Eros Now Paying Subscribers Grow 56% Y-o-Y to
Reach 29.3 Million
Revenue of $155.5 Million and Adjusted EBITDA
of $54.8 Million
Previously announced Eros STX merger closing
later today
Eros International PLC (NYSE:EROS) (“Eros” or the “Company”), a
global Indian entertainment company, today announced audited
financial results for the fourth quarter and fiscal year end 2020
and has filed its Form 20-F for the Fiscal Year ended 2020 with the
SEC.
The Company made the following statement:
“We reported a solid year-end set of financial results despite
the disruption caused by the global COVID-19 pandemic. As a company
we have risen to the challenge in these unprecedented times with
perseverance, dedication and adaptation to uncharted new market
conditions. This year we generated $155.5 million of top-line
revenue and $54.8 million in adjusted EBITDA, which represents a
margin of 35.2%. Our ability to generate a meaningful amount of
revenue and adjusted EBITDA despite the impact of COVID-19
highlights the resilience of our business model and inherent demand
for premium content.
We want to highlight that we expect that our previously
announced merger with STX Entertainment on April 17th, 2020 will be
closing later today. The Company will make a separate public
announcement announcing details of the transaction closing.
Eros is currently at an inflection point transforming itself
into a digital media powerhouse. As we continue to undergo this
shift we expect the skew of digital and ancillary revenues to
increase relative to our traditional theatrical and TV syndication
businesses. The shift to digital will increase the visibility of
our earnings as we move towards a more recurring revenue
annuity-type business model – higher quality of earnings and more
sustainable growth. The recent pandemic crisis has served to
accelerate this shift to digital for the media industry as a whole
and for Eros Now. While this transition will have an impact on
near-term revenues we expect it will increase the premium nature of
our content and ultimately increase ARPUs and loyalty of our
customers.
Our digital business demonstrated a strong operating and
financial performance this quarter, buoyed by increasing digital
consumption around the world. As of March 31, 2020 our Eros Now OTT
platform reached 29.3 million paid monthly subscribers and 196.8
million registered users, increases of 56% and 27%, respectively,
over the same period last year. This represents a net addition of
3.1 million paid subscribers during the fourth quarter alone, and
an annual conversion ratio of registered users into paid
subscribers of 15% - a meaningful increase over the period last
year. Eros Now has seen significant growth rates in user
engagement. Consumption from outside India has increased by 47% in
Q4 FY 20 post-lockdown as compared to pre-lockdown with US,
Singapore, UK, Australia, Canada, Sweden, Japan, and UAE featuring
among top 10 countries in terms of consumption. Since lock-down
measures were first introduced earlier this year, Eros Now users
across the world have watched more full-length movies than ever
before illustrating the power of our large library.
During Fiscal Year 2020, Eros Now digitally released a total of
630 films in 12 different Indian languages, over 8,000 music audio
and video files, as well as over 500 units of short form and Eros
Now Originals and Quickie content. Over the past two fiscal years,
we have digitally premiered (first ever digital release) over 65
films on the Eros Now platform, which is a testament to the
strength of our platform and breadth and depth of our offering.
Eros has a uniquely compelling slate of films and original series
scheduled for release over the coming quarters. With compelling
global concepts and productions in partnership with the best talent
available, we believe that Eros Now’s slate of original films and
series will appeal to a wide range of audience. Over the next 12
months, Eros Now is planning to launch an exclusive stable of
feature films, made-for-digital originals films and original
episodic programs, including: Flesh by Siddharth Anand; Halahal by
Zeishan Qadri; Bhumi by Pavan Kripalani, +745 by Sachin Mohite,
Smoke Season 2, Avataar; and a most awaited Season 2 of our
well-known series Metro Park. We are also scheduled to release more
new and compelling Quickie content including: Date Gone Wrong 3,
Women of Mettle, My Journey and The Investigation 2. Over the past
few months, despite the COVID- 19 pandemic, we have released
several pieces of original content on the Eros Now platform, A
Viral Wedding, Metro Park (Quarantine Edition), Date Gone Wrong
(Quarantine Edition).
Due to unprecedented factors we have seen the industry landscape
alter and adapt as consumer and creator habits are shifting. Eros’
foresight will ensure that we are well positioned for this shift as
measured by five important criteria:
Brand: Eros as a brand is dominant across the South Asian
diaspora worldwide with a 40+ year history. Eros is synonymous with
popular films in multiple Indian languages as demonstrated by our
consistent and leading box-office market share. This means we are
well positioned to continue the shift to digital and d2c
(direct-to-consumer)
Breadth (Distribution) : To maximize the reach of Eros
Now, we currently have collaborations and partnerships in India and
globally with market-leading telecommunications operators, OEMs and
digital distribution entities to make available our digital service
Eros Now across global audiences. Our partners include, among
others, major telecommunications providers such as Airtel, Reliance
Jio, Etisalat, Ooredoo, Vodafone and many more as well as streaming
service providers such as Amazon Channels, Apple+ Channels,
YouTube, Virgin Media, Roku, Sony TV and a plethora of connected
devices. We are the first and only Indian-content OTT service
provider to collaborate with Apple on a large scale. In addition,
we have a unique and strategic relationship with Microsoft to
further develop and create video technology. We believe that the
scale of our digital library and the number of partnerships and
collaborations with market leaders put us in pole position to take
advantage of the increasing demand for digital entertainment
content globally.
Build (Production) : Eros has unparalled global
production capabilities augmented by innovative and rich
partnerships with leading producers and platforms. Eros’s recent
strategic collaboration with Epic Games (producers of Fortnite)
will allow us to use Epic’s Unreal Engine across the production
slate, paving the way for real-time technology throughout Indian
entertainment. While impacted by the COVID-19 disruption, our
production team was still able to release three originals during
the peak of the pandemic – which demonstrates the determination and
innovation of our production platform. Our ground-breaking
commercial partnership with Microsoft will help us achieve our goal
of transforming the content streaming experience for consumers
globally.
Backlist (Library) : Eros has a deep and rich library,
with over 12,000 digital titles, that gives us critical mass and
the ability to monetize through multiple channels around the world
as stay-at-home media consumption is increasing. Our library size
is a key differentiator for us as we compete against other local
and international players who are more reliant on licensing content
and therefore more exposed to content cost fluctuations. Our
library also makes content and platform partnering opportunities
more attractive for other media players especially in the current
environment where the need for premium content is only getting
stronger. Eros Now, for which the majority of the content library
is our own existing content, has also started considering
innovative ways of updating its existing content library. Given the
rise in demand for content and increasing online viewership,
existing content is expected to become only more valuable in the
future, which will benefit us.
Balance Sheet : We remain well-capitalized with a healthy
balance sheet and no near term debt maturities that cannot be
addressed. As our business model continues the shift to digital our
balance sheet will be bolstered by higher-margin recurring revenues
which will enable us to fund content opportunities on an
opportunistic basis.
These five pillars, and the depth within each, form an integral
part of our go-forward future strategy to create a strong consumer
brand with recurring revenue cycles through our Eros Now
platform.
Favourable structural and demographic tailwinds across India as
well as watch-at-home consumption patterns underpin the Eros Now
growth trajectory and will help us surpass our target of 50 million
monthly paying subscribers by 2022. A recent Cisco Annual Internet
Report predicts that there will be over 907 million internet users
and 966 million mobile users in India by 2023. Importantly, these
figures imply penetration levels at 65%-70% of the population which
still leaves room for future growth which may be accelerated by
current entertainment shifts. Rural India will generate the highest
levels of user growth over the coming years as broadband adoption
grows and infrastructure improves. This underpins our business
strategy as we are focused on reaching a broad base of consumers
with the widest possible offering aiming to appeal to a multitude
of regional cultures, languages and tastes. Now more than ever our
innovative partnerships with local distribution, marketing and
payment partners put us in a great position to capitalise on the
growth in rural India.
In addition, content shortages will push consumers to start
watching content outside of their preferred language – this is a
trend we have observed with the recent Academy Award winning film
Parasite, and Netflix has succeeded with titles such as Narcos and
Money Heist. Our premium stables of originals and movies will
benefit from these tastes and changes which are accelerating in the
current environment.
During the period we had several theatrical film releases
scheduled in India and overseas, namely ‘Haathi Mere Saathi’ in
three languages (Hindi, Tamil and Telugu), ‘Shokuner Lobh’
(Bengali), amongst others. Given the present circumstances of the
COVID-19 pandemic, we have taken the decision to defer the release
of these films so that the revenue opportunities from these films
can be maximized and improve our cashflows to better serve our
commitments to our stakeholders.
We recorded a non-cash impairment loss of $431.2 million on our
P&L for Fiscal Year 2020. The impairment charge was taken as
per IAS 36 under IFRS accounting rules which require companies to
re-assess the carrying book value of assets both on a regular
annual basis and also in the case of irregular events. We believe
this is a conservative and prudent action in light of market
events, and does not materially impact the long-term business or
operations of the company, as it is driven by compliance with
accounting standards. In addition, to the extent that in future
periods there is a material positive change in the same underlying
business conditions, we will be able to write-up the value of
assets according to the same accounting standards.”
Conference Call
The Company will host a conference call on Thursday, July 30th,
2020, at 9:00 AM Eastern Standard Time.
To access the call please dial +1 (888) 771-4371 from the
United States, or +1 (847) 585-4405 from outside the U.S.
The conference call I.D. number is 49868032. Participants
should dial in 5 to 10 minutes before the scheduled time.
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 July 30th, 2020 (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.”
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005538/en/
Mark Carbeck Chief Corporate and Strategy Officer Eros
International PLC mark.carbeck@erosintl.com
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