G5 Games earned $44.7 million in the quarter. The main source of money is Hidden City
The Swedish company G5 Games, founded by immigrants from Russia, has published a financial report for the 4th quarter of 2017. In October-December, the company’s revenue amounted to $44.7 million. This is 93% more than a year earlier.
At G5 Games, the fiscal year coincides with the calendar year. For this reason, she called her report the final one in 2017. The finale turned out to be bright. The company showed both good annual and quarterly dynamics.
Annual dynamics
The company’s revenue has grown significantly over the year. A year ago, G5 Games reported revenue for the 4th quarter of $23.2 million. As a result of the 4th quarter of 2017, as we have already noted in the news lead, this figure amounted to $44.7 million.
Significant growth was observed in all regions, but the main driver was Asia. The company managed to increase revenue from it by 260% to $12.5 million.
The reason for this growth is the major success of Hidden City. According to the Datamagic analytical service, this hidden object game earns significantly more per month in the Asia-Pacific region than in North and Latin America or EMEA (a region that includes Europe, the Middle East and Africa).
Estimated earnings of Hidden City for December 2017 by region (Source: Datamagic)
Hidden City is the company’s most valuable asset today.
The game is responsible for most of the company’s revenue not only in Asia. Only Mahjong Journey receives a comparable but much smaller monthly income, according to Datamagic.
Estimated earnings of the top five G5 Games projects for December 2017 (Source: Datamagic)Quarterly dynamics
The 4th quarter was also marked by a good quarterly revenue growth. From October to December, G5 Games earned 33% more than from August to September. This growth is due to a significant increase in operating expenses – from about $12.5 million to $20 million. Mainly, spending on sales and marketing has increased, in other words, on buying users.
Dynamics of operating expenses of G5 Games for the 4th quarter of 2015 – 4th quarter of 2017, given in Swedish krona (Source: G5 Games)
The company explains the increased spending by considering the final annual quarter as an acceleration, which will give “new opportunities for growth.”
Such an increase in expenses led to a serious drop in earnings before interest and taxes. If in the 3rd quarter it was more than $3.7 million, then in the 4th quarter it was $1.9 million.
Negative Cash Flow and The Secret Society
The cash flow for the 4th quarter of the company turned out to be negative. It amounted to minus $929 thousand.
In December, G5 Games and MyTona settled a year-long dispute over The Secret Society. Its result was the purchase by G5 Games of all rights to the game for $ 6.5 million. The initial payment, which amounted to about $2.8 million, was the reason for the negative cash flow.
By the way, in January, The Secret Society’s monthly revenue, according to Datamagic, amounted to $797 thousand. In total, according to official data, the game has earned $ 100 million for the entire time of its existence.
Other figures
G5 Games in the report highlights the record-breaking MAGRPPU in its history. We are talking about the average gross income per monthly active paying user. It reached $42.7 in the 4th quarter.
Paid games and games distributed under the freemium model (a model in which the game is distributed for free, but requires one payment to unlock the full version) are responsible for only 2% of the company’s revenue.
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