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Updated: OnMobile Revenue Up 35.7%, Profit Down 25.5% YoY For Q1-FY13; Charts

Update: In response to our queries, OnMobile has shared the following additional information on their performance:
International revenues was 56% of the total revenue for Q1.
Indian market declining: In India, we see a slowdown due to changes in TRAI and operators’ policies, lack of sufficient new product launches and lack of an open ecosystem. We are continuing to see a good traction for our products in Latin America and Africa has been a high growth market for us.
– Product deployments: We are continuing our focus on deploying RBT and voice services in the emerging markets. We are targeting OnCloud solutions for the European and North American markets.
– Latin America operations: OnMobile RBT services have been launched in 14 countries of Latin America, generating over $10mn topline revenue per month to Telefonica in LATAM. Uruguay was the last one to go live in May.

August 1st: OnMobile Global reported consolidated profits of Rs 9.52 crore for the quarter ended 30th June 2012 (Q1-FY13), down 25.5% year on year and almost double the profit last quarter. There was some cheer for the company on the revenue front:

a topline of Rs 185.21 crore is its highest for a quarter till date, and marks its sixth consecutive quarter of increasing revenues (see the chart). Revenues grew 35.7% over the same period last year, and 4.13% quarter on quarter. On the decline of profits, the company says that “Net Profit declined by 26% because of higher foreign / withholding taxes, which was not a part of Q1 of last fiscal.”

During the quarter, Onmobile completed a buyback, buying back 4 million shares at an average of Rs 59.40 per share.

Revenue growth for the Onmobile has been coming mostly from its international operations,especially in Latin America, North America and Africa, it says. The company had expected that international revenues would account for over half its revenues; it hasn’t released the India versus International split this quarter, and we’ve requested the company for that information. The company also says that:

– EBITDA increased 33% from Rs 27 crore to Rs 35.9 crore, in line with the revenue growth. This is despite our continued investments in manpower in nascent markets as well as salary increments effective April 1st. The same was effective only from July 1st in the last fiscal.
– Operating Margin increased only marginally because of higher amortization of market development and deployment fee in Telefonica Latin America.

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Given the issues around the resignation of its co-founder and CEO Arvind Rao, the company has deferred its post-results investor call, saying that it would like to, apart from discussing the results, “share the steps taken by the company to improve its governance mechanisms and the way forward”, and that “some of the key measures are in progress and would take a few more days to conclude”. Meanwhile, reports have suggested that OnMobile is on sale.

Content Costs

Content costs, on a consolidated basis, declined marginally during the quarter.

Four Quarter Comparison

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

A few things to note:

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– Content costs for the last four quarters have been lower than before.
– Total revenue for the last four quarters is higher for the last four quarters than the preceding periods
– Profits have been at their lowest in the last four quarters. Onmobile has reported lower profitability for the last four months on total revenues of Rs 668 crore, than for Q2-FY10 to Q1-FY11, wherein they reported revenues of Rs 470.74 crore.

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

Key developments during the last few months:

– Jul 31st: Onmobile possibly on sale; Tanzania Ops cut: reports. Read
– Jul 12th: Sandeep Ganguly, Business Head of OnMobile’s LatAm operations, resigns. Read
– Jul 11th: Government seeks info on OnMobile CEO’s resignation; Promoter group company details. Read
– Jul 9th: Arvind Rao resigns. Mouli Raman made interim MD. Read
– Jul 5th: Onmobile completes buyback. Read
– Jun 28th: Onmobile denies allegations of fraud against Arvind Rao. Read
– Jun 6th: The status of Arvind Rao, Mouli Raman, Sanjay Uppal. Read
– Jun 1st: Ops committee to look into Onmobile’s Indian Operations. Read
– May 28th: Rajesh Kunnath appointed Onmobile CFO. Read

Downloads: OnMobile Q1 FY 13 earnings release | Standalone Press Release | Consolidated Press Release | Standalone Balance Sheet Condensed | Consolidated Balance Sheet Condensed

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