Flexion Mobile Plc - Q3 Report 31 December 2018
Flexion continues to grow its Q3 revenue. Total revenue increase to GBP 1.3m and its core business grows by 232%. During the quarter several large transactions were closed including the biggest deal in the Company’s history with an expected order value in excess of GBP 4m over time. In total, 7 titles were signed. The company also announced a strategic partnership with Samsung which increases visibility within the gaming community.
October to December performance
- IAP (In App Purchase) revenue increased by 232% to GBP 1.2m (GBP 0.4m*)
- Total revenue increased by 154% to GBP 1.3m (GBP 0.5m)
- Gross profit increased by 2% to GBP 0.22m (GBP 0.20m)
- Adjusted EBITDA fell by 157% to GBP -0.7m (GBP -0.3m) impacted by a one-off GBP 0.2m integration fee
- EBIT decreased to GBP -0.7m (GBP -0.1m)
- Earnings per share amounted to GBP -1.73 pence (GBP -0.33 pence)
- Operating cash flow increased to GBP 0.1m (GBP -0.3m)
- Cash amounted to GBP 7.0m (GBP 2.1m)
April to December performance
- IAP (In App Purchase) revenue increased by 282% to GBP 3.4m (GBP 0.9m)
- Total revenue increased by 159% to GBP 3.5m (GBP 1.3m)
- Gross profit increased by 32% to GBP 0.7m (GBP 0.5m)
- Adjusted EBITDA fell by 72% to GBP -1.6m (GBP-0.9m)
- EBIT decreased to GBP -1.4m (GBP -0.5m)
- Earnings per share fell to GBP -3.30 pence (GBP -1.23 pence)
- Operating cash flow improved to GBP -0.5m (GBP -0.9m)
- Cash amounted to GBP 7.0m (GBP 2.1m)
Important events during the quarter
- Flexion signed the biggest deal in the Company’s history for three top-tier and one mid-tier titles. Estimated transaction / guaranteed value in excess of GBP 4m over time. (R**)
- Flexion signed an agreement with Chinese developer ONEMT for their mid-tier title Rise of the Kings. (R**)
- Flexion announced a partnership with Samsung where Flexion offers a range of services to game developers for Galaxy Apps. (NR***)
- Flexion extended its co-publishing agreement with Chinese Developer YOOZOO to continue with the top-tier title Legacy of Discord and launch the mid-tier title Rise of Ragnarok. (NR***)
- Flexion signed an agreement with leading European mobile game developer Nanobit. The agreement covers their mid-tier title My Story: Choose Your Own Path. (NR***)
Important events after the quarter
- Flexion closed the biggest title in its company history when it signed a top-tier title with a division of a major film studio. Estimated transaction / guaranteed value of USD 2m over the two-year term
- Flexion launched its Plugin for Unity which provides developer access to the Flexion distribution platform already during game development (NR***)
- Flexion signed an agreement with Gumi to launch the strong mid-tier title Alchemist Code through the Unity PlugIn. Initial store is Samsung Galaxy Apps (NR***)
* Comparable number for the same quarter of the previous financial year in brackets
** (R) Released as a regulatory press release
*** (NR) Released as a non-regulatory press release
Notes from the CEO
Just before the Christmas break, we signed the biggest deal in the Company’s history. Our team has been working on this deal for quite some time and in closing it, Flexion has achieved a major milestone. These new titles bring huge potential for revenue. With this deal we have signed seven new titles in total during the quarter, three of them being top-tier, and the other four being mid-tier. The deal also shows we are serious about growth, which will further increase our footprint in the market helping us attract new developers and channels. We intend to close more deals like this over time. Top-tier titles have the potential to generate more than USD 100,000 per month in revenue and mid-tier titles more than USD 30,000 per month in revenue to Flexion. I am pleased to conclude that we are on track to deliver on our mid-term vision having signed 7 large monetising games and with a strong pipeline going forward.
Our market, the alternative Android games market, is getting more attention from both games media and developers. Developers and new market entrants are now openly questioning the two dominant stores, Google and Apple and when Epic Games decided to bypass Google Play with Fortnite, currently the most successful game of all times, we thought that they might launch their own game stores. We didn’t expect this to happen as soon as this quarter, but it did and in December, they announced the new Epic Game Store for PC games. With this, they will compete with Steam, the market leader in PC game distribution. An Epic Gamestore for Android games is also expected to come to our market during 2019 and we expect it to get good traction with developers and further strengthen our case.
Outside the game market, large players such as Netflix and Spotify are now also moving away from the traditional app stores and are instead selling their subscription through their own payment platforms. These trends are further evidence of a general movement towards open fragmented markets, like the alternative Android games market we operate in. This is what we have been building for the last 5 years and we are now perfectly positioned to support developers and app stores as the market enters its next growth phase.
At the Samsung Developer Conference in October we announced our strategic partnership with Samsung and we are now their main partner for games. This has given us an extra boost on the developer relations side but also improved visibility within Samsung. In November, we followed up with a trip to G-star, the biggest Game Show in Korea, and signed an agreement with a Korean sales agent who will be targeting for us some of the top Korean game developers. The Korean market is the 4th biggest Android game market in the world and is highly competitive. Traditionally, it has been dominated by Korean developers, but Chinese developers have moved in and opened the market. We aim to capitalise on a stronger demand for overseas distribution as we are looking for our first Korean top title.
The governmental freeze on new game launches in China has finally come to an end in December. This is great for Chinese developers who have suffered for almost 9 months.This is an exciting opportunity for us as their focus is shifting back to their home market making our full service offer a perfect fit for Chinese developers reaching new international markets.
Finally, I would like to introduce Victor Horbach as our Chief Revenue Officer. Victor joined us last spring as Head of Developer relations, from the large Dutch game developer Spil Games. Since joining Flexion, he has had a very positive impact on the sales team and he has been instrumental in closing some of our deals.
For more information
Niklas Koresaar CFO, Email: email@example.com. Tel: +44 207 351 5944
This is information that Flexion Mobile Plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CET on February 27th, 2019.
About Flexion Mobile Plc: www.flexionmobile.com
Flexion makes it easy for developers to maximise the growth potential of their Android games. The company offers as a distribution platform for free-to-play Android games. Flexion's unique service offering has solved a distribution problem for developers and at the core of Flexion's patented technology is the enabling and enhancement software that lets developers distribute one version of their game in multiple channels. As a result, game developers can reach new channels without having to make any changes to the game code. Flexion is integrated with global stores such as Amazon and Samsung and leading regional distribution channels in India, South Korea and Japan. Flexion Mobile Plc is listed on Nasdaq First North, ticker name: FLEXM. Certified Adviser is FNCA Sweden AB, +46(0)8-528 00 399 firstname.lastname@example.org.