Ladies and gentlemen, good day, and welcome to Nazara Technologies Limited Q4 and FY 2024 earnings conference call, hosted by JM Financial. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Kumar. Thank you, and over to you, sir.
Thank you. Good morning, everyone. Welcome to this call to discuss fourth quarter and FY 2024 results for Nazara Technologies. We have with us the management team of Nazara, represented by Mr. Nitish Mittersain, CEO and Joint Managing Director, Mr. Sudhir Kamath, Chief Operating Officer, Mr. Rakesh Shah, Group Chief Financial Officer, and Ms. Anupriya Sinha Das, Head of Corporate Development. With that introduction, let me now hand over the call to Nitish for his opening remarks.
Hi, good morning, everyone. Let me start with a summary of our performance for the financial year ending 2024. FY 2024, our revenue from operations increased by 4.3% year-on-year to INR 1,138 crore. We saw EBITDA growth of 16.5% to INR 128 crores, with our EBITDA margins improving by 110 basis points to 11.2%. Our PAT from continued operations grew by 41% to INR 89.5 crores. Most notably, and what is important for us, our operating cash flows increased to INR 131.4 crores, reflecting the company's strong underlying fundamentals.
This year, we have raised successfully between the parent entity and our subsidiaries, INR 950 crores of equity capital, marking our largest fundraise to date and resulting in a net cash balance of approximately INR 1,450 crores. We took many key initiatives this year, it includes our new publishing platform, new game launches, IP partnerships, and a strong M&A pipeline. Many of these are expected to yield results in FY 2025 and beyond. Our subsidiaries have been successfully executing our M&A strategy, notably, Absolute Sports, which runs Sportskeeda, acquired Pro Football Network in March 2023 and has doubled the business of this company to turn it profitable. Nextwave recently acquired UTP, a casual card game, and NODWIN Gaming has acquired Comic Con India, which is a very popular youth IP.
In 2024, we have taken significant steps to lay a foundation for accelerated growth in coming years, with a target of achieving an EBITDA of at least INR 300 crores in FY27. We are optimistic about FY25, anticipating faster growth in both revenue and EBITDA, and the impact of many of our initiatives should be visible from Q2 onwards. With substantial cash reserves and a strong M&A pipeline, we are well positioned to seize further growth opportunities and enhance our trajectory through strategic M&A over the next 12 months. With that, I now hand over the call to Anupriya, our Head of Corporate Development, for further business highlights. Thank you, and over to you, Anupriya.
Thank you, Nitish. Good morning, everyone. I hope I'm still loud and clear. Nazara operates across three business segments: gaming, esports, and AdTech. We are well diversified across demographics, geography, and business models. In FY 2024, gaming contributed to 36% of our revenues and 53% of EBITDA, while esports contributed 55% of revenues and 41% of EBITDA. AdTech accounted for the remaining share. Gaming, which includes gamified early learning, skill-based real money gaming, freemium, and telco sub-segments. This segment's revenue remained stable compared to FY 2024, while EBITDA grew by 13%, with margin expanding to 19.9%. Within Kiddopia, within gaming, Kiddopia, the FY 2024 revenue was stable, while EBITDA grew by 57% year-on-year. Q4 revenue declined by around 12% to INR 60.9 crores, while EBITDA increased to INR 11.7 crores.
The flat revenue, but higher EBITDA, reflects strong core profitability as we maintain tight control on user acquisition spending. We are exploring growth opportunities like IP licensing to expand the game beyond current user acquisition efforts. Lower user acquisition spending led to a higher rate of subscriber base decline in this quarter, while ARPU increased by around 1% quarter-on-quarter in Q4 FY 2024. Moving to Animal Jam, FY 2024 revenue was INR 95 crores, with EBITDA of around 19 crores. Q4 revenue increased by around 7% to INR 24 crores, with EBITDA growing to INR 2.9 crores. Q4 revenue was bolstered by the success and monetization of Wishing Coins. Wishing Wells were introduced in Animal Jam to enhance player engagement.
WildWorks is exploring integrating popular IPs into Animal Jam to drive user acquisition and is also working on a major new game set to beta launch in FY25. Moving to World Cricket Championship, FY24 revenue was around INR 22 crores, with EBITDA of around INR 4 crores. Nextwave plans to launch new game within Q1 to expand beyond its current scale. OpenPlay, FY24 revenue and EBITDA stood at INR 37.4 crores and INR 2.1 crores, respectively. The new GST regime since October 2023 has impacted the entire real money gaming industry's profitability. Our focus has been on improving operating efficiency through new product launches and cost optimization. We are exploring consolidation in the RMG space following regulatory clarity.
Our esports segment grew by 19% year-on-year in FY 2024, and 6% year-on-year in Q4 FY 2024, while EBITDA grew much faster, by 51% year-on-year in FY 2024, and 31% year-on-year in Q4 FY 2024. Moving to NODWIN, the Q4 revenue decreased by 9% to INR 99.1 crores, while FY 2024 increased by 10% year-on-year to INR 427 crores. During FY 2024, NODWIN raised INR 90 crores from strategic investors and made several acquisitions, including Comic Con India, PublishME, Ninja Global, Freaks 4U Gaming, which is an investment, Branded, and the IP related to Playground. These investments are part of its broad, broader strategy to dominate the esports and youth media space. The financial impact from these acquisitions will be reflected in FY 2025 and beyond.
Sportskeeda reported a robust year-on-year revenue growth of 60% to INR 196 crores in FY 2024, and 71% year-on-year growth in Q4 FY 2024 to INR 49 crores. EBITDA grew by 67% year-on-year to INR 65 crores in FY 2024, and by 67% to INR 13 crores in Q4 FY 2024. Sportskeeda's subsidiary, Pro Football Network, acquired in April 2023, reported a stellar revenue growth of 112% year-on-year in Q4, and has been profitable each month since September 2023. Datawrkz, FY 2024 was a reset for Datawrkz as we shifted focus from lower margin clients to higher margin clients and product business. This strategy pivot resulted in a revenue drop from INR 153 crores in FY 2023, INR 104 crores in FY 2024.
Gross margin improved from 19% in FY 2023 to 27% in FY 2024. We continue to invest in product development and increase marketing efforts, especially in the U.S., and we're expecting these investments to show results in FY 2025. This led to a decrease in EBITDA margin from 8.8% in FY 2023 to 8% in FY 2024. With this, I conclude my remarks, and we will now open the call for Q&A. I invite Nitish, Sudhir and Rakesh to join me for the session.
Thanks, Anupriya. You'll have Sudhir, Anupriya, Rakesh, and myself answer all the questions you may have. Let us please start.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deep Shah from B&K Securities. Please go ahead.
Yeah, hi, good morning. Thanks for the opportunity. Maybe the first question is around esports. So, you know, this quarter, we really didn't have any game ban impact, neither did we... And also, we had a favorable base because I understand BGMI was banned in the base quarter. Now, could you help us understand the organic NODWIN, the esports piece? Because if you remove BrandScale deconsolidation, what is the net impact? And ideally, we were thinking that this is a business which could grow much faster, right? Maybe 20%-30%. So if you can help us understand what is happening there, that is my first question, and then I'll ask the second question later.
Sure. Let me answer that. So basically, I think, what we have found is that, with games getting unbanned, many of the, you know, properties are coming back. However, there is a lag effect, so we expect much of the upside or the reflection of these games coming back to be seen in FY 25 versus FY 24. I think the other side, especially on media rights, FY 24 second half has not been a great time because of, you know, everything that's happening in that world. The OTT players, given the startup funding crunch, you know, have struggled to raise capital, and therefore, have kind of slowed down media spends. And also everything that's going on with the, you know, TV channels and the large media companies has kind of slowed down that process.
But that said, we personally expect FY 25 to come back very strongly on esports and are very bullish. We've seen also some good signs. For example, our Playground IP is really taking a strong foot, strong footing. We've seen, I would say season three doing very well. We're also seeing now international demand for that IP. So I think, on the whole, we are feeling very optimistic that FY 25 will be a much stronger year for esports, given everything we have done in FY 24.
Right. So, just a follow-up there. So, we had some plans of having international tournaments, so any update on that? And, the second follow-up is the fact that you alluded for the stagnation or sluggish media revenues, they are unlikely to go, they are likely to remain for foreseeable future, right? So, if we have the viewership and we have the kind of players, then we should be able to get away despite these problems. So, I was just trying to understand that.
Yeah.
-with BGMI, the kind of traction we see on the ground, it seems very difficult to say that no OTT player, or rather, the kind of viewership it can generate, that we are not able to win media deals. So one, on the international front, and second, how is this changing? What is that catalyst which will lead to this change?
Yeah, sure. I think, on the international front, we are definitely making large moves. If you would have seen, in the last quarter, or I think this was December quarter, NODWIN made an investment in Freaks 4U, which is the largest esports player tournament organizer in Europe. And along with that team, there are a lot of international activities going on, which you will keep hearing in the coming quarters, and especially see a lot of expansion in international activity in FY 25 on the esports side. I think, you are right in terms of the ground level activity. Like I referred, we've seen Playground do very well for us.
We are hopeful that the other tournaments in FY 25 will scale in terms of user base, in terms of audience, and we will break through the glass ceiling of, you know, where the media rights are at this point of time. That said, our FY 25 growth numbers are not entirely subject to media rights. We are seeing many other monetization opportunities, and therefore feel that we will grow a lot more than what we have grown in FY 24 on the esports side, on the NODWIN side.
Okay, fair, Nitish. The second question is on the ad tech business. So I, I fully understand the challenges in U.S., and it's, it's actually credible what we have done in terms of focusing on better customers. But where do we see this process stopping and then re-reverting back to growth? Because at every stage, you will have customers who are lower margin, vis-à-vis your blended margin, right? So even today, you will have some customers who will be lower than your reported gross margins. So when do we see this revenue declines, margin optimization process stop, and then growth returning with stability in margins?
We are betting that, Q2 onwards of this year, we should be able to achieve a growth status on the ad tech. I think, again, we have done a lot of groundwork there, and, FY 2025 should, bounce back on good growth, both in terms of revenue and EBITDA.
Okay, thanks, Nitish. If I can just squeeze one more.
Sure.
On the Kiddopia front, we've seen elevated levels of churn, about 7% monthly churn, which practically means that since we took the tariff hike to $8, about 60% of the customers would have churned out. And then because we net lost 60,000 customers, about 120,000 would have come in as fresh, but we haven't really seen ARPU trends improving. So if you could help us understand what's happening there?
Sudhir, you want to take that?
Sure. So I think, partly, the churn that you see, that is the net churn, not the, churn from the previous month only. It is, so it's not actually correct to say only old users churn out. It also happens that you have trials which are coming in, and people who then, after a month or two, may discontinue, so the churn is the net effect. And the older customers do still continue on the older price point. So partly it's that. Partly there's also, there will be periodic, small discounts, et cetera, because of which ARPU doesn't translate, fully. So I think that's the, the reason. But overall, if you see the last few quarters, we would see there is a upward trend on ARPU, and we expect that to, continue.
Okay. Okay, thanks. Maybe I, I'll take this offline. Thank you so much. All the best.
Thank you.
Thank you.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. The next question is from the line of Abhishek B from ICICI Securities. Please go ahead.
Yeah, hi. Just first, is there any clarity now on the acquisition pipeline? I think, Anupriya made a comment about, awaiting regulatory clarity on RMG. Does that mean only when the government, you know, comes... I mean, in terms of clarity, they have already provided, right? Are you, trying to wait for a reversion of the GST rates? What is the thought process there? And in terms of, segment other than RMG in the gaming space, are you looking at any acquisition there? And what would be the timeline, if, if anything?
Sure. I will answer that. So I think, clearly, M&A is a top priority for us. We have a very strong team that we put together, especially in FY 2024. And we've done a lot of activities to build a strong M&A pipeline, which includes, for the first time, really going out very aggressively globally, participating in a strong manner in, you know, for example, Game Developers Conference in the U.S., which is the, you know, largest gaming, conference in the world, and making our name out there. And it's been taken with a lot of great, great response, I would say. You know, people are looking at Nazara as a very potential consolidator of their businesses, not only in India, but also in markets like the U.S., which throws up, very good opportunities to us.
In the last few months, we've been in advanced conversations with many, many companies. At this point of time, we at least have four to five ongoing diligences with various companies, and we hope to get at least a couple of them across the finish line by Q2 of FY25. In terms of focus areas, one key focus is core gaming IPs, very similar to what we did with WildWorks and Animal Jam, which is playing out pretty well for us, and we think we can double down over there. Especially with new technologies like AI, we think there's a lot more that these studios can produce, and we can take advantage of that. So we've kind of started working a lot on AI to create a playbook that can really scale up these studios once we acquire them.
So I think that's one area of strong focus for us. On the RMG side, we are not waiting for any regulatory clarity, like you rightly mentioned. GST is already quite clear going forward, and we are actively in conversations with a couple of large players in that space to do something.
Understood. Any idea of what is the timeline on that?
On the RMG, I don't have a definitive timeline at this point of time. But on the gaming studio acquisitions, I would definitely expect that we are able to pull something over the finish line by Q2.
Okay. So just in terms of the gaming studio part, in the past also, we have seen acquisitions, of such as the, WildWorks doing very well. However, post reaching a kind of scale, you know, especially in developed markets, the revenue growth then becomes a challenge, as we are now seeing for Kiddopia. So are the new acquisitions that you're looking for going to be more India-centric, or will it be U.S.-centric, for that matter?
Gaming studio acquisitions today are more Western market focused, I would say, while they can definitely be also launched in India, but from a monetization perspective, they'll be US-focused. We expect, whether it's Kiddopia, whether it's Animal Jam, I think we are trying out many new ideas to break through the opportunity to scale. I think the reason for inability to scale has been more around the user acquisition, and we have a few ideas, including ongoing conversations with IT partnerships, to kind of break through that. So we are very confident that that business can scale. And on the other hand, I think there are a lot of margin expansion opportunities after acquiring these studios. One is there is an India arbitrage opportunity.
A lot of the work these studios do, while core product would still continue to run in the U.S., for example, a lot of the, you know, back-end work can be moved to India, expanding margins. We also think that there's an opportunity over a period of time to, you know, save on some of the margins that we pay the platform providers. And the third, which I was talking about, AI, right? I think that is a game changer, and I think Nazara is really doubling down on how we are going to use AI to, one, optimize these studios, as well as enhance their ability to engage with players, to analyze data, et cetera. And I think that could potentially be a game changer for us. So these are the two, three areas that we are very focused on deploying.
Got it, got it. So, my second question is on the NODWIN gaming part. And, if I look at the media revenues number, for the quarter, there seems to be an uptick, just for Q4, if I see. About INR 20 crores you have done in Q4, vis-a-vis about INR 13 crores you had done last year. And the content views also seem to be kind of catching up, in Q4. So is that read right, or do you still see, you know, material weakness in media revenues, as of now?
So Q4, you are seeing an uptick, one is, of course, with our, Playground IP. Like I was mentioning, we are in Season three, and Playground has done very well for us. It has wide acceptance, and, you know, the media channels are willing to pay for it. Sponsors are... We've got great sponsors coming in. So I think that's been a breakthrough for us. And I think that is a starting point, because with Season three, you have an IP that's now getting really established, and we expect that Season four, Season five should start seeing more nonlinear growth. I think the other thing we're excited about there is, this is the first time, I would say, a potentially global IP has been created in India on something that's really innovative, on gaming and esports.
We are seeing demand now from many different countries, different players, to kind of either license this IP or co-produce with us, and that actually throws up the whole world open. We think that this particular IP is very exciting for us. We've seen some reflection of that in Q4, and I think you will continue to see that in the years to come.
Understood. And then just one final question?
Sir, may I request you to please, rejoin the queue for the follow-up question?
Sure. Thanks.
Thank you, sir. The next question is from the line of Samarth Patel from Equirus Securities. Please go ahead.
Thanks for providing me the opportunity. Am I audible?
Yes, sir, you're audible.
Yeah. Just to expand on the Kiddopia point, the subscriber growth has been sluggish for several quarters now. So while we have attributed this to our strict CAPEX guardrails limiting marketing spend, how confident are we that the root cause is not in product or technology?
See, our internal analysis is very clear that it's essentially around how much we're able to spend on the UA, and there's a direct correlation between that and the number of subscribers. So product-wise, we think it's working that fine. From a retention point of view of customers, from how many convert, what is the activation rate, all of those metrics are holding just as well as we expect.
Okay. Additionally, can you please elaborate on the strategy for generating merchandising income through Kiddopia, and what plans are in place for this merchandising revenue stream, specifically for Kiddopia?
... Yeah. So at this point, it's still a small revenue stream for us. But, Captain Kidd, which is a character in Kiddopia, is one that we want to expand further, especially in the US market, around all kinds of merchandise. It's still very, very small, so we're not breaking that number out at this point. But, we will share more details in coming quarters. I think the broader strategy, though, is to expand the IP base, which is used in the games that we have, both for Kiddopia and Animal Jam. And, there, it could actually expand both the core revenue as well as the ancillary revenues for the game.
Thank you. That was helpful. Now, just coming to Sportskeeda, can we expect the strong margin performance to continue into FY 25, or should we anticipate some level of moderation in the margins going forward?
We do expect actually that it will continue for a while longer still. The market in the U.S. is much larger than what we currently tap, even in terms of number of sports. Right now, we're still present in a couple of the smaller sports in a dominant way, and we have a small position now in pro football, which is the largest sport there. We still have, I would say, limited presence or smaller presence in the other main sports which are popular in the U.S. So we think there's a lot of room for growth, and we do expect the momentum to continue.
Thank you very much for the opportunity, and all the best for the coming quarters.
Thank you.
Thank you.
The next question is from the line of Rahul from Dolat Capital. Please go ahead.
Yeah. Hope my line is audible.
Sir, may I request you-
Yes.
to please use your handset?
Yeah, just one second. Yeah, hi. Hope this is better.
It is yes, now.
Yes. So, couple of questions here. Firstly, on the Animal Jam side, can you bit share about the new game launch that we are talking about? And is this nudging things which you have shared around the Wishing Well and stuff, is it something what the earlier management was not doing, and this is enhancing the revenue potential for the business? Any color on these things would help.
Sure. So I think, with Animal Jam, there are two kinds of product developments which happen. One is there's a content-level update which goes out, every quarter, sometimes maybe a couple times every quarter. And that has kept happening, and we just introduced more discipline, put more resources behind that, and that has kind of continued to do well over the last few months and will continue in the next year as well. When we say new game, we mean something different. This is an entirely new game being developed by the team, and that is something that we expect to take into alpha in about three to four months, and beta by the end of the year. So that will be a major development, not just an incremental thing within the existing game.
One question for Nitish. To your comment that, you know, you would like to consolidate some of the gaming entities at the parent level, will that essentially reduce the cash flow requirement for future acquisitions? Because then you would be generating a lot of cash at the top. And does it changes your strategy towards, you know, acquiring gaming studios, which you were mentioning, which are very high ROC business, but not necessarily may be growing business? So any input on this overall thought process would be of great help.
Sure. I think what we are trying to really address is that if we are able to generate, you know, significant free cash flows at the parent level, it gives us a lot of flexibility to reinvest this capital. As you can see in our current structure, you know, most of our companies are generating good cash, but the cash gets stuck in the subsidiaries below, which is not a very efficient structure. The way we are looking at approaching this is a hybrid approach, where we start bringing in some of our core gaming IPs at the parent level. This would happen through either modules of existing subsidiaries or, you know, direct IP purchase in new M&A that we do. This is, this will not be a, you know...
From deal to deal, this is maybe different, but wherever possible, we will try and do this to bring the business directly to the parent level. That will give us a lot more flexibility. At the same time, many of our adjacent businesses of today, whether it is the esports business, Sportskeeda business, Datawrkz, et cetera, will continue to operate as satellite businesses, and we may also make new investments and new acquisitions in that way. So I think only the core gaming IP business is what we will try and bring to the parent level, and we think that will be a very efficient way to move forward. In terms of buying high ROC businesses which don't have growth or much growth, I think it finally depends on the value we pay for it.
I think we would prefer to see businesses, one, that have clear-cut sustainability of the business they are doing. Then we have some ideas in our own mind on how we can grow these businesses once we acquire them, even if in the last year or two years, they have had muted growth. I earlier mentioned a few points, where we are creating a playbook, and we believe we have a playbook that can very positively impact these businesses, both on margin expansion and growth. That is, that is the whole idea we are pursuing.
Appreciated the color. Just follow up on that part to your EBITDA outlook, which you have shared. Is it... You know, of course, this is very encouraging, but if you could try to explain a bit more in terms of what are the easy avenues for you to begin with in terms of EBITDA expansion? Is it some kind of integration? Is it more about scaling up margin on the existing business, or any way you would like to explain that?
Of course. So I think, for our existing businesses, we are going to continue to push for higher growth as well as higher margins. We believe that core gaming businesses should generate, you know, 25%-30% kind of margins, and there is enough room for us to increase our margins. So I think, there's a lot of focus on that. And over the next year or two years, we are very confident of uplifting the margins. I also think some of our businesses, like Esports, NODWIN, which are large revenue businesses but not contributing a lot of EBITDA at this point of time, will actually start, you know, contributing better EBITDA, and a few percentage point movement over there will make a significant impact on overall EBITDA in terms of absolute numbers.
Lastly, of course, we believe that most of the acquisitions we will do will also be good EBITDA contributors to our business.
Thank you. That's it from my side. That's it for the time being.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Abhishek Kumar from JM Financial. Please go ahead.
Yeah, hi. Nitish, my first question was on the M&A strategy. You know, we have, you know, in the past acquisitions used our own equity as a currency, as it kind of brings the founders skin in the game as well. Has that changed, given so much cash on the book? Are we looking at all cash deals, or would it still be, you know, a combination of share swaps and cash? That's my first question.
So I think there will be predominantly all cash deals at this point of time. We want to reduce the amount of equity we show, unless it is really needed. Of course, if it's for incentivizing founders, we may consider part some of it, or we may find alternate ways to incentivize, including cash bonuses linked to performance, et cetera. So we're evaluating all options, but in general, I would say going forward, we are not keen to issue equity very easily.
Okay. I'm not sure if that kind of exposes us to, you know, founders leaving. I'm asking-
No.
Uh-
No, I understand. I don't think so. I mean, look, for us, to do an M&A deal in our model, right, where we are not hands-on running every operation, having the founders and management incentivized is the primary goal, and we will not do any deal which does not allow for that. But that can be addressed through multiple structures. I'm not saying that we will not issue any equity. We would issue some equity, but that, those ratios may change, or we may find alternate or better structures. But ensuring that founders and management teams are highly incentivized is something that we are going to definitely prioritize, prioritize in any M&A we do.
Sure. One related question is on our decision to, you know, acquire the remaining stake in, World Cricket Championship. You know-
Yeah
... this property has not been doing very well.
Yeah.
Any particular reason why, you know, we have decided to do that?
Yeah. So, so we brought in a CEO in the previous year, and we believe that we've done a lot of good work that should start reflecting in numbers pretty soon. We've also, in recent times, scaled up our marketing and starting to see good traction. We see some global expansion opportunities. We see platform expansion opportunities on consoles, PCs and other platforms outside of mobile. And we're also launching a brand-new game now in this quarter, very shortly. So I think while the IP has not performed as we would have liked to in the last few years, I also believe that this value, it throws up a good opportunity for us to get in, take control of the entire business and drive it to the direction we want to.
I also think that AI is going to play a role here to drive it in the next year or so.
Sure. My last question is on the game publishing business. Obviously, it's very exciting. I just wanted to understand, as a publisher, and when we onboard various studios, you know, what our role typically is. Are we going to advertise and do the user acquisition? And if that is the case, I'm just wondering, given our focus is on the US market to... for these gaming studios, will the users that we acquire for these games as a publisher will also be based out of U.S., or would that be a more global kind of a clientele?
So, publishing for us, but Sudhir, you want to take it?
Yeah, I think let me take this one.
Yeah.
So, Abhishek, I think here, the primary focus for the publishing team is actually the India market. So we have essentially two kinds of studios that we are working with or intend to work with on the publishing side. One are the smaller indie studios, where maybe small indie developers locally from India, who may also target the US market. That actually going to be a smaller part of the overall publishing story. The bigger thing is working with larger studios, global ones, who have already a big game, which is big globally, maybe kind of under explored in India. They already have some revenue from India, but we believe that we can help them to scale it up much further.
In that particular case, we would be spending our money on scaling up both the user acquisition, but also marketing, branding kind of spends, working with influencers, working with media, et cetera, to help those games scale up.
... and that will be, I think, the primary focus in the coming, 12 months which I've listed.
We are confident of monetization, you know, given even WCC, which is the most popular game in India, right, cricket, monetization is a challenge, when it comes to Indian users. So how confident are we that we can bring in the games, global popular games, and we can still monetize them?
The games which are monetizing well in India right now are either or better, are either on the RMG side or on the IAP side. So we do have large global games which have the majority of their revenue coming from IAP. Some of which have actually struck a good chord with Indian users and are generating in the dollar millions, not just not small numbers, but reasonably high numbers, and which are growing. So those are the kinds of games that we would want to target for this solution, not necessarily ad-supported games only.
Sure. Thank you and all the best.
Thank you. The next question is from the line of Manan Poladia from MKP Securities. Please go ahead.
Hello. Hi, Nitish. So my first question is with regards to what the first participant asked on the Kiddopia thing. The subscriber growth really seems to have plateaued, and you've spoken about how our user acquisition, et cetera, has been a problem. But also my understanding was when we had acquired the AdTech platform, that is what we were going to use to solve our user acquisition problem. So if you could just give me some color on what is going on there. Are we realizing any synergies, or what are we doing with the user acquisition piece over there?
Sure. So on Kiddopia, firstly, I think the linear approach of trying to solve user acquisition clearly is not, you know, we're getting a kind of dead end, right? Which is very evident in the last few quarters. We've tried many things, and it's not really improving. So we expect that the business will plateau if we are not able to break through to an alternate route. What we are very bullish about right now is that by bringing in popular IP of known characters, where these IPs and characters are very popular with kids, we should be able to, we should be able to drive a lot more organic traffic, which kind of provides us scale and provides us with a much better blended cost per trial. So we are in advanced conversations with many global popular IP holders.
I don't know the name of specific companies till we sign a deal, but I expect in the next quarter or so, we will definitely do one or two such deals, both for Kidopia as well as for Animal Jam. I think that can really break through. I've seen, you know, a few other kids' businesses in the U.S., which have been more IP-driven, who have done very well, despite the UA issue, and that's what we are trying to, we're trying to solve it the same way. The advantage we have is that both Kidopia and Animal Jam are very widely appreciated by these IP holders in Western markets, so it's easy for us to license from them, and we are not like a, you know, unknown player coming in and asking for these licenses.
We are currently betting that that is going to be one way for us to break through. I think the overall business opportunity is still very large, but we need to do something different, and we are very much trying to do that currently.
Right. That sounds great. I look forward to seeing that happen. So my second question is on the NODWIN front. My understanding of Channel Check tells me that there is some slowdown with respect to spending, like you yourself mentioned. And my understanding is also that there is some competition coming up, like specifically right now, the whole BGIS IP is going on, which in my opinion, is a fairly big IP, right? And I am given to understand Tesseract, one of the competitors, is running that specific IP. So if you could just give some clarity on the competition situation since NODWIN is the market leader there.
Sure. I think, you know, competition is always good to be there. It keeps us on our toes. We think NODWIN is way ahead of the game at this point of time in terms of market share, brand awareness, and partnerships that it has. So I think, competition to a certain extent will help expand the market. We are not worried about that. On the whole, we think overall the sports market, should see us a good expansion in FY 2025, and, NODWIN should be the maximum beneficiary of that. NODWIN currently has an 80% market share, and I think that's a tough one to break through, given the kind of partnerships and investors NODWIN today has.
Right. So just a short follow-up. I understand that Krafton is an investor in Nodwin as well, and I, I get that that would give us a decent chunk of their business. Also, the, the second, on the Playground bit, I see that we have seen much better impressions, et cetera. I was just wondering if you are willing to give some breakdown of what sort of monetization we've gotten from, that particular IP, since we... I think this is something we mentioned in one of the previous calls as well, that we are focusing on monetizing our own IPs more than the white label IPs.
Yeah. I think the advantage of monetizing our own IPs obviously, is that as the rights increase, right, the profitability and margin contribution of these IPs would be significant. Season three had 24 million viewers, so I think we're starting to achieve a scale that is worth looking at. And a lot of sponsors, as well as Amazon, you know, miniTV, have come in again in season three to generate significant revenues. I don't immediately have exact revenue numbers contributed, but I think they were at least 50% higher than season two.... So I think, it's right in the right direction, and we are only talking, remember, we're only talking about India right now. I think Playground is an IP that can actually go global, and if you can take this IP into markets like the U.S., then really speaking, sky is the limit.
So we are very excited about it.
Great. This I understand. Thank you so much for your answers.
Thank you. A reminder to all the participants that you may press Star and One to ask a question. The next question is from the line of Carter, who is an individual investor. Please go ahead.
Yeah, hi, thanks for the opportunity. This is related to the comments that you made, saying that AI as a game changer. I wanted to understand, you know, recently, I think, you know, the text images and videos and audios with large language models, also with DALL-E, you know, the OpenAI sort of released that, right? So I wanted to understand, little bit more on what sort of, you know, where are you sort of applying this AI, and also whether you have in-house neural network models to, you know, expand the gaming agenda?
Yeah, sure. So I think AI can be leveraged in gaming in multiple ways. Low-hanging fruits are, for example, creatives, right? Whether it's creatives for your games, whether it's design elements, whether it's creatives for user acquisition, et cetera, can be easily used. We are looking at automating product testing through AI, stress testing through AI, having AI characters, you know, compete with each other on our games to really see how the games kind of evolve and how players will engage. So I think there are unlimited use cases of AI that we can deploy in gaming, both in terms of how the games are being produced, faster, better, more efficient, as well as how we are using AI to do two more things.
One is, how does AI—how do we throw all the data being generated by the players during their activity to the AI, to make a lot more personalized offerings, which will help increase engagement as well as better monetization through advertising and user acquisition. So I think the analytics piece can be very powerful, and overall engagement of the user can be done in a far more better way. Like I said, we are paranoid as well as excited about AI, because we know it's moving very fast, and we need to be in the forefront of this. We have an AI task force internally that is focusing on many innovative ways of using AI, testing it out on a couple of our studios, with an intent to create a playbook that can be replicated across everything else we do.
Okay. Thank you.
Thank you. The next question is from the line of Raj Kumar Vaidyanathan, who is an individual investor. Please go ahead.
Yeah, good afternoon. Thanks for the opportunity. Just couple of questions and one comment. The first question is on the inorganic growth that you have been, you know, mentioning in the call. I just want to know, are we pursuing inorganic opportunities just because we have enough cash in the balance sheet, or are we looking at... I mean, I just want to know, what is the thought pro- behind pursuing an acquisition?
I'm not sure I got it properly. Sudhir, you got it? You take it.
Yeah, I think I got it. Thanks, Mr. Raj Kumar. I think what you are asking was, what is the rationale behind pursuing inorganic opportunities? Is that correct?
Yes, correct. I just want to know what—I mean, you know, what is, like, you know, when you are looking at the growth in the next three to four years, so you are looking at more of organic growth or inorganic growth, to, you know, meet your objectives?
I think, both will happen. Organic growth is definitely high on the agenda for, and business specifically, we've broken that down in, some of our discussions. That's where we expect a lot of, upticks to happen in 2027 and beyond. Inorganic will also happen, and I think the question of why inorganic in the first place, I think, clearly, when we look at each of these businesses, scale does matter. And as we continue to add, IPs, for example, or add heft on the gaming side, then we're also able to get significant synergies with cross sell. We're also able to get significant cross-sell across games, which then helps us with the user acquisition side and so on. So there are, definite advantages to scale here, is what we feel.
Okay, okay. And the second question is, when you're pursuing, you know, M&A opportunity, I just want to know, how do you keep the founders, you know, kind of motivated? Because I've seen in business that when you acquire a company, the founders generally leave when the retention kind of, you know, gets paid out, for a period of time. So what do you... How do you think that you will keep the founders motivated? Because they are business people, so how do you think that they will accept the role of an employee from an, entrepreneur? Unless, you know, you give a stake in the company.
So, so let me take that. First of all, you know, we, whenever we acquire the business, founders have had one significant stake in the business. Second, we never consider them as an employee of the business, right? They are founders running the business, and in fact, largely have autonomous, you know, way of running the business. We support them in whichever way we can, but it's the founder who runs the business, and we very much respect that. In the past, I think we've seen good success of founders working with us, being able to accelerate the business significantly after, after, you know, joining hands with us. And at every step, we've tried to create liquidity for the founders at higher valuations.
Founder can see that they're creating value, they are able to monetize it themselves, and I think that playbook has worked quite well for us.
... Okay, that's great. And, lastly, one comment, you know, I think, there are a lot of—I can see that there are a lot of questions on EBITDA improvement and so on and so forth. But I know the promoters are more focused on the long term, so I just want to kind of reemphasize that point. You know, please stay focused on creating value for the company over the longer term, despite the short-term P&L pressures. You know, that's one of my thoughts.
We appreciate that sentiment, completely agree to it, and I can assure you that we are taking absolutely no decision with the short-term, quarter-on-quarter pressure, and only taking what we truly believe is the right decision for the company. Of course, we may be wrong sometimes, but we will take measured risks and only take decisions which we believe are truly in the interest of the growth of the company.
Yeah, that's very nice to hear, so all the very best. Thank you.
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Nikhil, who is an individual investor. Please go ahead.
Hi, Nitish. I hope I am loud and clear.
Yeah.
Yeah, so my question revolves around the promoter stake. So I just see, I read a news stating that the promoters have sold 6% of stake to an existing investor. I mean, what I understand is the current valuations of Nazara is at the lowest to date, I believe. So, selling it at a lower valuation, which I thought, the promoter should have been actively buying it, for the long term. So I just need your views on that.
So, look, it's important to understand that as a promoter family, right, we have been running this company for the last 25 years, and the way the company developed, we never had large amounts of liquidity in the past. So at some point of time, I think it was important to have, for the promoter family, to get some liquidity. And it's impossible, as you know, to get the timing, perfect, for this. I think what is more important to understand are two points. One is, the promoters will remain fully in control of the business. Myself, as CEO of the business, remain fully committed to running this business and taking it towards the eventual scale. For me, it's not about capital, it's more about, you know, a legacy of 25 years.
A dream that was about how India can become really big in gaming, and we continue to very aggressively pursue that. I think the second point is, Plutus has been an investor with us since the pre-IPO days. They initially put in a large amount of capital to purchase the stake, and I think they also participated in future some of the pre-placements that we did, including the latest one. And them now again coming back and buying this sizable stake shows confidence in the company's growth prospects, in the promoters, as well as the management.
Yeah. Another follow-up. So is it the case that since the people, the investors have bought the stake at a higher valuation before, they are keen to buy at this valuation so that they can average down? Is it the case?
No, I don't think so. If you look at Plutus's cap table, right? The way they've entered it, I don't think this is about averaging down. I think it's about taking a larger bet that this business will grow very aggressively in the future, and they want to increase their stake to the extent possible.
Okay, thank you so much. So, the promoters will be around 10%-12%, if I'm not wrong, after this, right?
Correct.
Okay. Thank you so much, Nitish.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to Mr. Nitish Mittersain, for closing comments.
Thank you everyone for joining the call. Just to summarize, we have made a robust platform for future growth, making us optimistic to deliver good results in the coming years and years, I should say. Stay on course to build Nazara as a global gaming company out of India to reckon with. Thank you very much again. In case of further queries, we request you to get in touch with us or Valorem Advisors, our IR firm. Have a good day.
On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your line.