Info Edge (India) Q1FY23 result review: Strong numbers...

What’s Buzzing:

The company reported 12.4% QoQ growth in Naukri revenues; Jeevansathi revenue declined QoQ due to strategy change.

Context:

Info Edge reported strong Q1 numbers on revenues as well as margins front. The company reported revenue growth of 11.4% QoQ, 58.8% YoY to Rs 507.7 crore driven by recruitment business (76% of revenue mix), which was up 12.4% QoQ, 73.9% YoY to Rs 387.1 crore while 99 acres reported revenue growth of 8.3% QoQ, 34.9% YoY. Shiksha business reported revenue growth of 28.3% QoQ, 37.3% YoY while Jeevansathi reported revenue decline of 9.8% QoQ, 9.1% YoY due to change in business strategy. EBITDA margins at company level improved by 400 bps QoQ to 32.1% while EBITDA increased by 27.4% QoQ to Rs 163.1 crore aided by strong revenues as some moderation in advertising expenses. The company’s billings increased by 66.8% YoY to Rs 524.1 crore while that of Naukri reported growth of 64.6% YoY.  Numbers of resumes on Naurkri.com increased 10% YoY to 84 mn. IT, ITeS revenue contribution was 35.9% in Naukri business. Number of paid listings on 99acres.com increased 2.5% QoQ, 35.4% YoY at 604,000.

Our Perspective:

Info Edge's numbers were above expectations on growth and margins. In the Naukri business, the growth was driven by both IT (on continued high attrition, healthy deal pipeline across companies) and non-IT sectors such as BFSI, insurance, education, health, retail, travel & tourism, etc. The company does not see any weakness in Naukri business coming from IT/ITES category due to any macro concerns in US. Growth in 99 acres has been strong both in own/rental space due to pent up demand and it is expected to be strong going forward despite rising home loan interest rates. The company have to continue invest in 99acres due to competitive intensity. Hence, EBITDA losses will continue. Jeevansathi reported revenue dip, which was on expected lines with the change in strategy wherein company is providing some of its services free. The company will continue with this strategy until certain milestones are reached in terms of market share, after that it will find ways for monetisation, which may include advertising. EBITDA margins also improved due to 9.5% QoQ decline in promotion expenses (large parts of it pertain to Jeevansathi business strategy change). The company says that Naukri business margins are likely to sustain at these levels. Despite lock in period expiry, the company is looking to stay invested in Zomato and PolicyBazaar and are in no hurry to divest their stake in these businesses. We bake in 20.2%, 28.3%, 25.9% revenue, EBITDA, PAT CAGR growth, respectively, over FY22-24E.