A sale worth Rs 50 crore in Ver Se Innovation on September 16, 2011 helped OnMobile Global post its highest profit in at least the last 14 quarters (probably more) of Rs 47.7 crore. So, without the Ver Se sale, this quarter would have been a net loss making one for the company at a consolidated level, and at a standalone level too. Interest and taxes played their part, and the PBT less other income was Rs 13.79 crore, down year on year from 15.02 crore. Onmobile sold 9-10% stake in Ver Se, and has 4-5% stake left in the company.
Keep in mind that OnMobile has a significant deployment in the Latin American region, and it’s international revenues are growing. The company reported total revenues of Rs 155.22 crore (up from Rs 131.53 crore the previous fiscal), and international revenues contributed 42% of topline revenues in the second quarter, and 47% in month of September.
Onmobile feels that by the end of this fiscal year, over 50% of its revenues will be from international markets. They launched in one more country in the Latin American region during the quarter, and the company says that they turned cash-flow positive on the LatAm project this quarter.
On the conference call, OnMobile CEO Arvind Rao said that he believes that the the Indian market will take off and see the next wave of growth when 3G becomes more pervasive, in terms of video sharing, video chat, but “You’re not going to see the historical growth rates, and this is why we’ve spent money, time and effort focusing on international growth, to ride the slowdown in the Indian market.”
Onmobile’s content costs increased from Rs 15.65 crore to Rs 20.51 crore during the quarter, at a consolidated level.
Rao said that the company has taken steps to derisk over the last 2-3 years, and are derisking “ahead of the curve”, and while the Indian market is overlicensed and worrying, take off and see the next wave of growth when 3G becomes more pervasive, in terms of video sharing, video chat. He warned that we’re not going to see the historical growth rates in India that we used to, and this is why they’ve spent money on international growth.
Four Quarter Comparison
Since the company suggests that they be looked at on a trailing four quarter basis, and not on a quarter on quarter basis, here’s how they’ve fared:
We’ll have more from the conference call later in the week, and are going to try and get an interview with the company on product related updates.