SUMMARY OF INTERIM REPORT FOUR, 1 OCTOBER – 31 DECEMBER 2023

FINANCIAL - 1 OCT 2023 – 31 DEC 2023

• Net sales amounted to SEK 82.1 million (SEK 80.3 million).
• Adjusted EBITDA amounted to SEK 17.7 million (SEK 7.6 million). *
• EBITDA amounted to SEK 74.2 million (SEK 7.6 million).
• Adjusted EBIT amounted to SEK 14.4 million (SEK 6.3 million). **
• EBIT amounted to SEK 34 million (SEK 6.3 million).
• Profit before tax amounted to 24.2 MSEK (SEK 6.8 million).
• Cash flow from current operations before changes in working capital amounted to SEK 2.8 million (SEK 4.3 million).
• Earnings per share during the quarter amounted to SEK 0.8 (SEK 0.2)

FINANCIAL - 1 JAN 2023 – 31 DEC 2023

• Net sales amounted to SEK 273.2 million (SEK 289.8 million)
• Adjusted EBITDA amounted to SEK 38.7 million (SEK 32.1 million). *
• EBITDA amounted to SEK 89.8 million (SEK 32.1 million).
• Adjusted EBIT amounted to SEK 23 million (SEK 27.3 million). **
• EBIT amounted to SEK 37.3 million (SEK 27.3 million).
• Profit before tax amounted to 11.7 MSEK (26.2 MSEK). 
• Cash flow from current operations before changes in working capital amounted to SEK 7 million (SEK 27.8 million).
• Earnings per share during the period amounted to SEK 0.3 (SEK 1.0)

* Adjusted EBITDA consists of operating profit before depreciation and amortization and adjusted for non-recurring revenue and costs.

** Adjusted EBIT consists of operating profit adjusted for non-recurring depreciation, and non-recurring revenue and costs.

CEO Comment

BEST QUARTER EVER IN A CHALLENGING ADVERTISING MARKET

Fourth Quarter

The fourth quarter was the financially strongest quarter of the year, showing the best result M.O.B.A. has ever achieved. Revenues amounted to 82 MSEK (80), an increase of 2 percent compared to the fourth quarter of 2022. Adjusted EBITDA amounted to 17.7 MSEK (7.6), which corresponds to an increase of 133 percent. The EBITDA increase between quarters 3 and 4 this year was 56 percent. Adjusted EBIT increased by 130 percent to 14.4 MSEK (6.3).

During the quarter, we focused on completing projects resulting from our strategic review that began in quarter 3 of 2023. The review has yielded the expected positive results in the form of cost savings and cost synergies. Another goal was to promote increased traffic to community sites during 2024, which we have made significant progress on by hiring leading experts in the field while starting a recruitment process. We have worked on implementing the collaboration with Mediacube regarding the MCN network UFG, and we are already seeing a positive development in the form of an increased share of new channels and creators joining. The transition to Raptive, our ad partner for community sites, began earlier in 2023 with positive effects in the form of increased revenues with higher profitability. As a result of the positive development, we have further expanded our collaboration with Raptive during the quarter.

We have further developed the app Porofessor and the sites that came with the acquisition of Wargraphs. This has led to higher fill rates on the ad inventory in Q4 compared to earlier in the year. We see that the app continues to increase in popularity. Porofessor surpassed the milestone of 12 million downloads during the quarter and is thus the most downloaded app on the Overwolf platform.

In connection with the annual financial statements, a write-down of CriticalClick and LolWiz, as well as an adjustment of the additional purchase price for the Wargraphs acquisition, has positively affected the result after tax by 20 MSEK in the fourth quarter. The write-down is non-cash affecting and of a one-time nature and is not included in adjusted EBITDA/EBIT. The decision for the write-down is based on the historically weak advertising market in 2023 and an increased discount rate (WACC).

Full Year 2023

For the full year of 2023, revenues amounted to 273 MSEK (290),a decrease of 6 percent compared to the full year of 2023. Adjusted EBITDA amounted to 39 MSEK (32), which corresponds to an increase of 20 percent compared to 2022. The year has been marked by a challenging global macroeconomy that has had a negative impact on the advertising market.

In June 2023, the group completed its largest and most transformative acquisition to date; Wargraphs. The company has performed well regarding operational KPIs and is globally leading in its niche, but the advertising market and thus the advertising revenues have not fully developed in line with our expectations in the short term. Together with our ad partner, Overwolf, we have developed an ambitious and detailed action plan aimed at significantly improving revenue and profit levels during 2024.

During the year, we have identified the best ways to utilize the great synergies between Wargraphs and the operational business in CriticalClick. This integration has gone very well and enables the next step in integration; to build new, profitable products based on the success of Porofessor. We aim to launch at least two apps during 2024, the first of which, developed for the game Valorant, is ready for the market during March/April 2024.

Otherwise, the year has been characterized by efficiency and new partnerships with Raptive and Mediacube, which M.O.B.A. assesses will have a long-term positive impact on the company.

Challenging Advertising Market Despite Accelerating Increase in Revenues for Community Sites

The advertising market remains challenging to assess. However, we saw positive signals during the fourth quarter and continue to see positive signals after the period for our community sites. For January 2024, revenues on community sites have increased by approximately 25 percent compared to the previous year. Raptive, our strategic ad partner, has started 2024 very convincingly, confirming that our choice to develop the partnership supports our growth.

At the beginning of Q1 2024, several community sites have had strong traffic development, and the work to further strengthen traffic and engagement among our fans is a very important reason for M.O.B.A. to quickly capitalize on an upswing in the advertising market. This also applies to Porofessor, which continues to have strong user figures even though our ad partner Overwolf has not yet performed at the expected level.

We note that the gaming industry continues to have a strong appeal with a strong target group that advertisers otherwise find difficult to reach, and past experiences show that when the market turns upwards, it happens quickly. Our long-term assessment of our assets is that they continue to be strong, appreciated by our fans, and can continue to be developed going forward.

Strategic Review Has Yielded Results

The company's management and board have conducted a strategic review which so far has resulted in:

·          Cost savings and synergies of more than 5 MSEK.

·          The board has decided to strengthen the group management and recruitment has been initiated.

·          The company has initiated an investment in AI to scalably translate content on selected community sites into more languages, which will increase revenues in the long term.

·          Development of a new app for the popular game Valorant together with the founder of Porofessor. In addition, we have decided to develop and launch another app. We assess that this can add a new and growing revenue source from the second quarter of 2024.

·          Increased focus on traffic optimization where an external agency is hired while we have started recruiting a centrally responsible for the traffic to all our community sites.

·          Change of ad network to Raptive, which has led to increased average revenue per displayed ad. The move was fully implemented at the beginning of 2024 and the effects will be realized during the year.

·          Implementation of an in-depth strategic collaboration with Mediacube around Union For Gamers, which has led to an increased intake of new creators and a significantly expanded direct sales force for ads. The collaboration was fully integrated at the end of 2023 and the effects will gradually be realized.

We have an exciting year ahead with great opportunities and challenges, mainly in the form of a challenging advertising market. Our team is dedicated to continuing to build M.O.B.A. to remain the leading consolidator within gaming communities. I would like to take this opportunity to thank the group's employees, corporate management, the board, and all shareholders.

CEO, Björn Mannerqvist 21 February 2024

SIGNIFICANT EVENTS DURING THE PERIOD

Significant events during the period 1 October 2023 – 31 December 2023, in brief

• Successful implementation of the Group's partnership with MediaCube Worldwide Inc. The implementation of the partnership with Mediacube Worldwide Inc. has progressed according to plan and was completed in the fourth quarter, increasing the revenue opportunities and service offering of Union For Gamers (UFG), the YouTube network that's owned and operated by M.O.B.A. Network.
   

The integration of MCPay, Mediacube's financial service, means greater flexibility and better services for UFG's content creators, such as daily payments, advance payment, and smooth transfers of funds to different payment cards, accounts, and e-wallets. This means an improved financial experience for content creators within the UFG network. Following the partnership's launch, M.O.B.A. Network has seen an increase in the number of new content creators globally joining the network, but the full effect will be generated in 2024. These additions contribute with their varied content, perspective and reach to a broadening of UFG's offering.

Significant events after the period 1 October 2023 – 31 December 2023

• The group has taken the strategic decision to increase its investments in projects related to app development and in-game advertising as a revenue model. The decision is a consequence of the strong growth of the in-game app Porofessor and a positive market outlook for the coming year supported by external market analyses.
   

As previously communicated, the group is developing a new in-game app and community for the immensely popular game Valorant, developed by Riot, with a planned launch and integration into the company's portfolio in the first half of 2024. Additional in-game apps will follow after this launch.

• The strategic partnership with Raptive regarding advertising sales and "ad tech" has been implemented on all of M.O.B.A. Network's communities.
   

During the third quarter of 2023, a new and greatly improved advertising agreement was signed with Raptive, a logical development against the background of a successful collaboration regarding the subsidiary Magic Finds communities. Intensive implementation work began in the fall of 2023 and was ready at the beginning of 2024.
 

The collaboration with Raptive is in line with M.O.B.A. Network's vision to accelerate organic growth while improving the user experience for our stakeholders through cutting-edge technology and strategic partnerships.

• On February 16, the board and management decided on write-downs not affecting cash flow of SEK 37 million in the fourth quarter in accordance with the IFRS accounting standard. The write-downs do not affect cash flow and are of a one-off nature.
   

As a result of the historically weak advertising market shown in 2023 in combination with an increased discount rate (WACC), the book value has been challenged in the short term for Critical Click, an asset that was acquired in 2018. Therefore, a non-cash flow-affecting write-down of SEK 27 million has been made. M.O.B.A. Network has continued confidence in the long-term growth prospects for the assets in Critical Click, where the start of 2024 has shown organic growth. The write-down corresponds to 27% of the total book value for goodwill and other intellectual property rights, attributable to the acquisition of Critical Click.
 

The company has also decided to migrate LoLWiz to the Porofessor app due to Porofessor being the leading app in the market and the product M.O.B.A. will continue to invest in, which means that the asset needs to be written off from the balance sheet with an amount amounting to SEK 10 million.
 

The company has determined that no additional purchase price will be paid for year 1 regarding the acquisition of Wargraphs S.A.S, which in accordance with IFRS will be booked as other income and will positively affect the result by SEK 57 million. The company has continued confidence in the long-term growth prospects for the assets in Wargraphs S.A.S. with a continued strong influx of users to Porofessor.
 

In total, write-downs and non-payment of additional purchase price positively affect EBIT by SEK 20 million and are non-cash-flow-affecting and non-recurring.

• The board proposes that no dividend be paid for the period January 2023 – December 2023.

Webcast

M.O.B.A. Network presents a webcast in regards to Year-End Report 2023, the webcast will be published on M.O.B.A’s website at 09.00 on 21 February 2024. Watch the webcast through the following link: ​​https://wearemoba.com/investor-relations/investor-information/presentations/