OnMobile Global Limited

OnMobile Global reported Q1 FY26 revenue of INR 127.6 crores, marking a 1.2% increase year-on-year and a 10.2% quarter-on-quarter growth, excluding deferred DeOSphere revenues. EBITDA significantly improved to INR 6.5 crores, a 7x increase year-on-year, with a margin of 5.2%. Profit after tax (PAT) stood at INR 15.6 crores, and gross margin expanded to 54.4% from 51.1% in the prior year quarter, reflecting improved mix and cost discipline. The company closed the quarter with a gross cash balance of INR 108.6 crores, driven by positive operating cash flows and statutory refunds.

The Gaming segment continues to be a key growth engine, with subscribers reaching 12.04 million, representing a 58% year-on-year and 13% quarter-on-quarter increase. Gaming subscription revenue grew by 25.2% year-on-year to INR 31.7 crores, with a monthly run rate of USD 1.3 million in June. Management aims for a $2 million monthly run rate by March 2026, translating to $24 million annually, and targets a 25% EBITDA margin within 12-18 months. Currently, the Gaming business is at breakeven as the company continues to invest in new products and platform development, which is expensed rather than capitalized.

The Mobile Entertainment segment saw a 13% quarter-on-quarter revenue growth, reaching INR 95.6 crores, though it was down 4.9% year-on-year. The traditional business is showing signs of stabilization and growth, supported by new greenfield deployments and renewals of large customer contracts for its Tones business, which now stands at an INR 57 million base. A significant win in Q1 was a 5-year Buzzmo (Enterprise Connect service) deal with a Middle East operator, with multiple other opportunities under discussion. The company targets a conservative 5% yearly growth for this segment.

OnMobile Global deferred INR 43 crores of revenue recognition from the DeOSphere contract due to fundamental software issues affecting service level agreements (SLAs). Management indicated that while the contract leverages their global network for AI/ML services, the software problems are causing operational difficulties. They are in deep discussions with the partner to resolve these issues and realign the contract, acknowledging the possibility of not continuing if synergies are not realized or problems persist. This deferral impacted the reported Q1 revenues and profitability.

The company's cash position increased significantly to INR 108.6 crores, partly due to an INR 60 crores income tax refund and positive operating cash flows. Management emphasized a focus on profitability and cash generation, aiming for cash flow positivity every quarter. Capital allocation will remain prudent, prioritizing working capital discipline, business scale-up, and product innovation. The company is also actively working to monetize other assets on its balance sheet, including an INR 60 crores investment in Chingari, which they are in discussions to sell.

OnMobile Global is developing new products, particularly in gaming, and plans to showcase them at its Annual General Meeting (AGM) on September 23rd. The company aims to secure at least one customer sign-off for new products before a public demonstration, ensuring a tangible market presence. This approach reflects a strategic shift towards a more measured pace of growth, focusing on profitable expansion and optimizing existing deployments rather than rapid, unmonetized scaling.