Music Broadcast Limited (RADIOCITY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '27 Music Broadcast Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abraham Thomas, CEO. Thank you, and over to you, sir.

Good afternoon, everyone, and welcome to the Q1 FY '27 Earnings Conference Call of Music Broadcast Limited. Joining me today is Mr. Rajiv Shah, our Chief Financial Officer. The first quarter of FY '27 marked a positive start to the year with the company delivering sequential revenue growth and a significant improvement in profitability. During the quarter, we witnessed improving momentum across our businesses, supported by stronger advertiser engagement, deeper client relationships and continued traction in our integrated offerings. Our core radio business increased from INR 35.5 crores increased to (sic) [ from ] INR 35.5 crores from INR 34 crores in the previous quarter, while creative business rebounded strongly to INR 9.8 crores, reflecting the effectiveness of our diversified revenue strategy and solution-led approach. Sequential growth of 11% to INR 44.5 crores was driven by higher advertiser participation and an improved business mix. In addition, our share of top 25 radio spenders increased to 21.8% from 15.6% in quarter 4. Demonstrating our ability to deepen strategic partnerships and expand wallet share of key advertisers. Revenue growth remains our foremost priority. While Q2 is historically a weaker quarter and it has begun on a softer note. We remain focused on disciplined execution, prudent capital allocation and operational efficiencies to support sustained margin expansion and improved profitability. Financial performance of Q1 FY '27. Revenue for Q1 FY '27 stood at INR 44.5 crores compared to INR 49.3 crores in Q1 FY '26, representing a decline of 10% year-on-year. Sequentially, revenue increased by 9% over quarter 4 FY '26. The sequential recovery in revenues was supported by improved traction in our core radio business, growth in creative business and stronger engagement with strategic clients. The benefits of the company's structural cost optimization initiatives continue to be visible during the quarter with total operating expenses declining by 26% year-on-year to INR 35.6 crores. As a result, operating EBITDA improved significantly to INR 8.9 crores in Q1 FY '27 from INR 0.9 crores (sic) [ INR 0.94 crores ] in the corresponding quarter last year. EBITDA margins expanded to 20% (sic) [ 20.03% ] compared to 1.9% (sic) [ 1.91% ] in Q1 FY '26, reflecting the benefits of structural cost optimization, disciplined expense management and improved operating leverage. Operating profit before tax stood at INR 4.1 crores (sic) [ INR 4.12 crores ] compared to -- with an operating loss of INR 6.9 crores (sic) [ INR 6.91 crores ] in the corresponding quarter last year. Other income for the quarter stood at INR 8.2 crores, resulting in a reported profit before tax of INR 12.3 crores (sic) [ INR 12.32 crores ]. Profit after tax stood at INR 9.2 crores compared with a loss of INR 2.2 crores (sic) [ INR 2.18 crores ] in the corresponding period. PAT margin improved to 20.7%, reflecting the strength of the company's operating leverage and disciplined execution. With that, I would now request the moderator to open the floor for questions and answers.

[Operator Instructions] The first question is from the line of Divyansh Jaju from Trinetra Asset Managers.

So my first question was around any opportunity to improve our operating leverage without purely relying on the revenue, like particularly on which cost maximum potential is there to -- in the next 2, 3 years, it can reduce?

Sorry. So what I understand is you are asking, is any further cost savings possible? Am I understanding the question right?

Yes, yes.

So I think we have done most of the cost savings, and this should be an optimum level of cost per quarter that you are looking at.

Okay. And my second question was, are you witnessing any meaningful shift in the advertisement spend like the spending which was observed past from like any example, traditional FMC are now shifting towards more quick commerce or new fintech company, this type of trend has been observed in any type of industry?

The pure radio advertising is subdued. And the created business, which is the Radio Plus business is where we are seeing traction. So that mix of spend of the advertiser is slightly shifting. But overall, we believe that the combination of pure radio and Radio plus will help us get to our target.

Okay. And last question is, what percentage of our advertisement contracts are recurring in nature, like the retention has been improved over the last few years?

Typically, we -- every quarter, we get about 20% of new business. Which are new businesses are businesses who haven't advertised with us in the last 1 year, but 80% seems to be recurring advertisers.

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

I have a few questions I would like to ask.

Sure.

I see there is a significant reduction in the other expenses. What are the reasons?

So major expenses reduction has come from the savings from the studios, which we have shifted to hub and spoke model. So that is one helping us on the premises cost. Second, we have been very consistent on having the marketing expenses, more controlled on the marketing expenses. That are the 2 major savings in the other costs.

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

I wanted to know the MSC split for this quarter.

78:22.

Okay. And what was your market share this quarter?

25%.

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

Sir, my question is broader on the industry front, wherein earlier one of the industry participants has already highlighted whether if in case the government is not looking at the broader participation of this stuff on the radio, we are not seeing a major traction over there. So how our company is looking at those front. Secondly, what is the contribution of the digital revenue as a percentage of total? And third, in terms of the new client addition, how the profile looks like that how much new clients onboarded out of which how much has captured by the radio?

Okay. So what was your first question?

First question, can you be repeating the first question a little bit? We didn't get the gist of the question.

So from the radio industry as a whole earlier one of the industry participant has highlighted that in case government is not allowing news or any other stuff to broadcast on the radio -- they are not even saying much progress or the growth in overall radio as a whole. So, how we are seeing the industry growth prospect? The question #1. Second, within this how we are likely to position ourselves because we are seeing digital or the newer mediums are getting very good traction. So how we are positioning ourselves?

So okay. Yes, there is -- as an industry, we've been lobbying with the government for some relief in terms of allowing news and current affairs. But till that happened, we have engineered our business so that we are able to stay profitable. So we have used technology, like we mentioned earlier, to go into hub-and-spoke studios. We would like given up offices and move to co-working spaces and so on and so forth. So the cost rationalization is done. On the revenue front, we are clearly moving into solution selling. So we have a team that comes up with ideas for clients. And then therefore, we are able to sell the Radio plus piece better. And we are also doing a lot of on-ground activations and events and stuff to shore up the creative business. So a combination of this is how we see the business growing.

And the second question on the digital share, it is 4% of the revenue as of now. And the new -- and the new clients, we have 29% share of the new clients coming on to the radio business.

Understood. Secondly, from the overall radio participation, is there any new venture within which the company is looking to scout for in terms of the horizontal or vertical expansion?

Currently, nothing is on pipeline.

Okay. Understood. And in terms of the manpower reduction, so already we have reduced the manpower by around 20-odd percent. Is there any further chances for that or we are currently at optimal level?