Nazara Technologies Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Nazara Technologies Ltd (NAZARA) Q2 FY23 Earnings Concall

Management Update:

• [00:07:48] NAZARA said that at Sportskeeda, it continues to grow its U.S revenues, that grew 2.6 times in 2Q23, driven by higher video revenues and strengthening offering in eSports as well as core sports.

Q&A Highlights:

• [00:11:28] Nitin Jain of FairConnect asked about margins dipping below 1Q23 guidance of 12-14%. Nitish Mittersain Joint MD said the guidance was linked to the revenue guidance of 50% for FY23. NAZARA added that as long as it can maintain positive margins, it will maintain a minimum level of 10% and maintain positive cash flow.

• [00:12:00] Nitin Jain with FairConnect asked about Nodwin margin falling further below 1%. Nitish Mittersain Joint MD answered that in Nodwin NAZARA took significant investments. Also there is seasonality with 1H having lower margins. And in 2Q23, NAZARA spent aggressively in marketing in the gaming accessories business.

• [00:17:15] Jinesh Joshi from Prabhudas Liladhar asked about the marketing spend of $3 million for Kiddopia in 2Q23 and going forward what would be the subscriber growth. Nitish Mittersain Joint MD said that it expects Kiddopia user base to be stable and should start showing growth in the coming quarters. NAZARA also expects to increase the spend as opportunities arise.

• [00:27:46] Abhishek Kumar of JM Financial asked about the reason for deceleration in the second half, which is usually a strong period. Nitish Mittersain Joint MD replied that 2Q23 growth has been higher due to festival sales in ecommerce. Overall, excluding Datawrkz and WildWorks, NAZARA would have grown 70% in 2Q23 and 58% in 1H over last year. So there’s no deceleration.

• [00:32:41] Ankit Dev of JM Financial enquired about the revenue split in Nodwin as to OML and D2C. Manish Agarwal CEO said that the company usually gives media and non-media. NAZARA does not want to give further split as each of splits are still very small in nature.

• [00:32:56] Ankit Dev of JM Financial also asked about the borrowings of 106 million in balance sheet. Manish Agarwal CEO replied that on the borrowing part, there is a brand scale, which is the gaming accessory business that has a working capital discipline, which is the addition to balance sheet.

• [00:35:05] Ankit Dev with JM Financial asked about the reason of a steep rise in other income in 2Q23. Manish Agarwal CEO answered that the other income is seeing a spike because of NAZARA’s investment in Rusk Media that came at a higher valuation that’s included in other income.

• [00:42:41] Aparna Shanker from SBI Mutual asked about the inclusions in media and non-media. Manish Agarwal CEO replied that any money that is collected from OTT, media, and TV platforms is included in media. And in non-media, it includes D2C, white-label events, brand sponsorship from own IP, and running the whole infrastructure for team and everyone.

• [00:44:35] Raj Joshi of Ace Securities enquired about the reason for impairment loss of around INR76 million. Manish Agarwal CEO clarified that the impairment loss is due to the partial write down on one of the investment it took in the quarter.