Blue Star’s Leaf Mobile hails growth as it plans to list on LSE

Post date Nov 2021

Blue Star Capital’s investee firm, the mobile game group Leaf Mobile, says revenue in the year to date has grown by 32.1% as the group has witnessed “positive signs” of ecosystem adaptation during 3Q which it says are “starting to work their way through the industry.”

Blue holds a 10% interest in Leaf Mobile from an around £57,000 investment in April 2020.  
In February 2021, Leaf Mobile reported that it had completed its acquisition of 100% of East Side Games Inc. for around C$159m. At the time, Chief Executive, Derek Lew, said the move would make Leaf “one of the leading, publicly traded mobile game companies in Canada.”

Addressing shareholders at the time, Lew added that the progress of Leaf Mobile had highlighted Blue Star’s ability “to identify promising investments with potential for growth.”

This week, Leaf Mobile released its results for the 3Q ended 30 September 2021 in which it stated that revenue has increased by 3.8% from CAD$18.3m in 3Q20 to $19m in 3Q21.
In the nine months from the year to date, revenue stood at $64.6m, an increase of 32.1% from the same 2020 period when revenue stood at $48.9m. For the same period, Adjusted EBITDA was $6.3m, an increase of 16.5% vs same 2020 period when Adjusted EBITDA was $5.4m.

“We saw steady results for our third quarter, which is historically our slowest quarter and the slowest for the mobile game industry as a whole,” CEO, Darcy Taylor, informed investors.

“This quarter we also continued to see the global reopening amplify traditional seasonality and Apple’s ATT introduction still working its way through the mobile marketing ecosystem. 

In response to this period, Leaf reduced its gaming marketing investments to “more measured levels” until the final month of 3Q, as it started to increase its user acquisition investments when it saw “positive signs of ecosystem adaptation working their way through the industry. The group said it continues to focus resources on building its pipeline of Q4 game launches.

During 3Q, Leaf Mobile unveiled a collaboration with Universal Games and Digital Platforms to create The Office: Somehow We Manage, a mobile game based on the critically-acclaimed Emmy® award winning NBC comedy, The Office, which is scheduled to launch next month.

Post-period, Leaf launched RuPaul’s Drag Race Superstar worldwide on 25 October. The mobile game has surpassed 1 million downloads and averaged over 150,000 daily active users since launch, achieving the highest daily active users for any of LEAF’s active games.

As of 11 November 2021, the mobile game was the number one ranking role playing or simulation game in the iOS App Store across 44 countries and ranked in the top 10 in 67 countries. The game has also reached the top 100 grossing games in 40 countries on iOS.

The group also launched B-Real Monster Buds worldwide in partnership with the American rapper B-Real of Cypress Hill on 1 November 2021. The rapper has more than 1.3 million followers on Instagram and over 700,000 subscribers to his BREALTV YouTube channel.

Commenting on the string of launches, Mr. Taylor said: “We continue to see the benefits of our investments in key areas that drive long-term revenue and margin growth. We’re excited for the fourth quarter of this year as we will see multiple super marquee IP game launches.”

Leaf is focused on executing its 3-pillar strategy of “combining accretive acquisitions, organic game growth and distributed growth” through its proprietary Game Kit platform licensing.
Addressing its shareholders, the company said that it expects its “Super Marquee” IP lead game titles in Q4 to deliver “a significant step change” in the group’s game growth potential. 

“We see this move from North American-centric IP, that has fueled our revenue delivery to date, to global IP with the associated global fandoms of The Office and RuPaul’s Drag Race attracting more players, and opening up further opportunities for future growth,” he added.

Leaf Mobile, which holds listings on the Toronto Stock Exchange on the OTC Markets Group’s OTCQB Marketplace in the US, has also unveiled its intention to join London’s main market.
The company, which started trading on the Toronto Stock Exchange (TSX) in February 2021, told investors that it will assume a dual-listed structure and that it intends to raise gross proceeds of around C$10m. The flotation is expected to value the group at around £130m.

“The mobile games market will gain increasing popularity in the next ten years, with free-to-play games acting as the industry’s foremost segment. “London is a global hub for video gaming, creative industries and technological innovation and a LSE listing will help LEAF Mobile to position itself at the forefront of the sector’s growth,” commented Taylor.

He said the dual listing will provide the company with “a springboard” to achieve its ambitious growth objectives in Europe as well as to enhance its access to London’s capital markets.