Mumbai-based gaming and esports company Nazara Technologies reported a net profit of Rs 23.6 crore for the first quarter ended June 30, 2024, marking a year-on-year (YoY) increase of 13% from Rs 20.9 crore in the same period last year.
The profit growth came despite a slight decline in the company’s operating income, which fell 1.7 per cent year-on-year to Rs 250 crore, compared with Rs 254.4 crore in the corresponding quarter last year.
Performance across all 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 declined to Rs 93 crore, contributing to a significant decline in profits to Rs 7 crore from Rs 18 crore in the previous year.
In contrast, the esports division, led by Nodwin Gaming and Sportskeeda, performed well and recorded a 12% increase in revenue to Rs 132 crore. Notably, Sportskeeda achieved a 33% increase in revenue to Rs 61 crore in 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 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 offering.
Impact of GST and tax obligations
The real-money gaming (RMG) segment faced challenges due to the introduction of a higher Goods and Services Tax (GST) regime, which significantly impacted revenues. Revenue from the RMG unit 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 subsidiaries Openplay Technologies and Halaplay Technologies have been served with show-cause notices for a proposed GST liability of Rs 1,119 crore, covering the period from 2017 to 2023.
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