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#G5 Entertainment: Many positives during #Q3

newlogo As we have reported in our weekly updates, daily revenues generated by mobile games for iPhone in the USA have increased steadily ever since we started to track the development in December 2013 (data provided by www.thinkgaming.com).  Since the beginning of 2014, daily revenues generated by mobile games for iPhone in the USA have now on average increased by around 45%. Looking at the development for Q3 2014, we note that the daily revenues are up by around 13% compared with Q2 2014.

thinkgamingOne of the companies active in the mobile gaming space is Sweden listed G5 Entertainment. The company has the habbit to update the market with preliminary revenue numbers, usually 3-5 days after the end of the quarter. That means that we should get the preliminary numbers for Q3 either already this Friday, October 3rd or on Monday, October 6th.

For Q2 2014, G5 Entertainment reported revenues of SEK 40.6m, up 86% compared with Q2 2013. The company’s success and growth is driven by its hit-game Secret Society, which has enjoyed steady top grossing rankings of around #35 on the iPad in the USA ever since the beginning of 2014. As you can see in the graph below, this was also the case during the third quarter. However, Q2 2014 saw a few days with the games being ranked in the low 20s, and it is our interpretation that overall the Q2 performance of Secret Society, in terms of rankings, has been slightly better than in Q3.

SecretSociety2014So what does this mean for G5 Entertainment’s Q3 2014 revenues? On the one hand we have a market that is growing steadily (+13% during the quarter on iPhone in the USA as noted above) and on the other hand we have continuously strong ranking for its all important Secret Society game, albeit somewhat weaker than in Q2 (in terms of rankings).

Furthermore, we think it is important to note the strong appreciation of the US Dollar during Q3 versus the Swedish SEK. G5 is reporting in SEK but the vast majority of revenues is related to USD. As you can see in the graph below, the USD has appreciated by around 7% versus the SEK during Q3:

USDSEKWe believe that the most likely scenario is that G5 Entertainment will report a slight sequential revenue increase for Q3, i.e. somewhere around SEK 42m. This would imply y-o-y growth of around 90%.

Nordic Investor

Follow the latest buzz around G5 Entertainment at www.buzztrader.se. G5 Entertainment is part of the Nordic Investor BuzzTrader portfolio.

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