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OnMobile Q211: Revenue Up 21.1%, Profit Up 106.1%; International Deployments

In a note released alongwith its earnings results for the second quarter of the 2010-2011 fiscal (Q2-11), OnMobile Global has said that its operating profit has declined marginally for two reasons – a Forex loss, and a one time expense related to the purchase of Dilithium assets. OnMobile goes on to say that “The impact of both the items put together is around Rs. 20 Mn, which has impacted our Operating Profit by around 1.5 percentage points.” Strange; I thought the Dilithium deal was signed in early October, after the September quarter ended. Anyway, this evens things out, since last quarter, they had reported a Forex gain of Rs. 21 million. Update: OnMobile CFO Rajesh Moorti clarified on the call that these are pre-acquisition related costs.

Download: OnMobile Q2-11 results, with additional charts

The company appears to have done well during the quarter, with consolidated revenue up 21.1% year on year, and net profit up 106.1%. Looks like international operations are impacting consolidated profits, since on a standalone basis (Indian operations), OnMobile reported a net profit of Rs. 24.89 crore, but a consolidated profit of Rs. 22 crore . OnMobile is in investment mode internationally, with multi-country deployment deals with Telefonica and Vodafone.

– OnMobile launched services in Mexico as the third country and the first large‐scale deployment as a part of its Telefonica project in Latin America – both Ringback Tone (RBT) and Voice (portal) services have been launched.
– RingBack Tone (RBT) services have been launched with Vodafone Egypt, and there is early revenue traction.
‐ In the Asia‐Pacific region, OnMobile claims to have doubled the penetration of Music Radio services in one large operator in SAARC, and in that same region, ramped up the penetration of RBT to 20+% in a large operator in Bangladesh.
‐ In Pakistan, OnMobile has launched live speech recognition based Music Search service in two large telecom operators.
‐ The OnMobile BI (Business Intelligence) product prevented 250,000 subscribers from churning in one month at a large operator in Indonesia.

During the quarter, OnMobile registered new offices in Panama, Chile, Nicaragua and Spain.

– OnMobile has developed a handset‐based antitheft solution with remote wipe and tracking capability that
is gaining wide acceptance with consumers in a large operator in APAC. Our take: Isn’t OnMobile late in the game? McAfee had acquired a similar company, TenCube, in July. Note: please see disclosure below.
‐ OnMobile has developed a sync and personal data management capability on Android, which has got it two western operator clients. Our take: With Google Sync on the Android platform, why would anyone buy the same from an operator?
‐ OnMobile developed and launched the Tafseer portal which contains interpretations from the Holy
Quran. This has been launched at an operator in the ME region.

Standalone results & India deployments

On a standalone basis, total revenue was up 37.9% year on year to Rs. 114.97 crore on a standalone basis, with net profit of Rs. 24.89 crore, up 115.9% year on year. Going by the chart below, this has been the most profitable quarter for OnMobile since Q3-09.

– OnMobile deployed its Reverse RBT offering with “one of India’s leading Telco”
– Expanded its Mobile Box Office with four more operators in India
– Won the contract to upgrade and replace the current RBT systems at MTNL in Delhi and Mumbai.

Note that after a quarter of content expenses going down a little, they were back up to Rs. 27.21 crore for the quarter.

Note that in October, OnMobile acquired Dilithium Networks, which will give it significant video delivery capability.Our coverage of that deal (a story that we broke, incidentally):

OnMobile Global To Acquire Dilithium Networks, A 3G Video Solutions Company
OnMobile’s Dilithium Call: What They Bought, Plans, Competition, Technology, Biz Model

* Disclosure: TenCube had investments from OnMobile competitor One97 Communications. One97 Communications is an advertiser with MediaNama.

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