Tips Music Limited (TIPSMUSIC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Tips Music Limited Q1 FY '27 Earnings Conference Call hosted by MUFG. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Ayushi Gupta for opening remarks. Thank you, and over to you, ma'am.

Thank you. Good evening, ladies and gentlemen. I welcome you to the Q1 FY '27 Earnings Conference Call of 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; 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 details, kindly refer to the investor presentation and other filings that can be found on the company's website. Without further ado, I would like to hand over the call to the management for their opening remarks, and then we can open the floor for the Q&A. Thank you, and over to you, sir.

Good evening, everyone, and welcome to Tips Music Limited's Q1 FY '27 Earnings Call. Thank you for joining us today and for your continued trust in the company. Our catalog and new releases are doing very well. As a result, our growth as well as engagement has improved across all platforms. Your company has announced a separate Board meeting to consider buyback of shares on 5th August 2026. As stated earlier, we remain committed to distribute last year's PAT that is INR 217 crores this year in form of dividend and buyback. With that, I would now like to invite Girish to share his perspective on the quarter. Over to you, Girish.

Thank you, Kumar. Good evening, everyone. I'm pleased to share that we delivered a strong quarter with healthy contributions, both digital and non-digital segments. During Q1 FY '27, we released 73 songs, including 55 film songs and 18 non-film songs. Our key releases, [ Hirani Tha ] and [ Nevppasnga ] received an encouraging response from the audiences. The album [ Hirwanioha ] crossed 186 million views on YouTube, while its most popular track, [indiscernible] crossed 70 million views. Similarly, the music album, [ Mevppasnga ] achieved nearly 100 million YouTube views with female versions of [indiscernible] May witnessing strong traction on Spotify. A from the movie print secured a position among the top 10 songs on Spotify's daily charts, highlighting the enduring appeal of our music library and its catalog. Further strengthening our digital footprint, our cumulative YouTube subscriber base increased to 158.3 million reflecting sustained audience engagement and the growing reach of our content across platforms. I will now be handing over the call to Sushant to take you through the financial performance in detail. Thank you, everybody.

Thanks, Girish, and welcome, everyone, to the Q2 FY '27 earnings call. I'm pleased to present the key financial highlights for the quarter. Revenue for Q1 FY '27 stood at [ INR 106.51 ] crores, reflecting a 21% Y-o-Y growth. Content costs increased by 90% Y-o-Y, driven by our new releases. Please note that as per our conservative accounting policy, we have expensed the entire content cost of the new releases in this quarter, while the corresponding revenue started coming from mid-month of May only. Profit after tax amounted to INR [ 4.8 ] crores, reporting Q1 [ '26 ]. With this, I conclude my opening remarks and open the floor for Q&A.

[Operator Instructions] The first question is from the line of Akshay Kolekar from Dalal & Broacha.

So my question is on basically the content cost basically. So you are -- for last quarter, you are saying that INR 80 crores to INR 90 crores of content we have acquired for the whole year. But we see that on this quarter, like Q1, your total content cost is around INR 40 crores. So do we still expect this -- is there any increase in the content cost in going onward next quarters? Or do we still maintain the INR 80 crores, INR 90 crores of content cost?

The overall content for the year would be in that range of INR 90 crores to INR 100 crores, reflecting our continued commitment to building strong content library. We have a robust new release pipeline also for the year. That includes, let's say, music from [indiscernible], music from [indiscernible] and other, let's say, regional and non-film music releases also. And we are also pleased to report that the content released in Q1 has performed exceptionally well, reinforcing our confidence in the strength of this pipeline.

Okay. Got it. And then my second question is on [indiscernible] as we see that the paid music subscription has been continued growing in India. So could you -- do you expect that subscription revenue becomes the larger contribution than advertised revenue like what will be the mix over 5 years horizon? Like how much is for subscription and advertisement revenue? And could you give a percentage-wise like for this quarter, how much is for subscription-based revenue and advertisement [indiscernible]

Subscription-based revenue across platforms on an average is currently, let's say, 10% to 15%. But let's say, if you see globally, subscription is the main driver, more than 50% of the revenue comes from subscription India also, we see that percentage moving ahead over the next 3 to 5 years. And most of the platforms, be it Spotify, YouTube or other platforms, they are pushing more towards subscription. So going ahead, let's say, we see a healthy growth and the paid subscribers are also growing, let's say, in the range of 40% to 50% CAGR.

Okay. And my question is on EBITDA margin. Like if you check the historically also, we have maintained around 65% to 70% of EBITDA margin unlike normalized level for a full year basis. So due to a larger portion of content cost this year around 40% EBITDA margin. So this EBITDA margin do we expect any structurally lower margin in the next quarter or going around 65% to 70%.

EBITDA margins, you have to look on an annual basis. Quarterly, there could be aberration due to content releases. But on an average, let's say, on an annual basis, it would be in that range what you said 65% to 70%.

So annually basis, we have maintained the 65% to 70% margin.

The next question is from the line of Sagar Jethwani from Phillip Capital PMS.

One of the questions just got answered. I have a couple of questions. Can you comment on the pipeline of the film-based in Q2 specifically? That is my first question.

I can't comment, but let's say over this year, as I said in my earlier answers, there are releases from music movies from [indiscernible] and let's say, a healthy slate of both regional and [indiscernible], it would depend on how the movie scheduled, but this is, let's say, the tentative pipeline.

So how many film songs it would be? How many number of films are there for this year?

At least five of them, but see how, let's say, the movie get scheduled get released. But tent... And [ secondly ], global music labels INR 50 to INR 0 as per your presentation per stream, where the labels in India, they are earning INR 4 to INR 0.0 per stream. So what explains this gap? Do you see some kind of convergence happening there? [indiscernible], the subscription that is a gap. Globally, let's say, the subscription price is also higher and the subscription percentage is also higher, that is around 50% to 60%. And India, currently the subscription price is also lower and the overall percentage revenue is around 15%. So that's the gap.

Any other player taking the price hike apart from 45 they have taken last year?

End of the last calendar have taken the price hike. As of now, no one has taken it, but we think there could be something in the pipeline, but difficult to comment on.

The next question is from the line of Saket Mehrotra from Tusk Investments.

My question is more around what sort of guidance are we working on in terms of the revenue? And secondly, on the buyback, how are we placed? -- we are going to -- like have we just moved the agenda from today to the date in August?

We continue to maintain [indiscernible] the open market buyback, which becomes effective from 1st August. And therefore, let's say, the Board meeting for buyback was rescheduled to August...

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

Kumar, again, you have delivered very good numbers. Can you bifurcate content cost of how much cost we had...

See, we can't reveal that figure. That's the confidential. So sorry, we can't do that. We can't tell you that it's a competitive market, so we can't do that.

Understand. -- understand. Or can you tell how much content cost towards film song and non-film song in this quarter 1?

Mostly film music. Mostly it's a film music.

And how much cash we are having on 30th June? A lot of cash we are having. Sushant, can you tell us...

Ravi, it's around INR 345 crores as on 30th June. But the buyback, we will do [indiscernible]

See, we don't know how much that exchanges and SEBI is allowing. So let us see.

Okay. Sir, next release Balaji will come. If you want to go the buying back next date, why you announce in today meeting because the momentum of share prices have vanished like anything...

The Board wanted to evaluate the open market buyback and that is effective 1st August. So the Board decided let's do it on 5 August and evaluate both the options, open market or tender offer and then accordingly -- and we have communicated clearly that this has been deferred by a few days. The buyback option will be taken at the Board meeting of August.

So I think we will make some money on this film...

The next question is from the line of Kavish Parekh from 360 ONE Capital.

Sir, just wondering on the growth. While we witnessed steady top line growth for this quarter, about 21% Y-o-Y, but this was also a quarter with 2 movie releases. If I look at FY '26, despite no major movie releases, the top line growth was 20% plus. What explains the slightly soft growth this time, 2% Q-o-Q despite having new releases, 2 releases, both the movies we had this quarter? I know we do not break down revenue details, but would it be great to get some color directionally, -- did you see some weakness on the -- relative weakness on the digital side, non-digital? Last quarter was pretty strong at 32% Y-o-Y. So any color, any explanation here would be great.

This song, let's say, got released, let's say, during the mid-month of May and during the June month only. So the full revenue impact is not there this quarter. And you will start seeing the full impact from Q2 onwards. I won't be able to comment on the digital, non-digital piece separately. But let's say, if you see the presentation, the digital segment has contributed around 75%. So that's healthy for us. And as the year, let's say, quarter pass on, we will see that number growing both digital and non-digital.

The next question is from the line of Yashowardhan Agarwal from IIFL Capital Asset Management Limited.

To the subscription basis, right? So what would be the realistic numbers that you think could be in the future to your thoughts on that industry, I can only say that the growth is in single digit for this year. But let's say for us, we are seeing a strong traction, and we continue to maintain our guidance of -- so that must be something which is not growing in the overall pie, right, that the industry is growing at single digit. So since the [indiscernible] let's say, in terms of it all depends on the content, let's say the content is doing well. Our catalog is doing well. So you see a higher growth rate for us. On the industry front, it comment...

Mentioned that Spotify is targeting around INR 15 crores potential users in India, right? So assuming INR 1,000 per customer spend that could translate to INR 15,000 crores, of course, not in a few years. But let's say in the medium term, 7 years down the line even 50% [indiscernible] around INR 7,000 to INR 8,000 crores revenue for the overall music label. Would that be the right way to look at it?

Absolutely. Yes.

So my question is that Spotify had revised the subscription prices in mid-May negatively. So do we expect any impact of that in our revenue going...

Yes, not a material impact...

That won't have a material impact -- and sir, what would be the YouTube supposed to happen in June or July this year...

[indiscernible] are still going on. And probably we'll update you next -- let's say, by end of Q2.

Okay, sir. Sir, my last question is that you mentioned that we are still holding on to our guidance of 20% revenue growth and 20% PAT growth with content acquisition cost to be in the range of INR 85 crores to INR 90 crores...

The next question is from the line of [ Chirag ] from Keynote Capital.

My first question is that I am able to see that there is an additional 4,000 music library added, which used to around 34,000 to 38,000. Is there a one-off or a separate buyout that we have taken in this particular quarter, which has included our content cost?

So Chirag, it is -- let's say, last year, we had acquired [ Gujarati ] catalog. So let's say, by end of Q4, we had digitalized everything and that gets added to the library. So that had around INR 400...

Got it. Second thing, I wanted to understand related to if there is any kind of an exclusive we have with some artists for the nonfilm song specifically. Does this industry functions in this way or no one can have a particular exclusivity in this particular industry?