Kuuhubb 2.0 – A Renaissance in Female Gaming

May 8, 2019 - Kuuhubb (KUU-TSXV) is a publicly listed mobile game development and publishing company, targeting the female audience with bespoke mobile experiences. Management´s vision is to become a top player in the women’s mobile gaming market. KUU creates games and apps that are designed to help its female audience relax, express and entertain themselves. Through games and partnerships, KUU explores new lifestyle trends that can be converted into games and apps. Over the next 12 months, KUU anticipates expanding its portfolio from two to six revenue generating apps, all addressing the most popular game segments for the female audience – enabling cross-selling between apps. Female gamers as an audience are still under-served and the market is growing fast. KUU has established a highly experienced game development team in Helsinki, to develop new female targeted games and apps in-house to further improve the existing products. According to Newzoo, the market is expected to grow from $56B in 2017, to ~$130B by 2025, for a CAGR of 9%. KUU’s growth strategy looks to discover, acquire, develop, integrate, grow user base, monetize and partner - enabling KUU to find the next billion dollar hit game or app.

We believe FQ319 (Mar) will mark the bottom in terms of quarterly revenue. With the steady release of new products, we see revenues flat in FQ4/19 (June) and then increase sequentially throughout F2020. KUU plans to commercially launch new products over the next 12 months that should drive its growth in terms of revenue, monthly active users (MAU), and value per MAU - which in turn should support a higher company valuation. KUU is trading at a significant discount to its peers - both Global/Nordic gaming and global social apps. Global and Nordic gaming apps are trading at 2019 EV/Sales of 4.9x/2.7x – valuing KUU in the C$0.75-1.25 range. Comparable global social apps are trading on average (excl. FB) at a multiple of US$65/MAU – valuing KUU in the C$4-5 range.