Nazara Technologies Ltd Q2 FY2026 Concall Summary

Key Takeaways

• A quarter of clean-up, not collapse: A large one-time gain from Nodwin’s de-subsidiarization masked two deliberate impairments on Freaks4U and PokerBaazi, as management chose to recognize mistakes quickly and stop funding loss-makers.
• Core gaming targets 20-25% growth: Mobile gaming, PC-console publishing, offline gaming and AdTech all delivered profitable growth, and management set a formal target to grow the core gaming business at 20-25% YoY with 20-25% EBITDA margins.
• Nodwin’s de-subsidiarization unlocked a ₹1,098 Cr gain while its vision scales to a \$1 bn revenue ambition over five to seven years, funded by fresh capital from believers including Krafton and Sony.
• Two problem children are being disciplined: Freaks4U will receive no further funding and must survive internally or file for insolvency; PokerBaazi’s impairment is complete and its technology platform licensing revenue may begin in Q3, though losses could persist another quarter or two.
• What to watch next quarter: Whether PokerBaazi’s platform licensing revenue materializes and losses shrink, the Bigg Boss game’s early KPIs after soft-launch, and any recovery signal from Sportskeeda’s organic traffic following the next Google Core update.

Impairments & Portfolio Discipline

• Freaks4U written down to zero: Triple headwinds hit the European esports agency: geopolitical turmoil, marketing budget freezes, and AI disruption. Management, as 60-62% shareholder, has told the business to survive internally or file for insolvency; no further cash will be injected.
• PokerBaazi impaired on regulatory shift: New regulations in India’s online skill-based real-money gaming space prompted a conservative write-down of everything except cash in the company. The business burned ~₹17 Cr in Q2 and continued losses are possible into Q3 FY26.
• PokerBaazi platform pivot underway: The technology platform is in demand, and management is exploring two paths: leveraging the large, loyal Indian consumer base for other offerings, and taking the platform global as both a D2C and B2B proposition. Revenue from platform licensing could begin in Q3, though costs may take another quarter or two to optimize fully.
• Sportskeeda cost reset: Hit by a Google Core update in March 2025 that depressed organic traffic, the business is planning a 40% YoY cost reduction in Q3. Recovery may follow the pattern of sister property Pro Football Network, which took roughly three quarters to bounce back; another couple of Google updates should help.

Nitish Mittersain: "if we make a mistake, we should recognize it quickly and move ahead rather than keeping on, you know, putting more cash into it."

Nodwin Gaming: De-subsidiarization & Global Ambition

• Stake fell below 50%, triggering a one-time gain: Post de-subsidiarization, Ind AS required Nodwin to be valued at fair value using the last funding round (done two-three months prior with Nazara, Krafton and Sony), producing a revaluation gain of ₹1,098 Cr.
• Four-leg growth strategy: Nodwin is focused on Live events, Content, eSports tournaments and Influencer IPs. Properties include Comic Con expanding globally, the World Championship of Counter Strike in Budapest, BGMS in India, and Playground, India’s most-watched youth show, now being exported with Banijay/Endemol.
• Fundraising momentum intact: A top-up raise was completed a couple of months back at broadly the same valuation as the prior round, and Nodwin is preparing an additional raise to accelerate its global strategy. A global gaming veteran was appointed as Non-Executive Director.

Akshat Rathee: "My stated vision is Nodwin wants to be a \$1 billion revenue company in the next five to seven years... We are blessed if we have a 50% success rate. But those founders who will try will go ahead and build value for us. And sometimes when those ventures fail, the idea will fail, but the founders never fail."

Core Gaming: Growth Engine & Targets

• Mobile gaming drove the quarter: IPs including Love Island, Big Brother, Kiddopia, Animal Jam and WCC delivered growth through improved UA efficiency, live-ops cadence and content refreshes. New IPs CATS and KOT were added.
• PC-console publishing delivered high-margin monetization: Curve Games benefited from evergreen catalog strength and new platform initiatives, and has integrated smoothly over the approximately six months since acquisition without material disruption.
• Offline gaming is cash-accretive and a digital funnel: Smaaash and Funky Monkeys drove revenue and EBITDA with a discipline-led playbook. Funky Monkeys is launching one to two stores per month and can scale from 14 centers to 100 in the next couple of years. Smaaash 2.0 is being reimagined with a re-launch targeted for FY27.
• AdTech delivered strong growth and robust profitability: Growth came from client synergies, broader cross-market solutions and a shift toward higher-margin product lines.
• Formal targets set: Management is targeting 20-25% YoY growth for the core gaming business, with EBITDA margins in the 20-25% range.

New IP, Platform & AI Initiatives

• Bigg Boss game soft-launched: Fusebox released the Bigg Boss narrative game the Thursday prior to the call. It is in early launch with KPIs being finetuned before user acquisition begins. Developed jointly in the UK and India with a trusted Nazara partner and Indian employees to ensure cultural relevance.
• Nazara Publishing platform built with Google: A large project with Google has been completed that enables one Nazara ID across all published games, unlocking cross-promotion, first-party data, better monetization and a loyalty platform. Initial rollout will be with existing games like World Cricket Championship.
• Centers of Excellence stood up: New CoEs in user acquisition, artificial intelligence, data analytics and growth have been created, staffed with strong professionals hired globally. Management expects increasingly improved metrics in coming quarters and notes some initiatives have a fairly quick payback period.
• AI is being embedded in production: The next version of the cricket game, WCC 4, is being coded entirely in AI using Claude. Management also expects AI to help optimize costs and generate more productivity from existing teams.

Nitish Mittersain: "We are going to, for example, launch WCC 4, which is the next version of our cricket game, which is completely coded in AI using Claude."

Problem Assets: Recovery Paths & Timelines

• Kiddopia showing early recovery signals: After struggling post-IDFA for a couple of years, management now sees "light at the end of the tunnel." The team has been beefed up and a new business head brought in.
• Sportskeeda traffic recovery is a waiting game: The March 2025 Google Core update hit organic traffic; it has been two quarters and the pattern at sister property Pro Football Network suggests roughly three quarters to recover. Another Google Core update is expected in November or December, and management is hopeful a couple more updates will restore traffic.
• PokerBaazi losses have a visible end: The ~₹17 Cr quarterly burn reflects a deliberate balance between cost optimization and continued investment in the technology team, whose platform is in demand. Revenue from that investment may lag by another quarter or so; continued losses are possible into Q3 FY26 before costs are optimized and revenues kick in.
• Freaks4U has no Nazara backstop: Management has been told to survive internally or face insolvency. Costs are already being reduced at a significant rate, and losses are expected to be significantly reduced or eliminated, but the outcome is now in the hands of the subsidiary’s management.

Akshat Rathee: "we are fundamentally not going to continue funding this business. So, the management of the business has been told very, very clearly if they can go ahead and survive internally with internal support, that's great. Otherwise, we will not be supporting them, which would mean that either they will go ahead and file for insolvency or they will go ahead and cut their costs."

Guidance & Commitments

Key Metrics