Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enad Global 7 AB (ENADF, Financial) reported a net revenue of SEK353 million for Q2, with expectations of significant revenue growth in the second half of the year.
- The acquisition of Singularity 6 is expected to expand the company's portfolio with the game Palia, which has already attracted approximately 5 million players.
- Cost optimization efforts are projected to reduce annual costs by around SEK100 million, enhancing future profitability.
- Big Blue Bubble contributed significantly to adjusted EBITDA, with My Singing Monsters stabilizing at levels nearly three times greater than in 2021.
- The company successfully uplisted to the Nasdaq main list, potentially increasing its visibility and investor interest.
Negative Points
- Q2 adjusted EBITDA of SEK33 million represents a decline from the previous year and quarter, attributed to My Singing Monsters stabilizing at a lower level.
- Toadman and Petrol faced challenges, with Toadman reporting an adjusted EBITDA loss of SEK8.5 million due to difficulties in ramping up their work-for-hire business.
- Daybreak's margins were lower than usual due to revenue deferrals, impacting the overall profitability for the quarter.
- Fireshine reported a negative adjusted EBITDA of SEK1.8 million, attributed to the timing of product releases.
- The company anticipates ending the year at the lower end of its EBITDA margin guidance range of 22% to 25%, reflecting ongoing industry challenges.
Q & A Highlights
Q: Is the USD10 million investment needed before Palia's release in Version 1.0, and will it be reported as CapEx?
A: Palia is a live service game, so there isn't a traditional Version 1.0. The USD10 million budget is for the PlayStation 5 and Xbox release in 2025, including publishing and marketing expenses. A significant portion of this investment will be capitalized. - Ji Ham, Acting CEO
Q: What is the potential upside for Palia?
A: It's premature to detail the potential upside, but Palia is performing well in open beta on PC and Nintendo Switch. We see significant long-tail performance and profitability potential, but more detailed planning is needed. - Ji Ham, Acting CEO
Q: What are your thoughts on stock buybacks in the current market?
A: We continue to evaluate buybacks, balancing them with growth investments like Singularity 6 and maintaining sufficient liquidity. No firm decision has been made yet. - Ji Ham, Acting CEO
Q: What are your expectations for the upcoming MechWarrior Clans release?
A: We are confident in its success based on the performance of MechWarrior 5 Mercenaries. The game has a dedicated fan base, and we expect it to perform well in line with our expectations in the fourth quarter. - Ji Ham, Acting CEO
Q: Can you discuss the potential for improvement in DC Universe Online, Dungeons & Dragons Online, and PlanetSide 2?
A: DC Universe Online has new leadership and is stabilizing. Dungeons & Dragons Online is expected to improve with new expansions. PlanetSide 2 faces challenges due to team transitions but is being actively managed. - Ji Ham, Acting CEO
Q: How is EverQuest performing compared to last year?
A: EverQuest is performing well, exceeding expectations with its recent Progression Server release and anniversary celebration. We expect it to potentially outperform last year's results. - Ji Ham, Acting CEO
Q: What is the status of Cold Iron's game development and H1Z1?
A: Cold Iron is building on the success of Aliens Fireteam Elite with a new title. H1Z1 is in concept iteration, focusing on a hardcore survival game. We are cautious with investments until the design is firmed up. - Ji Ham, Acting CEO
Q: Can you elaborate on Toadman's profitability after cost optimizations?
A: We aim for Toadman to achieve profitability during the third quarter following cost optimization measures. - Fredrik Rueden, Deputy CEO & CFO
Q: What can we expect for the full-year guidance in the second half of the year?
A: We aim for SEK1.8 billion in net revenue for the year, with the second half expected to bridge the gap. Adjusted EBITDA margin is likely to be at the lower end of the 22% to 25% range. - Ji Ham, Acting CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
