From Zero to Hero: The New Role of Net Interest Income in Earning
Top Public Gaming Companies Comps - 20230315
Here is a list of top public gaming companies that have reported their full-year 2022 numbers in NA and EMEA:
27 out of 32 companies are EBITDA positive.
21 out of 32 companies have more cash than debt.
The total available net cash is 46.64 billion, or 11.47 billion excluding Microsoft and Meta.
And for APAC:
27 out of 30 companies are EBITDA positive.
27 out of 30 companies have more cash than debt.
The total available net cash is 50.16 billion, or 30.03 billion excluding Nintendo.
Net Interest Income!!!
My list didn't include the interest income figures, but one surprise finding while going through their filings was the significant rise in net interest income for many companies, a line item that hasn't received much attention in the gaming industry due to low-interest rates in years.
Using Activision Blizzard as an example, the company generated $165 million in interest income for 2022, representing a staggering 3,200% increase year-over-year. In Q4 of 2022 alone, the company generated $97 million in interest income, which is a remarkable 9,600% increase on a quarter-on-quarter basis. Moreover, the company's interest expense remained at $27 million, thanks to having locked in at the previous low rates, bearing interest at a weighted average rate of 2.87%.
To put this into perspective, the interest income alone contributes approximately 24% of Activision Blizzard's total net income for Q4 2022. If we subtract the interest expense for the quarter, which was $27 million, the remaining interest income amounts to 17.37% of the company's total net income which is still SIGNIFICANT. This’s the complete opposite of Silicon Valley Bank.
Connecting Opportunities
A newly completed Eight-ball mobile game is currently seeking a publisher to bring the game to market
An Israeli talent studio has developed a high-quality, skill-based Bingo game for mobile with strong metrics and is currently seeking investment in the low-seven figures
Thanks weiming, I find myself asking what's the broader implication here? Any company can generate interest income by leaving cash on balance sheet. The challenge is whether gaming companies can find good ROE for their shareholders by deploying cash.