Release Date: February 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations for Q3 FY24 stood at INR156 crores, showing a 4% year-on-year growth.
- For the nine months ended FY24, revenue from operations was INR508 crores, representing a 30% year-on-year growth.
- Digital media revenues for Q3 FY24 were INR65 crores, up by 8% year-on-year.
- Traditional media revenues for the nine months ended FY24 were INR323 crores, witnessing a growth of roughly 47%.
- Shemaroo FilmiGaane on YouTube has 67 million subscribers and is the 22nd most subscribed channel in the world.
Negative Points
- EBITDA loss for Q3 FY24 was around INR18 crores, and net loss was approximately INR30 crores.
- For the nine months ended FY24, net loss was INR26 crores.
- Advertising spend was significantly impacted by the World Cup and state elections, leading to reduced viewership and muted advertising revenue.
- Employee expenses have increased significantly, with a 10-15% jump each quarter, raising concerns about cost management.
- Current debt has risen to INR362 crores, with expectations to close the year at around INR350 crores.
Q & A Highlights
Q: In terms of the expenditures that company has done and the losses that we have done in new initiatives, they are significantly higher than what you had earlier guided. So was it that you were taken by the extent of slowdown and the surprise in the revenue, which just did not come in, or the expenditure just shot up for us much more than our expectation?
A: No, I think that -- I mean, it's a good question. The first scenario is what played out. So as I even alluded to in my opening remarks that the planned investment played out, but the revenue shortfall was significantly lower than the budget or the expectation. So therefore, the gap kind of shot up. It's basically the revenue gap. (Hiren Gada, CEO)
Q: So when I look at not only the digital -- not only the broadcasting piece where I can understand a large portion of revenue did go to World Cup and some of the other things, but even in digital, if you look at the kind of viewership, it's kind of flattened out and significantly lower than what it was post COVID. But it kind of -- we have stopped seeing growth in that as well in terms of viewership, which is kind of impacting our revenue even in digital media. For now, like three, four, five quarters, our revenue growth in digital media is like single digits, right, which is kind of very low. So would you care to explain there?
A: Yes. So the revenue growth in digital media actually this year it has been the challenge. But as far as viewership -- so there are two parts to it. So revenue growth has happened. We've actually -- until FY23, there has been a level of revenue growth in the digital media. But FY24 has been the challenge because of the large component of various digital video platforms, which primarily comprises of YouTube, Facebook, et cetera, they have all been very flat in terms of their monetization and revenue. (Hiren Gada, CEO)
Q: First on the employee expense. If you look at the employee expense cost curve, it's significantly higher. Like we were last year same quarter 21-and-change across, last quarter 28-and-something, and now 31. So every quarter, there is 10%, 15% jump in employee expenditure, which is kind of unprecedented in our history, and it is actually much higher than any other company in the industry. So like what -- and I understand you're employing more people for newer things. But in a time frame where revenue is a challenge, do we look back and kind of scale down on such expansion?
A: So a couple of things. I think, firstly, about 1.5 years back, roughly, we embarked on this whole significant shift and upgrade in terms of professionalization and various aspects linked to that. Also, the future that we saw for media entertainment in the economic backdrop, we believe that the opportunity is humungous and the best way to play this, and if we have to play on the front foot, the best way to scale up is through having a significantly professionalized team driving the entire thing. And therefore, we invested and I have discussed this quarter after quarter, and we invested significantly in dialing up the teams and people. (Hiren Gada, CEO)
Q: Our borrowing in even last few months have gone up. And with the operating performance, how much will it be? Like INR315 crores is the last reported one, but what will be the current debt?
A: So current debt is at INR362 crores. We expect this to come down where on it was INR9 crores in terms of utilization of limit, but it would be -- we would be closing at around INR350 crores for the year. (Amit Haria, CFO)
Q: So if I look at like from the larger picture perspective, the overall construct is that whatever effort that we are putting in into building this broadcasting business, but a large part of our profitability and revenue is kind of driven by external environment, while the cost is something which we are currently increasing every quarter. So given this construct, if the external environment is not favorable, let's say, for two years -- we don't know how the future plays out, right. So given that, how do you guys look at this construct given the balance sheet shape that we are in with INR360 crores of debt, where we were actually earlier thinking that we will reduce debt by INR30 crores. So it's increased by INR20 crores, INR30 crores. So given all this, don't you think it's a good idea to consolidate first and then go for more aggressive scaling up of the business?
A: Yes, I agree with you. And that's exactly what we alluded to. So when you -- understand one thing, the construct of this quarter. This was a festive quarter. So festive quarter is when everyone expects the revenue to be at the peak. So therefore, the investments were also planned to peak in the festive quarter. And since that didn't happen, it's a double whammy that kind of resulted. (Hiren Gada, CEO)
Q: So my first question is that how reasonable is it for us to expect probably like a 24% growth quarter-on-quarter for the next quarter to achieve the FY '24 revenue target, like which is about INR700 crores? That is my first question. And the second one is more generic that in the presentation copy that you provide, investor presentation, is it possible for you to include more financial data and numbers for Shemaroo in general and not generic data that is relevant to media industry. That would be really helpful.
A: Okay. So to answer your first question, we have never given forward guidance on revenue and profitability, but 9 months, we overall have grown at nearly 30% on a year-on-year basis on top line. So yes, if the momentum is maintained, that number -- then it's an arithmetic calculation. But we hope that we are able to maintain the momentum. (Hiren Gada, CEO)
Q: Sir, my first question is, in the last quarter, we have reported a revenue of around INR200 crore despite the low ad demand, but this quarter, we have -- our revenues fell to INR156 crores. So -- and I understand also this was mainly because of World Cup, but IPL is also lined up from March. So how do we look at it? And sir, second is, in our investor presentation, two factors have been mentioned. One is reduced ad spends, and second is lower viewership. But on the contrary, our viewership has actually gone up from 7.4% to 7.6%. So how do we look at both of these things?
A: So Yash, I think first question you talked
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
