November 26th 2019

Ten Square Games Group, which produces and distributes Free to Play (F2P) games, published its financial report for Q3 2019. The Group’s consolidated revenue for the period was PLN 162.8M, an increase of over 120% from Q1-3 2018 when it amounted to PLN 73.7M. EBITDA in the period of Q1-3 2019 amounted to PLN 51m (PLN 28.3M in Q1-3 2018, +80% y/y). Ten Square Games’ net profit after nine months of 2019 was PLN 41.6M vs. PLN 22.8M a year earlier (+82% y/y).

In Q3 2019 alone, Ten Square Games revenue amounted to PLN 67.7M (+91% y/y), EBITDA was PLN 22.1M (+70% y/y) and net profit was PLN 18.1M (+77% y/y).

The increase in the Group’s revenue in 1-3Q 2019 is a result of further increase in the popularity of the company’s flagship game – Fishing Clash. The game generated PLN 138.6M in revenue in this period, which means an increase in revenue by PLN 84.7M as compared to Q1-3 2018, when it amounted to PLN 53.9M. The average monthly number of active users (MAUs) of the game in Q1-3 2019 was ca. 1.8M as compared to ca. 1.5M in the same period last year. Marketing expenses for the Fishing Clash game in the three quarters of this year amounted to about PLN 50M.

In August-October, revenue generated by Fishing Clash in each of these months exceeded PLN 20M (PLN 20.4M in August, PLN 20.7M in September, reaching a record level of PLN 21.7M in October 2019). Marketing expenses for the game amounted to approximately PLN 7.5M each in August and September, and PLN 6.1M in October. The slowdown in marketing spending in October is related to the “seasonality” of the market – much higher marketing spending by e-commerce companies in the pre-Christmas period and, consequently, higher and higher average user acquisition costs.

Let’s Fish generated a similar level of revenue to last year’s (PLN 11M) in Q1-3 2019 vs. PLN 11.7M in Q1-3 2018). Wild Hunt generated PLN 6.9M in revenue in Q1-3 2019 (vs. PLN 2.9M a year earlier).

The geographic structure of revenues of Ten Square Games in the period 1-3Q 2019 was as follows: North America 42.4%, Europe 40.1% and Asia 12.9%, other markets 4.6%. The largest portion of Ten Square Games’ revenue is generated from micropayments in games (In App purchases).

„Since August, Fishing Clash revenue has exceeded PLN 20M per month. The game is being developed and the expenditure on user acquisition is appropriately scaled, which brings measurable revenue effects. Performance of Fishing Clash confirms that our approach to scaling marketing expenses for the game is optimal. Moreover, at the turn of September and October we conducted a test advertising campaign on thematic TV channels in the USA. We are currently in the process of evaluating the effects of this campaign – says Maciej Popowicz, President of the Management Board of Ten Square Games.

As previously announced, in October and November we launched three of our new games – two women’s games: Flip This House and SoliTales, and a new hobby hunting game – Hunting Clash, based on our outdoor and simulation experience and Fishing Clash mechanics. We are currently working on verifying the correctness and stability of the games and introducing necessary corrections and improvements. Soft launch is carried out on several selected markets and can last from a few months to even more than a year. Golf Rush, on the other hand, is currently undergoing a phase of re-modeling the graphic layer and gameplay interface. – says Maciej Popowicz.

We are also working with our partner Netease on the launch of Fishing Clash on the Chinese market. The process of obtaining a license is in progress. In the third quarter we conducted technological tests on the iOS platform for this market. The tests were successful and generated little revenue for the Group. At present, after completion of the tests and temporary disconnection of payments, revenues from this market are not generated. – adds Maciej Popowicz.

In the coming quarters, our results will be influenced mainly by further development of Fishing Clash. We still have ideas on how to make this game more attractive and develop through optimized live-ops, or how to extend its functionality, including the introduction of new fisheries and rods. – sums up Maciej Popowicz.

At the end of September this year, the Company received a positive individual interpretation from the National Revenue Information System with respect to recognition of costs related to eligible intellectual property rights enabling the application of IP Box relief. However, the authority did not issue an interpretation concerning the qualification of the revenues obtained.

We have commenced work related to the implementation of IP BOX relief, however, we have not yet made a final decision on the relief settlement model and therefore the tax calculation for the third quarters of 2019 does not include the potential benefit of IP BOX relief. Together with our advisors, we are working on developing an appropriate model for calculating the relief. I would also like to draw your attention to the fact that settlement of the relief is possible from 1 January 2019. – When the final decisions on the scope of its application are made, the settlement will cover the entire year 2019. – says Magdalena Jurewicz, CFO of Ten Square Games S.A.

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Ten Square Games S.A is one of the largest mobile game producers and publishers in Poland. The company was founded in 2011 by Maciej Popowicz and Arkadiusz Pernal.

Ten Square Games specializes in hobby games. It produces and publishes free-to-play games, generating revenues from micropayments (for obtaining paid functionalities in the game) and advertisements. The games of Ten Square Games are offered on the most important mobile platforms – iOS and Android, as well as through Internet portals.

Ten Square Games has developed over 200 games so far. The best known projects are Fishing Clash – currently the most popular fishing game in the world – and Let’s Fish.

In April 2018 Ten Square Games conducted a public share issue (IPO). The value of the offer was over 94 million PLN. On 11 May 2018 the shares of Ten Square Games debuted on the Warsaw Stock Exchange. On June 15, 2018, the company joined the sWIG80 index, and on March 18, 2019, the new sector index on the Warsaw Stock Exchange, bringing together game producers – WIG.Games.

More information: https://tensquaregames.com/investors/

Twitter @TenSquareGames

Contact for investors: Bartłomiej Piekarski
tel. +48 667 872 742, bartlomiej.piekarski@tensquaregames.com