OnMobile Global Q4 FY26 earnings call

OnMobile Global reported a strong finish to FY26 with EBITDA growing 110.6% to INR 29.7 crores, achieving an EBITDA margin of 5.7%. This growth was primarily driven by significant cost optimization across all fronts. HR costs were reduced by 6.5% YoY to INR 110.7 crores, marketing spend decreased by 2.2% YoY to INR 92.8 crores, and other operating expenses were down 4.4% YoY to INR 43 crores. The subscription gaming business also became EBITDA positive as of Q3 FY26, contributing to the overall profitability.

The subscription gaming segment showed robust growth, with a 32% YoY increase in revenue and a subscriber base reaching 14.3 million. Quarter-on-quarter, the subscriber base grew by 600,000. However, the segment experienced a 15% revenue reduction QoQ due to the temporary halt of campaigns for five key customers. While these campaigns have restarted, the influx of new accounts with lower ARPU and transaction conversion rates led to overall revenue degrowth despite subscriber additions. Management expects to correct this trend and sees significant growth potential in the next 18 months, targeting a 10-15% growth for the subscription business.

A major strategic initiative is the imminent launch of the virtual console with Flipkart, planned within the next two weeks. This product, priced below INR 5,000 (including 3-12 months subscription), offers 4K, 60fps gaming and cross-device compatibility. The company has invested in custom controllers and server infrastructure across India. This launch is expected to open new distribution channels beyond mobile operators, including e-commerce, ISPs, TV providers, and retail chains, fundamentally changing OnMobile's go-to-market strategy. The console aims to capture a significant share of the Indian console market, which currently sells 150,000 units at much higher price points.

For FY26, the company's capital expenditure for gaming was significantly reduced to INR 3.5 crores, a tenfold decrease from the previous year, with no capitalization planned for FY27. This shift indicates a move towards an asset-light model, with servers and controllers being leased to minimize working capital impact. The company reported a gross cash position of INR 142 crores. A PAT of INR 11 crores negative (excluding impairment) was reported, with a total PAT of INR 35.3 crores negative after an INR 40 crores impairment provision related to the DeOSphere deal, which is still under negotiation.

OnMobile is diversifying its business with new revenue-generating products like Buzzmo and a new gaming platform. These have been launched with key customers, with one already live and another expected to go live next month, contributing to FY27 growth. The company is also innovating with cutting-edge technologies, including AI for dynamic ad rendering based on consumer profiles, and is exploring new marketing channels like Meta (Instagram, Facebook) and TikTok (outside India) to optimize marketing flows.

Management expressed confidence in the company's future, aiming for continued EBITDA growth and significant expansion in the console gaming market. The appointment of Leo Matthew, with his experience from Xbox and Meta, is expected to be instrumental in product roadmap and securing AAA game developer partnerships. The company is focused on proving the success of the Flipkart launch and then scaling the business, potentially through partnerships and capital raising, to achieve its long-term aspirational revenue targets.