Cyber Media Research & Services Limited (CMRSL) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to Cyber Media Research and Services Limited Q2 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Now I would like to hand over the floor to the Managing Director, Mr. Dhaval Gupta. Thank you, and over to you, sir.

Good afternoon, everyone. This is Dhaval Gupta, Managing Director of Cyber Media Research and Services Limited. Firstly, I would want to thank everyone for taking out time on Saturday to join the call. And as we have been doing over the last couple of years, we will continue to do our investor calls every once in 6 months so that we can give you an update on what is the business scenario, what are some of the major talking points from the last couple of quarters, and as well as good things as well as some of the challenges that we have faced. With that, let me start by sharing with you the numbers for the Q2 financial year '24/'25. We closed the quarter with an income of INR 17.88 crores while expenses were at INR 16.99 crores. This meant that our EBITDA for the quarter was about INR 89 lakhs. And as far as PBT is concerned, PBT closed at INR 68.74 lakhs with a PAT of INR 55.6 lakhs. In terms of the overall performance as far as H1 is concerned, we obviously had a slower H1 compared to the previous financial year. This was not in line with what our planning had been and what our anticipation had been. And needless to say, we're not happy and disappointed with the results that have closed. Some of the reasons that were behind this, I'll just address in a little bit, but let me just share some other numbers first as well. Our debt-to-equity ratio was at 0.44. The current ratio at 1.66. The debtors turnover at 273 days and the team size is at 81 people. In terms of the quarter, I think -- so while the performance was -- when the top line did not grow, it was lower than the previous financial year, we were able to make sure that we were controlling costs. And therefore, the profitability margin remained, and that is something that we, of course, were something part of quick action that was taken by the team to ensure that we were continuing to be profitable. In terms of the reasons as far as business performance is concerned, last time when we had, had this call, one of the things that I had spoken about was that we are looking at and working on a very, very healthy pipeline. And that continues to remain the case. In terms of our -- the closures that we were expecting in quarter 1 as well as quarter 2, many of those closures were -- have gotten delayed. And there are different kind of large enterprises as well as mid-market companies that we have been engaging and a lot of projects, custom projects, in particular, were pushed back into Q3 and Q4. And that is perhaps a little bit in line with the overall macro situation as well, where performance for some of those organizations and in general, in the market, has been a bit slow. In terms of the pipeline, the pipeline continues to remain very, very healthy. We are looking at a large number of orders, and there would be various closures that have gotten pushed back from Q1 and Q2 into Q3 and Q4. Aside from that, so we are expecting to work on a recovery as far as the second half of the year is concerned. We're seeing more strong numbers. And therefore, whatever lost ground we may have had in H1 is something that we will strive towards recovering so that year-on-year, we can make sure that we're not -- we are in a stable manner. As far as the existing clients are concerned, we -- our relationship with Google continues to remain strong. We continue to work with them on multiple products. That is something that sort of is a cornerstone of some of the work we do. I do want to mention that while that relationship is there, we -- there are changes that Google does bring about in the ecosystem that can have an impact from time to time. Having said that, that is not unique to Cyber Media, and we -- our team does a very good job in terms of making sure that we are actually trying to use that as an opportunity to gain traction. In addition to that, on the existing clients, I'd say that we would -- while the relationship with our existing clients remain strong, we have not lost any major clients. So that's a positive note. However, this, again, in Q2, the budgets that we were working with on from the existing clients have been slower or have gotten pushed back. So that remains the big challenge as far as H1 is concerned, and we are working more aggressively in the market to make sure that we can recover that ground. A couple of other announcements, of course, which were critical as far as the previous quarter is concerned. One was that we had announced earlier in the year that we would be -- there would be a dividend similar to what was there last year. And that has been announced and paid in August. So that is something we will continue to do. In terms of the -- there was a matter with the GST, which was a big matter. It was upwards of INR 8 crores that had come to us as a notice. And we were successfully able to get that settled with the GST department. And that was a positive -- very positive thing as far as the company is concerned for the Q1 and Q2 of -- for the company. With that, I would like to now -- I would like to sort of pass it back to the moderator. And moderator, I would be very happy to see if our investors have any questions.

[Operator Instructions] First question comes from [ Parth Chavda ], an individual investor.

Just a couple of questions. First, what's the percentage of revenue from market research versus the digital marketing side?

Yes. So market research contributes about 10% of the -- I would say 10% to 15%, because it varies, of course, of the overall revenue that CMRSL generates.

Just 10% in market research and digital marketing side contributes 90%?

That's right. Again, it's not -- I mean, that 10% will vary from quarter-to-quarter. There are sometimes major projects that we are closing. So for example, in Q3, we are expecting a major project for the research business. And that is -- will, of course, then increase its contribution, but you can say 10% to 15% for the full year would be the overall contribution from market research.

Okay. You mentioned some of your projects have been delayed. Can you tell me the nature of the projects which have been shifted to Q3 and Q4?

Yes, certainly. So we work on a lot of custom marketing projects as well as the custom market research projects. And for various reasons, we've had companies push back some of the budgets that they have. For example, we've got a custom project with HP, which was last year as well done in the first half of the year, which has gotten pushed back. And one of the reasons for those were internal to HP, and they were quite happy with what we have been working on. So that's an example of one project. Similarly, on the programmatic side, last year, there were some customers that we work with internationally where they had some good budgets for programmatic campaigns that were delivered internationally. And again, right now, they have been pushed back to the second half of this year. So those are a couple of examples, and there are a few more such like situations.

And in the last call, you mentioned that we will be reaching the INR 100 crores revenue in FY '25. Do you see that still happening?

So at the moment, our focus is on ensuring that we are recovering so that we can get to the figures that we had achieved last year. And we're working very aggressively and hard towards that. Yes, we had spoken about this year getting to INR 100 crores. At this stage, given that H1 has not gone to plan, it would -- it is something that would be a stretch for us.

In your pre-IPO call, you mentioned that Affle and Vertoz were your listed competitors and they are showing continuous growth revenue and plus their margins are upwards of double-digit. Do you see anything particular within the company because of that you aren't able to achieve because, if you see, the industry is growing?

Yes. So I think there are different talking points there. From a CMRSL perspective, what I would want to mention is that we have been developing technology like CMGalaxy as well as on programmatic side, right? Now when we start getting more and more campaigns on that, the margins as far as that is concerned is always higher. That is going to be in the range of 25% to 30%, right? When it comes to the services business, in the advertising industry, margins will be tighter. They will be probably closer to 10% or so. So that is something that we have been working towards. And very, very consciously, we have been talking about how we want to be more -- a larger percentage of the revenue should be product delivered so that we can be also getting closer to 25%, 30% margins.

Okay. But it's almost -- it's been a long time since you developed the CMGalaxy platform, right?

No. So as I had updated last call as well, the GDM for that is started now. So Q3, Q4 is what we had earmarked for the GDM strategy. We have been continuing to be investing as far as the platform is concerned. And there were various customers that we have onboarded, but remains still in an investment mode where we are adding more and more, for example, AI-related functionality into the product, right? But yes, we have now also developed the go-to-market strategy as well as the relevant material for it. So we expect that, yes, we will look at onboarding clients on that front from this quarter and next quarter onwards.

Q3 is almost half done and all the festive season has also gone. So what's the current trend in the market? Is it better than last year or is it the same?

So as I mentioned earlier, the Q3, Q4, we expect there to be a pickup. We're sort of seeing more positive response and some of the projects that I've spoken about are coming through. So we clearly expect second half of the year would be better in terms of performance.

Okay. And there is some investment in a particular company from your side, [ Apikus ] Private Limited. Anything on that?

So yes, [ Apikus ] Private Limited is an endeavor in an e-commerce space, which is very closely associated also with our digital marketing expertise. We have gotten -- this is through [ ONVC], where we are setting up an electronics store and there is -- all the setup has been done. The project is live and as well as the commercials for that have started. So it is in an early stage, but a very positive movement as far as that particular prospect is concerned. And in 6 months, I expect to have a very much more detailed update for you along with some numbers there.

So is this a subsidiary or just an investment with some stake?

It is going to be an investment from CMRSL.

And 2 other concerns are, like trade payables, there's 10x jump on the trade payable side also. Any particular reason for that?

Trade -- which is the number that you're seeing, because trade payables...

It's INR 15 crores. I mean, last year, on March '24, it was INR 1.5 crores, now it's INR 15 crores.

That doesn't sound right. One second. Let me just check, double-check. So the trade payables on 31st March were INR 15 crores. And the same number is about -- very similar number there for 30th September as well.

On 31st March, it was INR 1.5 crores.

No, no, INR 15.03 crores and INR 15.16 crores. So it is the same number. This is Pradeep Gupta here.

Yes, yes. I'm just seeing that 150.35 in 31st March and 1,516.41 in September.

It is 1,503.5, it is INR 15.035 crores. And now it is INR 15.1641 crores. Just two decimal points is not [Indiscernible]

Yes. Then your balance sheet won't tally for March. If you assume it to be INR 15 crores, then it will be much more -- your current liability will be above INR 5 crores. It states INR 5 crores in -- for this March quarter, March '24.

No, I'm looking at the consol balance sheet right now. And in the consol balance sheet of CMRSL, everything is as I've mentioned. I'm just...

150.35, right?

Just a second, [ 15035 ], correct, and [ 15164 ]

150.35, it's 150.35.

In which document are you looking at?

Your current posted document comparable with September end versus March.

Is there some investor document...

You're looking at the balance sheet document.

Yes, balance sheet.

Is it the document that we filed with the...

Yes, they are Exchange documents.

I'm looking at that only. I hope it is not that some figure is in millions and some figure is in crores. So that is...

It's all in lakhs. The figure is in lakhs, and it is -- we have 150.35, that makes it INR 1.5 crores. And here it is 1,516.41.

The one that I'm seeing, I'm getting -- can you just send a snap or whatever, and we'll also send you. If you send an e-mail, we will send you the snapshot and everything. Obviously, balance sheet has to tally and everything is tallied.

I'll just send an e-mail.

I think -- yes, I mean just to sort of reassure you that in terms of the trade payables, there is no significant change or area of concern in terms of the numbers from year-on-year for March over September perspective.

From INR 9.97 crores to INR 11.38 crores, I'm just comparing 31st March and 30th September. The current assets at INR 31.08 crores to INR 29.92 crores. Total equity is INR 15.52 crores to INR 16.65 crores. Non-current liabilities are 681 to 665. And current liabilities are INR 15.70 crores to INR 18 crores.

That's INR 5 crores. Current liability here states INR 5 crores. INR 5.17 crores.

Sorry? Yes. So this is where short-term borrowings are [ 1 crore 223 ] and they are less by 133. Trade payables are INR 15.303 crores and -- I'm talking in crores, INR 15.03 crores and...

INR 15.03 crores, you say INR 15.03 crores. Here it is mentioned 150.35 in lakhs, your Exchange filed documents.

Just send us on e-mail.

Yes.

We can double-check that, so please e-mail it across.

Next question comes from [ Deena ] [Indiscernible], an individual investor.

Yes. Just I have a few questions. First question from my side is like what is the difference between the 2 companies, the Cyber Media (India) and CMRSL. Can you please explain the business model of these 2?

Okay. So Cyber Media (India) Limited was -- is a business that houses the media business that was started by Cyber Media in 1982 with brands like Dataquest, PCQuest, Voice&Data, DQ Week, DQ Channels. And so the media business is part and parcel of Cyber Media (India) Limited. CMRSL used to be a subsidiary of CMIL. And of course, we went IPO in that business separately to sort of help grow the digital marketing and the market research business. The teams for the media business and the digital marketing business are entirely separate. There is no overlap as far as either the teams are concerned or any operational activity is concerned. And so that is the difference between Cyber Media (India) Limited, with the media business and CMRSL, which has the market research and digital marketing business.

Okay. So CMRSL, like which industries does it cater? Can you please explain?

Yes. So CMRSL, in terms of its services, provides digital marketing services, which focus on Google performance, Meta performance. We work closely with LinkedIn, X, Amazon, and so on. So we help brands improve their monetization ability as in through well-managed digital marketing services. So that's one part of it. Another part of it is where we also work with the publisher side of the ecosystem. We directly work with major publishers around India, including ABP, TV9, Dainik, then so many others, NDTV, and so on, so where we help them monetize their inventory in an effective manner, right? So we end up buying their inventory in a sense and monetizing that through platforms like Google, Magnite, PubMatic and so on. And then we also have a business in the market research and consulting space and where we provide a lot of enterprises with focused consulting and then data on -- within the IT industry and the technology sector.

Okay. Can you please share some light on the customer side of your business?

Yes. So we have customers like Hewlett-Packard, AWS. We work with customers in the education space like GEMS Business School, Apeejay, University18. We also work with international customers. So Google, of course, is a big customer. In the U.S., we have a couple of customers, which is -- one is NYTCP through whom we manage Iron Mountain, which is a Fortune 500 company. We also work with another listed entity in the U.S., Gain Therapeutics. So there is a very wide array of customers that we work with. And we can be happy to share sort of some more details around that outside of this call as well.

Yes. So on the customer side, I have seen that Go Digit is your customer, right?

So last year, Go Digit was a customer. And this year, we have done a 4-month campaign with them around their insurance products. This year, they are not a customer with us.

Okay. So like when it comes to the margin front, I have seen that for the past 4 quarters, the OPM is like very volatile, like 3%, 4%, 6%, 12%. So what is the normal percentage for that?

Yes. So in the services business, particularly with Indian clients, I would say that single-high-digit percentages are what typically the customers work on, which is exactly what brings you back to earlier big point that I was mentioning that we have been investing in developing technology and building a platform for a couple of years now. And CMGalaxy is one such product, in which we have been getting a lot of feedback. We've been -- we have a very good team working on it. And we've been getting a lot of positive feedback as far as the demo for the product is concerned. One of the things that we are excited about is that we have also integrated certain level of AI enablement within the product. Now with the product-led approach, we do expect our margins to improve as we move along in the future. And that is something that is quite exciting for us, and we continue to make sure that, that is an area where we are putting some of our best resources forward.

Yes. In your last call, you've given a target like INR 100 crores revenue for FY '25 and so the first half, it said INR 35 crores to INR 36 crores. So is it likely that the target will be missed by this year end?

Sorry, can you repeat your question once, please? Your voice was breaking a little bit.

Yes. Am I audible now?

Yes, you're audible.

Yes. Actually, what I asked, like in your last call, you mentioned that for this year end, the target revenue will be around INR 100 crores, right?

Correct.

Yes. So in the first 2 quarters, it's been around INR 35 crores to INR 36 crores.

That's right.

So is it very likely that this target will be missed by year end? So it's looking very highly unlikely that the next 2 quarters will come around like INR 55 crores to INR 60 crores so that INR 100 crores target will be met.

Yes. So as I was mentioning earlier, INR 100 crores this year will be a stretch. We will -- we are at the moment, focusing our energy on aggressively being active in the market and making sure that we are bringing back sort of growth so that we can move towards the kind of numbers that we had achieved last year.

Yes. So last question from my side. Like is there any plans for like any M&A as such? So what is the current cash on the balance sheet?

Sorry?

What is the current cash on the balance sheet at present right now?

Yes. [Indiscernible] sir, can I just request you to unmute yourself and help us with the figures, please?

Okay. So last question from my side. So what is the target for the remaining 2 quarters like for the H2? So what will be like -- can you give some guidance on the revenue front?

Yes. So see, we don't typically give future guidance. As I mentioned to you just now, which I think should act as the North Star, at least what we are focusing on at the moment is work towards the kind of numbers that we had achieved last year.

Okay. Last question from my side.

And to answer your earlier question, the cash on the balance sheet that is available is INR 3.77 crores.

Yes. So that is my last question. Is there any plans for M&A with this cash or anything like that to expand your business?

Yes. So absolutely. In the past also, we've been looking at targets. We've been looking at sort of having various conversations. In fact, there were a couple of conversations which had reached an advanced stage. However, we also recognize that we need to be very, very judicious when it comes to the money that we have, and we should be able to get a good valuation for all investors, right? So we are looking at other situations, but we will be very cautious and we will be very careful in terms of the valuation that we are able to get while considering any M&A activity.

Can we say that H2 will be better than H1 if you're like going forward?

Yes. So that is exactly what I was mentioning earlier also that H2, we are working and we have a good pipeline. We have -- are already seeing some positive movement. So H2 is going to be better than H1.

Next question comes from [ Darshan Chandra ] an individual investor.

Sir, 2 questions. One question from the balance sheet side. In the balance sheet, in the asset loans have given up to INR 9 crores. What is that? Loans and advances of INR 9 crores?

Yes. So this, we had already sort of sent a note explaining the entire thing. Cyber House, which is Cyber Media's property, 50% of that, there was a plan that CMRSL will buy it. And therefore, they have extended the advance towards that. And then finally, what happened was that it was decided that we will convert the cash and use it for growth. And so therefore, CMIL is returning that entire money. So that is the loan which is there on the books of the account as per schedule. In fact, in an accelerated manner.

Okay. And Dhaval ji, to throw if you talk about the CMGalaxy product, in H2, how much we can expect from CMGalaxy? And in next year, you might get a substantial amount from that side. So our margin will be in the double-digit.

Yes. So CMGalaxy as a product, we -- as I had mentioned that we have initiated the go-to-market activity. I think at this stage, it is a little premature to give guidance or fixed numbers on what is the monetization that may happen through CMGalaxy. But as I have mentioned very clearly, we want -- we are very keen to make sure that we are improving our profit margins. And therefore, CMGalaxy will be an important contributor to that from next year onwards is what I -- is my...

Okay. And Dhaval ji, one simple basic to promoter of the company, is that at the price of INR 110 or INR 105 will be the promoter Cyber Media Limited will be the active buying the share at this price from the market?

So in the past also the promoters have looked at sort of this activity. And in fact, promoters have done buyback as well. And as and when the situation arises, we will continue to look at that option and increase the promoter's stake. We do believe that at the current valuation, the company remains very attractive.

Okay. And Dhaval ji, I will request at least it will be -- in H2, the revenue will be at least INR 87 crores. It will achieve the last year target, not INR 100 crores, but at least INR 87 crores will be achieved by our company.

Yes. So that is what we are working towards and striving towards. And yes, that is what we expect.

And Dhaval ji, so H2 will be better than H1. So might be the margin will also improve a little bit, 200 basis points?

So H2 will be better than H1, yes. And on margin, we will -- like I mentioned, we at this stage are also being aggressive in the market. On margin, we always keep a tight eye so that we are profitable and we have good cash flow and so on. And so that will continue to be something that we do. What is the level of improvement on percentage, again, I will not be able to comment on that right now.

But it will be better than H1? Our margins will be better than H1?

I mean, aggregate profit will be better than H1.

[Operator Instructions]

If there are no more questions, then I would like to place on record a thanks -- a very big thank you to our investors. We continue to work towards -- we think that this is an exciting industry. We have a lot of belief and faith in the space that we are working on and with the solutions that we have. I also want to mention a recent trip to the U.S. where we were able to sort of talk to potential customers. I think it's something that has been interesting. And so we are working towards that, and we hope to repose your faith in the coming quarters and years. And if there are no further questions, then I would request that we bring the call to a close.

Sure, sir. Thank you. Now I hand over the floor to the Managing Director, Mr. Dhaval Gupta for closing comments.

Yes. So as I just shared, those were my closing comments. Again, a very big thank you to our investors. And we will continue to work towards making sure that we are steadily growing the company. In the past also, the company has delivered improved results year-on-year on a consistent basis. So we will -- we are striving towards that.

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.