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OnMobile Q2-FY14: Profit Down QoQ With India Revenues Declining 31.8%; International Now 76%

OnMobile_logo(by NT Balanarayan & Nikhil Pahwa)

OnMobile Global reported consolidated profits of Rs 10 crore for the quarter ended September 30, 2013 (Q2-FY14), up 60.9% from Rs 6.2 crore in the corresponding quarter last year, and down 28.8% from Rs 14.1 crore from the last quarter. Note that these numbers exclude the revenues of Livewire, which Onmobile acquired a few months ago. India revenue declined 31.8% to Rs 50.6 crore from Rs 74.1 crore last year, and 21.5% from 64.4 crore last quarter. The company reported revenues of Rs 206.9 crore, which were up 15.1% from Rs 179.8 crore last year, and up 9.1% quarter on quarter.

At Rs 206.9 crore, International revenues now account for 76% of Onmobile’s total revenues, and Latin America alone, at Rs 55.6 crore (26.87% of total) is bigger than India revenues, and this is excluding Livewire (now OnMobile Live). Developed markets account for a bulk of the revenues at Rs 62.3 crore (30%), and other emerging markets account for Rs 38.4 crore.

India revenues have been clearly impacted by the TRAI’s double confirmation guidelines released in July this year. This also led to a 60% drop in VAS activations, but it appears that the impact on Onmobile hasn’t been as much as it was on the rest of the industry. OnMobile had said during the previous earnings call that they were expecting a moderate impact due to these regulations.

EBITDA increased 3.3% y-o-y, however declined by 14.3% q-o-q to Rs 359 million at 17.4% margin, on account of change in revenue mix and one-time content reversals in Q1 FY2014. There was an increase in manpower cost on account of annual increments (Rs 4 crore) and forex impact due to the movement in Euro and USD (Rs 7.6 crore). Some of this was offset by “manpower rationalization initiatives in Q4 FY2013”

onmobile-q1-fy14

International business (excluding Livewire)

– Continued to record strong growth of 47.9% YoY and 24.8% QoQ constituted 76% of the revenues during the quarter.

– Latin America demonstrated consistent growth as revenue increased by 36.0% YoY and 8.3% QoQ.

– Revenue from Africa grew by 51.1% YoY and 14.3% QoQ.

– Launched RBT services with an operator in Qatar.

– Europe revenues increased strongly by 146.4% YoY and 80.9% QoQ, driven by revenues from the CVAS contract with Telefonica Spain.It also successfully migrated RBT in another operator in Spain. With this, OnMobile will reach over 90% of the mobile subscriber base in Spain.

– North America recorded growth of 2.3% YoY and 7.5% QoQ.

– During the quarter, the Company has incorporated OnMobile Global Czech Republic s.r.o. as its wholly owned subsidiary. As part of the on going alignment of business operations, the Company has transferred the business of its Spain branch to Onmobile Global Spain, S.L.U., a wholly owned Subisidiary, with effect from April 1, 2013.

– The net gain on foreign currency transactions and translations included in Other Income for the quarter is Rs 885 Lakhs and Rs 1,626 Lakhs respectively. Net loss included in Other expenses for the quarter was Rs 252 Lakhs and Rs 467 Lakhs respectively.

Performance, including Livewire

onmobile-including-livewire

onmobile-including-livewire

Financials

– Increase in manpower cost on account of annual increments (Rs 40 million) and forex impact due to the movement in Euro and USD (Rs 76 million).
– One time expenses of Rs 32 million related to the acquisition of Livewire.
– Q2 FY2013 had a forex loss of Rs 68 million reported under Opex (Q2 FY2014 forex gain of Rs 89 million reported under other income)

Livewire / OnMobile Live

Onmobile is now in the process of integrating teams, products and systems and has also launched cost efficiency measures initiated. The company says that migration delays and the ongoing integration has impacted the revenues, though margins have been broadly in line. Onmobile claims there have been high levels of interest among content providers to partner for Livewire’s services.

Other developments

– OnMobile appointed Ambassador (Retd) Barry B. White and R Chandrashekhar, previously Secretary, Department of Telecommunications for Government of India, as non-executive independent directors.
– Sanjay Bhambri was appointed Chief Commercial Officer of OnMobile

Downloads: Consolidated financials | Earnings Presentation

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