Nazara turns profitable in Q1 with consolidated PAT of Rs 13.6 crore
Operating revenues grew by 45% YoY to Rs. 131.2 crore from Rs 90.5 crore. Total expenses remained flat at Rs 101.1 crore compared to Rs 103.9 crore
Nazara Technologies has delivered net profit of Rs. 13.6 crore for the quarter ended 30th June compared to a net loss of Rs. 21.7 crore in Q1FY21. EBITDA stood at Rs. 30.1 crore compared to a loss of Rs. 13.4 crore in Q1FY21. PAT and EBITDA margins stood at 10% and 23% respectively.
Operating revenues grew by 45% YoY to Rs. 131.2 crore from Rs 90.5 crore. Total expenses remained flat at Rs 101.1 crore compared to Rs 103.9 crore.
Nazara is an India based, diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. As of June 30, 2021, Nazara has diverse business segments with revenue generation happening across gamified learning, Esports, freemium and telco subscription.
The company said that the gamified learning and esports segments have not only demonstrated strong growth momentum in 1QFY22 but have also laid foundation for predictable growth on account of proven user engagement and retention KPIs in gamified learning and multiyear media licensing and game publisher agreements in case of Esports.
Commenting on the performance, Nazara Group CEO Manish Agarwal said, “The Q1 FY22 results revenue growth and especially enhanced EBITDA margins demonstrate intrinsic strength & profitability of the underlying businesses across all three growth segments. However, we will continue to prioritize strategic growth over margin optimization to ensure that we continue to achieve and maintain leadership in segments we operate. Nazara continues to see strong consumer and partner interest across each of our segments and business KPIs across segments continue to remain healthy in this quarter which will further help in reinforcing leadership position of the Company across esports, gamified learning and cricket simulation mobile game. The recent acquisition of a majority stake in Publishme will further amplify our presence in MENA region. The acquisition will focus to build local execution capabilities cutting across key growth segments of freemium, gamified learning and esports.”
Revenue from this segment was up 46% at Rs 52.1 crore versus Rs 35.7 crore in the previous fiscal. The company posted an EBITDA of Rs 20.7 crore compared to a loss of Rs 15.3 crore.
The Kiddopia had 321,763 paying subscribers as of June 2021 which is a 25% increase in number of paying subscribers as compared to June 2020 (257,413). However, paying subscribers as of June 2021 declined by 5% as compared to March 2021 (340,482)
LTV (Lifetime Value) –CAC (Consumer Acquisition Cost) Parameters: Cost per trial has stayed range bound between 22 USD to 28 USD in last 3 months and activation ratio from free trial to subscription has also remained around 70%. Monthly ARPU of the user has been around $6.3 to $6.5 and monthly churn is range bound between 4% - 7% across the months in Q1FY22.
The Nodwin continued revenue growth momentum with 61% growth in Q1FY22 at Rs 38.4 crore over Rs 23.8 crore in Q1FY21. The company delivered an EBITDA of Rs 2.3 crore vs Rs 1.1 crore. Media rights contributed 49% of the revenues in Q1FY22 and 79% in Q1FY21 (55% for FY21). Game publishers formed second-largest source of revenue wherein Nodwin partnered with them for grassroot community tournaments across India.
Nodwin also expanded into Sri Lanka, Bhutan, Afghanistan and Maldives in Q1FY22. Nodwin continues to be the dominant player in Esports in India with its marquee IPs like ESL India premiership, Dew Arena etc. Further, Nodwin developed a partnership with a game publisher “RIOT.” Nodwin launched a new IP – Valorant Conquerors Championship (VCC), the official league for Valorant in India and only league, whereby winner gets a place in the Valorant world qualifier
With the help of partnership with Tencent, Nodwin hosted PMPL S3 event in Southeast Asia, PMCC and PMNC. Nodwin is now also running amateur to professional tournaments of PUBG mobile in South Asian countries other than India. Nodwin continued hosting domin8 2.0 in partnership with One Plus.
The sports news destination generated revenue of Rs 14.8 crore compared to Rs 2.8 crore. EBITDA stood at Rs 6.6 crore as against Rs 40 lakh. Sportskeeda has emerged as a leading Esports news and content destination in India Sportskeeda witnessed MAU growth of 254% on YoY basis and 21% QoQ basis. During peak cricket season (April 2021), Sportskeeda recorded 59.61 Mn MAU up from 23.51 Mn MAU in June 2020.
Freemium revenue was up 38% at Rs 5.8 crore compared to Rs 4.2 crore. The segment EBITDA stood at Rs 1.5 crore compared to Rs 90 lakh. The company said that the WCC (World Cricket Championship) is the world’s largest cricket simulation game franchise on mobile and is played for ~47 minutes / day by ~13.25 Mn monthly active users The Game has a very strong franchise among the midcore gamers who love virtual sports simulation genre and gets over 120,000 downloads every day organically and without any marketing spends.
"We expect growth in WCC to come from in-app purchases of virtual goods and WCC3 – the latest version of the game launched in July has been designed for enhancing in-app purchase conversion rates. In app revenues grew by 75% in Q1FY22 over Q1FY21," the company said.
Scale of Daily Active Users (DAUs) of world cricket championship (WCC) is stable with few spikes seen during IPL 21 hosted in month of April 2021.
The company said that the tangible progress has continued on % conversion ratio (daily paying to daily active users (DPU/ DAU)) in Q1FY22 via launch of WCC3. The % conversion in WCC3 has increased multi-fold to 0.10% - 0.15% as compared to 0.01% in WCC2. % Conversion in WCC3 is expected to increase further in FY22 through new product updates. "Once positive LTV/CAC equation is achieved, the company will invest aggressively in user acquisition to scale up its user base on WCC and drive profitable growth," it stated.
Telco subscription revenue declined 19% to Rs 17.9 crore compared to Rs 22.1 crore. Nazara has acquired rights to distribute a library of premium Disney and Star Wars games based on iconic stories and characters including Star Wars, Frozen, Big Hero 6, Cars, Duck Tales, Finding Dory, Toy Story, and many others in 100 countries for three years.
These premium games will be distributed through Nazara’s network of telecom operators to their customer base. Under this agreement with Disney, Nazara is the only third party distributor that Disney has granted the right to create and operate Disney themed storefronts for premium Disney and Star Wars games on these telco channels.
Real money gaming revenue dropped 18% to Rs 2.2 crore from Rs 1.8 crore. Sports fantasy had witnessed disruption in FY21 on account of lack of live matches in first half of FY21 and regulatory turbulence triggered by legislative ordinances passed in few of the large states banning real money gaming operations. The continued lack of stability in the regulatory framework led to Nazara taking strategically cautious approach in this vertical till further clarity emerges
"We have therefore pivoted to a product driven growth strategy versus an aggressive customer acquisition spends led strategy and the team is focused on enhancing existing as well as bringing new product features to differentiate ourselves in this segment," the company said.
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