Flexion Mobile reports another strong quarter and hits a new monthly revenue record in April. Positive adjusted EBITDA[‡] was reached for the full year - a new milestone for the Company. Quarterly revenue increases by 136% while gross profit is up 114%.
* Comparable number for the same quarter of the previous financial year in brackets
‡ The Company defines adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, finance costs, impairment losses and other income. Adjusted EBITDA (adjusting operating profit for several non-cash items) is used by the Company for internal performance analysis to assess the execution of our strategies. Management believe that this adjusted measure is a more appropriate metric to understand the underlying performance of the Company
Notes from the CEO
We kicked off this traditionally weaker quarter with a lot of momentum from the Christmas season and, to our great excitement, we maintained high pace throughout the whole period. Flexion's momentum was primarily driven by our top three titles, each generating over USD 0.5m in average monthly revenue during the quarter, as well as positive movements on some of our high-end, mid-tier titles. Flexion's strong performance continued in April, where we set a new monthly revenue record approximately 14% higher than the average monthly revenue in Q4.
Our full year performance was exceptional, and I am particularly proud of Flexion's annual revenue growth from GBP 9.5m to GBP 24.4m. It is not often companies grow organically by 158%, while keeping operational costs flat. The combination of high revenue growth and stable cost base has propelled Flexion into a positive adjusted EBITDA for the year, a key milestone for a growth company like ours. We have a very strong portfolio of games and our teams are doing a great job growing the revenue. April was our strongest month ever and with GBP 14.7m in cash, we have never been in a better position.
It is important to understand the full potential of Flexion's growth drivers. For example, we are still generating just a fraction of these games' universal revenue and know we can grow revenue significantly by adding more distribution from existing and new stores. Furthermore, we are being more selective with new titles by focusing on top-tier games with strong KPIs. Lastly, we plan to double our developer sales power by adding several new team members in key markets in the very near future.
During the quarter we signed four new titles, two from Goat Games, one from Wargaming and one from Superprism and we relaunched Gods & Glory from Deca Games. We expect to launch at least two of our newly signed titles next quarter. Bowling Crew is the 3[rd] title we signed from Wargaming and this really shows the value we bring and the importance of repeat business as a growth driver. Launching of new games has been slower than I would like this year due to a lot of small and frustrating delays. For instance, we decided to pause two game launches due to their poor performances in Google Play. This situation will improve as we get better at signing new games and managing multiple simultaneous game launches. Delivery is an area we are investing in.
The mobile games market has, in the last 24 months, seen unprecedented growth as well as a strong trend in favour of studio consolidation. We believe this trend will continue due to increased competition and the need for bigger marketing spend, amongst other things. In parallel, the market is rapidly becoming technically more complex and sophisticated. A fragmented market of smaller, profitable specialists currently provide game publishers with services such as performance marketing, payments, creative services, technical enabling and distribution. All focusing on taking the mobile games market beyond its current levels. However, these specialist companies are often too small to match the broader needs of the growing set of large global game publishers. Flexion is perfectly positioned with our strong game portfolio, wide service offering, technical solution, and important partnerships, to drive consolidation in the games-services market and to capitalise on the opportunity to provide publishers with a broader service offering. We can, through in-house development, acquisitions and partnerships, strengthen our existing service and broaden it to meet the growing needs of top games companies around the world. Moreover, this will increase our ability to scale revenue, improve margin on games and, even more importantly, make us the leading force of change in our market. As a first step, we have recruited a senior user acquisition manager as well as a highly experienced M&A team. Additionally, we are reviewing current and future organisational and technical needs and are planning further investment to optimise our model while also taking advantage of these new opportunities.
We will continue to press release newly signed and launched titles, but we will not give any guidance on the number of new titles, as this is not the best indicator of Flexion's revenue growth. We have received mixed feedback on our quarterly trading updates and have decided to stop releasing these updates. Instead, we will shorten the release time of the quarterly reports. We also intend to align our financial year, currently ending in March, with the calendar year. This means that we will close the current financial year in December 2021.
As we are now at the start of a new financial year, I would also like to comment on our targets and reporting going forward. For the financial year ending December 2021, we are targeting annualised revenue growth from our existing services of 40-60% with a stable gross margin while the headcount for the existing service is expected to grow by just 5-8 people. We have not yet assessed the expected revenue or margin impact of our future, wider, service offering as this depends on whether it is developed in-house or derived through acquisitions.
We are now entering a new and exciting chapter at Flexion and I am very much looking forward to providing you with updates on our progress and new milestones in the coming quarters.
Jens Lauritzson - CEO
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