Digital Bros FY2025 Q1 Earnings Release

PRESS RELEASE
The Board of Directors of Digital Bros Group approv ed
the Interim Report as of September 30th
, 2024

THE FY2024- 2025 FIRST QUARTER RESULTS:
• NET REVENUE AT EURO 21.5 MILLION , UP 6.3 % YEAR ON YEAR
• EBITDA AT EURO 5.9 MILLION, GROWING BY EURO 3.7 MIL LION
• NEGATIVE EBIT AT EURO 1.4 MILLION , IMPROVING BY EURO 1.7 MILLION
• REDUCTION IN NET LOSS, AT EURO 2.3 MILLION AT QUART ER-END
• NET FINANCIAL DEBT INCREASED BY EURO 5.3 MILLION, I N LINE WITH
EXPECTATIONS
• FULL YEAR OUTLOOK CONFIRMED WITH DECREASING REVENUE AND STABLE
EBIT

✓ Consolidated revenue of Euro 21.5 million, up by 6.3% , compared to Euro 20.2 million
as of September 30 th
, 2023, exclusively made by back catalogue sales
✓ EBITDA at Euro 5.9 million , increasing from the Euro 2.3 million realized as of
September 30 th
, 2023, because of the higher-margin product mix an d the
reorganization process implemented in the last fisc al year
✓ EBIT was negative at Euro 1.4 million, improving co mpared to the negative Euro 3.2
million EBIT as of September 30 th
, 2023, even after Euro 1.8 million increase in
depreciation and amortization
✓ Net loss at Euro 2.3 million, reduced from the net loss of Eur o 3.1 million of the first
quarter in the previous fiscal year
✓ The net financial position is negative at 30.1 mill ion euros (Euro 26.7 million net of
the IFRS16 effect), in line with expectations
✓ Revenue for the current fiscal year concentrated in H2 and expected to decline
compared to June 30 th
, 2024. EBIT projected to remain stable because of the actions
implemented in FY2024

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Milan, November
14th
, 20 23 – The Board of Directors of Digital Bros Group (DIB:MI) , videogames company listed on
the Euronext STAR Milan (ISIN: IT0001469995) and pa rt of the FTSE Italia Small Cap index, today approved the
Interim Report as of September 30 th
, 2024 (first quarter of the fiscal year from July 1 st
, 2024 to June 30 th
, 2025 ).
Digital Bros Group’s key consolidated results for the first quarter of FY 2024-2025, together with the previous year
comparatives, are as follows:
Results for Q1 FY 2024-2025 (from July 1 st
, 2024 to September 30 th
, 2024)
Euro thousand September 30 th

2024 September 30 th
, 2023 Change € Change %
Gross revenue 21,478 20 ,225 1,253 6.2%
Gross operating margin (EBITDA) 5,911 2,260 3,651 n.m.
Operating margin (EBIT) (1,433) (3,175) 1,742 54.9%
Profit / (loss) before tax (2,106) (3,574) 1,468 41.1%
Net profit / (net loss) (2,335) (3,117) 782 25.1%
• Consolidated gross revenue at Euro 21.5 million, up by 6.2%, compared to Euro 20 .2 million realized as of
September 30th
, 2023;
• EBITDA of Euro 5.9 million (27.5% of net revenue), compar ed to Euro 2.3 million as of September 30 th
, 2023;
• EBIT was at negative 1.4 million , compared to the negative EBIT of Euro 3.2 million a s of September 30th
,
2023;
• Loss before tax at Euro 2.1 million , compared to the Euro 3.6 million loss before tax as of September 30th
,
2023;
• Net loss of Euro 2.3 million , compared to the Euro 3.1 million net loss as of Sep tember 30th
, 2023.

RESULTS BY OPERATING SEGMENT
The video games market is experiencing new and chal lenging competitive dynamics after the optimism resulting from
the growth achieved during the pandemic. Such chall enges are increasing development budgets, greater consumer
selection and a reduced market liquidity. The publi shing strategies and the organizational structures adopted by
publishers and developers during the pandemic were no longer sustainable to hedge such uncertainties. As a result, the
Group, during the previous fiscal year, reconsidere d the investment strategy focusing on new productions with high er
margin, particularly fully owned Intellectual Prope rties to leverage on their long-term value creation.

As of September 30 th
, 2024, revenue amounted to Euro 21.4 million, incr easing by 6.2% year on year. The first quarter
is usually weak in absence of new releases. No vide o games were launched during the reporting period, similarly to Q1
last year, therefore revenue was exclusively made by the sales of back catalogue.

The product mix presented higher margins compared t o the previous fiscal year, enabling the Euro 1.4 million increase
in gross profit.

Operating costs were down by 26.9%, a Euro 3.6 mill ion decrease, mostly as a result of the reorganization process
implemented by the Group in the previous fiscal yea r. Such decrease in operating costs contributed to the growth in
EBITDA of Euro 3.7 million realized in the period. As of September 30th
, 2024, EBITDA amounted to Euro 5.9 million.

The break-even point was lowered by the fixed cost reduction. However, revenues of the quarter weakene d by the
market seasonality were not enough to achieve a pos itive EBIT. As of September 30th
, 2024, EBIT was negative at 1.4
million, still improved by Euro 1.7 million year on year, despite Euro 1.8 increase in D&A costs related to the new video
game launches of the second half of FY2024.

Revenues from international markets accounted for 9 4% of total net revenue, while digital sales amounted to 89% of
the total net revenue , as already disclosed in previous reports.

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The breakdown of net revenue by operating segment a
s of September 30th
, 2024, compared to the same quarter in the
previous fiscal year is as follows:
Net revenue
Euro thousand September 30 th,
2024 September 30 th,
2023 Change € Change %
Premium Games 16,989 15,005 1,984 13.2%
Free to Play 3,453 4,370 (917) -21.0%
Italian Distribution 909 703 20 6 28.9%
Other Activities 127 118 9 7.6%
Total net revenue 21,478 20,225 1,254 6.2%
The net revenue for the Premium Games operating segment as of September 30 th
, 2024 was at Euro 17 million, a 13%
from the previous fiscal year and representing 79.1 % of total revenue. This result was spread among se veral back
catalogue products, with the outstanding performanc e of the different versions of Assetto Corsa. The franchise
developed by the fully owned studio Kunos Simulazio ni generated Euro 5.8 million revenue in the reporting period.
Video games developed by the internal studios and f ully owned intellectual properties (IPs) accounted for 56% of the
total revenue for the operating segment, in line wi th the previous fiscal year and in line with the Group’s strategy, which
is focused on the owned and co-owned Intellectual P roperties within its video game portfolio.
The breakdown of Premium Games revenue by the type of rights held by the Group as of September 30th
, 2024 ,
unchanged with respect to the first quarter of the previous fiscal year, is provided below:

Revenues from the Free-to-Play operating segment amounted to Euro 3,453 thousand, down by 21% compared to the
first quarter of the previous fiscal year. The Grou p will relaunch the video games in the portfolio st arting from the
second half of the fiscal year, especially in some specific markets that are currently generating only marginal revenue.
The revenue from the Italian Distribution operating sector slightly increased from Euro 703 thousand to Euro 909
thousand as of September 30th, 2024. During the reporting period, the activities within the Italian Distribution
operating segment only consisted of sales of goods in stock.
The total cost of sales amounted to Euro 5,034 thousand, decreasing by 1.9 % with respect to the Euro 7,769 thousand
as of September 30 th
, 2023. As a result, gross profit amounted to Euro 13,853 thousand, increasing from the Euro 12,427
thousand realized in the first quarter of the previ ous fiscal year.
Other income amounted to Euro 1,742 thousand, down by Euro 1,335 thousand. Such decrease is mainly driven by the
reallocation of activities within development teams , now mostly dedicated to the live support of video games already
launched and therefore no longer capitalized.
The operating costs amounted to Euro 9,684 thousand, decreasing by Eur o 3,560 thousand compared with the Euro
13,244 thousand as of September 30 th
, 2023. The significant reduction in operating cost s reflects the reorganization
process implemented in the previous fiscal year, wh ich resulted in a workforce reduction of 158 units.
The EBITDA amounted to Euro 5,911 thousand, significantly hig her than the Euro 2,260 thousand realized in the first
quarter of the previous fiscal year.
Owned IPs 56%
Co -owned IPs and long
term agreements 29%
Publishing
agreements 15%
September 30, 2024

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Depreciation and amortization
increased by Euro 1,882 thousand due to the greate r use of video games launched
during the second half of the last fiscal year, suc h as Eiyuden Chronicle – Hundred Heroes and Crime Boss: Rockay City.
The EBIT was negative at Euro 1,433 thousand, improving fro m the negative Euro 3,175 thousand as of September 30th
,
2023.
The net interest expense amounted to Euro 673 thousand, compared to the Eur o 399 thousand of the first quarter of
the last fiscal year.
The loss before tax for the period amounted to Euro 2,106 thousand, im proving from the loss before tax of Euro 3,574
thousand realized as of September 30th, 2023.
The net loss amounted to Euro 2,335 thousand, compared to the E uro 3,117 thousand net loss of the first quarter in the
previous fiscal year.
The net loss attributable to the shareholders of the Pa rent Company was at Euro 2,302 thousand.
The basic loss per share and diluted loss per share were both at Euro 0.16, compared to the 0.17 basic loss per share
and the Euro 0.16 diluted loss per share as of Sept ember 30th
, 2023.
The loss attributable to non-controlling interests as of September 30th
, 2024 is at Euro 33 thousand, compared to the
Euro 714 thousand in the previous year, due to the fact that the Dutch subsidiary Rasplata B.V. is now fully owned by
the Group.
NET FINANCIAL POSITION
As expected, the net financial debt as of September 30th
, 2024 was at Euro 30,125 thousand, increasing by E uro 5,341
thousand compared to the Euro 24,784 thousand as of June 30th, 2024.
Digital Bros will be able to manage its current lia bilities with its future cash flow generation. The net financial debts
are expected to further increase in the second quar ter before decreasing starting from Q3 and are expe cted to arrive a
lower level compared to June 30 th
, 2024 at fiscal year-end.
The total net financial position, net of the IFRS16 effect, is negative at Euro 26,740 thousand.
TREASURY SHARES
As of September 30th
, 2024, Digital Bros S.p.A. did not hold any treasu ry shares, and no transactions have been made
in the period, in accordance with Art. 2428 paragra ph 2, comma 3 of the Italian Civil Code.
SIGNIFICANT EVENTS DURING THE PERIOD
No significant events occurred during the reporting period.
SUBSEQUENT EVENTS
On October 28th
, 2024, the Shareholders’ Meeting of Digital Bros G roup approved the Financial Statements for the fisc al
year 2023-2024 and appointed attorney Veronica Deve tag Chalaupka as a new member of the Board of Directors. The
new Director will remain in office until the expiry of the current Board of Directors, i.e. until the Shareholders’ Meeting
convened for the approval of the financial statemen ts as at June 30th
, 2026.

BUSINESS OUTLOOK
The PC version of Assetto Corsa EVO will be release d in Early Access on Steam on January 16th
, 2025. The release
schedule for the Premium Games operating segment wi ll also include the launch of a high-potential new video game in
the last quarter. The Free to Play video games rela unch will also be implemented during the second hal f of the current
fiscal year. As a result, revenues and margins are expected to improve in the second half of the fisca l year compared to
the first.

Despite the expected positive trend in the second h alf, the Group confirmed the previously announced o utlook,
projecting a full year decline in revenue. T he actions implemented in the previous fiscal year, i ncluding the
reorganization and the refocus of the investments, are expected to maintain the EBIT at the same level as of June 30th
,
2024.

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The forecasted results do not consider any effect o
f the 33% earn out on the net revenue from the vide o game PAYDAY3,
given the ongoing contractual disagreements and the potential arbitration with Starbreeze.

The net financial debts are expected to further inc rease in the second quarter before decreasing start ing from Q3 and
are expected to arrive a lower level compared to Ju ne 30th
, 2024 at fiscal year-end.

ART. 154-BIS OF THE T.U.F.
As required by paragraph 2, Art. 154-bis of the T.U .F., Digital Bros Group’s Chief Financial Officer, Stef ano Salbe, declares
that the information contained in this press releas e corresponds to the Group’s underlying documents, books and
accounting records.

This press release is available on the websites
www.digitalbros.com and www.1info.it.

DIGITAL BROS GROUP
Listed on the Euronext STAR Milan and part of Euron ext Tech Leaders, Digital Bros Group is a global company that has
been operating since 1989 as a developer, publisher and distributor of video games through its brand 505 Games. The
Group markets its contents on both retail and digit al channels, Digital Bros Group is active around the world through
its own direct operations in Italy, United States, UK, Czech Republic, China, Japan, Australia and Can ada with 284
employees.

For further information please contact:
Digital Bros S.p.A.
Stefano Salbe – CFO
Tel, + 39 02 413031
ir@digitalbros.com

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DIGITAL BROS GROUP- FINANCIAL STATEMENTS
Consolidated statement of financial position as of September 30th, 2024
Euro thousand
September 30 th
,
2024
June 30 th
,
2024
Non-current assets
1 Property, plant and equipment 6,779 7,379
2 Investment properties 0 0
3 Intangible assets 126,880 129,614
4 Equity investments 7,719 9,685
5 Non-current receivables and other assets 7,540 7,945
6 Deferred tax assets 21,321 21,166
7 Non-current financial activities 0 0
Total non-current assets 170,239 175,789

Current assets
8 Inventories 1,755 2,668
9 Trade receivables 11,153 16,887
10 Tax receivables 4,247 4,345
11 Other current assets 6,768 8,902
12 Cash and cash equivalents 3,367 11,981
13 Other current financial assets 5,265 10,238
Total current assets 32,555 55,021

TOTAL ASSETS 202,794 230,810

Shareholders’ equity
14 Share capital (5,706) (5,706)
15 Reserves (10,073) (11,868)
16 Treasury shares 0 0
17 Retained earnings (107,235) (113,426)
Equity attributable to the shareholders of the Pare nt
Company
(123,014) (131,000)
Equity attributable to non-controlling interests (542) 3,314
Total net equity (123,556) (127,686)

Non-current liabilities
18 Employee benefits (1,009) (967)
19 Non-current provisions (716) (563)
20 Other non-current payables and liabilities (1,362) (1,657)
21 Non-current financial liabilities (7,376) (10,324)
Total non-current liabilities (10,463) (13,511)

Current liabilities
22 Trade payables (30,925) (43,737)
23 Tax payables (951) (1,299)
24 Short term provisions (1,241) (1,241)
25 Other current liabilities (4,277) (6,657)
26 Current financial liabilities (31,381) (36,679)
Total current liabilities (68,775) (89,613)
TOTAL LIABILITIES (79,238) (103,124)

TOTAL NET EQUITY AND LIABILITIES (202,794) (230,810)

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Consolidated Profit and Loss statement as of Septemb
er 30th, 2024

Euro thousand September 30 th
,
2024
September 30 th
,
2023
1 Gross revenue 21,478 20,225
2 Revenue adjustments (0) (29)
3 Net revenue 21,478 20,196
4 Purchase of products for resale (173) (898)
5 Purchase of services for resale (1,774) (2,727)
6 Royalties (4,765) (4,260)
7 Changes in inventories of finished products (913) 116
8 Total cost of sales (7,625) (7,769)
9 Gross profit (3+8) 13,853 12,427
10 Other income 1,742 3,077
11 Costs for services (2,058) (2,800)
12 Rent and leasing (94) (133)
13 Payroll costs (7,272) (9,942)
14 Other operating costs (260) (369)
15 Total operating costs (9,684) (13,244)
16 Gross operating margin (EBITDA) (9+10+15) 5,911 2,260
17 Depreciation and amortization (7,317) (5,435)
18 Provisions 0 0
19 Asset impairment charge (27) 0
20 Impairment reversal 0 0
21 Total depreciation, amortization and impairment
adjustments
(7,344) (5,435)
22 Operating margin (EBIT) (16+21) (1,433) (3,175)
23 Interest and financial income 456 643
24 Interest and financial expenses (1,129) (1,042)
25 Net interest income/(expenses) (673) (399)
2
6 Profit/ (loss) before tax (22+25) (2,106) (3,574)
27 Current tax (68) 291
28 Deferred tax (161) 166
2
9 Total taxes (229) 457
3
0 Net profit/loss (2,335) (3,117) attributable to the shareholders of the Parent Comp any (2,302) (2,413) attributable to non-controlling interests (33) (704) Earnings per share:
33 Basic earnings per share (in Euro) (0.16) (0.17)
34 Diluted earnings per share (in Euro) (0.16) (0.16)

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Consolidated statement of comprehensive income as o
f September 30th
, 2024
Euro thousand September 30 th
,
2024
September 30 th
,
2023
Profit (loss) for the period (A) (2,335) (3,117)
Changes in the fair value (1,966) (6,111)
Tax effect regarding fair value measurement of fina ncial assets 473 1,467
Items that will not be subsequently reclassified to profit or loss
(B)
(1,493) (4,644)
Exchange differences on translation of foreign oper ations (420) 209
Items that will subsequently be reclassified to pro fit or loss (C) (420) 209
Total other comprehensive income D= (B)+(C) (1,913) (4,435)
Total comprehensive income (loss) (A)+(D) (4,248) (7,552)
Attributable to:
Shareholders of the Parent Company (4,215) (6,848)
Non-controlling interests (33) (704)

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Consolidated cash flow statement as of September
30th
, 2024
Euro thousand September 30 th
,
2024
September 30 th
,
2023
A. Opening net cash/debt 11,981 9,407

B. Cash flows from operating activities
Profit (loss) for the period (2,335) (3,117)
Depreciation, amortization and non-monetary costs:
Provisions and impairment losses 27 0
Amortization of intangible assets 6,705 4,783
Depreciation of property, plant and equipment 614 652
Net change in tax advance (155) (1,883)
Net change in other provisions 153 (0)
Net change in employee benefit provisions 42 46
Other nonmonetary changes to the net equity (1,795) (4,746)
SUBTOTAL B. 3,256 (4,265)

C. Change in net working capital
Inventories 913 (116)
Trade receivables 5,707 3,272
Current tax assets 98 (887)
Other current assets 2,134 13,067
Trade payables (12,812) (2,784)
Current tax liabilities (348) (787)
Current provisions 0 (0)
Other current liabilities (2,563) (411)
Other non-current liabilities (112) (215)
Non-current receivables and other assets 405 (687)
SUBTOTAL C. (6,578) 10,452

D. Cash flows from investing activities
Net payments for intangible assets (3,971) (12,800)
Net payments for property, plant and equipment (14) (179)
Net payments for non-current financial assets 1,966 (5,117)
Changes in financial assets 4,973 11,018
SUBTOTAL D. 2,954 (7,078)

E. Cash flows from financing activities
Capital increases 0 0
Changes in financial liabilities (8,246) (3,872)
Changes in financial assets 0 0
SUBTOTAL E. (8,246) (3,872)

F. Changes in consolidated equity
Dividends paid 0 0
Changes in treasury shares held 0 0
Increases (decreases) in other equity components 0 0
SUBTOTAL F. 0 0

G. Cash flow for the period (B+C+D+E+F) (8,614) (4,763)

H. Closing net cash/debt (A+G) 3,367 (4,763)

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Consolidated statement of profit and loss per opera
ting segment as of September 30th
, 2024

Euro thousand Share
capital
(A) Share
premium
reserve Legal
reserve IAS
transition
reserve Currency
translation
reserve Other
reserves Total
reserves
(B) Treasury
shares
(C) Retained earnings
Profit
(loss)
for the
year Total
retained
earnings
(D) Equity of Parent
Company
shareholders (A+B+C+D) Equity of
non-
controlling
interests
Total
equity
Total on July 1 st
, 2023 5,706 18,528 1,141 1,367 (913) 1,244 21,367 0 105,587 9,683 115,270 142,343 1,375 143,718

Allocation of previous year result 0 9,683 (9,683) 0 0 0 0
Other changes 39 39 364 364 403 (714) (311)
Comprehensive income (loss) 209 (4,644) (4,435) (2,413) (2,413) (6,848) (704) (7,552)

Total on September 30 th
, 2023 5,706 18,528 1,141 1,367 (704) (3,361) 16,971 0 115,634 (2,413) 113,221 135,898 (43) 135,855

Total on July 1 st
, 2024 5,706 18,528 1,141 1,367 (709) (8,459) 11,868 0 115,640 (2,214) 113,426 131,000 (3,314) 127,686

Allocation of previous year result 0 (2,214) 2,214 0 0 0 0
Other changes 118 118 (3,889) (3,889) (3,771) 3,889 118
Comprehensive income (loss) (420) (1,493) (1,913) (2,302) (2,302) (4,215) (33) (4,248)

Total on September 30 th
, 2024 5,706 18,528 1,141 1,367 (1,129) (9,834) 10,073 0 109,537 (2,302) 107,235 123,014 542 123,556