Metrics raised 2
- Mobile Entertainment margin target raised to 25% (from 20%)
- Mobile Gaming EBITDA target raised to 10-25% range (from break-even achieved in Q3 FY26)
Metrics cut 2
- Gaming MRR target deferred to ₹2 million/month in 3-4 quarters (from March 2026)
- Chingari buyback timeline deferred by 12-18 months (previously expected earlier)
Event Participants
Executives
4 Francois-Charles Sirois (Executive Chairman & CEO), Pratik Jagtap (Investor Relations, E&Y LLP), Radhika Venugopal (Whole-time Director & CFO), Bikram Sherawat (President & COO)
Analysts
6 Ashish Basim, Balaji, Diya Jain, Jitendra Bhutoria, Josh Burji, Shailesh Kumar
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue | ₹124.1 crores | Down 3.8% QoQ, driven by decline in mobile entertainment and intentional pullback in low-margin gaming accounts |
| Mobile Entertainment Revenue | ₹84.6 crores | Down 6.5% QoQ, driven by continued European video service degrowth; Tones business stable across 27 customers |
| Mobile Gaming Revenue | ₹39.4 crores | Up 2.4% QoQ despite marketing reallocation; profitability focus over top-line growth |
| Gaming Subscribers | 13.8 million | Base maintained while marketing spend reduced below 50% of revenue (from 65% two years ago) |
| EBITDA | ₹1.5 crores (1.2% margin) | Impacted by Onmo+ launch expenses accounted in Q1; legacy business at ~20% profit range |
| PAT | -₹28.9 crores | Includes one-time severance cost of ₹14.1 crores from restructuring (full-year cost, not quarterly) |
| Cash Position | ₹135.5 crores | Down QoQ due to Onmo+ investment and repayment of short-term credit facilities |
| People Costs | ₹27.9 crores | Down 1.1% QoQ from restructuring; expected to remain at 20-22% of revenue |
| DSO | 121 days | Improved by 10 days QoQ |
Geographic & Segment Commentary
Mobile Entertainment & Communications (Tones, Buzzmo): Cash cow business targeting margin expansion from 20% to 25%. Tones stable across 27 customers with new large Middle East/North Africa operator discussions and two Latin America deployments going live shortly. Cloud-native platform being rolled out across existing deployments for efficiency gains. Buzzmo close to signing a deal with customer engagement moving toward AI-led campaigns.
Mobile Gaming Subscription: Achieved break-even in Q3 FY26; now targeting 10-25% EBITDA range with optimized marketing. Management deliberately paused marketing in accounts with poor return on ad spend; deploying AI-led decision-making to improve efficiency. Marketing costs trending below 50% (down from 65% two years ago), with multiple channel expansions beyond Google being explored.
Onmo+ Smart Console (India & Spain): Launched on Flipkart June 26, 2026 with zero activation issues. 226 cities logged in, 82% of users under 35, 70 minutes per subscriber daily usage (2x top 10% PC median), 2.7x industry D7-D30 retention. Retail partnerships with major groups being negotiated for Diwali (October) launch. Spain retail launch targeting October-December. D2C model initially, with broadband operator distribution discussions underway.
International Expansion: Active discussions with 20 operators/broadband providers globally for smart console, 10 in commercial discussions. Running rate of 2-3 commercial proposals sent weekly. Additional markets (US, Canada, Africa, other Asian countries) being evaluated for 2027 launches contingent on India/Spain retail execution.
Company-Specific & Strategic Commentary
Onmo+ Product Performance: Management shared launch stats publicly despite strategic sensitivity to validate product quality to investors. Key metrics delivered: 70 min/subscriber daily usage, 75% of users play 5+ games, 45% play 10+ games, average 2.3 devices per user. Customer service calls were about gameplay rather than activation issues, validating the 60-second activation promise.
12-18 Month Competitive Lead: Management views the lead time before Xbox xCloud and NVIDIA GeForce enter retail as a critical window. Deliberately not disclosing PO/console sales numbers for competitive reasons. Pricing at ~$3.99/month vs Game Pass's $15-20/month, with one-sixth the infrastructure cost. Strategy focused on scaling retail volume to amortize server costs.
Restructuring & Cost Discipline: Restructuring resulted in ₹14.1 crores severance (full-year cost across India and international operations; Europe severance up to 2 years salary). Deliberate decision to exit accounts without profitability, prioritizing EBITDA growth over revenue. Traditional business headcount stable; Onmo+ requiring additional hires as markets scale.
Capital Raising Considerations: Management evaluating equity fundraising (QIP $5-10 million minimum) and strategic investor partnerships alongside leasing/lender facilities for retail expansion. Cash split across geographies with transfer restrictions; ₹65 crores debenture raised at ~13.5% for Onmo+ CapEx and settling short-term facilities. Management prefers strategic investors over general QIP but open to mix.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Legacy Business Growth | 2-5% annual growth target | Mobile entertainment to stop degrowth and stabilize; mobile gaming to grow "smartly" with profitability focus |
| Mobile Entertainment Margin | 25% target (from 20%) | Achieved through cloud-native platform rollout, cost discipline, selective deal acceptance |
| Mobile Gaming EBITDA | 10-25% range this year | Requires optimized marketing, AI-led decision making, multi-channel subscriber acquisition |
| Gaming MRR Target | ₹2 million/month in 3-4 quarters | Not guaranteed; dependent on marketing efficiency improvements and account-level profitability |
| Onmo+ Retail Launch | Diwali (October) in India, October-December in Spain | Retail partnerships being finalized; store promoters, displays, inventory planning underway |
| Onmo+ Investment Payback | Cash positive in 2-3 years, full recoup in 4 years | Based on retail volume plans; investment can be leased rather than equity-funded |
| PAT Positivity | Not guided; dependent on market launch aggressiveness | Launch costs, depreciation from server leasing, and retail expansion determine timeline |
| Additional Market Launches | February-April 2027 (post India/Spain retail) | US, Canada, Africa, Asia under evaluation; requires capital raise for aggressive expansion |
Risks & Constraints
| Risk | Context |
|---|---|
| Competition from Trillion-Dollar Companies | Xbox xCloud and NVIDIA GeForce could enter retail with massive content libraries. Management mitigates through 12-18 month lead time, aggressive retail scaling, and price advantage ($3.99 vs $15-20/month). Game catalog is the key competitive vulnerability. |
| Connectivity/Latency Issues | Some users report latency issues; management attributes to user connectivity rather than service quality. Mitigation: deploying more servers across locations, retail-trained promoters to guide setup. 226 cities reached with current infrastructure. |
| Chingari Investment Delay | Buyback pushed 12-18 months due to investee restructuring. Investment valued as of March 31, 2026 remains intact per certified valuation; reassessment due by FY27 close. Preference shares provide liquidation priority. |
| Ideosphere Receivables | ~₹45 crores written off previously; management committed to settling "one way or the other" within next two quarters. Recovery timeline uncertain. |
| Cash Constraints for Expansion | Aggregate cash geographically restricted. ₡65 crores debenture at 13.5% plus leasing facilities being explored. Aggressive multi-market expansion requires QIP (~$5-10 million minimum) or strategic investors. |
| Retail Execution Risk | Onmo+ retail model requires trained promoters, store displays, inventory management across thousands of stores. October launch deadline tight; management acknowledges need for right people and processes. |
Q&A Highlights
Gaming Subscription Performance
- Question: Gaming revenue declining over last 2 quarters; previous target of ₹2 million MRR by March 2026 deferred — what's happening? (Ashish Basim)
- Answer: Deliberate pullback from accounts with poor return on ad spend; paused marketing at 50+ live accounts, renegotiating with telcos on organic marketing channels. AI-led decision-making and multi-channel expansion expected to improve both efficiency and revenue in coming quarters. MRR target of ₹2 million in 3-4 quarters is aspirational, not committed. (Bikram Sherawat)
Ideosphere and Chingari Status
- Question: Update on ~₹45 crores Ideosphere write-off; any chance of future revenue booking? And Chingari divestment status/provisioning? (Jitendra Bhutoria, Ashish Basim)
- Answer: Ideosphere amount is due from them for services rendered; must be settled within next two quarters — no further drag. Chingari buyback delayed 12-18 months as investee restructures; investment valued at March 31, 2026 remains intact, reassessment by FY27 year-end. Preference shares provide liquidation priority. (Francois-Charles Sirois, Radhika Venugopal)
Onmo+ Strategic Decisions
- Question: Why not disclose console sales? What's the deal size with operators? (Ashish Basim, Josh Burji)
- Answer: Disclosure withheld for competitive reasons — competing with trillion-dollar companies; 12-18 month lead time is precious. Operator deals structured with minimum $50K/month plan (hardware CapEx paid by operator in non-retail markets), can be 2-3x higher with bundling. Retail unit economics: 4-year payback, cash positive in 2-3 years; investments can be leased. Revenues at $50/box or $75 with 12-month pack. (Francois-Charles Sirois)
Competitive Positioning vs Xbox
- Question: How do we compete with Xbox given their strong library and D2C plans? (Ashish Basim)
- Answer: Competitive on price ($3.99 vs Game Pass's $15-20/month) and activation experience (35-60 seconds vs 20 minutes for xCloud). Steam keys expanding catalog; looking to bundle AAA titles like GTA 5 (top game being played today). Essential Game Pass comparable to Microsoft's offering for target segment. Direct deals being pursued with key game publishers. (Francois-Charles Sirois)
Cash and Capital Management
- Question: Why borrow ₹100 crores at 14% interest when cash is ₹135 crores? What's FY27 CapEx requirement? QIP instead of high-interest borrowings? (Jitendra Bhutoria)
- Answer: Actual borrowing was ₹65 crores at ~13.5% to fund Onmo+ and settle short-term facilities; cash is geographically restricted, borrowing gives leverage and flexibility. CapEx depends on market aggressiveness — India and Spain budgets covered; additional markets require $5-10 million minimum equity raise. Mix of QIP, strategic investors, and leasing preferred; current pricing not ideal but upside justifies eventual raise. (Radhika Venugopal, Francois-Charles Sirois)
Cost and Restructuring
- Question: Severance of ₹14.1 crores vs ₹22 crores quarterly salaries — which team was downsized? (Ashish Basim)
- Answer: ₹14.1 crores is full-year severance cost across India and international operations; some European countries require up to 2 years salary. Restructuring involved key executives whose roles no longer aligned with business direction; long-term business call rather than short-term cost saving. (Radhika Venugopal, Francois-Charles Sirois)
PAT and Growth Timelines
- Question: When can we expect consolidated PAT positivity? Expected revenue growth and margins this year and next? (Diya Jain)
- Answer: PAT timeline depends entirely on how aggressively Onmo+ launches new markets — each market impacts EBITDA and depreciation negatively initially. Legacy business guided at 2-5% annual growth. Onmo+ revenue range tied to investment level: different volumes (low/realistic/high) come with different investment scope; retail execution and store count decisions in progress. (Francois-Charles Sirois)
User Feedback and Retail Strategy
- Question: Product purchased on Flipkart; some reviews mention latency. Retail model with in-store promoters could be game-changer. (Balaji)
- Answer: Agreed — latency reviews mostly connectivity issues on user side; service quality on our servers is good. In-store support will address activation/connectivity concerns. Retail volume averages out server usage, keeping costs at half of competitors. Planning deployment of more servers across locations. (Francois-Charles Sirois)
Key Takeaway
OnMobile reported Q1 FY27 revenue of ₹124.1 crores (down 3.8% QoQ) with EBITDA of ₹1.5 crores, impacted by Onmo+ launch costs and a ₹14.1 crores one-time severance from restructuring that drove PAT to a ₹28.9 crores loss. The headline event was the June 26 Onmo+ smart console launch on Flipkart, which has demonstrated strong early metrics: 226 cities reached, 82% of users under 35, 70 minutes daily usage per subscriber (2x industry top tier), and 2.7x industry retention. Management is prioritizing profitability across legacy businesses (entertainment targeting 20% → 25% margins, gaming targeting 10-25% EBITDA) to fund Onmo+ expansion, with retail launches planned for Diwali in India and October-December in Spain. Operator discussions are progressing with 10 deals in commercial stages, and a 12-18 month competitive lead over trillion-dollar rivals is the strategic window. Watch points include execution of the October retail rollout, capital raising decisions (QIP/strategic investors) for multi-market expansion, resolution of Ideosphere receivables within two quarters, and gaming marketing efficiency improvements toward the ₹2 million MRR aspiration.