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Next Games Corp. Business Review Q3 2017: Continued Revenue Growth, Strong Focus on Product Development
NEXT GAMES CORPORATION COMPANY RELEASE 3 NOVEMBER 2017 AT 8.00 EET
This release is a summary of the Q3/2017 report. The complete report is attached to this release and available at http://www.nextgames.com/ng/reports/
Gross Bookings does not include deferrals related to sales
Adjusted EBITDA is defined as operating profit, adjusted for depreciations, deferrals related to sales, licenses and commissions, as well as adjusted for listing expenses.
Definitions related to key operational metrics can be found at the end of the report.
The positive development of Next Games' revenue and gross margin continued compared to the corresponding period in 2016. 31% revenue growth and DAU/MAU ratio growth from 26% to 34% indicate that the investments made in The Walking Dead: No Man's Land are paying off. The company daily active users, DAU figure, grew by 12%. Average revenue per daily active user, ARPDAU, was 0.20 euros, whereas it was 0.19 euros in the corresponding period in 2016.
Next Games focuses on growth in its strategy, which requires investments for the future. This shows, as planned, in increased product development costs and is thus reflected on our EBIT as the company does not capitalize game development costs. Currently our product portfolio consists of one game that accrues significant revenue. The three games in development require upfront investments in development and marketing. This may affect Next Games' profitability prior to new game launches and their potential revenue impact.
Our game development proceeds according to plan. The Walking Dead: Our World will enter testing and soft launch phase at the end of 2017, latest in January 2018. The first teaser trailer of the game drew significant international attention amongst the entertainment and games media. The Next Games team is eagerly awaiting first player reactions as we begin testing the product. In addition, the game based on the Blade Runner movie franchise and the third, yet unannounced game project proceed according to plans.
The majority of our potential license partners, such as international TV and movie studios, as well as our key marketing partners are based in the United States. We will reinforce our local presence on the west coast of the US by establishing a small branch office consisting of marketing and business development functions in Los Angeles on the first quarter of 2018.
We have succeeded in recruiting experienced game developers both from Finland and abroad. At the end of Q3 2017 Next Games employed 104 professionals in total. We are proud of our commitment to the well-being and job-satisfaction of our staff and we will be moving to a new office space in Helsinki in 2018. The new space comfortably fits approximately 200 employees, which covers our growth needs for the next few years.
The company focused on developing its main product, The Walking Dead: No Man's Land and developing new games as well as active negotiations with new license partners during the period. The company has three new license-based games in development, of which The walking Dead: Our World is approaching testing and soft launch phase.
To reinforce its future product portfolio, the company undergoes active discussions and negotiations with new license partners. The majority of potential partners, such as international TV and movie studios, as well as key marketing partners are based in Los Angeles, United States. The company will therefore reinforce its local presence on the west coast of the US by establishing a small branch office consisting of marketing and business development personnel in Los Angeles on the first quarter of 2018.
The company's product portfolio currently consists of one game that accrues significant revenue, which supports the company's cost structure, i.e. the three new games in development and upfront investments to the new games' marketing. In addition the company will invest in new office space. This may affect Next Games' profitability prior to new game launches and their potential revenue impact. The company aims at launching at least one new game starting from 2018 as previously stated.
Saara Bergström
CMO
saara.bergstrom@nextgames.com
+358 (0)50 483 3896
Certified Adviser: Danske Bank A/S, Helsinki Branch, tel. +358 10 546 7937
Statements are made in this report, which describe, inter alia, the current beliefs and expectations of the management of Next Games regarding the future plans and objectives concerning future activities and goals of Next Games. All such statements involve risks and uncertainties, which may cause the achievements of Next Games to differ materially from what has been expressed or implied in such statements.
Next Games (Helsinki Nasdaq First North: NXTGMS) is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead: No Man's Land redefine the way franchise entertainment transforms into highly engaging service-based mobile games. The Walking Dead: No Man's Land, based on the popular AMC TV series, has been downloaded over 16 million times, with the game mirroring events as they occur in the show. Currently Next Games is working on three new games based on popular entertainment franchises including a mobile game for the extremely popular Blade Runner franchise and an innovative location-based augmented reality game for The Walking Dead. www.nextgames.com
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