Company Description: Nanobit is a gaming studio based in Croatia, developing and publishing free-to-play games for mobile. The company is focused on casual interactive storytelling, highly engaging mobile games predominantly for female players aged 18 – 40. The team of 125 employees is located in Zagreb and Budapest enables lower development cost compared to most peers. Owned by the two co-founders Alan Sumina and Zoran Vučinić, bootstrapped and profitable from the start.
A lucrative niche: Nanobit’s focus on the female audience which gives rise to an easier target marketing. Women aged 18-40 years are financially strong and spends a lot of money on gaming, and the user base is growing steadily.
We expect high lifetime value: The lifetime value of games within the narrative/lifestyle are usually very long if the game is successful. Nanobit’s Hollywood Story was published in 2016 had its highest-grossing year 2019. My Story, published in 2017, most likely has many years of strong revenue to come. Tabou was launched in 2020, and is already the biggest revenue contributor of the portfolio, will have many years of strong cash-flow generation to come.
Cross marketing synergies from new games: The total user base increased due to My Story’s success, which also leads to cross-marketing possibilities and enchanted the user figures for Hollywood Story. This networking effect and scale advantage will only get stronger. Tabou had a focus on an older user base with improved monetization possibilities. More games with this target audience will likely come.
New markets lie untapped: The huge Asian and LATM markets stiles lie almost untapped. The company has successfully started, at a small scale, with MENA adoption of their games. We believe this will enhance the growth in the years to come. For example, Japan is an interesting opportunity we believe.
Explosive Growth due to a newly released game: Nanobit generated net sales of USD 33m during 2019. We expect top-line growth of around 150% during 2020 mainly due to the successful release of the new game Tabou. Tabou launched in January 2020 is a record hit, after just four months the game was Nanobit’s largest game. For 2020 we expect that Tabou stands for about 45% of revenue. Despite extreme growth during 2020. The margins have been strong, showing high marketing efficiency.
We have updated our estimates due to the acquisition of Nanobit. The company will be consolidated in the group on October 1, 2020.
Estimate changes: In Q4 we estimate net revenue of SEK 1,784 million (SEK 1,531 million). Adjusted EBIT of SEK 641 million (SEK 599 million).
FY 2020: Net revenue of SEK 4,957 million (SEK 4,704 million).
We have increased our fair value range to SEK 750-1400 (580-1100) with a base case of SEK 1130 per share (SEK 860).
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