Earnings Release • Nov 9, 2023
Earnings Release
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The Board of Directors of Digital Bros Group approved the Interim Report as of September 30th , 2023
RESULTS FOR THE FIRST QUARTER OF FY2023- 2024 APPROVED:
ABRAMO GALANTE AND RAFFAELE GALANTE CONFIRMED AS CEO
REVIEW OF THE INDEPENDENCE REQUIREMENTS FOR DIRECTORS AND STATUTORY AUDITORS
BOARD COMMITTEES APPOINTED
Milan, November 9th , 2023 - The Board of Directors of Digital Bros Group (DIB:MI), videogames company listed on the Euronext STAR Milan (ISIN: IT0001469995) and part of the FTSE Italia Small Cap index and Euronext Tech Leaders, today approved the Interim Report as of September 30th , 2023 (first quarter of the fiscal year from July 1 st, 2023 to June 30th, 2024).
Digital Bros Group's key consolidated results for the first quarter of FY 2023-2024, together with the previous year comparatives, are as follows:
| Euro thousand | September 30th 2023 | September 30th , 2022 |
Change € | Change % |
|---|---|---|---|---|
| Gross revenue | 20,225 | 22,387 | (2,162) | -9.7% |
| Gross operating margin (EBITDA) | 2,260 | 5,155 | (2,894) | -56.1% |
| Operating margin (EBIT) | (3,175) | 2,242 | (5,417) | n.m. |
| Profit / (loss) before tax | (3,574) | 3,681 | (7,255) | n.m. |
| Net profit / (net loss) | (3,117) | 3,087 | (6,204) | n.m. |
Current market conditions make the release of new games into the market more challenging, especially for videogames with limited marketing budget to support the launch. Consumers are playing the same games for longer, rather than spending on new and different gaming experiences. Attracting gamers to new games intellectual properties requires greater investments in marketing than it used to.
The Group is still cautiously optimistic with respect to the medium to long-term outlook, despite the headwinds mentioned above. The Group also believes that its current investment portfolio, consisting of new versions of successful games (Ghostrunner, Assetto Corsa, Control and Bloodstained) with large development and marketing budgets, remains aligned with the current market trend, even if the gamers will continue to be selective.
In the next fiscal years, the Group will launch sequels of previously successful games, as well as introducing new games coming from crowdfunding campaigns and backed by robust investments in marketing.
During the first quarter of fiscal year 2023-2024, the Group generated Euro 20.2 million revenues, down by 9.7% compared to the same reporting period of the last fiscal year, which can be attributed to the fact that sales volumes in the summer period are typically lower when no significant new games are launched.
EBIT resulted at negative 3.175 thousand Euros, compared to the positive Euro 2.242 thousand at September 30th , 2022.
The Group recorded a consolidated net loss of Euro 3.117 thousand, compared to the net profit of Euro 3.087 thousand recorded in the first quarter of the previous fiscal year.
Revenues from international markets accounted for 96% of total net revenue, while digital sales amounted to 88% of the total net revenue, as already disclosed in previous reports.
A breakdown of net revenue by operating segment for the period ended September 30th , 2023, compared to the same reporting period in 2022, is provided below:
| Net revenue | ||||||
|---|---|---|---|---|---|---|
| Euro thousand | September 30th , 2023 |
September 30th , 2022 |
Change € | Change % | ||
| Premium Games | 15,005 | 15,529 | (524) | -3.4% | ||
| Free to Play | 4,370 | 5,971 | (1,601) | -26.8% | ||
| Italian Distribution | 703 | 672 | 31 | 4.6% | ||
| Other Activities | 118 | 189 | (71) | -37.7% | ||
| Total net revenue | 20,196 | 22,361 | (2,165) | -9.7% |
The net revenue for the Premium Games operating sector as of September 30th, 2023 was at Euro 15 million, representing 74.3% of total revenue, compared with the 69.4% recorded in the first quarter of FY2022-2023. This result was split among several back catalogue products, with the outstanding performance of the different versions of Assetto Corsa. The franchise developed by the fully owned studio Kunos Simulazioni generated Euro 5.3 million revenue in the reporting period.
Video games developed on Intellectual properties (IPs) owned by the Group accounted for 55% of the total revenue for the Premium Games operating segment, increasing from the 43% as of September 30th , 2022. This is in line with the ongoing transformation of the Group, with a strategy focusing about owned and co-owned IPs and longterm agreements within its IP portfolio.
A breakdown of Premium Games revenue by the type of rights held by the Group as of September 30th , 2023 is provided below, with comparative figures as of September 30th , 2022:

Net revenue from the Free to Play operating sector amounted to Euro 4,370 thousand, a 26.8% decrease from the Euro 5.971 thousand of September 30th, 2022.
Revenue from the Italian Distribution segment was stable at Euro 672 thousand, compared to the Euro 703 thousand recorded in the first quarter of the previous fiscal year.
The total costs of sales amounted to Euro 7,769 thousand, unchanged with respect to September 30th, 2022, despite the decrease in the net revenue in the reporting period. The increase in the purchase of services for resale recorded in this quarter is mainly due to the live support costs following the launch of the video game Crime Boss: Rockay City, which were not recorded in the previous fiscal year.
The operating costs amounted to Euro 13,244 thousand, in line with the result of the last fiscal year, amounting to Euro 13,482 thousand.
The gross operating margin (EBITDA) amounted to Euro 2,260 thousand, decreasing from Euro 5,155 thousand realised in the first three months of the last fiscal year.
The depreciation and amortization increased by Euro 1,710 thousand, following the launch of videogames in the second half of FY2023.
The operating margin (EBIT) was negative at Euro 3,175 thousand, compared to the positive Euro 2,242 thousand as of September 30th , 2022.
The net financial result was negative at Euro 399 thousand, decreasing from the positive Euro 1,439 thousand recorded in the first quarter of the previous fiscal year.
As of September 30 th , 2022, this item included the fair value adjustment of the financial receivable purchased from Starbreeze, which was then fully collected on July 3rd, 2023.
The loss before tax for the period amounted to Euro 3,574 thousand, decreasing from the Euro 3,681 profit realised at September 30th, 2022.
The net loss amounted to Euro 3,117 thousand compared to the profit of Euro 3,087 thousand as of September 30th , 2022.
The net loss attributable to the shareholders of the Parent Company was Euro 2,413 thousand.
The basic loss per share and diluted loss per share were Euro 0.17 and Euro 0.16 respectively, compared to the profit per share of Euro 0.21 as of September 30th , 2022.
The net financial position is negative at Euro 51,559 thousand, decreasing from the Euro 39,650 thousand as of June 30th , 2023. This result is in line with forecasts and consistent with the significant investment plan carried out by the Group during the quarter. The Group will be able to manage its current liabilities generating the projected cash flow.
The total net financial position, net of the IFRS16 effect, is negative at Euro 46,571 million thousand.
As of September 30th , 2023, Digital Bros S.p.A. did not hold any treasury shares, and no transactions have been made in the period, in accordance with Art. 2428 paragraph 2.3 of the Italian Civil Code.
The significant events occurred during the reporting period exclusively concern the relationships between Digital Bros Group and the Swedish group Starbreeze AB. As part of the overall agreement for the capital increase of the Swedish company announced on April 28th,2023, the Group successfully collected its credit to Starbreeze for 150 million SEK on July 3rd, 2023. On the same date, Digital Bros subscribed to 3.3 million multiple-vote Starbreeze A shares (equivalent to approximately 2.5 million Swedish Kronor). On July 10th, 2023, the Company requested the conversion of approximately 29.5 million multiple-vote Starbreeze A shares into single-vote Starbreeze B shares to reduce its voting stake to avoid the mandatory takeover bids requested by the EU regulations. Such a request was made considering the execution of the convertible bond into Starbreeze B shares within 30 days after finalization of the Starbreeze capital increase process. On July 19th, 2023, the Company executed the full conversion of the bond into 148.3 million Starbreeze B shares.
As of November 9th, 2023, after additional conversions of multiple-vote shares into single-vote shares by different shareholders, the Group now holds 87 million Starbreeze A shares and 223.4 million Starbreeze B shares. This accounts for 21% of the total capital and 38.8% of voting rights.
On October 27th, 2023, the Shareholders' Meeting of Digital Bros Group approved the Financial Statements for the fiscal year 2022-2023 and appointed the new members of the Board of Directors and the Board of Statutory Auditors. The new corporate bodies will remain in office until the approval of the financial statements for the fiscal year ending on June 30th, 2026.
The Group's publishing plan for this fiscal year provides the launch of Ghostrunner 2 in the second quarter and the launch of the new game Eiyuden Chronicles – Hundred Heroes in the fourth quarter. The launch of the PC version of Assetto Corsa 2 is postponed to next Summer, to enable the release of the Season 2024 pack for Assetto Corsa Competizione, the official game of the Fanatec GT World Challenge, scheduled for Spring 2024. Such rescheduling is expected not to have any significant effect on the projected revenue for this fiscal year.
The management believes that its publishing strategy based on the release of successful game sequels and new games with significant crowdfunding support should mitigate the launch-related risks and improve revenue predictability. The Group remains cautiously optimistic about its long-term publishing plans, which will involve the release of the sequels of Assetto Corsa and Control.
No significant launches are expected to occur in the Free to Play operating sector, which realized a satisfying level of revenues and margins, after the acquisition of 505 Go Inc..
Forecasted revenues and operating margins for this fiscal year are expected to grow in the second half of the fiscal year, in line with the release schedule.
The Group's investment plan will continue during this fiscal year, with investments expected to exceed Euro 50 million. As a result of this strategy, the net financial debts will further grow in the next two quarters, but it is expected to return to the same levels as of June 30th, 2023 at the end of this fiscal year.
The Group has an earn-out agreement for 33% of PAYDAY3's net revenues, capped at 40 million US dollars. The game was developed by Starbreeze and released on September 21st, 2023. As of today, Digital Bros is unable to assess the timing and the amount it will receive. If the game overperforms to trigger the earn-out in part of in full, it would result in a significant improvement in the Group's financial performance.
The Board of Directors also resolved on the following items:
The Board of Directors confirmed Abramo Galante and Raffaele Galante as the Chief Executive Officers for Digital Bros Group, with appropriate powers of attorney.
The Board of Directors verified that the Directors declaring to possess the independence requirements meet such criteria, pursuant to Art. 147-ter, paragraph 4 and Art. 148, paragraph 3, of the "TUF" and to Art. 2 guideline n.7 of the Corporate Governance Code (the "Code").
The following Directors were identified as independent: Carlotta Ilaria D'Ercole, Susanna Pedretti and Laura Soifer.
The Board of Directors appointed Laura Soifer as Lead Independent Director.
The Board of Directors appointed to the Nomination Committee the following non-executive and independent Directors: Carlotta Ilaria D'Ercole, Susanna Pedretti and Laura Soifer. The Director Carlotta Ilaria D'Ercole was designated Chairman of the Nomination Committee.
The Board of Directors appointed to the Remuneration Committee the following non-executive and independent Directors: Carlotta Ilaria D'Ercole, Susanna Pedretti and Laura Soifer. The Director Susanna Pedretti was nominated Chairman of the Remuneration Committee.
The Board of Directors appointed to the Risk and Control Committee the following non-executive and independent Directors: Carlotta Ilaria D'Ercole, Susanna Pedretti and Laura Soifer.
The Director Laura Soifer was appointed as the Chairman of the Risk and Control Committee.
As structured in the previous office, the Board of Directors decided to maintain its preexisting governance structure with an Executive Director in charge of the internal control and risk management system and to avoid the appointment the CEO as requested by the Code.
The Board of Directors confirmed the CFO Stefano Salbe as the Executive Director in charge of the internal control and risk management system.
In compliance with the applicable provisions, the Board of Statutory Auditors carried out the assessment of the independence requirements of its members, appointed by the Shareholders' Meeting on October 27th, 2023. The statutory Auditors Pietro Piccone Ferrarotti, Maria Pia Maspes, Paolo Villa and the alternate auditors Andrea Serra and Stefano Spiniello were all identified as independent.
As required by paragraph 2, Art. 154-bis of the T.U.F., Digital Bros Group's Chief Financial Officer, Stefano Salbe, declares that the information contained in this press release corresponds to the Group's underlying documents, books and accounting records.
This press release is available on the websites www.digitalbros.com and .
Listed on the Euronext STAR Milan and part of Euronext Tech Leaders, Digital Bros Group is a global company that has been operating since 1989 as a developer, publisher and distributor of video games through its brand 505 Games. The Group markets its contents on both retail and digital channels, Digital Bros Group is active around the world through its own direct operations in Italy, United States, UK, France, Spain, Germany, Czech Republic, China, Japan, Australia and Canada with 442 employees.
For further information please contact: Digital Bros S.p.A. Stefano Salbe - CFO Tel, + 39 02 413031 [email protected]
| Consolidated statement of financial position as of September 30th, 2023 | |||
|---|---|---|---|
| Euro thousand | September 30th , |
June 30th , |
Change | ||
|---|---|---|---|---|---|
| 2023 | 2023 | ||||
| Non-current assets | |||||
| 1 | Property, plant and equipment | 9,140 | 9,613 | (473) | -4.9% |
| 2 | Investment properties | 0 | 0 | 0 | 0.0% |
| 3 | Intangible assets | 161,040 | 153,023 | 8,017 | 5.2% |
| 4 | Equity investments | 16,517 | 11,400 | 5,117 | 44.9% |
| 5 | Non-current receivables and other assets | 8,776 | 8,089 | 687 | 8.5% |
| 6 | Deferred tax assets | 18,970 | 17,087 | 1,883 | 11.0% |
| 7 | Non-current financial activities | 0 | 0 | 0 | n.m. |
| Total non-current assets | 214,443 | 199,212 | 15,231 | 7.6% | |
| Current assets | |||||
| 8 | Inventories | 3,471 | 3,355 | 116 | 3.5% |
| 9 | Trade receivables | 10,832 | 14,104 | (3,272) | -23.2% |
| 10 | Tax receivables | 4,864 | 3,977 | 887 | 22.3% |
| 11 | Other current assets | 10,723 | 23,790 | (13,067) | -54.9% |
| 12 | Cash and cash equivalents | 4,644 | 9,407 | (4,763) | -50.6% |
| 13 | Other current financial assets | 326 | 11,344 | (11,018) | -97.1% |
| Total current assets | 34,860 | 65,977 | (31,117) | -47.2% | |
| TOTAL ASSETS | 249,303 | 265,189 | (15,886) | -6.0% | |
| Shareholders' equity | |||||
| 14 | Share capital | (5,706) | (5,706) | 0 | 0.0% |
| 15 | Reserves | (16,971) | (21,367) | 4,396 | -20.6% |
| 16 | Treasury shares | 0 | 0 | 0 | 0.0% |
| 17 | Retained earnings | (113,221) | (115,270) | 2,049 | -1.8% |
| Equity attributable to the shareholders | |||||
| of the Parent Company | (135,898) | (142,343) | 6,445 | -4.5% | |
| Equity attributable to non-controlling | |||||
| interests | 43 | (1,375) | 1,418 | n.m. | |
| Total net equity | (135,855) | (143,718) | 7,863 | -5.5% | |
| Non-current liabilities | |||||
| 18 | Employee benefits | (957) | (911) | (46) | 5.0% |
| 19 | Non-current provisions | (81) | (81) | 0 | 0.0% |
| 20 | Other non-current payables and liabilities | (1,609) | (1,824) | 215 | -11.8% |
| 21 | Non-current financial liabilities | (8,107) | (11,285) | 3,178 | -28.2% |
| Total non-current liabilities | (10,754) | (14,101) | 3,347 | -23.7% | |
| Current liabilities | |||||
| 22 | Trade payables | (44,053) | (46,837) | 2,784 | -5.9% |
| 23 | Tax payables | (1,995) | (2,782) | 787 | -28.3% |
| 24 | Short term provisions | 0 | 0 | 0 | 0.0% |
| 25 | Other current liabilities | (8,224) | (8,635) | 411 | -4.8% |
| 26 | Current financial liabilities | (48,422) | (49,116) | 694 | -1.4% |
| Total current liabilities | (102,694) | (107,370) | 4,676 | -4.4% | |
| TOTAL LIABILITIES | (113,448) | (121,471) | 8,023 | -6.6% | |
| TOTAL NET EQUITY AND LIABILITIES | (249,303) | (265,189) | 15,886 | -6.0% |
| Consolidated Profit and Loss statement as of September 30th, 2023 | |
|---|---|
| ------------------------------------------------------------------- | -- |
| 2023 2022 1 Gross revenue 20,225 100.1% 22,387 100.1% (2,162) -9.7% 2 Revenue adjustments (29) -0.1% (26) -0.1% (3) 10.5% 3 Net revenue 20,196 100.0% 22,361 100.0% (2,165) -9.7% Purchase of products for resale 4 (898) -4.4% (710) -3.2% (188) 26.5% 5 Purchase of services for resale (2,727) -13.5% (2,080) -9.3% (647) 31.1% Royalties 6 (4,260) -21.1% (4,585) -20.5% 325 -7.1% Changes in inventories of finished 7 products 116 0.6% (200) -0.9% 316 n.m. 8 Total cost of sales (7,769) -38.5% (7,575) -33.9% (194) 2.6% 9 Gross profit (3+8) 12,427 61.5% 14,786 66.1% (2,359) -16.0% 10 Other income 3,077 15.2% 3,851 17.2% (774) -20.1% 11 Costs for services (2,800) -13.9% (3,290) -14.7% 490 -14.9% 12 Rent and leasing (133) -0.7% (193) -0.9% 60 -30.8% Payroll costs 13 (9,942) -49.2% (9,608) -43.0% (334) 3.5% 14 Other operating costs (369) -1.8% (391) -1.7% 22 -5.8% Total operating costs 15 (13,244) -65.6% (13,482) -60.3% 238 -1.8% Gross operating margin (EBITDA) 16 (9+10+15) 2,260 11.2% 5,155 23.1% (2,894) -56.1% 17 Depreciation and amortization (5,435) -26.9% (3,726) -16.7% (1,710) 45.9% Provisions 18 0 0.0% 0 0.0% 0 0.0% 19 Asset impairment charge 0 0.0% 0 0.0% 0 n.m. Impairment reversal 20 0 0.0% 813 3.6% (813) n.m. Total depreciation, amortization 21 and impairment adjustments (5,435) -26.9% (2,913) -13.0% (2,523) n.m. 22 Operating margin (EBIT) (16+21) (3,175) -15.7% 2,242 10.0% (5,417) n.m. Interest and financial income 23 643 3.2% 2,798 12.5% (2,155) -77.0% 24 Interest and financial expenses (1,042) -5.2% (1,359) -6.1% 317 -23.3% Net interest income/(expenses) 25 (399) -2.0% 1,439 6.4% (1,838) n.m. 26 Profit/ (loss) before tax (22+25) (3,574) -17.7% 3,681 16.5% (7,255) n.m. Current tax 27 291 1.4% (670) -3.0% 961 n.m. 28 Deferred tax 166 0.8% 76 0.3% 90 n.m. 29 Total taxes 457 2.3% (594) -2.7% 1,051 n.m. 30 Net profit/loss (26+29) (3,117) -15.4% 3,087 13.8% (6,204) n.m. attributable to the shareholders of the Parent Company (2,413) -11.9% 2,996 13.4% (5,409) n.m. attributable to non-controlling interests (704) -3.5% 91 0.4% (795) n.m. Earnings per share: 33 Basic earnings per share (in Euro) (0,17) 0,21 (0,38) n.m. 34 Diluted earnings per share (in Euro) (0,16) 0,21 (0,37) n.m. |
Euro thousand | September 30th , |
September 30th , |
Change | ||||
|---|---|---|---|---|---|---|---|---|
Consolidated statement of comprehensive income as of September 30th, 2023
| Euro thousand | September 30th , 2023 |
September 30th , 2022 |
|---|---|---|
| Profit (Loss) for the period (A) | (3,117) | 3,087 |
| Changes in the fair value | (6,111) | 139 |
| Tax effect regarding fair value measurement of financial assets | 1,467 | (33) |
| Items that will not be subsequently reclassified to profit or loss (B) | (4,644) | 106 |
| Exchange differences on translation of foreign operations | 209 | 581 |
| Items that will subsequently be reclassified to profit or loss (C) | 209 | 581 |
| Total other comprehensive income D= (B)+(C) | (4,435) | 687 |
| Total comprehensive income (loss) (A)+(D) | (7,552) | 3,774 |
| Attributable to: | ||
| Shareholders of the Parent Company | (6,848) | 3,683 |
| Non-controlling interests | (704) | 91 |
| A. Opening net cash/debt 9,407 10,961 B. Cash flows from operating activities Profit (loss) for the period (3,117) 3,087 Depreciation, amortization and non-monetary costs: Provisions and impairment losses 0 0 Amortization of intangible assets 4,783 3,098 Depreciation of property, plant and equipment 652 628 Net change in tax advance (1,883) (4,986) Net change in employee benefit provisions 46 50 Net change in other non-current liabilities (4,746) 743 SUBTOTAL B. (4,265) 2,620 C. Change in net working capital Inventories (116) 200 Trade receivables 3,272 6,600 Current tax assets (887) 1,381 Other current assets 13,067 (332) Trade payables (2,784) (9,426) Current tax liabilities (787) 907 Current provisions 0 0 Other current liabilities (411) 1,654 Other non-current liabilities (215) 109 Non-current receivables and other assets (687) (4,529) SUBTOTAL C. 10,452 (3,436) D. Cash flows from investing activities Net payments for intangible assets (12,800) (16,458) Net payments for property, plant and equipment (179) (464) Net payments for non-current financial assets (5,117) (139) SUBTOTAL D. (18,096) (17,061) E. Cash flows from financing activities Capital increases 0 1 Changes in financial liabilities (3,872) 15,584 Changes in financial assets 11,018 37 SUBTOTAL E. 7,146 15,622 F. Changes in consolidated equity Dividends paid 0 0 Changes in treasury shares held 0 0 Increases (decreases) in other equity components 0 0 SUBTOTAL F. 0 0 G. Cash flow for the period (B+C+D+E+F) (4,763) (2,255) H. Closing net cash/debt (A+G) 4,644 8,706 |
Euro thousand | September 30th , 2023 |
September 30th , 2022 |
|
|---|---|---|---|---|
Consolidated statement of profit and loss per operating segment as of September 30th, 20223
| Euro thousand | Share capital (A) |
Share premium reserve |
Legal reserve |
IAS transition reserve |
Currency translation |
Other reserves |
Total reserves (B) |
Treasury shares (C) |
Retained earnings |
Profit (Loss) for the year |
Total retained earnings (D) |
Equity of parent company shareholders (A+B+C+D) |
Equity of non controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total on July 1st, 2022 | 5,705 | 18,507 | 1,141 | 1,367 | (611) | 1,626 | 22,030 | 0 | 79,614 | 28,546 | 108,160 | 135,895 | 1,423 | 137,318 |
| Capital increase | 1 | 21 | 21 | 0 | 22 | 22 | ||||||||
| Allocation of previous year result |
0 | 28,546 | (28,546) | 0 | 0 | 0 | 0 | |||||||
| Other changes | 40 | 40 | (5) | (5) | 35 | 35 | ||||||||
| Comprehensive income (loss) | 581 | 106 | 687 | 2,996 | 2,996 | 3,683 | 91 | 3,774 | ||||||
| Total on September 30th, 2022 |
5,706 | 18,528 | 1,141 | 1,367 | (30) | 1,772 | 22,778 | 0 | 108,155 | 2,996 | 111,151 | 139,635 | 1,514 | 141,149 |
| Total on July 1st, 2023 | 5,706 | 18,528 | 1,141 | 1,367 | (913) | 1,244 | 21,367 | 0 | 105,587 | 9,683 | 115,270 | 142,343 | 1,375 | 143,718 |
| Capital increase | 0 | 0 | 0 | 0 | ||||||||||
| Allocation of previous year result |
0 | 9,683 | (9,683) | 0 | 0 | 0 | 0 | |||||||
| Other changes | 39 | 39 | 364 | 364 | 403 | (714) | (311) | |||||||
| Comprehensive income (loss) | 209 | (4,644) | (4,435) | (2,413) | (2,413) | (6,848) | (704) | (7,552) | ||||||
| Total on September 30th, 2023 |
5,706 | 18,528 | 1,141 | 1,367 | (704) | (3,361) | 16,971 | 0 | 115,634 | (2,413) | 113,221 | 135,898 | (43) | 135,855 |
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