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Rediff.com India Limited (NASDAQ:REDF)

F2Q07 Earnings Call

November 7, 2006 8:30 am ET

Executives

Ajay Menon - IR & Corporate Affairs

Ajit Balakrishnan - Chairman and CEO

Joy Basu - CFO

Analysts

Ashish Thadhani - Gilford Securities

Sameet Sinha - Kaufman Brothers

Louis Corrigan - Kingsford Capital

Presentation

Operator

Good morning, and welcome to the Rediff.com Conference Call declaring the Earnings Results for the Second Quarter ended September 30, 2006. During the call, all telephones are in a listen-only mode. After the call, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to introduce your host for the conference, Mr. Ajay Menon, Investor Relations and Corporate Affairs Contact, Rediff.com India Ltd.

Ajay Menon

Thank you, April, and wish you all a very good morning and thank you for being with us to discuss Rediff.com’s financials for the second quarter ended September 30, 2006. I would now like to introduce you to the members of management present on this call who will take you through the highlights of our company’s performance.

We have with us Mr. Ajit Balakrishnan, Chairman and CEO; and Mr. Joy Basu, our Chief Financial Officer. As mentioned earlier, all of you are currently on a listen-in mode only. This conference call will last for about 20 minutes, and then we will be glad to answer any questions you may have.

For your immediate and ready reference, we have also posted the earnings release for the second quarter ended September 30, 2006, on our website at http://investor.rediff.com. You may well also call me at our office in India at 91-22-2444-9144, extension 202, and we will be glad to fax or email you a copy during the course of this call.

Before proceeding, I would like to mention that during this conference call, except for the historical information and discussions contained herein, statements may constitute forward-looking statements for the purposes of the Safe Harbor provision and under the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties, and other factors that can cause actual results to differ materially from those that may be projected by these forward-looking statements. These risks and uncertainties include, but are not limited to, a slowdown in the economies worldwide and the sectors in which our clients are based; a slowdown in the Internet and IT sectors worldwide; competition; the success or failure of our past and future acquisitions; attracting, recruiting and retaining highly skilled employees; technology, legal and regulatory policies; managing risks associated with customer or products; the widespread acceptance of the Internet; as well as other risks detailed in the latest annual report on Form 20-F filed by Rediff.com with the SEC.

Rediff.com and its subsidiaries may from time to time make additional written and oral forward-looking statements, including statements contained in the company's filings with the SEC and our reports to shareholders. Rediff.com and its subsidiaries do not undertake any obligation to update any forward-looking statements that may be made from time to time, by or on their behalf. These reports are available with the SEC or are available on request by emailing Rediff.com at investor@rediff.co.in.

I would now like to introduce you to Ajit Balakrishnan, our Chairman and CEO.

Ajit Balakrishnan

Thank you, Ajay, and good morning to all of you. To begin with, I would like to share some highlights in the environment in which we operate. According to the Indian government's Central Statistical Organization, the Indian economy performed strongly during the first quarter of financial year 2006-07 with real GDP growth placed at 8.9%, as against 8.5% in the same quarter a year ago. The government forecast the GDP growth will be around 8% for the current year.

Our total registered user base stood at 47.7 million users at the end of September 30, 2006, which is a 21% increase over the number of registered users during the same quarter in the prior fiscal year. Growth in the Indian mobile phone subscriber base remains steady with the addition of 24 million subscribers during the second quarter according to the Telecom Regulatory Authority of India. This takes the total mobile subscriber base to 150 million as of end September 2006. According to the same authority, the number of wireless subscribers grew by 139% during the first six months of the current fiscal year, compared to the corresponding period of financial year 2005-06.

Turning to our own performance for the quarter ended September 30, 2006, our revenues totaled $6.66 million, an increase of 53% compared to the same quarter last fiscal year. This was broken into two broad segments; India Online revenues, which grew 71% to $4.71 million; revenues from US Publishing, which increased 23% to $1.95 million.

Gross margins for the quarter increased to 80% compared to 70% for the same quarter last year. Net income for the quarter was $1.5 million, or $0.0514 per ADS, compared to net income of $51,000, or $0.0119 per ADS, during the same quarter last fiscal year.

On product innovation -- on the product innovation front, during the quarter we added a number of features to range a local search product. Fare Search, which allows users to search for and compare the lower airfares across the numerous domestic airlines, which has started, showed 41% increase in the number of searches compared to the quarter ended June 30, 2006, which was the previous quarter. To enable better travel planning for travelers with flexible dates, we added a "Lowest Fare Finder" tool to find the lowest price points for up to 90 days and for the future.

Job Search, which is a second search service that we have, allows users to choose from over 400,000 jobs across 100 sites, saw the number of searches increase by 24% over the previous quarter, which was June ended 2006. This service added two other features during this quarter. First, which is government jobs, which listed job openings in the vast [Government of India setup], and free email alert feature that allows users to stay updated on the latest job openings in the desired category.

Product Search is another search tool that we have, which allows users to search and compare products, features, prices, and get names and addresses of sellers closest to their location. Users have a new feature where they can now subscribe to a "Target Price Alert" that allows them once prices -- which alerts them, once prices of specific products reach their desired price point. It's important to note that all these search results arising out of the above products are absolutely vendor neutral. We believe that this will enable the users to make informed and unbiased decisions.

To expand our search product suite, we also launched during this quarter an Image Search facility with strong local Indian relevance. In this last quarter, we also improved and launched a new version of a popular web mail service, Rediffmail, supported by national advertising and PR. The new mail service includes features that provide users an experience similar to the desktop-based email products like Outlook. Overall adoption and new signers for the service have been encouraging. This service is available in 11 Indian languages.

We regard our instant messenger as a crucial and strategic product for ourselves. It is already VoIP enabled. We saw the numbers of unique users for this service grew 50% sequentially from June to September quarter 2006. To help grow -- to help the growing mobile subscriber base, to access this instant messenger, we have designed and offered our customers a free downloadable client, which works on Symbian Operating System-based mobile phones.

Consistent with our belief that we need to extend the usage of our instant messenger to a wider range of users, we have also introduced a Hindi language feature with predictive input technology, which enables users to use our instant messenger in Hindi, which is the largest single spoken language in India.

On the advertising front, we have extended our offerings to our customers in a number of different ways. On our classified platform, ad listings grew 54% this quarter over the previous quarter, previous quarter which was of June end 2006. These offerings -- classified offerings targets small businesses, which [enables] Rediff to increase reach. We extend this service and its availability through a network of direct sales and reseller agents.

One of the feature of this product is that it allows users to respond -- receive responses over SMS, which enables them to get received responses of classifieds over their own mobile phone anywhere in India. Our larger advertisers are serviced by our own in-house sales team. We have a number of advertising options for them to choose from. Apart from graphics and text-based ads we serve now also video-based ads for these brand advertisers.

That brings me to the end of this section and I request our CFO, Joy Basu, to take you through our financial performance for this quarter.

Joy Basu

Thank you, Ajit, and good morning to all of you. Overall revenues for the quarter ended September 30, 2006 was $6.66 million, an increase of 53% over the corresponding quarter last fiscal year. During this period, revenues from India Online stood at $4.71 million or an increase of 71% over the corresponding quarter last fiscal year. Revenues from our US Publishing business were $1.95 million for the quarter or an increase of 23% over the same period. Gross margins during the quarter improved to 80% compared to 70% for the same quarter of last fiscal year. Specifically, India Online recorded gross margins of 89% as compared to 84% last year.

Operating expenses during the quarter increased by 64% to $4.19 million compared to $2.56 million for the same quarter last fiscal year. This was primarily due to higher product development, higher advertising and marketing costs, as well as higher stock-based compensation costs.

Operating EBITDA for the quarter increased to $1.14 million from $0.50 million for the corresponding quarter last year. As you are aware, operating EBITDA is a non-GAAP measure, and we direct you to our press release dated today, which sets out a reconciliation of operating EBITDA to net income. Depreciation expenses increased to $0.60 million for the quarter compared to $0.31 million for the same quarter last fiscal year.

A majority of the company's cash balances are held in deposits with banks. Interest on these deposits contributed to an increase in interest income to $0.91 million during the quarter compared to $0.11 million during the same quarter last fiscal year. There was also a foreign exchange loss of $50,000 during the quarter, arising from the conversion of some of our bank deposits, which are held in US dollars into the company's functional currency, the Indian rupee due to strengthening of the Indian rupee against the US dollar.

Other income for the quarter was $0.11 million arising from the sale of equity shares in an external company. The cost of this investment was written off in the company's books in the prior year.

Net income for the quarter ended September 30, 2006 was $1.50 million or $0.0514 per ADS as compared to a net income of $0.31 million or $0.0119 per ADS for the comparable quarter last fiscal year.

Total cash and cash equivalents stood at approximately $51.4 million as on September 30, 2006.

That concludes our review of the quarter-ended September 30, 2006. I would now request Ajit to recapitulate the highlights of the quarter and conclude this call.

Ajit Balakrishnan

Thank you, Joy. India Online's ads and US Publishing revenues which grew 71% and 23% respectively for the quarter drove up overall company revenue for the quarter-ended September, 2006 to 6.66 million, an increase of 53% compared to the same period last year.

Overall gross margins during the quarter ended September, 2006 increased to 80%. Operating EBITDA rose to 1.14 million and net income was 1.5 million or $0.0514 per ADS. To maintain our position as a leader in the Indian online advertising market, we rolled out several programs. We added a number of features to our vertical search offerings that further enhance the usability. These features are key in meeting growing consumer needs. Our searches service performed well in this quarter with growth in the number of vertical searches ranging from 24% to 40% depending on each service. We continue to progressively deploy improved and enhanced content-sensing technology across our website to better match ads contents with user needs, subsequently also increasing return on advertiser investments. We now offer more advertise -- more established brands, more advertising options to choose from which includes text, graphic and video-based ads. We continue to focus on building our base of smaller advertisers using our classified ad platform and the network of direct and reseller agents. The number of ad listings on this platform increased by 54% during the quarter compared to the previous quarter of June 2006.

Independent international third-party data indicates that we continue to maintain leadership portal -- position as a preferred portal measured in terms of average time spent per user per month for Indian Internet subscribers. We believe this is attributable to our user-friendly web mail services, locally relevant content and searches, and engaging community-based services such as social networking and blogging. This was the summary of our operations for the first fiscal quarter ended September 2006. Thank you.

Question-and-Answer Session

Operator

Thank you, sir, we will now begin the Q&A session. (Operator Instructions). Your first question comes from the line of Ashish Thadhani with Gilford Securities.

Ashish Thadhani - Gilford Securities

Yes. Good evening gentlemen, very nice quarter. In the core India Online advertising business, would you consider the year-on-year growth of recent quarter as to be sustainable, and also at top gear clients, can you broadly quantify Rediff's share of online advertising spend?

Ajit Balakrishnan

Thanks for the question. We do not make a statement about immediate future, but certainly we see -- we have seen the market grow and we believe that we have maintained our growth if not increased our share. We don't have an exact estimate of that number. We hope that in times to come our trade association will compile a share growth figure, but at this moment we do not have a credible third party estimate of that number.

Ashish Thadhani - Gilford Securities

Yeah, fair enough, and one other question, I was wondering if you could provide some observations on the competitive landscapes in particular the impact that Yahoo! and Google may be having on the marketplace, and related to that is, would the uptick in sales and marketing expenses be a reflection of anything different in the last quarter?

Ajit Balakrishnan

First of all, I think the presence of two large and well-funded international companies Yahoo! and Google, first of all it's not new. Yahoo! has been here for many years and so has Google. Both are exerting a very beneficial influence on our market, and so far as for many years we were one of the few people who went out and were [publicizing] the virtue online advertising; now we have two other very capable companies doing that. As you know, we work totally, especially with Yahoo! on the Internet [appropriation] front to try and do miscellaneous selling to open up the advertising market, both among corporate clients as well as pay-for-performance advertisers. I can only say that having both of them reduces our own effort to one third of what it used to be. So they are greatly beneficial and they are also in my view good competitors in the sense that they compete on performance of the ads and price alone. So, I think as long as we maintain the price-performance parity, I think we have a good situation being said and to summarize I think it's very beneficial, I think, that they exist and I think we've recently seen MSN revive its activity in the Indian market, so that's a third player in the market. So, all this is for the good and it can only grow the market which needs that kind of competitor effect to make it grow.

Now, so far as the spend on marketing and advertising is concerned, increased competitive activity across the Indian Internet landscape, we believe [request], we will continue to spend at the same level if not at a slightly higher level. The reason for this being that the market is growing and we do not have absolutely clear estimate but we have seen estimates on comScore Media Matrix which seems to indicate that in urban India alone which is roughly where they have operators, the market is growing roughly 25% to 30% year-on-year, and during that period when new users come in, we need to keep our offer in front of them and so, its very important to be partly in television and partly in other forms of outdoor media to our -- I mean other forms of offline media to make sure that our offers are present in front of those new users as they come in. So we expect to continue spending at the same, if not high level, in the next few quarters.

Ashish Thadhani - Gilford Securities

Thank you. That’s very helpful. Good luck.

Ajit Balakrishnan

Thanks.

Operator

(Operator Instructions). Your next question comes from the line of Sameet Sinha with Kaufman Brothers.

Sameet Sinha - Kaufman Brothers

Good evening, gentlemen. I had a couple of questions. So, the gross margin expansion, that’s been pretty significant over the last few quarters and you'd mentioned that most of it was in the India Online business, what are the key drivers there? Is it pricing, is it something else, could you elaborate on that?

Ajit Balakrishnan

Yeah, Sameet, there are two factors working here; the first is the relative shift from -- on advertising to fee based that makes it moving in favor of advertising in this period, and advertising tends to have a higher gross margin percentage. And the second and most significant one is that we have seen a slight upward lift towards on pricing in terms of either measured as I mean weighted average CPM business. We are seeing an upward lift in the price differential. So both factors are playing. I'd say it's relatively equal weightage to both of these factors.

Sameet Sinha - Kaufman Brothers

That’s interesting. So in terms of CPMs, are you seeing that grow year-over-year or sequentially, and could you quantify that?

Ajit Balakrishnan

We don’t want to put in an exact number to that. It is a little complicated because substantial proportion of our advertising is performance based, and at this moment, it's not wise from the competitive point of view to disclose exact numbers on this, but this growth is healthy growth. It is really different from what it is used to be a few quarters ago.

Sameet Sinha - Kaufman Brothers

Okay. Excellent. That's good. And now, which are some of the key verticals that are driving growth in online advertising, when you are fairly representative of the overall market and you did mention a few of these verticals in your press release. Who do you see as sitting on the sidelines and it could move more money into this market?

Ajit Balakrishnan

Well, I think, this present growth is being driven by a clutch of online companies many in the jobs vertical, many in the matrimonial and matchmaking vertical, and others in the shopping vertical. And the new entrants in this area are the travel vertical, five or six of them, which have been very well funded by international companies, have entered the market. They are the ones who are at the moment sitting on the sidelines, apart from one or two the others are still building their sites out. So they should be -- they should start to get quite active, I'd expect in the next quarter or so, once they complete building their sites. We are seeing a lot of interesting activities from the financial services community. They have always been at the forefront here, people like ICICI Bank and Citibank and so on and so forth. So I think we have seen action across -- we are seeing across the -- it shows all kinds of categories. At the moment, the leading effort is being made by the online company.

Sameet Sinha - Kaufman Brothers

Okay. I mean, with all the venture money that's flowing -- it has flown into these new companies, do you see a bubble emerging? I mean, how much money do they have, are they spending it wisely? If they have run out of cash soon that could significantly affect the industry?

Ajit Balakrishnan

Well, the good thing about it is that the recent funded companies have pretty not got going yet. They are the ones who are -- the ones who are spending today. If you look at our own banks, who have funded long ago -- five, seven years ago, the new entrants are still building their sites out. We have not seen any of them enter the market in a significant way. So, as you probably know there are between 15 and 20 new leafy funds over $150 million to $200 million each, well who've just open shop in the last few months. So, I think they are all busy. I know they are all busy finding their investing companies; they are building websites, helping them embrace the strategies. And I think that effect is probably going to get known in the advertising market in the one or two quarters from now. So that effect has not worked its way into the market yet, and any bubble should it appear and I doubt if we can characterize the bubble this time around, and I think the people are very much wiser and the [reasons] for finding them are not (inaudible) any more. They are people like Kleiner Perkins and Ram Shriram's companies, Sherpalo and so on. They are all old veterans of these, kind of, things. So the virtual spending really starts in a quarter or two. It has not yet started. And hopefully it will continue for quite sometime and we will keep you posted as we know more about this.

Sameet Sinha - Kaufman Brothers

Based on your statements do you think that some of the forecasts that are out there for online advertising in India could that -- could those forecasts prove conservative?

Ajit Balakrishnan

Sameet, I have not seen that many forecasts, as if it is from our Trade Association, Internet and Mobile Association. I don’t believe they have put any forecast out as far as I know. If they have, I would -- I would say that we are a leader in this category, probably our growth so far is a good indication of where the market is, it cannot be more or can't -- there can be much less than that. So, I would not venture to look into the future, but certainly the received funds and the new companies, which are being created in our environment this time with very strong managements and very strong goals, will have their effect. It can only have a good and positive effect on our market in the upcoming months.

Sameet Sinha - Kaufman Brothers

Yes, excellent. Search advertising seems to be picking up pace, I mean, how do you capitalize on that opportunity?

Ajit Balakrishnan

Well, one of the features of the -- one of the -- yeah, it is you need searches and you need buyers for those clicks. You need both products -- both sides to get that party going, right?

Sameet Sinha - Kaufman Brothers

Sure.

Ajit Balakrishnan

So, at this moment the big buyers of clicks are the jobs -- the jobsite, the financial sites, the ones who're trying to sell credit cards and home loans, and the matrimonial and matchmaking sites, and these are which takes us to be among the big ones. At the moment, we believe we are in a strong position with each one of them because so far as jobs are concerned, we have a very strong jobs search vehicle aimed exactly at this. So, I think we have a kind of premium position in the search, all the current sites and the ones that are smaller and there are many, many smaller ones (inaudible) ones that you see. We search 100 sites to deliver those results and provide a lot of value added match-ups as you recall, as you know in our trade terms nowadays. So, we aim it at that. We have a strong offering for matrimonial as well in terms of search and more extensions are coming soon, and we think we have a strong offering generally in the search advertising area. The caution that I would add is commercial searches still are a very small proportion of total searches in India. I don’t have an estimate, but it's a single-digit number from what I can make out by talking to people in the [realm]. So, commercial search is still a very small. So, when I said proportional for advertising is performance based, it's just that they are not necessarily performance-based because of search, they are kind of based on click -- click rate contracts based on genuine ads to their text ads that are placed across for the product, not necessarily on search.

Sameet Sinha - Kaufman Brothers

Okay, excellent. And last question, if you could -- I know you've answered this, but in the press release, you mentioned that the time is right to support branding efforts to further build on the market leadership. Can you talk about how you are planning to do that, what sort of medium are you planning to use, any specific characteristics of your site that you are planning to highlight?

Ajit Balakrishnan

Well, one of the things we did last quarter was we ran a television and outdoor campaign for new mail service, and this new mail service uses Ajax and provides a kind of a very good outlook-type functionality and we wanted to present that in front of millions of our current as well as future customers, so we used television for that. We believe it has been quite effective and we've learnt a lot on how to use it more. So, where do you reach the growth, the growth incidentally is happening outside the job sites expertise, and when you talk of a number of towns, you need to go to about 2,000 to 3,000 different towns. So that’s the kind of thing, which only television can deliver. So, I think we are going to be waiting for television for sometime to come as the main medium.

Sameet Sinha - Kaufman Brothers

Thank you very much.

Operator

(Operator Instructions). Your next question comes from the line of [Louis Corrigan with Kingsford Capital].

Louis Corrigan - Kingsford Capital

Hi. I had a couple of questions. It looks like that you had a 160 advertisers in the quarter and now it was down sequentially, it looks like from 165 in the June quarter and it also looks like that your -- the concentration of the revenue is coming from -- the top ten accounted for 57% versus 55% in June. I wondered if maybe if you could discuss that, the higher concentration in the same number of people, the fewer advertisers sequentially. What would you expect for us to see in the future?

Ajit Balakrishnan

The trend is -- it sounds like NPV margin from 55-57. It historically it tended to fluctuate a little bit. I think it attributed more to seasonal than anything else and the concentration is really, I think the numbers I have are the top ten now, account for 57% compared to sequentially 55% and the year ago 52%. I wouldn’t read too much into that. I think of the current trend as I commented before, the expansion of activity in the Internet area is the fact due to large number of new advertisers are appearing, so this is -- my guess is this is not going to significantly increase beyond the stage as far as we can see. Even in terms of the number of advertisers, a word of correction there, as we tend to report and count only the large advertisers inside here. Do we have an exact cutout of how many big and small? So, these larger advertisers tend to be the corporate ones that we -- some corporate ones that we directly service. So, this 159 shrinking from 167 is, I think this is statistical aberration from it [we have taken through].

Sameet Sinha - Kaufman Brothers

I guess the larger question is, how many -- do you feel like there is a healthy group of advertisers out there that you still have yet to reach or essentially have you already reached your best advertisers and now the -- even now the game plan going forward would be to try to get more business from them?

Ajit Balakrishnan

We see two kinds of growth, which could happen in this market. One is the -- mainly three kinds of growth. One is the current group of clients growing, and all of them are growing their business, they trade online or [run] their business, they trade similar to us on a year-on-year or quarter-on-quarter basis. And they are driven by the growth of the Internet user base, which is around 25% to 30% year-on-year. So let's -- they will continue to grow and some of them are now publicly listed, at least one of them in domestic industry and all others are starting to get funded again by new bunch of business. We also see a group of advertisers which is a classic brand company to send vast amounts in television. They are starting to appear more and more and they are attracted by the larger and graphical formats which we have introduced including video, with increase of broadband. And the third leg of the growth is really the real strong advertisement of today we serve in a relatively straight fashion to bring them on through the classifieds and the individual text ads that we [send]. There is likely to be a lot of growth in that, but I think that growth curve will be relatively slow, because we are all building out reseller networks, and that’s going to take a little while to be in its place and the payment systems and all of that stuff. So, there is growth in all three directions possible. We're trying to do this cost effectively to capture the growth. So, I think it takes a little while for the growth to show up, but we are nowhere near exhausting that [piece].

Sameet Sinha - Kaufman Brothers

Okay. And can you tell me what the accounts receivable were at the end of the quarter and what the allowance for doubtful accounts was?

Ajit Balakrishnan

Yes. I will ask Joy to answer that question, hang on.

Sameet Sinha - Kaufman Brothers

And also the allowance for doubtful accounts?

Joy Basu

The total current assets of the company were about $10.4 million for the company as a whole, out of which accounts receivable was about $7.4 million. Now this is net of the provision; provision anything over six months, we automatically provide for it.

Sameet Sinha - Kaufman Brothers

Okay. So the provision last quarter was 1.77 million, which means that the accounts net of provision were about 5.4 million. And if the accounts receivable this quarter was 7.4 million, it means that you went up 2 million sequentially on less than a million in revenue. So, that would indicate that your DSOs are actually going up quite a bit sequentially. Is there a reason for that, was there a business late in the quarter, are you giving extended payment terms to some of the larger customers that you are relying on?

Joy Basu

Yes. Your question is relating my DSO, is my DSO going up?

Sameet Sinha - Kaufman Brothers

Yes. It looks like you want to [provided this] sequentially.

Ajit Balakrishnan

In fact, that’s not really true. In terms of the number of days, my DSO for the total company remains more or less the same, but what's happening is my volume of business is increasing; and therefore in term, in absolute terms, in dollar terms, my working capital is going up there. But in fact this is happening --

Sameet Sinha - Kaufman Brothers

I want to --

Joy Basu

Partly offsets because more and more advertisers and more and more of my advertising revenue is coming from -- this thing from media companies here.

Sameet Sinha - Kaufman Brothers

Okay.

Joy Basu

The numbers that you have got, I have got slightly different number, what is the DSO number that you gave us?

Sameet Sinha - Kaufman Brothers

What was the accounts receivable number in the June quarter?

Joy Basu

Accounts receivable number in the June quarter for the company as a whole was -- just a second, was about 95 days. Okay. If you look at it for the current quarter, it’s about 100 days. So it's gone up by only about five days here.

Sameet Sinha - Kaufman Brothers

And what was the net accounts receivable there for the June quarter, do you have that?

Joy Basu

Yes. I have got the net working capital. The net working capital for the company as a whole -- what is your question?

Sameet Sinha - Kaufman Brothers

The net accounts receivable, net of the allowance.

Joy Basu

Net of the allowance was $6 million in the June quarter.

Sameet Sinha - Kaufman Brothers

Okay.

Joy Basu

And now that’s gone up to about $7.4 million.

Sameet Sinha - Kaufman Brothers

Okay. What percent of your customers would you say are -- company is funded by venture capital or kind of dotcom companies of your advertisers?

Ajit Balakrishnan

Roughly half of our advertising revenue comes from, what is called, dotcom companies, which are online companies, these are travel companies and matrimonial companies and job companies and so on.

Sameet Sinha - Kaufman Brothers

Okay. So, and has that changed recently, is that going up as a percent?

Ajit Balakrishnan

Not really.

Sameet Sinha - Kaufman Brothers

Okay. Thank you.

Operator

That brings us to the end of Rediff.com conference call for the second quarter ended September 30, 2006. Thank you for participating in this conference call.

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