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Edited Transcript of EROS earnings conference call or presentation 17-Nov-15 1:30pm GMT

Q2 2016 Eros International PLC Earnings Call

Mumbai Nov 18, 2015 (Thomson StreetEvents) -- Edited Transcript of Eros International PLC earnings conference call or presentation Tuesday, November 17, 2015 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jyoti Deshpande

Eros International Plc - Managing Director and Chief Executive Officer

* Prem Parameswaran

Eros International Plc - Group Chief Financial Officer and President of North America

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Conference Call Participants

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* Tim Nolan

Macquarie - Analyst

* Eric Katz

Wells Fargo - Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to Eros International's second quarter fiscal year 2016 earnings conference call. This call is being broadcast live on the Internet and a replay of the call will be made available on the Company's website.

This morning the company published its earnings press release on its website,www.erosPlc.com. The Company would like to remind everyone listening that during this call we it will be making forward-looking statements under the Safe Harbor provisions of the federal securities laws. The Company's actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in today's press release. During the call the Company will also discuss non-GAAP financial measures in talking about its performance. You can find the reconciliation of these measures to GAAP financial measures in the Company's press release.

I will now turn the call over to Jyoti Deshpande, CEO of Eros Plc. Please go ahead.

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Jyoti Deshpande, Eros International Plc - Managing Director and Chief Executive Officer [2]

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Okay. Apologies, everyone. I understand that there was a technical error on the part of NASDAQ Europe so let's do Eros International Plc take two.

Good morning, everyone. Thank you for taking the time to attend Eros International Plc's earnings call for the second quarter ended September 30, 2015. As you've seen in our press release, Eros has reported impressive results due to our strong business fundamentals, compelling content offerings and differentiated digital platform. It has been a challenging last four weeks for the Company, as we have been attacked by individuals who've been anonymously spreading malicious, baseless allegations in what appears to be a coordinated shortselling campaign that resulted in unprecedented stock price volatility. While we have emphatically responded to the allegations in our previous press statements this month, we believe that our strong results for our second quarter serve as a testament to our market leadership in the Indian film and entertainment sector and the underlying strength of our company.

This has been one of the best years in performance for Eros so far, with the film slate performing exceedingly well at the global box office. I am proud to say 8 out of the 15 top 10 films on the Indian box office in the calendar year 2015 as of September 30, 2015 are Eros films and 3 out of the top 4 films. Bajrangi Bhaijaan, our quarter two release, remains a firm number 1 till date, followed by Tanu Weds Manu Returns, a Q1 release which is the number 2, and Welcome Back, again a Q" release, is at number 4. Our 41% aggregate market share over the last four years in UK and USA is tracking at a staggering 70% this year as per Rentrak data.

The box office reporting sources in India are websites, which is helpful data although not audited by any third-party sources like Rentrak. With over 1,000 films releasing in India each year, these websites mainly focus on Hindi films and largely don't report the box office of regional language films, which is an integral part of our strategy. We typically get 50% of the net box office revenue as our share of theatrical revenue on a sliding scale basis.

Importantly, in many cases, presale minimum guarantees protects us from underperformance of box office of films. So trying to reconcile our theatrical share purely based on reported Hindi box office of India may be misleading. For example, a high-profile Tamil film, Lingaa, which was released last year, our presales were significantly higher than the actual box office of the film. Our theatrical, television and digital and ancillary revenues breakdown form part our financial statements and we stand by them. Our strategy of investing in high-quality film content and diversified revenue streams across platforms, along with further exploitation of our library, our crown jewels, is reflected in our performance this quarter.

Moving on to the results for the three months ended 30 September 2015, revenues increased by 97.9% to $98.8 million. Currency comparable revenues increased by 129.6%. Adjusted EBITDA increased by 159.5% to $36 million. And for the six months ended 30 September 2015, revenues increased by 56.2% to $148.8 million. Currency comparable revenues increased by 81.5%. Adjusted EBITDA increased by 116.7% to $47.6 million.

During Q2 FY 2016, we released a total of 20 films, of which 3 were high-budget films, 3 were medium-budget films and the rest of the 14 films were low-budget films. Talking about number of films, we have always maintained that some of the small-budget films will have limited theatrical appeal and mostly form part of a bundle for television or digital monetization worldwide. The fact that some of these films may have had a very limited theatrical release in some remote areas of India in some prior years does not preclude them from being new releases for television or other formats. These films make a very minimal contribution to the overall revenues and associated costs of our film slate in any given year but are a facet of the overall long-term strategy for scaling the business.

The second half awaits films such as the much-anticipated Bajirao Mastani, our high-profile Christmas release, Suriya's 24, Pawan Kalyan's Sardaar Gabbar Singh and Dictator. Our fiscal 2017 Slate is promising, with franchise films Housefull 3 and Rock On 2 as well as Dishoom, Baar Baar Deko, Ajay Devgn's Shivaay, Anand Rai's Next, Leela Bhansali's Next and many such exciting projects in Hindi along with a strong Tamil/Telegu and other regional films slate.

Trinity Pictures, our franchise production arm, is ready with several compelling film scripts in the universes of kids and teens, action and adventure, gods and kings, etc., including two films being developed for a tailor-made Indochina co-production. We think at least 3 to 4 of these films will be produced and released in fiscal 2017. With 100% intellectual property ownership, Trinity will be an important pillar of our content strategy moving forward.

We are excited about our Eros Now platform strategy and we have remained acutely focused on execution. Our new two-tier pricing is now live in India. We continue to grow our 30 million registered user base. A large proportion of this are mobile WAP users who we acquired leveraging synergies from our Techzone acquisition. We remain on target to launch originals in the new year. We launched an original short graphic web series called Blazing Bajirao, based on our upcoming film Bajirao Mastani. We also have an exciting Blazing Bajirao game ready to go live on 11 December across all platforms.

The prolific broadband, mobile and 4G growth in India provide strong tailwinds for the Eros Now opportunity. Our attractive consumer proposition is comprised of exclusive content ownership and disruptive (inaudible) strategy with compelling product features such as high-definition viewing and Dolby sound, multilanguage subtitles, portability across devices and importantly our offline download experience which goes live in December. With its unique and broad entertainment offering across movies, music, television and originals at attractive price points, we believe Eros Now is advantageously placed to be a leading OTT player in Indian entertainment. We are confident in our business fundamentals and we believe we will continue to dominate the Indian film and entertainment industry in the times to come.

With that, let me hand over the call to Prem Parameswaran, our Group CFO, who will walk you through our financial performance in more detail. We will then open the call up to your questions. Thank you.

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Prem Parameswaran, Eros International Plc - Group Chief Financial Officer and President of North America...


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