Gameskraft's FY23 profit rises 14% to Rs 1,062 crore

The Bengaluru-based firm operates a range of skill-based gaming brands, including an online rummy platform Rummyculture, social rummy app Playship, and online poker app Pocket52

Skill gaming company Gameskraft has posted a total profit of Rs 1,061.86 crore for the financial year 2022-23, marking a 14.1 percent increase from Rs 930.5 crore profit in the financial year 2021-22, according per the company's latest filing with the Registrar of Companies shared by Tofler.

This growth is likely due to increased consumer adoption in the country, despite the company facing rising regulatory challenges.

Revenue from operations grew to Rs 2,662.51 crore for FY23, up 24.8 percent from Rs 2,133.1 crore in FY22. Overall income grew to Rs 2,732.11 crore in FY23, a 26.9 percent jump from Rs 2,153.24 crore. Gameskraft makes money from the platform fees it earns from players for allowing them to participate in a game on their platform.

The Bengaluru-based firm operates a range of skill-based gaming brands, including an online rummy platform Rummyculture, social rummy app Playship, and online poker app Pocket52. In September, Gameskraft also launched its super app Gamezy's rummy and ludo offerings as standalone apps RummyPrime and Ludo Culture while shutting down its fantasy sports offering.

It's worth noting that the government recently imposed a 28 percent goods and services tax (GST) regime on the real-money gaming sector, which became effective from October 1, 2023. The new tax rates are expected to hit the revenues and profitability of many companies in the sector.

Indian tax authorities have also alleged that the company failed to pay Rs 21,000 crore goods and services tax (GST) for the period between 2017 and June 30, 2022, making it one of the biggest claims in the history of indirect taxation. The Karnataka High Court had quashed the GST notice in May 2023, but the Supreme Court stayed this judgement on September 6. The apex court is set to hear the matter again in the coming weeks.

The Supreme Court's judgement could determine the fate of the retrospective GST liabilities for all real-money gaming companies, industry stakeholders and legal experts have previously told Moneycontrol. In recent months, the country's tax authorities have also served show-cause notices to the tune of Rs 1 lakh crore to other skill-based gaming companies, including Dream Sports and Games24x7, Moneycontrol reported on October 25.

Where was the money spent?

Gameskraft has spent heavily on marketing and business promotions during the fiscal to capitalise on the surge in the real-money gaming industry in the country and drive app installs outside the Google Play Store. The company spent Rs 408.6 crore on marketing and Rs 208 crore on business promotions in FY23 compared to Rs 91.5 crore on marketing and Rs 106.4 crore on business promotions in FY22.

That said the bootstrapped firm appears to have pulled back on advertisements in the past year. It recorded zero advertisement charges in FY23 as compared to Rs 261.2 crore advertisement charges in FY22.

Employee benefit expenses jumped 80 percent to Rs 374.9 crore in FY23 from Rs 208 crore in FY22. This includes a 98 percent increase in salaries and wages to Rs 208.5 crore in FY23 from Rs 105.55 crore in FY22 and a 45.6 percent increase in employee stock compensation expense to Rs 136.2 crore in FY23 from Rs 93.5 crore in FY22.

Gameskraft's total expenditure increased to Rs 1,300.72 crore in FY23, up 45.7 percent from Rs 892.79 crore in FY22.