Nazara Technologies Limited (NAZARA.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Nazara Technologies Earnings Conference Call, hosted by PL Capital. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from PL Capital. Thank you, and over to you, sir.

Yes. Good morning, everyone. On behalf of PL Capital, I welcome you all to the 1Q FY '26 Earnings Call of Nazara Technologies. We have with us the management represented by Mr. Nitish Mittersain, CEO and GMD; Mrs. Anupriya Das, Head of Corporate Development at Nazara; Mr. Rohit Sharma, Executive Director at Nazara; Mr. Rakesh Shah, CFO of Nazara; Mr. Terry Lee, CEO, Fusebox Games; Mr. Akshat Rathee, Founder of NODWIN; Mr. Anirudh Kumar, CSO, Sportskeeda; Mr. Senthil Govindan, CEO, Datawrkz; and Mr. Puneet Singh, Co-Founder of MOONSHINE. I would now like to hand over the call to Mr. Nitish Mittersain for opening comments. Over to you, sir.

Sure. Thank you. Good morning, everyone, and thank you for joining us this morning. In Q1 FY '26, Nazara reported revenues of INR 498.8 crores, that was up 99% year-on-year and an EBITDA of INR 47.4 crores, up 90% year-on-year. Our core gaming business delivered a healthy 24.4% EBITDA margin. PAT from continued operations was INR 36.4 crores and overall PAT stood at INR 51.3 crores, reflecting a 118% year-on-year increase. These results underscore the strength of our IP-led gaming strategy, delivering strong top line growth alongside disciplined cost management and a focus on growth with profitability. We are seeing the early benefits of our sharpened focus on owning and scaling high-quality gaming IPs and our centers of excellence in user acquisition and analytics are taking shape and will enable us to acquire, retain and monetize players more efficiently going forward. We continue to build on these things with a steady pipeline of titles designed to drive growth across multiple genres and geographies in the coming quarters. During this quarter, we took a strategic step by proposing the deconsolidation of NODWIN Gaming. This will sharpen our focus on core gaming while enabling NODWIN to pursue its e-Sports ambitions aggressively. We also strengthened our leadership team with the appointment of Mr. Rohit Sharma as Executive Director. Rohit brings over 25 years of experience in gaming and digital media and his expertise will be instrumental in advancing our IP growth strategy across genres, platforms and markets. The Board has approved 2 shareholder initiatives. Firstly, a subdivision of 1 equity share of face value INR 4 each into 2 equity shares of face value of INR 2 each and a bonus issue in the ratio of 1:1. At Nazara, our vision is to build a globally relevant and highly respected durable gaming company from India, and we believe we are well on our way to achieve the same. With disciplined capital deployment, strong IP ownership and operational excellence, we are confident in our ability to scale into a global gaming platform that can compete with the best. With that, I will now hand over to Anupriya to discuss segment-wise performance. Over to you, Anupriya.

Thank you, Nitish. Good morning, everyone, and thank you for joining us today. In Q1 FY '26, on a year-on-year basis, our Gaming segment revenue grew by 160% and our EBITDA grew by 311% with an overall EBITDA margin of the Gaming segment at 24.4%. Moving to Curve Games. Nazara acquired 100% equity of Curve Digital Entertainment for an equity value of INR 247 crores in an all-cash deal earlier this year. Founded in 2005 and headquarters in London, Curve Group is an independent video game publisher focused on platforms such as PlayStation, Xbox, Steam, Nintendo Switch and the PC. Curve Games posted revenue and EBITDA of INR 54.6 crores and INR 20.7 crores, respectively, in Q1 FY '26. Curve is building further momentum with recent releases like Wobbly Life on Nintendo Switch and Human Fall Flat levels, which are performing well across platforms. FY '26 is going to -- is marked by operational discipline, which has freed up capital to invest in upcoming IP-led opportunities, including 2 invite-only Nintendo Switch 2 titles. Fusebox Game, the Fusebox’s revenue grew 49% year-on-year to INR 73 crores in Q1 FY '26. EBITDA during the same period was INR 10.4 crores, reflecting a 14.3% EBITDA margin. Fusebox is successfully expanded from a single game studio at the time of Nazara investment to a multi-game studio, having launched a new Big Brother game in May '25 and 2 marquee IP-based games in the pipeline. In Q1 FY '26, we ramped UA spend behind the global launches of the Big Brother game and Love Island games that is positioning us for sustained long-term growth with rate investments expecting to start returning from Q2 FY '26 onwards. Moving to Kiddopia. Kiddopia posted revenues of INR 45.4 crores and EBITDA of INR 8.5 crores with EBITDA margin of 18.6% in Q1 FY '26. In Q1 FY '26, while investing in original content, Kiddopia ramps up its IP-led content, launching a Barbie Game Island in April, Baby John Playroom, a Moonbug Little Angel IP in May and PJ Masks activity in partnership with Hasbro in June. Partnerships with Animaj for Pocoyo and VOOKS are also being launched. Kiddopia ended this quarter with 227,000 subscribers as compared to roughly around 228,000 subscribers at the end of the last quarter. We noted stabilization attained through more disciplined UA and IP introduction. These strategic investments are expected to drive organic growth going forward. Moving to Animal Jam. Revenue increased by 12.1% to INR 26.4 crores, while EBITDA also grew by a robust 55% to INR 5.9 crores on a year-on-year basis in Q1 FY '26. Animal Jam saw IAP momentum from strong player engagement, community events and social content supported by new launches across bundles, portions and features. It also progressed on its [clinky] partnered casual mobile prototype whose soft launch is targeted for FY '26. Nazara completed the acquisition of Smaaash through NCLT process in early FY '26, making the strategic expansion of its offline gaming footprint. Smaaash delivered revenue of INR 8.1 crores and an EBITDA of INR 3.3 crores in the consolidation period starting from 6, June in this quarter. Nazara is closely collaborating with the management on revenue diversification, user experience upgrade center refurbish to achieve a fully revamped Smaaash relaunch in FY '27. Funky Monkeys. In Q1 FY '26, the revenue expanded by 6.5% year-on-year to INR 4.9 crores and EBITDA also grew to INR 2.3 crores during the same period. Funky Monkeys closed Q1 with 12 operational centers across India, opening a new center at Surat in the mid-quarter. It continues to expand aggressively in the current year, and we are looking to add another 8 to 9 centers in this year. Moving to PokerBaazi. Moonshine Technology is PokerBaazi parent is accounted as an associate and not consolidated in our book. Moonshine reported the highest quarterly net revenue of INR 191.8 crores in Q1 FY '26 with an EBITDA of negative INR 73.9 crores. Moonshine EBITDA loss due to front-loading marketing costs on account of IPL. PokerBaazi also delivered strong operating metrics in Q1 with gross gaming revenue, GGR up 46% year-on-year, gross transactional value up 23% and deposits up 19%. The IPL campaign drove record DAUs and MAUs and sustained user liquidity, while the May 25 PokerBaazi upgrade significantly boosted user engagement. Moving to other segments. As Nitesh mentioned in July 2025, Nazara announced the strategic deconsolidation of NODWIN, subject to shareholder approval, reclassifying it as an associate to align with its sharpened focus on core gaming and IP partnerships, core gaming IP. The deconsolidation is subject to shareholder approval and will enable NODWIN to independently raise growth capital and operate with greater strategic and financial flexibility, while allowing Nazara to allocate capital to core gaming businesses. In Q1 FY '26, NODWIN posted a strong revenue growth of 49% with an EBITDA of negative INR 11 crores. Continued growth in e-Sports event based on popular items such as PUBG and Valor aided revenue growth for NODWIN in this quarter. Moving to Sportskeeda. Sportskeeda's U.S. organic traffic declined post the Google March 4 update, which led to a 21% year-on-year revenue drop to INR 48.1 crores and EBITDA of INR 5.4 crores, prompting swift cost optimization through content cost renegotiation and rightsizing. Management expects traffic stability in the coming quarters, drawing a recovery experience from a similar algorithm impact on its PFN property. Other properties in the portfolio are delivering strong results with stable growth and standout performances from recent acquisitions such as PrimeTimer, ITR, TJR and Soap Central. For the first time in Q1 FY '26, PFN broke even, positioning absolute for a good rebound and sustained growth. On a consolidated basis, Datawrkz, including Space and Time, reported 313% year-on-year revenue growth and 283% EBITDA growth, delivering INR 106.1 crores in revenue and INR 2.6 crores in EBITDA in Q1. The combined operations will unlock client synergies, broaden cross-market offerings and open access to new industry segments. Datawrkz also continues on its path to shift higher-margin product lines within its independent adtech operations. Further, Space and Time acquisition is being leveraged to scale U.K. growth. With this, I conclude my remarks, and we will now open the call for Q&A. Thank you.

[Operator Instructions]. The first question is from the line of Rahul Jain from Dolat Capital.

Firstly, the gaming business is now led by 2 of the newer additions to the portfolio. It would be good to understand how we should see the seasonality and scale potential in Fusebox and the Curve part of the business, if you could throw some light?

Rahul, this is Nitish. For Fusebox Games, I think for all gaming businesses, the seasonality is the October to December, which is Q3 is usually the best quarter due to Christmas holidays, et cetera, given a lot of the revenues are coming from Western markets. I think in addition to that, specifically for Fusebox, the seasonality is also mirrored by the airing of the TV shows that the games are made on. For example, Love Island was adding in Q1 and Q2, especially in Q2 in the U.S., which did very well. You would see a spike in revenues during that period. I think there will be certain nuances specific to each business. At the same time, an overarching seasonality with the peak of revenues in Q3 for gaming business will continue as well.

Fusebox, you are saying, Q2 is better for the U.S. market and there we are also expected to announce another IP. Any color you could give on the scalability potential of this business from a 2 years, 3 years perspective?

Yes, sure. What I can do is, since we have Terry, who is the CEO of Fusebox on the call, first time he's attending the call, I can ask him to answer what he's working on currently. But lastly, we are seeing Fusebox move from a one title company to a multi-title company now with 4 titles either launched or in the process of being launched. Terry, over to you to talk a bit about the current status at Fusebox.

Thanks Nitish and thanks for the question. Yes, as you can see, since been acquired by Nazara, our main focus has been leveraging some of the center of excellence at Nazara as well as our core engine to expand away from being a single IP to a multi-IP studio, and that is essentially going to be the continued plan moving forward. As you can see, we've already released one game. We're due to release Big Boss very soon. Then we already have another IP, which the team are actively building right now with a plan to release early next year. Yes, basically leveraging the support from Nazara and continuing to build out and acquire new IPs with our expanded presence. That is essentially the plan for the Fusebox team.

Just last bit from my side. 2 questions on the each side of the business. One is, what is driving the additional losses in the NODWIN business? Is it specific to this quarter and gradually it should come off? Is there an annual plan on what kind of number we could see there? Secondly, the austerity common that you have on the Sportskeeda business, does that mean this pain could last slightly longer, while you have also commented that PFN study suggests that this could revise as earliest 1 or 2 quarter. Any color on that would be helpful.

Good questions, Rahul. I'll again have the leaders of each business to answer. Akshat, maybe you can comment for the NODWIN side of things.

Of course. Hi, everyone. I think the simple answer to this question is, look, e-Sports and youth culture that is being built right now in the world, as you can see from our very high revenue growth even at a very large base right now, is predominantly led by a very strong IP push across the world. Most companies in the world are pushing for newer-and-newer IPs and so does not win, right? While we have playground, we are expanding Comic Con into more locations this year. We are also going and launching more seasons of playground as we go forward. Our BGMS series continues to go ahead and do extremely well on Star Sports. We are also going and competing not only in the Indian market, we are also competing everywhere in the world market. As we go ahead and keep on focusing on global growth and our ambition is to be the top 2 companies in youth entertainment across the world in the next probably 3 years to 5 years, we are on track to go ahead and do that. We are already #3 and #4 in the world. We want to be #1 and #2. I think if that is the intention for us to go ahead and do, there will be the experiment -- some experiments that I do and some acquisitions that I do will not work out. I have 2 explicit failures that we've tried that have not done well. One was the wins one which we talked about earlier in a couple of quarters and [free] has also not done well predominantly because of German slowdown and the European slowdown per se in the world and including the Taiwan risk that comes and because of U.S. sanctions on different parts of the world. Those headwinds keep on coming in between what we are trying to do and some of those investments that we try will not work out. On the other side, some of them work out so phenomenally that it's not funny, like Comic Con has expanded from 5 to 8 last year. We are going to do 11 this year. We've just announced that, and we continue to go ahead and take it global across the world. We'll be going to more than 2, 3 countries as we go forward. As we keep on going and working towards building an IP portfolio for entertainment, including e-Sports, we will have 1 or 2 of these off chances that is there, not when first is normal growth out of its own accruals as such, but once in a while, we will have these errors that will come in. We've also thought long and hard about the fact that should we not do this, should we be very conservative and just hunker down. We've decided that it's more -- it's actually better for us to go and do well across the world and go ahead and keep on delivering what we want to go ahead and do. That's why Nazara's support in helping us raise funding from around the world is very beneficial and very, very appreciated by us. They've not sold a single share in us. They believe in us as much as they believe when we got invested in by them, but they're also giving us the freedom to beat the parents home and go fly and do wonderful things, so we are very appreciative. I know I've just answered your question, but hopefully, this also sets context for someone else who might be asking questions.

Thanks, Akshat. Rahul, I hope that answered your question on NODWIN. For Sportskeeda, obviously, this last quarter has been disappointing for us after really fantastic run over many, many quarters and last 2, 3 years, but we are very hopeful that this will recover. Anirudh, who is the Chief Strategy Officer of Sportskeeda, can deep dive into it, explain what has been really the cause of this problem as well as what are the actions taken and what is our expectation going forward. Also talk about some of the new properties that have been doing quite well for us. Anirudh, over to you.

Yes. Thank you, Nitish, and thank you for the question. I think we've been hit, obviously, by a Google core update. This is something that happens occasionally to sites, not very frequently, but it does tend to happen. In our internal portfolio, as we mentioned, it happened to PFN. We had similar austerity measures at that point in time to make sure that we are leaner to figure out how much time this is going to take and then be flexible on the operational side. To answer your question specifically on the austerity measures, here, they've been carefully calibrated to ensure that we both have a chance of really bouncing back, but at the same time, if the period of recovery gets extended a little bit more than what we expect, then we are lean enough to ensure profitability and operational stability. That's on the Sportskeeda.com side. As Nitish mentioned, in our entire portfolio, right now, only Sportskeeda.com is affected. If you look at what we have disclosed about our other properties, both Soap Central, Deltia’s Gaming, ITR, TJR Wrestling and now Prime Timer, all of them have been growing fairly healthily. In fact, the measures that we have put in place for PFN last year have actually helped quite a bit post the recovery as well. We've had the first non-season quarter where PFN has actually been profitable, right? That sort of puts us in a very good position as we enter into season in September. The outlook is that it should ideally based both on our internal observations as well as some of the external sites that we've observed, it should take anywhere between 1 quarters to 2 quarters. That's the typical time line, but if it is maybe slightly more or slightly less than that, then we have the flexibility and hence, the austerity measures in the cost.

Anirudh, just one more point. The good part is that the other pieces are doing well, they're too small right now to lift up the gain. Is it safer to assume that on an annualized basis, revenue could be retain at a FY '25 level or it would be difficult given that 1 quarters or 2 quarters including the [Q3] is important quarter, we might not see that kind of momentum. We could be down this year? Is it a possibility?

Right now, we are not commenting on the annual revenue figures. The idea is that we look at how the next quarter plays out and how all of our properties do together. Once that is -- there has just been 1 quarter since it has happened. Luckily, we got into action really early on just to ensure that we are well prepared, but as things go along, in the next quarter or so, we'll give you an update on what the [guidance] might be.

[Operator Instructions]. The next question is from the line of Aditi Parmar from I-Wealth.

Sir, I wanted to understand what would be included in the other income because it became so high this quarter?

Yes. I think the largest contributor to our other income is a gain that we booked due to Stan, the investment we had made in Stan. We had made an investment in Stan last year. Stan is a gaming community product, which is doing extremely well. We did a follow-on investment of a $1 million earlier this year, I think, last month. You've had many other marquee investors participate for a total fund raise of approximately $9 million, $10 million, including Google and Bandai Namco and many other well-reputed companies. We're quite excited about that business, and it's growing extremely fast, but the other income largely comprising of a INR 66 crore gain on Stan.

Sir, on the Curve Games, can you elaborate on how will the growth come on back of what IPs would it be? How can we see the future growth in this segment, in this company?

Yes, sure. I'm going to call in Rohit Sharma, who joined us as an Executive Director to answer this one. Given Rohit's vast experience in the PC and console gaming space in the last many years, he's actually working very closely with the Curve team on our behalf, and we'll be able to answer this in more detail. Rohit, over to you.

Thanks, Nitesh. Just to let you know, Curve Games is one of the leading indie game publishing studios in U.K. Obviously, they get revenue globally. One is that historically, they have had a great success with a lot of successful IPs that they have built like for the King and Human Fall Flat, which will continue to do well. The team's core strength is that they have extremely strong relationship. In the PC and console space, they have extremely strong relationships with all the large platforms like Sony, like Microsoft, Steam and Nintendo. On the development side, they are one of the most coveted publishers from studios to publish their games. We have a very strong -- in fact, we have just greenlit 2 very strong IPs that will start developing next quarter and will give us growth as we go on. To answer your question, there are existing IPs and long-tail IPs that are with Curve like Human Fall Flat, Dungeons of Hinterberg, for the King, and we have Wobbly Life on Switch 2, which will continue to give us growth. Plus, we have also, as I said, invested in 2 or 3 very strong IPs, which will give us growth in the future, so that's kind of the strategy and the growth trajectory for Curve.

[Operator Instructions]. The next question is from the line of Sachin Dixit from JM Financial.

This is Sachin from JM. I have 2 questions. The first one is on our dependence on platforms. Now I don't know how you think of it, right, obviously, because that dependence has impacted our business in the past as well, right, when Apple changed some rationale and now Google. How do you think of that dependence? How do you hedge against it? Or how do you basically mitigate the risk related to these platform-related risk?

Sure. Sachin, let me take that answer. I think one thing, obviously, is that there is some level of dependence on these very large platforms like Apple and Google, and we can't fully run away from that. That said, there are a lot of changes happening in the ecosystem, which is reducing dependence. One, from a Nazara perspective, our business model, which includes in-app purchases as well as advertising revenues, sponsorship revenues, to a certain extent, hedges the risks of these platforms. In addition to that, for example, web flows are being enabled now on a lot of these platforms where you can build customers directly. As you would be reading, there are a lot of global companies contesting some of the policies of these platforms, which will open up the platforms to a certain extent. I think there's a natural tendency for the platforms to open up over the next 2 years, 3 years. We also are very actively working on, for example, enabling web flows on products like Fusebox. They already have a pilot running. Lastly, I think the Curve Games business that we have acquired diversifies us to a different set of platforms. We're seeing a lot of business coming in now on the PC and console side from Steam, Nintendo. I think there's also a certain diversification of platform beyond Apple and Google through the Curve acquisition.

I think the key getting more into these spaces helps us there.

Yes.

My second question is on PokerBaazi, right? I know, obviously, this quarter's losses could be on account of the higher IT spend. But still, what is your visibility on the business, right, that regulatory environment remains highly uncertain. Basically, if I do a math of like look at your shareholding in PokerBaazi, your losses are almost like INR 35 crores, INR 36 crores from that business. Our EBITDA overall for the quarter is INR 47 crores, right? In that sense, it makes us slightly sort of open to all the challenges that might come on that piece. How do you think of it? What is your visibility on profitability?

Yes. Sachin, I'll give you my perspective and then also pull-in Puneet, who is the founder of PokerBaazi to talk a bit about how he sees it from his perspective. I think we are very excited about the PokerBaazi business. They continue to dominate and increase their market share. As you know, with a lot of these skill-based real money gaming platforms, liquidity on the platform is a very large moat. I believe PokerBaazi has kind of got that significant advantage. That's what you're seeing even at scale year-on-year revenue growth being significant. The EBITDA loss you referred to in Q1 is obviously on account of a large brand campaign on IPL, and most of that has been front-loaded in the year, so Q1 is where you'll really see that large impact. You won't see much of that in the coming quarters. I think overall, very exciting. All the metrics of the product continue to go north. We believe this is potentially a large cash flow business for us in the years to come. Puneet, you can add to that in a little bit more detail, maybe how you guys are thinking.

Yes. Thank you, Nitesh. Like Nitish explained that the spends during the quarter 1 were already planned and the aggressive branding campaign in quarter 1 has achieved its objective of driving the top of the funnel growth and which has also resulted in the record platform engagement. DAUs and our MAUs have been on the all-time high. In quarter 2, our focus is mostly on leveraging this momentum to unlock the full monetization potential for the new and the reactivated users, and to optimize the cohort system as well. We really believe that with the things lined up in the second quarter, the circuit online qualifiers, the anniversary promotions, we are very well positioned to deliver one of our strongest quarters in quarter 2. As to your spends on quarter 1, that is actually as per the plan because IPL as well as Shark Tank were both front-loaded.

Quickly, if you can share the impact of these sort of onetime-ish spends in Q1 in IPL and Shark Tank?

Because of these spends, what we have seen during the quarter 1 is that we have not only increased, maybe retained -- I would say, the session depth of all the users, but the ARPUs have also increased. What we have also seen during this--

I meant the amount of spend that is there, which might not sustain in the coming quarters. That's what I was trying to understand.

The IPL’s branding spend and the Shark Tank’s spend have been completely booked in the previous quarter itself, so they would not be coming in. The IPL’s spends were somewhere around INR 85 crores and the Shark Tank’s spends were around INR 25 crores on top of that.

The next question is from the line of Kunal Bajaj from Choice Institutional Equities.

Firstly, I wanted to understand strategy on Smaaash going forward as to what we are thinking on expanding in this front. Secondly, on the Kiddopia side, so we have seen that there has been arrest in subscriber churn, so do we see any growth coming in this financial year? Yes, that is 2 questions.

Kunal, I think in the whole offline entertainment and gaming category of ours, we have 2 businesses. One is Funky Monkeys and the second is Smaaash. Funky Monkeys is already well on its growth path. It is adding new centers now every month, and we believe it's a highly scalable business. It's a profitable business with a quick breakeven on the CapEx that we do. We are very excited about the opportunity, and you will see continued growth in that in the coming quarters. Now coming to Smaaash, as you know, we've acquired it through NCLT. It's been about 2 months or less. We have, I think, a two-pronged strategy there. One is to ensure that the existing business is stabilized, revitalized over the next few months. We're operating 11 centers and our whole idea is to ensure that these 11 centers get revitalized. I think the parallel process we are working on is to reimagine Smaaash 2.0, what formats will it have, what are the new experiences it will bring, how will we integrate synergies with the rest of the Nazara ecosystem. I think these are the 2 approaches we are having. I think in another 6 months or so, we should be able to come out with the Smaaash 2.0 POC once that is established successfully, we will look at expanding this aggressively. I think the next 2 quarters is going to be most of this work rather than very active expansion of centers at this point of time. I think FY '27 is when you should expect a rapid expansion of centers. Yes, coming to your question on Kiddopia. I think we've seen good performance in this quarter generally. The subscriber decline has been stemmed. You would have seen in the presentation that we've seen positive KPIs across the board, whether it's churn, whether it's CPT, the cost per acquisition that we are getting, et cetera. I think we continue to feel quite bullish about the growth opportunities. I do understand it's taken a long time coming. We've been working on this for a few quarters or more. I do think that we are getting very close to come back to growth. I think another quarter or 2, and we should be able to see growth again.

Also, a follow-up question on that. As a broad corporate level, we had a target of around INR 300 crores EBITDA margin level -- EBITDA level, sorry. How is our progress on that?

I think we're making great progress. Our guidance has been to achieve the INR 300 crore EBITDA in FY '27. I believe we are very much on track to achieve that or surpass that.

The next question is from the line of Abhisek Banerjee from ICICI Securities.

Just a couple of questions from my side. First off to Akshat. What is the thought process on profitability in NODWIN going ahead, right? You have often explained to us how the older IP kind of make decent margins, but as you invest in newer IPs, the overall losses can come up. Given you have been doing this for some time now and some of the older IPs are more than 5 years old. What is the time line that one should kind of built-in for some profit delivery in NODWIN?

The way to think about all our IPs is, again, think of it like a portfolio approach. I'll give an empirical example so you can go and do it. At any given time, since we do not do what the new game will be, what the new culture will be, what the new song will be, what the new event will be, what the new influencer will be, we have to go and have our ear to the ground. Think of it as angel investment, we need to book and have anywhere between 10 to 20 micro IPs in incubation at any given time every year. These don't cost too much. They cost anywhere between INR 50,000 to maybe INR 5 lakh, INR 7 lakh, INR 8 lakh each to go and keep on running experiments. It allows us to go very quickly through this incubation and that we keep on running experiments. That identify something that is worth investing in either because of critical mass coming in, high engagement coming in, high fraction coming in, we invest in that potential. We don't still call it an IP and we've done a first year experiment on it. Of course, first year experiment is [Technical Difficulty].

Sir, sorry to interrupt. Mr. Abhisek, I request you to pleas be on mute while the management is answering your question. Sir, please go ahead.

We try this experiment for around INR 10 lakhs to about INR 30 lakh, INR 40 lakh and look at whether it's successful or not. Again, in the first stage, we have about a 70% to 80% failure. In the second stage, we have about a 30% to 50% failure because it doesn't work, right? It doesn't have enough depth. It doesn't have any traction. Chess in point, which is there is a success for us. We invested in Chess 3 to 4 years ago. Playground is another one that has done well. But behind every success, there are upteen experiments that don't come to fruition. Typically, after the first year is there, we go and get behind traction after that. We then invest into the second season after the first one. This would typically be between INR 50 lakh to about INR 2 crore investment behind it. This is the time where we actually go ahead and make it -- try to go ahead and make real money out of it. We go to sponsors, we go to media rights, we go to data rights, we go into distribution and the partnerships. Again, maybe 30% to 50% failure rate for sure. Once this is established, it is now an IP. Then typically, the scales very, very quickly. This is now growth stage. You would normally not have failures in growth stage. You are looking at acceleration. How much acceleration is always the question. We typically after the first 2 years, look at a payback between 2 more years to go ahead and have a full payback and then a long tail that keeps on going and giving value. For example, all that matters, 15 years, 7 years, 14 years, [PGNS] fifth year. You can look at all our global IPs they go and try to be multi-decade long IP. That allows us not to be dependent on either platforms, influencers, talent, IP, gain, et cetera. That's the portfolio approach that we want to put into. If it all works, we get astronomical returns, but as we are building out of emerging markets and we are not building out of developed world, the failure rate is substantially higher. The beta always is higher. But as we move to more from a developing to a developed economy, I think contraction most of most core market.

In terms of -- what would be kind of the margins that your mature business is now making, if you could give some clarity on that?

Is a better way to mature IPs typically would have 60% to 75% margins, while next business would normally have [indiscernible]. 20%, 25% in those market.

One more question to -- for PokerBaazi, basically. You were actually speaking on how your advertisements have helped in improving your engagement, customer engagement and the session dip. If you could talk a little bit on how advertisement can kind of drive that? Because if you were to ask me, I can understand how advertising can drive customer acquisition, but how it can drive higher ARPUs, et cetera, would be great to understand.

Yes, sure. On that, what we meant was that because of the advertises, we get a long -- driving a top of the funnel growth. Once we do that, we have enough features within our system, which help us drive those, I would say, session depth retention and ARPU. Also, the new product innovation, which we have done in the previous quarter, which includes a lot of these features on user set, user learnings, we have added a Poker TV app with tailored content, PokerBaazi School for structured learning to advanced tools. So that all -- and Poker Shots, one more tool has also been added in the last quarter, which is a tool for game analysis. All these 3 tools together with having a big top of the funnel, in terms of getting users eventually help us achieving these things.

I would just add to that, that when you have a large brand campaign happening, it also increases the brand credibility in the eyes of the consumer and therefore, has a direct impact on usage and uplift in ARPU because the players are then coming back and playing more because of brand trust.

[Operator Instructions]. The next question is from the line of Jinesh Joshi from PL Capital.

Yes. Sir, my question is with respect to the fundraise in NODWIN, can you tell us how much is NODWIN planning to raise? Secondly, given the fact that Nazara will not participate in this fund raise, what will be our revised stake in the company?

Sorry, what's your second question is what will be our stake in the company?

In NODWIN, what will be our revised stake post the fundraise?

Yes. I think there's going to be a bridge round first and then a larger raise. The exact amount is still to be finalized. I won't be able to give you a specific equity position, but it will be in the range of 46%, 47% from what I understand at this point of time. Obviously, once this is completed, the necessary disclosures will be made in terms of exact numbers, et cetera.

Sir, secondly, on PokerBaazi, I think we mentioned that the IPL spends were about INR 85 crores and what we spent on Shark Tank was approximately INR 25 crores, so in-all, we have spent about INR 110 crores. If I look at our FY '25 EBITDA for PokerBaazi, it was negative at approximately INR 58 crores. Just wanted to know given the kind of spends we have made in 1Q, I know these are front-loaded spends, so to say, but given the quantum, I mean, should we expect profitability in FY '26 at the operating level? If not, I mean, when do you expect this business to kind of make profit at the operating level given how the taxation situation is?

Yes. Look, I think FY '26, we do not expect to deliver profitability for PokerBaazi. FY '27, we should, but it depends on our market positioning at that point of time and what's the right thing to do for the business. What is important to understand is that the marketing spend that we are doing today or the branding spends that we are doing today is very much driven by our desire to really dominate the market. It is something that is in our control to dial up or dial down as we would like to. The core business in itself is very profitable. If you were to dial down the marketing spends today, you would see a large amount of profitability be thrown up by the core business. I think it's just our aggressive positioning to continue to dominate the market at this point of time, we believe that is the right strategy for this business.

Sir, one last question on Fusebox. Given the fact that we released Big Brother in May '25, and I believe we have quite a few new IPs lined up over the course of the year. If I look at 1Q, given the fact that there was a big launch expected, our user acquisition spend had risen a bit, and that is why our EBITDA margin was down to about 14.3%. Now given the fact that new launches are lined up, how should we think about the margin trajectory? Because historically, this number was quite high. Because of higher spend, it has got diluted a bit to about 14-odd percent. Basically, your thoughts on the profitability side.

Yes. Sure. Jinesh, so I think it's important to understand that most of the user acquisition spend that you see in Q1 is driven by spends on the Love Island game and not on the Big Brother game. The Big Brother game is really when the game is launched, right now, the team is looking at the initial KPIs, which look very good and iterating the game before we start scaling it up. Most of the UA spend has happened on Love Island because the team was getting very attractive customer acquisition costs also because of the airing of the TV show at the same time. These spends will get dialed down in the coming quarters, and you will see the profitability show up and the margins come up again. I don't think new game launches will hurt margins a lot. I think over a period of time, they will keep adding scale to the business. Generally, the gaming business, as you see, this quarter has delivered 24%-odd margins. We will continue to drive all our gaming businesses towards a 30% margin goal. That's our first milestone that we want to try and achieve. I'm not promising any specific time line right now, but at least our internal thought process is towards that goal.

The next question is from the line of Rahil from Sapphire Capital.

Just one question. If you can just highlight or summarize, which of the divisions or the key businesses will be the main growth drivers for FY '26 that's on the top line? If you could provide any guidance to go with it.

Yes, sure. I think in terms of main growth drivers, at this point of time, if you look at Q1, we have seen Animal Jam perform very well for us. We've seen Funky Monkey get on to a growth path. Fusebox, we are very excited about. I think should have a great year as well. The rest of businesses, we are continuously plugging and working on building out Kiddopia is something we are -- like I was saying earlier, hoping that should get back to growth quite soon. In terms of guidance, we don't have any specific guidance for the year at this point of time.

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

Sure. Thank you, everyone, for joining today's call. Also thank you for the leadership team in Nazara for spending the time, answering all the questions patiently. Wish you all a very good day. Goodbye.

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