NAZARANSEQ3 FY25February 19, 2025

Nazara Technologies Limited

9,438words
99turns
11analyst exchanges
4executives
Management on call
Nitish Mittersain
CEO & JT. MANAGING
Sudhir Kamath
CHIEF OPERATING OFFICER, NAZARA TECHNOLOGIES LIMITED
Rakesh Shah Technologies Limited Ms. Anupriya Sinha Das
HEAD OF CORPORATE DEVELOPMENT, NAZARA TECHNOLOGIES LIMITED
Jinesh Joshi
PL CAPITAL
Key numbers — 40 extracted
INR 534.7 crore
rly revenue and EBITDA, reflecting the strength of our diversified portfolio. Revenues came in at INR 534.7 crores with 67% year on year growth, and our EBITDA was at INR 52.4 crores, with a 39% growth. PAT from
67%
A, reflecting the strength of our diversified portfolio. Revenues came in at INR 534.7 crores with 67% year on year growth, and our EBITDA was at INR 52.4 crores, with a 39% growth. PAT from continuing
INR 52.4 crore
ortfolio. Revenues came in at INR 534.7 crores with 67% year on year growth, and our EBITDA was at INR 52.4 crores, with a 39% growth. PAT from continuing operations was INR 13.7 crores post a one-time impairment
39%
n at INR 534.7 crores with 67% year on year growth, and our EBITDA was at INR 52.4 crores, with a 39% growth. PAT from continuing operations was INR 13.7 crores post a one-time impairment of Brand Sca
INR 13.7 crore
owth, and our EBITDA was at INR 52.4 crores, with a 39% growth. PAT from continuing operations was INR 13.7 crores post a one-time impairment of Brand Scale Innovations’ equity investment. For 9MFY25, we reported
INR 1,103.7 crore
-time impairment of Brand Scale Innovations’ equity investment. For 9MFY25, we reported revenue of INR 1,103.7 crores, EBITDA of INR 102.4 crores, and a PAT of INR 55.4 crores, respectively. Our core gaming segment
INR 102.4 crore
e Innovations’ equity investment. For 9MFY25, we reported revenue of INR 1,103.7 crores, EBITDA of INR 102.4 crores, and a PAT of INR 55.4 crores, respectively. Our core gaming segment particularly stood out in t
INR 55.4 crore
t. For 9MFY25, we reported revenue of INR 1,103.7 crores, EBITDA of INR 102.4 crores, and a PAT of INR 55.4 crores, respectively. Our core gaming segment particularly stood out in this quarter, with a 53% revenu
53%
55.4 crores, respectively. Our core gaming segment particularly stood out in this quarter, with a 53% revenue growth fueled by our strategic acquisition of Fusebox Games, as well as a fairly strong pe
rs,
have also started acquiring popular gaming IPs. Recently, we announced CATS, Crash Arena, TurboStars, and King of Thieves. These games are very popular IPs globally, and we have directly acquired them
INR 495 crore
accretive for us. To support our continued expansion, we have placed a preferential placement of INR 495 crores to Aksana Estates LLP led by Mr. Arpit Khandelwal and Mr. Mithun Sacheti, founder of CaratLane.
29%
d across demographics, geography, and business models. In Q3FY25, the Gaming segment accounted for 29% of total revenues and contributed 56% of EBITDA, while the eSports segment contributed 43% of rev
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Guidance — 20 items
Anupriya Sinha Das
opening
“Also, one large growth factor going forward for us, we've been making some good progress with the recent licensing agreements and upcoming integrations of popular entertainment IPs, which will enhance our user growth and engagement going forward.”
Anupriya Sinha Das
opening
“We intend to further scale this model in coming quarters and think this can be quite accretive for us.”
Anupriya Sinha Das
opening
“• Datawrkz on a standalone basis posted revenue growth of 38% YoY with EBITDA margin of 14.1% in Q3FY25 as efforts that were being made in prior quarters to shift towards more profitable business lines in Datawrkz's independent business are bearing fruit • The company will be continuing its investment in sales and marketing to sustain the growth • witnessed in Q3FY25.”
Deep Shah
qa
“Karan, if you can step in and just answer some of the more details, it will be helpful.”
Deep Shah
qa
“So, what I want to understand is, should we expect such kind of overlays here as this platform stays up?”
Senthil Govindan
qa
“So, while I understand that we are doing, you know, some intervention on the IP partnership, etc, but what is happening on the traditional side, because my understanding is this will still remain a significant channel for user acquisition going forward.”
Senthil Govindan
qa
“And second, how should we look at the margin profile now going forward in this business?”
Senthil Govindan
qa
“The revenue will be reported on a gross basis.”
Senthil Govindan
qa
“Now, having said that, in terms of Space & Time itself and what we can expect going forward, so start with the core principle.”
Senthil Govindan
qa
“Going forward, what we are expecting in this acquisition is first that we will be integrating a lot of the technology that Datawrkz has spent time and invested to build over the last many years, we'll be starting to deploy that in Space & Time, which should improve the collective margin profile of the Datawrkz group overall.”
Risks & concerns — 7 flagged
So, I think certain contracts are being accounted at gross and certain contracts are being accounted at net on the basis of the nature of that particular contract, depending on what is the risk on Space & Time.
— Senthil Govindan
So obviously, when we look at it, and when we obviously, you know, look at the projections on how the business is going to shape out both on the IP side and the non-IP side and accordingly the acquisition gets accounted for between IP and other ways of looking at other assets which is goodwill, which is certain assets that we acquire as part of the going concern.
— Karandeep Singh
Because we are able to acquire assets at very attractive prices, which is going to be very accretive for us and reduces risk of these acquisitions significantly.
— Nitish Mittersain
I think it's been a difficult environment for multiple reasons.
— Nitish Mittersain
Do you see Indian software engineers moving towards gaming or is it still difficult to find gaming tech developers in India?
— Ramanuj Chandak
I think if we were to do it from scratch in India, we would find it difficult.
— Nitish Mittersain
What we are trying to figure out is the one challenge in the Indian gaming market outside of the real money gaming is that monetization through in-app purchases, you know, still a small propensity, small percentage of players are having the propensity to pay for in-app purchases.
— Kewal Shah
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Q&A — 11 exchanges
Q
handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deep Shah from B&K Securities, please go ahead. Yeah, hi, good morning. Thanks for the opportunity. So, thanks for the detailed split about numbers and segmental EBITDA, that is quite useful. But within that, say, in the NODWIN segment, because before you acquired PokerBaazi, and even now, even after the acquisition, NODWIN could still be the outlier, which makes disproportionate money for us. So, I wanted to understand that slightly in de
Ajay Pratap Singh
This is Nitish. I will take that question. So, I think Animal Jam for us as an IP has continued to sustain its revenues and profitability post-acquisition. And we are quite happy with the performance of that business. Now we are starting to expand the product portfolio with the team, given that it's a very experienced team. We recently acquired another license for Slingy and the team will start working on that game. It has already started working on that game with a release later in the year. So, we believe that now we can build Animal Jam across different platforms, different IPs, increase th
Q
Okay. Hello. Am I audible now?
Nitish Mittersain
Yeah, much better. Yeah, I was asking how do you value IP for the organizations like StarLadder? You mean to say how do we value the acquisition price? Yeah, because StarLadder also has IPs, right? Yeah, yeah, yeah. Karan, why don't you take that? Yeah, so StarLadder, we obviously put an enterprise value on the company. It has revenues generated from both a combination of its IP as well as from other businesses that it gets. So, it's an enterprise value, sir, that we put from an acquisition point of view. And then, you know, the IP, then from an accounting point of view, purchase price account
Q
Hi, I wanted to know that after doing...
Management
Q
Am I audible now?
Management
Q
Is it better now?
Management
Q
Yeah, am I audible now?
Management
Q
Yeah, I just wanted to know that after doing so many acquisitions and raising so much cash in the last 6 to 8 months, what EBITDA guidance are we looking at for the next 3 to 5 years?
Nitish Mittersain
At this point of time, we'll stick with our FY27 EBITDA guidelines of INR 300 crores and we believe we are firmly on track to achieve that. But don't we see any increase in this guidance, since we've done so many acquisitions and we're consolidating everything to the parent level? Well, we obviously make our best effort to beat our prediction. But at this point of time, we're not prepared to give a fresh guidance. Okay, thank you so much.
Q
Hello. Am I audible, sir?
Management
Q
Hello. Yes, sir. My question is regarding broader perspective at the industry level. We have seen right from 2022, gaming industry as well as startups are facing a funding winter, not just USA but other countries also. So, do you think Nazara getting affected by that in any manner? And my second question is regarding, is it better for Nazara that you develop games in India and sell it in other countries or develop it worldwide and bring that to India? What would you prefer?
Nitish Mittersain
Sorry, can you repeat your first question, please? We have seen right from 2022, due to high interest rates, currently the world is facing a funding winter for startups as well as for gaming industry. So, let's assume if this goes on for a long time, is Nazara affected by that? No, it's a fantastic opportunity for us, no? Because we are able to acquire assets at very attractive prices, which is going to be very accretive for us and reduces risk of these acquisitions significantly. So, I mean, if other gaming companies are facing funding problems, is Nazara prepared for funds or will we also fa
Q
Yeah, thanks. Just, you know, one question. I think you mentioned around 3 billion EBITDA for 27, right?
Nitish Mittersain
Yes. And that would assume just current businesses or it could imply inorganic also? As of now, whatever we are focusing on or it could include some inorganic opportunities so I mean uh you know while we've not really broken it up through organic or inorganic as you know Nazara continues to be acquisitive and I’m sure from now to 2027 we will do additional acquisitions, but we're also quite confident that this the existing businesses will continue to grow well and continue to build on the profitability that we are delivering today. OK, fine, thanks.
Q
Sure. Thank you, everyone, for joining the call. I think over the past few months, we have taken important initiatives to fortify our position and lay a strong foundation for future growth of the company. We remain committed to making Nazara a robust player in the Indian and global gaming and eSports ecosystem. Thank you very much for your continued support and if you have any further clarifications, we request you to get in touch with our IR team. Have a good day.
Management
Speaking time
Nitish Mittersain
33
Moderator
13
Prem Sharma
9
Ramanuj Chandak
9
Yashita Banka
7
Kewal Shah
7
Abhishek Kumar
4
Karandeep Singh
4
Vavik Shah
4
Prakash Kapadia
3
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Opening remarks
Anupriya Sinha Das
Should you need assistance during the conference call, please signal an operator by pressing the star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from PL Capital. Thank you and over to you, sir. Yeah, good morning, everyone. On behalf of PL Capital, I welcome you all to the Q3 FY25 earnings call of Nazara Technologies. We have with us the management, represented by Mr. Nitish Mittersain, CEO and JMD, Mr. Sudhir Kamath, COO, Mr. Rakesh Shah, Group CFO, Mr. Senthil Govindan, CEO and Founder, Datawrkz. Mr. Ajay Singh, CEO, Absolute Sports. Mr. Karandeep Singh, Group CFO of NODWIN Gaming. Ms. Anupriya Das, Head of Corporate Development, and Mr. Harit Shah, who is part of the IR team. I would now like to hand over the call to the management for opening remarks. Over to you, Nitish, sir. Thank you. Good morning, everyone. In Q3FY25, we have achieved our highest ever quarterly revenue and EBITDA, r
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