Last Update 15 Apr 26
Fair value Increased 10%I did not consider penetration into the chinese market in the previous valuation. Upper end of my expectation is increased significantly. Revenue expectations increased from 150-170 to 160-200.
Mangements revenue guidance is 130-153, I believe even the upper end is very conservative considering marketing budget, marketing spend in Q5 and possibility of succesfull entry into the chinese market.
- Revenue is expected to reach 160-200m in 2026.
- Gross margins should improve modestly over time. A higher share of ad-based revenue will be supportive, while normalization of platform fees from Google Play Store will have negative impact. Overall, margins are likely to trend slightly upward but remain below 80% in the long term.
- Operating margins are expected to expand over the coming years. Current profitability is negatively impacted by elevated marketing spend in Q4, effect depending on share spend in “Q5”. Organic growth driven by the Farm Manager release have supported margins which should normalize in 2026. Operating leverage should improve as the business scales.
- Regulation presents a mixed outlook. Increasing scrutiny on freemium models could be a headwind. However, heightened regulatory pressure on platform operators may benefit developers, as any reduction in platform fees would directly enhance margins.
- AI is likely to be structurally beneficial particularly in reducing development cost and increasing marketing effeciency. That said, these gains will be industry wide, making it uncertain how the relative competitive positioning between small, mid sized, and large developers will be.
- Financial position is strong, especially relative to peers in a generally distressed industry. This provides strategic flexibility. the company is better positioned to navigate industry risks and may be able to capitalize on attractive M&A opportunities going forward.
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