In This Article:
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
G5 Entertainment AB (GENTF) reported a sequential revenue growth of 4% in SEK and 1% in USD, marking the first sequential growth in over two years.
-
The G5 store showed strong growth, now accounting for 19.1% of total net revenue, up from 13.2% a year ago, with a year-over-year growth of 37% in SEK terms.
-
The gross margin reached a record high of 69.1% in the quarter, driven by the fast growth of the G5 store.
-
Earnings per share (EPS) improved significantly to 4.29 for the quarter, compared to 1.12 last year.
-
The company maintained a strong cash position with SEK275 million, up from SEK182 million last year, and continues to have zero debt.
Negative Points
-
Revenue for the quarter was 12% lower than the previous year in both SEK and USD terms.
-
The actively managed portfolio of games fell about 9% in USD terms year over year.
-
There was an extraordinary one-time legal expense of about SEK5 million related to an M&A process that did not lead to a deal, negatively impacting profitability.
-
The EPS for the full year was 15.22, which is 4% down compared to last year.
-
User acquisition expenses were at 17% of revenue, which, although lower than last year's 19%, still represents a significant cost.
Q & A Highlights
Q: Can you provide more details on the M&A process you mentioned and your view on M&A as an alternative to organic growth? A: We can't discuss specific details, but we are interested in making deals. We have a strong balance sheet and are cash flow positive, which puts us in a good position for M&A. While we are committed to organic growth, we are open to opportunities that align with our strategy, whether it's diversification or strengthening our core business. - Unidentified_2
Q: What are the recent developments with Twilight Land, and what is needed for a global launch? A: Twilight Land was initially launched globally in November 2023 but was pulled back to soft launch in June 2024 for further iterations. We have made significant improvements, and if our findings are confirmed, the game could be globally launched this year. We expect to have more information by the end of the first quarter. - Unidentified_2
Q: How did December's performance compare to October, and what trends did you observe? A: December continued the positive trends from October, driven by new features in Sherlock and Jewels of Rome. These features improved game performance and contributed to a change in sequential trends. We plan to deploy more features in the coming quarters to enhance monetization and engagement. - Unidentified_2