Onmobile Global Ltd (NSE: ONMOBILE) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Pratik Jagtap — Investor Relations
Francois-Charles Sirois — Executive Chairman and Chief Executive Officer
Bikram Sherawat — President and Chief Operating Officer
Radhika Venugopal — Chief Financial Officer
Analysts:
Vedant Sekhri — Analyst
Bhavesh Patel — Analyst
Deepak Poddar — Analyst
Raaj Macwan — Analyst
Unidentified Participant
Elesh Gopani — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Global Limited’s Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Pratik from EY Investor Relations. Thank you, and over to you, sir.
Pratik Jagtap — Investor Relations
Thank you, Reyo. Good day and welcome to Q3 FY ’25 Earnings call of On-Mobile Global Limited. Representing the management today, we have FC, Executive Chairman and CEO; Rajika Venugopal, Global CFO; Dikram, President and CEO. The call will start with brief update about the overall performance during the quarter by FC. Vikram will share insights on operations, followed by Rathika, who will update on financials. After that, we will open the floor for Q&A session. I would like to mention that some of the statements made in today’s call may be forward-looking in nature and may involve risks and uncertainties that we see. For a list of such considerations, please refer to the earnings presentation. On-Mobile Global undertakes no obligation to publicly revise any forward-looking statement to reflect future or likely events or circumstances. Having said that, I now hand over the floor to Mr Etsy. Over to you. Thank you.
Francois-Charles Sirois — Executive Chairman and Chief Executive Officer
Thank you all for joining. This call strong quarter as we can see, 26% quarter-on-quarter growth, 16.65. I must say it’s really in-line with the — with the size of the projects we’re deploying. So I will focus on the gaming side, which really drew all the growth and then will led to Bitcrime Explain and the details on the balance of the business. And so gaming is now 45% of revenues. Let me start by talking about the gaming subscription, which grew, which is challenging now in non-mo, which grew by 16.9% quarter-on-quarter. So decent growth in-line with what we have said in the The past that our main focus is to optimize the accounts, reduce the marketing costs and grow. We had mentioned that we would last quarter double the revenues in the next five, six quarters. So we’re still in-line with this, so that in the next five quarters, we should be at EUR2 million revenues — monthly revenues in the next five quarters. So that growth is in-line with this. Now let me talk about the question, which I’m sure you all have is the gaming platform revenues for 50. And the gaming platform revenues is also in-line with the discussion we had last quarter about the DSPR infrastructure that we’re deploying. These revenues were book as mentioned last-time, DSPER is deploying their software on our network. We have a global network today. We have a lot of sun costs it took us 20 years to build this network and you know the objective is to actually build a specialized network that would be open for AI and gaming companies. Now just to be clear, to be able to maintain these revenues and really support the AI companies the has today, which are quite big, very big gaming and AI companies, they need important deployment of GPU servers. And that just to be clear, that’s why we wrote the notes here, we have to invest $15 million in servers deployment to be done actually in this coming months. So this has to be linked with the fact that we can finance and deploy these servers. And I must say this is only a start. There’s a lot more demand for servers deployment for being able to deploy a specialized network. As I mentioned last-time, the DSPR technology enables you know twice the performance at six times less cost. This is why it’s so attractive for AI and gaming companies and it enables us to do new services also. And to that end, you might have seen in our results also that we booked a high-cost of license that we need to — that we purchased and that we’re buying. And this is for a new service in the subscription side, which is not tied to and CA that will be deployed with key operators in our network. We are today in important discussions in advanced business cases with operator groups and this will a lot of servers also an important capex deployment. So we’ve not announced that service yet. We will in the future quarters. But it’s hitting our cost because we have to spend the money now to be able to showcase the service and deploy it and obviously launch it after. So that’s why when you look at our results and the mix right now, there is a key impact on the gaming platform revenues and that’s why also we’re going-in advanced-stage for financing the capex that will be required and it’s key for us to be able to raise the money so we can deploy the capex, so we can generate the revenues. So to that, I’m going to pass it to Vikram to explain in detail the operation of the business.?
Bikram Sherawat — President and Chief Operating Officer
Thank you, Asik. Good evening, everybody. I’ll touch upon the key lines of business beyond gaming, which already spoke about. If you see on tone side, we have increased our subscriber base, which we were serving from 57 million to 55 million to 57 million. We have around 500 odd million tone plays a day-on an average in the last quarter. We had one deployment major in LatAm region, which we were expecting to happen in Q3, which has been pushed to Q4. As of end of Q3, we have 32 customers which are live on the tolls business. Q-on-Q on the tones business, we have seen the revenue is flat, but with new focus on new business and new deals which are going to go-live, we are expecting positive movement there.
In addition to that, that, we’ve been discussing with one of the key clients in one of the largest markets for us to launch bundled packs on tones. We’ve been able to do that. We did that in the last couple of weeks of the quarter. So we are seeing some initial good green shoot results coming out of there. We are also very excited in one major operator in Middle-East to have launched an AI tunes based RBD, which also went live end of November to beginning of December, around 100,000 users have started using that. That’s very exciting for us to see that new technology is getting incorporated in the way users are trying to buy the content. We have renewed one major contract in South Asia with one of the large stones customer for three years. Those are the key highlights. The business I would say, is stabilizing and we would be focusing and ensuring that we start seeing upward trends there. If I move to the next line-of-business, which is videos, on the video side, what we have seen is that we have seen a certain amount of capping on the kind of go-to-market strategies we have in one of our largest customers.
We are in discussion with them to launch a large premium video service which is under discussions with the customer, we would see that going-live soon and I’m sure with that we would be able to arrest the revenue decline there as well. In addition to that, on our infotainment business, mobile entertainment has multiple aspects in our infotainment business, we are in discussion with large operators to relaunch contests. So that is something which is going well for us. If you see the overall business on the mobile entertainment tones, we’ve been able to fairly, strongly predict where we are going. So the way we have tried to package the discussion with our operator partners here is that we are showing value with new technology. We are showing new packages which we are ready to go-live with the customers on the pricing front. We are repackaging old content and new content in bundles for the customers. And we believe that with this, this, we would be able to maintain and grow this revenue in the coming quarters. I will hand it over to, who will take us through the financials.
Radhika Venugopal — Chief Financial Officer
Thank you,. A warm welcome and thank you everyone for joining this call. Wish you all a very happy and prosperous New Year. I’ll share the key highlights of the financial performance for quarter three and nine months ended, 31 December 2024. In terms of nine months FY ’25 performance, we reported a revenue of INR424 crores, growth of 6.6% on a Y-o-Y basis, while our gaming revenues have grown by 120% on a Y-o-Y basis to INR133 crores. Gross profit remained stable at 49%. On the cost front, OpEx has reduced by 10% on Y-o-Y basis as we continue to drive efficiency and productivity across our business lines.
EBITDA for nine months stood at INR10.8 crores, which is down by 56% on a Y-o-Y basis. This is mainly because of manpower cost, which was being capitalized in the previous year with pertaining to on more development, which is now charged directly to the P&L. On a like-for-like basis, EBITDA is up by more than 100% over the last year. Yes. In terms of Q3 FY ’25 performance, we reported a revenue of INR167 crores, which is a robust growth of 26.3% on a quarter-on-quarter basis and 36.2% on a Y-o-Y basis. This is mainly driven by the gaming revenues of INR75 crores, which was — which has more than doubled on a sequential basis.
Gross profit stood at INR73 crores, up by 10.6% on a quarter-on-quarter basis and gross margin stood at 44.6%. EBITDA is up by 4x to INR8.1 crores. This is mainly due to the revenues in gaming vertical. We reported a reduction in net loss to INR5.2 crores as compared to INR12 crores on a quarter-on-quarter basis. So this shows our efforts to get back on-track and back to be in profitable business in near-future with right execution. Overall, DSO is also down to 94 days as compared to 113 days in the previous quarter. During the quarter, we incurred R&D and product development expenses of INR2.1 crores. With this, I will hand it over back to Pratik.
Questions and Answers:
Pratik Jagtap
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question Queue assembles. To ask questions, please press star and 1. The first question is from Vedan from Artha India Ventures. Please go-ahead.
Vedant Sekhri
Hi, am I audible? We can barely hear you, Vedant. If you could speak a little louder. Hi, how about now? Yes, please go-ahead. Yeah, hi. Thanks for taking my question. My name is. I’m from Arthur India Ventures. I just had some questions on the expenses I reported this quarter. The cost of software licenses has significantly gone up year-on-year from about 2.5% to about 22% of total income. Any particular reason for this? Is this a new license that has been purchased? And another question that I had was regarding the content fee and royalty expenses, they have also gone down year-on-year from about 48% to about 34% of total income. So are these trends a sign of things to come? Is this what we will see going-forward
Francois-Charles Sirois
So let me just address first the license fee that went up as I was saying as an intro, right? It’s directly linked with the new subscription service on the gaming front that we’re developing right now and there will be even more costs to that service development. It’s quite a big endeavor that we’re doing in that front. It’s a service that we didn’t announce yet, and it’s not linked to the current subscription revenues of CA normal. And so that’s why the license went up. As full content I can let the crime already
Radhika Venugopal
Cost we have been in continuous negotiations with multiple content partners across the globe and as a result of these negotiations, the content cost has come down this quarter. Negotiations are still underway with some of these partners, but there is no timeline as to — so as and when these agreements come up for renewal, we negotiate and revise the content percentages?
Vedant Sekhri
I understand. Thank you for that. Just another question on the geographical split that we’ve seen in this quarter. The revenues from the mobile entertainment services coming out of India have gone up rather significantly, whereas Europe has steady, in fact, has declined a bit. So what would be the core reasons for this as well India as a customer.
Francois-Charles Sirois
So thanks for the question. In Europe, yes, one of our largest customers in mobile entertainment is based in Europe. And what we are seeing there is there is more focus on premium services there. So we’re trying to reposition and launch new services, which are far more premium with more premium content there. So what we are in discussion is as a result of that, what we are seeing is that existing services we will continue to hold forward and launch new services in Europe. So if I’ve answered your question properly.
Vedant Sekhri
Understood, sir. I just had two final questions. One was on the tools. This con-call you had mentioned that the ARPU for gaming would be around INR28 and the mobile entertainment services noted at INR15 to INR20 odd rupees. So could you also give the revised estimates as of this quarter? And my second question was regarding Vodafone as a customer. You had mentioned that you lost them previously. There was a possibility that we would engage with them going-forward as well. So is there any update on that as well?
Francois-Charles Sirois
So I didn’t get the first question properly, probably you’ll have to repeat, but I’ll take the second question first with regards to Vodafones. I just mentioned in my brief intro at the beginning that with one of the largest customers, we’ve been in discussion to launch bundled packs on tones for at least — at least four quarters now, and we’ve been successfully been able to do that finally in-quarter three. In addition to that, we are in discussion for them for relaunch another key service which we had with them previously and those discussions are moving very well. And I didn’t get the first question, probably your voice was not very clear.
Vedant Sekhri
Understood. I’ll repeat my first question. The first question was regarding average revenue per user estimates that were given in the previous con-call. For gaming, the number was at INR27 to 28 as the average revenue per user. And for mobile entertainment services, it was quoted at least INR15 to INR21. So I was just wondering if you could provide the latest estimate for this as well.
Francois-Charles Sirois
So you know, ARPU is a factor of the revenue which is actually delivered, right? If you see, our intent always is to always increase ARPU and focus on subscribers, which are going to help us grow revenue at minimum marketing cost, right? So what we look at is always sequential growth in ARPU, but that depends a lot on-market conditions and given how the world is moving and in some key markets, how the currency fluctuations are also happening. If we discount that, we always expect a better ARPU every quarter and that’s how we’ve been sequentially trending. It will be difficult for me to estimate right now for the quarter. I have some — we have focused on improving that quarter-on-quarter, right.
Vedant Sekhri
Okay, perfect. Thank you, sir. Those are all the questions I had.
Pratik Jagtap
Thank you. Thank you. Next question is from Bhavesh Patel from Patel Investments. Please go-ahead.
Bhavesh Patel
Thank you for the opportunity and you know, really great updates from all of you, FC,, as well as Vikram. And congratulations on great set of numbers in terms of growth and active customer-base as well as reduction in DSO. I do need your strategic input in terms of direction that we are taking to be net PAT positive. Ravika alluded to that, but not sure in terms of the timeline as a franchise what looking at? And the second question is around the plants as well as the timeline for the QLP. I do understand that we would use $15 million out of that for the servers and infra to enhance the gaming revenue in terms of capex, anything additional from a strategic perspective?
Bikram Sherawat
Let you answer first, I’ll take the QIP.
Radhika Venugopal
Thank you. Yeah. So QYP, we are planning to close it by end of Feb with all the process and legal documentation getting completed by first week of March. That’s the timeline for QIP. Currently, the due-diligence is in-progress and the investor roadshow will be somewhere around second-half of February. That’s how it is planned.
Francois-Charles Sirois
David. On your first question on how do we start making money, right? Basically that’s what you’re asking, like cash-flow is when we turn positive. And it’s clear that with the gaming platform that you can see, right, every additional customer will require capex. So just to be clear, $15 million is just the current customer. So every time there’s a new customer, there is additional capex. Now the key here is obviously to get the leasing plan, right, so that we can lead the capex long-term and make sure that it’s a net positive on the cash every month. That’s something that’s depleting cash every month, right? But it’s clear that it’s a model also that we’ll need more cash than the $15 million that we’re just discussing here. Same with the new subscription service. It’s a high investment product. I really look-forward to announce it once it’s ready. And actually the next call, I’m going to try to make this on a Zoom call, so we can actually do a demo of the service instead of having a call like this on the phone, I think it will be way better for everybody. And but all this to say that a lot of investment that goes today will pay-back you know quite rapidly. So our objective is that within the next 12 months cash-flow wise you know should be positive every month-on a cash-flow basis.
Bhavesh Patel
That’s great to know, Etsy and really appreciate if you can do the demo on Zoom, definitely will understand it more as well as probably the scaling opportunity.
Francois-Charles Sirois
Yes, totally agree. And I understand also for you, it’s very difficult, right? I mean, we had a call, I actually knew in 10 minutes, right, in November and now here, I understand it’s very difficult also as a public company not to be able, it’s not like a private company where I can do a lot of works in-progress, right? We have to announce stuff once it’s ready, not when it’s under development. And so — but yes, the goal is that by next call, we would do a nice demo and do this on.
Bhavesh Patel
Great. Appreciate it. Thank you. And all the very best.
Pratik Jagtap
Thank you. Thank you . Thank you. Next question is from Deepak Podar from Sapphire Capital. Please go-ahead.
Deepak Poddar
Yeah, am I audible, sir? Yeah,. Yeah, thank you very much, sir for this opportunity. Sir, first up, we just wanted to understand in this quarter, what was your gaming EBITDA margin versus your legacy business EBITDA margin in the 3rd-quarter do we get this out or we don’t?
Radhika Venugopal
We don’t publish segmental reporting?
Deepak Poddar
Okay. Okay. We don’t publish the segmental. But what is your legacy business EBITDA margin that we are seeing in general, I mean that data we can give? Your yeah.
Radhika Venugopal
See, we do not give segmental P&Ls. So it’s you can see the overall EBITDA margin — EBITDA percentage, which is around 4.9%.
Deepak Poddar
Okay. Okay, understood. And I mean, we are
Francois-Charles Sirois
Just in the past, just to answer your question clearly, in the past and we used to have a slide on this, right, the actual traditional business is going between 15% and 18% contributing margin and it was our goal to be breakeven by next year-on the gaming. That’s what we had said in the past. So we’re still in-line with that.
Deepak Poddar
Okay. So legacy was doing in the past some 15% 18% kind of EBITDA margin, your traditional business. And gaming business we are targeting to breakeven by what next year?
Francois-Charles Sirois
Yeah, exactly.
Deepak Poddar
Okay, okay. Understood. And I mean, how do we see the revenue trajectory in the gaming business? I mean we have seen a very strong growth, I mean even on a quarter-on-quarter basis. So if you have to look at next four, five quarters, this INR75 crores revenue in gaming in this quarter. So how should one look at the trajectory? I mean, some sense on that would be very helpful.
Francois-Charles Sirois
And that’s why also I kept it separate, right? I mean, we didn’t all the gaming revenues. So you could understand the platform revenues, right, which is driven by infrastructure and the DST agreement. And I kept the — we kept the subscription revenues for CA separates. So you can see what we’ve been investing in the past, where-is that trending, right? And as I mentioned, right, the key here is to double the revenues by and that was last quarter. So we said six quarters last quarter. So now in five quarters, we should be at $1 million a month, right? Basically $24 million of revenues a year for CE normal. That’s based on subscription and that’s driven also on amount of marketing that we invest that we’re pushing really down the cost per marketing to bring it down in the 50% and eventually in the 40s. And so that’s one variable. On the platform revenues and what you see right now as a growth, it’s directly driven from our ability to raise the money and deploy the servers. So, I mean, right now there’s more demand in the market than infrastructure than we can deploy. So really it’s for us, it’s a matter of how just to be clear, like no leasing companies, they ask for deposit also, right, they can lease, but they still need equity. So we need to have equity in our balance sheet to be able to capture these revenues properly deploy the servers and keep on growing the revenues, right? So
Deepak Poddar
Okay. Okay. So I mean on this run-rate part, I mean, we are looking at in next 18 months, $2 million per month kind of a run-rate in gaming, right? So ideally that annually run-rate comes to about 24%.
Francois-Charles Sirois
Yeah, that would only be the subscription or CA and only not including the new subscription service. Not including the.
Deepak Poddar
So ideally we are looking at a high-growth trajectory on a quarter-on-quarter basis, right? I mean, will it be fair to say, I mean on a quarter-on-quarter basis, we will see an upward trend only in the gaming revenue that we have seen in this quarter on a quarter-on-quarter basis?
Francois-Charles Sirois
Yeah. Honestly, this quarter, as you see, mobile entertainment went down. I mean, I still believe there’s no reason why our mobile entertainment business should go down, right? We should be able to make it grow, not go down. But for sure, as we said, the subscription business should be between 15% and 20% a quarter just on subscription. And the platform business, as you can see, we’ve got a jump now with the agreement and the AI companies they have is directly linked for our ability to be able to raise the money, deploy the servers and then get a new customer, raise more money, deploy more servers. And obviously, as we do this, that will have a direct impact on the revenues.
Deepak Poddar
Okay, understood. That’s very clear. That’s very clear. That’s very helpful. Just one last thing. I mean, we have said once — I mean, gaming revenue will reach optimum scale. So we can see a 25% kind of EBITDA margin in that business, right?
Francois-Charles Sirois
That’s 100% the goal. Now what we have to consider though is the in the new investments, right? So we have multiple products and we’re — we’re investing in new products. But if you just take, for example, in CA normal combined, you know, as we said before, that’s the target you know as we get to that $2 million a month, we should generate that 25% of course, that segment of that business. So at $2 million run-rate, we can achieve 25% kind of EBITDA margin rate. That’s it. That’s the goal.
Deepak Poddar
Okay. But that is after considering the investment expenses, I mean additional expenses that you might be passing-through P&L. Now I mean some of these expenses you would be capitalizing.
Francois-Charles Sirois
Additional investments is for other service, right? That’s just — and I know it’s a bit confusing because we have multiple investments, but the additional investments right now is for a new — a new subscription service. It’s not foreseen on loans.
Deepak Poddar
Okay, okay, okay. Okay. Understood. Understood. Fair enough. Okay. That would be from my side. All the way best too. Thank you. Thank.
Pratik Jagtap
Thank you. Next question is from Raj from Partners. Please go-ahead.
Raaj Macwan
Hello, am I audible? Yeah. Can you hear you. Hello. Actually, I wanted to understand the product. What exactly is this product
Francois-Charles Sirois
So is a streaming product specialized for mobile phones or mobile experience. So we call this social eSport, right? So you can play any moment. So we cut out any games that you can have on the App Store today, Android or Apple App Store, we take any game and we’re able to cut out moments of that game. And you don’t need to download the game that’s right from our service, you have access to thousands of moments of multiple games and you can play multiple games without downloading any games and you can actually compete on that specific moment. So that’s Onmo. It’s a subscription-based service that’s distributed today around 40 operators in the world and we call this social right and this product you sell it to the telecom operators right so actually just so we actually sell it to the consumer of the operator. So what we do is that we integrate the billing of the operator a bit like an app store, right? We do an app store integration, it’s actually a billing integration from the operator and we do invest marketing campaigns in that in that market on Google or other marketing means and we acquire subscribers. So that’s why we have a cost of marketing associated to it for marketing the service and getting — paying subscribers.
Raaj Macwan
Andre. So for example, if I am a subscriber of, right, so how does your product reach to me?
Francois-Charles Sirois
So you go, let’s say on Facebook, right, or you navigate on the web and you see an ad of and as soon as you click on it, we already know your phone number and your billing credential because you’re at Airtel and it just asks you, do you want to subscribe for 25 rupees a month and you say yes and then it goes right into your Airtel bill and then you can start playing on.
Raaj Macwan
Understood. So first, I need to log into a site and from there I get the access to all this all these games, right?
Francois-Charles Sirois
Exactly.
Raaj Macwan
Understood.
Francois-Charles Sirois
And it’s what we call the progressive web app, so you don’t need to go to the — normally, you would see an ad, you would click on it and you would need to go to the Android store, right? And then you have to download the app. In our case, you don’t — the app gets put on your phone-in one click. So you can actually have right away the app on your phone, phone but the app is a web app so it’s actually streamed but user don’t notice that it’s not a realized and it really feels like a real app from the app store but it’s streamed on your phone and from there you can actually have access to thousands of game moments?
Raaj Macwan
All right. And the content cost which you spend on these games, so is it passed-through the P&L or it goes into the balance sheet as an intangible asset
Francois-Charles Sirois
Both CA and on, it’s in our P&L. So those it’s expand already express
Raaj Macwan
Also in the intangible asset, I see a very-high amount Of around INR700 crores or so. So what exactly is this?
Francois-Charles Sirois
That was the actual investment to build the product, that’s the IP. We have a lot of patents on how we actually create moments. We’re the only one in the world who actually can take any app in any gaming app and create moments out of it and run eSport competition on moments. So that’s the investment that we’ve been doing for the last four years on that product.
Raaj Macwan
All right. So is this the content cost?
Francois-Charles Sirois
No, that’s not content cost, that’s product development cost.
Raaj Macwan
Product development cost and how do you determine the life of the prepared product?
Francois-Charles Sirois
How — sorry, how do we determine the —
Raaj Macwan
So in the intangible assets, so when you amortize it, so how do you determine that rate, amortization rate?
Francois-Charles Sirois
Okay. What was the rate of —
Radhika Venugopal
I’ll take that question. This is determined based on a valuation which is done and the valuation is done by one of the before. This is also vetted by the auditors with the valuation certificate gives us the number of years over — over which this is amortized.
Raaj Macwan
Understood. I’m not sure about the number of years, like how do you determine the years anyway.
Radhika Venugopal
So this is done technically based on the study of the study of the technical aspects of the product, the upgrades or updates which are required, there is a professional valuation team who does this work, they do the valuations along with the life of the product and gives us the rate of amortization.
Raaj Macwan
Okay. And sir, overall, how much?
Pratik Jagtap
Sorry to interrupt, but maybe request you to rejoin the queue as there are several participants waiting for their turn.
Raaj Macwan
Okay. All the best. Thank you. Thank you.
Pratik Jagtap
Thank you. We take the next question from Prakash from Consulting. Please go-ahead.
Unidentified Participant
Thank you so much for taking my questions. Yeah, the questions that penned at the beginning of the — of the call were brought up by the previous participant., I would request you if you could give us some kind of a notestroke document on the amortization policies, we would kind of help us as investors to understand the intangibles, but that was one small suggestion. The other one for FC was basically on the platform revenues, which are incremental to CA Stroke Onmo. Could you give us indications of the kind of mathematics in terms of revenues vis-a-vis the server investments, which is the $15 million or are the investments going to be larger over-time? So if you could give us visibility on both the investments and the potential revenues.
Francois-Charles Sirois
Yeah, let me take this, then I’ll let on the amortization. You know the current revenues we have is linked to the fact that we need to deploy the $15 million, right? So that’s in linked. Obviously, I mean, right now as I was saying earlier, we could deploy way more in capex. And once we deploy, then we can capture way more revenues, right, in-line with that same ratio. And so that’s — I mean, I’m a bit vague here, but you know, it’s really directly linked on the revenues on the platform side to be able to — every new customer needs new capex, right? They need access to GPU servers. As you know, all the AI and gaming companies need the latest NVIDIA cards and GPU cards, right? So that’s what we’re buying. We have our own configuration on the server and we deploy this in data centers. So every time there’s a new customer, there is automatically capex. And the key obviously is to be able to lease this so that we make a cash-on-cash benefit every month, right, so that we’re not stuck in a loop here where we’re just bleeding money and we never make money, right? So we have to get to a point where we have a very strong relationship with leasing companies or debt companies that can actually lease this capex and that we can capture the revenues and have a decent return.
Unidentified Participant
So now I was just asking a broad indication FC. Hello.
Francois-Charles Sirois
Yeah, broad indications of —
Unidentified Participant
No, I was just asking a broad indication of, let’s say I invest $50 million in servers, potentially how much revenue can that get me just ballpark? And on that revenue, what is the broad EBITDA? So it may not happen in a day which we understand is looking at the longer-term automatics.
Francois-Charles Sirois
Yeah, yeah. So I’ll keep it simple. I think 15 million of capex will give you about 2 million a month. They will cost you know, half of that so that’s in rough, that’s about the math.
Unidentified Participant
So 15 million of capex should give you 24 million of revenues all-the-time. Yeah. So 15 million capex should give you 24 million revenues vis-a-vis on which you should have about 12 million EBITDA.
Francois-Charles Sirois
Yeah, there’s other costs and capex. Let’s say contributing margin.
Unidentified Participant
Fair. No, that just gives an understanding — mere understanding of the mathematics there. Fine, sir. On the amortization, my request, is if you could give us some kind of an amortization policy that helps.
Radhika Venugopal
Yeah. So on amortization, there is already an accounting policy, which is available in our annual report, you can refer to notes to accounts page number 129 in the annual report, which will give you the details. Currently, we are amortizing the intangibles pertaining to product development over a period of 10 years based on the valuation.
Unidentified Participant
Okay. Fair. Thank you. Thank you so much for taking my question. Thank you. Thank you,.
Pratik Jagtap
Thank you. Next question is from Elesh Gopani from Kopani Securities and Investments. Please go-ahead.
Elesh Gopani
Good evening, everybody, and thank you for giving me an opportunity. I have three questions. The first question is, why has the gross margin declined even when gaming revenue has increased substantially. Question number two is, at what monthly subscription revenue in gaming do we aspire to-end this year? Third question, at what revenue level do we breakeven at PAT
Bikram Sherawat
Verika, you want to answer this?
Radhika Venugopal
So the first question regarding the decline in gross margin is mainly pertaining to the decline in legacy revenues. As you can see, the legacy revenues have declined and this is — legacy revenues are high, gross margin revenues and this has contributed to the decline in gross margin. Sorry, can I have your second question, please?
Elesh Gopani
At what monthly subscription revenue in gaming do we aspire to-end this year?
Bikram Sherawat
So if you see the subscription revenue quarter-on-quarter is growing between 15% to 20% and what we are — we are looking at maintaining that trends?
Elesh Gopani
And third question at what revenue level do we breakeven at PAT?
Bikram Sherawat
For which line-of-business?
Radhika Venugopal
So overall company-level right now the PAT is at a loss of INR5 crores. So anything which contributes to the margin or to the EBITDA of INR5 crores should make it breakeven, but it’s not a straight math. Any — it depends on which stream of revenues get added to the overall P&L and what is the margin on that? Approximately another INR10 crores if I take incremental revenues coming at a 50% margin, it would be around INR10 crores to INR15 — INR10 crores of revenue which gets added to the top-line, which will make the PAT neutral. But always remember that there is also the interplay of exchanges, Forex rates and other surprise expenses, which may come in. So it’s not a very strict or strict guideline on this, but yeah, in the current scenario, an addition of INR10 crores will make the path neutral. Neither positive non-negative. So in the presentation, quarter three results, if I take the quarter three results.
Elesh Gopani
So in the presentation, you have mentioned — in the presentation, you have mentioned that we will grow from $1 million to $2 million in 12 to 18 months. So can we accept — expect that we will be doing PAT in 18 months
Francois-Charles Sirois
Yes
Elesh Gopani
Hello
Francois-Charles Sirois
Yes for sure
Elesh Gopani
That’s for sure no okay thank you sir
Francois-Charles Sirois
Yes for sure now keep in mind, it all depends on the other investments we do and what we capitalize or we don’t capitalize, right? So it’s important also.
Elesh Gopani
Sir, one last question. When will we complete our QIP by March-end this year,
Francois-Charles Sirois
The target is to be in March. So we’re beginning or end of March and that’s where we plan to complete the.
Elesh Gopani
So when will we complete the investment that we are expecting in one first-quarter, we’ll complete the investments after The QIP.
Francois-Charles Sirois
We have to — honestly, we have to deploy servers in March. So I mean we — so we need the — we need that $15 million to deploy. So we will give — we will receive the money in March.
Elesh Gopani
So can we complete the investment in first-quarter of next year?
Francois-Charles Sirois
When you say complete the QIP would go till April, May, no. I would prefer to do it in March.
Elesh Gopani
No, no, I’m asking if we get the money in March ’25, can we complete our investment in the first-quarter of ’25, ’26?
Francois-Charles Sirois
No, we can. Just it’s you know now right now, you know it is like we have a customer that wants a servers, right? So normally, let’s make sure the customer is happy, right? I don’t want to have unnecessary delays because we’re, you know, you know, dragging our feet to raise the money, right? So that’s
Elesh Gopani
Okay. Okay, thank you.
Pratik Jagtap
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Vedan from Artha India Adventures. Please go-ahead.
Vedant Sekhri
Hi, thank you so much for taking my question. So I just had a question on the people cost that you have mentioned. So the employee benefit expense line-item year-on-year has gone down from 22% approximate to about 18% in this quarter as a percentage of total income. Could you give an estimation or guidance on whether this trend is likely to continue or whether this level will go back to the 22% 23%?
Radhika Venugopal
Yeah. So you’re talking about the employee benefit expense in the — in the numbers. As a percentage of revenue, this has come down because of the rationalization measures which were undertaken and moving a lot of work from the international geographies to India. So these are the steps which we took for cost optimization and this trend is likely to continue and it will continue. We even expect this to go down going-forward.
Vedant Sekhri
Thank you. And just a follow-up question on that. In your investor presentation, you mentioned that the cash position of the company from last quarter has gone down from INR41.3 crores to INR33.6 crores in this quarter and that reduction has been due to the utilization of this cash for severance pay to international employees. Is this a part of the cost optimization plan that you were talking about?
Radhika Venugopal
Yeah, that’s right. So there is a severance part which is paid out to the employees who exited as a part of this rationalization and optimization? And part of this cash reduction is due to the payout to these employees.
Vedant Sekhri
I see. And it also mentions the prepayment for gaming license cost. Is that what goes back-in links to the cost of license line-item on the result.
Radhika Venugopal
That’s right.
Vedant Sekhri
Okay, perfect. Thank you so much, ma’am. Those were all the questions I had.
Pratik Jagtap
Thank you. Participants who wish to ask questions, please press star and 1. Ladies and gentlemen to ask questions you may press star and 1 as there are no further questions, I would now like to hand the conference back to the management team for closing comments.
Francois-Charles Sirois
Thank you. Thank you. Thank you all for joining and now really excited for next quarter coming up. As I mentioned, we will do this on June. We’ll make sure to do a demo of our products, so we can understand the distinction between each and look-forward to share the results of the coming quarter. So thank you very much and speak to you soon.
Pratik Jagtap
Thank you very much. On behalf of Onmobile Global Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.