Flexion reports positive momentum towards the end of Q3 and includes strong earnings estimates for October.
July-
- Total revenue decreased by 20% to
GBP 14.8m (18.5)* -
Gross profit decreased by 16% to
GBP 2.5m (3.0) -
Adjusted EBITDA‡ decreased by 55% to
GBP 0.7m (1.5) -
Operating result decreased to
GBP -0.4m (-0.3m) -
EPS amounted to
GBP -1.24 pence (-1.25 pence ) -
Operating cash flow amounted to
GBP -2.0m (2.0) -
Cash and cash equivalents decreased to
GBP 7.5m (10.5)
January-
- Total revenue decreased by 1% to
GBP 46.5m (46.8)* -
Gross profit remained at
GBP 7.4m (7.4) -
Adjusted EBITDA‡ decreased to
GBP 1.9m (3.2) -
Operating result decreased to
GBP -0.5m (-0.4)
Important events during the quarter
- Launch of Stumble Guys from
Scopely Inc. -
Launch of Monopoly Go from
Scopely Inc. -
Payment of
GBP 3.2m for game distribution rights
Important events after the quarter
- Revised Revenue Guidance to 0-10% from the lower range of 20-40% for 2023
- New estimated revenue record for October in constant currency. Up 26% year-over-year
-
Total Estimated October revenue
GBP 6.6m and estimated adjusted EBITDAGBP 500k - New daily and weekly all-time highs for revenue in November
-
Signing of
Wolf Game : Wild Animal Wars from Special Gamez
Other items
- The 2022 audit is still ongoing and comparative numbers presented as at
31 December 2022 are therefore unaudited. Any adjustments made during the audit process will impact the comparative figures presented. -
The Company is aware of potential changes which could have an impact on the 2022 numbers presented. The uncertainty relates to the recoverability of certain receivable balances as at
31 December 2022 , impairment of intangible assets as a result of the insolvency of a customer (previously a related party) of the Company's German subsidiary, increased audit fees and reclassification of a financial asset at fair value to an investment in associate. The Company's estimated maximum exposure to the statement profit and loss for the 2022 year, in respect of these potential adjustments, isGBP 1.4m with an estimated maximum future cash flow exposure ofGBP 0.6m . These estimates exclude any potential recoveries from the insolvency and effects from the additional purchase price considerations and contingent consideration liability related to the acquisition of the Subsidiary which are yet to be determined. This is further described under note 12 comparative information as at31 December 2022 . When the audit is finalised, comparative figures presented in future reports will be updated to reflect final audited figures in respect of the 2022 financial year.
* Comparison figures for the year-earlier period in brackets
‡ The Group defines adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, finance costs, impairment losses, foreign exchange gains/losses, corporate acquisitions costs and other extraordinary costs (Insolvency related provisions/write-backs & costs).
Comments from the CEO
"I am pleased to say that Q3 2023 ended on a positive note, and we have now returned to profitable growth. We produced a strong September and a new monthly revenue record in October, posting year-on-year growth of 26% in constant currency. The momentum has continued into November, and we have just recorded daily and weekly all-time highs. This sets us up for an exciting year-end and a positive outlook for 2024.
After a sluggish summer, which is reflected in our Q3 figures, growth was re-ignited in September with the successful launches of our new titles. Our team successfully secured very strong promotions in all channels, and I am happy to say that the new games are performing well. Some of our important titles, such as Evony and World of Tanks, are also back on track, supported by significantly stronger distribution and promotions in our main stores.
I am also very positive about the growth potential for 2024 with our newest channels - Xiaomi GetApps, DT Hubs and Aptoide. Most of our store partners have ambitious expansion plans thanks to the forthcoming Digital Markets Act and we have secured sizeable marketing commitments from several of our partners for next year.
Our more robust sales activities are having a positive impact on our pipeline, which is looking solid with several big titles in negotiation. Since the launch of Monopoly Go and Stumble Guys in our channels in Q3, we have shifted up a gear and are seeing stronger interest from the top-grossing game developers around the world. I had hoped to see conversion of some of these deals already in Q3, but protracted negotiations and busy partner roadmaps have meant that some deals have now been pushed into Q4 2023 and Q1 2024. With this in mind, we decided to revise our 2023 revenue guidance earlier this month to 0-10% for the year. However, I am confident that we will sign new strong titles in the next few quarters, and we just announced an exciting title from Special Gamez called
Despite a slow-down in the advertising market, our influencer marketing business has continued to perform relatively well and the important 7vs.Wild project, which we announced in Q2, is expected to boost revenue by approximately
With more - and stronger - brands in our portfolio and growing distribution capacity, the risks associated with customer concentration are diminishing every quarter which is something we have benefitted from in a slower market this year. We have a strong cash balance, no debt, robust long-term and positive cash flows and growing EBITDA. While many game companies have struggled with negative growth this year, we are still growing, reporting 7% growth in constant currency during the first ten months of the year. This is testament to our strong business model and our continuously growing market. Several game developers that we are talking to have been reducing their User Acquisition budgets in Google Play and are now looking for new ways to market their games. This has benefitted us as we offer an alternative at a low opportunity cost. In parallel, developers are chasing better margins through cost reductions, which is something that favours our services.
We are participating in several exciting new strategic initiatives including the integration of third-party payment services in games, cloud gaming and direct distribution. All of these initiatives serve to generate more revenue and audiences for the games and developers with whom we cooperate.
The Digital Markets Act was introduced in
Supported by new regulatory pressure and increasing demand around the world, we believe alternative distribution is about to experience a breakthrough in 2024. We are ready and uniquely positioned when this happens."
For more information
Niklas Koresaar CFO, Email: ir@flexionmobile.com. Tel: +44 207 351 5944
This is information that
About
Flexion grows revenue and audiences for games. Our mission is to become the leading games marketing company. We offer unique game distribution and influencer marketing services to top grossing developers around the world. Flexion boosts game revenue and audiences for games by maxisimising their performance in new alternative app stores, including the Amazon,
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