Anyone who attended today’s concall. Can you post notes.
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Was just going through their recent concall.
At one point during the concall they were guiding for 25% rev. growth.
When probed they stated they are conservatively guiding for 25%.
Later while answering to another question from, they said they will achieve around 50% rev growth for FY-25 vs FY24.
Must we safely assume just 25% guidance for FY25?
Management didnt seem confident of answering straight forward questions
My take -
1)growth will be difficult in first 2 quarters. Some growth is expected from q3 onwards.
They are estimating to match h1 fy24 with orderbook of tippet.
2) recievables are a real pain.increasing qoq. This is even after recieving a major portion of Ayalan.
3) they mentioned billing for q4 around 35cr. However revenue for q4 was around 22cr. Couldnt undertand why revenue are lower than billing.
Definately going through a difficult and uncertain times.
Disclosure-invested.
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Yes receivables have skyrocketed.
But that’s been industry specific .
I was checking for basillic too, their receivables have also gone up.
So that problem isn’t a company specific, rather it’s whole VFX market facing headwinds.
But hopefully long term story remains intact.
Very curious though , what kind of real growth with come in during first 2 quarters of FY25, since management hasn’t given any sure guidance about that
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Q4FY24
• Anticipate a substantial revenue growth of 20% to 25% (conservatively) in the fiscal year '24 to '25. Margins could be same or higher as what declared in this Q (46%)
• Exploring opportunities to diversify our revenue streams through licensing, intellectual property rights, original content creation and other innovative business models.
• We already have 5 to 6 million worth of orders for the first half.
• Rev split: 40% international and 60% domestic. This year planning this to be opposite as int’l business has more profit margins.
• Market wasn’t great last year
• We are expecting a very huge surge in project flow from July onwards.
Hollywood Strike:
• Phantom is not just dependent on the North American film market. They have a global client base. Looking at European markets as well.
Receivables:
• Collection days are 60-90 days. Max business has come from Feb to march so receivables look high.
• Have received almost 20%-25% of the existing receivables for March '24.
• So, this is not something like an old outstanding, which is to be recovered or a number of days or more than that.
• Allowing a bit more of credit period due to other competitors doing it. Don’t deliver the final output until the total amount it recouped. Payment also happens milestone wise.
• Now, we are back on track and we are putting the same credit timeline in our current contract. So, we are not expecting that delays in the projects going forward.
• For Ayalaan, acquired most of the money. In 30-40 days, will receive the rest.
• Have movie rights in China as well as satellite.
Equity dilution:
• Do not have any plans to dilute the equity further.
Future Plans:
• We are already working with a lot of gaming companies, developing assets and creatives.
• Only thing missing is the technical side of it. The coding and other parts. We are looking at a couple of companies where we will partially acquire takes from them.
• We are looking at the gaming arena in a very serious note
• We have a very detailed plan and execution strategy for the next 3-4 years
• We are not just going to depend only on VFX, but also on the other verticals as well. So, that is going to increase the profit margins, increase the turnovers.
• We have also figured out new regions that are giving a lot of benefit to Phantom
AI Impact:
• When you say AI is going to do all the VFX work, that itself is a myth
• We have developed a lot of software and tools. And we are doing research on AI for the last 3-4 years
• We have started implementing a lot of AI tools in our pipeline already.
• AI is going to increase the studio’s productivity. For example, when we develop concept sketches, we used to take 15-20 days before. Now, we are doing it in 2-3 days
Disc: Invested
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I think management is trying to play ‘better safe than sorry’ here. From my understanding, they started out with 20-25% growth guidance and at one point, they said they may beat it and touch 50% as well.
Due to uncertainity in the last year, management has learned in this industry, things may not be as certain as they seem, so they are playing safe. This is good for the investors as well. I have held stocks where management used to give shiny projections only to later miss it by a huge mark. Markets punish such companies strongly.
To be honest, I am more concerned about the receivables than earnings growth in this industry. I hope what management mentioned in this concall that they are getting back on track regarding this is true and we see improvement on this front in coming quarters. This is something I will track like a hawk and take further decision.
Disc: same as earlier
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I see a lot of comments of receivables being shot up, it’s 51cr for 2024. Could someone point out what thresholds should we consider as high for it? Is it revenue to receivables or are you tracking some other ratio?
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According to the 2023 Annual Report, PhantomFX recognizes revenue in the month of raising the invoice. In the earnings call, the management mentioned that the company billed ₹11 crore in January, ₹15 crore in February, and the remaining amount in March. However, the reported revenue for Q4 FY24 is ₹23.03 crore, derived as follows:
Total H2 FY24 Revenue: ₹49.20 crore (mentioned in the May 30 earnings call)
Less Q3 FY24 Revenue: ₹26.17 crore (mentioned in the March conference call)
Resulting Q4 FY24 Revenue: ₹23.03 crore
The combined total billing for January and February alone is ₹26 crore, which exceeds the reported Q4 revenue. Where is the discrepancy in my calculation?
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Does anyone know why stock price of phantom fx fell? It seems like it fell by more than 20% after earnings call.
Probable answer is uncertainty. All vfx companies going through this phase of high receivables. Unless this gets clear out, probably it will remain in range bound.
Plus technicals also not supporting it.
Disc: dont hold any position, thoughts can be biased.
Haven’t the management given the clarification already? All of them are saying there receivables time is still 90-120 days, this receivables accounted for Feb and March as well. Even BFS was down but it seems like it is picking up now, but Phantom still is pretty low.
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Updates from Company Linked in posts since Last week:
Company has recently posted on LinkedIn that their involvement in “Kalki 2898 AD” movie and “Indian 2”.
Disclaimer: But majority of work for Kalki movie was done from DNEG a London based company.
Indian 2 has very less Visual effect as compared to movie Kalki.
Also I can see lot of Job posts in their company profile, Which could mean company is again looking at expansion.
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Can someone please comment on the higher trade receivables and negative cash flow from operations? Specifically, interested in understanding if this is common with the film industry. It seems concerning that an increase in sales doesn’t translate into generating enough cash
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This is common in VFX industry because the companies that can afford to use VFX are few like large studios, major OTT platforms and that gives them substantial bargaining power over supplier payments.
Usually VFX companies have to bid for a project based on initial scope and then there is a lot of reworks based on client satisfaction (usually without pay) and until the studios greenlight the VFX, there is no payment. Note: This is from my understanding by reading, studying the vfx industry. Experts can chime in here.
Hence, why many prestigious studios like Tippett Studio are going out of business. Tippett had to be acquired by Phantom
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With rave reviews on “Kalki”, it is surprising not to find any reflection on Phantom, or we will see late reaction on Monday?
Company has reduced it’s guidance for FY25 to 26-35% from 40-45% due to headwinds in the sector.I expect H1 to be flat and growth can only come in H2.
Does anyone know why Basilic Fly Studio(CMP 610) getting higher multiples than Phantom, And also we have seen recent spike in Basilic Fly Studios as there was no such big news.
Multiples are almost 60% compared to Phantom from current price of 440.
Also does anyone have updates on Investors meet con call updates?
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Hi
I was checking the employee count for phantom on epfo.
In last month the employee count has decreased by 20%.(basilic down 10%)
That is a significant layoff.
there was no mention of these in Q4 concall.so I guess it was not due to productivity gains as mentioned in the update today.
Layoff indicate that companies expect pain to continue in near term.
Dis: Invested. completely biased
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Bassilic has higher focus in Europe(Almost 100% export) while phantom has 50% revenue from India and 50% from export.The revenue from India gets delayed often.
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Employee count depends on project to project.So,hard to predict anything from that.