Nazara Technologies Limited (NAZARA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call of Nazara Technologies Limited 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.

Good morning, everyone. On behalf of PL Capital, I welcome you all to the Q3 FY '25 Earnings Call of Nazara Technology. We have with us the management represented by Mr. Nitish Mittersain, CEO and JMD; Mr. Sudhir Kamath, COO; Mr. Rakesh Shah, Group CFO; Mr. Senthil Govindan, CEO & Founder, Datawrkz; Mr. Ajay Singh, CEO, Absolute Sports; Mr. Karandeep Singh, Group CFO of Nodwin Gaming; Ms. Anupriya Das, Head of Corporate Development; and Mr. Harit Shah, who's part of the IR team. I would now like to hand over the call to the management for opening remark. Over to you, Nitish sir.

Thank you. Good morning, everyone. In Q3 FY '25, we have achieved our highest ever quarterly revenue and EBITDA, reflecting the strength of our diversified portfolio. Revenues came in at INR 534.7 crores with 67% year-on-year growth, and our EBITDA was at INR 52.4 crores with a 39% growth. PAT from continuing operations of INR 13.7 crores post a one-time impairment of brand scale innovations and equity investment. For 9 months FY '25, we reported revenues of INR 1,103.7 crores, EBITDA of INR 102.4 crores, and a PAT of INR 55.4 crores, respectively. Our core gaming segment particularly stood out in this quarter with a 53% revenue growth, fueled by our strategic acquisition of Fusebox Games as well as fairly strong performance by some of our existing games such as Animal Jam. Also, one large growth factor going forward for us we've been making some good progress with the recent licensing agreements and upcoming integrations of popular entertainment IPs, which will enhance our user growth and engagement going forward. The recent collaboration by Kiddopia with Mattel for the globally renowned IP of Barbie and with Moonbug Entertainment for Little Angel will strengthen engagement among our young audiences. But we have also made partnerships with well-known franchises, including Big Brother globally as well as Big Boss in India, which we will launch in 7 or 8 languages that will allow our interactive story gaming business to scale. We have also started acquiring popular gaming IPs. Recently, we announced CATS: Crash Arena Turbo Stars and King of Thieves. These games are very popular IPs globally, and we have directly acquired them in Nazara Technologies Limited, which will also be published by Nazara. Therefore, ensuring revenue and profit from these accrued directly to the listed entity. We intend to further scale this model in coming quarters, and think this can be quite accretive for us. To support our continued expansion, we have placed a preferential placement with -- of INR 495 crores to Axana Estates LLP led by Mr. Arpit Khandelwal and Mr. Mithun Sacheti, Founder of Caratlane. These capital infusions, combined with Nazara's strong cash reserves provide the company with financial flexibility to pursue further acquisitions as well as boost organic growth to drive long-term value creation. It's important to understand that at this point of time, the opportunity at the global stage is very attractive for us, and these acquisitions will tend to be very EPS accretive as we go ahead and execute them. With a strong foundation, a clear vision, and an experienced team, we are well-positioned to build a truly globally respected gaming company from India. With that, I now hand over the call to Anupriya for further business highlights. Thank you, and over to Anupriya.

Thank you, Nitish. Good morning, everyone. As you're aware, Nazara operates through 3 business segments: gaming, esports and ad tech. We are well-diversified among -- across demographics, geography, and business models. In Q3 FY '25, the gaming segment accounted for 29% of revenues and contributed 56% of EBITDA, while the esports segment contributed 43% of revenues and 32% of EBITDA. For the 9-month period, gaming contributed to 33% of revenues and 55% of EBITDA, whereas esports accounted for 49% of revenue and 37% of EBITDA. Ad tech accounted for the remaining share in both the periods. Moving to the gaming segment. Moonshine, the parent company of PokerBaazi, is reported as an associate and is not consolidated in the books of Nazara. The key operating metrics of PokerBaazi remained healthy with gross gaming revenue up 67% year-on-year, gross traded value up 52% [indiscernible] up 48% year-on-year in Q3 FY '25. Nine month revenue for Moonshine Technologies was INR 357.3 crores with an EBITDA of INR – with an EBITDA loss of INR 26.9 crores. The company reported revenues of INR 151.3 crores and EBITDA of INR 18.3 crores in Q3 FY '25. The Q3 FY '25 revenue for Kiddopia moving to the Kiddopia business. The Q3 FY '25 revenue was INR 47.6 crores, EBITDA of INR 12 crores and the EBITDA margin stood at a healthy 25.2%. As Nitish mentioned, Kiddopia has entered into a licensing agreement with Moonbug -- which is Moonbug Entertainment owner of the popular IP Little Angel to integrate Little Angel into Kiddopia and has also signed a licensing agreement with Mattel for integration of Barbie-related content into Kiddopia. Integration of these popular brands can aid stickiness in subscribers along with driving organic users at a lower cost, which has the potential to drive further revenue and margin in the coming quarters. Please note that Nazara has filed the scheme of agreement with the arrangement with the stock exchanges for the amalgamation of Paper Boat Apps Private Limited with Nazara and the appointed date of scheme would be 1st October 2024. Moving to Fusebox. For Q3 FY '25, Fusebox reported revenues of INR 59.4 crores with an EBITDA of INR 12.6 implying a healthy EBITDA margin of 21.2%. In the same period, the revenues grew by 132%. Fusebox has been reporting strong performance with key financial and operating metrics witnessing a healthy improvement, including daily active users and active players. The studio recently signed agreements to acquire rights to produce new games based on the popular TV show, Big Boss and Big Brother, and these are expected to launch in 2025, the calendar year. Animal Jam. Product metrics for retention, engagement, and monetization of users continue to be healthy at Animal Jam. The revenue grew by a healthy 14% year-on-year in Q3 FY '25, while EBITDA grew by 55%. Q3 has traditionally been a seasonally high quarter for Animal Jam, which was witnessed again this quarter, led by a strong performance during the Halloween and Christmas seasons. A partnership between Slinky and Animal Jam has been signed in January '25. WildWorks continues to explore the integration of popular IPs to drive greater organic user acquisition. Moving to OpenPlay, the operator of Classic Rummy business. Gross gaming revenue stood at INR 15.7 crores, while the net revenue stood at around INR 5.1 crores. Despite the higher share of GST in this quarter, which impacted the net revenue, EBITDA reached breakeven in Q3 FY '25, making a significant financial improvement compared to last year. The cost optimization and operational efficiencies have yielded this positive financial impact. Moving to our esport segment. Esport segment grew by 20.1% in Q3 FY '25 with an EBITDA margin of 8.4%. While Q3 FY '25 grew by 22% year-on-year. However, the like-for-like revenue growth was much stronger at 48% year-on-year, excluding revenue from Wings, which was deconsolidated from the business on 3rd February 2024. In 9 months FY '25, the year-on-year revenue, excluding Wings, grew by 57%. This growth is led by Nodwin's proprietary IP and live events such as Playground Season 4, Snapdragon Pro Series, DreamHack, and Comic Con. Nodwin continued to make strategic acquisitions in this quarter, including Trinity Gaming, which is an influencer management company; ASK Gaming, a content management company, StarLadder an IP and event portfolio. Q3 EBITDA was impacted due to cancellation of the NH7 Weekender event in Pune in December. NH7 is planned to be held now in March '25 with some of the artist agreeing to join and sponsors being supportive of the same. Nodwin continues to invest in multiple assets worldwide in emerging markets while focusing on organic growth, thereby expanding its share of international revenue. The international revenue stood at 48% of total revenue in Q3 FY '25 and 45% in 9-month period. Moving to Sportskeeda. Sportskeeda continues to maintain its ranking among top 10 U.S. sports news website. The Absolute Sports Group grew its revenue and EBITDA by 13% and 5% in Q3 FY '25 with corresponding figures for 9 month being 19% and 11%, respectively. The core Sportskeeda business continues to grow well with revenue and EBITDA increasing by 21% and 31%, respectively, in Q3 FY '25. However, overall revenue and EBITDA were impacted due to a subdued performance of PFN, the Pro Football Network. While Pro Football Network declined year-on-year in 9 months FY '25 and Q3 FY '25, there are early signs of recovery with December '24 revenue being higher year-on-year and the month witnessing the highest ever revenue month till post -acquisition. Soap Central, another business acquired by Sportskeeda saw robust performance with Q3 FY '25 revenue at 101% of the pre-acquisition annual revenue. Moving to ad tech segment. Datawrkz through its subsidiary, Datawrkz Corporations U.K. acquired 100% stake in Space & Time media for an equity value of INR 4.8 million GBP in October '25, equivalent to around INR 52.3 crores -- in October '24, sorry. Since then, the business has been consolidated in the books of Nazara. Our Datawrkz on a stand-alone basis posted revenue growth of 38% year-on-year with EBITDA margin of 14.1% in Q3 FY '25 as efforts that were made in the previous quarters led to previous quarters to shift towards more profitable business size in Datawrkz independent business are bearing fruit. The company will be continuing its investment in sales and marketing to sustain the growth witnessed in Q3 FY '25. Post the acquisition of S&T, efforts are in handy for speed integration of the company into the Datawrkz. With this, I conclude my remarks, and we will now open for Q&A. I'll request Nitish, Sudhir and the rest of the management team to join me for the session.

[Operator Instructions] The first question is from the line of Deep Shah from B&K Securities.

So thanks for the detailed split about numbers and segmented EBITDA. That is quite useful. But within that, say, in the Nodwin segment, which was before you acquired PokerBaazi and now even after the acquisition, Nodwin could still be the outlier, which makes disproportionate money for us. So I wanted to understand that slightly in detail. One is, I understand the INR 8 crore loss because of NH7 Weekender. But otherwise, we've not seen this business become profitable. So one question would be that what is their inflection point you believe or probably the inflection point is way ahead in the future where you see that we'll keep on investing before we start making money. Second, over the last year also, we've seen a few acquisitions, though they might be small in individuality in total, they might build up. On top of your mind, we have Freaks 4U Gaming, we have Comic Con, which I believe would not be there in the last quarter. So if you could give some idea about how numbers are without those acquisitions, that would be useful. That's my first question on Nodwin. I'll ask the same question later.

Sure. I'll answer it at a high level, myself, this is Nitish, and then I'll call on Karandeep, who is the CFO of Nodwin to get into more details. So I think as we maintained, right, from a Nazara overall perspective, we've always seen Nodwin as a large growth driver for us at a macro trend of esports. And they have also now expanded their horizons to capture the attention of the youth in addition to esports in adjacent areas that they have been active in. So I believe that the company continues to build market leadership. It continues to build moats around its business. This whole attention of youth live events, et cetera, are going to be very valuable in an economy like India. And I think Nodwin is extremely well positioned. Which is why from our perspective, even if Nodwin is not generating a lot of profits for us in the short term, we are supportive of them to continue to build it out over the next couple of years before we focus on the profitability. Karan, if you can step in and just answer some of the more details will be helpful.

Sure, Nitish. Thank you for this question. I think just to baseline the numbers as far as Q3 is concerned, and you've called out the NH7 cancellation as the reason for the loss. And if you were to remove that cancellation cost, we get to the breakeven. If you add to that, the opportunity of the profit that we've lost on the NH7, it would have made the quarter 3 profitable for Nodwin. Having said that, I think Nodwin has always invested in growth. That's what Nitish has called out, whether it was in the IPs that we are building or in the emerging markets that we are increasing our footprint. Last I was calculating with the acquisitions that we've done, the kind of footprint we have is almost across 20 countries, which includes markets in Africa, includes market in the Central Europe, et cetera, which are very youth-centric market, and that's our mission in terms of driving the engagement with the youth, which is what drives the brands and the publishers. But as we kind of tenure and mature on our IPs, we will definitely see the profitability kind of come through as we settle down in terms of our integration of the acquisitions. And as the footprint gets a lot more settled down and we operate as a more cohesive unit with all the acquisitions and all the footprint, I think the profitability should come through. So that's a quick answer on that. In terms of the growth numbers, which you've called out, while Anupriya has called out, about -- of the 58% that you've seen on the YTD basis in terms of the growth, about 20% is from organic and about 38% is because of the inorganic acquisition. But again, please remember that in the last year's numbers, there was NH7. If I remove the NH7 from the last year's numbers, the organic growth was much beyond 20%, it'll be probably 25%, 26%.

Maybe I'll take a few details offline. The second question is on these partnership. So we've seen this Animal Jam do spectacularly well. Yes, there is some seasonality, but we've seen margins improve there significantly. So what I wanted to understand is, should we expect such kind of overlays here as this platform scales up? And how do these partnerships actually work when it comes to, say, IPs for, say, properties like Big Boss or Big Brother. Is there upfront fee involved? Is it payment basis number of downloads? If you could give some idea? And then the CATS arena, will that work independently of Fusebox? I heard you mention something that you will work at Nodwin level, but will those developers work together? So how are we thinking, say, from this proposition as an owner of mobile games?

Sure. This is Nitish. I will take that question. So I think Animal Jam for us as an IP has continued to sustain its revenues and profitability post acquisition, and we are quite happy with the performance of that business. Now we are starting to expand the product portfolio with the team, given that it's a very experienced team. We have recently acquired another license for Slinky and the team will start working on that game -- has already started working on the game [indiscernible] is released later in the year. So we believe that now we can build Animal Jam across different platforms, different IPs, increase brand partnership over there. So I think now that this Animal Jam game itself has shown that it's sustainable, there's a lot more growth we can build on this. This particular quarter, of course, I must call out there was -- while the overall profitability has grown, it's also a little exaggerated because of some onetime income that we got of about $300,000. So if you adjust for that, you would still see fairly good growth in margins as well as, I think, about a 14% growth in revenue. Coming to your question on IP licensing and brand partnerships. Till now, most of our games, whether it is Kiddopia, whether it is Animal Jam, have been completely based on 100% original content. And the business model really runs in terms of also a lot of dependency on our ability to spend money to acquire users. But over the last year or 2, as we are talking to many companies, we are seeing some companies have quite successfully worked on user acquisition challenges by working with popular IP because popular IP, let's take, for example, in the case of Kiddopia, let's say, Barbie, right, these IPs are well known for their fan base and tend to generate organic downloads, which are in a way free of cost for us and therefore, also help in our advertising, our click-through rates improve. So our cost of acquisition decreases, user engagement improves a bit. So overall, we believe that by integrating some of these IPs into the games, we would benefit in multiple ways. How these IP licensing partnerships are usually structured are -- there are certain minimum guarantees involved. And beyond the minimum guarantee, we would share a certain percentage of revenue of the utilization of that IP. So net-net, our expectation is that even with the IP licensing cost, if you were to compare that to what we spend on user acquisition, it would still be a lot more profitable for us. So I think that's the direction we are going even with Big Boss or with Big Brother global launch. We've already seen Love Island as a game do extremely well, and we are hoping to repeat that success with some of these new IPs. I hope that answers your question.

Yes. This is helpful. If I could squeeze in one more question. On Sportskeeda for the last couple of quarters has been seeing slowing growth. So anything particular to call out there because it was growing quite well even on an organic basis before that, whilst we've maintained margins this quarter, anything specific there or is it just transient?

Yes. So I'll again share a high-level view, but I'd love to call Ajay, who is the CEO of Sportskeeda to give a more detailed insight. So from my perspective, Sportskeeda's core business has continued to grow well. I think at a overall numbers perspective, it's slightly slowed down because of the challenges we faced with Pro Football Network. But like Anupriya mentioned earlier in the commentary, we are already starting to see that recover. So we are not very concerned or worried about that. I think we've also seen some of the recent acquisitions play out extremely well, although on a relatively small scale. Ajay will maybe share a bit on Soap Central and how that has done. So Ajay, I'll pass this over to you, and why don't you give some context?

Yes, sure. Thanks, Nitish. Sportskeeda, to be honest, organically has been growing really well, both in terms of user base, in terms of yield per user. If you see this quarter, there are a couple of challenges as Nitish mentioned that one, Pro Football Network, we saw some dip for a couple of quarters because of Google Core updates and Pro Football Network was caught up -- wrongly caught up in that. However, that said, December month was one of the best months [indiscernible] for Pro Football Network in terms of overall revenue. And January also is looking really, really good for us. Last year, if you see in Q3, we had Cricket World Cup, which contributed to good revenue numbers and EBITDA for Sportskeeda. Unfortunately, this was not here -- this was not there in this quarter. That said, I think the Playbook is working really well, both in Pro Football Network and also the recent acquisitions that we did, Soap Central. So on Soap Central, when we acquired Soap Central, just some numbers there. Soap Central was doing somewhere around INR 5.15 crores in 12 months that we acquired. And in just October, November and December quarter, we surpassed that number. So the Playbook that we have created on Sportskeeda has shown good results. So we are pretty confident that Sportskeeda will continue to grow both organically and via Playbook application.

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

I have 3 specific questions. First on Kiddopia. The cost per trial seems to have jumped quite significantly on a Q-o-Q basis. I mean it looks like things are getting from bad to worse, especially on the traditional user acquisition channel. I was just doing some numbers from 1Q '22, CPT has increased by 60%, while our ARPU has increased just by, I think, 9%, 10%. So while I understand that we are doing some intervention on the IP partnership, et cetera, but what is happening on the traditional side? Because my understanding is this will still remain a significant channel for user acquisition going forward. Any color here would be useful.

Sure. This is Nitish. Good question. I think we've taken full control of this business in the recent months. It's been, I think, 3 or 4 months. And there's a lot of work we have done to get a better grip on data, underlying LTV, et cetera, trying to add new user acquisition channels. And I think some of that is starting to play out. So while December, particularly the heightened CPT was caused by, I would say, a larger spike in December. I think with some of our implementations, you are going to see a much, much improved quarter -- Q4 numbers. So we're feeling fairly comfortable that not only will we sustain what we have had, we will actually improve on it Q4 onwards. So I think leaving aside the new IP partnerships, et cetera, just on the business as usual, you should see much better metrics starting Q4.

The second question is on Space & Time. There seems to be some change in accounting here from gross net revenue, we are now doing a mix of gross and net revenue that what that has done is that has resulted in a significant increase in revenue run rate. But at the same time, shrunk the margins significantly. In fact, the margin seems to be tracking below last year's EBITDA margin number. So how should we -- first, what is the rationale of going with this accounting? And second, how should we look at the margin profile now going forward in this business?

Sure. So to be honest, our preference in this business was to report the revenue as per net. However, basis India's accounting and the advice received by our auditors, we had to take a blended accounting which we have also explained in the presentation. There's a note at the bottom of that slide, which explains how and why it is accounted for. So I think certain contracts are being accounted at gross and certain contracts are being accounted at net on the basis of the nature of that particular contract, depending on what is the risk on Space & Time. So I think that is how it is accounted. And therefore, you are absolutely right, the revenues have increased and the margins have shrunk. That said, it's early days for Space & Time. I think there's a lot of integration to be done. And we believe as that integration is done, overall margins will increase. You've already seen Datawrkz in this quarter has recovered extremely well. In the last year, Datawrkz was struggling, but we were quite confident that it's on the right track. And the stand-alone numbers of Datawrkz also reflect that. Senthil, who is the founder of Datawrkz and also the CEO, is on the call today. So maybe Senthil, you can add to this.

Yes, absolutely, Nitish. So I think Nitish correctly pointed out that this is more than anything else, it is the accounting treatment that we are following. Maybe to drill one level deeper into what is being reported at gross versus reported at net. So there are certain direct publisher relationships where Space & Time directly works with the publisher in order to buy inventory for delivering campaigns on behalf of brands that they work with. In those cases, the revenue is accounted at a net basis, where they're working with players such as Meta or Google or LinkedIn, and so on, the revenue will be reported on a gross basis. And again, this is based on advice given to us by our audit partner. Now having said that, in terms of Space & Time itself and what we can expect going forward, so start with the core principle, Space & Time is a marketing agency. So it's running advertising campaigns on behalf of its clients. As part of this, and given that it is obviously a very people-centric business, there are cost that are associated with it. And therefore, their margin profile tends to be lower given that Space & Time itself is in the U.K., which is a higher-cost geography. Going forward, what we are expecting in this acquisition is first that we will be integrating a lot of the technology that Datawrkz has spent time and invested to build over the last many years. We'll be starting to deploy that in Space & Time, which should improve the collective margin profile of the group -- Datawrkz Group overall. And separately, we will also have, over the course of time, more of a blended people approach between the U.K. and India, which as we grow along, let's say, over a period of maybe 1 to 2 years, we will see that, that also contributes to having their [ SG&T ], their indirect cost come down as a percentage of their gross margin. So overall, I expect that the margin profile will improve over time. But these are the basic reasons why we are in the current situation and what I expect for the future.

And just to clarify, there's no change in accounting. This is how it has been.

One last question is on Brandscale. We have taken a write-off, and we also mentioned in one of the notes that there is a INR 35 crores of loans and debentures, which will be provisioned. So if you could just please remind us what is the total investment that we did, including the debts and advances? And how much of it -- this percentage seems -- I mean, the overall write-off if that INR 35 crores also comes through, seems high. So I was just trying to understand what is it as a percentage of overall investment that we did.

Overall investments as Nazara?

Into Brandscale.

When you say percentage, do you mean...

No. So write off as a percentage of initial investments.

It would be I believe -- we've done about -- so the equity investment right now, we written off is about INR 15 crores, INR 16 crores, which was the entire outstanding value of our equity investment but some of it would have been amortized, et cetera, right? And the balance is INR 35 crores. So it's about 35% of the total outstanding.

And why...

Basically, the total equity investment has been impaired in our books.

And is there a -- I mean, we don't see any possibility of recovering this amount, which we have advanced to them? I mean what's the reason for providing for this now?

So we do see some potential of recovery, whether it's through inventory, whether it's through some person who purchases the brand, et cetera, which we are going to work over the next couple of quarters. We took a conservative view to do the equity impairment given the state of that business.

I was more referring to the loans that we are planning to provision for.

Yes. We haven't provisioned yet, right, because we do see some potential to recover. But we have just again, Nazara generally tends to have a conservative approach, and we like to transparently disclose any potential bad news, which is why we put it in just as a potential future exposure in the company. The next question is from the line of Prem Sharma from Virania Enterprise.

I have 2 questions. One is how do you -- how [indiscernible] there about driving [indiscernible] company when you have [indiscernible] and when you acquire all the [indiscernible] IPs, how do you value them? And the next question is about [indiscernible] acquiring a majority stake in Nazara. What is there [indiscernible] forward on Nazara?

I could understand your first question. I couldn't understand the second one. Maybe I'll answer the first one and then we can address the second one. So when you say valuing IP, are you referring to the games that we bought from ZeptoLab recently? Or are you referring to IP … So basically, we are looking at multiple things. One is how popular those games have been, what are the App Store ratings, downloads, current user base, current revenue trends and current profitability trends that we're looking at, point number one. Point number 2, what we feel we can do after taking over those games? Can we expand that business and we scale it through multiple improving Liveops, et cetera? And third is usually these deals or these transactions are based on an EBITDA multiple within a fair value range that we are willing to pay to purchase these assets.

And what about [indiscernible]? How do you value those?

Sorry, your voice is not very clear. Can you repeat that?

Mr. Prem can you please use your handset and speak?

I was asking how do you value IP for the organizations like StarLadder?

You mean to say how do we value the acquisition price?

Yes, because StarLadder also has IPs, right?

Yes, yes. Karan, why don't you take that?

Yes. So StarLadder is a -- we obviously put an enterprise value on the company. It has revenues generated from both a combination of its IP as well as from other businesses that it gets. So it's an enterprise value, sir, that we put from an acquisition point of view. And then the IP from our accounting point of view, purchase price accounting point of view, there's a value and all of that is done. But what you see in terms of the announcement you've done in terms of the acquisition, it's the enterprise value, not specific to the IP.

Okay. So no specific weight is given to IP for such organizations, right?

Yes, absolutely. I mean the potential of the IP is pretty strong. So obviously, when we look at it and then we obviously look at the projections on how the business is going to shape out, both on the IP side and the non-IP side and accordingly, the acquisition gets accounted for between IP and other ways of looking at other assets, which is goodwill, which is certain assets that we acquire as part of the going concern.

Okay. And the other question was about Plutus Wealth acquiring a majority stake in Nazara. What would be the vision? What's the vision going forward on Nazara?

Yes. So at this point of time, Plutus has not acquired a majority stake. The Plutus plus Mithun Sacheti combined have crossed a 25% threshold, which has triggered an open offer of an additional 26%. But depending on how that open offer is subscribed to, will be the final shareholding of this combined. As we already disclosed, Plutus and also Mr. Mithun Sacheti will join in as co-promoters in the company. In terms of their -- the existing business management, nothing changes. The existing management remains completely in control of the business. And we will have support from Plutus as well as Mr. Sacheti as we need and as they can provide. But overall, I would just like to comment on that. I think it's a big vindication for us to have our largest shareholder cross over the line and join us hand-in-hand as well as a celebrated entrepreneur like Mr. Mithun Sacheti join us, we feel very validated by that.

The next question is from the line of Bhavik Shah from MK Ventures.

I just want to understand how do we see PokerBaazi game like this quarter, we see PokerBaazi turning EBITDA positive again. So like what has changed in the last 2 quarters where you were doing EBITDA loss and this quarter, you turned positive? And how do we see the numbers here going forward?

Sorry, this is about PokerBaazi, right?

Yes.

Look, I think PokerBaazi is the dominant poker platform in India [indiscernible]. And therefore, it's very clear that at this point of time, they have to double down on creating a brand and creating a very large moat, which is very defensible on an ongoing basis. So the entire focus is going to be on growing their gross revenue – and gross revenue when I say I'm talking about the GGR, which is gross gaming revenue, which is the rate that they take. And establishing a very large brand. Bulk of the marketing costs are going into brand building, sponsorship, for example, they are one of the largest sponsors of Shark Tank. They are sponsoring IPL, et cetera. So I think depending on quarter-on-quarter, their brand spends depending on what's -- where they are advertising, right? For example, in Q4, IPL is in March. So there may be a large brand spend coming up in Q4. That's what you will see the movement in the EBITDA. The core business is very profitable. At this point of time, it's the brand spends that move the EBITDA up and down. And you will continue to see that in the next few quarters.

Okay. So basically, we continue to invest in marketing, maybe have some losses. But this quarter, so we have lower marketing spend and we see EBITDA positive, right?

Yes, correct. That shows you the underlying strength of the business of its ability to generate cash. It's important to understand that PokerBaazi is spending less on performance marketing or direct user acquisition and a lot more on brand building. And therefore, as the brand gets built even larger, we believe that will become a very large moat for the company.

The next question is from the line of Yashita Banka from Ratnabali.

I wanted to know that after doing…