Mighty Kingdom Reports $1.3M Quarterly Game Revenue and 60% Operating Cash Flow Improvement
Mighty Kingdom Limited reported a 10% increase in quarterly game revenue to $1.3 million and a 60% improvement in net cash used in operating activities for Q2 FY25, supported by a new $1.2 million secured debt facility while awaiting $2 million in government incentives.
- 10% quarter-on-quarter increase in game revenue to $1.3 million
- 60% improvement in net cash used in operating activities versus previous quarter
- Secured $1.2 million debt facility to support working capital
- $2 million in delayed government grants and tax incentives outstanding
- Ongoing development and live operations of key titles with partners ESGG, Google, and Spin Master
Revenue Growth and Operational Efficiency
Mighty Kingdom Limited (ASX: MKL) delivered a solid operational update for the December 2024 quarter (Q2 FY25), reporting a 10% increase in game-generated revenue to $1.3 million compared to the prior quarter. This growth was primarily driven by the newly launched Power Rangers Mighty Force and sustained contributions from ongoing partnerships with East Side Games Group (ESGG), Google, and Spin Master.
Importantly, the company achieved a 60% improvement in net cash used in operating activities, reflecting tighter cost control and operational efficiencies. Despite this progress, cash flow was constrained by delayed receipts of government incentives totaling $2 million, owed for FY24.
Capital Management and Liquidity
To bolster its liquidity position, Mighty Kingdom secured a $1.2 million secured debt facility in December 2024. This facility, with an interest rate capitalised at 20% and maturity in April 2025 or upon receipt of government rebates, provides crucial working capital support while the company awaits the delayed incentives. At quarter end, cash and equivalents stood at $275,000, supplemented by $875,000 in unused finance facilities, giving the company an estimated 1.2 quarters of funding available based on current cash burn.
Project Highlights and Partnerships
The company’s live games, Star Trek Lower Decks - The Badgey Directive and Power Rangers Mighty Force, continue to maintain player engagement and revenue streams. Notably, Power Rangers Mighty Force received content updates and gameplay improvements, with further enhancements targeted for release in Q3 FY25. Collaboration with ESGG has been instrumental in refining these titles.
Development work for Google’s Fitbit Ace LTE games progressed well, with positive feedback from Google on delivered support and new features. Additionally, Mighty Kingdom completed a significant update to Gabby's Dollhouse for Spin Master, launching new content ahead of the holiday season and receiving favorable user ratings. Discussions are ongoing to define future contract scopes with Spin Master, aiming for finalisation in Q3 FY25.
Outlook and Strategic Initiatives
Mighty Kingdom remains focused on driving profitability and reducing cash burn through operational efficiencies and monetisation of new products. The company is actively pursuing corporate opportunities that could enhance shareholder value and is engaging with potential work-for-hire clients, leveraging industry events such as Melbourne International Games Week to expand its partner network.
While the company acknowledges the challenges posed by delayed government incentives, it has recently received $2 million in cash inflows post-quarter, improving its financial flexibility. Management expresses confidence in continuing operations and meeting business objectives, supported by a track record of successful equity raises and debt financing.
Bottom Line?
Mighty Kingdom’s improved revenue and cash flow metrics, supported by strategic financing, set the stage for a pivotal Q3 FY25 as new game enhancements and corporate initiatives unfold.
Questions in the middle?
- How will the timing and receipt of the $2 million government incentives impact cash flow stability in coming quarters?
- What are the prospects and timelines for new contracts or expansions with partners like Spin Master and Google?
- Can Mighty Kingdom sustain its momentum in revenue growth while further reducing operating cash burn?
