In H1 2022, the consolidated bookings from users of Ten Square Games Group’s games amounted to PLN 266M, while combined revenue equaled PLN 274.4M. After a challenging first five months of the year, the Group has noted increased bookings in games. Revenue from leading titles Fishing Clash and Hunting Clash increased by 28% in August compared to May 2022.
In H1 2022, bookings from Ten Square Games Groups users were lower by 18% compared to H1 2021. Due to the war in Ukraine, in March 2022, the Group blocked distribution, marketing, and payment options in the territories of Russia and Belarus. The Russian market’s booking share was approximately 6.5% for Fishing Clash and 2.5% for Hunting Clash. The closure of that market had a direct impact on bookings and an intermediate effect on weakening player engagement and rotation in so-called clans due to excluding Russian users. Other factors impacting bookings included the loosening of COVID-19 restrictions in Q1 2022 and worsening consumer sentiment in all markets due to rising inflation. This decreased global spending in the mobile sector by 7% compared to H1 2021. All the factors mentioned above impacted the level of the adjusted EBITDA, which equaled PLN 70.6M in H1 2022, 37% lower compared to H1 2021.
In the reported period, the Group was mainly focused on improving team effectiveness and increasing production capabilities for new in-game content. Thanks to shortening production time on new features for Fishing Clash and Hunting Clash players, since the end of May 2022, positive effects have been visible in the form of an increase in the quantity and quality of traffic, which in turn generates a gradual rise in bookings. At the same time, several new titles were in development, and some of them debuted in recent months.
“In the first half of 2022, the entire industry was challenged by a volatile environment. The end of pandemic restrictions caused issues and increased user acquisition costs. That caused our results to be below expectations. We put a lot of work into improving our operational capabilities, the effects of which we saw in the first months of Q3. Reducing production time on new features impacts the increase in bookings we’ve seen since the end of May. In constantly changing market circumstances, controlling your own business is crucial. Another positive factor is good results from companies we have invested in previous periods, including Rortos.” Maciej Zużałek, CEO of Ten Square Games S.A. says.
The Group’s most recognizable title—Fishing Clash, has seen a decrease in bookings in H1 2022, impacted by external and internal factors, culminating in May 2022. In 2020-2021, intensified marketing during lockdowns gradually increased the average monthly users for Fishing Clash to 7 million (from around 2 million in Q4 2019). This automatically increased bookings in future periods. In H1 2022, the number of active users normalized and returned to 2 million players, and in August 2022, the number of average monthly users rose to 2.8 million.
Hunting Clash reached a nearly identical level of bookings in H1 2021 and H1 2022 (PLN 57.2M); however, marketing spending in H1 2021 was more significant and equaled PLN 34.6M, while in 2022, they equaled PLN 23.8M. The game premiered in 2020, and the product team is adding new events and features every quarter, which significantly impacts user engagement. The positive effect is visible in the following months of Q3, where the increase in payment compared to May amounted to 21%
In the first half of 2022, bookings from the acquired Rortos increased their share in the Group’s bookings. Rortos is a leading developer of flight sims, acquired in July 2021. In August, the Italian studio generated bookings 32% higher than May 2022.
On a strategic level, the Group decided to invest in Gamesture sp. z o.o. in H1 2022. Gamesture specializes in producing RPGs. Its two main titles are Questland and Slash & Roll, with two others in production. In the long perspective, the investment allows the Group to diversify revenues in other market segments. Bookings from Gamesture’s titles increased 46% in Q2 2022 compared to Q1 2022. According to predictions, Gamesture is generating a net loss, which is why the Group reported a loss of PLN 1.2 million from its interest in affiliates in the half-year report.
In H1 2022, the Management Board put the Magical District project on hold. A potential resumption of project work may occur in late 2022 or early 2023. The value of capitalized expenditures for this title is about PLN 9 M. At the same time, after an analysis was carried out in June for Football Elite of the marketing costs against the market potential and commitment of players who tested the new game, a decision was made to close the project. The write-down charged to the results of the first half of 2022 amounted to PLN 8.5 M.
Wings of Heroes, another Rortos title, was soft-launched on Android in late April 2022. The Group is preparing for the global launch, which will take place before the end of the year. In August, an iOS version was also launched, along with additional marketing campaigns. Despite the small scale of launched markets, the Group is satisfied with the achieved parameters. Works on Undead Clash and Fishing Masters continue, with the games planned to debut in Q4 2022.
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