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Nitish Mittersain
Mumbai-based gaming and esports company Nazara Technologies has reported a net profit of Rs 23.6 crore for the first quarter ending June 30, 2024, marking a 13% year-on-year (YoY) increase from Rs 20.9 crore in the same period last year.
The profit growth occurred despite a slight dip in the company's operating revenue, which fell by 1.7% YoY to Rs 250 crore, compared to Rs 254.4 crore in the corresponding quarter of the previous year.
Performance across verticals
The revenue decline was primarily attributed to a 15% drop in the gaming vertical, which includes popular properties such as Kiddopia and Animal Jam.
Revenue from this segment decreased to Rs 93 crore, contributing to a significant reduction in profit to Rs 7 crore from Rs 18 crore in the previous year.
Conversely, the esports division, led by Nodwin Gaming and Sportskeeda, performed well, registering a 12% increase in revenue to Rs 132 crore. Notably, Sportskeeda achieved a 33% rise in revenue, reaching Rs 61 crore for the quarter.
Strategic acquisitions and expansion
Nazara Technologies has been actively pursuing an acquisition strategy, having recently completed four deals, including the acquisition of UK-based Fusebox Games and the remaining stakes in Kiddopia's developer Paper Boat Apps and mobile gaming subsidiary Nextwave Multimedia.
The company has earmarked $100 million for mergers and acquisitions over the next two years to bolster its gaming and esports offerings.
Impact of GST and tax liabilities
The real-money gaming (RMG) segment faced challenges due to the introduction of a higher Goods and Services Tax (GST) regime, which significantly impacted revenue. The RMG unit's revenue fell sharply to Rs 5 crore from Rs 12 crore a year ago, leading to a negative EBITDA of Rs 1.1 crore for the quarter.
Additionally, Nazara's subsidiaries, Openplay Technologies and Halaplay Technologies, received show-cause notices for a proposed GST liability of Rs 1,119 crore, covering the period from 2017 to 2023.