Eat your iCandy: Stock rallies ~4% as Lemon Sky Studios revenue up

As nerves plague the markets and prices fall, iCandy investors can feel a glimmer of hope with the stock rising ~4% today on positive results from Lemon Sky Studios.

Games developer iCandy Interactive’s (ASX:ICI) acquisition of Malaysian-based Lemon Sky Studios has got off to a promising start with the company reporting 21% higher revenue for the financial year than forecast during the due diligence stage.

iCandy received notification Lemon Sky Studios recorded unaudited revenue of $15.5 million (RM46 million) for its 2021 financial year ending December 31, 2021.

Lemon Sky’s higher than expected revenue has been put down to very strong and growing demand for its high-quality game art and animation services from its blue-chip global clientele.

With most of its Lemon Sky’s costs fixed and overheads, much of its increased revenue is expected to translate into a strong profit after tax (PAT) of ~$2.7 million in FY201.

Lemon Sky also closed the financial year with a much stronger than expected balance sheet with $6.1 million as at December 2021.

Largest games development studios in Australasia

Earlier this month ~100% of iCandy’s shareholders approved its MYR 135 million (~$44.5 million) acquisition of Lemon Sky.

The combined entity will form one of the largest gaming studios in the Australasia region, with more than 450 full-time employees who are highly skilled in game design, development, game art and animation production.

With an extensive portfolio of partnerships with the biggest global players in the industry, Lemon Sky was founded in 2006 and has established itself as a leading studio in the Southeast Asia region.

Metaverse entry

Lemon Sky has worked on a string of big-budget AAA titles, including Uncharted: The Lost Legacy, the Final Fantasy franchise, StarCraft: Remastered and Marvel’s Spiderman.

iCandy’s acquisition gives it a leading position in the AAA market, at a point where global gamers, marketers and game developers are building solutions for the burgeoning online metaverse.

The metaverse is an emerging technology concept where users play and work in a virtual world that is connected online, where the use of new platforms such as virtual reality and augmented reality are expected to play an increasingly greater role.

Metaverse continues to gain traction, gaining momentum after tech giant Facebook renamed itself Meta in anticipation of major growth in the next generation of online gaming and content.

Strategic acquisitions

To further spearhead its entry into the Metaverse, iCandy kicked off 2022 by announcing a 60% acquisition in leading Southeast Asian gaming backend developer Gameconomy.

iCandy will pay MYR1.5 million ($497,264) in the cash and share deal for the boutique gaming software firm based in the Malaysian capital Kuala Lumpur.

Gameconomy specialises in gaming technology, related to real-time in-game analytics and player-versus-player (PVP) gaming mechanics.

Gameconomy and iCandy will collaborate on a metaverse-related real-time player-versus-player (PvP) game with plans to launch in the first half of 2022.

The iCandy share price was up 3.70% in morning trade to 14 cents.

This article was developed in collaboration with iCandy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.