<a id="bm-comp-2dec8fb5-f6f5-4677-8499-f91d46a7470a" name="bm-comp-2dec8fb5-f6f5-4677-8499-f91d46a7470a" class="BMCustomAnchor"></a><table><tr><td bm-component-id="2dec8fb5-f6f5-4677-8499-f91d46a7470a" style="vertical-align: top; width:100.000000%;"><ul><li>Solid sales growth (14% y-o-y) and positive FCF</li><li>EBIT estimates down slightly on higher opex in Q2</li><li>7-5x EV/EBIT in '25e-'26e with 12% sales CAGR in '23-'26e</li></ul></td></tr></table><a id="bm-comp-a03165e2-52bf-4af7-b8b9-0bc3ed4028ba" name="bm-comp-a03165e2-52bf-4af7-b8b9-0bc3ed4028ba" class="BMCustomAnchor"></a><table><tr><td bm-component-id="a03165e2-52bf-4af7-b8b9-0bc3ed4028ba" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">Sales at top-end of guidance, EBIT slightly weaker vs ABGSCe</h3><p>Flexion delivered Q2 sales at the high-end of its guidance (USD 22.5m or GBP 17.7m vs. guidance of USD 20-23m) and 2% above our forecast for a growth of 14% y-o-y (17% Distribution, -9% Marketing). EBITDA was a bit weaker at GBP 1.0m vs our forecast of GBP 1.6m. In addition, depreciations remained at higher levels (GBP 2.0m, up vs. GBP 0.6m in Q2'23) leading to a weaker EBIT of GBP -0.8m vs our forecast of GBP 0.9m. The EBIT continues to be burdened by game right amortisations while the free cash flow was positive at GBP 0.2m (GBP 0.8m). We raise our sales forecast slightly on the back of the report, but opex levels a bit more, for a negative revision to EBIT — we cut '24e-'26e EBIT from GBP 2/4/5m to GBP 1/3/4m compared to our FCF estimates of GBP 4/3/3m.</p><h3 class="bm-h3">Focus on top publishers is bearing fruit</h3><p>While we cut EBIT estimates somewhat, we reiterate our view that the company is on a solid growth trajectory, supported by new game signings. The signing of King's Candy Crush means that Flexion is now working with two of the largest mobile gaming brands of all time (together with Monopoly Go! and Candy Crush), showcasing the value its offering to publishers. In addition, it was encouraging to see that new game signings increased to five in Q2 (one top-tier and four mid-tier games), up from one new game in both Q4'23 and Q1'24, implying that the portfolio should grow sequentially in H2'24 over H1'24. Management also wrote in the report that it expects additional signings of big games in H2'24.</p><h3 class="bm-h3">Share is trading at 7-5x EBIT in '25e-'26e</h3><p>We forecast that Flexion will grow sales by a 12% CAGR in '23-'26e and reach an EBIT margin of 4% by 2026e. Based on our new estimates, the Flexion share is trading at 7-5x EBIT in '25e-'26e.</p></td></tr></table>