Flexion sees very strong first quarter growth
Apr18 – Jun18 Q1 financial performance
- IAP (In App Purchase) revenue increased by 371% to GBP 993,245 (GBP 210,926*)
- Total revenue increased by 173% to GBP 1,038,408 (GBP 380,776)
- Gross profit increased by 105% to GBP 239,532 (GBP 116,706)
- EBITDA fell by 25% to GBP -440,761 (GBP -351,826)
- Loss per share increased to -0.73 pence (-0.52 pence)
- Operating cash flow fell by 12% to GBP -172,712 (GBP -154,683)
- Cash amounted to GBP 7.4m (GBP 2.0m)
- Comparable number for the first quarter of the previous financial year in brackets.
The full report is available here.
Notes from the CEO
Flexion sees very strong first quarter growth.
Our core business, In App Purchase (IAP) revenue, increased by 371% resulting in an increase in total revenue of 173%.On the 13th of June, Flexion became a public company listed on Nasdaq First North in Stockholm. It required a real team effort to meet the deadline before Swedish Summer Holidays. Therefore, let me take this opportunity to thank our fantastic staff and advisors for their effort, existing and new shareholders for your support and welcome everyone on board this new and exciting journey with us. We were off to a flying start of the 2018/19 financial year with 371% growth in IAP revenue. This has fuelled a 173% growth in total revenue. It is important to note that IAP revenue now represents 96% of our total revenue since the decision to close our legacy services. We are now focusing all our efforts on growing the core business.
The growth in IAP revenue was mainly coming from our top five titles in our biggest channels and we are starting to see the positive impact of our strong business model. We have since the beginning of the year invested in our sales teams and it is starting to generate results in terms of a growing pipeline of quality games.
Growth in gross profit was 105% compared to last year. Since we no longer get any high margin contribution from our legacy services the gross profit was slightly lower than the growth in total revenue.
We are now actively recruiting in all areas to grow our business. As a result, our cost for overheads have increased. Costs associated with our IPO amounted to GBP 187,713. The cost increase was partly offset by positive foreign exchange differences of GBP 203,172 due to the strengthening of the USD. As a result, EBITDA fell to GBP -440,761.
While we are increasing our pace of investment we also work hard to keep control of our cash burn to ensure long term stability of the company. With our current cash balance of GBP 7.4m and quarterly cashflow of GBP -172,712 we have 94 months runway. This allows us to increase our investment pace significantly without putting the company at risk.
OVERALL MARKET GROWTH
The market is steadily evolving towards more openness and developer interest in Flexion is growing stronger every quarter. We are also seeing a new trend where Asian developed games are gaining traction in the West. China, the biggest mobile games market in the world, has since March this year not approved any new titles for their domestic market due to changes in their regulatory approval processes and this in turn means that game developers are starting to look more actively at new channels outside China. It is unclear how long this will last but we strongly believe that China will be a big opportunity for Flexion starting with games developed for Western markets.
Another influencing factor is the EU decision, this summer, to fine Google for abuse of dominating position on Android. It follows similar decisions in other countries such as Russia. It is too early to say how this will impact the market but it is definitely a step towards more openness and competition. This is good for Flexion as a more vibrant ecosystem with more channels offers a bigger opportunity for us.
During the quarter Huawei, who is now bigger than Apple in terms of devices sold globally, announced their new App Store for overseas markets. Huawei is already one of the leading App Stores in China. Xiaomi, less known in Europe, is another big device manufacturer from China who also just launched their own App Store overseas. These are two examples of companies that will be needing games for their stores and Flexion is perfectly positioned to take advantage of these opportunities as they develop over time. Our existing partners Samsung and Amazon are also continuing to invest in their ecosystems. All of this will benefit us longer term as our market keeps growing. To compete with Google Play, some app stores are now offering developers better terms than Google. One such example is our partner store in Korea who just announced improved developer payouts for new games and an interesting collaboration with Samsung in Korea.
Our immediate marketing focus is on investing in stronger partnerships with our biggest channels Amazon and Samsung and bringing more games to these stores. We are working on aligning our service offer together with them to make sure that developers fully understand the value we bring.
The funding raised earlier this year provides us with the necessary marketing muscle to be able to offer developers a clear incentive to join us. We can also be more active in developer marketing and attend events globally. The decision to go public has been very welcome by most people in the industry and it has been a real pleasure to personally experience how our profile has strengthened since then.
It is with excitement we look forward to an eventful autumn.
- Jens Lauritzson, Founder and CEO
Niklas Koresaar, CFO, Email: . Tel: +44 207 351 5944
This information 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 August 29, 2018.
About Flexion Mobile Plc
Flexion Mobile Plc () makes it easy for Android game developers to maximise the growth potential of their games. The company functions as a distribution platform of Android games. The company's unique technology has solved a distribution problem for developers. At the core of Flexion's patent pending 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 now 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, Shortname: FLEXM. Certified Adviser is FNCA Sweden AB