Verve Group Se Class A · OMXSTO:VER
Verve Group Se Class A — Media and Games Invest — Investor Presentation (November 2020)
47 slides from Verve Group Se Class A's investor presentation, November 2020
Slide 1: EKF Presentation
EKF Presentation November 2020
Slide 2: Disclaimer
Disclaimer THE INFORMATION CONTAINED IN THIS PRESENTATION IS STRICTLY CONFIDENTIAL. ACCORDINGLY, THE INFORMATION INCLUDED HEREIN MAY NOT BE REFERRED TO, QUOTED OR OTHERWISE DISCLOSED BY YOU, NEITHER DIRECTLY OR INDIRECTLY NOR WHOLLY OR PARTLY. BY REVIEWING THIS INFORMATION, YOU ARE ACKNOWLEDGING THE
Slide 3: Agenda
I. Transaction overview II. Business overview III. Division synergies IV. Strategy V. Financial performance
Slide 4: Today's presenters and ownership structure
Today’s presenters and ownership structure Shares listed on Frankfurt Stock Exchange and Nasdaq First North Premier Stockholm Remco Westermann Shareholders CEO & Chairman of the Board since 2012 • Manager, entrepreneur and investors with more than 25 Remco Westermann 37% years of experience from var
Slide 5: Dual Listing on Nasdaq First North Premier
Dual Listing on Nasdaq First North Premier Experienced Nordic gaming investors combined with a strong gaming cluster at Nasdaq Stockholm Listing on NASDAQ First North Premier Nordic peers with strong valuations • Completed SEK 300 million (€29m) capital increase with Pareto Securities AB • Tier-1 Ga
Slide 6: Bond Issue of EUR 80 million
Bond Issue of EUR 80 million Sole Bookrunner Pareto Securities AB Transaction overview Simplified transaction structure Media and Games Bond Issue: Invest plc EUR 80m - Issuer- Use of proceeds: • MGI issued EUR 80m in senior secured bonds (the “Bonds” or the Platform 161 ReachHero AppLift GmbH Samar
Slide 7: Summary of main terms – Senior Secured Bonds
Summary of main terms – Senior Secured Bonds Issuer Media and Games Invest plc • Up to EUR [80,000,000] Volume • Subsequent issues subject to Incurrence Test being met Tenor 4 years Coupon 3 month EURIBOR + [●] bps p.a., payable quarterly in arrears. EURIBOR floor at 0%. (i) Refinance existing gamig
Slide 8: Investment highlights
Investment highlights • No high-risk, capital-intense development of new games ensuring a business model without “hit-driven” exposure and unexpected costs Low-risk business model with • Global reach with access to a large user base comprising of +5m monthly active users substantial reach and • Inte
Slide 9: Business overview
I. Transaction overview II. Business overview III. Division synergies IV. Strategy V. Financial performance
Slide 10: Introduction to Media and Games Invest
Introduction to Media and Games Invest A leading European gaming and digital media powerhouse serving customers worldwide Key facts Geographic footprint key financial development Top 10 countries by revenues 2018 MGI acquires gamigo United States Germany France Canada EUR ~170m Market cap United Kin
Slide 11: MGI's two divisions
MGI’s two divisions Two profitable segments which combined accelerate user acquisition and organic growth Overview of the Group’s segments Gaming: Development and publishing Media: Influencer and performance marketing Share of revenues1 Share of EBITDA1 Share of revenues1 Share of EBITDA1 16% 37% 63
Slide 12: Business model centres around core gaming segment
Business model centres around core gaming segment An attractive mix between gaming and media enables MGI to effectively monetise on its user base Group description and overview of business model • Media and Games Invest (“MGI”) is a leading European digital gaming company active within game developm
Slide 13: COVID-19 has positively affected MGI's growth
COVID-19 has positively affected MGI’s growth Increased user activity as an effect of imposed restrictions Gaming ▪ The pandemic and its corresponding lockdowns have boosted user engagement within video games ▪ Online and mobile gaming market is growing as more people stay inside ▪ People use online
Slide 14: Case study: Fiesta during and after COVID lockdown
Case study: Fiesta during and after COVID lockdown Significant uptick in active and users and revenues compared with 2019 Fiesta Online: Revenues and active users 2019 vs 2020 • The lockdown imposed throughout the world has had a positive impact of MGI’s performance as people found Revenues 2019 vs
Slide 15: Division overview: Gaming
Invest G Media and Games Division overview:
Slide 16: Gaming: a substantial growth market
Gaming: a substantial growth market The largest entertainment market in the world with attractive underlying megatrends Steady growth in the global gaming market, particularly driven by further expansion of mobile games Global gaming market (USDbn) CAGR • Due to the strong competitive landscape, the
Slide 17: MGI is attractively positioned in the gaming industry
MGI is attractively positioned in the gaming industry Hybrid positioning combining attractive characteristics for publishers and developers Gaming players are typically divided into publishers or developers Key criteria Publishers Developers Commentary Own property ✓ ✓ MGI serves as publisher whil
Slide 18: Extensive gaming portfolio with ample opportunities
Extensive gaming portfolio with ample opportunities Portfolio of 30 MMO’s and 5,000 casual games implies limited dependency and diversified revenue streams Global gaming brands unified under one umbrella Well-balanced portfolio4 Solid organic pipeline Strong M&A pipeline • Gaming segment (B2C) inclu
Slide 19: A loyal customer base with multi-year relationships
A loyal customer base with multi-year relationships Gamers spend EUR 50-80 per month with games having a lifetime of more than 10 years Example: Fiesta Online A multiplayer role game Recurring revenues1 Substantial revenues 64% EUR +50m revenues 14% 12% 10% 6.8m gamers 1 year 1-3 years 3-5 years > 5
Slide 20: Revenues are typically recurring over +5 years
Revenues are typically recurring over +5 years Loyal customer base ensures a high degree of recurring revenues and visibility Revenue split by user tenure for selected games Desert Operations Global Last Chaos North America Last Chaos Europe 52% 54% 84% 28% 22% 11% 13% 11% 9% 4% 6% 7% 1 year 1-3 yea
Slide 21: Division overview: Media
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Slide 22: Digital media: a substantial growth market
Digital media: a substantial growth market A large, fragmented market, offering ample growth opportunities Global advertising market pivoting towards digital media Online advertising market (USDbn) CAGR • Global digital advertising market is expected to remain at its 448 Total strong growth trajecto
Slide 23: Media is a logical extension of the Gaming value chain
Media is a logical extension of the Gaming value chain Online media serves as a strong organic growth accelerator for games Illustration of value chain extension Games Media for user User Item sale Playing user acquisition acquisition advertising Selling ads in games Media Higher traffic volumes Hig
Slide 24: High-performance, real-time ad platform
High-performance, real-time ad platform Seamlessly connecting brands, advertisers and publishers to users in real time Full-stack advertising platform serving Fortune 500 advertisers Diversified, attractive revenue streams Key facts MGI ad-tech value chain Brands: Top Fortune 500 advertisers SaaS 16
Slide 25: In-house media for ArcheAge Unchained launch
In-house media for ArcheAge Unchained launch MGI provides high customer acquisition capabilities compared to traditional publishers and developers ArcheAge Unchained launch illustrates MGI’s user acquisition capabilities Objective Strategy Video spot created in-house Influencer booked in-house • Lau
Slide 26: Division overview: ESG
Division overview: ESG
Slide 27: ESG policy of the Group
ESG policy of the Group MGI’s environmental, social and governance initiatives are well in line with established UN goals Summary of the Group’s ESG commitment • MGI has migrated its games and media platforms to the cloud from traditional data centres, resulting in significant Adherence to relevant
Slide 28: Particular focus on youth and children protection
Particular focus on youth and children protection MGI targets to provide a safe environment for all its users Summary of the Group’s protective measures Preventive measures Control and sanctions Improvement targets • Building up a decent game portfolio, making sure that none • Trained community mana
Slide 29: Division synergies
I. Transaction overview II. Business overview III. Division synergies IV. Strategy V. Financial performance
Slide 30: Combining gaming and media offers clear synergies
Combining gaming and media offers clear synergies… Enhanced and more efficient user-acquisition through value chain optimisation Higher efficiency enabled through being active in a larger part of the value chain, more data and faster growth • Combining gaming and media offers clear synergies in both
Slide 31: …as evidenced by significantly lower breakeven ad-views
…as evidenced by significantly lower breakeven ad-views… MGI provides high customer acquisition capabilities compared to traditional publishers and developers Games and media combined: optimising the value chain Gaming standalone Gaming and media combined User acquisition CPI1: EUR 0.15 User acquisi
Slide 32: Strategic expansion of the mobile gaming business
Strategic expansion of the mobile gaming business Mobile gaming segment is on a strong growth trajectory Illustration of MGI’s expansion phases Building the mobile user acquisition base… …with ample M&A opportunities in mobile gaming… +1,500 +€2-3m Mobile Games EBITDA +€13m Revenues Efficient mobile
Slide 33: Strategy
I. Transaction overview II. Business overview III. Division synergies IV. Strategy V. Financial performance
Slide 34: Robust model enabling long-term value creation
Robust model enabling long-term value creation… ”Buy, integrate, build & improve” strategy consequently implemented since 7 years Overview of MGI’s strategy Buy Integrate Build and improve Market consolidation through Integration and synergy Ramp-up of organic sales prudent M&A strategy realisation
Slide 35: …built on a prudent and tested M&A strategy
…built on a prudent and tested M&A strategy… M&A strategy yields high growth figures based on acquisitions and synergies with MGI’s scalable model Overview of MGI’s M&A strategy 1 MGI has a strong M&A track record… 2 …built on a disciplined approach… Typical Pay-back time / Number of acquisitions Ty
Slide 36: …successful integration of acquired entities
…successful integration of acquired entities… Enhanced cost control and efficiency through the use of state-of-the-art technology Overview of integration process Data centres Cloud technology Outcome (EURk) • Once acquired, targets are swiftly integrated into • By utilising its state-of-the-art clou
Slide 37: …and strong ability to ramp up organic growth
…and strong ability to ramp up organic growth Developing and optimising games following successful integration Overview of “build and improve” process Phase 1: Rentability optimisation Phase 2: Asset optimisation Phase 3: organic growth 24% organic growth Synergies Balance Relaunches Unlocking syner
Slide 38: Financial performance
I. Transaction overview II. Business overview III. Division synergies IV. Strategy V. Financial performance
Slide 39: Summary of financial performance
Summary of financial performance Profitable business model with an increasing share of organic growth Long-term financial development (EURm)1,2 Revenues Adj. EBITDA % margin • Consistent growth over the past six years whilst preserving adj. EBITDA margins 130 - Revenues have grown at a CAGR of 43% b
Slide 40: Business model ensures diversified revenue sources
Business model ensures diversified revenue sources Limited dependency on single game titles and media solutions Overview of key revenue splits1 Group revenue split2 Group revenue by geography Gaming revenue by device Customer acquisition by channel 3% 2% 1% 2% 1% 3% 3% 4% 10% 4% 22% 4% 11% 4% 37% 5%
Slide 41: Licensed vs owned games
Licensed vs owned games Organic growth facilitated through new licensed and existing owned games Revenues generate from licensed and owned games Q1’19-Q2’20 Increased focus on owned games in 2020 70% 60% 50% 40% 30% 20% 10% 0% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Licensed Owned • Strong organic growt
Slide 42: EBITDA adjustments
EBITDA adjustments Highly profitable underlying business as illustrated by a solid reported EBITDA Overview of non-recurring items • MGI has posted strong EBITDA figures over the past 2019 EBITDA bridge years, reaching EUR 19.6m and EUR 22.4m in reported (EURm) and adjusted EBITDA in the LTM Q2’20,
Slide 43: Operating cash flow and capex development
Operating cash flow and capex development Highly cash generative business owing to modest capex needs and strong profitability Operating cash flow development1,2,3 Capex development (EURm) (EURm) 28,0 134% 21,3 97% 73% 78% 71% 82% 81% 16,2 17,3 14,1 13,1 12,2 24,0 6,9 6,6 6,9 4,4 5,5 9,1 3,0 3,8 12,
Slide 44: Long-term net leverage development
Long-term net leverage development Conservatively levered credit with an illustrative post-bond net leverage of 1.9x Net leverage to adj. EBITDA ratio development1 (EURm) • Post-transaction, the senior secured Net Interest Bearing Debt Net leverage bond will constitute the majority of 71,8 MGI’s int
Slide 45: Prudent mid-term financial targets
Prudent mid-term financial targets… Revenue CAGR EBITDA margin EBIT margin Net leverage 25-30% 25-30% 15-20% 2-3x • Invest in organic growth projects, • Reducing OPEX and costs based • Using cost synergies within the • Measured on a Net Interest e.g. sequels, re-launches & re- on economies of scale
Slide 46: …with a clear roadmap to completion
…with a clear roadmap to completion Strong revenue CAGR of +25% combined with 25-30% EBITDA margin Low business risk focus → MMO games with steady sustainable cash streams Strong organic growth → gaming as a service; updates, DLC’s & game launches Supported by the media unit → efficient user acquisi
Slide 47: Media and Games Invest
G Media and Games invest
Media and Games Invest — Investor Presentation (November 2020) on 6ix