Just Dial will need a sustained acceleration in growth over coming quarters to achieve Morgan Stanley’s FY17 growth estimate of around 16-17 percent in core search business.
The company’s revenue growth in the fourth quarter accelerated to 14.9 percent from 11 percent in the third quarter of FY16.
JD Omni— a CRM and inventory management platform for MSMEs (micro, small and medium enterprises) with online e-commerce solutions—has been receiving a positive response and is considered a positive for the long-term.
Morgan Stanley, in its reports on Just Dial earnings, says while the company’s reported headline numbers were better-than-expected, the adjusted EBITDA missed expectations. “Adjusted EBITDA margins (excluding ESOP and one-time expense) declined quarter on quarter and were also lower than our estimate,” it said.
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This drag was largely because of employee costs, where Just Dial’s total employee expenses as percentage of revenues increased from around 52 percent in third quarter to around 54.4 percent in Q4. The company added around 940 employees the previous quarter, the report highlights.
The company’s revenue growth last quarter in core search business accelerated, excluding the revenues from JD OMNI, to 12.6 percent year-on-year helped by both volume growth and realizations.
While realizations were weak over the last two quarters and declined year-on-year basis, the revenue growth was helped by realizations in the quarter ended March.
Morgan Stanley is of the view that understanding the outlook for revenue growth trajectory in core search business, traction within JD OMNI, and timeline for the monetization of Search Plus, would be the key things to watch out for post the management meet.