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Next Games - New game launches crucial in 2020

Next Games will report H2 results on February 28th. During Q4 Next Games announced that the Blade Runner Nexus game will not be launched during 2019 and updated its outlook. We expect Q4 revenue of EUR 8.2m, seeing some support from season 10 of TWD and the typically stronger Q4, as gross bookings have been on a declining trend for both live games, and an EBIT of EUR -1.7m.

Expect Q4 revenue of EUR 8.2m, EBIT EUR -1.7m

With Next Games having previously announced that the Blade Runner Nexus game will not be launched during 2019, of key interest in the H2 report will be any comments on the upcoming new products. We expect Q4 revenue of EUR 8.2m (Q4/18: EUR 11.3m), seeing some support for gross bookings from season 10 of TWD and the typically stronger Q4 due to holiday seasons, with gross bookings having been on a declining trend so far during 2019. We expect an EBIT of EUR -1.7m. Profitability has been burdened by the relatively high R&D costs in relation to revenue from live games.

Launch of new games in 2020 remain crucial

With the delay in the BRN launch from the company’s previous expectations, no new games were launched in 2019. Successful new game launches in 2020 remain crucial for ensuring cash flow stability. Both live games have previously been reported to be operated profitably as independent projects, but development costs relating to new products have kept earnings figures in the red. Our assumption is for BRN to be launched mid Q2/20 and the Stranger Things -game in early Q4/20. The successful rights issue during Q4 together with cost savings during 2019 provided some much-needed breathing room for the otherwise rather strained financial position.

HOLD with a target price of EUR 0.90

Following some estimates revisions due to BRN launch timetable assumptions we continue to expect weaker profitability in 2020 before revenue from new products kick in. We retain our HOLD-rating and target price of EUR 0.90 ahead of the H2 results.

Open Report