Embracer Group Ab Class B · OMXSTO:EMBRAC_B
Embracer Group Ab Class B — Q2 FY 22/23 Earnings Presentation
67 slides from Embracer Group Ab Class B's earnings presentation, Nov 17, 2022
Slide 1: Embracer Group Interim Report Q2 FY 22/23
EMBRACER GROUP INTERIM REPORT Q2 FY 22/23 November 17, 2022 © Embracer Group AB
Slide 2: Disclaimer
DISCLAIMER IMPORTANT INFORMATION – PLEASE READ THE FOLLOWING BEFORE CONTINUING READING This presentation (the “Presentation”) has been prepared by Embracer Group AB (“Embracer” or the “Company”) and is provided for information purposes only. By attending a meeting where this Presentation is presente
Slide 3: Interim Report Q2 FY 22/23
Interim Report Q2 FY 22/23 Net Sales Group YOY GROWTH Revenue driver SEK 9,569m 190% GROUP ORGANIC GROWTH GROUP PRO FORMA GROWTH 35% 18% On schedule for Adjusted EBIT YOY GROWTH 2,121m 115% Postponed to released SEK 28 April, 2023 today Adjusted EPS AFTER FULL DILUTION On track Global games SEK 1.95
Slide 4: Continued growth
INTERIM REPORT Q2 FY 22/23 Continued growth FINANCIAL GROWTH (TTM – OCTOBER TO SEPTEMBER) SEKm OPERATIONAL GROWTH (END OF PERIOD SEPTEMBER) 30,000 5.00 16 000 300 4.80 TOTAL HEADCOUNT 15,731 4.50 15,731 27,016 14 000 25,000 INTERNAL STUDIOS 250 4.00 132 237 12 000 ON-GOING PROJECTS 237 3.50 20,000 3
Slide 5: 1. Segments
1. Segments
Slide 6: Operative Groups by segment
SEGMENTS Operative Groups by segment PC / CONSOLE GAMES Total Headcount: 11,165 | Internal Studios: 96 | IP: 252 MOBILE GAMES Total Headcount: 1,135 | Internal Studios: 11 | IP: 41 NET SALES SPLIT | Q2 FY 22/23 ADJUSTED EBIT SPLIT | Q2 FY 22/23 1% 8% 20% ENTERTAINMENT & SERVICES Total Headcount: 941
Slide 7: PC / Console Games
PC / Console Games NET SALES REVENUE SPLIT SEKm & ADJUSTED EBIT MARGIN BACK CATALOG SALES SEKm 4,097 1,883 4,500 2,000 50 4,000 45% 44% 45 1,800 3,500 40% 1,600 38% 40 3,000 35% 34% 35 1,400 32% 1,200 30 2,500 26% 26% ATH 1,000 25 2,000 800 20 1,500 600 15 1,384 1,000 400 10 500 5 200 0 0 0 Q2 Q3 Q4
Slide 8: Mobile Games
Mobile Games NET SALES SEKm & ADJUSTED EBIT MARGIN NET SALES DRIVERS 2,000 50 1,759 1,545 1,488 1,441 40 1,500 Jigsaw Puzzle Nonogram.com Sudoku.com 29% 30 28% 1,000 864 23% 22% 19% 20 500 10 Super Stylist Number Match Blockudoku 0 0 Q2 Q3 Q4 Q1 Q2 FY21/22 FY22/23 Net sales, SEK m Adjusted EBIT, mar
Slide 9: Tabletop Games
Tabletop Games NET SALES SEKm & ADJUSTED EBIT MARGIN STRONG PIPELINE 3,500 3,247 25 3,000 2,665 20 2,500 17% 2,000 15 14% 13% 1,500 10 1,000 571 5 500 0 0 Acquired VR Group expanding Mantis (Exploding Kittens) was Q4 Q1 Q2 mass market distribution in finalist in the 2022 Toy of the FY21/22 FY22/23 A
Slide 10: Entertainment and Services
Entertainment and Services NET SALES SEKm & ADJUSTED EBIT MARGIN 1,600 16 15% 1,360 1,400 14% 14 13% 1,200 12 888 1,000 10 813 9% 811 784 800 8% 8% 671 8 466 465 600 6 429 400 4% 4 3% 200 2 1% 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY20/21 FY21/22 FY22/23 Net sales Adjusted EBIT margin, % OPERATIVE GROUPS C
Slide 11: Market update
SEGMENTS Market update GLOBAL VIDEO GAMES MARKET REVENUE FORECAST GLOBAL MARKET GROWTH 2022 Forecast USD billion PC * Console * 211 203 +0.5% -4% (+2%) (-2%) YoY YoY 193 194 184 179 Mobile * Tabletop -6% +7% (+5%) YoY 2020 2021 2022 2023 2024 2025 YoY 2020-25 CAGR 3,4% • The global video games marke
Slide 12: 2. Financial Performance
2. Financial Performance
Slide 13: Key PNL Metrics
FINANCIAL PERFORMANCE Key PNL Metrics Q2 Q2 YOY YOY YOY SEK million FY22/23 FY21/22 GROWTH ORGANIC GROWTH PRO FORMA GROWTH Net sales 9,569 3,305 190% 35% 18% Net sales – PC / Console Games 4,097 1,976 107% 57% 39% Net sales – Mobile Games 1,441 864 67% 8% 5% Net sales – Tabletop Games 3,247 - - - 9%
Slide 14: Financial development
FINANCIAL PERFORMANCE Financial development GROSS MARGIN DEVELOPMENT SEKm DEVELOPMENT OF MARKETING COSTS SEKm 12,000 120% 1,400 70% 10,000 1,200 59% 57% 60% 100% 9,569 1,000 51% 52% 50% 8,000 46% 76% 76% 80% 73% 800 66% 65% 66% 40% 40% 6,000 57% 60% 60% 60% 600 755 30% 4,000 523 40% 400 20% 2,000 20
Slide 15: Cash flow and investments
FINANCIAL PERFORMANCE Cash flow and investments FY22/23 FY21/22 TTM SEK million Q2 Q2 Q2 Net debt and Financing Adjusted EBITDA 3,056 1,299 7,992 • At the end of September Net debt amounted to SEK 11.2 bn and Cash Tax -203 -213 -602 available funds amounted to SEK 10.2 bn. Other non-cash items -162
Slide 16: Forecast
FINANCIAL PERFORMANCE Forecast MARKET • The global video games market is predicted to generate USD 184 billion in 2022, a decrease of -4% YoY (+2%) • This represents a clear downward revision of previous 2022 forecasts, largely due to a lowering of estimates in the mobile sector OUR FORECAST We now
Slide 17: Transformative partnership and licensing deal
FINANCIAL PERFORMANCE Transformative partnership and licensing deal POSITIVE IMPACT ENABLES PROFITS • Further investments into making even greater games based on both LOWER BUSINESS RISKS established and new IPs TRANSFORMATIVE PREDICTABILITY • Even further organic growth by hiring of PARTNERSHIP AND
Slide 18: Special review
FINANCIAL PERFORMANCE Special review Turbulent times create new opportunities • We continue our long-term mindset in building enduring, innovative and profitable businesses in a creative industry. • We need to adapt to the challenges of geopolitical and social issues around the world and the new mac
Slide 19: Now we will have Q&A
Now we will have Q&A Until 10:00 CET - hosted by Martin Arnell, DnB Markets This will be followed by Session 2: Deep Dives & Other presentations
Slide 20: 3. Deep Dives & Other Presentations
3. Deep Dives & Other Presentations
Slide 21: Sustainability – Part of our Business
Sustainability – Part of our Business
Slide 22: Sustainability - Part of our business
EMBRACER AND SUSTAINABILITY Sustainability - Part of our business Development and publishing Creating long term of games and entertainment value for stakeholders for the global market • Provide entertainment • MORE entertainment • Hiring people • Hiring MORE people • Paying tax • Paying MORE tax • S
Slide 23: Embracer and Sustainability
EMBRACER AND SUSTAINABILITY Embracer and Sustainability Business Support Risk Management • Products • People Values • Collaborations • Legal and Partnerships • Trust • Financial • Long-term • Reputational • Embracing 23
Slide 24: Our global presence
EMBRACER AND SUSTAINABILITY Our global presence HQ Skövde, HQ London, Sweden EMBRACER GROUP HQ HQ Livermore, UK Karlstad, Sweden USA OPERATIVE GROUPS 12 HQ Stockholm, TOTAL HEADCOUNT Sweden HQ Milwaukie, 15 731 USA HQ Texas, USA INTERNAL STUDIOS 132 HQ Berlin, Germany HQ Fort Lauderdale, USA * HQ Wi
Slide 25: Asmodee – Access +
EMBRACER AND SUSTAINABILITY Asmodee – Access + EQUAL AND INCLUSIVE ACCESS TO GAMES 25
Slide 26: Gearbox - Borderlands Science
EMBRACER AND SUSTAINABILITY Gearbox - Borderlands Science Sebastien Caisse STUDIO HEAD GEARBOX QUÉBEC 26
Slide 27: Best Places to Work 2022
@) Best Places to Work 2022 Canada Winner gearbox studio québec Large Company Winner Gearbox Quebec 27
Slide 28: Entertain the world sustainably
ENTERTAIN THE WORLD SUSTAINABLY 28 28
Slide 29: Score
Score 20 oe oe oe oe oe oe POOOOOOOOD OTe)
Slide 30: Nucleotides: with our partners
NUCLEOTIDES: WITH OUR PARTNERS • Cytosine • Guanine • Adenine • Thymine Human Gut Microbiome Bacteria DNA 30
Slide 31: Why?
WHY? Our gut microbiome impacts our health: • Obesity • Neurological diseases • Diabetes • Cancer • Psychological disorders 31
Slide 32: Why? Boosters!
Why? Boosters! BRAIN NANOBOTS +15% XP FOR 2 HOURS 2. fies) BOOSTER SHOP 999999 @ MAGNETISED FERROFLUID +25% MONEY DROP FOR 2 HOURS LUCKY CHARM MILK +10% RARE LOOT CHANCE FOR 2 HOURS TEARS OF THE GoV +50% BADASS SPAWN RATE FOR 2 HOURS. TAURINE AND TESTOSTERONE MIX — +50% WEAPON DAMAGE FOR 2 HOURS. UL
Slide 33: How?
Receptor Consortium Activity 4 a 1 ! Step 1 Step 2 >» step3 H & Filtered Alignment Ranked H = sequencing data puzzles puzzles H = H 1. Build puzzles 1. Distribute puzzles to H microbiome from data gamers H 2. Aggregate solutions to 2. Collect puzzle solutions H < improve alignments from gamers H 3.
Slide 34: April 7th 2020 Launch World Health Day
April 7th 2020 Launch World Health Day 34
Slide 35: The first 24 hours
THE FIRST 24 HOURS: ● More than 6 million puzzles completed, or 4,100+ puzzles solved every minute; ● More than 150,000 active players; ● Each player completed, on average, 40 puzzles; ● Our top player completed 519 puzzles! Our optimistic forecast was to reach one million completed puzzles by the e
Slide 36: Achievements
ACHIEVEMENTS More than 3.5 million active players as of November 17th 2022, with over 122 million puzzles completed. Worldwide coverage in specialized and mass media, as well as: ● Leveling up citizen science in Nature Biotechnology [https://doi.org/10.1038/s41587-020-0694-x] ● In-depth documentarie
Slide 37: Versatility of data in Borderlands Science
VERSATILITY OF DATA IN BORDERLANDS SCIENCE • It’s all about DNA • Data is easily interchangeable • Microbiome analysis is relevant to many fields of scientific inquiry 37
Slide 38: Create Value for the World
EMBRACER AND SUSTAINABILITY Create Value for the World Development and publishing Creating long term of games and entertainment value for stakeholders for the global market • Provide entertainment • MORE entertainment • Hiring people • Hiring MORE people • Paying tax • Paying MORE tax • Suppliers •
Slide 39: Phil Rogers, CEO
Phil Rogers, CEO CRYSTAL DYNAMICS eidos 14 montreal 39
Slide 40: Talent Expertise Synergy
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Slide 41: First 90 Days
First 90 Days 1. PEOPLE 2. STRATEGIC ALIGNMENT 3. BROADENING REVENUE SOURCES 41
Slide 42: Inspiring the great storytellers of the future
INSPIRING THE GREAT STORYTELLERS OF THE FUTURE 42
Slide 43: The iconic secret agent heroine returns
THE ICONIC SECRET AGENT HEROINE RETURNS
Slide 44: Unreal Fest: sharing knowledge and expertise
UNREAL FEST: SHARING KNOWLEDGE AND EXPERTISE
Slide 45: Unreal Fest: the path to exceptional design and craftsmanship
UNREAL FEST: THE PATH TO EXCEPTIONAL DESIGN AND CRAFTSMANSHIP
Slide 46: Multi award-winning game celebrates its 1st anniversary
MULTI AWARD-WINNING GAME CELEBRATES ITS 1ST ANNIVERSARY - 8M PLAYERS AND COUNTING
Slide 47: New hero - launching November 29th
NEW HERO - LAUNCHING NOVEMBER 29th
Slide 48: 73,000 survey responses from gamers
73,000 SURVEY RESPONSES FROM GAMERS – WE HEAR YOU!
Slide 49: Eidos
eidos . 4 S28. 49
Slide 50: Müge Bouillon, Group CFO, Asmodee Group
Müge BOUILLON Group CFO, Asmodee Group
Slide 51: Asmodee H1 highlights
Solid H1 topline performance driven by TCG’s while growing share in softer Boardgames market. Adj. EBIT delivered in line with last year despite temporary product mix impact and a challenging inflationary environment. 5,9bn SEK Global Tabletop Market (STCG + Boardgames) YTD net sales +7% +10% YTD Yo
Slide 52: September is the peak of seasonal working capital investment
September is the peak of seasonal driven working capital investment… Strong seasonal trend in market demand drives seasonality in boardgame inventory levels and distinct H1/H2 split in cash generation Boardgames Segment (excl. STCG) – Asmodee Historic Inventory Cycle Asmodee Free Cashflow historic s
Slide 53: Boardgames inventory impacted by temporary factors
…while boardgames inventory is also impacted by temporary factors driving a timing impact on cash generation Topline growth (TCG demand) and perimeter expansion (M&A take- Inventory net value +34% +3 days (2) on balances) at 30 Sep 2022 +65% YoY +5% FX translation from USD strength 4,171mSEK (1) Man
Slide 54: 25 projects in discussion
Strong release pipeline, exciting opportunities and further geographic expansion Exciting new releases in H1… Many exciting opportunities with other operating units 25 projects in discussion Including use of …collaboration with Dark Horse …and further Asmodee IP’s by on novels, comics, merchandising
Slide 55: ROI Deep Dive
ROI Deep Dive
Slide 56: Project ROI (Contribution / Investment)
ROI DEEP DIVE Project ROI - PC/Console PROJECT ROI (CONTRIBUTION/INVESTMENT) • Based on reported numbers until >50 30 September 2022 10 Average title project data: Sales SEK 272m, Contribution SEK 190m • Sample includes projects with and Investment SEK 80m. sales above SEK 40 mn or 9 investment abov
Slide 57: M&A Deep Dive
M&A Deep Dive
Slide 58: M&A follow-up
M&A DEEP DIVE M&A follow-up • Operative units & Standalone companies - 19 deals included, or 15 excluding integrated companies • The study include acquisitions since 2018, with a minimum of four quarters since acquisition • On a trailing twelve-month basis, adjusted EBIT has grown by over 50% since
Slide 59: M&A follow-up
M&A DEEP DIVE M&A follow-up Financials Rationale FINANCIALS | RATIONALE Day 1 EV = SEK 13,0 bn | Likely E/O = SEK 13,5 bn* Total purchase price = SEK 26.5bn Adding developing, publishing and other capabilities (5,945 people) Adjusted EBIT at closing = 2.49bn 2,415 people (+41%) organically
Slide 60: Amplifier
M&A DEEP DIVE Amplifier Location PC / PC / PC / Mobile / PC / PC / PC / PC / PC / Platforms Mobile PC PC - - - - Console Console Console VR Console Console Console Console Console Team size 5-10 5-10 10-25 5-10 10-25 5-10 10-25 5-10 10-25 5-10 10-25 10-25 10-25 50-100 25-50 10-25 AMPLIFIER BUSINESS
Slide 61: Coffee Stain & Ghost Ship Games
M&A DEEP DIVE Coffee Stain & Ghost Ship Games Country City Skövde Malmö Stockholm Göteborg Trollhättan Göteborg Göteborg Copenhagen Skövde PC / Console / Platforms PC / Console Mobile PC / Console PC / Console PC PC PC / Console PC Mobile Team size 25-50 >5 25-50 >5 5-10 5-10 5-10 25-50 5-10 IP - -
Slide 62: Studio case #1
M&A DEEP DIVE Studio case #1 • New and only game released in year 4 after acquisition • Negative cash flow before tax (EBITDA minus capex) for three years • Strong earnings and cash flow contribution at release • Adjusted EBIT and operating cash flow converge one year post-release • New game now und
Slide 63: Studio case #2
M&A DEEP DIVE Studio case #2 • New and only game released one year before acquisition • Strong earnings and cash flow contribution first two years post-acquisition • Negative cash flow in most recent quarters one year ahead of promising sequel • EBIT and cash flow expected to converge post-release,
Slide 64: Change of listing Venue
EMBRACER* GROUP Change of listing Venue I perenne Si SSIS y
Slide 65: Change of listing Venue to regulated market
CHANGE OF LISTING VENUE Change of listing Venue to regulated market The project for changing listing venue is progressing according to time plan, where we have the ambition to be ready for listing at the regulated Nasdaq Stockholm Main Market by the end of 2022, provided that certain milestones are
Slide 66: Q&A Until 11:00 CET
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Slide 67: Embracer Group
EMBRACER* GROUP