Games24x7 scale shrinks 24% in FY22, slips into losses

Multi-gaming platform Games24x7 entered the coveted unicorn club in March 2022 after raising $75 million led by Malabar. The Mumbai-based company has become the third unicorn and second most valued startup in this space followed by Dream 11.

The vogue for fantasy and card gaming seems to have dropped post covid as the revenue for the Tiger Global-backed company shrank 24.4% to Rs 1,169.27 crore in FY22 from Rs 1,546.27 crore in FY21, according to the financial statements filed with the Registrar of Companies (RoC).

Games24x7’s operations mainly run on RummyCircle and the fantasy sports website My11Circle. The service fees deducted for joining tournaments or contests are the primary source of revenue for Games24x7 which accounted for 98.7% of the operating income and shrank 24.3% to Rs 1,154 crore in FY22. The rest of the operating revenue comes from the sale of virtual items in freemium games which also decreased 32% to Rs 12.14 crore in FY22.

The company also has its other income mainly from interest on fixed deposits which abated by 23.4% to Rs 12.46 crore during the fiscal year ended March 2022.

Moving over to the cost sheet, the huge marketing campaign and multiple brand ambassadors on board has taken their toll with advertisement and promotion expenses the largest cost center for the company forming 58.6% of the overall expenses. However, this cost was reduced by 10.3% to Rs 877 crore in FY22.

Employee benefit expenses was the other major cost accounting for 25% of the total expenses. This cost jumped by 83.9% to Rs 372.7 crore in FY22. This includes Rs 108.25 crore as ESOP expenses out of which Rs 67.5 crore were settled in cash in FY22.

The company added another Rs 38.4 crore and Rs 14.7 crore as legal professional expenses and subscription membership fees respectively in FY22, which pushed total cost by 6% to Rs 1,497 crore in FY22 from Rs 1,411 crore in FY21.

As the scale shrinks, Games24x7 losses were recorded at Rs 282 crore in FY22, after a profitable FY21 when it showed Rs 110 crore in profits. On a unit level, the company spent Rs 1.28 to earn a single unit of operating revenue.

Currently valued at $2.5 billion, Games24×7 had an aggregate of 100 million users across its platform as of March this year. Interestingly, the firm has launched a Rs 400 crore ($50 million) investment fund called Games24x7 Ventures to invest in early-stage startups in the interactive entertainment space. The company’s arch-rival Dream11's parent company also launched a $250 million worth venture fund to back startups in sports, gaming, and fitness space in August last year.

Update: The post has been updated to mention the current valuation of Games24x7.