Info Edge (India) Ltd

Dear Shareholders,

The last two years have witnessed unprecedented disruptions due to the COVID-19 pandemic. Lives, health and businesses across the world were affected.

As I write this letter, India has administered more than 2.03 Billion doses of vaccination. Without a doubt, this has been one of India’s greatest healthcare achievements and the Government’s judiciousness played a role in keeping morbidity under tight control. While the various mutations of the virus will continue to affect lives and businesses, I am optimistic that science will be able to considerably mute the effects of the virus globally.

Consequently, economies across the globe are on their post-COVID-19 recovery path. This is especially true for India. The Government of India’s latest estimate suggests that real GDP growth has recovered well after a contraction of 6.6% in FY21 to grow by 8.7% in FY22. If one were to look at the estimate by World Economic Outlook (WEO) published by International Monetary Fund (IMF) in April 2022, India is expected to record the highest GDP growth in FY22 compared to any other advanced or major emerging market economy, including China.

Having said so, the consequences of the Russia-Ukraine war cannot be overlooked. The IMF has scaled down world economic growth for 2022 by 80 basis points to 3.6% and this could reduce further if the war continues. While these negative economic trends are likely to have a spill-over effect on India, we are on a strong recovery path and hope to recoup from the after-e ects of the war soon enough.

INFORMATION TECHNOLOGY IN A POST COVID WORLD

The pandemic has led to major structural changes in the way we live and work, and in the way we consume content. Businesses in every sector have transformed the way they interact and do business with customers. To begin with, though office-based business operations have resumed in recent times, there is a strong push for promoting ‘distributed management’ techniques. The rapidly emerging employee-centric flexible, hybrid work model has significantly increased the adoption of IT tools among companies.

These changes have led to an explosion in the adoption of modern technologies and innovation, forcing businesses to rapidly adjust or face the threat of extinction. As the adoption of Information Technology (IT) based applications increases, the adoption of digitisation witnessed a quantum jump from what was earlier considered the natural rate of growth. This burst of digitisation has led to certain key developments that have impacted our business as well.

First, storing and managing data on cloud computing is gaining popularity since it is more convenient for organisations than setting up large physical data warehouses. Today, substantial portions of sensitive information are on the cloud.

Second, a digitally integrated working environment enabled by widespread network integration and interfaces is supporting the remote work culture. Even day-to-day activities, such as food procurement, groceries, education, health service and medication, have witnessed much faster adoption of online means of execution, making internet-based activities more integral to daily lives.

Third, and most importantly, in this significantly higher digitised economic environment, there is a spurt in demand for people with a certain kind of IT-related skills. In the process, there is a major

Businesses in every sector have transformed the way they interact and do business with customers. To begin with, though office-based business operations have resumed in recent times, there is a strong push for promoting ‘distributed management’ techniques. The rapidly emerging employee centric flexible, hybrid work model has significantly increased the adoption of IT tools among companies.

churn in human resources across the global IT industry. On the one side, there are new job requirements and on the other, there is higher attrition in pursuit of better opportunities. Fundamentally, today, a large skill-based supply gap is fast emerging in the IT industry that has warranted higher activity in the recruitment and training space – a trend that is expected to continue for a few years.

In fact, we are moving into an era when every company will have to be digital, and every digital entity will operate with high reliance on data with the deployment of effective artificial intelligence (AI) tools.

In fact, clearly, in the last two years, the penetration of IT has become far more widespread globally and IT-based activities and value generation across economies are expected to witness significantly higher levels of growth over the next five years. Estimates by the IT research body, reportlinker.com, suggest that the market will reach $13.8 Trillion in the year 2026 at a staggering CAGR of 10.3%. Within our core job-placement business, too, emerging technologies are coming into play, which will necessarily require commensurate skills and qualifications among the IT workforce for effective adoption and deployment.

Simply put, COVID-19 has created an entirely new set of paradigms. And truth be told, none of us could have confidently predicted the sheer pace of this change even three years ago.

LEVERAGING INDIA’S IT POSITIONING

Today, India occupies a pivotal position in this digital ‘gold rush’. Domestically, India is now one of the fastest-growing IT markets, after the US and China. Moreover, India supports a large part of the global IT services industry, with onsite and back-end operations.

• Storing and managing data on cloud computing

• A digitally integrated working environment

• Spurt in demand for people with IT-related skills We are moving into an era when every company will have to be digital, and every digital entity will operate with high reliance on data with the deployment of effective artificial intelligence (AI) tools.

In recent times, the Government of India has been pushing for rapid digitisation, leading to increasing investments in the IT sector. In the Union Budget FY23, the government has announced some major digital developments such as further digitisation in banking, higher education, health sector, and government administration.

Clearly, there has already been a significant upswing in hiring activities in India during FY22. In the initial phase, this was mostly IT-led hiring. However, during the last quarter of FY22, non-IT hiring has also picked as non-IT companies are fast adopting digitisation and building their internal IT teams.

These industry-wide trends are creating tectonic shifts in the human resource market. As per our JobSpeak Index, hiring activity has shown a significant upswing since January 2022. In fact, as we get into FY23, a growth of 38% can be observed in the index (April 2022 versus April 2021). Several sets of market data suggest that the growth trend in IT employment opportunities is expected to continue over the next few years. For instance, despite the addition of a record 4.5 Lakh employees to the IT-based workforce in FY22, the demand-supply gap is expected to widen even more. According to a recent report by Nasscom-Zinnov, India is projected to face a shortage of 14-19 Lakh tech professionals by 2026. It is estimated that over the next five years, the country needs to add 52 Lakh IT professionals to the current tech workforce in India of 47 Lakh employees, as of 2021.

Given such market dynamics, this higher growth trajectory in the talent and skill acquisition market is expected to continue over the next few years.

Info Edge’s core business – recruitment solutions – under the primary brand ‘naukri. com’ witnessed an impressive performance in FY22. The business segment is strong in terms of cash generation – operating cash flow more than doubled from 4,919.01 Million in FY21 to

10,244.01 Million in FY22.

CORE BUSINESS PERFORMANCE

Given this backdrop, Info Edge (India) Limited’s core business – recruitment solutions – under the primary brand ‘naukri.com’ witnessed an impressive performance in FY22. The recruitment segment billings increased by 72.64% to 14,363.76 Million in FY22 while revenue grew by 44.21% to 11,542.16 Million. The segment’s EBITDA was 6,798.49 Million in FY22 – representing an annual growth of 55.39%. Most importantly, the business segment is strong in terms of cash generation – operating cash flow more than doubled from 4,919.01 Million in FY21 to 10,244.01 Million in FY22.

With this massive surge in demand for IT-related talent, Info Edge (India) Limited is positioned very strongly in this space with the largest online database to service this job market in India. The business is focused on leveraging its strength of database with a significantly improved online experience and value-added offerings. Through the continuous development and deployment of data management and analytical tools, we are able to provide more effective and tailor-made solutions for the different stakeholders in the talent acquisition market — both the job providers and the job seekers. In doing so, we now have a renewed focus on providing increased value to our customers, which has started translating into better monetisation of our products and offerings.

The Company has taken a conscious decision to increasingly service niche segments within the recruitment space. Consequently, it is developing specialised brands in addition to naukri.com, which enhance our offerings in the recruitment solutions space by providing more tailor-made solutions for different customer segments. To enable this, the Company has also made certain acquisitions, including iimjobs.com, India’s leading recruitment platform for management professionals, and hirist.com, an exclusive recruitment platform for premium technology talent. Both have been integrated within the Info Edge (India) Limited’s structure and with focused strategy deployment, they have witnessed good growth in online traction and revenue. The Company also has its own Gulf-based offering called naukrigulf.com, which also witnessed a revival in growth, thanks to a pick-up in hiring activities in the Middle East.

We now have a renewed focus on providing increased value to our customers, which has started translating into better monetisation of our products and offerings.

These platforms are being supplemented by specialised offerings. A focused site for blue-collared jobs called jobhai.com, which is at an early stage of development, gained momentum during the year. For back-end support to the recruitment vertical, the Company has also acquired zwayam.com, which is engaged in providing SaaS-based sourcing and screening recruitment solutions and end-to-end recruitment solutions with con gurable plug-and-play modules. In addition, there is the technical assessment platform, doselect.com, which is being increasingly used by clients to access technical skills. We are also actively developing ambitionbox. com as a trusted and transparent platform for sharing helpful information with the entire job-seeking community. During the year, this business has evolved and reached leadership levels in terms of tra c share in India. In addition to these wholly owned businesses, we also have an investment in codingninjas.com, which is essentially an upskilling platform.

Across all these platforms, we have been focusing on utilising technologies driven by AI. Hyper automation driven by AI is ensuring greater streamlining of processes that increase efficiency, accuracy and productivity. This is rapidly emerging as a driving force behind widespread digital transformation across the global economy.

RECRUITMENT

Today, our recruitment vertical has a comprehensive suite of services that addresses specific segments within a more widespread market. FY22 was a landmark year for setting up this suite of services, which are, each, in distinct phases of development. Given our comprehensive leadership position in traffic and the focused nature of our offerings, we believe that we have moved to a new growth trajectory — one that we expect will remain strong over the next few years.

EDUCATION

In the online education classifieds space, our offering - shiksha. com - is at an early stage of development, undergoing a recalibration of its business strategy in line with evolving

Our recruitment platforms are supplemented by multiple specialized offerings. A focused site for blue collared jobs, jobhai.com. A SaaS based sourcing and screening recruitment solutions - Zwayam. A technical assessment platform, doselect.com and ambitionbox.com, a trusted and transparent platform for sharing recruiter feedbacks. market opportunities. With this in view, we are working on streamlining the business and enhancing its deliverables. To begin with, we have repositioned the business as a ‘complete student counselling platform’ that fulfils the aspirations of Indians wanting to pursue higher education abroad as well as in India. We are actively investing on the product front to create a complete offering, building stronger relations with academia to enrich content on the site, using IT tools to best cull out information from our database and make the data platform more robust, and reaching out to more users by investing in developing the brand. This is a segment where the negative impact of COVID-19 was relatively low and the product has also developed well.

During the year, the ‘study abroad’ segment was redesigned as a complete end-to-end solution that supports students right from the selection of an appropriate foreign institute to securing a seat in it. This segment of the business performed well and recorded robust growth.

On a relatively modest base, the overall business performed well in FY22 - billing and revenue grew by 64.54% and 59.22% and stood at 964.83 Million and 906.92 Million, respectively. It is important to note that rapid top-line growth was achieved with extremely healthy cash flows – segment cash from operations more than tripled from 102.27 Million in FY21 to 330.83 Million in FY22.

REAL ESTATE

Despite cyclical swings during the pandemic, the Indian real estate sector has remained largely resilient. It is now showing signs of revival, with improved growth projections across segments primarily dealing with residential ownership and rentals. In fact, activity in this space has witnessed a considerable uptick in the second half of FY22 and we expect this growth to continue into FY23. In the prevailing market environment, there is an increasing trend for more digitised activities in the sector, which is what we intend to leverage further with 99acres.com, our offering in the real estate classifieds business.

Amidst intense competition, the business continued to maintain a leadership position in its market. We continued to improve the quality and nature of the content on sites to better user experience and streamline and optimise our sales and service teams.

We are aware that competition is strong and we need to make investments to maintain our leadership status. Consequently, even if short-term profits are under stress, we remain committed to making investments in this space. Our focus lies on enhancing platform experience, wider brand building and improving client delivery to remain the dominant player in the industry. We are confident that as a longer-term economic revival takes place, the real estate sector will bounce back and the 99acres.com platform will grow well.

While real estate segment revenues grew 25.06% to 2,173.22 Million in FY22, segmental EBITDA losses increased from 221.58 Million in FY21 to 782.14 Million in FY22. The Company has acquired a 62.52% stake in 4B Network Private Limited with an investment of 1,860 Million. This venture is built on providing a tech platform to connect agents, brokers and builders, on the one hand, and track and aggregate new home site visits and home loans on the other, to make it easier for all participants in the market. Through this acquisition, we intend to add value to our offering in the online real estate space.

MATRIMONY

We have been operating our online matrimonial segment through jeevansathi.com since 2004. Though we have succeeded in certain markets, in terms of overall scale, the business remains smaller than the market leaders. It requires more widespread penetration to move to the next round of growth. In the recent past, we have been the first movers in introducing innovations such as online chats in the segment and significantly enhanced the user experience on the platform. We are also moving into new geographies and communities within India with a specialised product and communication focus.

We have also proactively undertaken a detailed review of the business and initiated the process of deploying a substantially revamped strategic roadmap. This focuses extensively on increasing tra c and activity on our site by making several offerings ‘free for use’. We believe the increased tra c will lead to a network effect that will provide a much larger market share, enabling it to become a business that operates at a more sustainable scale of operations.

These free offerings were introduced in Q4 FY22 and may affect our billing and revenues for the initial few quarters of FY23. While revenue grew by 3.44% to 1,002.28 Million in FY22, segmental EBIDTA loss for matrimony increased from 955.57 Million in FY21 to 1,204.18 Million in FY22.

We have proactively undertaken a detailed review of the business and initiated the process of deploying a substantially revamped strategic roadmap.

In FY22, we acquired 79.22% (pre-creation of ESOP Pool) of Aisle Network Private Limited, which is engaged in the business of running multiple serious dating platforms on the web via its mobile apps. This is expected to provide a diversified proposition for us in the online matrimonial space.

Overall, primarily driven by the significant improvement in the recruitment and education classified business, the Company’s standalone performance improved significantly in FY22.

Billing increased by 58.70% to 18,660.18 Million in FY22, while revenues increased by 38.52% to 15,624.59 Million. Operating EBITDA grew by 60.96% to 4,637.30 Million. Importantly, deferred sales revenue stood at 8,195.97 Million as on March 31, 2022 – representing a growth of 57.12% over March 31, 2021. This reflects the strong revenue-generating potential of the business in FY23. Importantly, driven by significant growth in cash flow from operations from 3,809.35 Million in FY21 to 9,073.89 Million in FY22, the cash balance at an overall level stood at an extremely healthy position at 37,586.93 Million as on March 31, 2022. Leveraging our solid financial foundation, we are poised to embark on a new accelerated growth trajectory over the next few years.

ORGANISATION DEVELOPMENTS

While we continue to focus on different industries and businesses, as a corporate entity, we emphasise on two critical internal assets – people and technology. Internally, we have put strategies in place to preserve and grow our own talent pool, including the launch of an ESOP programme that is focused on talent retention. Our campus hiring process has also been ramped up significantly to get talent on board from an early stage. On the technology front, we continue to invest in building stronger teams with dedicated projects related to machine learning and AI. Major efforts are being undertaken in data mining and data analytics to create cutting-edge solutions for all our products. We will continue to remain steadfast with our investments on both these fronts over the near future.

INVESTEE COMPANIES

As I alluded to last year, we now have two clear objectives in terms of our investee companies. First, there are a set of strategic investments that support our core businesses and enhance our offerings to clients in our four core domains. Second, there are financial investments in entities for future value accretion. While the first set of investments is part of the growth strategy of the core business, the financial investments are focused on deriving share value appreciation from a mid to long-term perspective. To create greater clarity and promote efficiency, these financial investments are now routed through a set of Alternate Investment Funds (AIFs) in partnership with our long-term investment partner Temasek Holdings (Private) Limited (through its indirect wholly-owned subsidiary MacRitchie Investments Pte. Limited).

From the portfolio, we nurtured two of the largest entities over time – Zomato Limited (Zomato) and PB Fintech Limited (Policybazaar) – which got listed in FY22. Both garnered a favourable response from marquee investors and were landmark events on Indian stock exchanges. The valuations of these businesses are now driven by the stock market and have seen some depletion in the last quarter of FY22. However, we remain committed to these investments, which are managed effectively by a focused team that looks at the longer-term value goals of these investments.

The new phase of value-generating investments for the Company was initiated with the setting up of Info Edge Venture Fund (IEVF) in 2019. Under the IEVF, in January 2020, the first scheme namely IE Venture Fund - I was launched with a fund size of $100 Million in partnership with MacRitchie Investments Pte. Limited. This fund has made several investments during FY22 across food-tech, insure-tech, Web 3.0, health-tech, fintech, edtech, agri-tech and retail-tech sectors. By March 31, 2022, the fund has been able to successfully invest 80% of its corpus with 28 investments. Of these, 10 entities have been able to raise a follow-on round from marquee investors at higher valuations.

In addition, the Company has now launched an additional scheme under IEVF called IE Venture Fund Follow-on I with a corpus of $100 Million, which will invest in the emerging winners from IE Venture Fund - I. It has also set up two additional AIFs named Info Edge Capital and Capital 2B. Under Info Edge Capital, the scheme IE Venture Investment Fund II with a total corpus of $150 Million will continue to invest in new start-ups as per the strategy that IE Venture Fund - I had adopted. The fund Capital 2B has launched the scheme – Capital 2B Fund I – with a corpus of $75 Million. This fund will focus on investments in deep technology and patents. This is the next stage of the portfolio investment strategy of Info Edge (India) Limited. All these funds and schemes with a total target corpus of $325 Million have already been approved by SEBI. Info Edge and MacRitchie Investments Pte. Limited have committed to approximately 50% each of the total corpora of the schemes. Relevant approval from the shareholders, as per SEBI Listing Regulations and MCA circulars, has been secured through a postal ballot on May 21, 2022. These schemes will have a life of 12 years and are further extendable by two years as per SEBI Regulations.

TOWARDS BETTER PERFORMANCE AND SUSTAINABLE VALUE CREATION

As a company, we have done well to overcome the difficult phase of the COVID-19 pandemic, from a humanitarian and business perspective. We took several proactive steps to provide the necessary healthcare services to the affected and were an early mover in promoting vaccination among our stakeholders. The entire experience has taught us to optimise workflows and evolve an effective and efficient, hybrid mode of operations. Today, I believe the worst of COVID is behind us and as a business, we are poised to launch a new round of growth. We have streamlined teams and internal operations over this period and revised our strategies to successfully embark on the next round of rapid growth.

I thank all the employees and stakeholders who have been pillars of strength in these challenging times. I look forward to your good wishes as we embark on the next round in our journey of excellence.

Best wishes,