Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TIPS Industries Ltd (BOM:532375, Financial) reported a significant year-on-year revenue increase of 40%, reaching INR73.9 crores in Q1 FY25.
- The company's operating EBITDA for the quarter grew by 55% year-on-year, reaching INR54.4 crores.
- PAT for the quarter was INR43.6 crores, reflecting a notable increase of 61%, with PAT margins at 58.9%.
- The company successfully completed a share buyback for non-promoter shareholders amounting to INR46.62 crores.
- TIPS Industries Ltd (BOM:532375) launched an in-house ERP system called Pulse to aid in automation of content management, reporting, and analytics.
Negative Points
- The company has changed its content acquisition strategy, resulting in fewer releases, which may impact short-term revenue growth.
- Content cost for the quarter increased slightly to INR12.7 crores from INR12.2 crores in Q1 FY24, indicating rising expenses.
- The company is focusing more on quality rather than quantity, which may limit the number of new releases and potentially affect market presence.
- There is uncertainty regarding the exact revenue contribution from YouTube, as the company did not disclose specific figures.
- The company faces challenges in monetizing platforms like Meta (Instagram), which currently rely heavily on advertising revenue.
Q & A Highlights
Q: Did you plan how many songs we may add in financial year '25? And content cost, what is your figure in your mind? Second, projection for financial year '25 growth in top line and bottom line?
A: We will achieve 30% top line and 30% bottom line this year. We have already released approximately 900 songs and target around 300 songs this year, focusing on quality. Content cost will be around 25% to 28% of top line, approximately INR80 crores.
Q: How much revenue do we earn from YouTube out of total revenue?
A: We can't disclose the exact number, but YouTube contributes between 45% and 50% of our total revenue.
Q: This quarter saw a notable share of non-film music. Is this a trend that is expected to continue? What's the difference between the cost for non-film music and film music?
A: Non-film music won't be a substantial contributor overall, except for one or two hits. We will continue to acquire both film and non-film music, with a primary focus on film music.
Q: What is our strategy going ahead in terms of acquisitions? What new will we be doing?
A: Our main growth driver is our '90s repertoire, which is performing exceptionally well. We focus on quality content. Our new ERP system, Pulse, will aid in content management, reporting, and analytics.
Q: What will be the contribution of revenue from new content versus catalog content?
A: New content contributes around 10% to 15% of the revenue, with the remaining coming from catalog content.
Q: How do you decide what is quality content? How do you determine if a song is a hit?
A: Deciding on quality comes with experience. We aim to recover our costs within three years, ideally sooner. We evaluate the entire portfolio's performance over four to five years.
Q: Are we getting into bidding wars for content?
A: We avoid bidding wars and focus on prudent acquisitions. We aim for fewer but higher-quality releases.
Q: Can you provide more details on the Warner deal and its impact on revenue?
A: The Warner deal's impact will be more evident in the third or fourth year. We are currently booking revenue based on actual business reported by Warner.
Q: What is the change in our content acquisition strategy?
A: We have multiple strategies, including developing our own content, acquiring from external producers, and leveraging our own film production. We focus on involving our teams in the music creation process to ensure quality.
Q: What is your strategy to acquire new content to generate long-term revenue and reduce dependency on catalog content?
A: We aim to recover our investment in new content within four to five years. We write off the entire content cost in the same year, ensuring no financial baggage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
