Full Transcript of Rediff’s 3Q05 Conference Call — Prepared Remarks (REDF)

Here’s the entire text of the prepared remarks from Rediff's (ticker: REDF) Q3 2005 conference call. The Q&A is in a separate article. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.

Executives:

Debash Gosh, Investor Relations and Public Affairs
Ajit Balakrishnan, Chairman and CEO
Joy Basu, Chief Financial Officer

[Debash Gosh, Investor Relations and Public Affairs]

Hello. Thank you Lara. Wish you all very good morning and thank you for being with us to discuss rediff.com’s financials for the First Quarter ended June 30, 2005. I would now like to introduce you to the management present on this call, who will take you through our company’s highlights. We have with us Mr. Ajit Balakrishnan, Chairman and CEO and Mr. Joy Basu our Chief Financial Officer. [Standard disclaimers omitted.] I would now like to introduce Mr.Ajit Balakrishnan our Chairman and CEO. Mr.Balakrishnan.

[Ajit Balakrishnan, Chairman and CEO]

Thank you Debash and Good morning to all of you. Our registered user base at 37.5 million users. At end of June 2005 showed an increase of 19% on a year-on-year basis. During the quarter ended June 30 2005, our revenues totaled $4.2 million an increase of 63% compared to the same quarter last fiscal. Revenues from India Online grew 114% to $2.7 million and revenues from US publishing increased 3% to $1.7 million. Gross margin during the quarter ended June 30 increased 68% compared to 54% for the same quarter last fiscal year. Net profit for the quarter was $63000 of $0.02 per ADS compared to a net loss of $506,000 or $0.02 per ads.

We at rediff.com continue to focus on our key strength as the company, which is product innovation, and I will briefly update you on the highlights of our recent efforts. First, we had launched a beta version of our automated news service called newshounds; this service has made headlines from 700 news sources with headlines updated every five minutes. Since the launch we have been continuously monitoring the service and we will keep you informed regarding future developments.

VOIP, Instant messenger which is also yet to work on low bandwidth condition for launch for commercial use earlier this month after several months of beta testing. We are encouraged by the initial user response and are monitoring its progress regularly. Our connection service is based on social networking technologies has been under beta testing for some time now. And currently has over 1 million testers of from all over India proving valuable insights. We expected we will be able to release this service on a wider scale soon and we believe, it will be particularly useful in searching the services that satisfy your unique individual needs, also in locating people with specific business interest.

In the third quarter we had informed you about the pending launch of our options service. We are happy to announce the launch of this service earlier this month and we are in the process of stabilizing the platform. We start opening it up for wider audience, the initially response from participants has been quite encouraging. Our pay-per-click platform as you know is finally targeted at the online user while our recently launched pay-per-click classifieds.com is mainly targeted as the online classifieds print advertising base with the SMS based response mechanism. This context, we are partner with the leading print classifieds resellers throughout India. We have been integrated to online platform even online reseller marketing.

At present our paper click classifieds platform has over 160 online category and we believe that the platform is one of the most comprehensive classifieds section in the Indian media. Online advertising continues to strengthen its position as the leader in the Indian online advertising space with over 120 clients advertising results during the quarter. This closer 53% increase over the number of clients that advertise with us in the same quarter of previous year.

We believe that our range of products like VOIP, Instant Messenger, Social Networking, Automatic News Listing and Paper Clip Classifieds will allow us to expand the user base not just in India but also internationally. I now request Joy Basu our CFO to take you through our financial performance for this quarter.

[Joy Basu, Chief Financial Officer]

Thank you Ajit and Good morning to all of you. Revenues for the quarter ended June 30 2005 grow $4.2 million at increase of 53% over in the year ago quarter. During this period revenues from India Online stood at $2.7 million an increase of 114% while revenues from US publishing were $1.5 million an increased of 3% over the same period last year. Gross margin during the quarter improved to 68% or $2.9 million compared to 54% or $1.5 million for the same quarter last fiscal year.

Specifically India Online, recorded gross margin of 83% while US publishing recorded gross margin of 46%. The Increased product development and brand marketing initiatives during the quarter saw operating expenses totaled $2.7 million compared to $1.9 million during the same period last fiscal year. After providing for depreciation, interest income and exchange gains and losses, net income for the quarter was $53,000 or $0.2 per ADS. As compared to a net loss of $506,000 or $0.02 per ADS for the comparable quarter last year.

The net loss for the quarter ended June 30, 2004 included the loss of $150,000 from the discontinued operation of our Value Com business. Total cash and cash equivalents stood at $9.4 million as on June 30 2005. That concludes our financial review for the quarter I would now request Ajit to recapitulate our performance and sum up the call.

[Ajit Balakrishnan, Chairman and CEO]

Thank you Joy. Here is the summery. Revenues for the quarter totaled $4.2 million and increase of 63% year on year. Overall gross margin during the quarter expanded to 68%. For the quarter net income was $63,000 approximate or $0.2 ADS. We continued to invest and enhancing our existing products and launching new services. Some of them are listed, we launched the beta version of our new automated news service, newshounds, it compiles news sources from 700 news sources and that is updated every five minutes. We partner with the classifieds resellers to attract online classifieds for the new pay-per-click classifieds platform at present our classifieds platform offer 160 sections which we believe is one of the most comprehensive listing from the Indian media. A new version of our VOIP Instant Messenger has been open for wider commercial use, is encouraging early option for the service and our connections service currently under beta testing has already attracted over a million users from date. Thank you very much.

Proceed to the Q&A.