Key highlights

For the quarter ended June 2016, the net sales have increased by 6% to Rs 176.29 crore. As of June 30, 2016, the company was conducting approximately 3,89,400 campaigns for our paid advertisers as compared to 3,46,900 campaigns as of June 30, 2015 representing a Y-o-Y growth of 12%. The company database consisted of approximately 16.6 million listings as compared to 15.3 million listings as of June 30, 2015 representing a Y-o-Y growth of 8%. The company currently has 32 search plus services live on the platform. OPM decreased by 1063 bps to 16.6%. the net profit increased by 8% to Rs 38.93 crore due to fall in effective tax rate.

EBIDTA margin – will see improvement in margin. Due to lower sales growth, margin depressed in Q1. Once the company get on accelerated revenue groth, margin will come back.

Employee cost increased by 28% due to sales hiring and wage inflation

Paid subscribers from smaller cities, towns comprised ~15% of revenue. The company added users from smaller towns where product price is lower than metros, thus impacting avg. realization, thus impacted net sales.

The company added 800 employees of which 600 on sales sides in Q1 and expects to add 500-600 per quarter in FY17. The company plans to add 500 feet-on-street for JD Omni over and above its existing hiring plans over the medium term.

The mgmt expects hiring done in Q4 FY16 and Q1 FY17 is likely to reflect in higher campaign additions in H2 FY17. JD is also facing slower growth in traffic.

JD Omni achieved 6000 customers till Q1 clocking in revenue of Rs 5 crore in the quarter. 30% of Omni's customers have opted for the upfront payment packages (Rs 65000-95000 upfront fee), while the remainder have opted for monthly payment packages ( Rs 20000 upfront fee and Rs 2000-3000 recurring monthly fee). JD intends to achieve a customer base of 25000 in FY17 with 70% expected to opt for a rental model and 30% for outright purchase model.

Paid campaigns - The number of unique visitors remained stagnant at 75 mn on a YoY basis. 56% of reveneue came from top 10 cities.

Google contributes 82%-83% of internet traffic for JD with direct/referrals forming the remainder of the traffic. Of the Google-directed traffic, 20% was paid traffic, while the rest was organic. The proportion of paid traffic has increased from 15% in Q1 FY16 to 20% in Q1 FY17

Google has started putting paid local traffic at higher listing which has started impacting JD.

The company has earmarked Rs 100 crore for ad spends for Search Plus. An advertising campaign has been shot, and should be launched in Sep 2016 with quarterly spending of Rs 20 crore. The company has delayed this campaign several times primarily as it wanted to fine-tune its product before advertising it to users. The company now believes that its app with integrated service and product offerings is now in place, and hence can start with the advertising campaign

According to the mgmt, traffic growth will continue to be in single digits until traction in ad campaigns begins to deliver meaningful results

Demerger of the data and content team from JD Global and its consolidation with Just Dial has been done to consolidate all global businesses within JUST. JD Global is owned by pre-IPO shareholders of Just Dial

Tax-rate in Q1 was lower on account of higher proportion of other income booked on instruments which attract lower ta). Full year tax rate should be in the 20-25% range.