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

• Market Cap: €171.75M
• Dividend Yield: N/A
• Average Volume (3M): 48.35K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.46
• Revenue Growth: -1.36%
• EPS Growth: -91.72%
• Country: IT
• Employees: 286
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 0.32
• Shares Outstanding: 14,265,037
• 10 Day Avg. Volume: 53,299
• 30 Day Avg. Volume: 48,354
• PEG Ratio: -0.05
• Price to Book (P/B): 1.90
• Price to Sales (P/S): 2.31
• P/FCF Ratio: 6.66
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: €13.00 ▼(-1.96% Downside)

Digital Bros S.p.A. shows strong revenue growth and cash flow generation, which are key strengths. The technical indicators suggest a positive price trend, adding to the stock's attractiveness. However, profitability challenges and a negative P/E ratio weigh down the overall score. Improving profitability will be essential for enhancing the stock's valuation and overall appeal.

Positive Factors

Free Cash Flow Growth

Sustained, large free cash flow growth (TTM) indicates the company can self-fund game development, marketing, and IP investment without relying heavily on external financing. This supports strategic flexibility across product cycles and long-term value creation.

Low Leverage / Strong Equity Base

A conservative leverage profile and strong equity ratio reduce refinancing and solvency risk for a cyclical games business. This balance sheet strength allows sustained investment in titles, acquisitions, or marketing through downturns without materially increasing financial distress risk.

High Gross Margin

A >50% gross margin reflects scalable digital distribution and pricing power from owned IP and publishing services. High gross margins create headroom to invest in content and DLC monetization while absorbing SG&A, supporting long-term profitability if operating efficiencies improve.

Negative Factors

Negative Net Profitability

Recurring negative net margins indicate the company isn't yet converting revenues into sustainable profits. For a games publisher, this suggests elevated SG&A, marketing or development spend relative to returns and implies management must improve cost structure or title hit-rate to realize durable earnings.

Negative Return on Equity

A negative ROE means shareholder capital is eroding rather than compounding. Over the medium term this undermines the ability to fund organic growth from retained earnings and raises pressure for either operational turnaround or external capital to sustain expansion plans.

Cash Conversion Weakness

Operating cash flow lagging net income signals earnings are not fully converting to cash, potentially due to working capital swings or accruals. This weak conversion complicates reinvestment timing and could limit stable funding for development despite strong headline FCF 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 generates revenue through several key streams. Primarily, the company earns money from the sale of video games, both digital and physical, across various platforms. This includes revenues from its proprietary titles and those published from third-party developers. Additionally, Digital Bros monetizes its games through in-game purchases and downloadable content (DLC), which enhance player engagement and drive additional sales. The company also benefits from strategic partnerships with digital distribution platforms, which provide wider access to its games and help increase sales. Furthermore, Digital Bros may engage in licensing agreements and collaborations that can generate additional revenue, particularly in merchandising and adaptations of their gaming properties.

Digital Bros S.p.A. Financial Statement Overview

Summary

Digital Bros S.p.A. demonstrates strong revenue growth and cash flow generation, which are positive indicators for future performance. However, the company faces profitability challenges, as evidenced by negative net profit margins and return on equity. The balance sheet is stable with low leverage, but improving profitability will be crucial for enhancing overall financial health.

Income Statement

The company shows a strong revenue growth rate of 25.61% in the TTM period, indicating a positive trajectory. However, the net profit margin is negative at -11.66%, reflecting profitability challenges. The gross profit margin is healthy at 52.06%, but the EBIT margin is negative, suggesting operational inefficiencies.

Balance Sheet

The debt-to-equity ratio is low at 0.22, indicating a conservative leverage position. However, the return on equity is negative at -9.08%, highlighting profitability issues. The equity ratio is strong, suggesting financial stability.

Cash Flow

The company exhibits a significant free cash flow growth rate of 186.27% in the TTM period, demonstrating strong cash generation capabilities. The operating cash flow to net income ratio is below 1, indicating some challenges in converting income to cash. However, the free cash flow to net income ratio is positive, showing effective cash management.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	117.60M	93.62M	117.93M	117.93M	132.24M	149.18M
Gross Profit	58.85M	28.48M	79.77M	82.23M	86.78M	89.45M
EBITDA	27.02M	15.27M	33.67M	40.87M	59.66M	59.96M
Net Income	-4.03M	-10.92M	-2.21M	9.68M	28.55M	32.02M
Balance Sheet
Total Assets	178.28M	189.56M	230.81M	265.19M	226.31M	202.02M
Cash, Cash Equivalents and Short-Term Investments	16.29M	6.72M	22.22M	20.75M	11.29M	35.51M
Total Debt	14.22M	24.73M	45.63M	59.38M	25.25M	16.09M
Total Liabilities	59.11M	74.82M	103.12M	121.47M	88.99M	90.22M
Stockholders Equity	118.28M	113.95M	131.00M	142.34M	135.90M	110.90M
Cash Flow
Free Cash Flow	48.77M	32.50M	13.16M	-36.90M	-35.87M	43.49M
Operating Cash Flow	60.66M	32.83M	30.75M	37.53M	21.53M	99.12M
Investing Cash Flow	-23.20M	-17.18M	-14.78M	-78.33M	-53.72M	-61.34M
Financing Cash Flow	-24.54M	-20.91M	-13.40M	39.24M	7.42M	-10.80M

Digital Bros S.p.A. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 13.26
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 13.26 is above the 20-day moving average (MA) of 12.52, above the 50-day MA of 12.85, and above the 200-day MA of 13.01, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 32.97 is Neutral, neither overbought nor oversold. The STOCH value of 36.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
DGV	71 Outperform	€284.58M	15.10	―	2.82%	-24.28%	-57.55%
DIB	66 Neutral	€171.75M	-42.18	-8.92%	―	-1.36%	-91.72%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
CY4	60 Neutral	€167.36M	-25.83	-7.05%	―	29.64%	62.10%
IOT	58 Neutral	€324.46M	-34.77	-3.24%	―	1.84%	-15.49%