NAZARA - Nazara Technologies Limited Share Price

Management Outlook:
Nazara Technologies anticipates sustained growth driven by strategic acquisitions, global IP partnerships, and expanding its gaming portfolio. The company aims to leverage popular IP integrations (e.g., Barbie, Big Brother) to enhance user acquisition and engagement while reducing costs. Management highlighted a robust pipeline of high-margin acquisitions (e.g., CATS, Crash Arena) to directly boost revenue and EBITDA. The preferential placement of Rs.495 crores strengthens liquidity for future expansions.

Key Highlights:

1. Financial Performance: Q3 FY25 revenue reached Rs.534.7 Cr (+67% YoY), EBITDA Rs.52.4 Cr (+39%). Gaming (29% revenue, 56% EBITDA) and eSports (43% revenue, 32% EBITDA) led growth.
2. Gaming Segment:
   • Fusebox (132% YoY revenue growth) and Animal Jam (55% EBITDA growth) performed strongly.
   • Kiddopia secured licensing deals (Barbie, Little Angel) to drive subscriptions.
3. eSports (NODWIN): Focus on international expansion (48% revenue from abroad) and IP investments (e.g., StarLadder). Adjusted EBITDA impacted by event cancellations.
4. Adtech (Datawrkz): Acquired Space & Time Media; standalone revenue grew 38% YoY.
5. FY27 Target: Confirmed Rs.300 Cr EBITDA guidance, supported by organic growth and accretive acquisitions.

Management remains confident in capitalizing on global gaming opportunities, emphasizing profitability through IP integration and operational efficiencies.

Question 1 (Deep Shah, B&K Securities):
What is the inflection point for profitability in NODWIN given recent losses and acquisitions? How do numbers exclude new acquisitions like Freaks 4U?
Answer: NODWIN's Q3 loss stemmed from the NH7 Weekender cancellation (Rs.8 crore impact); excluding this, it would have been breakeven. Growth focuses on youth engagement via IPs, live events, and global expansion (48% international revenue). Acquisitions like Trinity Gaming and StarLadder bolster capabilities, with profitability expected as integrations mature. Organic growth (ex-Wings deconsolidation) was 48% YoY.

Question 2 (Deep Shah):
How do IP partnerships (e.g., Bigg Boss, Barbie) work in terms of payment structure? Will CATS and other IPs operate independently?
Answer: IP partnerships involve minimum guarantees and revenue-sharing post-threshold, reducing user acquisition costs via organic reach. Licenses like Barbie (Kiddopia) and Bigg Boss (Fusebox) aim to boost engagement. Acquired IPs (CATS, TurboStars) are published directly by Nazara, ensuring revenue/profit consolidation. Hybrid development (global design + Indian engineering) optimizes efficiency.

Question 3 (Abhishek Kumar, JM Financial):
Why did Kiddopia's cost per trial (CPT) spike in Q3 despite IP partnerships?
Answer: CPT rose due to seasonal December spikes and transitional adjustments post-Nazara's takeover. Improvements in user acquisition channels and data-driven optimizations are expected to reduce CPT from Q4. IP integrations (Barbie, Little Angel) will enhance organic growth, lowering long-term acquisition costs.

Question 4 (Abhishek Kumar):
Explain Space & Time's accounting shift (gross/net) and margin outlook.
Answer: Accounting follows Ind-AS: direct publisher deals (e.g., Meta) are gross, others net. This blended method increased revenue but lowered margins. Post-integration with Datawrkz's tech and India-UK resource alignment, margins will improve. Datawrkz standalone EBITDA rose to 14.1% in Q3, signaling recovery.

Question 5 (Abhishek Kumar):
Detail Brand Scale's write-off (Rs.35 crore loans) and recovery chances.
Answer: Nazara impaired Rs.15"“16 crore equity investment in Brand Scale, reflecting conservative accounting. Loans (Rs.35 crore) are provisioned but not written off; recovery efforts (asset sales/refinancing) continue. Total exposure is ~30"“35% of investment, with partial recovery possible.

Question 6 (Prem Sharma, Mirania Enterprises):
How are IPs like StarLadder valued? What does Plutus Wealth's stake mean for Nazara?
Answer: IP valuations consider revenue potential, market position, and synergies. StarLadder's enterprise value includes IP and operational assets. Plutus/Sacheti's 25% stake (+open offer) brings strategic support without operational changes, validating Nazara's growth potential.

Question 7 (Vavik Shah, MK Ventures):
How did PokerBaazi turn EBITDA-positive in Q3?
Answer: PokerBaazi prioritized brand spends (e.g., IPL, Shark Tank) over performance marketing, driving organic growth. Core profitability is strong; Q3 EBITDA reflects timing of brand investments (lower in Q3 vs. planned Q4 IPL spend).

Question 8 (Yashita Banka, Ratnabali):
Post-acquisitions, is FY27 EBITDA guidance (Rs.300 crore) unchanged?
Answer: The Rs.300 crore FY27 target includes organic growth and accretive acquisitions. Nazara remains acquisitive but confident in existing businesses' trajectory. Guidance may be revised upward pending future deals.

Question 9 (Ramanuj Chandak, Individual Investor):
How is Nazara navigating the gaming funding winter? Can India develop global games?
Answer: Funding constraints abroad create acquisition opportunities (e.g., Fusebox, CATS) at attractive valuations. Hybrid models (global design + Indian execution) balance talent and cost, leveraging India's engineering prowess for scalable IPs.

Question 10 (Nikhil, Individual Investor):
Update on Smaaash and G-commerce pilot.
Answer: Smaaash acquisition awaits NCLT approval (expected Q1 FY26). G-commerce integrates e-commerce into gaming via ONDC pilot (Q4 FY25), aiming to boost monetization beyond ads/IAPs.

Question 11 (Kewal Shah, Standard Chartered):
Freaks 4U's revenue/profitability and European eSports outlook?
Answer: Freaks 4U (Germany/Europe) is in turnaround; collaboration with Asian brands and Tencent drives events. Europe's eSports growth includes Counter Strike/PUBG events. NODWIN's global delivery model (India/MEA/Europe) targets profitability via IP maturity and cost synergy.

Question 12 (Prakash Kapadia, Spark PMS):
Does FY27 EBITDA include inorganic growth?
Answer: The Rs.300 crore guidance includes organic and likely inorganic contributions. Nazara's pipeline focuses on EPS-accretive global acquisitions, complementing existing portfolio growth.