Brightcom Group Limited · NSE:BCG
Brightcom — Investor Presentation (May 2020)
44 slides from Brightcom's investor presentation, May 13, 2020
Slide 1: Investor Presentation cover letter to BSE and NSE
brightcom group 74 7 Hel: +91 (40) 67449910 EEAX +91 (22) 66459677 May 13, 2020. The BSE Limited The National Stock Exchange of India Ltd. P. J. Towers, 25th Floor, Exchange Plaza, Bandra Kurla Complex, Dalal Street, MUMBAI – 400001. Bandra (E), Mumbai-400051. Scrip Code: 532368 Symbol: BCG Dear Mad
Slide 2: Company Overview
ANN brightcom group COMPANY OVERVIEW
Slide 3: Disclaimer
Certain Statements in this release reflecting our future growth prospects are forward – looking statements which involve a number of risks and uncertainties that could cause result to di!er materially from those in such forwarding looking statements. The risks and uncertainties relating to these sta
Slide 4: Company Overview
Brightcom Group is a leading global provider of comprehensive online or digital marketing services to: direct marketers, brand advertisers, and marketing agencies. We o!er them access to the billions of Internet consumers that visit our network of name brand publishers spread across the world. The C
Slide 5: Historical Overview
• The founders, Suresh Reddy and Vijay Kancharla started USA Greetings in 1998 and renamed the business to Ybrant technologies in 2000. Over the period of next twenty years, the Company became a global player in digital marketing and related platforms by successfully acquiring and integrating 10 acq
Slide 6: Company Timeline
Company Timeline LYCOS Gets Listed on the National Stock Exchange of India. Acquired MediosOne in US for $4.5 Announces Lycos Life Division. million, thereby entering into front end Raises $18 million from Oak India and Expanded o!erings in digital marketing space. Batterymarch. Acquired LYCOS from
Slide 7: Company Structure
Company Structure Brightcom Group Limited (India) 100% Ownership 100% Ownership 100% Ownership 100% Ownership 100% Ownership 100% Ownership 100% Ownership 100% Ownership International Ybrant Media Dyomo Max Interactive Online Media Yreach Media LIL Projects Frontier Data Expressions Inc. Acquisition
Slide 8: Services Overview
The Company’s services can be categorized into three primary divisions: (i) Ad-Tech (digital/ advertising), (ii) software Services Overview development services / IT services, and (iii) future technologies. The Company’s software development services are based in India, while all other subsidiaries
Slide 9: Digital Advertising
The Company’s services provide advertisers and online publishers with a combination of campaigns, networks, and technologies to engage consumers and maximize their digital marketing reach. The following provides a summary of Company’s services: Video Advertising: The Company o!ers video advertising
Slide 10: Affiliate Marketing and Social Marketing
A!liate Marketing: The Company o!ers a"liate marketing where in a publisher joins an advertiser’s a"liate marketing program and agrees to distribute the advertiser’s advertisements in exchange for commissions on leads or sales generated. One form of a"liate marketing is co-registration, which involv
Slide 11: Software Services & Future Technologies
Record-Keeping for Client Interaction: The Company collects and stores all information generated in client interactions in a data warehouse, which allows users to review and structure campaigns to improve e!ectiveness of services. The Company reviews all product and service inquiries and orders at b
Slide 12: Products & Brands
Through its various subsidiaries, the Company owns the following products: Products & Brands Onetag: generates a tag by the One Tag system which is implemented on the publisher’s website or ad-server to trigger the banner display from the Company’s system every time an impression is called. It is on
Slide 13: Intellectual Property
• The complexity of the Company’s products and the know-how incorporated into them make it di"cult to copy or replicate specific features. The Company relies on a combination of confidentiality clauses, copyrights and, to a lesser extent, patents, and trademarks to protect its intellectual property
Slide 14: Customer Overview
Customer Overview The Company’s customers include Ad agencies, publishers, and direct advertisers that depend on the Company’s products to deliver a comprehensive marketing experience to their clients. The following table provides a snapshot of few of the Company’s customers: CUSTOMER LOGOS
Slide 15: Customer Concentration
Customer Concentration The Company has a diversified base of customers where the top 10 customers within each subsidiary represent less than 45% of revenue from respective subsidiary, with an exception of LIL Projects Pvt Ltd where 100% of revenues are generated from Top 10 customers: CUSTOMER CONCE
Slide 16: Roadmap
Roadmap The Company has stayed at the forefront of its sectors by continuing to invest in new technology and expand through select acquisitions. The Company has a deep understanding of digital advertising trends, software and solid track record in acquiring and integrating niche technology companies
Slide 17: Legal Matters and Equity Capitalization
The Company has one pending litigation outstanding in the matter Daum Global Holdings Corp. v. Ybrant Digital Legal Matters Limited et al. The dispute between the parties arose out of a certain stock purchase agreement dated as of August 15, 2010 (“SPA”) between Daum and Ybrant Media Acquisition, In
Slide 18: Financials
brightcom group FINANCIALS
Slide 19: Income Statements (FY2015-FY2019)
Income Statements (FY2015-FY2019) (Amounts in Thousands, Years ended March 31) Operating Information FY2015 FY2016 FY2017 FY2018 FY2019 Digital/Advertising Revenue $244,293 $277,587 $297,503 $305,643 $305,060 Software Revenue $75,730 $66,744 $67,940 $70,293 $64,126 Other Revenue $2,317 $747 $102 ($5
Slide 20: Balance Sheets (FY2015-FY2019)
Balance Sheets (FY2015-FY2019) (Amounts in Thousands, Years ended March 31) ASSETS FY2015 FY2016 FY2017 FY2018 FY2019 Cash $9,042 $894 $12,412 $13,744 $14,938 Accounts Receivable $136,376 $110,238 $199,734 $134,359 $128,636 Short Term Loans & Advances $48,104 $81,110 $87,592 $91,662 $98,891 Other Cu
Slide 21: Cash Flow Statements (FY2018 – FY2019)
Cash Flow Statements (FY2018 – FY2019) (Amounts in Thousands, Years ended March 31) Sources: Operations FY2018 FY2019 Net Income $62,403 $63,115 Depreciation $17,615 $19,969 Ammortization $0 $0 Total Sources: Operations $80,018 $83,084 Uses: Operations Change in Working Capital ($29,679) ($21,097) O
Slide 22: Revenue Growth Analysis
Revenue Growth Analysis The Company’s FY2019 revenue is $368.8 million, which represents a 1.9% decrease over the FY2018 revenue of $375.9 million. This decrease in revenue is primarily coming from decrease in YMA revenue of $13.6 million countered by increase in OMS contributing $6.1 million, follo
Slide 23: Revenue Contribution and EBITDA Margin by Subsidiary
The Company’s FY2019 revenue of $368.8 million decreased by 1.9% from $375.9 million in FY2018. Revenue from OMS contributed 36.6% followed by DreamAD group at 15.2% to FY2019 revenue. The following tables show the revenue contribution from each subsidiary and their EBIDTA margins.. REVENUE CONTRIBU
Slide 24: Gross Margin Analysis
Gross Margin Analysis Given that the Company is in business of buying and selling digital advertising media, the COGS are primarily the costs of media purchased for advertising inventory. Media tra"c quality is continuously improving as better filters are in place and higher quality media tra"c has
Slide 25: SG&A Analysis
SG&A Analysis The Company’s SG&A expenses consist of: (i) personnel expenses, (ii) sales and marketing expenses, and (iii) administration expenses. SG&A percentage of revenue has shown marginal increase from FY2018 to FY2019 of 0.5% .The Company has been focused on building a tech platform to addres
Slide 26: EBITDA Analysis
EBITDA Analysis The Company’s FY2018 EBITDA of $110.5 million decreased marginally by 1.9% in FY2019 to $108.5 million. The EBITDA margin remained same at 29.4% between FY2018 and FY2019. The lower chart shows historic EBITDA levels and margin trend line. EBITDA BRIDGE AND MARGINS(FY2015-FY2019) (Am
Slide 27: Net Working Capital Analysis
Net Working The Company’s net working capital is decreased by $4.1 million in FY2019, primarily due to decrease in Accounts Receivables by $5.725 million, decrease in other assets by $6.1 million and increase in short term advances by $7.2 Capital Analysis million . The short term loans and advances
Slide 28: Revenue Drivers
brightcom group REVENUE DRIVERS
Slide 29: Revenue Growth Analysis
Revenue Growth Analysis ONLINE MEDIA SOLUTIONS (OMS) DREAM AD GROUP 250 70 250 30 CAGR : 17.1% CAGR : 19.9 % 219 REVENUE CONTRIBUTION : 37% 203 203 60 REVENUE CONTRIBUTION : 15% 208 196 200 189 200 171 50 169 20 150 150 133 40 Millions Millions 35 127 33 34 14 31 13 100 30 100 12 100 24 100 11 10 19
Slide 30: International Expressions, Dyomo, Brightcom India
INTERNATIONAL EXPRESSIONS DYOMO CORPORATION 250 30 200 188 100 CAGR : 16.7 % CAGR : 14.4 % 180 REVENUE CONTRIBUTION : 4% 200 200 REVENUE CONTRIBUTION : 8% 167 200 188 160 82.4 21 21 140 163 20 20 18 120 150 120 64.8 Millions 125 100 14 100 100 80 47.2 10 10 50 40 25 26 29.6 24 19 16 13 0 0 0 12 2014
Slide 31: Management Structure
brightcom group MANAGEMENT STRUCTURE
Slide 32: Board of Directors
Board of Directors The Company’s current Board of Directors is listed below: Name Title Background Mr. Reddy is the Chairman & CEO of Brightcom Group. With over a decade of online marketing and advertising experience, he has a strong understanding of building e"ective cross-country and cross-cultura
Slide 33: Board of Directors (Cont’d)
Board of Directors (Cont’d) Mr. Allamsetty, is one of the veteran IT professionals in the country, who co-founded many US-based technology start-ups in India. Mr. Allamsetty is the co-founder of Platys Communications in India, which is one of the first Fab-less digital high speed ASIC (Chip) design
Slide 34: Management Structure and Bios
Management Structure Suresh Reddy Chairman & CEO Vijay Kancharla Jacob Nizri Brad Cohen Y. Srinivas Rao Chief Innovation O!cer President Chief Strategy O!cer Chief Financial O!cer Management Bios Name Title Background Mr. Reddy serves as the Chairman & Managing Director of Brightcom Group. Prior to
Slide 35: Management Bios (Cont’d)
Management Bios (Cont’d) Mr. Yepuri joined the Company in 2001 and is responsible for the overall financial management. Previously, Mr. Yepuri has 29 years of diversified business experience, including 18 years in senior management positions. Before joining the Company, Mr. Yepuri held several Srini
Slide 36: Market Overview
brightcom group MARKET OVERVIEW
Slide 37: Market Overview
• The Company’s business operates within today’s complex and constantly diversifying $248.6 billion Digital Advertising industry (“DA”), which is a subset of the Global Advertising industry (“GAD”). Globally, programmatic Market Overview advertising has become the preferred method for buying and sel
Slide 38: Digital Advertising Relationship Overview
DIGITAL ADVERTISING RELATIONSHIP OVERVIEW
Slide 39: Digital Advertising Channels
The Digital Advertising industry utilizes several channels to execute advertising campaigns for brands. Some of these media formats include: (i) display marketing, (ii) Video Advertising, (iii) Mobile Marketing (iv) search and email marketing, (v) lead generation and (vi) Social Media Advertising Di
Slide 40: Global Ad Spending
INTERNET USER GROWTH 9000 8000 7,796 7000 6000 5000 4,574 4,294 4000 3000 2,300 2000 1,340 835 1000 527 728 658 454 261 369 349 180 42 29 0 Africa Asia Europe Latin America Middle East North America Australia Total Population Est in Millions 2020 Internet Users in Millions 2019 Source: Mckinsey, eMa
Slide 41: Total Global Ad Spending by Category and Region
TOTAL GLOBAL AD SPENDING BY CATEGORY AND REGION (Amounts in Millions of USD) Category 2014 2015 2016 2017 2018 2019 2019-2014 CAGR Digital advertising 127.3 146.6 168.5 190.5 212.0 231.4 12.7% Broadband 429.3 463.8 500.5 539.4 581.2 624.6 7.8% TV advertising 183.5 189.4 202.5 209.0 223,1 233.9 5.0%
Slide 42: Impact of Covid19 on Digital Advertising
When the restrictions are lifted the initial reaction of many will be to jump o#ine and do things that they couldn’t before – visiting friends and family, visiting museums and theatres, returning to pubs, restaurants, sports grounds, places of worship, gyms and libraries. However, digital marketers
Slide 43: Digital Advertising Industry Evolving Trends
• The profile of digital spend is changing as it evolves, with engaging online video formats and social (23.5% in 2018) growing rapidly whilst traditional display banner formats grow at more subdued single digit rates, a predicted 8.7% in 2018. • Digital spending is becoming predominantly mobile rat
Slide 44: Competitor Comparison
COMPETITOR COMPARISON Advanced Marketing Artificial Platform & Intelligence Media & Software & Data Email Video Ads Entertainment Mobile Development Analytics Marketing E-Commerce i i i Hi [india, USA, Europe, LaTaM,arac | ¥ v v 7 (Bid dingX ‘Guangdong, China Xx v x x v v x x x (Cite Pars, France x