Nazara Technologies Ltd

NSE:NAZARA

Earnings Call Analysis

Nazara's Earnings: Growth, Risks, and Expectations

Nazara witnessed a diverse quarter, with stable gross revenue but lowered net revenue due to increased loyalty promotion expenses, leading to an EBITDA loss in Q3 FY '24. The e-sports segment grew by 24% year-on-year in the 9 months FY '24, with an impressive EBITDA increase of 44% during the same period. Strategic acquisitions bolster the company's portfolio and market presence, signaling expansion and diversification ambitions. Despite a slight churn increase in user acquisition and reactivation, the expectations for Q4 seem optimistic, though seasonality might cause fluctuations. Investors should note risks linked to potential GST liabilities in real money gaming, although their impact might be subdued by the company's relatively small scale. Cash reserves are earmarked for strategic investments across segments to drive growth and cash flow. The outlook remains positive, expecting significant growth in the coming quarters, driven by both organic expansion and strategic M&A.

Growth Story Amidst Economic Pressure

Despite the macroeconomic rigors, the company reported a substantial increase in their key financial metrics. The company's revenue ascended to INR 320.4 crores, and their EBITDA surged by 24% year-on-year to reach INR 27.7 crores. The growth narrative is particularly potent in the E-sports segment, where a striking 79% EBITDA growth was observed year-on-year.

Margin Expansion and Profit Growth

The period reflected favorably on the company's margins and profitability. Overall EBITDA margins extended by 110 basis points to 11.3%, showcasing operational efficiency, while Profit After Tax (PAT) soared by a remarkable 44% to INR 74.6 crores, indicative of the company's successful strategies and profitability growth prospects.

Capital Infusion from Renowned Investors

The firm managed to bolster its financial strength, securing INR 760 crores through a preferential placement to distinguished investors, thereby enhancing its capacity to pursue strategic acquisitions aimed at growth acceleration.

Diversified Revenue Streams

The company operates across three dynamic business segments: gaming, e-sports and aptech, demonstrating a diversified and resilient business model. Gaming, e-sports, and aptech contributed to 36%, 55%, and the remaining revenue, respectively, with gaming also accounting for a significant 56% of EBITDA, indicating its pivotal role in the company's financial model.

Segment Performance and Strategic Adjustments

There were mixed outcomes across segments as some witnessed a decrease in quarter revenue, such as a 3% dip in the gaming segment. However, strategic changes are in progress, with product adjustments planned throughout the fourth quarter and beyond, highlighting the company's agility and forward-looking approach. This includes the planned introduction of a new game in Q1 FY '25, which could potentially catalyze future revenue streams.

Navigating Through Regulatory Change

The company adjusted to a 28% GST imposition on skill-based real money gaming, maintaining gross revenue stability via loyalty promotions despite this regulatory headwind. This adaptability in challenging conditions emphasizes the company's strong market position and readiness to navigate regulatory shifts.

E-Sports and Acquisition Plays

The proactive e-Sports segment saw year-on-year growth of 24% in revenue and an astounding 79% upswing in Q3 FY '24 EBITDA, underscoring its rapid expansion and profitability. To further amplify its market presence, the company completed strategic acquisitions, enhancing its global footprint and diversifying its portfolio, including notable investments in marketing and media companies.

Stellar Performance of Digital Content

Sportskeeda, the company's digital content platform, continued to exhibit exceptional performance, reporting year-on-year revenue growth of 57% in 9 months FY '24 and 68% in Q3 FY '24, reflecting high engagement and the potential for further expansion in this area.

Investing in Growth and Marketing

The firm significantly increased its gross margin percentage from 19% to 27%, demonstrating the effectiveness of its strategic pivot and operational modifications. Notably, investments in sales and marketing saw an increase, which, although it affected EBITDA figures in the short term, is expected to bolster the sales pipeline and build foundational growth for the coming fiscal periods.

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to Nazara Technologies Limited Q3 and 9 Months FY '24 Earnings Conference Call hosted by Prabhudas Liladhar Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Jinesh Joshi from Prabhudas Liladhar. Thank you, and over to you, sir.

[Jinesh Joshi, analyst]

Yes. Good morning, everyone. On behalf of Prabhudas Liladhar, I welcome you all to the 3Q and FY '24 earnings call of Nazara Technologies. We have with us the management represented by Mr. Nitish Mittersain, CEO and GMV, Mr. Rakesh Shah, who's the Group CFO; Mr. Sudhir Kamath, COO and Anupriya Sinha Das, who's the Head of Corporate Development. A majority of the questions today will be taken by Mr. Nitish Mittersain. .

I would now like to hand over the call to the management for opening remarks. Over to you, Nitish sir.

[Nitish Mittersain, executive]

Hi, everyone. Good morning, and a very warm welcome to all of you to Nazara Technologies Q3 and 9 months FY '24 earnings call. On this call, I'm joined by Sudhir Kamath, our Chief Operating Officer; Rakesh Shah, our CFO; Anupriya Sinha-Das, our Head of Corporate Development; and HGR -- we have uploaded our results presentation on the exchanges, and I hope all of you have had an opportunity to go through the same. .

For this quarter, our revenue stood at INR 320.4 crores and EBITDA grew by 24% year-on-year to INR 27.7 crores. We saw healthy growth in Animal Jam and Sportskeeda, resulting in our EBITDA increased by 24% year-on-year despite softer revenue growth on an overall basis due to some decisions we have seen in our aptech business as well as our real money gaming business.

Our EBITDA margin increased from 9.7% in Q3 FY '23 to 11.8% in Q3 FY '24 as we continue to push for higher margins in our business. Our e-sports segment witnessed a remarkable 79% EBITDA growth year-on-year. For 9 months FY '24, we reported 9% year-on-year increase in revenues to INR 872.1 crores and EBITDA for the same period increased by 20% to reach INR 28.7 crores. Our overall EBITDA margins for the first 9 months have increased by 110 bps to 11.3%, and our PAT has climbed 44% to INR 74.6 crores.

Our approach of acquiring global gaming IPs and leveraging focused user acquisition, along with data-driven product innovation is starting to pay off for us as demonstrated by animal GM's performance in Q3. When we acquired the [indiscernible] business we thought that we could make a good impact on it. And with all the hard work that has been put in by our team in the last few quarters, we're actually starting to see the results of the same.

Now we're more confident that this playbook can be expanded and scaled up significantly, and we will continue to try and dedicate this in the coming quarters as well potentially new in studio acquisitions. We have also completed our FY '24 fundraising board. We had set us as a target of INR 750 crores. We managed to secure INR 760 crores through a preferential placement to marquee investors like Mr. Nikhil Kamat, SBI Mutual Fund and ICICI Prudential Mutual Fund. With significant cash as of today, we are in an excellent position to pursue the exciting acquisition of Potter team has identified. They have been working diligently for the last year on putting together many opportunities, and we hope to take some of these to the natural conclusion in the coming quarters.

Our Nazara Publishing division has hit the ground running with its inaugural set of games going live soon. I think as a leading Indian company and also we are very focused on making India and for India. We are supporting a lot of Indian developers to this new initiative, and we hope to build a large user network through our Nazara publishing platform.

Finally, this March, we are proud to lead the Indian delegation to DTC San Francisco. This is the world's largest gaming conference and we are co-hosting the first ever India Pavilion. -- marking a significant mason for us as an Indian gaming community, which we believe gave the time for them to time. I would now like to hand over the call to Anupriya, who will give some highlights for performance in this quarter.

With said, we will be happy to answer all your questions. Thank you very much.

[Anupriya Das, executive]

Thank you, Nitish. Good morning, everyone. As you're all aware, Nazara operates across 3 business segments: gaming, e-sports and aptech. We continue to be well diversified across demographics, geography and business models. Gaming contributed to 36% revenue and 56% EBITDA in the 9 months ending December 24. During the same period, eSports constituted to 55% in revenue or 38% in EBITDA, while [indiscernible] contributed the rest. Gaming includes gamified Early Learning, skill-base real-money gaming, premium and telco subsegments.

This segment grew by 7% in 9 months FY '21. grew by 27% year-on-year in 9 months FY '24 and was down by 3% in Q3 FY '24 compared to Q3 FY '23. The EBITDA margin for this business is at 23.6% in and 9-month FY '24 versus 17.3% in 9 months FY '23 and stood at 16.4% in Q3 FY '24. Pingan Kopi revenues for 9 months stood at INR 168.6 crores compared to INR 162.9 crores in 9 months FY '23. For the quarter gone by, the revenue stood at INR 54.7 crores versus INR 57.1 crores in Q3 FY '23.

EBITDA for 9 months grew by 77% to INR 44.4 crores from INR 25.2 crores in 9 month FY '23. EBITDA margin increased substantially to 26.3% from 15.4% in 9 months FY '23. For Q3 FY '24, the EBITDA margin increased to 28.2% compared to 11.7% in Q3 FY '23. Due to an increase in user acquisition costs and lower marketing spend, we experienced a higher churn rate of subscriber will decline in this quarter. However, due to control on the CPT, we deliver higher EBITDA margin of 28.2% in Q3 FY '24.

We made a hard switch between our preferred user acquisition channel in December '23 to improve performance in the coming quarters. Also saw an increase of around 3% year-on-year -- quarter-on-quarter in Q3 FY '24. We are working on alternate growth opportunities, for example, IT licensing, which can break through the current user acquisition NOVA -- so moving to Animal Jam, Animal Dam delivered its highest quarterly revenue and EBITDA numbers since Nazara acquired it.

Revenue and EBITDA for the quarter increased to INR 26.8 crores and INR 6 crores, respectively. EBITDA margin for the quarter stood at 22.2%. The growth was driven by a very successful set of in-app events across the quarter, culminating an additional event that was very enthusiastically received by our community of young gamers.

In addition to ongoing performance marketing, Animal Jam also started experiencing with other user acquisition methods, including a campaign on Tik-Tok many influences coinciding with the holiday season. More broadly, Animal Jam growth over the year was driven by product development and better U.S. driven by deeper analytics. The success of Animal Jam gave confidence to us for deploying a similar playbook with other popular global gaming IPs.

Moving to work with the Championship. Revenue for the WCP franchise stood at INR 18 crores, with EBITDA FY '24.3crores in 9 month FY '24. The EBITDA margin for the business stood at 23.7%. As we shared in Q2, Nazara reinventing the French of WTT franchise to position it for growth and help it break out of its current scale. The initial set of actions have been taken over Q2 and Q3, including a revamp of next wave ad monetization, live of brand sales and user acquisition operations.

Product related changes will continue through Q4. This includes changes to the existing games, BC2 and BCCI as well as a new game to be launched in Q1 FY '25. Moving to open play. This segment's revenue and EBITDA stood at INR 32.9 crores and INR 0.8 crores, respectively, FY '24 compared to INR 3.6 crores and INR 8.5 crores in 9 month FY 3, respectively. In July 2023, a 28% cash for entry fees for skill-based real money gaming was implemented effective from 1st October 23.

The impact of increased GST costs has largely been absorbed by all industry players, including classic rummy, while player deposits are inclusive of 28% GST paid to the government. The payers still gets the full amount via loyalty promotion bonus, which can be used in the game. Post-GST implementation, Classic rummy recorded an EBITDA loss in Q3 FY '20. While gross revenue before netting loyalty promotion bonus is steady, but clear activity has not relied However, net revenue is lower due to higher loyalty promotion expense.

The added ESC costs led to an EBITDA loss in FY '24. Clear policy guidance, Nazara actively see consolidation opportunities in the sector. Our e-Sports segment grew by 24% year-on-year in 9 months FY '24 and 27% year-on-year while EBITDA grew by much faster by 44% in 9 month FY '24 and 79% in Q3 FY '24.

Moving to [indiscernible]. The revenue for the quarter increased by 20% to INR 133.9% and grew by 17% year-on-year in 9 months FY '20 to INR 327.9 million. EBITDA was at negative INR 5.8 crores in 9 months FY '24 and negative INR 2.2 crores in Q3 FY '24. These numbers include publish me, which was acquired by [indiscernible] in October clarity -- the EBITDA loss during Q3 FY '24 is attributed to the gaming accessory business brand scale innovation with houses of branding. To support upcoming product launches and expand into new markets, including laptops, brand can require substantial injection of fresh capital for marketing and branding efforts. [indiscernible] chosen to for further investment in relinquish control. enabling Landstar to see book capital from new investors.

Margin shareholding remains unchanged, but banca will be treated as an associated with the consolidated financial reporting from February 3, 2024. Large media rights have been pushed out into consolidation in the media, TV and OTT industries. However, Nodwin has been able to secure independent media rights for individual property. Encase independent media rights were higher than previous years. Revenue per partner has increased from INR 1.63 crores per revenue part for 9 month FY '23 to INR 2.7 crores per revenue part by 9 month FY '24.

I would also like to highlight the retail acquisitions made by Nodwin, which are propelling the expansion of product offering and market presence. In October, we see Nodwin acquired 100% stake in gaming marketing as published for sum of $2 million from its existing shareholder, Nazara Alger. This acquisition will provide the essential than wind for Nodwin gaming to drive its mission of leading the emerging market media landscape.

In December '23 rate in order and invested INR 33 crores in Fekola, a marketing services company for gaming and exports, the revenue services across the world, especially in the PC games and developed market. In January '24, Nodwin Gaming has announced acquisition of 100% stake in Comicon India through a cash and stock valued at INR 55 crores. Is this buyer nor will not only look to diversify food portfolio, but to also expand presence in its global entertainment space.

Nodwin remains committed to its vision of becoming 1 of the top 3 eSports companies globally. The growth adjective will be sustained through both organic expansion and strategic M&A aimed at enhancing capabilities in emerging and developed markets. Sportskeeda continues to have a stellar performance. We have reported a robust year-on-year revenue growth of 57% to INR 1.7 crores in 9 months FY '24 and 68% in Q3 FY '24 to INR 59.8 crores. EBITDA for the business improved to INR 518 crores in 9 month FY '23, a growth of 67% year-on-year. So whereas -- for Q3 FY '24 increased INR 26.7 crores, which is a growth of 97% year-on-year.

EBITDA margin for the business improved to 35.2% in 9 month FY '24 from 33% in 9 months FY '23. Sportskeeda to continues grow its revenue and EBITDA. In Q3 FY '24, it's subtier football network, a business we acquired in Banc also reported a healthy margin bolstered by the ongoing NFL season. Both Sportskeeda and PSN continue to grow in the U.S. post media market where post-Kraken in the port domain in the U.S. and PFLN3 in the American football domain in the U.S. in December 23 as per similar web.

Moving to Adi, our third segment. Over the past year, we have shifted focus from low-margin work to securing high-margin business clients. This strategic pivot it sorry, resulted -- in a year-on-year revenue dropped to INR 76.3 crores in 9 FY '24 from INR 114.2% in 9 months FY '23. Despite this, our gross margin percentage saw a significant increase from 19% to 27%, indicating an effectiveness of our strategy. Although our gross margins have improved data EBITDA fell to INR 6.6 crores in 9 months FY '24 from INR 10.8% in 9 months FY '23.

This decrease reflects our heightened investment in sales and marketing, including team overheads and promotional levels. These investments particularly during Q3 FY '24 has significantly enhanced our sales pipeline, leading to improved conversion rate and establishment of social partnerships.

With this, I will close my remarks here, and I'd like to open the call for Q&A. I request Mr. Sudhir and Rakesh Shah to join me for the Q&A.

[Nitish Mittersain, executive]

Thank you, Alok, for that. I'm or actually ask our Chief Operating Officer for the comment, and I hope will step up to answer the questions today. And I also want to jump in where required. So let's get started.

[Operator]

[Operator Instructions] The first question is from the line of Nitin Jain from Fair Investment Private Limited.

[Nitin Jain, analyst]

Yes. And congratulations on the good execution in eSports and Animal Jan. So I wanted to dwell a bit on the [indiscernible] business. So despite all your efforts, the subscriber growth is -- it's not picking up as expected. So what do you think would be the reason behind that? Like is it the product? Or is it the cohort that we are addressing in terms of their propensity to spend? Or let me put this way, like are there any learnings from animal jam that we could replicate here?

[Nitish Mittersain, executive]

Sudhir, let me take this one. So I think for [indiscernible], the challenge is not at all on the product or the consumer behavior or the penetration of the market. I think it's a very simple challenge of being able to acquire users had effectively at the cost that we are willing to pay. So I think that is where the challenge we have faced. This year, we have carried a lot with the main added -- but I see the Q3 numbers also [indiscernible] we able to 2 things. We are moving or we've actually moved as of December into some other side networks, which we are hopeful will be more effective for us. And the team is located on that.

But I think we also need to move beyond linear user acquisition into other ways of acquiring users. One thing we are quite excited about is licensing popular IP. So today, if you see of our animal cam, both these games are 100% original IP games. But we have seen that many companies in this stage in the kids space globally are doing much better when they are licensing popular IP of well-known characters from companies like Hasbro or Mattel or a Disney. And a lot of these companies have spoken to, and they are very keen to work with us for the quality of product is proven.

So we are hoping to execute some of opportunities in the coming 1 or 2 quarters. That will allow us to boost user acquisition through organic means and not just to pay. So I think that will be a potential game changer for us, which we are very actively working on. Yes, I hope that answers your question.

[Nitin Jain, analyst]

Yes. That's good. And just to continue on the itopia. So there was a plan to roll it out to other geographies. So what would be the status of that project?

[Nitish Mittersain, executive]

So we have at this point of time, continue to focus a lot on getting the core business stable. Look, I think the North American market has capacity for our user base to double. So we need to get that right before we focus elsewhere. We do have experiments running in markets like Japan, we have seen some success. But we really haven't doubled down whether you want to solve the 1 problem.

[Operator]

[Operator Instructions] Next question is from the line of Manan Palod from MKB Securities.

[Unknown Analyst]

Yes. Am I audible?

[Jinesh Joshi, analyst]

Yes, Manan.

[Unknown Analyst]

First of all, the acceleration in posting a sale side. Firstly, my question is also on the Topia I just wanted to understand this big that we're seeing in terms of subscriber growth, et cetera, -- and I understand you've made a hard shift from an acquiring platform. Can you give me some color on why the churn has happened? I understand the new user acquisition being in it, but this churn rate, I'm not really said so what's the situation there?

[Nitish Mittersain, executive]

Yes, I'll take it. I'll take it. So what happens is that when our spends are running well we have acquire new users but existing users who have elapsed, also get reactivated. So when you see a churn number, you see a net churn number, which includes activation and reactivation because our overall spend in this quarter have gone down significantly. The reactivation also dropped, which is why you were seeing a little higher churn edge.

[Unknown Analyst]

Correct. I understand that. My second question is on the win acquisition that we made a while back. And last year, last quarter also, I have spoken to you asked about the purchase of stock in trade line item. And we purchased some, I think, INR 64 crores, INR 65 crores worth of equipment for the wins platform. So -- and you were supposed to stand it in the festive season, et cetera. Can you give us an update about the performance of how that right?

[Nitish Mittersain, executive]

Yes. No, it has $0.30 for and our stock come down. In some earlier. .

[Operator]

Sorry to interrupt your voice. We're not able to hear you.

[Nitish Mittersain, executive]

.

Can you hear me now? .

[Operator]

Yes, sir.

[Nitish Mittersain, executive]

Okay. I'll just repeat my answer.

So the Diwali was reasonable for us and our inventory levels have come down. But we took a consolidated sales bonus. They have seen a lot of opportunity and initial in India.

And you just felt that for where the core business is we're still not able to hear you. Sharing let me just step in on this one. I just want to that again. I think I'm not sure you can get it each clearly.

Brings the 2 things. I think 1 is your question was around inventory. Inventory levels have come down over the festive season, overall, it's doing fairly well for them and especially laptop the category, which they had launched went very well. However, for us, the bigger question was bring seen the direction I think the growth for the segments which are away from the core e-sports which we had ended. So laptops, for example, is not really connected to the more of a generalist cap. That's probably what we've also seen in an announcement we put out a stat median to take up its option base metrology of that business. Does that answer the question?

[Unknown Analyst]

Yes, I think it does. My last question is with regards to the Sportskeeda and Nodwin numbers. From what I understand that this was a seasonally strong quarter, especially for Nodwin as well as Sportskeeda due to the PFL thing. I just wanted to understand how should we look at numbers going forward? Like is this something that would seasonally, we can show from here, do we see lower fines going forward.

[Nitish Mittersain, executive]

No, I think in general, if you look at the last few quarters as well, Sportskeeda has consistently done well in all the quarters, and we expect this very much. That said, there is seasonality in the business. So Q4 might be lower than we've seen but Q4 will definitely be much better than Q4 of the previous year. So growth is definitely there. So Nodwin as well, I think the long-term trend is clearly high growth and continues to be this quarter.

[Operator]

[Operator Instructions] Next question is from the line of Raj Joshi from Securities.

[Unknown Analyst]

Sir, I have a couple of questions. Our ad tech business is still facing challenges -- how do we look at growing this business?

[Nitish Mittersain, executive]

For that question, Raj. I think as we have said in the previous call as well, the ceded business has leading a more fundamental shift away from some of the low-margin business were earlier towards slightly higher margin businesses on the services side as well as the commodities. That switch takes time. It's the fundamental reset of the DNA of the company, the organization structure, et cetera.

So what you would have seen in the last quarter as well as in this quarter is there's an overall revenue degrowth, but most of the degrowth on the lower-margin businesses, which we are moving away for -- so the gross contribution level, the percentages will improve that dramatically on a quarter-on-quarter basis of margin product from 20% to 31%. That's it. Post gross margin, we then look at the investment that we make into the marketing team and the marketing event. And that has resulted in the -- I mean, that is what we expect to actually drive the growth of this business in the coming quarters. And we think we are on track with that plan. And the thing that is executing on the cloud that you.

[Unknown Analyst]

Okay. And my other question is, how do you look at the organic growth for FY '25?

[Nitish Mittersain, executive]

For the active business or for Nazara?

[Unknown Analyst]

For both.

[Rakesh Shah, executive]

So from the acting business side has been really a taxi. So I think a lot of the investment is a born this year around the marketing team and the events there have started delivering in terms of new client is -- and that to us is a great on this time for significant deal not go for AEC, as you saw. But let's say we do expect significant growth on that business. A small mandate also in the product business, that has started delivering good returns. It's still early days for that business, but the initial set of clients have started to increase and the stickiness of those clients.

So all that has been quite positive or we see that very positively for the coming year. Overall, at Nazara, think organic growth will be strong across the board is what we see that as edition of the series opening remark, We are sitting on a lot of capital, which will be deployed towards M&A. So we do expect both organic and organic growth issue in the coming years.

[Operator]

Next question is from the line of Rahul Jain from Dolat Capital.

[Rahul Jain, analyst]

Just I have a few questions. Firstly, on Animal Jam seen since we have seen improving growth out here, what is the right benchmark given where you are at the stage in terms of monetizing it? Can we see 15%, 20% kind of a growth potential here on? Or we still would have to monitor in non-seasonal quarter to understand what kind of growth it can.

[Nitish Mittersain, executive]

Let me take the questions separately. In a lot of the export in the last year was around fixing the processes and the structure of how they were doing and let's take now they're doing us an acquisition, what the monetizing players. A lot of those things are late. And in December, they delivered 1 of the best ever event in the game, which is called [indiscernible]. Now all of the basics are now in place. I think they're beginning to see good scale up now in terms of data monetization. We do expect that, therefore, this 0% to 5% growth, that kind of growth should be deliverable for all the quarters on a year-on-year basis. .

But we would like to wait for maybe 1 more quarter to see how it performs in a non seasonally high quarter as well. And [indiscernible] bit more confidence on that. But actually, a we are there.

[Rahul Jain, analyst]

Got it. And on the Nodwin business, we have mentioned on this bank scale side where we basically would, is it safe to assume that we would see improvement in EBITDA margin starting Q4 since that could not be consolidated? And what will be the stake for us over time as you have also highlighted they may be raising more money in that will be retaining our stake or may also see dilution over time.

[Nitish Mittersain, executive]

Let me [indiscernible] so 1 is I think just in terms of the impact on EBITDA, I think, indefinitely will be possible, will be both starting from the is when we are doing that has been announced last week. We've not broken out the exact numbers for revenue and EBITDA at this point. So can't share that detail that it definitely will be a positive impact on profitability for the con. I'm sorry, could you repeat the second question, Rahul?

[Rahul Jain, analyst]

Yes. Sir, second part was that we have mentioned that the reason we have done this is they have some different plans now or expanded plans and they may need more capital. So which would mean that we may get diluted over time or we would also participate in subsequent rounds out there?

[Nitish Mittersain, executive]

I think those falls, we will take [indiscernible], I think the call we have taken is that we are not retaining the right to majority of the anoint a of the directors. So that right we have given us. We are not really currently at about 40% of that scale. So it becomes an associate for us. We can let it dilute as well, but we could continue to invest in us. So the options are open depends upon some of the direction the company takes [indiscernible] which investment national [indiscernible].

[Rahul Jain, analyst]

Got. And on the real money gaming business, -- what is the right road map to look at in this business here on? And also any inputs you could share on the potential risk from GST liabilities that we saw at least on the media for some of our peers. So what are the -- what is status for us and potential [indiscernible] .

[Nitish Mittersain, executive]

Sure. Rahul, Let me step in. I'll step in here to answer. Is my voice clear.

[Rahul Jain, analyst]

Yes, I can hear in this .

[Nitish Mittersain, executive]

Yes. Okay. So I think 2 aspects on the RAC side, one, we are stabilizing our own business, and we've seen some positive traction there between it another quarter to get that done. In terms of M&A, we are talking to a few people and seeing the opportunities for us to be to potentially consolidate in the market. And third, in terms of GST liabilities. As you know, the industry has been a large industry issue where there have been notices sent for tens of thousands of crores to the RMG companies. We have 2 RMG companies, Open play and Halal. We did get summons for both of them, and we have supplied relevant information. If there's any further development, we will share with the market at the appropriate time.

But of course, it's important to remember that the scale of our business in RMG is much smaller than many of the people who are sitting on very large games. Overall, we think, hopefully, over a period of this year, we are quite hopeful that these headsets will fall off or the court will take a right view over there, but that's the instate.

[Rahul Jain, analyst]

Got it. Got it. And 1 question on the telco business, we have seen some increase in losses here. Is it pertaining to some increase in corporate level expenses or more to do with the initiative towards Nazara publishing?

[Nitish Mittersain, executive]

Yes. It's not specific to do with the telco business but some of the expenses are grouped within that. I think it's more one-off expenses that you are seeing showing some losses there.

[Operator]

[Operator Instructions] Next question is from the line of Rohit Mara from SK Securities. .

[Unknown Analyst]

The first question from my side is that the Q3 for Nazara is expected to be better in terms of quarter and number a number of events as well -- and what has led to the lower growth in media and revenue and curated views? .

[Rakesh Shah, executive]

So I think the first point is, as we know, that Mediabank and players that are improving, we have expected media also doing revenue [indiscernible].

However, I think there is a lot of churn, as you know, in the overall media sector as well with the and the potential sortation I think what we see is that there's a little bit of induction to look at very large scale across the board side of PDT. What soda therefore focused on this quarter is more individual, smaller die or property. Those have been happening and those are the better terms than previous year. But that's a bigger kind of media transaction is not yet happening. We do expect that to in the next set of 2 quarters .

[Unknown Analyst]

Okay. Perfect. And my next question is, as we have the good cash in hand, how do you look at the deploying this time and which areas we will be focusing on?

[Rakesh Shah, executive]

I think we are -- we have very clearly made limited strategy, which is look at businesses growth also will very clear cash flow and growth both. We are looking at business of all 3 of our segments. So you already would have seen some announcements coming in from not as today. and on both gaming as well as assets, multiple opportunities that our team has been looking at over the last few months. And as ideate hope to get the tote logical conclusion in the current quarter. But the pipeline is really good at this quarter.

[Unknown Analyst]

Okay. Okay. And how should we look at the growth in over the longer term because it has been a fairly narrow range. And obviously, the monetization has not been that positive as of now. Can you share some views.

[Nitish Mittersain, executive]

I think on the DCC as well, there is a historic business around WCC2and3etalation. And those have been some value entry I think the longer-term plan for us is to win a significant reset of those things as well as new teams that had launched by the studio. And the last quarters and progress this quarter as well more around those product development changes. We do expect next year to be a significant growth, but I think we've been opportunities to look at that in Q1 or Q2 of next year. We have -- we actually have results to talk about the position.

[Operator]

[Operator Instructions] Next question is from the line of Manan Poladia from MKB Securities. .

[Unknown Analyst]

So my first question is on the Nodwin side. I'm not sure to be used to earlier, but -- if I could please have the breakup for the content use quarter-by-quarter for this year -- so I don't have the number offhand, but .

[Nitish Mittersain, executive]

Maybe we can get it to you after the call. We do have it broken out and reach in our future for quarterly presentation. Can you just look back to those SP-5 Okay. .

[Unknown Analyst]

I'll look that up afterwards. And my second question is with regards to the statement that you put on that slide on Slide 26. -- where you said the large media brand deals have been postponed because of the consolidation in TV and OTT. And the revenue also I think 9-month revenue, some INR 50 crores versus INR 68 crores for year-on-year. If you could just explain how we should see that going forward in the next 6 to 9 months with respect to the large deals that you've spoken about?

[Nitish Mittersain, executive]

Yes. So I think in the previous year, there was a larger deal with part, which was not specific to 1 event, but also pulled in content from east sports events and package as an put together. So those kinds of deals have not yet started happening again. So probably still looking at more deals, which are individual events and their media -- we expect that to go back to later in the coming quarters. But I mean, we can't say the deal happened in this quarter or quarter .

[Unknown Analyst]

Great. Fair enough. I understand that. And as far as IT go, we are pushing some what I understand more IP wiser than the bid past year, right? .

[Nitish Mittersain, executive]

Absolutely, yes. .

[Anupriya Das, executive]

If I can just add there, right, sequentially, what we have seen is the revenue from a particular IP has been growing. So if you see especially the revenue per partner, which is an indicator for all media rights and bank sponsorship partners, the revenue per partner is has steadily increased. So that is a good positive from us.

[Unknown Analyst]

So since you said that the install fall I just wanted to understand what sort of traction are we seeing on the sponsor and the media, is there a little bit more excitement about eSports per se or is there more interest in partnering with you guys to do either IP or to sponsor your IPs?

[Anupriya Das, executive]

So we continue to see increased interest and an indication for that, again, like I mentioned about revenue per partner is increasing. So while we don't share an IT-wise trajectory, we have seen a sequential increase.

[Unknown Analyst]

Right. And just 1 last question. There's been a few competitors that has come up to not win specifically like Sky e-Sports or somebody else villager e-sports, et cetera. And they have been taking some smaller IPs from the publisher that is invested in us, which is Crafton, right? And they're still being getting some of the smaller IT that are published bank. I'm just curious what the industry structure should look like and how we should think about it? Are we going to get most of the bigger IPs and the smaller IPs will keep on going to the smaller players?

[Anupriya Das, executive]

Okay, you want to take it or should I take it? .

[Nitish Mittersain, executive]

No, go ahead.

[Anupriya Das, executive]

So at Nodwin, our effort is to create IPs across the levels, right? So grassroot international that give people that opportunity to create heroes and become larger international cards while creating those transhotel IPs. And the effort will be on that trajectory. And historically, we've also done that. In terms of the mix of revenue, the white label and other IPs -- white label predominantly IP providers that good margin support, but at the same time, our effort goes on increasing our own IP in that sense, which gives us [indiscernible] revenues and EBITDA to come. So the efforts will be on both sides, building the rate level is to proliferate sports in the country and at the same time, grow international IPs as well.

[Sudhir Kamath, executive]

Manan, just have a little here. I know this question was. But like I think there's a bunch of IPs like try in the box at random we can accord.

Many of these are the bigger IV side in the state, and we continue to focus on both products as well as added on new IP, which will be able to solve launched around from icon India, which is a very well launched kind of property. And I'm sure this loss is coming into the past that lot. -- we tended to focus [indiscernible] .

[Anupriya Das, executive]

And we continue to be the market leader by a disproportionate basis in India and other markets.

[Operator]

[Operator Instructions] Next question is from the line of Raj Joshi from A Securities.

[Unknown Analyst]

Sir, I would like to understand what is the scaling opportunity of the retail acquisition backed by Nodwin?

[Nitish Mittersain, executive]

So I think each of the update that you would have seen in the recent past, I have a lot of potential in nominee focus there is on taking Bellotti growing this further -- so the last, if I easily broader you over the last year to start with the Singapore one, which was branded, which actually has our insuringrowth already. has been published, which covers the Middle East. There is Comcowich happened this year, that speaks for you, which are more Western-based. And I'll get into Chen. .

Now all of these kind of bring different growth levers for us. They all have strong legacy from a year. They all have strong customer list, which is -- and I think what Nodwin be able to do is to grow a leverage fees in other markets or, for example, bringing in branding partners or customers who may be present in 1 geography and not looking for other geographies. and they can actually leverage them with other properties and to doctors. So that's capability. So it is a fairly strong growth play that not been is taking yet, and we continue to do so.

[Operator]

[Operator Instructions] Next question is from the line of Jinesh Joshi.

[Jinesh Joshi, analyst]

I have a question on our plastic rummy business. I think we absorbed the GST impact in this quarter. And hence, our EBITDA was into the negative territory. Now if I remember right, in the last earnings call, we had mentioned that perhaps may be able to achieve a breakeven in 4Q. But my question is, I mean, despite absorbing the GST impact, -- we have seen the revenues fall by about more than 50% if we are planning to achieve a breakeven in the next quarter, do we plan to [indiscernible] of the GST impact?

And in that case, what would be the consequent impact on revenue. And also a related question is that we are seeking consolidation opportunities in this sector, although the policy guidelines are quite clear right now. But given the impact on revenue and profitability, which we are seeing, I mean, what exactly are we looking out in terms of big opportunities in this space is what I want to understand.

[Nitish Mittersain, executive]

Sure. I'm going to take that answer, Sudhir. So 2 things. I think what is very important to understand that the actual business of classic rummy hasn't fallen in this quarter while the revenues presented showed a significant drop. And the reason for that is Consumers have continued -- because of GST is completely atop by us, consumers have continued to play in the way they were in earlier. And therefore, we haven't seen any significant drop in consumer traction, The amount of money being played with, et cetera, is the same.

But the reason the revenues are lower is because we have issued bonus to the consumers to offset the GST cost. And as per the accounting standards, we are now deducting the bonus from the revenues to display net revenues. So I think that's why you're seeing a larger fall in the revenues versus the actual business itself. Hopefully, that will stabilize over a period of time, we can reduce these bonuses that we are issuing. -- as a market also aliases a competitive thing we need to see what our competitors are doing, et cetera. But we expect that to start normalizing in the quarters to come.

In terms of consolidation, so we are looking actively at what are the opportunities. I think 1 thing we need to look at is about these retrospective liabilities that these companies are carrying. And in any consolidation move, how do we ensure that they do not get carried over to our company. So we have lawyers looking at all these aspects. And in the due course, we will take some action if it's appropriate for us.

[Jinesh Joshi, analyst]

Sure. My second question is on the media rights business. I understand we have stated that there was some deferment in deal. But can you share which all OTT partners are we currently negotiating with? And what kind of escalation can we see in the next year at least in terms of media rights .

[Nitish Mittersain, executive]

I'll answer that again. I think we don't want to disclose specific partners at this point of time because it is competitive information, and we don't always share it with the competition. But we do see a lot of interest. The team has been building a strong pipeline. And especially on some of our exclusive IP like playground, you will soon see Amazon, for example, did season 1, season 2. We will be making an announcement around that for season 3 very soon where the rights are going to be again, sold at a premium. So I think the trajectory is in the right direction.

[Jinesh Joshi, analyst]

Sure, sir. One last clarification required. I think we have mentioned that we will not invest more in brand scale, but our shareholding will remain unchanged. And we will treat it as an associate, and consolidation will not happen. So the question is, I mean, if the shareholding is unchanged, why the accounting changing?

[Nitish Mittersain, executive]

So basically, today, we had an option at our discretion to increase the stake to majority, right? And because we took a view that we do not want to invest more, we wasted option so that the company can raise money from external investors. Because we have waived the option to increase our holding in the company, we have lost the rates to consolidate the business as per the Ind AS accounting standards.

[Operator]

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

[Sudhir Kamath, executive]

Thanks, everyone, for the questions and especially the gene and his team as part of the reason is just summarize, I think for the quarter, I think we've led a very robust platform for future growth. So we are quite optimistic that we'll be able to deliver good results in the coming quarters and we are on course to continue with our profitability growth trajectory. We remain [indiscernible] commitment to make Lazara play a very substantial part in India spend to become a global powerhouse. Thanks for the time and look forward to having the interaction in the coming days and the quarter.

In case of any further queries, please to get in touch with us all with SDA Investor Relations ever. Thanks and have a good day.

[Operator]

Thank you. On behalf of Prabhudhar Liladhar Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.