Good morning everyone, and welcome to this presentation with Fragbite Group for our second quarter and first half of 2022. My name is Marcus Teilman, and I'm the President and CEO. With me today I have Lars Johansson, our CFO. I will start going through some highlights during the quarter and also what we've done after the quarter. I will give short market overview, and after that we'll go through an operational update. I'll hand over to Lars to go through the financials, and then we'll sum up with a summary and outlook, and then it's back to you, all the listeners, for your Q&A session. First of all, my name is Marcus Teilman, and I've been the CEO of Fragbite Group since the 25th of May.
I joined the group back in April last year as Deputy CEO and head of M&A. I've been here for over a year now, and I've been in a public environment working in leading positions since 2009. Let's start and going through the highlights. First of all, we have launched and released a downloadable content, a DLC, with Dead Cells in China through Playdigious. Dead Cells has been a fantastic game, a huge success for Playdigious, and we're really happy that we can launch new updates to that game, and I'm sure we will come back with more updates in the future for Dead Cells as well.
As you know, Stefan Tengvall has been elected new Chairman of the Board, and Zara Zamani was also elected a new board member. I have succeeded Stefan as the new CEO of Fragbite Group. During the quarter, we also announced that Playdigious has entered into an agreement with Netflix, where they will release the game Spiritfarer on mobile devices on Netflix's platform. It's a fantastic milestone, but I'll get back to you later on in the presentation with some more comments on that. Finally, we also released the MMA Manager 2: Ultimate Fight on the thirtieth of June, so last day of the second quarter.
The team has been working really hard to have that game released, although it was a little bit delayed, but we're super happy to finally have it out on the market. I will also get back to you with some more updates and give some color on that game. We have also announced that Fragbite AB, our esports vertical in Fragbite Group, they have announced a new tournament called the Swedish CS:GO Cup in close collaboration with Bonnier and also Space. We actually have our office, our headquarters here at Space where we're sitting now, so the final will be played here at Space Arena. The title sponsor will be Max Burgers this year. Really excited about that.
I think that's great that we see some innovation as well from Fragbite AB going forward. As you might have seen also, we have sold tokens, our in-game tokens, in a strategic round, where investors invested a total amount of approximately $3.35 million. Looking at the market, the global gaming market, it's a huge market with an estimated market size of roughly $197 billion. That's the global gaming market. If we look at the mobile gaming market, where we predominantly have our business, the mobile gaming market has a market size of roughly $103.5 billion. It's a huge market. It's a fragmented market, and we see a lot of opportunities here.
What's also important and interesting to see is that the mobile gaming segment within the global gaming market is the segment that is actually that is showing the highest growth rate at the moment. We see continuously many opportunities here in this much fragmented market. Looking at the esports market, it's not as big as the global gaming market or the mobile gaming market. The global esports market is estimated to have a market size of roughly $1.4 billion. However, we see a huge audience in the esports market, and I believe that we can see some opportunities going forward in order to monetize on that big audience.
What we also see in the current trends is that blockchain companies tend to invest heavily in esports companies going forward, and I see clear synergies now with what we are building in our Web3 gaming segment to the esports segment going forward in the long run. That's why we're here, to build a company in the long run. Yeah, looking forward to see what we can do there and utilize our synergies further. Operational update. As I said, we launched a DLC of Dead Cells called The Queen and the Sea. Again, that's a game with Playdigious. It's been a huge success. Really happy to see the game, how it's performing in China.
This is not the first DLC with Dead Cells, and I'm sure we'll see more updates regarding Dead Cells in the future. Lucky Kat, our Dutch company that we acquired back in December last year, they have entered into a partnership with The Sandbox, where we're expanding our Web3 presence even further. Streets of Rage 4 was also launched on mobile devices by Playdigious. Another great news is that we have also released Evoland 2 in China. To release the game in China, it takes time, but they're working really hard in Playdigious. It's really encouraging to see more titles being released on the Chinese market.
What I'm really glad of to see is that we have laid a foundation within Web3 gaming during the quarter and also after the quarter. We have formed a new legal entity in Gibraltar. We have obtained a registration as a Virtual Assets Service Provider. With that, we're one of the very first companies globally being a listed company, but also being a regulated company within blockchain and Web3 gaming. We have a solid foundation in place now for future growth. Talking about growth and revenue, well, in the beginning of August, we also announced that we have sold in-game tokens at an amount of $3.35 million in a so-called strategic round. I'm really happy to see the investors that we got.
They are renowned. Some of them are Solana Ventures. We see the marketplace Magic Eden, for example. Even Mysten Labs in San Francisco, also a very reputable investor, and also a large and renowned influencer marketing that is really into crypto. Sol Big Brain has also invested in the strategic round. I'm very happy to see those investors, and I think it's a sign that we are building something really interesting now within Web3. This is just the start. We also paid the first earn-out out of maximum three to the sellers of Lucky Kat, and that happened in July.
We have also had a promising start of MMA Manager 2, and I'll come back to that later on in the presentation. Moving on to Web3, our Web3 segment. If we look at our completed activities, like I said, we have the Virtual Assets Service Provider registration in place and the new legal entity in place. We have had the token sale of $3.35 million with some great investors, like I said. We will continue to sell tokens with the aim to sell tokens in a private round and in a potential public sale later on this year.
The partnership with The Sandbox, I already mentioned, and as you already know, we released the Panzerdogs tank brawler game last year already. In December last year, we had an NFT sale with Panzerdogs. We have continued to develop the game during the year, and later on this year we will also release a mobile version of Panzerdogs and that's also when we will start to push for some user acquisition activities as well. The coming activities within Web3, here's the summary of them, but I'm sure you'll see more activities than the ones that you have on the slide. We have announced that we will release a new game called Cosmocadia. That game will be released in 2023.
We are also looking into having an NFT sale, the first NFT sale for Cosmocadia. That will happen before the first beta version will be released, just the same way we did with Panzerdogs last year. Like I said, we will go for a private round. The aim is to do a private round and also a public sale of tokens later on this year. What's interesting to point out is that, we're building a portfolio token, not only a token that can be used in the Panzerdogs game, but also in coming games such as Cosmocadia and potentially additional games from after we've released the Cosmocadia.
The long-term goal is to build a platform where other developers can, let's say, tune in to our platform and use our tokens and NFTs in their gaming experience where they want to build their own gaming experience. We'll come back to that. Now we will focus on our own activities, such as selling more tokens, developing the Cosmocadia game and sell the NFTs there, and of course, to launch the Panzerdogs mobile version. That will be very interesting to follow.
Talking about the token sale, like I said, we have laid a foundation within Web3 from a legal and accounting perspective when we have formed the legal entity in Gibraltar, and we have got the Virtual Assets Service Provider registration in place, and where we have also brought in these investors. I think that's a clear sign that we are doing something really good here. I'm personally very impressed with the team of Lucky Kat and WAGMI, how they are building this new experience and how they are also transforming their business from hyper-casual games into more Web3 games.
We have also had an internal round where we have sold tokens to, well, Fragbite Group invested into tokens, but we've also had employees of Lucky Kat investing in the tokens. We sold 419 million tokens. We had a strategic round where we brought in $3.35 million, selling approximately 239 million tokens. Like I said, the aim is to continue to sell more tokens, approximately 335 million tokens later on this year in a so-called private round, and then also in a public sale or an IDO. Of course, that is very much depending on how the market will develop.
As you might have seen, it's a bear market, I would say, at the moment. We're constantly monitoring the market and how it develops, and we need to see exactly the timing and determine when the timing is right and also the size of it. Rest assured, we will do this to optimize the sale even further. What I can say is that I see fantastic opportunities going forward, but we need to just make sure that the timing is right. Showing again this tokenomics, I think it's important to point out a little bit of what Panzerdogs and our games, what Panzerdogs is about.
I think the most important thing to be successful within Web3 is to build an engagement where we see our users are active in the game. Therefore we have a tokenomics system, where we have, for example, staking pool, and you can craft your own tanks, but you can also trade them. We will receive commission on the trades being performed on the marketplace. The commission will be somewhere between 5%-10% depending on the items that is being traded. And that's why I think it's so important that it's really important to focus on increasing the engagement and building a fantastic game experience.
We can see some interesting revenues coming in from these transactional revenues also going forward. Looking forward to follow the Panzerdogs game closely later on this year and also next year once the tokens have been sold in a public sale. Moving on to Playdigious, which is our publishing and indie game studio. It's a French company that we acquired in May last year. It's not a wild guess or to say that they have been over-performing for sure with our estimations and expectations on Playdigious. I'm super happy to see how the team is doing a fantastic and hard work.
They have a fantastic pipeline going forward, not only this year, but also next year of games to be released and to be announced. During the quarter, Streets of Rage 4 was released on mobile devices, and we had Dead Cells, the DLC, released as well, the downloadable content. I'm also really happy to see that Evoland 2 was released in China. I think that's another milestone and where we can see that we have fantastic foundation in place for further growth in China, and it's not that easy to just release a game in China, and the process is quite long as well before you can actually release the game in China. Very happy to see that.
One big milestone, I would say, during the quarter that we announced is the partnership with Netflix, where Playdigious have entered into an agreement to release the game Spiritfarer on Netflix platform. That will be an exclusive release on the Netflix platform, hopefully later on this year. Of course, we will continue to work hard within Fragbite Group going forward to show our high quality of operational excellence going forward to hopefully get more agreements with platforms like Netflix and other similar platforms as well. This is a great first start when it comes to Netflix, and I think that's definitely a sign of quality. I'm super happy and proud of the Playdigious team.
FunRock & Prey Studios, they released the MMA Manager 2: Ultimate Fight now on the last day during the second quarter on the thirtieth of June. I'm also very happy to see how the team have been working super hard to have this released out. The game itself was a little bit delayed, but on the other hand, we have seen improved KPIs compared to the first game, MMA Manager 2021, that was released in April last year through Tilting Point. We have released both games through Tilting Point, that is the publisher. I would say the numbers look promising if looking at the first month of operation since the global launch.
ARPU, which is average revenue per user, increased 82% in July for MMA Manager 2 compared to MMA Manager 1, for the first month since MMA Manager did their global launch, so that was in April 2021. Super happy to see that. What this leads to now is that first of all, we will continue to scale the marketing and to grow the game, of course, but the next phase will now be to focus on improving the ARPU even further. I would also highlight that we are in talks and negotiations with publishers both in Asia and in the MENA region to release versions there of MMA Manager 2 later on.
Fragbite AB have announced the new IP, Swedish CS:GO Cup, in collaboration with Bonnier and Space, and also the Max Burgers being the title sponsor. I'm really curious to see how this will play out since we now have the four largest Swedish CS:GO teams globally coming to Sweden to play in the final stages. One of them being Ninjas in Pyjamas. I think that we have something super interesting for the future. It's important now to build a strong IP for the coming years.
What's really interesting here is to see that we have, you know, you and me, Lars, could form a team and we could actually, if we're successful enough, we could actually join the open qualification, and if we're successful enough, then we could, you know, move on to the group stage.
Highly unlikely.
Highly unlikely, yes, that's true. Then move on to quarterfinals, semifinals, and, you know, you never know. I think that's really interesting to see that even amateur teams could have the dream of actually playing versus the really big global teams such as Ninjas in Pyjamas and Team Finest, for example, and Eyeballers. A summary of the coming releases. You'll see that Panzerdogs will release a mobile version later on this year. We're going for a private round and then a public sale of our tokens, the so-called IDO. Swedish CS:GO Cup will soon start, and we will have the finals in by mid-October here at Space, which is the leading arena in Sweden for esports.
We will have a Cosmocadia NFT sale later on this year. That's the plan. Soon, Fragleague Season 9 will also start. We have two very interesting tournaments going on and operated by Fragbite AB. Then Playdigious, they have two titles that are not yet communicated, which they will announce later on this year. With that, let's move on to the financials, and I hand over to Lars Johansson.
Good morning, or good day rather. Well, the net revenue for the second quarter amounted to SEK 54.2 million and the EBITDA to SEK -1.4 million. Worth mentioning, however, is that Marcus mentioned previously, and we also say in the report that we have established a new subsidiary in Gibraltar, which will constitute the basis for our Web3 activities. That establishment obviously came with some costs. We think there are really costs that are affecting comparability. If we adjust for those costs, we have an adjusted EBITDA of SEK -0.6 million.
Looking at the first six months of the year, our net revenue amounted to SEK 108.9 million, and the EBITDA to SEK 1 million, but again, making the same adjustments as we made for the second quarter when it comes to the cost of establishing the subsidiary in Gibraltar, we had an adjusted EBITDA of SEK 1.9 million. As you can see, comparing these numbers to the numbers for the same period previous year, there's quite some differences, and obviously those differences are a result of the fact that we acquired three companies yesterday. We acquired Fragbite in the beginning of the year. We acquired Playdigious in May, June, and we acquired Lucky Kat effectively per October 1.
From those dates, those companies' figures are included in our consolidated result, which obviously drives revenue, it drives earnings, it also drives financial cost and to some extent tax, but most important, it also drives goodwill amortizations. Looking at the goodwill amortizations for the second quarter, we have approximately or slightly above SEK 20 million in goodwill amortizations compared to just about SEK 10 million for the same period previous year. Looking at the same numbers for the first half of the year, the goodwill amortizations amounted to above SEK 41 million compared to close to SEK 13 million for the first half of last year.
That obviously has some impact on EBIT, which for the first or the second quarter amounted to SEK -24.6 and a net revenue of SEK -30.8. The figures for the first six months then was SEK -43.5 in EBIT and a net result of SEK -52.5. Further to the right, you can see our full year figures for last year. We had revenue of SEK 124 million and an EBITDA of SEK 6.2. But again, we had some cost affecting comparability last year as well, connected to the IPO. If we adjust for those one-time costs, we had an adjusted EBITDA of SEK 9.7. Moving over to cash flow.
Our cash flow from operations, after changes in working capital amounted to SEK 11.4 million. Our investment activities was, we spent SEK 2.8 million. In reality, that is our development cost that we have capitalized, which turn out as investments. Financing activities brought us SEK 28.5 million, approximately SEK 26 million are new bank loans, net of amortizations on old loans, and SEK 2.2 million represents the net effects of the incentive programs to employees, key employees and to the board, which was decided and announced at the AGM, the annual shareholders meeting in May. We end the quarter and the first half of the year with a cash position of SEK 60.6 million.
After the end of the quarter, as we say in the report and we said in the press release, and also Marcus has touched upon a few times during this presentation, our newly established Gibraltar company made a sale of in-game tokens for a total amount of $3.35 million. In the press release, we said that we will recognize this revenue over the periods to come. I think that argues for some explanations. The cash is in the bank, but obviously, our performance obligation, if you so wish, which is really to provide this game to the gamers that is forward-looking.
Obviously, how to recognize this revenue will also have to be forward-looking, so it is treated like deferred income, so it's recognized over time, starting from Q3. Our tentative conclusion is that these in-game tokens will be spent evenly over the game, and we think that a three-year period seems like a good estimate. We think a three-year evenly spread revenue over the three years to come is a reliable estimate. However, we will review that very, very carefully going forward, and should it be like that any one of our assumptions are wrong, we may change the accounting principles for this revenue.
However, if we do so, obviously that will be very extremely transparent and we communicate that in our coming financial reports. Again, back to the assumption that we recognize this revenue over 3 years, so that will give us SEK 11.5 million on top line, in addition to the top line over the next 12-month period, starting in July, or put it another way, close to SEK 1 million per month. With those words, I hand the word back to Marcus.
Thank you, Lars. Let's summarize this presentation and then give a brief outlook. Like I said, we've had and we've seen a high level of activity in our daily business. I'm really happy to see that level of activity, although I have to admit that I'm not fully happy with the financial results in the quarter, but I'm confident that we will deliver a stronger performance in the coming quarters now, given all the activities. I mean, MMA Manager 2 was released now just after the quarter. We have had the token sale, as Lars referred to as well. We have a strong pipeline of games from Playdigious, and now we have really interesting concepts in Fragbite AB.
I look forward to get back to you by mid-November to present the report for the third quarter and then coming quarters as well. I'm in this company to build this company in a sustainable way long term and not look at the short-term profits. That's why I feel confident, and I look forward to present the coming reports. Short outlook then. As I said, we are pioneers within Web3. We are one of the first companies globally to be a listed company, but also to be regulated within Web3.
I think that we have a fantastic potential within our Web3 segments and now also very excited to see how the market will develop within blockchain to see what that will lead to in the coming private sale and also the public sale of tokens. Even the strong interest that we have seen in the strategic round, I think that's a clear sign that we're doing something really good here within our Web3 gaming segment. I know that many of you are wondering, so what happens with M&A. Well, what I can say is that we have a continued strong pipeline for M&A prospects. We are working with M&A targeting and screening and sourcing and so on on a day-to-day basis.
I would also say that we have ongoing discussions every day. That's the nature of these activities. We work hard to see what kind of M&A opportunities we have out there. One needs to understand also that we are being very selective when making acquisitions, and I think that you can actually see that just looking at the performance from Playdigious and what we're now building with Lucky Kat and the newly formed foundation in Gibraltar for Web3. To us, that's as much important to find the right companies and not just buy revenue and then we have potential problems with integrating these companies.
We're very selective and, yeah, I look forward to get back to you with more updates on this segment, so to speak, within M&A. With that, we open up for the Q&A session. The first question is, could you provide any color on the revenue split in the quarter? What are the reasons for the weaker gross margin in the quarter versus Q1 2022 and Q4 2021? Please give some elaboration around the game Spiritfarer on Netflix and how you will collect revenues from that game. You mentioned subscription revenues in the report. First of all, to give a color on the revenue split, we haven't shown the revenue split in the quarter. Hopefully we will be doing that going forward in the coming reports without promising anything.
To give some kind of flavor, I would say that first of all, it's important to keep in mind that in Lucky Kat, for example, we have transformed their business from hyper-casual gaming into the activities now within Web3 gaming. Of course, that has an impact on both the top line and on the profitability, because we're also ramping up our costs for the coming activities within Web3. To become a regulated company within Web3, you actually need some resources in order to operate that business going forward. Regarding the question on Spiritfarer on Netflix, how we collect the revenues in the game, it's not something I can comment on specifically exactly how much money we will make.
The referral in my CEO comments in the report was more that from a Netflix and a consumer perspective, that the users on Netflix, they pay a subscription revenue. They have a subscription service in place. That's something that I feel is really interesting to see what we also can do within gaming and even potentially e-sports in the future. I got another question, what's the value of the Netflix deal? I think that I've already answered that question. It's not actually something I can't comment due to non-disclosure clauses in the agreement as well. The next question is M&A is a key strategy for the group, and we have done it very successfully throughout the year, but nothing lately.
My question is, do we have significant costs for due diligence in this quarter? As in, do we have a good pipeline of sharp targets? Do we adjust for these costs as I have seen others do? Yes, we have seen costs now in the second quarter, but also in the first quarter this year for due diligence costs and other advisor costs. It's not something that we adjust for because we believe that this is ordinary course of business. It is something that we have been focusing on and that we will focus on and yes, I can tell you we have had deals where we didn't conclude the deals where we have entered into due diligence. But for several reasons, we decided not to enter into and signing the final SPA.
Of course, that has had an impact on our financials. Next one is congratulations on the deal with Netflix. I read in the CEO comments that this area with selling games to subscription platform is an interesting revenue going forward or avenue going forward. Does this include platforms as Apple Arcade, and how do you see Fragbite's potential in doing more deals of this kind? Follow-up, how does these contracts usually look? What's the model for us? Well, I think that revenue model I've already answered. Of course, we have high ambitions in the group. The first Netflix deal in Playdigious is a fantastic milestone.
What I can assure you is that we will work really hard to of course try to pitch some gaming ideas to these type of platforms going forward without promising anything. I can assure you that we will work hard and are working hard to see these kind of opportunities going forward. Next question. The token sale with the best in crypto was very successful. Has this led to any more interest in the company/game/projects? How do you see the potential of increasing the valuation of the tokens going forward? Well, yes, we have seen an interest from other investors like more or less similar investors that we saw in the strategic round.
We'll see what that will lead to in the coming private round and also in the public sale regarding the valuation. Yes, we see that the interest for our project has increased. Regarding valuation, it's really hard to comment on simply because the market is developing both up and down. It's something that we monitor very closely, and we'll have to see about the timing and the valuation itself. I think personally that the valuation in the coming rounds are the most important one. That's why it's important to follow the market very closely.
I can't speculate and comment on the exact valuation in the coming rounds, although that we have high ambitions. That's my message. Next question is, rumor is that Apple was the one approaching Lucky Kat for the mobile version of Panzerdogs. Is that true? Also, isn't this huge as in Web3 within the App Store? Yes, Apple has contacted Lucky Kat. It's not a secret that Lucky Kat has a great relationship with Apple. Even the CEO of Apple actually visited the office of Lucky Kat, Tim Cook. Yes, they are in contact with Apple on and to see how we can in the best way develop an app for Panzerdogs.
We will get back to you with further announcements once it's closer to release. The total token preliminary round further in 2022 are two Panzerdogs and one Cosmocadia. Is that correct? I don't really understand this question, to be honest, so I actually can't comment on that one. Then the next one is the estimated size of the token rounds is not also something that I can't comment on and what I just explained with the valuation and how the market develops. What I can assure you is that we follow the market closely and that we will do our best to optimize the coming rounds. I think that was the last question.
A final remark from my side is that I truly look forward to be presenting the Q3 numbers and then Q4 numbers as well. We have laid a foundation with lots of activities now in the second quarter and during the start of the third quarter. I think that we will see the results and from that in coming quarters. Yeah, that's what I look forward to. Like I said, we're here to build a sustainable company in the long run. Looking forward to coming back to you later on this year. With that, I wish you all a really nice day and