Nazara Technologies (NSE:NAZARA) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Nazara Technologies Limited q one FY twenty seven earnings conference call hosted by ICIC Securities Limited. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to from ICIC Securities. Thank you, and over to you, sir. Good morning, everyone, and welcome to Nazara Technologies Limited Q1 FY 'twenty seven Post Results Earnings Call. The call will start with brief management remarks on the earnings performance, followed by a Q and A session.

0:50 Nazara management will be represented by Nishiesh Mathurson, MD and CEO, Nazara Technologies Limited Rohit Sharma, executive director, Nazara Technologies Limited Rakesh Shah, CFO, Nazara Technologies Limited Anupia Sinadas, head of corporate development, Nazara Technologies Limited Shreyas Menon, full time director, Smash Terry Lee, CEO of Fusebox Games, Susan Blank, CEO of Curve Games, CEO of Curve Games, Maxime Lopin, CPO, Blue Tile Games, Manish Gaura, whole time director, Paper Boat Apps Private Limited, Jeff Amis, cofounder and CEO, WildWorks Inc Mayank Kumar, CEO, Absolute Sports Private Limited Asha Traki, founder, NordVen Gaming Private Limited Shenthil Govindan, CEO, DataWorks Business Solutions Private Limited, Chris Jones, CEO, Space and Time. Over to you, sir.

1:55 Hello? Yes. Hi, everyone. Good morning, everyone, and thank you for joining us this morning. This is Nitish. Q1 FY 'twenty seven marks a significant step forward in Nazara's evolution into a global gaming operating platform. Yesterday, we announced our Q1 results, the appointment of Raymond Stofer as our new CEO, effective for September, subject to relevant regulatory approvals and an acceleration of the previously announced Lutile and Destry transaction to acquire 100 ownership for a fixed all cash consideration of US$3.00 3,000,000. Consolidated revenue came in at INR $4.29 crores and EBITDA was INR 46 crores. We reported a VAT loss of INR 82 crores, largely attributable to the share of loss from associates and impairment loss.

2:53 Excluding the impact of NordVin's deconsolidation, comparable consolidated revenue grew approximately 9% year on year. Our gaming revenue increased 14% year on year to INR $2.75 crores with an EBITDA margin of 19.5%, and all our gaming businesses remained EBITDA positive and showing positive growth. Our shared capabilities across UA, data, product and growth are translating into stronger performance across the gaming portfolio. The long standing concern on Keytopia stagnation has changed in the last quarters, Keytopia revenues grew 19% year on year as a user acquisition scaled behind improving unit economics.

3:38 Goose Box, which runs the popular game Love Island, increased 12% year on year to INR52 crores, whereas our Kids IP Animal Jam revenue also grew 11% year on year. The Board on the recommendation of its investment committee has approved an amendment to the previously announced transaction structure to acquire 100% of Brutal and Desplay for a fixed cash consideration of US$3.00 3,000,000. Under this amended structure, 89,000,000 will be paid at closing with the remaining US$214,000,000 payable in agreed tranches by first April twenty seven. This new structure provides certainty of ownership and acquisition price, full economics upon closing, single owner governance, immediate operating integration, greater strategic flexibility and access to the cash generated by the business.

4:36 For reference, the BluTide and display business reported INR $5.18 crores of revenue and INR 55 crores of EBITDA in Q1 FY 'twenty seven. And subject to the final closing, we are expecting to start consolidating this entire business from Q2 of FY 'twenty seven. We have also appointed Blue Tile CEO and founder Raymond Stroffer as CEO of NAZARA Technologies effective for September 26. Raymond brings the founder's mindset and a proven record, especially on AI enabled development, operating discipline and capital efficient growth, and I think he and his team will be able to significantly boost and help all the other studios within the NAZARA umbrella.

5:23 As Founder and Managing Director, I will continue to shape Nazara's long term strategy, portfolio direction and key relationships, working closely with Raymond and the Board. Nazara enters its next phase with greater scale, stronger leadership and significantly deeper operating capability. With that, I'll hand over to Anupya to discuss segmental performance. Anupya, over to you. Thank you, Mitesh. Good morning, everyone. I'll cover the segmental performance. In q one FY twenty seven, our gaming segment revenue grew by 14% year on year to INR $2.75 crores, and EBITDA reached INR 54 crores resulting in an EBITDA margin of 19.5. Within mobile gaming, BlueTile and BestPlay, which should be consolidated from q two FY twenty seven, delivered 54% revenue growth year on year, which which gains reinvested into user acquisition. EBITDA held flat as UA spend rose from 78% to 85% of revenue, though revenue net of US spend still increased from INR 73 crores to INR 80 crores.

6:28 As mentioned, Curopia revenue grew 19% year on year in q one FY twenty seven with higher US spend deployed against improving unit economics. The twenty four month LTV cap continues to trend upward, though the step up in investment acquisition... In user acquisition at... Moderated the near term EBITDA. Animal Jam revenue increased by 11% year on year supported by a consistent content cadence and continued growth investment. Fusebox, the developer and publisher of Love Island game, grew by 12% year on year as the studio scale Love Island, which ranked number one in free apps and number five in top grossing apps in The US, while investing in Zig Brother's growth in the development of the new game creators.

7:14 With q one, FY twenty seven revenue of INR 53 crores and EBITDA of INR 14 crores, a 27... And a 27% EBITDA margin, PCM console population remains strongly profitable while funding the release date... Slate. Transaction sales for human falls flat and falls at King two both increased year on year, while more than seven... 60% of the development investment during the quarter was allocated to new signings. The new releases will begin from q two f y twenty seven. Margins will be lower... Were lower relative to q one FY twenty six, which had benefited from the first party studio release of Badlands crew crew last year. Offline gaming delivered healthy profitability at a 33% EBITDA margin with q one FY twenty seven revenue of INR 34 crores and EBITDA of INR 11 crores.

8:03 Funky Monkey revenue grew 58% year on year driven by both same store sales growth and store expansion, while the Smash two point o reimagine format is in development is in full flow. Within our other businesses, Databog delivered q one... FY twenty seven revenue of INR 26... $1.26 crores and EBITDA of INR 3 crores It supported the continued operating discipline. Space and time grew EBITDA year on year demonstrating margin resilience towards those softer demand environment. Active business, next focus is on scaling higher margin product business such as visible and expanding into newer markets. Absolute sports posted q one FY twenty seven revenue of INR 28 crores and EBITDA of INR 1 crores.

8:49 SportsKiller delivered positive EBITDA at a lower cost base with the full effects of cost actions expected from q two. While pro football network delivered best q one yet with a 19% EBITDA margin versus breakeven in q one f five twenty six. Northern q one, traditionally slowest quarter, saw stable revenue growth with losses substantially lower year on year. Comic Con Mumbai was a sold out show, and IT is expanding to 14 events in India this year alongside the registration of Comic Con World as a global IT. Is targeting organic growth of 30% plus for FY twenty seven and is progressing towards its IPO readiness. With this, I conclude my remarks, and we will open the call for q and a. Thank you. Thank you.

9:37 We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Participants, you are requested to limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ajithya Rawal with AK Investment. Please go ahead.

10:24 Yes. Thanks for the opportunity. You gave the top number. My question is to Raymond, if he's in the call. Raymond, can you just briefly talk about your journey regarding BlueTile? How did you scale up? And can you also briefly touch upon... I mean, your background was from Google where you were leading some trust in that proper product. But how did this gaming came into your thing? And and also, when I see your numbers in the seven years, have scaled beautifully. There were any inorganic equation that you have gone through, or it was all organic? That is my first high level question to him. Hello? Is Raymond on the call?

11:27 Hi. This is Nitish. Raymond is not on the call because he had a flight. He was on a flight during the timing of this call. He's represented by Maxim who's going to take over as CEO of Blue Tile and display once Raymond moves to the Nazara side. Right. So I think Maxim can answer some of this Yeah. On top of Yeah. Yeah. That works. Yeah. Okay. Hi, everyone. Can you hear me? I'm Max Kim. Yes. Yes. We can hear you. Okay. I I can't talk too much about Raymond's experience. I mean, he he will talk to you about it more in-depth. What I know is that I've been working with Raymond for a while now, and he's an absolutely extraordinary CEO. Now about the the second question, no, it's not organic growth. So the way we we spend money here at at BlueTime is that it's based on the pro... Profitability of the campaigns, so the UA.

12:25 And we have... We did several new games, new features for the games, for BestPlay, and we've seen a great return on investment on many different campaigns. So that's why we decided to increase the spend and therefore, the revenues. So most of the increase in revenues is driven by a paid acquisition, actually. And we did this in order to increase the revenue baseline and the user base basically, and that could give us full flexibility in the future to adjust revenues or EBITDA. But no, this was driven by a paid acquisition. Okay. Okay. That sounds good. Secondly, this question is for Mitesh.

13:11 Basically, we are acquiring I mean, we have changed the deal that we will go in all cash in deal. That is basically a liquidity exit to all the blue tile and display investors. Then we are also appointing Raymond as a CEO. Then what what would be their skin in the game in this? I mean, for a long term shareholder perspective. And also day after tomorrow, we are having a board meeting for a preferential rate. Is it for them? Yeah. Can you just throw some like that? Right. Yeah. So, obviously, cannot comment on the fundraise and the referendum issue before the vote of. You can be rest assured that we are working on structures that will incentivize the management team and including Raymond as CEO of NAZARA Group. But over the next few days, we will communicate more on that.

14:07 Okay. Okay. Thanks. All the best, and thank you. Thank you. The next question comes from the line of Samad Patel with Equities. Please go ahead. Thanks for providing me the opportunity. I had a couple of questions. First one was on games. So if I remember correctly, in the last call, you had mentioned that we will have six new releases this year. So where does we stand today? And in terms of margin, should we expect margin to stay at this level throughout the investment phase that we are doing on the? That's my first question. So let me first answer that and then get Susan to deep dive into it. I think fundamentally, what we've done over the last few quarters since we acquired the curve is to really push and encourage the team to start signing up new titles. Curve has been well known in the in the space for being able to select and bring, you know, excellent successful titles to the market. But over the last few years, their ability to invest into signing new titles was significantly depressed, which was kind of constraining them. So I think we've kind of unleashed them from that constraint, and I think they've done a very good job in terms of building a strong pipeline.

15:32 Susan, if you may come in and talk a bit more specifics around what's happening and what to expect in terms of the title roadmap, etcetera, it will be helpful. Thanks, Natish. Can you hear me? Yes. Hi there. Susan Plank of Games. Yes. So as Natish said, we have been investing in new titles under NAZARA since acquisition last year. Our new development titles generally have a a cycle... Development cycle of twelve to eighteen months, which has meant there has been some delay in reaping the the benefits of the new signings under Nazara. However, we are looking at releases upcoming within the next three quarters of f y twenty seven, starting actually with Sovereign Tower.

16:27 And it's title we're really excited about that's actually coming out later this week. We've then got Dragon Shelter releasing in September, and then a number of other new titles that we're incredibly excited about that are yet to be announced coming before the end of the year. With respect to the margin, yes, our 27 EBITDA margin that we saw in q one of FY twenty seven is lower than our expectation for the full year, and indeed, the margin in excess of 40% that we delivered last financial year. The new titles that we have signed will contribute significantly to increasing that margin in the subsequent quarters of the year.

17:18 Hi. This is Rohit. If I may also add, you know, in terms of the... You know, on your question to the margins, our own first party studio, Iron Oak, which makes the game for the king, For the king too has been seeing in the last couple of months a good upside on its numbers, and this will continue. And therefore, as we go along, we'll see better margin in the business. And Iron Oak is also now working on some new titles, which, again, because will be first party titles, will give us a better margin as we go along in the next couple of quarters. Understood. That was really elaborate and very helpful. Now my second question is on the offline gaming.

18:08 So I mean, what is the total capital commitment that we will have to the offline business over, let's say, next couple of years? And just extending on to that, I mean, which quarter the Smash two point o will actually open? If you can help me with those details. Yeah. Sure. See, right now, we are doing two things,. Right now, we are doing two things on the offline gaming. One is, like you said, we are working on establishing this match 2.2 product market fit. And the first reinvention is what will happen in the Mumbai Lower Puddell long standing Smash where we already started with the design and back end product and technology. We want to start implementing soon. So I think Q4 of this year FY '27, January to March 2027 is when we will look to launch it at this point of time. In terms of Funky Monkeys, they continue to expand their centers quite successfully and we will continue to encourage them to do that. They are funding it through internal approvals as well as some debt and some capital infusion by Nazara.

19:26 Right now, our overall commitment across these two businesses, including some stake increase in Funky Monkey is approximately INR 50 odd crores. And beyond that, we have not decided any specific capital allocation, especially till we see the smashed open low product to market fit. Thank you, Nitish, for that information. Very helpful. Now my last question is on NordVeent. So I mean, in the last quarter, we also spoke about raising anywhere between, let's say, 100,000,000 to $200,000,000 kind of capital. And I mean, NordVeent is also preparing for IPO. So where do we stand in that process? And, I mean, does the secondary sale from part of how the blue tile consideration will get funded along with the the the preferential development that we talked about?

20:23 Yeah. We have Akshat, the founder and CEO of. It'll be best for him to answer this. I'll answer the first part, Nitish. The second part might be more appropriate for you to take. Okay. Look, Nordman's been able to go ahead and do a significant turnaround. Our shows are now selling out across the world. We are expanding some of our Comic Con, our premier IP from 11 shows that we did last year to 14 domestically and two to three international ones also. We are also having we've had a bumper year on our eSports IPs. And with the clarity of eSports in India being a special category that has been made through the Proga Act, we are looking at significant tailwinds as part of our IPO process.

21:09 And as you know, when you go out in the market and all of your analysts, some of we have been talking to some of you, and we'll continue to go ahead and talk to some of you to go ahead and look at some guidances. The world is in a little crazy place right now, as you can understand, both geopolitically and figuratively where we are. So our process continues. We have very strong traction that is coming in for people who have interest in pre IPO versus normal rounds, funding rounds primary. And then it is over to the shareholders soon that we want to go ahead and have this conversation of where we take the company forward in all. And I think we have the utmost of support from Nazara and its management and Nitesh specifically to go ahead and chart our own path.

21:55 Yes. Can you just repeat the second question, please? So my question was that... I mean, the the secondary sale, would that be part of how the blue tile consideration gets funded along with the primary base that we might do? BluTile consideration, we have multiple options. One is that BluTile already has a certain amount of cash on its balance sheet post our acquisition. I believe it's about give or take around $20,000,000 that we will have access to. There will be additional cash flow generated by Nazara and Rutile up to that period, which will be leveraged. There could be some component of debt that we would take. There would definitely some equity, and there could be state sales. So I think we have multiple options that we will we have factored in to conclude the transaction.

22:52 Understood, Municip. That was really helpful. Thanks for providing the opportunity, and I will join. Sure. Thank you. The next question comes from the line of Kunal Bajaj with Choice Institutional Equities. Please go ahead. So I have a couple of questions regarding margins. So we see that EBITDA margins declined meaningfully this quarter. This is on the back of higher UA expenses. So should we expect a relatively sharp normalization over the next few quarters or the recovery is likely to be gradual? That is one. And regarding Glutile margins as well, we see Glutile margins in Q1 is around 11% as compared to 17% in the corresponding period last year. So what are the key factors behind the decline?

23:45 Yeah. I think I'll I'll answer for both the businesses or all the gaming businesses. I think the good news is that this is a good reason for the EBITDA decline, which means that while maintaining the guardrails of the LTV gap rate, the revenue we want to make versus the cost we want to spend on user acquisition while maintaining strong guardrails on that. We are seeing the ability to enhance AI implementations, data analytics, and user acquisition capabilities, ability to scale up. So we are basically scaling the user acquisition in a very profitable manner. And if we continue to see that, we will continue to drive with it. So we've not kept any gaps to it. So I think the way to think about it is if it's if you're able to see tangible growth on the revenue side, we are not driving it at a cost of margins. It's just that the margins are deferred because all the user acquisition cost is being absorbed upfront.

24:48 Eventually, this will, of course, normalize into much higher EBITDA margins being reported. Okay. Just one more bookkeeping question. So how do we see the quarterly D and A charges going forward? Quarterly which charges? Depreciation amortization charges going forward. I think, again, we amortize the intangibles that we take on book for the acquisitions. And currently, outside of Blu Tile, there's broadly steady state what we have been reporting, and we continue at the same... Broadly at the same level. Glutel will obviously add and have its own amortization, which I don't have a specific number right now, but that can be easily calculated or we can share it offline.

25:42 Sure. Just if I can put you in last question. So out of the $2,214,000,000 transaction, which we are expecting to be completed by 04/01/2027, so do we have the breakup of $2.01 4,000,000 as in one... By which time? Anupia, can you share that, please? Yes. Sure. So out of the 214 that we will acquire, we will get around... We we are looking to the consideration, which is due in ninety days from now onwards, is roughly around 75,000,000. And a total of $131,000,000 beyond that, which will have... Which is around 35,000,000 in December and the subsequent last amount in the month by... Before April 1 is $20.27.

26:32 Okay. Thanks. That's helpful. All the best. Thank you. Thank you. The next question comes from the line of Janesh Joshi with PL Capital. Please go ahead. Yes. Thanks for the opportunity. Sir, my question is with respect to the change in the mode of consideration with respect to the payouts relating to the Butyl acquisition. In the in the earlier version, the interests of the shareholders were pretty much well aligned given the fact that the payouts were staggered. And in which way, the earlier scheme of things, 100% consolidation was to happen from day one.

27:29 Although there was some bit of valuation uncertainty, which was there in the earlier version, Apart from that, I mean, which will get eliminated down the new version given the fact that you have a fixed amount that you need to pay over fixed time period. But when it comes to the payouts, obviously, that was spread out over three years. And now by April 27, you have to make the balance payment of 214,000,000, which might lead to some kind of dilution. Right? We are looking out for some preference. Maybe you also mentioned that we'll take some debt. So any specific reason to upfront these payments, maybe take debt, dilute rather than wait it out for three periods because consolidation, any which way was to happen from day one without any minority interest accrual?

28:20 Yes. I think there were multiple considerations here. One is obviously the trajectory of BlueTile and Bestplay made the investment committee that they formed feel that the payouts eventually may turn out to be much larger because they were all performance based payouts with annual payouts which would exceed to go up to 180% of the committed payouts. So I think that was one consideration on what the payouts can be. I think the second was since we thought that Raymond was really a good fit to come in as overall CEO, I think having continued performance metrics for a specific business would cause some level of conflict and disalignment, which we wanted to avoid.

29:06 So I think those are the two key reasons because of few other. In terms of the consolidation question, while we were going to ask for accounting standards consolidate, there would still be 50% leakage of, you know, the cash generated by BlueTile and Bestplay back to the founder, which in this case will now completely accrue to us. So I think that is one advantage that we have. Lastly, in terms of how we intend to finance everything again, our investment committee has laid out a complete plan of action, which I will not be able to share right away, but there's a thought through plan on how to execute this transaction as well as how to align Raymond and his team on the overall success of Nazara versus just blue tile or best play on a stand alone basis.

29:55 Sure. Sir, the second question is with respect to the tax notices that some of our real gaming subsidiaries had received in the past. And I think Supreme Court has upheld that these are legitimate notices. But but I I understand that we have fully written down our value of investments in. But given the fact that we had some kind of ownership in in in companies, Will any kind of tax liability accrue to us is what I just wanted to know. No. I think our exposure is limited to extent of our investments in these companies. And from a conservative approach, we have taken them out completely. Sure. And, sir, one last question from my side. The share of loss of associates in this quarter was at about 62 crores.

30:51 And if I look at the performance of NordVel, it was relatively steady on y o y basis, but I think the the share of losses have magnified. So is there anything of a specific one off in this quarter with respect to these I mean, most of the impairment and share of losses you're seeing are write off on the dominant values related to the Moonshine transaction. Sorry. Relating to the? The Moonshine investment. Oh. Oh, so it's not related to not win per se, but related to the Moonshine. Earlier, had later out about 90% of the risk, but there was some carrying value. After the recent judgments, we have written it out completely.

31:40 Got it, sir. Understood. Thank you. Thank you so much. Thank you. The next question comes from the line of Rahul Jain with Dollar Capital. Please go ahead. Hi. Thanks for the opportunity. First of all, I mean, how the day to day responsibility, Niti, changes for you now with the CEO chain that has happened where most of your energy will be devoted incrementally. I think we could start with that, then I have some more questions. Sure. I think Rahul, we will go back to how we operated with the CEO for seven years from 2015 to 2022.

32:33 As joint MD, I was more involved in the strategy, vision, M and A and long term relationships for the company and establishing the brand on a global stage. So I think a lot of my energies will go into that along with the lens on facilities, on technologies, etcetera, which are very fast moving now in that industry to make sure that we are on top of it. The CEO, Raymond, will be completely responsible for the day to day operations of the entire group and will be fully empowered to execute appropriately. Right. Right. Secondly, from a couple of business side question, if if there could be more color in terms of how we are seeing potential for fuse box business for this fiscal?

33:28 And anything in terms of recovery that we are seeing on the sports side, any inputs on that? Yeah. So on the Fusebox side, you know, their existing core game which saves most of their revenues, Love Island continues to do well. And they've, in recent times, worked a lot on the product side and all, which I think will continue to deliver fairly good results for them. But the big step change for sales force is going to happen through two things. One is the scale up of the Big Brother game, which is already live, but it takes a few quarters for it to assimilate enough content to be able to scale, and I believe we are reaching that threshold now. So we should start seeing a significant scale up on Big Brother. Also, very exciting is the creators game, which they have global rights too. This would Sorry? Translate.

34:20 So, yeah, so just to understand this aspect slightly better. So is it safer to assume that fuse box can continue a very high 20% type of a growth with this event expected to play out anytime soon? Yeah. Yeah. I... I'm I'm quite optimistic about the prospects. So like I said, their base game continues to perform well. Most of the growth we're seeing is right now only from the base game, and they have two games launching which can... Which has the potential to become as big or bigger than the base game. So I think if you look at correctly, FuseBoard should have a significant runway, not only for this year, but in the years to come as well. And on SportsKira side?

35:05 Yes. SportsKira has not seen that kind of recovery, but I think I would really feel that they've hit their bottom, and we are starting to see margin and all improve. Is Mayank on the call from SportsKira? Yeah.. Mayank, why don't you give us a a deeper view? Yeah. So with sports, Kira, the three things that we are focusing on. First is on the revenue front. We understand that the challenges of Google remain. So we are diversifying our traffic sources and the revenue sources by opening up new distribution channels. Already seen some results of it on q one, and this will only go up in the subsequent quarters with The US four seasons kicking in. Secondly, we have been a pro football network In the... In that business, we are also investing in building the tool side of the business, which will also work more independently from the ups and downs that we see on Google. So we are investing in that sort of business as well. So that has already against some results with more to come.

36:12 And lastly, obviously, is cost optimization, something that we had been working on in the last financial as well. That exercise continues, and we will... We are already working with a very lean set of trying to maximize our lives for the business. So, Mank, just to understand, now the revenue run rate has come closer to our operating expenses, and these expenses have stayed stable for last two, three quarters. So do you see a further risk of revenue deceleration while cost stabilize around here till the time you revive revenues. Is that a possibility? Or you think we are at kind of rock bottom and should see revenue momentum sequentially from this point?

37:02 So the numbers that we have seen in q one, that's in line with what we have set as internal expectations. And the revenue will only go up in q two and more so in q three and q four, which are the months when US sports season is most active, NFL, NBA, and all these sports kick in during that period. So at that point of time, we'll see pro football networks, sports data, all the websites getting in at maximum potential. Got it. Got it. And lastly, from my side, on the ad tech side of the business, we have seen a pretty strong momentum from a revenue point of view, but the from a EBITDA perspective, it's not done pretty well. So is it more like some of bit of COE or maybe the gross leverage of this business into different business unit has been playing out or is it mostly towards its own business and nothing to do with user acquisition on the other businesses within the company.

38:15 Yeah. Rohit, why don't you take that? Yeah. Sure. So I think if Sentil is there, he can also add. But I think there are mainly two or three things. Obviously, we are getting... So we are focusing more on our technology products like Visible, which are getting very good traction in the market. But right now, we are in the phase. We are investing in the sales and the product. We are... And we will see these margins getting better as we go along. Also, on the space and time side, if you see the... There is growth happening. Some of our one or two large margin clients have kind of have have kind of shut down their budget for the last couple of months, but they will be back soon.

39:07 But these two factors will change, and our margins will become better. Even who has now moved to UK is also hiring and has hired more kind of salespeople, and we will see much better profit margins in our ad tech businesses, especially for, as I said, our tech led product called Visible, which is a DSP for mid sized businesses, and it's getting very good traction in the Western market., if you would like to add something here, please go ahead. Yes. Thanks, Rohit. So agreed with pretty much everything that Rohit said. Just to also give a view, the the growth in revenue is in the attic business is not always going to directly correspond to and that much increase in the EBITDA because there is some amount of pass through revenue also that that is on the books, which represents anywhere between 60% to 80% of the closer to 80% of the revenue that top line that is supported.

40:18 Right? So so that is one thing to keep in mind. The second thing is Rohit said, and I want to reiterate, there is growth in the in in the product related business, which has more of a standard product profile where you have fixed costs where you have invested upfront, but then the growth in growth in revenue or the growth in at least the net revenue after the pass through is significantly detached from any growth in the fixed cost. Right? So the variable cost that you have take on is relatively limited. So we're very excited about that and the growth that we're seeing in the markets after having higher sales and continuing down the road.

41:06 Got it. Thank you, Santil, and Rohit. That's it from my side. Thank you. The next question comes from the line of Warwick Shah with Inveksha Capital LLP. Please go ahead. Yes. Hello, sir. So my first question is regarding BluTide. So what are the first thing is when EBITDA margin there? And, like, how are we done in q four of FY twenty six in terms of the revenue, EBITDA and margin profile? Yeah. Maxim, can you take that, please? Yes. Yes. So the the the reason for the for the increase in revenues and the fact that we've we wanted to receive some some great profitability on some new games, new features for the game and for Best Play. So we decided to to increase the stance to capitalize on the great performance in order to keep...

42:03 So to increase the revenue baseline and the user base and while keeping EBITDA flat. And so that in the future, we have proof of activity to adjust the EBITDA in case we want to, thanks to a bigger user base and a higher revenue base final. Yes. But what are the sustainable margins? And like what were the margins and EBITDA number last quarter? So the EBITDA margins last so in Q1 last year was 17.6%, and now it is around 11%. So, like, for the year, how do we look at, like, in terms of margin profile?

42:54 Yes. Yes. So the year is looking good so far. We... It will depend a lot on the opportunities that we see on the new games, on the on the features that we launched for the for the games and for for for BestPlay. The good thing is that now that we have a really high revenue baseline, we can... We have the full flexibility to adjust the the the EBITDA accordingly. So we are not sure yet till the beginning of the of the year how we're gonna change this. But, yes, we have full flexibility, and the goal is definitely while increasing the business, the revenue at the moment is that in the future, if we want to, we can increase the EBITDA margins whenever we think it's the right moment. Okay. So if you're spending acquisition, then what kind of growth are we looking in terms of revenue for the full year?

43:45 Yes. So again, we are not exactly sure. It will depend on the we have several games in the pipeline. It will depend a lot on the performance of this game, on the improvement that we bring to the to the games and and to best play. So so we can't we can't we can't confirm that what is gonna be the same for each quarter. It will depend a lot on the performance of the the games, on the seasonality. So so so, yes, we are looking for, like, yes, higher revenues, but then we can definitely play with the with the EBITDA in the future to increase the margins. Okay. And at NAZARA level, do we want to give any guidance in terms of revenue, EBITDA, margin? Not at this point of time. Sure. Thank you so much.

44:35 The next question comes from the line of with MKP Securities. Please go ahead. Hi. Thanks for the opportunity. My question is in relation to games and the launches of Badlands and Dragon Shelter. I believe you've had a demo launch for Dragon Shelter and a full scale launch for Badlands. I was just wondering, based on the same reviews, it looks like it's doing well. If you could comment on either economics or what kind of copies we've sold so far. Yes. Susan, can you take that? Hi. Sure. So we are... The Badlands crew released q one f y twenty six.

45:21 It was well received review wise, first party... Major first party launch for us, and we've currently sold around 50 to 60,000 copies in line with expectations. So for Dragon Shelter, that's actually being released in September. So we've had the the demo go live. We've had good response to that. And, actually, our wish list for the title, which is one of the main metrics that we we look at from a steam perspective, has exceeded our expectations and currently sits at around a 130,000 wish list, which should mean that we're on on track to deliver expected revenues for the year.

46:11 Susan, hi. Susan, hi. Rohit here. Maybe you should also talk about the response that you're getting for Sovereign Tower. Yeah. Absolutely. So Sovereign Tower was announced earlier in the year. Again, wishlists are exceeding expectations currently and followers. We're also getting good traction across the other social media platforms. So at the moment, we are in line to exceed the expect... Revenue for for August month based on the metrics we've seen so far. Right, Susan. Thank you. That's helpful. Just a quick follow-up over there. When you talk about these new games, could you possibly quantify if you're looking at in game transactions going forward like you've had for HFF?

47:10 And if you could put these games in perspective of HFF so we could understand the size of these games, I think that'd be really helpful. So... Oh, sorry. Sorry. Apologies. Yeah. Go on. Go on. Yes. So in terms of the comparison to to human fall flat, obviously, we have got 60,000,000 units shifted on human fall flat. So whilst we're excited about the upcoming releases, we wouldn't be forecasting results to be anywhere in line with with the breakout success we've seen with human fall flat.

48:05 Generally, in terms of the two releases we've got coming up, At the moment, we don't have any in app purchases forecast or planned. So the revenues will come from that unit sales of that of that product at this point in time. Great. Thanks, Susan. That's very helpful. No problem. Can we go to the next question? Yes, sir.

48:50 Actually, there are no further questions from the participants. I will now hand the conference over to management for closing comments. Got it. Sure. Thank you, everyone, for joining us, and we hope you have a good day ahead of you. Thank you. Bye. Thank you. Bye. Thank you. On behalf of ICIC Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.