Big Blue Bubble | The Ancient Gaming Noob

The Enad Global 7 financials dropped last week and, as was the case in Q4 2022, Big Blue Bubble’s title My Singing Monsters was the big draw for the company.

Enad Global 7

The investor’s report for Q1 2023 said the following about My Singing Monsters:

MSM delivered elevated performance throughout the quarter. As of the end of Q1, MSM had amassed 8.5 billion hashtags, 268 million video views, and 1.9 million followers on TikTok, continuing to expand its fanbase.

I still am unsure how the game, which has been around since 2012, took off late last year or if the social media coverage was the trigger or just an effect of the suddenly popularity.

So once again, Daybreak is relegated to second place in earnings when it comes to the EG7 games business segment.

Q1 2023 – Games segment revenue

It isn’t that Daybreak is failing to deliver. Its titles remain as solid as ever. It is just that My Singing Monsters has lit up and is suddenly way more popular than it has ever been over the last decade.

Daybreak remains solid while BBB was suddenly more than 4x expected

And BBB’s income has a lot higher margins, even before the big jump in sales, which probably reflects the difference in effort to support essentially one mobile/PC title versus running, supporting, and creating new content for half a dozen MMOs.

EG7 cautions that it may not stay that way, but says that it expects that its baseline performance will remain elevated going forward. My Singing Monsters is one key brands that the company owns, the list of which was given as:

EverQuest, considered to be one of the three most iconic fantasy MMO brands in the world together with World of Warcraft and Ultima Online.
H1Z1, the very first battle royale game that was credited as one of the inspirations for Fortnite, with over 40 million life-to-date (LTD) registrations.
My Singing Monsters, which has over 135 million (LTD) registrations on mobile and PC, reaching top 10 in over 100 countries in the App Store games category and the No. 1 spot in more than 15 countries 10 years after its release.

I am still not sure how they can put H1Z1 on that list with a straight face. They are doing nothing with it, have announced no plans to do anything with it, and appear to be just waiting for some sort of magic to happen. I supposed lightning striking My Singing Monsters gives them hope.

Aside from the caution about My Singing Monsters, when it came to Daybreak the report mostly emphasized the EverQuest 24th anniversary, the DC Universe Online 12th anniversary, and next year’s 25th and 20th anniversaries for EverQuest and EverQuest II respectively.

Mention of other Daybreak titles was limited to pointing out that some of them represented strong licensed IP opportunities. Lord of the Rings Online, specifically, received no special mention. The timing of the earnings release put it before Amazon’s announcement that they are working on a Middle-earth MMO of their own once more, so there was no expectation that we would hear anything about that. It may, however, get some notice with the Q2 2023 results.

Overall it was a positive report. It opened with record earnings. Also the company reports it remains debt free, has cash on hand, and is focused on long term profitability. The joys of being a modest sized public company registered in Sweden I suppose, because if some Wall Street investment group was running the show they would be demanding stock buy backs and stripping it for quick cash boosts without thought towards the long term.

Enad Global 7 – Investor Relations Page
Enad Global 7 – Q1 2023 Presentation
Enad Global 7 – Q1 2022 Financial Report
Massively OP – EG7 pulled in a record $54M last quarter
MMO Bomb – Daybreak And Standing Stone Parent Company Boasts $54 Million In Revenue

When I get around to talking about Enad Global 7 and their financials, I am usually quick to point out that the place has effectively become Daybreak Sweden, what with the old Daybreak owners expanding control of the board and putting one of their own in the role of CEO.

His acting career continues

And, of course, the fact that revenue from the gaming side of the business has been pretty heavily dominated by Daybreak in the past has helped sell me on that point of view. They’re running the show in part because they bring in the cash, being responsible for about 75% of the revenue most quarters.

But in the Q4 2022 financials a new hero arose. The Big Blue Bubble studio and its My Singing Monsters franchise has exploded over the last year, delivering amazing growth and the revenue that comes with that sort of thing.

Much reason to sing!

I may never have heard about My Singing Monsters outside of these financial reports, but clearly word is getting around somewhere. Is this another TikTok phenomena?

You can see in their 2022 earnings summary that Q4 just exploded for Big Blue Bubble.

Big Blue Bubble Goes Wild

Meanwhile, the Daybreak chart… and while EG7 keeps talking about all the studios they have, the do consistently roll Darkpaw Games, Dimension Ink, Standing Stone, and Rogue Planet up into under the Daybreak banner… tells a somewhat different tale.

Daybreak 2022 revenue numbers

Daybreak stayed ahead, contributing more to the revenue side of things than Big Blue Bubble, but when it came to profit BBB was at a screaming 60% margin while Daybreak had a meager 21% margin, which is kind of low for a software as a service company, and down from past quarters where it was closer to 30%.

Oh, and even their total revenue dropped in Q4 2022, which I find surprising because Q4 is when at least some of the Daybreak studios launch their paid expansions, so it is when money is spent on games like EQ, EQII, and LOTRO as well as bringing people back as subscribers to see the new content.

In the report they try and wave away the situation by mentioning unfavorable comparisons to conditions during the pandemic, which were extremely favorable for many video games, but that seems unlikely. So while Daybreak brought in 47% of the revenue, when it came to profit Big Blue Bubble was the champ.

Q4 2022 Game Studio Revenue

Of course, I have no sense of how big the My Singing Monsters mania really is. Was Q4 a quirk? Dare we wonder if it was a… *cough*… bubble? Or was it just the start of the My Singing Monsters era?

We will have to wait until we see the Q1 2023 financials in May to get a sense of how durable this performance was.

Meanwhile, Daybreak, despite the margins crunch it saw in Q4, has a pretty steady track record of financial performance. Big Blue Bubble had a big quarter, but that only brought it in line with what Daybreak has been delivering for a while now.

So in the financial report and presentation the company still calls out all the IPs that Daybreak has to back them up. They even keep mentioning H1Z1 on the original IP list, wistfully mentioning how it kicked off this whole battle royale thing as though they feel if they keep bringing it up in conversation we’ll suddenly decide to give it another try. H1Z1 isn’t completely dead, just mostly dead. But there is no Miracle Max around to revive it.

But now Big Blue Bubble and My Singing Monsters has earned its place on the list of valuable IPs that the company has.

Overall, it was a good quarter and a good year for EG7 despite the fact that the Russian invasion of Ukraine forced them to divest from one of their key service subsidiaries, Innova, getting jsut 32 million out of a company they paid 109 million for previously. Then there was Daybreak fumbling on the Marvel super hero MMO thing, which was an opportunity they’ll not likely get again.

The company came out with 559 million in Q4 2022 revenue and 1,865.9 million for the whole of 2022, both number up substantially from 2021. I haven’t bothered to put a currency unit on those numbers because they’re in Swedish Krona (SEK), but the ratio is about 10 SEK to 1 USD, so just move the decimal point over one place the left and you’re at a close approximation of the dollar value.

The company also highlighted that following aspects of the business:

Debt free
Strong liquidity with SEK 304 million of Net Cash balance as of December 31
Clean balance sheet after the write–down of assets with potential downside risks
Solid momentum to kick off 2023

Having no debt during a time of rising interest rates and cash in the bank is a pretty good way to start the year, especially after some of the rough patches in the last year.