Nazara Technologies’ Q4 net profit dropped 98% to INR 18 Lakh, with significant impairments and a 17% revenue decline

Nazara Technologies, a leading Indian gaming and esports company, reported a significant decline in profitability for the fourth quarter of FY24 (January-March 2024). Here's a breakdown of the key points:

Steep Profit Decline:

• Nazara's consolidated net profit nosedived 98% YoY (Year-over-Year) to a mere Rs 18 lakh in Q4 FY24, compared to Rs 9.4 crore in the same quarter last year.
• Sequentially (compared to the previous quarter), profit also witnessed a drastic fall from Rs 29.5 crore.

Factors Affecting Profitability:

• Non-cash Charges: Nazara incurred significant non-cash charges related to goodwill impairments (Rs 11.37 crore) and intangible assets (Rs 10.56 crore) within the gaming segment during Q4. These charges impacted the company's bottom line.

Operating Revenue Downward Trend:

• Nazara's operating revenue declined by 8% YoY to Rs 266.2 crore in Q4 FY24, compared to Rs 289.3 crore in the previous year's corresponding quarter.
• Sequentially, a steeper drop of 17% was observed compared to Rs 320.4 crore in Q3 FY24.

Gaming Revenue Contraction:

• The company's core gaming vertical experienced a contraction, with revenue falling 17% YoY to Rs 91.03 crore in the quarter ending March 2024.

Nazara's Q4 results raise concerns about the company's profitability trajectory. The significant decline in profit, coupled with falling revenue, warrants close attention from investors. While non-cash charges impacted Q4 results, the YoY decline in gaming revenue requires further investigation. Nazara's future performance will depend on its ability to address these challenges and revive its gaming vertical.