ASX Release

31 January 2019

 

Animoca Brands Q4 2018 Update: From Strength to Strength, Finishing Up the Company’s Strongest Year On Record

 

Quarter Highlights:

  • Core business continues to deliver - $4.6m of revenue up 188% on Q4 2017 

  • Total unaudited revenues for the year are a record $17.7m, including one-off items

  • Cash receipts for the Q4 2018 totalled $6.89m, up 637% on the same period last year; this is the Company’s fourth consecutive quarter with positive operational cashflow

  • Well-funded with $10.9m in cash and cash equivalents

  • Strengthened senior management team with the appointment of Gen Kanai (ex-Mozilla, Chinaccelerator & 500 Startups) as head of strategic partnerships, as well as Ed Fries, creator of Microsoft Game Studio and co-founder of the X-box project

  • In a landmark move into branded blockchain games, the Company partnered with Atari to make blockchain versions of the popular games RollerCoaster Tycoon Touch and Goon Squad 

  • Animoca Brands entered into an Earn-In Agreement to acquire a majority stake in Venture Classic Limited, the operational company of Zeroth SPC for a total consideration is A$1.5m. Zeroth is Asia’s first artificial intelligence (“AI”) accelerator

  • Cemented strategic partnership and co-investment deals with leading blockchain companies, including Dapper Labs (CryptoKitties), Mind Fund, Helix, Datum, LikeCoin, Musicoin and Simple Token

  • Completed the acquisition of Pixowl for an upfront consideration of ~A$6.65m

  • Signed major strategic China partnership agreement with i-Click Interactive Asia Limited (NASDAQ: ICLK)

  • Raised $6m at a price of $0.098 per share from strategic investors, including chairman and co-founder Yat Siu

 

Strategic Partnerships & Investments:

  • Animoca Brands entered into an Earn-In Agreement to acquire a majority stake in Venture Classic Limited, the operational company of Zeroth SPC for a total consideration is A$1.5m , comprised of A$1m cash contribution earn-in, and A$0.5m in Animoca Brands shares. Zeroth is Asia’s first artificial intelligence (“AI”) accelerator, having accelerated 33 startups, and also has investments in eight blockchain-related companies. Animoca Brands will leverage its partners to underwrite up to US$2m in cash contribution to Zeroth SPC, which will grant entitlement to claims on proceeds from the startups accelerated by Zeroth

  • The Company partnered strategically with a number of leading companies in the field of blockchain technology to develop games for their platforms and exchanged shares for tokens in each case with these partners, including Decentraland, Datum, LikeCoin, Musicoin, OST, Harmony, Mind Fund, Helix and I-House

  • Invested in the Series A financing of partner Dapper Labs, the company behind CryptoKitties, alongside Venrock GV, Samsung NEXT, Andreessen Horowitz, Union Square Ventures and others

  • The Company’s AI subsidiary Zeroth entered into a strategic partnership with AI incubator DEEPCORE, a wholly owned subsidiary of global technology player Softbank Group Corp (TYO: 9984)

  • Partnered strategically with China-based iClick Interactive Asia Limited (NASDAQ: ICLK) as a reseller, which is expected to generate approximately $11m per annum for the Company and also give subsidiary Zeroth access to iClick’s 780m user profiles. The Company intends to invest up to US$2m to develop products and services to monetise iClick’s China audience data

  • Partnered with Atari to make blockchain versions of the popular mobile games RollerCoaster Tycoon Touch and Goon Squad and Atari became a shareholder 

  • Completed the acquisition of Pixowl (first announced on 27 August 2018) for an upfront consideration of US$4.875m (A$6.65m), of which US$519,512 (about A$709,133, or 10.7%) is cash and the rest is in shares, with a lock-up period of up to 24 months

 

Animoca Brands Corporation Limited (ASX: AB1, the “Company”) is pleased to report that Q4 2018 has capped off a year of record results with continued strong performance. In addition, the series of strategic investments and partnerships in the area of blockchain games has positioned the Company to be a global leader in this burgeoning new sector.

 

Animoca Brands acquired a majority stake in Zeroth for $1.5m providing Animoca Brands with direct access to market intelligence and open innovation including partnerships with Softbank’s Deepcore and Sun Hung Kai Financial. Subsequent to the end of the quarter, Zeroth has started its 4th cohort which comprises of 30 new AI and Blockchain related startups from all over the world running out of India, Hong Kong and Tokyo.

 

Financial Results
The Company generated unaudited revenues of $4.59m during Q4 2018, representing an increase of 188% on the same period last year and bringing the total, unaudited revenues for the year to $17.7m including one-offs and $14.88m excluding the one-offs. Cash receipts for the Q4 2018 totalled $6.89m, up 637% on the same period last year, and the Company ended the quarter with $10.9m in cash and cash equivalents.

 

The total net cash inflow from operating activities for the quarter was positive representing the fourth consecutive quarter in which the Company has been cash flow positive.

 

The continued performance of the core gaming business, led by titles like Crazy Kings and Crazy Defense Heroes, as well as the portfolio of branded games, drove revenues and cash flow during the quarter. In addition, as the acquisition of Pixowl was integrated into the group, their portfolio of branded games such as Peanuts: Snoopy’s Town Tale, Garfield: Survival of the Fattest, and Goosebumps Horror Town, as well as their leading user-generated content platform The Sandbox.

 

Expenses during the quarter chiefly comprised operating and marketing expenditures related to the heightened activity of development and publishing of mobile games. 

 

Cash Position
During the quarter and in conjunction with the iClick strategic partnership, the Company raised $6m at a premium of $0.098 per share from strategic investors including Katherine Yip (founder of Pacific Alliance Group and co-founder and partner of Vina Capital), Moses Tsang (founder of AP Capital and founding chairman of Goldman Sachs Asia Pacific), Sonny Vu (founder of Misfit), and Yat Siu (chairman and co-founder of Animoca Brands). This, along with continued strong financial performance, left the Company with $10.9m in cash and cash equivalents at the end of Q4 2018. 

 

Outlook
Following on a series of major strategic investment partnerships in the areas of blockchain gaming with prominent blockchain companies like Decentraland, Simple Token and Mind Fund and strategic gaming and media companies like Atari and iClick in China, Animoca Brands is well-positioned to capitalise.

 

The additional capital raised around the iClick partnership has bolstered the Company’s cash position on top of a record fourth consecutive quarter of positive cash flow generated. Post the quarter, the Company has continued to consolidate its leadership in the area of blockchain gaming with a partnership with WAX Blockchain, the world’s first and largest purpose-built global blockchain e-commerce platform for trading virtual items.

The company expects to continue to execute on its mission in 2019 with a continued emphasis on Blockchain, AI and Brands with our specific target focus on games.

-END-

About Animoca Brands

Animoca Brands (ASX: AB1) leverages gamification, blockchain, and artificial intelligence technologies to develop and publish a broad portfolio of mobile products including games such as The Sandbox, Crazy Kings, and Crazy Defense Heroes as well as products based on popular intellectual properties such as Garfield, Thomas & Friends™, Ever After High and Doraemon. Animoca Brands is the exclusive China distributor of CryptoKitties. The Company is based in Hong Kong, Canada, and Finland. For more information visit www.animocabrands.com or get updates by following Animoca Brands on Facebook, Twitter or Google +.

Contact: press@animocabrands.com

Address: Unit 417-421, Cyberport 1, 100 Cyberport Road, Hong Kong

Copyright © 2019 Animoca Brands Corporation Limited. All rights reserved.

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