Digital Bros S.p.a. · MIL:DIB
Digital Bros — Investor Presentation (October 2018)
37 slides from Digital Bros's investor presentation, Oct 15, 2018
Slide 1: Financial Presentation October 2018
FINANCIAL PRESENTATION OCTOBER 2018
Slide 2: Our Milestones
OUR MILESTONES 1989 2000 2007 2012 2013 2015 2017 FOUNDATION MILAN STOCK RETAIL DIGITAL MOBILE MOBILE AND CONSOLE EXCHANGE PUBLISHING PUBLISHING PUBLISHING DEVELOPERS ACQUISITION M O B I L E OCTOBER 2018 2 2
Slide 3: Market Value Chain
MARKET VALUE CHAIN RETAIL CONSOLE DEVELOPER PUBLISHER DISTRIBUTORS RETAILERS END CONSUMERS MANUFACTURERS DIGITAL DEVELOPER PUBLISHER MARKETPLACE END CONSUMERS Digital Bros Group OCTOBER 2018 3
Slide 4: We Develop, Publish and Market Multichannel Videogames
WE DEVELOP, PUBLISH AND MARKET MULTICHANNEL VIDEOGAMES DISTRIBUTION Retail distribution (chains PUBLISHING and stores – global distribution network) IPs scouting and selection Digital download (digital PRODUCTION Production monitoring marketplaces, mobile and tablet store, social DR studios Marketin
Slide 5: Premium and Free to Play
PRODUCTS PREMIUM AND FREE TO PLAY THE GROUP OPERATES GLOBALLY IN THE PREMIUM AND FREE TO PLAY GAMES UNDER 505 GAMES BRAND PREMIUM GAMES FREE TO PLAY Acquisition of contents exploitation Development and publishing of rights from developers (IP ownership, videogames available to the public free long t
Slide 6: Digital and Retail
CHANNELS DIGITAL AND RETAIL DIGITAL RETAIL DISTRIBUTION DISTRIBUTION Online Marketplaces : Main chains and stores Steam REVENUES TREND Playstation Network Global distribution RETAIL VS DIGITAL Xbox Live network 100% 2% Game app download : 90% 14% mobile and tablet STORES 80% 40% 42% 47% 70% 49% 72%
Slide 7: Worldwide Presence
WORLDWIDE PRESENCE HEADQUARTERS: MILAN 180* PEOPLE WORLDWIDE Digital Bros Group Distribution OCTOBER 2018 7
Slide 8: New Releases & Investments
1 NEW RELEASES & INVESTMENTS OCTOBER 2018 8 8
Slide 9: Planned Investments
PLANNED INVESTMENTS OUR SUCCESSFUL PRODUCTS GENERATED CASH TO INVEST FOR GROWTH WE ENTERED INTO THE LARGEST INVESTMENT PLAN THROUGH STRATEGIC ACQUISITIONS AND BRAND NEW PUBLISHING DEALS large publishing deals IPs owned OCTOBER 2018 - NEW RELEASES & INVESTMENTS 9
Slide 10: IP Portfolio
IP PORTFOLIO OCTOBER2018 LONG TERM THIRD OWNED IP AGREEMENTS PARTY PARTNERSHIPS OCTOBER 2018 - NEW RELEASES & INVESTMENTS 10
Slide 11: Significant Releases for Premium and Free to Play
SIGNIFICANT RELEASES FOR PREMIUM AND FREE TO PLAY PREMIUM DIGITAL & RETAIL TBA 2019 2020 2021 FREE TO PLAY CONSOLE AND MOBILE OCTOBER 2018 - NEW RELEASES & INVESTMENTS 11
Slide 12: Overkill's The Walking Dead
OVERKILL’S THE WALKING DEAD SMASH HIT COMIC SERIES AND TV SHOW (Peaks of more than 16M viewers per episode on average) ALL-NEW WALKING DEAD STORYLINES WRITTEN BY ORIGINAL AUTHOR ROBERT KIRKMAN NARRATIVE-DRIVEN CO-OPERATIVE 1ST PERSON SHOOTER DEVELOPED BY STARBREEZE (PAYDAY2) OVERKILLS IS AN ALL NEW
Slide 13: Control
CONTROL CINEMATIC THIRD PERSON ACTION GAME BUILT ON REMEDY’S PROPRIETARY NORTHLIGHT® TECHNOLOGY DEVELOPED BY REMEDY ENTERTAINMENT, DEVELOPER OF AAA VIDEO GAMES (MAX PAYNE, ALAN WAKE AND QUANTUM BREAK) EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS FOR 505 GAMES EXPECTED RELEASE DATE to be announced FOR PLAYS
Slide 14: Bloodstained
BLOODSTAINED THE LATEST CREATION OF KOJI IGARASHI, THE FORMER SERIES PRODUCER OF CASTELVANIA FRANCHISE THE SPIRITUAL SUCCESSOR OF THE BELOVED CASTLEVANIA SERIES WHICH HAS BEEN A TOP SELLER GAME IN THE LAST TWO DECADES THE SECOND LARGEST VIDEOGAME CROWDFUNDING KICKSTARTER CAMPAIGN IN 2015 WHICH HAS R
Slide 15: Assetto Corsa
ASSETTO CORSA NEW EPISODE ASSETTO CORSA COMPETIZIONE: OFFICIAL GAME OF THE BLANCPAIN GT SERIES IN EARLY ACCESS ON STEAM ON 12TH SEPTEMBER 2018 3 YEARS PARTNERSHIP WITH BLANCPAIN COMPETITION FULLY LICENSED GT CARS FROM TOP MANUFACTURER: FERRARI, LAMBORGHINI, MCLAREN UNIQUE SELLING POINTS OF THE GAME:
Slide 16: Hawken
HAWKEN THE MECH GENRE IS A VIABLE MARKET OPPORTUNITY WITH A LARGE POPULATION OF GAMERS AND A LOW NUMBER OF GAMES TAKING THE SUCCESSFUL ‘MECH’ GENRE & LAYERING IT WITH STRONG F2P SYSTEMS IMMERSIVE PVE ELEMENTS THAT WILL APPEAL TO THE MECH PLAYER BASE: COLLECT, BUILD AND CUSTOMIZE YOUR MECH THE HAWKEN
Slide 17: Financials
2 FINANCIALS 17 OCTOBER 2018 17
Slide 18: Market Size
MARKET SIZE THE WORLDWIDE GAMES MARKET WILL REACH $180.1 BILLION BY 2021 $180.1 Bn $165.9 Bn 19% Console Games CAGR 2012-2021 $151.9 Bn 21% total 19% PC Games +11.0% $137.9 Bn 22% $106.5 Bn $121.7 Bn 21% 24% console 30% 27% 22% +11.0% 24% pc 27% Mobile Games +11.0% 30% mobile +26.8% 59% 57% 54% 51%
Slide 19: Consolidated P&L - FY 2018 Actual
CONSOLIDATED P&L - FY 2018 ACTUAL €/1000 FY 2018 FY 2017 CHANGE CHANGE % GROSS REVENUES 76,038 132,681 (56,643) -42.7% NET REVENUES 70,405 125,664 (55,259) -44.0% EBITDA 4,287 18,551 (14,264) -76.9% EBIT (3,563) 8,924 (12,487) n.m. EBT (2,912) 14,560 (17,472) n.m. NET PROFIT 9,174 11,297 (2,123) -18
Slide 20: Premium Games - FY 2018 Actual
PREMIUM GAMES - FY 2018 ACTUAL €/1000 FY 2018 FY 2017 CHANGE CHANGE % GROSS REVENUES 54,138 105,618 (51,480) -48.7% NET REVENUES 50,736 100,892 (50,156) -49.7% EBITDA 10,454 26,360 (15,906) -60.3% EBIT 5,934 20,957 (15,023) -71.7% FISICAL YEAR ENDING 30TH JUNE SOURCE DIGITAL BROS PAYDAY AND TERRARIA
Slide 21: Free to Play - FY 2018 Actual
FREE TO PLAY - FY 2018 ACTUAL €/1000 FY 2018 FY 2017 CHANGE CHANGE % GROSS REVENUES 5,813 7,736 (1,923) -24.9% NET REVENUES 5,813 7,736 (1,924) -24.9% EBITDA 1,067 (105) 1,172 n.m. EBIT (1,059) (2,847) 1,788 -62.8% FISICAL YEAR ENDING 30TH JUNE SOURCE DIGITAL BROS CONTINUOS REVENUE STREAM FROM GEMS
Slide 22: Net Financial Position and Investments
NET FINANCIAL POSITION OVER THE LAST YEARS 20,00 45,00 10,00 40,00 0 35,00 NET FINANCIAL POSITION (10,00) 30,00 (20,00) 25,00 INVESTIMENTS* (30,00) 20,00 (40,00) 15,00 (50,00) 10,00 (60,00) 5,00 (70,00) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q
Slide 23: Globalization
GLOBALIZATION 100% 2% REVENUES TREND 90% 14% ITALY VS INTERNATIONAL 80% 40% 42% 47% 70% 49% 72% 58% 60% 98% 86% Italy 50% international 60% 40% 58% 51% 30% 53% 20% 28% 10% 42% 0% 2012 2013 2014 2015 2016 2017 2018 2019 ACT ACT ACT ACT ACT ACT ACT BUDGET OCTOBER 2018 - FINANCIALS 23
Slide 24: Outlook
OUTLOOK EXPECTED REVENUES FOR NEXT YEAR BETWEEN EURO 145 AND EURO 190 MILLION, THANKS TO THE RELEASE OF THE BIG FY2019 PRODUCTIONS: OVERKILL’S THE WALKING DEAD, BLOODSTAINED, CONTROL IN LINE WITH THE INVESTMENTs CURRENTLY IN PROCESS THE CASH FLOW GENERATION SLOWs DOWN with a decline in the first hal
Slide 25: Digital Bros - A Snapshot
DIGITAL BROS - A SNAPSHOT Global company, operating across the videogames entertainment market Development, publishing and marketing multichannel videogames Combining premium games and free to play games to maximise the brand profitability Acquisition of underperforming intellectual properties (i.E.
Slide 26: Appendix
3 APPENDIX OCTOBER 2018 - FINANCIALS 26 26
Slide 27: Evolution of the Videogame Market
EVOLUTION OF THE VIDEOGAME MARKET FROM TRADITIONAL RETAIL DISTRIBUTION TO DIGITAL, MOBILE & STREAMING GAAS (GAME AS A SERVICE) MULTICHANNEL MOBILE & SOCIAL Game as a service is a Gamers now access With the explosion in community game that content across the web mobile devices everyone is retains gam
Slide 28: Margin Comparison
MARGIN COMPARISON RETAIL DIGITAL RRp €49,99 €49,99 RRp VAT 20% 20% VAT DISCOUNT / COMMISSION 35% 30% DISCOUNT / COMMISSION GROSS REVENUES €27,08 €29,16 GROSS REVENUES PRICE PROTECTION & ADJ 10% 0,0% PRICE PROTECTION & ADJ NET REVENUES €24,37 €29,16 NET REVENUES COGS €6,07 -- COGS MARKETING 10% 10% M
Slide 29: Who Are Our Competitors
WHO ARE OUR COMPETITORS RETAIL PUBLISHING DIGITAL PUBLISHING F2P DEVELOPMENT FAR EAST CAPCOM FOCUS HOME INTERACTIVE FRONTIER GLU MOBILE PARADOX STARBREEZE AB THQ NORDIC AB TEAM 17 BIG BEN GROUP DIGITAL BROS SOURCE: DIGITAL BROS OCTOBER 2018 - APPENDIX 29
Slide 30: Console Developer Acquisition March 2017
CONSOLE DEVELOPER ACQUISITION MARCH 2017 KUNOS SIMULAZIONI S.R.L. ACQUISITION OF 100% OF ASSETTO CORSA DEVELOPER FOR 4.3 EUR MILLION, OF WHOM: euro 1,375,000 entirely in cash on the closing date euro 1,375,000 entirely in cash within one year from the closing date euro 1,591,500 via the issue of 150
Slide 31: Payday Rights Sold Back to Starbreeze
PAYDAY RIGHTS SOLD BACK TO STARBREEZE SOLD BACK FOR SEK 249.3 MILLION (APPROX. USD 30 MILLION) PAID IN 10.9 MILLION NEWLY ISSUED STARBREEZE B-SHARES AS A DEFERRED CONSIDERATION DIGITAL BROS WILL BENEFIT FROM A 33% REVENUE SHARE ON FUTURE PAYDAY3 UP TO 40 MILLION USD IMPACT OF THIS AGREEMENT ON THE F
Slide 32: Disposal of Pipeworks Inc.
DISPOSAL OF PIPEWORKS INC. SOLD TO NORTHEN PACIFIC GRUOP, US PRIVATE EQUITY FIRM FOR 20 MILLION US DOLLARS OF WHOM 2,5 MILLION US DOLLARS FOR 12,5% STAKE ON DECEMBER 21ST 2017, 5 MILLION US DOLLARS ON FEBRUARY 23RD 2018 FOR EXERCISING THE BUY OPTION, 12,5 MILLION US DOLLARS IN THREE ISTALLMENTS, AS
Slide 33: Terraria
TERRARIA LICENSED TO IDREAMSKY GAMES THE EXCLUSIVE RIGHTS FOR TERRARIA FOR THE CHINESE MARKET DIGITAL BROS WILL RECEIVE A 50% ROYALTY ON NET SALES IDREAMSKY GAMES IS THE LARGEST INDEPENDENT MOBILE GAME PUBLISHING PLATFORM IN CHINA LISTED ON NASDAQ (DSKY) HEADQUARTERED IN SHENZHEN MARKET CAPITALISATI
Slide 34: Portal Knights
PORTAL KNIGHTS TERRARIA MEETS MINECRAFT AND LEGEND OFZELDA INTERNALLY DEVELOPED CONCEPT AND FULLY-OWNED IP #1 SELLING GAME ON STEAM AT LAUNCH OF EARLY ACCESS END OF FEBRUARY 2016 Shenzhen ASSIGNED TO DUOYI NETWORK CO. LTD. THE EXCLUSIVE RIGHTS FOR PORTAL KNIGHTS FOR THE CHINESE MARKET. PC PREMIUM VE
Slide 35: Italian Distribution - FY 2018 Actual
ITALIAN DISTRIBUTION - FY 2018 ACTUAL €/1000 FY 2018 FY 2017 CHANGE CHANGE % GROSS REVENUES 15,443 18,464 (3,021) -16.4% NET REVENUES 13,534 16,613 (3,097) -18.5% EBITDA (57) 565 (622) n.m. EBIT (431) (116) (315) n.m. FISICAL YEAR ENDING 30TH JUNE SOURCE DIGITAL BROS DECREASE DUE TO A REDUCTION OF S
Slide 36: Other Activities - FY 2018 Actual
OTHER ACTIVITIES - FY 2018 ACTUAL €/1000 FY 2018 FY 2017 CHANGE CHANGE % GROSS REVENUES 644 863 (219) -25.3% NET REVENUES (322) 423 (101) -23.9% EBITDA (364) (1,796) 832 -46.3% EBIT (1,517) (2,175) 658 -30.2% FISICAL YEAR ENDING 30TH JUNE SOURCE DIGITAL BROS DFS FANTASFIDA SALES AND DIGITAL BROS GAM
Slide 37: Digital Bros S.p.a. Contact
Digital Bros S.p.a. Via Tor tona, 37 20144 Milano, Italia www.digitalbros.com