Nazara Technologies Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Nazara Technologies Ltd (NAZARA) Q3 FY22 Earnings Concall

Q&A Highlights:

• Nitin Jain from FairView Investment asked if the company is seeing the margins dipping in 4Q. Manish Agarwal, CEO said the company would like to continue to work from a revenue growth point of view and not really maximize or optimize EBITDA. NAZARA would like to have first priority as revenue growth rather than saying that the company would throttle the growth to deliver an 18% EBITDA.

• Nitin Jain from FairView Investment also asked that in the Media Rights business the company were to start selling ad monetization slots and if any revenue is flowing in from there. Manish Agarwal, CEO said that it’s still not done. And for NAZARA to build that competency of media selling is what it’s really working on and the addition of the sales team from OML should help NAZARA.

• Mohan Kumar from Emkay Financial asked about the strong bump up in 3Q22 of eSports segment and if NAZARA expects this trend to continue going forward.  Manish Agarwal CEO replied that Q3 is always a very strong quarter for Nodwin. This time, Sports Keeda also became very strong which is where NAZARA got a lot of direct sales revenue. NAZARA expects very strong growth trajectory in this segment going forward.

• Mohan Kumar from Emkay Financial asked about the eSports and if the company expects that segment to become 45-50% of the total revenue in the coming quarters. Manish Agarwal CEO replied that looking at the first nine months, it’s already 48% and in 3Q22 it’s 53%.

• Depesh Kashyap of Equirus asked about the contribution of white label events and own events in world avenues. Manish Agarwal CEO replied that looking at 3Q, the seasonality is very strong and the partner base has increased from 20 to 60 plus partners. NAZARA’s data services is about white label, own IPs, media revenues and building a D2C business with Nodwin.

• Depesh Kashyap of Equirus asked that with recent change in ownership of ESL, if the company thinks there is any change in licensing agreement.  Manish Agarwal CEO answered that ESL was a important partnership for Nodwin to build tradability. The company believes there is no apprehension on the partnership with ESL. However, the company doesn’t have a dependency on ESL.

• Depesh Kashyap of Equirus asked that on Kiddopia, given the reduced marketing activity and increase in pricing, have there been any drop in rankings on market share in US. Manish Agarwal CEO answered that there has been no fall in market share in the US.

• Depesh Kashyap of Equirus also asked about the net debt position at the end of December and which segments is the company eying for acquisition apart from fermium already talked about. Manish Agarwal CEO said that the company will buy capabilities, capacities, geography expansion, synergies and users. The company doesn’t want to focus on a particular segment or geography.

• Jinesh Joshi with Prabhudas Lilladher asked about annual revenue run rate of OpenPlay of about INR80 crore, yet the revenue accretion was only about INR8.6 crores which is lower. Manish Agarwal CEO replied that INR80 crore is gross revenue. The net revenue run rate was INR3.5 crores.

• Jinesh Joshi with Prabhudas Lilladher also asked about the $8 Kiddopia pricing and monthly ARPU of about 6.7. Manish Agarwal CEO replied that on the Kiddopia piece, the company has 70% contribution broadly coming from monthly and 30% coming from annual. Annual is $60, while monthly is $8 and weighted average is 6.5-6.6.