InMobi's consumer bet is working Glance profitability in sight, IPO may be next

A subsidiary InMobi Pte Ltd launched five years ago to diversify its core ad tech business is taking centre stage as India’s first unicorn prepares for not one but two public share offerings.

Glance, which InMobi launched in 2019 as a preloaded feature to deliver content directly to Android lockscreens, currently reaches 450 million smartphones in markets including India, Southeast Asia and Japan. Its next target: one billion lockscreens in 3-4 years. 

Glance earned its own unicorn stripes four years ago. The consumer tech unit, which is majority owned by InMobi but also backed by Google and Jio Platforms, is expected to turn profitable next fiscal year, setting the stage for co-founder and chief executive Naveen Tewari to list it separately.

That would be after InMobi’s IPO, though. The 17-year-old company plans to file draft papers for an initial public offering of the shares of its profitable ad tech business later this year or early next year, for a listing in the second half of 2025-26, Tiwari told Mint in an interview. InMobi has decided to move its corporate headquarters from Singapore to India ahead of the IPO.

“We are rapidly expanding into new regions for Glance. As these new regions become live and reach a maturity level, it will achieve scale and turn profitable," said Tewari.

One billion screens

Glance remains an unconsolidated subsidiary of InMobi; meaning, the unit’s balance sheet remains separate from its parent’s. 

Earlier this year, Glance entered the US market. InMobi believes the US and Japan will prove to be high-margin markets; currently, it makes revenues on advertising on Glance, but as it enables commerce in these regions, it expects to achieve the scale to hit profitability, Tewari said, preparing the ground for Glance to go public on its own.

An average Glance consumer spends around 19 minutes on the locked screen, and sometimes makes purchases. So far, the company has commercialised Glance only in India and to an extent in Indonesia.

Glance launched in the US earlier this year and a partnership with a US company later this month is expected to give the company a major boost.

“That number (of customers with Glance) will get to a billion lock screens in the next three years. We are going to generate content on the locked screens in a way that has never been done before," Tewari said.

He expects that as Glance turns profitable thanks to the high-margin US market, it could become even larger than the core ad-tech business. The growth paths for both units remain crucial, however, even as the company evolves from being an adtech business to a consumer-focussed advertising and commerce business.

Lock screen content

Glance raised external capital for the first time in September 2019, securing $45 million from US venture capital firm Mithril Capital backed by Peter Thiel. It turned a unicorn in December 2020, when it raised an additional $145 million in a round led by Google and Mithril. In August 2021, Jio Platforms invested $200 million in Glance. Currently, InMobi owns nearly 60% in Glance, while Jio Platforms, Google and Mithril own the rest.

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InMobi’s core ad tech business enables third-party consumer businesses to advertise on other platforms, for which it takes a fee. This business has grown in fits and starts over the last four years, in part because of the pandemic outbreak. In FY19, the ad tech business reported revenues of $374 million, but its revenues dropped in subsequent years. The business, however, has remained profitable. 

Bikash Chowdhury, chief marketing officer for InMobi and Glance, said the company expects the Asia-Pacific market to be a key growth driver.

“In the past 18 months or so, I think the larger narrative just at a macro level is that in 2020, covid-19 happened, and then businesses came online. At InMobi, the nature of the business is demand-driven," Chowdhury said.

“As the economy grows, our business also starts to see growth. What has happened is post-pandemic, as businesses have arrived at a new normal, so you are not getting the massive growth that you were seeing in 2021-22 possibly. So, InMobi as a business is also following that."

In FY21, InMobi clocked revenue of $202 million and profit of $49 million, which grew to $275 million and $50 million in FY22, and $281 million and $41 million in FY23. In FY24, its revenue growth is expected to be over $300 million, a person with knowledge of the company said.

Growth track

Chowdhury said InMobi continues to grow. “There is a slackening as compared to 2021 and 2022, but the revenue is not dipping. 70-80% of our revenue comes from North America and that continues to grow. APAC, which historically, has not taken off in the programmatic side of the business, which is the more advanced form of advertising, has been somewhat slow, not for InMobi, but for the industry."

However, expanding scale may not be a cakewalk for InMobi, as for other digital advertising and commerce firms, as the global landscape for digital advertising shifts. Companies now spend 7.7% of revenue for marketing, down from 9.1% in 2023 and 10.5% in 2019, found a Gartner survey of 395 CMOs in North America and Europe. Alongside, European regulators have cracked down on the use of user data for targeted advertisements, making it harder for businesses like InMobi.

However, the growth of the digital advertisement business looked promising, an industry expert said.

“The market sentiment analysis for digital advertising exhibits different trajectories for different sectors. While the short-term sentiments look muted, the long-term outlook remains positive, projecting a robust recovery within the next few years," said Mukesh Kumar, associate partner at Redseer.

Bigger acquisitions

InMobi will make bigger acquisitions in the future, Tewari said, adding that the company is “cash-rich".

“In the past, we acquired smaller assets—sub $100 million, maybe sub-$75 million—in size. Going forward, we will be looking at acquiring larger companies," Tewari said, adding in future, it will likely make deals “somewhere around $500 million to a $1 billion".

Unless it is a tech-specialised company, smaller companies may not be relevant to InMobi. A larger company is more likely to make a difference to InMobi, within a two-year framework.

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“Currently, we don’t have an advertising stack for (digital) TV. It makes more sense for us to acquire instead of building it out," Tewari said. Similarly, it may look at other areas within advertising stacks.

He declined to comment on whether the acquisitions will be before its planned IPO or after.

Change of DNA

InMobi gets a fee when it arranges advertisements on Glance, like other third-party apps. Thus as Glance becomes bigger, some of the benefits will accrue to the parent as well. The ad tech business, where SoftBank is an investor, has been profitable since 2016, reporting a 25-30% margin since then. 

Glance reported a loss of around $100 million in FY23, which is expected to halve or narrow to around $70 million in FY24. It reported revenues of around $40 million in FY23, which is expected to cross $100 million in FY24.

Unlike the core ad tech operation which is a business-to-business entity, Glance reaches customers’ phones directly, which raises the potential to tap them for its advertising business.

“The best internet companies have a consumer business and an advertising business," Tewari said. 

“The shift was difficult… It was like a DNA change," Tewari said of the change from ad-tech to consumer and commerce business. “And those kind of DNA changes are quite hard to pull off. In a systematic way, we had to build the DNA of a consumer business, we had to build the DNA of a commerce business; we already had advertising."

Tewari, however, said that the core business has recovered from covid and will grow at 25-30% annually. Some of his optimism is also because InMobi has scaled up investments in Glance.

InMobi also acquired video platform Roposo in 2019, ecommerce company Shop 101 in 2021, and gaming company Gambit in 2022. It equipped Shop 101 with Roposo at the backend to present customers with a shopping experience on its video platforms. This platform sees six million transactions a month, fetching annual revenue of around $50 million, Tewari said. This revenue flows to Glance.

Not without challenges

“Both Glance and Roposo drive InMobi’s reach to hundreds of millions of consumers, helping the platform capture their behaviours, how they interact, communicate across languages, building richer social profiles, their on-device habits and more, which are great hooks for original equipment manufacturers, creators and above all the advertisers—its core target audience to drive top dollar for the ads," said Neil Shah, partner and vice president of research at Counterpoint Research.

But there are multiple challenges to this transition, Shah pointed out. 

“Challenges for InMobi stem from scaling the platform against the likes of bigger advertising competitors Meta, Google and others. These companies have multiple properties with greater scale, deeper integrations and advanced AI capabilities with Llama and Gemini respectively to make their platforms, engines more automated and intelligent," he said.

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The second challenge is how InMobi expands the platform to other geographies and segments, he said. 

“Thirdly, there are other integrated players with greater scale and similar ambitions in terms of Jio, which could be a partner as well as its biggest competitor in future. Fourthly, with the company looking to go public next year, it would be interesting to see how its R&D and earnings stack against global giants such as Meta, Google, TikTok and Affle."

Currently, most of the commerce around Roposo and Glance is around apparel, gadgetry and “a lot of quirky products with an average price of ₹800-900", Tewari said.

A key priority for Tewari now is to get the company’s artificial intelligence strategy right. The company is in the process of tying up with a large US AI-led tech company, which will power its next version of Glance in the US.

Crucially, most of the content developed on Roposo is done by artificial intelligence, lowering the cost of content creation. 

“The cost of a creator is too high to build a sustainable business unless you are Tiktok or, of course, Facebook or (the likes). And we said, we are going to go after creating content through machines."