Brightcom Group Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

The company reported a strong year, with consolidated revenues of Rs.7396.77 crores and PAT of Rs.1370.99 crores for FY2022-23. Consolidated revenues increased 47.36% YOY and PAT rising 50.30% YOY. The EBITDA also rose by 43.96% YOY. Companys Return on Equity (ROE), on an annualized basis has reached nearly 19.58%. We would also like to highlight that this ROE is unleveraged, because the group has zero debt on standalone and consolidated basis. We continue to focus on improving this key ratio. In addition, we achieved operating free cash flow of approximately Rs. 436.76 crores.

The main drivers of revenue were:

1. Client relationship fostered over the years

2. Improved client satisfaction leading to new client acquisitions

3. Presence in new geographic locations

4. Digitalization is going up

5. The AdTech Industry is growing

6. Adding new products to get higher wallet share of new clients

Additionally, during the year, we have added about:

260 Global Agency Relationships 15 New Advertising Agencies 630 Direct Advertisers 650+ large Publishers 50,000+ long-tail Publishers

The above development in turn led to better eCPMs for Brightcom. Blocal Exchange and Brightcom Video player, both New Product Technology Introductions, have started contributing significantly to the overall business growth. The above factors, combined with the overall Growth in "Digital advertising media" and client focus by all our operating teams across the geographies helped deliver the Robust Growth.

Inorganic Growth: M&A and Strategic Alliances Strategy

On the inorganic growth front, we have been working out the most effective structure to enable faster & ROE focused growth for our company. We are extremely focused on being highly capital efficient and are calibrating our inorganic growth strategy to get most bang for our buck. Appropriate announcements shall be made when inorganic transactions are consummated.

Updates:

The team participated at the "d3con Advertisers day" event in Hamburg. We also took part the "AdMonsters OPS" event in NYC in June 2022. In May 2022, Brightcom attended the "Advertising Week Europe - Creative Capital" event. Ezequiel Moschcovich Vice President of Business Development was at the DIGIDAY Summit in Miami, Florida in September 2022. Etai Eitany, CEO of Israel office, along with Roni Gelman and Daria Oshry of Berlin office were in Cologne, Germany to be at the event DMEXCO in September 2022 Sabrina Delas, Team Lead, Publishers Development, attended the CES 2023 Event at Vegas in January 2023 Our Brightcom team attended MWC Barcelona 2023 in February 2023 Etai Eitany and Sabrina Delas have attended Digiday Publishing Summit in March 2023 in Vail, Colorado, USA

Risk management

The Company has a well-structured and robust risk management mechanism, including a comprehensive register that lists the identified risks, their impact, and the mitigation strategy. Broadly, some overriding risks are listed below:

Data security risk: Technical failure and breakdowns in servers could interrupt our websites and result in corruption of all data and security breaches. The Company has initiated a pilot project to establish a secondary site in India as a precautionary measure.

Obsolescence risk: A technology-driven company always faces the risk of an innovation or product development that can make one or more propositions redundant. The Company remains alert with technological developments to overcome this risk.

Financial and tax risks: The Company has had a few income tax and service tax cases against it, which, if lost, may impact future cash flows. However, none of these is material.

Competition risk: Enhanced competition in the US market may reduce price and revenue margin. The Company is expanding globally and penetrating potential markets like Brazil and China. In the future, it would focus more.

Consolidation risk: Consolidation of service providers may affect the Company. The Company has also ventured into strategic acquisitions and tie-ups to capitalise on current market opportunities.

Regulatory risk: Businesses can be affected by privacy legislation and other regulations. The Company discloses all its collection statements and dissemination practices in a published privacy statement on its website.

Human resource

The Company firmly recognises the importance of its human resources to achieve its vision. BCG has significant policies to acquire and retain new and existing talent. It trains its people in various ways to create an extensive talent pool. Besides providing attractive remuneration to people, BCG also focuses on providing a stimulating and multicultural work environment.

Our journey till now and Road Ahead: As we reflect on the journey that began in 1998 with the founding of the Company in California Bay Area as USA Greetings.com, it is astounding to witness the remarkable evolution of the digital landscape. From a mere 300 million users tethered to desktop computers, the online realm now encompasses over 3 billion users across the globe, accessing information, entertainment, and education through a myriad of devices. Today, we stand at the precipice of another transformative era, characterized by the rapid integration of Artificial Intelligence (AI) into every facet of our lives. While Brightcom Group has only begun to explore the vast potential of AI, we recognize its influence in revolutionizing communication, problem-solving, and even reshaping big brands. The journey has just commenced, and we anticipate a magical transformation over the next two decades. In the ever-changing landscape of online engagement, weve witnessed screens transition from desktops to wrists, mobiles, and even car screens. Yet, we maintain that the form factor is secondary; its the consumer behind the screen that matters. The imminent shift to an AI-first world reinforces our conviction that the device will eventually fade away, giving rise to smart internet systems that understand users while prioritizing privacy and security. Looking ahead, our focus remains on driving effective monetization for publishers, enhancing ad effectiveness for clients, and embracing emerging technologies like AI/ML, IoT, and Quantum computing. Our strategic pursuits will be marked by efficiency and sustainability, ensuring our continued growth.