New deal/partnership.
Thereâs certainly been a great buzz all year. The growth in app store coverage fuels Flexionâs attractiveness to game developers. Competitive advantages over potential new entrants only continue to grow with the network effect. Once the scalability of expenses starts to show more clearly in the figures, itâll be 
Has there been any clarity on the amount going toward distribution rights? Does Flexion have to pay to be allowed to distribute the game on the platform, or what exactly is this fee? And does Flexion have the exclusive right to distribute this game outside of Google Play, or how significant are these agreements with different games?
Itâs certainly an interesting company, especially right now. One more thing came to mind: since Google and Apple are apparently required to open up competition by March 2024 (?) due to the EU decision, can they still appeal the decision and thereby delay its implementation?
Thatâs my understanding; they pay in order to be allowed to distribute the game. There is no mention of exclusivity anywhere, but I would believe that is the case. Otherwise, the distribution rights would have very little value if someone else could distribute the same game in the same app store. Flexion writes off the rights over two years, so thereâs no massive write-down risk brewing on the balance sheet.
Yeah 
I was just looking at the cash flow statement and noticed that suddenly 6 million disappears into distribution rights. Without that, for example, the cash flow would have looked quite different. I wonder how large similar amounts will be going out in the future, and I suppose these rights are paid for in advance before even knowing how the game will perform in the app store? I wonder if, for example, all distribution rights for the current games have been paid out of cash by now, or could there be some that become payable later? Does the company even comment on these game distribution right amounts etc. anywhere? At least the topic didnât catch my eye anywhere, or maybe I just donât remember because thereâs so much new information when getting to know the company.
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At a quick glance, it seems that was the first distribution right that had to be paid for upfront. Could this be reflected as a better commission on game sales for the contract in questionâi.e., the game developer wanted to lower their own risk? These are such key questions that one could ask IR.
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How do you know thatâs a prepaid distribution right and not from previous games? Itâs true that I could ask IR, but I feel like enough of a beginner still and my language skills are what they are, so I wonât go asking them myself 
I personally consider the cash flow statement quite important, and Iâve been learning to interpret it lately. At a quick glance, it looks like cash flow would start turning positive around this time, which would be quite positive. Learning to interpret the balance sheet is still ahead of me. Thanks for replying, and thanks to the thread starter too @Geologiopiskelija. Iâve had some realizations while reading the thread, for example, that fairly misleading revenue figure. Itâs nice that not everything needs to be translated from Swedish so the information sinks in faster. I donât know what Iâm missing because it feels like thereâs crazy potential here compared to the market cap, especially as the industry is opening up more to competition 
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Good question. I know this because the payment is labeled âdistribution rightsâ and it was capitalized on the balance sheet. You cannot capitalize an expense on the balance sheet if the related revenue is entirely in the past. Furthermore, it would be strange for rights to be paid for in arrears.
Iâm still researching this company myself, but itâs worth reading Redeyeâs analysis. One long-term risk seen is the consolidation of app stores if itâs found that there isnât enough of the pie for everyone. In such a case, Flexionâs added value would decrease. For now, however, the trend is completely the opposite, so Iâm not giving that any weight yet.
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Alright, Redeyeâs analysis actually provided quite a bit more information. Here is a direct link for others who might be interested:
Indeed, according to Redeye, the 6 million payment for game distribution rights is exceptional, and it was suspected that it was paid to Scopely, whose games are coming into distribution at the end of the year. These payments are not expected to recur in the future, but who knows. Below is a screenshot showing the games currently in distribution since '21:
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Good catch Iâve been browsing that same report, but I didnât think to look for more info there. There could indeed be more of these if more high-volume games are added to the platform.
If we use a very rough rule of thumb that distribution operations generate a gross margin of 2% relative to the game portfolioâs Google Play sales, then that $6m deal regarding distribution rights could bring in $0.28m per month (14mUSD x 2%) and $3.4m in annual gross margin. Flexionâs expenses would still need to be deducted from that. Based on those figures, the $6m distribution right seems expensive, but it brings quite significant growth to the gross margin. And I would assume that larger games are more profitable, as the number of âhandsâ required likely doesnât increase in the same proportion as sales. On the other hand, it must also be remembered that game sales decline over time.
I calculated this roughly by assuming Flexion currently makes $1m in gross margin per month and the Google Play sales of games distributed by Flexion are $55m per month. For clarity: Google Play has nothing to do with Flexionâs earnings, but Google Play figures can be used to estimate the impact of future games on Flexionâs numbers.
Edit. No one knows in advance what the games will generate on Flexionâs platform, and only the parties to the agreement know what Flexionâs share of game sales is in the deal in question.
Yeah, the amount paid for the distribution rights sounds quite high at first glance, but itâs possible that a higher revenue share was agreed upon for Flexion. Or perhaps theyâll get other games from the same company onto the platform, so that might have been a so-called entry fee for the companyâs games 
.
Since Q1, there have been at least the following changes at Flexion:
- A deal with Xiaomi, meaning Flexionâs games are also available in their app store
- Hill Climb Racing 2 has apparently been rolled out for wider distribution
- There were supposed to be two bigger releases during Q2, one of which is likely Hill Climb Racing 2, but I wonder what the other one is since I havenât spotted it yet
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Uutta diiliÀ/julkaisuja.
âLONDON - Aug 8, 2023 - Flexion ( NASDAQ:FLEXM.ST), the games distribution company, is bringing additional Scopely games, specifically âMONOPOLY GO!â and âStumble Guys,â to the Alternative App stores: Amazon Appstore, Samsung Galaxy Store, ONE Store, Huawei AppGallery, and Xiaomi GetApps, delivering these beloved mobile experiences to even more audiences. âMONOPOLY GO!â is available now, with âStumble Guysâ coming later this year.â
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Yeah, looks like Monopoly Go has hit distribution now it really surprised me that some Monopoly game can be the top-grossing game in the US on the Apple Store and Google Play. I wonder what people are actually buying in those games when the game itself is obviously free These werenât exactly new deals in themselves, as they were already known beforehand.
I wonder why they canât get, for example, Stumble Guys into distribution immediately if itâs supposedly so easy to add games to that platform? Could there have been some initial exclusivity with the Apple Store and Google Play?
Thereâs likely quite a bit of manual work involved with those new games to ensure everything runs smoothly. After the initial phase, however, one could assume the workload will decrease, as the company advertises that games can be managed on a single platform across all app stores. This is why I believe it would be good to have more of these long-lifecycle games. Through them, cost scalability comes through better.
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Oh, I somehow recall reading that the game wouldnât need many changes when being ported to this platform. But thinking about it again, thatâs a completely different matter. So there could actually be quite a lot of manual work on Flexionâs side, even if no changes are required from the developerâs side.
If it were the case that a game could simply be pushed onto the platform without manual work and it would work immediately in all app stores, then I believe selling platform licenses would be the primary option, using a fully or almost entirely self-service model.
Iâm not a hundred percent sure about this, of course, but that amount of manual work would explain the current profitability, as growthâmeaning new games or app storesârequires upfront costs.
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The Q2 results seemed to come out today. A bit of a weak quarter, but at least cash flow was positive and the sales pipeline is reportedly strong. There were also positive drivers for the rest of the year and next year, both in the form of top-tier game releases and new experiments on different platforms. For example, in the US and Canada, if I recall correctly, Samsung has a test ongoing for a cloud gaming service, meaning you donât need an app to play, and Flexion is involved in this. More details can be found in the report. Guidance was maintained, meaning they estimated reaching the lower end of that 20-40% growth range, partly through upcoming releases. Itâs a slightly difficult industry to keep track of their business, but as a shareholder, I thought Iâd watch the business development into next year, as Google and Apple will apparently be forced to open up those markets. Letâs see how long I stay on board.
The result was weak, and I certainly didnât expect a drop in revenue. Of course, this was mainly due to the weakness of the USD against the reporting currency, GBP. Now the exchange rate seems to be roughly at the 5-year average. I also failed to account for the impact of the end of Chinaâs COVID lockdowns on the figures, but in hindsight, it makes perfect sense that the âCOVID hangoverâ in that area is only hitting now. Here we saw the downside of the business model, as revenue is tied to game sales and Flexion does not receive steady licensing income.
Patience is clearly required, but there are plenty of long-term positive drivers, and it is positive that alternative marketplaces took market share from the App Store and Google Play. Considering also that Google Playâs sales plummeted by 28%, Flexionâs performance is actually quite excellent.
The company must be given more time to prove its conceptâŠ