Key data
Target price [PLN] 1,05
DCF Valuation [PLN] 1,20
Comparative Valuation [PLN] 0,78
Market price [PLN] 0,82
Growth/decrease potential [%] 28,8%
Market cap [mln PLN] 26,4
Free float [%] 50,0%
Industry mobile games
WSE code VVD
Bloomberg code VVD PW
Company profile
A modern gaming studio that designs, produces and publishes games for portable and stationary consoles, PC and Mac computers, and smartphones - which are the most dynamically developing sector of the market.
Shareholders: [%]
Wojczakowski Jarosław 22,5%
Kościelny Remigiusz 16,3%
Sominka Paweł 7,8%
Aleksandra Kościelna 6,2%
Growth factors
KF 2 revenue revival
data analytics investment
decrease of debt
Risk factors
low profitability
high costs of UA economic downturn
USD depreciation
Stock performance
For the first three quarters of 2022, Vivid Games generated revenues close to our forecasts. In the third quarter alone, sales were positively influenced by a one-off event (sale of BidLogic technology). The sales results allowed us to look with optimism at the chance to implement the strategy announced by the Company in November 2021. However, in the fourth quarter, along with the decrease in the USD exchange rate, changes in visibility in the App Store and lower consumer spending, the Company's revenues began to decrease significantly.
Revenue declines (excluding one-off events) were greater than expenditures on user acquisition (30.2% vs. 25.4%), which resulted in the loss of profitability at all operating levels in Q4. Finally, Vivid Games ended the year with results much better than in 2021 (revenue increased by 49% y/y, and net profit amounted to PLN 0.69 million compared to a net loss a year earlier), nevertheless, expectations after good 3 quarters of 2022 were much higher.
We also negatively view the preliminary estimates of revenue and net loss in Q1 2023 and the Company's cash position. At the end of March, Vivid Games had only 70k PLN in cash. Thus, the funds received from the sale of the BidLogic technology were spent on the Company's current operations, unfortunately without a clearly positive effect.
Finally, we lower our valuation to PLN 1.05 (from PLN 1.09) per 1 share at the end of 2023, still seeing the potential for an increase in the price relative to current quotations.
Analyst
Åukasz Bryl
Tel.: 785 500 874
