Nazara Technologies Ltd (NAZARA) Q2 FY23 Earnings Concall Transcript

Nazara Technologies Ltd (NSE: NAZARA) Q2 FY23 Earnings Concall dated Oct. 20, 2022

Corporate Participants:

Nitish Mittersain — Founder and Joint Managing Director

Sudhir Kamath — Chief Operating Officer

Manish Agarwal — Chief Executive Officer

Anupriya Sinha Das — Head of Corporate Development

Analysts:

Abhisek Banerjee — Analyst

Nitin Jain — FairConnect Business Advisors Pvt Ltd. — Analyst

Jinesh Joshi — Prabhudas Lilladher Pvt Ltd. — Analyst

Deep Shah — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

Ankit Dev — JM Financial — Analyst

Rahul Jain — Dolat Capital Market Pvt. Ltd. — Analyst

Aparna Shanker — SBI Funds Management Pvt. Ltd — Analyst

Raj Joshi — Ace Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q2 FY ’23 Earnings Conference Call of Nazara Technologies Limited hosted by ICICI Securities.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions] I now hand the conference over to Mr. Abhisek Banerjee from ICICI Securities. Thank you, and over to you, sir.

Abhisek Banerjee — Analyst

Yeah, hi. Thanks, Kshitija. Hello. Welcome, everyone to the Q2 FY ’23 results conference call of Nazara Technologies. Are the management here is Mr. Nitish Mittersain, Joint Managing Director; Mr. Manish Agarwal, Group CEO; Mr. Rakesh Shah, Group CFO; and Ms. Anupriya Sinha Das, Head of Corporate Development.

I would hand over the call to Mr. Nitish Mittersain for his opening comments. Over to you, sir.

Nitish Mittersain — Founder and Joint Managing Director

Thank you. Good morning and a very warm welcome to all of you to Nazara’s Q2 and H1 FY ’23 earnings call. First of all, I would like to wish all of you a very happy Diwali and festive season. We have already uploaded our result presentation on the exchanges, and I hope you all have had a opportunity to go through the same.

On behalf of Nazara, I am happy to share that for Q2 FY ’23, we generated revenues of INR2,638 million, up 104% year on year, and an EBITDA of INR213 million, up 9% year on year, and PAT of INR169 million, up 11% year on year. Similarly for H1 FY ’23, we generated revenues of INR4,869 million, which is up 87% year-on-year and EBITDA of INR514 million, which is up 4% year on year, and a PAT of INR334 million, up 17% year on year.

Our approach to capture growth opportunities across segments has been instrumental in us achieving better numbers in our growth estimates, and we continue to reinvest our profits for faster growth to achieve revenue scale and market leadership, at the same time maintaining healthy and positive cash flows and profitability to provide stability to the business. Given the strong H1 FY ’23 performance, we revised our revenue growth estimates upwards. We had earlier guided 50% growth for FY ’23, we are now revising this upwards to 70% to 75% for FY ’23, and we will achieve this while maintaining our EBITDA margins at a minimum of 10%.

As you would have already read, our CEO, Manish, will be stepping down effective November 30th, and I would like to take this opportunity to thank him for all his efforts over the years at Nazara. I will take over as CEO effective December 1st, ’22, and look forward to many opportunities to interact more closely with all of you in the days to come. I would also like to extend a warm welcome to Sudhir Kamath, who has joined us as Chief Operating Officer and will work closely with me going forward. Sudhir has 20 years of experience in strategy, consulting, private equity investing, and running companies. His key responsibilities will include developing, executing the strategy for us, working closely with our subsidiaries, and working with me on the M&A side.

I would request Sudhir to introduce himself, post which we will walk you through the quarterly highlights. Sudhir, over to you.

Sudhir Kamath — Chief Operating Officer

Nitish, thanks for a very warm welcome and good morning to everyone. I’m very excited to be part of Nazara. I think Nazara is clearly the pioneer in the Indian gaming ecosystem and has built a great platform, but I do believe there’s a lot of potential in the coming years, and I look forward to working closely with Nitish and the entire leadership team as we continue to build a large and profitable business. I’m looking forward to having great interactions with all the analysts and others on this call. Thank you.

I will request Manish to take over or Nitish.

Manish Agarwal — Chief Executive Officer

Hi, guys. Good morning. Hope everybody is doing well. Again, wishing you a very happy Diwali from Team Nazara. It is a great results which very happy to really sign off with a century kind of growth and a very, very privileged to be working with Nazara for last 7.5 years and working with Nitish and the entire leadership team of our founders to be able to build a platform which can deliver these growth, and not just revenue growth but also operating cash flows as well as profitability increase. So very, very happy to share that, and I’ll again reiterate that all our multiple growth engines strategy is really firing, and which is all contributing to this growth.

We grew 104% in the quarter two year on year, and we grew 87% in first half year on year, which are amazing numbers. As the company continues to grow in size and scale, maintaining that kind of growth usually people really are very, very skeptical, and we are very happy to really revise our estimates on revenue growth from 50% plus to 70%, 75% plus. We are also very pleased to achieve this high trajectory of growth while maintaining positive EBITDA margins as well as operating cash flows. And while the revenue growth we are upwardly revising, we are also maintaining that we would deliver a 10% thereabouts EBITDA margins for the year to come.

And I would request Anupriya to walk you through the key highlights of segments. And as in past, we have found that the interactions and conversations through Q&A is a much better opportunity for us to explain you various nuances of business, we would spend considerable amount of time on Q&A. Anupriya, over to you.

Anupriya Sinha Das — Head of Corporate Development

Thank you, Manish. Good morning to everyone. So I’ll quickly walk you through our segmental performance and then we’ll take on questions. So if you look at these eSports, our revenue growth for the quarter has been around 174% and 132% for half year, as Nodwin revenues grew by 240% in the quarter and 144% in the H1.

So Sportskeeda revenues grew by 76% in the quarter and 89% in H1. Now growth at Nodwin is driven by growth in media revenue led, by Master Series and Playground IPs, along with strong growth in the gaming accessories business. At Sportskeeda, we continue to grow our U.S revenues, which grew 2.66 [Phonetic] in the quarter, driven by increase in video revenues and strengthening offering in eSports as well as core sports like American Football, Basketball, Tennis, and Baseball.

Now Nodwin EBITDA has reduced to 0.8% in H1 versus 4.8% in H1 FY ’22 due to: one, an investment in the gaming accessories business where we have achieved leadership position within the gaming headphone category on Flipkart within a very short period of time. Also, we have built new IPs like Playground. Both of these initiatives require investment and have resulted in a revenue growth of 240% year on year in Q2.

Benefits of operating leverage will kick in as we scale the media and eSports-focused gaming accessories business, providing a fillip to the EBITDA margin for Nodwin. Now as we look at our Gamified Early Learning business, the Kiddopia CPT has stabilized at $37.9 in the quarter as the company optimized the channel mix for user acquisition. We will now scale the user acquisition cost to drive further growth.

We’ve also acquired 100% stake in WildWorks for $10.4 million on 30th August 2022. In the month of September, the WildWorks revenues was INR65 million and INR12 million in terms of EBITDA. Our growth strategy at WildWorks is focused on invigorating the core business while increasing user acquisition spend to drive subscriber growth, as well as accelerating content updates to drive engagement.

Moving on to the Ad-Tech segment. So we added Ad-Tech as a new business segment in the previous quarter. This segment contributed to around 14% of overall revenue in H1. The business grew by 38% in Q2 and 52% year on year in H1 and has added 23 new clients.

Now our skill-based Real Money Gaming segment, with OpenPlay which had strong revenue and EBITDA growth in H1. Within the Freemium business, Nextwave witnessed around 51% growth in Q2 and 41% in H1 FY ’23. I would like to reiterate all our major business segments are EBITDA positive and cash generating, and we’re happy to announce that our H1 FY ’23 EBITDA was INR514 million, leading to an EBITDA margin of 10.6% for the six-month period.

I’ll close my remarks here and open the call for Q&A and request Manish and Nitish to join me for the Q&A.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Nitin Jain from Fairview Investment [Phonetic]. Please go ahead.

Nitin Jain — FairConnect Business Advisors Pvt Ltd. — Analyst

Yeah. Congratulations on the good revenue growth. So my questions are relating to the profitability. So as we can see that this quarter the margins have dipped below the last quarter of guidance of 12% to 14%. Now we know that the management keeps reinvesting for growth. But was the reinvestment not factored into the guidance that was given last quarter? And also a follow-up on that is what gives us the confidence that the 10% guidance will be defended till the end of FY ’23?

The next question is related to Nodwin. So during the Q1 call, the management was confident that the Nodwin margins should revive to about 5% to 6%, but they have dropped further below 1%. So can you provide some more color on that? And does the guidance of 5% to 6% still hold? Thank you.

Nitish Mittersain — Founder and Joint Managing Director

Hi, thanks. This is Nitish, and I’ll answer your questions. So firstly, on the earlier guidance of 12% to 13%, it was linked to our revenue guidance of 50% for the year. But however, as the year has gone by, we have seen many more importunities for growth, and we took a strategic call that we want to press the accelerator on [Technical Issues] versus optimize or achieve higher margins, because we have this unique opportunity to really build for market leadership and for scale. And therefore, it’s a very conscious decision which you can see our actions reflecting in our revenue guidance, increasing from 50% to 70% to 75%, and also the much higher than expected revenue growth.

I think for a company like us, it’s very important we are working in very nascent businesses like eSports, and achieving market leadership. We are already Market leaders but building on top of that, running way ahead of competition at this point is extremely important for us. At the same time, as you know, our stated objective always has been that we will prioritize growth over margins, but at the same time, we do not want to drive growth by burning money or by making losses.

So I think as long as we are able to maintain positive margins, as we have guided right now, we will maintain a minimum level of 10%, and maintain positive cash flows as we have done in this quarter as well as H1, we are very comfortable prioritizing the growth and really going after scale. So I think that’s on the overall basis.

In terms of the Nodwin margins, I think there are very similar aspects in play over here, but I can deep dive a bit more. In Nodwin, in this quarter, we have taken on significant investments, one, in building new IP. It includes IPs like Playground, which we have launched and which have been received well. There is also, if you would remember, Nodwin usually has seasonality. Q3, Q4 are much larger quarters for them with higher margins, and also the gaming accessories business that we have launched, Q2 was the peak period for that because of the festive season, and we have aggressively spent money in marketing and building the brand over there.

So I think, again, you will see it’s the same approach that we are investing to build our IPs, we’re investing to build our brands, and if we see opportunities, we will aggressively go after them, even if that means that we need to reduce our margins by a bit. I hope that answers your question.

Nitin Jain — FairConnect Business Advisors Pvt Ltd. — Analyst

Yeah. That’s quite clear. Just one last question. So many congratulations to Manish for moving on. Just wanted to clarify whether the entrepreneurial venture will be in competition with Nazara.

Manish Agarwal — Chief Executive Officer

[Indecipherable] here, so that from the horse’s mouth you can hear it. And then Nitish has to answer that. So I’m very, very excited always in building of nascent areas much earlier ahead, and I think blockchain is some of that area which over the next seven, eight years will evolve, and there are a lot of teething issues on basic blockers on ecosystem friction [Phonetic], and I’m very excited always to build those blockers and look at those ecosystem play.

And so from that perspective building blockchain gaming space in India is so-so nascent that it will take a lot of time and more entrepreneurial risk appetite and that’s why I’m really setting out to build that. However, what is important to underline here is that I will continue to be on the board of the material subsidiaries as I’ve always been there. And plus, I’ll continue to work with Nitish because it’s a relationship of many years, and formalizing we’ll work together as an advisor to Nazara. I’ll continue to be associated. It is important to note that my significant holding is there in Nazara, and I’ve not sold anything and that’s where my interests and heart lies.

Nitin Jain — FairConnect Business Advisors Pvt Ltd. — Analyst

Thank you.

Operator

The next question is from the line of Jinesh Joshi from Prabhudas Liladhar Private Limited. Please go ahead.

Jinesh Joshi — Prabhudas Lilladher Pvt Ltd. — Analyst

Thanks for the opportunity. I have a question on Kiddopia. I think we spent about $3 million on Kiddopia in marketing in Q2. So with these kind of trends, are we back to hitting the trial trigger which we used to get pre Apple policy change? Basically just thought of asking as our activation and churn is more or less constant, and thus of if our trial figure has improved, there should be no further subscriber losses from these levels because sequentially even if I look at our subscriber base, it is more or less constant as such. And from here on, how should we look at subscriber growth given the fact that CPT has stabilized at about $37, $38?

Nitish Mittersain — Founder and Joint Managing Director

Sure. Hi. Thanks for that question. This is Nitish. I’ll just answer this one. So with Kiddopia, what we are feeling very good about is, if you see in this quarter, we spent $3.1 million which has been higher than the preceding quarters. Our spend had dropped after the Apple IDFA issue. And if you will see the cost per trial has actually declined from $39.3 to $37.9. What that really shows is now we are able to scale back spends, not at the cost of increasing our trial cost but actually improving it.

So I think we are very comfortable, as we also mentioned in the last call, with the $37 to $38 cost per trial because of our LTV increase which is now starting to reflect in the ARPU. If you see this quarter’s ARPU is $6.8 and is increasing, and we expect this to continue to increase as more and more users come in at the new price point. So I think to answer your question, yes, I think with this spend level, we expect Kiddopia user base to be stable, any further decline to be stemmed, and we expect that we should start showing growth in the coming quarters back. And we also expect that we will increase the spend as we get the opportunity to do so.

Jinesh Joshi — Prabhudas Lilladher Pvt Ltd. — Analyst

Sure. One last question from my side. After Google allows the pilot to download the fantasy sports and rummy on its App Store, is it possible to share what savings can we expect in the customer acquisition costs as the organic discovery will improve meaningfully? Because if I look at this quarter, we have given the customer acquisition cost at about INR1,977. So how can — what quantum can this decline? And also how has been the response so far in terms of downloads post this [Indecipherable]?

Nitish Mittersain — Founder and Joint Managing Director

So look with the RMG apps being allowed on Google Play and our Classic Rummy went live just a week or 10 days back. So very early for me to share specific data or stats for you. We are also still optimizing and accessing the data. But I think if you zoom out, there are going to be two major benefits of promoting the app or advertising the app on Google versus offtake [Phonetic] as we used to do earlier. One is the friction for people to download an APK outside of the Google Play Store was a lot, and that gets eliminated when the user is downloading via Google Play. And therefore, the funnel should improve significantly, which means we should see lower cost per trials or cost per paid users, I would say, depositing user.

The other benefit of Google potentially is the discovery, right? There are millions of users that actually go to Google Play every day, and you could also see, like we see in Kiddopia and other apps which are there on the app stores, you could start seeing organic discovery and organic downloads for our RMG apps, which means overall blended costs should come down also significantly. So this will help in two ways. It will either increase the number of users we’re able to acquire, or it will decrease the cost at which we are acquiring, or most probably both. But I think next quarter will be the first quarter where we’ll be able to present specific data to you on this trial.

Jinesh Joshi — Prabhudas Lilladher Pvt Ltd. — Analyst

Sure, sir. Thank you so much and congratulations to Manish sir for the new venture. Thank you so much.

Nitish Mittersain — Founder and Joint Managing Director

Thank you.

Manish Agarwal — Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Deep Shah from B&K Securities. Please go ahead.

Deep Shah — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Yeah. Morning. Thanks for the opportunity. My first question is around this BGMI event that we had. So, yes, I think it’s very clear that the ban might not be overturned anytime soon. So what is the way out now? Do we hold these events somewhere else, or do we host other games as part of the same IP? What is the idea there? That is one.

Second, we had highlighted that premium will be a focus area for acquisitions. So any update on that? And the Halaplay integration now done, how should we think about Real Money Gaming? Are we still looking to add more apps to increase liquidity on that portal? So any update on that would be really useful.

Manish Agarwal — Chief Executive Officer

Hi, Deep. Thanks for asking. Manish here. How are you doing?

Deep Shah — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

I’m good, Manish. And also, all the best for on new role.

Manish Agarwal — Chief Executive Officer

Thank you. So you have asked three questions, let me answer them. BGMI ban is a hit for the entire eSports nascent market because when you have a very large game, it creates and spawns [Phonetic] massive amount of viewership, influencers, the entire ecosystem activity really keeps growing. And that’s where the eSports. Such events are not great for highly, very, very early days kind of an ecosystem which has a very strong tailwind of consumer behavior.

The good thing is there are three levers which Nodwin has. One, the gamers are really playing. And if you look at what is popular in India is the first-person shooter, and there is 100 million odd people who are really playing that. And these guys are now trying to look at playing Battle Royale [Phonetic] or playing Call of Duty Mobile or even if you look at PUBG New State, which is still there, so you see an audience which is playing.

The second level which we have is the South Asia where we run PUBG championships. The teams — local teams in India are very, very keen to be part of that South Asia Championships, and maybe we relocate them to Dubai or relocate them to some other because there are two parts of eSports: one is the tournament and — one is the players; and other is the tournament and viewership. I think the tournament and viewership can continue to happen through broadcasting, while the teams are located outside India. Viewership is not an issue. So that’s the second lever.

The third lever is our ability to create and leverage this whole excitement around getting entertained with gaming context is what we are looking at creating IPs like playground which are not based on live tournament content, but which are an on-demand content. So that’s how we are really continuing to work in this ecosystem to keep growing, while not even suggesting that BGMI is a setback for the whole ecosystem and the entire industry should work together to really create right framework so that these things can’t keep hampering the growth of eSports. So that’s on the BGMI part.

On the freemium part M&A, we are absolutely working on that. As you know that our M&A is something which doesn’t happen in haste. We like to really engage with the different, different teams, their thought process there, how they really look at growth levers, what’s their software ambitions, and then only we will move [Phonetic]. So these are very important capital allocation decisions for us. So we are having a very healthy pipeline, but we don’t have anything concrete which we are going to really announce today on the Freemium part.

On the Halaplay, OpenPlay, I think to link it to the previous question, we are very excited about the whole Google Play fee [Phonetic], and fantasy is one of the large volume consumer driver. With the platform integration of OpenPlay, the tech being in place, I think, as Nitish said, its early days, but we are very excited about leveraging OpenPlay’s tech platform and the opening of Google Play to see what could be done in Halaplay, though I would like to caveat that space is a very strong network effect space and there are very large incumbents. So again, how much of the benefit can accrue to us, we will only come to know in coming quarters.

Deep Shah — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Right. Manish, I think this was very useful. Thanks a lot, and once again, all the best.

Manish Agarwal — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Abhishek Kumar from JM Financial. Please go ahead.

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

Hi, good morning. And first of all, Manish, for your future endeavor and…

Operator

I’m sorry to interrupt you, Mr. Abhishek, but you are not clearly audible.

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

One minute. Yeah, is it better now?

Operator

Yes, much better. Please go ahead.

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

Yeah. So congratulations and all the best to Manish for your new role, and welcome to Sudhir to Nazara family. My first question is on guidance. Nitish, so first half of this year we have grown at 87% YoY. So that essentially looks like there is going to be some deceleration in the second half, which is traditionally the stronger quarter and also the fact that we have actually acquired WildWorks and some of the other acquisitions which were not there. So any specific areas where we are seeing trends slowing down, which has resulted in — or is there just some conservatism built in the guidance?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, no. So I think there are a couple of things here. One is if you see our numbers, usually Q3, Q4 have been larger numbers even in the previous year, which means that the base is much higher compared to Q1, Q2. Q2, in fact, for last year if you look, it was a much smaller number compared to the increase in Q3, Q4. The Q2 growth has been higher because with our gaming accessories business [Indecipherable] Q2 now becomes a key peak period, I would say, because of festivals. The major sales happen through Flipkart and Amazon, and they run these large sales and business really happens in this quarter, which means you are seeing Q2 catch up much faster in posting 104% growth, but it’s coming off a smaller base last year. And you’ve got a new product which peaks in this second quarter.

So I think that’s one key reason why you are seeing the 104% growth, but a 70%, 75% growth for the entire year. I think if you look at our overall business, even if you were to exclude Datawrkz and WildWorks, which have been our recent acquisitions, we would have grown 70% in this quarter and 58% in H1 over next year. So I don’t really see a deceleration happening, but I think more of normalization happening over the year.

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

Sure. That’s helpful. Now one question specifically on Datawrkz. The company used to grow at well over 100% before the acquisition, and I think the first half you have grown around 50%, 54%. Also, if we look at globally what is happening in ad-driven businesses like SNAP, for example, they’re missing estimates, dropping guidance, etc. So is there any challenge in that ad-tech world either because of demand or change in Apple’s policy? The impact are we seeing on Datawrkz growth as well?

Nitish Mittersain — Founder and Joint Managing Director

Hi. Again, I’ll answer on two, three fronts over here. One is even in Datawrkz business there is a seasonality. Q3, Q4 are usually larger than the first two quarters because you run into the festive period in the U.S. where the advertising spends are more. So I think that’s one reason.

The second is — the second reason really is growth lever, Datawrkz in the last few months has been — since the acquisition being a lot more aggressive in acquiring new clients, and we believe that growth will come in. Now you have to remember in a very, very large industry of U.S. of $700 billion advertising industry, Datawrkz is just a $15 million, $20 million business. So I don’t think macro levels will affect Datawrkz a lot today.

And also as advertisers cut spend, I think Datawrkz with its operations out in India provides a significant arbitrage and cost/benefit for many clients. So I think as efficiencies become more important, Datawrkz should benefit going into FY ’24 rather than suffer from the overall market climate.

So we remain very bullish about this business. We think there is a lot of scale up opportunities here, and we will continue to work very closely with the team over there to achieve this.

Abhishek Kumar — JM Financial Institutional Securities Limited — Analyst

Great. Thank you so much. I’ll come back in the queue for any follow up. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ankit Dev [Phonetic] from JM Financial. Please go ahead.

Ankit Dev — JM Financial — Analyst

Hello.

Nitish Mittersain — Founder and Joint Managing Director

Yeah, hi.

Ankit Dev — JM Financial — Analyst

Hi. So I have a couple of questions. One, if you can just help us with the revenue split in Nodwin as to OML and D2C. And the other one being, there’s one line item on balance sheet as to borrowings of INR106 million. So can you just help us with that?

Manish Agarwal — Chief Executive Officer

Yeah, let me take the second one quickly. Manish here. Hi.

Ankit Dev — JM Financial — Analyst

Yeah. Hi, Manish.

Manish Agarwal — Chief Executive Officer

On the borrowing part, there is a brand scale, which is our gaming accessories business which has a working capital requirement always because you are ordering your stocks before and you are paying to your manufacturers and all that stuff. So that company would continue to have working capital requirement and that’s what we see in the balance sheet items which in other parts of the Nazara’s business is not required. So that’s the addition to the balance sheet line item.

On your first question which was around — sorry, I forgot. Split of Nodwin. So on the split of Nodwin, we have always given you 2 splits, media and non-media, and we do not want to, at this juncture, give you further splits because each of those splits are still very, very small, and we do not want to really get into any more data information till we have very strong, tangible, predictable, scalable levers proven to ourselves. And hence, that’s point one.

Point two, the true value creation in Nodwin is on two points: one, how do you really create and build IP and see the media and the numbers really growing because that’s where your elasticity on margins will happen and your operating leverage will happen. Second, the IP which you build has access to community and how do you leverage the access to community through more and more community-related transactions. These are the two growth essentially value creation drivers and operating leverage drivers in future.

Media is something which we started looking at it four, five years back, and hence we have been giving that. The other leavers, access to community, as we concretize it and formalize it more enhanced [Phonetic], then we will start splitting it but not — for now, we will continue to give you media and non-media.

Ankit Dev — JM Financial — Analyst

Okay. Thanks for that. Just if I can squeeze in one more. So there is a steep rise in other income line item during this quarter, so any reason for that?

Manish Agarwal — Chief Executive Officer

Can you speak a bit loudly, please?

Ankit Dev — JM Financial — Analyst

Yeah. So there is a steep rise in other income during the quarter.

Manish Agarwal — Chief Executive Officer

Yeah. The other income is you’re seeing a spike because of our investment in rights [Phonetic] media. There was an external investor that came in at a much higher valuation. So that investment has been marked up, which has been included in other income.

Ankit Dev — JM Financial — Analyst

Okay. Thanks, Nitish. Thanks, Manish.

Manish Agarwal — Chief Executive Officer

Yeah.

Operator

Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain — Dolat Capital Market Pvt. Ltd. — Analyst

Yeah, hi. Thanks for the opportunity. I have a couple of questions. Firstly, on this Animal Jam business, it’s been some time this business is integrated now. So any input in terms of how the metrics or the strategy have evolved ever since it has come into our fold? And what growth or margin thought process we can think of in this business in the current fiscal?

Secondly, on the — to the question specific to CEO. Basically, he is coming from a — if my understanding is right, coming from a background from a rummy kind of a business which he has also created. While that kind of a business for us right now is pretty small, so any thought process in terms of how this would change with Sudhir coming in? And definitely, that person related to Manish, that given that we, as an organization, are acting very powerfully as a VC plus P [Phonetic] kind of a situation in this gaming ecosystem. And with most of this transaction happening with Manish being around, so how we try to fill up this capability which probably would see a gap once he is not around? Thank you.

Nitish Mittersain — Founder and Joint Managing Director

Sure. So let me answer all of them one by one. So on WildWorks, as you know, the acquisition has been fairly recent, less than a couple of months back, and we are in initial days of understanding and integrating our process into that business. What we have already achieved well, I would say, is do some very crucial hires over there. For example, Director of Data Engineering was missing and data analysis was missing, and we found a very good resource who has already joined and started to throw up a lot more in-depth data, I would say, which can be actionable by us as well as the WildWorks team. So I think that’s one thing we started. We started working with the UAE team at WildWorks and also naturally with the way the transaction was done WildWorks team is now able to refocus again a lot onto the [Indecipherable] product, so small things like improving the — increasing budgets for customer service, bringing down turnaround time to customer responses, etc., have started happening, and already a lot more updates have started happening regularly. And we are already starting to see an uptick on that business. We did — in this September, the business did INR65 million in revenue and INR12 million in EBITDA. And we believe this [Indecipherable] the business should grow well because it’s also the festive Christmas season in the U.S.

I think WildWorks has a lot of potential to grow, which is the reason we really went into it. But it’s very early to guide specific numbers. We would like to get a lot more grip ourselves before we start guiding specific numbers there. But we remain very excited with the opportunity. The team is fantastic. The IP is fantastic. It has a very strong community of users. If you check on Instagram or Facebook or any social media, the fans and community is very engaged. And I think that’s a great foundation to build on.

On the second question with regard to Sudhir coming in from a RMG background and how that will impact our RMG plans. I think we will, of course, surely engage with Sudhir, take his inputs on direction RMG is going in and how Nazara can scale up here. We’re also very keenly looking to watch how the impact of Google Play — positive impact or Google Play for our products, and we will evaluate this alongside our earlier-stated objectives of getting clarity on GST, etc., before we continue to scale this business. Right?

Third, there was a question around Manish on M&A. So I think on the M&A bit, one is that me and Manish have worked very closely together on all M&A deals right from the start. And I think I will be taking the lead there on the M&A side, at least from a structuring, valuation, network perspective. The good part is over the years, Nazara having executed many M&A successfully, we have built a brand. We’ve also built a very strong soft asset in terms of how to be able to work with these teams and scale the business. And I think that is already attracting a lot of inbound M&A approaches to us. So our funnel has really increased. That said, also we are starting to work with a lot of investment bankers, not only in India but outside, because we have our scale — our potential scale of acquisitions is also increasing and that is bringing in a lot of interested parties to the table.

Lastly, we have — as you would remember, we’ve also become an LP in some gaming funds, like Griffin Partners in the U.S. and BITKRAFT in Europe, which also provide us good funnel for us to invest in or potentially acquire companies. So I think, I will be really taking the lead on the M&A side. Sudhir will work with me. We have a strong team. And at some point of time, we may also bring in a dedicated M&A head into the organization.

Rahul Jain — Dolat Capital Market Pvt. Ltd. — Analyst

Sure, sure. Thanks for all those answers. Best of luck, Manish, for your future venture. And I think you’re part of this ecosystem, and we never know how our paths cross again even for Nazara and for the larger ecosystem. Thank you and best of luck, and congratulations on your new venture.

Manish Agarwal — Chief Executive Officer

Thanks, Rahul. Thank you. Thanks for all the support and interaction.

Operator

Thank you. [Operator Instructions] The next question is from the line of Aparna Shanker from SBI Mutual Fund. Please go ahead.

Aparna Shanker — SBI Funds Management Pvt. Ltd — Analyst

Yeah. Congratulations on good set of numbers, Nitish. Just a small bookkeeping question. What is included in media and what is included in non-media? I’m not looking at granular data, just the header.

Manish Agarwal — Chief Executive Officer

Aparna ji, hi. Manish here.

Aparna Shanker — SBI Funds Management Pvt. Ltd — Analyst

Yeah, congratulations.

Manish Agarwal — Chief Executive Officer

Thank you, ji. What is included in media is any money which collects from the platforms such as OTT platforms, linear TV platforms, that’s the money which comes in media. What generates that revenue? Your live content, your on-demand content, your talent content — talent gaming. So these are the things which you really look at in the part of media.

And anything which is there on the non-media, it comprises of D2C, it comprises of white-label events, it comprises of any brand sponsorship from your own IP, and these are the three big components from the non-media. We also run [Phonetic] the whole infrastructure for team and everyone. That’s a very, very small component. So that’s the fourth one. So these four things comprise of non-media part and the media part I explained to you.

Aparna Shanker — SBI Funds Management Pvt. Ltd — Analyst

Yeah. Thank you. Thank you so much.

Manish Agarwal — Chief Executive Officer

Thanks.

Operator

Thank you. [Operator Instructions] The next question is from the line of Raj Joshi [Phonetic] from Ace Securities [Phonetic]. Please go ahead.

Raj Joshi — Ace Securities — Analyst

Hello.

Nitish Mittersain — Founder and Joint Managing Director

Yeah, hi.

Raj Joshi — Ace Securities — Analyst

Thank you, sir, for the opportunity. Sir, there is an impairment loss of around INR76 million. May I know it is related to what?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, this is related — we took a write-down on our another investment partially. And this is the impairment of that.

Raj Joshi — Ace Securities — Analyst

Okay. And sorry if this has been asked, but what level does eSports starts making money as we had a very low EBITDA margin despite a substantial revenue growth?

Nitish Mittersain — Founder and Joint Managing Director

Yeah. Well, eSports can start making money as of today also it’s up to the direction we want to take that business in. Like I stated earlier, I think being a nascent market, which will become a very large market and Nazara being a market leader over there and Nodwin being a market leader over there, our priority today is to really drive scale and achieve market leadership. The only guardrail we have put is we do not want to achieve the same by going into losses. So you will never see large losses being incurred to achieve market leadership. But trying to maximize margins or increase margins at this time at the cost of growth may also not be a very good idea. So we are trying to find the right balance over here, tThe priority that we need to increase our market leadership.

Also, what is important to understand is, as the eSports community for us grows, our IPs become larger, the elasticity on value that we can generate will be much higher, and this eventually should turn into a very high-margin business. Long term it’s not a low margin business. Why you see low margins today is because of reinvestment into growth. And as we will achieve scale, you will see much higher margins.

Raj Joshi — Ace Securities — Analyst

Thank you, sir. That’s it for my end.

Operator

Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

Nitish Mittersain — Founder and Joint Managing Director

Sure. I would once again like to thank all of you for joining the call, and I hope we have been able to address all your queries. If there is any further information, kindly get in touch with Anupriya or SGA IR firm.

I would like to sign off by saying that the opportunity in India’s gaming landscape for Indian companies to dominate the global gaming landscape is huge, and I think Nazara has a fantastic foundation to continue building on. As the incoming CEO from December, I’m very excited about the opportunity, and I would like to sign off with a quote from my favorite poet, Robert Frost. The woods are lovely, dark and deep. But we have promises to keep. And miles to go before we sleep and miles to go before we sleep. Thank you very much.

Operator

[Operator Closing Remarks]