Verve Group Se Class A · OMXSTO:VER
Verve Group Se Class A — Media and Games Invest — Jefferies Interactive Entertainment Virtual Conference 2020
36 slides from Verve Group Se Class A's conference presentation, November 2020
Slide 1: Jefferies Interactive Entertainment Virtual Conference
Jefferies Interactive Entertainment Virtual Conference November 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
I. Transaction overview 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 Shareholders CEO & Chairman of the Board since 2012 • Manager, entrepreneur and investors with more than 25 Remco Westermann 37% years of experience from var
Slide 5: Dual Listing on Nasdaq First North Premier
Dual Listing on Nasdaq First North Premier Experienced Nordic gaming investors combined with a strong gaming cluster at Nasdaq Stockholm Listing on NASDAQ First North Premier Nordic peers with strong valuations • First day of trading on 6 October 2020 • Completed SEK 300 million (€29m) capital incre
Slide 6: Business overview
I. Transaction overview II. Business overview III. Strategy IV. Financial performance
Slide 7: Introduction to Media and Games Invest
Introduction to Media and Games Invest A leading European gaming and digital media powerhouse serving customers worldwide Key facts Geographic footprint key financial development Top 10 countries by revenues 2018 MGI acquires gamigo United States Germany France Canada EUR ~170m Market cap United Kin
Slide 8: MGI's two divisions
MGI’s two divisions Two profitable segments which combined accelerate user acquisition and organic growth Overview of the Group’s segments Gaming: Development and publishing Media: Influencer and performance marketing Share of revenues1 Share of EBITDA1 Share of revenues1 Share of EBITDA1 16% 37% 63
Slide 9: Business model centres around core gaming segment
Business model centres around core gaming segment An attractive mix between gaming and media enables MGI to effectively monetise on its user base Group description and overview of business model • Media and Games Invest (“MGI”) is a leading European digital gaming company active within game developm
Slide 10: COVID-19 has positively affected MGI's growth
COVID-19 has positively affected MGI’s growth Significant uptick in active and users and revenues compared with 2019 Fiesta Online: Revenues and active users 2019 vs 2020 • The lockdown imposed throughout the world has had a positive impact of MGI’s performance as people found Revenues 2019 vs 2020
Slide 11: Division overview: Gaming
Invest G Media and Games Division overview: Gaming
Slide 12: Gaming: a substantial growth market
Gaming: a substantial growth market The largest entertainment market in the world with attractive underlying megatrends Steady growth in the global gaming market, particularly driven by further expansion of mobile games Global gaming market (USDbn) CAGR • Due to the strong competitive landscape, the
Slide 13: Extensive gaming portfolio with ample opportunities
Extensive gaming portfolio with ample opportunities Portfolio of 30 MMO’s and 5,000 casual games implies limited dependency and diversified revenue streams Global gaming brands unified under one umbrella Well-balanced portfolio4 Solid organic pipeline Strong M&A pipeline • Gaming segment (B2C) inclu
Slide 14: A loyal customer base with multi-year relationships
A loyal customer base with multi-year relationships Gamers spend EUR 50-80 per month with games having a lifetime of more than 10 years Example: Fiesta Online A multiplayer role game Recurring revenues1 Substantial revenues 64% EUR +50m revenues 14% 12% 10% 6.8m gamers 1 year 1-3 years 3-5 years > 5
Slide 15: 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 52% 54% 84% 28% 22% 11% 13% 11% 9% 4% 6% 7% 1 year 1-3 yea
Slide 16: Division overview: Media
G Media and Games Invest Division overview: Media
Slide 17: 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 18: Media is a logical extension of the Gaming value chain
Media is a logical extension of the Gaming value chain Online media serves as a strong organic growth accelerator for games Illustration of value chain extension Games Media for user User Item sale Playing user acquisition acquisition advertising Selling ads in games Media Higher traffic volumes Hig
Slide 19: …as evidenced by significantly lower breakeven ad-views…
…as evidenced by significantly lower breakeven ad-views… MGI provides high customer acquisition capabilities compared to traditional publishers and developers Games and media combined: optimising the value chain Gaming standalone Gaming and media combined User acquisition CPI1: EUR 0.15 User acquisi
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: Strategy
I. Transaction overview II. Business overview III. Strategy IV. Financial performance
Slide 22: 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 23: …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 24: …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) • Once acquired, targets are swiftly integrated into MGI, • By utilising its state-of-the-art
Slide 25: …and 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 syner
Slide 26: Strategic expansion of the mobile gaming business
Strategic expansion of the mobile gaming business Mobile gaming segment is on a strong growth trajectory Illustration of MGI’s expansion phases Building the mobile user acquisition base… …with ample M&A opportunities in mobile gaming… +1,500 +€2-3m Mobile Games EBITDA +€13m Revenues Efficient mobile
Slide 27: Financial performance
I. Transaction overview II. Business overview III. Strategy IV. Financial performance
Slide 28: 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 Revenues Adj. EBITDA % margin • Consistent growth over the past six years whilst preserving adj. EBITDA margins 130 - Revenues have grown at a CAGR of 43% b
Slide 29: 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 Group revenue split2 Group revenue by geography Gaming revenue by device Customer acquisition by channel 3% 2% 1% 2% 1% 3% 3% 4% 10% 4% 22% 4% 11% 4% 37% 5%
Slide 30: Licensed vs owned games
Licensed vs owned games Organic growth facilitated through new licensed and existing owned games Revenues generate from licensed and owned games Q1’19-Q2’20 Increased focus on owned games in 2020 70% 60% 50% 40% 30% 20% 10% 0% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Licensed Owned • Strong organic growt
Slide 31: Operating cash flow and capex development
Operating cash flow and capex development Highly cash generative business owing to modest capex needs and strong profitability Operating cash flow development1,2,3 Capex development (EURm) (EURm) 28,0 134% 21,3 97% 73% 78% 71% 82% 81% 16,2 17,3 14,1 13,1 12,2 24,0 6,9 6,6 6,9 4,4 5,5 9,1 3,0 3,8 12,
Slide 32: Long-term net leverage development
Long-term net leverage development Conservatively levered credit with an illustrative post-equity net leverage of 2.2x Net leverage to reported EBITDA ratio development1 • 14% deleverage (Q2’20) Net interest bearing debt, EURk • Strong EBITDA of €6.3m in (Q2’20) 80.000 • €1m FCF after total Investme
Slide 33: Prudent mid-term financial targets…
Prudent mid-term financial targets… Revenue CAGR EBITDA margin EBIT margin Net leverage 25-30% 25-30% 15-20% 2-3x • Invest in organic growth projects, • Reducing OPEX and costs based on • Using cost synergies within the • Measured on a Net Interest Bearing e.g. sequels, re-launches & re- economies o
Slide 34: The MGI share
The MGI share Secondary listing on Nasdaq First North Premier Growth Market completed in October 2020 Share price development Valuation statistics Xetra Frankfurt Stock Exchange (EUR) Ticker: M8G • # of shares: 117,073,507 2 Share price: EUR 1.44 • Share price: EUR 1.44 1,6 • Market cap: EUR 168.6m
Slide 35: …with a clear roadmap to completion
…with a clear roadmap to completion Strong revenue CAGR of +25% combined with 25-30% EBITDA margin Low business risk focus MMO games with steady sustainable cash streams Strong organic growth Gaming as a service; updates, DLC’s & game launches Supported by the media unit Efficient user acquisition;
Slide 36: G Media and Games
G Media and Games invest
Media and Games Invest — Jefferies Interactive Entertainment Virtual Conference 2020 on 6ix