MPL’s losses tripled in size to $148 million in FY22
- ByStartupStory | December 1, 2022
E-sports and skill gaming platforms had tremendous growth in FY21, thanks in large part to the epidemic. The growth rates appear to be rapidly slowing down in the post-COVID-19 period, though. According to the Mobile Premier League’s (MPL) statistics, the league failed to buck the trend in FY22. According to its annual financial statement in Singapore, MPL’s revenue from operations increased by 28.9% to $65.6 million (Rs 497 crore), but the company’s losses increased by 202% to $148 million (Rs 1,122 crore).
For context, the operating revenue for the company increased by almost 8X in FY21. 97% of all revenue came from online gambling, which saw a 25.7% increase to $63.87 million in FY22 from $50.8 million in FY21. Other sources of income included the sale of goods like jerseys and advertising revenue, which contributed $1.45 million and $310K, respectively. The MPL, led by Sai Srinivas Kiran, offers over 60 online games, including speed chess, rummy, and fantasy cricket, with real money awards in paid competitions.
The company, which is funded by Sequoia Capital, has 13 subsidiaries, including ones in Singapore, Germany, the USA, Indonesia, and India. Additionally, the business received $1.2 million in non-operating income from interest on deposits during FY22. Moving on to the cost sheet, marketing initiatives and the involvement of numerous brand ambassadors have had an impact, as advertising and promotion costs accounted for 43% of the total cost. From $51 million in the prior fiscal year to $92.3 million in FY22, this expense increased by 81%. (FY21). Employee perks accounted for 27.3% of total costs, increasing 3.5X to $58.68 million.
In addition, $14 million in employee stock options are included in this expense. Costs for hosting and IT support services went up by 88% and 106%, respectively, to $12.6 million and $17.3 million.In order to increase its overall expenditure by 115% to $215 million (Rs 1,630 crore) in FY22 from $100 million (Rs 758 crore) in FY21, the company spent an additional $13.1 million on professional and legal expenses.
The company’s losses increased by 3X to $148 million (Rs 1,122 crore) in FY22 from $49 million (Rs 371.4 crore) in FY21 due to a more than 2X increase in costs. MPL has stopped operating in Indonesia, where it separately reported a loss of $16 million in FY22. Due to its high costs, MPL’s cash outflow from operations increased three times to $139 million in FY22, worsening its ROCE and EBITDA margins, which were respectively -123.86% and -216.98%.
As MPL laid off 10% of its personnel in the current fiscal year (FY23), the expense for employee benefits may be lowered. The company’s exit from Indonesia will also have a favorable effect on its balance sheet. In order to extend operations throughout European markets, where it now generates 10% of its overall revenue, it has acquired Germany-based GameDuell. The Indian online gaming business is not a place for capital-starved companies because of the declining market, the weight of onerous rules, and the high cost of acquisition (of customers). It is clear that the market will consolidate over the coming years, and during that time at least one, if not more, of the top 5-6 gaming corporations will be out of business.
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