Release Date: February 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Saregama India Ltd (BOM:532163, Financial) reported substantial revenue growth, exceeding their guidance of a 30% increase for FY25.
- The Music business, including Licensing and Artist Management, grew by approximately 19% year-on-year.
- The company is aggressively investing in new content, with a planned investment of over INR1,000 crore in new music content between FY25 and FY27.
- Saregama's digital footprint has expanded significantly, with followers across YouTube, Instagram, and Facebook growing to 324 million.
- The Live Events business showed strong performance, highlighted by the successful Dil Luminati tour with Diljit Dosanjh, indicating long-term growth potential in this vertical.
Negative Points
- The disproportionate revenue from Live Events, a lower-margin business, led to a decrease in adjusted EBITDA to 21% for the quarter.
- The closure of Airtel Wynk, a free audio streaming platform, is expected to cause short-term revenue pain.
- The Video segment reported negative EBIT for the nine months of FY25, with profitability still a challenge.
- Carvaan's retail revenue dropped by 39% year-on-year, reflecting ongoing challenges in this segment.
- The aggressive investment in new content is currently resulting in incremental revenue just matching the content charge-off, impacting short-term profitability.
Q & A Highlights
Q: The Music Licensing revenue seems to have grown by just 12% year-on-year. Is this growth lower than expected, considering the views on YouTube and OTT platforms?
A: Vikram Mehra, Managing Director, clarified that the analysis is incorrect if Artist Management is excluded. The combined growth of Music Licensing and Artist Management is around 18% to 19%. Catalog music is growing steadily, and the temporary impact of platforms like Airtel Wynk shutting down is short-term.
Q: How should we view the profitability of the Video segment, given the negative EBIT for the nine months of FY25?
A: Vikram Mehra stated that the Video business should yield high-single-digit EBITDA margins. The business is still stabilizing after acquiring Pocket Aces, and the IRRs are high due to the quick cash turnaround.
Q: Can you explain the impact of the exit of free platforms like Airtel Wynk on your business?
A: Vikram Mehra explained that the shutdown of free platforms like Airtel Wynk and others has led to the loss of minimum guarantees. However, many users have transitioned to other platforms or moved to paid services, mitigating the impact. The transition from free to paid models is expected to continue.
Q: What are the expectations for the Live Events business, and how will it impact margins?
A: Vikram Mehra noted that the success of the Diljit Dosanjh tour shows the potential of the Live Events business. While such success may not be repeated every quarter, the long-term growth potential is significant. Margins in this business are high-single digits, but the short capital lock-in results in high IRRs.
Q: How is Saregama planning to engage with younger audiences, particularly with the hip-hop genre?
A: Vikram Mehra highlighted the company's strategic move into hip-hop to appeal to younger audiences. Saregama has partnered with MTV Hustle Season 4 and signed exclusive deals with artists to create and monetize hip-hop content, aiming to diversify and remain relevant to younger demographics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
