2016 IPO Prospects: InMobi May Have Missed the Bus

According to eMarketer, worldwide ad spending is expected to reach $674.24 billion by the end of 2020. Mobile ad spending in the US in 2017 is expected to grow to $77.37 billion or 38.4% of total ad spending.

InMobi’s Offerings

Bangalore, India-based InMobi was founded by IIT Kanpur alumni Naveen Tewari, Abhay Singhal, Amit Gupta, and their friend Mohit Saxena. After getting his engineering degree and while working at Citifinancial, Amit realized that he did not want to be a software engineer but rather wanted to help businesses implement business IT systems. Within a few years, Amit left his job, set up a company within the business intelligence space. He along with Naveen then went on to set up mKhoj, a mobile search venture. When the mobile search idea did not really take off, the founders pivoted the business model to lean toward mobile advertising. Today, InMobi offers mobile advertising solutions for leading brands, developers, and publishers. For more on the entrepreneurial journey, read my interview with Amit.

Their suite of products has helped simplify mobile advertising for brands. Their key products include a Native ad platform that lets users design ads and choose ad layouts best suited for their apps to drive monetization and customer engagement. The InMobi Ad SDK is a monetization platform that uses integration tools and enables developers to monetize sites and apps with ads. The InMobi Studio is another platform that enables faster creation of mobile rich media ads to be deployed across multiple platforms for both mobile and tablet devices. They have seen over 200 billion monthly ad impressions and are used by over 1.5 billion unique mobile devices.

Last year, it launched MiiP, a commerce platform that helps mobile phone users discover and buy products that are relevant to them through targeted mobile advertising. Response to it was tepid in the US and China, but it gained 750 customers and clocked 2,500 transactions a day at an average order value of INR 1,000- INR2,000 ($15-$30).

InMobi’s Financials

InMobi recorded revenues of $262 million with a loss of around $40 million and cash reserves of $30 million in 2015. It is venture funded so far with $220.6 million in venture funding from investors including Mumbai Angels, Kleiner Perkins Caufield & Byers, Sherpalo Ventures, and SoftBank. Their last round of funding was held in 2011 when they raised $200 million from Japanese investor Softbank at an undisclosed valuation. Analysts, however, pegged their valuation at $1 billion at the time of the funding.

InMobi’s Challenges

InMobi was in a good position last year. It was the single largest mobile advertising network globally. However, the rise of programmatic ad buying in the US and Europe and the growing dominance of Facebook in mobile advertising have made things tough for InMobi. It is now cutting down its 1000-strong workforce by 100. It has also been losing its top executives over the past 18 months. CFO Manish Dugar quit recently to join another start-up Practo.

Mobile ad networks that went public are having a hard time as well. Stocks of mobile ad networks that went public have dropped from $60 to $2 over the past two years.

InMobi has been aiming for an IPO in India for the past couple of years. Earlier this year, in reponse to speculations about its acquisition by Google, its CEO Naveen clarified that it is not for sale but is aiming for an IPO. However, in the face of these challenges, it is more likely to focus on improving its profitability than go public this year.

Photo credit:  nickolouse13/Flickr.com.

This segment is a part in the series : 2016 IPO Prospects