Skill gaming firm Head Digital Works's FY24 revenue jumps 31% to Rs 1,378 Crore

Head Digital Works plans to focus on reducing customer acquisition costs and improving customer engagement time

Head Digital Works, the owner of the online rummy platform A23 Rummy and poker site A23 Poker, saw a 31 percent increase in its consolidated gross revenue from operations to Rs 1,378 crore in FY24, from Rs 1,051 crore in FY23, the skill-gaming firm announced on January 17.

The company posted a profit after tax (PAT) of Rs 72 crore in FY24, a 24% increase from Rs 58 crore in FY23. This growth came despite an increased tax burden from higher goods and services tax (GST) rates implemented in October 2023, as well as higher spending on player rewards and bonuses.

EBITDA (earnings before interest, taxes, depreciation, and amortization) increased to Rs 98 crore in FY24 from Rs 89 crore in FY23. The firm however stated that EBITDA margins have narrowed since the implementation of the 28 percent GST tax slab.

Similar to its rivals, Head Digital Works is currently absorbing the additional tax burden without passing it on to the players, in order to avoid a potential churn in user base.

"Our FY24 financial results reflect our resilience and strategic initiatives in the face of regulatory challenges. By investing in data analytics, adjusting game economics, and streamlining operations, we have optimised our costs effectively" said Deepak Gullapalli, founder of Head Digital Works.

"Moving forward, our focus will be on increasing customer acquisition by reducing customer acquisition costs and enhancing customer engagement time on the platform. This, we hope, will ultimately improve our margins and ensure sustainable growth in the long term," he said.

Head Digital Works, which is majority-owned by Canadian private equity firm Clairvest, forayed into online poker in September 2023 in an effort to diversify its offerings. This launch took place just ahead of the 28 percent GST rollout in October 2023.

The Hyderabad-based firm, which also owns a cricket destination Cricket.com, claims to have 75 million registered users across its platforms.

Increased expenditure

Head Digital Works stated that its gross total expenditure rose by 33 percent to Rs 1,298 crore in FY24, from Rs 975 crore in FY23.

In addition to higher rewards and bonuses, the firm also saw its employee costs grow by 40 percent to Rs 138 crore in FY24, from Rs 98 crore in FY23. This was due to an expansion of the company's workforce to meet its growth needs during the year.

Head Digital Works stated that it also took various measures to manage its costs this year. This includes adjusting its game economics and leveraging data analytics to better understand player behaviour and preferences in order to optimise marketing spend and increase player engagement and revenue.

In October, M-League, the parent company of Bengaluru-based skill gaming unicorn Mobile Premier League (MPL), also reported a 22 percent revenue jump in FY24. The firm posted a post-tax loss of $44.9 million in FY24 against $37 million in the previous year.

The startup however stated that it achieved break even with an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $0.2 million in FY24.