One Horizon Group (NASDAQ:OHGI), the mobile-VoIP optimization startup, is finally going to give its investors what they've been waiting on dating back to its IPO in early-2014. Or, at least it seems that way. CEO Brian Collins is out in a recent press release making his most aggressive comments to date regarding One Horizon/Aishuo (One Horizon's branded, Chinese mobile-VoIP app) revenues. These comments and subsequent reporting should do well for giving those accumulating shares a chance to fight an existing and growing larger bear thesis which charges that the company is nothing but a provider of a commoditized, unmonetizable platform.
Collins has stated, "…at this very early stage in our lifecycle, we are demonstrating that there is a sustainable, expanding business model in deploying a smartphone app to people that want low priced mobile VoIP calls…we are also encouraged to see early revenues in a space which is typically dominated by free app-to-app calls…we look forward to reporting our final revenue numbers for the quarter in November and Aishuo's effect on our overall bottom line…".
Again, these are Collins' first comments directly addressing One Horizon's elusive revenue conversation - both from a guidance standpoint as well as a cadence standpoint. What do I mean by the latter? I mean to date Aishuo (as well as other globally deployed but white-labeled versions of One Horizon's licensed platform) has generated little revenues despite significant outperformance from a downloads and overall adoption standpoint. While this has been a clear execution of the technology launch roadmap set by the company, the lack of revenue timeline guidance from the company and paralleled lack of revenue generation from the app portfolio (licensed and owned) has helped fuel bizarre but now widely circulating theories that One Horizon's platform is commoditized and not monetizable. Both, I've argued in great detail and long-form against. To date though this theory has been viable in that the financials haven't countered it and management hasn't guided for a countering. That's seemingly about to change at One Horizon's next reporting.
But Collins' much needed revenue commentary and quarter-reporting "table setting" wasn't the only major update given in the press release. One Horizon updated investors that Aishuo, the only app that One Horizon reports granularity for as this is its own proprietary version of its platform technology, has now eclipsed a whopping 10 million downloads. Again, this keeps Aishuo well ahead of its guided, "15 million downloads over 24 months" pace which was set at the launch of Aishuo. Having launched in late-February, Aishuo is now 66% to completion of goal just 9 months into 24 month maturation.
Also important, Aishuo through 9 months is averaging greater than 1 million downloads per month. This is highly encouraging considering the typical app download-slopeline of growth which accelerates at mid-maturation into greater network effect coupled with greater marketing spend (typically, as per App Annie analytics). I expect Aishuo downloads to pick up in velocity as the app crosses into 50% maturation of guided launch (roughly at 12 months from launch, roughly 3 months from now). That's going to matter from a key metric standpoint but also now potentially from a monetization and revenue generation standpoint. We'll have to wait for Collins' comments regarding the latter before making any analysis.
In addition to this, updated since my last research note, One Horizon announced an app-tech upgrade which allows for seamless 3G to Wifi call transitioning for its app. Remembering that One Horizon's platform is almost exclusively launched in emerging markets with stressed telecom infrastructures, this is an important feature for the platform to own in that this will greatly reduce calls dropping when making the transition. While this is certainly one of the more basic tech platform updates we've seen come out of One Horizon the all-inclusive differentiation being established by the tech solution is beginning to become more and more visible to the addressable market. Visibility of the value-prop, I'll remind investors, is what's driving the accelerated download rate and what should drive continuation and expansion of this acceleration into the maturation curve (as noted above).
All told I continue to be happy to own One Horizon, inclusive of what has been minimal dilution and a highly volatile share price. Reiterating what I drafted in long-form in my most recent update, I fully understand the inefficiency of investing longer-term in startups (especially tech startups) and I fully understand that for the next handful of quarters I'll be valuing the underlying tech platform at One Horizon to analyze company health rather than the equity price (as I have had to do at times with HubSpot, Marketo, Paycom, Paylocity, New Relic, Zendesk, etc.). But, I will say that I'm excited to finally have a revenue conversation and to finally have something tangible from a financial reporting standpoint to stand behind when countering bear theses.
One Horizon is still very much so a growth story so I'm not expecting anything miraculous from a revenue standpoint, I'll still be watching tech platform evolution as well as downloads as my primary health-tracking key metrics, but revenue will give the One Horizon valuation bull case much more solid footing. I look forward to updating investors on the other side of quarterly reporting. Good luck everybody.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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