Nazara Reports Strong Q1 FY24 Performance: Rs 254 Cr Revenue from Operations, Profits Surge by 31%

Nazara Reports Strong Q1 FY24 Performance: Rs 254 Cr Revenue from Operations, Profits Surge by 31%

Nazara Technologies, a gaming and sports media platform, has reported a 14% growth in revenue from operations during the quarter ending June 2023 (Q1 FY24). The company’s unaudited consolidated quarterly report, published on the National Stock Exchange, shows that it earned Rs 254.4 crore in Q1 FY24, compared to Rs 223.1 crore in the same quarter of the previous year (FY23).

Nazara offers a range of interactive gaming, e-sports, adtech, and gamified early learning services to users in India, Africa, and North America. Some of its popular offerings include mobile games like World Cricket Championship (WCC), Kiddopia, and Wildworks.

During the quarter, Nazara’s revenue distribution was as follows: 41% from North America markets, 19% from India, and the remaining 41% from the rest of the world. Notably, 45% of its total business operations were focused on the United States market.

This growth in revenue highlights the company’s successful expansion and adoption of its gaming and sports media services in various markets. The company’s diverse offerings and strong presence in North America and other regions have contributed to its positive financial performance during the quarter. As the gaming and sports media industry continues to evolve, Nazara Technologies appears to be well-positioned to capitalize on the growing demand for interactive gaming and related services.

During the quarter ending June 2023 (Q1 FY24), Nazara Technologies collected 46.32% of its total operating revenue from the e-sports segment, amounting to Rs 117.84 crore. The gaming segment contributed 43% of the collections, generating Rs 109.52 crore in revenue. The remaining Rs 27.07 crore came from the company’s adtech business.

In addition to its operating income, Nazara earned Rs 11.74 crore in non-operating income, which includes interest and gains on financial assets. This brought the overall revenue for Q1 FY24 to Rs 266.17 crore.

However, when compared to the previous quarter (Q4 FY23), Nazara’s revenue from operations experienced a decline of 12%, dropping from Rs 289.3 crore.

The company’s total expenses during Q1 FY24 included content, event, and web server-related costs, which accounted for 33.54% of the total expenses, amounting to Rs 79.8 crore. Advertising and employee benefit expenses were registered at Rs 45.7 crore and Rs 45.35 crore, respectively.

These financial figures indicate the distribution of revenue across Nazara’s various business segments and highlight the company’s performance during the first quarter of the fiscal year 2023-2024. As the gaming and e-sports industries continue to gain popularity, Nazara’s revenue generation from these segments is likely to play a significant role in the company’s growth and financial success.

During the first quarter of FY24, Nazara Technologies incurred commissions amounting to Rs 13.7 crore, contributing to the total expenditures of Rs 237.9 crore for the same period. Compared to the first quarter of the previous year, the company’s total expenses witnessed a significant increase of 14.5%, rising from Rs 207.8 crore.

Despite the rise in expenses, Nazara’s bottomline saw substantial growth in line with its scale. The company’s profits increased by over 31%, reaching Rs 20.86 crore during Q1 FY24, compared to Rs 15.9 crore in Q1 FY23.

In terms of segment-wise results, the gaming segment proved to be the most profitable, generating Rs 18.46 crore in profits. The e-sports segment and adtech segment recorded profits of Rs 6.31 crore and a loss of Rs 1.61 crore, respectively, during Q1 FY24.

On a unit level, Nazara Technologies spent Rs 0.93 to earn a rupee of operating income during the first quarter of FY24.

These financial figures indicate the company’s profitability and cost-effectiveness during the first quarter of the fiscal year 2023-2024. The growth in profits, particularly in the gaming segment, showcases the success of Nazara’s business model and its ability to navigate the gaming and e-sports markets effectively. As the company continues to expand its offerings and operations, its financial performance is expected to remain a key indicator of its success in the gaming and sports media industry.

Nazara Technologies experienced a quarter-on-quarter contraction in scale, with its revenue decreasing by 23.7% to Rs 254.4 crore in Q1 FY24 compared to Rs 314.8 crore in Q3 of the previous fiscal year. Notably, Q3 was the best-performing quarter in terms of revenue during FY23. However, despite the reduction in scale, Q1 FY24 proved to be the most profitable quarter for the company.

The company’s ability to maintain profitability even during a period of reduced scale is noteworthy. It indicates that Nazara Technologies has effectively managed its operations and costs, allowing it to remain profitable despite the decrease in revenue.

While the decrease in scale from Q3 to Q1 is a concern, the fact that Q1 FY24 was the most profitable quarter shows the company’s resilience and ability to optimize its resources. As the gaming and sports media industry continues to evolve and grow, Nazara Technologies will need to focus on strategies to regain and potentially surpass its previous levels of scale while maintaining profitability.

The Indian government’s decision to impose 28% GST on the full face value of online gaming has sparked protests from players in the industry, including Nazara Technologies and Winzo, as well as from investors. The move to levy such a high GST rate on online skill gaming has raised concerns among stakeholders about its potential impact on the sector’s growth and viability.

Online gaming companies and investors argue that the 28% GST rate is excessively high and could have detrimental effects on the industry. It may lead to a decline in user engagement and spending, as higher taxes may deter players from participating in online skill games. Additionally, the high GST rate could adversely affect the profitability and competitiveness of gaming companies, potentially hampering their ability to invest in innovation and expansion.

The letter written by around 30 investors, including prominent names like Peak XV Partners, Tiger Global, and Alpha Wave, seeking a review of the decision, highlights the seriousness of the issue and the collective concern among stakeholders about its potential repercussions.

The gaming industry in India has been witnessing significant growth and attracting substantial investments in recent years. However, the imposition of a 28% GST rate on online gaming threatens to hamper this momentum and impede the sector’s development. The stakeholders are urging the government to reconsider its decision and possibly revise the GST rate to a more reasonable level that supports the growth of the industry while also ensuring appropriate tax revenue for the government.

As the protests and appeals gain traction, the Indian government may review its decision and engage in further discussions with industry players and investors to find a balanced solution that addresses their concerns while meeting the government’s fiscal objectives.