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Nexters said it is raising financial forecasts for the year as it prepares to go public through a special purpose acquisition company (SPAC).

The Limassol, Cyprus and Russia-based company said it grew its financial performance in the first quarter and it has raised its outlook for 2021. The company expects to go public this year, thanks to growth of Hero Wars RPG, a role-playing game with more than 100 million downloads to date on iOS and Android. Hero Wars is one of those games you may not be aware of, but you’ve probably seen its ads. Its main goal is to deliver midcore (hardcore gameplay in short time cycles) gaming to more casual players.

“We are in between casual and midcore, and we want to combine this knowledge and grow the market,” said Anton Reinhold, the chief business development officer at Nexters, in an interview with GamesBeat.

Players’ behavior continued to show positive dynamics, with the monthly average bookings per paying user growing by 7% in Q1 to $115. That means the paying users are spending more money. The company estimates year-on-year revenue growth of 48% in Q1 2021 based on a solid 15% growth in bookings, which were $113 million. And due growth in April, the company is raising its estimate for the year and says bookings will grow 38% in 2021. Hero Wars has seven million monthly active players.

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Nexters is based in Cyprus and has development operations in Eastern European cities such as Moscow. It has struck a deal to merge with Kismet Acquisition One, a SPAC formed to take a private company public.

Above: Nexters CEO Andrey Fadeev

Image Credit: Nexters

The growth has been supported by new marketing initiatives and acquiring users with forecasted paybacks above initial expectations, which led to an increase in the number of monthly paying users by 9%. To capitalize on the Q1 growth, the company has increased its marketing campaigns and achieved an increase in monthly paying users of 42% year-on-year in April.

Strong performance in the beginning of the year allowed Nexters to significantly update the forecast for 2021 bookings, which are expected now to grow at 38% year-over-year and reach around $610 million.

Nexters CEO Andrey Fadeev said in a statement that the company’s games won’t stop being fun when the pandemic ends. On the one hand, he sees ongoing growth of Hero Wars, a “forever franchise” first released in 2016. On the other hand, the company sees some promising results from new titles such as Chibi Island, a farming adventure game.

Reinhold said Chibi Island takes a lot of lessons from Hero Wars and applies it for not only better downloads but improved monetization as well. In that game, players can grow their farms like in FarmVille. But it has a significant adventure element as you can unlock and explore different parts of the island.

That game went into limited “soft launch” at the end of 2020 and is expected to fully launch this year. The company is also working on Puzzle Island for this year and a match-3 title for 2022.

Under the SPAC deal, Nexters will have an enterprise value of $1.9 billion, will be funded by approximately $250 million held in trust by Kismet, subject to potential redemptions, as well as the additional $50 million investment by the SPAC Sponsor, Kismet Capital Group.

The company generated $318 million in net bookings and $120 million in free cash flow to equity in 2020. Based on the expected continued growth of Hero Wars and new mobile game titles launching in 2021, it projected back in January that net bookings would grow to $562 million in 2023, after platform fees. Before platform fees, it now expects bookings to be $876 million in 2023, Reinhold said.

Nexters was founded in 2010, and it really started to grow after launching Hero Wars in 2018. It is played in more than 100 countries, and it has delivered 8.5 times monthly active user growth in the past two years. And the game has a presence on both the web and Facebook Canvas in addition to mobile.

As for the post-pandemic effect, Reinhold said, “We don’t see people churning. We see good and healthy cohorts where people play the same or more.” Apple’s change in its Identifier for Advertisers (IDFA) spooked a lot of people last year, and it took effect in the second quarter. But Reinhold said the company prepared for that change and it believes most revenue won’t be affected. It is decreasing some of its marketing activities on iOS for the moment.

The company has more than 500 employees. Its past titles include Throne Rush.

Updated 9:10 a.m. on July 1 with information from interview with Anton Reinhold.

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