Earnings call transcript: MOBA Network Q1 2025 reveals revenue drop

Moba Network's Q1 2025 earnings report highlighted a decline in revenue and earnings before interest and taxes (EBIT), with revenue falling to CHF 64 million, marking a 4% decrease year-over-year. The company's stock reacted negatively, dropping 13.82% pre-market to $6.55. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation, with a "GOOD" overall financial health score. Despite the challenges, long-term revenue and EBITDA metrics showed growth compared to the previous year.

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Key Takeaways

• Q1 revenue decreased by 4% year-over-year to CHF 64 million.
• EBITDA fell by 26% to CHF 8 million, while EBIT saw a significant 64% drop.
• The stock price fell 13.82% pre-market following the earnings release.
• Long-term revenue and EBITDA metrics improved compared to the previous year.

Company Performance

Moba Network reported a mixed performance in Q1 2025. While the quarter's revenue and EBIT declined, the company demonstrated resilience in its long-term metrics, with revenue and EBITDA showing 12% and 45% growth, respectively, compared to Q1 2024. This suggests that while short-term challenges persist, the company's strategic initiatives may be yielding positive results over a longer horizon.

Financial Highlights

• Revenue: CHF 64 million, down 4% year-over-year.
• EBITDA: CHF 8 million, down 26% year-over-year.
• EBIT: CHF 2 million, down 64% year-over-year.
• Long-term revenue growth: 12% compared to Q1 2024.
• Long-term EBITDA growth: 45% compared to Q1 2024.

Earnings vs. Forecast

The actual revenue of CHF 64 million fell short of market expectations, contributing to the negative market reaction. The company's performance missed forecasts, reflecting ongoing challenges in the gaming ecosystem and macroeconomic pressures.

Market Reaction

Following the earnings announcement, Moba Network's stock experienced a significant pre-market drop of 13.82%, bringing the price to $6.55. The stock has declined 43% over the past year and currently trades at 0.49x book value. This decline places the stock closer to its 52-week low of $5.3, indicating investor concerns over the company's short-term performance and its ability to navigate current market conditions.

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Outlook & Guidance

Looking ahead, Moba Network is focusing on expanding its subscription-based revenue and rolling out new paid features in Q2. The company has launched MobaForge, an innovation hub aimed at accelerating product development to address macroeconomic challenges and drive growth. InvestingPro data shows analysts expect the company to return to profitability this year, with a forecasted EPS of $0.05 for FY2025.

Executive Commentary

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CEO Anders emphasized the company's strategic focus, stating, "Our vision is to become the go-to destination for gamers and creators worldwide." He also highlighted the importance of MobaForge in future-proofing the company's growth and diversification efforts.

Risks and Challenges

• Global economic uncertainty and U.S. tariff impacts could affect revenue.
• Lower engagement in League of Legends-related products may impact user growth.
• The competitive landscape in the gaming industry remains intense.

Despite these challenges, Moba Network's strategic initiatives and long-term growth metrics suggest potential for recovery and expansion in the coming quarters.

Full transcript - MOBA Network publ AB (MOBA) Q1 2025:

Anders, CEO, Moba Network: Hi, I'm Anders. I'm the CEO of Moba Network, and thanks for watching this presentation of Moba Network's results in Q1. Moba Network owns and operates a diversified portfolio of gaming community platforms, in game apps and a multichannel network of video content creators. Our vision is to become the go to destinations for gamers and creators worldwide. We reach more than two twenty million gamers every month, and we engage users across the world's most popular games.

Our products serve as a layer in the gaming ecosystem that provides gamers with content, data, insights, tools. In essence, gamers can level up their game by using our products. We primarily monetize through advertising, but we're heavily focused on increasing subscription based revenue. After three record breaking quarters, we manage to meet our expectations in Q1. Revenue versus same period last year was down 4%, sixty six million to CHF 64,000,000 EBITDA down 26%, ten million to 8,000,000 EBIT versus same period last year, down 64%, four million to 2,000,000 and cash flow from operating activities before changes in working capital was down EUR 3,000,000.

Our LTM numbers quarter by quarter remain strong. Revenue is up 12% compared to Q1 'twenty four. LTM EBITDA up 45% compared to Q1 'twenty four. So Q1 'twenty five has been about navigating headwinds and also advancing our long term growth agenda. Seasonally, Q1 is a weak quarter, but this was also amplified by global economic uncertainty and U.

S. Tariffs. We also did see lower engagement in key products, especially our products that are connected to the game of League of Legends. Our product and tech team are pursuing a very ambitious product road map and working hard. We've managed to add more direct sales partners.

We've optimized our ad setup experience across many products. And we also launched a new cross promotional program utilizing the fact that we're a network in the products in cross promote. We're spending a lot of time focusing on enhancing Porrifessor as a product. It's received many updates and also two major features were launched in Q2 and many more are to come. We're also developing a number of features that will be fueling our subscription offering and will start to roll out already during Q2.

Union for Gamers saw its fourth consecutive quarter of growth. So revenue is up 6%, up to EUR 47,000,000, and our creator base has grown to seven forty nine creators, up 7%. We managed to add new high margin revenue streams. Our fintech service to towards creators is a great example, up 518% year on year. I would like to introduce MobaForge.

It's our new innovation hub created to drive fast product and feature development. It's an agile team with a fail cheap mindset for rapid experimentation. This is our way of future proofing growth and diversification, and the team already has its first product looking to launch in Q2. To sum this up, there's significant uncertainty in the macroeconomic environment. Our products and tech teams are working hard to increase traffic and active users.

UFG saw its fourth consecutive quarter of growth, and we've launched MobaForge to drive faster innovation in product and feature development. We're also heavily focused on Poorfessor's subscription offering, and we'll start rolling out more paid features in Q2. Thank you very much.

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