Nazara Technologies Ltd

NSE:NAZARA

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Nazara Technologies Q1 FY '25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Banerjee from ICICI Securities. Thank you, and over to you, sir.

[Abhisek Banerjee, analyst]

Hello. Good morning, everyone. On behalf of ICICI Securities, I would like to welcome all of you to the Q1 FY '25 Earnings Call of Nazara Technologies. We have with us, from the management team, Mr. Nitish Mittersain, CEO and Joint MD; Mr. Sudhir Kamath, Chief Operating Officer; Mr. Rakesh Shah, Group's CFO; and Ms. Anupriya Sinha Das, Head of Corporate Development.

With that introduction, let me now hand over the call to Nitish for his opening remarks. Please go ahead, sir.

[Nitish Mittersain, executive]

Thank you, Abhishek. Good morning, everyone. For the first quarter of the financial year ending financial year 2025, we achieved a consolidated revenue of INR 250.1 crores and EBITDA of INR 24.9 crores and a PAT of INR 23.6 crores. This is our 14th successive profitable quarter since our IPO, and our focus remains on rising growth with profitability in FY '25 and beyond through the organic growth of our existing businesses, as well as M&A, especially in the core gaming sector.

Recently, we announced the acquisition of the remaining stake in Paperboat apps. Now our holding is 100%. And we believe that there are several opportunities in front of us that can help grow this business going forward. We also acquired Fusebox, an exciting IP-based gaming studio in the U.K., that has done very well. And again, we believe this will add a lot of value in terms of potential growth and profitability to our business.

Our other subsidiaries have also been very active in the M&A side with NODWIN recently acquiring 100% of a leading eSports company in Europe, Freaks 4U, as well as iconic property, ComicCon India. Sportskeeda also acquired SoapCentral and Deltias Gaming in recent days. In FY '24, our team had worked very hard to create a strong pipeline of opportunities that fit our objectives very patiently, but at the same time very actively. And as can be seen, we are now deploying our cash reserves this year to acquire such businesses that we like. And we expect that these acquisitions will help us accelerate towards our FY '27 goal of achieving an EBITDA of INR 300 crores that you have set for ourselves.

With that, I now hand over the call to Anupriya, our Head of Corporate Development for further business highlights. Thank you, and over to you, Anupriya.

[Anupriya Das, executive]

Thank you, Nitish. Good morning, everyone. As you are aware, Nazara operates across 3 business segments: Gaming, eSports and Adtech. We are well diversified across demographics, geography and business models. In Q1 FY '25, gaming contributed 37% of revenue and 43% of EBITDA, while eSports contributed 53% of revenue and 55% of EBITDA. Our third segment, Adtech, accounted for the remaining share.

If you look at businesses within gaming, Kiddopia reported revenues of INR 49 crores, EBITDA of INR 10.4 crores with an EBITDA margin of 21.4% in Q1 FY '25. Most of our key performance indicators have either improved or stabilized this quarter. Especially, our cost per trial has decreased. Our activation rate has increased and the average revenue per user has improved. The churn has also reduced in the sales period.

As a result, the rate of decline in subscribers in Q1 FY '25 was lower compared to other quarters in the past. With stable or improving KPIs, we anticipate that our subscriber base will begin to grow again in the coming quarters. We are also making progress on closing IP partnerships, which will provide a boost to organic user acquisition going forward.

Moving to Animal Jam. Q1 FY '25, revenue increased by 7% to INR 23.6 crores, driven by the ongoing success and monetization of Wishing Coins and the launch of a new pet, dragons, via the wishing well within the game. We had higher investments in user acquisition in Q1 FY '25, which is expected to pay back over 12 to 18 months' time frame.

Moving to OpenPlay, the RNG business. While gross gaming revenues have declined only slightly, that is customers are still playing almost the same. Increased GST has led to a sharp decline in net revenue after GST. Our organic focus has been on enhancing operating efficiencies to achieve profitability within the constraints of the new GST regime. Our eSports segment revenue grew by 12%, while EBITDA grew much faster by 85% in Q1 FY '25.

Going to NODWIN. The NODWIN revenue grew by 3% compared to the last year INR 271 crores. However, accounting for the deconsolidation of Wings, which took place on 3rd February 2024, the revenue growth is much higher of 35%. The growth is led by strong performance from NODWIN's proprietary IP, including Branded, Gaming Matters, ComicCon and others and the media business, which showed 44% growth year-on-year. Profitability was muted as NODWIN continued to invest in new events and IPs. With a healthy pipeline of upcoming events in the next 2 quarters, we expect accelerated growth for the year ahead with profitability.

On the M&A side, NODWIN has increased its investment in Freaks4U Gaming from 13.5% to 57% initially and subsequently 100%, eventually, through shares were being valued at INR 271 crores. Notably, Freaks4U reported revenues of INR 223 crores in CY '23. And we will consolidate this business in NODWIN from 1st July 2024 onwards.

Moving to Sportskeeda. Sportskeeda continued its growth journey for both revenue and EBITDA this quarter, reporting a year-on-year revenue growth of 33% in Q1 FY '25, while EBITDA increased by 28%. Sportskeeda has done 2 acquisitions. In June 2024, the company acquired SoapCentral.com for USD 1.4 million, approximately -- which is approximately INR 11.6 crores.

This acquisition aligns with an overall strategy of acquiring smaller niche assets and expanding the wonderful ownership and controls of Sportskeeda. In August 2024, the company agreed to acquire Deltias Gaming in an all-cash deal worth USD 900,000. Deltias Gaming produces high-quality content for specific games such as Baldur's Gate 3 and Elder Scrolls Online on platforms, including YouTube, Twitch and its own website.

Moving to the third segment, Adtech. During Q1 FY '25, we strategically shifted away from lower-margin business, resulting in a year-on-year revenue drop to INR 25.7 crores from INR 27.6 crores. However, gross margin improved significantly, leading to a gross profit increase of INR -- to INR 7.3 crores from INR 6.2 crores due to a higher share of product business. We continue to invest in product development and increased marketing efforts, especially in the U.S. market, which has kept EBITDA subdued compared to Q1 FY '24. We expect these investments to positively impact business outcomes in the coming quarter.

With this, I conclude my remarks and will now open the call for Q&A. I would like to invite Nitish, Sudhir and Rakesh to join me for this session.

[Operator]

[Operator Instructions] The first question is from the line of Abhishek Kumar from JM Financial.

[Abhishek Kumar, analyst]

To the management team, first question is on the GST notice. I saw that we have got INR 1,100-odd crores of notice. Now we understand this is an industry-wide phenomenon. What is our view on this? And is there any provision that we plan to make against this notice?

[Nitish Mittersain, executive]

Sure. Let me take that. This is Nitish. So there are a couple of things. Of course, it's an industry-wide known issue and it is subjudiced. There are various hearings that are going on. And we will see how that pans out as well as a position that the GST Council takes. In terms of the notices, we are on -- not there in 2 of our subsidiaries, OpenPlay and Halaplay. And as you know, both of these do not, at this point of time, contribute material revenues or profitability to our overall performance. At this point of time, we do not require to take any provisions on the Nazara balance sheet.

[Abhishek Kumar, analyst]

Okay. Sure. Second, on our recent acquisitions. I just wanted to understand, given the speed with which we have been acquiring some these assets, what is the risk and governance framework that we have to select these to basically assess their future potential, et cetera. given these are not in India and we are doing it at a fast pace?

[Nitish Mittersain, executive]

Yes, sure. I'll give you answer with that one. While it may look like we are executing at a very fast pace. There are a couple of points here. One is, as I mentioned in my earlier commentary, most of last year, we spent, a lot of time, diligently looking at opportunities and going through -- because we have a very clear framework of opportunities that we want to go ahead and acquire in terms of the potential business of the company, the management, the structure of the deal as well as the value that we pay. So I think we feel very selective in what we are buying and not going after every deal that is offered to us. So that's one point.

The second point is also, as you can see, many of our subsidiaries are active in M&A, whether it is NODWIN, Sportskeeda, for example. And these have focused managements who understand their core business very, very well and alongside support from Nazara and the Nazara corporate strategy team, they are able to execute these transactions, which provides us with a lot of bandwidth. This is, I think, one of the unique positionings of our company's platform that allows us to do this at a scale with a lot of bandwidth.

Lastly, I think there's a common set of format, agreements, legal teams that work on this, so that a lot of our basic thought process of M&A remains constant in the way we have done over the years and also in corporate learning that we have gathered over the years. I hope that answers your question.

[Abhishek Kumar, analyst]

Yes, that's very clear. Nitish. And maybe just one last question, again, on the acquisition. So this 100% stake in Paperboat, I think this is the second instance earlier we had done it with WCC.

[Nitish Mittersain, executive]

Yes.

[Abhishek Kumar, analyst]

If I'm not wrong, so what is the rationale here to take this up? Because that would mean that the founders of that business will no longer be associated with us. So does that create any sort of risk going forward?

[Nitish Mittersain, executive]

No, I think the founders have done a fantastic work of bringing the business to the stage it is, right, in any business that we would acquire 100%. And we believe that there is potential in the business, which is why we are acquiring 100%. We also believe that the value we are acquiring is accretive to us and our stakeholders, which is why we are acquiring the business.

I think if you would look at Sportskeeda as an example, where we acquired stake from the founder who builds Sportskeeda into a fantastic company, the professional management over there has done a fantastic work beyond that in being able to scale the business to the next level. So we also believe that in the most recent acquisition of Kiddopia for example, by acquiring 100% stake, it opens up a lot of synergies that we, directly at Nazara, can operate.

We do have a strong management team in place and we'll continuously strengthen it and try and scale the business. We have specific ideas. Some of this we have actually shared in our presentation, which we are very actively working on, which we believe can help Kiddopia breakout of the kind of plateau it has been since the 2 quarters.

[Operator]

The next question is from the line of Jinesh Joshi from Prabhudas Lilladher Pvt Ltd.

[Jinesh Joshi, analyst]

Sir, my question is again on Kiddopia. I understand you have shared some insights with respect to how you plan to scale the business up, for instance, by minding beyond the U.S. geography, or for that matter, entering into India. But I mean, where we choose to operate, the act -- like, the issue will continue to [ level ] as right. So what exactly are we trying to think through why acquiring this balance sheet and how do we plan to get back on the growth path? I'm asking this because for quite some time, we have seen the subscriber base fall off in Kiddopia. So just your thoughts on that.

[Nitish Mittersain, executive]

I think the biggest opportunity here is to boost organic traffic. For achieving that, we need to partner with popular IP characters of kids from all over the world and integrate them into Kiddopia. We are very actively in discussions with many such large IP holders. Most names you would know, but I will not disclose on the call until we have an agreement in place, which I believe will lead to a large boost in organic traffic for the company.

I think what we need to do is move away from the pure user acquisition led model. And we have seen competitors of ours in the U.S., for example, do very well through this organic IP-driven route. Given that Kiddopia's core product remains very popular, it remains very sticky. We think the combination of Kiddopia product with popular IP can be a very successful one. And we are hoping that in the coming months, we announced and integrate these and take them to market to give a fresh lease of life for the product. We still believe there is a lot of potential. It's certainly a much larger-scale business, but we need to think out of the box, which is what we are currently very actively working on.

[Jinesh Joshi, analyst]

Sure. But when do we plan to induct the IP character that you just spoke about?

[Nitish Mittersain, executive]

The companies that we are talking to are very large corporations, and therefore, they have their own processes. We've been in discussions for the last 2 quarters at least. And I believe we are coming to a point where maybe in Q2 or just by Q3, we should be able to announce some of these. We will go with content that we have that are just easily adaptable to these characters so that the time to market is not takes a lot of time. I think Q3, or latest Q4, which is October to December period is when we look at launching IP-driven content in Kiddopia.

[Jinesh Joshi, analyst]

Sure. Sir, my second question is on Fusebox. From whatever I've understood is that we basically published based on a popular TV IP. So are we supposed to pay any kind of royalty to the production studio? That is question one. And secondly, if our game is dependent on some TV show or an IP for that matter, basically, the content intelligence is with someone else and we are just trying to basically mimic it. So just wonder how simple and successful this format can be.

[Nitish Mittersain, executive]

Yes. No, it is -- actually, the way this works is, firstly, of course, it's actually an IP play. So similar to what we are talking about Kiddopia, which is licensing popular IP. In this case also, the studio is licensing popular IP, which gives them a significant boost in organic CapEx. So like, Fusebox, we can already see the success of what IP can do, which is what we're trying to replicate in Kiddopia. And if you've seen the Fusebox numbers we uploaded, right, we've seen rapid growth.

There's a lot of the revenue coming from iOS despite the IDFA shows, et cetera. Now the model that works is basically a revenue sale. So usually, you are paying net revenue of, in some cases, after you wear, some cases before you wear. You're paying anywhere from 12% to 20% range for IP. But that cost, generally, is lower. They're the costs that you would pay for user acquisition. So the margin profile is much higher even after factoring in for this cost.

In terms of content. For example, in the case of Fusebox, while you draw on some of the characters of the show, the content is actually fairly de-linked. It's within the guidelines of the show, but it is pretty de-linked with -- now with AI, et cetera, our ability to produce this content is much faster. With Fusebox, particularly why we were very excited is that they've got a proven engine for narrative-based, story-based games and we believe that beyond the current IPs that they have, one which is very successful, one which is going to launch in the next few months. We believe this -- we can take this engine across the world in different geographies, partner with local popular television serials or shows and launch. I think it's quite a scalable platform that we've acquired and we will build on.

[Jinesh Joshi, analyst]

Sure, sir. One last question from my side. [ IVC ], we still own about 40% in a brand and our exposure is about INR 53 crores as of date. Currently, we are also evaluating options to raise money. So I just wanted to know, have we deepen any write-down in our investments so far within the IP?

[Nitish Mittersain, executive]

No. So we own 40%. And we've -- as you noted, we deconsolidated this business due to 2 reasons. One, they wanted to venture into the lack of space, which was not conducive to our own model or where we want it to go. And second, it was not able to -- it was making losses, which we do not really want to sustain. So at this point of time, we are evaluating options to either sell our stake if we can get a buyer or the company is looking to raise capital. At this point of time, we have not taken any impairments, but there is a potential risk of impairment in the future.

[Operator]

The next question is from the line of Manan Poladia from MKB Securities.

[Manan Poladia, analyst]

Am I audible now?

[Operator]

Yes, sir.

[Manan Poladia, analyst]

Okay. So my first question is on the Datawrkz business. I think it's been another 5 or 6 quarters or more since we've acquired the business.

[Operator]

Ladies and gentlemen, we have lost the connection of the current participant. We will move on to the next participant. The next question is from the line of Samarth Patel from Equirus Securities.

[Samarth Patel, analyst]

Am I audible?

[Operator]

Yes, sir.

[Samarth Patel, analyst]

Sir, I had 3 questions. The first one is with the BGMI Master series to naming it down, streaming on Star Sports, how should we think about the growth trajectory and margin outlook for eSports segment this particular year?

[Nitish Mittersain, executive]

So I'm going to call Sudhir to take up the questions around the eSports business.

[Sudhir Kamath, executive]

Sure. Samarth, I think as you mentioned, streaming has started. In this quarter, if you look at the numbers, we have seen an uptick in media revenues for NODWIN's business, so almost a 45% kind of an uptick compared to same time last year. That doesn't actually reflect a lot of the BGMI marketing in the revenue. So that will still come in the coming quarters. So we do expect a pretty nice growth on that front.

[Samarth Patel, analyst]

Would that quantum be similar to what we had last time when the streaming used to happen on Star Sports? Or is there material difference in terms of media revenue?

[Sudhir Kamath, executive]

I think it's still a little early to say that. Earlier with Star Sports, there was -- apart from the series, there was also different packages that we were providing. I think on that front, there is still work being done. So I think maybe just wait a quarter or so and then we'll give you a more detailed update on that.

[Samarth Patel, analyst]

Okay. And apart from that, considering the Smaaash Entertainment, which operates the physical and team [ mentors ] across various cities in India. And like, how do you envisage the synergy between Nazara's core gaming business, eSports business and the Smaaash Entertainment going forward?

[Nitish Mittersain, executive]

I'd just like to first call out the Smaaash, as you know, it's in a NCLT-led process. So the committee of creditors have selected Nazara as the preferred bidder but it's still awaits NCLT court approval. So that, we think, will take a few more months. Until then, we are not really -- we can't say anything much about Smaaash at this point.

But just broadly, from a strategic point of view, the way we see it is there is an emerging kind of hybrid gaming model that we see, where you will have physical centers like Smaaash or others, which also become an avenue for online games like ours to have cross-selling synergies. The same customer segment is there and they can get exposure to both sides. So we do see synergy, especially with the 2 parts of our business. One is the cute gaming side with Kiddopia and Animal Jam, and the second one is eSports and live event side. And I think that will hopefully come in future.

[Samarth Patel, analyst]

Okay. That was really helpful. And my last question is on RMG. So is there any change in our acquisition strategy in the RMG segment? And, like, if we are, like, pursuing it, how close are we to securing a deal of any significant scale here?

[Nitish Mittersain, executive]

So there's no change in the strategy. We are looking at -- as we mentioned in previous quarters, we are looking at sizable companies, which are market leaders or in the top 3, at least in their segments. And that continues to be the focus, and it will be sizable. The alternative here, which we're also looking at, is very small tuck-in acquisition, combined entirely with OpenPlay and use their, like, end-product platform. which would be smaller in nature.

So both are still in the pipeline, I would say that we're working and it's, indeed -- it's very difficult to predict when things will close. And specifically in RMG, there is also the average complexity of the legacy chat streams, which are there, right? So we do need some regulation. I do believe, as we've seen in the budget, the government has now got the power to waive parts of it. It is really good seeing how the target uses the app in, I think, some of the transactions that we've spoken to.

[Operator]

[Operator Instructions] The next question is from the line of Nikhil Gupta, who is an individual investor.

[Unknown Attendee]

My question is for Nitish. It is around Smaaash only. I know you cannot share more details at this point. But I just want to know, let's say, we go ahead with the deal. What is the vision for the next 5 years? How do you see getting integrated, the offline and the online and the revenue growth, the projection you can see in the next 5 years?

[Nitish Mittersain, executive]

Yes. So I'll answer in context to offline or physical gaming zones and entertainment zones versus a specific response to Smaaash. So we think that -- as Sudhir mentioned, one is eSports with NODWIN, what we have. NODWIN eSports already has a lot offline tournaments, et cetera, which we believe can integrate very well with a footprint that we have in the offline gaming zones. I think that is one clear opportunity for us.

The second is we believe that VR, AR, et cetera, are taking off very well. We've been actively looking at acquiring some VR studios, for example. And I think online, offline VR experiences could be also very interesting play. Third is, we want to roll out our online open Nazara loyalty platform, which can also integrate into this. So we have several ideas on how we can really make this value accretive for both online and offline.

In terms of just the offline entertainment, I think increasingly, with India's growing consumerism, the ability to expand significantly across the country, the scale and opportunity for such businesses over the next years is going to be immense, and we want to have our own play in the same.

[Unknown Attendee]

Yes, that's quite helpful. Sir, if you can have some tentative number you have in mind, which can grow in the next 5 years in the...

[Nitish Mittersain, executive]

Not at this point.

[Operator]

[Operator Instructions] The next question is from the line of Abhishek Banerjee from ICICI Securities.

[Abhisek Banerjee, analyst]

A couple of questions from me. So with regards to the Kiddopia business. See, I understand that the CPT has remained in a bag and you have managed to contain that. But the marketing spend are still pretty low, right? So you used to have a INR 2.7 million, INR 2.8 million kind of run rate, and it is much lower than that as of now. So given that the subscriber number has been declining, I take your point that the decline has arrested a little bit, but it's still a decline, nevertheless. So why are we not being more aggressive on acquisitions at this point by increasing the marketing spend?

[Sudhir Kamath, executive]

Nitish, let me take that one. Abhishek, thanks for hosting this and also for the question. I think on the CPT side, what you said is correct. I mean, we have managed to keep it at the current level. But that's the current spend level of about INR 2.4 million or so. What we've seen in the past is that when you scale up, CPTs and churn have typically increased the a little beyond what we think is a comfortable level for the business.

So I think as Nitish said in the -- one of the earlier answers, I think for Kiddopia, the growth, I think, will keep the U.S. probably stable at this level or maybe slightly higher as we can, we keep exporting other channels for that. But eventually, the bigger chunk of growth will come from [ non-user-led ] measure. So IT integration is probably the #1 idea of initiative there, which should -- where we want to acquire minimum organic use, and that's what has to retire [indiscernible].

[Abhisek Banerjee, analyst]

Understood. But if we even look at that route, right? So whatever royalties we'll be paying Will that be the same -- I mean, that can -- will it come to the similar kind of a number as what we are seeing today?

[Sudhir Kamath, executive]

So we've done various simulations on this, and we're also seeing some of our competitors' -- the [ suitcases ] around sort of the segments as you said, in the time. And we do firmly believe that the cost in June royalty of what we paid for those users, so the CAC there will be lower than what we've seen from a purely user-led strategy.

[Abhisek Banerjee, analyst]

Understood. Okay. My next question will be on the Pro Football Network, right? So there, you've talked about some changes to the product that has happened. So first, I mean, so PFN has been an exceptional performer for you guys. So exactly what has been modified here? And what kind of growth are you expecting in PFN for the Q2 -- I mean, the peak season?

[Sudhir Kamath, executive]

I think it's not so much changes, it's actually new product, which PFN has been able to create with the support from the Sportskeeda. So we even had a fairly small [ deal ] and most of it, it has a much larger infrastructure in terms of if you could help them both on the tech side and on the content tool, side. And many tools have been developed, which will then be given to customers in the coming [ anniversary ] period, which actually starts in September. So that's what we're looking forward to.

In Q1, what you saw, there was about a 50% kind of revenue growth over the previous year. So I think that's off season. We are waiting to see if that gets replicated in the actual season as well or not. I don't want to really put a number on it at this stage. But I think by next quarter's results, we will start seeing some numbers.

[Abhisek Banerjee, analyst]

Got it. And finally, on the eSports business, there also, you have spoken about a lot of new IPs which are coming in the next quarter. So any clarity on what is exciting you there?

[Sudhir Kamath, executive]

So I think there's obviously the big excitement around the whole Freaks4U acquisition, and that allows us to expand into a very high-value geography. At the same time, you have each team which sort of can sit in India, Turkey and other places. So we think that combination is going to be quite powerful. That also brings with it a bunch of IPs for those markets and the IPs from the India market as well, which are coming up. So I think very, very exciting times for NODWIN.

[Abhisek Banerjee, analyst]

Got it. Just a request from my side. If you can give some sort of guidance on what happens to the organic business at least, that would really help us to make our models, at least for the next one.

[Operator]

The next question is from of [ Kavil Shah ], who is an individual investor.

[Unknown Attendee]

My question is related to the publishing division of ours. So I think we have recently tied up with FAU-G, one of our decent-sized games, I believe. So I just wanted to understand in detail what is the business model here for foundation? What is the opportunity size? And how do we have revenue sharing, et cetera? And what are the long-term margins possible in distribution as well?

[Sudhir Kamath, executive]

So if I can clarify, what we have signed with the contracts for publishing a new game, which is called FAU-G Domination. There was a game called FAU-G a couple of years back. That's the same game from the same team. But we are basically focusing on the new game, which is being launched. So at this point, we're still in the preregistration kind of a process stage right now. We expect the full release to happen around Diwali time, end of October [Foreign Language]. And our target is to have, at least, signed a registration before that.

If we do that, then the game will be one of the bigger successes out of India. The revenue -- again, there is a revenue share kind of a structure. Commercial -- these are not actually disclosed the percentages, et cetera here. But I think broadly, the way it is to work is, as you would understand, that we at Nazara will invest in the marketing and promoting that game, helping it to keep -- so we would developed it and quote it in the [ fortnight ].

[Unknown Attendee]

So overall, what...

[Sudhir Kamath, executive]

Also as one of the kind of margin structure there, I mean...

[Unknown Attendee]

Overall, for the publishing division -- sorry, I just wanted to know overall quality publishing division, how does the business model work in general, not only specific to 4G.

[Sudhir Kamath, executive]

So publishing, we follow the same model, which is somebody else has developed a game which we like and we think works in selected markets, which could be India, could be Middle East or could be global, right? For those markets, Nazara would then invest funds for user acquisition, marketing, branding, any supported, really. And the revenue typically goes through Nazara and then a percentage of that is given to the developer. So that's the typical model.

[Operator]

The next question is from the line of Rahul from Dolat Capital.

[Rahul Jain, analyst]

I just wanted to understand the seasonality. How this -- some of the newer businesses that we are integrating soon, how this would play out in some of these businesses and even on the revised way, how we have to see from the existing businesses that how this should play out.

[Nitish Mittersain, executive]

Sorry, I didn't exactly get the question. You're talking about seasonality for Q2 coming up or...

[Rahul Jain, analyst]

Yes, yes. So what I'm trying to understand, like, for example, the bigger units like Freaks4U or Fusebox, what are the right way to think about in terms of the flow of revenue through the year? Are they seasonal because of the kind of back-end events that they are linked to? Or they are more like through-the-year kind of businesses? And at the overall level, if you could give that -- how the weight of the revenue for Nazara, as a company, should play out over 4 quarters. Is it going to be bigger? 2 big quarters or say 2 smaller quarter? Or anything of that level will be of help.

[Sudhir Kamath, executive]

Sure. I think Nazara is fairly diversified across businesses. So it does help us to smooth out these kinds of variations. But at the individual business level, they definitely have seasonalities and traits. We go through a couple of some individual effects. So if you get something like Freaks4U, that definitely seen significant higher revenue in the second half, just given the nature of how tournaments will happen in Europe. I think the winter kind of season works better.

Similarly, for PFN, there's very high seasonality. The season typically comes from September to Jan for them. On the eSports side as well as for Sportskeeda, there is an IPL season which is Q1. But other than that, for U.S. sports and to the U.S. side of the business, second half is again higher. Hard rates are also higher in that period. So again, from a revenue point of view, there's a significant seasonality there.

If we look at something like Fusebox, it was another one. Fusebox, the quarter is linked to TV IP. There is a linkage to when the period is airing. And historically, there has -- the team had not being into that. But what the team has done successfully over the last years and one of the reasons we really like that business, is we've been able to kind of de-link how the season indoor games go versus seasons on the TV show. So that makes it now a lot more spread out over the course of the year. Overall, if I would say, I think, for Nazara as a whole, second half of the year is definitely higher seasonality wise in aggregate, but it does balance out a bit more than these individual business do.

[Rahul Jain, analyst]

Right. Right. And just a follow-up on the use blocks question. Of course, there is some more input that you have shared in the PPT. But just to try to understand how the scalability potential out here is. Because I think we are going to widen the number of IPs that it would -- I think, as I mentioned, a Big Brother. So is that already baked into the Jan/July number? Or this is going to be -- more part of it is going to be in the future?

[Sudhir Kamath, executive]

Now, all of this is in the future. Let me clarify. So the current revenue is almost 90% plus, some single game, which is the Love Island game. And that has scaled very nicely over the last 1 year, 1.5 years, okay? And we do expect that specific game itself to continue scaling for the coming quarters and years. In addition, if there is a new game, new IP-based game, which is going to be launched which we expect to launch maybe by the end of this financial year, early next financial year as well.

Yes, however, we are most excited about is that the platform that they have built, the tech platform and the product and the processes around it. That can be leveraged for other IP business, which is beyond these 2 and -- which we would like to work with the team to figure out for those same markets or other markets such as. And obviously, that will require more investment also in terms of team and concentration ability still. But we do believe there is ability to grow that platform further, beyond the first and the second wave.

[Rahul Jain, analyst]

Yes. And one last question from my side. Given that now we have the entire control on the Kiddopia business as well, so does that changes the way we could possibly strategize it, given that the operational day-to-day is now much more controlled. Is it going to change the way we strategize? Or it won't -- it's more about the consolidation thing that is going to happen, like, from an operational point of view, it would not have much of a difference?

[Sudhir Kamath, executive]

So I think there will be differences, which you will see in the coming quarters. I think the consolidation is one part of it, but especially that the focus on IP-based games, which Nitish spoke about. And after the consumption, transition that. I think you will see in the coming quarters.

[Operator]

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

[Sudhir Kamath, executive]

Nitish, would you like to...

[Nitish Mittersain, executive]

Thank you everyone for joining the call. I believe that with all the activity that is currently ongoing, the remainder of FY '25 should be exciting for us, and we will continue to work hard to deliver value for all our stakeholders. Thank you very much.

[Operator]

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.