Digital Bros S.p.A. (DIB) AI Stock Analysis

• Market Cap: €197.43M
• Dividend Yield: N/A
• Average Volume (3M): 30.46K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.38
• Revenue Growth: 3.84%
• EPS Growth: 80.30%
• Country: IT
• Employees: 286
• Sector: Technology
• Sector Strength: 86
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 0.10
• Shares Outstanding: 14,265,037
• 10 Day Avg. Volume: 27,292
• 30 Day Avg. Volume: 30,457
• PEG Ratio: -0.41
• Price to Book (P/B): 1.83
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -7.07
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €20.00
• Price Target Upside: 44.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 65 Neutral
• Price Target: €15.50 ▲(11.99%Upside)

The stock score is driven primarily by strong technical momentum, despite financial challenges indicated by negative earnings and declining revenue. The lack of profitability and absence of dividends are significant valuation concerns, but the robust equity position and absence of debt provide some stability.

Positive Factors

Game Release

The anticipated release of Wuchang is expected to be a game-changer, with predictions of it becoming a million-seller and drastically improving the financial profile of Digital Bros.

Market Sentiment

The growing interest in Wuchang, now with over 100,000 followers on Steam, indicates strong market anticipation and potential for significant sales success.

Partnerships

Wuchang's partnership with Microsoft, offering the game to its subscribers on Day One, significantly reduces risk for Digital Bros and enhances potential success.

Negative Factors

Game Release Delays

A 12.3% year-over-year decrease in 9M25 revenues to €66.4m was impacted by a lower number of new game releases compared to the previous year.

Revenue Decline

Digital Bros reported a 9% decrease in semester revenue to €43.0M, reflecting challenges in maintaining top-line growth.

Digital Bros S.p.A. Business Overview & Revenue Model

Company Description

Digital Bros S.p.A. develops, publishes, distributes, and markets video games in Europe, the Americas, and internationally. It operates through Premium Games, Free to Play, Italian Distribution, and Other activities segment. The Premium Games segment acquires and distributes video games content rights on digital marketplaces, such as Steam, Sony PlayStation Network, Microsoft Xbox Live, Epic Game Store, etc., as well as through an international sales network; and publishes video games under 505 Games brand name. The Free to Play segment develops and publishes video games and applications that are available free of charge on digital marketplaces under the 505 Games Mobile brand name. The Italian Distribution segment purchases and distributes video games under the Halifax brand; and Yu-Gi-Oh! trading card games through newsstand distribution channel in Italy. The Other Activities segment organizes video game training and professional update courses. Digital Bros S.p.A. was founded in 1989 and is based in Milan, Italy.

How the Company Makes Money

Digital Bros S.p.A. generates revenue through multiple streams in the gaming industry. The primary source of income is the sale of video games, which includes both physical and digital distribution. The company also engages in publishing agreements, where it partners with game developers to bring their products to market, earning revenue through distribution rights and royalties. Additionally, Digital Bros makes money from in-game purchases and downloadable content, which enhance the gaming experience for users and provide ongoing income beyond initial game sales. Key partnerships with other gaming companies and platforms also contribute to its financial success, enabling broader reach and access to diverse markets.

Digital Bros S.p.A. Financial Statement Overview

Summary

The company faces profitability challenges with negative net income and declining revenue, despite having a strong equity position and no debt. Cash flow remains positive but is declining, indicating a need for improved cash management.

Income Statement

The company has shown a decline in total revenue in recent years, with revenue dropping from €149.18M in 2021 to €113.86M in TTM (Trailing-Twelve-Months) 2024. Gross profit margin remains relatively stable at around 56% in TTM 2024. However, net income has turned negative, indicating profitability challenges. The EBIT and EBITDA margins have also decreased significantly, reflecting operational inefficiencies.

Balance Sheet

Digital Bros S.p.A. has maintained a strong equity position with a debt-to-equity ratio of 0 as of TTM 2024, indicating no reliance on debt financing. The equity ratio stands at approximately 60%, suggesting a robust capital structure. However, the return on equity has been negative due to recent losses, which is a concern for long-term sustainability.

Cash Flow

The operating cash flow has decreased over the years, yet remains positive at €18.76M in TTM 2024. Free cash flow is positive, indicating some level of financial flexibility. However, the free cash flow growth rate is negative compared to previous periods, suggesting a need for better cash flow management. The company has managed to maintain an operating cash flow to net income ratio that indicates better cash management relative to its net income losses.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	113.86M	117.93M	117.93M	132.24M	149.18M	136.68M
Gross Profit	63.44M	79.67M	82.23M	86.78M	89.45M	56.95M
EBITDA	43.53M	33.67M	43.45M	54.13M	59.96M	34.68M
Net Income	-2.21M	-2.21M	9.68M	28.55M	32.02M	14.97M
Balance Sheet
Total Assets	202.83M	230.81M	265.19M	226.31M	202.02M	155.65M
Cash, Cash Equivalents and Short-Term Investments	9.85M	22.22M	20.75M	11.29M	35.51M	8.53M
Total Debt	0.00	45.63M	59.38M	25.25M	10.97M	12.07M
Total Liabilities	80.57M	103.12M	121.47M	88.99M	90.22M	75.72M
Stockholders Equity	121.48M	131.00M	142.34M	135.90M	110.90M	78.95M
Cash Flow
Free Cash Flow	13.01M	13.16M	-36.90M	-35.87M	43.49M	19.28M
Operating Cash Flow	18.76M	30.75M	37.53M	21.53M	99.12M	53.80M
Investing Cash Flow	-5.96M	-14.78M	-78.33M	-53.72M	-61.34M	-35.73M
Financing Cash Flow	-12.40M	-13.40M	39.24M	7.42M	-10.80M	-14.32M

Digital Bros S.p.A. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:DIB, the sentiment is Positive. The current price of 13.84 is below the 20-day moving average (MA) of 14.24, above the 50-day MA of 13.00, and above the 200-day MA of 11.18, indicating a neutral trend. The MACD of 0.17 indicates Positive momentum. The RSI at 51.14 is Neutral, neither overbought nor oversold. The STOCH value of 28.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IT:DIB.

Digital Bros S.p.A. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DIB	65 Neutral	€197.43M	―	-1.29%	―	3.84%	80.30%
Sector *	50 Neutral	AU$1.46B	1.74	-28.24%	3.29%	15.64%	-7.01%
7GV		€310.50M	―	-8.20%	―	―	―
101		€96.54M	10.96	11.71%	―	―	―
68H		€121.63M	―	-7.13%	―	―	―
DGV	83 Outperform	€306.47M	8.66		3.16%	-3.76%	-9.21%
PWS		€247.91M	18.64		4.40%	―	―

Digital Bros S.p.A. Corporate Events

Digital Bros Gains Influence Over Starbreeze AB with Board Election

Digital Bros Group has announced that it has acquired significant influence over its Swedish subsidiary, Starbreeze AB, following the election of its CFO, Stefano Salbe, to Starbreeze’s Board of Directors. This development allows Digital Bros to consolidate Starbreeze using the equity method, which is expected to impact the company’s financial statements and decision-making processes, potentially enhancing its strategic position in the video game industry.

The most recent analyst rating on (IT:DIB) stock is a Buy with a EUR22.00 price target. To see the full list of analyst forecasts on Digital Bros S.p.A. stock, see the IT:DIB Stock Forecast page.

Digital Bros Reports Improved Operating Margin Amid Revenue Decline

Digital Bros S.p.A. reported its financial results for the first nine months of the 2024-2025 fiscal year, showing a decline in net revenues by 12.3% to 66.4 million Euros, while achieving a positive operating margin of 2.3 million Euros, a significant improvement from the previous year. Despite the declining revenues, the company has managed to maintain a stable operating margin by focusing on high-margin video games and discontinuing less profitable projects, which has led to a reduced net loss and improved financial debt position.

The most recent analyst rating on (IT:DIB) stock is a Buy with a EUR22.00 price target. To see the full list of analyst forecasts on Digital Bros S.p.A. stock, see the IT:DIB Stock Forecast page.