Key Highlights
- Revenue Surge: Games24x7’s operating revenue grew by an impressive 70.1% to Rs 1,988 crore in FY23, compared to Rs 1,169 crore in FY22.
- Loss Reduction: The company successfully narrowed its losses by 29% to Rs 199 crore in FY23, down from Rs 282 crore in the previous year.
- Controlled Spending: Games24x7 managed expenses strategically, with a focus on employee benefits and advertising.
Revenue Growth Drivers
- Increased User Base: The 70% year-on-year growth in revenue signifies a significant rise in Games24x7’s user base.
- Platform Fees: The primary source of income comes from platform fees charged for joining tournaments and contests, contributing to 99% of operating revenue.
- Freemium Model: Additional revenue is generated through the sale of virtual items within freemium games offered by the platform.
- Investment Income: Games24x7 earned Rs 35 crore from interest and gains on current investments, contributing to a total income of Rs 2,023 crore in FY23.
Expense Management
- Marketing Investments: Advertising and business promotion remained the biggest expense category, accounting for 66% of the total expenditure. However, the company managed to keep this growth under control at 61.7% compared to the previous year.
- Cost Control: Overall expenditure increased by 43.4% to Rs 2,147 crore in FY23, a positive sign considering the significant revenue growth. This indicates controlled spending on employee benefits, legal fees, travel, training, recruitment, subscriptions, and other overheads.
Financial Performance Improvement
- Reduced Losses: The combined effect of revenue growth and controlled spending led to a substantial reduction in losses.
- Improved Margins: Games24x7’s EBITDA margin improved from -24% in FY22 to -4.6% in FY23, demonstrating better financial efficiency.
- Return on Capital Employed (ROCE): The ROCE also improved from -48% to -18%, indicating better utilization of capital.
Looking Ahead
- Increased Marketing Spend: With the recent acquisition of the official fantasy sports partnership for the IPL, Games24x7 has tripled its marketing investment for the year. This is expected to further accelerate user growth and potentially impact financial performance in FY25.
- Funding and Valuation: Games24x7 has successfully raised over $107 million in funding, with Tiger Global being the largest external stakeholder. The company’s strong financial performance and strategic partnerships position it well for continued growth in the future.
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