One Horizon Group (NASDAQ:OTCQB:OHGI), the mobile-VoIP optimization startup, is out with a meaningful downloads and revenue update that the market has responded well to - of course, this update is for its proprietary Chinese mobile-VoIP telco Aishuo. While the update is short, I believe it comes at an important time in the One Horizon story and that it should provide plenty of reason for new investors to enter the name at the turn of the New Year. I'll explain.
First, let's backtrack a bit. We last heard from One Horizon in early-November when the startup updated investors that Aishuo downloads - this figure is for Aishuo only and not inclusive of its white-label VoIP solution that it markets and licenses on a global basis - had eclipsed the 10 million mark. This was meaningful in that this downloads mark had been breached at such a quick rate and because the download rate "pull forward," or the truncation of the expected time it would take to reach the company-stated goal of 15 million total downloads over 24 months, also meant that One Horizon could do two all-important things.
The first, that One Horizon could, if it chose to do so (it did), turn on monetization early and with a much greater margin for error. The second - that One Horizon could use that margin for error to work on revenue generation optimization efforts in parallel to ramping into its initial time table (again, 24 months from Aishuo launch) for monetization. Both, quite clearly, are going to be hugely valuable to One Horizon over the long-term development of the startup even if only in learning from the optimization efforts. This learning, it should be noted, are still an asset. As is probably understood, I'm quite high on this development.
That's where One Horizon's most recent announcement comes into play. One Horizon has apparently seen success in its optimization efforts regarding monetization and has seen continued success regarding downloads. Remember, downloads are still the primary strategic initiative at the company. One Horizon has updated that Aishuo has now been downloaded over 12 million times and that revenues have doubled for the third consecutive (sequential) quarter.
To put the current rate of downloads into context: roughly 2 million downloads in ~60 days - this should mean that over the next 90 days (assuming no variance in download rate - even though the download rate has been accelerating into larger numbers) - One Horizon should achieve its 24-month stated goal of 15 million downloads. What does this mean longer term and why should investors care? For the exact same reasons noted above but with greater scale. One Horizon will now reach its 24-month launch milestone (assuming no major retention issues) with a much larger user base and with a much optimized user base.
That's going to matter as One Horizon rolls out what I'm calling "Phase 2" of monetization. "Phase 2," while not officially announced by the startup and should be considered complete speculation at this point (but is fairly visible even this early into completion of "Phase 1"), is what I believe will be further development of the product roadmap. Specifically, the products that can be sold within Aishuo. One Horizon has already tested a few of these products with the most recent being emoji stickers. Knowing which intra-app products (or in-app purchases) work and do not work from a traction standpoint will be helpful in not fatiguing the user base. I believe this will help with long-term retention rates of the larger user base as One Horizon (again) now has the luxury of testing optimization on the (presumably) smaller user base currently. That too, higher retention rates, will be helpful in driving enterprise value as well.
All told I continue to be impressed with One Horizon and I continue to be optimistic regarding the long-term future of the company. I like that progress is being made on schedule and incrementally and that the company is willing to be transparent about this. I'll continue to update readers as the story develops.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
This article was written by
Disclosure: I am/we are long OHGI. 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.