Why the Emerge Gaming (ASX:EM1) share price is rocketing 33% higher today

The Emerge Gaming Ltd (ASX: EM1) share price is rocketing higher on Monday after the release of an update…

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The Emerge Gaming Ltd (ASX: EM1) share price has started 2021 with a bang.

The esports and gaming technology company’s shares were up 33% to 10.5 cents in morning trade.

Why is the Emerge Gaming share price rocketing higher?

Investors have been buying the company’s shares this morning following the release of an update on its MIGGSTER social gaming platform.

According to the release, Emerge Gaming has banked its first cash receipts from the social gaming platform to the value of A$8.3 million.

The MIGGSTER platform was launched on 14 November 2020 and the first cash receipts represent gross subscription fees received by Emerge in the 48 days since its launch date.

Management also advised that MIGGSTER subscriptions continue to deliver strong daily growth and further material updates will be provided to the market as they transpire.

What are gross subscription fees?

Due to its revenue sharing with Influence Crowd Technologies (formerly known as Tecnología de Impacto Multiple or TIM), not all subscription fees are received by Emerge Gaming.

Management has attempted to clarify the situation by providing a breakdown on how its agreement with Influence Crowd Technologies works.

It explained that the MIGGSTER platform is operated under a licensing agreement with Influence Crowd Technologies to market Emerge’s proprietary tournament platform technology into an affiliate sales network under a white-labelled brand.

“Under the licencing agreement, Emerge will earn 64.5% of the Net Revenue from the platform where Net Revenue is determined as gross subscriptions received less direct taxes and other directly attributable platform costs,” it commented.

Why has its partner changed its name?

No details were provided to explain why Tecnología de Impacto Multiple (TIM) has changed its name to Influence Crowd Technologies.

However, it is worth noting that there has been negative coverage of TIM in the past due to its connections to companies that have been flagged for using questionable business practices.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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