Ladies and gentlemen, good day, and welcome to the Entertainment Network (India) Limited Q1 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 touchtone phone. Please note that this conference is being recorded. I will hand the conference over to Ms. Runjhun from EY Investor Relations. Thank you, and over to you, ma'am.
Thank you, Neha. Good evening, everyone. Welcome to the Q1 FY 2025 earnings call of Entertainment Network (India) Limited. To take you through the results and answer your questions today, we have management team from the company represented by Mr. Yatish Mehrishi, Chief Executive Officer, and Mr. Sanjay Ballabh, Chief Financial Officer. The financial results and the presentation have been uploaded on the company website and on the exchanges. Should you need any further information, you can reach out to us at EY IRC.
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 evening, ladies and gentlemen. On behalf of ENIL, I extend a warm welcome to all of you for joining our Q1 FY 2025 earnings call. I trust you had the opportunity to review our financial results. Please allow me to provide a brief overview of the same. I am pleased to share that we continued the momentum and began this year on a strong positive note. During the quarter, we clocked a domestic revenue of INR 109.4 crores, representing a robust growth of 19.3% year-on-year. This broad-based growth was driven by both our radio and digital segments, which grew by 10.8% and 4x YoY respectively. EBITDA for the year, excluding digital, stood at INR 20.5 crores as compared to INR 19.2 crores in Q1 FY 2024. EBITDA margins were at 21.8%.
Our PAT rose to INR 5.8 crores as compared to INR 4.4 crores in the same period last year. Coming to our business segments, we continue to maintain our leadership position in FCT. We have grown ahead of industry both in volume and value. Our FCT revenue for the quarter was at INR 75.2 crores as compared to INR 67.8 crores, a growth of 10.8% year-on-year. We have a volume market share of 24.3%. Non-FCT segments, including digital, witnessed a growth of 43.6% year-on-year on the back of subscription revenue from Gaana.
Moving on to the digital front, we have had a promising improvement post the integration of Gaana. During the quarter, we launched an improved version of the previous app, which was well received. This led to a strong digital revenue of INR 17.8 crores, constituting almost 25% of our radio revenues as compared to 11.8% in Q1 FY 2024. You would recall that we had guided earlier that our aspiration and ambition is to get 25% of revenues from the digital segment. We have made investments on this new platform, which is close to INR 15 crores this quarter.
However, the key takeaway is that this is expected to come down in the subsequent quarters. Our international market continues to be EBITDA positive at INR 1.5 crores for Q1 FY 2025. Our balance sheet remains robust, with a cash balance of INR 355 crores as of June 30th, 2024. In conclusion, our primary objective, as always, remains to maximize shareholder value on the back of sustainable growth and profitability. With that, I would like to invite any questions you may have. Thank you very much.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephones. 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. The first question is from the line of Akshay Sharma, an individual investor. Please go ahead. Mr. Akshay, your line has been unmuted.
Hello.
Please go ahead with your question.
Hello?
Yes, sir.
Hi. My question is, I would like to ask, what is the Gaana profitability for FY 2025?
Akshay, you are not very audible. Can you repeat the question, please?
I am for the one FY.
Akshay, I request you to join back the queue. Your voice is breaking.
Hello?
Yes.
Yes, Akshay.
I was asking that what is the Gaana revenue and profitability for the Q1 FY 2025?
Akshay, generally we do not give any forward-looking statement. But as I said, we are looking at investment and our aim is to make Gaana business profitable as soon as possible. That what I would be able to answer right now, but any further questions you can write to Yogesh separately.
Okay. Apart from this, can you tell me about the inventory utilization for this quarter?
The inventory utilization, just a moment.
Yeah.
The inventory utilization for this quarter has been about 72%.
72%. Okay. Thank you. I will join the queue for the further questions. Thank you.
Thank you, Akshay.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Shikhar Mundra, from Vivog Commercial Limited . Please go ahead.
Hi, sir. I want to understand the economics of Gaana business. What are the revenues right now? What are the expenses, and how much are we investing? At what level will we break even?
Okay. Shikhar, to give you certain perspective, what we have envisaged on Gaana as we took over on 1st December , we have gone ahead and done a pure subscription business. It is not a free music business, unlike what Gaana herself used to do or as Spotify does right now, or what JioSaavn does. Our business is a pure subscription model. It is more of a revenue share with the label business, and you have to pay to listen to music on Gaana.
It is a pure subscription model business, what we look at. Our pricing earlier used to be INR 299, which was not feasible. But recently you would have seen from 1st July , we have increased the price to INR 599. As you look at any business, any new digital investment require certain bit of incubation period. We will be investing for another couple of years into the business, into the product, into the product experience or recommendation engine, acquiring more and more subscribers.
Right now, it is a very healthy number what we have. We have a very good base and a good market share in the subscription business, if I look at only the subscription business. I am not looking at the free music subscription, only the paid subscription business if I look at, we have a healthy share of the market. The way we look at it, with our experience in the radio business and our present, we believe we will be able to drive this business profitable as soon as possible.
Okay. What are the total number of subscribers right now?
I would not be able to address that, Shikhar, on call. If you have anything, you can separately write to us on that part. It's a very healthy number what we have.
Okay.
It's increasing day in, day out, and month and month basis.
Okay. Can you give me an idea about the CAGR growth rate you are seeing there in the subscribers? Not the volume of subscribers.
See, the way we look at this, if you look at where the market itself, if you look at in India, the last EY and IMI report said about 200 million free music subscribers. It's about behavior change of the subscribers to pay for music. Earlier, you and me have paid for a CD or a cassette also for one album also. What we're looking at a INR 599 per annum is not a major amount of money you're going to ask from a consumer. The way I look at it's not about a CAGR growth, it's about the potential you have.
Right now, we are in a very initial stage of six months. As I said, we have a very healthy base. I believe, getting the right product, getting the content right, getting the experience right will help us drive the numbers. Overall, also, if you look at in the competition side, everybody is looking towards subscription. Nobody is looking at acquiring consumers. Everybody is talking about getting more paid subscribers, be it Spotify, be it JioSaavn. Everybody is talking the same thing. The entire ecosystem is working towards building the paid subscription business. From that perspective, I believe, we are in a very good shape. It's about execution in the next couple of years to make the business really robust.
Okay. Is the subscription the only revenue we get, or is there some advertisement component also?
No. We don't believe it. For our Gaana business, it's pure subscription. We do our digital advertisement business separately, but for Gaana, it is a pure paid model.
Right.
That's the way we have our relationship with the labels also.
Right. For the traditional business, we experienced a 20% growth, is that right? In revenues.
On FCT pure, it was about 10%. Including everything.
Okay
It is a 19% growth.
Okay. When you say pure FCT, that is only the radio business. Pure radio.
Pure radio business grew at 10.8%.
Okay.
But there were activation events and other businesses along with digital
Okay
Which grew at 43%. So on a total level, the domestic business has grown by 19.3%.
Right. For the traditional radio business, in that 10.8% growth, what was the split between volume or revenue pricing increase?
This time there was a political business and as you know, political business comes at a premium.
Right.
There was some bit of price increase, about 5.8% the price increased. But I would not read much. It is one time because of the political. Good part to say on the pricing is stabilized, and we do not see any further drop. Maybe in the festival season, we will see some bit of price increase. Quarter one generally is a weak quarter in media you would know that. But because of the political business, the increase in the year has happened.
All right. In spite of the elections not being there, you do not see a drop in prices or a drop in volumes going ahead?
If I remove elections also this quarter, our price remains stable. I don't see.
Okay
Any further drop in pricing happening.
Right. Now, let's say hypothetically, we would have not made this investment in digital and Gaana, what would have been our EBITDA? As an investor, how should we look at that?
The way we look at it's overall the business we look at as a future, being future ready. It's an investment in digital we made, and this year, as I spoke in my opening remark also, we've done about INR 15 crores of investment in the Gaana platform for the quarter.
Okay.
You could count, instead of 20.5, which was our excluding digital business EBITDA, another INR 15 crores, so it would have been about INR 35 crores to INR 36 crores.
But those INR 15 crores must have been used for the building up a library also. Though that technically are building up your assets, right?
Library building, we don't buy content. It is all licensed content. So it's not about building library. It's more on the tech investment, little bit of marketing, getting the product stable. There was people on the HR side were required because, as I said, we just acquired in December. So the first six months we wanted certain costs to come in. But as we believe, this cost over the next few quarters will go down.
Right. All right. Thank you and best of luck for the future.
Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Meghna, an individual investor. Please go ahead.
Hello?
Hello.
Am I audible?
Yes, Meghna.
I had a few questions. First one was, what has been the volume growth for radio this quarter?
Give me one second. Just a moment.
Yeah, sure.
About 3%.
YoY increase, right?
Yeah. That is a thing. We've got a political business where we have seen a price growth, and which has led to a higher value growth.
Okay. How have been the effective rates this quarter, the growth YoY, and how does it compare to pre-COVID levels?
Pre-COVID levels is still down. We don't see that coming up very fast. But over year-on-year, it's about a 6% increase in price.
Okay. Can you shed some light on Gaana revenue? How is it performing this quarter, and how has the profitability been like?
I have already mentioned in my earlier discussion, we believe over a period of few quarters, it will become much more robust. It is still on initial days. It has been just six months we have got into the business. We have stabilized the business with a robust paid subscription business. There has been certain investment which are bit front-loaded in the first and the second quarter. But we believe as we progress ahead, the business will become much more robust and stable.
Okay. Thank you. That answers my question.
Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. We will take the questions from participants. Our first question is from the line of Deepan Narayanan from Trustline PMS. Please go ahead.
Good evening. Thanks a lot for the opportunity.
Good evening, sir.
Good evening, sir. Sir, can you give little breakdown of this solutions part of the business, which has de-grown by around 1%? So, what is the reason for it, and which part of that segment has not grown well?
So, if you look at our multimedia solution business has grown well except for one business, which is, we used to do this digital content, Kareena Kapoor Khan show, the original content. Which we have pushed into this quarter because as I had said earlier also, our principle remains profitable growth. So, we were not looking at a very good margin in this quarter. So, we have pushed that business, that event, or I would say two activities, into this quarter. So , the original content business, which we had done last year about almost INR 1.5 crore, has been pushed to this quarter, and that's the reason you have seen a marginal drop in that business.
But otherwise, other business of multimedia solution has grown 10%, activation has grown by about 42%. Just as I said, this is the one business where we believe we wanted to have a much better margin because that remains our guiding principle across the company. And that's the reason we have pushed that business to this quarter. So it's a pushback rather than anything to worry about. We remain very optimistic about our non-FCT entire portfolio.
Okay, understood. Sir, you told that excluding Gaana, the EBITDA would have been INR 36 crore and we have invested something like around INR 15 crore during this quarter. So was this kind of investment there in the Q4 FY 2024 quarter as well, or we have started investing now only?
Q4, if you look at it, we had just taken over in December. By that time, you stabilize the business, you realize certain things which you want to invest in on data sciences, on recommendation engine, on getting the product experience better. So there were certain people required, certain bit of marketing to be done. So it's a planned expense. I would say for the first quarter it's little on the higher side, but as we see for the next quarter, this cost will come down.
So it's not that it come as a surprise to us. We had planned certain bit of investment in Gaana for this year. And we are on track of it. It's just that certain costs come upfront to you when you start a new business. And as we make it more and more efficient, the cost will go down. We believe this INR 15 crore is one time in this quarter. Subsequently in the subsequent quarters will be little lower than this. It has been a planned expense.
Okay. Understood. During last quarter call, you said that Gaana was contributing around INR 9.5 crore kind of revenue run rate. Have you seen any increase in terms of revenue run rate because you have done lot of investments, or is it yet to be visible in the coming quarters?
You will see much more robust in the subsequent quarter. This is just the second quarter only after we took over. We have seen, as I said, we see a healthy growth coming in. Plus, we have changed the price from July 1st. Our price was INR 299, now we increased the price to INR 599. That impact will also happen over subsequent quarters. May not happen in the immediate quarter because there are people who continue at INR 299, they change only when the renewal comes in. Whatever we had planned in terms of the price increase, in terms of the cost efficiency, we are on track on it. We are seeing revenue growth, we are seeing subscription growth also.
Okay. Got it. As we have now doubled our subscription rate, even if we are able to double our subscribers, that is when we would be closer to our break-even in terms of Gaana business. Is that assumption right?
See, the thing is the way it works is, if you have already, you will change the price only for the new customer. The old customer is already on that price. So the blended price will take a while to become double.
Okay.
So only the new customers are coming at a higher price. The old customer continues at the same price. We have sold a product at the old price, so he continues that. When he comes for a renewal, that is the time he will change. So the blended price will take a while to become double, Deepan.
Okay. Got it, sir. Thank you.
Thank you, Deepan.
Thank you. Ladies and gentlemen, you may press star and one to ask a question.
Go ahead.
The next question is from the line of Vedant from Minerva Asset Advisors. Please go ahead.
Yeah. Hi, thank you for the opportunity. Am I audible?
Yeah, Vedant.
Yeah. My first question was on the volumes of the traditional radio business. Can you give me some sort of split between how much government or political versus non-political?
Yeah. If you look at overall volume growth has been about 3% for us. The political and government business contributes in this quarter are almost about 10% to 11%. See, what happens is when the political business happens, the government business stops. So, it's never been together because of the code of conduct coming in, you don't get government advertising happening. So, it actually replaces. It's just that you get a better pricing from political business. But if you want to look at non-political, non-government business, 90% will be non-political, non-government, 10% was the contribution for government and political put together. About 11%, I would say it is.
Got it. Thank you. And one more question on, is there any update on the M-Ping business part of it? Are we planning on investing more over there? Just what's the quarter been like on M-Ping?
So it's very robust. We have done some learnings. We are looking at newer and newer tires. Maybe offline we can have a chat more on this, Vedant. But what we look at is this first year has been a great learning process. We are now looking at more and more additional inventory. Audio inventory, we have almost everything. We are now looking at can we just look at just audio, can we look at into video inventory also? So, we have done that, and we believe it's a very robust business to continue in the next two, three years. And this year is going to be another pivotal year as we move from not just doing audio inventory, but video inventory also.
Got it. Thank you so much. My last question, would you have any guidance for growth in either pricing and volumes for the next few quarters?
See, generally, in media, not just radio, any media, the price is a supply and demand thing. The H2, we believe starting September, could be a chance where we could look at certain price increase as the business comes back. And the media is always skewed towards H2. So there could be some bit of price increase. We are optimistic or hopeful on that. But I don't see the price going down anymore.
Understood. Just one last question. On this 90% part of the non-government, non-political, in this quarter, the price you're saying remains sort of stable only.
Yes. It increased marginally, but as I always say, 1% or 2% price increase, up to 5%, I never look at a price increase or price drop because there are a lot of factors involved. It could be a station mix change it could be a client mix change. It is not a uniform pricing. Correct? If you have been following us, it has been stable, and I do not see any drop coming in the pricing.
All right. Understood. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. We have one more question from the participants. We will take that. Our question is from the line of Rahul Shah from Alpha Capital. Please go ahead.
Hi, sir. I just missed your initial statement. Just wanted to know the cash balance.
Rahul, our cash balance is INR 355 crores as on 30th June.
Okay. Thank you so much.
Thank you, Rahul.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Management?
Yeah. Okay. Thank you, Neha. I would like to express my sincere gratitude to each one of you for the unwavering support you have been giving to the company. We continue to prioritize profitability and maximizing shareholder wealth. The cornerstone of our journey is profitable growth, serving as our guiding principle for all our actions. Thank you very much for joining the call. Have a nice day. Thank you.
Thank you. On behalf of Entertainment Network Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.