WinZO Experiences Revenue Surge But Net Loss Widens in FY23

WinZO, a prominent online gaming platform based in Delhi NCR, witnessed a substantial increase in its operating revenue for the financial year ending March 31, 2023 (FY23). The company reported a nearly threefold rise in revenue, reaching INR 673.94 crore compared to INR 233.89 crore in the previous fiscal year.

Founded in 2018 by Paavan Nanda and Saumya Singh, WinZO focuses on skill-based gaming. It operates through a mobile application, partnering with third-party developers to host games. The platform generates revenue by charging users fees to participate in real-money games.

Including income from additional sources, WinZO’s total revenue climbed 2.8 times to INR 690.71 crore in FY23, up from INR 244.8 crore in FY22.

Financial Growth Overshadowed by Net Loss

Despite the encouraging revenue growth, WinZO’s net loss also witnessed a significant increase. The company’s net loss surged 1.9 times to INR 710.15 crore in FY23 compared to INR 370.1 crore in the previous year.

It’s important to note that a non-operating expense of INR 835.9 crore was recorded in FY23 due to changes in the fair value of compulsory convertible preference shares. Excluding this accounting adjustment, WinZO actually achieved a profit of INR 126 crore during the year under review. This figure stands in contrast to the non-operating expense of INR 240.45 crore reported in FY22.

Breakdown of Expenses

WinZO’s total expenditure also increased by 2.3 times, reaching INR 1,400.86 crore in FY23 compared to INR 614.9 crore in FY22.

• Employee Benefits: The company’s employee-related costs, including salaries, provident fund contributions, and gratuity, rose by 1.9 times to INR 54.81 crore in FY23 from INR 28.79 crore in FY23.

• Advertising and Promotional Expenses: Marketing and promotional activities have traditionally been a major expense for most gaming startups. WinZO’s spending in this area increased to INR 257.61 crore in FY23 from INR 198.61 crore in FY22.

Funding and Market Challenges

WinZO has secured over $110 million in total funding to date. The company’s investor base includes prominent names like California-based Griffin Gaming Partners, gaming-focused funds like Maker’s Fund and Courtside, and Indian venture capital firm Kalaari Capital.

The Indian online gaming sector is currently facing challenges due to the implementation of a 28% Goods and Services Tax (GST) on the full face value of real-money gaming. Notably, this tax does not differentiate between games of skill and games of chance.

In light of these domestic tax troubles, WinZO announced plans to expand its presence internationally, specifically targeting the Brazilian market, in 2023. Additionally, the company launched a $50 million “Game Developer Fund” last year to invest in global startups across various aspects of interactive entertainment, including game developers and publishers, gaming economies, content creation, live operations, and security.