Flexion Mobile: Organic sales growth of 61% y-o-y - ABG

Q2 performance bodes well for FY guidance
Revisions to reflect a change to calendar year
Exciting additions to the board of directors

Flexion reported Q2 sales of GBP 7.8m (+61% y-o-y and +19% q-o-q), which was 9% ahead of our forecast. The sales growth came from top-tier titles, which on average reached a new high for monthly revenue per game. The sales beat did not translate to EBITDA (GBP 0.03m versus our forecast of GBP 0.09m). The deviation was caused by a slightly lower gross margin and higher opex following more new hires than we anticipated. We are not worried about the higher opex level in the quarter, as it indicates management optimism. Flexion hired five new employees during the quarter, three of which were hired to pursue new strategies outside of the current distribution business. Moreover, Flexion had strong cash flow in the quarter, ending with cash and cash equivalents of GBP 15.6m.

In addition to the healthy sales growth in Q2 and recent success with game signings, Flexion also strengthened its board of directors, with two exciting additions that will increase the competence level. Our DCF valuation range is unchanged at SEK 17-28.

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