Nazara Technologies: Navigating Challenges with Strategic Growth in Q2 FY26

Nazara Technologies Limited, a prominent player in the diversified gaming and sports media sector, recently announced its financial results for the second quarter and half-year ended September 30, 2025 (Q2 & H1 FY26). The company showcased robust top-line growth, driven by its core gaming and AdTech segments, even as it navigated significant one-off challenges related to regulatory changes and market shifts. For H1 FY26, Nazara reported a consolidated revenue of INR 1,025.2 crores, an impressive 80.2% increase year-on-year. EBITDA for the same period surged by 118.5% to INR 109.4 crores. However, the consolidated Profit After Tax (PAT) for Q2 FY26 stood at a negative INR 33.9 crores, primarily impacted by a substantial impairment loss on its investment in Moonshine Technologies (PokerBaazi).

Nazara's performance underscores its strategic resilience and diversified portfolio approach. The core gaming segment, encompassing mobile gaming, PC & Console publishing, and offline gaming, continues to be a primary growth driver. Mobile gaming revenue alone grew by 81% year-on-year in Q2 FY26, fueled by strong performances from IPs like Love Island, Animal Jam, and the addition of CATS and KOT. The PC & Console publishing business also demonstrated high-margin monetization, with Human Fall Flat selling 1.25 million units and Wobbly Life surpassing 2 million lifetime units. The offline gaming segment, comprising Smaaash and Funky Monkeys, delivered INR 12 crores of EBITDA in H1 FY26 at a 27.5% margin, with Funky Monkeys actively expanding its footprint. The AdTech segment exhibited exceptional growth, with Q2 FY26 revenue increasing by 501% and EBITDA by 289% year-on-year, contributing INR 10 crores to H1 FY26 EBITDA.

Strategic Shifts and Operational Excellence

Nazara is actively evolving its business model, shifting from publishing individual games to building and scaling long-term IP-led franchises. This strategy aims to expand IPs across multiple platforms—mobile, console, PC, and offline—and diversify monetization channels through in-app purchases, subscriptions, and catalogue sales. This approach is designed to reduce hit-driven volatility and foster recurring revenue streams. The company's investment in Centers of Excellence (COEs) for User Acquisition, Analytics, AI, and Growth is a testament to its commitment to operational excellence. These COEs are already showing early signs of improving Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratios, automating retention, and creating operating leverage across the portfolio, particularly evident in games like Kiddopia.

However, the quarter was not without its challenges. New regulations in India's online skill-based real-money gaming space led Nazara to recognize a significant impairment of INR 914.7 crores on its investment in Moonshine Technologies (PokerBaazi). Additionally, Nazara's stake in NODWIN Gaming fell below 50%, leading to its de-subsidiarization and accounting for it as an associate. This resulted in Nazara recognizing INR 206.3 crores as its share of loss from NODWIN, predominantly due to an impairment related to Freaks4U, an esports entity in Europe that faced market stagnation and layoffs. Despite these setbacks, NODWIN's core business continues to grow profitably, with a sharpened focus on youth content and scaling esports across emerging markets like India and Saudi Arabia.

Future Outlook and Management Confidence

Looking ahead, Nazara's management remains confident in its strategic direction. The company is targeting a 20-25% year-on-year growth for its core gaming business, aiming for a similar EBITDA margin range. Initiatives like the planned launch of Animal Jam on Roblox and the expansion into Indian markets with Bigg Boss are expected to drive further IP growth and leverage large user bases. The SMAAASH 2.0 revamp is on track for an FY27 relaunch, aiming to surpass prior performance and serve as an audience funnel for Nazara's digital IPs. Furthermore, NODWIN is expected to achieve EBITDA profitability in H2 and aims to become a $1 billion revenue company in the next five to seven years, focusing on global youth mindshare ownership.

Nazara's proactive approach to market realities, including the strategic impairment of underperforming assets and aggressive cost optimization for segments like Sportskeeda, demonstrates disciplined capital allocation and a clear focus on profitability. The company's refreshed brand identity,