Tips Music Limited (TIPSMUSIC.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '26 Earnings Conference Call of Tips Music Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Ayushi Gupta from MUFG Intime India Private Limited. Thank you, and over to you.

Thank you. Good evening, ladies and gentlemen. I welcome you to the Q2 and H1 FY '26 Earnings Conference Call for Tips Music Limited. To discuss this quarter's performance, we have from the management, Mr. Kumar Taurani, Chairman and Managing Director; Mr. Girish Taurani, Executive Director; Mr. Hari Nair, Chief Executive Officer; and Mr. Sushant Dalmia, Chief Financial Officer. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more detail, kindly refer to the investor presentation and other filings that can be found on the company's website. Over to you, sir.

Yes. Good evening, everyone, and welcome to the Q2 and H1 Financial Year 2026 Earnings Call of Tips Music Limited. Thank you all for taking the time to join us today. Before we begin, I would like to extend my warm wishes to everyone for a Joyous and prosperous Diwali in advance. Despite the challenging industry environment, the company's revenue grew by 15% in the first half year -- half year of financial year 2026. Over the longer term, we expect a strong business momentum supported by sustained paid subscriber growth, beginning of ad revenue sharing from short-form content platforms and robust expansion in the public performance segment. We will pursue a disciplined and selective content acquisition strategy, ensuring each investment meets our payback and return threshold. I am also pleased to share that the Board of Directors has cleared a second interim dividend INR 4 per share for the financial year 2026. With that, I would now like to hand over the call to our CEO, Mr. Hari Nair, who will provide more insights.

Thank you, sir. Good evening, everyone, and happy Diwali to all. This quarter has seen a revenue growth of 11%. We continue to see growth in content usage and monetization across platforms. We also expect a strong traction in second half of financial year 2026. I will request Girish to share insights on the content business across platforms. Thank you, everyone.

Thank you, Hari. Good evening, everyone. Talking about our content business, we released 133 songs in Q2 FY '26, including 76 film songs and 57 non-film songs. During the quarter, the song, Vibe Undi, from the film, Mirai, which is a Telegu film, crossed over 69 million views and is among the top 5 music videos on YouTube. Another release, Raaj Karega Maalik, from the film Maalik crossed 25 million views on YouTube. Additionally, our YouTube subscriber base has continued to grow impressively and now stands at 134 million collectively. Our catalog performance on Meta is very heartening. The songs Tere Aane Se from the movie Run, did 1.5 billion views, while songs Saajan Saajan from the film Dil Ka Rishta and song Kahin Aag Lage Lag Jaaye from the movie Taal did 150 million -- sorry, 850 million and 700 million views, respectively. I will now hand over the call to Sushant who will present the financial highlights to everyone. Thank you all. Wish you a very happy Diwali.

Thank you, Girish, and welcome, everyone, to the Q2 and H1 FY '26 earnings call. Let me take you through the financial highlights of the quarter gone by. Our revenue for Q2 FY '26 was INR 89.22 crores, reflecting a year-on-year growth of 11%. Operating EBITDA for the quarter stood at INR 67.9 crores that is year-on-year growth of 14%. Operating EBITDA margin throughout the quarter was 76%, and our PAT for Q2 reached around INR 53 crores, representing a growth of 11%. Now looking at the highlights of first half FY '26. Our revenue was INR 177.3 crores, which represents a growth of 15% and our PAT for the first half was INR 9.4 crores, showing a growth of 8%. With that, I conclude my opening remarks. I did like to wish you all a very happy Diwali in advance. I'll now open the call. Thank you.

[Operator Instructions] The first question is from the line of Kavish Parekh from B&K Securities.

Good evening, team. Thanks for the opportunity and wishing everyone a very happy Diwali in advance. Team, my first question pertains your growth plan. So earlier, you aspire to deliver 30% top line growth. However, that was brought down to around 20%. I assume largely due to one-offs from Wynk in the first half of FY '25 plus consolidation in the industry. Where do things stand now? What is your growth guidance? And what levers will drive the same? And how does the risk calendar look like for the second half of the year?

We are sticking to that 20% growth, what we have projected and told all of you. So we are sticking to that, we will grow by 20%, 20% top line, 20% bottom line. And we have signed many non-film artists, and we are releasing many songs. You will see -- every 15 to 20 days, you will see a song coming from Tips. So that we have planned. Also, we have 2, 3 films, but for films we don't know whether it's depending upon the release of the films. Any film is releasing before March. So music will come this year. Otherwise, it will -- maybe go into next year. So films, we are not sure about anything but for non-film music, we have a proper lineup for our songs.

Could you name these films?

Films, we have one, No Entry. But I think that will come next year. And we have signed one film directed by Imtiaz Ali, Music by A.R. Rahman and Diljit Dosanjh and many other actors are there in the films, so we have signed that. And then there is one -- another there is a Tips film, we are making Hai Jawani Toh Ishq Hona Hai, Varun Dhawan is acting in it, and David Dhawan is the director of the film. Also, there is another film, Vikas Bahl is directing and actress is Wamiqa Gabbi, that film is also there. So we have 4, 5 film plus. we have a few films in regional language, Telegu. So we have quite a few films.

Understood. Sir, with respect to the industry dynamics, post consolidation on the OTT side, how do the yields look like? So are they still at -- are they still stable at around 10 paisa for free OTT users and 20 paisa, 25 paisa for paid OTT or have you seen some pressure there?

There is overall pressure because of -- we've seen in last 1, 1.5 years, many people have shut down their businesses or they have gone behind the paid 100%. That pressure is there. We all need that and that pressure is not only on us, it's on all the players, music players. But I feel this is a temporary phase. Subscription is growing, so I feel the subscription will take over -- it will give us a big boost. We will make more money in coming months. So I feel it is a temporary phase, maybe 1 -- 6 months to another 1 year, it will take, so let's see.

Understood. And last question from my side. So where do things stand with -- where do discussion stand with respect with short format content platforms with respect to sharing of ad revenues? Today, what kind of revenue contribution does it account for? And with pickup in ad revenues going in, where do you expect this number to reach, short-format content.

I think short format is still, they are not sharing the -- revenue sharing is not there. It's lump-sum kind of a deal. But what we see, we see a quite a bigger jump in the revenues of that because our content is really doing very well on that short ad. But if you see overall catalog of Tips. Tips catalog is doing really well. So last 4, 5 years, whatever growth we are seeing, it is because of that also. And even this year, our catalog is doing really well. But because of this -- actually even these ads, whatever like Spotify or JioSaavn, they are not allowing free stream. Basically, they are pushing for a promotion or if you are a subscriber and you don't want to subscribe, you want to just listen music free, so they will push you first for the ads and also, they will trouble you. They will not allow you to listen your favorite songs again and again, they are pushing all of the people to go for a paid wall. So that's really hurting business. But actually, long term, maybe we will have a difficulty for a few quarters. But long term, it is beneficial for the business. If people start paying, in the 2006, '07, there was a service called CRBT that time, the telecom companies was making money from subscription and downloading of content, that's only 30-second content. And that also you're keeping on your phone for others to hear. And those mobile companies used to make INR 8,000 crores. So we have many people who can subscribe, who can pay monies. So it's a temporary trouble we have. But we -- I think in the entire industry, all music labels, we feel we will overcome soon. Next -- it will take 3 quarters or 7 quarters, but will come through from this.

Sir, if I can squeeze in one more question, one last question. On the content acquisition side, content cost as a percent of top line was slightly on the higher side in the first quarter. I think into the release of Maalik, this quarter, again down to 15%. So what is the plan for the second half in FY '27.

So overall, we feel this year we will achieve 25% -- 23% or 25%, we will invest in content.

The next question is from the line of Ravi Naredi from Naredi Investments.

Thank you very much to give me opportunity. Sir, our net profit margin for 6 months are low by 350 basis points. This is worrisome?

Raviji, it's primarily on account of content only. So nothing to worry about the margins.

And second, we do not get in 30% growth as we promised last year also. So this time, we presume lower side?

For this year, we have said we will grow by 20%, instead of 30%. There's a lot of changes happened recently, as I earlier mentioned, many, many OTT has close down, shut down their business and many has gone behind the paid walls. There was a app called [ WESO ], they shut down 1.5 years back, and they in the last year, when they were live they paid us $2 million. So we expected we thought next year, they will give us at least $3 million. But because of this India-China issues, they shut down the business and gone back to China. But I feel this TikTok, if the U.S.A. settles, India will -- again, they will come back and they will again enter into this business, and we expect big monies again will be given to us.

Sir, film industry, this song industry, are you getting new song is costlier than last year or anything is going like this?

I think it is stable now because there has not been many successes in the industry. So there is the -- buyers are there, but it's stable. And we are, as mentioned earlier, many times, we are not into that rat race or a competition or a bidding process where we don't enter into that. I can tell you 1 film recently, there is a producer, he called me, [Foreign Language] INR 17 crores I'm getting, what should I do? I said, immediately run and give it to that. [Foreign Language] So we also do that.

And any website we are having where our Tips industry, total songs are available?

[Foreign Language]

But not official website from Tips industries, right?

[Foreign Language] Yes, it's there.

The next question is from the line of CA Garvit from Nvest Advisory LLP.

My first question is on the consumer preferences. The average cycle for which song is typically in trend, it seems like itself is getting reduced. I agree that at the same time, biggest hit now has longer on traditional charge. But the point is formality is also a fact. So I just want to understand what exactly are we doing to identify the trends, number one. Which are extremely dynamic and changing in the modern world. And what exactly are we doing to give the short-term goal sir? So that's my first question.

Let me answer that. So on the trending part, right, so our teams daily monitor on the particular platform like Instagram or YouTube. And also, we get daily reports, so where we also have analytics teams sitting in here who try to get what song is picking up on Instagram or TikTok. So we do that on a daily basis, morning, we have set up alerts for ourselves and basis that, we start working and pushing the sound more. So that's the reason you see a lot of catalog songs, getting picked up on Instagram, I think 2, 3 examples like Saajan Saajan and Kahin Aag Lage Lag Jaaye, even Madhuri was dancing on to that. So -- it is a great song. So I mean, it picks up any time. There is no specific, what do you say, time line to it. It is just a trend that the platform shows and we latch on to that trend. Did I answer your question?

Yes. That makes sense. And sir, you mentioned like our songs are getting good traction, right? But at the same time, we are saying like platform, specifically these short-format content, they are not ready to share on a variable basis. So can you let us know like what is the reason, if our product is good, right? And why they are not paying us on a variable basis because ultimately, the negotiation power should be with us, right?

Yes. I think you're very right on that. But overall, if you see the short format video apps, they're all new to the market. though they have been there, they are still yet to establish themselves. And all these deals, right, they come -- basically are done by the global majors first with the platforms, and it's all on a lump-sum basis right now, the revenue share model will already -- will also be kicked in once the platforms and the labels, both agrees on sharing that. And some of the guys have already done that, but it's just that the revenues on the ad side is not so great and the [indiscernible].

Yes, I think last part I missed that, maybe because of poor voice, I think maybe, network.

So I was just saying that the deals are right now all fixed deals not based on advertisement, and it will change over a period of time, like how it did with YouTube, right? Initially, YouTube was fixed deals, then it moved on to ad revenues or fixed fee, whichever is higher. So it will move. So I think the short format video apps also will move in that direction. It will take some time for that.

Understood. And sir, in PPT, we mentioned like our YouTube views are going down. And the reason we are giving is the YouTube Shorts. So what is our exact plans or strategy to monetize our IP on the YouTube Shorts because if that is going to be the case, maybe like the target we are setting, 20% growth, I think it will be difficult to achieve, right?

So YouTube Shorts again, is a fixed fee deal, but the larger YouTube is an ad sharing deal, and it is stable and it is growing. So what we see in the first week of October, it has just picked up. So I'm very positive about the growth from YouTube also.

And it is not having any revenue impact or a profit impact. It's a lump sum deal.

Understood. Sir, like in order to grow 20% on a full year basis, second half, we have to grow significantly well. So what is giving you that confidence like we will be able to do? Because last con call also our target was like minimum, we will be growing by 20% and we target of 30% was still intact. But now we are speaking about like 20% target only. So like what has changed over this period of time? And what is giving you the confidence that we will be able to grow on a full year basis by 20% because first half may -- the growth is not that good, specifically on the bottom line side?

We are working very hard on our content, whatever content we are making, we have confidence in, we will make such a good content that will give us good numbers and good revenue.

Okay. And lastly, what is our content growth going to be for second half in absolute term?

As I told you, we are not sure if there is any film to be released in the music side. But we are sure we have made some non-film music. We have signed many, many individual artists. We have 2 songs, 4 songs, 3 songs deals. And by March, I feel around 15, 20 some of all the big artists, good songs will be released. So that can really give us a bigger review. I think I mentioned in my earlier calls, we are now focusing on the quality rather than the quantity. So that is -- we are working on that.

Thank you very much, and wishing you happy Diwali.

Thank you.

The next question is from the line of Deepak Ajmera from IGE India.

So we have done an acquisition of Studio Radha culture music legacy of Gujarati and Kutchi songs. So what is the rationale behind our acquisitions? And what are our expectancy as we are trying to move into new, new geographies?

We have acquired -- we've got that 4,000 strong, Gujarati songs and that is at a very reasonable price. Currently, we are digitalizing that asset, and it will take around 6 to 12 months to post it on various platforms. Going ahead in terms of strategy, we are looking at inorganic growth and wherever we see value, we'll do -- go and acquire it.

And also to add in, if you see the devotional content also has a lot of monetization, a longer monetization and a better monetization than the normal one. So it is very sticky, and it just keeps on giving revenues on YouTube or Spotify, any platform you take.

Okay. And my next question is on do we have any new collaborations with any artist or exclusivity with any artist upcoming maybe?

Yes. We have many, many songs coming up with many artists. Top ones -- very soon, you must have seen that Aparshakti Khurana, we have released a song, than our next releases of Aditya Rikhari, again, big artist, then there's Lucky Ali, then there is Paradox. So we have many songs, it's coming.

And last one is what is our growth in the subscriber base via comparison to other competitors? If you can compare it to industry growth wise?

Industry growth-wise, see, we will not be able to tell you exact numbers because we may not know the numbers of competition. We just spoke about the YouTube subscriber base. I think that's growing healthy for us.

[Operator Instructions] The next question is from the line of Saket Mehrotra from Tusk Investments.

I was going through your deck, you've mentioned about royalties coming in from AI where WMG and UMG are -- there's some agreement in the works. Is there -- like can you tell us something more about this? What exactly is happening here? And is this something that you guys are excited about?

I think that's a very positive news if UMG and Warner, both are getting into an agreement with the AI companies, it's a very positive sign. In India, we are also having similar conversations with the AI companies. There is already -- yes. Not Suno AI, we are doing with OpenAI. I think we have some case also going on. So I think it's overall positive if the global majors end up with a deal with Suno AI. I think it will have a positive impact on us also in India.

Saket, it will take a little time, but that's the opportunity what we have mentioned. [Foreign Language]

And sir, like circling back on growth, in case we want to achieve that 20% growth number, H2, we have to grow by 27%, 28% over last year. So is that something that we are confident on? And if yes, what will drive that for us? Is it like new launches? Yes, are we expecting some sort of pricing flow through, what exactly gives us that confidence and how confident are we doing this full year number?

[Foreign Language] number one. Number two, I think even YouTube will perform better in [Foreign Language].

[Foreign Language] Where does that stand? Like is it up for renewal this year? Or is it up for renewal next year?

[Foreign Language]

The next question is from the line of Akshay Kolekar from Dalal & Broacha.

Two questions from my side. So first is about the dividend amount declared as, we see last 2 years, the dividend amount has declared exceed the company's expenditure on content acquisition. Does this reflect the lack of growth or investment opportunity in the market, like management's priority in distribution of dividend rather than investing in a new content cost. Could you please elaborate on this?

We have a lot of spare money. It's not -- we're not buying content and giving dividend. After giving such a huge dividend, we have a lot of money lying still. We are not getting content at the right price. [Foreign Language] We have a lot of cash. But we are very, very selective, and [Foreign Language] We are very focused on the quality, quality, quality. So the dividend has nothing to do with this. [Foreign Language] They can plan that money better and they can make more money from that also. That's the idea.

My last question is on like classification based on that. When we calculate the content, we include the advertisement cost, so my concern is the advertisement cost is generally expensed out, that impact the top line immediately, like without building future economic benefit. So the same way as we acquired the content, so can you please explain on this scenario?

Akshay, we write off promotion costs as well as content cost, same quarter. So we don't have any of that burden, [Foreign Language] So as and when it gets written off immediately.

The next question is from the line of Bhargav from AMBIT Asset Management.

Sir, my first question is that we have seen Spotify increase their subscription prices for the first time. So do you see this a yearly phenomenon and obviously you're [Foreign Language]?

[Foreign Language] As far as our revenue is concerned, it's a percentage. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] We are controlling free consumption of music. [Foreign Language] they are controlling and we can't [Foreign Language] they are trying to improve their margins and we are trying to improve our margin. [Foreign Language]

[Foreign Language]

[Operator Instructions]

So this is the last question. I have no further questions. Can I go ahead, just the last question?

Yes, yes. Okay, go ahead, go ahead.

Sure.

Sir, is it possible to share what is our revenue from Spotify or we will not be able to do that?

No, Bhargav, we can't do that because see, it's a competitive world [Foreign Language] Please bear with us.

No problem, sir, and have a happy Diwali to your team as well.

Thank you.

Next question is from the line of Vaibhav Muley from YES Securities.

Congratulations on strong set of numbers. My first question was on our balance sheet. There has been a significant reduction in current and noncurrent other liability. Is this pertaining to the advance received from Warner?

It is pertaining, let's say, to advance received from Warner SMP and other customers. And as we said earlier, let's say, for the second year, we have received the first tranche from Warner. And the second tranche is due in October end, so we will receive that also.

And in terms of number of teams for apps operated by Warner, how has been the overall revenue collection over there? So are we surpassing the overall advance that we are receiving? And when do we expect the overflows to start flowing in?

[Foreign Language]

[Foreign Language]

[Foreign Language]

And just on the guidance, 20% revenue growth guidance, we are still maintaining. So other calculation [Foreign Language], what we understand is around 25% on an average revenue growth is what we will require for Q3 and Q4, just to achieve 20% revenue growth. So are we confident to see a sharp pickup in Q3 and Q4? And what would be driving this immediate pickup in the numbers?

[Foreign Language]

Okay. And regarding this live performance and public performance rights, in the presentation, you have said, industry is growing at 40% to 50% CAGR. So, is it fair to assume that Tips should be benefiting at the similar growth rate for these 2 segments?

We are not in event business, but we -- whatever our music consumption happening in the -- those events we are making money and we are very good money from there. But we have a lump-sum deal with the party who takes our license. So -- but we are having a very good deals with them. We have a sufficient growth every year-on-year basis.

Okay. And regarding this YouTube Shorts, sir, when -- is it current fixed deal going to expire? And do we expect the renegotiations to happen towards revenue-sharing model?

[Foreign Language] We should have a sharing basis.

The next question is from the line of Naitik from NV Alpha Fund.

My first question is, last year, in the second quarter, we had some one-offs income from Wynk. So if I excludes that, we have grown at approximately, say, 20% give or take, so is that understanding correct?

Yes. Yes.

And sir, the second question is, if you could just let us know in our current revenue, what percentage of our revenue will be from paid subscribers and what would be from advertisement?

Can you repeat your question?

What percentage of our revenue in this quarter would be from paid subscription?

Overall, let's say, on an average, let's say, I can give you on an industry basis, let's say, around 10%, would be paid subscription.

And just one clarification. You mentioned the current YouTube Shorts deal is going to expire in April next year, right?

June next year.

The next question is from the line of Akshay Jogani from Xponent Tribe.

[Foreign Language] our revenue from digital was 75% of INR 81 crores. And this year, it is 71% of INR 89 crores, right? [Foreign Language] our growth does not come, right, it is a function of what else is happening in the market in terms of other people's pipeline, ad spend, everything, right? So it would be helpful if you could give us your thought process/mathematics behind arriving at a 30% number or a 20% number or a 15% number. Yes, these are the 2 questions.

Akshay, on the first question, the digital, let's say, last year in the September quarter, there was a one-off revenue of Wynk of around INR 7 crores. So you need to factor in that to adjust your growth rate. And let's say, what we said that there was -- what we have seen a slower growth on the YouTube, so that would be the second reason.

[Foreign Language]

The next question is from the line of [ Shrenik Mehta ] from [indiscernible] Wealth.

So my question here is more about long term. How do you see this company evolving over the next 3 years? Would you have similar drivers in the business? Would you have some more new lines of business or new channels that you would see in the next 3 years?

I think 3 years is a good time. But all of us -- if I say 3 to 5 years, then it will be better. We have a lot of plans. One major focus is absolutely on the creation of music, music and music. So we are not going to do -- we are not entering into event business or all those kind of businesses, but there is a business, artist management. So maybe we are looking at tying up with some company and maybe that company, we are partnering with them, they handle artist management. And the artist they signed, we will do music part of that -- those artists. So we have those plans. It's not a major investment or anything like that. But we should have -- if we have our own artist, so we can really plan business more organized and more better way. We can get 10, 12 songs, 15 songs a year. So we have those plans. But absolutely focus only on music, music and music plus good quality music. That is our focus.

So you see this INR 800 crore business, INR 1,000 crore business, what will be the digital part of it, how do you see this company in next 3 to 5 years? What kind of domination will it have?

I feel the industry can grow, industry can become in the next 5 years, around INR 10,000 crore to INR 12,000 crores industry can happen and should do because of this 3 major things are there. One is that subscription. Second is this small content, short content, Instagram Reels, TikTok. TikTok will come back and this YouTube Shorts, they will do some profit sharing, some revenue sharing with us, they will also start a model where advertisers can advertise. So I think industry can be INR 15,000 crores also. So if we have around 7%, 8% share, so you can estimate what can be our business, we can achieve easily INR 7,000 crores, INR 8,000 crores, not a big deal. Third thing, I mentioned 3, but I forgot to mention that public performance, is now this business is around INR 350 crores. It can easily become INR 2,000 crores business.

Thank you. Ladies and gentlemen, due to time constraints, this will be the last question for today. I now hand the conference over to Ms. Ayushi Gupta for closing comments. Thank you, and over to you.

Thank you. I would like to thank the management for taking the time out for this conference call today and also thanks to all the participants. If you have any queries, please feel contact -- to contact us, we are MUFG Intime Private Limited, Investor Relations Adviser for Tips Music Limited. Thank you so much.

On behalf of Tips Music Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.