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Animoca Brands Corporation Ltd

Animoca Brands Corporation's deals with iClick and Atari bode well for revenues

The games publisher and developer has been making strategic partnership deals.

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The iClick deal is tipped to generate $11 million of new initial revenue in 2019

Animoca Brands Corporation Ltd (ASX:AB1) has taken the next step in developing its core gaming business and blockchain operations, inking deals with the Amazon of digital assets trading Worldwide Asset eXchange (WAX) and a subsidiary of video gaming pioneer Atari SA (XPAR:ATA) (NASDAQ:PONGF).

Hong Kong-based Animoca executed a term sheet with WAX overseer Exposition Park Holdings SEZC last week and formed the Atari partnership in December.

READ: Animoca Brands Corporation signs deal to expand trading of blockchain-based digital assets

Animoca’s core business is gaming, contributing popular games to the global gaming marketplace such as Crazy Defense Heroes and its prequel the tower defence collectable card fantasy game Crazy Kings.

The ASX-listed company has expanded its dominance in the gaming space with a number of key acquisitions over the last six months.

Among these was its September quarter 2018 acquisition of independent mobile game company Pixowl Inc for $US4.875 million.

The buy-up with 90% shares and 10% cash brought games and characters into the fold, including The Sandbox, Peanuts: Snoopy’s Town Tale, Garfield: Survival of the Fattest, and Goosebumps HorrorTown.

Pixowl-Animoca’s successful game franchise Sandbox allows gamers to generate their own assets or content.

Monetising assets

The WAX deal with Exposition Park will allow Sandbox users to monetise their creations by selling them at the largest blockchain in the world.

As of July 2018, WAX globally had the most blockchain trades by transaction volume, with more than 5 million peer-to-peer trades of digital collectables each day.

Animoca co-founder and chairman Yat Siu spoke to Proactive Investors’ Stocktube video channel last week about the Exposition Park term sheet, confirming the company would launch Sandbox on WAX.

Siu said: “We’re really proud and excited to be working with them because it allows people who create digital items to monetise their assets.”

Siu compared WAX to worldwide retail giant Amazon or goods-trading pioneer eBay which was also a payments pioneer with its early-adopter payments option PayPal.

 

Blockchain opportunities

WAX is powered by blockchain, one of Animoca’s specialities.

Animoca is taking advantage of blockchain opportunities in the gaming space and for investments.

An interesting way the company did this was through its mutual investment in six blockchain-focused developers and companies in October 2018 — Datum, LikeCoin, Musicoin, OST, Harmony and I-House.

Animoca engaged in a US$1 million share-and-token swap that valued Animoca shares at 10 cents apiece — this morning’s trading price.

The company’s shares have continued to steadily trade at the price point since November 2018, sitting 2 cents off its 12-month high of 12 cents.

A separate $1.5 million earn-in agreement in the September quarter 2018 allowed Animoca to grab a majority stake in Zeroth SPC operating company Venture Classic Limited.

 

Animoca’s licence agreement with Atari in December 2018 will allow the blockchain gamer to produce and publish blockchain versions of the popular Atari mobile games RollerCoaster Tycoon Touch and Goon Squad in global markets outside Greater China.

Atari took a $250,000 payment upfront in the form of shares in the company its former employee, chairman Siu, co-founded, priced at 11 cents apiece.

READ: Animoca Brands partners with video game pioneer Atari

Siu believes the two-decades-strong gaming evergreen RollerCoaster Tycoon “is a perfect candidate for blockchain adaptation.”

Atari will share in gross game revenues once these pass the US$500,000 mark.

The new partners will explore ongoing opportunities in gaming, product development, blockchain and other areas.

 

Earlier in December 2018, Animoca began collaborating with large online technology company iClick Interactive Asia Limited (NASDAQ:ICLK), giving it access to audiences in China, including those on social networks.

The partnership with iClick is tipped to generate $11 million of new initial revenue in 2019 as Animoca gains marketing access to 780 million Chinese user profiles, including web users on WeChat.

The Chinese messaging and payments platform WeChat has more than 1 billion active users.

Both Animoca and iClick will leverage data provided by Animoca’ artificial intelligence (AI) subsidiary Zeroth through the analysis and application of data using AI systems and approaches.

READ: Animoca Brands outlines China opportunity through iClick partnership

Siu told Proactive’s Stocktube channel in December 2018: “The fact that we’re able to put together these partnerships is a demonstration of the fact that we are a leader in this space and are very credible.

“We’re very honoured that these well-established companies — in many cases significantly larger than us — have also become shareholders in our business, are involved in us, are working to grow us; so they believe in our long-term vision for games, blockchain and artificial intelligence.”

Speaking specifically on the iClick deal, Siu had told Stocktube a few days earlier the collaboration framework agreement would “really open up the China market for us.

“We already have some presence there with some of our games, but now working with a company like iClick — which is the largest independent marketing company in China, with special access to platforms such as WeChat — will allow us to expand our distribution and marketing capabilities.

“It also adds, through the re-seller arrangement, a new revenue angle where we will be able to sell advertising and media services to clients from all over the world into China.”

 

Major investors

Tightly held Animoca’s top 20 shareholders held 89.36% of the company on December 10, 2018.

Its number-one shareholder was Yip Katherine Chin with 14.78%, followed by Pheby Paul John on 9.61% and Asyla Inv Ltd with 8.87%.

JP Morgan Nom Aust PL, Toronga PL and Cleland Projects PL each held 7.39% stakes for a collective fourth to sixth place while Aust Executor Ttees Ltd had 5.62%.

Financial results

Animoca is finalising its quarterly report for the December quarter of 2018 after three successive quarters of positive cash flow for the company.

The company gained in the December quarter on the day it announced an unaudited $2.97 million, or 283%, increase in revenue to $4.6 million for September quarter 2018.

Cash receipts had been up $5.7 million, or 73%, to $12.9 million in the quarter, when compared to September quarter 2017.

BIG PICTURE: Animoca Brands increases revenue amid key acquisitions

Animoca collected $6 million with two oversubscribed placements to strategic investors in the quarter, with directors Siu and Holly Liu, strategic advisor Wilhelm Taht, and leading Hong Kong conglomerate Sun Hung Kai and blockchain partners such as Lympo also tipping in.

The company ended the September quarter with $5.65 million cash and cash equivalents.

In the quarterly report published on October 31, 2018, the company predicted $4.2 million of cash outflows for the December quarter.

Animoca’s quarterly results are expected later this month.

Quick facts: Animoca Brands Corporation Ltd

Price: $0.19

Market: ASX
Market Cap: $151.89 m
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