Flexion sees its best-ever quarter in terms of game signings and continues to grow its quarterly revenue by 26% and gross profit by 27% year on year.
July 2021 to September 2021 performance
- Total revenue increased by 26% to GBP 7.8m (GBP 6.2m)*
- Gross profit increased by 27% to GBP 1.0m (GBP 0.8m)
- Adjusted EBITDA‡ remained flat at GBP 0.07m (GBP 0.11m)
- Operating result remained flat at GBP -0.02m (GBP 0.05m)
- Earnings per share amounted to GBP -0.07 pence (GBP 0.08 pence)
- Cash amounted to GBP 15.1m (GBP 3.7m)
April 2021 to September 2021 performance
- Total revenue increased by 42% to GBP 15.6m (GBP 11.0m)*
- Gross profit increased by 30% to GBP 2.0m (GBP 1.5m)
- Adjusted EBITDA‡ decreased by 26% to GBP 0.09m (GBP 0.1m)
- Operating result remained flat at GBP -0.07m (GBP 0.01m)
Important events during the quarter
- Launch of Legendary Game of Heroes and Guardians of Cloudia
- Signing of Evony: The King’s Return from Top Games Inc.
- Signing of The Ants: Underground Kingdom from StarUnion
- Signing of Puzzles & Survival from 37Games
- Signing of a top grossing game as part of a seven-game deal
Important events after the quarter
- Launch of Evony: The King’s Return
- Alignment of the financial year with the calendar year by closing the current financial year after 9 months in December 2021
* Comparable number for the same quarter of the previous financial year in brackets
‡ The Company defines adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, finance costs, impairment losses and other income. Adjusted EBITDA (adjusting operating profit for several non-cash items) is used by the Company for internal performance analysis to assess the execution of our strategies. Management believe that this adjusted measure is a more appropriate metric to understand the underlying performance of the Company
Notes from the CEO
“Without exaggerating, as a distributor, we now have the strongest portfolio of games in the history of Android”. These were the exact words of our Chief Revenue Officer at one of our recent weekly company meetings and I think it really captures how we feel as a company right now.
We started the financial year with focus on strengthening our portfolio of top games while reducing the launch time for new games. We have delivered on both points by i) signing four very large titles; ii) securing a two-year extension for six of our existing games; and iii) launching three new titles with significantly reduced time to market. I am extremely proud of what we have signed this year and pleased with how well we continue to execute on our strategy. It has been a real team effort.
The underlying growth potential in our portfolio should not be underestimated. The four newly signed titles are making a massive USD 36m per month in Google Play and this becomes even more significant when considering our current live portfolio, which is making USD 40m per month in Google Play. This results in a total of USD 76m per month for our portfolio in Google Play. We have already reached an average of 10% compared to Google Play for our live portfolio, which means that once the new titles are live, we could potentially double our portfolio revenue over time. This will fuel our revenue growth and gross profit for the coming years and allow us to strengthen our focus on top earning games. In addition, this allows us to gradually phase out lesser-performing games which will help us drive efficiency gains and improve our EBITDA margin.
Looking at the quarterly performance, we had a solid quarter without any major events. The beginning of the quarter was relatively slow, but September was strong and back to our high-water mark. Total revenue remained in line with our record-breaking June quarter, resulting in a 26% quarterly growth YoY. Total gross profit grew by 9% QoQ and 27% YoY to GBP 1.0m, driven by our improved margin on the back of the seven-game deal signed in September. We are now gearing up for the traditionally strong fourth quarter with a lot of major game promotions and early positive effects from some of our newly launched games. We maintain our revenue growth target as set out at the beginning of the year and really look forward to the most exciting quarter of the year.
With the new game additions, we now hold 5 top 40 grossing games, a total of 17 games within the top 250 grossing games and a total of 27 top 500 grossing games, based on Google Play rankings in North America and EMEA. It adds a new dimension to our sales and marketing and helps strengthen our co-operation with existing channels. We are now in a prime position when talking to new stores and this allows us to start looking at expanding our current service offering.
We continue to see how the changes to IDFA is impacting paid user acquisition for most of the bigger spending game publishers and it is a general driver for change in the market. We expect this to continue to have a positive impact on the alternative distribution market and help drive awareness for our services. We also see some large new entrants to the market with Microsoft launching support for Android games in Windows 11 through their partnership with Amazon Appstore. Netflix has also announced that it will be launching a new mobile game service. All new entrants will be looking to add content which puts Flexion in pole position with our strong game portfolio. We expect the trend to continue as the ecosystem gradually opens for new participants.
Another big driver for change is the legal battle between EPIC and Apple. It will lead to new and increased competition for payments inside app stores and games, something which is good for alternative markets who already offer higher pay-outs to developers.
I am very pleased with how we have executed our core strategy. Thanks to our size and being a first mover in the alternative market, we have been able to build our business on organic traffic and this will continue. We are now ready to shift some of our attention to non-organic traffic from new and unique traffic sources. This will cement our leading position and allow us to scale revenue faster. We are working on a detailed plan for the commercial, technical, and operational requirements needed for new initiatives. In addition, we are also scouting the market for potential targets which, through acquisitions or strategic co-operation, would add value to our business and support our mission. As the market trends are new, our targets are typically relatively small and profitable companies, which are attracted by our story, market position, developer partnerships and close relationship with the channels, all adding a lot of mutual synergies.
To summarise, we had our most successful quarter in terms of game signings, and we will be able to reap the benefit from these for the years ahead.
Jens Lauritzson – CEO
For more information
Niklas Koresaar CFO, Email: firstname.lastname@example.org. 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 November 18th, 2021.
About Flexion Mobile Plc: Flexion offers a distribution service for free-to-play Android games. Using the service developers can distribute their games in multiple channels like Amazon, Samsung, Huawei, Xiaomi and ONE Store. These are channels that the developers are struggling to reach and support. At the core of Flexion's service is the patented enabling and enhancement software that converts developers' existing Android games into specific game versions for the new stores without any work required by the developers. Flexion Mobile Plc is listed on Nasdaq First North Growth Market, Shortname: FLEXM. Certified Adviser is FNCA Sweden AB, +46(0)8-528 00 399, email@example.com