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Nazara Technologies Ltd. – Business Update for the year ended on March 31, 2021

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Vi brings Gaming for its customers, in association with Nazara Technologies
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In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information in terms of Regulation 8 of SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company would like to update on the following key business parameters on consolidated basis for the Year ended March 31, 2021

Business Overview:

Nazara is an India based, diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America.

As of March 31, 2021, Nazara has diverse business segments with revenue generation happening across gamified learning, Esports, freemium and telco subscription.

S. No. Business Segment Business Model Content IP Ownership IP Name % Revenue Contribution FY21
1 Early learning Gamified App for 2–6 year old kids with subscription paid by parents Yes Kiddopia 39%
2 Esports Premium exclusive content / (Media rights licensing) & brand sponsorships (ads shown on the platform) Yes Nodwin, Sportskeeda 37%
3 Freemium Ads & virtual items purchased within the games Yes WCC 4%
4 Telco Subscription Business Players subscribing to curated game packs and payment collected through telecom operator channel No 16%
5 Skill Based Real Money Gaming Platform fee collected from the skill games played on the platform Yes Halaplay, Qunami 4%

 

Income Statement Performance: Snapshot of FY21 over FY20

Key Highlight of FY21: Delivered 84% YoY revenue growth and 470% YoY EBITDA growth

Revenue Performance: Snapshot – FY21 when compared to FY20

Nazara Technologies delivered consolidated revenue of 4,542 Mn INR (unaudited) in FY21 which is 84% growth over FY20 (2,475 Mn INR). Gamified learning and Esports segments have not only demonstrated strong growth momentum in FY21 but have also laid foundation for predictable growth on account of proven user engagement and retention KPIs in gamified learning and multiyear media licensing and game publisher agreements in case of Esports.

Segment wise revenue breakup is as follows:

Revenue INR Mn FY21

(unaudited)

FY20

(audited)

% Growth
Gamified Learning 1,758 191* 820%
Esports 1,701 842* 102%
Freemium 195 198 (2%)
Telco Subscription 749 818 (8%)
Real Money Gaming 139 426 (67%)
Total Revenue 4,542 2,475 84%

*included from date of acquisition in the consolidated financial statement for FY20.

Consolidated EBITDA Performance: Snapshot – FY21 when compared to FY20

EBITDA including share of non-controlling interest for FY21 has witnessed 470% growth over FY20.

Particulars FY21

(unaudited)

FY20

(audited)

EBITDA margin 12% 4%

 

As Nazara is operating in high growth business segments such as gaming, gamified learning and Esports, we will continue to drive profitable growth while prioritizing growth over profit maximization at this stage so that we can achieve and maintain market leadership in the segments we operate in.

Segment wise commentary on business performance:

  1. Gamified Learning: Kiddopia had 340,282 paying subscribers as of March 2021 which is a 172% increase in number of paying subscribers as compared to March 2020 (197,522).

LTV (Lifetime Value) – CAC (Consumer Acquisition Cost) Parameters: Cost per trial has stayed range bound between 22 USD to 26 USD in last 12 months and activation ratio from free trial to subscription has also remained around 70%.  Monthly ARPU of the user has been around 6.3 – 6.4 USD and monthly churn is range bound between 4% – 6% across the months in FY21.

  1. Esports: Esports revenues comprise of media rights licensing of own content, brands sponsorships for offline and online events, licensing fee received from game publishers for community activation and programmatic inventory selling on Sportskeeda. Esports is disrupting traditional sports worldwide and is an outcome of sports and gaming intersecting to create fast paced spectator entertainment content.
  • Sportskeeda witnessed 487% growth in MAU in FY21. During peak cricket season (October 2020), Sportskeeda recorded 68.44 Mn MAU up from 10.53 Mn MAU in April 2020.Sportskeeda has emerged as a leading Esports news and content destination in India.
  • Nodwin continued revenue growth momentum with 75% growth in FY21 over FY20. Media rights contributed to majority of the revenues in FY21 and game publishers formed second largest source of revenue wherein Nodwin partnered with them for grass route community tournaments across India. Nodwin also expanded into South Asia in FY21. Nodwin continues to be the dominant player in Esports in India with its marquee IPs like ESL India premiership, Dew Arena etc.
  1. Free to Download (Freemium): WCC (World Cricket Championship) is the world’s largest cricket simulation game franchise on mobile and is played for ~46 minutes / day by over 15 Mn monthly active users. The Game has a very strong franchise among the midcore gamers who love virtual sports simulation genre and gets over 100,000 downloads every day organically and without any marketing spends. WCC revenues were flat in FY21 on account of drop in advertising rates in India due to COVID. We expect growth in WCC to come from in app purchases of virtual goods and WCC3 – the latest version of the game launched in July has been designed for enhancing in-app purchase conversion rates.
  • Scale of Daily Active Users (DAUs) of world cricket championship (WCC) is stable with few spikes seen during first phase of lockdown in April 20 and during IPL 20.
  • Tangible progress has been made on % conversion ratio (daily paying to daily active users (DPU/ DAU)) in FY21 via launch of WCC3. The % conversion in WCC3 has increased multi-fold to 0.08% – 0.10% as compared to 0.01% in WCC2. % Conversion in WCC3 is expected to increase further in FY22 through new product updates.

 

Once positive LTV/CAC equation is achieved, the company will invest aggressively in user acquisition to scale up its user base on WCC and drive profitable growth.

  1. Telecom operator driven Subscription business declined by 8% in FY21 over FY20 primarily due to decline in India revenues in H2FY21. Nazara has acquired rights to distribute a library of premium Disney and Star Wars games based on iconic stories and characters including Star Wars, Frozen, Big Hero 6, Cars, Duck Tales, Finding Dory, Toy Story and many others in 100 countries for three years. These premium games will be distributed through Nazara’s network of telecom operators to their customer base. Under this agreement with Disney, Nazara is the only third party distributor that Disney has granted the right to create and operate Disney themed storefronts for premium Disney and Star Wars games on these telco channels.
  1. Sports Fantasy (Real Money Skill Gaming): Sports fantasy witnessed disruption in FY21 on account of lack of live matches in first half of FY21 and regulatory turbulence triggered by legislative ordinances passed in few of the large states banning real money gaming operations. The lack of stability in the regulatory framework lead to Nazara taking strategically cautious approach in this vertical till further clarity emerges. We have therefore pivoted to a product driven growth strategy versus an aggressive customer acquisition spends led strategy and the team is focused on enhancing existing as well as bringing new product features to differentiate ourselves in this segment.

 

About Non-Financial GAAP measurement

We use EBITDA as supplemental financial measures. EBITDA is defined by us as net income before interest expense, income tax expense and depreciation and amortization, including share of non-controlling interest. EBITDA as used and defined by us, may not be comparable to similarly-titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDA provide no information regarding a Company’s capital structure, borrowings, interest costs, capital expenditures and working capital movement or tax position.

These numbers have not been subjected to audit or limited review.

 

Asia

React Gaming to Offer LOOT.BET Esports Wagering Skin via HHRP in the Philippines

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Generationz Gaming Entertainment, a subsidiary of the React Gaming Group, has signed a white label revenue sharing agreement with HHRP Inc to operate LOOT.BET’s esports wagering platform in the Philippines, pending successful certification of the LOOT.BET platform by Gaming Laboratories International.

“We are thrilled to have HHRP as a partner for the Philippines market, HHRP being one of only four companies holding online gaming licences in a country of more than 109 million people,” Laurent Benezra, President and CEO of React Gaming, said.

“This agreement is part of our two-pronged growth strategy to expand LOOT.BET’s reach into the B2C and B2B markets. The advantage of the B2B market is that LOOT.BET’s platform will be offered to established customer bases, thus involving no customer acquisition cost on our part. Our partner will offer our white-label platform as its own to its customers and we will receive a portion of the revenue generated when those customers use the platform. The more popular our platform, the more revenue it will generate. The great thing about this model is that we can replicate it in multiple markets and with multiple online gaming providers at minimal cost,” Laurent Benezra added.

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Asia

BetMakers Signs Agreement with Royal Sabah Turf Club

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BetMakers has signed an agreement with the Royal Sabah Turf Club to provide its solutions to the Malaysian racecourse operator and its betting network.

Through the five-year deal, BetMakers will deliver a tote betting system along with content management services at the Tambalang Race Course and the Royal Sabah’s off-course betting network, via its Global Tote and Global Racing Network divisions.

BetMakers will be the exclusive rights holder for races held at the Malaysian club within both Tote and fixed-odds markets. BetMakers owns Global Tote, which it acquired from Sportech last year. Global Tote will deliver the Quantum to the Royal Sabah Turf Club as a SaaS solution, which will provide the club with the operational tools and training to distribute races to racetracks licensed by betting operators worldwide.

Lance Ku, Director of Sales & Business Development Asia for Global Tote, said: “Global Tote is very pleased to extend and grow our partnership with Royal Sabah Turf Club. The Global Tote solution offers advanced capabilities and features that will help them deliver a fantastic customer experience.

“Combined with Global Racing Network’s professional content management solution, Royal Sabah has a powerful route by which to pursue opportunities for growth.”

Datuk Peter Chin, Chairman of Royal Sabah Turf Club, said: “We have been very pleased with the services we receive from Global Tote and having the ability to turn to BetMakers for both our betting technologies and services, as well as for content distribution management, offers Royal Sabah Turf Club the most efficient, effective means by which to reach new markets for our racing, new content for our customers, and new revenue streams.”

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Mayhem Studios announces its first Battle Royale title

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Mayhem Studios announces its first Battle Royale title
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“Underworld Gang Wars” or UGW, which revolves around the rivalry between two gangs, launched through India’s largest drone show designed for a game reveal

 Mayhem Studios, India’s first studio for AAA games has announced its first title “Underworld Gang Wars” (UGW), a Battle Royale game set in India. With the characters and plot rooted in India, the game promises an exciting setting with some interesting characters inspired by stories of India.

Set in a truly Indian plot, the locations, the gangs and the icons represent an Indian context in a AAA game for the first time. The theme, weapons, and the maps of the game have been designed to offer a unique experience to the gamers.

The gameplay becomes intense in UGW as the underdog gang from the West wants to take control of the Eastern region from its arch-rival urban gang.

To provide an authentic experience, each region depicted in the game resembles a real location in India, be it the coal mines or the next-door apartment complex. It also has iconic landmarks including a fort, station, stadium and a racecourse.

Scheduled to be launched later this year, the game’s pre-registration window will open from 22nd May.

Commenting on the announcement, Ojas Vipat, CEO of Mayhem Studios, said: “We are thrilled to come up with the first Battle Royale Title that promises to offer one of the most relatable storylines for gamers. UGW’s unique locations and the highly relatable universe with great graphics are sure to provide a great experience for Battle Royale players. We are also excited to put together a blockbuster game with some unique stories of India for the world.”

Mayhem Studios has conducted India’s biggest game reveal through a drone show at Mumbai’s Mahalaxmi Racecourse. Through this drone show, the studio revealed the game logo and also created a QR code that directed the onlookers to the game teaser.

The event was also attended by leading gaming influencers and enthusiasts like Tanmay Bhat, Mortal, Scout and Dynamo Gaming.

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