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Reports Revenue of $32.3 Million and Adjusted EBITDA(1) of $7.8 Million

Eros Now Paying Subscribers Grow 81% to Reach 23.5 Million

DOUGLAS, Isle of Man–(BUSINESS WIRE)–Eros International PLC (NYSE:EROS) (“Eros” or the “Company”), a global Indian entertainment company, today announced unaudited financial results for the second quarter fiscal year 2020.

(USD in millions)

Q2 FY20

Q2 FY19

Q1 FY20

Q4FY19

Q3FY19

Revenue

32.3

63.4

43.5

69.7

76.7

Y/Y % Growth

-49.1%

0.2%

-27.7%

-3.1%

17.6%

Q/Q % Growth

-25.7%

5.3%

-37.6%

-9.1%

21.0%

 

 

 

 

 

 

Operating Profit/(loss)

-13.6

8.4

1.0

-4.4

13.2

Operating Profit Margin

-42.1%

13.2%

2.3%

-6.3%

17.2%

 

 

 

 

 

 

Adjusted EBITDA (1)

7.8

27.5

18.6

13.1

35.8

Adjusted EBITDA Margin

24.1%

43.4%

42.8%

18.8%

46.7%

 

 

 

 

 

 

Global Paid EN Memberships

23.5

13.0

21.1

18.80

15.90

Y/Y Growth

80.8%

251.4%

108.9%

138.0%

218.0%

Q/Q Growth

11.4%

28.7%

12.2%

18.2%

22.3%

Global EN Registered Users

177.7

128

166

154.7

142

Paid / Registered Users

13.2%

10.2%

12.7%

12.2%

11.2%

 

 

 

 

 

 

Films Released

11

17

12

16

25

 

 

 

 

 

 

Cash

$99.4

$134.9

$80.8

$135.8

$134.9

Gross Debt

212.0

297

220.9

280.8

294.0

Net Debt

112.6

162.1

140.1

145.0

159.1

  1. A reconciliation of the non-GAAP financial measures discussed within this release to the Company’s IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.

The Company made the following statement:

This quarter we generated $32.3 million of top-line revenue and $7.8 million in adjusted EBITDA. Our Eros Now business continues to ramp up and grow its paid user base worldwide, supported by one of the largest libraries of Indian movies, along with its unparalleled market position and brand name. As of September 30, 2019 our Eros Now OTT platform reached 23.5 million paid monthly subscribers and 177.7 million registered users, increases of 81% and 39%, respectively, over the same period last year. This represents net additions of 4.7 million paid subscribers and 23 million registered users during the first half of Fiscal Year 2020. Eros Now currently garners viewership from over 150 countries around the world. Eros has a strong slate of films and original series scheduled for release over the coming quarters, and we expect this to help drive continued growth in our Eros Now business as well as box-office revenue.

We have several high-profile upcoming film releases, including Kaamiyab, Pagalpanti, Marjaavaan, Pati Patni Aur Wo, The Body, the trilingual remake of Haathi mere Saathi as well as a host of regional releases. In addition, Eros Now has a strong slate of originals scheduled to release in the coming quarters, including Flesh, Halahal, Avatar: The Legend of Vishnu, Metro Park 2 and Crisis.

In September, we announced a ground-breaking commercial partnership with Microsoft with the goal of transforming the content streaming experience for consumers globally. This collaboration will help Eros Now develop a new intuitive online video platform to ensure seamless delivery of content across countries and languages. It will also create a host of new interactive voice offerings for customers including video search experiences, voice search for video content across multiple Indian languages, and create personalized content. This collaboration will help our Eros Now platform enhance and strengthen its reach across globe and increase engagement with consumers.

As we see new players enter the Indian OTT market and international players such as Apple, Disney, Fox and Amazon redoubling their focus on India, we believe our market-leading offering built through years of investment and innovation puts us in a very fortunate position. We are one of the first OTT services to develop in India and are now benefiting from the foresight we had years ago to pioneer the market.

For the full fiscal year 2020, we are reiterating our consolidated revenue guidance in the range of $200-220 million, and Adjusted EBITDA of $80-$95 million. We have a healthy balance sheet with net debt of $112.6 million and $99.4 million of cash and cash equivalents.”

Global Strategy

At the core of our strategy has always been the goal to make local stories a global experience. Investing in unique, compelling content to adapt, exploit and expand great stories for consumers around the world is something we have always been very excited about. Great stories transcend languages and cultures and can come from anywhere. We are, therefore, very focused on increasing our distribution and partnership channels outside of India, with a goal to bring people the best and most diverse offering of Indian language content in any format. Our recent successes in China and other overseas markets underscore the appeal of quality content in new markets, and it also highlights the longevity of our content and ability to monetize in new markets and windows.

To that end, here are some recent highlights and proof points of our global strategy:

  • Two of the top 5 grossing Indian films in China were released by Eros – Andhadhun and Bajrangi Bhaijaan – which combined grossed $92 million in the China Box Office
  • We recently secured international distribution rights to four Hindi language films which will be released in the current fiscal quarter
  • We are releasing the critically acclaimed Andhadhun in cinemas in Japan this month
  • Roam Roam Mein, a psychological-drama film produced by Eros, premiered at Busan International Film Festival in Korea and won the Asian Star Award
  • Maunn, an Eros Now Quickie content piece, was the Winner of the Asia Pacific Film Festival in Los Angeles and also nominated at the Vancouver International Film Festival
  • Eros Now original series Smoke was the only original from India to be screened at Mipcom 2018 in Cannes
  • Our highly-acclaimed original series, Metro Park, is an example of cutting-edge cross cultural content which helped grow Eros Now viewership in the US by 22%
  • We launched 120 new films on Eros Now this quarter in 6 different Indian languages

Eros Now Distribution & Technology:

Eros Now has continued to expand its distribution partnerships both domestically and globally. We continue to be a front-runner from India and South Asia platforms in regards to distribution deals and alliances around the World. Technology has always been a core focus for Eros Now and in this quarter we announced an important partnership with Dolby. Movies on Eros Now have been Dolby enabled and our Dolby enabled partnership with One Plus TV was the first of its kind for an Indian OTT company. Eros Now also launched a refurbished version of progressive Web Apps in order to improve the funnel conversion into paid subscribers, and early results have been very encouraging.

We closed two meaningful distribution partnerships in India this quarter with Jio and Walmart-owned Indian ecommerce Giant Flipkart. We were one of the first partners to be integrated on the new Jio set top boxes. Our partnership with Flipkart brings entertainment to their millions of daily shoppers tying together the world of entertainment and ecommerce.

This September we announced an alliance with Microsoft to develop a cloud powered online video platform and new AI powered solutions to redefine the video viewing experience for South Asian consumers. This partnership will enable our customers with easy viewing and easy discovery with many personalization options.

The partnership will cover three areas:

  • Building a new intuitive online video player. This will be supported by a robust content delivery network (CDN) that leverages Microsoft Azure and Microsoft Azure Media Services for seamless delivery of content;
  • Exploring new offerings for consumers in the area of interactive voice services starting with 10 Indian languages;
  • Creating a new personalized recommendation engine for users by leveraging Eros’ user data, combined with Microsoft’s AI solutions. It will enable a shift from a tedious user discovery to provide relevant, targeted content on the go.

Deep personalisation and localisation will help us target a 50m+ paying subscriber universe as well as serving content to the micro-niches of the world beyond India in a language and environment in which the consumer feels most comfortable.

With a goal of increasing our higher-paying international direct to consumer subscribers, we recently closed on several meaningful distribution partnerships in the Middle East including Zain Telecom in Bahrain, Kuwait, Jordan & Oman. We also look forward to the imminent launch of Eros Now across the global Apple plus platform, we are the only non-US entertainment partner during initial launch.

We recognise the size and importance of the Chinese market which has been a major focus for us. Given recent successes of Indian content in the Chinese box office we believe this is a market ready for Eros Now consumption. In September 2018 we finalised a licensing agreement with digital leader iQiyi which marked our entry point into the digital space in China. Our next step in China was a digital distribution deal with Wasu Media, a large state-owned culture media group, signed earlier this year. The Wasu Group is one of the biggest comprehensive digital content service operator and service provider across interactive TV, 3G / 4G mobile TV and Internet TV in China. Wasu’s services cover approximately 100 cities in 29 provinces in China with cable network as well as covering the three major telecom operators and several million Internet users. The Eros Now service will go live beginning the week of 18th November, 2019 on Wasu.

We will continue to focus on deep experiences to ensure we are able to drive value to both domestic and international subscribers across geographies and multiple distribution channels.

Eros Now Marketing:

Eros Now ran an innovative and expansive Indian Independence Day campaign in August – promoting 73 of India’s Biggest Films on the 73rd Indian Independence Day. A large focus this quarter for Eros Now was to improve the digital marketing funnel, re-marketing and subscriber CRM. Eros Now was recognized by Media Brand Awards with a Gold Award for the Best Promo in OTT Video for Side Hero, and a Silver Award for Metro Park in the Original Series Category

In September 2019, Eros Now and KPMG India published a report on online video in conjunction with FICCI and Creative First. Several key highlights of the report include:

  • Eros Now is the best distributed app in the SVOD eco-system in India
  • 9% of Eros Now users spend more than 21 hours/week watching video – highest across all platforms
  • Session average across SVOD OTT services in India was 43 minutes as compared to 75 minutes for the higher-tier the Eros Now paid subscribers
  • Cord-cutting is a real trend in India with 80% of respondents feeling that digital video would satisfy their entertainment needs and 38% ready to “cut the cord”

Eros Now Content:

We launched 120 new films on Eros Now in Q2 Fy 2019 in 6 different Indian languages. In addition we released over 2,600 music audio files on Eros Now and 97 units of short form and Eros Now Quickie Content. A unique innovation in Content formats with Singham Returns, Zindagi 50/50 were converted into short form Quickie Movies. Eros Now also celebrated Quickie Festival and Original Series Festivals supported by a large push on social and marketing. Eros now also launched its first lifestyle original : Yoga Vibes with Mansi Gulati, a world renowned face yoga expert. Lastly, we announced a partnership last year with Fashion TV whereby content from the channel will be available to Eros Now consumers. This has been proven successful, and Eros Now remains the first OTT player to venture into the fashion and lifestyle segment.

In addition, Eros Now has a strong slate of originals scheduled to release in the coming quarters, including:

  • Flesh by Siddharth Anand (target release Q4 FY20)
  • Halahal, a digital film, by Zeishan Qadri (target release Q4 FY20)
  • Avatar: The Legend of Vishnu by Anirudh Pathak and Sree Narayan Singh (target release Q4 FY20)
  • Metro Park 2 by Abi Varghese and Ajayan Venugopalan (target release Q1 FY21)
  • Crisis by Gaurav Chawla and Nikhil Advani (target release Q3 FY21)

Conference Call

The Company will host a conference call on Friday, November 15, 2019, at 8:30 AM Eastern Standard Time.

To access the call please dial +1 (888) 753-4238 from the United States, or +1 (706) 643-3355 from outside the U.S. The conference call I.D. number is 4282928. Participants should dial in 5 to 10 minutes before the scheduled time.

A replay of the call can be accessed through November 29, 2019 by dialing +1 (800) 585-8367 from the U.S., or +1 (404) 537-3406 from outside the U.S. The conference call I.D. number is 4282928. The call will be available as a live webcast, which can be accessed at Eros’ Investor Relations website.

About Eros International Plc

Eros International Plc (NYSE: EROS) a Global Indian Entertainment company that acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital new media. Eros International Plc was the first Indian media company to list on the New York Stock Exchange. Eros International has experience of over three decades in establishing a global platform for Indian cinema. The Company has an extensive and growing movie library comprising of over 3,000 films, which include Hindi, Tamil, and other regional language films. The Company also owns the rapidly growing OTT platform Eros Now which has rights to over 12,000 films across Hindi and regional languages. For further information, please visit: www.erosplc.com.

This release contains “forward-looking statements.” These statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation, the factors discussed in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission on August 14th, 2019 (the “20-F”), including under the sections captioned “Risk Factors.” The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, as well as the other factors described in the 20-F under the sections captioned “Risk Factors.”

Eros International Plc Financial Highlights :

 

 

Three Months Ended September 30

 

 

Six Months Ended September 30

 

(dollars in millions)

 

2019

 

 

2018

 

 

% change

 

 

2019

 

 

2018

 

 

% change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

32.3

 

 

$

63.4

 

 

 

(49.1)

 

 

$

75.9

 

 

$

123.6

 

 

 

(38.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

15.5

 

 

 

25.3

 

 

 

(38.7

)

 

 

42.4

 

 

 

49.0

 

 

 

(13.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit/(loss)

 

 

(13.6)

 

 

 

8.4

 

 

 

(261.9

)

 

 

(12.6)

 

 

 

18.8

 

 

 

(167.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

7.8

 

 

$

27.5

 

 

 

(71.6)

 

 

$

26.4

 

 

$

55.0

 

 

 

(52.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.

Financial Results for the Three and Six Months Ended September 30, 2019

Revenue

In the three months ended September 30, 2019, the Eros film slate was comprised of 11 films of which 11 were low budget as compared to 17 films in the three months ended September 30, 2018, of which four were medium budget and 13 were low budget.

In the three months ended September 30, 2019, the Company’s slate of 11 films comprised of two Hindi film and 9 regional films as compared to the same period last year where its slate of 17 films comprised five Hindi films and 11 regional films and one Tamil/Telugu regional films.

In the six months ended September 30, 2019, the Eros film slate was comprised of 23 films of which 23 were low budget films as compared to 31 films in the six months ended September 30, 2018, of which five films were medium budget, 26 were low budget. In addition Eros Now released five original series titled Modi: Journey of a Common Man, My name is Sheela, A Monsoon Date, That Man In The Picture and Maunn during the six months ended September 30, 2019.

In the six months ended September 30, 2019, the Company’s slate of 23 films comprised of three Hindi films and 20 regional films as compared to the same period last year where its slate of 31 films comprised of eight Hindi films, two Tamil/Telugu films and 21 regional films.

Three months ended

High

Medium

Low

Total

September 30, 2019

0

0

11

11

September 30, 2018

0

4

13

17

Six months ended

High

Medium

Low

Total

September 30, 2019

0

0

23

23

September 30, 2018

0

5

26

31

For the three months ended September 30, 2019, aggregate revenues from decreased by 49.1% to $32.3 million from $63.4 million for the three months ended September 30, 2018 mainly due to lower syndication revenue for the three months ended September 30, 2019, partially offset by increase in revenues from the Eros Now business for the three months ended September 30, 2019.

For the six months ended September 30, 2019, aggregate revenues from decreased by 38.6% to $75.9 million from $123.6 million for the six months ended September 30, 2018 mainly due to lower syndication revenue for the six months ended September 30, 2019, partially offset by increase in revenues from the Eros Now business for the six ended September 30, 2019.

Cost of sales

For the three months ended September 30, 2019, cost of sales decreased by 55.6% to 16.9 million compared to $38.1 million in the three months ended September 30, 2018 and in the six months ended September 30, 2019, cost of sales decreased by 55.2% to $33.5 million, compared to $74.7 million for the six months ended September 30, 2018. The decrease was mainly due to lower amortization costs.

Gross profit

For the three months ended September 30, 2019, gross profit decreased by 38.7% to $15.5 million, compared to $25.3 million in the three months ended September 30, 2018. The decrease was mainly due to lower amortization, marketing, advertising and distribution costs for the three months ended September 30, 2019 which is partially offset by increase in administrative cost.

In the six months ended September 30, 2019, gross profit decreased by 13.5% to $42.4 million, compared to $49 million for the six months ended September 30, 2018. The decrease was mainly due to decrease in amortization costs for the six months ended September 30, 2019.

Administrative cost

For the three months ended September 30, 2019, administrative cost increased by 72.2% to $29.1 million compared to $ 16.9 million in the three months ended September 30, 2018. For the six months ended September 30, 2019, administrative cost increased by 83.1% to $ 55.1 million, compared to $30.1 million for the six months ended September 30, 2018. The increase was mainly due to increase in expected credit loss accounted as per default method under IFRS 9.

Adjusted EBITDA (Non- GAAP)

For the three months ended September 30, 2019, Adjusted EBITDA decreased by 71.6% to $7.8 million compared to $27.5 million in the three months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to expected credit loss expense accounted as per default method under IFRS 9.

In the six months ended September 30, 2019, adjusted EBITDA increased by 52% to $ 26.4 million, compared to $55.0 million for the six months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to expected credit loss expense accounted as per default method under IFRS 9.

Net finance costs

For the three months ended September 30, 2019, net finance costs increased by 866.7% to $ 2.3 million, compared to $(0.3) million in the three months ended September 30, 2018 mainly due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.

In the six months ended September 30, 2019, net finance costs increased by 109.5% to $4.4 million, compared to $2.1 million for the six months ended September 30, 2018 mainly due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.

Income tax expense

For the six months ended September 30, 2019, income tax expenses decreased by 41.3% to $2.7 million, compared to $4.6 million in the six months ended September 30, 2018. Effective income tax rates were 16.8% and 11.6% for September 30, 2019 and September 30, 2018, respectively excluding non-deductible share-based payment charges and gain/loss on fair valuation of derivative liabilities. The change in effective rate principally reflects a change in the mix of the profits earned from taxable and non- taxable jurisdictions.

Trade Receivables

As of September 30, 2019, Trade Receivables decreased to $189.8 million from $196.4 million as of March 31, 2019 after considering expected credit loss reserve upon adoption of new accounting standards during the period.

Net Debt

As of September 30, 2019, net debt decreased by 22.3% to $112.6 million from $145.0 million as of March 31, 2019 primarily on account of repayment of loans.

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except share and per share data)

 

 

 

 

As at

 

 

 

Note

 

September 30,

2019

 

 

March 31, 2019

 

 

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

$

10,187

 

 

$

10,921

 

Right of use assets

 

 

 

 

1,456

 

 

 

 

Intangible assets — content

 

5

 

 

739,589

 

 

 

706,572

 

Intangible assets — others

 

 

 

 

3,343

 

 

 

3,794

 

Investments

 

 

 

 

2,000

 

 

 

2,650

 

Trade and other receivables — amortised cost

 

1

 

 

8,577

 

 

 

10,065

 

Income tax receivable

 

 

 

 

1,561

 

 

 

1,284

 

Restricted deposits

 

 

 

 

115

 

 

 

756

 

Deferred income tax assets

 

 

 

 

1,243

 

 

 

1,263

 

Total non-current assets

 

 

 

$

768,071

 

 

$

737,305

 

Current assets

 

 

 

 

 

 

 

 

 

 

Inventories

 

 

 

$

 

 

$

435

 

Trade and other receivables — fair value

 

1

 

 

134,363

 

 

 

125,229

 

Trade and other receivables — amortised cost

 

1

 

 

62,927

 

 

 

79,916

 

Investments

 

 

 

 

200

 

 

 

1,042

 

Cash and cash equivalents

 

 

 

 

99,442

 

 

 

89,117

 

Restricted deposits

 

 

 

 

5,064

 

 

 

55,858

 

Total current assets

 

 

 

 

301,996

 

 

 

351,597

 

Total assets

 

 

 

$

1,070,067

 

 

$

1,088,902

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

$

92,141

 

 

$

83,487

 

Acceptances

 

3

 

 

1,981

 

 

 

8,366

 

Short-term borrowings — fair value

 

2

 

 

53,797

 

 

 

68,349

 

Short-term borrowings — amortised cost

 

2

 

 

93,054

 

 

 

140,559

 

Derivative financial instruments

 

 

 

 

 

 

 

620

 

Lease liabilities

 

 

 

 

757

 

 

 

 

Current income tax payable

 

 

 

 

29,378

 

 

 

17,291

 

Total current liabilities

 

 

 

$

271,108

 

 

$

318,672

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Long-term borrowings — amortised cost

 

2

 

 

65,051

 

 

 

71,920

 

Lease liabilities

 

 

 

 

800

 

 

 

 

Other long – term liabilities

 

 

 

 

15,706

 

 

 

13,898

 

Deferred income tax liabilities

 

 

 

 

15,867

 

 

 

27,427

 

Total non-current liabilities

 

 

 

$

97,424

 

 

$

113,245

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

$

368,532

 

 

$

431,917

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

Share capital

 

4

 

$

53,200

 

 

$

39,326

 

Share premium

 

 

 

 

629,988

 

 

 

580,013

 

Reserves

 

 

 

 

(16,227)

 

 

(2,202)

 

Other components of equity

 

 

 

 

(82,296)

 

 

(79,696

)

JSOP reserve

 

 

 

 

(15,985)

 

 

(15,985

)

Equity attributable to equity holders of Eros International Plc

 

 

 

$

568,680

 

 

$

521,456

 

Non-controlling interest

 

 

 

 

132,855

 

 

 

135,529

 

Total equity

 

 

 

$

701,535

 

$

656,985

 

Total liabilities and shareholder’s equity

 

 

 

$

1,070,067

 

 

$

1,088,902

 

Contacts

Mark Carbeck

Chief Corporate and Strategy Officer

Eros International PLC

mark.carbeck@erosintl.com
+44 207 258 9909

Erica Bartsch

Sloane & Company

212-446-1875

ebartsch@sloanepr.com

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