Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Just Dial Ltd (BOM:535648, Financial) reported a 13.6% year-on-year growth in operating revenue, reaching INR280.6 crore.
- The company achieved a healthy 28.7% EBITDA margin for the quarter, representing a 260 basis point sequential improvement.
- Profit before taxes stood at INR153.9 crore, growing 45% year-on-year.
- Deferred revenue grew by 11.1% year-on-year, indicating strong future revenue potential.
- The company added 10 million unique users during the quarter, resulting in a total of 181.3 million quarterly unique visitors.
Negative Points
- Collections growth was only 5.4% year-on-year this quarter, indicating a potential slowdown in cash inflows.
- The effective tax rate stood at 8.2%, which is lower due to the reversal of deferred tax, but this may not be sustainable in the long term.
- Employee headcount increased by 2.2% sequentially, which could lead to higher operational costs if not managed efficiently.
- Advertising spends were tightly controlled at INR5.8 crore, which might limit brand visibility and growth potential.
- The company has a significant cash pile of INR4,755 crore, and there are ongoing concerns about its utilization, which could dilute return ratios.
Q & A Highlights
Q: Can you talk about the revenue and campaigns split in top 11 cities versus the rest of India? Also, why was collections growth only 5.4% year on year this quarter?
A: Tier 1 cities contributed about 58% to our revenues and about 40% to campaigns. The collections growth was slower due to a slower April and May, partly impacted by prolonged elections. However, June saw strong recovery with collections around INR97-98 crore for the month.
Q: Are markets outside the top 11 cities growing faster than the top 11 markets? Is this trend visible in collections as well?
A: Yes, non-top 11 markets are growing faster. The realization in non-top 11 cities is now at about 48-49% of Tier 1 realizations, up from 45% a year ago. We expect this number to continue increasing.
Q: What is the Board's thought process on utilizing the cash on the balance sheet?
A: We are discussing internally and with the Board about possibly implementing a healthy dividend policy. Our aim is to distribute at least 100% of annual profits in a tax-efficient manner.
Q: What should be the optimal price structure on a blended basis for Just Dial?
A: Currently, the monthly revenue per campaign is about INR1,580. We believe this is affordable and expect it to grow, especially in Tier 2 and Tier 3 cities, which are currently at INR1,100 per month.
Q: Are there any new initiatives that require sharp focus and could become growth drivers?
A: We are focusing on content enrichment, new features for service-oriented businesses, and tools for SMEs to manage their campaigns better. We are also working closely with Jio Teams on telecom services and exploring cross-selling opportunities within the group.
Q: How are you optimizing advertising spends to ensure quality traffic?
A: We focus on digital advertising and SEO optimization. Our current advertising is highly optimized towards top revenue-generating categories. We prioritize quality over quantity of traffic.
Q: What are the components of increasing EBITDA going forward?
A: EBITDA growth will be driven by top-line growth and controlled expenses. We may increase sales headcount by 3-4% if needed to maximize productivity.
Q: Can you provide data on customer retention rates?
A: Currently, about 60% of customers go into year two. This number has improved from 55% a year and a half ago, partly due to our strategy of signing up more customers on monthly payment plans.
Q: What is your long-term vision for revenue growth?
A: Our long-term vision is to grow revenue by 15-20%, primarily from the core local search business. New initiatives and tools for SMEs and users will contribute to this growth.
Q: How do you plan to handle the tax rate fluctuations?
A: Our effective tax rate for fiscal '25 is estimated at 8.2% due to the reversal of deferred tax on part of our treasury. Long-term, we expect the effective tax rate to be around 18-20%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
