CEO Peter Levin comments:

Studios continues its strong performance

Studios continues its strong performance The business area had record sales in the quarter due to a recovery in the film and TV sectors, continued strong demand from the gaming industry and that we are growing faster than the market. The increased demand has been met through higher productivity, increased number of freelance workers and new innovative outsourcing solutions.

Our studios have a strong position and can create ground-breaking digital experiences, both within and outside the entertainment industry, thanks to both talents and technology. Our customers from the streaming, film and gaming industries are to a high degree recurring customers and also some of the largest and most demanding companies in the world. This means that we also attract a lot of attention from companies outside the entertainment industry that are reviewing their future strategies for the web 3.0 and metaverses. This development is opening up entirely new market segments which broadens our already vast addressable market.

In order to secure sustainable and profitable growth we will continue to invest in technology and our organization. We are seeing tough competition regarding talents but we have a strong position through our studios in Stockholm, London and Vancouver thanks to our strong brand, attractive customers and exciting projects.

Continued development in other business areas

A soft launch was carried out of the app Z-Cut in collaboration with South-Korean Naver Z Corporation during the quarter. Z-Cut makes it possible for users to create and share 3D-animated films that include ZEPETO avatars. At a full-scale launch, the app will be made available to over 300 million users that use the avatar-platform ZEPETO.

In business area Games & Apps, the development of the location-based mobile game Hello Kitty is progressing according to plan. Planning is underway together with Sanrio regarding the broader launch which is still expected to take place during the second half of 2022.

In business area IP & Products, the divestment process for Sayduck is progressing and we expect to complete the divestment during the current financial year. Overall, both IP & Products and Games & Apps have performed in line with management’s expectations.

Focus on profitable growth

We have begun the year with strong profitable growth. The group’s EBITDA amounted to SEK 1.6 million (-9.5) and includes non-recurring costs of SEK 3.2 million related to the re-organization that took place during 2021.

We continue to optimize the business in order to reach our financial target, an EBITDA-margin exceeding 20%. Our cost optimization program is now fully implemented and is expected to reduce operating expenses by SEK 28 million on an annual basis during 2022 compared to 2021. The financial situation remains stable and we maintain our view that no additional capital raising will be necessary to cover the business’s ongoing working capital needs.

Goodbye Kansas Group has a strong position thanks to its customer relationships, talents and technology, and our market continues to grow rapidly. Our studio business in Visual Content & Brand is well positioned and we have exciting launches in Games & Apps and IP & Products awaiting.

Peter Levin,
CEO,
Goodbye Kansas Group

First quarter, January 1 – March 31, 2022

• Net sales increased by 54 percent to SEK 90.4 million (58.9) due to strong demand for services in Visual Content & Brand.
• Adjusted operating profit before depreciation (adjusted EBITDA) amounted to SEK 4.8 million (–9,5). The increase is due to increased sales and more diligent cost control. Adjusted EBITDA excludes non-recurring costs of SEK 3.2 million related to structural measures.
• Operating profit before depreciation (EBITDA) amounted to SEK 1.6 million (–9.5).
• Operating profit (EBIT) amounted to SEK –14.8 million (–22.9) of which amortization of goodwill amounted to SEK 7.2 million (6.2).
• Profit before tax amounted to SEK –16.4 million (–28.2).
• Earnings per share before dilution amounted to SEK –0.04 (–0.27).
• Earnings per share after dilution amounted to SEK –0.04 (–0.26).
• Cash at hand amounted to SEK 45.2 million (39.2) on 31 March 2022.

Significant events during the quarter

• Goodbye Kansas Group entered an agreement with minority shareholders in the subsidiary Goodbye Kansas Holding AB whereby outstanding shares were acquired in an all-cash transaction.
• Goodbye Kansas Studios received two new orders to produce VFX for TV-series and the combined order value amounted to SEK 26 million. Both projects were initiated in the first quarter of 2022.
• Goodbye Kansas Group’s subsidiary Plotagon in business area Games & Apps initiated a soft launch of the new app Z-Cut in collaboration with South-Korean Naver Z Corporation and their avatar platform ZEPETO which has over 300 million users globally. The app Z-Cut has initially been launched on a limited number of markets and a broader launch is expected in the near future.
• Goodbye Kansas Group carried out a rights issue of 12,500,000 shares by way of set-off, raising 4,780,000 SEK before rights issue costs, directed to owners of Nogatolp AB, as part of an additional consideration for the acquisition of Plotagon AB. The rights issue was granted approval by an extraordinary general meeting and an ensuing board decision.
• Goodbye Kansas Studios received two orders to produce cinematic game trailers for global customers. The combined order value amounted to SEK 25 million and production of both projects were initiated during the first quarter.
• Goodbye Kansas Studios received an order from a recurring international customer to produce gaming content through Motion Capture-technology and animation rigs. Production was initiated during the first quarter 2022 and will be completed during the second quarter 2022. The total order value amounts to approximately SEK 7 million.
• Peter Levin, CEO of Goodbye Kansas Group, has been included in a jury for the Swedish Government’s Export Prize for cultural and creative businesses 2021. The prize is awarded by the Foreign Trade Minister to acknowledge different sectors and their contribution to Swedish exports and the perception of Sweden. The prize will be awarded in October 2022.
• Goodbye Kansas Group began renting out a floor in the Goodbye Kansas building in Hammarby Sjöstad to The Park, one of Stockholm’s leading co-working providers. The Park’s ambition is primarily to attract tenants in the digital sector with a focus on innovation and metaverse, that will together with Goodbye Kansas Group create an innovation hub in the heart of Stockholm.

Significant events after the period

• Goodbye Kansas Studios received an order to produce a cinematic game trailer for a recurring global customer. The order value amounts to SEK 13 million and production will be commenced and completed in the second quarter of 2022.

For more information, please contact:
Peter Levin, CEO, Goodbye Kansas Group
e-mail: peter.levin@goodbyekansas.com Tel: +46 (0) 73 041 63 93

Goodbye Kansas Group
Goodbye Kansas Group AB (publ) is a leading supplier of technology driven visual content. The company creates award-winning visual experiences for all media and offers products that combine cutting-edge technology with world-class artistry. In order to realize growth opportunities the Group has created three business areas: Visual Content & Brand, IP & Products and Games & Apps. Visual Content & Brand offers visual content for film, TV and games. IP & Products develops IP for film and TV, offers VR-training solutions and a SaaS platform that visualizes e-retailers’ products through AR. Games & Apps develops location based mobile games and offers an app for 3D animation. Goodbye Kansas Group is listed on the Nasdaq First North Growth Market and has studios and offices in Stockholm (HQ), London, Helsinki, Vilnius, Belgrade, Los Angeles, Vancouver, Beijing and Manilla.

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