Any current/future new fundraising through debt or equity?

No immediate plans for new fundraising through equity or debt were indicated in the call. On the Chingari investment, Sanjay Baweja mentioned they are looking to raise more funds but do not expect this in the next 1-2 quarters, given the subdued market conditions. The company currently has sufficient cash resources and facilities to support growth in Challenges Arena and ONMO segments. Cash position has improved and is expected to remain stable while supporting ongoing marketing and R&D investments. No explicit mention of new equity or debt fundraising for OnMobile itself in the near term.

Future growth expectations in sales/revenue/volumes?

The company expects rapid growth in mobile gaming revenues in coming quarters, driven by onboarding new customers and scaling existing ones. They aim to grow from 75 live gaming customers in Q2 FY’24 to 100+ in Q3 and ultimately 200 operators within a year. Mobile gaming subscriber base is targeted to reach about 5.2 million by Q3 FY’24, up from 4.47 million in Q2. Gaming revenues are anticipated to contribute around 25% of total revenues by FY’24 and FY’25, up from 12-13%. Europe and Tier 1 markets, with higher ARPUs, are key growth areas, with 5-7 European customers expected live in

Future growth expectations in earnings/operating earnings/profits/EPS?

EBITDA margin is expected to improve from the current 9%, with the old business stabilizing around 18% margin and gaming business targeting 25%+ EBITDA margin once stabilized. Gaming EBITDA is projected to exceed 30% after stabilization, driving overall profitability growth. Marketing costs will be high temporarily due to new customer launches but will normalize, supporting margin recovery and improvement. Revenue growth is expected from rapid ramp-up of new gaming customers; 123 contract confirmations with 83 live as of Q2, targeting 100+ live customers in Q3 (33% growth). EPS improve

Current/ Expected Orderbook/ Pending Orders?

OnMobile has a strong pipeline with 123 contract confirmations as of Q2 FY24. Out of these, 83 customers are already live. The company aims to go live with 100-plus customers by Q3 FY24, representing a 33% growth. The target is to sign and be live with around 200 operators within the next 4 to 6 quarters. This expansion will significantly reduce customer concentration risk. The company is making rapid progress in Europe, expecting 5 to 7 European customers to go live in Q3 FY24. Overall, the momentum continues with a healthy pipeline and new clients expected to go live in upcoming quarters, su

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OnMobile Global LtdQ3 FY23Media

OnMobile Global Ltd Q3 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹56.1P/E: 33.8Market Cap: ₹588 CrSector: Media

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→The company expects rapid growth in mobile gaming revenues in coming quarters, driven by onboarding new customers and scaling existing ones.
→They aim to grow from 75 live gaming customers in Q2 FY’24 to 100+ in Q3 and ultimately 200 operators within a year.
→Mobile gaming subscriber base is targeted to reach about 5.2 million by Q3 FY’24, up from 4.47 million in Q2.
→Gaming revenues are anticipated to contribute around 25% of total revenues by FY’24 and FY’25, up from 12-13%.
→Europe and Tier 1 markets, with higher ARPUs, are key growth areas, with 5-7 European customers expected live in Q3 FY’24.
→Despite temporary impacts like Vodafone Idea’s business model change, base revenue for growth is established, with future quarters expected to see strong revenue ramp-up.
→Marketing investments are heavy short-term but expected to stabilize, leading to higher profitability and EBITDA margins moving forward.

Margin guidance

Category 3

→EBITDA margin is expected to improve from the current 9%, with the old business stabilizing around 18% margin and gaming business targeting 25%+ EBITDA margin once stabilized.
→Gaming EBITDA is projected to exceed 30% after stabilization, driving overall profitability growth.
→Marketing costs will be high temporarily due to new customer launches but will normalize, supporting margin recovery and improvement.
→Revenue growth is expected from rapid ramp-up of new gaming customers; 123 contract confirmations with 83 live as of Q2, targeting 100+ live customers in Q3 (33% growth).
→EPS improved in H1 FY'24 to INR 1.7 vs INR 0.4 YoY, indicating growing profitability; further EPS growth is anticipated as revenues and margins improve.
→COVID-like volatility may persist short term, but medium-term organic growth and cost optimization will drive earnings expansion.
→Cash generation is stable with reinvestment into product marketing and R&D supporting future earnings growth.

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Fundraise plans

→No immediate plans for new fundraising through equity or debt were indicated in the call.
→On the Chingari investment, Sanjay Baweja mentioned they are looking to raise more funds but do not expect this in the next 1-2 quarters, given the subdued market conditions.
→The company currently has sufficient cash resources and facilities to support growth in Challenges Arena and ONMO segments.
→Cash position has improved and is expected to remain stable while supporting ongoing marketing and R&D investments.
→No explicit mention of new equity or debt fundraising for OnMobile itself in the near term.

Order book

Yes

→OnMobile has a strong pipeline with 123 contract confirmations as of Q2 FY24.
→Out of these, 83 customers are already live.
→The company aims to go live with 100-plus customers by Q3 FY24, representing a 33% growth.
→The target is to sign and be live with around 200 operators within the next 4 to 6 quarters.
→This expansion will significantly reduce customer concentration risk.
→The company is making rapid progress in Europe, expecting 5 to 7 European customers to go live in Q3 FY24.
→Overall, the momentum continues with a healthy pipeline and new clients expected to go live in upcoming quarters, supporting rapid growth in gaming revenue.

Capex plans

Yes

- OnMobile Global is currently in an investment phase, particularly investing in marketing to drive growth in new geographies and with new operators. - Marketing investment is significant in the initial period after launching with new operators to ramp up user acquisition. - The company continues to invest in R&D from a product development angle. - Investments are expected to stabilize as customer bases mature, leading to better profitability and cash generation. - No specific large capital expenditure (capex) announcements were made, but ongoing investments in marketing and R&D are highlighted as strategic priorities. - Cash balance has improved and is expected to remain stable, supporting continued investment in growth without pressing cash constraints. - Chingari investment: No immediate monetization plans; awaiting potential equity rounds by Chingari before any realization. Overall, the focus is on marketing and R&D investments to scale gaming and mobile entertainment businesses rather than heavy capex.

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