Nazara Tech Q3 results: Net profit jumps 47% to Rs 30 cr; Revenue grows to Rs 320 cr

Nazara Technologies currently operates in three key sectors - gaming (World Cricket Championship, Kiddopia, Animal Jam, Classic Rummy etc), esports (Nodwin Gaming, Sportskeeda) and advertising (Datawrkz).

Nazara Technologies on February 6 reported a net profit of Rs 29.52 crore for the quarter ended December 31, 2023, registering a 46.7 percent jump from Rs 20.12 crore profit in the year-ago quarter.

This growth was led by strong performance in the esports vertical during the quarter offset by lower profits in the gaming and adtech segments.

Revenue from operations was at Rs 320.4 crore for the quarter, up two percent year-on-year (YoY) from Rs 314.8 crore in the corresponding quarter last year.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 24 percent YoY to Rs 37.7 crore for the quarter as against Rs 30.5 crore in Q3-FY23.

The diversified gaming and sports media firm also announced the appointment of Dhaval Sheth as its Head – Strategic Initiatives (Founder's office). He was previously serving as the CFO of Nazara Technologies subsidiary Kiddopia.

Nazara Technologies currently operates in three key sectors - gaming (World Cricket Championship, Kiddopia, Animal Jam, Classic Rummy etc), esports (Nodwin Gaming, Sportskeeda) and advertising (Datawrkz).

"Our approach of acquiring global gaming IPs and leveraging focused user acquisition alongside data-driven product innovation is beginning to pay off, as demonstrated by Animal Jam's performance in Q3. We are optimistic this strategy will enable substantial scale-up opportunities we can replicate in the future" said Nazara Technologies founder Nitish Mittersain.

During the quarter, Nazara Technologies raised Rs 250 crore from a clutch of new and existing investors, including Zerodha co-founder Nikhil Kamath, Plutus Wealth, and ICICI Prudential Mutual Fund.

With this investment, the company completed its FY24 fundraising goal by securing a total Rs 760 crore, including Rs 510 crore from SBI Mutual Fund and Zerodha co-founder Nikhil Kamath last year.

"With significant cash reserves, we're in an excellent position to pursue the exciting acquisition opportunities our team has identified, aiming for strategic expansion in the upcoming quarters" Mittersain said.

In December, Nazara Publishing, the recently launched publishing unit of Nazara Technologies, announced its initial set of five games, ranging across various genres from four Indian game studios. Mittersain said these games are set to go live soon.

Nazara Publishing plans to launch up to 20 games across mobile, web3, virtual reality (VR) and personal computer (PC) over the next 12-18 months and invest between Rs 1 crore and Rs 3 crore a game.

Segment-wise performance

Esports remained the biggest vertical for the company, with revenues of Rs 193.7 crore in Q3FY24, up 27 percent YoY from Rs 152.5 crore in Q3FY23. The segment accounted for 60.5 percent of Nazara's Q3 topline.

Nodwin Gaming saw a 20 percent increase in its revenues to Rs 133.9 crore for the quarter, while Sportskeeda witnessed a 68 percent jump in its revenues to Rs 59.8 crore.

The gaming vertical reported revenues of Rs 101.5 crore for the quarter, down 12 percent YoY from Rs 115.7 crore in Q3FY23. The segment accounted for 31.7 percent of the company's overall Q3 revenues.

The Kiddopia business saw its revenue decline by 4.2 percent to Rs 54.7 crore for the quarter. The company said that it witnessed a higher rate of subscriber decline during the quarter due to an increase in user acquisition costs and lower marketing spends.

Revenue from Animal Jam business grew to 26.8 crore in Q3-FY24, which Nazara said was the company's best quarterly performance since its acquisition in August 2022.

Nazara's freemium business, which includes the cricket simulation game World Cricket Championship, saw its revenue decline to Rs 5.4 crore during the quarter from Rs 6.7 crore in the year-ago quarter. The World Cricket Championship had a monthly active user base of 9.34 million, of which 1.41 million are daily users.

The real-money gaming business saw its revenue halve to Rs 7.6 crore for the quarter, from Rs 15.1 crore revenue in Q3-FY23, due to the impact of the government's 28 percent GST regime that became effective from October 1, 2023. Higher loyalty promotion expenses also resulted in lower net revenue, the company said.

The added GST cost resulted in the company posting a loss of Rs 2.5 crore for the quarter, as compared to Rs 3.3 crore profit in the year-ago period.

Nazara's adtech business saw a 44 percent decline in its revenues to Rs 26.1 crore for the quarter, from Rs 46.6 crore. The company attributed the drop in revenues to shifting focus from low-margin work to higher-margin business clients, however it also noted that the firm is simultaneously diversifying its client base to minimise dependency on a few customers.

In terms of geographies, India accounted for 46 percent of the company's revenues for the first nine months of the financial year 2023, while North America contributed for 38 percent and the rest of the world contributed the remaining 16 percent.