Modern Times Group Mtg Ab Class A · OMXSTO:MTG_A
Modern Times Group Mtg Ab Class A — Investor Day (June 2022)
79 slides from Modern Times Group Mtg Ab Class A's investor day presentation, June 2022
Slide 1: MTG Capital Markets Update 2022
MTG Capital Markets Update 2022
Slide 2: Agenda for the day
AGENDA FOR THE DAY Management Team Our strategy, vision and ambition in a fast Maria growing gaming landscape Arnd A deep-dive into MTG’s portfolio Q&A Break Maria Redin Arnd Benninghoff President & CEO EVP Gaming Optimizing growth: A deep dive into digital Christian marketing Q&A Supporting growth
Slide 3: Our vision and strategy
OUR VISION AND STRATEGY Maria Redin, President and CEO
Slide 4: A successful start to 2022
A SUCCESSFUL START TO 2022 We’ve spent 2022 so far delivering on our strategy, vision and shareholder commitments Divested ESL Gaming to Savvy Gaming Group for $1 billion, creating the Returned over SEK 3 first esports unicorn and billion to shareholders enabling the merger of through buybacks and E
Slide 5: Gaming is the entertainment of the future
Gaming is the entertainment of the future. And mobile gaming is the future of gaming… Company presentation | Modern Times Group MTG AB 5
Slide 6: Now is the time to invest in the future of entertainment
THE GAMING MARKET Now is the time to invest in the future of entertainment Gaming is part of our Young digital natives are Gaming delivers strong, culture: 97% of teenage fuelling an ever growing consistent growth with low boys, 83% of teenage girls gaming audience macro correlation and a history an
Slide 7: Gaming is the most relevant entertainment market today
THE GAMING MARKET Gaming is the most relevant entertainment market today 228 193 179 USDbn 139 144 98 123 87 107 62 67 56 Mobile 43 72 37 40 34 34 PC 32 32 26 43 43 55 54 Console 33 34 2016 2017 2018 2019 2020 2021 Global Music Global home Global Pay TV Industry 2021 and mobile market 2021 entertain
Slide 8: Both the IAP market and the mobile advertising market will continue to grow
THE GAMING MARKET Both the IAP market and the mobile advertising market will continue to grow Western European and North American Global Gaming In-app advertising market, mobile IAP market, USDbn USDbn +11% +5% +18% 31 10 26 7 18 2019 2021 2025F1 2021 2025E Source: Newzoo, Reserachdive Company prese
Slide 9: Building the best Home for Game Makers – a Gaming Village
VISION AND STRATEGY We’re building the best Home for Game Makers – a Gaming Village with an ecosystem of knowledge, skills and technology Company presentation | Modern Times Group MTG AB 9
Slide 10: MTG is now a pure-play gaming group
VISION AND STRATEGY MTG is now a pure-play gaming group • Genre-defining tower • CCG expert with evergreen IP + defense franchise developer with • World-class IP licenses with partnerships with leading global globally popular Bloons some of the biggest names in entertainment brands • BTD6 is #17 hig
Slide 11: With some of the best evergreen gaming franchises
VISION AND STRATEGY With some of the best evergreen gaming franchises MTG Strategy & simulation Word games Tower Defense Racing Other franchises Bloons TD6 Sunrise Village Rise of Cultures Bloons TD Forge of Bloons Battles Empires TD5 Lost Survivors Battles 2 Elvenar Franchise launched 2012 Franchis
Slide 12: We're building a synergetic gaming acceleration platform
VISION AND STRATEGY We’re building a synergetic gaming acceleration platform Acceleration platform Boost organic growth through synergies from internal talent, tools Diversified group and technology Reduce operational risk through diversification Single Gaming studio One/few successful IPs ACCELERAT
Slide 13: Our platform will deliver further growth and higher profitability
VISION AND STRATEGY Our platform will deliver further growth and higher profitability Evergreen IPs & Genre Audience Reach & mastery Cross-promotion Growth Consolidation & Ad-tech & Innovation & Diversification Capabilities Blockchain Company presentation | Modern Times Group MTG AB 13
Slide 14: Building a strong operating model with stable, diversified cashflow
VISION AND STRATEGY Building a strong operating model while still delivering a stable, growing and diversified cashflow Strategy Governance Reporting & Capital Culture Sustainability Central & M&A & steering accounting allocation & talent and CR Functions The Flow BI & Marketing Cross- Ad Platform –
Slide 15: The Flow Platform – shared skills and tech
VISION AND STRATEGY The Flow Platform – shared skills and tech BI & Marketing Cross- Ad Analytics & UA promotion monetization We are here Step 1 Step 2 Step 3 Within word games franchise Within all franchises Between all franchises Word Tower Racing games Defense Word games Strategy & Other simulati
Slide 16: Building a strong operating model with stable, diversified cashflow
VISION AND STRATEGY Building a strong operating model while still delivering a stable, growing and diversified cashflow Strategy Governance Reporting & Capital Culture Sustainability Central & M&A & steering accounting allocation & talent and CR Functions The Flow BI & Marketing Cross- Ad Platform –
Slide 17: Supporting our growth with strategic and accretive M&A
VISION AND STRATEGY Supporting our growth with strategic and accretive M&A Acquire studios with Focus on strong Pursue targets with Look for companies distinguishable games financials, committed synergies with the that fit our culture that are uniquely management and rest of the portfolio and values
Slide 18: Creating a home for gaming entrepreneurs to thrive and grow sustainably
CORPORATE RESPONSIBILITY AND SUSTAINABILITY Creating a home for gaming entrepreneurs to thrive and grow sustainably Inclusive & Proud & Long-term Welcoming Respectful MTG is to MTG is to be enhance a more MTG is to climate neutral diverse ensure strong workforce sustainability governance MTG is to i
Slide 19: Our growth ambition: 2x MTG
OUR GROWTH AMBITION We will create a MTG that is 2x of what it is today through an organic and inorganic strategy &A M retive ac c lue x2 th er va Fur a n ic g rowth e” / or g s “in hou o ac celerate platform t Common Strong portfolio positioned to growth 2021 2022 2023 2024 2025 Company presentatio
Slide 20: What it takes to win
WHAT IT TAKES TO WIN Arnd Benninghoff, EVP Gaming
Slide 21: A compelling business model: The F2P User Journey
OUR BUSINESS MODEL A compelling business model: The F2P User Journey Activity Commitment to Engage in Download game Engage and play & buying events and new Start playing invest time digital items content # installs Engagement # of payers Life-time value KPI/Analytics CPI Day 7/15/30 Payer conversion
Slide 22: The Gaming Value Chain – Games as a Service
OUR BUSINESS MODEL The Gaming Value Chain – "Games as a Service" (GaaS) Development Publishing and growth Monetization and retention Positioning Test (Early) Soft Launch Commercial Launch Post launch Retention Test Live Services & Optimization Product development & Innovation LiveOps: Content update
Slide 23: Gaming is based on data and BI
OUR BUSINESS MODEL Gaming is based on data and BI: A great game is only the beginning The life Dev. phase: GaaS phase: of a game Creativity & Tech Content, Feature & Monetization LTV CAC Market prices Marketing User Payer Revenue per for efficiency retention conversion paying user advertisement LTV
Slide 24: Gaming is highly stable with predictable, recurring revenues
OUR BUSINESS MODEL Gaming is highly stable with predictable, recurring revenues Forge of Empires, ARPDAU contribution breakdown from in-game purchases Events Feature #5 Breakdown ARPDAU Feature #4 Feature #3 Feature #2 Feature #1 Core game Jan’14 Jan’15 Jan’16 Jan’17 Jan’18 Jan’19 Jan’20 Jan’21 Jan’
Slide 25: Evergreen franchises are long-lived with a highly loyal fan base
OUR BUSINESS MODEL Evergreen franchises are long-lived with a highly loyal fan base Strategy & Simulation gross revenue Tower Defense gross revenue Word Games gross revenue1 Forge of Empires Sunrise Village Bloons TD5 Bloons TD6 Word Trip Word Wars Elvenar Lost Survivors Bloons TD Battles Bloons TD
Slide 26: Our portfolio
OUR PORTFOLIO We have a well diversified portfolio with a wide span of relevant genres, game play types and revenue streams Company presentation | Modern Times Group MTG AB 26
Slide 27: InnoGames: The specialist for strategy and simulation games
OUR PORTFOLIO InnoGames: The specialist for strategy and simulation games Hamburg, Germany Key franchises: Strategy and simulation Founded in 2007 Live Games in Games Development Part of MTG since 2016 ~400 employees in Dec’21 Share of group pro- forma revenue 2021, % Daily active Average users1 rev
Slide 28: Top-tier LiveOps driving game longevity
OUR PORTFOLIO Top-tier LiveOps driving game longevity, allowing for continued high UA spend Forge of Empires revenue and ad-spend cumulative Revenue, cumulative Ad-spend, cumulative Jan’12 Jan’13 Jan’14 Jan’15 Jan’16 Jan’17 Jan’18 Jan’19 Jan’20 Jan’21 Jan’22 Liveops has kept Forge of Empires The sta
Slide 29: Strong line-up of new games in or awaiting commercial launch
OUR PORTFOLIO Very strong line-up of new games being in or awaiting commercial launch Revenue from new game launches, mSEK1 19 17 Lost 14 Survivors 12 10 Sunrise 10 Village 6 5 5 3 Rise of 3 Cultures 2 1 Mar’21 Apr’21 May’21 Jun’21 Jul’21 Aug’21 Sep’21 Oct’21 Nov’21 Dec’21 Jan’22 Feb’22 Mar’22 Note:
Slide 30: Further opportunities to monetize non-payers through ads
OUR PORTFOLIO Further opportunities to monetize non-payers through ads InnoGames revenue split 2021 IAA testing (in one of the new InnoGame’s titles) Measured after 2-month runtime +60% upside IAP potential when 100% introducing ads in Control Group one of InnoGame’s new titles 2021 +60% Test Group
Slide 31: PlaySimple: A leading word games developer
OUR PORTFOLIO PlaySimple: A leading word games developer Bangalore, India Key franchise: Word games2 Founded in 2014 Live Games in Games Development Part of MTG since 2021 ~250 employees in Dec’21 Share of group pro- forma revenue 2021, % Daily active Average users1 revenue per daily active user1 No
Slide 32: Tech company with live ops strength – gaining market share
OUR PORTFOLIO Tech company with live ops strength – gaining market share Word Games genre market share PlaySimple’s market share in PlaySimple Other Word Games sub-genres, 2021 Anagram 25% Crossword 17% 10% PvP 7% 4% 18% 2019 2020 2021 Sources: Benchmarked using Data.ai Company presentation | Modern
Slide 33: In-house ad stack and cross-promotion as key strengths
OUR PORTFOLIO In-house ad stack and cross-promotion as key strenghts AdStack driving the monetization and retention across all games PlaySimple generate 8% free installs from cross- promotion Company presentation | Modern Times Group MTG AB 33
Slide 34: Hutch: Re-inventing Mobile Racing
OUR PORTFOLIO Hutch: Re-inventing Mobile Racing London, United Kingdom Key franchise: Racing Founded in 2011 Live Games in Games Development Part of MTG since 2020 ~130 employees in Dec’21 Share of group pro- forma revenue 2021, % Daily active Average users1 revenue per daily active user1 Notes: 1)
Slide 35: Fast time to market and innovating the racing genre
OUR PORTFOLIO Fast time to market and innovating the racing genre Winning Strong Strong Category concepts licensing community inventor Company presentation | Modern Times Group MTG AB 35
Slide 36: Hutch as one of the leading racing games developers
OUR PORTFOLIO Hutch as one of the leading racing games developers Highest grossing racing publishers by IAP 2021, USD1 Zynga Nintendo Electronic Arts Baidu Autonoma Pixel Federation Gameloft Huuuge Games Fingersoft 0 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000 1) Sensor Tower d
Slide 37: Ninja Kiwi: Pioneers of Tower Defense Genre
OUR PORTFOLIO Ninja Kiwi: Pioneers of Tower Defense Genre Auckland, New Zealand & Dundee, United Kingdom Key franchise: Tower Defense Live Games in Founded in 2006 Games Development Part of MTG since 2021 ~80 employees in Dec’21 Share of group pro- forma revenue 2021, % Daily active Average users1 r
Slide 38: Bloons as evergreen IP and games platform
OUR PORTFOLIO Bloons as evergreen IP and games platform Bloons franchise cumulative revenue development Bloons TD6 is ranked #17 top- Bloons TD2 Bloons TD3 Bloons TD4 Bloons Super Bloons TD5 Bloons TD Battles Bloons Super rated game of all Bloons TD6 Bloons TD Battles 2 Monkey Monkey 2 time on Steam
Slide 39: UA through organic community building
OUR PORTFOLIO UA through organic community building – turning twitch viewers into players Bloons TD6 Revenue and Streaming Twitch Channels comparison, 2021 Gross revenue Peak number of Twitch channels streaming Average number of Twitch channels streaming Jan’21 Feb’21 Mar’21 Apr’21 May’21 Jun’21 Jul
Slide 40: Kongregate: The collectable card game specialist
OUR PORTFOLIO Kongregate: The collectable card game (CCG) specialist San Francisco, USA Key titles: Founded in 2006 Live Games in Games Development Part of MTG since 2017 Excl. publishing business ~85 employees in Dec’21 Share of group pro- forma revenue 2021, % Daily active Average users1 revenue p
Slide 41: Strong track record of licensing with world class IP
OUR PORTFOLIO Strong track record of licensing with world class IP Strong in CCG Proven licensing Collaborating with first-tier IP owners capabilities such as Disney, Nickelodeon and Fox Company presentation | Modern Times Group MTG AB 41
Slide 42: Kongregate set to become a frontrunner in blockchain gaming
OUR PORTFOLIO Kongregate set to become a frontrunner in blockchain gaming Own NFT Games Web 3.0 Platform Gaming Token economy Company presentation | Modern Times Group MTG AB 42
Slide 43: An attractive portfolio of established and new games
OUR PORTFOLIO An attractive portfolio of established and new games positioned for future growth Produce Introduce Grow Establish Harvest F1 Clash Bloons TD 6 Animation Forge of Crossword Throwdown Empires Jam Rise of Cultures Sunrise Top Drives Village Word Trip Battles 2 Notes: Chart only reflects
Slide 44: MTG's Flow Platform enables gaming entrepreneurs
OUR FLOW PLATFORM MTG’s Flow Platform enables gaming entrepreneurs to access an ecosystem of knowledge, skills and technology that helps them accelerate Company presentation | Modern Times Group MTG AB 44
Slide 45: Q&A
Q&A
Slide 46: Marketing games and bringing in players that stay
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Christian Pern, CMO
Slide 47: Our industry is fun, yet a serious business
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Our industry is fun, yet a serious business What we actually do What people sometimes think we do Data Driven Games1 Performance Marketing Economic Success Notes: 1) Including all related services around the actual game Company presentation | Modern
Slide 48: Constant improvement of marketing enabling long-term growth
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Constant improvement of marketing enabling long-term growth Optimization Levers Campaign Funnel User’s Lifetime Value Placement Partner (LTV) Ad Impressions Click Through Rate (CTR) Cost per User (CPI or CPA) Creative Country Conversion Rate (CVR) Re
Slide 49: Predictability of Marketing
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Predictability of Marketing 100 Cohort Development 1st HY 2019 Share of LTV Over Lifetime PLAY 80 AD 80 2019-01 60 D 1 0 to 2019-02 % D30 High accuracy in LTV 40 from 2019-03 ±5% predictions allows for precise iction 2019-04 accuracy Pr ed ROAS estim
Slide 50: Sustainable growth with cohorts stacking up
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Sustainable growth with cohorts stacking up Contribution to monthly net revenue of Forge of Contribution to 2021 net revenues Empires per year of registration per year of registration 2022 23% 2021 31% 2020 2016 2021 2019 2017 2018 2017 2018 2016 202
Slide 51: 360° marketing automation
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY 360° marketing automation Learning Planning Reporting Concept Execution Creation Company presentation | Modern Times Group MTG AB 51
Slide 52: Platform to reduce operational costs while ensuring UA efficiency
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Platform to reduce operational costs while ensuring quality and efficiency of UA User Acquisition Games Reporting CAT F1 Clash Forge X-Selling Animation Sunrise Throwdown Village BI Marketing API Marketing Partner Ad Mon / Mediation MMP Notes: Simpli
Slide 53: Marketing Tools: CAT (Creative Administration Tool)
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Marketing Tools: CAT (Creative Administration Tool) CAT Creative Administration Tool Store, search Request Evaluate and access new performance creatives creatives of creatives Company presentation | Modern Times Group MTG AB 53
Slide 54: Company presentation | Modern Times Group MTG AB
Company presentation | Modern Times Group MTG AB 54
Slide 55: Quality of creatives is a major driver for profitable user acquisition
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Quality of creatives is a major driver for profitable user acquisition Registrations Original Variations per day1 132k Regs +110k Regs 6,000 332k€ NPP +372k€ Optimization NPP 5,000 Extending a creative’s Net Payout Potential 4,000 +100% 3,000 2,000 1
Slide 56: Marketing Tools: MAPI (Marketing API)
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Marketing Tools: MAPI (Marketing API) Marketing API Create, edit, Pull partner data analyze campaigns directly via API Campaign Automation Company presentation | Modern Times Group MTG AB 56
Slide 57: Focus on marketability increasing success rate on new games
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Focus on marketability increasing success rate on new games Positioning Test (Early) Retention Test Soft Launch Commercial Launch Proving players stick with Evaluate genre and setting, Proving marketability of the Scale the game the game and want to
Slide 58: Four pillars of the MTG Marketing Agency
MARKETING GAMES AND BRINGING IN PLAYERS THAT STAY Four pillars of the MTG Marketing Agency User Creative Tech Group BI Acquisition Production & Tools & Analytics Internal Marketing Agency supporting all group companies Company presentation | Modern Times Group MTG AB 58
Slide 59: Q&A
Q&A
Slide 60: A long-term value driven approach to M&A
A LONG-TERM VALUE DRIVEN APPROACH TO M&A Arnd Benninghoff, EVP Gaming
Slide 61: Well-defined approach to M&A
M&A STRATEGY Based on a well-defined approach to M&A we will continue adding successful game studios to our village. Company presentation | Modern Times Group MTG AB 61
Slide 62: We are attractively positioned for further M&A
M&A STRATEGY We are attractively positioned for further M&A Great Reputation Strong balance sheet Great games portfolio MTG ‘fire-power’ (SEK bn) ~11 Independence ~9 Capital & ~8 Focus Establish funding ~7 The #1 preferred Grow home for Learn Flexible Entrepreneurs and grow structures Leverage Incen
Slide 63: Proven track record of acquiring and supporting entrepreneurs
M&A STRATEGY We have a proven track record of successfully acquiring and supporting our entrepreneurs in their success journey Enterprise value (SEKm) and Multiple paid (based on LTM Q1’22) Success enablers +50% revenue growth 2.9x (2020 to Q1 2022 LTM) 10.9x 7.9x Upfront consideration Earnout consi
Slide 64: A clear M&A framework which resonates with Entrepreneurs
M&A STRATEGY We have a clear M&A framework which resonates with Entrepreneurs Company presentation | Modern Times Group MTG AB 64
Slide 65: Identified highly attractive M&A opportunities
M&A STRATEGY Based on our M&A criteria, we’ve identified highly attractive opportunities M&A funnel Market screening 300 Potential targets 50 Deal discussion 15 Company presentation | Modern Times Group MTG AB 65
Slide 66: Building a financial structure for long term growth
BUILDING A FINANCIAL STRUCTURE FOR LONG TERM GROWTH Lasse Pilgaard, CFO MTG
Slide 67: A mature approach to financial management
FINANCIAL AMBITION A corporation with a mature approach to financial management and a shareholder value-driven approach Trailing performance and new data disclosure of Revenue per major game franchise UA spend as % of revenue Cash conversion Long term outlook (2022-2025) on revenue, profitability an
Slide 68: Strong double digit growth the last 9 quarters
FINANCIAL AMBITION Strong double digit growth the last 9 quarters Revenue, Adj. EBITDA mSEK margin, % 38 1400 +10% 36 +19% 1,264 1,282 1300 34 Re-iterating guidance 1,180 1,187 32 provided as part of Q1 1200 1,165 1,115 30 1,097 1,102 1100 28 FX adjusted proforma growth for Q1 (10%) is 26 1000 976 i
Slide 69: MTG: A family of strong game franchises
FINANCIAL AMBITION MTG: A family of strong game franchises Strategy and Simulation Racing Wordgames Other smaller franchises Tower Defense YoY Growth Sequential (LTM Q1 ‘22 vs LTM Q1 22 vs LTM Q1 ’21) LTM Q4 21 +10% 4,785 4,905 4,563 4,643 4,478 4,289 1,700 -10% -2% 1,727 1,738 1,882 1,833 1,834 75%
Slide 70: Stable revenue growth from top established titles
FINANCIAL AMBITION Stable revenue growth from top established titles, with further revenue growth driven by new titles Revenue (rounded) New games Top 5 games New games revenue development mSEK Other established games (5 games) 50 70 12M runrate revenue1, mSEK 5 10 10 20 350 0 0 0 0 440 430 300 440
Slide 71: Ambition to outgrow the market with 7-10% CAGR
FINANCIAL AMBITION Looking ahead; Our ambition is to outgrow the market – growing with an est. 7-10% CAGR for the next 4 years, with new titles to account for ~20% of revenue in 2025 New Games yet to be launched 2-5% Est. MTG outperformance Proven new games Est. underlying market growth Established
Slide 72: A unique diversification of revenue
FINANCIAL AMBITION Which will create a unique diversification of revenue Type of revenue (IAP vs IAA) Platform revenue Game franchises 21% 30% 34% 36% 64% 95% 26% 34% 72% 65% 10% 10% 27% 14% 11% 9%1 15% 11% 3% 5% 7%1 2020 2022 2025 2021 2022 2025 2021 2022 2025 Browser IAP IAA Other Strategy and Sim
Slide 73: Adjusted EBITDA margin at 23-25% going forward
FINANCIAL AMBITION We estimate an adjusted EBITDA margin at 23-25% going forward (24-26% old definition) 2022-2025 avg. full year margin UA spend as percentage of decomposition revenue % 50 Revenue 48 46 UA investments 39-42% 44 42 42 Platform Fees 39 Indicative outlook 40 38 SGA OPEX 36 34 34 34 33
Slide 74: 50-60% cash conversion delivering significant cashflow
FINANCIAL AMBITION We est. 50-60% cash conversion delivering significant cashflow to shareholders or M&A 2022-2025 avg. Free cash flow composition1 Balance sheet de-levering % of revenue bSEK Adjusted EBITDA 100% ~4.9 ~2.2 ~3.0 ~3.9 CAPEX 13-17% 3-4% NWC ~0% FCF Pre Tax/ ~0.0 ~85% earn-out ~0.0 -~2.
Slide 75: Potential to double EBITDA through M&A from balance sheet only
FINANCIAL AMBITION We estimate a potential to double EBITDA through M&A from balance sheet only Free cashflow will create 11bSEK of capital ‘fire-power’ If all deployed through M&A: Potential to more than either enabling significant shareholder distributions or double EBITDA and deliver more than 14
Slide 76: Summary
Summary 2022 guidance Long term outlook (2022- New disclosure Definitions (re-iterated) items for Q2 25) Pro forma FX adjusted Pro forma growth for Q1 (FX Estimated organic Revenue growth rate (Based on actual adjusted 10%) to be indicative Revenue by major franchise 2021 FX rates) for the full year
Slide 77: To summarize the investment case
To summarize the investment case • MTG is uniquely positioned to capture above-market growth in a Fantastic market very attractive and growing market opportunity • We estimate delivering a 7-10% organic revenue CAGR, plus opportunities from M&A • MTG can utilize the reach and capabilities of it’s po
Slide 78: Q&A
Q&A
Slide 79: Thank you
Thank you