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Rediff.com FY10 Results Disappoint, But Says Indian Advertisers Are Back; ESOPs

Updated below.

Rediff has reported disappointing results for the financial year ended 31st March 2010 (FY10),  with revenues down 25.91% to $18.84 million, from $25.43 million during the previous year. This decline in largely due to a 25.47% decline in its India Online revenues, and despite a 5.53% reduction in its overall expenses (Cost of Revenues + Operating Expenses). Importantly, Rediff’s Cash Balance declined only 2.83% year on year, from $46 million to $44.7 million. That gives them the freedom to invest $1-1.5 million per quarter over the next 2-3 quarters.

While Rediff has reported a reduction in loss (Net loss for the year was down to $7.97 million from $11.26 million in the previous year), one must also take into account that last year, the company had written off approximately $7.95 million to an impairment in the value of its India Abroad US publishing business, and a write-off of $0.14 million this fiscal. If you don’t take into account the writeoffs, Rediff’s loss has effectively increased 136.56% from a loss of $3.31 million last fiscal to a loss of $7.83 million this fiscal. Rediff reported Operating EBITDA of -$6.63 million for the year, up from -$1.53 million last fiscal.

Rediff, however, says that the quarter indicates that there is recovery in the advertising market. In a statement, CEO Ajit Balakrishnan said that after nearly three consecutive quarters of low activity, advertisers in Finance, Education, IT products and Electronics are back. Sequentially, Rediff’s India Online advertisement revenues increased 15%, and 29% on a year-over-year basis. Note, however, that year-on-year, it’s India Online revenues (which include both advertising and commission businesses), increased only 17.49%. So has the commissions business declined, compared with last year?

It’s interesting to see a year-on-year increase in Rediff’s Online Advertisement revenues, especially since it doesn’t have ads on its homepage, as compared to the same quarter last year. Either the rates or the internal pageviews must have increased, or the rates. Rediff says that its user base grew 17% compared to Q409 and 5% sequentially, according to Comscore, while Comscore indicates that India’s Internet user base increased by 14% year on year and 3% sequentially. Note that we are skeptical about the accuracy of Comscore’s numbers in India, and this may not be an accurate indicator.

Update: ESOPS

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Rediff, alongwith its results, has mentioned that during the year, they established an ESOP trust for their employees, and “purchased 750,000 shares (equivalent to 1,500,000 ADS). We’ve written to Rediff about more details of the ESOP trust, about when they intend to offer these to employees and the terms.

Note: If Rediff’s execs are reading this, it would great if you could publish the effective exchange rate you’ve used for converting your Indian Rupee revenues into US Dollars, each quarter. Would help us do quarterly comparisons for the entire year.

Rediff Net Loss Down To $1.64M, Revenues Up 18% QoQ As Advertisers Return
Q4-09: Rediff.com QoQ Loss Triples To $8.86 M Due To Writeoff
Q1-10 Call: Rediff.com Expects Single Digit Revenue Hit On Account Of Redesign
Q409 Call: Rediff Buys 26% In Examville, Writes Off Vakow; Debit Card Commerce; REST APIs

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