Onmobile Global returned to profitability as the company reported a net profit after tax of Rs 1.26 crore for the quarter ended September 30th 2015. It had reported a net loss of Rs 0.16 crore in the preceding quarter and Rs 1.21 crore in the same quarter last year.
It reported consolidated revenues of Rs 207 crore for the quarter ended September 30, a marginal decrease of 0.2% from Rs 207.5 crore from the same quarter last year and an increase of 2.6% from Rs 201.8 crore from the preceding quarter. Cash reserves for the company increased to Rs 255.7 crore compared to Rs 254.2 crore.
EBITDA grew by 42% year-on-year to Rs 39.3 crore in Q2 FY’16. “Expenditure to support the development of new products and brand continues at the rate of 2% of revenue in the current quarter,” the company added.
According to the company, “Headcount optimization during the last financial year and quarter resulted in a reduction of manpower cost by 23.6% y-o-y and 3.8% q-o-q.” Onmobile’s employee base at the end of September 2015 was 1,075.
Employee costs are now 27.1% of total costs. For context, two years ago, employee cost was 40% of total costs.
At 22% of total revenues, India business was approximately Rs 45.1 crore, down 21.6% from approximately Rs 58.09 crore from the corresponding quarter last year, where it was around 28% of revenues. Sequentially, the India business increased marginally 1.7% from approximately Rs 44 crores, (around 22% of revenues).
The company won western circles from Airtel for Ring Back Tone business to become the largest Ring Back Tone partner for Airtel in India. “This win increases our reach in Airtel from over 60 million subscribers to over 115 million subscribers,” it added. CVAS, a direct to consumer product, was also launched in a large operator in India.
International business accounted for 78% of the total revenues or Rs 161.46 crore, up 8% y-o-y and up 2.8% sequentially.
Readers will note that OnMobile had sold Voxmobili to Synchronoss for $26 million in July last year, following an intellectual property violation case filed by Synchronoss, against Voxmobili, Onmobile Global and Onmobile USA LLC.
Latin America was a cause for concern, as revenue was down 1.5% quarter-on-quarter, and 23.9% year-on-year. Revenue grew by 5% q-o-q, excluding the forex impact of fluctuations in local currencies.
Readers will remember that in June the company renewed its Ringback Tones partnership with Telefonica / Movistar in Latin America for four years. More importantly, this contract renewal was secured without any upfront fee (i.e. minimum guarantee). Onmobile says that it believes that not paying an upfront fee and accepting a lower revenue share is a better financial model for OnMobile. “As a consequence of this approach, FY16 will conclude the amortization cost relating to the upfront fee and the Depreciation cost in FY17 will be lower” by around Rs – crore.
Europe recorded a revenue growth of 49.2% y-o-y and 4.4% q-o-q. The company launched “High-Definition (HD) Identity RBT service” for 4G Voice (Voice over LTE) customers of Vodafone Spain in the preceding quarter. OnMobile now has the new service in two major operators in Spain, including Telefonica.
In other Emerging Markets
Revenue grew by 6.7% y-o-y and 7.0% q-o-q to Rs 37.3 crore. The company deployed its Ringback tone service in Malaysia. In Bangladesh, it crossed 8 million subscribers, and has 16% RBT penetration with one of the large operators in Bangladesh. Onmobile launched a digital music store with Grameenphone. More on that here.
It won CVAS business in 2 major operators in Srilanka, each with a subscriber base of around 6 million.