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Nazara revenues increase by 84%; cautious about ‘real money skill gaming’

Nazara, an India based gaming and sports media company announced that its operating revenues have increased 84 percent YoY to Rs 454.2 crore.

The main driver behind this revenue is Nazara’s verticals Gamified Early Learnings and eSports which grew by 819% YoY and 102% YoY to Rs. 175.8 crore and Rs. 170.1 crore, respectively. Manish Agarwal, Group CEO of Nazara that they recorded a Rs 478.4 crore cash reserve including liquid investments, apart from zero debt on its balance sheet.

However, it’s worth mentioning that the company’s overall revenues declined by 5% sequentially, due to seasonal reasons. For instance, Nodwin Gaming, (which is included in Nazara’s ESports vertical) does not plan big events for the last quarter as 14–21 year-olds have exams during this time.

Key financial highlights for the financial year 2021

  • Operating revenues grew by 84% YoY to Rs. 454.2 crore
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 508% YoY to Rs. 59.6 crore
  • EBITDA margins improved from 3.7% in FY20 to 12.7% in FY21
  • Delivered a profit after tax (PAT) of Rs 13.6 crore in FY21
  • Recorded a positive net cash flow from operations of Rs. 67.4 crore in FY21

Revenue contribution in FY21 according to business segments

Agarwal, said, “As we operate in the high growth business segments of Gamified early learning, eSports and Freemium, we will continue to prioritize growth over profit maximization, so that we can achieve and maintain market leadership in segments we operate in.”

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Key takeaways

eSports to be the main disruptor in the future: During the investors call, Group CEO Agarwal said that this segment will continue to grow in the future as it will engage with Millenials and Gen Z. He said that the segment grew by 102% YoY

Covid dulled revenues: WCC (World Cricket Championship)’s revenues were flat in FY21 on account of a drop in advertising rates in India due to COVID. “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,” the company said.

Cautious about real money skill gaming: Sports fantasy witnessed disruption in FY21 on account of lack of live matches in the first half of FY21 and regulatory turbulence triggered by legislative ordinances passed in a few of the large states banning real money gaming operations. The lack of stability in the regulatory framework led to Nazara taking a cautious approach in this vertical till further clarity emerges.

Between 2018 and 2020, Online Fantasy Sports (OFS) revenue registered a 9.4x growth. While COVID19 is likely to slow down the rapid growth in user base and engagement (due to lack of live sports), fundamentals of the business remain robust. However since gambling is a state subject in India, there have been regulatory turbulence in Andhra Pradesh, Telangana and Tamil Nadu. Nazara sought to explain that unlike gambling which is chance-based, their offerings are skillbased.

Earnings | Investors Call

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Among other subjects, I cover the increasing usage of emerging technologies, especially for surveillance in India

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