetize. But from a 5-year, 7-year perspective, I think it's a market we can't afford to ignore. It also helps us keep competition at bay. We don't want to sort of keep any doors open from which competition can enter and then sort of get into our main business. So we'll keep investing in JobHai. The big categories for JobHai where we are seeing a lot of traction right now are categories like delivery boys, categories like credit card sales, telesales for domestic sort of customers, domestic businesses, not overseas call centers, SMEs where we have a few hundred thousands -- tens of thousands of SMEs of the platform and they need to hire a few people each every year. So these are the hotter categories. These are categories where there's a lot of attrition and there's a lot of demand for talent. The manufacturing piece is very, very tiny for us right now both in Naukri and on JobHai.
Okay. The last question I'll ask is on 99acres. It seems that you have turned the corner there with respect to traffic share as well as growth. So apart from the market buoyancy that is currently manifesting and perhaps offering you a tailwind, what is going right for you in 99acres, and competitively, what is changing there? Or is it just too early to comment?
No. See, I think, it's a bunch of things. The market has been supportive. See, for a long time, real estate was in deep trouble, I mean, starting with demonetization and then RERA, then GST and NBFC crisis, COVID. Prices were sort of flattish. In fact, in real terms, prices have actually went down. The advertising spend in the space fell, builders are sitting on lots of inventories, a lot of projects were -- took time to get completed. So the market was in trouble for a long time. I think we have turned -- gotten to a point where it's looking good now. There's more demand. The industry has sort of restructured. There are more -- there are bigger developers, better capitalized developers. RERA is being enforced strictly.
So interest rates are reasonable, incomes have gone up. After COVID, there is more demand for bigger homes. So the industry sort of -- I mean we don't want the prices to go by too much because real estate not becoming unaffordable. But otherwise, it looks good. At the same time, the other thing that happened is that developers and builders and channel partners and brokers have become savvier about using the digital medium. So they're getting -- they've realized that they can -- their customers are all online, and therefore, they need to be online. And therefore, spend is also moving from off-line media to online media, ad spend.
So, one, ad spend is growing, and two, ad spend is beginning to move from offline to online. And three, I think we've also been executing well. So we've seen a surge in inquiries on our platform. We've seen more visitors on our platform. We are seeing -- we've done a lot of good work on putting out interesting real estate content, whether it's locality reviews or society reviews or transaction prices. Real Estate India is a very opaque market. There's no information available. So people sort of need to visit platforms like 99acres to understand what's happening to prices, what's happening to supply, what's happening to various other things in the market. So we're happy with the way our team has also executed over the last couple of quarters. But fingers crossed, one swallow does not make a summer. There is not a summer [ break ] like this say. So let's see if this continues over the next few quarters. And I'll be sort of -- I'll feel more confident about [ same of this. ]
The next question is from Swapnil from JM Financial.
So the first question is to Hitesh. And that's on the commentary that we had in the previous quarter, where the insinuation was that if the economy grows, let's say, 6% to 7%, our non-IT business could grow 20% to 25%. But if I hear you correctly, you mentioned that July was a soft quarter now, soft month, sorry. Yes. So what has changed suddenly in the last 2 to 3 months that [ for us to say that ] things are looking soft now, especially in the non-IT.
Yes. Actually, it's -- I think July number surprised us, the JobSpeak number. So we are digging deeper to understand what could have happened. Was it that there's some shift in seasonality? Was it because of the rains? Or is it because we -- because post-COVID, the non-IT market opened up last year, and there was a surge in hiring. So is it a base effect in some way? But yes, long term, we continue to maintain that if the Indian economy continues to grow at 6% or more per annum, then it is possible to grow at 20% plus in India.
Just a continuation to that. You mentioned that there could be an impact on the base effect also. Can you just give us an understanding of like how things moved between, let's say, last 2, 3 quarters, how -- and it would be good if you can just give a sense and compare it with pre-COVID things, how things used to be and now -- and how had the base moved in?
Look, see, pre-COVID, when we have -- whenever we used to get 5%, 6% GDP growth, the Naukri business used to grow at 15%, 20% per annum. Now last year -- last year Q1 billing growth was 80% in Naukri, right? Even Q2 billing growth is very high, 55%, 60%. So the base is high. And then, of course, it started moderating towards the second half. By Q4, I think, we were down to 15%. So there could be some base effect here at work.
And the base effect was a result of the market opening up post-COVID, right? I mean suddenly, there was a lot of demand, you had the Great Resignation, you have people coming back to work, et cetera, et cetera. So that led to a lot of attrition. Things have stabilized to some extent since then. But I mean, in the long run, like I said, once we go back to 5%, 6% growth and once we are over and done with all these COVID and post-COVID effects, growth should stabilize at 15% to 20%, depending on how fast the economy goes.
And my second question is with respect to unique clients that you report on a quarter-to-quarter basis. So this quarter, again, you had a decent growth in -- sequential growth in terms of unique clients. And the majority of the decline that has happened in your billings, that seems to have come from the realizations or people not renewing at the same rate that they were doing earlier. So can you just give some sense, like how should one see these trends going forward as well? And how do make sense out of these things, whereas your unique lines continue to grow, but realizations have -- mode have come down significantly much more comparatively.
Look, see, in real estate, we've added more customers. And what happens is when you add new customers, we've added a lot of new customers, they don't buy long-duration products to start with. They don't sort of buy high-end products to start with. They test out the platform to get a good response. They upgrade, we upsell to them. So normally, when you get in a lot of new customers, your ARPUs fall or tend to remain flattish because unless you take a serious price hike because the new customers sort of -- the customer mix changes towards more new customers in the mix, and new customers don't spend too much money to start with. In a slowdown, what you see is pressure on prices, you see pressure on even a new customer addition, you see pressure on renewals. So in a serious slowdown, what you get to see is pricing falls, volume falls, number of customers also, and customer acquisition also starts to fall.
So that's how -- that's the nature of beast here [Foreign Language] in both real estate and Naukri. In Naukri, I haven't sort of looked at the numbers very closely, but I suspect we may have lost some customers in the IT space, a lot of startups may have sort of stopped hiring, stuff like that would have happened because of the market slowing down. On the non-IT side, we're continuing to add new customers.
The next question is from Raghav Behani from Citi.
Hitesh, my question is on the non-IT side. So the realizations in non-IT seem to be much lower versus the IT. So any pockets here like BFSI, where you can take price hikes? Because we have seen some of the banks report higher attrition and wage increases in 1Q. So any comments on the realizations over here?
See, we're not looking to take an aggressive price hike at this point in time. But in general, like I was saying before this, see, if the market heats up and if companies start hiring a lot of people, if attrition rates go up, then what we've seen in the past is that companies negotiate a lot less. Therefore, our realized price goes up. They also hire more sort of, they want more volume. And they also upgrade to high-end products. So in the end, hiring cost is a small cost for many of these companies. In a slowdown, because they're not in a hurry to negotiate harder, everything sort of -- while in a good economy, they are constantly under pressure to hire. And they don't mind paying 10% more to Naukri at that time. So we are not looking to up our rate card rates right now. But in general, I mean, if the market is hot, you end up sort of discounting a lot less in the market.
Okay. Just a follow-up question on the non-IT side. So some of the CapEx heavy sectors might slow down. Do you think they might slow down hiring before the general elections? Because, in general, we see that some industries just push back hiring or CapEx to post election clarity. Any comments on that?
I have no idea how this works. In the past, at least what we have seen is that actually government spend more in that election time, and that results in higher demand for a lot of products. And while hiring in some sectors may slow down, like you said, if the government is spending money on CapEx, and they may sort of -- I don't know how it works. But in general, there is more money sort of spent at election time, and that results in more demand for goods and services. And that will result in hiring in other sectors for all you know. But I don't know how this plays out. I don't think it's going to have any material impact on the business.
Can I just add to that? See, if the company has got -- is dependent on government contracts, right? And there is a serious possibility of the government changing, and therefore, contracts either not coming through being canceled or company may be cautious. But if it's not dependent on government contracts or if the company is confident that the government will not change, I don't see it making a difference. So that's -- but we don't know what they're thinking.
The next question is from Baiju Joshi from Macquarie.
Am I audible?
Yes, go ahead, Baiju .
I have 2 questions on behalf of Aditya Suresh. First is on renewals. What is the nature of discussions that you're having with clients as you renew these contracts? You briefly touched upon this, but would you like to highlight anything in particular that is different this time?
Sorry, can you say that again?
Yes. So on the nature of discussions that you're having as you renew your contracts, is there anything in particular that you'd like to highlight that is different this time?
No, no. See, what I see what happened last year was, see for 7, 8 quarters, there was a surge in demand for IT talent because of post-COVID, massive sort of increase in digitalization worldwide. And there was a scramble for IT talent. And attrition rates were sky high and salaries went sky high. And talented -- and people were hard to get. Our business also flourished as a result.
Revenue more than doubled. Profits maybe tripled over the last couple of years. So -- and then there was a sudden sort of slowdown for whatever reason. And attrition rates, I think, have been gone back to where they were pre-COVID. And suddenly, companies realize that they are overhired, right because demand suddenly vanished. And what is happening right now as we speak is companies are getting -- their bench size has grown to -- is now higher than what they want it to be. And therefore, they sort of cut down on hiring, and they're waiting for some national attrition so that they go back to the number they are comfortable with. And then again -- and hopefully, demand will also come back in a couple of quarters and then they will start hiring once again. That's what companies are telling us right now, mainly.
Right. So is it fair to say there would be slightly more discretion on pricing or maybe tenure of contracts? Anything in particular that comes up more...
No, no, see, it's like this. They have -- their hiring requirements have gone down. And therefore, they negotiate harder, they need fewer licenses. So that results in sort of -- and they're not growing anymore, they're not adding a new head count. So that results in low realization in the end. And some of them, sometimes -- you may say, listen, we're not hiring for the next 1 or 2 months. So come back after a month, come back after 2 months, that happens during slowdowns. This happens every time.
Understood. Second one is on billings. So given the decline, how should we think about marketing and other OpEx?
See, long term, we continue to be bullish on the Indian market. We think -- and that's what we've seen for the last few years. These slowdowns don't last for more than 2, 3, 4 quarters and business always goes back to normal. And we don't want to cut any long-term investments. I mean we spend -- we're currently spending maybe INR 20 crores, INR 25 crores a quarter on new businesses, like JobHai and AmbitionBox, et cetera, where we don't generate any revenue, right? So -- and we're spending money on marketing, doesn't move the needle in the short term for Naukri. But I think -- we think it's important from a long-term standpoint. So unless and until the slowdown is very prolonged and deep, these investments will continue.
Next question is from Sarang from RW Investment.
I have 3 questions. My first question is to Mr. Chintan. Is it possible to give the breakup of other income on consol level and how this could pan out [indiscernible]
Sure, mostly in treasury income, the other income part. But if you want a more detailed breakup, we'll come back to you.
My second question is to Hitesh sir. Sir, you said the major chunk of revenues contributed by top 7 to 8 cities. Is it possible to put an approx percentage figure on maybe Naukri side and 99acres?
Sorry to say, may top...
Top 7 to 8 cities, the revenue contribution...
7 to 8 cities.
Yes.
Yes, we don't give that breakup, but it's a large chunk. Delhi, Bombay, Bangalore, Chennai, Hyderabad, Pune, these are our big markets.
Sure. Okay. And my third question is to Sanjeev, sir. Sir, is it possible to share your experience and learnings from investing in 4B networks, if you are allowed to speak about it.
Okay. Chintan, do you want to take that or Hitesh, you want to take that? Or should I take it, I can take it if you want.
You can take it. See, the matter is under arbitration. But Sanjeev, you could take it.
Yes. So I've said this to others who asked me that, look, sometimes you make mistakes right? Investments do go wrong. We have, in the past, lost money on several companies, but we've made money on some and we've made some big money on some. Overall, the outcome, and yes, 4B was a mistake, I think. We have to admit it. I mean you can't write off INR 276 crores, or how much we've written off. Chintan, how much we've written off?
Yes, total INR 288 crores is what...
Because you can't write off INR 288 crores and say, it wasn't a mistake. It was a mistake.
Or any other steps you are taking to ensure this doesn't happen internally?
Yes, yes. We keep -- in fact, we discussed that about bidding today, and we have already reviewed internally. And we are taking -- we have taken some steps, we are taking more steps. And we continue to discuss at Board level on how do we -- do we need to change some of our diligence practices, tighten it up? What are the signals, indicators and red flags that emerge during conversations with founders that there may be a problem here. How we deal with other situations in case anything comes up, which thankfully, so far has not in terms of fraud. Companies go under, but fraud is a different thing.
Next question is from Ashish Chopra from Goldman Sachs.
Sorry, my question has been answered.
Next question is from Vivekanand, may be a follow-up question from Ambit Capital.
Two questions. This is to Sanjeev. So with Info Edge Ventures getting a new investor for its funds, is there any change in the objective or the conditions as far as these 3 funds are being run, whether it's governance or fund life or objectives of capital deployment? So that's question one. Secondly, Sanjeev, comments you made on the round sizes getting smaller, valuations getting more reasonable, now you have 2 kinds of funds, right? One is funds that's scout for new companies where you want to be the first check, and the other one is a follow-on fund, which is basically identifying the winners from the previous AIF and doubling down on them. So where are you finding it easier to deploy money in the current context? And if you could just help us understand how the follow-on fund is doing versus -- or how your process is for the follow-on fund versus the funds where you are investing in new companies?
So fund 1 is more or less done, okay? Because [indiscernible] been deployed, there will be no -- there's unlikely to be a new company coming into fund 1. And the follow-on fund only looks at the companies of fund 1 and figure out where to go and how much. And prospective winners, we will back them more and more now. So it is a Fund II and capital IIb, which are actually scouting new companies and investing in them. And that is where we are saying, we're finding it easier. We find valuations lower, the round size is smaller, and we are being careful, right? So -- and as far as the first question is concerned, no, we do not have any change in mandate. Our strategy remains the same. Go in -- well, for the most part, I won't say always, we will have some sort of a popular capital for growth in late stage, but that will be a small fraction of the total fund.
Most of the money -- most of the companies we invest behind, we will try to be early and first check or second check in that and then double down and then invest further in the ones that we find good. So strategy has not changed. But yes, there will be a certain pocket in both funds where we will do slightly later-stage investments. So in the first fund, we did -- for instance, first one, we did Shiprocket. That was a later-stage investment. But the bulk of the money went into the -- or the bulk of companies, most of the companies -- or companies where we -- the first check went in early.
Okay. This is helpful. Just one follow-up with respect to the follow-on fund that you have, right? So here are you looking to be the only check for the subsequent rounds? Or is it -- are you open to getting -- the winners getting external investors to...
In fact, we like to say that we wanted to get external investors and we come alongside.
That was the last question of the day. .
Anand, there's one question in the chat box. So that question is for Hitesh. Hitesh, how should we see the trend in the recruitment business for a longer period of time. Since we are the dominant player, we have a large database, and we get already trend how the sector would behave in coming time.
Long term, see, we've always said, Recruiters indexed to GDP growth. If the Indian economy continues to grow at 5%, 6% per annum, it should be possible to grow at 15%, 20% per annum in the Naukri business -- in the core Naukri business. And around the core Naukri business, we are trying to add more bells and whistles, we acquired iimjobs, we got Zwayam, we've got hirist, we've got DoSelect, so we're trying to create a new sort of opportunities for us, JobHai, a big opportunity in the long run, but from a 5- to 10-year time frame, not in a 1- to 2-year time frame. The blue collar segment has now become -- I mean there are tens of -- maybe a few million sort of people who work in some of the sectors I mentioned delivery workers, as counter sales people, as telesales people and in salons and in restaurants and lots of other sort of small SMEs and small businesses. So long term, this also is a big opportunity, but we'll have to -- we're working on the unit economics, it will take some time to figure this out.
So the core Naukri platform, index of the economy, depending on economic growth, if it -- it can grow at between 15% to 25% or 10% to 25% depending on where India ends up, then we are adding these adjacent sort of verticals around the core Naukri business. They're small today but hopefully they'll grow faster than core Naukri over time, but they're a small part of the revenue today.
Coding Ninja, et cetera, are separate. We are there, we are trying to monetize job seekers and not recruiters. So that's a B2C model, not a B2B model. And then in the long run, over a 5-, 7-, 10-year time frame, blue-collar market would start making sense. So that's the [ game plan, ] that's the strategy for Naukri. That's -- which sectors are likely to do well going forward? If the government continues to invest in infrastructure, if the real estate market continues to be buoyant, if it's a start of a new cycle, then we did not see much action in spaces like cement, metals, heavy engineering, oil and gas, construction, real estate, heavy engineering, infrastructure kind of sectors for a long time. At one point in time, the sector was because IT for us. But over time, over the last 10, 15 years, because of the twin balance sheet problem because of whatever reason, the share of all these sectors and the overall Naukri revenue base, revenue went down from maybe 30% to 15% or 14%.
So if the infra sort of investments take off and hopefully more jobs will be created for civil engineers, mechanical engineers, electrical engineers, site engineers, site supervisors, et cetera, et cetera, et cetera. And this kind of hiring may look up. Manufacturing, very, very tiny for us today, very tiny. It doesn't move the needle for us. But if the manufacturing sector takes off, manufacturing hiring perhaps is less than maybe 5% or 7% or 8% of all hiring on Naukri today. So if this -- government is trying very hard with the PLI scheme and with other schemes. Now if manufacturing India takes off, then of course, this would become big for us.
But again, it's unlikely to happen in the next 12 to 18 months. This could have play out over the next 5, 7 years. Other services, that's where the action is. I mean BFSI, insurance, healthcare, retail, travel, tourism, hospitality, these sectors have been strong and will continue to be strong. IT captives, we expect them to be okay. Domestic IT hiring, we expect it to be fine. Startup hiring hopefully will come back in a year or so. IT service -- Indian IT services companies, fingers crossed, let's see how it plays out over the next few quarters.
Yes. Hitesh, we have 2 more questions. I think both are for you. One is from [ Sanjan Ladha. ] Is AmbitionBox profitable? And can you share its business model and the growth prospects going forward?
No. See, AmbitionBox, we are not monetizing, but we are using it to get more traffic. So it's a content play right now. It's deeply integrated with Naukri. And it's helping us, one, keep Glassdoor at bay and it's not because of Glassdoor India in terms of traffic. And two, it's helping us get new users to the platform because there are enough users who visit AmbitionBox to get information on salaries, to prepare for interviews, to read reviews on companies and so on and so forth. We are not monetizing it. But the traffic we get through AmbitionBox, of course, gets monetized through the revenue models that we have in Naukri.
Okay. Next question from [ Abhishek Bhandari. ] Can you please talk about the competitive intensity in the core recruitment classified vertical? Has it changed or remained status quo?
Status quo, not much change there, not much change there. I mean, LinkedIn and us continue to be the 2 big players. And of course, LinkedIn is slightly different from us in terms of the segments we operate in, no, not much action otherwise, no change. .
Okay. Then the third question, Chintan, that's for you. How have we -- this is from [ Karan Kukreja. ] How have the discussions -- investors been? Investors such as FIIs and DIIs? Are you seeing more interest from new investors as of now?
I think the better way to really kind of respond to this is that now that results are out, we need to see what the real -- how the market is receiving the numbers. And is there a real movement in whether FII or DII. But otherwise, we have not seen any kind of a different trend recently as compared to what it was passed. And I think the pattern of holding remains more or less same. But yes, every time there's a result, then we are watching how the pattern changes.
There are no more questions in the chat box.
Yes. There is an online question again from Vivekanand from Ambit Capital.
So, Hitesh, since you spoke today extensively about JobHai, I want you to spend some time on competition there. So who is your real competition? Is it Apna or is it the staffing companies? And secondly, as far as the segment goes, does it have similar network effects as your core naukri.com? Or is it very different because it's part offline. I just want you to spend some time on the details as far as JobHai is concerned. You've been running this business for a while now so that's why.
So there are a bunch of companies who tried their hand at blue-collar hiring, gray-collar hiring, it's been the case for years now. So over a period of time, we've seen at least 15, 20 companies take a shot at this space. You have Apna. Apna, of course, has been added. Then there's WorkIndia and there are a bunch of others. There's Quikr, there's [indiscernible] which was very active till some time back. So a lot of companies have been trying, but the space as -- like I said, it's still small. But -- at least we are getting more users on the platform now. So there's more usage. There are -- more SMEs also trying out JobHai, which was not the case. So these -- because I think the economy has become more digital than it was a few years ago, and people have become very savvy about using their smartphones. And of course, we are doing a lot of product work. So the JobHai platform is very local.
It's totally -- it's very -- it's mobile first, and it's increasingly becoming more and more vernacular. So of course, the product is also evolving to sort of meet the needs of this segment. So all kinds of players are trying, but it's early days. In the long run, will there be network effects in this space? I'm sure there will be a network effect in this space as well. But the market is right now -- very, very early. It will take a few years for things to mature and stabilize in this space.
Okay. Hitesh, do you see staffing companies as competitors or collaborators in this level?
Collaborators, collaborators. There will be clients.
So that was the last question we had for the day. Vivek, we will conclude the call now.
Yes, sure. Thanks, everyone. On behalf of Info Edge, we conclude this call. Thank you. You may disconnect your lines now.
Thank you.
Thank you, everyone.
Thank you.