Ten Square Games Sa · GPW:TEN
Ten Square Games Sa — Q1 2021 Earnings Presentation
41 slides from Ten Square Games Sa's earnings presentation, May 25, 2021
Slide 1: Q1 2021 Results
O01 2021 RESULTS May 25, 2021
Slide 2: Q1 2021 Highlights
O01 2021 HIGHLIGHTS
Slide 3: Q1 2021 Highlights
Q1 2021 HIGHLIGHTS Investment in future 1 Results dynamics 2 Product decisions 3 growth Team size Q1 2020 231 FTEs New product update Q1 2021 340 FTEs Bookings PLN 95M→169M* (+77% yoy) (+47% yoy) Adj. EBITDA PLN 38M→65M* Decision time (+71% yoy) *Consolidated numbers; Adjusted EBITDA reconciliation
Slide 4: New Game – Football Elite
NEW GAME – Football Elite • Game type: Sports / Clash / slot • Target audience: sports fans, looking for entertainment with strong social elements; profile similar to Fishing Clash players (mostly US, Canada, Germany, UK) • Market potential: huge – over 60% of US population watches football (150M pe
Slide 5: New Game – Football Elite: The Journey
NEW GAME – Football Elite The Journey >12 months – research, internal pitching, discussions, Incubation early prototypes Development 7 months – fastest in TSG history! Technical launch May 2021, USA Current status Simple, playable early version available on Android Soft Launch Planned in H2 2021 Vis
Slide 6: Golf Royale discontinued
Golf Royale discontinued • Game in development since late 2019 • Technical launch: January 2021 • Key findings of market research: o Market overcrowded in recent months o Good feature set, but similar approach taken by new competition o Very strong TOP 2 players Decision: Decision to discontinue dev
Slide 7: Portfolio performance
Portfolio performance
Slide 8: Covid-19 impact - acceleration of Fishing Clash growth
Covid-19 impact - acceleration of Fishing Clash growth by approximately 18 months Fishing Clash bookings trajectory 40 January 2020 35 30 25 20 15 10 5 0 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Baseline No-COVID Scenario 8
Slide 9: Fishing Clash development
Fishing Clash development Tech focus, new features Testing Growth Feature offensive COVID boost production Battle Pass Skirmish, Star meter 180 New booster Bookings (M PLN) VIP tiers 160 Battle Royale 140 New main screen M PLN Wheel of fortune 120 New minigame 100 New gear 2.0 80 Reevents 158,0 164,
Slide 10: Fishing Clash bookings at a higher post-covid base
Fishing clash Bookings at a higher post – covid base Bookings and marketing expenses (M PLN) 60 Marketing expenses Bookings 50 40 M PLN 30 57,8 58,8 56,6 55,9 53,6 50,4 48,5 48,9 48,2 44,3 44,3 20 37,3 39,2 42,7 28,6 31,7 24,4 10 16,7 20,4 20,7 21,7 23,2 22,9 19,2 14,7 14,6 14,5 13,9 14,1 12,4 11,4
Slide 11: Hunting Clash - second largest title contributing to profits
Hunting Clash - Second largest title contributing to profits just 8 months after global launch Bookings and marketing expenses (M PLN) 12 • Dynamic growth of bookings supported by Marketing significant marketing budgets in the first months 10 expenses after launch Bookings • Marketing expenses lower
Slide 12: Hunting Clash like for like performance vs Fishing Clash
Hunting Clash like for like performance vs Fishing Clash after launch WAU – first 9 months after global Net bookings – first 9 months after global launch launch 1,20 2,50 Hunting Clash Fishing Clash Hunting Clash Fishing Clash 1,00 2,00 0,80 1,50 Users in M M PLN 0,60 1,00 0,40 0,50 0,20 0,00 0,00 1
Slide 13: Hunting Clash – development plan
Hunting Clash – development plan Very strong start to build up on: HC among top FPS games in USA 30 000 000 25 000 000 • Number 4 grossing FPS in USA just 8 months after launch Net revenue in USD* 20 000 000 • Current priorities: • Optimization – live ops, UI, UX, 15 000 000 matchmaking • New featur
Slide 14: Flagship games getting ready for next phase of growth
Flagship games getting ready for next phase of growth • Significant growth of both Clash FTE Teams Golf team transfer – 11 FTEs • Continuous focus on technical upgrades (game performance optimization, processes and tools improvements) • Intense feature production and improvements (e.g. season conten
Slide 15: Wild Hunt and Let’s Fish – continued stable performance
Wild Hunt and Let’s fish – continued stable performance Bookings of Wild Hunt & Let’s Fish (M PLN) 10 Wild Hunt Let's Fish • Bookings for „legacy” portfolio near historical levels 8 4,5 • Constant delivery of new content, live ops 6 4,3 4,2 3,8 3,7 M PLN 4,2 4 3,6 • Proof of ability to maintain long
Slide 16: Growing product diversification
Growing product diversification Q1 2020 Q4 2020 Q1 2021 Total bookings: Total bookings: Total bookings: PLN 95.1M PLN 180.4M PLN 169.2M 10,9% 7,1% 6,3% 0,1% 6,8% 15,9% 89,0% 86,1% 77,8% 16
Slide 17: Financial results
Financial results
Slide 18: Bookings breakdown and dynamics
Bookings breakdown and dynamics Bookings (M PLN) Bookings breakdown – geographies and products 70 Fishing Clash Hunting Clash 60 Others 5% 13% North America 50 Europe 45% Q1 2021 Asia 40 Others 37% 30 20 2% 2% 2% Fishing Clash 16% 10 Hunting Clash Q1 2021 0 Let’s Fish Jan-20 May-20 Jun-20 Sep-20 Dec
Slide 19: Operating expenses under control
Operating expenses under control Operating expenses excluding selling Selling costs* costs* 20 10% 140 100% 74% 8% 63% 80% 120 61% 55% 51% 54% 6% 48% 60% 15 100 2,6% 4% 49% 40% 2,2% 3,8% 2% 72,8 3,1% 3,6% 80 20% M PLN M PLN 2,7% 2,9% 6,9 2,6% 10 0% 40,4 32,3 40,1 4,7 4,5 0% 60 3,7 -2% 3,4 -20% -4% 4
Slide 20: Standardized operating results
Standardized operating results* Adjusted EBITDA* Net profit IFRS 70 90 60% • Adjusted EBITDA* 60 80 up by 71% yoy 50% 70 50 • Net profit up by 49% 60 43,9% 43,1% 40% yoy 40,6% 40,7% 40 38,5% M PLN M PLN 50 • Q4 2020 net profit 32,8% 32,5% 30% 40 30 58,8 affected by first time 77,6 73,3 65,1 52,7 rev
Slide 21: High profitability and cash generation
HIGH profitability and cash generation Profitability and Cash Flow KPIs Adjusted EBITDA Free Cash Flow - Operations Adj EBITDA/Bookings Adj EBITDA to FCF OP conversion 70 90% 77,2% 76,6% 80% • Stable profitability and free cash flow 60 generation 70% 50 • Adjusted EBITDA* to Bookings close to 40% 60
Slide 22: Quick build up of cash for investment in growth
Quick build up of cash for investment in growth Cash flow (M PLN) Balance sheet (M PLN) 100 500 fixed assets cash CF operating 400 other current assets 80 84,2 CF investment equity 82,9 CF financial 300 debt 71,0 • Operating cash flows 60 65,9 up by 67% yoy 200 73,2 284,7 39,9 69,2 236,6 • Excellent
Slide 23: 2021-2022 motivation scheme overview
2021-2022 motivation scheme overview Key parameters • KPI: Adjusted EBITDA* 2021: PLN 248.8M, 2022: PLN 251.3M (consolidated) • Max number of new shares: 100 000 • Share subscription price: PLN 0.10 • Total dilution max: 1.37% (over two years) • Lockup: January 2024 and 2025, respectively • Number o
Slide 24: Dividend proposal and share buyback option
Annual General Meeting – Management Board proposals* Dividend proposal Dividend history since IPO** • Dividend payment: PLN 72 673 110 80 80% • Dividend per share: PLN 10 70 70% • Payout ratio: 48.3% 74,9% 60 60% • Dividend day: July 5th, 2021 48,3% 50 50% 35,8% Payout ratio 40 40% M PLN 72,7 Share
Slide 25: Q1 2021 Summary
Q1 2021 Summary Investment in Fishing Clash and Hunting Clash production capacity Technical launch of a new game – Football Elite, ongoing work on other projects Further strengthening of the organization on all levels 25
Slide 26: Strategic overview
Strategic overview
Slide 27: Investment in production capacity
Investment in production capacity Dec 2019 Dec 2020 Dec 2021 Game Development 142 202 Spokes 0 10 60 Game Support 12 31 Business Intelligence 7 14 Growth 17 26 Back-office 37 45 TOTAL 215 318 500+ 27
Slide 28: New games in production
New games IN PRODUCTION Game Status Description Soft launch* Production Undead Clash • Zombie shooter with „clash” metagame • 2021/2022 accelerating Technical launch • Social based competitive game • 2021 Project ’Verne’ Early production • Simulation with „clash” metagame • 2021/2022 Project ’Tokyo’
Slide 29: Diversification Strategy
Diversification Strategy 2012 2018 2020 2021+ Fully diversified platform +UNDEAD CLASH Wroclaw Hub +1 MORE GAME IN PRODUCTION 0.17" 2 GAMES IN Spokes DEVELOPMENT M&A QUALITY M&A PIPELINE 29
Slide 30: Investor’s calendar
Investor’s calendar • Erste CEE Innovation Conference (virtual) – 26.05.2021 • GPW Innovation Day (virtual) – 22-24.06.2021 • Q2 2021 Sales update – early July 2021 • H1 2021 Financial report – August 23rd, 2021 (video conference on August 24th) 30
Slide 31: Q&A session
Q&A session
Slide 32: Thank you!
Thank you! IR contact Bartłomiej Piekarski bartlomiej.piekarski@tensquaregames.com +48 667 872 742
Slide 33: Backup
backup
Slide 34: Profit and loss report
Profit and loss report Selected items of P&L in k PLN 2018 2019 Q1’20 Q2’20 Q3’20 Q4’20 2020 Q1’21 Revenues from sales 115 258 241 133 95 018 169 622 179 258 134 296 578 195 174 114 Fishing Clash 88 763 206 501 84 678 158 044 164 256 155 357 562 335 131 659 Let’s Fish 16 453 15 214 3 869 4 551 3 708
Slide 35: Balance sheet
Balance sheet Selected positions in k PLN Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 ASSETS Fixed assets 3 733 4 433 5 176 4 936 11 215 11 604 14 395 16 101 19 091 Trade receivables 16 249 15 652 24 012 20 737 34 447 58 723 57 205 47 589 57 331 Cash and cash equivalents 50 890 28 745 42 3
Slide 36: Cash flow report
Cash flow report Selected positions in k PLN Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 OPERATING ACTIVITIES Profit before tax 12 674 15 944 22 316 33 691 39 192 28 814 65 849 37 091 58 432 Total adjustments -299 -1 589 -7 197 671 -7 735 -6 675 2 219 49 366 5 172 Amortisation 186 270 320
Slide 37: Results reconciliation
Results reconciliation Q1 2021 bookings to IFRS revenues (PLN m) Q1 2021 motivation scheme non cash costs (PLN m) 14 12 1,4 Pre 2021 motivation scheme Deferred revenues (virtual currency) 10 Deferred revenues (durables) 3,0 5,7 2021-2022 motivation scheme 8 PLN m General 6 Administrative costs Costs
Slide 38: Method of determining adjusted EBITDA
Method of determining adjusted EBITDA Selected items of the Profit and Loss Statement in thousand PLN Results Q1 2021 Operating profit IFRS 55 919 Amortisation 941 EBITDA IFRS 56 861 Corrections: Non-cash impact of the incentive programs +11 694 Deferred revenues (unused virtual currency and durable
Slide 39: Accounting principles for revenues – IFRS 15
Accounting principles for revenues – IFRS 15 Virtual currency • Payment -> a player purchases virtual currency Payment Sales revenue • Revenue -> the player uses the virtual currency to purchase a +/ - virtual goods (e.g. rods, lure packs) Deferred revenue/ Unearned revenue • Deferred revenue -> unu
Slide 40: Marketing expenses policy
Marketing expenses policy Marketing expenses „We invest in marketing provided we get positive returns throughout user lifetime” Marketing expenses model cumulative approach • The Group invests in marketing at point „0”. Cohort acquired in this period analyzed throughout user lifetime (period „0” to
Slide 41: Legal disclaimer
Legal disclaimer • Neither this presentation (the “Presentation”, references to which shall be deemed to include any information which has been or may be supplied in writing or orally in connection herewith or in connection with any further enquiries) nor any copy of it nor the information contained