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Leaf Mobile CEO Darcy Taylor: Aiming to double game portfolio by year-end

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How do you see the future of mobile gaming revenues – is it going to be primarily from advertisements, or will it be more skewed towards in-app purchases and paid games. And how are you playing this space?

I think it’s going to be a mix of those payment methods, primarily depending on the type of games that you are in. If we look at our games, we are from predominantly in-app purchases, with some advertising revenue that makes up roughly 20-30% of our revenue within our games. And we see that as a comfortable balance that ensures that the gameplay is still engaging for the players without over-indexing ads and deteriorating the player experience. 

Coming to your technology platform IdleKit, what does it offer to developers and how does it generate revenues?  

I think the easiest way to explain the IdleKit platform is that it allows developers on the platform to build games faster, cheaper, and with a higher propensity of success or monetization. We make revenue off it through developers on a SaaS-based licensing model. Plus we participate on the upside of the gross economics on the success of the games, depending on where we participate. 

If we look at games on the platform right now, I think we are close to eight games operating on the IdleKit platform that’s within our group as well as third-party developers. It’s a margin, a sweetener for our business and more importantly, it provides a very strong or proven game platform. We are doing a framework for those developers to utilize so that they are successful with their game launches.

Tell us a bit about the deal with Truly Social Games. How is this expected to benefit Leaf Moblie?

We have worked with Truly Social for several years. They were the co-developers on the Archer game. So we have gotten to know not only the management team but also their lead developers, understanding how they work as far as they are thinking on a culture or game player basis. 

And after that sort of relationship through the development period, we thought they would be a good fit within the Leaf Group and enabling them to fulfill their vision of where they wanted to take the company.  We have worked with them in the past, so there is no onboarding. It’s progressing as we expected and its allowing us to further scale, and develop more games within the group. 

When it comes to future acquisitions, what kind of firms are you looking at?

We are quite active in this space, looking at multiple potential partners globally. At the moment, the first place that we look at for a potential new M&A is within our IdleKit partner ecosystem. We feel that is a very robust way to get to know partners and to understand if there is a fit or a need for them to go down this path of acquisition. And then we are looking for accretive companies that add or build to our group. 

We look for seasoned entrepreneurs that want to take the next step in their growth trajectory with their business. And then there are some other lenses that we look at, like does the game portfolio fit with ours, can we add value to the group, is there some audience arbitrage elements that can benefit, as well as tech stack, team culture, etc. 

We have been very successful. We have had three acquisitions in the last 12-18 months. And we will continue to look for potentials going forward.

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You have doubled your revenue growth last year and tripled your adjusted EBITDA growth. Should investors expect a similar trend going into the next couple of years?

If you look at where we are situated right now, we have 10 games driving the revenue and bottom line as you you’ve highlighted. Over the last 12 months, it’s roughly $94 million in top-line revenue at about 10% adjusted EBITDA emerging. 

We will look to double our game portfolio by the end of this year. We have more games in development currently than we have had to date. We will have roughly 17 plus games coming into the market in the next two years. We see that as an early indicator of how much we will be scaling our business and we see that revenue recognition coming in the late Q3, Q4 this year. 

We are really enthusiastic about our next 12 to 24 months. And we think we are just going to continue to build on strength while also looking at M&A possibilities to round out our group growth. 

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In a recent interview, you had mentioned that building brand visibility would be a major priority as most investors are yet to discover the growth opportunity that Leaf provides. Why do you think that’s the case, especially with mobile gaming being a popular and highly discussed industry?

It’s more linked to the public markets that we are currently listed in, which is predominantly Canada. Canada has usually been focused more on mineral resource-based businesses. I think that’s changing now. I think tech is starting to play a larger role within the financial ecosystem in Canada. We came out onto the TSX in February and have been building upon that with some strong news and financial results. 

We have spent this summer building the foundation and awareness across institutionals as well as additional analyst coverage. We have three analysts covering us now and we will continue to build throughout the fall. Also, our most recent press release this morning, highlighting the NBC Universal partnership to launch the Office game, is also going to build awareness for the brand. 

We are just going to continue to execute our plan and we feel that the fundamentals of the company and the IP and games that we are launching will start to bring further awareness to us as we go forward.

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For more insights into Leaf Mobile, read the latest earnings call transcript

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