OnMobile Q4 FY26: Better margins, a one-off hit, and a near-term Virtual Console launch

OnMobile Global ended Q4 FY26 with a mixed headline. Revenue declined and reported profit swung sharply negative, but operating profitability improved across the year. The quarter also set up what management described as the next growth lever: a Virtual Console product that is expected to be announced for launch within two weeks of the May 19, 2026 earnings call.

For Q4 FY26, gross revenue stood at INR 129.0 crore, down 18.8 percent year on year. EBITDA was INR 6.5 crore, compared with INR 3.4 crore in Q4 FY25, but down sequentially from INR 8.1 crore in Q3 FY26. The biggest distortion was below EBITDA. The company booked an impairment of receivables of INR 46.8 crore in the quarter, which took PAT to minus INR 36.5 crore. Management clarified on the call that the impairment related to a single deal, DeOSphere, and was recorded because the receivable crossed 365 days under the company’s internal policy.

For the full year FY26, the story was more constructive. Gross revenue declined 10.2 percent to INR 524.5 crore, but EBITDA more than doubled to INR 29.7 crore, translating to a 5.7 percent margin versus 2.5 percent in FY25. Gross margin expanded to 52.7 percent from 46.7 percent, largely reflecting lower cost of goods sold. Reported PAT for the year was minus INR 11.5 crore. Excluding the impairment provision, PAT was stated at plus INR 35.3 crore.

Product mix: gaming volatility, entertainment stability

OnMobile’s revenue base continues to be dominated by Mobile Entertainment, while the company’s strategic emphasis is increasingly on Gaming. In FY26, Mobile Entertainment revenue was INR 370.0 crore, down 1.6 percent year on year. Mobile Gaming revenue was INR 154.5 crore, down 25.4 percent year on year.

In Q4 FY26, the product mix shifted further away from gaming. The deck shows Mobile Gaming at 30 percent of Q4 revenue, Tones at 23 percent, and Videos and Info at 47 percent. This compares with Mobile Gaming at 47 percent in Q4 FY25. Management attributed the Q4 gaming revenue decline to disruption in marketing campaigns with the top five customers, followed by growth through new accounts that started at lower ARPUs and weaker conversion.

The operational KPI that improved despite revenue softness was the subscriber base. Gaming subscribers reached 14.3 million in FY26, up 34.5 percent year on year, with 600,000 additions sequentially in Q4. Management described subscription gaming as EBITDA positive since Q3.

Virtual Console: the next distribution shift

The most prominent strategic narrative in the deck and the call was the Virtual Console. Management positioned it as an expansion from mobile gaming into the console and PC gaming opportunity, specifically targeted at emerging markets. The company highlighted a launch price segment below INR 5,000, with a bundled multi-month subscription and a controller included. The deck also claims console-style experience, base quality starting at 1080p at 60 FPS, and an upgrade path to 4K on future plans.

Operational readiness points were stated clearly: gaming GPU servers have been deployed in north and south India for pan-India coverage, controller inventory is ready, and final launch preparations are underway. Management said the launch announcement is expected within two weeks from the call date, with Flipkart as the initial ecommerce partner.

Beyond the launch itself, management repeatedly highlighted distribution as the strategic unlock. Historically, the company’s distribution strength was with mobile operators and carrier billing. With the Virtual Console, management described new channels opening up, including ecommerce, broadband and ISPs, retail stores, smart TVs and set-top boxes, in addition to mobile operators.

This push is also tied to a numeric target the company shared in the deck: a plan to reach USD 3 million monthly recurring revenue in the next 15 to 18 months for gaming subscription. The deck also notes the company has reached USD 1 million MRR in 36 months. Management did not provide quarterly targets but reiterated it does not intend to change its growth goals despite Q4 disruption.

Cash, collections, and the key watch items

OnMobile ended Q4 FY26 with gross cash of INR 142.0 crore, up from INR 138.5 crore in Q3 FY26. The cash trend in the deck shows a steady increase across FY26, attributed to positive operational cash flows. Management clarified on the call that the impairment is a non-cash item and does not affect cash flow.

However, the deck also shows a deterioration in collections efficiency. Days sales outstanding rose to 131 days in Q4 FY26 from 123 days in Q3 FY26. Combined with the large impairment provision, this becomes a clear near-term investor focus area.

Management also addressed capital needs for the Virtual Console. It stated that the majority of the working capital for servers and controllers is being handled through leasing companies, reducing the upfront cash requirement. Management also said it has reduced capitalization meaningfully, and stated that FY26 capitalization was around INR 3.5 crore, with no capitalization planned in FY27.

Closing takeaways

Q4 FY26 was dominated by a large receivable impairment that masked underlying operating progress. FY26 shows material margin improvement and EBITDA growth despite lower revenue, driven by cost optimisation and lower COGS. The gaming subscriber base continues to expand, but the Q4 episode underlined the sensitivity of gaming revenue to campaign continuity and customer concentration.

The next quarter’s narrative is likely to be shaped by execution on the Virtual Console launch with Flipkart, and early signals on product adoption, distribution expansion, and monetisation. Separately, investors will watch for improved receivables discipline and stability in gaming revenue as campaigns restart.