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ONMOBILEQ4 FY23

ONMOBILE Q4 FY23 Earnings Call Analysis

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

Price: ₹47Market Cap: ₹516 CrSector: Media

Management growth scorecard

Revenue

Category 1

Margin

Category 1

Fundraise

N/A

Order

Yes

Capex

Yes

4 of 4 growth signals are positive — a strong management growth story.

Full analysis

Revenue guidance

Category 1
  • The company targets overall FY'24 revenue to be much higher than INR 600 crores, similar to levels seen in FY'18.
  • Gaming revenue is expected to increase to over 25% of total FY'24 revenue from 13% in FY'23, with better margins.
  • Challenges Arena (CA) revenue has grown 22x in 8 quarters; targeting EBITDA above 25% in coming years.
  • Gaming business (CA and ONMO) expected to grow about 2.5x year-on-year, with CA reaching around INR 150 crores plus.
  • ONMO revenue guidance suggests 300% growth next year from INR 10 crores this year.
  • Gamize platform is in early stages with discussions with 12-13 customers, targeting 500 enterprises by 2025, offering wide revenue potential beyond telecom operators.
  • Legacy business expected to stabilize and possibly grow, especially Tones, by end of FY'24.
  • Marketing spends are reducing, expected to improve profitability starting Q1 FY'24 with continuous robust growth expected quarter-on-quarter.

See what ONMOBILE management said on margin guidance — free account, 30 seconds.

Fundraise plans

The transcript on page 15 and surrounding pages does not mention any current or future fundraising plans through debt or equity. Key points relevant to fundraising are: - Sanjay Baweja mentioned big investments in Challenges Arena (CA) and ONMO, but no specific fundraising discussed. - Cash management is cautious, with no dividend declared to preserve cash amid investments (page 14). - Chingari investment monetization is being considered within the next 6 months, but no fundraising linked to that (page 8). - Francois-Charles Sirois clarified promoter shareholding and no new share purchase planned (page 13). - No explicit mention of raising equity or debt financing in the transcript. Overall, there is no indication of any planned or ongoing fundraising through debt or equity as per the discussion in these pages.

See what ONMOBILE management said on order book — free account, 30 seconds.

Capex plans

Yes
  • The company is making significant investments in its gaming ventures, including Challenges Arena (CA) and ONMO, which are currently in the investment phase but expected to become EBITDA positive during FY'24.
  • Marketing expenses have increased in FY'23 due to new product launches but are expected to taper off significantly in FY'24 as the businesses mature.
  • There is an ongoing plan to activate 100 telecom operators this year out of a 200-operator target by 2025 for gaming.
  • The launch of the Gamize platform represents a strategic move into enterprise gamification beyond telecom operators, targeting over 500 enterprises by 2025.
  • Although no specific figures on capex are disclosed, the company emphasizes strong investments to ramp up new products with a focus on growth and profitability.
  • No current plans for dividend payments due to ongoing investments; interim dividend may be considered later.

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Margin guidance

Category 1
  • The company expects stabilization and potential growth in the mobile entertainment (legacy) business in the coming year, aiming for at least stable revenues with improved EBITDA margins aided by recent restructuring (INR 19 crores annualized savings).
  • Gaming business (Challenges Arena and ONMO) is projected to grow approximately 2.5x in revenue FY’24, with Challenges Arena revenue expected to reach INR 140-150 crores from around INR 60-70 crores currently.
  • Positive EBITDA is anticipated from Challenges Arena this year, with improving margins quarter-on-quarter and a target of 25%+ EBITDA margin at maturity (may take beyond FY’24).
  • Overall company EBITDA margin expected to improve from ~9-10% (legacy) to 18%+ with gaming business contribution.
  • FY’24 revenue guidance is above INR 600 crores; gaming expected to contribute >25% of total revenue with better profitability than FY’23.
  • Marketing spend in gaming will taper off, improving profitability, with EBITDA and profits expected to show marked improvement from Q1 FY’24 onwards.

Order book

Yes
  • The transcript does not explicitly mention current or expected orderbook or pending orders in precise numbers.
  • However, it indicates strong sales momentum:
  • - Challenges Arena had cumulative agreements of 66 customers by Q4 FY'23, up from 35 customers the previous quarter (20% increase).
  • - They expect to reach around 75 live revenue-yielding customers by the end of Q1 FY'24.
  • - ONMO had 19 customers agreeing to commercial proposals by Q4 FY'23, with 10 live customers and an expectation to reach 26 agreements by Q1 FY'24.
  • A significant order for the Tones business from America Movil covering 11 countries is expected to stabilize legacy business revenues.
  • Overall, the company is experiencing steady growth in customer acquisitions and contract signings, pointing to a healthy pipeline and increasing order backlog going forward.

How does ONMOBILE rank vs peers in Media?

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