The decrease in adjusted EBITDA is mainly due to the lower operating margin (revenue minus commissions minus marketing) for Fishing Clash.
Ten Square Games’ revenues amounted to PLN 123.6 million in this period, in line with the consensus. Revenue is down 10.8 percent. compared to the previous quarter and by 13.3 percent. y/y
In the commentary to the results, the management of Ten Square Games announced that the beginning of 2023 brought decreases in the payment level of the group’s two main titles – Fishing Clash and Hunting Clash, with an increase in revenues from Wings of Heroes.
One of the main reasons for these declines was the reduction in marketing spending from the fourth quarter of 2022, which reduced the influx of new players to the game. Less marketing activity also affected the quality of traffic provided by the algorithms of the largest platforms. These factors contributed to the lower level of payments recorded in Fishing Clash in April 2023, equal to PLN 20.4 million.
“The marketing team focuses primarily on improving marketing indicators and the profitability of advertising campaigns. In the next step, it is planned to increase advertising budgets in order to acquire users and search for new channels for marketing activities” – it was written in the commentary.
In the first quarter of 2023, Hunting Clash recorded payments in the amount of PLN 32 million. This is the same value as in the first quarter of 2022 and slightly lower than that recorded in the fourth quarter of 2022. The management of Ten Square Games said that this is mainly due to the new approach to organizing events in the game. In the first quarter of 2023, marketing expenditures in the game were lower both compared to those incurred in the first and last quarter of 2022. This translated into a decrease in the level of payments in the game in April 2023, which amounted to PLN 7.9 million.
The EBIT loss in the first quarter amounted to PLN 14.4 million against PLN 18.9 million of the profit assumed in the consensus. The company recorded a net loss of PLN 12.8 million in this period, while the consensus assumed a net profit of PLN 18 million.
The reported EBITDA amounted to PLN 17.1 million, and analysts estimated it at PLN 25.6 million.
Comparing the operating result to the adjusted EBITDA, the Management Board of Ten Square games indicates a significant impact of write-downs on the value of games. Along with the change in the business strategy, the management board decided to close two projects and write off their production costs in the amount of: Fishing Masters PLN 11.7 million and Undead Clash PLN 14.9 million.
In the first quarter, the Group recorded an increase in cash from PLN 126.6 million to PLN 140.2 million.
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| Results of Ten Square Games in the first quarter of 2023 and their reference to the PAP Biznes consensus (data in PLN million) | |||||
|---|---|---|---|---|---|
| 1Q2023 | results | conc. | difference | r/r | q/q |
| Revenue | 123,6 | 123,6 | 0,0% | -18% | -5,9% |
| EBITDA Adj. | 27,6 | 29,5 | -6,4% | -33% | -22% |
| EBIT | -14,4 | 18,9 | — | — | — |
| profit net jd | -12,8 | 18,0 | — | — | — |
| EBITDA margin | 22,4% | 23,9% | -1,52 | -4,99 | -4,53 |
| EBIT margin | -11,7% | 15,2% | -26,89 | -31,21 | -14,85 |
| net margin | -10,4% | 14,5% | -24,93 | -27,42 | -4,83 |
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2023-05-22 16:22:00
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