Entertainment Network (India) Limited (ENIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Entertainment Network (India) Limited Q1 FY '27 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the call over to Ms. Sneha Salian from EY Investor Relations. Thank you, and over to you, ma'am.

Thank you, Atharva. A warm welcome to all the participants to the Entertainment Network (India) Limited Q1 FY '27 Earnings Call. The investor presentation and the financial results are available on the company's website and on the stock exchanges. Please note, anything said on this call, which reflects our outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with the risks that the company faces. This conference call is being recorded and the transcript, along with the audio of the same will be made available on the website of the company as well as on the exchanges. Please also note that the audio of the conference call is a copyright material of Entertainment Network (India) Limited, and it cannot be copied, rebroadcasted or attributed in press or media without specific and written consent of the company. To give you a brief business update and to take you through the results from the management team, we have Mr. Yatish Mehrishi, Chief Executive Officer; and Mr. Sanjay Ballabh, Chief Financial Officer. I would now request Mr. Yatish to provide you with a brief update on the quarter. Over to you, sir.

Thanks, Sneha. Good morning, everyone. On behalf of ENIL, I extend a very warm welcome to all participants joining us for our Q1 FY '27 earnings call. We announced our results yesterday, and I hope you had a chance to review them. I will now take this opportunity to walk you through our performance. During the quarter, we recorded domestic revenue of INR 111 crores, marginal degrowth of 1.9% year-on-year. Performance was affected by the geopolitical conflict and related uncertainties, which led to our event cancellations, curtailed travel activities of artists and consequently lower business volumes during the quarter. EBITDA for the quarter grew by 42% to INR 8.7 crores. This was achieved through the successful execution of several strategic cost rationalization measures we have undertaken during the year. Encouraging to note that despite prevailing macro headwinds, the non-digital business improved profitability, delivering EBITDA growth of 7.4% and PAT growth of 85% during the quarter. Our international operations, though impacted by the West Asia conflict, contributed INR 3 crores in revenue. The company continues to maintain a robust balance sheet with a cash balance of INR 389 crores as of June 30, 2026. Turning now on the performance of our key segments. Let me start with Radio. The Radio City Advertising segment delivered reported revenues of INR 62.2 crores on the back of ongoing macroeconomic scenario. The challenging conditions witnessed in FY '26 extended into Q1 FY '27 with advertiser demand remaining soft due to the uncertainties. This is affecting not only Radio segment, but the overall media industry. Despite the headwinds, we maintain our leadership position, showing resilience of our business model. Coming to our non-FCT segment. The non-FCT segment stood at INR 17.5 crores, impacted by event cancellations and artist travel disruptions across markets weighed on our business activity. Moving to our Digital business. In this quarter, Digital revenue stood at INR 31.1 crores, up 43.3% year-on-year, contributing to 30.2% of our total revenue, up from last year of 23%. This growth was largely powered by Gaana's strong user traction and consumer engagement on the platform. I'm happy to report that investment in Digital business declined to INR 8.3 crores from INR 9.8 crores in the same quarter last year, reflecting the results of our ongoing operational efforts. We have been reiterating that Digital business will be the key driver of our growth, and Q1 FY '27 results were yet another quarter to showcase exactly the same. With this, I'll hand over the call to the moderator and look forward to your questions. Thank you.

[Operator Instructions] The first question comes from the line of Suresh from [ Baram's Financials ].

Sir, actually, so many quarters in our Radio business will suffer from advertising? It is only for West Asia issues -- reasons or any other issues? And second question, you will only for -- you will search for Radio and Digital business, you go for any other ventures, you go for -- revive the company and go for any other businesses? You try to do any other businesses, sir.

Okay, Suresh. Thank you, Suresh. See, on overall, yes, the West Asia crisis and overall economy situation did have an impact on Media. Media, as I've been telling in other earnings calls also, is going through a major transition phase where the subscription numbers or advertising revenues are under pressure where there is a lot of content available. There is media fragmentation happening and which is leading to pressure on overall the advertising landscape. It's not just radio, but be it television, be it print, be it outdoor, all forms of vanilla advertising are under pressure. And in addition to that, with the geopolitical crisis and uncertainties lead to a more -- much bigger impact. And that's the reason the Radio degrowth you are seeing across the board, not just us, but I would say across traditional mediums, there has been a softness in the industry. To your second question, we have 3 businesses we put as verticals. One is radio. The second is Digital, which you rightly said. The third is our Events business, which has been growing really quarter-on-quarter every quarter. This quarter has been marked by a lot of cancellation because of artists couldn't travel. We had to cancel a couple of activities due to the uncertainties. And that's the reason we have not been able to do that. But, otherwise, our 3 major businesses remain Radio, Events and Digital.

Okay, sir. And actually, this business verticals, all verticals will be some media side, it is not good for growth. Any other you will try to -- any other diversifications, any planning?

So -- Suresh, so far, we have concentrated on the Media business, but with new tech of AI and all, we do delve on that, and we keep experimenting on and do investments -- internal investments on usage of AI, but largely, our overall sector will remain media.

Only for media. You will go for media. Okay. Actually, I am the long shareholder in Entertainment Network. Investor wise you will not grow any company. Sir, any buyback you can plan? The cash is available in the company reserves, any buyback plan you can say?

So that's a Board discussion. We keep discussing. As and when it comes, I think we will come back to you.

You can take feedback, sir.

Yes, Suresh.

[Operator Instructions] The next question comes from the line of Ronak Shah from Equirus Securities.

My first question is on the point you highlighted about the Events business that there are a few cancellations. So is there a possibility to roll over those business into the quarter or the event got canceled is a permanent kind of thing? So I'm just asking from a one-off or a bump into the Events revenue from the subsequent quarters?

So Ronak, what happens is you're right, a couple of times, a few events get canceled because they are strategic to that quarter. But for us, a couple of events have moved to the quarter 2. There were a couple of international artist concerts we wanted to do, which are happening in quarter 2. But largely, sometimes it does happen that the events are planned for that month, and if that gets canceled, then you lose the event. Having said that, the Events business has always been H2 heavy. Q1 and Q2 are always subdued. Other than -- like media is like 45%, 55% H1, H2. Events is almost 35%, 65%, if not more. So that's the way it looks like. So we remain very, very positive on our Events business, and we believe our quarter 2 onwards, the business will remain in good shape only.

Understood. Secondly, from the Gaana perspective, so we have increased our subscription pack. So now what percentage of our subscribers are on that pack? And have we seen some dip just because of the increase into the subscription price?

Yes. So overall, it remains healthy. As I said, we have always been very prudent about looking at profitable subscribers and not just gun for subscriber growth. The overall thing for us has always been to look at profitable growth. Our -- the way we look at the profitable margins in the subscribers, it's about 70% now for us. So there were a little low-end subscribers, which we keep churning out and keep a balance of subscriber numbers and profitability.

Okay. And directionally, though not a specific number, how you are likely to see FY '27 shaping up, both in terms of your Radio plus non-FCT business? And from the profitability front, how the trajectory will look like?

So we believe this year, the traditional mediums of Radio, TV, Print will remain subdued, the pure radio advertising. Events business will grow, exponentially has been growing across the board, and we continue to be bullish about it. To compensate and to work on our radio muted growth or traditional media growth, we have taken certain very, very strong corrective actions on our operational cost models. You have seen some results in quarter 1. It will flow into all quarters over a period of time. This is just -- we have just over -- last 1 quarter and a little more, we have started taking those actions, which will flow into the entire year also. So the whole idea is to look at the broadcast model starting afresh and see how we can look at -- operating costs are really, really efficient about it.

Okay. So can you elaborate on that part? Because one of your peers also highlighted they have restructured the operating cost model and the numbers are quite visible in their profitability. So which are the line of items which we are looking in terms of the cost saving? And what can be the quantum of the savings which we can expect?

So I will not be able to put you the number to it right now, but to give a perspective, yes, there are networking of stations, usage of new tech of AI, usage of new broadcasting tools helps us minimize the cost of broadcasting really, really drastically. So that helps a lot, which impacts line items across the cost base. Radio has always been a fixed cost model. So earlier it was difficult. But with new tech available and networking, it helps us to look at line items across cost structures to make it more efficient. And you would have seen even quarter 1 for us, even with the subdued revenue, the profitability has improved over the last year. And as I said, it's just a quarter. We believe over a full year, it will be much better.

Understood. Understood. And on the profitability front, any directional thing, which you can highlight compared to FY '26 or based on the current run rate?

Generally, Ronak, we don't provide any guidance on this. I will leave that to you right now for that.

[Operator Instructions] The next question comes from the line of Tanishi, an individual investor.

I have few questions I would like to ask. Can you share only Gaana revenue and profitability for this quarter and Y-o-Y growth?

Gaana revenues have been, just give 1 sec, INR 21.4 crores against last year of INR 17.5 crores with a growth of almost 19%.

Okay. And what was the FCT and non-FCT split for this quarter?

Percentage would be -- as I said, we are now -- Digital is about 30%. So it's almost equal for us in terms of 45% Radio, 30% Digital and balance is non-FCT.

Okay. Can you share the details on the inventory utilization?

So inventory utilization has gone down by about 8%, but the price has improved by almost 5%.

Okay. And what was the volume growth that you have achieved in this quarter?

I said the volume utilization has gone down by 8%, ma'am.