Good morning everyone, welcome to this presentation of Fragbite Group year-end report as well as the fourth quarter of 2022. My name is Marcus Teilman. I'm the CEO of Fragbite Group. With me today I have our CFO, Lars Johansson. Looking at the agenda I will start off with some highlights for the fourth quarter and for full year of 2022. I will give you a brief update or an introduction of Fragbite Group, moving on to operational update. I will hand over to Lars, who will go over the financials. We will round off with an outlook. It's over to you where we will open up for a Q&A session. Moving on to the highlights.
It has been a record quarter, where we have reported a all-time high when it comes to net sales. We grew our revenues from the third quarter 2022, so a sequential growth of 2.5% compared to Q3 2022. Compared to Q4 2022, then we saw a year-on-year growth of 21.3%. Looking at full year 2022 compared to full year 2021, we saw an increase in net revenues of 102.7%. That's driven both by acquisitions and organic growth. In the fourth quarter, we launched the first successful tournament of Swedish CSGO Cup. We had some really nice numbers when it came to number of spectators.
We had a sold-out arena here at Space Arena where we are sitting right now. We had 1.6 million unique streamers watching the finals. We have, during the quarter, also broadened our revenue models and the distribution network, thanks to the releases on the Netflix platform as well as the Apple Arcade platform. Also, now in January we have released the game Teenage Mutant Ninja Turtles: Shredder's Revenge on Netflix. Like I said, it has been a record quarter when it comes to net revenues in an isolated quarter. Looking at the year-on-year growth, we more than doubled our revenues, driven by both organic as well as acquisitive growth.
The EBITDA increased from SEK 6.1 million to SEK 11.9 million. The goal for 2023 remains our firm ambition is to grow with profitability in all areas. Who are we? First of all, Fragbite Group, we are active in the global markets of gaming, esports, and Web3. We develop, adapt, and publish games and esport content for traditional and Web3 platforms. Our strengths, well, we have a unique position, I would say, a unique market positions where we leverage our unique position combining gaming, esports, and Web3 in a publicly traded environment. We work actively and selective with our M&A agenda, and we acquire profitable companies run by experienced entrepreneurs with businesses that add synergies to the group.
Also, we have a lot of passion and expertise in our group. Group expertise, capital, and structure elevate each subsidiary, building on their passionate entrepreneurship to drive long-term success. Putting this into a context and looking at the market sizes and trends that we're currently seeing in all these three markets, I'd like to start off with the gaming market. First of all the gaming market is huge. In 2022 it was estimated to have approximately 3.2 billion players. The market size itself is estimated to have a market size of roughly $185 billion, with a compound annual growth rate from 2020 to 2025 estimated to be roughly 3.4%.
We are seeing the trends in the market is that we see new revenue models such as the subscription platforms such as, you know, Netflix and Apple Arcade, where the users are on a subscription model. That's very interesting and I'm also very glad that we are active in that area as well with the release of Spiritfarer in October and also the Dead Cells game on Apple Arcade by end of November, and now also a Teenage Mutant Ninja Turtles game now in January 2023.
Moving on to the esports market, the market size is estimated at roughly $1.4 billion with a CAGR of 16.3%. The esports market has a reach of roughly 525 million players, or people actually. That's a lot with tremendous growth potential in all these three areas I should also add. Moving on to the Web3 gaming market, it's a little bit harder here to predict the market size and the growth, depending on which research report you're looking at.
According to the DappRadar Blockchain Games report, looking at the investments into the Web3 gaming, we saw that the investments in 2022 amounted to $7.6 billion, which was an increase of roughly 59% from 2021. We see a lot of potential in that market, although we have also seen a crypto winter now in Q3, Q4, and now at start of 2023. However we see underlying interesting indications in Web3 gaming that we believe will be helping us now in 2023 with the products that we have ahead.
We also see that large corporations such as Meta, they have invested a lot into Web3. They have to date, I think they have invested over $10 billion into Web3. With the blockchain technology, this brings new player engagement strategies, new platform, and new monetization models to gaming and esports. Monetization models could be play-to-earn for example, or play-and-earn. That's very interesting. As I said, with our unique market position, combining all these three markets in the long term, that could lead to significant growth opportunities to add on to each market itself isolated.
Looking at our portfolio of companies and where we are positioned in our group, first of all, we have Fragbite AB, which is our subsidiary, active in the esports market, acquired in February 2021. It's one of the leading and largest communities in esports, organizing tournaments, also helping large companies to market themselves towards the unreachables, so to speak. In the gaming sector, we have Playdigious, a French company that we acquired back in May 2021. They are porting games from PC to mobile primarily. What they do is that they take a PC game, and they develop a mobile version and publish it on mobile platforms.
Here in Sweden, we have FunRock & Prey Studios, the two mobile gaming studios merged in early 2020. They are primarily focusing now on sports manager titles. We have Lucky Kat, a Dutch company that we acquired in December 2021. They started off, or their core focus at the acquisition date, was a hyper-casual studio, but now they are moving and shifting their focus towards more Web3. Hence you see their logo in both the gaming and the Web3 space here on this slide. Together with Lucky Kat, we founded a new entity in Gibraltar called WAGMI, which is a licensed entity that has obtained a virtual asset service provider registration so that we, in a regulated environment, are able to sell tokens.
All right. Let's move on to the operational update. Like I said, now in January 2023, that was also announced in the fourth quarter, we have released the game Teenage Mutant Ninja Turtles: Shredder's Revenge on the Netflix platform. It's an exclusive game that players are only able to play on the Netflix platform. So far we have received great reviews, over 100, 170 articles. What's good with this type of game is that it further diversifies our distribution of revenue split towards different clients and networks, but also on revenue models. I'm really happy with this type of IP.
It brings me back to my childhood as well since I was watching that show when I was a kid. Dead Cells, this has been a success to say the least. Dead Cells was launched by Playdigious over three years ago in the West on mobile platforms. After like two-year review by the Chinese authorities, it got the governmental approval, it was released in China on different platforms. Now in the fourth quarter of 2022, we also released an exclusive version of Dead Cells on Apple Arcade. On top of this, we add more revenue streams thanks to the past and upcoming DLCs, the downloadable content.
This is a fantastic case of a successful IP, but also the type of IPs that we're targeting going forward. Yeah, we have some interesting discussions at the moment with several IP owners. Looking at our porting and publishing division in Playdigious, first of all, they won at the Pocket Games Awards. They won with Spiritfarer in the category Best Storytelling Game. That's a great achievement. Looking at the recent and upcoming games, we have released Spiritfarer, as I said. That was in October. We released also Dead Cells on Apple Arcade in late November. Now in January, we have released a DLC on Northgard.
Soon, I think very, very soon, we will have a new DLC release of Everyone is Here!, and Boss Rush on Dead Cells, and an upcoming DLC later on this year called Castlevania. Little Nightmares is a game that will be released later on this year as well. We have a title that will be announced in the coming months. Really exciting times ahead here for Playdigious. Moving on to FunRock & Prey Studios, which is our mobile gaming studio that develop sports manager titles or at the moment primarily MMA Manager 2: Ultimate Fight. What we said also in November when we presented our Q3 report, is that now in the fourth quarter, we have been optimizing the internal KPIs.
During the fourth quarter and now also the beginning of the first quarter of 2023, we have scaled down on the marketing spend in order to improve our internal KPIs, such as the average revenue per user, ARPU, and also LTV, meaning, or being lifetime value. These two internal KPIs are key to reach a level where we feel comfortable in scaling up the UA again. I think that the efforts so far are showing a positive underlying trend, and we are planning to scale up the UA again, but we will continue to optimize the game a little bit further. It's really key to do this also as well because our ambition is to release more titles on this game engine.
It's a little bit of work to do, but I look forward to see the game scale up their marketing again. Moving on to our subsidiary, Fragbite AB, they launched a new tournament in the fourth quarter called Swedish CSGO Cup, where we partnered up with Bonnier, for example. We had Max Burgers as the title sponsor and then Space Arena where we had the finals. The final saw more than 3 million started streams on our live streaming for the final, out of which 1.6 million unique viewers. We had a sold-out arena. The final was played between Ninjas in Pyjamas and EYEBALLERS. Ninjas in Pyjamas was the winners.
We will continue to develop the concept, both here in Sweden and potentially over time, looking into taking the concept abroad into other countries as well. A short comment on Fragbite as well. It has been a more of an investment year. Fragbite has not been showing profitability now in 2022, but I think we have a good opportunity to show profitability now in 2023, and I will soon explain more projects where we will focus on now in order to report a profitability. Swedish Chess League, for example, is one of the projects that we can optimize further. It's the first national esports chess league.
It's hosted in collaboration with the Swedish Chess Federation, the online tournaments are being played on Chess.com platform, which is the largest platform globally for playing chess. We have four divisions from beginner to professional level, the new season of Swedish Chess League has just kicked off. You know, both when it comes to Swedish Chess League and Swedish CS:GO Cup, it takes time to build up a concept and to actually prove the concept before we can actually, let's say, ramp up a little bit of the sponsorship price list. I think that we are in a good position to actually increase our revenues when it comes to our tournament IPs now in 2023.
Another area that we have seen early indications now in 2023 on new clients being signed for 2023 projects is our agency part of Fragbite AB's business. It's an award-winning agency with 10 years of experience. It's a full service, tailor-made solutions for brand entering the esport market where they want to market themselves towards the unreachables. We have clients such as Philips and Samsung, but we have also signed new clients now in the beginning of 2023. There will be some interesting projects coming up now in 2023, and then I have high hopes on Fragbite AB as a whole.
Web3 business, and when it comes to WAGMI and Lucky Kat, our first Web3 game, Panzerdogs, they had their first NFT collection sale in December 2021, where they sold 5,555 dog avatars, and we collected SEK 9.9 million in the fourth quarter of 2021. And after that also of course gives the players some advantages. They form a community where we can have contact, and they have a they get airdrops and so on. So there are some advantages of actually owning their NFTs in the game. We have continued to develop the game throughout the year in 2022, and we also sold tokens in July last year, of over $3 million.
The sale of tokens will be, as we have explained before, be recognized over a period of three years. Not, you won't see the $3 million in our P&L in 2022. Again, that will be spread out over three years period. Currently, we are working on the UA testing to improve the first-time user experience. I'd say that the underlying KPIs looks promising, and. What we have reiterated, and I'll actually reiterate again what we said in the previous quarterly presentation, is that we are preparing for additional token sales throughout the year now in 2023. Moving on to our next Web3 game, which is Cosmocadia. Cosmocadia will be launched in conjunction with Sui, once Sui mainnet is live.
it will be one of the first projects on the Sui blockchain, and real excited about this game as well. Have also entered into a strategic partnership with Mysten Labs, who is the owner of Sui. I'd say that we have had a great traction in building up a strong community for this Web3 game, where we at the moment have roughly 28,000 followers on Twitter and 17,000 followers on Discord. There will be a pre-release NFT sale that will allow access to play the game demo, and that will happen now in coming months. What we have also recently announced is a continued partnership with The Sandbox. it's a blockchain metaverse where players can create and monetize their own content via NFTs.
The first project that we announced a couple of months ago was Lucky Cat Land. We have recently announced also that we have entered into a new agreement with The Sandbox where we will de-develop a parkour-themed game which has a multiplayer functionality, and I think that's also interesting, perhaps combining Web3 and esports in the future. It will be a standalone experience, but we're also building a template for reskinning. As you can see at the bottom of this slide, there are some really famous brands that have also partnered up with The Sandbox. I would say that we are in great company. All right. With that, I'll hand over to Lars Johansson, who will go over our financial. Go ahead, Lars.
Thank you very much. Well as Marcus said our fourth quarter was the strongest quarter for the year. Our net revenue amounted to SEK 73.2 million, which is up approximately 21% compared to the same quarter previous year. The EBITDA amounted to SEK 5.8 million, which is down compared to the same quarter previous year, I will circle back to the reason for that. Operational EBIT, we regard that as a very good sign, if you so wish, of a company's operational performance. We define that as EBIT before non-operational amortizations and impairment of intangible fixed assets. As you know, we follow the K3 accounting principles, which means that we do amortize on our goodwill over five years.
Taking into account the goodwill amortizations of roughly SEK 21 million, we end up with a negative EBIT of SEK 22.6, and a negative net result of SEK 27.6. Looking at the full year, as Marcus said, we more than doubled our revenue from SEK 124 to SEK 254, partly organic and partly through acquisitions. Our adjusted EBITDA amounted to SEK 12.8 compared to SEK 9.6 for the same period previous year. First of all, when we talk about adjustments, the adjustments that we made here, in 2021, we made adjustments for the one-time cost related to the IPO, the stock listing that year. For 2022, we adjusted for one-time cost of establishing our Gibraltar company.
As Marcus touched upon earlier, it's also worth mentioning that during Q3 last year, we sold tokens for more than $3 million. For reasons that I will explain a little bit further, we defer or recognize over three years. SEK 5.5 million out of those $3 million is sort of included in the adjusted EBITDA. The rest is yet to come, so to speak. Operational EBIT amounted to SEK 5.3 million. We had goodwill amortizations of roughly SEK 83 million, which then gave us a negative EBIT of SEK 83.2 million and a negative net result of SEK 103.1 million. Next slide, please. Here you can see the development over time, or at least for the past eight quarters.
As you can see on the revenue bars, it's a fairly stable trend, growing trend, again, as a result of organic growth as well as acquired growth. As you can see, the development of the EBITDA is you cannot see the same trend. It's two things worth mentioning and worth observing. Again in the fourth quarter 2021, we made a very successful sale of NFTs, which brought us roughly SEK 9.9 million on top line, and that is then included in the EBITDA, the revenue and EBITDA for that quarter. It was fully recognized in that quarter.
On the other hand then again, we made also a very successful sale of tokens in the third quarter this year, or 2022, which when defer over three years. That is not. It's only a sixth, if you so wish, that is recognized out of the $3 million, it's recognized during 2022. As I said previously, the rest is yet to come. Next slide, please. This is our balance sheet, and I will circle back to the cash on the next slide. No doubt, you look at our intangible assets of SEK 311 million.
That is to most extent is goodwill from our acquisitions and to some extent, smaller extent also, capitalized development work. What I would like to draw your attention to is what we called provisions in the balance sheet, here we wrote out the earn-out provision because it relates to two things. It relates to potential earn-out payments to the seller of Playdigious and potential earn-out payments to the sellers of Lucky Kat. We account for this at the maximum amount. We hope and we think because these two companies develop very well, we think that we actually pay out the SEK 88 million. It's not SEK 88 million in cash.
It's 46% in cash, and the rest is to be settled in equity through new share issues at the time it happens, so to speak. Out of the 46% in cash, 12% will be settled this year, and 88% will be settled next year. As I'm sure most of you are aware, in very good KPI when it comes to a company's borrowing capacity is looking at net interest-bearing debt divided by last 12 months adjusted EBITDA. In our case, that amounts to 1.2 x which we regard as low which again then is a very good indicator of our borrowing capacity should we need to borrow, for example, for growth investments into intellectual properties or what have you.
When entering into M&A discussions or potential acquisition, obviously that requires a completely different financial discussion or financing discussion. Again, needless to say, having low leverage as we do is a very good start of such a discussion. Next slide, please. Here you have the cash development, and those of you who remember our full-year report for 2021 will remember that we basically on New Year's Eve, you could say, we finalized the transaction with Lucky Kat, when 2021 turned into 2022. In accordance with the share purchase agreement, we paid for and had the right to include their fourth quarter result in our result which we did.
The actual legal transaction, due to technical reasons or, international banking opening hours and the foreign exchange market, we did not manage to actually pay for the shares until the first banking day of 2022. We borrowed the funds, roughly SEK 30 million in the end of 2021, which then adds up to the SEK 87.5, which then were converted into the investment, which you can see then is included in the SEK 141.2 investment activities. Among the investment activities, we also have the second earn-out payment to the Playdigious because they delivered in accordance with their estimates. We paid out a full earn-out payment to the sellers of Playdigious and we also pay out the full earn-out payment for the same reason.
They delivered accordance with their estimates and with our goals so we also paid out the full earn-out payment to the sellers of Lucky Kat. That is also included in investment activities. Looking at the cash flow from operating activities amounted to SEK 43.1, here you can see the full effect of the token sales because even though in the P&L, we only account for a sixth of the $3 million, obviously in the cash flow statement, it has the full effect. Looking at the cash flow from financing activities, it is partly the equity part of the acquisition of Lucky Kat.
Because that's the way we structure our earn-out payments, partly equity, partly cash. The cash flow from financing activities also include the equity part of the earn-out payment to Lucky Kat sellers and also to Playdigious sellers which then all along or all together gave us a cash position in the end of the year of SEK 41 million. I hope that was crystal clear.
Great.
Thank you very much.
Thanks a lot, Lars. All right. Let's go over the outlook now for 2023 and the road ahead. Like I explained earlier, we will continue to grow organically and through M&A. We have an active M&A agenda. We, I would say, on a daily basis, we are evaluating companies, but we're also very selective. We will continue to be selective, but we will also continue to drive our M&A agenda for going forward. We will see an increased number of projects and content combining gaming, esports, and Web3, utilizing our unique position. What we have also announced earlier is that we will have a continued expansion in our porting and publishing division in Playdigious as well.
Like I explained earlier is that we are having some interesting discussions with some IP holders or IP owners as well. We will come back with some more information about about this as well throughout the year. We will continue to further develop our esports offering and capitalize on our tournament IPs. Like I said, in 2022, it was an investment year for our subsidiary, Fragbite AB. Now it's time to really little bit ramp up the price list, so to say, from and increase the revenues from sponsorships and so on.
Again, also reiterate what I said, we are planning to sell NFTs, especially now in Cosmocadia going forward, and also additional token sales of our in-game token. The next step is to continue to build our sports manager game engine and the product line. Continue to optimize our internal KPIs in order to scale up the UA user acquisition on MMA Manager 2: Ultimate Fight, and then also add some more titles on that game engine. That's the outlook. Now we will be opening up for the Q&A session. Lars, do we have any questions?
Yes, we have one regarding the accounting treatment of the NFT sales versus the accounting treatment of the token sales. Why do we account for those two transactions differently? I guess the first answer is that there's two separate type of digital assets. An NFT is a product, while a token is an in-game currency that can be used in various ways in the game. Since the nature is of that kind, we are committed to continue to develop and provide for that game as long as it is in demand, we feel it's prudent to recover or recognize the revenue from that sale over a three-year period, the three-year period is basically our guesstimated lifetime of the game.
We elaborated a little bit on that on the report, but it was good that I got the question. Maybe to simplify it even further, you can say that, you know, an NFT is like buying a pair of jeans in the local H&M store, and the transaction is over and done with. The token is more like a voucher that can be used for a predefined, specified time, in any H&M store, in the future within this specified timeframe. Again, that is also explaining, as I said previously, that The way we account for this is a very good explanation why the EBITDA, if you look at the past eight quarters, doesn't show the exactly the same trend as the revenue does. What IR activities have you planned going forward to increase awareness and interest in Fragbite Group?
Yeah. I mean, starting off today, I would say meeting you and existing shareholders, we will be doing some presentations as well through different investment banks and other parties. Stay tuned on our social media accounts with some more information on upcoming presentations.
Are all the founders still active of the companies we have acquired, I assume?
Yes. I mean, if we look at, if we look at Lucky Kat and Playdigious, for example, yes, the founders are still there. I would say that we have a great collaboration with all of them. If we look at Fragbite AB as well, we have actually brought in one of the founders now again as a consultant, which is very promising now for 2023 and going forward. Yes, all the founders are still here and happy to see that the collaboration works so well with all of them.
Why haven't you changed to IFRS? It would fix the goodwill. I guess that question is mine. It's absolutely correct. We account in accordance with K3, which means that we are obliged to amortize the goodwill, which we do over five years. If we would move over to IFRS, includes a lot of changes, but one of the most important ones are that, no, you don't no longer amortize your goodwill. You still need to stand the impairment test. If you feel that the goodwill is not worth what you have in your books, obviously you need to amortize that.
Of course, that will have a great effect on our P&L because that will have, you know, for the last quarter, we had goodwill amortization of SEK 22 million. For the full year, we had goodwill amortization of SEK 88 million. That will do wonders with the EBIT and net result. I should also mention that even in K3, obviously, we have to stand clear for the impairment test, which we did this year. We had no problems defending our goodwill as of the end of 2022. Will you change accounting principles to better present the performance? What are the negatives of IFRS? Wow. Well, I should have said that previously. Our plan is. No decisions made.
Our plan is to move over to IFRS from 2024. That was the answer to the first question. What are the negatives for the IFRS? Yeah. One of the negative things that the reporting requirements increase a lot. I've done it a few times. I can talk for a long time about this. I shouldn't. The analysis when you do acquisitions change. I'm not saying it's negative, but it's more granular. If you have rental cost, which we don't really have, not to a great extent, that is treated like Rather than rental cost, you create sort of a fixtures asset consisting of all the future rental payments, and then you amortize over that over that over the rent period.
Rather than having rental cost above EBITDA, you will have depreciations of this fixtures asset, below EBITDA. You can have a lot of thoughts about that, but that's the case. There's a lot of other changes as well. I'm not saying it's negative. I think the most negative is, if anything, is that the reporting requirements increases. On the other hand, that's a sign of quality. That's also why we think it's a good idea for various reasons. Again, no decisions made. Most likely, if I'm here to guess we will move over to IFRS in the beginning of 2024. Panzerdogs is a really good game, especially after the recent update. Can we monetize it even outside of the crypto world? It would be an amazing hyper-casual game.
Great question. I'd say that the main focus at the moment is to have a full launch of the game on with the mobile version and also that's what we're focusing on now to have the game fully released on mobile devices and also with the upcoming token sales connected to it. Whether it will be an hyper-casual game or, let's say, more or less a copy of Panzerdogs as a hyper-casual game, we'll see. That's something that I would need to discuss with the management and the staff of Lucky Kat.
Okay. Little Nightmares, what are your expectations? Could it be as successful as Dead Cells?
Wow. That was a tricky question. I would say it depends on first of all we would need to release the game. It has not yet been released, but we're planning to release the game. We'll see the release first. Whether it will be as successful as Dead Cells, yes or no, I would say that's something to be determined within three to four years' time, I'm not saying that we will, but whether if we would go for a release in China, of course, that will require governmental approval, and that approval process takes like 18 to 24 months, roughly, my best guess. Whether the game will be published on other platforms as well, it's too early to say. Maybe I could come back to that question later on this year.
Mention that you're driving to improve the rev share conditions for Playdigious. Has that materialized yet? Could we see something starting 2023 when new games are released? You aim to increase the investments in Playdigious. How many new employees are required to reach full capacity? There were a few questions in one there.
Yeah. Regarding the rev share conditions, it depends on the, on each discussion with IP owner. Without going into details, I would say that it depends on how big the IP is, to be honest. In my opinion, I would more prioritize a game that could bring in a higher amount of revenues and higher amount of, let's say, net profit in actual Swedish kronors, so to speak, rather than increasing the margin. It's an ongoing discussion that we have with the IP owners as well, depending on the negotiations. Regarding number of employees, we will ramp up number of employees.
Can't say exactly how many new employees we will have. I guess we will need to come back with that when we have more information on the plan for this ramp-up project, so to speak. There will be more information that will be announced later on this year, and with an update also on the different IP discussions that we're having. Let me get back to you with an answer on that one in the coming presentations.
I guess that's that was it.
All right. I'd like to thank everyone for participating in the call, for listening in, and for asking some questions. We look forward to see you all in May when we release our Q1 report. Thank you, and have a nice day.
Thank you very much.