Ad tech contributes 9% to Nazara Technologies revenues in FY24

Nazara Technologies operates across three business segments: Gaming, sports and Ad Tech. In FY24, Gaming contributed to 36% of its revenues and 53% of EBITDA, while Esports contributed 55% of revenues and 41% of EBITDA and Ad Tech accounted for the remaining share, the company shared in an earnings call. Gaming includes Gamified Early Learning, Skill Based Real Money Gaming, Freemium and Telco Supplements. This segments revenue remained stable compared to FY24, while EBITDA grew by 13% with margin expanding to 19.9%.

The company's advertising and promotion expenses for FY24 stood at Rs 177 crore.

Within Gaming, Kiddopia, the FY24 revenue was stable, while EBITDA grew by 57% year-on-year. Q4 revenue declined by around 12% to INR 60.9 crores, while EBITDA increased to Rs. 11.7 crores. The flat revenue but higher EBITDA reflects strong core profitability as we maintain tight control on user acquisition spending.

"We are exploring growth opportunities like IP licensing to expand the game beyond current user acquisition efforts. Lower user acquisition spending led to a higher rate of subscriber base decline in this quarter, while ARPU increased by around 1% quarter-on-quarter in Q4 FY24," said Anupriya Sinha Das, head of corporate development, Nazara Technologies, during an earnings call.

The company highlighted its results as revenue from operations increased by 4.3% year-on-year to INR 1,138 crores. Nazara Technologies saw EBITDA growth of 16.5% to INR 128 crores with EBITDA margins improving by 110 basis points to 11.2%. Its PAT from continued operations grew by 41% to INR 89.5 crores.

"Most notably, and what is important for us, our operating cash flows increased to INR 131.4 crores in reflecting the company's strong underlying fundamentals," said Nitish Mittersain, CEO and joint MD, in the earnings call.

He added, "This year, we have arisen successfully between the parent entity and our subsidiaries INR 950 crores of equity capital marking our largest fundraise to date and resulting in a net cash balance of approximately INR 1,450 crores. We took many key initiatives this year. It includes our new publishing platform, new game launches, IP partnerships and a strong M&A pipeline. And many of these are expected to yield results in FY25 and beyond. Our subsidiaries have been successfully executing our M&A strategy, notably Absolute Sports, which runs Sportskeeda acquired Pro Football Network in March 23 and has doubled the business of this company and turned it profitable."

The company also recently acquired UTP, a casual card game, and NODWIN Gaming has acquired Comic Con India, which is a popular youth IP. In 2024, Mittersain said they have taken significant steps to lay a foundation for accelerated growth in coming years, with the target of achieving an EBITDA of at least INR 300 crores in FY27.

He said, "We are optimistic about FY25 anticipating faster growth in both revenue and EBITDA and the impact of many of our initiatives should be visible from Q2 onwards. With substantial cash reserves and a strong M&A pipeline, we are well positioned to seize further growth opportunities and enhance our trajectory through strategic M&A over the next 12 months."

NODWIN's Q4 revenues decreased by 9% to INR 99.1 crores, while FY24 increased by 10% year-onyear to INR 427 crores. During FY24, NODWIN raised INR 190 crores from strategic investors and made several acquisitions including Comic Con India, Publish.Me, Ninja, Freaks4U, which is an investment branded and the IP related to Playground. These investments are part of its broader strategy to dominate the Esports and Youth Media space. The company said the financial impact from these acquisitions will reflect in FY25 and beyond.

Sportskeeda reported a year-on-year revenue growth of 60% to INR 196 crores in FY24 and 71% year-on-year growth in Q 4 FY24 to INR 49 crores. Sportskeeda’s subsidiary Pro Football Network, acquired in April 2023, reported revenue growth of 112% year-on-year in Q4 and has been profitable each month since September 2023.

Ad Tech FY24 was a reset for datawrkz as the company shifted focus from lower-margin clients to higher-margin clients and product business. This strategy pivot resulted in the revenue drop from INR 153 crores in FY23, INR 104 crores in FY24. Gross margins improved from 19% in FY23 to 27% in FY24.

The company said, "We continued to invest in product development and increased marketing efforts, especially in the US market, expecting these investments to show results in FY25."

World Cricket Championship's FY24 revenue was around INR 22 crores with EBITDA of around INR 4 crores. Next, the company has plans to launch new game within Q1 to expand beyond its current scale. OpenPlay FY24 revenue and EBITDA stood at INR 37.4 crores and INR 2.1 crores respectively. The new GST regime since October 23 has impacted the entire real money gaming industry profitability. The company said its focus has been on improving operating efficiencies through new product launches and cost optimization: "We are exploring consolidation in the R&D space following regulatory clarity. Our Esports segment grew by 19% year-on-year in FY24 and 6% year-on-year in Q4 FY24, while EBITDA grew much faster by 51% year-on-year in FY24 and 71% year-on-year in Q4 FY24."