Punktid Technologies
Company Announcement

Punktid Technologies AS group's results for the Q4 of 2022, meeting the annual sales goal and raising the forecasts for 2023.

The sales of Punktid Technologies AS (hereinafter Punktid) in the fourth quarter of 2022 totalled EUR 973 000 and increased by 23% compared to the fourth quarter of 2021 (the sales of the fourth quarter of 2021 were EUR 788 000). Of this, EUR 597 000 was the gross sum of the mediation service for the Punktid platform*, which increased by 14% compared to the fourth quarter of 2021 (the gross sum of the mediation service in the fourth quarter of 2021 was EUR 522 000).

In addition, in the fourth quarter, the wholesale of HVK Business OÜ increased by 41% compared to the same period last year (the wholesale of the fourth quarter of 2021 was EUR 266 000 and the wholesale of the fourth quarter of 2022 was EUR 376 000).

“The fourth quarter was very positive for the whole group, we set an absolute monthly record in retail sales in October and were able to beat it the next month, November. In the fourth quarter, our efforts brought 87% more traffic to the platform compared to the same period last year and 13% more compared to the third quarter,” commented Hannes Niid, a member of the management board of Punktid.

The table below shows the gross amounts received from the mediation service through the Punktid sales platform in the fourth quarter of 2022 compared to the results of the same period in 2021.

Comparison of the gross amount of mediation services for the fourth quarter of 2021 and 2022 by domains aimed at target markets**

**Numbers above EUR 10 000 in the table are rounded to the nearest thousand euros. The numbers in the table are not yet final (that is, they may change slightly), as the fourth quarter of 2022 has not yet been closed in the accounts. The sales via the Ukranian domain Punktid.com.ua is not reflected in the table, because the sales under this domain are conducted by the franchisee on the basis of a franchise agreement. Sales forecasts by years can be found on page 67 of the company description of Punktid. The sales goal for 2022 was set at a total of EUR 2 805 000.

*The intermediary service includes the online sale of digital codes for video games, Nintendo, Playstation, Xbox, etc. through the Punktid sales platform managed by Gamekeys OÜ, a member of the Punktid group, both in Estonia and abroad. The gross amount is money received from the customers through the Punktid platform, also referred to as sales.

More precisely about the markets 

• The gross amount of the mediation service of the Estonian domain (Punktid.ee) decreased by an average of 12% in the fourth quarter of 2022 compared to the same period in 2021. We did not make any major changes in our operations and continued to position ourselves in the market in the same volume as before, but the high inflation that hit Estonia has forced people to change their consumption habits as well, as a result of which we also suffered a slight decline in the local market.
• The gross amount of mediation service provided by the Latvian domain (Punktid.lv) increased by an average of 11% compared to the same period last year. We have achieved a stable position on the market there, and we apply our own tested methods to maintain the position.
• Through Punktid’s international English-language domain (Punktid.com), the mediation service has grown by an average of 74% in the fourth quarter of 2022 compared to the same period last year. The biggest increase occurred in November 2022, where the increase was 127% compared to November 2021. International sales were boosted in November by wider coverage and strong promotion.
• The gross amount of the mediation service on the Russian-language domain (Punktid.ru, which is mainly aimed at customers from the Baltic countries) decreased by an average of 21% in the fourth quarter of 2022 compared to the same period last year. The decrease is mainly due to the fact that in the second quarter, a large part of the sellers of the game sector stopped their activities on the Russian market, leaving the customers using products sold via Russian domain without a service. For this reason, the sales of one of the favourite products of our Russian-speaking clientele, Russian region cards for Playstation, also decreased, which affected the sales result of Punktid.ru. Several users of Russian products living in the Baltic countries have started using other regions, which helps to maintain a stable turnover.
• We started active marketing of the Lithuanian domain (Punktid.lt) in June, which is why we can clearly see the increase in sales numbers in the fourth quarter. The average growth in the fourth quarter was 171%.
• The Finnish-language domain (Punktid.fi) has grown very strongly organically this year. Although from June we started to support the Finnish market with a more specific marketing plan, which is why turnover also increased in the fourth quarter. The largest increase occurred in October, where the increase was 14,900% compared to October 2021.

The number of new orders and customers in the fourth quarter of 2022

In the fourth quarter of 2022, a total of 14 876 orders were placed in the online sales environment of Punktid, of which 4 365 in October, 4 863 in November and the highest number of orders of the year, 5 648 in December. A total of 2 643 new customers were added in the same period – 769 in October, 861 in November and 986 in December.

Retrospect of 2022

The 2022 wholesale goal was fulfilled - the goal for 2022 was EUR 800 000, at the end of the year the amount was EUR 1 000 465, which exceeds the forecast by 25% and the previous year’s sales by 41% (2021 sales were EUR 705 000).

“Although the sales results on the Punktid platform vary by language, the general trend is good. We see a trend where sales numbers in the local markets are struggling to match last year’s peaks, but we compensated for this by expanding into foreign markets.

Sales of the global domain Punktid.com increased by 124% (2021 sales were EUR 175 000 and 2022 sales were EUR 393 000). Since the goal for 2022 was EUR 243 000, we exceeded the goal by 62%.

The second biggest gainer was the Finnish domain Punktid.fi, which increased by 3100% (2021 sales were EUR 3000 and 2022 sales were EUR 96 000). Since the goal for 2022 was EUR 15 000, we exceeded the goal by 540%,” commented Hannes Niid, a member of the management board of Punktid.

The result fell short of the 2022 goal set for retail sales by 7.7% (the 2022 goal was EUR 2 005 000 and the actual result was EUR 1 849 000). “Although our Lithuanian portal Punktid.lt has also shown a good start in the Baltics, there was too much time between setting goals at the beginning of the year and implementing the capital of the initial public offering of shares in May. We had to focus our limited resources on conducting the initial public offering, and thus we only had half a year to assemble the team and receive the estimate for the mediation service. Consequently, we are very satisfied with the final result. The summer was low, and anxiety about inflation and the effects of war remained in the air until fall, so we considered lowering our forecasts, but decided against it and bet on a good start to the season. The season (September-December) showed a strong increase, where we set new records every month. We fulfilled both the goal set for the Finnish market on the Punktid.fi domain and the global sales goal of the Punktid.com domain, as well as the wholesale sales goal of the Punktid group,” commented Hannes Niid, a member of the management board of Punktid.

Team

In 2022, 4 people joined our team directly and 7 indirectly through cooperation partners (mainly developers and UX/UI designers). After the initial public offering of shares in the spring of 2022, an average of 18 people were involved in the Punktid project on a daily basis. In the first quarter of 2023, the construction of the new platform will be completed, and as a result, the labour rental costs associated with cooperation partners will decrease. Future activities include adding new features to the platform at a steady rate and page administration/maintenance.

Development

In 2022, we started a large-scale system upgrade. After the initial public offering of shares in the spring of 2022, we were able to complete our team and involved the workforce from the partner company Trinidad Wiseman OÜ. From May to August, during the holiday season, we were able to work on the development of a new brand and design, and from September on technical developments, which should be completed in the first phase in mid-February 2023. The new platform is modern and beneficial in terms of prospects, because the old platform is no longer sustainable in the near future. We have been using the old platform since 2015, and it is difficult for new developers to navigate the platform because it has been constantly changed. The new platform gives us the ability to add new languages and currencies very easily, which was very cumbersome and expensive to do on the old platform. In addition, we enhanced the speed of the system through well-optimized databases. Also, the onboarding of new partners to the platform is greatly simplified and this in turn means more automation for us and more up-to-date product options, prices and better availability for the customer.

Markets

The first quarter of 2022 showed good growth. The main marketing continued in the Baltics until the middle of the summer, after which we started to focus more on foreign markets in connection with the opening of Lithuanian and the international Punktid.com domain.

Local market

Before the initial public offering of shares in the spring of 2022, 69% of the turnover of the Punktid platform came from the Estonian market. We are pleased to note that although the financial share remained essentially the same in 2022 (change -6%), by the end of the year the share of the local market in the total turnover of the Punktid platform had dropped to 56% (in 2021 the turnover of the Estonian market through the Punktid.ee platform was EUR 1 094 million vs EUR 1 026 million in 2022). Our goal is to get more than 50% of our turnover from outside the Estonian market, and we believe that we will be able to reach this in 2023.

Ambitions and plans

Despite the fact that the organization of the initial public offering of shares fell into an anxious period and we raised only 60% of the desired amount, our ambitions have not changed. The ambition of the Punktid group is to be the video game sales platforms with one of the largest clientele in Europe. We have been profitable throughout (except during the investment period) and can return to profitability at any time.

Goal for 2023

The goal is to continue growing and expanding into new markets. We would like to increase the turnover forecast of the platform’s retail sales to EUR 3 million and wholesale to EUR 1 million in 2023, which are 10% higher in retail sales (previous estimate was EUR 2.7 million, new estimate EUR 3 million) and 20% in wholesale (previous estimate EUR 0.8 million, new estimate EUR 1 million) compared to the figures presented at the IPO. The total estimated growth compared to the turnover of the mediation service in 2022 would be 63%.

In the context of marketing, we will continue with similar activities in which we have achieved success. A new step has been taken in the direction of artificial intelligence, where from the beginning of the year we use the OpenAI service for writing content texts, which increases our visibility in the field of SEO, brings more revenue and significantly reduces the administrative burden. By March at the latest, we will launch a new platform with which we will get better organic sales revenue and with which we will expand to new markets. 

The information published in this announcement on the gross amount of mediation service is not reflected in the financial statements of Punktid as according to the Estonian Financial Reporting Standard (EFS), sales revenue from the mediation service is only the commission, but not the gross amount collected under agreements. Nevertheless, Punktid assesses its growth and success solely on the basis of sale by Gamekeys OÜ (i.e., the gross amount of the mediation service).

Contacts for additional information

Hannes Niid
Management Board Member of Punktid Technologies AS

E-mail: invest@punktid.com   

Punktid Technologies AS is a holding company established and operating in Estonia which has two subsidiaries, Gamekeys OÜ and HVK Business OÜ. Punktid group owns and develops the largest online sales environment for digital codes of video games, Nintendo, PlayStation and Xbox in Estonia, whereas:

• The main activity of Gamekeys OÜ is the mediation of the world's best-known video games and video game gift cards in an online environment and the related customer service and marketing both in Estonia and abroad; and
• The main activity of HVK Business OÜ is the wholesale of video games and gift cards for business customers, Punktid.com IT project development and sale of the right to use the Punktid.com platform