Embracer Group Ab Class B · OMXSTO:EMBRAC_B
Embracer Group Ab Class B — Q4 FY 22/23 Earnings Presentation
74 slides from Embracer Group Ab Class B's earnings presentation, May 2023
Slide 1: Q4 FY 22/23 Embracer Group Interim Report
Q4 FY 22/23 EMBRACER GROUP INTERIM REPORT JANUARY – MARCH 2023
Slide 2: Disclaimer
EMBRACER GROUP - INTERIM REPORT Q4 FY 22/23 Disclamer IMPORTANT INFORMATION – PLEASE READ THE FOLLOWING BEFORE CONTINUING READING representation or warranty, express or implied, is made by the Company or any of its affiliates, directors, advisors, employees and representatives as to the accuracy, co
Slide 3: Today's Agenda
TODAY’S PART 1 AGENDA INTRODUCTION Update on strategic partnership negotiations & FORECAST 09:00 – ~10:00 Forecast Q&A session #1 PART 2 Q4 PRESENTATION, Highlights from Q4 and Full Year Report DEEP DIVES AND OTHER PRESENTATIONS Operating segments Q4 performance ~10:00 – ~11:00 Financial
Slide 4: Update on strategic partnership negotiations
EMBRACER GROUP - INTERIM REPORT Q4 FY 22/23 Update on strategic partnership negotiations • Late last night, we were informed that one ground-breaking strategic partnership that has been negotiated for seven months will not materialize • The specific strategic partnership deal would have included USD
Slide 5: Forecast FY 23/24
EMBRACER GROUP - INTERIM REPORT Q4 FY 22/23 Forecast FY 23/24 CURRENT FORECAST PREVIOUS FORECAST Adjusted EBIT SEK 7,000 - 9,000 million SEK 10,300 - 13,600 million • Compared to the previous guidance, a specific, significant transformative partnership will not materialize. • Additionally, several n
Slide 6: Q&A
Q&A Moderated by Martin Arnell, DNB Markets, until ~10:00 CEST This will be followed by Part 2: Q4 Presentation, Deep Dives & Other Presentations
Slide 7: Q4 Presentation, Deep Dives and Other Presentations
Q4 Presentation, Deep Dives and Other Presentations
Slide 8: Highlights from Q4 and Full Year Report
HIGHLIGHTS FROM Q4 AND FULL YEAR REPORT Interim Report Q4 FY 22/23 Q4 FY 22/23 2023/24 PIPELINE Net Sales Group YOY GROWTH SEK 9,356m 79% GROUP ORGANIC GROWTH GROUP PRO FORMA GROWTH - 4% - 5% SEVERAL NOTABLE GAMES EXPECTED THIS FY Adjusted EBIT YOY GROWTH SEK 915m -14% SEK 9,309m in capitalized deve
Slide 9: Operating segments Q4 performance
Operating segments Q4 performance
Slide 10: Operative Groups by segment
OPERATING SEGMENTS Q4 PERFORMANCE Operative Groups by segment PC / CONSOLE GAMES Internal Headcount: 10,436 | Internal Studios: 102 | IP: 258 MOBILE GAMES Internal Headcount: 1,177 | Internal Studios: 11 | IP: 48 NET SALES SPLIT | Q4 FY 22/23 ADJUSTED EBIT SPLIT | Q4 FY 22/23 7% 16% ENTERTAINMENT &
Slide 11: PC/Console Games
PC/Console Games NET SALES REVENUE SPLIT SEKm & ADJUSTED EBIT MARGIN BACK CATALOG SALES SEKm 4,500 2,500 50 3,478 4,000 45% 44% 45 1,693 3,500 2,000 40 3,000 35% 34% 35 32% 1,500 30 2,500 26% 26% 25 2,000 1,000 20 1,500 16% 15 1,000 10% 500 10 500 338 SEKm 5 0 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2
Slide 12: PC/Console Games: invested in game development
PC/Console Games INVESTED IN GAME DEVELOPMENT PROJECT PIPELINE # 1,800 6 250 221 1,600 5 4.8x 200 1,400 64 56 1,200 4 3.6x 150 1,000 3.4x 3.3x 3.1x 3.2x 53 3 800 2.6x 2.5x 100 600 2.0x 2 159 165 1.8x 1.4x 400 50 107 1 0.8x 200 0 - 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 13: Project ROI (Contribution / Investment)
PC/Console Games PROJECT ROI PROJECT ROI (CONTRIBUTION/INVESTMENT) DETAILS >100 14 Average title project data: • Based on reported numbers until Sales 276 SEKm, Contribution 193 SEKm 13 31 March 2023 and Investment 78 SEKm. 12 • Sample includes projects with sales SEK 18.2 Bn above SEK 40 mn or inve
Slide 14: Mobile Games
Mobile Games NET SALES & ADJUSTED EBIT MARGIN MILESTONES 2,000 50 1,759 1,488 1,441 1,573 40 6.02 bn 1,500 1,317 DOWNLOADS* 29% 30 28% 1,000 25% 19% 22% 324 SEKm 20 1.5 bn 500 DOWNLOADS* 10 0 0 Q4 Q1 Q2 Q3 Q4 NET SALES DRIVERS FY 21/22 FY 22/23 Net sales, SEK m Adjusted EBIT, margin % CrazyLabs (DEC
Slide 15: Tabletop Games
Tabletop Games NET SALES SEKm & ADJUSTED EBIT MARGIN NEW RELEASES 4,500 4,146 40 4,000 35 3,500 3,247 3,074 30 3,000 2,665 25 2,500 21% 20 2,000 17% 14% 15 1,500 13% 1,000 10 571 8% 500 250 SEKm 5 0 0 Q4 Q1 Q2 Q3 Q4 FY21/22 FY22/23 Net sales Adjusted EBIT margin, % STRONG LINEUP OF KEY NEW RELEASES
Slide 16: Another solid P&L performance to close the year in seasonally quiet quarter
Another solid P&L performance to close the year in seasonally quiet quarter Q4 Full Year Net Sales +6% Net Sales +2% vs last year (1) 3,074m SEK vs Q4 ’21/22 (1) 13,132m SEK Adj. EBITDA -12% Adj. EBITDA -10% vs last year (2) 345m SEK vs Q4 ’21/22 (2) 2,318m SEK Adj. EBIT -18% Adj. EBIT -11% vs last
Slide 17: Careful working capital management drives strong H2 cash generation
Careful working capital management and unwinding of inventory drives strong H2 cash generation Reminder from Q2 Asmodee Historic Asmodee Free Seasonal unwinding of stock to year end Inventory Cycle Cashflow historic split with ~70m€ of temp effects unwinding over H1/H2 next 12 months Seasonality Exp
Slide 18: Entertainment & Services
Entertainment & Services NET SALES SEKm & ADJUSTED EBIT MARGIN 2,500 2,328 16 14% 14 2,000 12 1,487 1,360 10 1,500 9% 8% 8% 8% 8 811 784 1,000 6 671 429 466 465 4% 4% 4 3% 500 66 SEKm 2 1% 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY20/21 FY21/22 FY22/23 Net sales Adjusted EBIT margin, % Middle-earth Enterpris
Slide 19: Market update
OPERATING SEGMENTS Q4 PERFORMANCE Market update GLOBAL VIDEO GAMES MARKET REVENUE FORECAST GLOBAL MARKET USD billion Forecast PC * Console * 206 expected to grow by expected to grow by 197 +0.5% +7% 193 189 179 183 144 in 2023 in 2023 Mobile * Tabletop ** expected to grow by all-time record Q4 +2% +
Slide 20: Financial Performance
Financial Performance
Slide 21: Continued growth
FINANCIAL PERFORMANCE Q4 Continued growth FINANCIAL GROWTH (Full Year) SEKm OPERATIONAL GROWTH 38,000 400 37,665 4.50 16,000 TOTAL HEADCOUNT 16,601 33,000 4.06 4.00 16,601 350 14,000 INTERNAL STUDIOS 3.50 3.50 138 300 28,000 12,000 ON-GOING PROJECTS 12,760 3.14 3.00 221 250 23,000 10,000 223 221 2.5
Slide 22: Key PNL Metrics
FINANCIAL PERFORMANCE Q4 Key PNL Metrics Q4 Q4 YOY YOY YOY SEK million FY 22/23 FY 21/22 GROWTH ORGANIC GROWTH PRO FORMA GROWTH Net sales 9,356 5,238 79% -4% -5% Net sales – PC / Console Games 3,478 2,097 66% 17% 0% Net sales – Mobile Games 1,317 1,759 -25% -36% -36% Net sales – Tabletop Games 3,074
Slide 23: Financial development
FINANCIAL PERFORMANCE Q4 Financial development GROSS MARGIN DEVELOPMENT SEKm DEVELOPMENT OF MARKETING COSTS SEKm 12,000 120% 1,400 40% 10,000 1,200 35% 100% 1,000 30% 8,000 9,356 76% 76% 80% 73% 555 25% 66% 65% 66% 800 6,000 60% 56% 58% 60% 20% 20% 20% 600 17% 16% 4,000 15% 13% 13% 40% 400 10% 10% 1
Slide 24: EBITDA and Capex
FINANCIAL PERFORMANCE Q4 EBITDA and Capex PC/CONSOLE GAMES MOBILE GAMES 2,500 200% 600 10% 180% 9% 2,000 500 154% 160% 8% 140% 400 7% 1,500 120% 120% 6% 98% 105% 300 5% 5% 100% 5% 1,000 80% 4% 65% 60% 200 3% 500 40% 2% 100 2% 20% 1% 1% 0 0% 0% 0 0% Q4 FY 21/22 Q1 FY 22/23 Q2 FY 22/23 Q3 FY 22/23 Q4
Slide 25: Cash flow and investments
FINANCIAL PERFORMANCE Q4 Cash flow and investments FY22/23 FY21/22 TTM SEK million Q4 Q4 Q4 • Negative Free Cash flow Before WC mainly driven Adjusted EBITDA 1,938 1,527 9,867 by increased net investment in portfolio of ongoing game development in PC/Console Games Cash Tax -158 -86 -902 Segment. Oth
Slide 26: Embracer and Sustainability
Embracer and Sustainability
Slide 27: Goal for our sustainability work
EMBRACER AND SUSTAINABILITY Q4 FY 22/23 Goal for our sustainability work • Minimizing the risk of negative impacts on our stakeholders. • Finding and developing business opportunities to do good for our stakeholders and the rest of the world. • Living our values. SUSTAINABILITY 27
Slide 28: Sustainability tools
EMBRACER AND SUSTAINABILITY Q4 FY 22/23 Sustainability tools • Sustainability goals • Policies • Ambassador Group • Case database for sustainability work • Internal webinars • Employee Survey • Whistleblower program • Reporting SUSTAINABILITY 28
Slide 29: Result of the Employee Survey 2023
EMBRACER AND SUSTAINABILITY Q4 FY 22/23 Result of the Employee Survey 2023 Response rate Global satisfaction rate Work environment FY 22/23 FY 21/22 85% FY 22/23 FY 21/22 80 FY 22/23 FY 21/22 81 80% 81 82 Collaboration Engagement Employee net promoter score (eNPS*) FY 22/23 FY 22/23 FY 21/22 83 FY 2
Slide 30: Smarter business – Great People
EMBRACER AND SUSTAINABILITY Q4 FY 22/23 Smarter business – Great People SMARTER BUSINESS FRAMEWORK GREAT SOLID OUR PEOPLE WORK PLANET GOVERNANCE 30
Slide 31: Linda Duchaussoy
LINDA DUCHAUSSOY Communications Director | Eidos- Montréal 31
Slide 32: Sustainability | Eidos-Montréal: Focus on Great People
SUSTAINABILITY | EIDOS-MONTRÉAL FOCUS ON GREAT PEOPLE 32
Slide 33: Our Context
OUR CONTEXT WORLD’S 5TH LARGEST VIDEO GAME DEVELOPMENT HUB MORE THAN 200 STUDIOS 19 000 TALENTS * Data from Montréal International 33
Slide 34: Work-life balance, well-being, career development
WORK-LIFE WELL- BALANCE BEING CAREER DEVELOPMENT 34
Slide 35: Work-life balance
WORK-LIFE BALANCE HYBRID MODEL: WORK REMOTELY OR FROM THE OFFICE TIME MANAGEMENT POLICY HOLISTIC APPROACH TO WELL-BEING 35
Slide 36: Well-being
WELL-BEING HEALTHCARE ASSISTANCE PROVISION OF VARIOUS FITNESS FACILITIES AND ACTIVITIES GIVE BACK, BEING PART OF OUR COMMUNITY 36
Slide 37: Career development
CAREER DEVELOPMENT INTERNAL MOBILITY: PEOPLE OR TECHNICAL PATH CONTINUOUS LEARNING COMMUNITIES OF PRACTICE 37
Slide 38: Conclusion
CONCLUSION Net Promoter Score of 32 (Great) to the question : How likely is it that you would recommend your company to a friend? POSITIVE IMPACT ON EMPLOYEE SATISFACTION & ENGAGEMENT Improved employee well-being Reduced turnover and absenteeism Increased Talent acquisition and rehiring 38
Slide 39: Earnout per Year-End
. Paid 4 Earnout per Year-End ‘id
Slide 40: Earnouts – Fair value evaluation
EARNOUT PER YEAR-END Earnouts – Fair value evaluation As part of the year-end closing, we have performed fair value evaluations on contingent considerations and other balance sheet items relating to earnouts. The evaluation considers the likelihood of meeting earnout targets, the timing of meeting e
Slide 41: FY 2022/23 – derivation of P&L metrics
EARNOUTS AND APM UPDATE FY 2022/23 – derivation of P&L metrics Adjusted EBIT Derivation GAAP NON-GAAP Adjusted Net Profit Derivation GAAP NON-GAAP Reported EBIT 194 SEKm 194 SEKm Reported Net profit 4,454 SEKm 4,454 SEKm Add back of acquistion related +0 SEKm +2,631 SEKm personnel expenses Add back
Slide 42: FY 2022/23 – derivation of EPS and BS metrics
EARNOUTS AND APM UPDATE FY 2022/23 – derivation of EPS and BS metrics Earn out Adjusted earnings per share Derivation GAAP NON-GAAP Derivation Not adjusted (GAAP) Adjusted (NON-GAAP) Cash obligation included in 5,595 SEKm 8,595 SEKm Net profit 4,454 SEKm 5,515 SEKm purchase price Cash obligation cla
Slide 43: Deep Dive: 5 Years of PLAION as Part of Embracer Group
Deep Dive: 5 Years of PLAION as Part of Embracer Group Klemens Kundratitz, CEO © 2023 PLAION / plaion.com
Slide 44: Timeline
5 Years at Embracer Growing and Unlocking Potential Rebranding to PLAION Acquired by Embracer Group Established Free Acquired Radical Design Sola Media Studio Acquired Acquired Acquired Warhorse Voxler Springboard VR and Acquired Release of Studios and Force Field VR Splatter Connect Dead Island 2 M
Slide 45: AAA Game Business
Creating Long-Lasting Value By Building a AAA Games Business A track record of developing and publishing PC/console games to global success AAA Game Business © 2023 PLAION / plaion.com
Slide 46: Milestone
Specialized in Racing Games Milestone On track for expanding the games portfolio and audience RIDE 5 Hot Wheels Unleashed MotoGP 23 Milestone © 2023 PLAION / plaion.com
Slide 47: Vertigo
VR Experts Vertigo Games Group Leading AAA VR games developer and publisher After Arizona the Fall Sunshine Vertigo © 2023 PLAION / plaion.com
Slide 48: DPI Merchandising
Transmedia Opportunities DPI Merchandising Expanding our reach and revenue through diverse merchandising opportunities tied to our game IPs and films DPI Merchandising © 2023 PLAION / plaion.com
Slide 49: PLAION PICTURES
European Independent Film Company with Award-Winning Portfolio PLAION PICTURES The Whale, the next Oscar-winning film – further establishing our presence in the film industry PLAION PICTURES © 2023 PLAION / plaion.com
Slide 50: Revenue Performance
5 Years of Commercial Success Revenue Performance 700 600 500 PLAION Pictures Partner Publishing, Merchandising 400 Vertigo Publishing Milestone Publishing 300 PLAION Publishing 200 Revenue Performance 100 0 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 in million € © 2023 PLAION / plaion.com
Slide 51: AAA Games: Resurrecting an IP, Dead Island
Resurrecting an IP Dead Island 2 Pioneering zombie-slaying RPG genre, propelling PLAION's growth and brand recognition AAA Games © 2023 PLAION / plaion.com
Slide 52: The Sleeping Giant
N G G I A N T T HE SLEEPI 18 MIL COPIES 100+ MIL YT VIEWS © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STRICTLY INTERNAL INTERNAL - AMD
Slide 53: Brand Challenges
H AALLLLEENNGGEESS C BBRRAANNDD C H DI2 was already announced A new iteration of DI2 was deemed Game was believed in 2014, players and press dead on arrival – way too many cancelled or in constant got promised a specific zombie IPs to be able to stand out development hell tone and content © Copyrigh
Slide 54: Challenges
H A L L E N G E S dam buster C How do we live up to The first-person zombie What features to players expectations after genre has moved on. focus on and an 11-year wait? How do we stay relevant? where to excel? © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserve
Slide 55: Dambuster Response
r R E S P O N S E dambuste NEW BRAND ID & TONE NO SMOKE AND MIRRORS BUILD UPON KEY DIFFERENCES AIM FOR TOP TIER ASSET © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DI
Slide 56: Dambuster Response
R R E S P O N S E DAMBUST E ESTABLISH KEY PILLARS FOCUS ON OUR PASSIONS LESS IS MORE TECHNICAL EXCELLENCE © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION –
Slide 57: The Outcome
THE O U T C O M E © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STRICTLY INTERNAL INTERNAL - AMD
Slide 58: Review Quotes
Q U O T E S REVIEW © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STRICTLY INTERNAL INTERNAL - AMD
Slide 59: Press and Players Sentiment
N T I M E N S EE N T I M E N T S T P RESS • GAME RUNS SMOOTHLY AND LOOKS GORGEOUS IN EVERY PLATFORM • GORE TECH IS AN IMPRESSIVE NEXT GEN FEAT • CORE GAMEPLAY IS ADDICTIVE AND FUN • LOS ANGELES LOOKS INCREDIBLE P LAY ERS • MASSIVE PRAISE FOR DAMBUSTER’S WORK DESPITE ALL ODDS • GAME SIMPLICITY IS ONE
Slide 60: Sales Numbers
N U M B E R S SALES © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STRICTLY INTERNAL INTERNAL - AMD
Slide 61: Key Stats
Y S T A T S ” “KE 5 BIL 10 B I L 17 0 MI L ZOMBIES DISPATCHED DISMEMBERMENTS PLAYER DEATHS © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STR
Slide 62: What's Coming
C O M I N G WHAT’S © Copyright © Copyright 2021 2022 Deep Deep Silver. Silver. All Rights All Rights Reserved. Reserved. Private Private & Confidential & Confidential – NOT – NOT FORFOR DISTRIBUTION DISTRIBUTION – STRICTLY – STRICTLY INTERNAL INTERNAL - AMD
Slide 63: Navigating the Present
Navigating the Present Embracing Opportunities and Challenges in the Entertainment Industry Adapting to market changes: Successfully Re-branding from Koch Media to PLAION: navigating the evolving landscape in gaming Seamlessly transitioning to a new brand identity and film during the COVID-19 pandem
Slide 64: Guiding Principles
PLAION’s Strategy Update and Organizational Alignment Guiding Principles Going Forward Focused Streamlined portfolio, prioritizing quality over quantity and leveraging our IPs in gaming, film and merchandising Guiding Principles © 2023 PLAION / plaion.com
Slide 65: Guiding Principles
PLAION’s Strategy Update and Organizational Alignment Guiding Principles Going Forward Focused Better Streamlined portfolio, Commitment to delivering prioritizing quality over outstanding entertainment quantity and leveraging our experiences for our players, IPs in gaming, film and viewers, and cons
Slide 66: Guiding Principles
PLAION’s Strategy Update and Organizational Alignment Guiding Principles Going Forward Focused Better Together Streamlined portfolio, Commitment to delivering Fostering collaboration and prioritizing quality over outstanding entertainment teamwork within our quantity and leveraging our experiences f
Slide 67: Building for the Future: 2024 & Beyond
Building for The Future 2024 & Beyond Development Publishing © 2023 PLAION / plaion.com
Slide 68: Smart Collaboration
Supporting M&A Deal-Making and Strategic Partnerships Smart Collaboration within Embracer Smart Collaboration © 2023 PLAION / plaion.com
Slide 69: Focused. Better. Together.
PLAION > Focused. Better. Together.
Slide 70: Q&A
— ee — Until ~44:00 CEST
Slide 71: Appendix
Appendix
Slide 72: Example of a typical earnout structure
EARNOUTS AND APM UPDATE Example of a typical earnout structure Embracer has made an agreement to acquire a game studio with a deal term of total 1,500. 600 will be paid at day of closing and 900 is future payments pending on earnout agreements. Of the total earnout of 900, 300 is connected to that k
Slide 73: Earnout effects on P&L, BS, CF and dilution
EARNOUTS AND APM UPDATE Earnout effects on P&L, BS, CF and dilution Non-GAAP Year 1 Year 2 Year 3 Year 4 NON-GAAP Earnout liability 1 900 900 900 0 The full value of the earnout is recognized at day 1 No costs is accrued over the PL Personnel expenses 0 0 0 0 In year 4 when the conditions for
Slide 74: Embracer Group
EMBRACER* GROUP