Interim Report 1 2023 - The acquisition of Wargraphs is transformative - diversifies the product portfolio, and increases growth and profitability

SUMMARY OF INTERIM REPORT ONE, 1 JAN – 31 MARCH 2023 

FINANCIAL - 1 JANUARY 2023 - 31 MARCH 2023
•    Net sales amounted to MSEK 55.7 (MSEK 67.4), a decrease of 17%.
•    EBITDA amounted to MSEK 2.7 (MSEK 8.4), a decrease pf 68%.
•    EBIT amounted to MSEK 1.2 (MSEK 7.4), a decrease of 83%. 
•    Profit before tax amounted to MSEK 0.5 (MSEK 6.9), a decrease of 93%.
•    Cash flow from operating activities before changes in working capital amounted to MSEK 2.6 (MSEK 11.8) during the quarter. 
•    Cash and cash equivalents amounted to MSEK 41.5 (MSEK 34.8), and in addition the company has an un-utilized overdraft facility of MSEK 15.
•    Earnings per share during the quarter amounted to SEK 0.0 (SEK 0.3).

COMMENTS BY THE CEO
THE ACQUISITION OF WARGRAPHS IS TRANSFORMATIVE - DIVERSIFIES THE PRODUCT PORTFOLIO, AND INCREASES GROWTH AND PROFITABILITY
M.O.B.A. Network (M.O.B.A.) acquired Wargraphs S.A.S. after the reporting period. The acquisition is trans-formative and significantly increases growth and profitability while further diversifying our product portfolio. The acquisition fits well into our long-term strategy and also adds important expertise as the founder joins M.O.B.A.

Wargraphs S.A.S. is a leading game service provider and developer of game applications providing players with essential statistics and data for popular games such as League of Legends, Teamfight Tactics, and Legends of Runeterra. The company is a digital publisher with revenues mainly attributable to sales of advertisements via its websites and its leading game application (Porofessor). The acquisition of Wargraphs will add approximately 800,000 daily application users to M.O.B.A., which will strengthen the group and potentially enable economies of scale in discussions/negotiations with advertising brokers and other partners.

Wargraphs S.A.S. delivered an adjusted net turnover of 12.3 million euros (137 MSEK) and an adjusted EBITDA of 8.4 million euros (MSEK 94) over the past twelve months. The operating cash flow for the same period amounted to approximately 6.6 million euros. To put this in context, the combined turnover of M.O.B.A. and Wargraphs pro forma for 2022 amounted to MSEK 427 with an EBITDA of MSEK 126. The deal is expected to be completed at the end of May and is expected to be consolidated from June 1, 2023. The acquisition is described in more detail on page 8-9.

Challenging quarter with a focus on long-term growth

In the first quarter, M.O.B.A. continued to deliver profit, positive cash flow, and earnings per share, despite strong headwinds in the market. M.O.B.A. had a turnover of MSEK 55.7 (-17%) with an EBITDA of MSEK 2.7 and an operating cash flow of MSEK 2.6 in the first quarter. The global economic situation negatively affected the digital advertising market in the first quarter. Inflation and interest rates have led to increased costs and lower margins. We are following our long-term strategy and have continued to invest in the business as planned, which impacted the cost base in the short term but will strengthen our growth in the future. During the quarter, we have launched new collaborations and partnerships that we expect to contribute to the group's growth and profitability in H2 2023.

We note that the uncertain market situation continued to put pressure on the advertising market during the quarter but saw a recovery in digital advertising in March. In the long term, we are not worried about the digital advertising market within gaming, but individual quarters can be negatively affected by the uncertain macroeconomic situation. We can confirm that the gaming industry continues to have strong appeal with a financially strong target group that advertisers otherwise find hard to reach. Furthermore, experiences from previous downturns, such as during Covid, have shown that when recovery occurs, it does so quickly and powerfully.

M.O.B.A. is an attractive consolidator

M.O.B.A. has a unique position as the leading consolidator in a relatively untouched industry. Most communities are run by engaged fans/entrepreneurs and often it is their passion for a game that has created their life's work. In line with our strategy, we continue to look at potential acquisitions that meet our acquisition criteria, and the acquisition of Wargraphs is no exception. M.O.B.A. has made a strong name as a partner people want to collaborate with or become a part of. The culture within M.O.B.A., where we ensure that we do not destroy a community, is attractive to passionate entrepreneurs.

I am very pleased that we have succeeded in acquiring Wargraphs S.A.S and financing the acquisition despite a challenging capital market. We have only scratched the surface regarding consolidation and have many synergies to implement in M.O.B.A. Our strategy is to constantly broaden our offering to content creators, to create opportunities for increased ad sales and increased audience. 
Our entire global team is motivated and dedicated to delivering the best experiences for gamers in line with our growth factors:
•    M.O.B.A. is a leading consolidator within gaming communities, a relatively untouched market within the gaming industry.
•    M.O.B.A. invests in games that have a long history and a large number of players/fans which gives a positive network effect and strong SEO.
•    M.O.B.A. aims to grow both organically and through acquisitions and to increase revenues exponentially with traffic volume.
My team and I look forward to the coming years with confidence.
Björn Mannerqvist 
CEO, M.O.B.A. Network AB, 30 May 2023

SIGNIFICANT EVENTS DURING THE PERIOD
Significant events during the period 1 January 2023 – 31 March 2023, in brief
•    M.O.B.A. Network appointed Andreas Björkman as CFO of the group on March 15th. Andreas brings ex-tensive experience as an auditor from Grant Thornton and as CFO at Generaxion.
•    M.O.B.A. Network's YouTube network, Union For Gamers (UFG), launched "Shorts" in March, a new for-mat for creators. YouTube Shorts aims to be a competitive alternative to TikTok and introduces a new revenue stream within UFG.
 

Significant events after the period 1 January 2023 – 31 March 2023
•    On May 5th, M.O.B.A. NETWORK announced the acquisition of Wargraphs S.A.S, subject to securing financing. Nordea Bank Abp was hired to issue senior secured bonds. Wargraphs S.A.S is a digital publisher with revenues primarily derived from advertising sales on its websites and its world-leading gaming application (Porofessor). In the 2021/22 fiscal year (ended November 30, 2022), Wargraphs S.A.S generated a rolling twelve-month adjusted net revenue of 12.3 million euros (137 MSEK) and an adjusted EBITDA of 8.4 million euros (94 MSEK). The operating cash flow for the same period amounted to approximately 6.6 million euros. To put it into context, the combined revenue of M.O.B.A. and Wargraphs pro forma in 2022 reached 427 MSEK with an EBITDA of 126 MSEK.
•    On May 11th, M.O.B.A. Network AB announced the successful placement of a senior secured bond loan with a volume of 25 million euros within a framework of 60 million euros, with a maturity of 3 years.
 

This disclosure contains information that M.O.B.A Network AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 30-05-2023 07:30 CET.

Stockholm 2023-05-30

Björn Mannerqvist, CEO

Mail: info@wearemoba.com

Web: https://wearemoba.com

Certified Adviser - FNCA Sweden AB

M.O.B.A Network AB acquires, develops and operates gaming communities for the global gaming market. The company owns one of the world's largest networks in gaming communities, with 20 web-based global brands and the YouTube network Union For Gamers (UFG) with over 1,000 content creators. The company's business areas consist of advertising sales on the company's communities and video sales via the YouTube network.