NAZARA - Nazara Technologies Limited Share Price

Nazara Technologies Limited has provided an optimistic outlook for FY '26, emphasizing a year of acceleration with a strong focus on profitability. The management reported record financials for FY '25, achieving an EBITDA of INR 153.5 crores and revenues of INR 1,624 crores, which entails a PAT of INR 62.5 crores. Q4 FY '25 attained revenues of INR 520.2 crores, marking a 95% YoY increase, while EBITDA reached INR 51 crores, up 74% YoY.

Key forward-looking points include:

1. Growth in High-Margin Gaming Business: Management expects increased profitability from the gaming segment, projecting enhancements from strategic acquisitions, including Curve Games, which boosts global publishing capabilities.

2. Strategic Acquisitions: Nazara completed various acquisitions in FY '25, including 100% ownership of Kiddopia and investments in PokerBaazi, aiming for more robust cash flows and improved execution speed. A notable investment includes INR 1,500 crores deployed toward inorganic growth across various segments.

3. Focus on IP Development: Management emphasized a commitment to developing and acquiring strong gaming IPs, indicating a shift towards creating content that resonates with users, which is expected to drive engagement and revenue.

4. Investment in User Acquisition and Technology: Management highlighted advancements in user acquisition strategies and the establishment of centers of excellence for analytics and AI to enhance operational efficiencies and growth potential.

5. Market Positioning: Nazara aims to solidify its presence not only in India but also in Western markets through strategic acquisitions and partnerships, establishing itself as a global player in the gaming ecosystem.

Overall, management indicates that the concerted efforts in FY '26 will lead to strengthened profitability, strategic growth, and enhanced shareholder value.

Major Q&A from the Earnings Call

1. Question by Jinesh Joshi: "What is the path to profitability for Nodwin, considering the recent EBITDA loss of INR 15 crores in FY '25 and other challenges?"

   • Response by Nitish Mittersain: "We focus on growth in Nodwin, accepting breakeven as long as it grows strategically. We faced some challenges with Freaks 4U and NH7 Weekender, which affected our profitability, but we expect FY '26 to improve as we strengthen our market leadership."

2. Question by Jinesh Joshi: "Why did commission costs spike to about INR 61 crores?"

   • Response by Nitish Mittersain: "The increase relates to the Fusebox acquisition, which added costs. Globally, app stores face pressure to reduce commissions, and we expect adjustments in the future."

3. Question by Jinesh Joshi: "What are the EBITDA losses for PokerBaazi, and how do we estimate a breakeven level?"

   • Response by Nitish Mittersain: "PokerBaazi is a market leader, and while we see fluctuations in EBITDA due to significant marketing spends, it's critical to build brand loyalty and we anticipate improvements in FY '26."

4. Question by Samarth Patel: "What is Nodwin's revenue mix among ticketing, IPs, and sponsorships?"

   • Response by Akshat Rathee: "Nodwin operates with an integrated model leveraging influencers for IP creation across ticketing and sponsorships, making it hard to give precise revenue splits. Our core consists of live events, eSports, and media."

5. Question by Abhiram Reddy: "What are out plans for Poker's adjacent categories like Rummy and Fantasy?"

   • Response by Nitish Mittersain: "Currently, our focus is on expanding Poker given its market leadership. While we assess adjacent opportunities, we'll primarily channel our investments to fortify Poker's growth over the next year."