Verve Group Se Class A · OMXSTO:VER
Verve Group Se Class A — Media and Games Invest — Q4 2020 Earnings Presentation
42 slides from Verve Group Se Class A's earnings presentation, 2021
Slide 1: Fourth Quarter 2020 Presentation
FOURTH QUARTER 2020 PRESENTATION Year End Report 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: Introduction
I. Introduction II. Business overview III. Strategy IV. 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 Shareholdings2 CEO & Chairman of the Board since 2012 33% • Manager, entrepreneur and investors with more than 25 Remco Westermann years of experience from v
Slide 5: Business overview
I. Introduction II. Business overview III. Strategy IV. Financial performance
Slide 6: Introduction to Media and Games Invest
Introduction to Media and Games Invest A leading European online games and digital media powerhouse serving customers worldwide Key facts Geographic footprint key financial development +30 M&A transactions since 2012 EUR +500m Market cap 34% Listed on Frankfurt Stock Exchange and Nasdaq First North
Slide 7: MGI's two divisions
MGI’s two divisions Two profitable segments which combined accelerate user acquisition and organic growth Overview of the Group’s segments1 Games: Development and publishing Media: Influencer and performance marketing Share of revenues1 Share of EBITDA1 Share of revenues1 Share of EBITDA1 21% 21% 46
Slide 8: High cost advantages through synergies
High cost advantages through synergies Reduced user acquisition cost combined with higher ad-income Games and media combined: optimising the value chain Games standalone Games and media combined User acquisition CPI1: EUR 0.15 User acquisition CPI: EUR 0.10 Playing user Playing user Ad-income CPM2:
Slide 9: Another record quarter on the books
Another record quarter on the books • In this newly to be launched innovative ATLAS ROGUES tactical game, players can look forward MOBILE GAMING EARLY ACCESS SUCCESSFUL • Verve Group has concluded further to a unique rogue-lite experience PARTNERSHIPS RELEASED key partnerships in the games sector ag
Slide 10: Fourth quarter financial highlights
Fourth quarter financial highlights Adjusted EBIT grows by 64% Net revenues amounted to 48.7 mEUR (Q4’19: 28.2 mEUR), which is an increase of 73%. Adjusted EBITDA amounted to 10.1 mEUR (Q4’19: 5.8 mEUR), which is an increase of 74%. Adjusted EBIT amounted to 5.8 mEUR (Q4’19: 3.6 mEUR), which is an i
Slide 11: Solid organic growth pipeline with great outlook
Solid organic growth pipeline with great outlook • gamigo has also acquired the worldwide licensing rights for the mobile game "Heroes of Twilight“ Heroes of Twilight • The competitive and turn-based role-play game is characterized by a dynamic day and night change, which means that the characters a
Slide 12: Division overview: Games
Invest G Media and Games Division overview: Games
Slide 13: Online Games: a substantial growth market
Online Games: a substantial growth market The largest entertainment market in the world with attractive underlying megatrends Steady growth in the global online games market, particularly driven by further expansion of mobile games Global games market (USDbn) 180 168 CAGR 152 40 Total 138 38 122 11%
Slide 14: Clear focus on risk diversification and high growth
Clear focus on risk diversification and high growth Diversified revenues, solid organic and M&A growth Diversified revenues1 Solid organic pipelines Strong M&A growth 2% 5% Games Unit 15% 20% Announced launches in 2021 15% +30 companies and assets 15% Successful Launches acquired 24% 4% gamigo MMOs
Slide 15: Wizard101: The Harry Potter Of Online Games
Wizard101: The Harry Potter Of Online Games A dedicated customer base with multi-year relationships Massively Multi-player Recurring revenues1 Substantial revenues Game 51% USD +375m revenues 23% 16% 10% +50m gamers 1 year 1-3 years 3-5 years > 5 years • A family-friendly MMORPG, first • Over 50% of
Slide 16: 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 84% 54% 58% 25% 21% 12% 11% 10% 9% 4% 5% 7% 1 year 1-3 yea
Slide 17: Division overview: Media
Invest G Media and Games Division overview: Media
Slide 18: 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 19: Strong user acquisition advertising platform
Strong user acquisition advertising platform Seamlessly connecting brands, advertisers and publishers to users in real time Full-stack advertising platform serving Fortune 500 advertisers Diversified, attractive revenue streams1 Key facts MGI ad-tech value chain Brands: Top Fortune 500 advertisers S
Slide 20: 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 21: Division overview: ESG
Division overview: ESG
Slide 22: 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 Adherence to relevant UN • Energy efficiency - migration of platforms to the cloud away from energy intensive traditional data centres. sust
Slide 23: MGI aims to provide a safe environment for all its users
MGI aims to provide a safe environment for all its users Particular focus on youth and child protection Preventive measures Control and sanctions Improvement targets • Community behavior rules • Trained community management • Automated chat filters • Code of conduct for each game team • Age-appropri
Slide 24: Strategy
I. Transaction overview II. Business overview III. Strategy IV. Financial performance
Slide 25: 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 26: 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 27: 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) • Scalable cost base 543 • Largely constituting variable 141 • High fixed costs costs Before
Slide 28: 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 sy
Slide 29: MGI acquires KingsIsle
MGI acquires KingsIsle Leading North American game developer and publishing platform with +50 million of registered gamers ▪ Transforming and highly accretive acquisition increasing EBITDA1 by app. 60% ▪ Strengthens the quality of earnings in MGI’s games segment ▪ Purchase price USD 126 million plus
Slide 30: Strong M&A pipeline with EUR +150m revenues
…with a strong M&A pipeline with EUR +150m revenues Several good targets in the pipeline, with some signings expected soon Shift from EBITDA negative to more EBITDA positive cases Buy <24 months <6x EBITDA Pay-back for EBITDA for EBITDA positive negative cases cases (incl. synergies) Market consolid
Slide 31: Financial performance
I. Introduction II. Business overview III. Strategy IV. Financial performance
Slide 32: Summary of financial performance
Summary of financial performance Profitable business model with an increasing share of organic growth Long-term financial development (EURm)1,2,3 85.0% CAGR +45% 177 75.0% 65.0% 140 55.0% 45.0% 84 35.0% 29.6% 29.1% 25.0% 25.0% 17.7% 21.6% 20.8% 51 19.9% 45 42 39 15.0% 29 9.9% 22 15 18 5.0% 11 13 4 7
Slide 33: Pro Forma Financials Jan-Sep 2020 (unaudited)
Pro Forma Financials Jan-Sep 2020 (unaudited) KingsIsle is transformative for MGI adding about 60% Group EBITDA YTD (EURm) 109 Comments 92 • The transaction is transformative for MGI as it will materially increase the size and profitability of MGI Group, adding about 31 60% Group EBITDA on a 28% pro
Slide 34: Fourth quarter revenue and EBITDA development
Fourth quarter revenue and EBITDA development Growing 7x faster than the games market in 20201 Revenue Adj. EBITDA (EURm) (EURm) 35.0 160.0 +73% YoY 140.2 +74% YoY 29.1 30.0 140.0 120 24.8 120.0 112 25.0 22.4 97 19.6 100.0 20.0 83.9 18.1 80.0 15.0 60.0 48.7 10.1 35.0 10.0 40.0 28.2 30.0 5.9 6.7 6.4
Slide 35: Segment Performance
Segment Performance Strong organic growth of both segments combined with M&A Games Segment Media Segment (EURm) (EURm) 25 24.5 24.2 +76% QoQ 25.0 +92% QoQ 20 18.8 20.0 18.0 17.0 15 13.9 37% 15.0 31% 12.6 11.2 29% 28% 10 10.0 7.7 11% 5.1 5.5 10% 5.0 5 5.0 8% 7% 2.4 1.2 1.4 0.9 0 0.0 Q1'20 Q2'20 Q3'20
Slide 36: 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 2% 5% 15% 38% 15% 39% 50% 12% 24% gamigo MMOs KingsIsle MMOs Advertisement Supply Side Platfom Agency Services PC Casual Mobile Casual Media Demand Side Pla
Slide 37: Licensed vs owned MMO games
Licensed vs owned MMO games Organic growth facilitated through new licensed and existing owned games Revenues generate from licensed and owned games Good balance between own and licensed games 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Owned (MMO) Lic
Slide 38: Operating cash flow and capex development
Operating cash flow and capex development Operating cash flow development1,2,3 Capex development (EURm) (EURm) 25.2 37.7 20.6 16.2 12.2 33.1 14.1 13.1 6.9 5.5 4.4 6.6 6.9 3.8 9.1 3.0 12.7 2.1 2.0 1.2 1.4 1.7 0.4 5.2 5.3 0.3 0.6 0.4 0.8 1.4 4.0 4.6 1.4 1.7 2014A 2015A 2016A 2017A 2018A 2019A 2020A 20
Slide 39: Long-term net leverage development
Long-term net leverage development Conservatively levered credit with an net leverage of 2.1x Net leverage to adj. EBITDA ratio development1 (EURm) Net Interest Bearing Debt Net leverage 61.6 34.9 25.2 20.5 20.4 7.0x 13.1 10.5 3.0x 3.0x 2.4x 2.1x 2.0x 1.9x 2014 2015 2016 2017 2018 2019 2020 Source:
Slide 40: Prudent mid-term financial targets 2021
Prudent mid-term financial targets 2021… Revenue CAGR EBITDA margin EBIT margin Net leverage 25-30% 25-30% 15-20% 2-3x Source: Group information 40
Slide 41: With a clear roadmap to completion
…with a clear roadmap to completion Strong revenue CAGR of 25-30% combined with 25-30% EBITDA margin Low business risk focus MMO games with steady sustainable cash streams Strong organic growth games as a service; updates, DLC’s & game launches Supported by the media unit Efficient user acquisition;
Slide 42: Media and Games Invest
G Media and Games invest
Media and Games Invest — Q4 2020 Earnings Presentation on 6ix