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Nazara Technologies Limited Q4 and FY24 Earnings Call Summary
Key Financial Highlights • Revenue Growth: 4.3% year-on-year increase to INR 1,138 crores. • Profit After Tax (PAT): 41% rise from continued operations to INR 89.5 crores. • EBITDA: Grew by 16.5% to INR 128 crores, with margins improving to 11.2%. • Equity Capital Raised: INR 950 crores, resulting in a net cash balance of approximately INR 1,450 crores.
Business Segment Performance • Revenue Contribution: • Gaming: 36% • Esports: 55% • M&A Activities: Successful acquisitions in gaming and esports sectors.
Future Outlook • FY25 Expectations: Optimism for accelerated growth, particularly in Esports and Ad Tech. • Esports Challenges: Addressed stagnation in media rights and lagging impacts of unbanned games. • Ad Tech Recovery: Anticipated growth resumption by Q2 FY25.
Acquisition Strategy • Focus on M&A: Ongoing discussions for acquisitions, particularly in the US market. • Monetization Strategy: Emphasis on scaling existing products like Kiddopia and Animal Jam.
Media and Subscriber Growth • Media Revenues: Noted uptick in Q4 due to Playground IP success. • Kiddopia Subscriber Growth: Sluggish growth attributed to limited marketing spend.
Competitive Landscape • NODWIN's Market Position: 80% market share in esports, with confidence in growth for FY25. • Emerging Competition: Concerns about new IPs like BGIS in the NODWIN segment.
Strategic Initiatives • AI in Gaming: Applications for automating game testing and personalizing user experiences. • Inorganic Growth: Focus on achieving scale and synergies while retaining autonomy for acquired founders.
Investor Relations • Stakeholder Interest: Investors looking to increase stakes in anticipation of future growth. • Promoter Commitment: Promoters to hold approximately 10% to 12% post-investment.
Conclusion • Long-term Vision: Aim to establish Nazara as a prominent global gaming company from India, with an invitation for further inquiries.
Earnings Overview • Quarterly Revenue: INR 320.4 crores (24% YoY EBITDA increase to INR 37.7 crores) • Segment Performance: • Growth in 'Animal Jam' and 'Sportskeeda' • Declines in Ad Tech and Real Money Gaming • Esports segment: 79% YoY EBITDA growth • 9MFY24 Performance: • Revenue: INR 872.1 crores (9% increase) • EBITDA: INR 98.7 crores (20% increase)
Strategic Initiatives • Funding: Raised INR 760 crores for FY24 for future acquisitions • Nazara Publishing: Launching first games to support Indian developers • GDC San Francisco: Nazara to lead Indian delegation
Segment Updates • Nextwave Operations: Revamp and new game launch planned for Q1 FY25 • OpenPlay: Revenue and EBITDA decline due to new tax on Skill-Based Real Money Gaming • Nodwin: Revenue grew by 20% in Q3; EBITDA loss due to gaming accessory investments • Sportskeeda: 57% revenue increase in 9MFY24 • Ad-Tech: Shift to high-margin clients, resulting in revenue drop but improved gross margins
Q&A Highlights • Kiddopia: Concerns about subscriber churn and user acquisition • Wings Acquisition: Strong sales, but growth diverging from core esports • Ad Tech Outlook: Transitioning to higher-margin services expected to improve margins • Animal Jam Growth: Targeting 10-15% YoY growth • Real Money Gaming: Stabilization efforts and M&A opportunities discussed • Telco Business Losses: Attributed to one-off expenses
Future Outlook • Nodwin's Growth: Potential for scaling through established IPs and partnerships • Media Rights: Significant interest and strong pipeline for future deals • Overall Strategy: Focus on growth opportunities across all segments
Conclusion • Management's Optimism: Commitment to establishing Nazara as a key player in India's gaming industry, with a positive long-term outlook despite challenges.
Nazara Technologies Limited Q2 and H1 FY2024 Earnings Call Summary
Key Financial Highlights • Q2 FY2024 Performance: • Revenue: Rs. 297.2 Crores (13% YoY increase) • EBITDA: Rs. 27.9 Crores (30% growth) • PAT: Rs. 24.2 Crores (53% rise)
• H1 FY2024 Performance: • Revenue: Rs. 551.7 Crores • EBITDA: Rs. 61 Crores (19% increase) • PAT: Rs. 45 Crores (42% rise)
Segment Performance • Gaming Segment: • Revenue growth: 19% in H1 FY2024 • Contributed 39% to total revenue • EBITDA margin: 22.7% • Key IPs: Kiddopia and Animal Jam showing positive trends
• eSports Segment: • Revenue increase: 21% in H1 FY2024 • Boosted by the return of popular games
• Adtech Segment: • Revenue decline due to loss of a key client • Improved gross margins
Strategic Insights • GST Impact: • New 28% GST on deposits expected to erode margins • Potential EBITDA losses in Q3 FY2024
• Acquisition Strategy: • Strong pipeline for acquisitions • Focus on utilizing subsidiary funds for targeted acquisitions
• Publishing Model: • Balancing ownership of game studios and providing a publishing platform • Aims to create a large consumer base and enhance cross-promotion
Future Growth and Challenges • User Spending: • Improved in-app purchase conversions in India • Stagnant growth in WCC franchise; efforts to enhance monetization
• Kiddopia Growth: • Challenges in scaling user acquisition • Exploring alternative ad networks and IP licensing
• Adtech Market: • Challenges acknowledged, but optimism for Datawrkz and PFN growth
Overall Company Focus • Emphasis on customer acquisition, cost optimization, and exploring new revenue streams • Flexibility in guidance to seize strategic opportunities • Positive outlook for Q3 and Q4 growth compared to H1
Conclusion • Nazara Technologies is strategically positioned for growth despite challenges, focusing on optimizing existing segments and exploring acquisition opportunities within the gaming and eSports markets.
Nazara Technologies Q1FY24 Earnings Call Summary
Key Financial Highlights • Revenue Growth: 14% year-on-year increase to INR 254.4 crores. • EBITDA: 10% rise to INR 33.1 crores. • PAT: 31% growth to INR 20.9 crores. • Gaming Segment: 24% revenue growth and 41% increase in EBITDA.
Strategic Focus • Acquisitions: Emphasis on acquiring recognized gaming IPs. • Expansion: Growth in eSports and Adtech businesses. • Regulatory Caution: Careful approach to online gaming sector developments.
Segment Performance • Gaming Segment: • 43% of revenue, 24% year-on-year growth. • Kiddopia: 10% revenue increase, EBITDA margin improved from 18.4% to 28%. • Animal Jam: EBITDA margin improved from 11.6% to 22.5%. • OpenPlay Segment: Revenue impacted by rummy game ban in Tamil Nadu. • eSports Segment: • 46% of total revenue, 15% year-on-year growth. • Nodwin: Revenue of INR 68.6 crores but negative EBITDA. • Sportskeeda: 52% revenue growth. • Adtech: 16% revenue decline due to loss of a low-margin client.
Future Outlook • Cost Normalization: Anticipated growth and profitability in upcoming quarters. • Kiddopia Growth: Slight increase in subscribers expected; not at market saturation. • Nodwin Profitability: Expected to improve margins and profitability in FY24.
Regulatory Developments • GST Council Announcement: Expected to clarify tax applications in skill-based gaming, potentially impacting short-term revenues but creating long-term opportunities. • Industry Consolidation: Smaller players may struggle under new tax implications.
Marketing and Growth Strategies • Kiddopia: Focus on pricing and monetization strategies; exploring new revenue sources in the U.S. • Celebrity Endorsement: Partnership with cricketer Shubman Gill for gaming accessories brand.
Employee Expenses • Increase in Costs: 60% rise due to team expansions; no significant organic growth expected moving forward.
Conclusion • Positive Outlook: Confidence in achieving higher margins for FY24 and commitment to making India a global gaming hub.
Fundraising Announcement • Date of communication: May 25, 2023 • Conference call held on: May 19, 2023 • Total funds raised: INR 232 Crores • INR 197.2 Crores from primary placement • INR 34.76 Crores from secondary sale by founding shareholders • Purpose of funds: • Enhance eSports ecosystem in India • Develop new intellectual properties • Expand market presence • Pursue strategic acquisitions
New Investors • Notable new investors: • Sony Group: Acquired ~3.2% of Nodwin for INR 10 Crores • Innopark India • Investment from Sony: $10 million, providing flexibility for IP development and geographic expansion
Strategic Insights • Importance of strategic investors like Sony: • Participation as observers on the board • Contribution to strategic discussions • Krafton's investment attributed to Nodwin's growth and returns • Nodwin's revenue diversification despite challenges (e.g., game bans)
M&A Strategies and Profitability • Inquiry by Rahul Jain regarding M&A strategies and EBITDA margin profile • Nitish Mittersain emphasized: • Focus on profitability and global expansion • Redefining business model to lead in the sector
Ownership and Future Plans • Nazara's ownership stake in Nodwin: ~47.63% (fully diluted) • Fundraising aims: • Attract strategic global investors • Capitalize on market conditions for inorganic growth • Majority of funds allocated for acquisitions, with some for experimental investments in new gaming communities • Management optimistic about announcing deals soon
Nazara Technologies Limited Q4 and FY23 Earnings Call Summary
Key Financial Highlights • FY23 Revenues: Exceeded INR 1,000 crores for the first time, reaching INR 1,091 crores (75.5% YoY growth). • EBITDA: INR 109.7 crores. • PAT: Grew by 21% YoY. • Q4 Revenues: INR 289.3 crores (65% increase). • Q4 EBITDA: INR 27.7 crores (86% increase). • Q4 PAT: INR 9.4 crores (92% increase). • Cash Position: Strong cash reserves of INR 628.3 crores.
Segment Performance • Gaming: • Grew by 28%, contributing 37% to revenues and 56% to EBITDA. • Notable subscriber growth for Kiddopia (311,758 subscribers). • eSports: • Grew by 75%, with Nodwin's revenue up by 84%. • Adtech: • Grew by 53% YoY. • Real Money Gaming (RMG): • 33% revenue growth, but impacted by a ban in Tamil Nadu.
Strategic Insights • Acquisitions: • Plans for strategic acquisitions to enhance growth. • Selective larger acquisitions, with faster subsidiary-level bolt-on acquisitions. • Regulatory Clarity: • Positive developments in the skill-based RMG sector.
Management Insights • Pro Football Network (PFN): • Seen as a valuable addition to Sportskeeda, with expectations for profitability. • Kiddopia: • Cost optimization efforts leading to improved EBITDA margins. • Future Growth: • Positive outlook for organic growth exceeding 10-15%. • Anticipated margin expansion across gaming segments.
Challenges and Opportunities • BGMI Ban: • Impact on media revenue and marketing growth. • Viewership Challenges: • Absence of popular mobile titles affecting performance. • RMG Strategy: • Focus on growth in existing businesses and collaboration with global developers.
Future Projections • EBITDA Margins: • Projected around 30% for gaming and eSports segments. • Modest growth expected in Adtech margins (currently 9-10%). • Client Growth: • Resilience in Adtech despite a weakening US market.
Conclusion • Nazara Technologies is positioned for continued growth with a strong financial foundation, strategic acquisitions, and a focus on enhancing profitability across its diverse segments.
Nazara Technologies Limited Q3 & 9M FY23 Earnings Call Summary
Key Financial Highlights • Revenue Growth: • 80% year-on-year increase for the first nine months, reaching INR 8,017 million. • 69% increase in Q3 revenue to INR 3,148 million. • Kiddopia Performance: • 3.7% growth in subscribers. • 21% revenue increase.
Segment Performance • eSports: • Contributed 49% of revenue. • 84% revenue growth driven by offline events and new international IPs. • Gamified Early Learning: • Kiddopia back on growth trajectory. • 3.7% increase in subscribers and 21% revenue growth in Q3. • Adtech: • 55% year-on-year revenue growth. • Freemium Segment: • 38% revenue increase. • OpenPlay: • 28% revenue growth in skill-based real money gaming. • Telco Segment: • 16% revenue decline, but EBITDA grew by 2% due to cost optimization.
Management Focus • Emphasis on profitability, governance, and exploring new tech trends. • Open to mergers and acquisitions for value creation.
Analyst Inquiries and Management Responses • eSports Recognition: • Positive implications for professional gaming ecosystem. • OpenPlay MAUs: • Focus on improving customer quality and operational efficiency. • WildWorks Performance: • Ongoing improvements and optimism for future growth. • Adtech Margins: • Declining margins attributed to scaling new customers, expected to stabilize. • Kiddopia Pricing Strategy: • Stable churn rates and increasing ARPUs; recent price hike anticipated to positively impact revenue.
Future Plans • Enhancing efficiency in Classic Rummy business under OpenPlay. • Targeting better user engagement and leveraging Google Play opportunities. • Focus on growth over margins, with stable EBITDA despite non-cash amortization losses. • Continued investments in Sportskeeda and other segments to drive user growth.
Conclusion • Commitment to delivering strong results in upcoming quarters while navigating industry challenges and regulatory landscapes.