Nazara Technologies Ltd Q1 FY2027 Concall Summary

Key Takeaways

• PAT loss of INR 82 crores, but core gaming grew 14%: The headline loss stems from associate write-offs and impairments, not operational weakness; all gaming businesses remained EBITDA positive with positive revenue growth.
• Bluetile deal restructured, CEO appointed: Nazara will acquire 100% of Bluetile for a fixed \$303 million all-cash, consolidating from Q2; Bluetile founder Raymond Stauffer becomes Nazara CEO, aligning incentives across the group.
• Margins dipped on deliberate UA investment: EBITDA margins fell as user acquisition spend scaled behind strong LTV/CAC guardrails; management views this as profitable investment that defers, not destroys, margin.
• Kiddopia turnaround and Fusebox scaling: Kiddopia revenue grew 19% YoY with improving unit economics; Fusebox grew 12% as Love Island performed strongly, with Big Brother and The Traitors set to scale.
• What to watch next quarter: Bluetile consolidation impact, Curve Games new release performance, Sportskeeda recovery as US sports season begins, and whether UA-driven margin compression eases.

Bluetile & BestPlay: Restructured Deal and CEO Transition

• Deal restructured for certainty: The amended agreement replaces performance-based earnouts with a fixed \$303 million all-cash consideration, with \$89 million at closing and \$214 million in tranches by 1 April 2027, providing certainty of ownership and full economics upon closing.
• Consolidation from Q2 FY27: Subject to final closing, Nazara expects to consolidate the entire Bluetile business from Q2 FY27, giving immediate access to cash generated by the business.
• Raymond Stauffer appointed Nazara CEO: Effective 1 September 2026, subject to regulatory approvals; Nitish Mittersain moves to Joint MD focused on strategy, vision, M&A, and long-term relationships.
• Alignment drove the restructuring: Management removed performance targets tied only to Bluetile because having Raymond as overall CEO with Bluetile-specific metrics would create conflict and misalignment.
• Financing mix still being determined: Options include Bluetile's ~\$20 million cash, additional cash flow from both entities, some debt, some equity, and potential stake sales.
• Management incentives in the works: A structure to incentivize the management team including Raymond as CEO is being developed, with more communication expected in the coming days; no specifics on skin in the game were provided.

Nitish Mittersain: "This new structure provides certainty of ownership and the acquisition price, full economics upon closing, single owner governance, immediate operating integration, greater strategic flexibility, and access to the cash generated by the business."

Gaming Portfolio: Growth Drivers and Margin Dynamics

• Gaming revenue grew 14% YoY to INR 275 crores: All gaming businesses remained EBITDA positive and showed positive growth, with the portfolio demonstrating broad-based momentum.
• Kiddopia turnaround gaining traction: Revenue grew 19% YoY as user acquisition scaled behind improving unit economics; 24-month LTV/CAC continues trending upward, though the step-up in UA moderated near-term EBITDA.
• Fusebox scaling on Love Island strength: Revenue increased 12% YoY to INR 82 crores, with Love Island ranking #1 free apps and #5 top-grossing in the U.S.; Big Brother game is live and reaching the content threshold needed to scale, while The Traitors (global rights) will launch soon.
• Animal Jam steady: Revenue increased 11% YoY, supported by consistent content cadence and continued growth investment.
• Bluetile and BestPlay grew 54% YoY: Growth driven by paid user acquisition; UA spend rose from 78% to 85% of revenue, EBITDA held flat, but revenue net of UA spend increased from INR 73 crores to INR 80 crores.
• UA spend is the margin story: EBITDA margins declined meaningfully because UA spend was scaled aggressively behind strong LTV/CAC guardrails; management views this as profitable investment with margins deferred, not lost, and has kept no caps on UA spend as long as guardrails hold.
• Bluetile margin flexibility: Q1 EBITDA margin fell to ~11% from 17.6% YoY because strong game performance led to increased UA spend to grow the revenue baseline; management states they now have full flexibility to adjust EBITDA whenever the right moment comes, though the year is still early and the path will depend on game performance and seasonality.

Nitish Mittersain: "The good news is that this is a good reason for the EBITDA decline, which means that while maintaining the guardrails of the LTV/CAC ratio... we are basically scaling the user acquisition in a very profitable manner. And if we continue to see that, we will continue to drive it. We have not kept any caps to it."

PC & Console Publishing: Curve Games and Investment Phase

• Curve Games margin below full-year expectation: Q1 EBITDA margin of 27% is lower than the almost 40% delivered last financial year, due to an investment phase in new signings with 12-18 month development cycles delaying benefit realization.
• New releases beginning Q2 FY27: Sovereign Tower releasing this week, Dragon Shelter in September, and additional unannounced titles before year-end; these are expected to contribute significantly to increasing margin in subsequent quarters.
• IronOak Games showing upside: For The King II numbers have improved in recent months, and IronOak is working on new first-party titles expected to deliver better margin in the next couple of quarters.
• No in-app purchases planned: Upcoming Curve releases will generate revenue from unit sales only, with no in-app purchase forecasts.
• Badlands Crew performance: Released in Q1 FY26, sold around 50,000-60,000 copies in line with expectations and was well-received review-wise.
• Sovereign Tower and Dragon Shelter tracking well: Sovereign Tower Wishlists and Followers exceeding expectations, in line to exceed expected August revenue; Dragon Shelter demo is live and on track to deliver expected revenues for the year based on Wishlist metrics.

Susan Planck: "While we are excited about the upcoming releases, we wouldn't be forecasting results to be anywhere in line with the breakout success we have seen with Human: Fall Flat."

AdTech, Sports Media, and Esports

• Datawrkz delivered steady performance: Revenue of INR 126 crores and EBITDA of INR 3 crores, supported by continued operating discipline.
• Space & Time showed margin resilience: EBITDA grew YoY through a softer demand environment, though one or two large-margin clients cut budgets in recent months.
• AdTech EBITDA lagging revenue momentum: Investing in sales and product for Vizibl, plus 60-80% of revenue being pass-through, has weighed on margins; improvement expected as Vizibl investments mature and large-margin clients return.
• Vizibl gaining traction: The DSP for mid-size businesses is seeing very good traction in Western markets.
• Absolute Sports turning around: Sportskeeda delivered positive EBITDA at a lower cost base with full effects of cost actions expected from Q2; Pro Football Network delivered its best Q1 yet with 19% EBITDA margin versus break-even in Q1 FY26.
• Sportskeeda recovery expected from Q2: Revenue was in line with internal expectations in Q1; management believes it has hit bottom, with revenue expected to rise in Q2 and more so in Q3 and Q4 when the US sports season kicks in.
• NODWIN stable in slowest quarter: Q1 saw stable revenue growth with losses substantially lower YoY; Comic Con Mumbai was a sold-out show, and Comic Con is expanding to 14 events in India this year with Comic Con World registered as a global IP.
• NODWIN targeting 30%+ organic growth for FY27: Progressing towards IPO readiness, though the process continues amid a geopolitically uncertain environment with strong pre-IPO interest.

Akshat Rathee: "The world is in a little crazy place right now, as you can understand, both geopolitically and figuratively where we are. Our process continues. We have very strong traction that is coming in for people who have interest in pre-IPO participation versus normal primary funding rounds."

Offline Gaming and New Initiatives

• Funky Monkeys grew 58% YoY: Driven by both same-store sales growth and store expansion, contributing to a 33% EBITDA margin for the offline gaming segment.
• SMAAASH 2.0 launch in Q4 FY27: The first reinvention at the Lower Parel, Mumbai outlet is likely to launch between January and March 2027.
• Capital allocation on hold pending product-market fit: Beyond the ~INR 50 crore commitment, no specific capital allocation has been decided for offline gaming, especially until SMAAASH 2.0 proves its model.
• PROGA Act creates esports category: Esports in India has been made a special category through the PROGA Act, providing regulatory clarity.

Financials: Loss Drivers and Capital Allocation

• PAT loss of INR 82 crores: Largely attributable to share of loss from associates (INR 62 crores) and impairment loss, not operational weakness.
• Associate losses driven by Moonshine write-off: The INR 62 crores loss primarily reflects write-offs on remnant values related to the Moonshine transaction; earlier ~90% had been written off, and after recent judgments the remainder has been fully written off.
• Management declines to provide guidance: Nazara will not give revenue, EBITDA, or margin guidance at this point of time.
• Fundraise and preferential issue unconfirmed: Management cannot comment before Board approval.

Guidance & Commitments

Key Metrics