Devolver Digital, Inc. · LSE:DEVO
Devolver Digital — H1 2023 Earnings Presentation
22 slides from Devolver Digital's earnings presentation, September 2023
Slide 1: Investor Presentation 1H 2023 Results
INVESTOR PRESENTATION 1H 2023 RESULTS
Slide 2: Summary
SUMMARY • Prioritising quality to unlock long-term value. • Financial performance reflects unusually quiet 1H release schedule, as expected. • Seven releases scheduled for 2H 2023 including major titles Wizard With A Gun and The Talos Principle 2, as well as Gunbrella, KarmaZoo and Hellboy: Web of W
Slide 3: 1H 2023 Highlights
1H 2023 HIGHLIGHTS REVENUE GROSS PROFIT1 EBITDA2 $43.9m $9.4m ($3.5m) -17% vs 1H 2022 -51% vs 1H 2022 1H 2022: $6.8m Terra Nil critically acclaimed CASH BALANCE TITLES RELEASED 82 Meta Critic $64.8m 4 After c.$7M EBT Share Average Metacritic Score: Purchase 76 G4C Most Innovative x3 Honourable Game
Slide 4: 2023 Title Releases
2023 TITLE RELEASES Metacritic Score 82 71 87 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec N/A 75 80 Further Q4 ‘23 releases to be announced 1H 2023 Metacritic Average Score: 76 2023 Year-to-date Metacritic Average Score: 79 Note: Title scores calculated as simple average of applicable platform s
Slide 5: Focus on Operations – Strategic Decisions
FOCUS ON OPERATIONS – STRATEGIC DECISIONS Game Release Dates Subscription Deals • Strong commercial rationale to move 5 titles out • Forecasting methodology change - We will no of 2023. longer forecast subscription deals. Why? • The titles moved are: Plucky Squire, Anger Foot, • Overall platform dea
Slide 6: Good Shepherd – Publisher Subsidiary
Good Shepherd – Publisher Subsidiary New focus Re-set • Licensed IP on an Indie budget. • New General Manager has right-sized the business. • Continue to target Hollywood licensed IP. • Team size reduced, management team now on • In addition, announced first ever partnership for West Coast USA. Rebe
Slide 7: Back Catalogue – 1H 2023: Life-Cycle Activity
Back Catalogue – 1H 2023: Life-Cycle Activity Porting/Content Updates - 12 Games Launched on New Platforms in 1H 2023: Trek to Yomi Switch Shadow Warrior 3 Definitive Edition PS5 & Xbox S/X Tentacular PSVR2 McPixel 3 PS4, PS5 & Mobile Gorn PSVR2 Inscryption Xbox One & Xbox S/X Loop Hero Xbox One & X
Slide 8: Back Catalogue – Case Studies: Lengthening the Life-Cycle
Back Catalogue – Case Studies: Lengthening the Life-Cycle Ongoing Content Updates and Sales activities: Cult of the Lamb Sales DLC Release Cult of the Lamb – Relics Of the Old Faith • Strategy: Repeated DLCs layered on top of current momentum • 2022 original release, lifetime revenue >$50m • 2023 Ap
Slide 9: Back Catalogue Strength
BACK CATALOGUE STRENGTH $160m Game Sales revenue mix Back Catalogue # Title Releases (cumulative) 109 $140m New Titles (front catalogue) • Back catalogue growth of 10% in 1H 2023 – primarily driven by FY22 release Cult of the Back Catalogue Lamb and Inscryption. $120m • 87% of total revenues in 1H 2
Slide 10: Evergreen Back Catalogue Titles
EVERGREEN BACK CATALOGUE TITLES Back Catalogue revenue mix Tier 2 Back Catalogue (Revenue <$1m) Back Catalogue Tier 1 Back Catalogue (Revenue $1m+) $70m # Tier 1 Back Catalogue Titles • Consistent and strong increase in total dollar quantum of back catalogue sales, year over year. $60m GR CA • Tier
Slide 11: Continuing a Track Record of High-Quality Releases
CONTINUING A TRACK RECORD OF HIGH-QUALITY RELEASES H1 2023 H2 2023 Developer: Free Lives Developer: Deconstructeam Released 28th March 2023 Released 16 Aug. 2023 PC & Netflix Mobile PC & Switch 82 Metacritic 88 Metacritic “incredibly fun gameplay, “A masterwork of narrative striking and gorgeous vis
Slide 12: A Closer Look at Q4 2023
A CLOSER LOOK AT Q4 2023... Launching Oct’23 Launching Q4’23 Launching Oct’23 Online cooperative sandbox Croteam's sequel to their hit Comic-style roguelike action brawler survival game developed by release, Talos Principle 2, is a developed by Upstream Arcade Galvanic Games breathtaking puzzle adve
Slide 13: Exciting Pipeline for 2024
EXCITING PIPELINE FOR 2024 …and more to come! PC, PlayStation, Xbox & Switch PC & PlayStation PC Developer: All Possible Futures Developer: Cuzillo, Boch & Foddy Developer: Free Lives “I can't stop thinking about The “Baby Steps is going to blow “High-impact, physics-based Plucky Squire” your collec
Slide 14: – And Beyond
– AND BEYOND PC & Console PC & Console Announced by Devolver June 9 2022 Announced June 8 2023 Developer: Sam Eng Developer: No Brakes Games Steam Next Fest hit Highly anticipated follow-on from Human Fall 2.2M Video Views Flat hit in 2016, which achieved >40M units & >$70M revenues 240 Articles 3.5
Slide 15: Financials
FINANCIALS Devolver Digital Investor Presentation 15
Slide 16: Profit & Loss – Statutory Reporting
PROFIT & LOSS – STATUTORY REPORTING US$’m FY20 FY21 FY22 1H 22 1H 23 • COMMENTARY Net revenue 212.7 98.2 134.6 53.0 43.9 Cost of sales (121.0) (58.9) (89.4) (34.7) (33.6) • Quiet half with only 4 releases (only one Impairment of capitalised development cost - - (22.8) - (0.9) of size) resulted in a
Slide 17: Cash Flow
CASH FLOW US$’m FY20 FY21 FY22 1H 22 1H 23 COMMENTARY Operating activities Cash inflow/ (outflow) from operations 78.0 56.2 (100.8) (14.8) (7.4) Amortisation & depreciation 7.0 9.3 112.4 10.9 7.9 Share based payments 2.7 55.2 19.6 11.5 3.9 • Operating cashflow lower than prior-year Interest Payable
Slide 18: Balance Sheet
BALANCE SHEET US$’m FY20 FY21 FY22 1H 22 1H 23 • COMMENTARY Non-Current Assets Intellectual property 23.3 53.4 25.8 49.6 24.7 Capitalised developments costs 28.3 44.4 40.1 53.0 47.6 • The Group’s net asset position was $158.9 Goodwill 0.2 66.8 19.2 66.8 19.4 Deferred tax assets and others 1.7 2.6 11
Slide 19: Operating Expenses - Trends
OPERATING EXPENSES - TRENDS US$’m FY21 FY22 1H 22 1H 23 Forward Trend • COMMENTARY Payroll 9.3 13.6 6.9 8.1 Slow rise • 5% increase in total normalised Professional fees 1.6 4.6 2.4 1.5 Steady fall operating expenses despite Subtotal payroll & prof. fees 10.9 18.2 9.3 9.6 Slow rise considerable infl
Slide 20: Summary: 1H 2023 Recap and Outlook
SUMMARY 1H 2023 RECAP Quiet release schedule: 4 titles, only 1 of size, versus 7 in 1H 2022. Commercial decisions: Moved titles into 2024 and turned-down sub-par platform deals. Maintained high Metacritic scores: 76 average in 1H 2023, 79 average year-to-date. Total operating expenses falling: 34% l
Slide 21: Exciting Pipeline for 2024
EXCITING PIPELINE FOR 2024 …and more to come! PC, PlayStation, Xbox & Switch PC & PlayStation PC Developer: All Possible Futures Developer: Cuzillo, Boch & Foddy Developer: Free Lives “I can't stop thinking about The “Baby Steps is going to blow “High-impact, physics-based Plucky Squire” your collec
Slide 22: Thank You
THANK YOU