Zee Entertainment Enterprises (ZEEL) Q2 24/25 earnings summary

Executive summary

• Strategic focus on frugality, optimization, and quality content led to sequential improvement in performance and profitability, with EBITDA margin rising to 16% in Q2 FY25 and PAT from continuing operations up 61% YoY.

• H1 FY25 EBITDA margin reached 14.3%, up 330 bps YoY, and net profit for H1 FY25 stood at ₹3,275 million, compared to ₹695 million in H1 FY24.

• Cost discipline and optimization drove profitability despite macroeconomic and ad market challenges.

• Cash and cash equivalents as of September 2024 stood at Rs 17.8 Bn, reflecting strong free cash flow generation.

• Management remains optimistic about further margin strengthening and prudent cost discipline.

Financial highlights

• Q2 FY25 operating revenue was Rs 20,007 Mn, down 18% YoY, with EBITDA margin at 16% and PAT from continuing operations at Rs 2,095 Mn, up 61% YoY.

• H1 FY25 operating revenue was Rs 41,312 Mn, down 7% YoY; net profit for H1 FY25 was ₹3,275 million.

• ZEE5 EBITDA losses narrowed from INR 265 crores in Q4 FY24 to INR 159 crores in Q2 FY25.

• Cash position strengthened to INR 17.8 billion as of 30th September 2024, aided by INR 2 billion FCCB inflow.

• Subscription revenue grew 9% YoY, while ad revenue declined 8% YoY.

Outlook and guidance

• Optimism for ad revenue pickup in Q3 with the festive season, but cautious on post-festive sustainability due to uneven rural demand.

• Confident in maintaining subscription revenue growth trajectory and expect movie releases in H2 FY25 to boost other sales.

• Committed to achieving 18%-20% EBITDA margin by end of FY26, balancing growth and cost management.

• Long-term revenue CAGR aspiration of 8%-10% across all business segments.

• Management expects no material adverse impact from ongoing legal and regulatory matters.