Eros International Reports Fourth Quarter And Fiscal Year End 2019 Results

Eros International, a global Indian entertainment company, announced unaudited financial results for the quarter and fiscal year ended March 31, 2019.

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 year Eros International Plc generated $270.1 million in revenue and $103.8 million in Adjusted EBITDA. The Company’s Adjusted EBITDA margin expanded to 38.4% compared to FY 2018, which is a significant improvement. The Company’s Digital and Ancillary business generated $123.1 million in revenue, which represented over 46% of Eros’ combined revenue, driven by the strong growth in its’ Eros Now platform.

Eros Now has continued its rapid growth trajectory and reached 18.8 million paid monthly subscribers as of March 31, 2019, a 138% increase over last year. As previously announced, Eros achieved its year-end target of 16 million paying subscribers in just over nine months. The Company has a very strong slate of films and compelling original digital series, which it plans on releasing over the next twelve months that it expects to help drive the growth in its Eros Now business.

Eros’ balance sheet remains conservative and the Company is well-capitalized, with net debt of $145 million, a decrease of $14.1 million compared to the third quarter of FY 2019, and $135.8 million of cash and cash equivalents (including restricted deposits of $46.7 million). The Company has no meaningful near-term debt maturities payable in cash over the next twelve months.

As announced on June 19, 2019, Eros is currently assessing strategic alternatives for the Company with a view to maximizing shareholders’ value and have engaged Citigroup to assist with that review. The process is ongoing and the Company will update the market accordingly, as and when there are any material developments.

Eros also reminds investors that, as addressed in the Company’s July 2, 2019 press release, a short seller has made allegations against Eros which the Company believes is an improper attempt to harm the Company and drive down its stock price so that the short seller can benefit. Eros previously disclosed in March 2016 that the Company’s Audit Committee, with the assistance of Skadden Arps Slate Meagher & Flom LLP, completed an internal review of the Company’s financial reporting for the following areas: (i) UAE sales and revenue recognition, (ii) amortization policy of intangibles, including film and content costs, (iii) related party transactions, (iv) Eros Now registered users count, and (vi) Eros’ film library. Following that review—which covers many of the allegations repeated by the short seller—the Audit Committee was, and still remains, satisfied with the Company’s financial reporting and disclosures in its financial statements as filed with the SEC.

Results Overview

Growth in FY 2019 was fuelled primarily by Eros’ Digital and Ancillary business, including Eros Now, which generated total revenue of $123.1 million. The Company’s theatrical and television syndication businesses generated $69.5 million and $77.4 million in revenue, respectively, over the same period. Eros Now reached 18.8 million paid subscribers as of March 31, 2019, which represents growth of 138% year-over-year, and registered users grew ~ 155 million, a 55% increase versus the prior year period. Eros Now’s registered user base of ~155 million grew by 13 million users in the last quarter alone, which the Company believes shows the large addressable market and consumer base it is able to harness.

Eros Now successfully converted a growing portion of its registered user base into paid subscribers over the past year to 12.1% when compared to 7.9% as of March 31, 2018. At the beginning of this fiscal year, the Company had converted an average of 8% of its registered users to paid subscribers. By March 31, 2019 that metric had increased to over 12%. Several internal metrics measured by Eros also demonstrate its progress in reaching more Eros Now users and creating an increasingly “sticky” subscriber base. Over the past twelve months Eros Now has seen quarterly growth rates of 27% on video plays and 25% on new unique devices.―Yahoo Finance

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