Release Date: May 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gaming business grew by 12% in the last quarter, with a 26% increase in net active subscribers.
- Signed up 150 operators in the last two years, with over 100 operators live.
- Gross profit margin stood at 53% on a full-year basis.
- Manpower costs were down by 19.2%, driving efficiency and productivity.
- EBITDA for the year doubled to INR28.3 crores, with EBITDA margins improving to 5.5% from 2.4% last year.
Negative Points
- Overall revenue declined by 0.7% on a full-year basis, mainly due to Vodafone Idea revenue loss.
- Marketing costs grew by 14.9%, primarily due to investments in non-gaming products.
- Net loss of INR70 lakhs this quarter, compared to a loss of INR2.4 crores in the previous quarter.
- Exceptional ForEx loss of INR7.7 crores due to currency devaluation in Nigeria and Egypt.
- Only 35 out of 100 deployed accounts are optimized for marketing, leading to higher costs and inefficiencies.
Q & A Highlights
Q: Over the past two years, we've been discussing the potential for the mobile gaming business to surpass the traditional business. However, the numbers haven't materialized as expected. What are your growth expectations for FY25 and FY26 for both the traditional and mobile gaming businesses?
A: Francois-Charles Sirois, Executive Chairman and CEO: Our expectation was for faster growth in gaming, but it takes more than two quarters to optimize an account. We have 100 deployed operators, but only 35 are optimized. We need to fix this quickly. I aim for steady growth every quarter, not spikes. We need to make our relationships with operators more strategic to avoid setbacks.
Q: Some key management team members have left recently. Can you provide insights into the future management structure?
A: Francois-Charles Sirois, Executive Chairman and CEO: Radhika Venugopal is now our CFO, and she has been with the company since the IPO in 2008. Sanjay Baweja stepped down due to personal reasons and the inability to relocate to Bangalore. I am now based in Madrid, and we have a new President and CEO based in Bangalore. We aim to meet at least 80 of our 100 operators to strengthen relationships.
Q: Are you confident in achieving profitability in FY25 and FY26? Do you have the delivery and platform team in place to scale without issues?
A: Francois-Charles Sirois, Executive Chairman and CEO: Our platform in Qatar has zero downtime and is highly reliable. We have strong products but need to negotiate better contracts. Radhika Venugopal, CFO: Excluding the exceptional Forex loss, we are at INR7 crores of profit this quarter. We aim for steady growth in revenues and margins.
Q: Can you provide more details on the challenges in monetizing your products with operators?
A: Francois-Charles Sirois, Executive Chairman and CEO: Our gaming products are robust, but operators have multiple gaming services, making it hard to stand out. We need to be more strategic and respond to RFPs. Our tones business and infotainment services also have potential for growth, but we need to push them more effectively.
Q: What steps are you taking to grow the legacy business, which has been declining?
A: Francois-Charles Sirois, Executive Chairman and CEO: We need to focus more on our legacy business and make it more strategic alongside gaming. We have solid product lines that can drive growth if we manage them better. We aim to stabilize and grow the legacy business while continuing to expand in gaming.
Q: Will you be able to grow revenues and margins steadily, excluding Forex fluctuations?
A: Radhika Venugopal, CFO: Yes, our goal is steady growth in revenues and margins. However, we will have the impact of depreciating our gaming investments, which will affect our P&L but not our cash flow.
Q: Can you provide more transparency on revenue concentration from top clients to avoid surprises like the Vodafone India situation?
A: Radhika Venugopal, CFO: We have nondisclosure agreements with operators, so we can't disclose names. However, we can provide data on revenue concentration from our top clients.
Q: How do you plan to optimize the 65% of accounts that are not currently optimized?
A: Francois-Charles Sirois, Executive Chairman and CEO: We are not putting significant marketing dollars into these accounts currently. Our focus is on optimizing the 35 accounts that are performing well. We aim to increase this number to 100, using AI to optimize campaigns and reduce marketing waste.
Q: What is your long-term objective for the revenue split between gaming and legacy businesses?
A: Francois-Charles Sirois, Executive Chairman and CEO: Our objective is to achieve a 50-50 revenue split between gaming and legacy businesses in the next two to three years. However, if we grow both segments, it will be a good problem to have.
Q: How do you plan to manage marketing expenditures to ensure steady growth?
A: Francois-Charles Sirois, Executive Chairman and CEO: We aim for steady growth without spikes. We will manage marketing expenditures carefully, focusing on accounts that are optimized and can grow steadily. We will use AI to optimize campaigns and ensure efficient use of marketing dollars.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
