Ace St. Germain CEO Beyond Frames

Ace St. Germain (CEO) Beyond Frames

This is an interview in a paid collaboration.

Beyond Frames (XR/VR/Virtual Reality/Gaming) is one of the few companies in the gaming industry that focuses solely on the VR gaming niche, which is the fastest growing. The company has now had multiple successes with their published games, which is why we can see the revenue and EBITDA growing. In this interview, CEO Ace St. Germain will tell us more about how the company will proceed from this point and why he believes there will be higher margins in the future!

Chart above: Beyond Frames 12 months rolling, revenue and EBITDA.
Source: Börsdata/Dagens Börs

Refresh our readers goldfish memory – what is Beyond Frames main operations?

Ace St. Germain (CEO) Beyond Frames: Beyond Frames is a video game publisher and studio group primarily focused on the development of immersive interactive entertainment. We’re best known today for developing games for XR and special computing platforms like Meta’s Quest headsets, the Apple Vision Pro, and more.

For those unfamiliar with the “XR” term, it’s an umbrella term that covers virtual reality, mixed reality, and augmented reality.

We have ownership in 3 studios:

• Cortopia Studios at 100%
• Moon Mode at 55%
• Odd Raven at 38%.

We are also a games publisher, meaning we fund, market, and distribute games for our internal studios as well as external partner studios.

Do you make more income from developing your own games or publish other companies’ games?

Ace St. Germain (CEO) Beyond Frames: Gross revenues are much higher through our publishing efforts, but net revenues is fairly even between our publishing and studio divisions. We’re able to distribute and sell more titles through our publishing division and have a major hit within our publishing portfolio, but the margins for our in-house studio titles are higher and the funding received for development comes through our studio division as well.

In our last interview we were talking about “fully financed” orderbook to mid 2026. What does “fully financed” means?

Ace St. Germain (CEO) Beyond Frames: Fully financed means our current cash and conservative cash projections, which also include contracted funding agreements with partners, can cover all the costs related to internal and external costs for developing the game. These costs include all production of the game themselves as well as the marketing!

In the last quarterly report (Q1 2024), we could see EBITDA at +7,80 MSEK and EBIT at -0,04 MSEK, what is the reason for this?

Ace St. Germain (CEO) Beyond Frames: We capitalize costs when making a game. The delta between our EBIT and EBITDA are amortized costs from last year’s games and games currently in development since we begin to amortize linearly for 3 years from the day production starts (red: amortizing normally means depreciation for intangible assets/ non-physical assets, dvs avskrivning av immateriella tillgångar).

Looking backwards the last 12 months, income amounted to 179 MSEK and EBITDA to 17,8 MSEK, almost exactly 10 %. Would you say it is a big challenge to increase this? How does this compare to other competitors? Are you focused on increasing revenue or margins?

Ace St. Germain (CEO) Beyond Frames: Our accounting recognizes Sales as the entirety of gross revenues before store fees and studio partner revenue splits. Due to the meteoric performance of Ghosts of Tabor, which we acquired the rights to publish at a low investment in exchange for a lower share of revenue, there was significant downward pressure on our margins.

Every company handles their books differently. Some only recognize their portion of the revenue split in their top-line, others capture everything the way we do. Our margins would be greatly improved if we accounted for things differently, but we think it’s important to show the market what the VR gaming industry is capable of.

Profitability is our focus so we can continue investing in new games. Given our upcoming sales of in-house titles, we believe we should see stronger margins in the future!

Beyond Frames delivered a record-level of income in Q1 2024 – why, and what does it take to make a new record soon?

Ace St. Germain (CEO) Beyond Frames: Much of Q1’s top-line performance was due to the re-launch of Ghosts of Tabor from early access to the main Meta Quest Store. This gave the title more visibility to a broader audience. Additionally, Cortopia Studios received payment on several development milestones from external partners with whom we have agreements with.

In terms of being able to break this record, we expect recurring revenues from our existing catalog to remain strong. We believe that between these steady revenues and new revenues from our future titles, our business should continue to surpass prior performance over time.

What are the longer term, plan for your income/capital (that is; the supposed profits you make in the future, will all that be consumed by growth-related cost or is there a plan for dividend or buy back)?

Ace St. Germain (CEO) Beyond Frames: The 3 to 5 year plan is to continue re-investing in our game pipeline. As our asset and IP value grows, so will our opportunities, leading to more lucrative returns.

What is the current status of the head-set industry? (who is the biggest 3 manufacturers and how much do they charge for a head-set?)

Ace St. Germain (CEO) Beyond Frames: The headset industry continues to grow at a healthy pace as adoption increases. The lead platform is Meta with their Quest line of headsets, which range around $300 to $500. Pico and PlayStation are a distant second place with headsets priced around $500, but the PlayStation VR2 requires the purchase of a PlayStation 5 console as well, so the combination can be quite pricey.

Apple is quickly rising through the ranks with their Apple Vision Pro, which is currently positioned as an enterprise machine, so we’ll have to wait and see what their approach is to your everyday consumer.

What is the outlook for prices to come down on these head-sets, so an even broader mass of average Joe can buy them?

Ace St. Germain (CEO) Beyond Frames: The cost of a headset today is already priced competitively compared to the rest of the video game market. Meta Quest 2’s, which are still capable of playing the most recent games, cost less than a PlayStation 5 or Xbox Series X.

That said, the goal of every headset manufacturer is to continue decreasing costs, and I anticipate we should see even cheaper headsets with powerful chipsets in the next 6 to 18 months.

What is the biggest “triggers” (news, events etc that callas for a BUY) for Beyond Frames?

Ace St. Germain (CEO) Beyond Frames: Ongoing performance of our catalog, performance of our new games, and news about external project funding are the biggest drivers of our business. That said, we have an incredible portfolio of titles coming between now and 2026.

We recently announced/published “Escaping Wonderland” a spiritual sequel to our Alice in Wonderland-based studio hit, “Down the Rabbit Hole,” which has made a 400% ROI since the franchise’s first-entry launch in 2020.

Additionally, we have 5 more titles slated for release. 1 title is a VR game based on a massive intellectual properly. Another is a sequel to one of the best-selling VR games of all time. 2 more titles are coming from Combat Waffle Studios who made “Ghosts of Tabor” and are already creating lots of buzz within the gaming community. Finally, we have a title under development through Odd Raven Studios, which we can’t say much about yet, but we believe could be a strong seller.

Video above:  ”…“Escaping Wonderland” a spiritual sequel to our Alice in Wonderland-based studio hit, “Down the Rabbit Hole,” which has made a 400% ROI since the franchise’s first-entry launch in 2020…”
Source: YouTube/Beyond Frames

You recently made a personal investment of approximately 5.4 MSEK in the company (300,000 shares at 18kr). Can you explain why?

Ace St. Germain (CEO) Beyond Frames: As mentioned, we have an incredibly strong slate of games coming. Additionally, we have a best-in-class publishing team, fantastic studios, and strong partnerships that give me all the confidence in the world that we can be one of the greatest providers of immersive entertainment in the world.

Thank you so much Ace, for an interesting interview!

Diagram ovan: Beyond Frames dagsdiagram (diagram källa: infront)