“We are very well poised in terms of our structure, in terms of the Friends of Nazara network and how we are operating. Our DNA is rightly placed to take advantage of this opportunity. We will continue to be aggressive in this space. We will continue to partner with new companies and we will continue to focus on tangible business while also growing a consumer base, says Nitish Mittersain, Founder & MD, Nazara Technologies.
How big is the recent acquisition of Planet Superheroes? Why do you think it is a game changer?
If you step back and look at the way the gaming community in India is expanding right now, there are hundreds of millions of potential gamers who are playing games largely on their mobile phone. I think the next eventual step is for this community to engage a lot more with gaming and that is going to flow into merchandising whether it is wearing game based T-shirts or all types of merchandising. As a next connect with the community, this is an important aspect and Nazara and our subsidiary companies have great relations with global publishers. So we can bring some of the best IPs into this merchandising which is why we have entered that space.
At your board meeting of January 17, fundraising via preferential issues was going to be discussed. Any update that you can share with us? What you are going to do with the funds that will be raised?
Just to clarify, it was not meant for a fundraise. We have just announced an acquisition. We are acquiring a company called Datawrkz which is a adtech platform based in Bangalore where 70% of the revenues are coming in the US. The preferential issue was in relation to that.
We would love to know more about what this acquisition really brings on the table for you?
Datawrkz is an ad tech company. They focus on optimising customer acquisition cost, especially on mobile and secondly, they have a product called Primus that generates higher revenues for publishers. So when you are monetising through ads, they have products and tools that help you optimise the yield that you are getting on these ads. It is relevant for Nazara for two reasons; one is Nazara has a large user acquisition cost that comprises almost 20% of our revenues or a little higher. We are hopeful that we will be able to deploy these products and technologies and the experience of the team to optimise our user acquisition cost.
On the other hand, many of our platforms and products – whether it is our world cricket championship game or Sportskeeda – they generate a lot of revenues through advertising on their platforms and by using products like Primus from Datawrkz, we can optimise the yields and hopefully increase our revenues. These are the two reasons we believe this is very synergistic to us. In addition to this, there is a lot of convergence happening between ad tech platforms and gaming.
We believe that we can bring a lot of value to Datawrkz in terms of them being able to independently scale up their business. So we were excited about this business, we value the company up to Rs 225 crore it is a structured payout where initially we will be taking a 33% stake for Rs 60 crore, out of which Rs 35 crore will be paid in cash and the balance Rs 25 crore will be paid either in cash or through shares and the balance will be decided based on their performance in CY2023.
Given that Datawrkz has offices in the US as well as Singapore, what kind of opportunity does this play out for your own international presence as well as expansion?
Adtech is a global opportunity and like you rightly said, Datawrkz is already working in multiple geographies. In India we will be able to help them scale up their business very fast through our network. They are already established in the US and 70% of their revenues are coming from the US. I believe there is a long way to go, there is a lot of opportunity and a combined effort should allow us to scale that business. Datawrkz will be another way to scale up our revenues in the US.
Is the acquisition going to be margin accretive and what kind of shift do you see in the overall mix of offerings that you have?
Datawrkz’s unaudited numbers for CY2022 show they posted a revenue of approximately Rs 90 crore with about 12% margin or Rs 9-10 crore EBITDA. So it is a profitable company. It is generating positive cash flow but like always, our focus is on growth today in terms of revenues and strategic initiatives so we are not going to very strongly focus on margins at this point of time even for Datawrkz. We believe that the business itself can scale quite significantly from here. Our whole focus will be on growth in the short term.
How have things panned out in terms of users as well? The Gamified Early Learning and esports revenues have grown well but in terms of user addition, how has that panned out?
Q3 results are going to be out soon and I cannot pre-empt that but the overall trend for the business is very healthy and we are very excited about FY23 ahead of us.
You are going to bet on merchandising as far as Planet SuperHeroes goes? The market has given you a thumbs up already for investing in other start-ups and providing capital to the ecosystem as well. What can we expect next?
Our journey is only beginning. It may sound strange for a company that has been around for 20 years, but from my heart, I believe that this is the decade of gaming in India. We are very well poised in terms of our structure, in terms of the Friends of Nazara network and how we are operating. Our DNA is rightly placed to take advantage of this opportunity. We will continue to be aggressive in this space. We will continue to partner with new companies and we will continue to focus on tangible business while also growing a consumer base. So we remain very excited, as excited as day one I would say.