The Headlines will read profits have dropped by half YoY and they’ve dropped QoQ from 50 to 34 crores and there’ll be calls to sell. They may be justified.
However, there is a glimmer of hope since this is about what was expected based on last Concall. Revenue has actually gone up from 169 to 176 crores QoQ. It was never supposed to reach pre covid levels this quarter and the fact that its grown from December is a nice surprise… so revenue has grown along lines QoQ. The reason profits have dropped so drastically are because expenses were increased as guided on hiring + advertising and other income has dropped from 30 crores to 15 crores. There’ll be a couple more quarters of this until the covid situation improves and jdmart starts showing something tangiblely positive on the balance sheet. Until then this should remain just a work in progress.
The PAT is significantly lower than what was expected though even with decrease in other income and increase in ad expenditure. So management commentary on Monday would be good to explain this.
No. Of listings and reviews and app downloads has continued increasing. However site visitors is flat QoQ.
Employee costs are high and margins have gone below 20 percent due to high other expenses which could be advertising budget increase which was expected but still a shocking drop
Cash and investments are still 1500+ crores so I’m not sure how other income fell so drastically
Revenue trend continues to rise since Q1 so there’s a positive there.
Monetisation was back to nearly pre covid level with collections at 85 percent in Jan and Feb but last 4 to 6 weeks ie March was a washout with lock downs being imposed. This won’t bode well for Q1 and Q2 by the looks of it.
Ad spends were down from 68 crores in fy20 to just 6.8 crores in fy 22. So most of the traffic was organic. March and April however they spent a lot on jdmart advertising(the lock downs + increase in advertising expense in March explain why this quarter was so badly hit)
Will be an interesting concall.
Disc: invested. Brought my Expectations down to nothing for the next few quarters here though
The Y-o-Y drop primarily reflects the impact of lower collections, which we have witnessed over the past few quarters due to impact of COVID-19.
With lockdown leaving an impact of COVID-19 abating post the first wave, monetization has been on an improving trajectory in 4Q.
4Q monetization stood at approximately 85% of pre-COVID levels.
March month, in fact, we were at almost 90% of pre-COVID levels.
So fourth quarter, I mentioned that we did about 85% of pre-COVID levels. So fourth quarter, we collected, say, around INR 200 crores as per balance sheet number of INR 210 crores if I were to allocate April 1 week, March and later collection. So that was broadly 90% of our pre-COVID run rate of INR 235 crores, INR 240 crores a quarter .
April, it is not possible to have improvement simply because the impact of second wave has, as all of us know, has been much, much severe. So April, anyway, typically tends to be softer versus March because since we run on April to March cycle. Typically, we have high ticket renewals that are lumpy in March month. And April this time obviously had impact of second wave also. So we are still monitoring how April, May this particular quarter pans out. So we’ll have to see the impact as quarter end.
Sequentially, there has been some decline in margins due to approximately 5% quarter-on-quarter increase in employee expenses , which was partly due to increase in variable payouts and partly due to increments. Other expenses were higher by about INR 4 crores quarter-on-quarter due to INR 1.5 crores increase in advertising spend and about INR 2.9 crore of CSR provisions, which got bunched up in fourth quarter .
Other expenses were down 48% year-on-year in fiscal '21. Even excluding advertising spends, the rest of other expenses were also down about 15% year-on-year.
Other income for the quarter stood at INR 15.6 crores, which was impacted due to increase in bond yields during the quarter versus declining yields, which we had been witnessing in TCD quarters and same quarter last year.
Cash and investments stood at INR 1,572 crores as of March 31, 2021, down just 1.2% year-on-year. The INR 220 crore buyback that we concluded during the year, we were effectively able to fund the entire buyback and taxes related payout of total INR 273 crores via our operating cash flows and treasury gains.
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During FY '21, we spent only about INR 3 crores to INR 4 crores on advertising versus about INR 65 crores spend in FY '20 . In FY '21, bulk of traffic came organically.
So first quarter, yes, IPL related expense – would get expense. So largely, they should be in the range of INR 48 crores to INR 50 crores or so. This includes all types of advertising spend, including content creation and other related spend. For the entire year, as we had mentioned earlier, that we are planning to almost have double of tens of FY '20, FY '20, we spent about INR 65 crores. So INR 121 crores, INR 130 crores, we have allocated for Fy22, but we would obviously be judicious enough to see how to allocate this. We have done our mass media campaign. The next step would be focusing on paid traffic plus SPO, Google organic traffic related initiatives then as we reach third and fourth quarters, the mass media campaigns could again come back.
For 4Q, we had 129.1 million quarterly unique visitors, which was almost flattish quarter-on-quarter if you consider the impact of 2 lesser calendar days in 4Q versus 3Q.
JD Mart
Our advertising spend resumed from April '21 in order to promote our newly launched B2B platform JD Mart. Our IPL 2021 campaign has resulted in great branding and awareness among businesses about our JD Mart platform . So IPL, the contractual arrangement was based on that we would be billed for whatever inventory gets placed. So IPL ran for 29 out of 60 matches. So almost 45%, 48% of overall deal value will get billed. So that is how it is.
So this particular IPL campaign was focused on popularizing JD Mart. So this would obviously have impact on maybe Mart app downloads, so just to give some brief color pre campaign, we had only about 1,500-odd downloads that were happening. During the campaign is touched as high as 20,000 ads, 30,000 a day also on certain days.
On JD Mart, we shall be having logistics services enabled in a couple of weeks. Businesses would have 10 to 11 logistics providers to choose from. Payment escrow services shall be rolled out very shortly.
JD Mart traffic also should start gathering traction in the coming months as JD Mart start shifting in Google Search results for B2B search queries.
As we speak, 2 million pages of JD Mart have already been indexed.
On the monetization side, we have carved out a team internally, frontline sales executives who will be working on B2B monetization. We have also beefed up our senior management team on the monetization front, there are people who will be solely dedicated towards this particular monetization initiative .
I think in the 2 months, both traffic and monetization should start seeing upward trends. Not to mention that this particular second wave caught all of us of that. We had great plans on monetization in parallel with IPL. Those seem to be sort of deferred by maybe 1 or 2 months. But that’s okay. The platform is being built to the B2B player to go for the next 3 years, 5 years perspective.
So we are working on various packages, where we do plan to give 30-day or 60-day free trial to customers .
At this point of time, there are 2 teams that are aggressively working on creating digital catalogs. So there’s an in-house team as well as there are certain external vendors also helping us do the things. We already have about 30 million products as part of catalog with JD Mart listing. And we already have about 400,000 to 500,000 rich backlog that are on JD Mart platform .
universe of businesses is around overall 7 million to 8 million for JD Mart out of total 30.5 million listings that we have on Just Dial. And out of those 7 million to 8 million, we are right now in the process of creating their digital catalog. About 85,000, 90,000 of B2B customer would be actually our paid customers as part of Just Dial.
So the way this particular platform is being based is with basic philosophy that, okay, 5 years down the line, we want it to be sort of equivalent of Alibaba in India. What I mean by that is that this particular platform should have 2 themes of revenue. One is subscription revenues, other should be transaction linked revenues .
Today, SMEs do not look at a platform just as an advertising medium. Yes, advertising is at the core, but they also want tools and other things that the platform can provide to help them run their business efficiently, which is why we are incorporating certain additional features such as logistics services, where any SME, as soon as we enter their shipment details, they will have 10 to 12 different logistics service providers to choose from. Similarly, there will be payment at crew services as well. In logistics, transit insurance will be bundled for all the shipments that will take place. At the same time, we are working on integrating financing and insurance-related options as well. So any SME wanting to avail fire insurance, any natural calamity insurance or any other insurance for the business or for even individuals themselves or their family members, et cetera, all those features we intend to have. And same on the financing side as well. On financing, many lending peers want that particular rich information that we have in terms of how long has this particular SME beam in business, is the SME GSE registered or not? What is the payment schedule to just, which they can use as a property to gage how much – whether to lend working capital loan to the concerned person or not. So all these features will ideally result in SME being very sticky with this particular platform. There will be some SMEs wanting to go for subscription plans. There will be certain SMEs wanting to pay a certain percentage of commissions on the transaction side will happen. So platform will cater to all type of SMEs.
So JD Mart, the sole purpose is to B2B marketplace of India. So whatever it takes, we could achieve it. You have seen our product it’s been well appreciated. There’s a big thumbs up from both the vendor community and the user community. JD Mart campaign also took off very well. The awareness about the product has reached now the second level campaign from the company is inviting every B2B business to download the JD Mart app and they get a free catalog as well as free customer leads. They don’t have to pay for the lead. They will get 3 customer leads. So whatever they may be paying a competition to be part of, they can just by downloading the app and uploading the catalog, they would get free leads till there is a paid ecosystem takes over, obviously, the paid people will get preference. So there is going to be an aggressive promotion is no, B2B means a business buying from another business, which means in both the cases, we would want both the parties to download the app. Preferably, we would want the traffic to come directly through our own app. To make it more attractive, we are launching this scheme of download the app, activate your catalog, get advertising worth probably INR 20,000, INR 30,000 for free, okay? So this is why. Now to make JD Mart to be even more successful, like the likes of Alibaba and all, you kind of plug-in payment, escrow payment services plus logistics, the best practice logistics into it, and give it as a complete solution. So as we move forward, you will see those many businesses may source shrink via JD Mart, they may want to pay through JD Mart because you’re dealing with another party who is not known. So basically, you want to secure. So if you pay, you want to be sure that you get your goods and services. Similarly, the selling party may want to dispatch only for sure about the payment. So we play as a very active role, and we see this as a tremendous scope in the future. Logistics service, without a logistic plug-in, it will be incomplete, any marketplace.
First time ever, we are launching, hopefully, in the next 2 to 3 weeks, we would have launched Just Dial, down the app and avail JD Cash.
The JD cash is like a virtual cash. You can burn it against transacting online on JD, which will include flight tickets, bus tickets, train tickets and all those online digital solutions we provide. You can burn it there. And soon when the lockdown gets over, you will be able to burn this JD cash also on home press, on spas and various other establishments. Now in order to earn JD cash, you want to download the JD app. And as you download the app, you get some JD cash. And if you refer more friends and family to download JD app, for every successful download, you get more JD cash. And in the process, you can accumulate a lot of JD cash and which you can spend online on Just Dial or offline with Just Dial vendors. And basically, it’s equivalent to cash. And this is what we are working on. And this should give a lot more – see, important is to, of course, create the awareness and have people to come and transact online. As you know, that we want to get on to an online transactable engine as much as possible going forward. So these kind of instruments would help us.
And as far as JD cash is concerned, it’s neutral cash neutral exercise, which is the – you share from what you own or businesses honor your JD cash because they’re getting advantage of a new customer?
Total active database on Just Dial stood at about 30.4 million listings and paid campaigns at the end of the quarter were about 457,000 .
So by and large, if we see, annually, we had about 29% impact in top line. Against this particular 29%, about 14%, 15% drop has been due to paid campaigns. And the rest, about 12%, 13% impact has been due to a realization .
On the campaign on this particular quarter also, we added around 2,500, 3,000 campaigns . In fact, March, what happens is that during the last week of March, since there are bank holidays, et cetera, a part of the collection tends to get filled over to the month of April. So about INR 10 crores worth of collections got spilled over to April. Had that particular collection being booked in March itself, that itself would have added probably 5,000, 6,000 additional take campaigns. So from that perspective, these campaigns are trending in the right direction.
So firstly, on Tier 1 versus rest of cities. So Tier 2, Tier 2 cities today contribute, say, for last quarter, about 33% to top line and to campaigns about 54% or so. As far as traffic contribution is concerned, that is largely 50-50, 50% traffic comes from Tier 1 cities and rest from Tier 2 and Tier 3.
overall, about 30% comes via monthly payment and the rest 70% via upfront collections . Monthly payments are not hit due to covid that much because monthly payments anyway are recurring in nature, those customers do understand that, okay, whatever they are paying is for a longer duration. Typically, what gets impacted is the new customer signing up because that customer obviously has the option of saying that, “oh, let me not take it right now. I’ll take it a month later when I have better grip on my own business.”
now almost about 50% plus payment or 60% payments come via digital mode versus the remaining coming via checks. So that does connect with customers is happening online.
So Q1 FY '21 immediate impact on profit was quite severe. There was about 50%, 55% immediate drop in April last year. This year, traffic has reasonably held up well. So there has been only about 10 or [indiscernible] on traffic. Monetization, again, April was quite severe. This year, there has been broadly about, say, around 35%, 40% impact versus the March quarter in this particular period . Situation is still evolving. Good thing is certain Tier 1 cities are coming out of this second day impact. Those restrictions are yet to be lifted. Fighting if these particular cases remain low for few more weeks, then recovery should also be faster. My sense is that first wave had a much serious immediate dent, and it took longer for recovery to take place. This year, as far as traffic et cetera is concerned, the impact is muted, there is an impact on monetization, but as and when the second wave subside, monetization should come back with a bang, which is what we were witnessing in from second half of March onwards.
So finally seems Reliance comes for the buy out…based on articles it seems they are buying at valuations close to what today JD is trading at…deal is at around 6600 cr and todays mcap is 6900 cr…pls correct me if wrong?
Apart form valuation (since it is still under discussions), I find this news as a validation to JD’s business model. If Tata’s and Reliance are showing interest, they see value in the company. So even if the deal does not go through, I would not be much disappointed.
What does it mean for the retail investor. Will the company remain separately listed or will merge with Reliance? I read about the open offer going to be made at the same price Rs.1026. What it means if we don’t tender the shares in open offer?
The timing of the sale is a bit surprising to me. The company launched JDMart with much fanfare. It was meant to be a game changer. They spent good money roping in AB and advertising in IPL.
It is getting valued at 33% discount to IndiaMART on P/E basis. If JD has superior database and reach compared to IndiaMART and they believe they can be a disruptor in the segment, I am wondering why would they sell out before the JDMart potential is realized. In 3-5 years, they could have got much better valuation.
I am sure the management knows better, just my thoughts.
According to the announcements, they plan to only raise stakes up to 66.95%. 25.33% (preferential allotment) + 15.62% (from VSS mani) + 26% (open offer)
So, they aren’t planning to de-list; only taking over the company, and this much stake acquiring is in accordance with SEBI Takeover Regulations.
You are free to keep your shares as the company will remain listed. Just Dial now trades at 1072/- and so the open offer at 1020/- is below the market price and I suppose there will be an upward revision.
It took IndiaMart many years to become what they are now, and JD Mart has only started, despite having a superior database. I am sure VSS Mani realized that he needs a bigger hand to scale it up quickly and in a better way. Giants like Tatas or Reliance offer requisite synergy to its grand plan.
As a shareholder of Just Dial I can’t be more happy that the deal with Reliance went through.
PS: It would be interesting to watch whether Nalanda decides to stay now or not. I am guessing that they will quit.
Everyone does homework. Even Carlyle did in case of Sequent Scientific, but that fizzled out too. Not saying that it would happen in this case too, but the possibility can’t be ruled out.
@sujay85 agree to all important points presented by Sujay.
Add to that…I think even if anyone does homework, who would not try to buy at lower prices if there is no cost involved in later upward revision. If you yourself say the first quote in a deal I am willing to pay 50% premium, the other party in this not so simple world would want to extract more from you…I may not be explaining clearly but knowing true worth is one thing and deal making is another…you know when odds are in your favour, underquote and when not and you need something, don’t let it go at even 100% higher valuations…that’s true deal making according to me, when you know what it’s worth for you and what are the odds in your favour…overpaying/underpaying are short-term things important for MBAs and CEOs for their resume…and also for analysts for discussing…
Does anyone know dates of open offer of Just dial as declared by RRVL? CMP is below open offer price so wondering whether there is any opportunity to buy at CMP and sell in open offer as an arbitrage play?
Surprisingly, not finding this dates anywhere. Infact even Thyrocare deal which happened a month back, not seing Open offer dates anywhere and also Open offer not visible in my DP.
Any idea where such open offers are visible…do they show under buybacks?
Also, is there any eligibility like only those shareholders who had shares before open offer start date etc.? Thanks
