Q1: Seasonality effects larger than expected
Flexion reported Q1 net sales of GBP 16.3m (+54% y-o-y, of which 37% organic). Although this looks strong on paper it was below our expectations as sales were 18% below ABGSCe. The company says seasonality effects were larger this year than before, but we also suspect that the current live portfolio is beginning to reach its peak revenues. Marketing Services was also below our expectations and down y-o-y, which we think illustrates tougher market conditions for influencer marketing in the gaming space currently. The group gross margin was 0.5pp lower than ABGSCe as the IAP gross margin continued to slide as lower-margin games had a higher share of total revenues. However, Marketing Services' gross margin was stronger than expected, signalling sound decision-making in which deals it enters despite the tougher market conditions.
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