Bengaluru: Advertising technology firm InMobi eked out a net profit in the last quarter of 2016 and the company expects to be profitable this year, chief executive Naveen Tewari said in an interview.

Tewari declined to disclose the company’s profit figures.

News website Factordaily last year reported that InMobi reported a loss of $40 million on a revenue of $262 million for the year to March 2015, citing the company’s Singapore filings. InMobi said it follows a calendar year but because it is incorporated in Singapore, the firm reports its numbers there according to the financial year.

If InMobi can achieve its target of generating a net profit this year, it will mark a remarkable turnaround for a company that has been written off by many investors and analysts.

“Till about the first half of last year, InMobi was struggling to make some of its recent big bets work on a sustainable basis. What they’ve done since then is they’ve gone back to the basics and doubled down on some of their core products and markets like the US and China," said Satish Meena, a senior forecast analyst at Forrester Research. “They’ve also channelled resources into key areas such as mobile video, and that has helped them show early signs of recovery. Their other offerings around mobile are also starting to witness some traction."

He added: “However, we may have to wait a little longer to assess whether the recent recovery is sustainable. For now, mobile video holds the key for them, since most large companies that are investing in this space are betting big on mobile advertising—that’s where most of the advertising dollars are being spent right now."

Tewari said the company’s profit push, which began in mid-2015, was based on signing high-margin deals with clients, an increase in its video ad business and a shift towards more profitable markets.

“We became ultra-focused on doing the right deals. You start choosing the right deals and giving up the bad deals. Then, last year, we focused only on two markets—US and China. This year, we’re focusing on three other markets—India, Indonesia and Australia. This is a big shift from previous years when we were spending freely on expanding in all markets," Tewari said.

The firm, which didn’t increase its headcount last year, was also helped by an increase in its re-seller business, in which its partners in various markets earn commissions based on the business they bring, Tewari said.

The focus on profits came at a cost: sales growth at the firm dropped to roughly 20% in 2016. In previous years, InMobi has seen sales growth of at least 30%.

However, Tewari said growth will pick up this year as it increases its presence in India, Indonesia and Australia, and strikes deals with large enterprises across the world that are eager to generate advertising revenues online.

To be sure, InMobi has missed targets in the past. It competes with the giants of the online advertising business—Google and Facebook—both of which have been mentioned as potential buyers of InMobi in the past.

It went on a hiring spree in 2012 and 2013 with disastrous consequences. And some of its products have flopped. One such, launched in 2015, was Miip, which took the form of an animated monkey that tracked users’ browsing habits across mobile apps and showed ads in the forms of bubbles and animations instead of traditional display ads.

InMobi’s last fund-raising was in 2011, when it raised $200 million from SoftBank Group Corp. Since then, discussions with several investors over funding haven’t materialized.

“Our need for raising money was never for operational uses even when we were losing $3-5 million a quarter. At that rate, we would have had cash to last till 2019. Now, of course, we’re adding cash. So, to clarify, we wanted to raise money to be able to do strategic things like acquisitions and not for running the business. For a variety of reasons like differences over valuation, these acquisitions didn’t go through," Tewari said.

InMobi has raised a working capital debt of $60 million, which has to be repaid by 2020. Tewari said the firm is adding to its cash reserves every month after its business turned profitable at the EBITDA (earnings before interest, taxes, depreciation and amortization) level last March.

InMobi is also in the process of hiring a new chief financial officer after its previous finance chief, Manish Dugar, left to join online healthcare platform Practo last May.

“Now that we are profitable, we think we can be a public company. Either going public or figuring out if this could be a bigger play (combining) with somebody else—those are both opportunities," Tewari said.

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