G5 Entertainment hosted an investor presentation today in Stockholm and CEO Vlad Suglobov gave an upbeat message to the audience.
My main takeaways in summary:
- CEO is confident that G5 will release 80 new games during 2011. So far, 22 have been released and the CEO reminded the audience that 2011 will be “tail-heavy” in terms of game releases, similar to 2010. In other words: Expect revenue and earnings growth to accelerate as the year develops
- G5 Entertainment aims to release a new game app every week trying to position itself as an “entertainment service” which enables the customer to download a new game to play during the weekend. In order to facilitate a constant flow of games, G5 is co-operating with 18 partner studios around the world, publishing their games under a licensing agreement and the company is signing up new studios every month
- The CEO also reminded the audience that in 2010, G5 had to upgrade the forecast a number of times towards the end of the year. My interpretation: Expect a similar pattern also during 2011 as new games will be released
- Encouragingly, G5 is gaining more and more ground also in Asia. In 2010, roughly 45% of sales came from Europe, 35% from North America and 20% from Asia & other. In the more recently published games, the geographical split looks like this: 25% Europe, 40% North America, 35% Asia & other
- Ipad games are gaining share as % of total sales. In 2o1o, 33% of Apple related revenues came from iPad games, in 2011 year-to-date this number is 47%. on top of that Mac sales represent 13% of Apple related sales. This is interesting since it is contributing to a positive mix shift as games for iPad and Mac are usually more expensive than iPhone games
- Strong and wide spread portfolio of games: No single game accounts fore more than ca. 15% of sales, making G5 Entertainment less vulnerable for “fashion misses”. In my opinion, this is a great strength and sign of stability. Yes, there is no big hit like “angry birds”, but on the other hand there are no real dogs either
- Very encouragingly, CEO Suglobov reported that the average price has increased from USD 2 to USD 5 over the last to years as players are willing to pay more for quality games
- CEO statement: “G5 can be a company with SEK 300m revenue and SEK 100m operating result in the next few years”! (Current forecast for 2011 is SEK 45m in revenue and SEK 16m operating result)
So all in all, I feel confirmed in my positive stance towards G5 Entertainment. It is always good to talk to management in person and the CEO left a competent and confident impression.
You know I am long G5 and you should be too!
PS: you can check out the presentation material on the company’s website: http://www.g5e.com/corporate?t=rep&y=2011#20110607