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OnMobile spent 2% revenue on developing new products in Q1FY16

OnMobile Global

OnMobile Global, a provider of mobile services and ringback tones, said that it spent two percent of its revenue on developing its new products strategy and brands for the quarter ended June 30.

“Operating expenditure has gone up from Rs 31 crores to Rs 33.7 crores in the quarter mainly because of new cost which we have started incurring on the new products strategy and the new brands,” chief financial officer Praveen Kumar told analysts in a conference call. “The total costs are approximately around 2% of revenue which means it has impacted our EBITDA by around two percentage points,” he added.

Though OnMobile CEO Rajiv Pancholy did not specify what the new products were, he did mention while that the company was developing mobile apps. “So to answer that question I have to basically break down the investments and new products into several different buckets and perhaps that will give you sort of indirectly answer your question. There is the actual investment in R&D which is application development, service development, platform evolution to support these new services,” Pancholy said to an analyst’s question. “For years we have positioned ourselves as a white label value added services. Frankly, it’s my personal opinion that as an expression of who we are doesn’t make much sense,” he added.

Readers will recall that in the preceding quarter, Pancholy said that the company is making a “transition away from a network-centric 2G service provider to an organization that generates applications in the smartphone space and today’s mechanism.” Pancholy also added that OnMobile will launching two new products by the end of the financial year but declined to say which geographies.

Converged VAS (Value added service)

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During the call, chief commercial officer Sanjay Bhambri elaborated on the company’s converged VAS product which they deployed in Europe and other parts of the world. “Fundamentally most of the operators globally what they are doing is they are kind of consolidating this storefronts under one look-and-feel one banner ….  So all different kind of contents get monetized over different kinds of stores and just to tie them together into one single platform look-and-feel and engagement with the consumer,” he said.

OnMobile financials

Onmobile Global reported a net loss after tax of Rs 0.16 crore for the quarter ended June 30th 2015, down significantly from the Rs 23.88 crore loss it had reported for the same quarter last year. The company reported consolidated revenues of Rs 201.8 crore for the quarter ended June 30, a marginal increase of 1.5% from Rs 198.78 crore from the same quarter last year and a drop of 5.7% from Rs 214 crore from the preceding quarter.

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