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Stable core business performance in Q1FY24; new initiatives may take longer to deliver

In Q1FY24, JustDial delivered 33.1% YoY revenue growth. This was driven by volume growth, mix improvement and price increases in both B2B and B2C segments. Paid campaigns grew 13.4% YoY. Management also mentioned price increases were taken in Q1FY24 in non-premium listings. We believe this is indicative of robust demand-led growth outlook. Also, B2B is now ~26% of sales, and the management believes this is likely to grow faster than B2C segment in the medium term. This is in line with our thesis (link). In our view, management sounded more cautious about making fresh investments in its new initiatives such as JDXpert. Amidst this, we expect a delay in the commercial launch of these new initiatives.

Sustained revenue trajectory but miss on revenue and EBITDA:

Revenue in Q1FY24 was Rs2,470mn, up 6.2% QoQ / 33.1% YoY (I-Sec: Rs 2,537mn). Employee expenses at Rs1,826mn were up 6% QoQ / 22.6% YoY. Other expenses at Rs277mn were up 2.5% QoQ, but down 1.8% YoY. EBITDA margin expanded to 14.9% (+60 bps QoQ). Adjusted EBITDA margin (preESOPs) was 14.7%. PAT was Rs834mn (I-Sec: Rs637mn). Collections in Q1FY24 were Rs2,590mn (-3.4% QoQ, 29% YoY). Traffic increased 6.8% QoQ/ 17.5% YoY in mobile segment. Paid campaigns grew 1.9% QoQ /13.4% YoY to 548,270 as Just Dial continued to sign up customers on monthly payment plans. Top 11 cities contributed 60% to overall revenues and 40% to volume/traffic. User engagement on the platform (ratings and reviews) continued to increase. Active listings (38mn) grew 4.1% QoQ, 15.9% YoY

Key takeaways from management conference call:

According to management, top 11 cities grew at ~25% YoY and remaining tier 2/3 cities grew at ~46% YoY in Q1FY24. Given base pricing in tier 2/3 cities is 40-45% of that in the top 11 cities, there is still enough room for mix improvement. Management sounded confident of achieving 20-25% revenue growth in FY24 (volume:realisation::1:2) and of reverting to pre-covid EBITDA margin of~25%. Management highlighted growth in core business is going to be the key focus area in the near term. B2B segment is expected to grow faster than B2C segment in medium term. In Q1FY24, 68% of new plans were monthly subscriptions plans. ESOP provision for the quarter was Rs4mn. We note a change in management’s outlook on new businesses. In our view, management sounded more cautious about making fresh investments in its their new ventures such as JDXpert.

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