Company Release
Next Games Corp. Business Review January-September 2019. Profitability improved, rights offering concluded successfully

Published November 01, 2019

Next Games Corporation Company Release 1 November 2019 at 08.00 EET

This release is a summary of the January-September 2019 Business Review. The full report is attached to this release and available at

Next Games Corp. Business Review January-September 2019. Profitability improved, rights offering concluded successfully

July-September in Short

  • Revenue was 7.8 million euros, a decrease of 42% (13.4). The exceptionally high revenue level in the comparison period was caused by The Walking Dead: Our World’s launch.
  • Gross profit increased by 1 percentage point and was 4.3 million euros, 56% of revenue (7.4, 55% of revenue)
  • Adjusted operating profit improved by 8.0 million euros and was -1.2 million euros (-9.2)
  • EBITDA improved by 8.2 million euros and was -1.1 million euros (-9.3)
  • EBIT improved 8.2 million euros and was -2.1 million euros (-10.3)
  • Product development costs were 2.1 million euros (3.4)
  • Number of employees was 105 at the end of the quarter (143)
  • On 25 September the company announced it will commence a rights offering of approximately 8 million euros. The rights offering was concluded successfully and the proceeds were transferred to the company’s accounts after the reporting period on 22 October at which date the company’s cash balance was 10.3 million euros. Additionally, the company renewed its credit limit, totalling 3 million euros.

January-September in Short

  • Revenue was 27.0 million euros, an increase of 13% (23.9)
  • Gross profit increased by 2 percentage points and was 15.6 million euros, 58% of revenue (13.4, 56% of revenue)
  • Adjusted operating profit improved by 10.3 million euros and was -3.0 million euros (-13.3)
  • EBITDA improved by 11.5 million euros and was -2.6 million euros (-14.1)
  • EBIT improved 9.7 million euros and was -5.6 million euros (-15.3)
  • Product development costs were 6.7 million euros (7.0)

(Numbers in brackets refer to the corresponding year-on-year period unless otherwise mentioned)

Key Figures

07-09/201907-09/2018Change01-09/201901-09/2018ChangeFull year
Revenue (k€)7,81213,435-42%27,03623,91213%35,245
Gross Profit (k€)4,3367,410-41%15,58613,44416%21,294
Gross profit margin %56%55%0ppt58%56%1ppt60%
Operating Result (EBIT) (k€)-2,113-10,342n/a-5,609-15,296n/a-16,915
Operating result margin %-27%-77%50ppt-21%-64%43ppt-48%
Adjusted Operating Result* (k€)-1,195-9,199n/a-3,004-13,271n/a-13,777
Adjusted operating result margin %-15%-68%53ppt-11%-55%44ppt-39%
Depreciations and Amortizations total (k€)9911,0292,9761,1692,165
IFRS 16 (k€)256256768256512
Amortizations of R&D & Licenses (k€)579301,736911,248
Other (k€)157743472822405
Employees (end of period)105143105143143

Reconciliation of Non-GAAP Measurements

07-09/201907-09/201801-09/201901-09/2018Full year
Operating Result (EBIT)-2,113-10,342-5,609-15,296-16,915
Depreciations total9911,0292,9761,1692,165
IFRS 16-256-256-768-256-512
IFRS 2 share based payments1833713961,1121,483
Adjusted Operating Result-1,195-9,199-3,004-13,271-13,777

Adjusted operating result is an non-GAAP measure and differs from EBITDA as it excludes IFRS 16 depreciations and include IFRS 2 adjustments for share based payments. The company’s management uses this Non-GAAP measure as an alternative to EBITDA to analyze the profitability of the business. Please see reconciliation of Non-GAAP measurements.

Current ratio is an alternative measure which is calculated by dividing current assets such as cash and short-term receivables to current liabilities. Current ratio measures the liquidity of the company.

Chief Executive Officer Teemu Huuhtanen

We took a significant step forwards in September when we announced our rights offering, and thus officially kickstarted the final phase of our turnaround project. This far during 2019, we have first successfully balanced our cost structure, secondly renewed our operational model and lastly kickstarted the rights offering, all according to our original plan. I am very pleased about our current shareholders’ commitment to the company and happy that we received a total of full 8 million euros subscription undertakings from Jari Ovaskainen and AMC Networks. I would like to thank our new and current shareholders for their confidence in the future of the company.

Our third quarter EBIT improved significantly, by 8.2 million euros, and was -2.1 million euros (-10.3). Our costs remained on the expected level and we strongly believe that we will be able to reach our cost savings target going forward. Decline in daily active users contributed to our revenue development. Our revenue grew 13% from the comparison period and gross profit was two percentage points higher. It is important to also note that the revenue level during the comparison period was significantly higher due to the launch of The Walking Dead: Our World in July 2018. Additionally, we have carried out an extensive renewal of our operations during 2019, while simultaneously succeeded in growing our revenue and maintaining a balanced profitability trend.

The combined average revenue per daily active user (ARPDAU) from our live games developed positively in comparison to the third quarter of 2018 and grew 22.7 percent from 0.22 to 0.27 euros. The Walking Dead: Our World had a major impact in this, as the game’s ARPDAU improved by 56.5 percent from the third quarter of 2018. Number of daily active users (DAU) decreased from the third quarter of 2018. The comparison period was affected by Our World’s global launch in July 2018. The launch had a significant temporary effect in the number of users as the company made significant investments in growing the game during its first weeks.

The Walking Dead: Our World team has focused on renewing the game’s first time user experience, which is expected to have a positive impact on the game’s early retention towards the end of 2019. Provided that the retention figures improve and the game’s ARPDAU remains stable, we will have an opportunity to carefully scale the game’s marketing investments and pursue increasing the number of daily active users. We have also continued the soft launch of Blade Runner Nexus and focused on testing the game’s usability and finalizing functionalities. Preliminary results have been promising. Development of the Stranger Things game continued according to plans and the project nears the end of pre-production phase. Our goal is to launch the game according to the original plans during 2020.

We have continued our focus on renewing our product portfolio and succeeded in bringing multiple projects into the prototyping and  concepting phase thanks to our renewed game development process. It is important for the company to have several projects in the pipeline to ensure successful global launches of products, as it is typical for the mobile games industry that only a portion of games will pass through the testing phases to global launch.

After the conclusion of our successful rights offering in October and with multiple promising game concepts, we are excited to work towards the end of 2019. We will focus on developing and publishing games faster, more efficiently and with a more controlled risk level.

Business Outlook 2019 (unchanged)

The company seeks moderate revenue growth during 2019 compared to 2018 and, as a result from the changes in its cost structure, strives towards remaining cash flow neutral in the longer term. As part of cost restructuring, the company estimates it will achieve monthly savings of approximately 550 thousand euros in salaries, administrative costs and product development costs, totalling approximately 6.5 million euros on a yearly basis as compared to the second half of 2018.

Basis for Outlook

The company’s estimates are based on the assumption that The Walking Dead: No Man’s Land and The Walking Dead: Our World maintain their current revenue levels. In addition, the outlook is based on game development staying on schedule and on target of launching one game per year.

January-September 2019 Audiocast

Next Games holds an audiocast and phone conference in English on November 1 2019 at 10.30 EEST. You can join the audiocast by using the following link:
More information about the audiocast and phone conference:

Additional information:
Saara Bergström
+358 (0)50 483 3896

Certified Adviser: Danske Bank A/S, Finland branch, tel. +358 10 546 7938

Next Games in Short

Next Games is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead games redefines the way franchise entertainment transforms into highly engaging service-based mobile games. In summer 2018, Next Games launched The Walking Dead: Our World, which utilizes cutting edge AR technology and is powered by Google Maps. Currently Next Games is working on multiple new games based on popular entertainment franchises including, Blade Runner Nexus, for the popular Blade Runner franchise and a mobile game based on Netflix’s Stranger Things.