Ladies and gentlemen, good day and welcome to Entertainment Network (India) Limited Q3 FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Runjhun Jain from EY. Thank you, and over to you.
Thank you, Ashish. Good afternoon, everyone, and welcome to the Q3 and nine months FY 2025 earnings call of Entertainment Network (India) Limited . To take you through the results and answer your questions today, we have the management team from the company represented by Mr. Yatish Mehrishi, Chief Executive Officer, and Mr. Sanjay Ballabh, Chief Financial Officer. Please note the financial results and the presentations have been uploaded on the company's website and on the exchanges. Should you need any further information, you can talk to us. Before we begin, I would like to remind you that today's discussion might include forward-looking statements based on the current expectations and assumptions. These statements are subject to risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to update these statements after today's call. With that said, I will hand over to Mr. Yatish.
Thank you, Runjhun. Good afternoon, ladies and gentlemen. On behalf of Entertainment Network Limited, I extend a warm welcome to our Q3 FY 2025 earnings call. As this is our first interaction of 2025, I would like to take this opportunity to wish you all a very happy and a prosperous new year. We announced our quarter three and nine-month FY 2025 results on Friday, and I trust you have had a chance to review them. To ensure everyone is aligned, allow me to provide a brief overview of our performance. During this quarter, our domestic revenue reached INR 154 crores, marking a healthy 9.7% year-on-year growth. This was including digital sales. This growth was primarily driven by our digital and our non-FCT segments, which expanded by approximately 151% and 21% year-on-year respectively.
Excluding digital, our core business recorded a 3.2% year-on-year growth, with revenue reaching INR 138 crores. Now let's take a closer look at the segment-wide performance. Our radio business faced some challenges due to a shorter festive season and overall slowdown in the media markets, which impacted overall volumes. Our pricing remains stable, and we continue to maintain our revenue leadership position in the segment with a healthy 27% market share. On the other hand, the non-FCT segment witnessed strong momentum growing 21% year-on-year to INR 50 crores. This growth was driven by success of our key on-ground events like Mirchi Spell Bee, Mirchi SBI Green Marathon, Mirchi Rock N Dhol, as well as top talk shows including What Women Want with Kareena Kapoor Khan.
Coming to digital business growth, our digital business continued to deliver exceptional growth with revenue reaching INR 15.4 crores, up by 151% year-on-year, largely fueled by the strong performance of Gaana. As you may recall, we launched an updated version of Gaana in July 2024 with a revised pricing, moving from INR 299- INR 599 for our annual pack pricing. The response from customers has been highly encouraging. Since our pricing plans follow annual subscription model, we expect the full impact of the price revision to reflect from FY 2026 onwards. YTD levels, our paid subscriber growth has been healthy and in the range of approximately 15%. In quarter three FY 2025, digital revenue accounted for 26% of our total radio revenues against last year of near 13%.
At YTD levels, radio contributes to 63% of our total revenues compared to almost 71% last year. These figures align with our strategy goal of evolving from an FM radio company into a comprehensive multimedia entertainment enterprise. We remain committed to centering our digital offerings, investing INR 10.5 crores during the quarter, which is almost 26% down over the quarter one FY 2025. As Gaana revenues continues to scale, losses are narrowing, reinforcing our expectation that the business will likely break even in the next four to five quarters. Let's look at some of the key financial metrics. EBITDA excluding digital stood at INR 38.8 crores, with EBITDA margins at a healthy 28%. Profit before tax for the quarter stood at INR 22 crores. Our international operations remain EBITDA positive, contributing INR 2.1 crores in the quarter.
Our balance sheet remains strong, with a cash balance of INR 344 crores as of December 31, 2024. With this, I will hand over to the moderator and look forward for some questions from you. Thank you.
Thank you very much. We will now begin the question and answer session. To ask a question, please press star and one on your phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take the first question from the line of Deepan Sankara Narayanan from TrustLine Holdings. Please go ahead.
Good evening, everyone, and thanks a lot for the opportunity. Firstly, from my side, how has been Gaana's performance in terms of revenues and subscribers? How has been our churn rate and new subscribers churn rate for the quarter?
Deepan, thank you for the question. As I said, our YTD growth has been almost 13% increase on subscribers. We see some churn always in quarter three because that's when we went paid. Overall, it remains very healthy in the paid market share. Our paid market share is also increasing quarter on quarter. The Gaana revenue for the quarter has been almost INR 12.6 crores against last year of INR 3 crores.
Okay. In terms of radio advertisement, which are the segments which has done well and which are the laggards for the festive season for the past quarter?
See, largely what happened was last year, the quarter three was getting into general elections. There was a lot of government spends also coming in, which also subsided. Overall, if you look at the economy and overall sectors have been down. The real estate has been down, health and pharma has been down. The durable segment, which are the consumer segments, if you look at apparels, consumer durables have been down. Auto has done well. I would say auto has done well relatively because of a last year base, last year impact. Last year, auto was not doing so well. From a base effect point of view, automobile and health and pharma has done reasonably well, plus the jewelry section. If you look at it from an economic point of view, gold is doing well. Jewelry has done well for us. Auto sector has done well.
But largely, if you look at the disposable consumer segments like apparels, durables have not done well.
What are the key reasons for this 13% increase in our production expenses year-on-year?
Sorry?
Our production expenses has gone up substantially high. What are the reasons for that?
That's largely different because if you look at the non-FCT segment, which is growing and if you look at the event business, has almost doubled. That's the reason. It's a direct variable cost to the event business, what we do.
Okay. Lastly from my side, we had a very high base for Q4 of last year. How do we see the current quarter doing in terms of volumes and also pricing in terms of radio business? How do we see overall the Q4 performance?
The way we look at, Deepan, if you look at the market factors also, there is a shift in media which is moving towards more experiential marketing rather than advertising sales. It's not to do with radio, but across mediums. If you look at television, print, everywhere vanilla advertising has been muted this year with the way the economy has performed. We are not very aggressive on the radio side that it will have a very healthy growth. Having said that, our solution business, the event business is doing very well, and we are confident that we will do much better also in Q4 in that.
Okay. But we are saying event business has done extremely well, but our margins has been lower than last year. Any specific reasons for that?
It's a product mix change. If you do more events and less radio, you know the business depends. Radio is more profitable than any other business. It's a product mix change. When the radio business comes back, the margins will look much better also. It's a product mix change rather than anything else.
No. The overall mix I can understand, but even within the solutions, the margins of solutions business has come down, non-FCT business as compared to last year.
Yes. It is not very major. There are a couple of concert business. If you look at in media business or in the experiential business, the concerts will generally have a less margin compared to managed events. If there are certain concerts which comes in the quarter, it can decrease a bit of margins. But overall, if you look at, we remain committed on a very healthy, profitable thing. It could be a quarter-on-quarter thing, but overall, per se, the margins have been in line with the expectations, Deepan.
Okay. Thanks a lot. I will end that.
Thank you, Deepan.
Thank you. We will take our next question from the line of Shikhar Mundra from Vivog Commercial Limited. Please go ahead.
Hi.
Hi.
How much cash we are burning in Gaana right now?
This quarter we have burned about INR 10 odd crores, which is almost 25% less than what we spent in quarter one. We believe in the next four quarters we keep going down.
Can you explain me the cost structure of Gaana right now? INR 12 crores of revenue we did. I am assuming INR 22 crores was the expense. Since you said INR 10 crores is the cash burn. What was these expenses for INR 22 crores?
See, as I spoke, we increased the price from INR 299 only in July. At INR 299, the business doesn't make sense. When we increase the price, because it's an annual pack, the entire pricing will take a year to come back to INR 599. The entire impact takes a year. Unlike any other product, like a telecom, you can change the price today, and next month the price will be higher. But in a subscription product where you've already taken a payment for annual year and for annual pack, that price will only change after a year. To give you a perspective, right now, almost about 30% of our whole subscription are on the new price. As that number goes up, the profitability will keep increasing. All the new customers are getting acquired at INR 599.
As the INR 299 comes for a renewal, they will move to a INR 599 pack. That's the reason the difference of the loss, what we're looking at. But if you look at as a product, it's very stable now. At INR 599, we will make money on that part, and that's the reason we are saying in the next four quarters, four to five quarters we'll be breaking even, and the losses are reducing quarter on quarter.
Okay. When did we increase this price to INR 599? Which month?
First off, we announced in July, it started in August.
August. Since August, what has been the month-on-month rate? I mean, have you seen a dip because of the price increase?
Not much. If you look at it from an impact of upgrade rates, it doesn't change much. Even if it changes, it depletes a little bit during certain months, but the impact of the price hike is much better than looking at a little dip. Overall, we are in a healthy growth region. As I said, YTD levels , we increased our subscription by almost 15%. We believe in quarter four also it will go much higher on this front.
Okay, got it. So without the Gaana, the other part of the business would have done an EBIT of how much without the cash burn in Gaana?
INR 39 crores.
INR 39 crores.
We have INR 410 crores.
Okay. What are the utilizations of the radio channels right now?
It's about 71% the rating count, but at the inventory level, it's about 11 minutes an hour. There is a lot of volume available on that for us. Being leaders, we run the least in inventory, so we have a lot of headroom. Had the economy and overall market scenario would have been better, the radio would have also performed better. I don't think volume is the issue. The overall market sentiments have been down in the last two quarters.
And if we compare this to a year back, say quarter three last year versus quarter three this year, the utilizations of a radio?
The volumes have gone down by about 3% over last year. That comes from a point of view, this is a shorter festive season. Last year, and media gets impacted by festive, last year, Diwali being in mid-November, the festive was a longer period. This year it got clubbed into October, and then November didn't do well for media across sectors, not just media, if you look at overall other companies, they've not done well. The media spends were also very muted. It's a factor of couple of things, a shorter festive season and overall economy not doing so well across the board.
Got it. With the cash balance of INR 344 crores and this Gaana cash burn also coming to an end in the next four or five quarters, how do we plan to use our cash? I mean, such a big cash balance.
We keep evaluating opportunities to grow the business, and as we've taken about a year to stabilize Gaana, we keep discussing with the board on the utilization of this part.
It's been a long time since we have not been able to create value for our shareholders at all. I mean, would it make much more sense to increase our dividend payout?
No, Hrishikesh, the way we look at this, for us, we have been consistent on the dividend policy from day one for every year on year. Last year we increased, but understand we were coming out of COVID, the revenues were not up to the mark two years back. That was the reason we were a little conservative on that and we wanted Gaana to stabilize. Now, having the business stabilized on Gaana, the business is looking much better, in a healthy position, and we now have a visibility on the breaking even part. We will now evaluate on this part also. But having said that, we've been consistent on the dividend year on year.
Got it. One general question I have. It's been around four, five years since our radio business has not performed the way it used to. This is common across the industry, not just us.
Yeah.
Do you feel this is something of a cyclical downturn, or do you feel radio as an industry itself is kind of dying down?
I don't think radio is dying. It's never been dead across the world, Hrishikesh. The thing is, people look at radio in a very different way. It's actually the ad sales which has been an issue across the board. If you look at television or print, everywhere ad sales have become a problem. The clients are becoming more demanding, and they are more solution approach rather than plain vanilla advertising. If you look at even print or television, it's the same issue which everybody's facing. Not just us. If you look at digital sales also, the pure ad sales of digital, where it was growing two years back at 40%, 50%, has come down to 10%, 15% growth year-on-year. The overall ad sales business is going through a shift, is in a transition phase, and we'll have to weather that storm.
But the solutions business, that's the reason it's doing well. Now, five years back, experiential marketing was not doing so well. If you look at now, and you would have seen the concerts business and the way they are growing, that's where the shift is happening. If you look at our strategic intent over the last few years, been very clear that we no longer want to be just a radio company, but a multimedia company. That's where the shift is happening. If you look at our business segments, it's not just radio. We have solutions business, now we have Gaana, and we keep evaluating different things. It's about how do you look at transforming the company in this transition phase? It's not radio being dead, it's the ad sales business.
Radio is still, as per our estimates, it's still heard by about 40 million people in this country. We do well globally also. In that market also, people listen to radio. It's just that the ad sales business, because it's dependent on ads, and ad sales is right now taking a beating, that's where the problem is.
Okay. Got it.
Sorry, Shikhar. Your voice is breaking.
No, I'm done with my questions.
Okay.
Yeah.
Thank you. Before we take the next question, we'd like to remind participants to press star and one to ask a question. We'll take our next question from the line of Hrishikesh from Robo Capital. Please go ahead.
Hi. Thank you for the opportunity. Sir, firstly, could you share what the revenue and PAT Gaana has been for Q3 as well as for nine months?
I am sorry, Hrishikesh. Your voice is not very clear. Can you use the handset mode, please?
Hello, am I audible now?
Yes, please.
Okay. Thank you very much. Firstly, could you share what revenue and PAT Gaana has done for Q3 and nine months as well, and currently, how many subscribers does Gaana have, paid subscribers and what would be the ARPU currently?
I am not able to share you the exact numbers of subscribers. You can come and meet us or speak to Sanjay on the phone separately. We do not divulge our subscriber numbers right now for confidential reasons. Our Gaana revenue, as I said, for the quarter has been almost INR 12.53 crores and our YTD level is about INR 33 crores. As I said, it is growing at 16% YTD levels, the subscriber numbers. The blended ARPU would be around in the 300 range because, as I said, right now, 27% contributes the INR 599, while INR 299 are the balance. As the year goes by and people renew their subscription, they will also become INR 599.
Okay. Could you share any internal targets that we have on Gaana in terms of revenue, market share, how many subscribers are you targeting, and what would be the target margins?
The way we look at it is the first milestone for us is to break even in the next four to five quarters, which we are in line with. Our growth and our stories for so far in the last three, four quarters is in line with that ambition. We believe in the next four, five quarters, we should break even. In the paid market shares, there are very few players now left. Largely, it is Spotify and us. YouTube also has YouTube Music, but otherwise, in 100% paid market share business, there is hardly any player. We want to be a very, very strong competition to Spotify.
Okay.
We have a very healthy market share in the paid market segment.
Got it. Regarding our radio business, firstly, what are the current yields compared to pre-COVID levels? As in percentage terms, obviously. Can you share any visibility, when can yields get back to pre-COVID levels?
So, see, you know how overall companies have performed in quarter two and quarter three. Media per se, it's not just radio. Media per se lags GDP growth by quarter. But as businesses do well, they start spending on marketing. That's the reason it's not done well for the last one year, and we still lag our pre-COVID radio sales. But the way we look at the business is not just look at radio, but as overall business. Overall business, we are higher than COVID, and we believe by the end of the year, we'll be higher than the pre-COVID levels. So it's a shift which has happened. Behaviors have changed and the business has changed.
As I was explaining the previous question, the ad-sales model could be also relooked at, and that's the reason we're looking at transforming the business, just not being a radio company, but to a multimedia company. So that's the way we look at the business per se.
Okay. But if we have to compare, let's say, the radio yields that are there and comparing that to pre-COVID levels, what would that be in a percentage term?
If I just compare radio to radio, it would be about 75%-80% of pre-COVID levels.
Okay. In yields terms.
Sorry?
In terms of the yields that we earn, right?
No, yields are 20%-25% down. I was saying on the revenue per se.
Got it. Thank you very much.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. We'll take our next question from the line of Meghna, an individual investor. Please go ahead.
Hello, am I audible?
Can you use your handset mode, please?
Hello.
Yes, Meghna. Please go ahead.
Yeah, am I audible?
Yes.
Good morning. I am an individual investor. I wanted to know the effective rates of radio, the year-over-year change, and compared to pre-COVID level, how has it been like?
On overall radio yield, on quarter-over-quarter, we are almost about flat, but pre-COVID level, as I said, it is about 25% down.
Okay. Related to Gaana, what has been the PAT like for Q3 and YTD?
We are investing, as I said, on Gaana. We have reduced our losses by about 25% over the quarter over. On the third quarter, we have invested about INR 10 crores in the Gaana business. As I said, it will remain in investment phase for the next four quarters. By that time, it should break even.
Okay. Year-to-date level, how much have we bought?
About 37 crores.
Okay. Thank you. That answers my question.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. As there are no further questions, I now hand over the call to management team for closing comments. Over to you, sir.
Thank you very much. We sincerely appreciate your continued support. Our guiding principle remains unchanged. We could focus on profitability, strengthening our shareholder value, and on ensuring long-term sustainable growth.
Thank you. On behalf of Entertainment.
Thank you.
Yes, sir. Please go ahead.
Sorry, no, I was just concluding. Thanks for joining the call. Have a good day, and thank you very much.
Thank you, sir. On behalf of Entertainment Network (India) Limited, that concludes this conference. Thank you for joining us. You may now disconnect.