Ladies and gentlemen, good day and welcome to the Q1 FY 2024 earnings conference call of Entertainment Network (India) Limited. As a reminder, all participant lines will be in listen-only mode. 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 telephone. Please note that this conference has been recorded. I now hand the conference over to Ms. Runjhun Jain from EY Investor Relations. Thank you, and over to you, Ms. Runjhun.
Thank you, Jacob. Good evening, everyone. We welcome you to the Q1 FY 2024 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 here represented by Mr. Yatish Mehrishi, Chief Executive Officer, and Mr. Sanjay Ballabh, Chief Financial Officer. The financial results and the presentation have already been uploaded on the company website and on the exchanges. Should you need any further information, you can reach out to us at EY IR team, and we would be happy to send it over to you. Before we proceed with the call, a disclaimer.
Please do note that anything said on this call during the course of introduction and in the documents, which reflects our outlook towards the future or which should be considered as a certain forward-looking statement, must be viewed in conjunction with the risks that the company faces and may not be updated from time to time. With that said, I will now hand over the call to Mr. Yatish. Over to you, sir.
Thank you, Runjhun. Good evening, everyone. First of all, I'll extend my best wishes to all of you as our beloved country celebrates the 77th year of independence. On behalf of ENIL, I extend a warm welcome to all of you for joining our Q1 FY 2024 earnings call. I hope you had the opportunity to delve into our quarterly results. However, I would urge you to look at the positive underlying trends and not look at just the overall results. Please allow me to navigate you through the results. Overall media industry, if you look at in the Q1 performance, has remained subdued both in revenue and margin terms. This has largely been impacted by the global macroeconomic factors. Media sector performance has been far from the. If you look at television or print, the numbers have not been very encouraging.
In fact, radio shines as a standout performance in the traditional media space, as evidenced by our industry Q1 results also. Coming to our performance, to begin the FY 2024 with a distinctive upswing in profitability gives us enough delight to share the results. There has been a marginal dip in revenues, but we have managed to improve our EBITDA and EBITDA margin significantly. The revenue dip was partly due to the absence of TV properties which we do in quarter four, and which rolls into the quarter one also in our solutions business. The factor contributing to the subdued revenues in the solutions business has been our deliberate strategy to focus only on profitability and only events which are profitable to us.
Shifting our focus to the core existing business, which is the radio business, we have achieved a healthy 8% growth, predominantly led by a remarkable 70% growth in volume, which has been the story for the last few quarters. As a management team, and in the previous quarter I have been saying, our unwavering focus continues to be on profitability of the business and making our existing radio business more lean and more agile. In terms of profitability, if we exclude the digital investments which we have been doing over the last quarters, our EBITDA stands at INR 9 crores, signifying a robust growth of 59% year-on-year growth. The margins have improved to 31.7% against 12.8% in the same quarter last year. This improvement has been result of our commitment on stringent cost-saving measures which we have been doing over the last few quarters.
Our solutions business grew at a lower revenue and demonstrated an improvement in margins from 34.8% last year to 43.1% this year. Similarly, if you look at our existing business excluding the digital and DVC, our cost base has undergone a 6% reduction, showing our strategy to make our radio business very agile and lean so that we run an efficient operation. That is not it. If you look at our PAT also for the first time in last few quarters, we have turned profitable if we exclude our digital investments. We remain committed to invest towards our future towards digital. During this quarter, we increased an additional INR 7 crores on our digital foray, Mirchi Plus, which has been demonstrating good growth on overall all parameters, and this gives us immense satisfaction. Our focus on sustainable profitable growth extends to our international business as well.
To move away from the loss-making venture which we had, we have closed operation in San Francisco and undertaken vigorous cost-cutting initiatives in overall U.S. business. In Bahrain, we have recalibrated our operations and negotiated prices to make it more profitable. As a result, our international business has also turned profitable during the quarter, and it has supported our profitability on a consolidated level. Our financial remains very strong with a cash reserve of INR 258 crore as on June 30, 2023. As we have always promised that our aim remains maximization of shareholder value and continue to focus on profitability, and we continue taking those measures. With that, I will hand over to Runjhun to invite for questions. Thank you.
Thank you, Yatish. Jacob, we can open the floor for questions now.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you press star then one on your telephone. 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 Deepan Sankara Narayanan from TrustLine PMS. Please go ahead.
Good evening, everyone, and thanks a lot for the opportunity. Firstly, from my side, what would be the contribution of platform business alone in this quarter, and what is the contribution of digital for the overall business?
Okay. You follow through with the question or?
This is one of the main question from-
Quickly to answer you, our digital revenue has been almost INR 7.86 crores as the total digital contribution. Then if you look at the percentage of radio revenue, it has been about 11.9%.
Okay. In that, how much is platform and how much is YouTube and other digital revenue?
The Mirchi Plus platform, which is our own app, we have still not started monetization on it. But if you look at pure digital revenue, it would be INR 5.7 crores and INR 2.09 crores. INR 2.09 crores comes from other components. To give much more perspective, the revenues from YouTube has been about INR 1.35 crores. Syndication revenue comes to about INR 3 lakhs. The M-Ping revenue, which we have been discussing with you over the previous quarters, is almost about INR 1.6 crores.
So M-Ping, how much did it contribute previous quarter in total?
Last quarter?
Yeah.
Just give me one second. Last quarter, it was about INR 2 crores. This quarter, it has been INR 1.6 crores.
On the scalability of M-Ping business, nowadays we are able to see a lot of ads coming up in Spotify also. So likely, we are planning to extend this to all other internet platforms also. What is the kind of scalability possibility here, and what is the kind of market share we have in this business currently?
To answer on this, yes, we are looking at more and more tie-ups and more and more partnerships with all audio OTT players. That's what we have been aiming to, and that's the reason if you look at our performance on M-Ping has been up and on where we partner all on board. Most of the partners who are now on board, which came in last part of Q4 and the current quarter. Now we have almost, if you look at the major OTT players, we've almost got 90% of the inventory. From a competition point of view, there is one player which is there, which is a small player. But clearly M-Ping is the only player in this space if you look at an independent player. I'm not counting Spotify selling their own revenues or any platform selling their own revenues.
As a third-party competition, there's only one competition in this space. Having said so, the margins are very healthy as we speak right now. We believe as the markets open up and because the overall market conditions are not so great, but as we scale, I think the numbers can be in 2x or 3x of these numbers.
Okay. If not Spotify, then what other kind of platforms are we selling M-Ping currently?
Sorry?
Other than Spotify, what other platforms are we selling M-Ping currently?
There are many. If you look at, there is Spotify, there is JioSaavn, there is Pocket FM, there are a lot of gaming companies. There are lot many. There is Hubhopper, there is Wynk Music. There are many guys. We have aggregated most of the all audio OTT players, and our focus remains largely on the audio segment.
Okay. On the solution business for the current quarter, you can declare around INR 7.81 crores, right? This has been fallen from the previous quarter. Otherwise, outdoor has been doing well for most of the players. Any specific reason?
Yes. In my opening remarks, if you remember, which I put it across. Our solution business constitutes the TV property business, which we largely do in the quarter four, but there is always an overflowing which goes into the—a lot of revenue flow into quarter one also. If you remember, in the quarter four revenue, we didn't do our major properties, which are the Mirchi Music Awards in various languages, simply because we believed in profitability of running a business and not just gaining revenue. The impact of that not being an event has gone into Q1. If you look at overall solution business barring that, the growth remains quite encouraging. The good part is the margins keep growing on that business also.
Okay. Lastly, from my side, this 8% growth in radio business, that is mostly from volume growth itself. Also, are we seeing any CPR increase in yield in near future?
The good part is the price has stabilized. It doesn't look like going further down, and we don't want to look at any pricing going down. There's been marginal growth in the metro markets. But the 88 frequency station and the batch one station still lag behind. It's been very marginal. I would not comment very heavily that there has been very great improvement. Yes, you are right, the major growth has come through volumes. But at least the prices stabilized, not went down. Compared to last year, the price is stable. If I look at eight stations, which are the top eight metros, the price has gone up by 1.5%-2%.
Okay, cool. Thanks a lot. I'll get back to you.
Thank you.
A reminder to all participants, to ask a question, you may press star then one. The next question is to the line of Suresh Shetty, an individual investor. Please go ahead.
Sir, is it audible?
Yes. Please proceed.
Hello, sir. Actually, you are sitting on cash around INR 250 crore. But why you can see the current sitting low on INR 350 crore, sir?
Thanks, Suresh. Could you just specify it?
Actually, your report will give the sitting on cash from 200 and back investor presentation. But in financial statement, you have a broad range around INR 250 crores. What is the difference between. I am not understand that well.
I will ask Sanjay to help you with this one.
Hi, Suresh. Yes, you are right. On the cash and cash equivalent, we have INR 258 crore as on June 30, 2023. However, what you are currently seeing as liability is not actually a financial liability. It is the impact of Ind AS, Indian accounting standard-related accounting impact, which we had to pay as per the accounting norm. There is no real loan or anything of that we or the company has taken, either in this current quarter or in earlier quarters. The company remains completely debt-free.
Completely debt-free.
Yes, it is completely debt-free.
Sir, one more question.
Since 2019, the company is completely debt-free.
Okay, one more question. Sir, actually, last time some person calling, what is the opinions of investors in the business side in user survey type of polling person. I will give you some opinions. But sir, you know Saregama Carvaan.
Yes.
That type of carvaan. ENIL also so many programs which you might conduct there. The type of events we can attend or profitability. Actually, when we conduct some presentations and programs in UT. Small events we will do the type of. You can understand, sir. I know little bit Hindi. Like events. Hello?
Suresh, can I take this question?
Yes, sir.
Okay. I think you are mixing couple of things. Saregama and the product launch like the carvaan, et cetera, is a completely different segment and different business. Being a listed company, we are not authorized to talk about their performance or their financial numbers. If you have any specific question and query about our performance and our numbers, you can mail it to us, to the mail ID given in the investor presentation.
Thank you. Mr. Shetty, may I request you to come to the question queue? The next question is on the line of Subrata Sarkar from Mount Intra Finance. Please go ahead.
Yeah. So sir, my question is like what we are seeing from your performance as well as a few of your other competitors, the radio ad volume has now back to pre-COVID level in terms of volume I am talking about, but in terms of the ad rate, we are still far below that. So what is your take on that? Are we thinking of raising the rate and, if so, from what time period are we looking to raise it and at what quantum? If you can throw light on that.
Thanks, Subrata. So if you look at, yes, the business has been driven by volumes. For us, the volumes are higher than pre-COVID levels. We remain always the best in the industry in terms of running less volumes and playing more music. So we still have a lot of headroom in terms of the volumes available. If you look at the capacity utilization also right now, we are about 70% of the capacity we have. On your question on pricing. Yes, the pricing remains subdued. It is a function of the supply and demand. Generally, pricing in media improves in the second half of the year, and we believe some bit of pricing improvement you would see in quarter three and quarter four. We believe that we should look at quarter three and quarter four. Good part is the pricing has now stabilized.
It is not going down at all, and we believe we will be able to improve price in quarter three and quarter four.
Okay. And sir, second question on the more of a generic question, but on the digital side. So again, our performance has been improving in terms of viewership and all those things. What is our digital spend on different? What are the messages and viewers we can have, and what is our priority on this side, and how we are planning it?
Yeah. So on our digital portfolio, just to get app, see there are two verticals for the digital strategy. If you look at it, there is an mWeb and there is an app. mWeb we've been monetizing through our multimedia solutions and using that. But if you look at pure app, this is our Mirchi Plus app. We believe in building the content right now, which we have about 3,000 hours of content. We would ideally want it to be 10,000 hours of content, build a very good base of consumers, and then look at monetizing. So we keep doing experiments in terms of looking at subscription models and both ad reviews, and based on that, as we have a critical mass of content available in various languages, we will get into the monetization part. I hope that answers your question.
Yeah. And sir, last question on your event and outdoor activity. What is the current situation right now? Because it was muted, to be very honest. And sir, one thing, previously we were sharing each of the verticals, like the revenue or growth. Now we have merged it to be digital and others almost. If you can share that data, will help us. And as I told you, outdoor activity, Q4 was very weak, so are we anticipating real pickup on that front?
If you look at, yes. If you would have gone through other industry earnings call and all, every company is now very bullish about doing ad spend both in media and activation. If you read maybe Barber or Evans, everybody is looking at increasing the spend. And we believe we are also very bullish in the event segment that the second half will be much better than even last year, and for sure first half. Generally, the event business is skewed towards the second half of the year. So we believe the event business should be back in the second half of the business.
And-
And on the investor deck, all the data is available. We have not merged it. You might have to just look at it again. If there is anything specific you want to know, please write to us. We will be very happy to share that.
Okay. Sir, one last question on the government ad side. So in Q3, traction that is coming back because for other media there are some traction we are observing, number one. And number two, sir, since election is due next year first half. So are we expecting very good ramp-up on that side in the Q3, Q4 and Q1? So H2 and Q1.
Yeah. So there are two aspects to it. One, we believe the pricing in government, which has not been raised for the past few years, we believe that could lead to a change, so that will also have an impact on overall government revenue. We believe that could happen in a quarter or so. On the government, yes, you are right. Whenever there are election period and a year prior to the election, government spend goes up and also the political spends come up. In fact, not just central government elections, even the state government elections, we believe in MP, Chhattisgarh, Rajasthan, and even Andhra, Telangana, we believe there will be a ramp-up in government and political spends. So yes, in the second half, we anticipate good amount of government and political spends to happen.
That is all. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, you may press star and one. A reminder to all participants, to ask a question, you may press star and one. A reminder to all participants, to ask a question, you may press star and one. The next question is on the line of Deepan Sankara Narayanan from TrustLine PMS. Please go ahead.
Yeah, thanks a lot for the opportunity again. Sir, I am just trying to reconcile revenue number for Q1. So radio is INR 61.83, and solution is INR 20.87. But overall digital is INR 1.86. So rest of that contributed by which part?
One second. We will come back to you. Just give us a moment. So basically, what happens, Deepan, that when we report the digital numbers, the digital revenue is generally distributed among many other revenue streams. So a direct addition of the numbers may not always give you the arithmetically correct answer. Let me tell you the numbers for the current quarter. So digital content solution this quarter, the revenue was INR 2.75 crore. And digital components which was available in other segment, which was present in other segments, that was about INR 2.09 crore. My digital platform, including M-Ping, et cetera, we earned about INR 3.02 crore. So total was INR 7.86.
Welcome on call. Okay. In that case, in the investor presentation, you have mentioned non-HPT plus your digital platform, then you have given non-HPT separately. If I take only that digital platform, that is around-
Yeah. You are right. Absolutely right, Deepan. The non-HPT portion, which we have mentioned, that does not have. On the growth a little ago, which has been uploaded today, it has non-HPT plus digital platform. At the end, we have not separately mentioned digital platform, the numbers which I have called out right now.
The rest of the digital revenue forms part of HPT?
Some of it. Not necessarily all of them, some of them.
Okay. Sure, sir. Thank you.
Just to clarify, there is no HPT component in the digital component. Just to remove the doubt that in the digital revenue when we report that, there is no HPT component which is included in it. Did you get it, Deepan?
No, it is still not clarified, sir. The 7.89+ if I add to this. So the solutions include the digital component also, solutions business?
Yeah. So even just to give you an explanation, pure digital component is about INR 2.09 crore. In our solutions business, when we do multimedia solutions to a client, there is a digital component of that also.
Okay.
So that is about INR 5.77 crore and also our original content properties. So when you look at solutions, there is a digital component and then there is a pure digital play also, which is the YouTube revenues, OTT revenues, and M-Ping revenues.
Okay.
Got it.
Got it. Thank you.
Thank you. The next question is on the line of Ankit Patel from HSBC Securities. Please go ahead.
Yeah, hi. Thanks for taking my question. My question was regarding the radio business. If compared to, say, history FY 2019 or FY 2020, compare radio business EBITDA generation, it's fairly off from there. Just want to understand the management outlook in terms of how you see the radio business recovering. What part of the recovery do you think has already come through? When do you see it recovering? To what extent will it actually be able to recover in terms of those peak levels of EBITDA generation? The second part is you also have cash on the books. Are you looking at any ways to bump up this radio business in any way?
Yes. Thanks, Ankit. First I'll answer your last question. Yes, we do have cash. We see developing opportunities available in the market, both in traditional and digital space. When we get the right opportunity at the right visibility, we will look into it. That's how I would answer that. On the investment part, look at it. If you look at, yes, the EBITDA percentage numbers have gone through. Problem has been largely the revenue. The revenue has been down because the pricing deals have gone down and the volumes have gone up. As we get the right mix of pricing and volume and the business goes up in ratio, you will see that number coming back to pre-COVID levels.
Also if you look at on the event side also the business has a bit subdued over last two quarters because of the overall economic segment. But I think the second half we should be looking at a pre-COVID number if you want to say that. Just the second half, not saying the full year basis. But on the second half, we would be bullish. Look at the event business doing well and also when you look at the commentary of all industries, everybody looking at spending money in the second half. We believe the traditional media also should have a decent growth in the second half of the year.
All right, thank you. The other question, sir, was on this license fee for the radio business, which is again an expensive that you have to pay. Now if the yields and if the mobilization of new revenue over there is behind, is there any way to address that? We actually heard in other calls that there is a representation being done to ministry to look at this. Just your views on how this is likely to progress.
Yes, Ankit, you are right. There has been a representation on that to support [inaudible] We have been asking the government to support the industry on this front in terms of the license fee, which is a function of the license or the revenue. There has been a strong representation and we would want to believe that government will look into it, considering that new auctions are also being announced. I do not know if it is soon or not, but at least they have announced it. Part of that they might look into it, which could be a good jump for the entire industry and we would really, really welcome that. But it remains with the government. We have been doing our job of doing the representation very, very strongly on that.
Right. Okay. Thank you.
Thank you. A reminder to all participants, to ask a question you may press star and one. Ladies and gentlemen, to ask a question please press star and one. Anyone who wishes to ask a question may press star and one. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you very much. Thank you for joining the earnings call and your continued support over the years to the company. We look forward for this continued support in the coming years also. Thank you very much. I will hand over to Runjhun. Thank you.
Thank you, sir, for your cooperation and we look forward to host you again. Any other questions you have, you can reach out to us. We are happy to help you. Thank you.
Thank you. On behalf of Entertainment Network (India) Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.