OnMobile Exits Ver Se, Kabuza; India Revenues Down 28% YoY In Q3-FY13; Charts


Update: OnMobile’s search for a CEO has ended… Mouli Raman, currently MD of the company, has also been appointed its CEO. More details in the concall here.

Earlier today: OnMobile Global has reported consolidated profits of Rs 20.62 crore for the quarter ended 31st December 2012 (Q3-FY13), up 16.02% up year on year, and over thrice the profit reported last quarter. The company posted a topline of Rs 176.16 crore, up from Rs 179.8 crore last quarter, and from Rs 168.83 crore reported for the same fiscal last year. Revenues were up 4.34% year on year, but down 2% quarter on quarter. EBITDA increased by 11.2% y-o-y and 25.7% q-o-q to Rs 43.7 crore at 24.8% margin. Operating expenses during the quarter were impacted by Rs 4.2 crore foreign exchange translation gain as a result of restatement of subsidiary financials during consolidation.

Some major announcements by the company:

India Revenues Decline 27.8%

OnMobile has reported a decline in India revenues by 27.8% year on year for the quarter, and 15% quarter on quarter. India revenues contributed 36% of Q3-FY13, compared to 41% in Q2-FY13. Why has this happened? There’s an indication in its content costs: OnMobile’s content costs declined 7.17% year on year and 23.75% quarter on quarter, which points towards a reduction in the utiliziation of Caller Ringback Tones. Remember that telecom operators have begun implementing TRAI’s Mobile VAS guidelines, and its impact is apparent. However, note that the full force of the changes will only be felt in the next quarter (and a little in this, ongoing, quarter) so expect further decline. There is some hope, though: OnMobile entered the m-Governance space with a pilot with the Government of Karnataka, which we had reported here.

Exits Ver Se and Kabuza Marketing

During the quarter, OnMobile sold its remaining stake in Ver se Innovation for Rs 5.5 crore, thus completely exiting the job alerts business. The Net Profit reported includes a Rs 3.8 crore (post tax) profit on the sale of the companys stake in Ver Se Innovation.

It also called it quits on Kabuza, its Mobile Marketing joint venture with advertising agency Madison, and sold its 50% stake in the venture for a meagre Rs 18 lakhs.

“The net profit arising on sale of these investments amounting to Rs. 474 lakhs has been disclosed in other income,” OnMobile has disclosed.

International Growth

OnMobile is also benefiting from the foresight it had to go International: despite the decline being witnessed in Indian mobile VAS, the companys International business helped push up topline. International revenues increased to Rs 113.2 crore, and contributed 64.2% of net sales, as compared with 48.3% in the corresponding quarter last year.

- Tax Rate Benefit: “The Company has finalized and implemented its Transfer Pricing policy, with retrospective effect from the beginning of the fiscal year. The Effective Tax Rate (ETR) has declined to 35% in YTD FY2013 as compared to 48% in H1 FY2013″

- Latin America revenues were up 105%, contributing 25% of Q3-FY13, as compared with 23% in Q2-FY13, although, one should also take into account the decline in India revenues. The company says it reported a significant growth in RBT subscriber base in several Latin American countries. Note that next year is a major opportunity for VAS in Latin America, given that Brazil is hosting the FIFA World Cup.

- Africa business for OnMobile grew 94% year on year, and the company won a contract for managed services for Football content.

- In Europe, it reported a 36% growth in Revenues, securing contracts from two major operators for provision of RBT services, and what it says was a “significant growth in RBT Revenues q-o-q from an existing contract in Spain.”

Charts: Quarter on Quarter (Consolidated)

Content Costs

Content costs, on a consolidated basis, declined marginally during the quarter. The standalone content costs (possibly India only; wer’re not sure) were up quarter on quarter, to Rs 11.87 crore, from Rs 11.44 crore, but significantly down from Rs 21.01 crore reported for the same quarter last year.

Four Quarter Comparison

OnMobile suggests that their performance be viewed from a four quarter perspective. Below are the results for the trailing four quarters:

Note that the Net Profit figures include returns from the sale of stake in Ver Se Innovation.

Products?

Once again, there’s no update on products and their deployment from the company. OnMobile really needs to go beyond RBT. Check the chart below. The company needs Data & Others to switch places with RBT.

Download: Earnings Presentation | Consolidated Results | Standalone Results

We’ll be reporting from the conference call live