OnMobile Global Limited (ONMOBILE) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I'm Ranjita, the moderator of this call. Thank you for your standing by, and welcome to OnMobile Q1 FY 2021 investors conference call. [Operator Instructions] Joining us today on the call are Mr. FC, Chairman; Mr. Krish Seshadri; Mr. Sanjay Bhambri; and Mr. Sanjay Baweja from management team. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risk and uncertainties. For a list of such consideration, please refer to the earning presentation. OnMobile Global undertakes no obligation to publicly revise any forward-looking statement to reflect future likely events or circumstances. Please be advised this conference is being recorded today. I would like to now hand over the call to Mr. FC. Thank you, and over to you, sir.

Thank you. Thank you all for joining this Q1 call. A good quarter. I'm quite happy. First, let me start by welcoming Krish on board. Very happy he joined. Krish, as you've seen, very deep experience in media, which really complements with our telecom expertise, being at Zynga for many years on the gaming side, really Krish will help us launch this in gaming offer. And I'm quite happy he accepted to join as CEO. So Krish is on board with us now. Welcome, Krish. Also for the new Board members we have, I'm quite happy. We have 2 new Board members. Geeta, very experienced Board member in India. She's on the Board of many key companies and Steven Roberts, who's actually Global VP at PlayStation, Sony PlayStation in charge of competitive gaming. And Steven has been actually involved in Esports for the last 10 years at ESL, which is one of the first Esports league, one of the biggest ones in the world. So Steven is probably the person, who has the most experience on Esports globally. So I was very happy that he joined our Board, also will help us in this endeavor. In the quarter -- if I come back on the results on the quarter, as you can see, we really have a good profitability in the quarter, 14% EBITDA margins, excluding the investment in gaming and the losses in LatAm. So when we exclude these 2, we're actually at 19% EBITDA margin. From my point of view, this is where we should be as our core business should always produce around 20% EBITDA margin. So we're at 19%, excluding these investments, 14% in all. It will be a bit tough to maintain in the coming quarters. But from my view really, this is the benchmark for our core business to be able to -- to be around 20% on the core business EBITDA margin. Now let me just touch a bit on the gaming. I know there's a lot of excitement, not just in the market, also in the team. Everybody is really working hand-in-hand to deliver this new gaming platform. Last quarter, we announced investment in Rob0 and for all investors just to touch base on Rob0. Rob0 basically what they do is they have an AI-based system that analyze the feed, the video feeds of every video game that, obviously, that we have our system on to. So basically they analyze the feed of the game and they know exactly the players' issues that arise while playing the game and understanding when they drop off and what the issue is exactly. So that's the whole engine that we actually leverage for our new platform also. And we use it in multiple ways. I must say, I'm really happy with the Rob0 onboarding. The team have been quite very good here in Montreal. Rob0 is also helping us staffing up the team in Montreal for gaming in both hands. But they're already starting developing all this layer that goes on top of our cloud gaming, which is developed by Appland. Appland is really working hard to deliver the cloud gaming infrastructure. And the third aspect to it is really all the contest platform in digital content platform that we have, which will be integrated also in the wallet, all the wallet integration, all the context engine will be integrated into that gaming platform also. So it's really a very good collaboration between Sweden, Montreal and India, and bringing this platform altogether. So quite happy so far. I must say also, we pitched it to some of the -- given the offers to get their collaboration and the feedbacks have been very good. They've not seen anything like this in the market, and they're really excited to start the journey with us. So to that, I'm going to transfer to Krish, the mic. So Krish can talk a bit about himself and what he views about the gaming. Krish, please?

Great, thanks. Thanks, FC. Good to be here, and meet you all virtually. I'm very excited to join OnMobile at this transformational point. As FC mentioned, a large part of my background over the last 10, 15 years have been in building out digital content and gaming properties across India, U.S., Europe, at pioneers like Zynga, and AOL, which had a lot of content. And for me, joining OnMobile at this transformational point, made absolute sense. OnMobile being a leader in the media and the telecom industry for decades and got tremendous global reach and is a preferred partner for some of the most prominent operators. And now there has been a lot of focus on digitizing our products and in particular, building out the gaming business. As FC mentioned, the acquisition of Appland, which brings us cutting-edge video streaming technology and the acquisition of Rob0, the visual game analytics, it further strengthens and reaffirms the importance of OnMobile strategy to become a leader in the global gaming market. And the global gaming industry is just taking off and it's got huge, huge potential, especially given the millennial audience, both in India, Asia and the rest of the markets. So for me, in summary, OnMobile is a fantastic platform to go and build out and pursue these great opportunities. A little bit about what has been happening in the gaming side. I've been here just for a week, but I have already seen us on the B2B -- on the B2B2C side, working on upgrading the B2B games with streaming technology and social features. And as you know, our focus is mobile first. So mobile's being fueling the growth of gaming. There is a focus on cloud gaming. And of course, the social aspect of gaming will definitely come into play. Gamers are more likely to stay in games because of social connections. And in the Esports and competition side, that's driving a lot more audiences. We've see over 50% of Esports only don't play a game, but they watch a game and they participate. And we are also working on the direct to consumer gaming product and building it out, as FC mentioned, the huge cooperation between the teams in Sweden, Montreal and in India. We have a target market launch with our beta product by Q3 December that's on track. And we're working on building this out. And that said, I'm really looking forward to working with a global team and building out the products, working on their momentum and pursuing all these field opportunities ahead. I'll hand it over to Sanjay now.

Thank you, Krish. Good evening and a very warm welcome to all of you on the call. I will quickly run through the financials. Although I'm sure most of you would have seen the investor deck that has been mailed to you and also put on the OnMobile and the exchange website. If anyone is not on our mailing list, please do drop in a mail to us, and we will add you to our distribution list. Our Q1 revenues for FY '21 were at INR 147 crores, marginally lower than the Q4 of FY '20 and grew, however, by 5.3% on a year-on-year basis. As we alluded, while globally our revenues remained flat, we saw some headwinds in both India and Bangladesh due to the COVID pandemic. And this is the key reason for the marginal regrowth. From a product perspective, the tones degrew by about 6.2%, whereas the games remained flat quarter-on-quarter. The gross margin improved a little over 100 basis points, as we indicated during our last call that they will stabilize over time. However, the standout numbers of the EBITDA margin, which jumped up to 14%, an increase of 580 basis points over the last quarter. EBITDA actually grew by over 4x on an year-on-year basis. The key factor that caused the jump in profitability is the cost rationalization that we've undertaken. And we've also must say -- we've also got some help from savings due to the complete reduction in travel costs that were curtailed as a result of the pandemic. We would, however, caution our investors not to model this jump in EBITDA for all subsequent quarters. Having said that, we remain focused on cost rationalization and we will clearly continue to conserve our savings and create alternate permanent savings for us to sustain the high EBITDA margins. Operating profit as a consequence was also higher at 11.6% as compared to 5.8% in the last quarter, and we registered manifold growth on a year-to-year basis. This is a result of our sustained efforts in the direction of headcount rationalization and achieving operational efficiencies. Profit after tax was INR 12.1 crore. This is not strictly comparable with last quarter number, since we had a onetime exceptional gain of [ 8.25% ] in Q4. Excluding onetime gains, the PAT margin is at 8.6% as compared to 6.6% versus in the last quarter. We are focusing on the Latin American businesses, and we would be walking away from countries where we do not have right pricing power. Clearly, our focus is to show an improved profitable revenue growth in our legacy businesses. The efforts are on to completely reduce the loss from Latam countries, which would be one of the big drivers for EBITDA margin at the company level as we move forward through this year. A quick word on the buyback process. We have bought back about 2.2 million shares as of August 3, 2020. Our cash on books stood at INR 265.9 crore. This is a reduction as compared to INR 275 -- INR 274.5 crore at the end of Q4. The decrease is due to the investment of about INR 5.4 crore in Rob0 and buyback cost of about INR 6.5 crores. Our DSO also improved in this quarter and headcount stood at 697. A lot of other operating matrices and data are present in the presentation deck, and I'm sure all of you would have either accessed it or will look at it. Let me now give it to Ranjita for the Q&A session.

[Operator Instructions] We will take the first question.

Hello. Congrats for the great set of numbers. I wanted to how many operators are using our gaming platform? And what can the revenue be per month from one operator? It is based on subscription-based? Or there is a fixed fee that we get by using our platform?

Yes. Keep in mind that the current -- the deployment that we do are going to be upgraded with the new service, and the new service comes with the new agreements, meaning that it's not going to be the same revenue shares and the same type of revenues. In terms of deployment today, we have about 38 games club that are live with operators. So that's the current footprint. So they will be upgraded over time. But we have to decide -- today, when you subscribe to a game club, you pay $5 a month for all you can use 500 games with no advertising and no purchase, which is very different than what we're thinking about doing now with the new service, which is more angled towards paying for cloud gaming, but on the other front, being able to do Esports and maybe other items. So that's what we will be upgrading both the club, but also the business model will be upgraded.

And further sir, is any operator using our platform? Or only means, we are providing games? Or we are providing platforms?

We're providing a platform that includes games that is sold with a subscription fee to users, and they can log in and download the games. And the issue I have today is that people pay for the subscription, but to download the game because of the app stores rules, they get the warning "Be careful, if you download this game, you might have a bad app or something.” So a lot of people are careful. So the user experience from my end is not satisfying. So although we're getting some users. I'm not -- that's why we're not pushing anything too much on marketing right now with gaming. So if you see the gaming revenues are pretty much flat because we're really waiting for a new service to upgrade and making sure that we market a service that has a very good user experience.

So we have launched this gaming platform in which, which countries?

Sanjay, you want to -- in which countries did you launch it, Sanjay?

So fundamentally from OnMobile, we would have some of the Middle Eastern countries, North African country 1 and 1 in the Central Africa. There will be also 2 countries in Europe.

Sir, we are not -- I'm not getting your voice properly. Please repeat the answer.

What I said was, we have 2 countries in Middle East. 1 country in North Africa. We will have 1 country in Central Africa. We will have 2 countries in Europe, and we will have 1 country in Latin America.

Now keep in mind that's only OnMobile front. Appland already had this network also of operators through other service providers. So that's why in total, we have about 38 game clubs deployed.

We will now take the next question.

And I have 3 questions. First one is your net revenue has grown by 3%, but the EBITDA grew more than 3x due to cost cutting measures. How much of these cost cuts are sustainable? And rather, which cost do you see coming back as the economy normalizes? This is my first question.

Sanjay? Yes.

Yes, yes, I will take that. So I think the one benefit that we got from the overall reduction and rationalization of manpower, that's a permanent reduction. While you're right, the pandemic did impact our travel. So the travel costs which we have been able to reduce is because of that. But having said that, like I mentioned in my opening statement, it is our endeavor, and we are looking at various things. For example, we are rationalizing our office space, et cetera. We continuously are looking from an overall perspective, that's the big change. We are looking at the Latin American countries where there is -- had loss -- some of the countries are loss making. So we are trying to -- so we are likely to sustain over the next 3 quarters. We are likely to sustain the profitability margin that we've been able to get.

So is it right to assume that we can continue the similar kind of margins for the next 2, 3 quarters?

So the rental changes, for example, are -- don't go into EBITDA, so they go into at operating margin level because with the new accounting policy, you're probably aware that you have to put it in the lease accounting, and that's a separate thing. Although it comes into operating margin, it doesn't get into EBITDA, it comes as financial costs and other things. But having said that, on a broad basis, over the next 2, 3 quarters, we'll make sure that our profitability does not suffer. We will get back some of the costs like traveling, but we will make sure there will be other savings, which will ensure that the profitable margins will be in the same ballpark.

Okay. My second question is, could you provide some more info about revenue growth visibility over the coming quarters? That means, which verticals do you think would contribute to the growth in revenue over FY '21? And specifically, any -- targeting, any particular growth segment?

Yes. We're really -- sorry, go ahead.

From our perspective, it's difficult to give a clear indication in terms of the growth, but our focus, as FC mentioned and Krish talked about, really towards the end of the year, focus on gaming, which could be the big driver for revenue. Our legacy business will continue to grow, but not at the pace at which the potential of gaming is there. And that's our big focus area for growth by the end of this year. But in the other division, otherwise, tones and contest both will go slowly and not as fast as gaming would. FC, if you would want to add.

Yes, what I want to add is that we're doing a very big switch in the company. We're moving from a pure B2B -- most of our revenues are B2B. As we say, we have 100 million subscribers, but they're all done through operators, right? So they're all then branded through the operator's brand, the call center of the operator, everything, it's through the operator, although it's all our service behind. Now we're launching a gaming platform that's completely B2C on one hand. And I must say B2B2C on the other hand, when I say B2B2C is that our brand will have to remain because of the social gaming aspect, which is a pitch to the operator rather than selling a game's club branded to the name of the operator, it has to be cobranded now. So that's a big pitch to the operators. But that's a big switch to the company also because now we're really having our brand out there. And as you know, the KPIs on B2C is completely different than the KPIs that we have on B2Bs. So that's switch over, and that's why Krish is stepping on board also to make sure that we do that switch over in the right manner. So that will bring, obviously, a different set of KPIs, different set of customers, direct key customers. And the revenues, obviously, will be totally different also. So I think we should expect the B2C to really have success, but we have to be patient also on the actual growth in B2C, meaning that, it's not the data we launch contrary to an operator when we launch, we have the whole marketing of the operator. Now when we launch B2C, we'll have to do our own marketing. So although I think we have a very, very good platform, we still need to be thoughtful that we still have to invest the money. And obviously, on the other side, we will have to convince the operator to push a brand that's not 100% their brands. So that's the big switch over that we're doing in the coming quarters.

Okay. And my third question would be -- this is last. You have mentioned investments to be made in cloud and social gaming. What would these entail? And any amount earmarked for the same like addressable markets for these planned investments?

Yes. Addressable market, just so you know, we have 1 in 3 person actually play mobile games on their phones. So the mobile game market is probably the biggest market out there for mobile and mobile entertainment. So from our view, we really want a platform that addresses the casual gamers and not just the Esports professional because also -- we mentioned also Esports, but I just want to make sure we understand. I mean, the Esports market right now, it's really professional gamers. So when you have the casual gamer, the reason why they only want to watch is that we don't want to lose money also playing with guys, who are so good that they're going to lose. So we have to bring a platform that's really for everybody for that casual gamer, which includes the 50% women playing games in that category also in India. In terms of deployment, as we mentioned, the key -- for me, the Indian market is so important, and that's why we really want to launch first in India, make sure that we address this market at large. And for me, in terms of target market, 1 in 3 person in India is a potential customer. So that's going to be the first launch. Then deployment will go on as a B2C model in Europe and the U.S. as a second phase. But the first phase, I really want to make sure we hit with goods. And also -- it will help also to be able to see the product and comment on the product. So hopefully, by next investor call, we'll have shown at least a beta to you, so that you can see the platform and judge for yourself on what's the quality of service that we have and what's from your point of view, the target markets here?

[Operator Instructions] We will take the next question.

My name is Gautam Trivedi. I'm the co-founder of Nepean Capital. We invest in listed mid- and small-cap companies. First of all, I want to congratulate Krish for coming on board, a very impressive resume. And we hope that this is something that you're going to make a significant change and impact on OnMobile. The question I had was as follows. You -- your gaming revenues, as you said, have not significantly increased as yet. But globally, gaming is a very, very big business, online gaming that is. And a lot of companies are getting great valuations, getting a lot of funding. What is the 5-year plan for the gaming business? And how big could that become as a percentage of revenues?

We're not supposed to share projections here, but all I can say is that the current revenues are mostly B2B, as I was just mentioning. And for me, we're really going very hard on gaming. So although video today is a big part of our revenues, the -- and the gaming is quite small compared to videos and tones. I really view gaming taking over most of the revenues in 5 years, not that the video and the tones are not good. I mean, tones for me are going to maintain. I mean, it's not the game market -- I really view tones that's helping us launching for gaming. Also, with the launch of RBT that will help also, we'll use our own capabilities on RBT in India to be able to promote gaming service. But in terms of revenues, if you ask me in 5 years, I would say, 80-20, 80% gaming and 20% the rest.

Excellent. The other question I had was with respect to videos, do you have a product? Or are you developing a product, which is similar to TikTok?

No. We don't have a TikTok product, honestly. No, if I had known that and we would have planned for it. But we can't do in advance, obviously. And the places for video services is a bit crowded, as you know. It's very -- so right now, our service -- it's a larger service that we have. It's really a subscription service, where you subscribe to 150 content -- type of content and content providers. And we have many categories and on many aspects, which is very different than how TikTok works today. So even if I would say, okay, we're going to reshuffle the resources to come out with a TikTok product as soon as possible. First, I think that'd be a total focus on our team that's really focused on gaming. Second, I think that we would get beaten out in the market with all the others currently doing that. So unfortunately, we will not address this market.

Okay. And I guess my other question really is, I assume that a lot of your customers are already in 4G or seeking to launch 4G because I assume that because for gaming to actually effectively be cross-border or for that matter, multi-user, you do need a 4G technology. So can you give us a sense -- I mean, 60% of your revenues are from Europe. And I assume a lot of those operators there have already launched 4G. But is that important element of your business?

For gaming, it's going to be very important. Now keep in mind that in India, a lot of people and actually not just in India here also in Montreal. No, if I look at my kids and everybody, a lot of people are playing on WiFi, especially for the -- that the -- like in -- like PUBG, Call of Duty, all the games that actually have a lot of video streaming everybody is on WiFi. The big change I would tell you is -- 4G here, we did the test and 4G here in Canada is about 7x faster than 4G in India. So for me, the Indian market is really -- yes, it will be 4G, but it will be a lot of WiFi gaming also, whereby when we commit to the U.S., for example, 5G, the cloud gaming solution that we have today is probably one of the best for 5G cloud gaming out in the market. So that's, again, the loop back to operators. I really think that we can focus our team to go back and see all the operators launching 5G and making sure that they launch with our gaming service because that's where we really make a difference. Obviously, for latency and bandwidth, 5G really solves the issue here. And especially if you wanted to compete with your friend, the last thing you want is to have a slowdown or a screen lockup, while you are competing. So yes -- so the good mix is we need a 5G with the operators and a WiFi or -- yes, 4G also, depending where you are with your 4G connection.

Understood. I have one final question. I don't see United States on your geography of -- so is that an area that you want to pursue? Or is there already too much competition there? Or what's your view on the U.S. market?

No, no, no. For sure. We were waiting for the U.S. market to have the right product to really invest in the U.S. We have today -- we have Sprint that we're doing music service on Sprint that we've been having for many years in the U.S. But the key to the U.S. is we will come back with this gaming solution as soon as we launch in India to launch in the U.S. market. Now keep in mind that in the U.S., we have pretty much a cost of acquisition that's going to be almost 10x more than in India. And now the ARPU will be probably 10x more too or 8x more so it all goes together. So that's something to keep in mind. But still, in terms of absolute marketing budget, you need way bigger budget to launch in the U.S. a B2C solution than what we need in India. So that's why we're going to launch first in India, and then we have to look back on key partners to make sure we have the right marketing budget to launch in the U.S., but I don't want to -- today, I really view that we have at least 6 months advance on the market and what's out there. And nobody has a solution like we will announce. So I want to keep that 6 months advance. So the U.S. market will follow-on pretty fast right after we launch in India.

Understood. And have you in India tied up with Reliance Jio or not yet?

Not yet. We are in discussion with Jio on multiple fronts, but we don't have any contracts set for Jio.

We will now take the next question. Since we do not have an audio from this line, we will move on to the next question.

My question is in terms of your buyback. So if we are so bullish on the market, we bought back at INR 28. So what's your take on buyback, right? Because if you grow revenues 5x, being only 3% of your revenues gaining 5 years down the line, with 10% being now. So you'll grow your revenues 5x. So what is your take on buyback?

As you know, on buyback, once you agree to do a buyback at a specific price, you cannot increase it. So unfortunately, it's going to be very tough to complete our buyback. And we cannot change the pricing. So -- now that being said, I'm back on the valuation of the company. As you know, if you just look at today's trend in the quarter, we're at least on a $10 million EBITDA trend on the year. I don't know any media companies with that scale that trades at 10x EBITDA let alone 5x. So I'm not going to do the maths for you, but this stock price should have never been that low and I keep repeating this year-over-year anyways. And in terms of buyback, yes, we could have made the buyback higher. Now in terms of our cash management, we have many projects that will require cash. When we're talking about launching B2C, where we have many other initiatives that we're looking at in terms of -- so when I look at cash management versus the buybacks, as you know, when you do a buyback, you cannot admit cash for 1 year. So I cannot raise more money. So now it's a tricky position, while we really believe in the company, and the stock price is low. I believe also that cash position in the current situation is important. So that's about the current situation with this.

I have 2 more questions. What about the [Audio Gap] I think your marketing costs, let's say, [Audio Gap] right? So will your marketing cost double? Or you will pay a fixed marketing cost? Or variable marketing cost? How is your marketing cost like?

For sure, marketing costs will increase when we launch B2C in India. Now the reason why also I want to launch in India is that we already have a lot of partners in India. As you know, we're dealing with all the operators, except Jio. So my expectation is that we strike a deal with these operators that they are happy to push our new service. We're dealing with a lot of wallets. We're using a lot OEMs in all our phones like Samsung, Xiaomi. We're dealing with OTT players. So my view is that we get the clear partnership lineup where we have a lot of people pushing our product and that we at least share on marketing. But for sure, we have to expect that we will invest in marketing in the Indian market, and that will show in our P&L, obviously.

Okay. What I meant is your content cost, right? Today, content cost is 45% of your sales. So you did INR 150 crore, which is Indian revenue, right? And your content cost was around INR 65 crores, which is like 45%. So in the next 2 years, what is your content cost? Because for any media company, right, 45% content cost is a very high number. So let's say tomorrow your subscribers doubles, will the content costs be 45% of it? Or it will come down?

Yes, we have -- tomorrow, we have many lines of revenues and one of them, obviously, sharing revenues with the game developers. So -- and some of them are key developers. So obviously, they want a big share of that pie. And I still plan, and you're right, and our content cost in percentage of revenue is high. I still plan that we should be able to reduce it a bit. Now keep in mind also that our hosting costs will increase. One of the line that we don't have here is hosting today. Now doing cloud gaming is quite expensive on servers and hosting. So that's the line that's going to increase. So -- and the overall mix, it's probably going to be the same sort of cost. It's just going to be split between content and...

I disagree to that part, sir. I disagree to that because once the cloud cost increases, right, your depreciation cost will decrease because the moment you move from phone and power, to a lead tower, which is cloud ideally [Audio Gap] right? Your cost of ownership should come down drastically if you move to cloud?

Yes. But now it goes in the OpEx, right?

Sir, what about the depreciation cost? That will also lower down that your depreciation will reduce.

Yes. We have a lot of -- we already have a lot of servers today and they're mostly depreciated. So they are already -- so we buy some every year. But now for the cloud gaming, we're -- it's all going to be in the cloud, all in the OpEx. So anyway, I think those are -- and we're really working today on reducing the costs that we have today on our cloud gaming to be able to hit the market with a reasonable cost. But keep in mind that the initial cost of whole thing will higher than once the volume really kicks in in percentage or dollar per sub. The key will be to reduce that. All I'm saying is that we'll have -- to your point, yes, we will work on reducing the content cost. But that will come also on the fact that the hosting costs should increase.

But I think you pay to cloud as we go, right? So cloud is not a fixed expense. So unless you don't have a lot of users, there is no fixed cost on the cloud, whether it'd be B2C [ other rates occurs ], any [indiscernible] you work on, right? So I'm still not able to follow why your cloud cost is a onetime operating cost. It's more of a variable cost, right? As you're a user and previous cost will increase. But I'm not able to follow how it's an OpEx cost and it's a fixed cost.

So it will be a kind of a semifixed cost where you take some -- while it will go completely on the cloud basis into the service provider, yes, you're right. But there will be something -- some minimum guarantees, et cetera, which we have to pay for when we ask for some large space or large requirement on an ongoing. To that extent it will be semifixed. But otherwise, you're right, it would vary based on the kind of volume that we generate with our gaming strategy.

So I happen to work on cloud infrastructure, right, and we handle petabytes of data, right, and application. And the very reason why people move to cloud is because there's no fixed cost, right? So frankly, I'm not able to follow what you are saying, right? Because you pay as you go. It's not a fixed model. And that is why people move to cloud. The second question I have is, like, a lot of the other customers, right, Jio and others, why don't you get a credible investor on board? Why can't you have a [Audio Gap] today, whole management team is like a business team, right? You hardly have technical people on board or you have hardly developers, right? So even for that matter, whatever we have done, Appland and every company, right, you acquired. So what was the strength of OnMobile? Can OnMobile develop in-house products? Or it will always acquire companies like Rob0 also. So for every company, any skill you need, right? I see other DevOps companies, whose only ability is to execute what is developed. So I'm not able to follow what is the strength of OnMobile? Will it just be an acquisition company and a rollover company who is just doing sales? Because I'm not able to follow what you are as a company. Are you a product company? Or you're a service company?

So just -- we've been having this discussion in the past. But again, for me, OnMobile today is clearly a service company with operators. We're doing managed services and all the services that we have are branded with the operators' name on it. And we're very good at servicing operator in doing large-scale operation, very secure at the operator's premises. Now we're switching all this over to a B2C operation on gaming. And we needed a gaming platform. That's why when we did the -- 2 years ago, the Appland acquisition, we needed a gaming platform. And yes, we could have used our product team to start from scratch a new gaming platform, but honestly, I thought it was way better and I know Appland has been in the market since 2011. And they had pretty much the -- one of the best gaming platform to start with. Once we got that gaming platform, we had to migrate it on the cloud. So now Appland has been working for the last year full-time on upgrading everything on having the best cloud-based solutions. And now that we wanted to launch with new social gaming features on top of that platform, and Esports features that work -- it comes that we looked at the Rob0 investment and really view what Rob0 had as a B2B service because, again, Rob0, is a B2B service, we could leverage to launch our B2C solutions. So that's why we did the Rob0 investment. We're not -- I'm not using OnMobile as a [ BT arm gear ] and taking some [ BT calls ] that would be very different. So we did it because we had a clear need. We knew exactly where we're going. And we needed the Rob0 technology to do that. So that's why we've done that. And today, when you look at the actual service that we'll launch, it integrates actually from the contest back end that we have with all the integration with wallets [indiscernible] billing and all the contest engine. On top of the Appland gaming platform and cloud gaming platform using the Rob0, Esports and all the analysis that goes on top of it. The -- so that we can have the social features and Esports features enable. So all that combination together, we said that we have a great -- honestly, I really feel that we have a great product. I really look forward to next call, so that I can show you the product. And now we have a more -- a clearer discussion what we're launching what's the revenue model. And [indiscernible]. It's clearly a B2C product. And now we have to convince our B2B operation to actually push our products with our brand, co-branded certainly and with some conditions that the operators will ask us, but that's the key. And I really want to leverage the current relationship. We have over 100 operators that we have relationship with. So if we can really translate our new gaming offer and really convince the operator to push it, I think we'll have a very successful B2C business in gaming and still maintain and grow our B2B business, servicing operators and wallets and OEMs. So that's the combination. That's what is OnMobile about today, and I really think we have a great future.

So you're branding OnMo. So basically, the brand name for OnMobile sales, right? So tell me the brand value, let's say, tomorrow you plan to sell one of the platform. So what is the share of branding OnMobile? I think this is the biggest, mistake OnMobile did over the years, where you are branding, like you're selling your services under your cost and still the branding is with the operator. So let's say, tomorrow, you -- what is your branding, like, what is the value you get out of the sharing, right, of the brand name? So if tomorrow you sell the OnMo India, what percentage of share comes to OnMobile?

Today -- tomorrow, when we launch a gaming platform, it's going to be branded OnMo, you're right, but it's going to be our brand. So depending if we go direct to consumer, if we sell it through an operator, obviously, the operator will have a share selling our service, but it's our brand. And you're right, we could have launched [ about a year ago ]. But I didn't feel we had the product for doing that. That's why...

Okay. I think it is a great news. So I think with this in mind, why don't we bring a credible investor, right? Because now if you're able to brand it under your name, and just with the credibility, why don't you, let's say, you underprice your share and sell it, right, but why can't you get a good investor to give credibility to your management team.

We have multiple lines in the queue for question and answer. If you like to ask a question once again, I would like you to come to the queue. So we'll take the next question from the next caller.

So, sorry, operator, I just want to answer the question before we move to next question. If I may, 100%, I want to get credible investors on board. Now to have credible investors, you have to have a very good product, which we're getting along. And for me, it's very important that we do launch the product before we get investors, so they can see it, we can see the results, and everybody can josh with, first. And second hand, it helps when you get credible investor on board to have a good stock value today. So no, I'm happy that stock increases. But for me, it's still really not at the mark where it should be. So my objective, it's during the coming quarters, it's clearly to get a clear investor that understands the market, that are in that space and that technology base that you'll judge for yourself, oh, wow, they're great investors. But to do that, I want to launch. So next quarter we'll have a product and then we'll work on investor that can join the company to support that growth. So that's the time line. Thank you. Now, we can move to the next question.

It's V.P. Rajesh from Banyan Capital. I am a new shareholder, so pardon my -- some basic questions. First one, on the video side, if you can just give a little bit more description on what exactly is the business model? From your comments, I did pick up that we are selling to the end consumer. But if you can just describe the business model, that will be helpful.

Yes. So the business models that we have -- one of the key components, we have about 150 content providers in many segments. So we have sports content. We have women content, kids' content. We have many content categories where people go and subscribe to it. So pricing varies depending if it in Africa, it's in Europe. In Europe for example, we get an average revenue per user of about EUR 8 a month and they subscribed to services, some of them subscribed to 1, 2, 3, 4, 5 services a month. And it's a mix of video and editorial content. And we get the life value of about 6 to 8 months really on that. And it's really done, again -- most of it is done, again, on the brand of the operator. So we use the operator's relation and billing to be able to build a subscriber. And we use the first page of the browser, so as soon you open your browser, we have that first page where we preview video content that you can actually subscribe to in one place. You subscribe and now you subscribe through the service that you want to see. So that's -- no, let's say, 90% of the business of video, that's exactly how we do it.

I see. That's helpful. So why is the content cost going up? I'm assuming that most of this cost is related to your video's business.

A lot of cost is related to the video cost. 80% of the video business is offered by outside content providers, and they take a big part of the revenues. That's why it's very costly. When you talk about sport content or a lot of content is pricey. In some cases, we actually managed to get very low content cost because we are almost like news. For example, we do our news. And we know we catch our own news and we managed to sell a new service where we have full margin. So it's a mix of the 2. If you look at music, for example, we don't -- we almost make no margin on music and reselling music and music video. So those are categories that we don't push at all. So the categories where we don't make margins, we don't push too much, the ones where we make a lot of margins, we push the most. But in the mix, obviously, we cannot just push our categories, we have to get a good mix because the operators are asking us also to get a good mix of content not just push our content here. So that's...

Okay. On the gaming side, you said that you have invested in Rob0 because it is a good B2B platform. So my question is, as we think about the gaming side, do you have an option or intention to acquire rest of Rob0? Or why invest in them? You could have just done a partnership also. So just trying to get some clarity about this investment.

Yes. You know, we -- what we've done with Rob0 actually it's really a co-development agreement. And just a small investment would not have cut it because we have the whole mindset of the whole management team actually developing our platform today. So they sort of didn't put pause on their B2B business. But a lot of the developments, the joint development whereby what they develop they'll need for Rob0. And some of the development they will not need. So they're really doing for us. We have an option to actually grow to 50% of Rob0. So a 50-50. My view is really to let them -- as entrepreneurs, let them grow their business and their business model is signing game developers to help them monetize and finding all problems in their app and their game experience. And everything they do on the business-to-business front, obviously, they're signing game developers, it helps us and carry more game developers on our side, and vice versa, when we signed our own game developers. So it's really a very -- a true collaboration. And it's always risky to do that kind of deals, but we just -- we've done pretty -- we moved very fast on that deal. And I was really, really surprised to see the quality of the team that we have and how helpful they are in building our solution. So they're -- so that's the plan. So will one day, it makes sense for us to integrate all of Rob0? Maybe. The plan today is worth 25%, and we have an option to grow at 50%. But I like the 50-50 partnership here. So that's a bit the philosophy.

I see. And just the last question. So the remaining 25% that you can buy, will it be at the same price or at a different price.

Same price.

We will now take the next question.

May I know -- I mean, what was the reason behind like making the price as INR 28 for the project?

Yes. Well, keep in mind that we -- yes, Sanjay, you want to answer that? Go ahead, Sanjay.

Yes. So I think, if you look at the way the share price was at that time and considering at around INR 14, INR 15, we thought INR 28 was a very big jump in terms of the amount of money that we could offer for a share. And that's the reason and that we were advised like that by a lot of people in the end taking advice from. Clearly, the INR 28 and the Board decided that INR 28 was the right price to go in for at that that.

And if I can add also on 2 hands, I want to make sure we manage our cash also for what's coming ahead. But also, with this pandemic, it was really not obvious where the economy would go. And although I really believe it was underpriced and it's still underpriced. The economy going forward...

You see, the value -- yes, actually, the value is a market determinant. Let's not comment on that, but we thought it's best actually, but the Board decided that's the [ credit cost ].

Because my concern was like if you can invest actually 1.5 as a dividend, why we can't buy actually at higher end? Because I'm basically an investor from, like, past 6, 7 years and [indiscernible].

So I think clearly, while we understand where you are coming from. But clearly, the performance of the company, I think, will drive the value rather than anything else. And we are focused on value creation through profitability of the company. And as we've noticed in this year's -- this quarter's result, it's been a -- we've seen a substantial improvement. We expect that we will continue to improve as a company as grow and we get into gaming and that investment will bring money. So our focus is to create value through operations and profitability of this company. The buyback is one of the issues where we saw the price of the share was very low and we thought, does not reflect the full value. And when the Board decided to buyback at particular value.

There are no further questions at this time. Speakers go ahead, please.

No further questions. Okay, thank you. So thank you very much, everybody, for joining this call. Again, I really look forward to next investor call in November. And we will have a beta version for you so that every investor can see exactly what we're launching. And I really look forward to that discussion. So thank you again. And thanks for your support. Bye-bye.

Thank you.

This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect your lines.