Nazara Technologies Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Core gaming business surged while reported revenue fell: Gaming segment revenue grew 66% YoY and EBITDA rose 87% YoY, even as consolidated revenue dropped 24.1% due to the deconsolidation of NODWIN's esports business.
• NODWIN turned profitable after absorbing a self-inflicted wound: The esports unit swung to EBITDA profitability once the loss-making German subsidiary Freaks 4U was impaired and deconsolidated, revealing a core business that was always running at 20-30% margins.
• Kiddopia returned to subscriber growth with a deliberate margin trade-off: Subscriber growth resumed after several flat quarters, but EBITDA margin dipped to 9% as the company spent aggressively on user acquisition, confident it can earn back 100% of that capital within two years.
• Management is building an India gaming bet that does not pay yet: Minority investments in Stan, Rusk, and nCore (FAU-G) target the Indian market, which leads global downloads but ranks outside the top 10 on monetization; near-term revenue will still come from international markets.
• What to watch next quarter: Whether Kiddopia's subscriber growth converts into margin recovery as revenues catch up to elevated spend, the pace of NODWIN's new IP pipeline converting into sustainable revenue, and any clarity on the Smaaash 2.0 relaunch economics.

Gaming Segment: The Engine Inside the Decline

• COE-led operating model is tightening performance: A centralized center of excellence for user acquisition, data analytics, and live ops is now driving LTV guardrails and content cadence across Kiddopia, Animal Jam, and other titles, producing the 66% gaming revenue growth and 87% EBITDA growth.
• Kiddopia's subscriber growth came at a cost: Margins compressed to 9% because Q3 user acquisition spend stepped up sharply; CAC improved to \$35.80 from \$37.50 and ARPU rose to \$7.45 from \$7.34, so unit economics are improving even as near-term profitability dipped.
• The payback discipline is the guardrail: The company will keep spending as long as each dollar of user acquisition capital is earned back within two years, a policy that prioritizes growth over margin maximization in the near term.
• Curve's catalogue strategy is working quietly: Human Fall Flat has sold 5.8 crore lifetime units, Wobbly Life moved over 200,000 units on Switch 1, and five or six new titles have been signed since acquisition, with releases spread across FY27 and FY28.
• Fusebox is a seasonal swing factor: The studio's TV-linked IPs benefit from virality when shows air, creating quarters of aggressive spend with a 60-day payback period; Big Boss launched in India, Big Brother globally, and a traders license IP even larger than Love Island is coming.

Mittersain: "We want to earn back 100% in two years period of whatever capital we invest in user acquisition. As long as we are able to achieve that, we will maximize our spends for growth."

NODWIN: The Turnaround and the Mistake

• The German acquisition was the problem, not the core business: Freaks 4U, the European esports subsidiary, was a persistent drag that consumed profitability and prevented R&D investment; management called it "a mistake" and "a trap," and its deconsolidation is what unlocked the reported EBITDA profitability.
• Core margins were always healthy: Natural profitability in the NODWIN business runs at 20-30%, but those margins were eaten away by the European drag; the Q3 outperformance reflects what the business looks like without that weight.
• IPs follow a three-year build cycle with a 60% culling rate: Year one is an experiment expensed out, year two generates traction, and year three IPs become sustainable; most large IPs (NH7, DreamHack, Comic Con, BGMI) are over 10 years old, while domestic IPs are hitting five-year cycles.
• The Counter-Strike world championship created a cascade: Hosting the Major in Budapest was a one-time event, but the credibility it built for an Indian company has already produced an order book of at least 10 other events from publishers, plus work from Disney on launch portfolio projects.
• NODWIN is raising a new round and management describes it as among the top two esports companies globally by revenue, and the only profitable one among the largest emerging-market players.

Rathee: "Freaks 4U was always a trap like it was something that we made a mistake, right? Like -- and it's not the only mistake we have made."

Offline Gaming: Profitability Now, Growth Later

• Current portfolio is lean and profitable: Smaaash delivered INR24.3 crore revenue at 36% EBITDA margin, while Funky Monkey posted INR6.1 crore revenue with INR3.7 crore EBITDA; one loss-making Smaaash center was closed, removing that drag.
• Funky Monkey is scaling fast with a clear margin target: The company is opening one to two centers a month and sees a path to 100 centers in India over the next couple of years; steady-state EBITDA margin is projected at 35-40%, though current 61% margins were not explained as sustainable.
• Smaaash 2.0 is the real growth catalyst, still months away: The all-new Smaaash experience relaunch will take a couple of quarters before expansion begins, with openings expected in H1 next year; only then will the economics become clear.

Adtech and Media: Mix Shift Over Volume

• Revenue fell deliberately as low-margin work was shed: Adtech revenue declined 22% YoY because the company reduced its focus on non-tech managed services, but EBITDA rose 26% YoY as the mix shifted toward tech-enabled, higher-margin offerings.
• Sportskeeda was collateral damage in a Google update: The March core update from FY25 caught Sportskeeda in the crossfire, and costs have been cut 32% year-over-year to run lean until recovery; management does not know when the bounce-back will come.
• Pro Football Network offers a recovery template: PFN was hit by the same Google Core update last year and took roughly 2.5 to 3 quarters to recover, suggesting a similar timeline is possible for Sportskeeda if the next Google updates are favorable.

India Bet and Capital Allocation

• Minority investments are options on India's gaming future: Stakes in Stan, Rusk, and nCore (publisher of FAU-G, the made-in-India PUBG competitor) are intentional bets on a market that is number one in downloads globally but not in the top 10 on monetization; all options remain open, from monetization to larger stakes to outright acquisition.
• International markets will carry near-term growth: Management is explicit that while India will eventually become a large monetizable gaming market, Nazara's revenues today come largely from international markets, and those will continue to grow faster in the near term.
• INR700 crore of net cash is earmarked for deployment: The cash will fund organic growth where capital is required and additional M&A, especially of gaming studios; the company remains focused on disciplined capital allocation with the COE model designed to extract more synergy from future acquisitions.

Mittersain: "India will eventually become a very large monetizable gaming market going forward. So our intent is that while today, Nazara's revenues are largely coming from international markets... it's very important for us as our home base being India, we kind of continue to invest very aggressively in this market."

Margins and the Path to 20%-Plus

• The 16.7% consolidated EBITDA margin is a starting point, not the destination: Management is working toward margins beyond 20%, with a timeline of two to three quarters, as the business refocuses on higher-margin IP-based gaming and the drag from low-margin adtech managed services and NODWIN's European losses recedes.
• Kiddopia's margin recovery is mechanical if spend holds steady: If user acquisition spend remains at Q3 levels, margins will automatically expand as revenues grow, because the payback discipline ensures every dollar spent returns two dollars within two years.
• Moonshine (PokerBaazi) is an offsetting drag: NODWIN's profit in associates was completely offset by Moonshine's INR30 crore operating loss for the quarter, of which Nazara's share is 46%; management hopes some of that loss will reduce going forward but offered no timeline.
• Depreciation stayed flat despite deconsolidation: While Freaks 4U depreciation went out, Smaaash and Curve depreciation were added, balancing the line.

Mittersain: "Eventually, the margin should rise to beyond 20% is what we are working towards."

Guidance & Commitments

Key Metrics