Were my predictions wrong? - Q3 Report $11B (-1,38 %)

As the only analyst reporting on 11 Bit here on the platform, I am pleased to be able to present the company's quarterly figures to you.

As I had already assumed, 11 Bit reported record sales and record profits for the first 9 months of 2024. At PLN 106.6 million, sales were even higher than in the best year in the company's history.

The sales partnership with Microsoft $MSFT (+0,49 %) generated around half of the revenue.

In Q3, a total of around PLN 76 million was generated, which is around seven times the figure for the same quarter of the previous year. 11B was highly profitable and achieved a net profit of PLN 47.5 million, which corresponds to a net profit margin of 63%.

As already mentioned in previous analyses, this is due to a one-off effect - namely the release of its blockbuster Frostpunk 2, which contributed around 75% to total sales. This game sold around 441,000 copies in September, falling short of market participants' expectations. The games were mainly sold to China, the USA and Germany.

After 2 months, we are now at 511,000 units of the game sold. This could be roughly on a par with the original Frostpunk, which was released in spring 2018 and sold around 1.4 million units within a year. This means that Frostpunk would now have to sell around 90,000 units every month to reach this target as well. It will be exciting to see how Christmas sales and the console release will affect sales.

It is also worth noting that around half of customers were persuaded to buy the Deluxe Edition of the game, which is around twice as expensive, which is an indication of strong customer confidence and loyalty. This is particularly relevant for future sales in the franchise and for the release of the new IP "The Alters" in spring 2025

All in all, I am very surprised by the lack of a positive reaction from the market. As already mentioned, the company has just closed the best quarter in its history and at the same time the lowest share price in the company's history. Something does not add up here. I am therefore reiterating my price target of €93