What kind of response did you expect for the IPO? Also, what is the outlook on the monthly active users from an average of about 40.17 million, what is it that you expect?
Nitish Mittersain:: We are, of course, very happy. It is a milestone day for us at Nazara. We have been at it for 21 years and it is a very exciting day for us and we have the love and affection of all our partners, all our team, all our investors and hopefully of all the shareholders who will be joining us soon. We believe that the dream we had of India being a large gaming country is a lot closer and we believe that the next decade is going to be the decade of gaming for India. We are really looking forward to this and are very excited about it.
Manish, how was the response to the IPO and the outlook on MAUs?
Manish Agarwal: I think unfortunately we are not in a position to give you any forward looking statements as you will appreciate. All I can say is that we have built a very strong platform for us to continue our growth momentum and we will do whatever it takes to make this the golden decade of gaming in India and to leverage that. We have the best A team which can make it happen.
What further acceleration do you see in demand over 2020 and going forward as well? How do you see that panning out on account of the Covid-19 situation for ad tech and for e-sports as well as mobile gaming?
Manish Agarwal: Our strategy of following three massive consumer trends was laid out in around 2016-17. We have doggedly persisted with it. Gaming is going to be the biggest pie of entertainment. It is zero friction for players to consume and interact with the gaming content. Secondly, gamers will be watching professional gamers playing video games and that will take a large share of the sports entertainment business in terms of leadership, revenue and brand sponsorship,.Thirdly, learning can be made fun through gaming especially for 2- to 6-year-olds. These are the three consumer trends which we have looked at. Covid only solidified these habits, making them more deep rooted, strengthening the opportunity for companies like Nazara.
The company’s stated objective has been to build its market position and also continue its global expansion. What are the plans there and what capex have you set aside?
Nitish Mittersain: At Nazara Network, we have partnered with some great companies, some great founders, some great teams and the platforms. We have created the friends of Nazara, which is very scalable. We would love to add more friends to our platform going forward post IPO. We will of course be on the lookout for companies that fit our strategy and DNA and as and when the right opportunity arises, we will be more than happy to go ahead with it.
What has been lined up on the acquisition front? Where are you looking to increase stakes and which verticals could you be focussing on going forward?
Manish Agarwal: The current verticals that we are working on are our strong drivers — the e-sport space, the sport assimilation space and the gamified early learning space. These are all very exciting spaces where our teams are doing a lot of work and there is huge potential for growth. There are several other areas and extensions that we are interested in but it is very important that we take the right calls and do not hurry. We will be very selective and pretty careful in terms of where we put out not only our capital but also our bandwidth to ensure that whatever we do is creating value for ourselves and for our shareholders.
Historically the company has been EBITDA positive and has generated sufficient cash flows from operations. What is the outlook on your cash and cash equivalents? What about the worries of negative cash flow?
Manish Agarwal: From our perspective, we believe in running and growing businesses with a single minded focus on ensuring that our EBITDA margins are positive. We do not stop at EBITDA margins. We also look at our cash flows and ensure our cash flows are positive. We are always looking at how we can generate enough cash and we draw it back into investments. So as a company we have an over a decade long track record of being EBITDA positive.
In the last two years, the EBITDA margins have been increasing, the EBITDA absolute numbers are increasing. The PAT is negative mainly because of depreciation and amortisation expenses which are non cash items that is coming on account of increase in intangibles in our balance sheet owing to acquisitions. Otherwise from a cash point of view, it is a positive cash flow and it is a positive EBITDA business. And those acquisitions have done exceedingly well. They have grown very well and for us that is the growth platform which we are really building. The right way to look at our business is to look at EBITDA margin, EBITDA margin expansion and the revenue growth and the absolute revenue.
