Winking Studios Limited 1H2025 Financial Analysis and Investment Outlook

Winking Studios Limited, a leading global game art outsourcing and development provider, released its 1H2025 financial results for the period ended 30 June 2025. The results highlight robust growth, strategic acquisitions, and strengthening market positions, particularly in Asia and Western markets. Below, we analyze the key financial metrics, notable corporate actions, and provide an investment outlook for current and prospective investors.

Key Financial Metrics

^*Previous quarter figures were inferred from annual splits and may not reflect exact numbers.

Historical Performance Trends

• Revenue has shown consistent growth: \$12.3M in FY2020, \$20.4M in FY2021, \$22.0M in FY2022, \$24.1M in FY2023, \$26.4M in FY2024, and \$19.4M in 1H2025.
• Gross profit margin improved from 27.9% in 1H2024 to 30.2% in 1H2025, reflecting better cost control and higher margin contributions from AAA console platform projects.
• Adjusted EBITDA margin decreased slightly from 13.6% to 12.6% due to AIM ongoing listing expenses.
• Headcount increased to 1,405 as of 31 July 2025, driven by acquisitions and organic growth.

Exceptional Earnings and Expenses

• Significant one-off expenses include AIM ongoing listing expenses (\$0.3M) and costs associated with the acquisition and integration of Mineloader (\$0.09M).
• Foreign exchange gains of (\$0.23M) provided a slight offset to expenses.
• Amortisation of acquisition-related intangible assets increased to \$0.20M in 1H2025 due to recent acquisitions.

Corporate Actions and Fund Flows

• Mergers & Acquisitions: The acquisition of Mineloader for \$19.8M (largest to date) added 495 employees and boosted revenue and gross profit, especially in higher-margin AAA console games.
• Fundraising: Multiple fundraises over the last 18 months, including SGX IPO (\$6M), private placement (\$19.9M), and AIM dual listing on LSE (\$10M).
• Cash Flow: Net cash used in investing activities spiked to \$13.5M in 1H2025, reflecting the Mineloader acquisition. Operating cash flow was positive at \$0.6M but down from \$0.9M in 1H2024 due to higher working capital and supplier payments.
• Shareholder Structure: Acer Group holds a combined 64.2% of shares, with management owning 13.2%. Public float stands at 22.7%.

Forecasts and Market Outlook

• Management expects continued growth in art outsourcing and game development, with 24+ months of revenue visibility and indicative bookings of \$49.4M.
• The group is scaling operations in Southeast Asia and launching Vertic Studios, targeting high-end AAA games.
• Focus remains on M&A and expanding into Western markets, leveraging cost advantages and creative talent in Asia.
• The gaming outsourcing market is forecasted to grow at a CAGR of 10% (2023-2028), with mobile gaming and Asia dominating sector growth.

Chairman’s Statement

“Committed to delivering growth, supported by good revenue visibility and healthy, long-term market drivers… Winking Studios is well positioned to seize the opportunities from the growing outsourcing trend in the industry… Continued execution of our M&A strategy, supported by a strong cash position and no outstanding debt. A key focus will be building out our UK office as a strategic foothold for long-term international expansion.” (Tone: Positive and Expansionary)

Directors’ Remuneration

No specific figures provided for directors’ pay or remuneration in this report.

Events Affecting Business

• No natural disasters, legal disputes, or policy changes disclosed.
• Positive macroeconomic environment and structural shifts favor outsourcing and Asian production models.
• AI technology development underway, but management notes creative art services for AAA games cannot be replaced by AI.

Conclusion & Investment Recommendations

Performance and Outlook: Winking Studios Limited demonstrated strong financial performance in 1H2025, driven by strategic acquisitions and increased demand for game art outsourcing, particularly from blue-chip clients. The company maintains a healthy balance sheet, robust revenue growth, and a positive outlook supported by long-term industry trends and M&A strategy. The Chairman’s statement and operational metrics underscore management’s confidence in sustained growth, especially in Western markets.

Recommendation for Current Holders: Hold. The company’s strong revenue growth, increasing margins, and proven M&A track record suggest continued upside potential. Strong bookings and visibility into future revenue reinforce the investment case.

Recommendation for Non-Holders: Consider Accumulating. For investors not currently holding shares, Winking Studios presents a compelling opportunity given its scalable business model, sector leadership, and expansion into high-growth markets. However, monitor cash flows and integration of acquisitions for any signs of operational stress.

Disclaimer: The above recommendations are based solely on the financial and operational data disclosed in the company’s official report. Investors should conduct further due diligence and consider their own risk tolerance and investment objectives before making any decisions.

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