Animoca Brands Investor Update for the Quarters Ending on 30 September 2024 and 30 June 2024

20 December 2024 – Animoca Brands Corporation Limited (“Animoca Brands” or the “Company”) is pleased to report key unaudited financial and business highlights for the three months ending on 30 June 2024 (“Q2 2024”) and the three months ending on 30 September 2024 (“Q3 2024”). 

Post this reporting period, the Company notes that as of the end of November 2024 it recorded a marked increase of approximately 40% in the value of its crypto asset balances and a doubling of revenue from market making and trading activity. In addition, MOCA Coin was listed on the South Korean exchanges Upbit and Bithumb on 16 December 2024, after which MOCA’s 24-hour trading volume exceeded US$2 billion (refer to “Market Outlook” below).

The results below include contributions from the Company’s key business units and launch partners, including but not limited to The Sandbox, Mocaverse, Open Campus, Anichess, GAMEE, TinyTap, Animoca Brands Japan, nWay, Eden Games, Blowfish Studios, Pixowl, Forj, Motorverse, and Crazy Defense Heroes (TOWER), in addition to Web3 services revenue and revenue arising from portfolio investments and partnerships.

Key financial highlights for Q3 2024 and Q2 2024 (unaudited, non-IFRS measures)

• Bookings YTD through Q3 2024 totaled US$209 million, reflecting strong performance through a volatile year as outlined below.
• Bookings1 of US$69 million in Q3 2024 and US$48 million in Q2 2024, compared with US$26 million in Q3 2023 and US$162 million in Q2 2023. Bookings in the third and second quarter of 2024 include the following:

1. US$25 million in Q3 2024 and US$16 million in Q2 2024 from Digital Asset Advisory (DAA), which includes fees from token advisory, blockchain node operations, and market activities; 
2. US$39 million in Q3 2024 and US$14 million in Q2 2024 from Web3 Operating Businesses of subsidiaries and projects incubated by the Company, which include token-based sales, in-app purchases, and other non-blockchain sales;
3. US$5 million in Q3 2024 and US$17 million in Q2 2024 from Investment Management, which includes realized gains from digital asset investments and management fees from Animoca Ventures. 

• Operating expenses of US$59 million 2 and US$52 million in Q3 2024 and Q2 2024, respectively, compared with US$60 million and US$65 million in Q3 2023 and Q2 2023, representing a 1.7% decrease in expenses YoY in Q3 2024 and 20% decrease YoY in Q2 2024.
• Asset balances as of 30 September 2024 include the below:
  • Cash and stablecoin balances of US$248 million;
  • Liquid third-party digital assets of US$330 million, composed of US$218 million in available-for-sale assets and US$112 million from unvested tokens in the balance sheet. Major liquid tokens held on the balance sheet include ETH, BTC, APE, and others;  
  • Off-balance sheet token reserves of US$1.6 billion, comprising tokens issued by Animoca Brands majority-owned Web3 subsidiaries and projects launched by Animoca Brands. These reserves include tokens such as SAND, EDU, MOCA, REVV, TOWER, GMEE, and others.
• Minority investments in over 530 portfolio companies as of the end of Q3 2024, which includes investments made by Animoca Ventures.

Note (1): “Bookings” is a non-IFRS measure of the total sales activity of the Company and is commonly used by companies in the gaming sector to more effectively represent economic performance. It represents the total sales activity of the Company combining revenue reflected on the income statement and deferred revenue, which is a liability on the balance sheet. Deferred revenue is an accounting concept that represents payments received for sales that have not yet been earned. It generally applies to digital assets sold in the Company’s games and applications. Although the Company collects payment for these sales, it is not able to recognize them as revenue on the income statement because there is an obligation to provide services within those games and applications in the future. As services are provided over time, deferred revenue will be recognized as revenue. 

Note (2): The increase in expenses QoQ from US$52 million in Q2 2024 to US$59 million in Q3 2024 is due to one-off expenses for third party advisors used in the MOCA Coin token launch, which was completed in July 2024.

Key business highlights for for Q3 2024 and Q2 2024

Market Outlook

In the period following the conclusion of the 2024 US presidential election on 5 November 2024, crypto asset prices have increased dramatically. Post-election, the Company has seen the value of its crypto asset balances, both on and off balance sheet, increase by approximately 40% through November 2024. Revenue from market making and trading activities more than doubled during that period. 

On 16 December 2024 MOCA Coin, the core token supporting the Mocaverse platform (more detail below) was listed for spot trading on Upbit and Bithumb, which are large centralized exchanges in South Korea. MOCA Coin’s 24-hour trading volume exceeded US$2 billion after the listings, highlighting the strong market for digital assets in South Korea and marking the expansion of Mocaverse into an important new customer base.

The digital assets sector is being led by moves in Bitcoin price to all-time highs above the US$100,000 milestone. Institutional investment continues to move into the digital assets sector, most notably via Microstrategy (NASDAQ: MSTR). The rest of the digital assets sector, including altcoins, has increased as well, and the Company expects the improving outlook for more favourable and transparent regulatory environments globally to support continued digital asset growth.

1. Digital Asset Advisory (DAA)

In Q3 2024 and Q2 2024, the DAA business recorded US$25 million and US$16 million in revenues, respectively, accounting for 37% and 34% of total bookings, compared to US$65 million in revenues or 72% total booking contribution by the DAA business in Q1 2024. The decrease in revenues is mainly due to i) overall crypto market corrections after nearly breaching all-time highs in Q1 2024 and ii) slowdown of marquee token launches such as PIXEL in Q1 2024, despite the number of token advisory deals in Q2 2024 increasing to 10 from 4 in Q1 2024. The pipeline for new token advisory deals remains strong with over 60 token projects in progress, and there has already seen revenue upside driven by the market rallies and volatilities in quarter-to-date Q4 2024. 

       2. Web3 Operating Businesses

Mocaverse

Mocaverse is the marquee growth network with an interoperable infrastructure layer of Account, Identity, Reputation, and PointFi systems seeded by Animoca Brands. In April 2024 Mocaverse collaborated with CoinList to co-launch MocaList, a token launch platform exclusively for the Mocaverse community. In May 2024 MOCA Foundation’s MOCA Coin was the first public token sale launched on MocaList, which raised a total US$5 million with 6x oversubscription.

In July 2024 MOCA Coin was launched on major exchanges including Bybit and Kucoin, achieving a fully diluted valuation (FDV) of more than US$1 billion on the first day of trading. MOCA Foundation and TON Foundation executed a US$10 million strategic foundation-level token swap agreement of MOCA Coin and Toncoin to incentivize cross-pollination of users and projects across both ecosystems.

From user acquisition perspectives, 1.8 million Moca IDs, the on-chain identity system of Mocaverse’s Realm Network, had been claimed by the end of Q3 2024. Mocaverse further expanded its Moca Network, adding Anime Foundation, MyAnimeList, One Football, and others to its network of more than 30 partnerships. 

In September 2024 Mocaverse announced a strategic collaboration with leading cross-chain NFT platform MagicEden to launch MagicMoca, the first co-branded NFT launchpad from Mocaverse or Magic Eden to curate high-quality NFT projects from key cultural verticals such as gaming, sports, IP, and others for holders of Moca NFTs, MOCA Coin, Moca IDs, as well as the Magic Eden community. MagicMoca will adopt MOCA Coin as its primary currency for sale activities, while Magic Eden will accept MOCA Coin as one of the preferred currencies for its marketplace.

Open Campus

Open Campus is a community-led decentralized autonomous organization (DAO) that is building an on-chain education network to empower both educators and students. Animoca Brands and its subsidiary TinyTap are launch partners of Open Campus. 

Open Campus ID, the education-focused decentralized identifier (DID) launched by Open Campus in January 2024, had issued more than 615,000 Open Campus IDs as of 30 September 2024.

In May 2024 TinyTap announced it would accept the EDU token on its learning platform that serves over 11 million families. EDU is the governance and utility token used by Open Campus, and its integration into TinyTap significantly enhances the reach of Open Campus. In June 2024, Open Campus formed a strategic partnership with KIP Protocol to launch Open Campus U (OCU), a decentralized AI learning platform that allows broader access to high-quality educational resources, while providing educators with opportunities for compensation. In the same month, Open Campus also collaborated with ForbesWeb3 on OC 100, an initiative that identified the most impactful educators in the Web3 space. 

Open Campus received a grant from the Arbitrum Foundation in July 2024 to support the upcoming launch of EDU Chain, which is being built on Arbitrum and is the first Layer 3 blockchain specifically designed for education. Open Campus supports the Arbitrum Ambassador Program which includes educational content initiatives and tailored workshops to support ambassadors and developers within the Arbitrum ecosystem. Open Campus also participates in Arbitrum hackathon competitions, offering incentives to developers who created dApps for EDU Chain.

In July 2024 the Open Campus community passed a proposal to establish a US$20 million developer ecosystem fund and node leasing plan to incentivize developers to build on EDU Chain, and to promote collaboration between developers and educational institutions to ensure the long-term sustainability of the Open Campus platform. The node leasing plan will be activated when the EDU Chain mainnet goes live in Q1 2025. Also in July, Open Campus announced a US$1 million Hackathon Series that attracted 4,500 participants and resulted in the creation of 725 dApps, 40 of which were invited to an incubator and successfully deployed on the EDU Chain testnet. 

Open Campus concluded Q3 with the EDU Chain testnet campaign, which recorded 1.8 million unique active wallets and 67 million transactions across dApps deployed on the testnet (refer to current live data).

GAMEE

GAMEE, the mobile gaming platform behind the viral game WatBird, has grown notably since becoming a global gaming launch partner of Telegram Messenger in 2016. GAMEE is now one of the largest gaming platforms on Telegram, having launched the popular Telegram game mini-app WatBird in June 2024, which had 16 million monthly active users as of the end of September 2024. 

In August 2024 GAMEE announced an investment from TON Ventures and an investment from Pantera Capital. The investments were aimed at further empowering GAMEE’s ecosystem, enhancing user engagements, capitalizing on TON-based digital assets, and expanding GAMEE’s presence on TON via WatBird.

In Q2 2024 GAMEE introduced a new partnership business model designed to leverage its extensive user base in support of other projects. This initiative now includes collaborations with notable projects including Mocaverse and OneFootball Club, reinforcing GAMEE’s commitment to fostering a vibrant, interconnected Web3 gaming community. As part of a broader strategy to leverage GAMEE’s extensive audience, brands were able to connect through targeted advertising opportunities. Partners included Forbes, Notcoin, Yescoin, OKX Racer, Mocaverse, Anichess, Banana, Jetton and Bitget Wallet. In Q3 2024 GAMEE transitioned the GMEE Token into a payment token which enabled GAMEE to launch the formal testing phase of GAMEE AdNetwork, a new tokenized advertising network. 

In Q3 2024 GAMEE launched WATCoin on the TON blockchain. WATCoin is a fungible utility token that forms the basis for a reward system aimed at GMEE coin holders and the GAMEE community. WATCoin’s growth is driven by user engagement and community growth within the Telegram platform, with 72% of total supply allocated to the GAMEE community as rewards. Its utility within the Telegram ecosystem includes in-app purchases and holder benefits. 

The Sandbox

The Sandbox is an immersive metaverse platform in which users play, create, and monetize unique experiences alongside their favorite brands, IPs, and celebrities across gaming, entertainment, music, art, and other aspects of culture. Animoca Brands acquired The Sandbox in 2018 and it has been one of the Company’s main game operating businesses since then. The top-line bookings of The Sandbox are predominantly from the sale of SAND tokens and NFT sales. 

In June, The Sandbox announced US$20M funding at a US$1B valuation cap to expand the creator economy in the open metaverse. The strategic funding was led by Kingsway Capital and Animoca Brands with participation by LG Tech Ventures and True Global Ventures.

Despite difficult market conditions during much of 2024, The Sandbox continued to enhance user engagements and facilitate the expansion of its ecosystem of community participants. Alpha Season 4 of The Sandbox launched on 9 October 2024 to broad appeal and is presently ongoing. Performance of the SAND token has improved significantly since the launch of Alpha Season 4, with approx. 350% appreciation in value as of 9 December.  

Anichess

Anichess is a Web3 gaming project developed in a collaboration between Animoca Brands and Chess.com, the leading global online chess platform. On top of the US$1.5 million seed round funding completed in 2023, in April 2024 Anichess raised US$1.8 million from Sfermion, Amber Group, Fenbushi Capital, Aspen Digital, SNZ Capital, and others. Anichess is using the new capital to fund game development, marketing initiatives, and team expansion.

In May 2024 Anichess began a partnership with Team Secret, a global esports brand dedicated to bringing together the best gamers to compete worldwide and to deliver entertaining experiences to its fans. The partnership aims to solidify chess’s esports status by combining a new platform to play and learn on for an engaged audience of up-and-coming online chess masters.

In August 2024 Anichess completed Season 2 of its spell chess puzzle game with approximately 30,000 monthly active users and 20,000 daily active users. 

Stablecoin Project

Standard Chartered Bank (Hong Kong) Limited, Animoca Brands, and HKT announced in July 2024 that they joined forces to take part in the Hong Kong Monetary Authority (“HKMA”) stablecoin issuer sandbox,  which the HKMA announced in March 2024. The three companies are working with a shared vision that the digital asset market can grow in a sustainable, transparent, and appropriately risk-managed way in Hong Kong and beyond.

       3. Investment Management

Animoca Brands has been investing in Web3 projects and technologies since 2018, and this strategy has significantly helped the Company to gain deep industry expertise and exposure. As of Q3 2024, Animoca Brands held over 530 investments in its portfolio, including investments made from the Company’s balance sheet, its venture fund Animoca Ventures, and various accelerator partnerships. Investment management revenue is earned through management fees from Animoca Ventures and the sale of tokens and exits from equity positions in the Company’s portfolio.

YTD Q3 2024, Animoca Brands invested in approximately 60 new projects and realized US$28 million from its token related investments. Notable recent investments in Q2 and Q3 include Aethir, Carv.io, Gunzilla, Nillion, Abstract Chain, and Igloo, the company behind Pudgy Penguins, one of the leading NFT-based intellectual properties. 

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