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Spice Mobility’s device biz posts Rs 10.8 Cr loss in Q1-FY15

Spice Mobility‘s* mobile devices business has posted a net loss before tax of Rs 10.8 crore for the quarter ended September 30, 2014, as compared to a profit of Rs 9.11 crore in the same quarter last year. This is however an improvement from Rs 16.8 crore loss in the preceding quarter.

The segment reported revenues of Rs 497.71 crore for the quarter, registering a minor 2.92% growth rom Rs 483.1 crore in the same period last year. The segment had posted revenues of Rs 498.02 crore in the preceding quarter. With this, the company is now headed to the crucial holiday quarter where the devices sales tends to be the strongest.

Mobile devices still contribute a significant part of Spice Mobility’s revenues, accounting for 91.02% of the company’s quarterly revenues that was at Rs 544.71 crore. In comparison, mobile devices segment accounted for 90.41% of the company’s revenues in the same quarter last year and 92.01% in the preceding quarter.

Continued brand building expenses: Spice Mobility mentions that it continues to invest in brand building through increased media spends and distribution infrastructure to grow the business as part of its strategic initiative started last year. Accordingly, branding expenses increased by 39.49% to Rs 23.7 crore from Rs 16.99 crore from the same quarter last year. Branding expenses were however down 3.15% from Rs 21.71 crore in the previous quarter.

This branding exercise continues to impact Spice Mobility’s profitability with the company reporting a net loss of 13.65 crore for the quarter, as compared to Rs 8.1 crore profit in the same quarter last year. The losses however narrowed from Rs 18.62 crore in the previous quarter.

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Services Revenue Declines: The revenue from Spice Mobility’s services business slid to Rs 49.05 crore for the quarter, down 7.36% from Rs 52.95 crore in the same quarter last year and up 9.53% from Rs 44.78 crore in the previous quarter. Services business currently represent around 9.04% of Spice Mobility’s revenues for the quarter, as compared to 8.3% contribution in the same quarter last year and 8.25% in the previous quarter.

Recent developments at Spice Mobility

– During the quarter, Spice Digital acquired 26% stake in in Bangalore-based Vavia Technologies that has developed apps like the SMS-based search engine txtBrowser and a Secret-like anonymous social network app Confess.

– Prashant Bindal was appointed as the CEO of Spice Mobility with effect from August 27, 2014. He took over from RS Desikan who ceased to become the company CEO on June 30, 2014.

– Spice launched a Firefox OS-based smartphone called Fire One Mi-FX 1 which was priced at Rs 2,299. It also launched an Android One smartphone called Spice Dream UNO Mi-498 which is priced at Rs 6,299.

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*Disclosure: Spice Digital is an advertiser with Medianama

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