Nazara Technologies Ltd (NAZARA) Q3 FY23 Earnings Concall Transcript

Nazara Technologies Ltd (NSE: NAZARA) Q3 FY23 Earnings Concall dated Jan. 25, 2023

Corporate Participants:

Nitish Mittersain — Founder and Joint Managing Director

Anupriya Sinha Das — Head of Corporate Development

Sudhir Kamath — Chief Operating Officer

Analysts:

Karan Taurani — Elara Capital — Analyst

Rahul Jain — Dolat Capital — Analyst

Abhishek Kumar — JM Financial — Analyst

Jinesh Joshi — Prabhudas Lilladher — Analyst

Mukul Garg — Motilal Oswal — Analyst

Deep Shah — Batlivala & Karani — Analyst

Nitin Jain — FairView Investments — Analyst

Ankit Zope — JM Financial — Analyst

Pranav Mashruwala — Dolat Capital — Analyst

Presentation:

Operator

Ladies and gentlemen good day and welcome to the Nazara Technologies Q3 Nine Months FY ’23 Earnings Conference Call, Hosted by Elara Securities Private Ltd. [Operator Instructions].

I now hand the conference over to Mr. Karan Taurani. Thank you, and over to you sir.

Karan Taurani — Elara Capital — Analyst

Thank you, Mike. Hi, everyone. Good morning and welcome to this call of Nazara Technologies Q3 FY ’23 and nine month results con call. Please join me in welcoming the management of Nazara Technologies, which is represented by Mr. Nitish Mittersain, who is the Joint Managing Director; Mr. Sudhir Kamath, who is the Chief Operating Officer; Mr. Rakesh Shah, Group Chief Financial Officer; and Ms. Anupriya Sinha Das, who is the Head of Corporate Development.

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

Nitish Mittersain — Founder and Joint Managing Director

Thank you. Good morning everyone and a very warm welcome to all of you to Nazara Technologies Q3 and nine month FY ’23 earnings call. I would like to start by wishing all of you a very happy new year and a fantastic ’23 ahead. I have with me Sudhir Kamath, our Chief Operating Officer; Rakesh Shah, our Chief Financial Officer; Anupriya Das, our Head of Corporate Development; and SGA, our IR firm.

We have uploaded our results presentation on the exchanges, and I hope everyone has had the opportunity to go through the same.

Coming straight to our financial performance, we [Technical Issues] of INR8,017 million in nine months FY ’23 which is up 80% year-on-year. Our EBITDA came in at INR820 million for the nine months and a PAT of INR558 million, which is up 22% year-on-year. For Q3 FY ’23, we generated revenue of INR3,148 million, up 69% year-on-year. Our EBITDA came in at INR306 million and a PAT of INR224 million, which is up 31% year-on-year. This performance is in line with our stated goal of driving past growth through reinvestments into the businesses, while maintaining healthy profitability and positive cash flows.

As we anticipated earlier and also mentioned in the last earnings call, it is heartening to see that our flagship product for young children, Kiddopia came back on a growth path. Kiddopia subscribers grew by 3.7% in this quarter, while revenue grew by 21% aided by the price hike we had taken in the earlier quarter. We also undertook another price hike in this quarter on December 1, and we have not seen any material negative impact in our core KPIs that we track, and this makes us confident that the benefits of this action will accrue to us in the coming quarters.

I also want to highlight that our recent acquisition of Datawrkz in the ad-tech space is performing well and has seen its revenues increased by 55% year-on-year to INR1,182 million for the first nine months of FY ’23.

Businesses in Nodwin, Sportskeeda, Nextwave and OpenPlay continue to perform well, and we are working closely with the WildWorks team to ensure that they get on to a fast growth track at the earliest.

A lot of the work we do with these businesses, is instilling the Nazara DNA in each of them. This includes focus on profitability, a long-term mindset and enhanced governance. As long as we continue to drive these aspects, I fully believe each of these businesses will continue to drive long-term compounding of value for us.

We have also made several key hires across our businesses over the last few months, as we see the present market downturn as a good opportunity to attract good talent for ourselves. We have recently created a special projects team, that will work closely to analyze and execute new opportunities that we want to pursue, including new tech trends such as Web 3.0 and Generative AI, with an intent to use them to our advantage across our businesses

We also continue to evaluate various M&A opportunities across the five verticals we operate in, and we will not hesitate to make fresh investments if opportunities fit our value-creation framework.

I look forward to the continued support of all our stakeholders, as we continue to pursue our long-standing commitment of Nazara playing a significant role in India’s journey towards becoming a global gaming powerhouse.

Now, I will request Anupriya to talk about each of the businesses in detail, and thereafter, we will be happy to answer all your questions in detail as well. Over to you, Anupriya.

Anupriya Sinha Das — Head of Corporate Development

Thank you, Nitish. Good morning everyone. In terms of our segment performance, eSports contributed to 49% of revenue, while gamified early learning and ad-tech contributed to 24% and 14% of revenue respectively. Freemium and skill-based real money gaming contributed to 2% and 5% respectively in nine months FY ’23.

Now moving to eSports; for our eSports vertical which consists of Nodwin, Sportskeeda and Publishme, our revenue grew by 84% for nine months FY ’23 and 40% for Q3 FY ’23. During the same period, revenue grew by 98% in nine months FY ’23 and 53% year-on-year growth in Q3 FY ’23. Nodwin witnessed growth in revenues led by offline events such as DreamHack, NH7 Weekender, as well as creation of new international IPs.

EBITDA margins in Nodwin were lower due to significant investment made in creating these new IPs, as well as negligible margin contribution by the gaming accessories business that is still in high growth phase. Benefits of operating leverage will kick in, as we scale revenues. Our own IPs and media rights revenue to stream — to show non-linear EBITDA growth as IAPs scale. Also the B2C business will become even more margin accretive, once brands are well established.

Revenue growth of 59% in nine month FY ’23 compared to nine month FY ’22, owing to strong growth in revenue from the U.S. market, where Sportskeeda scaled its video business, [Technical Issues] in core American sports like basketball, American football [Technical Issues]…

Operator

Ms. Anupriya. Can you hear us?

Anupriya Sinha Das — Head of Corporate Development

Hello.

Operator

Yes mam, we can hear you now.

Anupriya Sinha Das — Head of Corporate Development

Yeah was I not audible in the meanwhile [Phonetic]?

Operator

Yes mam.

Anupriya Sinha Das — Head of Corporate Development

Okay, so should I…

Nitish Mittersain — Founder and Joint Managing Director

Just continue.

Anupriya Sinha Das — Head of Corporate Development

[Technical Issues] 8% growth in [Technical Issues] in December 2022 versus December ’21, while ad time spent also saw a significant increase from two minutes 48 seconds in Q3 FY ’22, to five minutes three seconds in Q3 FY ’23.

Gamified early learning, this vertical consists of Paper Boat and WildWorks. As Nitish mentioned, we are very excited to report that Kiddopia is back on the growth track, both in terms of subscriber growth and revenue. Subscriber growth for the quarter has been 3.7%. We’ve increased marketing spend to $3.4 million in Q3 FY ’23, while maintaining CPT at $37 per user, through channel optimization for the user acquisition spend.

Kiddopia had also taken another price hike in the beginning of December, and we have not seen any of our key metrics regress [Technical Issues]…

Operator

Sorry to interrupt ma’am, your voice is breaking in the between, the words are not clear. If you could speak repeat the sentence once again.

Anupriya Sinha Das — Head of Corporate Development

Sure. Kiddopia has taken another price hike in the beginning of December and we have not seen any of our metrics regress. In fact, churn has declined from 6.5% in Q2 to 5.9% in Q3. Our revenue growth for Q3 FY ’23 has been 21% year-on-year.

Like Nitish mentioned, WildWorks is a work in progress, we have reported revenues of INR298 million, with EBITDA of around INR19 million in nine month FY ’23. We are working on optimizing user spends across channels and working on product level updates to drive higher engagement and monetization.

Moving to the ad-tech segment, the ad-tech revenue grew by 55% year-on-year in nine month FY ’23. 31 new clients were added in nine month periods, contributing to 31% of total revenues during the same time.

I’ll now move to the Freemium segment, the revenue grew by 38% in nine month FY ’23 over nine month FY ’22, driven by 48% growth in ad revenues and 14% growth in IAP revenues. EBITDA margin increased to 29.9% in nine month FY ’23 on account of revenue growth, as operating expenses remained constant. We are in the process of ramping up the core team in NextWave to help drive the next phase of growth for our business.

Moving to the skill-based real money gaming asset called OpenPlay, revenue growth of 28% in nine month FY ’23, as OpenPlay works on optimization of the product. We also know that the new proposed IP rules, which are the first steps towards clearer regulation of this sector. As part of the public consultation, we have shared our feedback on some aspects that need further clarity, but overall this is a great step.

Moving to the telco, for nine month FY ’23, the revenue has declined by 16% while EBITDA grew by 2%. We have been able to continue optimizing cost in this segment to drive higher EBITDA.

I will close my remarks here and would like to open the call for Q&A, and request Nitish, Sudhir, and Rakesh Shah to join me for the Q&A.

Questions and Answers:

Operator

[Operator Instructions] We have the first question from the line of Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain — Dolat Capital — Analyst

Yeah, am I audible?

Operator

Rahul your voice is not very clear, if you will go off the speaker-phone once. Okay, Mr. Rahul has left the queue.

[Operator Instructions] We have the next question from the line of Abhishek Kumar from JM Financial. Please go ahead.

Abhishek Kumar — JM Financial — Analyst

Yeah hi, good morning, everyone, and good to see growth back in Kiddopia. The first question I have is on Kiddopia. First, it looks like the growth has come at the expense of margin, which is not bad, but I just wanted to understand, we have been taking price hikes for last couple of years. However, the blended ARPU seems to be quite stable. So just wanted to understand what is driving this? And second, are you now comfortable with this kind of CAC, which seems to have stabilized, and therefore we can push for more user acquisition through higher marketing spend?

Nitish Mittersain — Founder and Joint Managing Director

Hi Abhishek. This is Nitish. I will answer both your questions. So I think if you see the ARPUs, right, the most recent price hikes have happened in the last quarter and starting of December. What is [Technical Issues] to understand is, that the price hikes impact only new users that we acquire and not on existing subscriber base. So, you will see a trend up of ARPUs over a period of time, which you are actually seeing. If I look at Q3 FY ’21, we were at $6.3 average monthly ARPU has now increased to $6.8 on an average in Q3 of FY ’23.

We are seeing a gradual increase, and I think back-to-back price increases that we’ve done in the last few months, which probably show a faster increase in ARPUs in the coming year. I think that’s one point.

I think on the CAC side, we are quite comfortable with the current range of CAC, especially adjusted for the price hikes that we have done. If you also see, our CAC was $39.3 in Q1 of FY ’23, on a spend of $2.7 million. We increased our spend to $3.1 million in Q2, and the CAC actually came down to $37.9. And in the current quarter, the CAC has actually come down to $37.3 on an increased spend of $3.4 million. So, I think both these trends are very positive, right. We are increasing our marketing spends quarter-on-quarter and at the same time being able to optimize our CAC, which will also lead to margin expansion.

So I think overall, we are quite satisfied with the way things are playing out for Kiddopia, and are very hopeful that this growth will pick up pace in the coming quarters.

Abhishek Kumar — JM Financial — Analyst

Great, thanks. Just to clarify before I move on to my next question, should we build in the same level of marketing spend going forward every quarter, or would you increase or decrease it as you go along?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, we would like to increase it, provided we are within our guardrails of our CACs. So I think if the opportunity does arise and we are able to efficiently spend the money to acquire users, we will surely increase it.

Abhishek Kumar — JM Financial — Analyst

Great. Now my next question is on eSports. So sequentially, the growth was not very strong given Q3 is traditionally the seasonally strong quarter. And my understanding is, you can correct me if I’m wrong, is because last quarter was seasonally strong for the accessory business. So given that accessory business is not very margin accretive, there should be a strong margin expansion, which has not come through. So if you can just explain me why the margins have still not gone up and when can we expect margins to go back to historical levels of 6% to7% in this business?

Nitish Mittersain — Founder and Joint Managing Director

So I think there are multiple things happening here at Nodwin, which is kind of suppressing the margins in the interim period. One is, even in this Q3 quarter, we’ve seen revenues come from the gaming accessories business, as well as some of the new IPs that we have launched, such as Playground, which remain today margin neutral, I would say. So, there is a — significant growth come from those areas, which have not contributed to margins.

The other aspect is, really speaking, many of the real-world events are also coming back after a long time and they will take, I think, a few quarters to get back completely up to speed in terms of efficiencies. We have introduced new games in these events because of some of the games that were kind of banned earlier in the year. We’ve focused on new games and new development of IPs around that. So I think that has also kind of hurt the margins a bit.

Our focus on Nodwin right now is to develop multiple businesses around that, putting the gamers in the center and make sure that we are able to, through business, kind of cater to his needs on a 360 degree basis. So from our overall Nazara portfolio perspective, the way we are looking at Nodwin is, to continue to drive market leadership in the key areas that they’re operating in, while many of our other businesses right now focus on contributing to margins.

So I don’t have immediate visibility on when margins of Nodwin are going to really come back to where they were or enhanced [Phonetic]. So I would not like to give any guidance.

The last point here is also for addressing a lot of these areas that Nodwin has got into. Nodwin has been hiring some senior teams and key hires over there, which have also kind of added costs on the team side [Technical Issues] And so I would think of these as medium to long-term investments and we are very happy to support this business to continue to grow strategically for us.

Abhishek Kumar — JM Financial — Analyst

Great. That’s very helpful. Thank you and all the best.

Operator

Thank you. We have the next question from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead.

Jinesh Joshi — Prabhudas Lilladher — Analyst

Thanks for the opportunity. Sir, I have a question on eSports. I think recently Government of India recognized eSports as a part of a multisport event. So basically what is the implication here? I mean, will there be any budgetary support from the government here to train the players, or is this move basically just a veto, so that more people take up professional gaming as a career option?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, hi Jinesh. So I think any step taken by the government to recognize eSports is a highly positive step for us, right. I think the multisport recognition is just one step towards what we would really like to see eSports recognized as a standalone sport on its own feet. And I think we will get there sooner or later, and this is a good step towards that. I think just categorizing and calling eSports as part of a sport, right, allows a whole ecosystem to build around it, which includes professional athletes, better training, serious participation in global events which then would lead to increase in fan base in India, which would mean increase in viewership potentially, helping us on media rights, etc. So I think it’s a whole ecosystem building, and this is certainly a step in the right direction. But there’s a lot more we want to happen.

Jinesh Joshi — Prabhudas Lilladher — Analyst

Sure sir. Sir, my second question is on OpenPlay, if I look at our MAU, they have declined from 27,000 odd in September to approximately 23,000 odd in December, and this is despite the fact that Google has now allowed Rummy App to be listed on its Play Store. So is there any specific reason for this decline, which you would want to highlight?

Nitish Mittersain — Founder and Joint Managing Director

I think our focus has been on kind of — on OpenPlay, on deep-diving on our valuable customers and really enhancing their ARPUs and setting our systems and our processes and our funnels right. So that as we scale our user base, we are very efficient in our operations. The update on the Google Play really is, it’s a work in progress. We have launched our Google Play App. However, there was a lot of friction on the KYC process, which means there is still some enhancements being done there for us to really be in benefit of it.

Early signs are very positive. We’ve seen that the quality of customers we are getting from Google Play — the ARPUs are much better. We are recovering kind of 20% of our first time depositor cost on Google Play App, versus we normally might recover 10% in the first month when it’s off Google Play. So we’re very positive about this, but this hasn’t gone mainstream yet for us. We are hoping that maybe by next quarter, we will really be able to scale up the Google Play opportunity and start showing better results from there.

Jinesh Joshi — Prabhudas Lilladher — Analyst

Sure sir. One last question if I may. Sir, can you give us some color on how WildWorks has been doing, especially in terms of CPI? Because I think it had subscriber base of about 1 lakh with an ARPU of about $8 to $8.5. So has there been any improvement here, like we have seen for Kiddopia? And any specific number you would like to give on marketing spend here as well?

Nitish Mittersain — Founder and Joint Managing Director

In WildWorks, I would say it’s completely a work in progress right now. We are trying to bring a lot of the learnings of Nazara into WildWorks. We are working very closely with the team. The first thing we did was, bring in someone senior in the data analytics team. There were a lot of fixing to be done in terms of how we are capturing the data. A lot of the data that we were capturing was not — earlier was not accurate. So I think they have been kind of fixing the hygiene over there. We’re also creating a strong product roadmap, that we feel will be valuable to the end consumer. And lastly, we are also evaluating our pricing strategy over there, because WildWorks has not increased prices for a really long time, and it’s a low-hanging opportunity there.

So all-in-all, I would say, there’s still a lot of work going on and therefore a lot of the data points that we have, or that we have shared in the past also, right, may not be the right reference point. I think we are hopeful that by next quarter, we will be able to show more accurate data over here, as well as positive momentum and traction.

Overall, this quarter’s contribution in revenues has been strong for us, and we’ve seen good growth. But underlying, we see a lot of opportunities where we can work on and improve. We continue to be very excited about this opportunity with Animal Jam being a fantastic IP, and we’re very hopeful that in FY ’24, we will maybe see the Animal Jam and WildWorks perform very well with us.

Jinesh Joshi — Prabhudas Lilladher — Analyst

Sure sir. Thank you so much, and all the best.

Nitish Mittersain — Founder and Joint Managing Director

Thank you.

Operator

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

Rahul Jain — Dolat Capital — Analyst

Yeah, thanks. Sorry, I got dropped earlier. Firstly on the Kiddopia side of the business, since now the churn is stable — declining rather despite the price hike and CAC is also getting optimized, now what kind of growth one should see in the subscriber? What kind of anticipation one should build, going into this calendar or next fiscal, any input on that would be helpful?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, Rahul, it’s a bit early for us to make forward guidance on that, because this is the first quarter where we have kind of come back on growth. But like you rightly said, all the parameters are indicating a lot of potential, declining cost per trial, increasing ARPUs and reducing churn rate. The team has also done a lot of work on the product side. So I think it’s not just the pricing strategy, but also the efforts in the last year we have put in on the product that has started to show some benefits.

So, I think right now the guidance for the team is, let’s not be in a large hurry to spike spends. Let’s just keep doing what we’re doing with our guardrails on, as long as we are acquiring quality users at the right price that we’re willing to pay, we can surely increase the amount of money that we’re spending, which as you can see also in the last three quarters, every quarter we’ve gone from $2.7 million to $3.1 million to $3.4 million in each quarter, you’ve seen about a 10% increase in spend every quarter and we will try and continue to do that.

Rahul Jain — Dolat Capital — Analyst

Right. And on the profitability side, somehow this investment in the Nodwin and also the mix change that has happened, you said difficult to gauge how these things will keep moving. In that light, will it be a better idea to share the Nodwin core business margins separately, to understand how that business is shaping up, and either identifying the revenue and margin for OML, Wings, Playground as a separate data. Probably that would give us a better idea? And also, any change in seasonality of this business that you foresee now, given that offline is also on, and now some of these businesses may not be as seasonal. So what should be the — how we should see the seasonality here, in Nodwin?

Nitish Mittersain — Founder and Joint Managing Director

Sure. So I think two things, right, the business mix of Nodwin right now is changing very rapidly quarter-on-quarter, because there have been multiple new businesses and new business lines that have been introduced. We would like to see it stabilize before we start carving out and sharing individual line items but surely in the coming quarters, we will intend to do that.

In terms of seasonality, I think it’s broadly the same, H2 will always be more than the H1 in terms of revenues. Although there will be some balancing because of the game accessories business which has Q2 as the largest driver of revenues. So I think this has normalized to a certain extent, but this October, the Q3 and Q4 is a time when most of the physical events also take place, because of the better weather, etc in the country. So I think broadly, the seasonality will still continue.

Rahul Jain — Dolat Capital — Analyst

Right, right. And Animal Jam, sorry I missed your comment. So when we see this margin and growth coming back into this business the way we would like it to?

Nitish Mittersain — Founder and Joint Managing Director

Like I said earlier, we are very actively working with the team on multiple fronts. And I think I would give it one or two quarters to stabilize, before we have very clear visibility on growth. But the more we work on this product, the more we see low-hanging opportunities for ourselves. So we will remain convinced that this was a great IP to buy, and there’s a lot that Nazara will be able to do here. Hopefully by next quarter I will give more visibility — more specifics around Animal Jam.

Rahul Jain — Dolat Capital — Analyst

So you are saying for one or two quarters probably, the margin would be low and growth would be stable and then probably some of the actions that we’re taking would fructify over the coming period?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, because we want to make sure that we get the hygiene right. We will have full grip on data. We have the right customer acquisition channels. Now we have completely given user acquisition of Animal Jam to Datawrkz, which is an internal team now starting to work very actively on.

So, I think the whole idea is before we start really scaling this business, we want to make sure we have a complete grip on all the levers of the business, and then we would like to do that. So I think by next quarter, we should be able to at least be very comfortable ourselves that we have all levers in place. We have kind of addressed all the low-hanging opportunities. And then once we are satisfied with the potential LTV, lifetime value, and the cost of customer acquisition across multiple channels, we will start scaling this business up.

Rahul Jain — Dolat Capital — Analyst

Sure. That’s very helpful. Lastly, if I can just squeeze in one, which is on the ad-tech side of the business, here we are seeing consistent growth but margin is coming off a bit because of some pricing pressure and given the macros we are in?

Nitish Mittersain — Founder and Joint Managing Director

No, we’ve not seen pricing pressure, but I think a lot of new customers have been added. As new customers scale, we will see overall better margins. So I don’t think it’s much to do with pricing pressure. The company has grown fast. Introductorily we do better pricing for customers till they get to a certain scale. So I think that’s what’s being demonstrated on the margins.

Rahul Jain — Dolat Capital — Analyst

So 8% to 10% is the range that we should keep in our mind for this business?

Nitish Mittersain — Founder and Joint Managing Director

At this point of time yes, I think there will be many ways for us to optimize and increase these margins, we will focus on this in the coming year.

Rahul Jain — Dolat Capital — Analyst

Okay, thank you. I think you’ve done exceptionally well on the gaming side, business side and these metrics are very encouraging. Hope you have a very great year. Thank you so much.

Nitish Mittersain — Founder and Joint Managing Director

Thank you, Rahul.

Operator

Thank you. We have the next question from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead.

Mukul Garg — Motilal Oswal — Analyst

Thank you very much. I hope my audio is clear? Nitish, good morning. [Indecipherable] fairly broad-based growth and a good job this quarter. Had a couple of quick questions. First, following upon Rahul’s comment on Nordwin, is it possible to kind of give some sense of what was the core growth in Q3? Because the Q3 historically is the strongest quarter, but this time you had Master Series in Q2, you had accessory seasonality, which kind of played out, while Q3 NH7 and multiple other offline events also started. So how should we look at seasonality — Q4, I mean, in past has been the low season because of exams, kind of issues — which kind of act as a headwind. Has that been going away now and will it be more broad-based?

Nitish Mittersain — Founder and Joint Managing Director

I’m sorry, your last sentence kind of broke up. Can you just repeat that, Mukul?

Mukul Garg — Motilal Oswal — Analyst

So, with the kind of performance in the Nodwin business, be more broad-based than Q3 heavy kind of impact given the multiple events which will be there across the year in the offline model?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, I think more or less, yes. I would say Q4 for example with more events will also do better. Q1, Q2 will also see better. So I think overall, like I was saying earlier as well, we will see more normalization across quarters. We still think at least into FY ’24, Q2 will be a larger share but the percentage may drop vis-a-vis H2 versus H1 and expense may normalize a bit. The mix is rapidly evolving. We think events will continue to grow, especially now with — as we were discussing earlier, with the better recognition of eSports, you will see much more audience coming in, much more players coming in. So I think overall, we are very positive on physical events, online events, media rights, as well as the other businesses that Nodwin has got into.

Holistically, I think this business should continue to grow into FY ’24. At the right time, we will, Mukul, also focus on margins. It’s not that we don’t want to make margins on this business and we will keep a strong eye over there and see whatever we can do, but at the right time.

Mukul Garg — Motilal Oswal — Analyst

I completely agree with you. Just the second part on — following up on the [Indecipherable]. SROs, obviously, there has been a lot of fear in the industry due to the kind of mixing up of RMG with eSports, how receptive is government to kind of look at [Phonetic] that separately and not do a mandatory — your registration or validation of the users?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, I think we’re obviously engaging with the government and the entire industry is engaging with the government. I think a lot of the regulation right now is focused on where money-in, money-out is involved, right, and which really focuses the entire activity or the regulatory activity on the skill-based RMG side. And I think that’s really the key focus. I think some better definition comes out in the regulation once it’s out, will be good. But I don’t see eSports or our freemium business or other businesses impacted by this regulation, I don’t think they are the target at all.

Mukul Garg — Motilal Oswal — Analyst

No actually. You expect kind of the regulations, final ones to come out a bit differently from the current clubbing?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, I mean they put out — for public opinion feedback including the industry, and I’m sure they’re incorporating — reviewing all suggestions and hopefully the final guidelines will address concerns that have been raised.

Mukul Garg — Motilal Oswal — Analyst

Sure. One clarification on Kiddopia, how should we see that flow through of the price hikes, and the new users kind of coming into revenues, will the average pass through happen over a six-month period or will it be a longer impact as the previous pricing kind of gets into revenues?

Nitish Mittersain — Founder and Joint Managing Director

I think as you are seeing quarter-on-quarter, there has been increase in ARPUs. I think over the next couple of quarters at least you will continue to see that because, we’ve increased — we took on price hike in the previous quarter and one price hike in this quarter. So I think we’ve made some good 30% increase over that, which is surely going to play out.

As new subscribers come in at higher price, this will get sold [Phonetic]. Therefore we, for example, aggressively scale up our marketing spend and we are let’s say able to raise our marketing spends, the ARPUs are also raised faster because the mix of the old users versus new users will change. But I think trend wise, we are absolutely in the right direction in Kiddopia.

Mukul Garg — Motilal Oswal — Analyst

Sorry if I may ask [Phonetic] one last question on the Freemium side, especially that — not too much discussion happens on that, your BAUs and MAUs have been fairly stable there now. I know the dynamics are not extremely favorable in that space, but you have been able to maintain a fairly high profitability there. Why not pour that back into higher advertisements to drive topline growth, given the pace at which the industry is growing?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, we are, Mukul, making many changes and enhancements to that product right now. And you’re absolutely right, in the coming months, we are very keen to increase our marketing spend and scale up the user base there. There are a lot of new updates that are going to be coming out. After that, we are already starting to actually experiment with advertising. Again, we have Datawrkz, setup a focused team to help us achieve that. And one of our targets is to see how we can really scale WCC to the next level and not remain kind of plateaued, as it has been in the past.

Mukul Garg — Motilal Oswal — Analyst

Super. Great, thanks a lot, Nitish, and all the best for rest of ’23.

Nitish Mittersain — Founder and Joint Managing Director

Great. Thank you, Mukul.

Operator

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

Deep Shah — Batlivala & Karani — Analyst

Yeah, good morning. Thanks for the opportunity. Nitish, if you could just explain or rather kind of highlight some of the events which you plan to do in this year. So I see a slide in your presentation, but what are the games that we are looking to target and scale up, given that I don’t think BGMI is coming back anytime soon? So, one was that, that which games in India are we going to now target or are we looking to scale them up or create Ips? And are we looking at international events, because some games have a large international audience also, can we do that in the eSports segment? That is my first question.

Nitish Mittersain — Founder and Joint Managing Director

Sorry, your last line broke up, can you just repeat that?

Deep Shah — Batlivala & Karani — Analyst

No, I’m saying that say games like BGMI where we have a good hold, they have a massive international audience also. So are we looking to host these events outside India, any plans on that, if you could just share?

Nitish Mittersain — Founder and Joint Managing Director

Yeah. So, two things, I think one is on what games are we focusing right now on. NEW STATE has been one game that has done well. Valorant, I think there is a big opportunity and the Nodwin team is doing a lot around that. Interestingly enough, even in DreamHack, we saw a lot of success with online chess. So we’re also looking at that opportunity. So I think we have many games that we can kind of play with.

On the global opportunity, we are evaluating and also trying to work with publishers to do international events with them on a much larger scale and perhaps those events could be also broadcast in India. So I think that’s the line we are trying to kind of take on the games that are not very active in India today.

Deep Shah — Batlivala & Karani — Analyst

Yeah, thanks for that. But if I can just ask a follow-up here. So we have kind of been organizing international events already — maybe not standalone, but in partnership with others. So is that the right assessment or we were just or we’ve not had international events done? I mean, what has been international presence in organizing IPs?

Nitish Mittersain — Founder and Joint Managing Director

No, we have always been active in doing international events outside of India as well. And we did, for example, even the PUBG events for South Asia in Q3 of FY ’23. So it’s not something new that we are going to do. We have always been active on it. We are doing it as we speak, and we have supported Tencent in Dubai for PUBG. So I think there is a lot of activity there and a lot of growth opportunity for us there.

Deep Shah — Batlivala & Karani — Analyst

Right. Nitish, secondly, on this real money gaming space. So, yes I completely buy your point there is a lot of flux right now, but given that how polarized the space has become where do you find our sweet spot? Because cricket is completely dominated by one large player, and then I think they will try to enter into other sports also. What is that sweet spot that we’re looking in, say Rummy or create a platform, so what is kind of the blue sky scenario there?

Nitish Mittersain — Founder and Joint Managing Director

Yeah. So I think obviously, today’s classic rummy business that we have under OpenPlay, right, it’s approximately INR5 crores a month business, which from a R&D scale is extremely small. What we are really focusing on is, building a very powerful platform. We brought in a new CEO in that business in the last quarter, who has also come in and worked a lot on the tools and the data that we are operating with, really kind of enhancing the funnel that we operate in.

So I think we have two thoughts here; one is how can we accelerate the growth of the business, the existing business, by being more efficient, by being able to target users better, by being able to generate higher ARPUs, by taking advantage of the Google Play opportunity that is presented in front of us, etc, right. There are many things we can do, to kind of accelerate this core business. But at the same time, everything that we’re doing to accelerate this core business, that has also become a launchpad for many other games that we can drive alongside. So that’s one thing, that’s the organic part of the RMG growth.

The second is, I think as — over the next few months, as more regulatory clarity emerges, as well as taxation clarity emerges, we will not shy away from consolidating other games and other players on this OpenPlay platform, because I think in this case liquidity sharing, etc could be very powerful, cost efficiencies could be there and we could actually create one plus one equal to three. So I think scaling up RMG is very much on our mind, as the regulatory clarity is coming out, and we will see how we evolve this into FY ’24. In the meantime, organic growth is a strong focus for us.

Deep Shah — Batlivala & Karani — Analyst

Okay, Nitish. Thanks for the insights.

Operator

Thank you. We have the next question from the line of Nitin Jain from FairView Investments Private Limited. Please go ahead.

Nitin Jain — FairView Investments — Analyst

Yeah, so first of all, congratulations on the execution. My first question is on the overall business. So, since the IPO, the company has maintained that it would be prioritizing growth over margin, but also make sure that the growth is profitable. But if you look at the consolidated numbers this quarter and strip out the other income, we have actually made a loss at the PBT level. So my question is going forward, how far you would be comfortable allowing the margins to dip, to achieve growth? And my next two questions are on the Gamified Learning business. So, the pleasant surprise this quarter has been the growth in the Kiddopia business, and assuming that the decline in Kiddopia subscriber base has bottomed out now, does your revenue guidance for the year include growth in the subscriber base? And regarding WildWorks, can you talk a little about the unit economics of WildWorks business, and whether we see any opportunity for price hikes here as well? Thank you.

Nitish Mittersain — Founder and Joint Managing Director

Sure. Thanks, I’ll answer all three questions for you. The first one, I’m not sure I grasped properly, because our EBITDA was INR30.6 crores at the consolidated level and our [Technical Issues] is not included in EBITDA. So I’m not sure whether I misunderstood your question. I’ll just answer the other two also and then we can come back with the first if you wish.

The second one in terms of Kiddopia, yeah, absolutely, it has grown 8.7% on a subscriber base this quarter, after many quarters of kind of plateauing out in some couple of quarters of drifting [Phonetic] So I think they are very excited about seeing the growth coming back. Given all the unit economics are trending positively, we have encouraged the team to scale, to spend, and grow the subscriber base. So we should continue to see subscriber base growth. I won’t be able to kind of put specific numbers there right now because it’s the first quarter of growth and we need to see how this is trending over the next quarter or two.

In terms of WildWorks unit economics, like I said previously, there’s a lot of work in progress, a lot of different things happening, and a lot of moving parts. But I think it’s a bit premature to get into a lot of specific unit economics of WildWorks. But at the right time once things are stable, we will start presenting almost exactly the same KPIs and unit metrics that we provide for Kiddopia, given that both businesses are very similar.

Lastly, I very much think that there is a lot of potential to increase pricing in WildWorks, it’s been untouched for maybe the last two, three years and there are many different ways to do it and it’s all work in progress right now.

Nitin Jain — FairView Investments — Analyst

Okay, thank you. So just to clarify my first question. So while we have been flat at the EBITDA level, so at the PBT level, if I strip out the other income, on its own the business has made a loss this quarter, so because of the significant margin decline. So, if you can just clarify that dip?

Nitish Mittersain — Founder and Joint Managing Director

If you can just open that page for us, one second. So our final PAT — look, I think there are two things here. One is on the EBITDA level, we are flat, that I think is okay for us, we’ve done INR306 million or INR30.6 crores EBITDA consolidated versus INR30.3 crores EBITDA at the previous quarter year-on-year. We are thinking — same as long as we are growing in the right strategic directions, while maintaining profitability and cash flows, we are okay with it.

I think one thing is, on the PAT you must realize that we take a fairly large amortization of the acquisitions that we have done, which are non-cash amortization. So, I think from a PBT perspective, that kind of colors it a bit. But even then I’m seeing — on my numbers I’m seeing a PBT of INR285 million or INR28.5 crores, removed other income of INR11.5 crores, it is still positive. I’m not still very clear where you’re seeing the loss.

Nitin Jain — FairView Investments — Analyst

Okay, I’ll take it offline then.

Nitish Mittersain — Founder and Joint Managing Director

Sure, sure. Thank you.

Nitin Jain — FairView Investments — Analyst

Thank you.

Operator

Thank you. We have the next question from the line of Ankit from JM Financial. Please go ahead.

Ankit Zope — JM Financial — Analyst

Hi Nitish, congratulations on a great set of numbers. So I have a couple of questions, first one on the unique wagerer count in the RMG segment for this quarter that — I mean if you can give. So, last quarter it was around 27,700, I think this quarter, you have not disclosed that in the presentation?

Nitish Mittersain — Founder and Joint Managing Director

Sorry, the question is what is the unique…

Ankit Zope — JM Financial — Analyst

Unique wagerers.

Nitish Mittersain — Founder and Joint Managing Director

Yeah. Why that has declined?

Ankit Zope — JM Financial — Analyst

Just the count of…

Nitish Mittersain — Founder and Joint Managing Director

I’m not getting your question.

Operator

Ankit, we can’t hear you very well. If you could kindly go off the speakerphone or repeat your entire question?

Ankit Zope — JM Financial — Analyst

Yeah. On the unique wagerer front, I mean if you can just give the numbers of which monthly unique wagerer is for the quarter that — last quarter it was around 27,700?

Nitish Mittersain — Founder and Joint Managing Director

It’s already there in the presentation no, 23,690.

Ankit Zope — JM Financial — Analyst

Okay. And then second question on the ad-tech front, so ad-tech is usually — this business is seasonal third quarter, it seems to be a seasonal quarter for all the businesses. So do you — in the fourth quarter would that growth remain there, or what is the growth that you’re targeting?

Nitish Mittersain — Founder and Joint Managing Director

So, for ad-tech you are right, October to December, because the ad-tech — our ad-tech business is focused in the U.S. and October to December runs up into Christmas, right. So brands are spending the most during this, and then they drop off the spends in the first quarter of the further year or the Q4 for us. The spend in the Q2 will drop off. So there is seasonality that builds up in Q3 and then normalizes in Q4. And you will see the same thing happen this year as well. But on an overall basis, we will continue to see a good growth year-on-year on that business.

Ankit Zope — JM Financial — Analyst

Okay.

Operator

Thank you. We have the next question from the line of Pranav from Dolat Capital. Please go ahead.

Pranav Mashruwala — Dolat Capital — Analyst

Hello. Yeah, hi, am I audible?

Nitish Mittersain — Founder and Joint Managing Director

Yeah.

Pranav Mashruwala — Dolat Capital — Analyst

Hello. Yeah, just had a quick question on Sportskeeda. So I think the revenue run rate for Sportskeeda could have been better, given the seasonality. And even the margin profile, when we compare on a YoY basis, they have declined a bit. So can you just give a sense of how you are seeing Sportskeeda, and any takeaways, were that specific to this Q3 quarter?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, no, I think we continue to see good growth overall on Sportskeeda, and we’re satisfied with that. The margins are, I think we’ve also opened a new sports style [Phonetic], we have kind of build teams on some new areas that we are investing in. So I think some of the margins are potentially — would be slightly lower because of new investments that we’re making in teams and content, etc. You could see our growth in terms of the average MAU, right. That has also steadily increased, even in this quarter, it’s INR76.9 million, up from INR72.8 million. So I think overall it’s a healthy business, we continue to be very happy with it and we will continue to invest in new areas within that, to see how we can drive growth for FY ’24.

Pranav Mashruwala — Dolat Capital — Analyst

Sure. Thank you.

Sudhir Kamath — Chief Operating Officer

Hi, this is Sudhir here, Nitish, can I just add a bit here?

Nitish Mittersain — Founder and Joint Managing Director

Yeah, please.

Sudhir Kamath — Chief Operating Officer

So, I just want to make a point, that on Sportskeeda, we also had a change in the management this quarter, as you know, that Porush stepping out and Ajay stepping in as the CEO or stepping up. And with that, there’s also been a lot of new ideas and new directions in which we can grow this business, and therefore there is a bit of investment which goes along with that. And that’s reflecting already in terms of the MAUs and so on. But over time, I think it will start showing in the margins as well. Just wanted to add that one. Thank you.

Pranav Mashruwala — Dolat Capital — Analyst

Sure, thanks.

Operator

Thank you. That was the last question. I would now like to hand it over to the management for closing comments.

Nitish Mittersain — Founder and Joint Managing Director

Thank you everyone for all the questions today and for listening in. We look forward to continuing with our work and coming back to you in the coming quarter with good numbers and on the strategy for FY ’24. Thank you again.

Operator

[Operator Closing Remarks]