The gaming industry in India witnessed a joyride until Fiscal Year 2023, enjoying the absence of taxation heat. Among the success stories, Gameskraft and Zupee stand out, exemplifying the good old days of substantial revenue and profitability. In FY23, Gameskraft reported a revenue of Rs 2,662 crore and a hefty profit of Rs 1,062 crore. Zupee, a Gurugram-based gaming firm, demonstrated remarkable growth, with revenue from operations spiking 2.05X to Rs 832 crore and a reduction in losses by over 73% during the same fiscal year.
Zupee, founded by Dilsher Singh Malhi and Siddhant Saurabh, achieved substantial growth in FY23, with revenue from operations reaching Rs 832 crore, marking a 2.05X increase compared to Rs 405 crore in FY22. The company’s consolidated financial statement sourced from the Registrar of Companies (RoC) highlights its robust financial performance in a favorable gaming landscape.
Business Model and Revenue Streams
Zupee’s business model revolves around letting users participate in quiz tournaments across various topics and win real money. The platform offers a diverse range of games, including ludo, snakes & ladders, trump cards, and tombola, allowing users to engage in real cash gaming. The primary source of revenue for Zupee in FY23 was platform fees, representing a specified
percentage charged by the company on total gaming transactions. Additionally, the company earned non-operating income of Rs 33.35 crore, mainly from interest on fixed deposits during the fiscal year.
In line with other gaming platforms, Zupee allocated a significant portion of its expenditure to advertising and promotion costs, accounting for 52% of the overall expenditure. The total expenditure surged 2.65X to Rs 468 crore in FY23. The cashback provided to users increased by 14.5%, reaching Rs 235 crore in the same fiscal year.
Detailed Expenditure Categories
- Advertising and Promotion: This category constituted 52% of the overall expenditure, indicating a substantial investment in marketing strategies.
- Cashback to Users: The cashback provided to users increased by 14.5% to Rs 235 crore, reflecting a commitment to user engagement and retention.
- Employee Benefits, Commissions, and Overheads: Expenditure on employee benefits, commissions, legal/professional fees, server costs, information technology, and other overheads contributed to the total expenditure of Rs 901 crore, reflecting a 65.93% increase from FY22.
Funding and Valuation
Zupee, a four-year-old firm, has successfully raised $121 million across funding rounds and achieved a valuation of $600 million in its last fundraise. Nepean Capital is the largest external stakeholder with a 16.61% stake, followed by Westcap and Seminal Digital Ventures. The co-founders, Singh and Saurabh, cumulatively command 12.17% of the company.
With Kapil Sharma as a brand ambassador in July of the current year and substantial spends on promotions, Zupee has continued its efforts in FY24 to maintain momentum. The company’s strategic moves, coupled with a strong financial performance in FY23, position it for potential success in the evolving gaming landscape.
Looking Ahead to FY24
As Zupee navigates FY24, industry observers are keen to see how the company sustains its momentum. The strong financial performance in FY23, coupled with strategic initiatives, puts Zupee in a favorable position. While questions may arise regarding the relatively low share of cashback winnings given back to players, the company’s focus on maintaining momentum and potential expansion plans in FY24 remains a topic of interest.
In conclusion, Zupee’s exceptional growth in FY23 showcases the buoyancy of the gaming industry during a period without taxation concerns. As the company looks ahead to FY24, its ability to capitalize on the gaming trend, strategic initiatives, and continued financial success will be closely monitored. The gaming industry’s joyride may continue for those well-positioned to navigate the evolving landscape and capitalize on emerging opportunities.