Flexion Mobile

April-June 2025 performance

• Total revenue decreased by 4% to GBP 17.1m (17.7m)*
• Total revenue increased by 4% in constant currency terms (USD)
• Total gross profit decreased by 31% to GBP 2.5m (3.6m)
• Adjusted EBITDA‡ decreased by 104% to GBP -0.05m (1.1m)
• Amortisation decreased to GBP 0.3m (1.7m)^#
• Operating result amounted to GBP -0.4m (-0.8m)
• EPS amounted to GBP -0.58 pence (-2.22 pence)
• Operating cash flow amounted to GBP -1.1m (0.6m)
• Cash and cash equivalents decreased to GBP 13.3m (13.9m)

January-June 2025 performance

• Total revenue decreased by 3% to GBP 35.0m (36.0m)*
• Total revenue decreased by 2% in constant currency terms (USD)
• Total gross profit decreased by 25% to GBP 5.6m (7.5m)
• Adjusted EBITDA‡ decreased by 76% to GBP 0.7m (2.7m)
• Operating result amounted to GBP -1.4m (-1.2m)

Important events during the quarter

• Signing of Realms of Pixel from NovaSonic Games PTE
• Signing of a Top 5 Grossing game to be fully launched in Q3
• Launch of Golf Clash from Electronic Arts (NASDAQ: EA)
• Annual General Meeting was held on 25 June 2025

Important events after the quarter

• Launch of Realms of Pixel from NovaSonic Games PTE

* 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. 
# The total amortisation of GBP 324,740 (1,696,491) includes GBP 65,959 (1,389,153) related to game distribution rights, GBP 131,891 (132,444) related to Brand, GBP 55,832 (104,760) related to customer relationships, GBP 70,899 (70,133) related to capitalised development costs and GBP 159 (Nil) related to computer software.

CEO's Comments on Q2 2025 Performance

A solid quarter dominated by app store rulings and FX swings.

We started Q2 with strong momentum in distribution, building on the success of Q1's new game launches. I am pleased to say that the new games are already contributing with more than USD 600k in revenue per month and supported our continued growth in the quarter. In USD terms, Distribution revenue was up 4% and Audiencly by 5% year-on-year. While our total reported revenue in GBP saw a 4% decline due to a weaker USD, this does not reflect our underlying performance. Audiencly's return to profitability in Q2 came on the back of a record number of clients served in Q1 with an average margin for the first half of the year at approximately 30%. Despite the typically slower summer period and a challenging market for games, we met our revenue guidance. Notably, our game portfolio and channels significantly outperformed its Google Play equivalents which experienced a 27% decline in the same period based on AppMagic figures, underscoring the clear shift towards alternative markets, including direct-to-consumer (D2C) channels.

In Q2, we made progress on game launches and sourcing. We successfully signed "Realms of Pixel" and officially launched EA's "Golf Clash." We also secured another top 5 grossing game, yet to be fully launched. Looking ahead to Q3, our game portfolio now features 34 games and is expected to include four Top 10 grossing games (based on Google Play ranking). The average monthly revenue of our top tier games in Q2 was USD 700k. Having secured 4 out of 10 top grossing games is a major achievement for Flexion, making us uniquely attractive to existing and new distribution channels, as well as marketing and payment partners. This strategic advantage should help us maintain current momentum and secure more new deals into the autumn. I anticipate performance to pick up towards the end of Q3 once the summer period concludes, expecting revenue in the range of USD 21-24 million for the quarter.

As highlighted in Q1, the amortization of our game distribution rights has significantly decreased, with our largest deal now fully amortized, leading to a closer alignment between our adjusted EBITDA and operating result. As our largest deal transitioned back to standard terms, our distribution gross margin declined as expected, reflecting the contractual shift in economics once our investment in the game was recouped. This outcome underscores both our commitment to bringing successful titles to alternative app stores and the underlying strength of these top-grossing games. Meanwhile, Audiencly’s gross margin improved, contributing to a consolidated company gross margin of 14%. I am also pleased to report that we have successfully extended and renewed several crucial developer agreements, providing greater revenue visibility over the next few years. We are in a strong financial position, with GBP 13.3 million in the bank and no debt, enabling us to continue strategic investments such as in our D2C initiatives. Total investment in product development so far this year is approximately GBP 0.4m. 

The alternative market continues to be shaped by pivotal legal decisions, with court rulings against Apple and Google in the US, alongside enforcement actions by the EU and other regulatory bodies in major mobile games markets. It is unequivocally clear that the long-standing "walls" of control on both iOS (Apple) and Android (Google Play) are coming down, and this shift is irreversible. This paradigm creates unprecedented new market opportunities for game developers and service providers. The growth of the mobile games market has long been constrained by Google and Apple's strict control. We firmly believe it is now poised to re-enter a period of growth, as increased developer freedoms, higher margins, and intensified competition will collectively drive significant investment and expansion in game marketing. For example, we are seeing increased capital investment activity in D2C payment and web store startups. For instance, Appcharge, a payments company we are working with, recently raised USD 58 million, bringing their total funding over the past nine months to USD 89 million. Besides continued investment in our SDK, our support for D2C includes integrations with Appcharge for in-app payments, alongside Xsolla and Coda Payments. On the product development side, we are also adding support for the Epic Games Store this year.

Over the past 12 months, we have streamlined operations in Distribution, reducing headcount by 8% while improving overall efficiency. At the same time, we continue to invest in product development. 

Our teams recently returned from China Joy, Asia's largest game show and Gamescom in Europe, and the trend is clear: alternative stores are now firmly integrated into most game developers' user acquisition strategies, as return on ad spend (ROAS) can be higher due to more attractive payouts from these stores. This is a very important first step as the pace of change will depend heavily on paid user acquisition being funnelled through to new and high margin stores and D2C. We continue to develop expertise in user acquisition for the alternative markets and are seeing strong performance with certain games and channel combinations. For both existing and new stores, the ability to offer their services through Google Play thanks to the recent rulings will be tremendously beneficial, significantly reducing user friction and greatly assisting with user acquisition. We believe this will lead to an increased number of stores and empower developers to transform their web stores into powerful distribution channels over time. We are actively building for this open, competitive market, which represents a multi-billion dollar opportunity for developers. With our strong game and store partnerships, we are exceptionally well-positioned to capitalise on these emerging opportunities, and it is crucial that we continue to strategically invest in our robust service offering to remain at the forefront as the market transitions.

I will continue to update you on our progress in these areas in Q3 and wish you a happy end to the summer season.

CEO Jens Lauritzson