India's largest job portal Naukri.com is looking to expand its offering in order to offset the slump in IT hiring. For parent company Info Edge, Naukri is the most profitable vertical, even as its matrimonial and education verticals steadily inch towards profitability.
Info Edge's real estate vertical, 99acres, has seen a setback due to the slowdown in real estate post demonetisation, though the company expects things to improve in a couple of quarters.
The company has also made several venture capital investments in technology firms such as food-tech firm Zomato, coupons site Mydala, online insurance policy aggregator PolicyBazaar, e-learning firm Meritnation and online photography startup Canvera Digital Technologies.
Managing director and chief executive of Info Edge, Hitesh Oberoi, talks to TechCircle.in about the group's future plans and investments. Edited excerpts:
How has the year been for Naukri?
When it comes to Naukri, in the jobs board space, which has players such as TimeJobs, Shine, and others, our market share has grown to 75%, with healthy EBIDTA margins of about 55%. It's one of the few profitable internet businesses in India. The business has been growing by about 15-20% per annum in the last couple of years.
Naukri has about 60,000 companies that we work with now. We are a total of 4,000 people, with 1,800 working for Naukri. We launched a referral hiring platform, with over 500 customers. Close to 60% of our traffic is from our mobile app, and it has worked well for us.
Lately, we have also been investing in crawling technologies, to see if there are any jobs elsewhere which can be posted on our site. So, we are investing aggressively in product development, though the market is not very hot. Barring startups, not everyone is hiring these days, but still we have been able to grow our revenues because of these investments.
We constantly scout for companies in the recruitment space. Those we can easily integrate with our platform, we would rather acquire; otherwise, we invest.
IT hiring is going through a slowdown. How does it affect Naukri?
IT, both product and services companies, is a large part of our business, contributing about 40%. IT is influenced by what happens in the US. But it's not a large part of our spend (capital expenditure). So, we might be affected if it slows down phenomenally, but not with a slight slump. In fact, they might invest more in us in these times to cut down other types of hiring which are more expensive.
Non-IT companies do a smaller proportion of hiring from Naukri than IT companies. This is an area of improvement for us. While the services sector has been fine, contributing another 40%, there are many non-IT sectors which have not been hiring, such as construction, real estate, engineering, power, energy, etc. This sector contributes about 20%. So, we have to improve our offering to get a larger share of jobs in this segment.
Which are your top performing cities? How is the Gulf business faring?
NCR, Mumbai and Bengaluru top the list, followed by Chennai, Hyderabad, and Pune. The Gulf business was doing well, but then the oil prices went down. So it has been flattish for the past few quarters; hiring has slowed down a lot in the Middle East. Once oil prices go up, hiring will increase, and it will be a good sign for us.
How are the margins for Naukri?
Overall Naukri has an EBITDA margin of 54-55%, but Naukri corporate business has a margin of 62%.
When will 99acres break even?
With 99acres, we were about to break even three years ago, but then half a billion dollars were invested by VCs in a bunch of companies. So, we also had to raise some money and up our spending. In 2015-16, we must have lost about Rs 90 crores. But even after spending a tenth of what our competitors were spending, we have gained market share. Last quarter, we lost around Rs 10 crore. We were hoping to break even by Q4 of this year, but then demonetisation happened, which has impacted our business a lot. Anecdotally, transaction value in real estate has gone down by 40-45%. Now whether this will impact our business for one quarter or multiple quarters, we don't know yet. But in the long term it will help us as there will be more buyer interest with falling prices and transparent markets. But short term will be choppy because of the uncertainty.
In the last earnings call, you mentioned that you would be investing more in Jeevansaathi.
It's the fastest growing matrimonial nationally. It's at number three, but a strong number two in the north. It's close to breaking even as well.
We have invested a total of $10 million in Jeevansathi, $20 million in 99acres, and less than $10 million in Shiksha. We have been very capital efficient. Even though Jeevansaathi is a rapidly growing business, things could change in the future.
At Jeevansaathi, if we want to break even, we can, but we want to gain more market share before we do that.
What are your plans for Shiksha.com?
Shiksha is also close to breaking even. Even in this space, we are constantly talking to companies to acquire/invest in, if they are aligned with our business. It's unlikely that we will do test prep or training; it will remain a college/course/career advisory portal.
How are your investments faring?
We are happy with the progress Zomato is making. They are doing a good job of scaling up revenue, and cutting costs. Their burn is down to about $1 million a month, from a peak of $7-8 million a month. Revenue has almost doubled compared to last year. Food ordering is doing well as well. It's already an established name in the United Arab Emirates (UAE).
Going forward, what is your investment outlook?
We have made 13-15 investments in the past few years, I am sure four to five of them will do very well. I think four to five might be moderate, while the rest may not be as good. I think this is the case with all investment portfolios.
We don't have a budget for investment, and we keep scouting for opportunities for both internal businesses and otherwise. If it's a good team, we'd love to acquire/invest. There is some money allocated for follow on investments, but there is no budget otherwise. Segments of interest to us are mostly in the internet/mobile space, and companies focussed on the Indian market in the business-to-consumer/consumer space, and with less competition. We invest in companies that are not capital intensive; we can't invest in companies which need a billion dollars to succeed.