Fourth quarter 2022

• Revenue amounted to SEK 73.2 (60.3) million.
• EBITDA amounted to SEK 5.8 (10.2) million.
• Adjusted EBITDA (before items affecting comparability) was SEK 5.8 (10.2) million.
• Operational EBIT amounted to SEK 4.0 (7.5) million.
• Net result after tax was SEK -27.6 (-14.3) million.
• Earnings per share after dilution amounted to SEK -0.30 (-0.17).

Full year 2022

• Revenue amounted to SEK 254.1 (124.0) million.
• EBITDA amounted to SEK 11.9 (6.1) million.
• Adjusted EBITDA (before items affecting comparability) was SEK 12.8 (9.6) million.
• Operational EBIT amounted to SEK 5.3 (-3.1) million.
• Net result after tax was SEK -103.1 (-50.4) million.
• Earnings per share after dilution amounted to SEK -1.14 (-0.60).

Operational EBIT is defined as EBIT excluding non-operational amortisation and impairment of intangible assets.

Significant events during the quarter

• Playdigious released Spiritfarer exclusively on Netflix.
• The first staging of Fragbite AB’s The Swedish CS:GO Cup was a success with the audience and the final, at a sold-out Space Arena, was watched online by 1.6 million unique viewers.
• Playdigious signed an agreement with Apple Arcade, launching an updated exclusive version of Dead Cells on the platform.

Significant events after the end of the period

• Playdigious released a mobile version of the well-known game Teenage Mutant Ninja Turtles: Shredder’s Revenge exclusively on Netflix.
• Playdigious’ mobile version of Dead Cells passed 5 million sold units at the beginning of the year.
• Wagmi and Lucky Kat entered into partnership with Mysten Labs on the web3 game Cosmocadia for launch on the Sui blockchain in 2023.
• Lucky Kat has signed a further agreement with partner The Sandbox on developing an experience with a parkour theme for launch in The Sandbox’s metaverse.

CEO Marcus Teilman comments

I am pleased to summarise the full year 2022 by reporting that we more than doubled our revenue from SEK 124.0 million to SEK 254.1 million, driven by a combination of acquired and organic growth.

EBITDA increased from SEK 6.1 million to SEK 11.9 million. It is worth noting that the token sales of more than USD 3 million in the third quarter of the year are recognized over 3 years and have thus contributed SEK 5.5 million in 2022.

The fourth and final quarter of the year proved to be the year’s strongest, with revenue increasing sequentially to SEK 73.2 million compared with the third quarter, despite the fact that we spent significantly less on marketing MMA Manager 2, which affected the revenue for the quarter. At the same time, EBITDA improved compared with the previous quarter.

Net sales increased by 21.3% compared with the same quarter in the previous year, partly driven by positive exchange rate development. However, EBITDA showed a decline compared with Q4 in the previous year, largely due to Q4 2021 being affected by an NFT sale of 5,555 avatars for Panzerdogs, which brought in approximately SEK 9.9 million in 2021, recognised in Q4 of that year.

In conclusion, the past year has been challenging given the significant macro factors that have negatively affected world markets and the stock markets, Fragbite Group has nevertheless still shown that we can grow with profitability.

Playdigious continues to deliver
I shall never tire of the privilege of repeating this: Playdigious continues to deliver on its ambitious goals. The game Spiritfarer was released on the Netflix platform during the fourth quarter and it was also announced that Teenage Mutant Ninja Turtles: Shredder’s Revenge would be released exclusively on the same platform. The TMNT release took place in January 2023. In addition, Dead Cells, a game that can take pride in 5 million sold units since the launch of the mobile version, was released on Apple Arcade. The combination of a growing portfolio of games and more distribution platforms increases the diversification of Playdigious’ revenues while also proving the high quality the French team is capable of delivering. The keen interest in cooperation from IP owners is also very encouraging and discussions on releasing more games are currently well underway with several IP owners. We will therefore scale up the team in France during the year in order to increase capacity for major title releases in 2023, but also in 2024 and beyond. I look forward to providing more information as soon as we have the contracts in place.

Investment year for Fragbite
For Fragbite AB, 2022 was an investment year in which we incurred significant costs in building new tournament concepts, primarily related to the Swedish Cup, which contributed to the subsidiary not achieving profitability. It goes without saying that we should achieve profitability in all operating subsidiaries, but the investments we chose to make in 2022 are clearly justified considering what was achieved, particularly in view of the success of the Swedish Cup with its 1.6 million unique livestream viewers and a sold out SPACE arena. A solid foundation has been laid for 2023, as we not only plan to increase revenues now that we have proved and pressure-tested the concept, but we have also optimised our organisation and costs.

The web3 market looks to be recovering
In web3, there has been talk of a real “crypto-winter”, particularly after the FTX crash, which did not, however, have a direct impact on us as a company. The market has generally been challenging, resulting in investors becoming more cautious, which had some bearing on our decision to postpone our planned NFT and token sales during the period. In view of the general decline in crypto currency prices over the year, we have chosen to write down the value of our holding of Solana. However, our plan stands firm, and development of the two web3 games Panzerdogs and Cosmocadia has continued at a good pace during the period. We are closely monitoring market developments to assess the timing of upcoming NFT and token sales and we are also engaged in dialogue with market makers for the upcoming public token sale.

As previously announced, we decided that the game Cosmocadia would be released on the new Sui blockchain. Sui is operated by Mysten Labs, which we know well, particularly since the token sale last summer when they decided to invest. Mysten Labs have clearly stated that they want to ensure a successful launch of the blockchain, and they also have a strong financial position enabling extensive marketing activities for Sui, which I believe will also benefit us. The cooperation is very promising and I look forward to following its development closely.

Work on MMA Manager 2 continues
As previously mentioned, we focused on optimising MMA Manager 2 during the quarter in order to improve our internal KPIs such as “ARPU” (Average Revenue Per User) and “LTV” (Life Time Value). During the quarter, we therefore decided to spend less on marketing, which had effect on revenue, as anticipated. Marketing for mobile units has generally become more difficult and expensive in recent years, which is why we have chosen to focus on improving internal KPIs before scaling up the marketing of the game again. Efforts so far show an improvement in our internal KPI:s and this work is expected to continue for a period of time before we expect to gradually scale up marketing efforts. We are now also placing extra emphasis on fine-tuning the underlying game engine in order to obtain good leverage when we take the next step and add more sports manager titles.

Outlook for 2023
Looking ahead to 2023, I look forward to presenting more strong titles published by Playdigious. I also expect our web3 business to take further strides and show strength through both NFT sales and more token sales. The management teams of both FunRock & Prey Studios and Fragbite AB are resolute and well prepared in their plans to achieve profitability and a positive cash flow during 2023. Finally, may I say that the goal for 2023 remains: our firm ambition is to continue to grow with profitability in all areas. I feel confident that the potential, drive and passionate ambition within the Group will contribute to a positive and interesting, to say the least, 2023.

Stockholm 23 February 2023

Marcus Teilman
President and CEO

The report is attached to this press release and available for download from the Fragbite Group website: www.fragbitegroup.com/financial-reports