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OnMobile FY11: Q4 Content Costs Down; Revenue Rs. 537 Cr, Profit Rs. 86.6 Cr

OnMobile Global reported a decline in revenues in the quarter ended 31st March 2011, owing to  “change in contractual scope involving content management responsibilities in one of its major customers.” This is probably the reason why content fee and royalty expenses for the company also saw a 53.09% decline quarter-on-quarter and 50.09% year-on-year, at Rs 13.76 crore. We’ve not been able to confirm this, but we’ve heard rumors that Vodafone was looking to do direct deals with music labels, bypassing platform companies.

On the conference call, OnMobile CFO Rajesh Moorti explained: “In one of the large customers, there is a change in the content management responsibilities, and that has had an impact on the revenue. Without this adjustment, our revenue would have been more or less flat quarter on quarter, and our EBITDA would have been 21%, as against 23% in the quarter before. For modelling purposes, you can consider a recurring revenue adjustment of roughly around Rs. 10 crore going forward.” We’ll have more from the concall soon.

Annual Results

For the fiscal year 2010-2011 (FY11),  on a consolidated level, OnMobile’s total revenues increased by 18.2% at Rs 537.21 crore, compared with last year’s revenues of Rs 454.40 crore. Its net profit saw a jump of 104.7% at Rs 86.68 crore, from Rs 42.35 crore that it registered, last fiscal. On a standalone basis, OnMobile registered a net profit of Rs 91.64 crore, an increase of 73.2% over previous year’s profit of Rs 52.91 crore. Its total revenue also increased by 25% to reach Rs 455.03 crore from Rs 363.92 crore, that it reported last year. The company is currently in investment mode in Latin America.

The results have been impacted by the sale of stake in Ver Se Innovation, which we reported earlier. On the conference call, Moorti said that “That (sale) fetched us Rs 23.5 crore, and post tax, that is Rs 17 crore. If I exclude the PAT contribution of Ver Se stake sale, the profit would be more like Rs. 10 crore, so a Rs. 20.9 crore coming down to Rs. 10 crore, and this would be split into three parts – the drop in operating profit; the operating profit margins have been maintained at the same level – we had an operating profit of 17.5 crore last quarter, which is Rs 16.3 crore. Our other income, excluding Ver Se stake sale (interest and dividend income has come down by Rs. 2 crore, which is due to a lower cash corpus that we have. And a third one is on the tax. The local taxes in India and foreign taxes have gone up by Rs 7 crore. There is some regrouping from previous quarter to this quarter. I’ve just requested to model this on tax rate for the whole year of 17%, as against a guidance of 15-17%. We expect for the coming year, the tax rate would be around 20%.”

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Quarterly Results

On a consolidated level, the company registered a decline of 10.29%, quarter-on-quarter, in its total revenue at Rs 133.32 crore, although it saw an increase of 8.50% when compared to the same quarter, last year, when its revenue was Rs 122.88 crore. OnMobile mentions that the revenue loss can also be attributed to ” general weakness in the European economy”, where the company has many deployments, and also on account of the quarter being a lean period, since its treated as the first quarter, with Capex orders being less. The company’s net profit increased by 34.72% QoQ at Rs 26.85 crore. The increase was much more, a massive 162.46% on a YoY basis, from Rs 10.23 crore.

On a standalone level, it reported a total revenue of Rs 108.62 crore, a decrease of 13.2% QoQ, and an increase of 5.5% on a YoY basis. Its net profit increased by 79.2% QoQ, at Rs 31.68 crore, a 123.9% hike when compared to the previous year’s net profit.

Telefonica LatAm Deployments
– OnMobile had live deployments in six countries, covering 80% of the total subscriber base in these markets.
– It claims to have acquired more than 3 million active users in the last nine months from the deployment in its first company.
– It informs that the RBT ARPU in these markets are two to three times more than that of India.

Dilithium Acquisition
– The company has licensed its ‘ Video call software stack’ to major handset, chipset and platform vendors in China, which will embed the video calling software in handsets and chipsets, including Android ones.
– It opened an office in China to support demand and expand its video product unit.
– It has also renewed deals with two of the largest operators in China, which were erstwhile Dilithium customers.

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New Customers & Products
– OnMobile launched Social RBT on four leading Indian and international telcos.
– A major African operator selected the company as its music service provider.
– It also reports that a leading Indian telco experienced 100% growth in Reverse Ring Back tone services and similar services were launched for a major operator in the Asia Pacific region.

OnMobile Sells 9% In Ver Se For Rs 28.59 Crore
OnMobile Forms Africa Partnership With Starfish Mobile
Video: OnMobile Says Margins Recovering; LatAm Could Be 50% Of Biz
OnMobile Completes LatAm Deployment; 1:1 Bonus Issue
OnMobile Inks Licensing Agreements In China; Launches Social Karaoke Service
OnMobile Q3-FY11: Revenues Up 36.8%; International Driving Growth, India Flat

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