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#G5 Entertainment: worth a gamble ahead of prel Q1 numbers

In its usual fashion, mobile gaming developer and publisher G5 Entertainment will publish its preliminary Q1 2015 revenue numbers a few days after the end of the quarter, i.e. around April 6th. Important to keep in mind this time is the fact that as of Q1 2015, G5 Entertainment will report revenues and costs in a functional income statement format. Simultaneously, G5 will begin reporting revenues including commission to distributors. This will increase reported by approximately 40% as compared to the previous revenue recognition method, according to the company.

We believe it could be good idea to accumulate a position in G5 ahead of the preliminary Q1 numbers as the quarter has shown some several developments:

1.) Overall market continues to grow steadily (using US iPhone market as a proxy):


2.) Secret Society top grossing rankings are still at good levels, albeit somewhat lower than in Q4 2014:


3.) Mahjong Journey is climbing the top grossing rankings:


4.) Letters of Nowhere: A Hidden Object Mystery has entered the top grossing rankings during Q1 2015:


5.) CEO Vlad Suglobov has bought 16.000 shares on March 17th, 2015

In Q4 2014, G5 reported revenues of SEK 57,7m. In our opinion, anything above SEK 63m for Q1 2015 (i.e. 9% sequential growth) should be seen as a positive. With the new reporting method, the “number to beat” is closer to around SEK 88m.

Nordic Investor

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