Info Edge (NAUKRI) Q1 FY26: Is Its Core Business Slowing? Unpacking Diversified Growth & VC Impact

Info Edge (India) Limited (NAUKRI) is more than just a collection of popular digital platforms; it’s a strategic powerhouse that blends established market leaders with a vibrant venture capital arm. Its Q1 FY26 earnings offer a fascinating glimpse into how this unique business model is navigating the current economic currents.

The broader Indian market has witnessed a strong rally in Q1, followed by a period of correction in July, spurred by cautious corporate guidance and global uncertainties. Foreign Portfolio Investor (FPI) flows have turned net negative after an initial positive start. In this environment, the market’s preference is clearly tilting towards domestic-growth themes, a space where Info Edge predominantly operates. But is its performance a testament to resilience, or are there underlying shifts that warrant closer scrutiny? Let’s dissect the numbers to understand what Info Edge’s latest quarter truly means for its future trajectory.

Billings: Unpacking the Core Growth Engine

Billings, representing fresh sales, are the true indicator of future revenue for a subscription-heavy business like Info Edge. For Q1 FY26, Info Edge reported standalone billings of ₹644 crore, showing an 11.2% year-over-year (YoY) growth. At first glance, this seems steady. However, the story becomes more nuanced when we look at the individual segments.

The flagship Recruitment business (Naukri), while still the largest revenue generator, saw its billings growth moderate to 9.0% YoY (₹470 crore). Management commentary attributed this slowdown to “geopolitical headwinds” and a “sectoral slowdown” impacting areas like IT services and recruitment consultants. This moderation in the core business, which has historically been a strong growth driver, suggests that the market for talent acquisition is currently facing some headwinds, leading to deferred contracts, particularly from large clients.

But here’s where the plot thickens: Info Edge’s non-recruitment businesses are stepping up. Combined, these segments delivered a robust 17.6% YoY billings growth, indicating a healthy diversification of the company’s growth sources.

• 99acres (Real Estate): Posted a solid 17.0% YoY growth in billings, reaching ₹94 crore. This segment defied expectations for a typically soft quarter, driven by an increased customer base and improved average billing per customer.
• Jeevansathi (Matrimony): The standout performer of the quarter, with billings soaring 36% YoY to ₹35 crore. This is a continuation of strong momentum, driven by successful monetization initiatives.
• Shiksha (Education): Grew billings by 8% YoY to ₹45 crore, maintaining its trajectory despite facing challenges from higher visa rejection rates impacting overseas study interest.

The company’s deferred sales revenue for the quarter stands at ₹1,254 crore. This substantial backlog provides a cushion for future revenue recognition, mitigating the immediate impact of the moderated billings growth in the recruitment segment. The key takeaway here is the shifting balance: while Naukri faces cyclical challenges, the other segments are demonstrating their potential to drive future growth.

Sales Performance: Converting Bookings to Revenue

Revenue from Operations reflects the value of services delivered during the quarter. Info Edge’s standalone revenue grew by a stronger 15.3% YoY to ₹736 crore, outpacing the billings growth. This is a positive signal, indicating efficient conversion of past billings into current revenue, demonstrating the stickiness of its customer contracts.

Let’s look at the segment-wise revenue contribution:

The Recruitment segment’s revenue growth of 14.8% YoY is commendable given the moderation in fresh billings. This suggests that the impact of the slowdown will be more visible in subsequent quarters if the trend persists. Naukri’s growth continues to be largely volume-driven, with customer additions from Tier-2/3 cities and SMBs offsetting a flat average realization per customer. This indicates a focus on expanding its market footprint rather than immediate price hikes, a pragmatic approach in a softer demand environment.

The ‘Others’ segment, encompassing Jeevansathi and Shiksha, delivered a robust 22.7% YoY revenue growth. This diversification away from the core recruitment business is a strategic positive, providing multiple avenues for top-line expansion and reducing overall business concentration risk.

Key Business Metrics: The Operational Heartbeat

Delving into the operational metrics provides a clearer picture of each segment’s health and potential:

• Naukri (Recruitment): The platform’s resume database continued to grow, reaching 108 million, with 26,000 new resumes added daily. This demonstrates the continued allure of Naukri for job seekers, which is crucial for maintaining its market leadership. While overall billings moderated, specific niches showed resilience. Global Capability Centers (GCCs) grew by an impressive 17% in billings, and subsidiaries like IIMJobs and Hirist surged 41% YoY. This highlights the strategic importance of targeted verticals within the broader recruitment landscape.

• 99acres (Real Estate): Despite operating at a loss, 99acres is making significant strides in engagement. It boasted a lower bounce rate (34.89%) and higher time spent (00:03:54) compared to its primary competitors. These metrics are critical, as they signify higher quality traffic and stronger user stickiness, which are precursors to better monetization. Billing growth was primarily driven by brokers and channel partners, who outperformed developers. Live new project listings also grew a healthy 17% YoY, ensuring a rich inventory for users.

• Jeevansathi (Matrimony): This segment is the undisputed turnaround story of the quarter. It not only continued its strong billings momentum but also achieved operating breakeven and generated positive cash flow in Q1 FY26 (₹6 crore cash from operations). This is a monumental shift from previous losses and indicates successful execution of monetization and cost-efficiency strategies, including a ~21% yearly reduction in marketing spend in FY25. The ability to achieve profitability while maintaining high user engagement (90%+ on mobile apps) is a testament to strong unit economics. 🚀

• Shiksha (Education): Remained profitable and is adapting to market shifts. While higher visa rejection rates in the US have diverted student interest towards the UK and Europe, the emergence of new domestic private universities presents a significant opportunity. The company is actively exploring new marketing funnels to drive user acquisition and mitigate the impact of AI bots on content-driven platforms.

AI Initiatives: Info Edge is not just observing the AI revolution; it’s actively embracing it. The company is leveraging AI to enhance search quality and personalization, build new AI-powered features, develop new products, and improve internal operational efficiency. For instance, AI and machine learning upgrades to the Naukri database product have already improved recruiter productivity. Management acknowledged some impact from AI bots on content platforms like Shiksha but affirmed that the core businesses (Naukri, 99acres, Jeevansathi) have not yet seen a “material impact” on traffic.

Earnings Performance: The Bottom Line Resilience

Info Edge’s earnings narrative in Q1 FY26 is a blend of solid operational performance and significant, albeit volatile, non-operational gains from its investment portfolio.

• Standalone Operating Profit: Increased by a healthy 10.1% YoY to ₹250 crore, maintaining a robust operating profit margin of 34.0%. This indicates disciplined cost management, particularly impressive given the moderated billings growth in the recruitment segment.
• Standalone Net Profit: Saw an 11.8% YoY increase to ₹2,596.20 million, translating to an Earnings Per Share (EPS) of ₹4.01 (post-share split), a commendable 11.5% YoY growth.
• Consolidated Profit before Tax (before exceptional items): Rose significantly to ₹435.7 crore from ₹329.4 crore in Q1 FY25, a robust 32.3% YoY jump. This reflects improving underlying profitability across the group, driven by the turning fortunes of the non-recruitment segments.

Let’s examine the segment-wise profitability before unallocable expenses and income:

The Recruitment segment continues to be the primary profit driver. The slight widening of 99acres’ operating loss both YoY (₹19 crore vs ₹14 crore) and QoQ (₹14.86 crore in Q4FY25) is a point to watch. However, it’s crucial to view this in the context of the segment’s strong billing growth and improved engagement metrics, suggesting that the investments are yielding operational traction that could lead to profitability in the future.

The significant news on the earnings front is Jeevansathi’s achievement of positive operating profit and cash flow. This strategic turnaround of a previously loss-making venture into a profitable entity is a strong testament to management’s capability to deliver on its guidance for this segment.

Other Comprehensive Income (OCI): The most striking, and volatile, element of Info Edge’s total comprehensive income comes from the fair valuation of its listed financial assets, primarily Zomato and PB Fintech. For Q1 FY26, there was a massive gain of ₹74,881.08 million (standalone) and ₹81,456.53 million (consolidated). This contrasts sharply with a significant loss in the preceding quarter (Q4 FY25). While these gains significantly boost the reported total comprehensive income, it is vital to remember they are non-operational, mark-to-market adjustments. This highlights Info Edge’s characteristic as an “asset play,” where its venture portfolio can heavily influence its reported value, but also introduces significant volatility.

Tax Impact: A notable, non-recurring impact on the prior year’s earnings was a significant deferred tax charge of ₹2,596.77 million (standalone) and ₹3,205.64 million (consolidated) for FY25. This was due to a revision in the effective tax rate on long-term capital gains from 11.44% to 14.30%, a result of changes in the Finance Act 2024. This adjustment affects prior period comparisons but does not reflect current operational performance.

Considering its diversified and increasingly profitable operational segments, coupled with an actively managed and valuable investment portfolio, Info Edge can be classified as a “fast grower” with significant “asset play” potential. The ability of its non-recruitment businesses to gain traction amidst a core segment slowdown underscores management’s strategic agility.

Working Capital & Cash Position: A Fortress of Liquidity

A hallmark of Info Edge’s financial health is its robust balance sheet, built on an asset-light internet business model. The company maintained a strong standalone cash balance of ₹4,828 crore (including wholly-owned subsidiaries) as of June 30, 2025. This substantial “war chest” provides immense financial flexibility, allowing the company to fund strategic investments, weather market uncertainties, and pursue organic growth without relying on external debt.

Cash generated from operations (before taxes) on a standalone basis was ₹180 crore, a 3.3% YoY increase. While the growth rate is modest, it signifies continued positive cash flow from its core operations. The deferred sales revenue of ₹1,254 crore is also a key indicator of financial strength, representing customer advances for services yet to be delivered. This reflects a healthy working capital cycle where customers often pay upfront, minimizing working capital stress.

Capital Expenditure & Financing: Lean, Mean, and Strategic

As an asset-light digital company, Info Edge’s capital expenditure is primarily focused on technology, product development, and talent acquisition, rather than heavy physical infrastructure. The depreciation and amortization expense of ₹225.96 million (standalone) reflects ongoing investments in maintaining and enhancing its digital platforms.

The company’s financing activities remain conservative, reflecting its self-funded growth model. A substantial portion of the Qualified Institutional Placement (QIP) proceeds (₹10,350.99 million) from August 2020 remains unutilized, strategically invested in debt mutual funds and term deposits, further augmenting its cash reserves. This prudent approach to financing, supported by strong internal accruals, contributes significantly to Info Edge’s financial stability.

Strategic moves like the board’s approval for the amalgamation of several wholly-owned subsidiaries (post-Q1FY26) and the planned divestment of its stake in Shopkirana (a joint venture), highlight an ongoing effort to streamline operations and optimize the investment portfolio. These actions suggest a clear focus on consolidating core strengths and judiciously allocating capital.

The Road Ahead: Navigating Growth and Volatility

Info Edge’s Q1 FY26 results paint a complex yet largely encouraging picture. The moderation in its core recruitment business billings is a definite watchpoint, aligning with the broader slowdown in India’s IT sector and global uncertainties. However, the strong performance and increasing contribution of its non-recruitment ventures, particularly the significant turnaround of Jeevansathi to profitability and positive cash flow, demonstrate the success of its diversification strategy and management’s ability to nurture emerging businesses.

The substantial, albeit volatile, gains from the fair value adjustments of its listed investments highlight Info Edge’s dual identity as both an operational business and a significant asset play. Investors should focus on the underlying operational cash generation and profitability, which remain robust.

In a market environment that currently favors domestic-growth themes and is grappling with FPI outflows and cautious corporate guidance, Info Edge, with its dominant digital platforms, strategic investments in AI, and formidable cash reserves, appears well-positioned. The stock split, completed in FY25, also enhances liquidity and accessibility for a broader investor base.

While the recruitment segment’s softness warrants continued monitoring, the positive changes in other business segments and the overall financial strength suggest that Info Edge remains a compelling long-term investment. The key will be how quickly the recruitment sector rebounds and if the non-recruitment businesses can continue to scale up their contributions to the overall top-line and profitability.

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