The goods and services tax (GST) levied on online gaming platforms should be on their revenues, and not on deposits made by customers in platform wallets, WinZo co-founder and chief executive Paavan Nanda told FE, as the company’s growth rate slowed in FY24.
The company’s growth is likely to be stymied further in FY25, when the full impact of the higher GST rate of 28% will be felt. The new GST regime came into force in October 2023, resulting in a partial impact on the gaming platform’s FY24 financials. WinZo reported a net revenue of Rs 1,055 crore in FY24, up 70% year-on-year from Rs 619 crore.
The company’s adjusted profit after tax at the end of FY24 stood at Rs 315 crore, up 151% from around Rs 125 crore in the previous fiscal. Its earnings before interest, taxation, depreciation and amortisation (Ebitda) came in at Rs 397.2 crore. WinZO grew at around 200% in FY23 over FY22, but its growth rate slowed significantly since the GST rate hike.
“We have no issues with the GST rate (of 28%). That depends on the decision of the government. However, currently GST is charged on deposits to the gaming wallets. That is not our revenue. Our revenue is a percentage of the winnings they earn on the platform,” Nanda said.
“However, once the full impact of the GST comes into the picture, as it will in FY25, almost 45% of our revenues will go for GST,” Nanda said. He added that while there is no visibility yet on what the final FY25 financials will look like, it is certain the company will not be able to maintain the growth momentum of FY24.
The platform does not reveal its gross revenue.
In its earnings release, the firm also said that the migration from IGAAP to Ind-AS accounting will require a provisioning of Rs 999 crore as liability. A majority of the revenue for WinZo comes from the platform commission or rake fees, and a small portion comes from in-app purchases. The gaming platform, however, did not specify the split.
WinZo is also expanding its game developing capabilities through a $50 million fund which focuses on funding and/or acquiring games to be added onto its platform. So far, of the 100 games on the WinZo app, 7-8 have been released through this initiative.
While in the long run the firm can look to boost margins by developing more games on the platform, it is currently looking at it from an eco-system building lens. Nanda said that the intention is to have more play in the gaming ecosystem.
Another focus area for the company is global expansion, Nanda said, though he refrained from giving specifics about which market, and any timelines on the roll-out of WinZo beyond India and Brazil, where it is currently available.