• Nazara Technologies' Q2 FY25 net profit fell by 33% due to strategic investments.
• Despite the profit drop, the company's operating revenue grew by 7%.
• The company raised Rs 900 crores and invested in Pokerbaazi and Stan, indicating expansion plans.
• The merger of Paperboat Apps with Nazara aligns with the company's strategy for organic and inorganic growth.

Nazara Technologies, a leading Indian gaming and sports media company, has reported a 33% decrease in its net profit for the second quarter of the fiscal year 2025 (Q2 FY25). The company's consolidated net profit for the quarter stood at Rs 16.24 crore, a significant drop from Rs 24.18 crore in the same quarter of the previous year.

This decline in profit is not an isolated event but follows a sequential trend. The company's profit had already seen a 31% decrease from Rs 23.62 crore in the previous quarter, according to the financials released by Nazara.

Strategic Investments Amid Profit Decline

However, it's not all gloom for Nazara Technologies. The company's operating revenue saw a growth of 7%, increasing to Rs 318.94 crore from Rs 297.24 crore in the same quarter last year. This growth in revenue, despite the drop in net profit, indicates a potential increase in operational costs or investments. Indeed, the company's total expenditure saw an 11% increase, amounting to Rs 321.27 crore.

This rise in expenditure could be attributed to various factors, including investments in new ventures, increased operational costs, or even losses incurred from discontinued operations.

In fact, Nazara Technologies reported a loss of Rs 1.86 crore from discontinued operations for the quarter. This is a stark contrast to the profit of Rs 1.68 crore it had made from these operations in the same quarter last year. The nature of these discontinued operations and the reasons for their discontinuation could provide further insights into the company's strategic decisions and their impact on its financial performance.

Expansion and Mergers

In the same quarter, Nazara Technologies raised a substantial amount of Rs 900 crores through a preferential equity issue. This fund was raised from a group of investors, indicating the company's continued attractiveness to investors despite its declining profits. The raised fund was not left idle either. The company made significant investments in Pokerbaazi, a leading skill-based gaming platform. It also increased its stake in Absolute Sports (Sportskeeda) and acquired a minority stake in Stan, a rapidly growing esports community.

These strategic investments indicate Nazara Technologies' commitment to expanding its footprint in the gaming and esports industry. The company's decision to invest in these platforms could be seen as a move to diversify its portfolio and tap into the growing popularity of skill-based games and esports. In addition to these investments, Nazara Technologies also announced a significant corporate decision. The company's Board of Directors approved the merger of Paperboat Apps with Nazara.

The merger of Paperboat Apps with Nazara is a pivotal step in our mission to lead the gamified early learning space with Kiddopia having already made a substantial impact in this sector worldwide, said Nitish Mittersain, Founder and Managing Director of Nazara Technologies. This merger aligns with the company's strategy to bring its core gaming business into the parent entity to provide fungible cash flows that can be deployed for organic and inorganic growth going forward, Mittersain added.