The online rummy platform A23 reported flat revenue growth for the fiscal year ended March 2024. However, the company's earnings increased by 24% during the same period, owing to lower expenses and more non-operating income. A23's net sales increased to Rs 841 crore in FY24 from Rs 839 crore in FY23, according to company consolidated annual financial statements obtained from the Registrar of Companies (RoC).
Notably, the firm's gross sales increased by 31% to Rs 1,378 crore in FY24, from Rs 1,051 crore in FY23. Of this, Rs 537 crore was paid out to players, for a net revenue of Rs 841 crore in FY24. The platform fee, or commission, levied as a proportion of user buy-in fees, remained A23's sole revenue source in FY24.
The platform also generated Rs 37 crore, largely from interest on deposits and current investments, bringing its total revenue to Rs 878 crore in FY24. The company claims to have more than 5 crore participants on its platform and offers five games: rummy, fantasy, poker, carrom and pool. A23 has not divulged much about its overheads, although it has classified Rs 515 crore, or 68% of the total cost, under the miscellaneous heading.
This could include all significant costs such as advertising, servers, and hosting. A23's employee perks increased by 41% to Rs 138 crore in FY24 from Rs 98 crore in FY23. In FY24, the entire expenditure was Rs 761 crore, which included legal, safety & security, printing, travel, and other overheads. Despite the static size, A23's managed expenditure and increase in other income allowed them achieve a 24% increase in net profits to Rs 72 crore in FY24, up from Rs 58 crore in FY23. Its ROCE and EBITDA margins increased to 11.5% and 15.26%, respectively, while the expense-to-revenue ratio remained at Rs 0.90.
At the end of FY24, A23's total current assets were Rs 613 crore, with cash and bank balances of Rs 534 crore. In the real-money gambling business, MPL's revenue increased 22.2% to Rs 1,068 crore in FY24. Revenues for Gameberry and Gameskraft increased by 46.9% and 30%, respectively, to Rs 461.7 crore and Rs 3,500 crore. Dream11 has yet to reveal their FY24 financial results.
Gaming enterprises have been battling GST issues for the past two years, with the DGGI issuing 71 notices accusing them of dodging GST totaling Rs 1.12 lakh crores. Earlier this month, the Supreme Court of India stayed the GST show-cause summons given to various online gambling enterprises.
The verdict, announced by a bench led by Justice JB Pardiwala, comes before the Supreme Court's final hearing on the matter, which is scheduled for March 18, 2025. While government monitoring is expected at this scale, the gaming industry continues to be a hotbed for profitable companies.
Aside from zero debt, corporations have built in enormous managerial slack to reduce earnings and increase expenses. Given the prospect of a slowdown, FY25 performance will be closely examined, while rent-seeking departments such as the GST authorities will continue to scrutinize the enterprises. As one of the top players, A23 would battle not to be distracted by these difficulties, both good (how to minimize profitability) and negative (notices), but the company would be wise to invest in some serious game development that generates real IP for it.
The majority of its previous offerings have a narrow moat in comparison to competitors, and it certainly has the resources to strive to be more unique now. While avoiding the most obvious temptation for cash-rich gaming firms--crypto, which will almost certainly enhance the attention they receive from the government.
