Nazara Technologies Limited (NAZARA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Nazara Technologies Ltd. Q1 FY27 Earnings Conference Call hosted by ICICI Securities Ltd. As a reminder, all participant lines will be in the listenerly mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now have a conference over to Mr. Niran Dhumal from ICSA Securities. Thank you, and over to you, sir.

Good morning, everyone, and welcome to Nazara Technologies Ltd. Q1FI27 Post Results Earnings Call. The call will start with brief management remarks on the earnings performance, followed by a Q&A session. Nazara Management will be represented by Nishish Mitherson, MD and CEO, Nazara Technologies Ltd. Rohit Sharma, Executive Director, Nazara Technologies Ltd. Rakesh Shah, CFO, Nazara Technologies Ltd. Anupriya Sinadaj, Head of Corporate Development, Nazara Technologies Ltd. Shreya S. Menon, Whole Time Director, Smash. Terry Lee, CEO, Fusebox Games. Susan Blank, CEO, Curb Games. CEO, Curve Games. Maxim Lopin, CPO, Blue Tile Games. Manish Gaurav, whole-time director, Paper Boat Apps, Private Limited. Jeff Amis, co-founder and CEO, Wildworks Inc. Mayank Kumar, CEO, Absolute Sports, Private Limited. Akshat Raki, founder, Nordwind Gaming, Private Limited. Senthil Govindan, CEO, Dataverse Business Solutions, Private Limited. Chris Jones, CEO, Space and Time. Over to you, sir. Hello. Yeah.

Hi, everyone. Good morning, everyone, and thank you for joining us this morning. This is Nitish. Q1 FY27 marks a significant step forward in Azara's evolution into a global gaming operating platform. Yesterday, we announced our Q1 results, the appointment of Raymond Stoffer as our new CEO, effective for September, subject to relevant regulatory approvals. And an acceleration of the previously announced Lutal and Desperate transaction to acquire 100% ownership for a fixed all-cash consideration of USD $303 million. Consolidated revenue came in at INR 429 crores and EBITDA was INR 46 crores. We reported a bad loss of INR 82 crores, largely attributable to the share of loss from associates and impairment loss. Excluding the impact of Nordwind's deconsolidation, comparable consolidated revenue grew approximately 9% year-on-year. Our gaming revenue increased 14% year-on-year to INR275 growth 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 Kenopia stagnation has changed since the last quarter, and Kenopia revenues grew 19% year-on-year, as the user acquisition scaled behind improving unit economics. Usebox, which runs the popular game Love Island, increased 12% year-on-year to iron out 82 close, whereas our ITBs 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 new talent and display for a fixed cash consideration of USD $303 million. Under this amended structure, USD $89 million will be paid at closing, with the remaining USD $214 million payable in agreed branches by 1 April 27. 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. For reference, the BlueTile and Best Play business reported INR 518 crores of revenue and INR 55 crores of EBITDA in Q1 FY27. And subject to the final closing, we are expecting to start consolidating this entire business from Q2 of FY27. We have also appointed BlueTile CEO and founder Raymond Stauffer 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. 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 Anupia to discuss segmental performance. Anupia, over to you.

Thank you, Nitish. Good morning, everyone. I'll cover the segmental performance. In Q1 F527, our gaming segment revenue grew by 14% year-on-year to INR 275 crores, and EBITDA reached INR 54 crores, resulting in an EBITDA margin of 19.5%. Within mobile gaming, Plutile and Best Play, which will be consolidated from Q2F by 27, deliver 54% revenue growth year on year, with gains reinvested into user acquisition. EBITDA held flat as UA spend rose from 78% to 85% of revenue, though revenue net of UA spend still increased from INR 73 crores to INR 80 crores. As Nipish mentioned, Kirokia revenue grew 19% year-on-year in Q1FI27, with higher US spend deployed against improving unit economics. The 24-month LTV CAG continues to trend upward, though the step-up in investment acquisition, in user acquisition, 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 Games, grew by 12% year-on-year as a studio-scale Love Island, which ranked No. 1 in free apps and No. 5 in top-grossing apps in the U.S., while investing in Big Brother's growth and the development of the new game creators. With Q1 FI27 revenue of INR 53 crores and EBITDA of INR 14 crores and a 27% EBITDA margin, PC and console's population remained strongly profitable. While funding the release slate, transactional sales for human false flag and for the king 2 both increased year on year, while more than 50% of the development investment during the quarter was allocated to new signings. The new releases will begin from Q2 FY27. Margins were lower relative to Q1 FY26, which had benefited from the first-party studio release of Badlands Crew last year. Offline gaming delivered healthy profitability at a 33% EBITDA margin with Q1FY27 revenue of INR34 crores and EBITDA of INR11 crores. Funky Monkey revenue grew 58% year-on-year driven by both same-store sales growth and store expansion while the Smash 2.0 reimagined format development is in full flow. Within our other businesses, DataWorks delivered FY27 revenue of 126 crore and EBITDA of INR 3 crore, supported the continued operating discipline. Space and time grew EBITDA year-on-year, demonstrating margin resilience through a softer demand environment. At Take Business, next focus is on scaling higher-margin product business, such as Visible and expanding into newer markets. Absolute Sports posted Q1 FI27 revenue of INR 28 crores and EBITDA of INR 1 crores. SportsCenter delivered positive EBITDA at a lower cost base with the full effects of cost actions expected from Q2. While Pro Football Network delivers best Q1 yet with a 19% EBITDA margin versus break-even in Q1 FI26. Nordwind's Q1, traditionally its slowest quarter, saw stable revenue growth with losses substantially lower year-not-year. Comic-Con Mumbai was a sold-out show, and IP is expanding to 14 events in India this year alongside the registration of Comic-Con World as a global IP. Nordwind is targeting organic growth of 30% plus for FI27 and is progressing towards its IPO readiness. With this, I conclude my remarks, and we will open the call for Q&A. Thank you.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchdown telephone. If you wish to withdraw yourself on 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 their questions to 2 per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ajitya Jawa with AK Investment. Please go ahead.

Yeah, thanks for the opportunity. Great fit of number. My question is to Raymond, if he's in the call. Raymond, can you just briefly talk about your journey regarding Blue Tile? 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 and that's proper product, but how did this gaming came into your thing? And also, when I see your numbers in the seven years, you have scaled beautifully. There were any inorganic acquisition that you have gone through, or it was all organic. That is my first high-level question to remember. Hello, is Raymond on the call?

Hi, this is Nitich. Raymond is not on the call because he had a flight, he was on a flight during the timing of his call. He is represented by Maxim, who is going to take over as the CEO of Lutile and display once Raymond moves to the Nazara side. So I think Maxim can answer some of this on top of him.

Yeah, that works. Yeah.

Okay. Hi, everyone. Can you hear me? I'm next to you. Yes, yes, we can hear you. Okay, I can't talk too much about Raymond's experience. I mean, 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 second question. No, it's not organic growth. So the way we spend money here at BlueTile is that it stays on the profitability of the companies, so the UA, and we have released several new games, new features for the games, for best play, 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 would give us full flexibility in the future to adjust revenues or a visa. But no, this was driven by a paid acquisition.

Okay, that sounds good. Secondly, this question is for Nitish. 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 best play investors. Then we are also appointing Raymond as a CEO. Then, 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 race, which is for them. Yeah, can you just throw something like this?

Right. Yeah. So, obviously, cannot comment on the fundraise and the preferential issue before they want to move it. But 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.

Okay. Okay. Thanks. All the best.

Thank you.

Thank you. The next question comes from the line of Samantha Patel with Aquarius. Please go ahead.

Thanks for providing me the opportunity. I had a couple of questions. First one was on Curve 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 going on the Curve Games? That's my question.

So, Samath, 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 Curve is to really push and encourage the team to start signing up new titles. Curve has been well known in the indie 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. 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, etc., it will be helpful.

Thanks, Nitish. Can you hear me?

Yes.

Hi there, Susan Frank, Curve 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 cycle, development cycle of 12 to 18 months, which has meant there has been some delay in reaping the benefits of the new signings under Nazara. However, we are looking at releases upcoming within the next three quarters of FY27, starting actually with Sovereign Tower, an 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 Q1 of FY27 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.

Hi, this is Rohit. If I may also add, you know, in terms of the, you know, on your question to the margin, 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 margins 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. 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 2.0 will actually open, if you can help me with those details?

See, right now, we are doing two things on the offline gaming. One is, like I said, we are working on establishing the Smash 2.0 product market fit. And the first reinvention is going to happen in the Mumbai lower barrel long-standing Smash. Where we have already started with the design and back-end product and technology, we want to start implementing. So I think Q4 of this year, FI27, Jan 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. We are funding it through internal approvals, as well as some debt and some capital infusion by Nazara. Right now, our overall commitment across these two businesses, including some stake in Cleveland, Punky Monkey, is approximately 50-odd crores. And beyond that, we have not decided any specific capital allocation, especially till we see the smashed open-to-product market fit.

Thank you, Nitesh, for that information. Very helpful. Now, my last question is on Nordwind. So, I mean, in the last quarter, we also spoke about raising anywhere between, let's say, $100 million to $200 million kind of capital, and I mean, Nordwind is also preparing for IPO. So where do we stand in that process? And does the secondary sale form part of how the blue tile concentration will get funded along with the preferential allotment that we talked about?

Yeah, we have Akshat, the founder and CEO of Nordwind. It will 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. Look, Nordpin'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. So 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 scale wins as part of our IPO process. And as you know, when you go out in the market and all of your analysts, we have been talking to some of you, and we will 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. And I think we have the utmost of support from Nazara and its management and Netish specifically to go ahead and chart our own path.

Yeah, can you just repeat the second question, please?

So, my question was that, I mean, the Norway secondary sale, would that be part of how the blue tile consideration gets folded along with the primary base that we might do?

BlueTile consideration, we have multiple options. One is that BlueTile already has a certain amount of cash on its balance sheet post our acquisition. I believe it's about to give or take around $20 million. That we will have access to. There will be additional cash flow generated via Lazara and BlueTime up to that period, which will be leveraged. There could be some component of debt that we would take. There could be some equity and there could be state sales. So I think we have multiple options that we will, we have factored in to conclude that transaction.

That was really helpful. Thanks for providing the opportunity, and I will join you.

Thank you. The next question comes from the line of Kunal Bajaj with Choice Institutional Equities. Please go ahead.

Yeah, hi. Good morning. Thanks for my question. So, I have a couple of questions regarding margins. So, we see that EBITDA margins are 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 blue-tie margins as well, we see blue-tie 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?

Yeah, I think 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 cap 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 the debt, so we have not kept any caps to it. So I think the way to think about it is, if you are 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 up front. 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 DNA charges going forward?

Quarterly which charges?

The acquisition amortization charges going forward.

I think, again, we amortize the intangibles that we take on book for the acquisitions. And currently, outside of Glutile, they are broadly steady-state what we have been reporting, and we continue broadly at the same level. Glutile will obviously add 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. Sure.

Just if I can pitch in the last question. So out of the 214 million transaction, which we are expecting to be completed by April 1st, 2027, so do we have the breakup of 214 million? As in by which time? Yeah, yeah. Tanuktya, can you share that, please?

Yes, sure. So, out of the 214 that we will acquire, we will get around, we are looking to, the punctuation which is due in 90 days from now onwards is roughly around 75 million, and a total of 131 million beyond that, which will have, which is around 35 million in December, and the subsequent last amount in the, by, before 1st of April 2027.

Okay, thanks. That's helpful. All the best.

Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Jinesh Joshi with PL Capital. Please go ahead.

Yeah, 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 earlier version, the interests of the shareholders were pretty much well aligned given the fact that Thank you. 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 million, which might lead to some kind of dilution, right? We are looking out for some preference. Maybe you also mentioned that we 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... And from day one, without any minority interest.

There were multiple considerations here. One is obviously the trajectory of blue tile and best play made the investment committee that we formed feel that the payouts eventually may turn out to be much larger because they were all performance-based payouts with annual payouts which could exceed 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. So I think those are the two key reasons besides the few others. In terms of the consolidation question, while we were going to, as per accounting standards, consolidate, there would still be 50% leakage of, you know, the cash generated by Blutel and Bestplay back to the founders, 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 Lutile or Best Play on a standalone basis.

Sure. Sir, the second question is with respect to the tax notices that some of our real meaning gaming subsidiaries had received in the past. And I think Supreme Court has upheld that these are legitimate notices. But I understand that we have fully written down our value of investments in Okarbazi. But given the fact that we had some kind of ownership 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 the extent of our investments in these companies. And from a conservative approach, we have written them out completely.

Sure. And so one last question from my side. The share of loss of associates in this quarter was at about 62 crores. And if I look at the performance of Nordville, it was relatively steady on a wide-wide basis, but I think the share of losses have magnified. So is there anything of a specific one-off in this quarter with respect to the loss?

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. So, it's not related to Nodwin per se, but related to the moonshine, because earlier we had created out about 90% of the risk, but there was some carrying value. After the recent judgments, we have written it out completely.

Sure, 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.

Thanks for the opportunity. First of all, I mean, how the day-to-day responsibility 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, as joint MD, I was more involved in the strategy, vision, M&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 what's the latest on technologies, etc., which are very fast moving now in that industry to make sure that we are on top of it. The CEO, Raven, 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 questions, if there could be more collaboration in terms of how we are seeing potential for Fusebox.

So, on the Fusebook side, you know, the existing core game which drives most of the 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 Fusebox 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 Traders game, which they have global rights too.

This would translate. So, yeah, so just to understand this aspect slightly better, so is it safer to assume that Fusebox can continue a very high 20% plus type of a growth with this event expected to play out anytime soon?

Yeah, I'm a bit optimistic about the prospects. 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 have the potential to become as big or bigger than the base game. So I think executed correctly, Fusebok should have a significant runway, not only for this year, but in the years to come as well. And on SportsCreator side? Yeah, Sportskeeda has not seen that kind of recovery, but I think I would really feel that they've hit the bottom, and we are starting to see margin and all improve. Is Mayank on the call from Sportskeeda? Yeah, I think I am, yeah. Mayank, why don't you give us a little deeper view?

Yeah, so with Sportskeeda, there are 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 Q1, and this will only go up in the subsequent quarters with the U.S. four seasons kicking in. Secondly, PFN, a Pro Football Network. So 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 side of the business as well. So that has already, again, some results with more to come. And lastly, obviously, is cost optimization, something that we had been working on in the last financial as well. That exercise continues, and we are already working with a very lean setup trying to maximize ROI for the business.

So, Manc, just to understand, now the revenue run rate has come closer to our operating expenses, and these expenses have stayed stable for the last two, three quarters. So, do you see a further risk of revenue deceleration while cost stabilize around here till the time you, you know, revive revenues? Is that a possibility, or do you think we are at kind of rock bottom and should see revenue momentum sequentially from this point?

So the numbers that we have seen in Q1, it's in line with what we have set as internal expectations. And the revenue will only go up in Q2 and more so in Q3 and Q4, which are the months when U.S. 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 kicking 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 from an EBITDA perspective, it's not done pretty well. So, is it more like some of bit of COE or maybe the cross 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?

Yeah.

Rohit, why don't you take that?

Yeah, sure. So, I think if Senthil 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 face, we are investing in the sales and the product. And we will see these margins getting better as we go along. Also, on the space and time side, if you see, there is growth happening. Some of our one or two large margin clients have kind of shut down their budget for the last couple of months, but they will be back soon. But these two factors will change and our margins will become better. Even Sensil, 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 is getting very good traction in the Western market. Chensil, if you would like to add something here, please go ahead.

Yeah, thanks, Rohit. So, I agree with pretty much everything that Rohit said. Just to also give a view, the growth in revenue in the ATTIC business is not always going to directly correspond to and, you know, that much increase in the EBITDA because there is some amount of pass-through revenue also that is on the books. This represents anywhere between 60% to 80% of the revenue, that top line that is supported. So that is one thing to keep in mind. The second thing, as Rohit said, and I want to reiterate, there is growth in the In the product-related business, which has more of a standard product profile, where you have six costs where you have invested up front, but then the growth in revenue or the growth in at least the net revenue after the pass-through is significantly detached from any growth.

Thank you, Shantel and Ravi. That's it from my side.

Thank you. The next question comes from the line of Bhavik Shah with Inveksha Capital, LLP. Please go ahead.

Yeah. Hello, sir. So, our first question is regarding BluTile. So, what are the questionable EBITDA margins there, and like how have we done in Q4 of FY26 in terms of, say, revenue, EBITDA, and margin profile?

Yeah. Maxim, can you take that, please?

Yes. Yes, so the reason for the... For the increase in revenues and the flat EBITDA, we wanted to receive some great profitability on some new games, new features for the games and for best play, so we decided to increase the expense to capitalize on this great performance in order to increase the revenue baseline and the user base and while keeping EBITDA flat, so that in the future we have improved flexibility to adjust the EBITDA in case we want to, thanks to a bigger user base. Thank you.

Yeah, but what are the sustainable margins and like what were the margins and EBITDA number last quarter?

So, the FDAMR genes, so in Q1 last year, was 17.2%, and now it is around 11%.

So, like, for the year, how do we look at Blutile, like, in terms of margin profile?

Yeah, so the year is looking good so far. It can depend a lot on the opportunities that we see on the new games, on the features that we launch for the games and for best play. The good thing is that now that we have a really high revenue baseline, we have the full flexibility to adjust the EBITDA accordingly. So we are not sure yet, in the beginning of the year, how we're going to change this, but yes, we have two activities, and the goal is definitely one, increasing the revenue at the moment, is that in the future, if we want to, we can increase the EBITDA margin whenever we think is the right moment.

Okay, so if you're spending on the user acquisition, then what kind of growth are we looking in terms of revenue for the full year?

Yes, so again, we are not exactly sure. We have several games in the pipeline. It will depend a lot on the performance of this game, on the improvements that we bring to the game, and to best play. So we can't confirm that it's going to be the same for each quarter. It will depend a lot on the performance of the game, on the seasonality. So, yes, we are looking for, like, higher revenues, but then we can definitely play with the data in the future to increase the margins.

Okay, and at Nazara level, do we want to give any guidance in terms of revenue, EBITDA, or margin?

Not at this point of time.

Sure. Thank you so much and all the best.

The next question comes from the line of Munan Polaria with MKP Securities. Please go ahead.

Hi, thanks for the opportunity. My question is in relation to Curb 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 the 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 Q1 FY26. It was well-received review-wise, major first-party launch for us, and we've currently sold around 50,000 to 60,000 copies in line with expectations. So for Dragon Shelter, that's actually being released in September. So we've had 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 look at from a STEAM perspective, has exceeded our expectations. And currently sits at around 130,000 wishlists, which should mean that we're on track to deliver expected revenues for the year.

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, wish lists 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 expected revenue for August month, based on the metrics we've seen so far.

Right, 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, 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.

Oh, sorry. Sorry. Apologies.

Susan, go on, go on.

Yeah, so in terms of the comparison to human fall flats, obviously we have got... 60 million 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 the breakout success we've seen with human fall flat. 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 product at this point in time.

Great. Thanks, Susan. That's very helpful.

No problem.

Yes, sir.

Actually, there are no further questions from the participants. I will now hand the conference over to the management for closing comments.

Got it. Sure. Thank you, everyone, for joining us, and we hope to have a good day ahead of you. Thank you. Bye. Thank you. Bye.

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