Flexion reported Q4 revenue growth of GBP 10.5m (+52% y-o-y and 33% q-o-q). This was 16% better than ABGSCe, as we expected less uptick from the Q3 numbers. The deviation was caused by higher revenue per top-tier game that has already passed the ramp-up period alongside a solid contribution from newly launched top-tier games. For the latter, Flexion managed to launch these during the busy Christmas period with a lot of store promotion, which is key to ensuring a high number of downloads in the distribution channels that Flexion is targeting (there is currently no functionality for user acquisitions). The growth was also done profitably, as gross profit and adj. EBITDA were up 63% and 163% y-o-y, respectively. Adj. EBITDA was GBP 0.33m (0.13m), clearly ahead of our GBP 0.12m. Apart from the solid report, Flexion also announced a strategic investment in Liteup Media, a German start-up for mobile game influencers, and signed a new game title (Kingdom Guard) on 14 February that is showing potential in Google Play.
Positive revisions from Q4 performance
The investment in Liteup Media means Flexion initially acquires a 20% stake for USD 0.5m and has the right to acquire an additional 20% at the same valuation before having an option to buy the whole company based on an undisclosed multiple of gross profit in 2025. In conjunction with the Q4 report, Flexion provided revenue guidance of 40-60% for ’22 despite having some revenues at risk from Russia (less than 10% of the group). We see this as a strength and after our positive estimate revisions, which are mainly driven by higher revenue per game, we are at 45% sales growth for 2022.
New DCF valuation range of SEK 20-34 (17-28)
We update our DCF valuation range with our positive estimate revisions and FX, resulting in a higher valuation range of SEK 20-34 ...
Läs mer på Introduce
