Atari financial report

[PowerDubs]

[JPF997]

Here's the article for anyone interested in reading it.

 

https://www.globenewswire.com/news-release/2024/08/01/2923023/0/en/ATARI-FULL-YEAR-2024-RESULTS.html

 

 

The most important takeaway of this report is that Atari doubled they're revenue in 2024 ( 20 million vs 10 million in 2023 ), Atari's debt hasn't decreased much mainly because of all the recent big acquisitions (biggest one being Roller Coaster Tycoon3), overall the  new strategy  they've adopted since 2021 is finally starting to bear fruit, in a year or two i expect that Atari is going to become a truly profitable company/business once again.

 

 

Edited August 1 by JPF997

[JPF997]

https://companiesmarketcap.com/eur/atari/revenue/

 

 

Atari is finally back to 2019/2020 levels of revenue, now will Wade's new  strategies bring them back to 2001-2003 levels of success? Probably not in the short term but it's at least feasible that they will reach 2008-2012 levels of success in the next couple of years ( imo ).

Edited August 1 by JPF997

[PowerDubs]

Sorry- sent the link from my phone before I even got home to read it.

 

Here is the actual full report PDF- https://atari-investisseurs.fr/wp-content/uploads/2024/08/ATARI_FY2024-ConsolidatedAnnual-Financial-statements_EN.pdf

 

My thoughts-

 

You don't base a companies worth on current earnings- you base it on forward growth.

 

Game revenue- 2x'd

 

Hardware revenue- 7x'd

 

"INTANGIBLE FIXED ASSETS" 67.2 million euro (game IP acquired)

 

Purchases are a 1 time debt... once paid off, the benefits will show themselves.

 

Example- page 28 of the full report- Current liability of €16.6M for 'earn-out' related to acquisitions concluded during the year (Nightdive, Digital Eclipse and RCT3 game)

 

Earn-outs are capped, so...will run out eventually.

 

The report confirms Atari still holds digital assets *non valued in the financial statements* of 972 parcels of Sandbox Land

 

And this is new- Atari Games Private India Ltd

[Maztr_0n]

5 hours ago, JPF997 said:

Here's the article for anyone interested in reading it.

 

https://www.globenewswire.com/news-release/2024/08/01/2923023/0/en/ATARI-FULL-YEAR-2024-RESULTS.html

 

 

The most important takeaway of this report is that Atari doubled they're revenue in 2024 ( 20 million vs 10 million in 2023 ), Atari's debt hasn't decreased much mainly because of all the recent big acquisitions (biggest one being Roller Coaster Tycoon3), overall the  new strategy  they've adopted since 2021 is finally starting to bear fruit, in a year or two i expect that Atari is going to become a truly profitable company/business once again.

 

 

My reaction when Atari got rid of the blockchain NFT crap and brought the atari club back



But also in seriousness, it seems really good that these first steps have done well for the company, i'm hoping this is only the beginning as it'd be cool to see a new market for the retro systems become more viable.

[PowerDubs]

Ummm....  the Atari Club IS blockchain & NFT

[Lord Mushroom]

Net income for the year was a loss of €13.5 million. So they lost €6.9 million in the last 6 months, much worse than I thought. Here are some things I found interesting:

 

1) €4 million of that is unpaid debt by a licensee. Does anyone know who this is? My best guess is that ICICB never paid for their hotel rights.

2) Atari pays an interest of 10% on their loans from Irata (Wade Rosen´s company).

3) If I am reading Note 27 correctly, Wade´s annual pay from Atari is currently $447.000. Last year it was $638.000. The directors are paid $35.000-$59.000.

4) There are no immediate plans for a further capital increase, but Irata will support Atari for the next 12 months (if necessary).

5) "Impairment on games" apparently means game development that was cancelled. There was €3.6 million of that for the year.

6) They have changed their amortization practice for games, better reflecting reality. This made the result €2.8 million worse than it otherwise would have been. Of course, this just means that results of previous years were even worse than previously thought.

 

[+Cheez26]

18 minutes ago, Lord Mushroom said:

Net income for the year was a loss of €13.5 million. So they lost €6.9 million in the last 6 months, much worse than I thought. Here are some things I found interesting:

 

1) €4 million of that is unpaid debt by a licensee. Does anyone know who this is? My best guess is that ICICB never paid for their hotel rights.

2) Atari pays an interest of 10% on their loans from Irata (Wade Rosen´s company).

3) If I am reading Note 27 correctly, Wade´s annual pay from Atari is currently $447.000. Last year it was $638.000. The directors are paid $35.000-$59.000.

4) There are no immediate plans for a further capital increase, but Irata will support Atari for the next 12 months (if necessary).

5) "Impairment on games" apparently means game development that was cancelled. There was €3.6 million of that for the year.

6) They have changed their amortization practice for games, better reflecting reality. This made the result €2.8 million worse than it otherwise would have been. Of course, this just means that results of previous years were even worse than previously thought.

 

What the hell am I even reading? No, really. Is there any positive out of that? Like...I look at this post and compare it to the rest of this thread. Am I going crazy or are you really just tough to please?

[Lord Mushroom]

3 hours ago, PowerDubs said:

Purchases are a 1 time debt... once paid off, the benefits will show themselves.

The current operating income for the year was a loss of €6.5 million. With the new amortization practice, I am uncertain how much of that was in the last 6 months, but they definately had losses there too.

 

That means that even in the last 6 months, they were losing money before paying interest on debt/bonds. And then there are game impairments for the last 6 months of about €2 million on top of that. 

 

3 hours ago, PowerDubs said:

Example- page 28 of the full report- Current liability of €16.6M for 'earn-out' related to acquisitions concluded during the year (Nightdive, Digital Eclipse and RCT3 game)

 

Earn-outs are capped, so...will run out eventually.

It still has to be paid. Atari doesn´t seem to be making money anytime soon, certainly not enough to cover those liabilities. They are almost broke, with €6.8 million (8.7%) in equity, so they can´t get a normal loan. That means expensive loans from Irata, or a capital increase of some kind.

 

3 hours ago, PowerDubs said:

The report confirms Atari still holds digital assets *non valued in the financial statements* of 972 parcels of Sandbox Land

From what I can tell, those are worth $300.000.

[+bent_pin]

20 minutes ago, r_chase said:

Am I going crazy or are you really just tough to please?

You're not crazy. He's been on a mismanagement kick for a while now. Looks like he's an armchair CFO now too. 

[Lord Mushroom]

34 minutes ago, r_chase said:

What the hell am I even reading? No, really. Is there any positive out of that? Like...I look at this post and compare it to the rest of this thread. Am I going crazy or are you really just tough to please?

I am certainly harder to please than the others. They want to see the positives, and only mention those. But the most important figure for a business has always been the bottom line, and the bottom line is bad.

 

You can find some positives in the things I wrote, though:

1) It is much better that €4 million of the losses were a one time thing that is unlikely to be repeated, than if it was an annual event.

2) The lack of plans for a capital increase could be an indication that they expect results will improve, and I think that is the case.

Edited August 1 by Lord Mushroom

[+Cheez26]

5 minutes ago, bent_pin said:

You're not crazy. He's been on a mismanagement kick for a while now. Looks like he's an armchair CFO now too. 

Yeah, but I feel like the simp and the pessimistic lord are gonna argue...and I feel like this has happened before.

 

[+Cheez26]

1 minute ago, Lord Mushroom said:

I am certainly harder to please that the others. They want to see the positives, and only mention those. But the most important figure for a business has always been the bottom line, and the bottom line is bad.

 

You can find some positives in the things I wrote, though:

1) It is much better that €4 million of the losses were a one time thing that is unlikely to be repeated, than if it was an annual event.

2) The lack of plans for a capital increase could be an indication that they expect results will improve, and I think that is the case.

Now that's more like it.

[Lord Mushroom]

It is going to be interesting to see how the market (in France) reacts to the results.

[+Cheez26]

7 minutes ago, Lord Mushroom said:

It is going to be interesting to see how the market (in France) reacts to the results.

 

[PowerDubs]

45 minutes ago, Lord Mushroom said:

It still has to be paid. Atari doesn´t seem to be making money anytime soon, certainly not enough to cover those liabilities.

 

Earn out isn't paid first - when NightDive or Digital Eclipse makes money- so does Atari.  ND & DE just get paid back up until they hit the agreed on cap but it's not like they take all the sales until the earn out is done.   I haven't sat down and tried to do the math on how much is paid VS what the cap is... but they just got a decent chunk I'm sure.  

 

Atari IS making money.... they are just spending it at the same time...  growth costs.   That will continue to happen.

 

33 minutes ago, Lord Mushroom said:

But the most important figure for a business has always been the bottom line, and the bottom line is bad.

 

That is absolutely NOT the most important figure... there are many examples of VERY successful businesses that did exactly what Wade is doing.

 

Products, Projects, Partners are expanding- the profits should follow.

 

This price is a gift for those that understand that.

 

Wade is the largest shareholder- and his average is a LOT higher than this. Digital Eclipse and NightDive also hold a LOT of shares- at a higher price.

 

But- to the comment of lets see how Europe market reacts... I don't expect much. 

 

We are still at the early stages... most people don't know Atari still exists...and much of the people that do either still think of Atari from 5-10-15 years ago OR are investors tired from waiting for the last 5-6-7 years and no longer believe.

 

 

[Lord Mushroom]

1 hour ago, bent_pin said:

He's been on a mismanagement kick for a while now. 

Feel free to point out the bad recommendations I have made, and why they are bad, so I can improve.

[MrBeefy]

I just need to know were speakerhat sales up?

 

I feel like they will use those to air motivational speeches to prep people for the upcoming glory and overtaking their rightful spot of #1.

 

🤘🧢🎵🎵🎵

[Lord Mushroom]

41 minutes ago, r_chase said:

 

 

Atari is listed (mainly) in France.

[MrBeefy]

24 minutes ago, Lord Mushroom said:

 

Atari is listed (mainly) in France.

 

[Lord Mushroom]

1 hour ago, r_chase said:

Now that's more like it.

Here is one more: It seems Wade Rosen has taken a pay cut of almost $200.000.

[Lord Mushroom]

10 hours ago, PowerDubs said:

Earn out isn't paid first - when NightDive or Digital Eclipse makes money- so does Atari.

It is not guaranteed that Atari as a whole makes money if NightDive and Digital Eclipse does. That may in fact be what happened this year. Alternatively, NightDive and/or Digital Eclipse didn´t make money, which would be even worse.

 

10 hours ago, PowerDubs said:

ND & DE just get paid back up until they hit the agreed on cap but it's not like they take all the sales until the earn out is done.   I haven't sat down and tried to do the math on how much is paid VS what the cap is... but they just got a decent chunk I'm sure.

Do you know what the terms are for the earn outs? I mean, I know we know what the maximums are, and I know NightDive earn outs are to be paid for three years and Digital Eclipse ten, but aside from that.

 

10 hours ago, PowerDubs said:

Atari IS making money.... they are just spending it at the same time... 

This is still not the case. R&D for the last year was $€4.4 million, up from €2.3 million. A part of that increase is the inclusion of NightDive and Digital Eclipse.

 

Let´s say it takes €3.4 million to maintain the level of activity that Atari, NightDive and Digital Eclipse has had recently. Then only €1 million was added to the R&D. If you subtract that from the losses for the last 6 months, they would still be losing money. So the extra €1 million in investment came from losses, and the rest of the losses are simply losses.

 

If someone thinks those R&D numbers are low, they are. One thng I learned from this year´s results was that a major part of what they have called "Research and Development Expenses" are amortisations of the games, which isn´t really R&D.

 

Revenue has undeniably gone up dramatically in one year (doubled), but that has been done by issuing new shares to buy new companies. Of course you can make revenue grow that way, and if you buy profitable companies, you can improve the result too. But it won´t do anything for the share price.

 

10 hours ago, PowerDubs said:

That is absolutely NOT the most important figure... 

Companies are about making money, and Net Income is how much they make. If you gave owners of companies a choice between high Revenue and high Net Income, they would choose Net Income. A high Revenue is desirable because it has the potential for a high Net Income, but high Net Income is high Net Income.

 

10 hours ago, PowerDubs said:

Products, Projects, Partners are expanding- the profits should follow.

Expenses are also expanding. If you want profit, you should buy profitable companies/things. If you buy a ton of companies that are losing money, you don´t magically become profitable because you are big.

 

It is hard to tell if NightDive and Digital Eclipse were profitable, although I would guess so. The result improved considerably in the last 6 months, if you ignore the €4 million lost bad debt, but I am sure the 2600+ played a big part in that.

 

10 hours ago, PowerDubs said:

Wade is the largest shareholder- and his average is a LOT higher than this. Digital Eclipse and NightDive also hold a LOT of shares- at a higher price.

You have to stop thinking about that stuff. It is history. Whether they got the shares at $100 or $0.01, it doesn´t make any difference. It has no impact on how the company is run, or how it will turn out.

 

10 hours ago, PowerDubs said:

But- to the comment of lets see how Europe market reacts... I don't expect much. 

You seem right about that one. I expected a 10% drop, but so far it seems like business as usual.

Edited August 2 by Lord Mushroom

[PowerDubs]

2 hours ago, Lord Mushroom said:

It is not guaranteed that Atari as a whole makes money if NightDive and Digital Eclipse does.  

 

If you buy profitable companies, you can improve the result too. But it won´t do anything for the share price. 

 

If you gave owners of companies a choice between high Revenue and high Net Income, they would choose Net Income.

 

You have to stop thinking about that stuff. It is history. Whether they got the shares at $100 or $0.01, it doesn´t make any difference. It has no impact on how the company is run, or how it will turn out.

 

 

I disagree with all of the above.  But we all have our own viewpoints.  Not going to argue about it here.  If we were at a pub having some beers, it would be good conversation- and easier to clearly back/forth.

 

Like anything else... time will tell.

[MrBeefy]

I would only discuss this at a pub over brewskies if they served tacos. Good selection of hotsauce would be bonus.

 

They mentioned the 2600+, did they mention the VCS?

[PowerDubs]

8 hours ago, Lord Mushroom said:

Do you know what the terms are for the earn outs? I mean, I know we know what the maximums are, and I know NightDive earn outs are to be paid for three years and Digital Eclipse ten, but aside from that.

 

From the report, ctrl F-ing to relevant terms I get this-

 

______________________________________________________________________________________________

 

Nightdive - The consideration transferred comprises the purchase price for 100% of Nightdive shares consisting of
i) an initial consideration of US$9.5M, paid in cash for for US$4.5M (€4.1M) and newly issued Atari shares for US$5.0M
(€4.55M), plus ii) an earn-out of up to $10M payable in cash over the next three years based on future performance
of Nightdive. The difference between the consideration transferred (€12.4M) and Nightdive’s net assets (€3.2M) is
presented under goodwill.

Digital Eclipse - The consideration transferred comprises the purchase price for 100% of Digital Eclipse shares
consisting of an initial consideration of US$6.3M, of which i) US$3.8M in cash paid on the closing date and ii) US$2.5M
in newly issued Atari ordinary shares issued on the closing date, as well as a remaining earn-out of up to US$13.5M
payable in cash over the next ten years. The difference between the consideration transferred (€16.8M) and Digital
Eclipse’s net assets (-€2.6M) is presented under goodwill.

 

RCT- "potential differed cash 3 mil"

 

Other non-current liabilities increase from €0.7M to €17.4M over the period given the recognition of €16.6M earn-out
related to acquisitions concluded during the year (Nightdive, Digital Eclipse and RCT3 game), as per the terms of the
acquisitions.

 

Other current liabilities represent €3.5M.... include, €1.0M estimated earn-out for the current
year.

 

For the FY24, revenues generated by the acquisitions represent €6.7M (from acquisitions dates).

 

 

________________________________________________________________________________________________

 

 

It's confusing - and the math doesn't work for me... but make of it what you will.

 

I'll say that most of the paid earn out (appears to be 1 mil euro) probably went to ND as long as the % was the same- as ND sold a lot more just based on Steam sales estimates.

 

That being said- they also had more time as DE came on later- and this report ended March 31st.

 

ND is one year in on their 3 year earnout...  2 years left, so probably won't get near the 10 mil cap.  I'd be more 'concerned' about DE having a 10 year run.. but honestly neither of those bother me.  They make money when they make Atari money... it's all good.

 

Appears ND & DE combined brought in 6.7 mil euro- and neither were there for the full year.