Open any game on your smartphone and chances are it’s one from Azerion’s portfolio. The company, founded in 2015, now has a database of 17,500 online games: from crossword puzzles to poker. But Azerion mainly earns money with ‘adtech’: linking advertisers to games. The company sells 4.9 billion digital advertisements every month.
In February, the game and advertising company went public on the Amsterdam stock exchange, via a spac, an empty stock shell that invested the invested capital in the acquisition of Azerion and then offered public shares. That yielded less money than hoped, but Azerion founder Atilla Aytekin showed himself with 55 million euros in fresh capital very satisfied† Last week it was announced that the company had doubled its turnover in the first quarter compared to last year, to 94.4 million euros. Investors appreciated it, the price rose again to almost 9 euros after a small dip at the beginning of May.
The increase in turnover is mainly due to acquisitions. That is the company strategy: growth through acquisitions. Since its IPO, Azerion one company left: Infinity. But according to analyst Wim Gille, who follows the share for ABN Amro-Oddo BHF, there are more acquisitions to come in the second half of this year. He is positive about the company. “Azerion delivers what it promises. That’s always good,” says Gille.
profitability
Analysts are still somewhat conservative with their price targets: the expectations for the share value next year are around 10 euros. For Gille, his ‘neutral’ advice has several reasons. First of all, the profitability – it has to be increased. Below the line, Azerion recorded a loss of 12 million euros in the first quarter. “In the current stock market climate, profitability is a fairly important precondition for generating interest among investors,” said Gille.
In addition, the free float – the number of shares that are freely tradable – now small: less than 10 percent. A limited free float means limited liquidity, which makes a share less interesting for institutional investors.
Finally, Gille says, he wants to see some more “proof” that Azerion can also integrate all the companies it acquires into one well-functioning platform. “The company has a track record of many acquisitions. But just adding up all those turnovers in a spreadsheet is ultimately not that interesting.” In addition, because of all those acquisitions, it is still difficult to analyze how big the organic growth of the company really is, he says.
Azerion is delighted about two developments in the online game sector: the metaverse and trading NFTs. The game Habbo Hotel van Azerion is heading for the metaverse, after all, it is already a highly developed virtual world in which people live as avatars.
Azerion is also experimenting with NFTs; a Non-Fungible Token is a unique digital certificate of ownership of a digital object. For example, in the case of Azerion, gamers could purchase an exclusive piece of clothing or special accessory for their avatar in Habbo Hotel†
Is Azerion’s optimism about these developments justified? “Yes and no,” says Gille. “NFTs were a bit of a hype last year. This year the interest is significantly less.” He finds these exciting developments, although it remains to be seen that they actually earn money. “But Azerion is one of the few companies that is serious about building a revenue model around NFTs. It’s nice to see how they do that. In that respect, they are in a good starting position.”
A version of this article also appeared in the newspaper of 7 June 2022