In a much-awaited release, Animoca Brands Corporation Ltd revealed an exponential increase of 401.5% in deferred revenue for 2020, from $6.947 million to $27.890 million.
In releasing its 2020 annual report, Animoca Brands founder and chairman Yat Siu said the company faced several challenges in compiling the annual report, most notably the Covid-19 pandemic, but is now firmly on the path to comprehensively comply with the Corporations Act 2001.
"The pandemic significantly impacted our capacity to integrate acquisitions into our blockchain/NFT strategy and locked down many of our employees across several countries," Siu explained.
The company's unique structure and forward-thinking investments in digital assets and associated businesses contributed to the complexity of the financial reporting process.
However, its release now marks the establishment of a financial reporting framework for future companies with similar complexity and operations to Animoca Brands, he added.
Remarkable growth
Since 2020, Animoca Brands has experienced remarkable growth, with its employee count leaping from under 200 to around a thousand.
With Evan Auyang at the helm as group president, the company has made numerous strategic senior management appointments in various crucial roles.
Animoca Brands' commitment to blockchain and digital assets has led to a unique accounting methodology, where revenue is deferred upon receipt from customers, then recognised in profit or loss once services are delivered.
The company will continue to evolve its financial reporting in line with changes to accounting standards and under the guidance of its auditors.
Beyond blockchain
Turning to artificial intelligence (AI), Siu said Animoca Brands has invested in over 60 AI-related start-ups through its AI accelerator since 2018, with some of the start-ups’ products being integrated at the group level as well as across its portfolio companies.
“Five years ago, we understood the implications, not just of blockchain but also of AI, and particularly the potential synergy between these areas of technology. It goes beyond synergy – we believe the two are firmly intertwined.
“As AI becomes increasingly autonomous, we believe that the medium of exchange between AI agents will run most efficiently on blockchain and utilise cryptocurrency. Being a digitally native construct, AI will require a digitally native currency.
“Some parts of our organisation are already seeing improvements of up to 80% in efficiency on product development that utilises AI, and we are very excited by the ways in which AI can accelerate different Web3 efforts in areas such as education and learning, gaming, fashion, sports, and all the other forms of digital identity and culture addressed by Animoca Brands,” Siu added.
Metaverse “alive and well”
The company weathered one of the deepest crises the industry has ever faced last year to emerge as an international leader in a unique position to drive the global Web3 industry, Siu said.
“Despite various shocks, Web3 remains poised for growth. The open metaverse – the metaverse of true digital ownership – is alive and well.
“During 2022, which devolved into a frighteningly bearish market, NFT sales still generated over US$24 billion. Just in the first quarter of 2023, NFT sales generated nearly US$5 billion.”
Well-placed
With regulatory frameworks in Hong Kong, Japan, and the European Union leaning favourably towards Web3, Animoca Brands is in a leadership position based on its investments and geographical locations.
"Recent updates to the regulatory frameworks in Animoca Brands’ main places of operations, such as Hong Kong, Japan, and the European Union, all suggest that these territories understand the relevance and importance of Web3 and are keen to create environments in which Web3 ventures will thrive.
“We could not be more excited about the future of Web3 and the open metaverse,” Siu concluded.
To download the 2020 annual report, click here.