Redeye gives a brief comment on FMG’s downward revision of its full-year guidance. The company attributes the adjustment primarily to lower sportsbook margins and increased marketing spending. While lowering guidance is never positive for sentiment, Redeye considers the adjustment relatively minor, with a limited impact on our valuation.

The company now expects sales of SEK92–96m and EBITDA of SEK65–69m for 2024, down from its previous guidance of SEK97–105m and SEK70–75m, respectively. For comparison, our estimates were SEK97m in sales and SEK69m in EBITDA. As such, the new guidance does not materially impact our forecast and, therefore, has only a minor impact on our valuation.

The company attributed the adjustment primarily to lower sportsbook margins and increased marketing spending. Both factors should be viewed as temporary, with the latter potentially being positive, as it suggests the company has identified good opportunities to invest in ads in the quarter, hopefully driving growth in 2025.

On the back of the revised guidance, we have adjusted our 2024e estimates from SEK97m in sales to SEK94m and EBITDA from SEK69m to SEK67m. Consequently, we have lowered our base case from SEK12 to SEK11 and our fair value range from SEK6–20 to SEK5–18. The company is scheduled to report its Q4 results on 20 February.

Fable Media Group

* Lacks clear sustainable competitive advantages or moats, potentially limiting long-term profitability and market dominance.
* High revenue concentration with the largest partner accounting for a majority of sales, increasing vulnerability to client loss.
* Operates in a highly regulated industry (igaming), exposing the company to potential political and regulatory risks.
* Dependent on its founder, Frederik Cardel Falbe-Hansen, for success, presenting key person risk.

* Strong recurring revenue model based on revenue share agreements, enhancing business stability and predictability.
* Asset-light business model allowing for efficient scaling without significant reinvestment, supporting high incremental returns.
* Operates in the growing igaming market, benefiting from secular tailwinds and expected to outgrow the overall economy.
* Demonstrates profitability with positive operating cash flow and returns on invested capital exceeding cost of capital.
* Relatively non-cyclical business nature, providing stability in various economic conditions.

* Inconsistent historical growth, with stock price not compounding at 10%+ since IPO and earnings growth below historical averages.
* Weak dividend performance, lacking attractive yield, consistent growth, or strong cash flow coverage.

* Strong profitability with gross profit margin >40%, operating margin >20%, and Return on Equity ≥20% for the last five years.
* Solid financial health with Net Debt less than twice Operating Cash Flow and five times Free Cash Flow.
* Excellent earnings quality, with accounts receivable management, low one-time charges, and high Operating and Free Cash Flow conversion rates.

* Inconsistent disclosure of key metrics: The company could improve its communication by disclosing more key performance indicators (KPIs) consistently over time.
* Limited sustainability reporting: The company's commitment to sustainability reporting appears weak, particularly in communicating social responsibility efforts relevant to its business model.

* Strong founder involvement: The company's founder remains actively involved, owning over 77% of outstanding shares, indicating long-term commitment and alignment with shareholder interests.
* Clear strategic focus: The company has a well-defined strategic plan centered on sports betting and revenue share contracts, expected to create shareholder value.

FMG: Estimate revisions
		New estimates			Old estimates			Difference %
	2024e	2025e	2026e	2024e	2025e	2026e	2024e	2025e	2026e
Net Sales	94.1	108.2	124.4	97.3	111.9	128.7	-3%	-3%	-3%
Growth	13%	15%	15%	17%	15%	15%	-4pp	0pp	0pp

Other income	0.4	0.0	0.0	0.4	0.0	0.0	0%	na	na
Total revenues	94.5	108.2	124.4	97.7	111.9	128.7	-3%	-3%	-3%


Direct costs	-13.0	-18.4	-21.8	-13.5	-19.0	-22.5	-3%	-3%	-3%
Other external costs	-9.6	-11.4	-13.7	-9.9	-11.8	-14.2	-3%	-3%	-3%
Personnel costs	-4.8	-6.0	-7.5	-5.0	-6.2	-7.7	-4%	-3%	-3%
Earnout revaluation	-15.0	-	-	-15.0	-	-	0%	na	na
Total Opex	-46.5	-35.7	-42.9	-47.6	-36.9	-44.4	-2%	-3%	-3%

EBITDA*	67.0	72.5	81.5	69.3	75.0	84.3	-3%	-3%	-3%
EBITDA (%)	71%	67%	66%	71%	67%	66%	0pp	0pp	0pp

D&A	-4.0	-	-	-4.1	-	-	-2%	na	na

EBIT	48.0	72.5	81.5	50.2	75.0	84.3	-4%	-3%	-3%
EBIT (%)	51%	67%	66%	52%	67%	66%	-1pp	0pp	0pp

Net income	33.9	55.2	64.7	35.5	57.2	66.9	-5%	-3%	-3%
Source: Redeye Research
*excluding revaluation of earn-outs

FMG: Income Statement
SEKm	2022	2023	2024Q1	2024Q2	2024Q3	2024Q4e	2024e	2025e	2026e
Net Sales	61.5	83.5	21.8	27.6	21.7	23.0	94.1	108.2	124.4
Other income	0.4	0.4	0.2	0.2	0.0	0.0	0.4	0.0	0.0

Direct costs	-17.3	-19.9	-3.6	-3.1	-3.1	-3.3	-13.0	-18.4	-21.8
Other external costs	-4.6	-6.8	-2.5	-2.5	-2.3	-2.3	-9.6	-11.4	-13.7
Personnel costs	-8.4	-8.0	-0.9	-1.5	-1.1	-1.4	-4.8	-6.0	-7.5
D&A	-5.5	-4.6	-1.1	-1.2	-1.2	-0.6	-4.0	0.0	0.0
Earnout revaluation		-10.0		-15.0			-15.0
Total Opex	-35.7	-49.4	-8.1	-23.2	-7.6	-7.5	-46.5	-35.7	-42.9

EBITDA*	31.7	49.2	15.0	20.7	15.2	16.0	67.0	72.5	81.5

EBIT	26.2	34.6	13.9	4.6	14.1	15.5	48.0	72.5	81.5

Net finance	1.3	6.9	-0.8	0.0	1.8	-0.2	0.8	-3.0	0.0

Profit before tax	27.5	41.5	13.1	4.5	15.9	15.3	48.8	69.5	81.5

Tax	-5.4	-10.4	-3.1	-4.3	-3.8	-3.7	-14.9	-14.3	-16.8

Net Income	22.1	31.1	10.0	0.2	12.0	11.6	33.9	55.2	64.7

Growth %
Net Sales y/y	77%	36%	7%	21%	13%	10%	13%	15%	15%

Margins %
EBITDA Margin	52%	59%	69%	75%	70%	70%	71%	67%	66%
EBIT Margin	43%	41%	64%	17%	65%	67%	51%	67%	66%
Net margin	36%	37%	46%	1%	55%	50%	36%	51%	52%
Source: Redeye Research
*excluding revaluation of earn-outs