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.
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.
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.
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 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.
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.
- Enad Global 7 – Investor Relations Page
- Enad Global 7 – Year End and Q4 2022 Presentation
- Enad Global 7 – Year End and Q4 2022 Financial Report
- Massively OP – EG7 Q4 2022: Revenues are up thanks to mobile as LOTRO sees ‘mainstream resurgence’