Dream11 Records INR 6,384 Crore Revenue and INR 188 Crore PAT in FY23
Three points you will get to know in this article:
- Dream11 Sports excelled in FY23, posting a 66.21% revenue growth and a 32.40% surge in profits.
- Despite GST challenges, the company, valued at $8 billion, refrained from layoffs, adjusted targets, and made strategic decisions for FY24.
- As India’s top fantasy sports revenue generator, Dream Sports anticipates challenges in the upcoming fiscal year, testing its growth and margin sustainability.
In the past fiscal year, Dream Sports, the proud parent company of Dream11, showcased an exceptional financial performance, witnessing a remarkable 66.21% growth in revenue, bringing it close to the impressive Rs 6,400 crore mark for FY23. Simultaneously, the company experienced a 32.40% surge in profits during the same period.
Revenue Sources and Expenditure Allocation
According to the consolidated financial statements obtained from the Registrar of Companies (ROC), Dreamll’s revenue from operations soared to Rs 6,384 crore in FY23, marking a substantial increase from Rs 3,841 crore in FY22.
It’s noteworthy that the fantasy gaming platform primarily relied on platform fees collected from users participating in contests, also referred to as Gross Gaming Revenue (GGR), serving as the exclusive source of income for FY23.
The company experienced a significant boost in its financial standing, garnering Rs 197 crore through the sale of current investments. This, in turn, contributed to a robust total revenue of Rs 6,581 crore in the fiscal year 2023.
Dream 11 has been a steadfast sponsor of the Indian Premier League for the last three seasons, aligning itself with a constellation of star cricketers who serve as brand ambassadors. Consequently, the company allocated a substantial 51% of its overall expenditure to advertising and promotional efforts. This spending surged by 37.3%, reaching Rs 2,964 crore in FY23 compared to Rs 2,158 crore in the preceding fiscal year.
Operational Expenditure and Profit Increase
In FY23, the employee benefit cost witnessed a remarkable 2.3X increase, soaring to Rs 1,154 crore. The firm experienced a significant uptick in overall expenditure, driven by information technology, content creation, processing, and other overheads. This led to a 55.21% surge, with total expenditure reaching Rs 5,839 crore in FY23, up from Rs 3,762 crore in FY22.
The substantial growth in magnitude propelled Dreamli to achieve a remarkable 32.39% uptick in its earnings, reaching Rs 188 crore in the fiscal year 2023 compared to Rs 142 crore in FY22. Notably, its Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin experienced positive advancements, settling at 29.4% and 12.8%, respectively. At the granular level, the company invested Rs 0.91 to generate a rupee during the fiscal year 2023.
Competition and Industry Challenges
In the preceding financial year, the company boasted a comprehensive current asset portfolio amounting to Rs 1,609 crore, encompassing a notable Rs 779 crore in cash and bank balances. Notably, Dreamli emerged as the leading revenue generator in the Indian fantasy sports industry, outpacing competitors such as Gameskraft, Games24x7, A23, MPL, Zupee, and Gameberry. However, Gameskraft took the lead in terms of profitability, securing the top spot on the earnings chart with a reported profit of Rs 1,062 crore in FY23.
The landscape for fantasy and skill-based gaming enterprises has been challenging following the implementation of a 28% GST by the Indian government. This fiscal measure prompted a government crackdown, compelling Mobile Premier League (MPL), Spartan Poker, and Kavin Bharati Mittal-led Hike Rush Gaming Universe to make difficult decisions, leading to the dismissal of numerous employees. Several startups, including Fantok, One World Nation (OWN), and Quizy, had to cease their operations in response to these challenges.
Despite the industry turmoil, Dreamli, while refraining from layoffs, made strategic decisions to adapt to the changing environment. In a notable move, the company closed its corporate venture capital (CVC) arm, Dream Capital, in October of the preceding year. This dynamic landscape reflects the resilience and adaptability of companies like Dreamli in navigating the intricate challenges posed by market shifts and government policies.
Future Outlook and Challenges
In the fiscal year of 2024, Dream11 has revised its operating profit target downward by 80%, attributing this adjustment to the impact of the recently implemented GST regime. As the preeminent startup in its sector, the company achieved a remarkable valuation of $8 billion following an $840 million funding round in November 2021.
Despite its entrenched position in the industry, Dream11 faces challenges stemming from the new regulatory landscape, which are expected to exert a strain on both growth and profit margins. Despite concerted efforts to shift perspectives yielding limited success thus far, the upcoming fiscal year, FY24, stands as a litmus test for evaluating the company’s future growth prospects and margin sustainability.
Furthermore, the expanded cost base is anticipated to face heightened scrutiny, potentially resulting in imminent cost-cutting measures. Stay tuned for upcoming announcements, as we navigate these changes in the company’s trajectory.
In the past fiscal year, Dream Sports displayed extraordinary financial performance, marking a 66.21% revenue growth, reaching Rs 6,400 crore in FY23. The company also experienced a 32.40% surge in profits, primarily from platform fees and investments. Despite a robust financial standing, increased expenditure and industry challenges surfaced, prompting strategic adaptations. Dream Sports revised its operating profit target downward by 80% in response to the impact of the newly implemented GST regime and expects a strain on growth and profit margins in the upcoming fiscal year, FY24. The company’s resilience and adaptability will be crucial in navigating these changes and sustaining future growth.
