Stillfront Group Ab · OMXSTO:SF
Stillfront Group Ab — Merger or Acquisition (January 2020)
41 slides from Stillfront Group Ab's merger presentation, January 2020
Slide 1: Acquisition of Storm8
Acquisition of Storm8 Investor presentation January 2020
Slide 2: Important information
Important information This presentation has been produced by Stillfront Group AB (publ) with registration number 556721-3078. In this presentation, "Stillfront", "Company" or "Group" refers to Stillfront Group AB (publ), or the group in which Stillfront is the parent, or a subsidiary within the grou
Slide 3: Transaction structure
Transaction structure D E A L S U M M A RY C O N T E M P L AT E D T R A N SA C T I O N ST R U C T U R E • Initial transaction consideration of USD 300m on cash and debt free basis, EV/Adj.EBIT 4.7x LTM Q3’19 Adj. EBIT Purchase price table USDm SEKm LTM Q3’19 • Cash payment of USD 225m (SEK ~2,125m)
Slide 4: Agenda
Agenda → Intro to Stillfront Intro to Storm8 Transaction Rationale Financial overview Appendix 3 Stillfront January 2020
Slide 5: Stillfront – a free-to-play power house
Stillfront – a free-to-play power house ST I L L F RO N T AT A G L A N C E G LO BA L P R E S E N C E • A global group of gaming studios in the free-to-play online strategy games genre Europe 44% • A diverse and evolving game portfolio with two common themes; loyal users and long lifecycle games • 6.
Slide 6: Our growth vision: 3x revenue within 5 years
Our growth vision 3x revenue within 5 years 5 Stillfront January 2020
Slide 7: Financial targets 2020-2022
Financial targets 2020-2022 GROWTH PROFITABILITY LEVERAGE NET REVENUE ADJ. EBIT MARGIN NET DEBT / ADJ. EBITDA RATIO 4,000 ~35% <1.5x SEKm by end of 2022 Stillfront’s growth target is to reach a Stillfront’s target is to reach an The Net debt/ Adj. EBITDA net revenue of SEK 4,000m by the end Adjusted
Slide 8: At the forefront of the converging gaming industry
At the forefront of the converging gaming industry F2P data driven and process oriented business Convergence in many Middle getting dimensions squeezed A race for market leadership Traditional AA+ downloadable games businesses 7 Stillfront January 2020
Slide 9: Proven models for acceleration
Proven models for acceleration A free-to-play Entrepreneurship, Leading risk/reward powerhouse Scale & Structure creation model 8 Stillfront January 2020
Slide 10: Market split and how to take a leading position
Market split and how to take a leading position SHARE OF REVENUE IN TOP 200 ESTIMATED BY DATAMAGIC DECISIVE FACTORS TO TAKE A LEADING POSITION Approximately 60% of Casual ✓ Idea and operational leadership consist of Puzzle / Match-3 games Mid-core Casual ✓ Size will matter even more 43% 40% ✓ Increa
Slide 11: Continuing the proven M&A track record
Continuing the proven M&A track record Stillfront’s acquisition history and process 2010 2012 2013 2014 2016 2017 2018 2019 • The process of • Stillfront Group • 51% of Bytro Labs • Acquisition of • Acquisition of Babil • Acquisition of • Acquisition of • Acquisition of founding Stillfront establish
Slide 12: From acquired to organic growth
From acquired to organic growth Part of Stillfront since 2016 Part of Stillfront since 2013 167% CAGR1 %, revenue 207% CAGR1 %, EBITDA 30% CAGR2 %, revenue 35% CAGR2 %, EBITDA Unique market position, Performance Engine for unique Cross platform MENA marketing strategy games publishing Platform exten
Slide 13: Agenda
Agenda Intro to Stillfront → Intro to Storm8 Transaction Rationale Financial overview Appendix 12 Stillfront January 2020
Slide 14: Storm8 – Leading mobile mash-up games publisher
Storm8 – Leading mobile mash-up games publisher STO R M 8 AT A G L A N C E K E Y P E RS O N N E L • Storm8 is a California-based market leading mobile game publisher with expertise within casual and puzzle / match-3 games • Founded in 2009, Storm8 has published more than 50 games across a variety of
Slide 15: A brief history of Storm8
A brief history of Storm8 +$1bn in Cumulative revenue PROVE ABILITY BUILD ON LIVE TO LAUNCH TOP OPS EXPERTISE GROSSING AND LAUNCH DEEP EXPERTISE IN GAME DEVELOPMENT LAUNCHING +50 CASUAL GAMES GAME NEW HITS • Build multiple genres S8 network • Grow the most profitable genres • Invest into R&D with a
Slide 16: Three core product groups
Three core product groups H O M E D E S I G N M A K EOV E R ! P RO P E RT Y B ROT H E RS H O M E D E S I G N LO N G TA I L G A M E S • Home Design Makeover! is a narrative mash-up match-3 • Property Brothers Home Design: IP based spin-off • Storm8 has a portfolio of ~50 long tail games puzzle game w
Slide 17: Home Design Makeover!
Home Design Makeover! → Home Design Makeover! was soft-launched in January 2018 and initiated scaling in June 2018 after Android release late May → Innovative mash-up game: narrative match-3 puzzler with design meta layer focused on players helping families transform dreams into reality with home ma
Slide 18: Home Design Makeover! KPIs
Home Design Makeover! KPIs Sep-18 I O S U S PA I D RO I Oct-18 C O M M E N TA RY 400% Nov-18 300% Dec-18 Jan-19 → Very high ROI across all 200% Feb-19 channels Mar-19 100% Apr-19 → Historical data shows 0% May-19 Jun-19 that ROI/LTV grows after current 100% ROI during Month 1 Month 2 Month 3 Month 4
Slide 19: Property Brothers Home Design
Property Brothers Home Design → Property Brothers Home Design was globally launched in June 2019 → IP based spin-off created on Home Design Makeover engine → Based on HGTV stars Drew & Jonathan Scott’s show Property Brothers, launched in 2011. In the game you help clients achieve their home design d
Slide 20: Property Brothers Home Design KPIs
Property Brothers Home Design KPIs I O S U S PA I D RO I 390% UA 335% Jun-19 $108,237 271% 276% Jul-19 $197,492 177% 186% 187% 187% 155% 102% Aug-19 $23,581 Sep-19 $25,283 Month 1 Month 2 Month 3 Month 4 A N D RO I D U S PA I D RO I UA 293% 258% Jun-19 $95,294 215% 176% 162% Jul-19 $108,221 146% 134
Slide 21: Long Tail Games
Long Tail Games → The Long Tail Games portfolio consists of ~50 games → Deep expertise in game development from launching +50 casual games between 2009 and 2017 → A diversified and profitable portfolio that is managed as a testing tool → Efficiency is driven by shared learnings/technology among port
Slide 22: Long Tail Games KPIs
Long Tail Games KPIs 4.4 4.3 R E V E N U E S ( N E T, $ M ) 3.9 3.9 3.7 3.5 3.6 3.2 3.0 3.0 2.9 2.7 2.8 2.6 2.4 2.6 2.4 2.3 2.2 2.3 2.2 Jun-18 Nov-18 Dec-18 Jun-19 Jul-18 Oct-18 Jul-19 Feb-18 Sep-18 Feb-19 Sep-19 Apr-18 Aug-18 Apr-19 Aug-19 Jan-18 Mar-18 May-18 Jan-19 Mar-19 May-19 M AU ( M ) 9.9 9.
Slide 23: Development
Development HDM / PBHD TEAM G A M E D E V E LO P M E N T Creative director UA creative designers P H I LO S O P H Y P RO C E S S Engineers Tech artists → Be open minded and challenge all UI designers QA / Release manager assumptions Idea → Passion to build for greatness -> Artists / Outsourcing Expe
Slide 24: Agenda
Agenda Intro to Stillfront Intro to Storm8 → Transaction Rationale Financial overview Appendix 23 Stillfront January 2020
Slide 25: Transaction rationale
Transaction rationale R E V E N U E E X PA N S I O N A N D SY N E RG I E S E N G I N E R E C YC L I N G → Apply each company’s expertise within marketing, e.g. Stillfront’s expertise within achieving longevity → Apply Storm8’s knowledge of mash-up on Stillfront’s game portfolio with building/progres
Slide 26: Agenda
Agenda Intro to Stillfront Intro to Storm8 Transaction Rationale → Financial overview Appendix 25 Stillfront January 2020
Slide 27: Financial highlights
Financial highlights NET REVENUE (USD MILLION) E B I T ( U S D M I L L I O N , % M A RG I N ) C O M M E N TA RY 118 → Growth in revenue and 58 profitability driven by; → HDM, soft launched in Jan-18 followed by the subsequent Android launch late May-18 and scaling in Jun-18 → Q3’19 growth is driven
Slide 28: Pro forma income statement
Pro forma income statement P R E L I M I N A RY C O M M E N TA RY P RO FO R M A I N CO M E STAT E M E N T LT M 3 0 S E P 2 0 1 9 IFRS Unaudited Stillfront Group (As reported) Storm8 (IFRS) Stillfront Group (Pro forma) → The transaction creates a much larger and diverse SEKm LTM 30 Sep 2019 LTM 30 Se
Slide 29: Pro forma balance sheet
Pro forma balance sheet P R E L I M I N A RY C O M M E N TA RY P RO FO R M A BA L A N C E S H E E T P E R 3 0 S E P 2 0 1 9 IFRS Unaudited Stillfront Group (As reported) Storm8 (IFRS) Stillfront Group (Pro forma) → Intangible assets increase with ~SEK 4bn, whereof SEKm 30 Sep 2019 30 Sep 2019 Adjust
Slide 30: Appendix
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Slide 31: Genre mashups
Genre mashups CLASSIC CLASSIC GENRE Match-3 GAME STRATEGY GAME MASHUP Lower CPI Higher CPI Lower CPI Higher short-term retention Lower short-term retention Higher short-term retention Weaker longevity Stronger longevity Stronger longevity Weaker monetization Stronger monetization Stronger monetizati
Slide 32: Use case: Empires & Puzzles by Small Giant Games
Use case Empires & Puzzles by Small Giant Games • Empires & Puzzles: Epic Match-3 is a successful mashup that combines the strengths of three genres: ○ Match-3 gameplay from Puzzle Games ○ Hero collection from RPG Games ○ Building from Strategy Games • By combining the best of multiple genres, the g
Slide 33: Rise of mashups
Rise of mashups Narrative Match-3 genre has already surpassed Classic Match-3 in terms of download volumes • The weakness of low longevity in classic match-3 titles has been addressed by combining this genre with new elements that support longevity • Stronger longevity makes a higher marketing inves
Slide 34: Storm8 approach to longevity
Storm8 approach to longevity Storm8 presents its games as narrative building experiences • Storm8 is a market leader in casual games, because it leads the trend by combining Classic Match-3 with additional genres ○ Match-3 gameplay from Puzzle Games ○ Narrative storytelling from RPGs/Adventure Games
Slide 35: Portfolio update Q3
Portfolio update Q3 Diversified portfolio: largest game represents less than 15 percent of revenue 26% 17% 57% <1% EMPIRE BRAND BIG BRAND C O R E P RO D U C T S OT H E R • Four products: Empire, Four • Three products: Big Farm, Mobile • In total 29 products • Long tail products Kingdoms, Millennium,
Slide 36: Strong revenue growth and solid profitability
Strong revenue growth and solid profitability N E T R E V E N U E , UA C D E V E LO P M E N T COMMENTS Net Revenue, MSEK UAC, MSEK UAC, % of Net Revenue 517 1,782 480 1,579 Net revenue growth of 64% YoY 418 1,428 – Strong organic growth in Nida Harb 3 and Big Farm: Mobile Harvest 366 1,243 1,325 315
Slide 37: Active User Base
Active User Base DAU ¹ Y-o-Y ’EMPIRE’ BRAND ’BIG’ BRAND CORE PRODUCTS (’000) 1,411 1,317 1,309 +37% 1,140 954 751 699 724 +180% 476 259 350 330 342 334 301 -14% 345 335 318 284 284 -18% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 MAU ² 5,874 5,881 Y-o-Y (’000) COMMENTS Q3 2019 5,342 +30% 4,770 4,098 • S
Slide 38: Paying User Base
Paying User Base MPU ¹ Y-o-Y ’EMPIRE’ BRAND ’BIG’ BRAND CORE PRODUCTS (’000) 205 211 +38% 184 192 153 87 103 +174% 71 83 38 48 44 51 48 47 -3% 67 69 67 60 61 -9% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 ARPMPU ² Y-o-Y (SEK) COMMENTS Q3 2019 +7% +30% +6% +21% 902 923 873 801 826 782 800 • Loyal paying
Slide 39: Additional KPIs (1/2)
Additional KPIs (1/2) M AU ( M I L L I O N ) 9.9 9.5 9.0 8.5 8.1 7.9 7.9 7.7 7.1 6.4 6.2 6.1 5.9 5.9 5.6 5.3 5.1 5.0 5.0 5.0 4.5 4.1 3.5 3.4 3.4 3.3 3.2 3.0 3.0 2.7 2.8 2.8 2.5 2.6 2.5 2.4 2.3 2.3 1.7 1.3 0.5 0.2 0.4 0.0 0.0 0.1 Jun-18 Nov-18 Dec-18 Jun-19 Jul-18 Jul-19 Oct-18 Feb-18 Apr-18 Sep-18 F
Slide 40: Additional KPIs (2/2)
Additional KPIs (2/2) AV E R A G E DA I LY PAY E RS ( T H O U SA N D ) 37.0 37.8 34.6 35.1 30.5 32.5 28.0 29.5 29.1 25.9 25.3 23.7 22.8 23.7 19.9 16.7 16.3 15.9 14.9 13.9 11.4 13.4 13.0 12.2 11.4 10.9 10.7 10.0 10.1 9.9 9.5 6.9 9.0 8.3 7.8 8.97.3 8.67.3 7.76.9 2.5 4.2 0.0 0.8 2.0 Jun-18 Nov-18 Dec-1
Slide 41: Stillfront Group
STILLFRONT GROUP
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