A Truly Different Kind of Mobile Gaming Company

While the stay-at-home COVID-19 economy has had a profound effect on our everyday lives, not all news is negative. The new normal has created multiple variables for innovative companies to help consumers cope with, adapt to, and even flourish during changing social and economic norms.

As a result, savvy investors are looking to capitalize on new investment opportunities that have opened up as a result of the pandemic.

Investors also know that developing and owning a unique business model doesn’t always translate to success. Failing to continually innovate and adapt can relegate even the most powerful companies to the dustbin of history…like Blockbuster Video, Polaroid, Compaq, and dozens of other examples.

Enter a new kind of Company that’s moving the needle in the new tech economy. And creating free fun and enjoyment for end-users never hurts, as well.

Toronto, ON-based PopReach Corporation (POPR) (TSX-V.POPR, OTCQX: POPRF, Forum) is a free-to-play mobile game publisher that is focused on acquiring and optimizing proven video game franchises has been providing shareholders cash-flow positive results and returns.

PopReach is a high-growth, cashflow positive Company that offers a unique low-risk strategy of consolidating and improving profitable game franchises.

To date, the Company has acquired a a number of proven mobile gaming brand franchises with well established audiences and a firm platform for growth. But nostalgia alone doesn’t necessarily equate to success. PopReach’s risk mitigating business model in an industry traditionally driven by developing for smash hits is truly one-of-a-kind. Here’s how.

With both-in home and personal entertainment now more prevalent than ever, the stay-at-home post-COVID economy is driving an increase in play time and money spent on mobile game apps. And the industry is experiencing downloads and use at unprecedented levels.

PopReach has acquired and is improving about 30 mobile games across 12 successful game franchises, competing primarily in the North American game market, including tried and true legacy favourites like Smurfs' Village (IP under license), Kitchen Scramble, Gardens of Time, City Girl Life, War of Nations and Kingdoms of Camelot. The company's franchises are enjoyed by over 1.2 million players each month.

A main strategic advantage that PopReach brings to the table is how they breathe new life into the already historically successful franchises they’ve acquired. This fundamentally includes improvements to the game’s economy, along with updating the first-time user experience, which can be followed by new user acquisition when a subsequent game is ready. They don’t rely on the element of chance associated with creating a hit game from scratch, because their games are already proven assets. Now, how ingenious and cool is that?


Click image to enlarge


In the News

In a recent Stockhouse article, our investor audience found a detailed, firsthand account of the strong growth metrics this forward-thinking gaming group has reached in a relatively short period of time (POPR debuted as a Tier 1 Issuer on the TSX Venture Exchange via a reverse takeover (RTO) listing on July 8th, 2020).

And it’s been a very busy and productive 2020 for PopReach.

Of considerable note to investors was the October announcement of a $5 million strategic investment from Chinese multinational technology giant Alibaba Group’s Global Investment Arm, eWTP Tech Innovation Fund. Investors took note, and then some. POPR’s shares skyrocketed from $0.84 on October 8th to a high of $1.57 on October 16th – nearly doubling over the course of about a week.

On November 17th, PopReach announced it had completed its previously announced public offering, including an impressive raise of over $17 million in gross proceeds in a bought deal financing to support its acquisition strategy. Equally impressive for an early stage company, PopReach generated revenue USD$18 million in 2019 with adjusted EBITDA of USD$3 million.

Already cash-positive before even before recently entering the public market on the TSX Venture Exchange in early July, PopReach is looking ahead to 2021 and beyond to advance and accelerate its already-proven business strategy and business model.

In less than six months since their public listing, POPR has delivered exceptional shareholder results and is already nearing a market cap of $100 million.


(6 month TSX-V: POPR stock chart July – December 2020. Click image to link to chart)


In an August news release, Company Co-founder and CEO, Jon Walsh, commented on the Company’s Q2 2020 financial results:

“We are successfully executing against our strategy of reducing operating costs from acquired assets to increase cash flow while investing in our key franchises to ensure continued profitable growth. The completion of our server cost reductions in the second quarter drove significant gross profit margin improvement. Our ability to drive higher cash flows from our assets combined with our healthy balance sheet puts us in a strong position to execute against our pipeline of acquisition opportunities.”


From the CEO

In an exclusive, recent interview with Stockhouse Editorial, the CEO detailed how his Company has set itself on a focussed course. Mr. Walsh is a gaming industry veteran with over 20 years of experience in game publishing, having delivered more than 30 games across console, PC, and mobile platforms. Prior to starting up PopReach, he was the Founder of Fuse Powered – a mobile game technology company sold to Upsight.

“We don't try to build new hit games. Our organic growth is driven by investing in proven franchises and focusing on user optimization and retention and operating cost reductions. We minimize risk through a disciplined approach to identifying and executing acquisitions coupled with maintaining a diverse portfolio."

He went on to explain that while the group doesn't need the cash to operate the business from a working capital perspective, the firm will look to acquire proven and established games that already have an audience and existing cash flows.

SH: Jon, the $5 million strategic investment by Alibaba Group's global investment arm was big news in November. Can you tell us some of the details of this deal and what it means for shareholders and would-be investors?

JW: Alibaba’s eWTP Tech Innovation Fund is run by two long time gaming industry veterans, like ourselves, that we first met a few years ago. They immediately recognized and understood our unique business model, the purpose built operations we were assembling to support this strategy, and the large market opportunity to acquire and revitalize legacy hit game franchises. However, they wanted to see the execution of our plan unfold over time. It was an extensive proving out process but we continued to deliver against milestones and were very happy to bring them on as investors, making it a great validation for our business.

SH: You’ve acquired some of the biggest legacy game names in business, including Smurfs' Village (IP under license), Kitchen Scramble, Gardens of Time, City Girl Life, War of Nations and Kingdoms of Camelot. What’s the real upside to owning a legacy or mature brand?

JW: Free to play mobile games are living, breathing assets that require continued investment to extract full value, but as they mature they are often underinvested in for various reasons, some structural. But the mature games that we identify already have many of the ingredients required for continued success, including an existing audience, a strong brand and proven game mechanics. Because of our experiences in the industry and through our analysis of key game metrics, we develop a solid blueprint on where to invest, and our purpose-built in-house game development studio allows us to revitalize these assets and extend their lifespan in a very profitable way.

SH: Your stock is still performing well, especially from early October on…up over 80%. To what do you attribute these strong metrics?

JW: Since going public in July we’ve had two quarterly releases under our belt that demonstrate the execution of our cost reduction strategy resulting in Adjusted EBITDA growth of 93% for the first nine months year to date. Since October, we’ve also greatly improved our balance sheet by refinancing our debt with a Canadian Schedule I bank, closed a strategic investment with eWTP and completed a bought deal financing. I think our combination of delivering operational improvements while accomplishing these key strategic tasks, combined with our unique risk mitigating strategy in a high growth industry, have been well received by our shareholders.

SH: As mentioned, you’ve enjoyed a very nice bump to your share price since listing. What can you tell our investor audience regarding the current valuation of your stock and why it’s still such a good value buy right now?

JW: With the capital that we have raised we’re in a great position to execute on our strategy of acquiring more proven mobile game assets and investing in our current portfolio. We feel we’re in the driver’s seat to execute on our growth iniativies for 2021 and feel there is plenty of room for our business to grow.

SH: And, finally Jon, what sets the company apart from other mobile game publishers in this space and what makes your business model attractive to investors?

JW: I think our unique business model, which is to acquire proven game franchises that we improve and extend the lifespan and cash flows of, means that not only do we not have to rely on creating hit games from scratch, but also that we have a more predictable growth trajectory that still delivers strong upside potential. I think this really changes the risk profile of our business compared to other traditional hits driven game companies.


In Closing

PopReach offers investors – both retail and institutional – a very unique and powerful value proposition. Modern tech investors and company shareholders know a good thing when they see it, and POPR continues to ride a steady wave of investor confidence not often seen in this space for such a relatively young company.

Tech analyst Suthan Sukumar from Eight Capital – an investment banking and equity research company – had this to says about PopReach’s long-term investment potential:

“Unlock this reward: A BABA-backed gaming roll-up play; initiating with a BUY, $2.35 target. We view PopReach as a rare gaming roll-up-play focused on consolidating, operating, and revitalizing mature free-to-play (FTP) mobile games with established brands, player bases, and profitability.”

This well-financed, well-managed company with sound market fundamentals, a bona fide track record in gaming, and backed by the Alibaba Group should be kept well within any tech investor’s radar and gaming screen well into 2021 and beyond.


Click image to enlarge


For more information, visit popreach.com.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.