Interim Report January-March 2022

2022-05-25 07:30:00

Stable start to the year

First quarter 2022

  • Net revenue amounted to SEK 54.7 (2.4) million.
  • EBITDA amounted to SEK 2.4 (-2.5) million. EBITDA for Q1 in the previous year included non-recurring costs of SEK -1.8 million.
  • Net result after tax was SEK -21.7 (-7.4) million.
  • Earnings per share after dilution amounted to SEK -0.24 (-0.2).

Significant events during the quarter

  • The acquisition of Lucky Kat was completed on 3 January and in connection with the completion, the Board decided to issue a total of 3,944,551 shares. Lucky Kat’s result for Q4 2021 was included in the Group’s result for the fourth quarter 2021 in accordance with the acquisition agreement.
  • On 9 February, Fragbite Group’s subsidiary Lucky Kat entered into a partnership with The Sandbox to create a virtual world with an amusement park theme in the Metaverse – a decentralised digital eco-system based on the next generation Internet – Web 3.0.

Significant events after the end of the period

  • On 12 April, the Board held a special meeting during which they decided to appoint Marcus Teilman as President & CEO, who takes up the position at the AGM on 25 May 2022. Marcus is currently Deputy CEO and Head of M&A. The Company’s current President & CEO Stefan Tengvall steps down from the role with effect from the AGM on 25 May 2022 and has informed the Nomination Committee of his availability for an operational Board role.
  • Prior to the AGM on 25 May 2022, the Nomination Committee has proposed that Niclas Bergkvist, Claes Kalborg, Dawid Myslinski, David Wallinder and Sten Wranne be re-elected to the Board. Stefan Tengvall and Zara Zamani are proposed as new Board members. The Nomination Committee has also proposed that the Company’s outgoing President & CEO Stefan Tengvall be elected as Chairman of the Board and Niclas Bergkvist as Vice Chairman.

CEO’s comments
The first quarter of the year has started steadily with net revenue of SEK 54.7 million and EBITDA of SEK 2.4 million This is compared with net revenue of SEK 60.3 million and EBITDA of SEK 10.2 million for the fourth quarter of 2021, during which period Lucky Kat sold 5,555 dog avatars for the Panzerdogs game, generating positive non-recurring revenue for that quarter. Our first quarter of the year shows that we have a solid revenue base on which to stand and grow. The first and third quarters tend to be the less intense quarters for our operations and this first quarter was no exception.
 
During the first quarter of the year, we focused much effort on integrating Lucky Kat into Fragbite Group. Lucky Kat is also exploring the possibility of selling its own token, which can be used as a type of currency for the games it produces. It is our hope that we will soon have the legal structure and all necessary permits to implement this successfully. I have a feeling that this is the start of something completely new that could have significant potential for us in the future. I am highly satisfied with the integration so far.
 
As in previous years, our e-sports company Fragbite AB did not have any tournaments running in the first quarter of the year, but new seasons of both Fragleague and the Swedish Chess League have begun after the end of the quarter. Fragbite is also planning new e-sports concepts and it is my assessment that they could be launched later this year. We will get back to you as soon as we have signed the contracts. Fragbite’s development in 2021 was negatively affected by the pandemic, but a recovery has started in the first quarter of 2022.
 
Playdigious continues to perform better than planned. Streets of Rage 4 was launched on Android and iOS yesterday, 24 May, and the studio has a number of other game releases scheduled during the remainder of the year, which I feel will further strengthen us. It was a particular pleasure to see the games Northgard and Sparklite nominated and winning the “Best Mobile Video Game” and the “Best International Mobile Video Game” awards at The Pégases Game Awards 2022.
 
For our FunRock/Prey mobile game studio, we have seen clear KPI improvements for the game MMA Manager 2: Ultimate Fight compared with MMA Manager 2021. What remains now is for us to create better leverage from the marketing campaigns carried out by our external publisher. We are monitoring developments closely and plan to launch the game globally as soon as the time is right.
 
We continue to focus on our acquisition agenda. We have chosen not to pursue some of the acquisition discussions, but to explore others in more depth. We are very selective when making acquisitions, which requires patience.
 
As previously communicated, after just over 2 years as CEO, I have decided to hand over the baton to Marcus Teilman, who is currently Deputy CEO and Head of M&A. This is my last day as CEO and I have also been proposed by the Nomination Committee as the new Chairman of the Board, to be decided by the Annual General Meeting later today. I have great confidence in Marcus and will continue to support him and the Company closely in the future, and I look forward to continuing to work with Fragbite Group in a new role for a long time to come. The remainder of 2022 looks set to be interesting, to say the least, as we have many opportunities to take advantage of. I would like to take this opportunity to thank our investors for the confidence and support they have given me and our employees.

Stefan Tengvall, President & CEO

Interim Report January-March 2022 (Link)

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