Flexion Mobile - Reassuring guidance for 2020/21e
Temporarily higher opex in Q4 Promising game signings of late DCF valuation range of SEK 17-28 (15-26) Q4: EBITDA behind ABGSCe due to performance fees, FX Flexion reported Q4 net sales of GBP 6. 6m (+136% y-o-y), in line with its 14 April pre-announcement. Revenue growth was heavily driven by the top three titles, with each generating over GBP 0. 5m in monthly revenue during Q4.
EBIT was GBP -0. 15m (-1. 4m) vs.
our forecast of 0. 04m. The deviation was caused by performance payments to employees at the end of 2020, as well as higher-than-anticipated FX adjustments.
Flexion signed an additional four games in the quarter, taking full-year game signings to 14, while its portfolio of live games contained 19 titles at the end of Q4, with an additional five yet to be launched. In addition, the company also announced it will stop its trading updates and change its reporting to a calendar year basis, so this financial year will end on 31 December. Sales estimates intact, minor adjustments to margins Instead of targeting a number of game signings in the mid-term, Flexion guided for revenue growth of 40-60% this fiscal year.
We keep our sales estimates intact following the report, thus maintaining our forecast of 39. 6% revenue growth for 2020/21e driven by new game signings and an increase in revenue per game. , Flexion signed two promising titles after the quarter ended: Guardians of Cloudia and Legendary Game of Heroes.
The former launched on Google Play with strong KPIs in May; we classify it as a mid-tier title for now, but it might come to reach top-tier status. The latter is an older, top-tier title that launched on Google Play in 2016 but is still generating high monthly revenues (USD 2m in May). Exploring possibilities within user acquisition and M&A In addition to the distribution business, Flexion is also exploring new possibilities within user acquisition and M&A through new hires with expertise in these fields.
We raise our DCF valuation range to SEK 17-28.
