Tips Music Limited (TIPSMUSIC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Tips Music Limited Q2 FY '27 Earnings Conference Call hosted by [indiscernible]. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Bhiwani [indiscernible] from [indiscernible]

Thank you. Good evening, ladies and gentlemen. I welcome you to the Q2 and FY'27 Earnings Conference Call for Tips Musics Limited. To discuss this quarter's performance, we have on 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 detail, finally refer to the investor presentation and other filings that can be found on the company's website.

Good evening, everyone, and welcome to Q2 and H1 FY '21 earnings for Tips Music Limited, Wishing all of you a very happy Navratri and are very happy Diwali in advance. We have successfully completed the buyback of shares amounting to INR 44.4 crores through open market back. During this quarter, the Board has declared an intererm dividend of India INR 6.5 per share. With that, I would now like to hand over the call to Girish for his comments. Over to you, Girish

Thank you, Kumar. Good evening, everyone. During the quarter, we continued to see strong engagement across our new releases as well as our catalog content, supported by both our digital and nondigital segments. During the quarter, we released 73 songs, comprising of 40 film songs and 33 non-film songs. Our new releases in general have received a strong response from the business. In particular, our Panjabi film music album [indiscernible] , has crossed 100 million used on 2. Our recredit song [indiscernible] from our [Cato] release during the quarter and has crossed 66 million views on . We continue to witness sustained traction in our new releases with [indiscernible] , let's go release in Q1 FY '27, which has now cost 100 million views on youtube. And the female version of Tata Pass name from Duke album Maas and continue to perform strongly on Spotify and all music streaming platforms. Our catalog track tera naam group from the movie entertainment gained significant traction on Instagram and crossed 1 billion views on Instagram. Our YouTube subscriber base is now at 164.5 million, and doing -- and total views across our portal library has surpassed 54.3 billion. Demonstrating the growing mobility and we at content above platforms. With that, I would now like to hand over the call to Sushant to discuss the financial performance in greater detail. Wish you all a very happy Navratri and happy Diwali in advance.

Thank you, Girish, and welcome, everyone, to the Q2 and H1 FY '21 earnings call. I'm pleased to present the key financial highlights of the quarter gone by. Revenue for Q2 FY '21 stood at INR 120 crores as compared to INR 89.2 crores in Q2 FY '26, representing a year-on-year growth of 35%. Content cost for the quarter stood at INR 26.18 crores, which almost doubled as compared to last year. Operating EBITDA was INR 84.64 crores, reflecting a Y-o-Y growth with an EBITDA margin of 17.5%. Profit after tax stood at INR 65.5 crores, representing a growth of 23% over the previous year quarter, while PAT margin for the quarter was 54%. For the first half FY 2017, revenues came at INR 227 crores, reflecting a growth of 28% over the corresponding period last year. Please note, during the 6 months, the content cost was at INR 71 crores which is planned to load and we expect the content cost for the full year to be in the range of INR 90 crores to INR 100 crores only. Profit after tax for the per stood at INR 109 crores, representing a Y-o-Y growth that, I conclude my opening remarks and open the floor for questions. Thank you.

We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Karish Parik from 361 Capital.

Congratulations on a very strong set of numbers. Sir, first question pertains to the growth. We have seen periods of strong growth in the past as well. Could you explain what drove growth this quarter, 35% Y-o-Y, any breakup in terms of contribution from digital versus nondigital revenue. How sustainable do you think this momentum is? And a follow-up question. The growth is on our platform deals, could you update us on negotiations with YouTube for shorts monetization and [instigates] -- has the Warner partnership sort of strengthened our negotiation position, particularly on the pricing front, which aided growth this quarter?

Kavish, Sushant here. On the question of YouTube short, the deal is still under negotiation. It's not been concluded. We'll update once the deal is done. -- on the 1 of the partnership continues as per our expectation. In terms of growth for this quarter, it was driven by both new releases and our catalog. -- and, let's say, digital and non-digital platforms contributed. Digital contribution for the first half was 73% as we have mentioned in the presentation.

Understood. Understood. Second, content spend, you alluded in your opening remarks that you maintain your full year guidance of about INR 90 crores first half west the that imply second half will, again, not really see any meaningful indecent releases and growth in 2H will you have to depend on catalog. Is that a fair understanding?

Primarily, let's say, the new releases was more trans-loaded. So it would continue to say, support the growth in the H2. And on the content piece, the H2 would be lighter. And any names that you can share of the movies which are planned to be put out into? It would be, let's say, smaller slim than on-times, not bigger news.

Understood. And lastly, what explains the sharp pickup in advertising spend this quarter despite no major release in 2Q?

so it was primarily driven by new releases, we had a very, let's say, a front-loaded new release in first half. So let's say the promotion cost was timely driven by the new releases. And let's say you have to see promotion as part of my content cost.

I agree with that, but I think 2 of the largest movies for which we ended up paying a huge sum for the content per se given 1Q [indiscernible] was 1 of them. So the costs -- the advertising spend that we see in 2Q also pertain to those moving the ones that released in June? Or is this some other content?

It would be towards that also because they the middle of the -- the content was believed was the middle the group. So the promotional activities continue.

Understood. That's it from my side. Thank you.

Our next participant is Nitin Chen from eValue Equity Advisors.

My first question is on the digital new share. So for H1, the number is around 73%. And for Q1, we were at 75%. So Q2 is probably lower 71% -- so what I wanted to understand is why this variation Q-on-Q and what is the impact on profitability? And also, what is your guidance for the year for this metric?

let's say, the digital revenue would be in the range of 70% to 75%. And let's say, difficult to, let's say, give a proper signing into 1% to 2% variation. But let's say, it's more driven at the growth is more driven both by digital and nondigital segment. And in terms of profitability, so digital impact be more profitable -- because let's say, our content budget and the fixed costs are more or less in line. So no impact on profit.

Great. And my next question is on the subscription-based revenue share. Any comment for this quarter? Last quarter, I think you mentioned it was 10% to 15%.

It is in that range.

Next question is from the line of Akshay Kolar from Dalal Boca.

So my first question is on Pulse, you indicated that revenue and PAT growth guidance has been upgraded by 2 to 3 percentage points from our year guidance of 20%. Given that H1 FY '27, the revenue growth is already 28% year-on-year. So achieving the annual growth rate of, let's say, 22%, 23% will require only 19% of growth in H2 FY '27. And historically, we see that the H2 is generally stronger than -- so against this backdrop, do you believe that revised guidance remain conservative? Should we expect H2 growth to be moderately meaningful compared to -- and also, can you elaborate on the assumption behind the revised revenue and PAT growth guidance? Yes, that's my first question.

1 has been stronger for us. We have grown by around we have been let, we would like to be conservative in our guidance. You are right to some extent that H2 would be stronger given, let's say, we're entering the season. But let's say, we would continue with our conservative guidance. It's better to undergone over deliver?

So the guidance will be 23% correct?

Would exceed our 20% guidance. It could be -- we don't want to put a static number to it.

for time being, you consider as 20%.

Understand. So my second question is on you have indicated in Q1 FY '27, that the content investment guidance is around INR 90 crores to INR 100 crores for overall FY '27. -- against which the company already spent around INR 70 crores to INR 71 crores in H1. So that's a significant investment already made in content. So do you intend to maintain our year guidance? Or you are considering to increase the content investment target?

So it will be maintained for the full year between the range of INR 90 crores to INR 100 crores. So the content investment in first half was front loaded and the second half will be much lighter in terms of the content cost.

Okay, understood. And then the last question is like other than Guzik, does the company have any plan to diversify in other segments like artisanal because these segments are growing significantly. Or will you continue to focus exclusively on core music business? What are you views on this?

Our focus is absolutely on a new music -- and that artist management is really a lot of trouble, and you have to really take care of Artes so much. And then there is a commitment we have to do so many sons, and we don't believe in all that. We believe we will have a short-term kind of a contract with at to someone like that, and we are really happy with that.

The next question is from the line of Sanidhya Agrawal from Unicon assets.

Congratulations on successfully completed the buyback -- another great set this quarter. like really impressed by the number of songs that we have released this quarter is we didn't have any large firms as such, but we had a few smaller firms and I think, individual music releases and multiples. So that was really heartening to see, and many of them train million views across that one. So it was really good to see that. So it sures that Malman is like really making cautious court invest in the future. I just want to highlight that market sometimes doesn't fully appreciate that our entire cost that we expense entire content cost that we expensed in the same quarter that would leave them use it, unlike most of the industry players, which spread it over years. I think sometime market at even checker, but how -- I would like to understand how mating thinks about that thing? And also, -- should we like really think that you are investing for future because that's what really drives devaluations as such, if I were to say, for the market. like we're seeing today, NID companies are having a hard time because of AIM previous times for newer next taping the next wave, you can see. So how is the building the same approach how are we focusing on validity rather than optimizing margins for quarter-on-quarter basis. I think arcuate should really acknowledge that today, the company is enjoying the fruits that you acquired the music really cheap in '90s and early 2000s that catalog has done wonderfully well for the company. I think Girish also acknowledge that if we don't invest into songs today that are relatively for the newer generation per se, with new relation cutting more today and maybe they would eventually end up listing those songs for the next 20, 30 years, maybe even more. So we would -- the company wouldn't be like because, of course, the songs that we already have, the liabilities are doing good, but there is obviously a life cycle for the entire content that we already have. How are we really focusing on not looking in near term, but rather longity of the company? That would be my cope.

Yes. Sanidhya, we are very much focused on music business. And we are -- whenever we are acquiring the new content, we are very, very careful, and we only deal with the people who are like minded and maybe they can take our advice on music, how to create, which kind of song we should give them. And even now, as you know, our catalog is performing very, very well. So every producer, they are really like to tie up with us, and we give them 1 or 2 songs in their film to recate those songs, and they are doing well. So I think we are in a very good place as business. We have done -- also we are talking to a few more producers. If we can do business with them, we can sign their audio rights and which will be -- we'll announce very soon. So I think everything is fine. Our catalog is doing well. And I think next 15, 20 years, at least I feel we are very, very safe. We don't have to think twice what's going to happen. I think many, many new new things will happen to our industry like AI and many other platforms will come, business will change. People will do subscription that small content, short led content will also get proper monetization that public performance that shows artists are shinging, performing. all business -- I think a few months back, Prime Minister said we want to see INR 50,000 crore business for events. So imagine in 10 years' time knowledge India will be 15 crore people will be subscribers. If they pay INR 100. So I think we have a very solid future and music business. I think we are just waiting to explore.

Okay. Second question would be on -- so let me put it this way. So if I see 4 quarters from today, I'm not going quarter-on-quarter. I'm just saying 4 quarters from today, that is H2 of this year and H1 of next year. If I do a rough estimate on this quarter's annual run rate, we will do somewhere between INR 500 crores, INR 550 crores of revenue in the next 4 quarters. If you say 20% to 25% or 22%, whatever number you want to put it, I think INR 100 crores and INR 130 crores, something like that would be the number that we will have for us to invest in the content cost, basically. That's a very meaningful pool -- that's what I understand from this. And like INR 100 crores, INR 130 crores is like a good amount that we can actually buy some good music rights, something fresh that's coming to the industry rather than just focusing on remake of the older songs or the catalog. Of course, that is important because that gives a push to our catalog as well. That is the -- currently driving the growth very fast. I think it's done wonders to the company. But how do you -- how would you like to like give some vision, some bifurcation, how do you see the split of the content cost that we'll have in next -- like this pool of more than INR 100 crores that we'll have for ourselves in the next 4 quarters in terms of what would be the amount that you'll be spending on the fresh music that's coming to the industry for relatively new generation, you can say versus what is already there yes, go ahead.

We are investing in new content. There is a film called all new songs by Rayman, we have not given them. And wherever we are giving our song, it's only 1 song or maximum 2 songs. So we are not giving all the songs. If film has 5 songs, maybe 1 song will become from -- pick up from old catalog. The rest 4 songs, 5 songs, 6 songs are all new. Plus we had this one Punjabi music is doing so well, Bepra,anny in that all 7 new songs are there. So we know that we have to focus on new songs. We want to secure our future too. And also, I have always guided my budget is around can explain people -- but because also you have to consider is the only company which writes off their entire content cost in the same year. So that was a big thing with us. But they were keen to do business with whatever we commit, we deliver 100% promotion-wise availability wise. So we have a priority we have our own things. I think don't worry about the content. We know what we are doing. And at present, we have already told all of you 20% top line, 20% bottom line, 22% to 20%, 22% we'll invest in content. We are going with that -- but let's see -- let one more quarter go what happens. We'll brief you then in the next call.

Yes. And I would really like to close up by saying, I think there are enough and more investors in the company and in the market who would like to see you grow rather than focusing on operational numbers quarter-on-quarter. I understand there is volatility in terms of stock price. I think we can all like look over it and rather focus more on what the company is actually doing. And I think the strongs were really good this quarter, and I hope we continue to do that rather than just thinking that, okay, 20% to 22% of content cost only, I think we are fine even if you invest more. If the top line grows, the profit grows and the future is more better, I think anyway.

Sud here, myself, my family at 64% of this company we hold. So don't worry, we are on the job, very focused, and we want -- we should come back to 30% of growth earlier our projections. So -- but the amount is getting we are very...

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

See, Pari sir, you are running this company on best professional ethics. We may say we are fortunate we become shareholder of our company since 7 years back and make our best buyback and good dividend pay only any good reput company can do. You are doing best for us. Sir, how much revenue we earned usually from old song before 2000 or after 2000, can you give some bifurcation...

So let's say, around 85% of our revenue comes from releases, which are, let's say, 3 years and before and 15% comes from releases in the -- what we have acquired content over the last 3 years.

Last 3 years, within 3 years and 15% more than last 3 years, right?

85% from the content which we acquired 3 years back -- last 3 years back and 15% from the content which we acquired within that 3 years.

Okay. Okay, reverse. And sir, Sani, I would like to ask if you want to give reply how our 2 film songs, which we have bought in June quarter...These songs perform? Can you tell some

[Foreign Language]

The next question is from the line of Rohan Nagpal from Helios Capital.

Yes. So on the strong revenue growth that we've delivered this year, are there any one-offs? Or is this just -- I mean, is this just part of the trend that we are seeing?

There is no one-off in this revenue, let's say, coming -- the growth is coming both from digital and nondigital segment.

Okay. And within growth in across digital and nondigital, if you can segment, how much of the growth would you say is coming from increasing consumption? And how much of the growth would you say is coming from increasing realization that we are seeing per stream or however you would like to look at it?

It would be primarily, let's say, volume-driven growth. Marginally, it could be, let's say, related to subscription, but let's say, the subscription piece is also growing at a healthy pace, but it would be primarily, let's say, volume-driven growth.

Understood. Okay. Fair enough. And how would you -- in terms of listing share in terms of listing share within the industry, do you have any estimates of what is your share of total streams -- and how is that trending?