Brightcom Group Ltd

NSE:BCG

Earnings Call Transcript 2023-Q1

[Operator]

Good evening, ladies and gentlemen. I'm Kritika, moderator for the conference call. Welcome to Brightcom Group Limited Investors Conference Call. The duration of the call will be for one hour.

We have with us today Mr. Suresh Reddy, Chairman and Managing Director; Mr. Peshwa Acharya, President, Group Strategy; and Mr. Narayana Raju, Chief Financial Officer, Brightcom Group Limited. [Operator Instructions] This conference is recorded.

Before we go ahead with the conference, Brightcom Group would like to mention that, during the conference call, certain statements in this call reflecting Brightcom's future growth prospects are forward-looking statements, which involves a number of risks and uncertainties that could cause results to differ materially from those in such forward-looking statements. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

Now I hand over the floor to Mr. Narayana Raju, who will update us on the financial aspect of the call. Thank you, and over to you, sir.

[Singaraju Lakshmi Raju, executive]

Thank you, Kritika. Hello, everyone. Good evening. Thank you very much for taking time out of your busy schedule to join today's call. We appreciate your interest in understanding our company's financial results for the last quarter from April 2022 to June 2022.

I'm excited to share the quarterly results of the company. Our company, for the quarter ending June 30, 2022, achieved a 126.38% increase in revenue and 162.66% rise in profit after tax. This is all compared to the quarter ending June 30, 2021, an outstanding performance at the end. The EBITDA, too, have a healthy growth of 121.90%. For the period ending June 30, 2022, our company reported consolidated revenue of INR 1,480.61 crores and a profit after tax of INR 277.24 crores.

Let me share with our segments [indiscernible]. During the quarter, we have achieved a turnover of INR 1,386.30 crores from our asset, Digital Marketing segment. This amounts to about 144.9% jump year-over-year. For the Software Development segment, the turnover is INR 94.30 crores, amounting to a year-on-year increase of 7.2%.

On the return on equity front, I'm happy to inform you that we continue to be committed on improving the return on equity. The ROE for the current quarter has reached to about 20% compared to about 17% for the quarter ending March 31, 2022. We are committed to improving our capital efficiency constantly to take this metric higher.

As committed earlier, we are extremely delighted that we have achieved our target free cash flow of INR 492 crores. This is a true measure of operational efficiency and shareholder value creation of the company because ultimately, as you are all aware, our business is valued on cash flows as much as [ chip ] is valued on profitability.

Just to define the free cash flow, to put it in a layman's way, it is the cash available to the company after making the operational expenses and capital expenditures. Free cash flow will help us to increase the shareholder value by investing and developing more holistic solutions of our customers, and tapping into new areas by expanding our global footprint by meeting new or upcoming demands of the customers and evaluating inorganic expansion ideas.

For the quarter ending June 30, 2022, the approximate tax rate is coming to 28.29%. On the [indiscernible] front, our continued efforts have helped us to reduce the number of days outstanding in total receivables to 132 days when compared to 137 days as of March 31, 2022. When we compare this to the industry leader, the [ Trade Desk ], they are having about 608 days outstanding for the receivables. So when it comes to the Digital Marketing division, the current days outstanding is 129 days compared to 133 days as of March 31, 2022. And for the Software Division, the number of days outstanding is 181 days compared to 183 days as of March 31, 2022.

So this is the information that I'd like to bring to you all. I now hand it over to our Chairman, CEO and Managing Director, Mr. Suresh Reddy; and Mr. Peshwa, our President, Strategy, to tell you more about the company. Thank you all.

[Muthukuru Reddy, executive]

Thank you, Raju garu. Very warm and a very good afternoon to all for participating on the call today. I'm very happy that we've had a stellar quarter compared to last year at the same time, and so we are just excited overall about all the happenings in the company.

Before I start into the details, let me wish you a very happy Krishna Janmashtami. It's an auspicious day. We are delighted to be able to address you on this day. Mr. Raju has taken us through the numbers and the results, so I have to place on record, kudos to the team for outstanding performance. We're really pleased with the performance this quarter.

I will try and set a little more context to the numbers behind, and also a few comments. And Peshwa will help me a little bit on the future growth discussions we are having, and a few points that we would like to bring forward. This is the broad idea.

So coming to the overall growth, the growth has been -- almost, we achieved close to 2.5x, what we did the same time. So there are multiple reasons why this happened, and I'd like to bring out some of the drivers that are responsible for the growth of the revenue.

On the demand side, coming to this quarter alone, we added about 6 new ad agencies, 14 new direct advertisers, 12 newspaper relationships, especially on Blocal Exchange, that is another nicely growing area. I want to expand a little more on why Blocal is important to us. If you look at advertisers, there is -- they all go to agencies, and some of them go directly. So the national advertisers, specifically in the U.S., go to the national agencies, and that's how -- and there are a lot of networks why for that business. Whereas when you come to the local advertisers, they are pretty large, their spend is large, and they have much better margins for somebody like us to work with them. That set of advertisers is still untapped, and this product is what helps us reach out to the local advertisers. And we are, in fact, looking on how we could expand that local advertisers stream, maybe provide that to other networks as well. So this is an interesting area that we are exploring right now. We will have some more announcements as we go on those slides.

Then to give you an overall perspective on the size of the business today, we are doing close to 85 billion to 90 billion impressions a month, basically ad-delivering opportunities. We have close to 650 large publishers, 50,000-odd long-tail publishers, more than 600 direct advertisers, 250 ad agency relationships spread across the world. So this is the big picture of the company.

And in terms of the products that have helped, our relaunched Compass has been optimizing the clients' ad spend across media formats. When we built this product, the area was whether you try to solve the problem when the advertiser is trying to decide where they should spend the advertising budget. They do [indiscernible], so they do it on videos, social media. So to solve that issue, we came up with the product, Compass, and the new relaunched version gets even better, which includes video programmatic all together. So this helps the advertiser put the spend into it as the system decides how the money has to be distributed between various media formats.

So this has led the advertisers to get better eCPM, and it also helped us as a company to get better eCPMs. We have, in effect, achieved higher customer satisfaction because of that. So this is also helping us cut in more into the market by going for a larger market share from clients and agencies. So this is a nice product that is actually catching more traction and more fire right now. So we're very happy about the relaunch the Compass product, or the Compass platform that we have.

And coming to other developments, this is more to do with things that are happening that we initiated last quarter. Our Berlin office is getting into rhythm of the overall organization in terms of the working principles, just the way how we function. And Berlin has been the epicenter of creativity in Europe, and new technology developments are doing a lot towards growth momentum as well. So we love the fact that we have an office there, we have business there that's actually helping the overall thinking. So in fact, we are thinking of having our next Board meeting. The Board is very keen on being their next Board meeting in Berlin. So that is a possibility we are exploring, it all depends on schedules and such. So that's an area that -- just we want to understand exactly how this new energy center, center of creativity is helping the world. So that's another point I wanted to make.

Beyond that, our top platforms OneTag, Compass, [ Volo MP ], the programmatic of Brightcom, ProxyTool, Pangea, they're all generating revenue for the company consistently. And one -- it just keeps flip-flopping here and there, but it's all together. We are getting a solid support with respect to platforms, the adtech platforms that we have. Specifically Blocal Exchange, which I explained a little earlier, and Brightcom Video players, both are the new platforms that have started to contribute to the overall growth now. So hence, you are seeing a little additional push from a revenue growth and margin growth perspective. So these are some of the points I wanted to make with respect to -- just key points that are behind the numbers.

Coming to the other update. What we do in our business is we need to stay in touch consistently and continuously with our clients. That is one point. And also, stay in touch with what is changing with respect to tech advances. So these are 2 key things that we have to, always be on top of kind of have a pulse of the market.

So our core team attends a lot of events across the globe. Some of the events we attended is -- in the last few months are we participated at the ATS London in June. This is an event that focuses on digital marketing, publishers, collaborative -- other collaborations that happened, primarily on partnerships that we can initiate. So this was in June. And then the team also took part in d3 (sic) [ d3con ] Advertisers Day in Hamburg. We also took part in AdMonsters OPS event in New York. Again, also in June, a different team that had gone there. Then in May, Advertising Week Europe, which is, again, Creative Capital event. The team was there as well. These are some of the events that the team has been there to primarily add more publishers, add more relationships with respect to advertisers and agencies, and be on top of new development, new thinking that's going on with respect to digital advertising.

So it becomes all the more important because there are large digital majors, which are having difficulty, and there are markets that are having difficulty. But for us to stay on top of it and actually use this opportunity to cut into the market share is very critical. So the team is fairly nimble, and been at it for now.

Also to take on this additional growth, the company has been hiring new talent in technology, operations and also on the sales side. Primarily, Argentina has been hiring. India has been looking to hire a lot of tech talent because, I mean, I'll explain a little more on what we are planning to do on the India side, which is more on the AI and ML side, where we're getting a lot of a lot of work towards us, and we want to develop a few products also around that. And Israel has also been hiring, quite a few new hires there. This is the -- broadly on the organic side, what has happened.

Coming to -- there are a lot of questions regarding the inorganic front. There have been questions on what happened to this announcement and next announcement. So I'll try and see to what extent I can talk about today. The inorganic growth front, we are working out an effective structure to basically keep in mind the ROE focus that we have developed as a company. Our focus on improving ROE of the company, and we have actually achieved 20%, as Raju was talking about it just before me, we increased from 17% to 20%. And so that's important to continuously grow this, because it's, to us, one of the indicators of how well we are performing. So we are very focused on being highly capital efficient, and we are also calibrating our inorganic growth strategy with this new angle in mind.

So to get the more bang for the buck, we are reconfiguring some process metrics and some understanding with the current acquisition in play, which is Media Mint. So that becomes more efficient for both parties, so we'll have an announcement very soon on that.

Then coming to our audio acquisition, which is out of the East Coast that we've been working on, it's going full swing. The due diligence is complete, final agreements are almost in place. There is a lot of excitement in the air on both sides. In fact, I was in the U.S. last week, meeting with the management and the owners on that side, to make this combination happen sooner than later. So I urge you to watch out for this space in the coming few weeks. We will have something for you here.

This is broadly the update, I'll let Peshwa do the future outlook, then I'll come back after that for other updates that are out there. Peshwa, can you take over?

[Peshwa Acharya, executive]

Yes. Thank you, Suresh. Thank you so much. A good afternoon to all of you who have joined in. Today is a fairly auspicious day for us, and I'll quickly try to give you some thoughts on the way we look at the future, and we believe there is a fairly robust and strong future ahead. I think it's not new. All of you would already be aware, the way the marketing and the advertising world is moving towards. Today, a large part of the advertising and marketing world is moving towards online and digital. Both in terms of communication and transactions, both within India and of course, globally. So this is a very interesting time to be in this industry, and we believe that the whole global advertising pie, which is already $1 trillion in the near future, and it is in this context that we must look at the industry.

And Brightcom, let me put on record, that we essentially play a rule of an enabler, not really a disruptor. It's really an enabler, but enabler which technology, that's what we are. And if one looks at the system, as a platform in this whole ecosystem, we have advertisers, brands, something called a demand side play platform, supply-side platform, ad exchange publishers, and there's a large number of data management and data supply, which is involved in this whole play. So I think it's an interesting tech-driven play, and I think as we move along, digital becomes very important in the overall commercial lifeline of organizations, and I think we will remain at the epicenter of that. So that's one thing, which I wanted to bring to your notice.

The second very interesting, I think, insight and phenomena, which is happening is, we are kind of actually witnessing an expansion of what is called omnichannel play, and this is happening globally. And at Brightcom, we must ensure that all our clients are part of this omnichannel play, and we are with them to help them ensure the play.

So what essentially is omnichannel play? What does it mean? So today, digital marketing or digital advertising is just not what we say on websites, and it's much more. So just to kind of demystify it, we have what is called display advertising. We have online video, very important one, which is taken on and is called CTV or connected TV. In other words, we watch a lot of [ OTT ] and a lot of other things on television today, our traditional television. Then there is something called native ads. There's a lot of digital on mobile, tablets and other forms. There's something called digital audio, which some of you would be following. And there is something called digital OOH or outdoors.

So today's clients and brands want to participate in this omnichannel. That's very important. And I think as a company, we must ensure that we gear up for this omnichannel play and which we are doing. Let me also -- so these are, according to me, some of the significant growth drivers of the category and the industry.

And when we talk of connected TV or OTT, a very interesting thing is happening, and some of you may actually have been following some of the international news last 2, 3 days. And this, I think, has been happening for quite some time. A lot of content-driven platforms, which were very much driven by subscription model. And I can mention some of the names, whether it's the Netflix or Disney of the world, is actually moving from a subscription-only model, what we call in technical parlance, SVOD, to what is the subscription and advertising driven model, which is AVOD.

And in fact, according to me, this would be one area of growth even for adtech companies and digital marketing companies. So this is happening. As we talk, it is happening, and I think [indiscernible] days you must have picked up some of the news, which some of you [indiscernible]. So this, to me, is a very important sentiment according and -- insight.

The second one, again, is very significant. It's what is called the rise of concept shopper marketing. Now shopper marketing essentially is in the area of consumer products. In India, we call it FMCG, the typical things, which people buy, and retail brands. Why suddenly this becomes important? Because we are seeing now today, even the big brands are giving a huge [ emphasis ] on the digital retail ads, not just brand building ads. And I think companies like yours, Brightcom, we are in the process of launching to capitalize on this. So this is another thing, which is happening globally, where there is the rise of shopper marketing ads.

And the third one, I think, is very important is essentially our ability to enhance the revenue by taking a larger wallet share from all our clients, agencies and brands by really providing technology-centric platform that are super-efficient. That is very important because as a client, you tend to give business to someone who you are doing business with, where they feel that efficiency and that distinct growth, the wallet share keeps on increasing. And not only that, I think it's a culture of retaining clients where we have built that interaction and that relationship with the client. That's also a strong growth driver.

So these are some of the kind of points which I wanted to say, and really, we see the future to be extremely growth-focused, and you must keep on being focused and effective, so this is what I wanted to share with you.

Suresh, can I hand it back to you? Okay.

[Muthukuru Reddy, executive]

Thank you, Peshwa. Thanks a lot. Yes, a few other points that were brought up [indiscernible] some questions. I'll just answer them, and then open for questions. I think a couple of -- 2 or 3 points, I think, we just wanted to address, then we can go to questions after that.

See, again, to reemphasize, yes, there is a global movement towards [ removal ] of third party, and we are expecting it to happen in '23 or '24, and there are questions about how will that impact us? How will it impact Brightcom Group's revenue? And does it increase our costs and such?

So we actually -- it does, I mean, what -- the way it functions is we collaborate closely with publishers, and we mostly depend upon the first-party data. Whether we like it or not, it's very important. The data comes a lot from the publishers themselves, with whom we collaborate. And it's also more -- it helps the privacy of the consumer as well, because consumer is becoming more privacy conscious. So due to this, it is beneficial direction for the consumer, hence, it is beneficial for BCG as well.

Most companies and many operators were very young when these were used in the past, and they were -- even the third-party data that was always -- pick through cookies and such, came later. But BCG has been around since the beginning. We have seen the arrival of cookies and the [ disappearance ] of cookies, so we know how to manage this, just to give you comfort on that. We understand that there are effective ways to target, and we know exactly how to play this card. So we are not concerned about it, so just to assuage that.

We'll employ strategies. We have technologies. We have collaborated with some new technology providers. In fact, we announced one collaboration a couple of quarters ago just to meet this new generation. So we are ready. It should not affect us in any which way. In fact, it should enhance us because we would be somebody with experience getting into it. So important thing is we should work with third-party targeted data, which is ethical and legally available, without violating privacy. So this is the new mantra that will happen going forward. So that is one point.

Then there is a question regarding, of course, yes, the main one is about forensic audit. Where do we stand? There's an update, a lot of people are requesting that. There were additional requests on -- in terms of details of the company, so we have provided additional account details to the regulator. And any other information they requested, we have provided. And we expect to see a fair report. We have not received any additional queries for the last, I would say, few weeks now, more than 2 weeks. We expect to see a fair report from them in due course. And that's about it, and I think we'll have to wait and see how it flows. That's all I have to say about forensic audit.

Then there is a new point that I also want to bring about because there's a lot of discussion in social media, and some of the investors are inviting to me and messaging me about it. And we -- while the company has been doing the best they can in terms of maintaining corporate governance...

[Peshwa Acharya, executive]

Suresh, I think...

[Muthukuru Reddy, executive]

Hello. Can you hear me? Yes. We have been doing a few things. Hello?

[Operator]

Hello, you are audible sir. Please go ahead, sir. You are audible.

[Muthukuru Reddy, executive]

Yes. Okay. There's some interference. Peshwa, did you say something?

[Peshwa Acharya, executive]

No, no. I just wanted to remind you that there may have been some questions on corporate governance and all that.

[Muthukuru Reddy, executive]

Yes, I'm getting to it. I'm getting to it. Yes. So on the corporate governance side, so we, as a top management, we sat -- basically the Board and the management, we sat, and we have decided to make this one of the key focus areas. And along with ROE and free cash flow, which were the 2 pillars, this would be the third pillar we would evaluate ourselves going forward. So this, we have committed to ourselves to do this in light of a lot of happenings that have happened, and it's important as the company goes to the next level. And we also are happy to announce that now we are in the A group, it was gone through whatever and the exchanges put us in the A group. So it's important -- all the more important to start putting more systems, checks and balances.

So we have committed to ourselves that we'll make our systems a lot more robust from this level. And in fact, we can start looking at some, enhancing our committees, adding more advisers to the team, to the company, in terms of helping us develop into a next level company. So these are some of the initiatives that we are going, and we will start reporting on this from -- going forward from here on.

That's all I had, so you can go ahead for questions now.

[Operator]

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. First question is from [indiscernible] Vivek from [ RT ] Capital.

[Unknown Analyst]

Yes. There are 2 questions, and very common [indiscernible]. Like, we'd like to know what is the update on the Lycos deal that was -- any settlement with Daum that was in place, like, everything is in place, or how is it going? And second is, we have been hearing about 44 Ventures. And, like, we have presented -- how are we associated, or how is Brightcom associated with 44 Ventures and its management team? And that's all, sir.

[Muthukuru Reddy, executive]

These are the 2 questions? Okay. Is something more, Vivek, or that's it?

[Unknown Analyst]

No, that's it, sir.

[Muthukuru Reddy, executive]

Okay. So on the Lycos, we -- like I've mentioned in the past, we have a settlement agreement in place, and we've been talking to the seller, which is Daum. We want to close that out. So there has been some delays due to us being busy with few other points, so there are things that are taking us time. So it required us to go through the final settlement agreement to make the final payment. There's no challenges per se, so I believe we should be able to close out this quarter. So that's my -- worst case in the next 3 months, we should have it all done and closed. That's my commitment to you.

And then coming to 44 Ventures, basically, 4 of senior members from OMS, which is our Online Media Solutions company or [indiscernible]. They are actively involved in running the company day to day. We were unable to issue what you call employee stock to them long time ago, and they needed flexibility to grow beyond what we are doing because they have the bandwidth to grow. So they came up with the idea of having opportunity to do things, which are not competing with what we are doing, and which do not have any challenges with respect to what we are doing. So they have formed the company called 44 Ventures. And they are contracting themselves into the company, into Brightcom. And they are fully committed in growing Brightcom and have seen the growth through them. So it's just an arrangement to give them opportunity to do other things outside of Brightcom, which is non-conflicting. That is the core of it, nothing beyond.

[Unknown Analyst]

That's fine. So it's basically an entrepreneur, like, sort of...

[Muthukuru Reddy, executive]

Yes, to keep them more active to get them additional opportunities, especially because Israel is buzzing with technology and new [indiscernible] as such. So it just keeps them [indiscernible].

[Operator]

Next question comes from [ Mayur Manji ], an individual investor.

[Unknown Attendee]

First of all, congratulations, sir, for delivering such a great quarter. I have a couple of questions. I'll ask them in line. You did mention about the status of the forensic audit. I would just like to request you to, if you can, elaborate a bit more on that? Like, how confident is management about the status or outcome that may come on that front?

And my second question is, company had plans of consolidating the foreign subsidiaries that we have. We had the kind of initiated process also. So where does that stand at the moment? I do have a couple of more questions, if I may.

[Muthukuru Reddy, executive]

Sure.

[Unknown Attendee]

Yes. So what clients do you have with Lycos coming back, once we settle with the Daum? if we have some concrete plans on that front? And next to that, sir, what is your take on asset industry size overall in 10 years, let's say? And where do we see ourselves by then? What part of -- what portion of that pie we can actually look for in such a time frame?

And one more important question I had. The tax rate -- current tax rate that we have reported is around -- somewhere around 28% to 29%, if I'm right, globally. So are we thinking on those funds, like, are you planning anything to reduce the tax rate overall on the global front?

[Muthukuru Reddy, executive]

Okay. [indiscernible] so many questions.

[Unknown Attendee]

Yes. Really, I was just like...

[Muthukuru Reddy, executive]

You already asked more questions. I'll give you just one more.

[Unknown Attendee]

Yes. Yes. It's just a request. It's not a question. Last one. Can we come out with the presentation elaborating like all the different types of offerings that we have, like, we provide, including mobile, desktop and in-app advertisement, mobile advertisement because this has been like a question on the screen to understand our business better. So that's just a request.

[Muthukuru Reddy, executive]

Okay. That's a request, so we'll address that later. So first 4 questions, let me come to that. First 5 questions, actually. Status of forensic audit, I think, I've given you as much as I can give, given the fact that we are dealing with government and there's no point trying to speculate because from our side, we know we are clean. We know we have everything that is required to be provided, and we have provided. So let's wait and see what the government regulator comes back with.

So we are confident, we're 100% confident that everything is good hunky-dory, but we'll have to wait for the response from the regulator. So that is the most I can tell you on that, okay? I don't want to get into any trouble by saying wrong things on that. So that's the reason we're being careful and measured with respect to forensic audit. So that is one.

Coming to consolidating subsidiaries, yes, that is very much on the cards. We had a lot going on in terms of the bandwidth that's taking up the management. So without losing focus on 2 things, which are the 2 core things that I just talked about, improving cash flows and improving ROE and not hurting the bandwidth, we are doing -- we're focusing on that. And then we are looking at other things to do, so hence, the consolidated subsidiaries part have kind of taken a back seat for the past few quarters. Now we will come back to it. There are a few ideas that can be used for how we can generate additional funds for the company and how we can grow it from there. So that is definitely on the cards. So beyond that, there's nothing more to talk about on that.

Lycos, what do we plan to do once we get it back? See, the one is we have a legal liability that we have to settle and get that out of it. We can't just walk away from Lycos and say, okay, [Foreign Language], you keep Lycos, so we'll go away. That cannot be done. We have to ensure that it is closed, that is more important.

Now what do we do with Lycos once it comes back to us? So this is a long story, but I'll try to quickly explain. We -- what we did is we had met with the founders of -- original founders of Lycos to understand what was their thinking when this brand came out. You have to understand, this is a brand that was the first company to be on the -- first tech company to go listing on the NASDAQ, was part of the index of NASDAQ, and they had ads running on Super Bowl. It is the most recognized brand at one point in time. So it is a huge brand. And what we have to make sure is we have to delicately take it and position it in a way, I cannot go and recreate another search engine, which does not make any sense. So we have to see what is the best way to utilize the brand and the awareness of the brand, and how do we take it forward given the current date's context.

So that is the idea with which we started an IoT product called Lycos Life, which did not succeed for various reasons at that time. So now we will -- we have a few thoughts, but we will now look at what works and what did not works, and then come up with the best way to go forward. I cannot reveal those plans yet unfortunately, because they are in state of flux, and we are still working through them. And we want to wait until it comes back. It doesn't make sense to read into things before we finish the transaction. So that is where I'm unable to talk more beyond it, but that is the broad thinking there.

Then coming to adtech industry, what size will it become? Is it going to be $1 trillion, is going to be -- yes, all those are things to be seen. But more importantly, from the way we are looking and where we stand as a company today with respect to the global majors. My singular focus here is to take this company to a level where we would be considered one of the majors in the industry. So we will do what it takes, whether me or the team, we will do what it takes to get there. Now it will not be -- not happen in 1, 2 years. Like you said, 10 years is a good time frame. And we have a lot of things that have to align that have to fall in place. There's a lot of confidence we have to win with respect to investors, regulators, media, and a lot of things that we have to do.

So these are the things that are happening as we speak this year. And once these are in place, you start seeing some of the most that will help the business get step-by-step towards where we want to see it. This is not the end. This is just the beginning. That's all I can say.

And then the last point, with respect to tax rate. See, we are -- these are all already existing businesses teams that are functioning there. We cannot relocate them, we have to comply. But that said, there are ways to look at tax. Part of the reason why the consolidation of subsidiaries is also looking at that item. We will do our best to improve the tax rate. I do understand 28% to 29% is -- it's not bad or it's not great, so we have to figure out. If we can cut out even a couple of points, it will help the profitability. I see your point there.

And coming to our offering, we will do an entire presentation during our offering and upload it in the coming few weeks. I hope I've answered all your questions, Mayur.

[Operator]

Next question comes from [ Vijay Patil ], an individual investor.

[Unknown Attendee]

Congratulations to you and your team for, again, a wonderful quarter. I have about 3 questions, let me start with the first one.

Is it fair to assume that organic growth for the whole adtech industry will eventually taper around 30% CAGR? The question is around, can it be improved? I mean, you also talked about a lot of opportunities or lack of capital in the previous years, now that we have an improved cash flow. And also, are you thinking about maybe improved additional capital by taking a debt that -- you also talked about [ LOC ] in the previous cycle. Are you thinking that, considering opportunities available now? That's my first question.

Second question, what are your goals on the inorganic growth, especially you also considered other companies, too? And what are those time lines, if at all? And what would your funding plans to achieve those inorganic growth objectives?

The third one is around how can we increase the -- is there any plan to increase the dividend payout percent going forward? So those are my 3 questions.

[Muthukuru Reddy, executive]

Yes. I hope I can answer all of them, let me give it a shot. Organic growth, CAGR, are we looking at debt? We are very happy being debt-free. It gives us tremendous freedom, and it's all opportunity-driven, Mr. Vijay, because as of now, we have -- our cash flows are improving, we have areas that we are trying to grow. Organic growth has been fantastic, and we can see further push we can do. Hence, we're trying to get -- enhance the team, so that we can take on more available opportunity. So that will happen anyways. For which we will not need any additional money, we can -- and we are also trying to achieve better growth rates than 30% for sure on a CAGR level. We'll see how that flows.

It depends partly on how the market will expand and also partly on how we execute in this expanding market and changing markets. So the players will change, the leaders will change. Is there an opportunity for us to cut in? Like I said, in answering the previous caller, that is an area that we are closely looking at and see how we can play our cards there. So that's broadly the best answer I can give you on that.

In terms of inorganic growth, we do have internal funds, then we will try to minimize dilution as much as possible. We will try to have a combination of earnouts, and if required, we may do a small very, little equity just to keep the new team enthused on growing. But the equity dilution, we are trying to keep it very minimal. And then in terms of debt, if the opportunity is great and if it -- if we feel super confident that it is highly serviceable, we will consider that.

Coming to the dividend, we've already announced the dividend for the previous financial year. Let's see how this year plays out. I just want to use the funds for the growth of the business, both organic and inorganic. And then we will evaluate the status to see how things are and then decide on the dividend. At this point, I'm not looking at increasing any further dividend in the coming this quarter or next quarter, but we'll see how that flows out. I hope that answers your questions.

[Operator]

Next question comes from [ Kirtan Desai ], an individual investor.

[Unknown Attendee]

Hello? Are you able to hear me.

[Muthukuru Reddy, executive]

Yes, I can hear you.

[Unknown Attendee]

Yes. Congratulations, sir, for a good set of numbers. I have some few questions. The first question is if you can just throw some more comments on free cash flows? And if it's possible, if you can provide the cash flow guidance for this financial year? Another question is, what's the update on that Media Mint deal? What impact will it make for the future of the business, or how the growth will come in this financial year or within the next financial year?

And the last question is if you can just provide me the revenue breakup nation-wise? How much is from U.S.A.? How much is from Europe? And if you can just give some details or demand shape up in U.S. and Europe, given a recession rhetorical stories going on as second and third quarter is base quarter for BCG across last 2, 3 years? So if you can you just provide some more details on [indiscernible].

[Muthukuru Reddy, executive]

First let me just repeat, you are saying revenue breakup by country or by region?

[Unknown Attendee]

By region.

[Muthukuru Reddy, executive]

Right, okay. Free cash flows, I think our CFO explained to you broadly what we see as free cash flows. I will give you my view of free cash flows. So basically, it's cash flow -- to run the business as is, what we need, you need to invest in product, you need to invest in receivables, you need to invest in people. All those things are part of the cash -- the required expenses or investments that happened. Cash that remains beyond that is free cash flow.

Now can I take that and sit on the cash? That will be inefficient use of capital, so I may use that to go make an acquisition or make some new market and do something else. So -- but it's utilization of the free cash flow, or I can give dividend or distribute it back. So this is how do we -- if there is an opportunity that will enhance the overall value of the company, so that is the call we as management will have to take because that comes -- that is primarily my job, of best utilization of the funds. If I'm able to do that well, then I can bring value in terms of increasing the ROE, increasing the PAT and increasing the valuation of the business, then I'm helping all the shareholders. So whether I do it by giving dividend back to you or reinvesting in a company, that is the call we have to do. So that is the broad idea.

And then in terms of the guidance for the year, I -- because of -- like you rightly said, a lot of things that are happening in Europe, a lot of things that are happening in the U.S., I'm staying away from making that prediction of free cash flow. We have given guidance on the revenue and profitability. Free cash flows, I have to see because we have to see how quickly the receivables will come. We had a very clear idea, hence, I thought I'll just go ahead at talk about 2 quarters going forward.

So we will -- it will not [indiscernible] giving guidance on revenue and overall profitability and things like that, we will continue to do. When we see there is a surge, when there's an opportunity for us to tell you upfront that there is going to be faster base of receiving funds and doing things, we will give that out. At this point, I'm reluctant to give because a lot of things are in state of flux. One is we have acquisitions coming in. We have a few things that are happening. So talking about free cash flows may not be possible for at least a quarter. We'll try and give an update to you in terms of guidance when it is possible.

Then coming to revenue breakup by regions or by country. Broadly speaking, about 35%, 40% comes from the U.S. North American region. And then next is a pass up between -- I'm just giving you a very high level number. We'll give you actual numbers, we'll put it down, and that's a point that our new CFO, who is already working on a presentation, and we will get that out. Then the next [ start-up ] is between the South American region and Europe because we have significant presence in both these regions. And then Rest of the World comes after that, so we are not -- so that is the [indiscernible] is roughly around 20%, 17% [indiscernible], the rest comes to the Rest of the World.

[Unknown Attendee]

So that's an update on Media Mint?

[Muthukuru Reddy, executive]

Yes, update on Media Mint, yes. The Media Mint is a fantastic company. They have solid processors in place. And the key reason why we are looking to -- in fact, why we look at this particular acquisition, was to help us scale because we know that we have a few things to do both from organic and inorganic side. And we need a stronger support beyond what we have today that can scale quickly that is already servicing third parties, so which is why we felt Media Mint would be a great acquisition.

And so we are now trying to see what is the most efficient way to keep that being together in a way that will help the business and we minimize our costs in this process. So this is what we are trying to put that together and come up with the announcement fairly soon, so that's where that is. I can't go beyond -- once we have that space, we'll go ahead and announce that to the market.

[Operator]

Next question comes from [ Vincent DeCosta ], an individual investor.

[Unknown Attendee]

Yes. Sir, congratulations for the numbers.

[Muthukuru Reddy, executive]

Thank you.

[Unknown Attendee]

Yes. So I think most of the questions have been answered. Just have one-off question, may I. Sir, regarding the bonus. So the second bonus, which was there [indiscernible] resulting in change in [indiscernible]. So I know it's a thing of the past, but do you have any plans like this [indiscernible] can be reduced by going further or you're going to add additional bonuses after this?

[Muthukuru Reddy, executive]

Yes, that's a good question. So when you make a decision about bonus, the first bonus and the second bonus, we took a decision based on that market conditions and what we felt was right for the company at this point, and I still think it's a good decision. I don't -- I know there is quite some float, but I think it's beginning to stabilize. There is no -- I don't see a major issue going forward. Things are stabilizing, and I think it will all come together in the coming few months. I'm not too concerned about that.

We think the key thing here is the number of shareholders and the participation. So if you look at it, the participation has gone from what used to be 1 lakh shareholders to now almost 3.5 lakh shareholders, so it creates more stability to the stock. While it may look little disturbing when that transmission is happening from 1 lakh to 2 lakh to 3.5 lakhs. But once that kind of a shareholding comes in, it creates a very stable base for the company. And we are not threatened by 1 or 2 shareholders who would say I'm going to dump the share if you don't go this way or that way, as opposed to trying to have a buyer and the seller and no single person can manipulate the stock as opposed to it will be a much more fairer way and the stock will see its fair value. We were snubbed down because of that, which is why I feel that having a large distribution of shareholders is important for a stable stock, which is why we took that call.

[Operator]

Next question comes from [ Jigar Shah ], an individual investor.

[Unknown Attendee]

Suresh, sir. What's the reason for the delay in appointing a company secretary, sir?

[Muthukuru Reddy, executive]

Yes, it's a good question. Anything else, or just only one question for you?

[Unknown Attendee]

And sir, second question is [Foreign Language].

[Muthukuru Reddy, executive]

[Foreign Language]. Any other questions?

[Unknown Attendee]

[Foreign Language], sir.

[Muthukuru Reddy, executive]

Thank you. See, the company secretary, there was a possibility of trying to get the old company secretary back. And since we are very comfortable, we're trying to work on that, so which is why there was a little delay. And then -- so for now, we have a Compliance team. Mr. Raju is also doing the job of the Head of Compliance now. So then, we have support in terms of -- it's not like I'm doing the company secretary's job. There are people who are working on that.

So I'm not -- so the more important thing is the appointment of company secretary, we have a few alternatives and we are trying to find the best option because we don't want to keep changing again and again. We want to have somebody to stay there and we can grow, which will help us grow going forward. Because there lot of corporate actions that were taking place, and it is all well handled by the previous company secretary. So we're thinking if we could, we would be bringing him back, but we'll see how it plays out. So at this point, we will -- I think we are now forced to take a decision which way to go. So we will fairly soon announce the company secretary's name. Okay?

[Unknown Attendee]

Okay.

[Muthukuru Reddy, executive]

And then audio acquisition, [Foreign Language] it's getting close. Please have some more patience, Mr. Jigar. We'll announce.

[Operator]

Last question for the day comes from [ Taral Patel ], an individual investor.

[Unknown Attendee]

It was a great quarter and good numbers. Congratulations for that, and to you and your team. I have just a simple -- like, I just wanted to know the future projection of the company. As we have appointed the independently a person for the Indian division, so what are the future plans for India? And in last con call, also, you mentioned that you are exploring the other countries also. So is there any development on that side? And last, related to the same, like as you mentioned earlier about this U.S. listing in NASDAQ. So is there any update on that?

[Muthukuru Reddy, executive]

Yes. Thank you, Mr. Patel. So in Indian division, we did have -- we did have a different general manager before, and he has moved into a corporate role, so it's over time. So we brought in an old-timer, who's been heart and soul in the company for 23 years, I think, approximately, [ Shreedhar ]. And he comes from a tech background. He is a programmer himself, and he's gone through the ranks of the company doing various roles. So that appointment was very exciting for me because we have seen somebody join and go through the ranks in the company. It's not that we brought in somebody from outside.

So what do we want to do with this division? See, there is -- what has happened in our business is used to be very people intensive in the past. It used to require a lot of people to set up a campaign, to monitor a campaign, to report a campaign. So there's a lot of back-end work that was required at one point of time to execute a certain advertising campaign, which is the core of our business. So when you run an advertising campaign, somebody has to do all these things, and then make all the appropriate information being sent. There is technology that needs to be built. There is creative one needs to develop. So there's a lot of different pieces that go into building an ad campaign, and all that was done from India.

But over time, what has happened in the last, I would say, 5, 6 years, a lot of things have got automated. So with programmatic advertising, with real-time bidding, so many things have got automated. And systems are talking to the systems, systems are bidding, systems are actually doing the groundwork that a lot of individuals are doing. So requirement of having as many people in the back end slowly started to reduce. So we started to see what else can we expand into, and hence, we started to develop -- from an Indian division perspective, we started to develop because the way it is set up is, we have the Israeli group that focuses on advertising campaigns and that, and such. The Indian team develops technology and back-end work for the other divisions across the country. That is how we set up.

Now slowly, we all got automated. Some of the work coming to India started to shrink. So we started to think about AI and ML, and we did a few -- we worked with a few clients on this, and we started to see that growing. And recently, I'm working on a few things that are coming into the Indian division. And we see this expand very quickly, so we need somebody with a technical knowledge in background to take this and to service the client the best way we can.

So we see approximately 100 new programmers immediate requirement. And then there are other requirements that are coming in, in terms of managing audio advertising, which is again, based on new acquisitions that we are looking at. So we see this going to scale at a very rapid pace. So hence, it brings a lot of focus back to the back end, so alongside what we talked about Media Mint as well. So there is the opportunity for us to build out this whole thing together from that perspective.

So hence, Indian division is important in the scheme of things for us to execute and deliver the results that we have promised. So that's broadly the thinking. I can -- we'll try and see if we can put a note out in the coming maybe a month or so and exactly where things are with respect to the Indian divisions.

Then coming to the U.S. listing side. In fact, this trip also, I was in New York, and we had a few meetings with some bankers. There is a lot of interest. I'm waiting for a few things to be completed from Indian perspective. Once we are out of some of these things that are happening, we should be in a position to consider that. But again, I don't want to dilute too much. it's more from a status perspective and access perspective to be listed on a different exchange. So -- but there is an opportunity of trying to do 2 consolidation of subsidiaries without impacting the parent. So those are things that we have been evaluating for years, where I think now coming closer to the end.

[Unknown Attendee]

Okay. And we are exploring any, like, new market to start up for the adtech? Like Middle East or any other country, if you would like to mention any name?

[Muthukuru Reddy, executive]

I didn't understand your question.

[Unknown Attendee]

Like, we are doing good in the U.S. and Europe. So are we exploring the, like, Asian or the Middle Eastern market to expand for the adtech...

[Muthukuru Reddy, executive]

Yes, yes. We're still working on that. So not much to announce on that. We're looking at China. China, we have tried in the past. We are looking at China and Middle East right now. That's an area that is very important and growing. And Africa as well. Africa, we are there to an extent, but there is another very fast-growing continent that we should tap into. These are some of the areas that we are looking at.

[Unknown Attendee]

So it was great. So we're looking forward to hear more updates.

[Muthukuru Reddy, executive]

Thank you.

[Operator]

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you and have a pleasant evening.

[Singaraju Lakshmi Raju, executive]

Thank you.

[Muthukuru Reddy, executive]

Thank you. Thank you everyone.