Good morning, everyone, and welcome to this presentation with Fragbite Group, a presentation of the third quarter of 2023. My name is Marcus Teilman, and I'm the CEO of Fragbite Group. And with me today, we have a new face, our new CFO, Anders Rössel. Warm welcome to Fragbite Group, although you've been here now for three months already.
Yes. Thank you.
The agenda for today is that we will start off with some highlights of the third quarter, then we will give you a brief introduction to Fragbite Group, to those of you who are new, who haven't heard anything about Fragbite Group before. Then we will also dig into some details about the acquisition of Fall Damage that we closed off just over a month ago in October. After that, we will go over some operational update. After that, I'll hand over to Anders, who will go over the financials, and we will round off with an outlook and summary. And then it's time for a Q&A session. So let's start with the highlights for- Okay. [audio distortion ]
Good morning, everyone, again, and welcome to this presentation with Fragbite Group, a presentation of the third quarter 2023. My name is Marcus Teilman, and I'm the CEO of Fragbite Group. With me today, we have a new face, Anders Rössel, our new CFO since 3 months. Welcome to Fragbite Group, Anders.
Thank you.
So the agenda for today is that we will start off with the going over the highlights of the third quarter, and then we will give you a brief introduction to Fragbite Group for those of you who are new out there. And then we will dig into some details of the recently closed acquisition of Fall Damage. After that, we will dig into operational update. Anders will go over the financials, and after that, we will look into the future, and then we will round off with a Q&A session. So let's start. Highlights. So first of all, we have had net revenues of SEK 61.3 million, a decrease from last year where we had SEK 71.9 million.
I'd like to reiterate what we said in our first quarter report this year, and also our second quarter report this year, is that over the year, we will have, we will be dependent on when we have game releases. Now, in the third quarter this year, we haven't had any big game releases. On the other hand, we have a couple of very interesting and exciting activities and game releases now in the fourth quarter this year, but we will dig into that later on in the presentation. Also offsetting some of the revenues from last year is that last year, we, we also launched MMA Manager 2 with an external publisher. We have just recently brought that game back. We'll dig into that later as well.
Also last year, we saw a quite big revenues, at least, top line from our hyper-casual portfolio, where we have seen a steep decrease in the revenues, following the refocus into Web3. Adjusted EBITDA amounted to SEK 2.7 million. Also worth mentioning during the third quarter is that we have also announced that we have signed eight new agreements in Playdigious for release of new games. We'll dig into these titles as well, leading us to double, that we can now in 2024, doubling the amount, at least doubling the amount of game releases in a single year in 2024. So we've taken a lot of investments now in 2023 for further growth in 2024 and 2025.
As I mentioned, we have also just recently brought home the game MMA Manager 2 for in-house UA and marketing. We will dig into some of the details, but we're ready to scale up the game now. Happy to see that finally. Also worth mentioning, and which I also mentioned in the report for the second quarter, I'd like to reiterate that again, that for a full year of 2023, we see that our esports business within Fragbite AB is on the path to show a profitability for full year 2023 numbers. I'm also very happy to see that we have had a successful onboarding of so-called Web2 players into the Web3 game, Panzerdogs, now reaching over 1.5 million players in the game. Okay, so who are we at Fragbite Group?
First of all, we are active on the markets of gaming, esports, and Web3. And what we do is that we develop, adapt, and publish games and esports content on traditional and Web3 platforms. And what is Web3 and traditional platforms? Well, you'll see soon, in the presentation. If you look at our strengths, first of all, we have a unique market position, where we leverage our unique experience and competence within all these three markets: gaming, esports, and Web3. Also, in a publicly traded environment, and also regulated environment in our Web3 business. We have a clear and outspoken M&A agenda. However, we are very selective. That's why we haven't done that many acquisitions.
We have just recently announced the acquisition, and closed that acquisition as well, of Fall Damage Studio AB, that we will dig into the details shortly in this presentation. But we have this selective M&A strategy, so we are not a company that will acquire, like, 10, 20 companies a year. Maybe one or two acquisitions a year. So we're very careful and selective, although that our pipeline is strong and wide. But also, most importantly, noticing is that we have a passion for building great games, and we have expertise in all these three areas: gaming, esports, and Web3, where we help each other to elevate each subsidiary and businesses into the next level.
So how does our business look like when it comes to all our subsidiaries and brands? So first of all, gaming is our strong core business. It's a profitable business, and we have just recently announced the acquisition of Fall Damage. So in gaming, we have Playdigious in France, a company that was founded over eight years ago, has shown stable growth, top line, and also managed to increase its profitability over the years. That's why we also in September 2022 announced that we would invest more into that business, that we are now seeing the results by showing these new titles as well, but also to announcing the new label called Playdigious Originals.
So Playdigious, what they've done historically is that they are porting games, the traditional PC console games that have already been released on PC and console, and we are taking these games and adapting and developing a mobile version of the games. Now, we are expanding the business so that we can release more games on mobile, but also in the new label, Playdigious Originals, we also help indie developers to launch games on PC and then later on as well into console platforms. Funrock and Prey Studios develop our own IP, MMA Manager 2, and that's the base where Fragbite Group was founded. And then we have Lucky Kat Studios that we acquired back in December 2021. Originally, a hyper-casual company.
We still have some hyper-casual games active, although we are now fully focusing on the Web3 business. But also in the gaming segment, we now have the latest acquisition, Fall Damage Studio, that we will come into the details fairly soon. In esports, we have Fragbite AB, who has. That is a company that was founded over 20 years ago. It's one of the leading and largest esports communities in the Nordics. And they are running esports tournaments, arranging esports tournaments, but they also have an agency business called Config. So they help larger consumer-facing brands to target their marketing towards this audience within gaming, called the Unreachables.
And also, Web3, which is operated by Lucky Kat in the Netherlands, and also through our newly formed subsidiary in Gibraltar, which is a regulated entity, called Wagmi. So we are regulated by the Gibraltar Financial Services Commission. So all in all, we have a well-diversified portfolio of businesses and companies with extraordinary potential, and we'll go through that potential in every single business area soon. So let's look a little bit into our ecosystem. So as I just mentioned, gaming is our core and our base profitable and also growing business. On the base of this profitable core base, we also leverage our expertise into the other markets.
So we see that all these three markets, gaming, esports, and Web3, they are converging, and we leverage our expertise in gaming into meeting all these opportunities that we see in the other areas as well. So we share our knowledge, we share our tools, and we create additional value thanks to that. In Web3, as I just mentioned, we are a regulated company, but we're also pioneers in Web3, where we put the game experience first. You'll soon see. You'll later see a trailer of our Web3 games, so you'll understand that. We see a shift in the consumer behavior and in the culture, let's say, within gaming and also especially in Web3 gaming, where we have new strategies to also engage with the community.
The community expects to be taking part in the development of the games. And as I mentioned as well, we have our e-sports business, and that's a great go-to-market strategy, especially now as well with the acquisition of Fall Damage and their game, ALARA Prime. I mean, e-sports is about arranging tournaments around different games, and then we do live streaming events that can reach a very broad audience. So that's a fantastic tool to use if you have a competitive game mode, and to organize the tournaments to reach a broad audience.
As I mentioned as well, with the agency services that we have, is that we can also add additional revenue streams by adding brands into the games as well as sponsors. So that's a short background about Fragbite Group. Exciting news happened in October when we announced the acquisition of Fall Damage. So what does Fall Damage gives us at Fragbite Group? First of all, it gives us an accelerated growth, I would say, a hyper growth, even if we look at the estimates for 2025, that we will soon go over. So thanks to the acquisition, we can elevate our growth and also profitability quite significantly once the game is launched in Q3 next year.
Secondly, we also get a strong, proprietary IP that we own, and we can do whatever we want with that IP. That means that we can create esports tournaments should we want to, and should the community expect so. We can take the game to other platforms as well. We will start with PC. And we can do a lot with our merchandise and so on, connected to that IP, ALARA Prime. We have a niche position with significant revenue potential, and we will dig into what this means soon as well. It's a tactical first-person shooter game, where we found a sweet spot, and there's a gap in the market that we've found, which I'm super excited to show you a little bit more about soon as well.
And we see clear synergies, of course, both operative synergies between the companies in Fragbite Group. Clear operative synergies is, of course, that we can take the game into the esports field, but we can also leverage our expertise, especially from Lucky Kat and Playdigious in how to build strong communities and increase player engagement as well. And we also see synergies from a cost side perspective by reducing overhead costs. For example, we moved into, as in, all the Swedish entities within Fragbite Group, we moved into the premises of Fall Damage by first of November this year, and we see also a reduce in overhead costs when it comes to accounting and other overhead overhead costs as well.
So we have a lot of synergies when it comes to this acquisition with Fall Damage. All right, let's look into Fall Damage. What is Fall Damage? Well, that's a company that was founded by four DICE veterans, Mikael Kalms, Anders Gyllenberg, Dan Vaderlind, and Marcus Nyström. So all four founders come from DICE, where Marcus Nyström, the chief art director, is actually one of the original founders of DICE back in 1992. So he has been in the industry for quite some time now. We are very impressed with the founders, but also with the team and the expertise that they have. They definitely have AAA capacity.
If we look at the founders specifically, they have experience from developing big titles such as Battlefield 3, Battlefield 4, and also Star Wars: Battlefront. The studio consists of over 50 employees, and since 2019, they have solely been focusing on developing the game, ALARA Prime, which is the main IP. And as I mentioned, that's a first-person shooter game in the genre, and it's a strategic choice to go into that genre, and especially in the tactical shooter genre. So this is a unique new game that will enter the scene in Q3 next year. It's a tactical shooter, which means it's a highly competitive and skill-based game.
But if we go back in time to the nineties, when shooters, shooter games, started, we, we saw, Quake and Doom, coming up, for example, which was a huge success. We have seen other, shooter games such as, Counter-Strike and, and Call of Duty that are, you know, more or less the top-selling games, at all times. And we also see Valorant that, that came up in 2020, and only after a few weeks, saw, a monthly, number of active, monthly players of over 20 million. So there is a, there is a gap in the market as well for tactical shooter games that we will soon, dig into. And a tactical shooter go actually beyond the typical mechanics of a, of a shooter game.
It's not only about running and gunning, but we also bring a new layer of gameplay, so to speak, by adding new types of both gadgets and weapons as well. So that means that by adding new weapons and gadgets, there is a new layer that also adds this tactical element. What's unique for ALARA Prime, compared to other games, is that we also add a third team into the gameplay. So if I'd like to—if I should try to explain this to my dad, for example, who is very interested in football, let me try to explain that to my dad. For example, in the Premier League, in the UK, we have Manchester United and Manchester City that are rivals.
Okay, you see that derby game, that's quite an exciting game to see two football teams playing against each other. But by adding a third team, let's say Liverpool, so you have Manchester United and Manchester City as the attacking teams, and then you have Liverpool as the defending teams, that creates a new layer of tactical aspect. First of all, it's not only about competing Liverpool, it's also about, okay, how shall I, as Manchester United, think of the strategies that Manchester City has? So this creates more of a backstabbing standoffs and mind games into the tactical space. I hope my dad understands what a tactical shooter game means now, especially with ALARA Prime adding the third team into the play.
So three teams, that's a multilayered tactical approach, as I said, and utility play that creates a unique gameplay. And this is definitely something new into the market. You'll soon see, as well, a positioning chart. And traditional players that have played like Counter-Strike, Valorant, and Rainbow Six Siege, they would definitely, you know, they would definitely find a new home here with ALARA Prime. Once we've done extensive player tests, some people have actually called this new game a new love child. Also, players of these games, as I said, they feel right at home when it comes to the basics, but also adding the tactical aspects could even attract a broader audience.
Not only the more experienced competitive players, but also more casual players. So, this gives truly a more global target group. So if we look at the competitive positioning chart, we have a niche position, as I just mentioned, that allows us to be very competitive. We have other games, more classical shooter games, that are not as tactical as ALARA Prime. Some of them have more teams than two, or three teams and more, but are not as tactical as ALARA Prime. We have other tactical games in the shooter genre as Rainbow Six Siege and also Valorant, that are highly tactical, but only with two teams.
So that's why we are, we see ALARA Prime as a unique game, with this three-team game mode as well. And as I said, we have done extensive player tests, so we know that the game itself is fun to play, and we have created the most important tasks already. The game works perfectly well. We just need to create more of the things that we need to do to release the game. So, like, more maps, more weapons, and gadgets, as well, before the release. As I mentioned, we have done extensive player tests over the years. And we started actually, or Fall Damage started with playtest already in 2020.
We have held so-called closed playtest, where we invite and include 12 or 24 players. So in these three teams, there are four players in each team, meaning that in a game, a match, you have 12 players playing. So we've had smaller game tests with 12 or 24 players. In the in-game test, we get very extensive feedback from the players as well once they've played the game. And quite interesting to see was actually last week when we did a closed player test of 12 players. The game test should last for roughly two hours. But after nine hours, our staff, it was already over midnight, and our staff said that now it's actually time to go home and rest.
These players that had played for over nine hours, they were playing the same map for nine hours. I think that says something about the game and how fun the game could actually be. During our process of acquiring ALARA Prime, we did a thorough due diligence as well, and we did extensive play tests as well. We brought in professional esports players as well. We brought in publishers as well to try out the game, so that we could get a feeling on what this could bring for the future.
In 2022, there was a large public test of over 6,000 players competing in the game, and over 98% of the players participating in that large public playtest responded that they want to be invited for a future playtest as well. And that's how we have also engaged with our community. We have actually also invited gaming influencers, streamers, and esports professionals who have all liked the game, and here's just one quote from one of the streamers called Abel Green. You also have a BigFry, who has tried out the game three times already. And worth mentioning as well is that these streamers and influencers, they haven't gotten paid to play the game.
So they do this to show their community what's coming up. So with that, I think it's time to show you a trailer of ALARA Prime, how it looks like.
Two guys coming main. Three guys coming main. Securing the uplink. Frag out.
One more, one more, one more!
Hell, yeah.
So that was ALARA Prime coming out in Q3 next year. Let's look into the transactional structure and details. So first of all, the total initial purchase price is or was SEK 20 million, where SEK 10 million was paid in newly issued shares, and SEK 10 million will be paid in cash as well. On the newly issued shares that have been issued to the four founders of Fall Damage, there is a lockup of three years as well. There is also a recoup of earlier investors of up to $22.3 million, and that's based on future cash flows in Fall Damage from the game, ALARA Prime.
So 50% of future cash flows, up to $17.3 million, will be paid back as a recoup to the earlier investors of Fall Damage. Then 30% of future cash flows between $17.3 million and $22.3 million will then be paid to the earlier investors. Worth mentioning as well is that the recoup is on the balance sheet as a provision in Fall Damage. So that will not have an effect on the actual P&L statement, but only on the cash flow statement going forward.
The founders of Fall Damage, they are also, they also have an earn-out connected to this deal that will be measured in total during the years of 2024 up until 2027, with a potential payout in Q2 2028. If there will be earn-out paid out, the founders will get 80% in cash, and we at Fragbite Group, we have the option to pay up to 50% in shares. So that could lead to paying 100% in cash or 75% in cash and 25% in shares. You get it. That's also based on the future cash flows in Fall Damage as well during these four years.
And should the founders get their full earn-out of SEK 400 million, that means that we at Fragbite Group would have had a net cash flow after payout of both a recoup and earn-out of over SEK 1 billion. We have also estimates of Fall Damage for the year 2025, since the game will be released in Q3 2024. We thought it would be more interesting to look at how 2025 would look like. So we have a target of net sales in the region of SEK 480 million-SEK 680 million.
And with an EBITDA, like I mentioned in the beginning of this presentation, quite significant EBITDA as well, should they hit the targets, with a target of between SEK 55 million and SEK 86 million. So again, this is a truly transformative acquisition for Fragbite Group, that can also give us this hypergrowth with significant profitability. We will work hard to release the game in Q3 next year, and as I mentioned, we have done or come over the most difficult parts when it comes to game development as well. Now, we just need to create a little bit more maps and also weapons and other gadgets as well before the release, as well as setting the go-to-market strategies with a publisher. All right.
With that, we should move on and look into giving you an operational update of the third quarter, and let's start with the gaming. First of all, we have Funrock and Prey Studios that is developing our sports manager game engine. Today, we have the title MMA Manager 2, and we brought back the game now in-house by end of second quarter, and we started with some UA user acquisition now in the third quarter as well. We have been focusing on the U.S. and also other tier one countries and on different marketing channels.
What's encouraging to see is that we have seen day one and day seven retention rates significantly improving, and we are also now seeing the long tail retention rates also improving as well. However, we have seen a higher cost to acquire these new users. I mean, we are starting with optimizing these marketing channels ourselves. So that's a little bit of tweaking. Now it's about scaling up now in the fourth quarter. So we look forward to I mean, not use as many marketing channels as we have done now in the third quarter.
We will go for the marketing channels and the markets that we have seen most potential of, and that's where we'll where we will scale up the game now in Q4. So that's very encouraging to see. And also, we've done recently a major update in the game in the gameplay, where we have also added a team versus team functionality. So that I think and hope that will increase the retention rates and return on ad spend even further. If we look at Playdigious, also now in the third quarter, we announced that we have signed eight new titles for scheduled release now in Q4 this year, up until Q2 2025. We have significantly increased the pace and scope for Playdigious.
That's something that we announced in September 2022. We have taken a lot of investments into Playdigious now in 2023, and as I mentioned as well, it takes time to develop games. Now we have actually a new base for having, let's say, a more stable release plan in 2024 and 2025 and beyond, thanks to these new investments into the company. Both new game releases, as I mentioned, but we will also do some platform extensions for our mobile games. As I mentioned, we have also announced a new label called Playdigious Originals, where the first title on that game has been announced, that's Fretless.
We are chasing even more games to publish on PC and console, and I look forward to update you all on how that development is going, but it looks promising, I would say, to say the least. What's interesting is that when we release games on PC and consoles, that can actually also help us to take these games into new platforms, not only on PC, we will start with PC, then we can take the games into consoles, and then also later on into mobile devices, and then we can do platform extensions as well. So that's a very scalable business. Interesting to see is that we have also already received over 40,000 on wish list to date on Fretless that is being released in 2024....
And as I mentioned, what we as well announced in our press release in the beginning of August, we had the pleasure of announcing eight new titles in addition to the already announced titles, Little Nightmares and Fretless as well, where we have included them in different categories of estimated revenues over the coming three years. Six of these 10 titles are in category A, meaning revenues in the region of up to EUR 1 million. Two games are in the category B, which means revenues between EUR 1 million and EUR 2 million, and two games in category C, with revenues of over EUR 2 million.
We have to date, only announced, three titles or naming three titles, which is Little Nightmares, that is now being released in Q4 this year. We have Shapez, Potion Permit, and actually four titles, with, with Fretless as well. So, very exciting to, to see, all of this. I look forward to update you all, in the beginning of next year, when, we will announce more titles as well. But, I'd say that, 2024 looks very exciting, to say the least, when, when I look at the release plan from, from Playdigious. If we look at the release plan now in, Q4 this year, as I mentioned, already, Little Nightmares will be released in, by mid-December.
That was actually scheduled for release in July this year, but we have moved it into Q4 this year. Looks promising as well when it comes to follower base and wish list as well. And follower base and also how many that have signed up for early access. We have Shapez as well, that will be coming out now in Q4. Very exciting to see that game as well. And we released Dead Cells on the Netflix platform by end of October. And as you—for those of you who have listened in before, Dead Cells is a fantastic game that has been a huge success for Playdigious.
So very nice to see how we managed to release Dead Cells first in Europe, then we brought the game to China. We took the game and did a new platform extension by adding the game to Apple Arcade, and now we have also finally managed to add the game to the Netflix platform. And also in Q4, we have two more platform extensions to release, and we will announce the titles and platforms in due course. With that, I think it's time to show you a new trailer, and this time it's Little Nightmares coming out in only a few weeks. Scary, right? Let's move into the esports business and give you an update. Exciting news is that we see a profitable business now for full year of 2023.
They are definitely on the path of showing a profitable full year numbers of 2023. We have a very active fourth quarter this year with Swedish Cup already have started with the qualifications, but we have the finals being played, the final being played on the third of December at Space Arena. We have also managed to sign up new sponsors, and we have a new record in number of sponsors. What's also exciting news to share with you today is that you will see ALARA Prime as a partner at the during the Swedish Cup in December, when where we will do some events, and we will show the trailer on the broadcast and so on.
Last year, we had over 1.6 million unique viewers on our live stream, and we had a sold-out Space Arena in Stockholm as well. So I'm really excited to see this year's Swedish Cup. We have also managed to see an uptick in sales in the agency business under the label Config, where we have managed to sign both new clients and also to further increase our scope for existing clients as well. That leads us to a bright, positive outlook for 2024 as well. So I would say that we have a strong 2024 pipeline already now, which is also very nice and encouraging to see. So it looks bright in our esports business.
And again, I reiterate, full year outlook of 2024 of esports is that they are on a clear path to profitability in 2023. Let's move on to our Web3 business then, and let's start with looking at how we do it. We are breaking new ground in a new, evolving business. We are pioneers at Lucky Kat. First of all, worth pointing out and what we focus on the most is actually the game experience. That's what we put first. That's all about that. It's not actually speculating in the Web3 space. It's more of trying to convert players from traditional games into our Web3 games. Then we have also NFTs. That means that you can own your own digital assets.
In our case, for example, in our game, Panzerdogs, you can own your own dog that you can actually trade on external platforms. That adds a new technical layer and a new layer of engagement with our players as well in the game. And then also, we are adding a new currency into the game, so-called tokens, and our token is called KOBAN. We'll dig into that soon as well. But also, worth mentioning and important to point out, is that how we work with our engagement and our community. If we look at the effects of the blockchain community and consumer behavior today, is that players, they want to be part of the game development.
So we invite them, especially the NFT holders, we invite them to our community, where we're very transparent with what we want to do, and we ask them for advice and feedback on which direction should we go. So we put a lot of efforts into taking care of our community, and the feedback from that in order to make sure that the updates that we are doing in our games actually make sense for our player base. So let's look into a trailer of our two games, Panzerdogs and Cosmocadia. So that was a trailer of our two games, Panzerdogs and Cosmocadia. Cosmocadia, that will be released during 2024.
And what you could see in this trailer is as well that we have managed to increase number of connected wallets, onboarded players into Panzerdogs, and in this trailer, I think it showed over 500,000 active wallets. But now, and since we have, during the quarter and also after the third quarter, we have increased our focus on UA of the game, Panzerdogs, and now we have actually managed to increase number of onboarded players successfully. So now we have over 1.5 million players in Panzerdogs. So the focus has been now in the third quarter as well, to attract or to onboard as many Web2 players into the Web3 space, to start to show them the game, how fun the game Panzerdogs can look like.
The focus now in Q4 and Q1 next year will be to convert these players and get more of the transactional revenues in from the game as well by boosting the-- or increasing, improving the conversions of the casual players to more engaged players with the in-game transactions as well. As I mentioned as well in the Q3 Q2 report, sorry, is that that we want to do a public launch of our KOBAN token, which is our premium portfolio token. And in 2022, we did the first strategic sale of-- strategic round or a sale of tokens to strategic investors, where we sold tokens worth of over $3 million.
We still have the plan to launch the token and say sell more of our tokens as well. We are ready to deploy and make this happen. However, what we have also, and I like to reiterate that again, we need to closely monitor the market as well, and have a close collaboration and discussion with our advisors. So the plan is still there. We just need to make sure that the timing is right to make the most out of that event as well. And we will, of course, communicate more regarding that timeline later on as well. And there could be as well a potential private sale of tokens before the public sale.
We are currently investigating that, and get back to you with updates as well in due course. Also upcoming is that we will see a full release of Cosmocadia during 2024. I have tried the game now myself in the demo mode. It looks very exciting, I would say, very fun. So, I'm super excited to see that game coming out. I think that Cosmocadia targets a wider audience than Panzerdogs and another type of audience that actually could create a lot of fun and loyal player base if they do things right. But it looks promising from the build that I've seen so far as well. And we will also do an NFT collection campaign soon as well in Cosmocadia.
With that, it's time for the financial section, and I hand over to you, Anders.
Thank you. Financials, that's my part of the presentation. Looking at the profit and loss, on the top line, the quarter closes at SEK 61.3 million, which is slightly higher than last Q, but a decrease from the same quarter last year. There are two main reasons for this. Firstly, we had this very strong Q3 last year with the release of MMA Manager 2. We had initially expected to come in on a similar level this quarter with Little Nightmares planned for mid Q3. But, as Marcus mentioned earlier, this release is now confirmed for quarter four. Another factor is the discontinued business within our hyper-casual portfolio, but we will change the focus to Web3.
Adjusted EBITDA is lower this quarter, 2.7, compared to same quarter last year of 5.1, which is also an effect of the factors that I just mentioned. This flows down to operational EBIT that ends at 0.7 versus 5.1 same quarter last year. Operational EBIT is EBIT before non-operational amortization and impairment of intangible assets. In our case, that's mainly depreciation of goodwill. Net result ends at minus 19.7 versus 23.0, same quarter last year. As revenue and profit can vary between the quarters, a better view is to look at the year-to-date figures. Year-to-date shows a small decrease in revenue versus last year, going from SEK 180.9 million to SEK 176.8 million.
Meanwhile, the adjusted EBITDA actually grows from SEK 7 million last year to SEK 11 million this year. More on that on next slide. Let's take a look at net revenue and adjusted EBITDA per business area. As I said, as revenue tend to fluctuate over the quarters, looking at the business area on a year-to-date basis provides a more accurate perspective. In gaming, revenue is somewhat lower than the same period, 2022, mainly due to the lower frequency of game releases this quarter compared to last year, compared to last year, as I mentioned earlier. With a rather intense quarter four ahead of us, we expect 2023 to catch up versus 2022 on a full year basis.
As mentioned, in the previous slide, we are also seeing the effect of diminished revenue from the hyper-casual games in the gaming, in the gaming business area, which has led to a shift in focus towards the Web3 business with high margins. So part of the decrease in gaming can be seen as growth in Web3. Esports, 2022 had higher net revenue, but with a negative EBIT, EBITDA margin. This year, we have restructured the business to focus on products with higher margins. Although the table still shows negative EBITDA margin year to date, the pipeline for Q4 is very strong, so it would surprise me a lot if we could not show you a positive EBITDA on the full year. In Web3, revenue has more than doubled compared to last year.
The tokens sold in late 2022 are recognized over three years, meaning only one quarter last year contributed, while for this year, all three quarters contributes to the revenue. This, together with the NFT sales in May this year, has made the net revenue and EBITDA grow substantially. Looking at the adjusted EBITDA margin, there's a strong overall growth. On group level, we increase our adjusted EBITDA by SEK 4 million or 58%. The margin is growing from 4% to 6%. Let's have a look at the balance sheet then. I'll run you through all the columns and boxes here. Other is mainly accounts receivable. Cash, we will look into on next slide.
Intangible assets mainly consist of our goodwill, which is depreciated over five years. This will change when we move over to IFRS next year, where it is, to be evaluated every quarter. Intangible assets also consists of the capitalized costs. Other liability is accounts payables and accrued income for token sales, that we made last year. Bank borrowing is just what it sounds like. Earn-out provisions relates to the acquisition of Lucky Kat and are accounted to the maximum possible amount, whereof SEK 43 will be settled in cash. Of course, this is given that Lucky Kat reaches their financial goals for this year.
Our net interest-bearing debt by EBITDA ratio for the last 12 months is getting better every quarter, moving from 2.7 in quarter one to 2.0 in quarter two, and now only 1.9 this quarter, which is a good figure. So cash. We started the quarter at SEK 17.2 million. Cash flow from operating activities includes EBITDA, financial and tax items, but are mainly changes in working capital. Accounts receivables has decreased as we have received payments, and accounts payables has increased due mainly due to the timing of royalty payments. Cash flow from investment activities are mainly payment of earn-out to Playdigious and capitalized work on a on own account.
Cash flow from financing activities are new share issue related to the same as I just told you, the earn-out in Playdigious, and change in bank borrowings. We end the quarter at SEK 24.4 million, which is an increase of SEK 7.2 million during the quarter... which is good. I'll hand over to you, Marcus.
Thank you, Anders, and thank you for going over the financials. So let's look at the road ahead and give you a little bit of an outlook as well. And as I just mentioned, we are now we have been preparing ourselves to increase the pace significantly within Playdigious by doubling the amount of game releases in a single year. That means, 2024, where we are targeting to release somewhere between six and eight new titles at least. We are now also integrating the acquisition of Fall Damage as well. Looks promising so far, and together with the team at Fall Damage, also set the go-to-market strategies, including as well a publisher.
As I mentioned, we are now also scaling up the UA in MMA Manager 2 now in the fourth quarter, after the initial UA test that we've done now in the third quarter, also again showing significantly improved retention rates for day one and day seven. And we also see now that the long-tail retention rates are improving. So excited to see that as well now in the fourth quarter and going forward. And again, let's reiterate it one more time. We see that our esports business in Fragbite AB is on a clear path to become a profitable company now in 2023 for full year numbers.
We are prepared to as well do a public launch and sale of our KOBAN tokens, and we'll get back to you with further announcements around timing and so on. But again, we have a close collaboration and discussion with our advisors and following the market developments closely. So it's also a timing effect on when we will do this. And again, we will continue to focus on converting these onboarded Web2 players into our Web3 games. We have put a lot of efforts and cost, of course, to for user acquisition, marketing of these players. Now it's about converting them into becoming paying players as well of the games. So that's the short outlook in the short term. And then to summarize, why Fragbite Group?
First of all, we have a solid, profitable base. So that's thanks to a fantastic work by all companies involved in Fragbite Group. It's been hard work from all subsidiaries this year, but we have a clear path going forward as well to further increase and improve our profitability as well. Secondly, we have a unique market position where we can leverage our expertise within all these three areas: gaming, esports, and Web3. And especially now, once we have brought in Fall Damage, we can even further elevate our synergies within the group both operative synergies and as I said, as well, cost synergies that we clearly see.
There's already a good collaboration between Fall Damage and other group companies as well within Fragbite Group. We have a broad exposure to different gaming segments as well within the group, and we have further broadened that exposure, thanks to the acquisition of Fall Damage that is a PC title. So we will have a more, let's say, broader revenue streams going forward once the game, ALARA Prime, is released on PC. So not only mobile revenues. We have a proprietary and proven, both internal, our own IPs, but also external IPs in our portfolio. You see some of the IPs behind me and Anders here on the screen as well.
As well, we are on the forefront within Web3, where we put a lot of efforts as well into being at the forefront in a regulated environment. So with that, I think that we are ready for our Q&A session. Are you ready, Anders?
Well-
Good.
Go ahead.
Let's, let's start with the first question coming in here. With the amount of players in Panzerdogs, shouldn't revenue tick up considerably in Q4? And, I would say, as I just mentioned, we have focused now on getting the players in through an extensive UA campaign. We have a hard work now on converting all these players now into becoming paying players as well by also adding new strategies as well in order to engage these players. So, that's the focus for sure now, in conversion of these players going forward. Okay, next question is: When will Fretless be launched in 2024?
We haven't announced any launch date yet, so we will have to come back with a clear launch date later on. Then the next question is: Will we see ALARA Prime on the Swedish Cup Final? Yes, you will. As we just mentioned, you will see the ALARA Prime both the trailer on the live stream, and we have some other events live at the Space Arena, where we have the tournament actually being played, and there's a huge gaming center there as well. So, the ones who are there physically attending the finals of Swedish Cup, you'll see ALARA Prime for sure. Next question is: How many KOBAN tokens does Fragbite hold themselves, and what did you pay for that?
That's a question that I can't answer today. I'm not sure if we have disclosed that either, once we did that transaction during summer 2022. Can you give me some kind of guidance for Q4 this year? No, unfortunately, we can't. We haven't included that, the guidance in the report. What I can say is that we are setting the go-to-market strategies now for ALARA Prime as well. So I think that you'll hear more when it comes to guidance during next year and beyond once we have fully integrated Fall Damage into Fragbite Group as well.
For sure, as I mentioned in the CEO statement, we are targeting a strong finish or round off of 2023, for sure. Especially now also with the big game releases now in December. Little Nightmares, for example, now by mid-December in Playdigious is one example. As I mentioned, Swedish Cup, esports business should show profitability for full year 2023. So that should lead to, or that will lead to a strong round off of 2023. Okay. Next question is that, what kind of payback ROAS days do you target with UA spending? Positive effect in net financials of SEK 3 million, what is behind this effect? I don't really understand that one.
I think we need to get back on that one as well. Okay, next question is, how much—what’s the net sales and the EBITDA in Playdigious? And we don't show our company specifically exactly how much they are generating in revenues and EBITDA. But what I can tell you for sure is that it's a significant part of the revenues in EBITDA in the gaming segment that stems from Playdigious. Lucky Kat seems to decrease their profitability. Why is that? And shouldn't the EBITDA be relatively stable based on deferral of token sale?
First of all, it's worth mentioning that you'll have revenues and EBITDA from the Lucky Kat business in both gaming and Web3 segments, because we still have some revenues in the gaming from the hyper-casual portfolio. Again, I'd like to reiterate that we have put a lot of efforts now in this quarter on UA to bring in a lot of new players into the game for the future and for further growth. We are actually increasing our efforts in Web3 because we still want to be at the forefront in Web3. With the share price being significantly below price when issuing shares for the acquisitions, are share repurchases an option with cash flows expected in full year 2024?
Of course, that's not something that we can comment on, but you should also know that we are listed on a Nasdaq First North Growth Market. That means that that's not a regulated market. So share buybacks, per se, is not something that we are obliged to do, being on a non-regulated market such as First North. Should we have been on the Nasdaq Main Market, that could have been an option since that's included in the rule book, but that's not included in the rule book of First North as well. So and that's not an option, simply. What was the reason for ALARA Prime to sell at this point? Were they at risk of running out of capital?
How big is the yearly burn rate of their team? So I think that if we look at the acquisition of Fall Damage and the game ALARA Prime, they really wanted to find a new home as well, and parting ways with a previous investor in good faith, I would say. We still have discussions of potential collaboration in the future as well. And I think why they chose Fragbite Group, first of all, you should listen in to the webcast that we did in October when we announced the acquisition and you heard the CEO, Anders Gyllenberg, talking about why they chose Fragbite Group.
But from my gut feeling and what we have from my understanding, when we have been talking to the founders of Fall Damage, they see clear synergies in Fragbite Group, that we can help them to elevate their business as well. And that's what they found very positive for their business. And also we share the same ambition and view on the future as well, on how to develop the studio as well. Regarding burn rate and so on, that's not something that we comment on specifically. So can't comment on that. And that was the last question for this Q&A session.
See you all in February next year, where we will be presenting the presentation of for the year-end report of 2023. Thank you, and have a nice day.
Thank you. Bye-bye.