Nazara Q1: Net Profit Grows 13% YoY To INR 23.6 Cr, Operating Revenue Declines

SUMMARY

Nazara’s operating revenue declined 1.7% YoY to INR 250.1 Cr in Q1 FY25, hurt by degrowth witnessed by two of its verticals – gaming and adtech

Nazara’s net profit had declined 98% YoY to INR 18 Lakh in Q4 FY24 as it incurred INR 16.9 Cr loss from writing off some legacy businesses

The CEO of the company, which has been on an acquisition spree, said that it is focusing on organic as well as inorganic growth

Online gaming major Nazara Technologies’ consolidated net profit rose almost 13% to INR 23.6 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25) from INR 20.9 Cr in the previous year’s quarter.

Nazara managed to improve its bottom line despite its operating revenue declining 1.7% year-on-year (YoY) to INR 250.1 Cr during the quarter under review, hurt by degrowth witnessed by two of its verticals – gaming and adtech.

While the gaming vertical’s revenue slumped 15% YoY to INR 92.8 Cr, adtech’s revenue fell 1.7% YoY to INR 25.7 Cr. The gaming vertical includes Kiddopia and Animal Jam, among others.

Nazara said that Datawrkz, which comprises its adtech vertical, is exploring M&A opportunities to achieve faster scale and growth in profitability through synergies.

Meanwhile, Nazara’s esports vertical, which comprises NODWIN Gaming and Sportskeeda, witnessed a strong revenue growth of 12% YoY to INR 131.9 Cr in Q1 FY25.

Helped by an increase in other income, the company’s total revenue stood at INR 275.6 Cr during the quarter, growing from INR 266.2 Cr in Q1 FY24.

It is pertinent to note that Nazara’s net profit had declined 98% YoY to INR 18 Lakh in the preceding March quarter (Q4) of FY24 as it incurred INR 16.9 Cr loss from writing off some legacy businesses, including Halaplay.

On a QoQ basis, Nazara’s operating revenue in Q1 FY25 fell 6% from INR 266.2 Cr.

Announcing the Q1 earnings, Nazara joint MD and CEO Nitish Mittersain said, “We are focused on driving profitable growth in FY25 and beyond via organic growth of our existing businesses as well as M&A, especially in the core gaming sector.”

It is worth noting that Nazara has continued its acquisition spree in the current fiscal as well. Recently, it acquired a 100% stake in Paper Boat Apps (Kiddopia) and Fusebox. Its subsidiary NODWIN has also acquired 100% stakes in Freaks4U and ComicCon India in 2024.

“In FY24, our team focused on building a strong pipeline of opportunities and as we move into FY25, we are strategically deploying our cash reserves to acquire businesses that align with our vision and will further strengthen our platform for long-term growth,” Mittersain said.

Where Did Nazara Spend?

Nazara’s total expenses grew 1.3% YoY to INR 240.9 Cr in Q1 FY25.

However, the gaming major managed to control its expenses on a QoQ basis. Expenses declined 15.4% in Q1 FY25 compared to INR 284.9 Cr in the preceding March quarter.

Content, Event And Web Server: Nazara’s spending in this bucket saw a significant 20% QoQ decline to INR 84.7 Cr.

However, the spending rose 6.2% from INR 79.8 Cr in Q1 FY24.

Advertising And Business Promotion: Nazara spent about INR 41 Cr in this bucket in Q1 FY25, which was a decline on QoQ as well as YoY basis.

The company spent INR 45.7 Cr towards ads and promotions in the corresponding quarter last year.

Employee Cost: The gaming major’s spending towards employee benefit expenses were up about 16% QoQ and 13% YoY to INR 51.3 Cr in the reported quarter.

Ahead of its Q1 FY25 earnings announcement, Nazara’s shares ended Tuesday’s (August 13) trading 1.1% down at INR 939.6 on the BSE.