123Greetings.com revenues up 22% to Rs 29Cr in Q3, profit crashes due to content development cost

Intrasoft Technologies Ltd, which runs the e-greeting and e-commerce site 123greetings.com, reported 22 per cent increase in total income to Rs 29.08 crore in the third quarter ended Dec 31, 2012, over the year-ago period. The company, however, saw its net profit nosedive 78 per cent to Rs 0.82 crore, from Rs 3.9 crore in the corresponding quarter last year.

This marks the continuous pressure on the bottom line as Intrasoft saw its profit halve during the second quarter. Intrasoft is one of the two Indian public-listed internet firms in India (the other is Naukri.com, owner Info Edge India).

The company saw more pressure on the bottom line as its product and content development expenses rose over 50 per cent in Q3. It also witnessed over twofold rise in depreciation and a sharp rise in general administrative expenses for the quarter over the year-ago period.

The operating EBITDA for the quarter decreased to Rs 3.23 crore, compared to Rs 5.39 crore in Q3 FY12.

123Greetings has a core electronic greeting card business, a value-added service called 123Greetings Connect and a studio for the artists. It also runs 123Greetings Invites and a Facebook app for inviting friends over for a party.

However, the company is slowly evolving into an e-commerce site, selling perfumes, skin care products, home appliances, furniture and even bicycles on its website. The Kolkata-based e-greetings company is backed by the venture capital firm Intel Capital and raised Rs 53.65 crore in an IPO during 2010.

Commenting on the results, Intrasoft MD Arvind Kajaria said, "The performance of the third quarter showed the continued growth in our e-commerce business. The quarter saw impressive growth in vendor tie-ups and addition of new customers. Buoyed by the success of the model, we plan to launch two more marketplaces in the coming two quarters, thereby leading to increase in sales.

"The greetings business continues to do well with all-round growth in our products like Studio, Connect and Invites. During the quarter, we launched a reward plan in 123Greetings Studio which is showing impressive results. Our mobile strategy is on path and we should be launching shortly," he added.

Taking about profits, Kajaria said, "The margins continued to be under pressure owing to depreciation and expenses incurred towards vendor development, additions to the team required to manage larger order flows and market development. We believe that moving forward, these investments will lead to even higher sales and subsequent bottom line."

Intrasoft generates revenues primarily from online advertising and online retail sales. The growth in total income in the last quarter was led by an increase in online retail sales.

123Greetings Store, the online gifting business, recorded a total of 51,546 orders shipped during the quarter, averaging approximately 560 orders a day (403 orders a day in Q2). It has an active base of 389 vendors, compared to 314 vendors at the end of September 2012.

123Greetings Connect, a value-added service, saw the total number of registered users at 2,027,285 as on Dec 31, 2012, recording a growth of 25 per cent compared to the corresponding quarter of last year (it had 1,894,613 users as on Sept 30, 2012).

123Greetings Studio saw the total number of registered users at 21,354 as on Dec 31, 2012, recording a growth of 53 per cent, compared to the corresponding quarter of last year (total number of registered users stood at 18,567 as on Sept 30, 2012).