Just Dial, one of the leading search engine provider has planned a service launch in international markets with minimal investment for initial 2-3 years.
The company’s cost to download apps on mobile internet has escalated 3-4 times in the last year itself. Ramkumar Krishnamachari, CFO, Just Dial is confident of app downloads to see a sharp rise via aggressive marketing spends.
In an interview with CNBC-TV18’s Reema Tendulkar and Sumaira Abidi, he says Just Dial’s Search Plus engine will be margin-accretive once it scales up. Their Search Plus engine is asset-light in capex as well as opex. “As and when these products scale up in terms of usage, these are definitely going to be high margin products for us. Our idea is to make sure to first get the usage up, because these involve changes both at the user end as well as the vendor’s end”, he adds.
Moreover, the company’s premium listings that account for 45 percent of the revenue, stood at 16000, highest in 8 quarters.
Below is the edited transcript of the interview:
Q: We understand the customer acquisition cost to download app online has gone up by 3-4 times in the last one year. How will that impact biz?
A: It's something that has happened and our belief is that this sector today, there is so much attention given to the internet and the mobile space, specially the mobile internet space, lot of companies are spending a lot of money in getting their app downloaded that is pushing up the cost. As far as we are concerned, predominantly our downloads have been organic, so we haven't been spending a whole lot of money in getting the app downloaded, but we have been closely monitoring the situation as to how the costs are trending, and that's what has happened. We have our strategy cut out as to what we are going to do in terms of propagating our app downloads, and you'll see that in the next couple of months.
Q: Give us an update on your international expansion plans. The company had earlier indicated UK website could go live in August, UAE in September and Singapore and Malaysia by December. Are these plans on track?
A: Definitely, the idea behind international is to make sure that- one- we have a service launch there, so I just want to be clear that there is not a whole lot of investment that is going on. We are not in a rush to monetise in those countries, monetization is what will require marketing and advertising and other investments there. We will not be doing that in the next 1-2 years.
Q: While you have indicated that the company will not aggressively spend on your international expansion and it wont affect profitability. But you will still have employee cost and data content cost. Can you give us a number?
A: It's not that material. The amount that we are talking about could be less than half a million dollars, so that is not a material amount from our perspective given the size and nature of opportunity and potential that we are talking about. We are being very cautious in terms of how we are spending and investing there. We want to feel the waters there and then calibrate the investments accordingly.
Q: As of last quarter, there are 20 live search plus engines, can you share what the internal target is of how many Search Plus engines will be live by the end of Q2 and FY15?
A: The 20 lives ones are on internet as well as mobile internet. Our idea is to make sure that there are a couple of more products that are under the pipeline and those should go live shortly too. Our idea is to get all these 21-22 odd products live on mobile platform and make sure that we have mobile app which is completely live with both these 22-23 and go about doing the mass communication to the users. We are a few weeks away or a month from that.
Q: We understand Search Plus monetization will be in FY16. Once you do begin to monetize it, what will the margins look like?
A: The Search Plus product is completely asset light in terms of capex and opex. We have a single sales infrastructure and the entire marketing and advertising is going to be for both, Just Dial and Search Plus. Whatever happens in Search Plus will benefit Just Dial as a whole. As and when these products scale up in terms of usage, these are definitely going to be high margin products for us. Our idea is to make sure that first to get the usage up, because these involve changes both at the user end as well as the vendor’s end and these take time.
Q: What is the ballpark range of margins?
A: It is difficult for me to give that number. This is going to be a high margin business for us, no doubt. It is only a question of how quickly we scale this business up and we are confident that once the business scale is up, it is going to be creative. I don't want to put a number at this point, they can be misleading for both the upside and downside, so I'll leave it at that.
Q: Any fresh tie ups? Last quarter was with makemytrip for domestic hotels and booking.com for international hotel bookings.
A: Nothing that I can report at this point in time, Yes, talks are always going on to make sure that the user experience is great, so we are always talking to people to make sure that in the back hand we have great solutions to make sure that the user experience is of highest quality.
Q: Your paid listings were at 16000, highest in 8 quarters. Is this run rate sustainable and has there been an increase in average realization in paid listings?
A: We have seen a healthy trend as far as far as paid listings are concerned. As we are into the last leg of this quarter, I would wait for this quarter to come to an end before I comment on that. Trends are very healthy, looking good.
Q: Have any of the investors who had a lock in period sold in the open market?
A: There hasn't been much of a material change in the PE in a position as of now, doing some small changes, but nothing material at this time.
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