Highlights of the call
For the quarter ended December 2008 the company has recorded consolidated revenue of Rs 115.72 crore, 18.7% higher sequentially. On Y-o-Y basis the consolidated revenue surged by 44%. YTD International revenue is 24% of total revenue as compared to 19% for same period last year.
Revenue concentration from top 5 Operators came down from 77% in FY08 to 69% during YTD current year.
The consolidated EBITDA of the company for Q3 FY09 stood at Rs 40.53 crore (35% EBIDTA margin). Sequentially the consolidated EBIDTA grew by 48.1%. The consolidated net profit for the quarter stood at Rs 27.64 crore (22.4% of revenue) with 50% growth Q-o-Q.
The direct costs of the company during the year are higher mainly due to higher content costs including costs related to strategic alliances and higher payouts for media and mobile marketing business.
The company has continued to focus on reducing the discretionary expenditure beginning Q3 FY09, which, coupled with increased revenue, has positively impacted the operating margins.
Material New Developments – Customers
- During the quarter the company has Launched Cross Operator ‘press * ‘ to Copy between two more Operators in India. It has also won the order to provide VAS services to another GSM operator in India.
- In overseas market it started deployment of first RBT customer in Europe and signed contract with another Operator in Bangladesh for IVR, OBD and Subscription services.
- Company also signed contract with an Operator in Bangladesh for providing Phone back-up services. Further a Letter of Intent signed for providing IVR services with another Operator in Indonesia.
Material New Developments – Products
- During the quarter the company launched Music Search with Bharti Airtel on Telisma’s Speech Recognition Technology.
- The company has also launched OnMobile Developer Network and initiated retail kiosk rollout with one of India’s largest Operators.
The company has launched its Ad-RBT (advertisement while calling) service with Vodafone in 2 circles on test basis and got a very encouraging response. The adoption rate for the same is quite higher. The recall intensity of Ad-RBT over advertisements is 24 times stronger than other mediums such as FM radio.
The company expects to launch this service on full scale shortly as few technical improvements are still required. The company expects that the revenue from Ad-RBT will start coming from FY 10 and significant revenue will start coming from FY 11 onwards.
The company expects huge potential from Ad-RBT service and estimates about 15-20% of VAS revenue to come from this service only when will launch on Pan India basis.
The company has exclusive agreement for Ad-RBT with Vodafone for some definite time. However, after required time the company will launch this service with all other players as well.
The share of revenue in Ad-RBT would be atleast equal to current sharing or even better.
So far the company has not been affected by the economic slow down. The usage of value added services is increasing in un-conventional circles like Bihar, Madhya Pradesh and UP, which has mitigated the impact of domestic slowdown. Further the robust subscriber addition also provides cushion to the company against any slowdown.
The management sees that now a days VAS and mobile services are viewed as personalization than discretionary expenditure.
As the company is still spreading its global footprints and has limited global presence, as the overseas revenue constitutes just 24% of total consolidated revenue during Q3 FY09, the global slowdown has less impacted the company comparatively.
The management considers Talisma, which is a speech recognition technology, as a technology of future and is trying to embed Telisma in all the applications.
As on 31st December 2008 the company has cash equivalents of about Rs 270 crore. The company is open to any merger/acquisition opportunity.