Devolver Digital, Inc. · LSE:DEVO
Devolver Digital — H1 2022 Earnings Presentation
27 slides from Devolver Digital's earnings presentation, Sep 26, 2022
Slide 1: Investor Presentation 1H 2022 Results
INVESTOR PRESENTATION 1H 2022 RESULTS Devolver Digital Investor Presentation 1
Slide 2: 1H 2022 Highlights
1H 2022 HIGHLIGHTS REVENUE GROSS PROFIT EBITDA (NORMALISED) (NORMALISED) $53.0m $19.0m $6.8m +14% vs 1H 2021 +22% vs 1H 2021 -46% vs 1H 2021 CASH BALANCES TITLES RELEASED INSCRYPTION: Award Winning $74.2m 7 Average Metacritic Score: 77 Devolver Digital Investor Presentation 2
Slide 3: The Indie Developer's Publisher
THE INDIE DEVELOPER’S PUBLISHER Normalised Revenue Fall Guys Outperformance $142m $98m $71m $59m $53m (1) $46m $42m CAGR 37% +14% Founded 2009 2018 2019 2020 2021 1H 2021 1H 2022 ADJ. EBITDA(1) $5.8m $11.6m $15.8m $25.7m $12.6m $6.8m MARGIN (%) 13.6% 19.8% 22.2% 26.2% 27.1% 12.9% (1) Excl. Fall Guys
Slide 4: Releasing 10-15 Titles Each Year
Metacritic RELEASING 10-15 TITLES EACH YEAR Score 70 71 88 76 87 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 80 71 78 81 82 Devolver Digital Investor Presentation 4
Slide 5: Porting Activity H1 22
BROADENING THE OFFERING PORTING 2021 H1 22 H2 22 3 Titles 1 Title 11 Titles ACTIVITY 3 Platforms 2 Platforms 20 Platforms TBC Oct’21: Jun’22: Aug’22: 1-2 more Windows MAC & Linux PS4 & PS5 consoles Devolver Digital Investor Presentation 5
Slide 6: Back Catalogue Momentum
BACK CATALOGUE MOMENTUM Game Sales revenue Back Catalogue Levers # Titles released (cumulative) New Titles (Front catalogue) 97 • Porting to new platforms Back Catalogue • Localisation in other languages 89 79 • Capitalising on sequel and franchise 36% release momentum 104 39% • Platform bundle agre
Slide 7: Back Catalogue Quality
BACK CATALOGUE QUALITY Back Catalogue revenue Back Catalogue # Tier 1 Back Catalogue titles (revenue $1m+) 15 Tier 2 (<$1m) Back Catalogue % • Consistent and strong increase in total dollar quantum of back Tier 1 Back Catalogue % catalogue sales, year over year and half over half. 16 31% • Tier 1 ti
Slide 8: Evergreen Back Catalogue Titles
EVERGREEN BACK CATALOGUE TITLES 17 Tier 1 titles generate 77% of back catalogue revenues Tier 1 super titles are ‘Evergreen’ to reflect consistent, above-average material contribution, year after year Devolver Digital Investor Presentation 8
Slide 9: It Feels Good to Be Baaad / Eerie Triumph
“A deft and “ 1 st w eek s t at s over 1m sales It feels good Metacritic Scores heartfelt journey ” through nostalgia” 14.1m streaming to be baaad 88 84 Eurogamer hours watched PC Gamer video views: 27.8m “The game “ 326k mentions Metacritic Scores Everything I is just filled ” trended #1 on with jo
Slide 10: Exciting Pipeline for 2023 & 2024
EXCITING PIPELINE FOR 2023 & 2024 Top 10 Wishlist “Not your average Steam Next Fest skating game” The Guardian 535k 219k Trailer views Streaming hours 217k 330 Trailer views Articles 9.1m 2.6k Video views Mentions 5.0m 10.1k Trailer views Mentions “I can't stop thinking about Coming 2024 The Plucky
Slide 11: Financials
FINANCIALS Devolver Digital Investor Presentation 11
Slide 12: Profit & Loss – Statutory Reporting
PROFIT & LOSS – STATUTORY REPORTING FY20 FY20 $'M FY21 1H 2021 1H 2022 COMMENTARY Statutory Normalised Net revenue 212.7 71.1 98.2 46.4 53.0 Cost of Sales (121.0) (48.0) (58.9) (30.7) (34.7) • Semi-annual net revenues up 14.1% to record high in 1H 2022 (not including Fall Gross profit 91.7 23.1 39.2
Slide 13: Statutory to Normalised Profit & Loss
STATUTORY TO NORMALISED PROFIT & LOSS $’000 2020 2021 1H 2021 1H 2022 • This table presents the adjustments to Revenue ‘normalised’ revenue, gross profit and Adjusted EBITDA. Reported Revenue 212,738 98,152 46,443 53,003 - - • The outperformance element in FY20 Normalised revenue adjustment (141,635
Slide 14: Cash Flow Statement
CASH FLOW STATEMENT $’000 2020 2021 1H 2021 1H 2022 Operating activities Net income 64,093 30,627 79,451 (16,610) • Cash from operating activities is primarily Amortisation & Depreciation 6,978 9,338 4,780 10,873 driven by the trading of the business in Share based payments 2,747 55,150 13,638 11,47
Slide 15: Balance Sheet
BALANCE SHEET $’000 2020 2021 1H 2021 1H 2022 Non-Current Assets o The Group’s net asset position was Intellectual property 23,254 53,382 40,117 49,640 $238.6 million at 30 June 2022 Capitalised developments costs 28,319 44,441 56,829 52,960 reflecting: Goodwill 159 66,820 40,117 66,820 Deferred tax
Slide 16: Strengthening the Bench – Scaling for Growth
STRENGTHENING THE BENCH – SCALING FOR GROWTH o Operating subsidiaries in the UK, Devolver Group 16% Publishing, Netherlands, Croatia, Poland and the United Headcount Production & QA States. 1H 2022 o Adding talent: production, QA, marketing, finance & legal. Raising the level of ‘polish’ for new tit
Slide 17: Operating Expenses - Trends
Operating expenses - Trends $'M 2021 1H 2021 2H FY21 2022 1H Trend • Headcount – up 22% YOY due to: Payroll 8.7 5.8 15.5 6.3 Slow rise Stock compensation expense 12.9 42.3 55.2 11.5 Steady fall 1) acquisitions 2) scaling for growth Professional fees 2.4 7.1 9.5 2.9 Slow fall Travel and entertainment
Slide 18: Summary and Outlook
SUMMARY AND OUTLOOK Ø Maintaining FY22 guidance: 30% revenue growth, 15% EBITDA growth. Ø Momentum in H2 2022: quality of new titles and back catalogue. Ø Strong balance sheet: supports investment in long-term growth. Ø Healthy pipeline: 30+ titles for 2023-2025. Devolver Digital Investor Presentati
Slide 19: Thank You
THANK YOU Devolver Digital Investor Presentation 19
Slide 20: Appendix – Background Information
Appendix – Background Information Devolver Digital Investor Presentation 20
Slide 21: Diversification Across the Board
DIVERSIFICATION ACROSS THE BOARD BY DEVELOPER BY TITLE* BY GEOGRAPHY BY PLATFORM* Top 10 categorised only 64 Development partners #1, 11% 6% 4% worked on the existing 12.2% 4% portfolio… #2, 11.3% Other, 41.3% 2021 2021 41% 25% 2021 …29 Revenue #3, 8.6% 21% Steam Unit Sales Revenue* 97 Titles develo
Slide 22: Growth Strategy
GROWTH STRATEGY Release 10 – 15 Mine our back Improving our craft Selective studio & unique titles per year catalogue increases margins IP acquisitions Organic Growth Devolver Digital Investor Presentation 22
Slide 23: Improving Our Craft Increases Our Returns
IMPROVING OUR CRAFT INCREASES OUR RETURNS More gameplay testing Better game selection Improved localisation services Greater investment More talent Wider & increased marketing Devolver Digital Investor Presentation 23
Slide 24: Selective Studio & IP Acquisitions
SELECTIVE STUDIO & IP ACQUISITIONS DATE TYPE OF # of own IP franchises ACQUISITION COUNTRY HEADCOUNT FRANCHISES ACQUIRED ACQUISITION 2015 (50%) n/a IP N/A 1 2018 (100%) 1 38 Total Oct-2020 Croatia Developer 2 32 Devs Netherlands Publisher & 56 Total 3rd party Jan-2021 & Poland Studio 35 Devs1 contra
Slide 25: Board of Directors
BOARD OF DIRECTORS Devolver Digital Investor Presentation 25
Slide 26: Independent Directors
INDEPENDENT DIRECTORS KATE MARSH JANET ASTALL SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR INDEPENDENT NON-EXECUTIVE DIRECTOR Remuneration Committee Chair Audit Committee Chair Audit Committee Member Nomination Committee Member • 30 years of experience in digital and media businesses • Over 20 years of
Slide 27: 1H 2022 Tax
1H 2022 Tax 1H 2022 Tax Provision, $’m 1H 2022 YTD Pre tax profit / (Loss) (11.6) Estimated Annual Effective Tax Rate (44.6)% Tax for 1H 2022 has been calculated YTD Tax before Adjustments 5.2 by applying the FY22 effective tax rate Tax Adjustments (0.2) as required by IAS 34 ‘Interim Financial Repo