Flexion delivers its sixth consecutive record quarter with revenue growth of 138% and EBITDA of
July-
- Total revenue increased by 138% to
GBP 18.5m (7.8)* -
Gross profit increased by 196% to
GBP 3.0m (1.0) -
Adjusted EBITDA‡ increased to
GBP 1.5m (0.1) -
Adjusted profit before tax# increased to
GBP 0.3m (0.1) -
EPS amounted to
GBP -1.22 pence (-0.07 pence ) -
Adjusted EPS amounted to
GBP 0.51 pence (0.08 pence ) -
Operating cashflow amounted to
GBP 1.9m (-0.4) -
Cash and cash equivalents amounted to
GBP 10.5m (15.0)
January-
- Total revenue increased by 111% to
GBP 46.8m (22.2)* -
Gross profit increased by 166% to
GBP 7.4m (2.8) -
Adjusted EBITDA‡ increased to
GBP 3.2m (0.04) -
Adjusted profit before tax# increased to
GBP 0.8m (-0.1) -
Operating cashflow amounted to
GBP 4.9m (1.4)
Important events during the quarter
- Launch of King of Avalon from FunPlus
-
Signing and launch of
Matchington Mansion fromMagic Tavern Inc -
Signing of Call Me Emperor from
Clicktouch Co. on the Japanese market - Signing of Kiss of War from tap4fun
-
Completion of
USD 500k Liteup Media investment for 20% stake -
Launch of cost-per-install (CPI) service by Liteup Media to target
TikTok users
Important events after the quarter
- With Amazon-Windows 11 deal, Flexion can help Android games reach PC audiences
* Comparison figures for the year-earlier period in brackets
‡ The Company defines adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, finance costs, impairment losses, foreign exchange gains/losses and corporate acquisitions costs. The definition was updated in
# The Company defines adjusted profit before tax as profit before tax excluding foreign exchange gains/losses, amortisation of intangible assets from corporate acquisitions & corporate acquisition related costs. This quarter, the adjustment amounted to
Q&A with the CEO
Q: How would you describe this quarter?
A: This was another exceptionally busy and strong quarter where we saw a great deal of momentum, especially within Distribution, and where we reported organic growth of 111%. At Group level, this resulted in explosive year-on-year quarterly revenue growth of 138%. Strong growth can also be seen for gross profit and EBITDA, at 196% and 951% respectively.
This is our sixth consecutive quarter with record figures, and naturally we are very proud of this achievement.
We are making good progress with our new and scalable Group structure - gearing the company for strong profitable growth moving forward. This decentralised structure will allow for expansion into new verticals broadening the service offering for the top game publishers in the world while also leveraging sales and cost synergies between the verticals.
Q: What is driving your continued revenue growth?
A: Our 2022 revenue guidance of 90-110% shows how ambitious we are as an organisation. Meeting these targets in the current market environment is a great accomplishment. Looking at this quarter's growth, we see that it is primarily driven by the large games we signed last year. These games are now entering their more mature long-term phase and focus is therefore on adding new growth engines for next year within Distribution. This illustrates the strength of our business model and our unique value proposition. It offers stable long-term portfolio growth with revenue bumps thanks to new signings and market share expansion.
In 2018, when we went public, we stated that our target market was around 400 games. The market has grown tremendously since then, and the same number today is more like 800-1000 games. It is interesting to conclude that we still have a long way to go although we are expanding very rapidly.
Q: Your EBITDA growth has been very strong in the last few quarters, but this isn't reflected in profit. Can you please explain why?
A: Over time intangible assets from new acquisitions such as Audiencly will grow and according to IFRS accounting principles we must amortise these. This negatively affects net operating profit and we therefore decided to introduce Adjusted profit before tax alongside Adjusted EBITDA to better reflect the underlying performance of the business. Essentially, we add back amortization of intangible assets from acquisitions and FX effects to get Adjusted profit before tax. This quarter, the adjustment amounted to
Q: So where do you see growth within Distribution going forward?
A: We see plenty of new and exciting distribution initiatives from companies such as Microsoft,
Q: Your Audiencly acquisition also appears to be performing well - is this thanks to the aforementioned marketing synergies?
A: Audiencly has strong growth in its core business, and we expect that to continue. As a standalone entity, Audiencly reports 61% growth in revenues and EBITDA so we are clearly pleased with the performance. In addition, we are working hard on developing marketing synergies as we cross sell our services to top grossing game developers. We expect both marketing and cost synergies to be visible next year.
Q: You recently announced that Amazon Appstore is now offered on Windows 11 and that you already have several games live, how does this work and is this an opportunity for you?
A: We have supported this project for quite some time. It is driven by the need to provide Microsoft users with more apps and games. Like many others, Microsoft has been unsuccessful in gaining meaningful traction with game developers for its
Technically, it is an integration of
Windows 11 will be rolled out to hundreds of millions of users around the world and over time it should provide an interesting opportunity for game developers. For Flexion, it is a significant opportunity to grow its Amazon revenues for game developers and should make the Flexion game marketing services even more appealing. This is the first iteration of the Windows service, and it will take some time before it gains proper market traction, but we expect to see an impact primarily in the second half of next year.
Q: There have been many strategic mergers and acquisitions in the market in the last 12 months - what's driving these transactions?
A: In recent years, the mobile game market has noted a great deal of consolidation at studio level but the deals we are now witnessing are of a different nature. For instance, Unity's acquisition of
Some of the deals are driven by regulatory changes such as the Digital Marketing Act in
Q: You mentioned that you are working on a decentralised Group structure, why is that so important and can we expect M&A activities when this is complete?
A: Until now, our core business has been game distribution to alternative appstores which essentially means that we grow audiences and revenue for games while freeing up resources for our customers i.e., we are reducing their opportunity cost for growth. The acquisition of Audiencly, was a natural step into influencer marketing as it is very similar in terms of the value it offers our customer base. The strong relationships we have established with the world's biggest game developers puts us in a unique position to further expand our service offering and become a global games marketing company.
We are looking to take new strategic positions in important game market segments such as influencer marketing, where we can become a world leader. We enter these new verticals through a combination of buy, build and commercial partnerships, all dependent on what works best for each opportunity. We focus on initiatives that show clear marketing and cost synergies. The target companies are typically smaller, profitable market leaders in their respective niche with strong management teams. To support this growth strategy, we are now building the foundation and structure for a global leading games marketing company. It is a new and exciting phase that we are entering.
For more information
Niklas Koresaar CFO, Email: ir@flexionmobile.com. Tel: +44 207 351 5944
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