Flexion Mobile: Strong growth in Q3, but below ABGSCe - ABG

Strong sales growth in Q3, but 5% below our expectations
We cut 2025e EBIT 1% but raise 2026e 4% on lower opex
Share is trading at 7-5x EV/EBITA, 15-10x P/E on '25e-'26e


Sales +20% y-o-y in Q3, but 5% below ABGSCe

Flexion delivered Q3 numbers slightly short of our expectations. Sales of GBP 18m corresponded to a 20% increase y-o-y, but were 5% below ABGSCe, while EBIT was GBP -0.6m vs. ABGSCe GBP 0.6m, impacted by slightly higher depreciations. That being said, Flexion has a strong pipeline, with King's flagship game Candy Crush (top 10 grossing mobile game globally) entering the portfolio, which we expect will have a positive impact on growth in 2025. Management guided for revenue of USD 26-30m in Q4 (GBP 21-24m), which is a tad below our pre-Q3 estimate (GBP 25m). We therefore cut our sales estimates by 5-3% for '25e-'26e. While depreciations have remained elevated near-term, we expect depreciations related to game distribution rights with Scopley to decrease from 2025. We forecast slightly lower opex, which means that we make more limited revisions to EBIT in 2025e (-1%) and slight positive revisions to 2026e (4%) despite slightly lower sales.

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