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#G5 Entertainment: Time to be bullish into Q1 numbers

newlogoIn one week’s time (May 15th), G5 Entertainment will report its Q1 2014 result.  Already on April 2nd, the  company announced preliminary Q1 2014 revenues of SEK 40m,  which corresponds to achieving 45% revenue growth compared to the same period of 2013. Management reiterated that it expects a profitable and cash flow positive first quarter. All eyes will be on the operating margin, which has been the big disappointment in the last quarters. Encouragingly, G5 recently released new financial targets which included an unchanged EBIT margin target of 30%.

Meanwhile, the overall app market is developing very favourably and revenues generated by mobile games continue to increase as the year progresses, against the historical seasonal pattern of a strong start to the year followed by some slower months. The top grossing charts are dominated by free-to-play titles which do not seem to follow the historical pattern anymore. As a proxy, we are tracking daily revenues generated for iPhone games in the USA, as provided by As you can see in the chart below, there has been a gradual increase of the daily revenues generated since the beginning of December. This has continued throughout April and into May:

TopGrossingiPhoneUSANaturally, this should also affect G5 Entertainment with its increasing focus on free-to-play titles and in particular it should reflect the performance of its blockbuster hit Secret Society. We look forward to positive comments regarding this development in the report next week. For G5, iPad is the most important source of revenue and we believe that the development on this platform is similar to the one witnessed on iPhone. G5’s overall game rankings among the top grossing iPad charts in some of the most important global markets are keeping up well at the start of Q2:

G5TopgrossingiPad Nordic Investor

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