While bigger games companies continue to flail, EG7 actually managed to grow last year, as its latest investor report demonstrates, with overall revenues up over 9%. However, Q4 2023 itself wasn’t a positive contributor to that, as it saw a 15% decline in revenues when compared to Q4 2022. “Another record year,” the investor presentation declares while simultaneously referring to “industry pain” brought on by corporations’ “irrational exuberance.” Indeed, as we reported yesterday, the news wasn’t without casualties; we know that Daybreak just issued a round of layoffs, including serious hits to the DC Universe Online team at Dimensional Ink.
“2023 was a difficult year of adjustment for the entire industry,” Acting CEO Ji Ham says (he’s referred to in the written presentation as CEO and on the investor call as Acting CEO). “As a result, some of our business units were naturally impacted negatively. However, on a combined basis, we are quite proud to have delivered another record year of growth, outperforming many of our peers and demonstrating the value of our portfolio and prudent management.”
Notably, My Singing Monster is driving a large chunk of the company’s revenue, which is overshadowing Daybreak and its stable of MMORPGs, which Ham says was hampered by delays – specifically, DC Universe Online’s latest-gen console launches. But as the report shows, Daybreak saw another meh quarter in Q4, with revenues of 182 SEKm ($17.2M US) – almost even with the equally meh Q3 – in spite of good Q4 launch performance from LOTRO and the EverQuest franchise. However, DCUO is usually the studio’s largest revenue-driver, so any dip hurts.
“Daybreak, which has been the biggest revenue and profit contributor historically, took a backseat to Big Blue Bubble this year,” Ham says. “Beyond the difficult comparison to MSM and its extraordinary year, some of Daybreak’s titles performed below expectations, largely due to delayed content releases. Therefore, Daybreak results for the year came in 9.3 percent below 2022.”
“For Q4, Daybreak contributed Net Revenue of SEK 181.8 (198.9) million, down 8.6 percent from the prior year, and Adjusted EBITDA of SEK 29.1 (41.7) million. Adjusted EBITDA margin amounted to 16.0 (21.0) percent. The lower performance for the quarter was consistent with observed trends throughout the year. The underperformance is largely attributable to the lower content delivery for a few of the titles for the year, including the delayed launch of DC Universe Online (DCUO) on the latest generation of consoles, which had an impact on the game’s visibility during the year-end holidays, especially on PlayStation 5. The launch is now set for Q1 2024. Further, the overall industry softness likely has impacted performance negatively. Key highlights for the period included successful expansion pack releases for EverQuest, EverQuest 2 and The Lord of the Rings Online. The content releases were received well by the player communities and performed according to plan.” [Emphasis ours.]
Ham also says that Daybreak “Daybreak successfully closed on the sale of a noncore IP for USD 5.9 million” – we’re not quite sure what that IP was, but the cash will apparently “[provide] EG7 with further improvement to its liquidity.”
The investor presentation reminds investors that it’s “initiated concept explorations for H1Z1” as part of its efforts to realize its “vision of becoming a leader in the mid-market publishing”; the company also notes ongoing anniversary celebrations for the EverQuest franchise. The layoffs were not mentioned in the written presentations.
