Not a bad quarter from Playside to round off a transformational year – market seems to agree as well for once!

$6m in revenue ($5.4m in receipts) for a total of ~$29m for the full year (unaudited). It’s just shy of my $30m prediction, and a 169% beat on FY21.

By my napkin math, they also just managed to spit out ~200k in free cash flow, despite burning through about $2m this quarter (due primarily to IP investment). I think we can safely attribute this windfall to the NFT Beans mint, which generated a one-off $8m in cash, so this year could be a step backwards... Having said that, the $6m revenue run-rate heading into Q1 FY23 – a near 100% increase on the PCP – suggests another decent year is probably on the cards again.

A couple of thoughts:

• Looks like they actually will be looking at doing another NFT collection with details to be announced in Q2. I doubt it will have the same impact as BEANS though.
• I don’t mind the addition of the publishing house at first glance (announced a couple of days ago), there’s lots of domain expertise they already possess to make a low-cost/risk start. 
• Absolutely no mention of ‘Defend the Bits’, which was only just recently released. Looking at the reviews and player numbers from Steam, we can safely say this isn’t performing well…

All told, the result looks quite solid to my eyes. There are lots of ways they can win now too; publishing, mobile, WFH, original IP, licensed IP, etc. etc. The business doesn’t immediately go bust if any of these fail either, and there’s a tonne of cash in the bank (~$38m). 

Time to update the valuation.

Just a quick one, since there was no announcement to the market (so far), to say that the Gold Coast studio has released their first PC title, 'Defend the Bits'. Looks like a cool little game. ~$15 on sale in steam (early access).

https://store.steampowered.com/app/2009340/Defend_The_Bits_TD/

DL numbers here: https://steamspy.com/app/2009340

And for a couple of sponsored gameplay sessions, check out 2 Aussie twitch streamers here:

https://www.twitch.tv/videos/1504250159

https://www.twitch.tv/videos/1503124171

Decent revenue number out of the Beans mint – $8.4m to be exact, a little shy of the $10m I ballpark in my valuation.

A crucial point that has been somewhat overlooked is that Playside will take (to the best of my knowledge) a ~6.5% cut of each subsequent sale from here on in (on certain marketplaces), potentially generating lots of extra passive revenue. 

Provided this isn’t a fad that will blow over – and to be frank, that’s the base case – any hike on the price and volume might translate to substantial income going forward. I think it will depend on how good this new VR MMO is.

On that note, these NFTs now appear to be tied to Meta and the Quest platform. The MMO Playside announced – almost certainly native to the Quest – will host these NFTs as characters probably just as skins at first, but the real interesting potential here is 2-fold in my view.

1) What, if any, character modifiers do the NFTs give players in game? For example, a rare NFT with unusual features might provide superior stats to a player. This is a sort of ‘play to win’ feature, and divides the community.

2) More interestingly, if we assume the BEANS characters can ‘level up’ in game, and become ‘more powerful’, does this add to their after market value? I.e., Does 100 hours of levelling your BEAN character ascribe it more value to someone on OpenSea who’s looking to buy one? 

I suspect we'll see more of these beans minted in the coming weeks. The tech seemingly has already been built to spin these out ad infinitum, so why not when people are prepared to pay? I just hope Playside treat this as more than a money grab, and really make the MMO spectacular. And more importantly, make it accessible to everyone, not just users with a BEAN.

Just a quick note to say that BEAN NFTS have/are being minted as we speak, and it looks like they will be converting the ETH to AUD. Might warrant an announcement to market?

Some evidence to suggest that as much as $3m has already been converted.

Potential here to raise funds in the millions of AUD.

A couple of very quick observations from PLY’s quarterly out this morning.

A nice revenue bump on both the PcP and QoQ numbers, up 71% and 33% respectively. Work-for-hire revenue jumped 112%, and original IP up 53% on the PcP. The mix between the two remains steady.

Pleasingly the quarter was operational cash flow positive – although by very small margin – at $313K. Net loss for the Qtr was about $2.85m, mostly attributable to $3m in IP acquisition costs, though I can’t work out what they relate to from the announcement. Someone might be able to help me out there.

One key question about the funds raised from the minting of Beans NFTs has been answered, which is that they will at some point convert the 3,000 ETH to AUD, which might boost next Qtr revenue significantly, depending on the price of ETH at the time. There’s no mention of when it will be converted, so this might be pushed back into the future. Tough to say, and I by no means have any knowledge here on what’s required by Aus law, so your guess is as good as mine!

Overall, very good trajectory in the business. Without a doubt they’ll hit $20m revenue for the full year, which was my base case before the Beans NFT came onto my radar. Even with 100% YoY revenue growth (if they do manage $20m this year), the valuation looks stretched. Having said that, there’s a tonne of opportunity in development pipeline, so happy to hold this one for the time being.

Full announcement here

Playside have been very busy with Dumb Ways to Die since buying the franchise last year. 

Further to @Bradbury’s post 2 days ago, the Bean NFTs project has released some more detail on the minting numbers this afternoon. They look interesting.

They’re releasing ~10k NFTs at a minting price of 0.3 ETH. Simplistically, that equates to about USD $1k per NFT.

So assuming all beans get taken up, that’s AUD ~$13.5m before costs. Playside could perhaps take home $10m from this, more if they retain the ETH and it appreciates on the balance sheet. Either way, the base case looks to me like a doubling of revenue YoY (FY21 = ~$10.9m). They’ll very likely announce this soon after the minting takes place on the 3rd Feb.

Like Bradbury, I would hope these NFTs have some wider utility in the years to come. If Playside can develop an innovative way for owners to utilise them with some lasting impact or use, whether in-game or IRL, that would be a huge catalyst for recognition and progress in this space. Remains to be seen however if they can execute to a high level with community support behind them.

Very hard to know the true potential of the way games and NFTs might interact in years to come, but Playside certainly are throwing everything they have at it. At the very least, the $2m DWTD acquisition is looking very smart on these numbers.