Nazara’s revenue from esports jumps 14X in FY19; turns cash flow positive

The fiscal year ended in March 2019 was a period of changes for Nazara Games where the company saw a shift in its customer base that consumes online games and media.

The company generated operating revenues of Rs 167 crore in FY19, which dropped a mere 2% from Rs 170.54 in FY18. Breaking down revenues further, the company generated a majority of its revenues from subscription income and game downloads which decreased by 38% to Rs 94 crore in FY19 from Rs 151.7 crore in FY18. 

A big game-changer was the revenue generated through its esports events, which increased 13.7X from Rs 3.6 crore in FY18 to Rs 49.2 crore in FY19. Notably, Nazara had ventured in the prolific esports space through its acquisition of Nodwin Gaming. It helped the company cash in the growth of esports games in India driven by the success of PUBG Mobile and Fortnite. 

Income through freemium content also added Rs 24 crore to the company’s coffers, which grew by 58% from Rs 15.2 crore in FY19. Nazara managed to generate other income (including interest in investments and mutual fund appreciation) of Rs 16.3 crore in FY19 jumping by 66.32% from Rs 9.8 crore in the previous fiscal.

Coming to expenditure incurred by the company, it spent around 10% more on its employee benefit expenses which amounted to Rs 40.8 crore during FY19 as compared to Rs 37.1 crore in the last fiscal.

While the expenses on rent increased by 2.37 times for the company this year (Rs 10.2 crore), its IT expenses also jumped by 2.25 times amounting to Rs 7.9 crore in FY19.

Besides, the company’s spends on advertising and promotional charges reduced by 41.4% from Rs 41.5 crore in the previous fiscal to Rs 24.3 crore in FY19. It also spent Rs 21.5 crore on several events it organised to gather eyeballs from esports and the online gaming ecosystem. 

More important than this drop in revenues was Nazara’s net operating cash flow which improved to positive cash flow of Rs 13.7 crore during FY19 from the negative cash flow of Rs 5.7 crore in FY18.

Despite lower revenues, the company managed to improve its margins and posted a profit of Rs 4.4 crore in FY19, growing 2.7X from Rs 1.2 crore in FY18.

During 2019, it invested in PaperBoat apps, Absolute Sports, Crimzocode Education Private limited and fantasy sports platform Halaplay Technologies. 

Improved operational efficiencies, while growing through strategic investments and creating business synergies has set the company for a well-footed in FY20.