Animoca Brands reports bookings fell 30% for 2023 fiscal year

Animoca Brands reported that its bookings dropped 30% from $402 million in 2022 to $280 million in 2023, the company announced today.

The decrease in bookings was mainly due to the slowdown of economic activities in the overall Web3 market and the challenges faced by crypto-related businesses following the FTX scandal, the collapse of Luna and TerraUSD, and similar events connected to the crypto winter that developed in 2022 and persisted in 2023.

The Web3 gaming company issued its unaudited key financial and business highlights for the year ended December 31, 2023, as well as quarterly results for the period ended March 31, 2024. Despite the decrease in bookings year-over-year, performance improved toward the end of 2023 as digital asset markets strengthened, the company said. 2023 Q4 bookings increased 59% over the prior quarter.

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.

It’s worth noting that the results are unaudited, based on Animoca Brands’ press release.

The bookings in 2023 came from a variety of business segments. Animoca Brands reported $77 million in bookings in digital asset advisory activity, which includes fees from token advisory, trading, and blockchain node operations. It also reported bookings of $182 million in sales from subsidiaries and projects incubated by Animoca Brands, which include token sales, NFT sales, in-app purchases, and other non-blockchain sales.

The company also said it saw $21 million in bookings from investment activity, which includes realized gains from digital asset investments and investment management fees from Animoca Ventures. And it said that digital asset advisory revenues and realized gains from investment activity are generated by Animoca Brands headquarters and comprise 35% of total booking for 2023.

Animoca Brands said it had operating expenses of $246 million for the 12 months ending on 31 December 2023, up from $234 million for 2022.

Total expenses slightly increased in 2023 due to increase in the number of subsidiaries operating under the Animoca Brands group as a result of acquisitions in 2022. The increase was offset by cost reduction initiatives across all subsidiaries as well as the addition of a new business line providing digital asset advisory services. The second half of 2023 saw a 9% decrease in operating expenses compared to the first half of the year.

Company assets

Animoca Brands said it has cash and stablecoin balances of $175 million. And it has digital assets held on the balance sheet of $203 million. Approximately 70% of these assets are held in a combination of BTC, ETH, APE, and MATIC.

Off-balance sheet token reserves for Animoca Brands and its subsidiaries of approximately $1.6 billion, which comprise approximately $930 million in liquid tokens (tokens listed on a top-tier centralized digital asset exchange and/or with a 24-hour trading volume of more than $25 million) and $665 million in lower-liquidity tokens (Lower-liquidity tokens are defined as tokens listed on lower tier centralized exchanges or decentralized exchanges and/or with a 24-hour trading volume of less than $25 million).

The reserves include Animoca Brands tokens such as SAND, EDU, REVV, TOWER, GMEE, and others. And the company has minority investments in over 450 portfolio companies.

The company report total capital raised from equity and convertible note issuance of $83 million during fiscal year 2023. The company released 2020 audited financial statements in June 2023, and is currently in the process of auditing 2021 financial statements.

Key business highlights

Despite broad sector headwinds during the prolonged crypto winter, throughout 2023, Animoca Brands said it continued to focus on developing, expanding, and funding its products, services, and subsidiaries, enabling further diversification of its business.

Throughout 2023 Animoca Brands successfully expanded its Digital Asset Advisory (“DAA”) business, which was established in 2022 to provide Web3 projects with token advisory, tokenomics, marketing, listing, node operation, and trading services.

In FY2023, DAA accounted for 27% of total bookings, making it the company’s fastest growing segment. Many of the Web3 projects served by the DAA business are sourced from the more than 450 companies in Animoca Brands’ minority investment portfolio, which has resulted in a strong synergy between these two business lines.

Launch of Open Campus and EDU Token

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.

At its core, Open Campus is an ecosystem that connects learners, educators, content creators and educational institutions, enabling new ways of collaboration and value creation through blockchain technology.

Open Campus’s governance and utility token is EDU Token, which was launched in April 2023 on Binance. EDU Token also powers Open Campus’s core protocol, including EDU Chain, Open Campus ID and Publisher NFTs. By the end of FY2023, Open Campus had onboarded over 50 companies (representing up to 20 million addressable learners). To date, Open Campus has sold out two seasons of Publisher NFTs, raising over $670,000 and minted over 130,000 Open Campus IDs.

Launch of Mocaverse and Moca ID

Mocaverse is like Animoca Brands’ version of the metaverse. It is the membership non-fungible token (NFT) collection for Animoca Brands’ ecosystem of subsidiaries, projects, portfolio companies, shareholders, and partners.

Through Mocaverse, the company is leveraging this ecosystem to build the largest Web3 game publishing platform. Users of Mocaverse will be able to access games and participate in other on-chain activities to earn Realm Points and incentives provided by partners.

In March 2023, Animoca Brands completed the initial Mocaverse NFT mint, generating 3,552 ETH ($5.5 million at the time) in sales volume. In October 2023, Mocaverse introduced Moca ID, an on-chain decentralized identifier (DID) for Animoca Brands’ ecosystem. By the close of 2023, Mocaverse had attracted 207,738 MOCA IDs (1.5 million as of the date of this announcement) and more than 20 partners to its ecosystem.

Partnership with TON; Gamee on Telegram

On November 28, 2023, Animoca Brands became the largest validator on TON Blockchain as part of a strategic collaboration with the TON Foundation that will facilitate rapid viral onboarding of Telegram users into Web3, using as catalysts Gamee games and the games of other companies in Animoca Brands’ portfolio.

This move aims to integrate Web3 gaming into Telegram, a platform with an existing (crypto-friendly) user base of over 800 million, as recently demonstrated by the official launch of Notcoin (NOT) in January 2024.

Animoca Brands’ game studio Gamee first launched its games on Telegram in 2016 when it became the global gaming launch partner of Telegram Messenger. Today, Gamee is the largest gaming community on Telegram, with over 80 million users and 3 million daily active users mining WatPoints.

Gamee has accrued 10 billion gameplays across 50 casual games on its mobile gaming platform Arc8 and the @gamee bot on Telegram.

Continued expansion of The Sandbox

The Sandbox is a gaming metaverse where players and creators can make 3D assets and experiences that can be monetized via NFTs.

The Sandbox provides a voxel-styled universe with gameplay based on digital ownership and robust in-game economics based on the utility token SAND and the other tradable assets within the virtual world. The circulating market capitalization of SAND increased to $1.2 billion as of the end of 2023, from $600 million the previous year.

The Sandbox generated a total of $64 million of new bookings in 2023 from the sale of SAND and $5 million from the sale of NFTs. At the end of 2023 The Sandbox had 5.8 million total users, 280,000 creators, and more than 200 partners.

Capital raising activity

Animoca Brands’ subsidiary TinyTap raised $5 million via Simple Agreements for Future Equity (SAFEs) from investors including Liberty City Ventures, Kingsway Capital, GameFi Ventures and others in April 2023.

Subsidiary Anichess raised $1 million in an oversubscribed seed round via SAFEs from investors including GameFi Ventures, The Operating Group, Koda Capital, Bing Ventures, 708 Capital, Asymmetry Capital, and others in June 2023.

Animoca Brands issued $5 million in convertible notes to Mitsui & Co. in May 2023 at a conversion price of Australian$4.5 per share, based on the same terms of the convertible note issuance announced in September 2022.

Animoca Brands attracted $32 million for its project Mocaverse (of which $20 million was received in 2023) in two tranches via SAFEs for new ordinary shares of Animoca Brands, which included utility token warrants. Participants in the raise were investors including CMCC Global, Kingsway Capital, Liberty City Ventures, GameFi Ventures, Block1, OKX Ventures, Foresight Ventures, Polygon Ventures, Dapper Labs, and others in December 2023.

Investors who participated in the company’s 2021 capital raise of $139 million in two tranches in July 2021, exercised their options to subscribe for one additional share for every four subscription shares under the 2021 Share Subscription Agreement, raising an additional $30 million via the issue of 35.4 million shares as per the 2021 warrant agreement.

Thought leadership

In April of 2023, Yat Siu, Animoca Brands’ co-founder and Executive Chairman, gave a TED Talk titled “The Dream of Digital Ownership, Powered by the Metaverse”. The talk was well-received and has been viewed approximately 2.4 million times on TED’s platform and TED’s YouTube channel.

In March of 2023, Animoca Brands’ CEO of Investments Robby Yung was invited to present to the United Kingdom All Party Parliamentary Group on Metaverse and Web3 regarding the role of Web3 in the metaverse. In December 2023 Yung was also asked by the United Kingdom All Parliamentary Group on Blockchain Technologies to present on the adoption of Web3 technology in the U.K. and how the U.K. government can be more supportive of the growth and regulation of Web3 businesses in the country.

Animoca Brands also reported a number of other thought leadership moments and awards as well.

Expansion into Saudi Arabia

In October 2023 the company announced it entered into a strategic partnership with Neom in Saudi Arabia to drive regional Web3 initiatives in line with the Saudi Vision 2030 plan. Additionally, the company and Neom Investment Fund entered into a term sheet for a proposed $50 million investment. That includes $25 million in convertible notes at a conversion cap price of A$4.50 per share $25 million to be invested in purchasing the company’s shares on the secondary market.

Animoca Brands is working with NEOM to develop Web3 enterprise service capabilities with global commercial applicability, which will be deployed to support technology advancements in Riyadh and the Neom region. These projects will include a range of Web3 initiatives, including plans to establish a hub within Neom to nurture the local Web3 ecosystem and bring in extensive capabilities from across Animoca Brands and its subsidiaries, partners, and broad portfolio of investments.

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

In the first fiscal quarter ended March 31, 2024, Animoca Brands reported unaudited bookings of $90 million, compared with $52 million in the first quarter of 2023, representing a 72% increase. Bookings in the first quarter of 2024 include the following: $65 million from Digital Asset Advisory (DAA), which includes fees from token advisory, trading, and blockchain node operations.

Animoca Brands also saw $19 million in bookings from its Web3 operating businesses: subsidiaries and projects incubated by the company, which include token sales, NFT sales, in-app purchases, and other non-blockchain sales. And the company saw $6 million in bookings from investment management, which includes realized gains from digital asset investments and fees from Animoca Ventures.

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

The company had operating expenses of $55 million for the three months ending on 31 March 2024, compared with $64 million in the first quarter of 2023, representing a 14% decrease.

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 cash and stablecoin balances of $291 million.

And it had liquid third-party digital assets of $558 million, composed of $278 million in available-for-sale assets and $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 are $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. And the firm has minority investments in over 450 portfolio companies.

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, 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.

Global expansion in Q1 2024

In March the company entered into a deal with King Abdulaziz City for Science and Technology (KACST) to collaborate to advance the Web3 and gaming ecosystem in the Kingdom of Saudi Arabia.

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 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.

Q1 2024 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.