OnMobile Q4 FY26: Margin-led EBITDA gains while gaming builds the next growth leg

OnMobile Global Limited closed Q4 FY26 with gross revenue of INR 1,290 Mn, down 18.8 percent year on year and 5.8 percent quarter on quarter. But the quarter also showed why the company’s earnings story has shifted from topline dependence to margin and operating discipline. Gross margin in Q4 FY26 stood at 51.5 percent versus 44.9 percent a year ago, helping EBITDA rise to INR 65 Mn, up 91.2 percent year on year despite lower revenue. Reported PAT was negative INR 365 Mn, largely driven by an impairment of receivables of INR 468 Mn. Excluding that impairment, PAT would have been positive INR 103 Mn.

For the full year, the same pattern is clearer. FY26 gross revenue declined 10.2 percent to INR 5,245 Mn, but gross profit grew 1.4 percent to INR 2,763 Mn as COGS fell 20.1 percent. This lifted gross margin to 52.7 percent from 46.7 percent in FY25. EBITDA more than doubled to INR 297 Mn, with EBITDA margin improving to 5.7 percent from 2.5 percent. Reported FY26 PAT was negative INR 115 Mn, but without the impairment provision the company reported PAT of INR 353 Mn.

That split between operating performance and accounting impact matters for investors trying to interpret the quarter. The impairment provision is large enough to dominate the headline PAT, but the underlying operating trend points to improving unit economics in the core business and a steady ramp in gaming subscriptions. At the same time, the presentation highlights a strategic expansion beyond mobile, with a Virtual Console product line positioned to open new distribution channels.

Q4 FY26 operating picture: revenue pressure, margin resilience

Q4 results reflected mixed momentum across the portfolio. Mobile entertainment remained the larger revenue contributor in the quarter at INR 901 Mn, down 1.0 percent QoQ. Mobile gaming revenue was INR 389 Mn, down 15.1 percent QoQ. In the revenue mix shared for Q4 FY26, Mobile Gaming accounted for 30 percent of gross revenue, Tones for 23 percent, and Videos and Info for 47 percent. Compared with Q4 FY25, mobile gaming’s mix share was lower, a sign that the gaming ramp is still not enough to offset broader variability in legacy categories.

Cost actions and gross margin improvement helped protect profitability. COGS fell to INR 626 Mn in Q4 FY26 from INR 887 Mn in Q4 FY25, supporting the step up in gross margin. Marketing spend was reduced meaningfully in the quarter to INR 204 Mn from INR 252 Mn in Q3 FY26, and from INR 244 Mn in Q4 FY25. People cost was largely stable at INR 282 Mn, slightly higher QoQ but lower YoY. Opex was INR 114 Mn.

The net effect was EBITDA of INR 65 Mn at a 5.0 percent margin, compared with INR 34 Mn in Q4 FY25 at a 2.2 percent margin. This EBITDA improvement, despite falling revenue, is consistent with the company’s FY26 margin narrative: better gross margin, controlled spending, and improving operating leverage.

The quarter also showed a tightening focus on cash and collections. Gross cash balance rose to INR 1,420 Mn in Q4 FY26 from INR 1,385 Mn in Q3 FY26, with the company attributing the increase to positive operational cash flows. However, DSO trends moved in the opposite direction, with total DSO rising to 131 days in Q4 FY26 from 123 days in Q3 FY26. This context helps explain why management highlighted receivables impairment as a key event in the quarter.

FY26: revenue down, EBITDA up, and a cleaner gross margin profile

At the annual level, FY26 was a year of margin repair. While revenue fell to INR 5,245 Mn, COGS declined faster to INR 2,481 Mn, driving gross margin to 52.7 percent. The company also reduced operating cost lines: people cost fell 6.5 percent to INR 1,107 Mn, marketing declined 2.2 percent to INR 928 Mn, and opex fell 4.4 percent to INR 431 Mn.

This combination took EBITDA to INR 297 Mn, up 110.6 percent year on year. EBITDA margin expanded to 5.7 percent. Reported PAT improved to negative INR 115 Mn from negative INR 405 Mn in FY25, despite the impairment charge. Excluding impairment, the improvement is sharper, with PAT excluding impairment at INR 353 Mn.

Gaming is central to the story, even though gaming revenue declined in FY26. Mobile gaming revenue was INR 1,545 Mn, down 25.4 percent year on year. Mobile entertainment revenue was INR 3,700 Mn, down 1.6 percent. Yet the subscriber metrics point in a different direction: the gaming subscriber base reached 14.3 Mn, up 34.5 percent year on year, and management highlighted gaming subscription revenue growth of 32.2 percent in FY26 compared with FY25.

This divergence between subscriber growth and reported mobile gaming revenue likely reflects mix, pricing, regional performance, and timing, but the presentation does not provide a reconciliation. For investors, the key point is that the company is treating gaming as the engine of future scale, with multiple monetization routes beyond pure mobile subscriptions.

Gaming and the next growth platform: from mobile to Virtual Console

OnMobile’s investor deck positions the business as evolving through product phases. The company’s current portfolio spans mobile entertainment (tones, videos), gaming (Challenges Arena, ONMO, ONMO plus Virtual Console, and a gaming platform), and enterprise communication (Buzzmo). Subscription has been the dominant monetization model, with platform and licensing also highlighted as part of the evolution.

The gaming narrative is built on two parallel tracks. The first is subscription growth at scale. The company reported a gaming subscriber base of 14.3 Mn and sequential net adds of 600K from Q3 FY26 to Q4 FY26. It also highlighted momentum in monthly recurring revenue in dollars, noting it reached 1M dollars in 36 months and set targets to reach 3M dollars MRR in the next 15 to 18 months, with a longer horizon of 2M dollars MRR in 30 months. The deck also notes that the USD to INR rate used in the MRR context moved from 83 INR in Q3 FY25 to 94 INR in Q4 FY26.

The second track is market expansion. The presentation frames a shift from focusing on mobile gaming, described as one half of the global gaming market, toward entering console and PC gaming, the other half. It cites a projected gaming industry size of 400 Bn dollars by 2029 with an expected CAGR of 10.5 percent.

This is where the Virtual Console becomes the central strategic move. The deck argues that the Virtual Console is built on shared foundations already in place, including telco distribution and billing integration, content licensing and rights frameworks, streaming and content delivery tech, and cloud infrastructure. The investment case is that this enables two product lines with marginal incremental investment.

Launch details in the presentation focus on user experience, pricing, and readiness.

• The product targets a console-style user experience with base plan quality starting at 1080p HD at 60 FPS, with a 4K upgrade path on future plans.
• The company is targeting the 5,000 rupee price segment, bundling multi month subscription access into a retail offering, and positioning the product to work on any screen including TV, laptop, mobile, and tablet.
• The launch library includes a curated AA library for first time explorers, plus bring your own games support for users to port existing AAA game licenses.
• The offering includes a pro controller with 4 device pairing and one button quick switch.

Operationally, OnMobile stated that gaming GPU servers have been deployed in the north and south of India for pan-India coverage, controller inventory is ready for distribution, and final launch preparations and promotions are underway. The company said to expect a launch announcement in two weeks.

The strategic logic is supported by four stated reasons: an underpenetrated console and PC D2C market in emerging markets, higher ARPUs, stronger retention, and brand elevation. Management also emphasized that Virtual Console unlocks distribution channels beyond mobile operators, including e-commerce, broadband and ISPs, retail and stores, smart TVs and set-top boxes, and continued telco distribution through carrier billing and higher ARPU bundles.

What to watch: execution discipline and the quality of growth

Two data points in the deck help frame the investor checklist for the next few quarters.

First, cash improved while DSO rose. Gross cash ended FY26 at INR 1,420 Mn, and liquid assets as a share of total assets stood at 34 percent in Q4 FY26. But DSO at 131 days is elevated. Combined with the impairment taken in Q4, collections and receivables quality should remain a key watch item.

Second, profitability improvements have been driven heavily by gross margin and operating discipline, even as revenue declined. FY26 gross profit increased despite lower revenue, and EBITDA margin expanded meaningfully. Whether this margin profile is sustainable will depend on revenue stability in mobile entertainment and the pace at which gaming, platform licensing, and the Virtual Console contribute incremental gross profit without adding proportionate marketing and operating expense.

The investment rationale section ties these threads together. OnMobile highlighted more than 35M dollars invested in technology, producing three live products: gaming subscription, gaming platform, and the Virtual Console. It also stated that gaming revenues are expected to grow by 50 percent in FY 2027, driven by continued subscription scaling, ramping licensing revenue on the gaming platform, and the upcoming Virtual Console revenue stream. The deck also notes that OnMobile trades at a discount to gaming industry peers despite being EBITDA positive, and argues that a shift in mix toward gaming could change how the market values the company.

The theme that emerges from Q4 FY26 is strategic clarity backed by improving operating discipline. Revenue trends remain challenged, and the impairment event reinforces the importance of cash conversion. But the company’s gross margin improvement and EBITDA expansion provide evidence that the cost base is being managed to protect earnings while the gaming portfolio is built out. The next inflection will depend on whether subscription momentum translates into durable revenue growth, and whether the Virtual Console launch can convert operational readiness into repeatable distribution partnerships across e-commerce, ISPs, retail, and smart TV ecosystems.

For investors, the near-term question is simple: can OnMobile keep margins intact while rebuilding growth. The deck suggests management is placing that bet on gaming, and FY27 will likely be the year where that strategy is tested in the market.