Flexion Mobile

January - March 2025 performance

• Total revenue decreased by 2% to GBP 17.9m (18.3m)*
• Total gross profit decreased by 20% to GBP 3.2m (4.0m)
• Adjusted EBITDA‡ decreased by 57% to GBP 0.7m (1.6m)
• Operating result amounted to GBP -0.9m (-0.4m)
• EPS amounted to GBP -1.88 pence (-0.94 pence)
• Operating cash flow amounted to GBP 1.5m (2.7m)
• Cash and cash equivalents increased to GBP 14.4m (13.8m)

Important events during the quarter

• Launch of War Machines from Wildlife Studios
• Launch of War Robots from MY.GAMES
• Launch of Gossip Harbor from Microfun
• Launch of Candy Crush Solitaire^© from King.com
• Signing of agreement with Electronic Arts (NASDAQ: EA)

Important events after the quarter

• Launch of Golf Clash from Electronic Arts (NASDAQ: EA)
• Release date of Q2 report was changed to 03 September 2025
• Date of Annual General Meeting is 25 June 2025

* Comparative figures for the year-earlier period in brackets. 
‡ The Group defines adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, finance costs, impairment losses, foreign exchange gains/losses, corporate acquisitions costs, fair value gains/losses and other exceptional costs.  

Comments from the CEO

We began 2025 with excellent momentum and I am happy to report that we achieved the high-end of our revenue guidance for the first quarter. I am equally pleased that this momentum has continued into Q2.

Q1 marked a significant period with the launch of five high-profile games, all of which were games that we signed in Q4 2024. We have successfully launched games from industry leaders like King, EA, MY.GAMES, Wildlife Studios and Microfun. For a small company this is a great achievement. While it is still early days to see the full revenue impact, it is worth mentioning that these titles are generating over USD 20m per month on Google Play, positioning us for growth in the coming quarters.

Over the past five quarters, we have added 13 new titles, bringing our total portfolio to 35 revenue-generating games. Our ambition is to continue adding new top-grossing games at a similar pace. These additions contributed approximately 25% of our Q1 revenue. Notably, five of the 13 new games launched in this period have already surpassed USD 100,000 in monthly revenue in our channels, demonstrating both their strong potential as well as the value we bring to our partners. While some games had a slower initial ramp-up, we continue to refine our approach to signing top-grossing games, always aiming to improve our success rate.

In constant currency (USD) and according to our trading terms, our distribution revenue was up 5%. After the effects of a weaker year on year currency translation, revenue in GBP was up by only 1%, this has been impacted by the continued strengthening of GBP versus USD in the period. Our continued organic growth highlights the strength of our diversified portfolio and the resilience of our model, especially amidst broader market trends where many publishers have experienced revenue declines in Google Play. Our ability to seamlessly add new top-grossing games without major investment is a key advantage that benefits developers and channels. We are actively expanding our distribution channels, and our sales pipeline remains robust, ensuring a steady stream of promising titles in 2025. We remain selective in our game sourcing, focusing on top-tier games and optimising the portfolio with each launch for maximum success. In Q1, the average monthly revenue for our top-tier titles that are past the ramp-up period was USD 702,229 (USD 582,070). We keep growing the average revenue per top-tier game which is key and there is still room for improvement in terms of optimisation and growth.

As we predicted, recent developments on the regulatory front are very encouraging for the alternative market. Apple’s legal challenges in the US, allowing developers to link to competing payment services, and the EU’s enforcement of the DMA, with substantial fines for Apple and required changes by June 2025, are paving the way for a more open and competitive market. Epic’s new improved app store terms are a direct positive result of this, and we are delighted to be working on adding the Epic Game Store to our offering this year. The increasingly competitive environment benefits consumers and developers alike, fostering innovation and market growth. As in most competitive markets, some stores will not survive. During Q1, Amazon decided to close their 3rd party app store. It never really gained much market traction and the impact on Flexion will be small and limited to a few titles. Amazon’s focus continues to be on its App Store for the Fire devices which do not come with Google Play. The 3rd party store will be phased out by the 20 August 2025, and we are making good progress moving users to attractive alternatives.   

The evolving landscape of alternative stores and Direct-to-Consumer (D2C) strategies in particular is creating exciting opportunities for developers. We are exploring innovative ways to empower developers to use our services in channels with higher margins and ultimately through D2C, by refining our business model over time. In Q1, we have for instance, set a record on profitable paid User Acquisition in our channels. While this still represents a relatively small part of our business, there is potential for it to grow significantly, thanks to investments made by us and the channels, offering scalable and viable marketing opportunities. Most notably Samsung’s Instant Play but we see this across many channels. Developers are generally excited about the opportunity as it offers another way to find meaningful and profitable growth for their games.

Our product development team continues to be laser-focused on our D2C offering powered by our new SDK, with good progress on payment integrations and supporting tools to enhance the user journey outside Google Play. We have completed several rounds of refinements to the payment flows and are now finally ready for initial tests with select games using Coda Payments in the US. We are excited to share further updates on this during the year.

Audiencly had a solid quarter with a strong gross margin of 32% and revenue of GBP 1.9m. It is positive to see that 40% of the revenue is from new accounts. In Q1, we had 50 clients booking campaigns with us which is a record, and it is great to see that we continue to diversify our client-base. This makes the business more stable and predictable. The 22% decline in revenue relates 7vsWild, which contributed significantly in Q1 2024 and ended in December 2024. We have made some organisational improvements in Audiencly and appointed a new General Manager in Dusseldorf. Mario Lohe brings his long experience from Havas, which will really benefit us. 

Looking ahead to the 2nd quarter, which is normally a bit slower, we still anticipate sales in the region of USD 22m - 25m, thanks to our newly launched games. I am also pleased to say that our ongoing focus on operational efficiency is evidenced by a 7% decline in overheads which helps underwrite our future scalability. In addition, we have fully recouped our strategic investment of USD 13m including our own margin in the extended framework deal we announced in March 2023. The deal has now reverted closer to our historic revenue share terms. This adjustment explains the reduction in gross profit and margins which was mentioned last quarter. Due to the changed terms of the framework deal, I anticipate that our overall margins will continue to decline slightly through the first half year before settling thereafter at a healthy level. So far, this investment has generated approximately USD 45m in revenue and will continue to generate strong gross profit and contribute to our free cash flow in 2025. As it is now fully amortised on the balance sheet, the new terms will not impact our operating profit. For the size of our business, the balance sheet remains extremely strong with GBP 14.4m in cash and no debt. 

Finally, I can confirm that our 2024 audit is nearing completion, and we will be filing our accounts shortly, bringing us back on schedule. This will unlock new possibilities such as share-buyback that we discussed in the last update. A big thank you to the finance team for their hard work and a warm welcome to Ross Logan as our new CFO. Ross, a Chartered Accountant, began his career at PwC and brings over two decades of experience in the games industry, having previously served as CFO at companies such as Miniclip and Wooga.

Jens Lauritzson – CEO