Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UFO Moviez India Ltd (BOM:539141, Financial) reported an 11% year-on-year increase in total revenue, driven by a 7% increase in theatrical revenue and a 79% growth in the sale of products.
- The advertisement screen network grew by 13% year-on-year, reaching 3,735 screens, which includes 2,122 multi-screen and 1,613 single-screen setups.
- The company added 432 advertising screens over the past year, indicating expansion in their advertising reach.
- Despite a challenging quarter, the company improved its EBITDA from INR66 million in Q1 FY25 to INR102 million in Q2 FY25.
- UFO Moviez India Ltd (BOM:539141) maintained a strong cash position with consolidated cash at INR998 million and net cash at INR409 million after considering outstanding debt.
Negative Points
- The company experienced a 17% year-on-year decline in advertisement revenue due to fewer tentpole releases and underperformance of several key films.
- UFO Moviez India Ltd (BOM:539141) reported a net loss of INR9 million in Q2 FY25 compared to a net profit of INR33 million in Q2 FY24.
- The EBITDA for H1 FY25 was significantly lower at INR168 million compared to INR340 million in H1 FY24, primarily due to lower advertisement revenues.
- The advertisement revenue per screen showed a decline, with the number of minutes sold per show per ad screen at a low of 2.68 in H1 FY25.
- The company faced challenges with high advertisement revenue sharing costs, which increased by 33% year-on-year, impacting profitability.
Q & A Highlights
Q: Can you explain the NCLT order mentioned in the press release and why the accounts are being reinstated now?
A: The NCLT order was related to a merger scheme involving our 100% subsidiaries, aimed at simplifying our corporate structure. The effect was given immediately after the order in Q4 of last year. The reinstatement ensures an apple-to-apple comparison for financial statements, reflecting the merger's impact on last year's numbers.
Q: Why has there been a significant dip in advertisement revenue, particularly in minutes sold per show per ad screen?
A: The dip is due to the poor performance of content in Q1, which affected advertiser allocations in Q2. Despite this, our ad sales team managed to maintain higher pricing, which partially offset the volume decline. The challenge was compounded by the lag in advertisers' response to content performance.
Q: Why did the advertisement revenue share with exhibitors increase by 33% despite a drop in ad revenue?
A: The increase is due to strategic acquisitions of advertisement sites with higher minimum guarantees, particularly in the South. This move was part of our strategy to improve network quality by acquiring multiplexes, which typically have higher sharing commitments.
Q: What is the impact of the Caravan and Nova Cinemas initiatives on increasing theater footfall and revenue?
A: Caravan Cinema is gaining traction, especially in rural areas and during elections, though it fluctuates seasonally. Nova Cinemas is still in its early stages, with one property operational and another opening soon. Both initiatives aim to rekindle cinema-going habits in areas lacking theaters, but success depends on the quality of film releases.
Q: Is there any plan for a share buyback given the recent drop in share price and available liquidity?
A: Currently, there are no plans for a buyback. Our focus is on business recovery and growth in advertisement revenue. Additionally, technical constraints like accumulated losses prevent a buyback, despite positive reserves from share premiums.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
