NAZARA - Nazara Technologies Limited Share Price

In the Q1 FY26 earnings call, Nazara Technologies reported significant growth with revenues of Rs.498.8 crores, marking a 99% year-on-year increase. The EBITDA was Rs.47.4 crores, up 90% year-on-year, with a core gaming business EBITDA margin of 24.4%. The profit after tax (PAT) from continuing operations was Rs.36.4 crores, contributing to an overall PAT of Rs.51.3 crores, reflecting an impressive 118% year-on-year increase.

Management highlights include a strategic shift towards focusing on high-quality gaming intellectual properties (IPs) and operational excellence, contributing to robust topline growth and cost management. Notably, a strategic deconsolidation of Nodwin Gaming is proposed to enhance focus on core gaming, allowing Nodwin to aggressively pursue its esports ambitions.

Key forward-looking points provided by management include plans for two new titles at Curve Games which is anticipated to strengthen revenue growth, the expectation for user engagement and monetization to improve at PokerBaazi post-IPL marketing expenses, and an overall strategy to achieve an EBITDA target of Rs.300 crores by FY27. The leadership team expressed confidence in leveraging synergies from the expanding portfolio, with a focus on successful IP management expected to enhance profitability going forward. Specific segments like Fusebox Games and Funky Monkeys are also anticipated to play crucial roles in driving growth in FY26.

Major Questions and Detailed Answers from the Q&A Section:

1. Question: "How should we see the seasonality and scale potential in Fusebox and Curve?" Answer: "For the gaming business, the key seasonality peaks in Q3 due to Christmas holidays. Specifically for Fusebox, the airing of associated TV shows impacts revenues, notably Q2 for 'Love Island'. With Fusebox transitioning from a single-IP to a multi-IP operation, we expect significant scalability driven by upcoming releases. Our focus remains on expanding our portfolio, which is now underway."

2. Question: "What is driving the additional losses in Nodwin, and what are the austerity measures in Sportskeeda?" Answer: "Nodwin's losses stem from strategic investments in esports IPs and increased global competition, though we anticipate improvement as these IPs mature. For Sportskeeda, after an unfavorable Google update, we've implemented cost optimization without compromising growth in other segments. We expect recovery within one to two quarters, aided by past refinements."

3. Question: "What's included in Other Income this quarter?" Answer: "The primary contributor to Other Income this quarter is a Rs.66 crore gain from our investment in STAN, a gaming community product. We invested $1 million earlier this year, and STAN has attracted several marquee investors, signaling strong growth potential."

4. Question: "What are our strategies toward platform dependence and mitigating risks?" Answer: "While we acknowledge our reliance on major platforms, diversifying revenue streams and gaining ground in PC and console gaming dilute this risk. We're exploring direct billing options and adapting our products to lessen dependence on Apple and Google, bolstered by our acquisition of Curve to enhance platform diversity."

5. Question: "What visibility do you see on PokerBaazi's profitability given high marketing spends?" Answer: "This year, we do not expect PokerBaazi to achieve profitability due to planned marketing campaigns, particularly around IPL. However, our strategy emphasizes market share growth, projecting profitability in FY27 when we can optimize our marketing with increased user engagement from current spends."

6. Question: "What growth drivers should we expect for FY26?" Answer: "Key growth drivers will include Animal Jam, Funky Monkeys, Fusebox, and Curve. Each has shown strong performance or growth potential. While Kiddopia is stabilizing, we don't have specific guidance but are optimistic based on current trends."