Riding e-sports wave, Nazara reports 46% growth in revenue in FY20

Two decades-old gaming tech platform Nazara Technologies has filed its prospectus for an IPO in January and will probably be the first digital platform to go public in 2021.

While Nazara has been profitable in the ongoing fiscal (FY21), the holding entity which controls 21 subsidiaries including Halaplay, Sportskeeda and Nodwin Gaming, had recorded a loss on a consolidated basis in FY2O, its regulatory filings show. 

The Rakesh Jhunjhunwala-backed company saw its annual income rise by 41.3% to around Rs 263 crore during the fiscal ended March 2020. Nazara's revenue streams diversified during the period and its revenue from operations grew by 45.8% to Rs 247.5 crore in FY20 from Rs 169.8 crore in FY19.

Esports stood out as the biggest revenue vertical with income from brand sponsorships and sale of media rights on its esports platforms such as Nodwin accounting for 34% of Nazara’s revenues. Such collections surged by 71.2% to Rs 84.16 crore during FY20.

Around 33% of revenues were earned through the sale of game pack subscriptions on its online gaming platforms which stood at Rs 81.8 crore.

Real money gaming on Halaplay, Carrom Clash and rest pocketed Nazara Rs 42.64 crore while the sale of subscriptions and digital products on its gamified e-learning platform Kiddopia brought in Rs 19.1 crore.

Income through advertisements and sale of virtual items on its freemium model games made up 8% of the revenues. The two-decade-old technology company has changed its spending pattern during FY20 to keep up with the changing paradigm of the online gaming industry in India and abroad. 

To reach out to a bigger audience base for its games, the company spent heavily on marketing and its advertising costs rose 4.9X to Rs 133 crore in FY20 from only Rs 27.2 crore spent during FY19. These expenses were the biggest cost centre for Nazara, making up 46.4% of its total spending during FY20.

On the other hand, Nazara reduced its spending on employee benefits by 24% to Rs 21.2 crore and rental  payments which dropped by 440% to Rs 1.9 crore during FY20

Further, costs relating to content, events and web servers grew by 14.3% from Rs 44.3 crore in FY19 to Rs 50.65 crore in Fy20. Commission and payment gateway expenditure also ballooned 3X to Rs 9.5 crore in FY20 as the company processed increased volume of payments during the period.

Another Rs 4 crore was spent on IT & communication, pushing the total expenditure to Rs 286.9 crore in FY20, increasing by 63% from expenses of Rs 175.9 crore incurred in Fy19. 

Nazara spent Rs 1.16 to earn a single rupee in FY20.

The firm posted a loss of Rs 24.9 crore in FY20 as compared to a profit of Rs 4.4 crore in FY19. EBITDA margins also dropped from 14.35% in FY19 to Rs 3.84% in FY20.

The financial health of Nazara has been stable with notable growth in operating revenue during FY20. The company that had remained profitable for most of the fiscals after 2012 is confident to cross Rs 450 crore in topline in the ongoing fiscal (FY21). 

And, it's quite achievable for Nazara to grow over 75%, given a spurt in takers of virtual gaming during and aftermath of the pandemic.  The company’s upcoming public listing has been witnessing strong confidence. It recently raised Rs 100 crore from Instant Growth Limited.