Animoca Brands investor update for the quarter ending on 31 March 2024

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10 July 2024 - Animoca Brands Corporation Limited (“Animoca'' or the “Company”) is pleased to report key unaudited financial and business highlights for the three months ending on 31 March 2024 (“Q1 2024” or the “Period”).

 

These results include contributions from the Company’s key business units including but not limited to The Sandbox, TinyTap, Darewise Entertainment, nWay, Eden Games, Blowfish Studios, GAMEE, Pixowl, Forj, Grease Monkey Games, Motorverse (previously known as REVV Motorsport), and Crazy Defense Heroes (TOWER), in addition to Web3 services revenue and revenue arising from portfolio investments and partnerships.

 

Key financial highlights as of 31 March 2024 (unaudited, non-IFRS measures)

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• Bookings of US$90 million for the 3 months ending on 31 March 2024(1), compared with US$52 million in the first quarter of 2023, representing a 72% increase. Bookings in the first quarter of 2024 include the following:

(i) $65 million from Digital Asset Advisory (DAA), which includes fees from token advisory, trading, and blockchain node operations; 

(ii) $19 million from Web3 Operating Businesses: subsidiaries and projects incubated by the Company, which include token sales, NFT sales, in-app purchases, and other non-blockchain sales;

(iii) $6 million from Investment Management, which includes realized gains from digital asset investments and fees from Animoca Ventures. 

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• 80% of Q1 bookings were achieved by the Digital Asset Advisory business and other projects driven by Animoca headquarters.

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• Operating expenses of $55 million for the 3 months ending on 31 March 2024, compared with US$64 million in the first quarter of 2023, representing a 14% decrease.

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• Asset balances as of 31 March 2024 were reported in a prior announcement (refer to announcement of 17 April 2024). For convenience, the balances are included below:

  • Cash and stablecoin balances of US$291 million(2).

  • Liquid 3rd party digital assets of US$558 million, composed of US$278 million in available-for-sale assets and US$280 million from major unvested tokens in the balance sheet. Major liquid tokens held on the balance sheet include ETH, APE, EDU, BTC, and MATIC; these tokens comprise approximately 81% of the Company’s total available-for-sale digital assets. Major unvested token balance is predominantly from unrealized valuation gain from PIXEL. 

  • Off-balance sheet token reserves of US$1.8 billion, comprising tokens issued by Animoca Brands majority-owned Web3 subsidiaries. These reserves include Animoca Brands tokens such as SAND, EDU, ASTRAFER, QUIDD, PRIMATE, REVV, TOWER, GMEE, and others.

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• Minority investments in over 450 portfolio companies.

 

Note (1): “Bookings” is a non-IFRS measure of the total sales activity of the Company and is commonly used by companies in the gaming sector to more effectively represent economic performance. It represents the total sales activity of the Company combining revenue reflected on the income statement and deferred revenue, which is a liability on the balance sheet. Deferred revenue is an accounting concept that represents payments received for sales that have not yet been earned. It generally applies to digital assets sold in the Company’s games and applications. Although the Company collects payment for these sales, it is not able to recognize them as revenue on the income statement because there is an obligation to provide services within those games and applications in the future. As services are provided over time, deferred revenue will be recognized as revenue. 

 

Note (2): Cash and stablecoin balances increased substantially from $175 million at 31 December 2023 to $291 million at 31 March 2024 as a result of a realized gain on token transactions in The Sandbox, a controlled subsidiary of Animoca Brands. The gains from these transactions impact Company cash balances, but are not included in core operating income represented by Bookings.

 

Business Model Update

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The Company has continued to expand on its vision to deliver digital property rights to the world's Internet users thereby creating a new asset class, building new economies with a more equitable digital framework that will improve people’s lives. The initial strategy  focused on developing the gaming sector and making ecosystem investments, and over the past 18 months the Company has attracted world-class talent that has enabled additional business capabilities that allows it to execute on its vision in a more diversified and strategic manner. The Company’s business model now comprises three key pillars that are synergistic with one another; these are briefly described below.

 

1. Digital Asset Advisory (DAA)

Animoca Brands offers a full suite of services for digital asset projects that are looking to bring a token or NFT launch to market. Services include, but are not limited to, tokenomics design, smart contract advisory, exchange listing support, launch strategy, decentralized autonomous organization (DAO) setup, node operations, and liquidity provisioning. In FY2022, DAA made up approximately 25% of the Company’s total bookings, and in Q1 2024, DAA made up approximately 72%. There are currently over 150 projects in the pipeline for DAA services. DAA revenue is primarily earned via advisory fees (in tokens) and trading fees, and provides diversification and resilience to the Company’s business model under volatile market conditions.

 

2. Web3 Operating Businesses

One of the core objectives of the Company since 2018 has been to build Web3 applications and platforms, via Animoca Brands, its subsidiaries, and its investments. The Sandbox, Mocaverse, Tinytap, Anichess, and other projects are developing Web3 products and platforms that span gaming, metaverse, AI, education, and digital identities, among other areas. In Q1 2024, the Company’s operating businesses made up approximately 22% of bookings. Revenue of operating businesses is earned primarily via token and NFT sales, as well as transactions within the platforms, and tends to be concentrated around application and platform launches.

 

3. Investment Management

Animoca Brands has been investing in Web3 technologies since 2018, and this strategy has significantly helped the Company to gain deep industry expertise. As of Q1 2024, Animoca Brands has over 450 investments in its portfolio, including investments made from the Company’s balance sheet, its venture fund Animoca Ventures, and various accelerator partnerships. Investment management revenue is earned through management fees from Animoca Ventures and the sale of tokens and exits from equity positions in the Company’s portfolio. 

 

The DAA business originated from the Company’s reach in the Web3 ecosystem via its Investment Management business, as well as its Web3 Operating Businesses. Today, the vast majority of projects in the DAA pipeline have been sourced from the over 450 minority investments in the Company’s investment portfolio and network, thereby providing a revenue stream from the portfolio that is in addition to realized gains. The Operating Businesses also provide opportunities for DAA and investments through their various partnerships and activities.

 

In addition to these three pillars, the Company is developing a fourth pillar, expected to launch later in 2024, based on building Web3 and blockchain applications for larger institutions, such as the Company’s partnership with NEOM in Saudi Arabia (refer to announcement of 30 October 2023). Animoca Brands is also pursuing initiatives with stablecoins and decentralized physical infrastructure networks (DePINs).   

 

Key business highlights as of 31 March 2024

 

Digital Asset Advisory (DAA)

In Q1 2024, DAA accounted for 72% of total bookings, making it the Company’s largest revenue contributor. During the Period, the Company invested in and supported notable token projects including  Farcana (FAR), Pixels (PIXEL), and zkSync (ZK), provided trading services for more than 15 projects, and served as node operator  for 17 projects, including TON and RONIN.

 

Given the considerable Web3 expertise that Animoca Brands brings to customers and partners, many of the more than 450 Web3 projects that the Company has invested in represent potential future sources of business for DAA. By the end of Q1 2024, driven by improved market sentiment and activity, Animoca Brands had built a strong pipeline with over 150 deal opportunities for its DAA. 

 

Mocaverse and Moca ID

The Company continued to build and expand the Mocaverse platform, which leverages Animoca Brands’ ecosystem of subsidiaries, projects, portfolio companies, and partners with the objective of building the largest Web3 game publishing platform. Participants in Mocaverse can access games and participate in other on-chain activities to earn Realm Points and incentives provided by partners. Key achievements of Mocaverse in Q1 2024 include: 

 

• Moca ID, introduced in 2023, is an on-chain DID (decentralized identifier) for Animoca Brands’ ecosystem (for project background, please see Moca ID’s Medium page). At the end of Q1 2024, Mocaverse had created 1.5 million MOCA IDs for new users, representing a 500% increase from the prior quarter.

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• Mocaverse established new partnerships with global digital asset exchanges OKX and KuCoin. Through these partnerships, each exchange onboarded over 150,000 new wallet customers, highlighting the appeal of the Mocaverse ecosystem. Mocaverse participants that were onboarded completed gamified “missions” to earn Realm Points and build engagement with the Company’s partners.

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• Established user activation partnerships with Pixelmon, Param Labs, and XION whereby Moca ID and Moca NFT holders will receive token airdrops, subject to eligibility criteria.

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• Partnered with decentralized cloud computing platform Aethir to support the latter’s initial node offering. Moca NFT holders registered for 760 whitelist spots to access a dedicated pool of 760 nodes. Aethir is building decentralised cloud infrastructure for gaming and AI, and successfully launched its utility token ATH in June 2024. Aethir currently has over 200,000 users operating nodes in over 23 locations.

 

Open Campus and Open Campus ID

Animoca Brands is an incubator and launch partner of Open Campus, a decentralized platform that aims to tackle the key challenges facing the education sector. Notable developments of this project during the Period are provided below. 

 

• In January Open Campus launched Open Campus ID (OC ID), a blockchain protocol that issues immutable, virtual representations of learners' online personas. Over 100,000 OC IDs were claimed by the end of March 2024, marking a significant step in adoption of Open Campus’s Web3 education protocol. The goal of OC ID is to empower students, educators, and educational institutions around the world by enhancing educational experiences and providing learners with control over their educational data. The protocol will be integrated with the learning systems of participating schools and other educational institutions in the Open Campus Alliance to enable the issuance of on-chain verifiable credentials in a privacy-preserving manner made possible by the learner profiles linked to each OC ID (for more information about OC ID please refer to the announcements of 24 January 2024 and 18 March 2024). 

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• In February Open Campus and Animoca Brands launched the OC100 in partnership with ForbesWeb3 (refer to announcement of 1 February 2024). OC100 is a competition that seeks to identify the top educators and thought leaders in Web3, offering winners the opportunity to be spotlighted by Forbes, connect with leading Web3 innovators at OC100 events hosted by Animoca Brands, and enjoy early access to Open Campus's products.

 

Anichess

Anichess is the Company’s chess-based online strategy game being developed in partnership with Chess.com and five-time World Chess Champion Magnus Carlsen. 

 

In January, Anichess launched its player-versus-environment (PvE) daily chess puzzles (refer to announcement of 16 January 2024), and since then has secured over one million  registered players and 150,000 daily active users who have collectively solved over 50 million chess puzzles. 

 

On 11 March Anichess launched its Season 1 leaderboard ranking players based on points accumulated from solving daily puzzles and collecting Orbs of Power obtained through gameplay and participation in social events. 

 

GAMEE

GAMEE, the Company’s gaming studio and casual gaming platform, has grown notably since becoming a global gaming launch partner of Telegram Messenger in 2016. Over the course of Q1 2024, GAMEE continued to expand its operations on Telegram, developing its WAT Protocol while working to integrate Web3 gaming into Telegram’s platform, which currently has 900 million users. Today, GAMEE has built up significant distribution via Telegram and has launched the WAT Protocol on The Open Network (TON), exceeding 3 million daily active users and 5 million active followers on social media (for more information please refer to GAMEE’s Q2 2024 update). 

 

Global expansion

In March the Company entered into a Memorandum of Understanding (MOU) with King Abdulaziz City for Science and Technology (KACST) to collaborate to advance the Web3 and gaming ecosystem in the Kingdom of Saudi Arabia (refer to announcement of 11 March 2024). Founded in 1977 and previously known as the Saudi Arabian National Centre for Science and Technology, KACST operates as an independent governmental entity tasked with fostering the advancement of science and technology, as well as facilitating collaboration among various scientific institutions in the KSA. Under the partnership, Animoca Brands and KACST will work together to strategically drive the advancement of the Web3 ecosystem and gaming ecosystem in Saudi Arabia, including establishing a physical Web3 Hub located in Riyadh to incubate Web3 startups and blockchain technologies in the region.

 

Mocaverse entered into various partnership agreements for strategic expansion of Mocaverse Partner Network in the South Korean market to bridge, integrate, and export Korean Web3 culture through a multi-partner activation plan in key sectors including K-pop, digital IP, GameFi, and others.

 

Thought leadership

In January 2024 the United Kingdom All Party Parliamentary Group on Metaverse and Web3  invited Animoca Brands’ CEO of Investments Robby Yung and The Sandbox co-founder and COO Sebastien Borget to present on the role of the games industry in the development of Web3 and the metaverse. Mr Yung had previously shared his views with the parliamentary group in March 2023. The Company continues to provide global thought leadership in numerous presentations, podcasts and articles, and Executive Chairman Yat Siu continues to serve on the Task Force on Promoting Web3 Development established by the Government of the Hong Kong Special Administrative Region, which provides recommendations on the sustainable and responsible development of Web3 in the territory.

 

Capital raising activity

The Sandbox raised US$20 million in convertible notes with two-year maturity and 10% per annum interest from institutional investors including Kingsway, Animoca Brands, TGV, and LG Group, at a valuation cap of US$1 billion. The raise was concluded in Q1 of this year (refer to announcement of 6 June 2024).

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Additional illustrations

 

The following images represent supplemental illustration of information and figures provided above:​