This is a useful chart of Axie Infinity cumulative revenue over...

This is a useful chart of Axie Infinity cumulative revenue over the past 3 years. Considering that Axie sometimes has weekly trade volumes of over US$5m (notwithstanding the lumpiness in trade volumes), it serves to illustrate that only a very small proportion of sales translates into revenues for the business.

It would be great if Animoca published similar information for their stable of blockchain games, although I doubt they will.




Relative to Axie, by my guestimate Animoca has managed to generate a much higher proportion of revenue from land sales (which is to be expected for 2nd generation games), but there's little visibility of the proportion of revenue generated from marketplace fees.

I tend to view initial token/land sales as one-off revenue boosters. A game like the SandBox might generate enough revenue from token/land sales to cover all development costs and any surplus could be ploughed into financing the next game. Whereas a game's marketplace revenues reveal much more about it's longterm sustainability or profitability as a large proportion of these revenues would fall to the bottom line. In this way, on-going revenues from marketplace type activities can be thought of in the same way as one might view the recurrent revenues of a SaaS company.

Knowing the split between project (one-off) revenue and recurrent revenue is crucial, because investors place a much higher multiple on the latter.

So whilst it is great to get sporadic updates from Animoca about project revenue, such as:

16 April 2021 -- HONG KONG -- Animoca Brand announced today that its two sale events of non-fungible tokens (NFTs) for the blockchain games F1 Delta Time and The Sandbox have generated the equivalent of approximately US$9.28 million on 14-16 April 2021.

On their own, these announcements can be highly misleading. Animoca also needs to start a) disclosing revenues in a timely and consistent basis (e.g. quarterly reporting) and b) disclosing the split between project and recurrent revenue.

If Animoca were to disclose quarterly revenues, we could benchmark against the growth rates of games like Axie that are growing by 300% QoQ.

Whilst we remain in the hyper growth phase, Animoca needs to start communicating to the market how it is growing at a rapid pace by disclosing QoQ sales and revenue growth. If it can do so (even showing a fraction of the growth rates of Axie), then the stock price will get re-rated higher.