Eros Now partly assuages Eros International's syndication declines

Eros Now had 4.7 million paid and 23 million registered subs additions

BENGALURU: Eros International Plc (Eros) reported 49.1 percent decline in aggregate revenue to $23.1 million for the quarter ended 30 September 2019 (Q2 2019, quarter or period under review) as compared to the corresponding year ago quarter’s $63.4 revenue. Eros explains that lower revenue was mainly due to lower syndication revenue for Q2 2020, which was partially offset by increase in revenues from the Eros Now business. “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,” says a statement by Eros.

In Q2 2020, the Eros film slate comprised 11 films of which 11 were low budget as compared to 17 films in Q2 2019, of which four were medium budget and 13 were low budget. In Q2 2020, the company’s slate of 11 films comprised two Hindi films and nine 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 film.

Operating adjusted EBITDA declined to less than a third (declined by 2.53 times)  y-o-y to $7.8 million in Q2 2020 as compared to $27.5 million in Q2 2019. Eros claims that the decrease in Adjusted EBITDA was on account of increase in administrative costs due to expected credit loss expense accounted as per default method under IFRS 9.

Gross profit for the period under review declined 38.7 percent y-o-y to $15.5 million from $25.3 million in Q2 2019. Eros reveals that the decrease was mainly due to lower amortisation, marketing, advertising and distribution costs for Q2 2020 which was partially offset by increase in administrative cost.

The company reported a lower operating loss of $13.6 million for Q2 2020 as compared to an operating loss of $261.9 million in the year ago quarter.

The company says that cost of sales decreased by 55.6 percent to $16.9 million in Q2 2020 compared to $38.1 million in Q2 2019. Eros says that the decrease was mainly due to lower amortisation costs. Administrative cost increased by 72.2 percent in Q2 2020 to $29.1 million compared to $ 16.9 million in Q2 2019. The increase was mainly due to increase in expected credit loss accounted as per default method under IFRS 9.

For Q2 2020, Eros’s net finance costs increased by 866.7 percent to $2.3 million, compared to $(0.3) million in Q2 2019 mainly due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.

Eros says that as of 30 September 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.

Company speak

Excerpts of a statement made by the company:

“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 30 September 2019 our Eros Now OTT platform reached 23.5 million paid monthly subscribers and 177.7 million registered users, increases of 81percent and 39 percent, 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.

“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.”

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