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A23 reports Rs 841 Cr revenue and Rs 72 Cr profit in FY24

Online rummy platform A23 reported flat revenue growth for the fiscal year ending March 2024. However, the company achieved a 24% increase in profits, driven by controlled expenses and an increase in non-operating income during the same period.

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Kunal Manchanada
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A23

Online rummy platform A23 reported flat revenue growth for the fiscal year ending March 2024. However, the company achieved a 24% increase in profits, driven by controlled expenses and an increase in non-operating income during the same period.

A23’s net revenue was recorded at Rs 841 crore in FY24 from Rs 839 crore in FY23, its consolidated annual financial statements sourced from the Registrar of Companies (RoC) show. 

Notably, the firm's gross revenue grew by 31% to Rs 1,378 crore in FY24, up from Rs 1,051 crore in FY23. Of this, Rs 537 crore was paid out to players, resulting in a net revenue of Rs 841 crore for FY24.

A23

The platform fee, or commission, charged as a percentage of the buy-in fees from users, remained the sole revenue source for A23 during FY24. Additionally, the platform earned Rs 37 crore, primarily from interest on deposits and current investments, bringing its total revenue to Rs 878 crore in FY24.

The company claims to have over 5 crore players on its platform and operates five games - rummy, fantasy, poker, carrom, and pool.

A23 has not disclosed its overheads much and booked Rs 515 crore, which is 68% of the overall cost under the miscellaneous head. This might include all the major costs including advertising, servers, and hosting.

A23’s employee benefits grew 41% to Rs 138 crore in FY24 from Rs 98 crore in FY23. Its legal, safety and security, printing, traveling, and other overheads pushed the total expenditure to Rs 761 crore in FY24.

Despite the flat scale, the controlled expenditure and increase in other income helped A23 to post a 24% increase in its net profits to Rs 72 crore in FY24, compared to Rs 58 crore in FY23. Its ROCE and EBITDA margin improved to 11.5% and 15.26%, respectively while the expense-per-revenue ratio stood at Rs 0.90. At the end of FY24, A23’s total current assets were recorded at Rs 613 crore with cash and bank balances of Rs 534 crore.

A23

In the real-money gaming sector, MPL reported a 22.2% increase in revenue to Rs 1,068 crore in FY24. Gameberry and Gameskraft saw a 46.9% and 30% growth in revenue to Rs 461.7 crore and Rs 3,500 crore in. Dream11 has yet to release its financial results for FY24.

Gaming companies have been facing GST challenges from the last 2 years where the DGGI has sent 71 notices to gaming companies, accusing them of evading GST worth Rs 1.12 lakh crores. Earlier this month, the Supreme Court of India granted a stay on the GST show-cause notices issued to several online gaming companies. The ruling, issued by a bench led by Justice JB Pardiwala, precedes the Supreme Court's final hearing on the case, set for March 18, 2025.

While attention from government departments is a given at this scale, the gaming business remains a hotspot for profitable startups. Besides zero debt, firms have built in significant managerial slack to depress profits and show higher expenses. FY25 performance will be keenly watched considering the talk of a slowdown, even as scrutiny of the firms will continue from rent seeking departments like the GST authorities. 

As one of the biggest players, A23 will struggle not to be distracted by these issues, good (how to reduce profitability) and bad ( notices), but the firm will do well to get into some actual game development that builds real IP for it.  Most of its existing offerings offer a limited moat vis a vis competition, and it certainly has the resources to try and be more original now. While holding off on the most obvious temptation for cash rich gaming firms- Crypto, which will probably increase the attention they get from the government.

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