Radiowalla Network Limited (RADIOWALLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to H1 FY '26 Earnings Conference Call of Radiowalla Network Limited hosted by AKMIL Strategic Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Vaishnavi Vaity from AKMIL Strategic Advisors. Thank you, and over to you, ma'am.

Good evening, and thank you. I'm Vaishnavi Vaity on behalf of AKMIL Strategic Advisors. I welcome you all to the H1 FY '26 Earnings Conference Call of Radiowalla Network Limited. Today, we are joined by Mr. Harvinderjit Singh Bhatia, Promoter, CEO, CFO, and Executive Director and Mr. Harpreet Singh, Dy CEO and COO, who will share insights on the company's performance, key operational highlights and strategic outlook. Without any further delay, I would now like to hand over the call to Mr. Harvinderjit Singh. Over to you, sir. Thank you.

Thank you, Vaishnavi. Good afternoon, everyone. My name is Harvinderjit Singh Bhatia. It is my pleasure to welcome you all to Radiowalla Network Limited Earning Call for the first half of FY '26. I'd like to extend my sincere gratitude to all our investors, analysts and stakeholders for joining us today and for your continued confidence in Radiowalla. The first half of FY '26 has been a period of steady progress and resilience for the company despite a challenging macro environment and temporary disruption in the advertising ecosystem due to GST-related changes. We have maintained consistent performance across our core verticals. During H1 FY '26, Radiowalla reported a total income of INR 10.39 crores, reflecting stability among industry headwinds. Advertising revenue grew by an impressive 20% year-on-year, highlighting the strong traction of our audio advertising and in-store engagement platforms. Our profitability also improved both year-on-year and sequentially, supported by operational discipline and cost optimization. Excluding notional ESOP costs, profit -- and this ESOP cost was not there in the previous year. So excluding that notional ESOP cost, profit after tax grew by over 50% year-on-year, reinforcing the underlying strength of our business model and execution capabilities. Strategically, we continue to expand our in-store audio network across new geographies, adding over nearly 2,000 new stores and 74 brands were onboarded during this period. Our Digital Signage and DOH verticals gained further momentum with over 800 screens now under content management and 15 digital holdings operational across key states of Gujarat, UP as well. We also made notable progress in international markets, expanding our presence into Africa, and advancing plans to establish a subsidiary in Dubai. As we look ahead, we remain optimistic about the growth potential across our Audio, Digital Signage and Advertising business. The increasing adoption of AI-driven content curation and programmatic advertising positions Radiowalla to capture new opportunities and brand engagement, both in India and overseas. Before we move into detailed financial and operational review and questions, I'd like to take a moment to thank our clients, partners, employees. Their continued trust, creativity and commitment enable us to keep innovating and delivering exceptional value to all our stakeholders. With this, I'll now open the floor for questions and look forward to addressing any queries you may have. Thank you. We have already uploaded the presentation on the exchange with our financial numbers. So we're open to any questions. I have my colleague, Harpreet Singh, who is the Deputy CEO and the Chief Operating Officer of Radiowalla on the call with me, and we'll be happy to address any questions from people on the call. Thank you.

[Operator Instructions] Sanket Gupta, an individual investor.

I have a bookkeeping question that there is a line item, other current asset, which is around INR 4 crores and in the cash flow, it has also increased by INR 2.4 crores. Can you give any details on what the other current assets are?

Sure. So, primarily, I'll just...

Sir, sorry to interrupt you. Your voice is breaking. Sir, can you hear us?

Yes, I can hear. Yes. Am I audible?

Yes, sir. Now you are audible.

Okay. Yes. So primarily, we have GST and income tax related credits which are there, which are part of the current assets as well. And the second question you had asked about was cash flow?

No, the same thing that INR 2.4 crores are the other current assets. It is shown in cash flows in this half year balance sheet.

Cash flow, yes, that is increase in the current assets in the cash flow. Yes. As I said, one is on the income tax credit what we have as well, which gets accumulated at our end. And other than that, we have some advances to our vendors, which are there. That is lying over there, which will get adjusted as well during the course of that period. These are the 2 major...

And one question regarding all these verticals in maybe 3 to 4, 5 years, say, in long term, which vertical you see highest potential in your company?

So there are -- I won't say one particular vertical because they're all interrelated because advertisement is dependent on our network. So we need to keep expanding our network and create opportunities for advertisement. Obviously, advertisement -- if you ask me specifically, yes, advertisement will be a larger play as we add up our digital screens as well as audio because then there are 2 verticals available for advertising revenue. And what we are seeing is that more and more brands are using our -- these 2 platforms for advertisement to reach the targeted shoppers. So that's very key for us going forward.

Okay. And do you think that the growth will back in H2 because the GST impact and all that, the H1 growth is not there. H2, it will recover or back to normal?

Definitely. I'll request Harpreet to add on. But we are very confident because in our business, typically, H2 is much higher than the H1 revenue being in Media business because it's all festive season starting from October, November, we see that more and more brands are spending. September, because GST regulations were changing, everyone put their spends on hold. So September, typically, Diwali would have expected much more revenue. But because of that, lots of brands held back their spends. I'll request Harpreet if you can -- want to add on something here.

This is Harpreet. So just adding on to what Harry is saying, we are expecting much stronger shows, especially in terms of advertising revenue in the second half, which is normally also the case. The second half is generally higher than the first half in terms of ad spend as the festive season typically falls in the second half, and there are a lot of ad spends, which happened during the second half. So we are already seeing traction in terms of the second half and it's back to normal to what we expected the second half to be. So to answer your question in simple terms, yes, second half is looking much better than the first half.

And sir, I was looking at an interview in YouTube channel, you mentioned about the restaurants potential and you are working on that direction. Is there any progress on that? And what is going on in this field of restaurant in Audio?

Okay. Harry, you want to answer that? Or should I take that?

No, no, go ahead. Go ahead.

Okay. So there are multiple things which we are doing to target restaurant category. We already are the largest service provider when it comes to restaurants, especially in case of audio solutions. We service some of the leading names in the restaurant category. However, the idea is to look at restaurants beyond the larger chains. So we are working closely with FHRAI and have been partnering with them to reach out to a larger number of restaurants. That is one. Two, we're working on a platform to automate the music curation for restaurants. That is likely to be launched in the second half itself. So that should help us reach out to smaller chains in a more efficient manner. So that is something which we will specifically target for restaurants, not only for restaurants, but for smaller chains as compared to the larger chains which require personalized attention.

Actually, we are working on that kind of platform to cater small players?

Yes, that's right.

Yes, that is important to...

[Operator Instructions] Next question is from the line of Parth Doshi, individual investor.

My question is all about your revenue segment. So which segment drive more profit in FY '26?

So as I mentioned in the answer before, as of now, the subscription revenue, which is coming from our in-store Radio Services, that's the largest revenue stream for us today. And as we increase the scale, there would be much larger proportion of advertisement revenue potential arising out of our network. So we see in the years to come, advertising revenue will grow faster than the other revenue streams. Corporate radio is another very interesting segment where we are using audio as a medium for training and learning for corporates. So that also is a very exciting revenue stream and a sector where we are pitching to large companies as well. And -- but that cycle is a bit slightly longer than a retail cycle because it is primarily a corporate kind of decision. So it has much longer time to take a decision. But that's again a very interesting and better margin business, as I can say.

Okay. Understood, sir. I have other question. Like you just mentioned that you are a strategist. So do you have any plan, like a strategic plan to improve your margins in the upcoming 3 to 4 years?

So margins will definitely improve because even today, if you see our cost segment, our major cost is primarily employee cost because that's where the business is all being driven by. We have a specialist music team, technology team, back-end ops. So we are -- now we are investing in further AI and tech tools to automate the processes at the back end, which means that we don't have to hire more people now as the business expands. That will automatically reduce our payroll as a percentage cost to revenue, will keep going down going forward. And as the revenue increases, the margins will improve automatically. So yes, the focus for us is definitely to continue with our revenue growth year-on-year as well as improve the margins.

So are there any specific numbers like in percentage you can mention like in next 3 to 4 years you are targeting?

See, we have to be at a net margin level, we should be north of 10% in the next 2 years or so. And automatically, when I talk of percentage, the revenue has to grow as well. So you have to keep that in mind. Even in this year, our margins have improved, but because of the accounting entry of ESOPs which we had to factor in, which was not there last year. So that took that created a hit on our P&L. But that's just an accounting timing issue because as and when the ESOPs get rested, that will be reversed in the P&L, and we will have income shown in that particular year. But this year, because of our ESOP plan, we had to take a hit on the -- almost INR 17 lakhs, INR 18 lakhs ESOP hit came in this first half.

And then, I have another question. Like the company is planning to establishing a subsidiary in Dubai. So what is the rationale behind this? Like what is the strategy for establishing in Dubai only?

So I'll take the opening statement and then Harpreet can add on to it from a business perspective. So we have been doing business with some clients in Middle East for some time. But what we have noticed is that this being a local company over there has many advantages as compared to working with the overseas companies. As you can imagine, even in India, our clients would want a rupee billing and not want a dollar billing because it increases the paperwork and coordination at their end as well. So because of that, we have requests from our clients about having a local company. And it also gives an opportunity to expand further when you have a local player. So Harpreet, you can add on.

Yes, yes. Also, what we believe is that we've reached a critical stage in Dubai, where having a local company can actually help us, one, target more clients; and two, upsell additional services to the existing set of clients that we already service. And that can happen only once you have a local presence, you have somebody visiting and meeting these clients and interacting with them on a regular basis. Also, what we have noticed is that Middle East or Dubai region is kind of the gateway for a lot of companies which have operations in Africa. So North of Africa, especially Egypt, et cetera. There are companies which are headquartered in Dubai, which have presence in Africa region as well. And we've seen some success in Africa in terms of getting more clients there. So it will be good to set up a base in Dubai to expand in that region. That's why particularly Dubai is what we're looking at.

Okay. Understood. So when we can see this launch?

Sorry?

So when we can see this launch, like a time line you foresee for this launch, the subsidiary in Dubai?

Yes. So currently, the paperwork is in progress. It should happen shortly.

Shortly. There is no specific time you can say like around 1 year, it will take?