Interim Report for the period January – March 2023
CEO Marcus Teilman comments: “The first quarter was characterised by a high level of execution across the business with several important milestones achieved. With this high pace maintained we look forward to an exciting and eventful 2023.”
First quarter 2023
- Revenue amounted to SEK 55.2 (54.7) million.
- EBITDA amounted to SEK 1.9 (2.4) million.
- Adjusted EBITDA (before items affecting comparability) was SEK 1.9 (2.4) million.
- Operational EBIT amounted to SEK 0.1 (1.7) million.
- Net result after tax was SEK -25.3 (-21.7) million.
- Earnings per share after dilution amounted to SEK -0.27 (-0.24).
Operational EBIT is defined as EBIT excluding non-operational amortisation and impairment of intangible assets.
Significant events during the quarter
- Playdigious released a mobile version of well-known title Teenage Mutant Ninja Turtles: Shredder’s Revenge exclusively on Netflix.
- Playdigious’ mobile version of Dead Cells reached 5 million sold units at the beginning of the year.
- Lucky Kat and Wagmi entered into partnership with Mysten Labs regarding web3 game Cosmocadia and its release on the Sui blockchain in 2023.
- Lucky Kat signed an additional agreement with partner The Sandbox on developing a parkour-themed experience to be released in The Sandbox’s metaverse.
- Lucky Kat and Wagmi announced that web3 game Panzerdogs and its NFT collection will be migrated to the Sui blockchain.
- Playdigious announced that the company is developing and publishing the game Legend of Keepers for mobile platforms with release date set to 23 May 2023.
Significant events after the end of the period
- Fragbite Group has engaged a market maker ahead of the sale of $KOBAN tokens that will be used as the premium currency for Panzerdogs, Cosmocadia and future web3 titles.
- Fragbite Group is taking over publishing of MMA Manager 2 – Ultimate Fight.
- Sale of NFTs for web3 title Cosmocadia is planned to start on May 24 when the first playable demo version of the game will also be made available.
- Subsidiary Fragbite AB launched gaming and esports agency Config.
- Gaming and esports agency Config nominated for “Campaign of the Year” by StockholmMediaAwards.
- Swedish Cup in CS:GO will be held during fall 2023. MAX Burgers, Expressen/Bonnier and SPACE return as partners.
- The Fragbite Group Board of Directors has decided to change accounting principles to IFRS.
We start the year in line with our expectations based on how game releases and other key commercial activities are planned over the year. Revenue amounted to SEK 55.2 million, compared with SEK 54.7 million for the same period the previous year. EBITDA was SEK 1.9 million, compared with SEK 2.4 million. It should be taken into account that we have increased costs and thereby capacity in Lucky Kat and Playdigious, both having increased their workforces in preparation for a highly intensive 2023. The Parent Company has also increased costs for, among other things, key positions such as acquisitions and investor relations but also finance, partly in preparation for the upcoming transition to IFRS.
At first glance, the quarter may seem like an uneventful quarter with few game releases, but the fact is that all parts of Fragbite Group have demonstrated a high level of activity. We have continued to maintain the same high tempo in the second quarter to ensure good delivery for the full year 2023.
Preparation for new heights in web3
Lucky Kat has increased its focus on building a larger and even more engaged community within web3 ahead of the impending NFT sale of Cosmocadia, the migration of Panzerdogs to Sui and forthcoming token sales. At this moment, we are preparing for our launch of the NFT collection for Cosmocadia, planned to start on May 24. The same day a first playable game demo will be made available. We are very proud to see Lucky Kat part of an exclusive group of developers whose game projects will be the first releasing on the Sui blockchain, which went live just over a week ago. Panzerdogs will also migrate to Sui, after which we look forward to benefiting from more recurring revenues through transaction revenues for the NFTs that are sold on the secondary market via external marketplaces. We have also engaged Amber Group as market maker in a first step towards selling more tokens, which may be sold on one or more occasions under new brand name $KOBAN. Amber Group is also tasked with maintaining liquidity in our token as soon as it starts trading on public exchanges. I am very impressed with what the organisations of Lucky Kat and Wagmi have achieved, particularly considering that the launch of Sui Mainnet progressed faster than originally planned, which required a lot of intense work from our team during the quarter.
Playdigious building a strong foundation
Playdigious has like Lucky Kat also focused on expanding its production capacity. This allowed us to, with more force and weight, enter into several highly interesting business dialogues regarding the release of upcoming game titles. We have signed a number of agreements and are in the final stages of other negotiations, and with this we continue to build a strong foundation for the Group. Playdigious’ revenue for the first quarter of this year was marginally lower compared to the same quarter the previous year, mainly due to a lower game release page. We expect this pace to increase over the coming quarters, which means that the prospects of showing clear organic growth for 2023 compared with 2022 are good. I look forward to coming back to you with more details on how this work is progressing.
Improved conditions for MMA Manager 2
Funrock & Prey Studios have in good faith come to a mutual agreement with our external publisher resulting in us resuming responsibility for publishing MMA Manager 2. That way we can decide on channels and level of marketing from here on out. In the short term, it is important to ensure that, in every detail, the game is returned in a way that enables us to benefit from the organic traffic. As a consequence of our structured efforts on finetuning the product over the past periods, the underlying KPIs for the game have gradually improved in recent months. This change enables us to create the conditions needed to improve margins, among other things due to reduced fees paid to game distribution platforms such as Apple App Store and Google Playstore.
Fragbite AB builds a more dynamic organisation
During the quarter, subsidiary Fragbite AB has signed a number of important sponsorship agreements ahead of the Swedish Cup, which will take place during the fourth quarter 2023. Thanks to the success of the Swedish Cup in 2022, we expect to be in a good position to charge more this year now that the concept is proven. We are especially pleased that the campaign developed for last year’s title sponsor MAX Burgers was recently nominated for “Campaign of the Year” by StockholmMediaAwards. Fragbite’s agency business has recently been launched under a new brand: Config, for which new contracts have been signed with clients Samsung and Philips who have now extended Config’s engagement to the international level. In addition, changes have been made to enable a more proactive organisation, altogether leading to the expectation for this subsidiary to yet again be cash flow positive for the full year.
Cornerstones in place for a bright 2023
We have high ambitions and have therefore continued to invest in our own business by recruiting new skilled employees to achieve continued profitable growth. Through Fragbite Group’s decentralised organisation with independent entities, we have created the conditions for continuously strong entrepreneurship with a high degree of motivation and flexibility. I think this has also been demonstrated by the hard work and high level of activity that we are now showing across the Group. On the acquisition side, we continue to be active and prepared to pursue acquisitions that add value to the Group. Despite a somewhat cautious start to the year in financial terms, I am therefore confident, and remain confident, that we will achieve significantly improved revenue and EBITDA in 2023 compared to 2022.
Marcus Teilman, President and CEO
The report is attached to this press release and available for download from the Fragbite Group website: www.fragbitegroup.com/financial-reports