Ten Square Games Sa · GPW:TEN
Ten Square Games Sa — Q3 2021 Earnings Presentation
36 slides from Ten Square Games Sa's earnings presentation, Nov 23, 2021
Slide 1: Q3 2021 Results
Q3 2021 Results November 23rd, 2021
Slide 2: Q3 2021 highlights
Q3 2021 highlights
Slide 3: Q3 2021 Highlights
Q3 2021 HIGHLIGHTS Business Focus on key Significant Strategic options 1 performance 2 strategic pillars 3 events 4 review Core portfolio Q2/Q3 Bookings (PLN M) Rationale PLN +2% q-o-q PLN 155.0M 157.7M New games Q2/Q3 Adj. EBITDA* (PLN M) + project Osaka Process >10 M&A PLN +17% q-o-q PLN Analyzing
Slide 4: Portfolio performance
Portfolio performance
Slide 5: Fishing Clash performance (excl. FC China)
Fishing clash performance (excl. FC china) Bookings and marketing expenses (M PLN) 60 Bookings 50 Marketing expenses 40 M PLN 30 55.9 57.8 59.8 57.6 53.8 50.6 48.7 49.1 48.1 44.3 44.4 42.9 20 37.3 39.1 39.0 38.2 39.2 35.7 41.5 31.7 32.7 28.6 23.2 22.9 24.4 10 19.2 14.1 11.4 12.4 9.6 10.4 8.4 8.3 8.2
Slide 6: Fishing Clash after Covid-19 impact
Fishing clash after Covid-19 impact Bookings trajectory Factors currently affecting performance January 2020 POSITIVE • Team strengthening – more possibilities for further growth • Continued work on the product development • Back to new features and content development (strong roadmap) • Elevated pl
Slide 7: Fishing Clash China
Fishing clash China The Journey of Fishing Clash to China Successful Launch App store TOP sport GAMES IN CHINA (Jul – oct 2021, APP ANNIE) Team of 22 Agreement Final license FC China FTEs and New android • +1M downloads with NetEase issued Launch continued stores within 3 month development after lau
Slide 8: Hunting Clash performance
Hunting Clash performance Bookings and marketing expenses (M PLN) 12 Bookings • Bookings in Q3 2021 at a stable level, despite ca. 26% lower marketing expenses than in Q2 2021 Marketing expenses 10 • Focus in Q3 – team scale-up to 70 people, strengthening the leadership of the team and new features
Slide 9: Wild Hunt and Let's Fish – our evergreen portfolio
Wild Hunt and Let’s fish – our evergreen portfolio Bookings of evergreen titles – WH and LF (M PLN) • Evergreen portfolio team reconstruction (from ca. 50 to 22 FTEs) with members of the team relocated to core portfolio and new game development teams 4 • Bookings for evergreen portfolio slightly dec
Slide 10: Rortos Q3 2021 Snapshot
RORTOS Q3 2021 Snapshot • Acquired in June 2021, Rortos is the largest player in a highly attractive mobile flight simulation segment • 3 main live titles and 1 title under development – both commercial and military flight subgenres • Growing team of +20 FTEs based in Verona, Italy • Airline Command
Slide 11: Rortos Integration and development plan update
Rortos Integration and development plan update Q3 2021 2022 Connection with TSG’s IT Implementation of TSG • Full set-up of analytics • In-depth analysis of Rortos systems business intelligence and toolset with accurate in- game data allowing for marketing tools game data further product & growt
Slide 12: Growing product diversification
Growing product diversification Q3 2020 Q1 2021 Q3 2021 6.8% 6.3% 5.1% 1.9% 4.6% 15.9% 17.8% 77.8% 72.5% 91.3% Fishing Clash % Hunting Clash % Rortos games % Others % WG 12
Slide 13: Production pipeline update
PRODUCTION PIPELINE UPDATE Game Description / Current status Soft launch* • Zombie shooter with „clash” metagame • Development of metagame and monetization features Q2 2022 • First playable version of the game to be released to players in Q4 2021 to better prioritize production roadmap • Social base
Slide 14: Financial results
Financial results
Slide 15: Bookings breakdown and dynamics
Bookings breakdown and dynamics Bookings (M PLN) Bookings breakdown – geographies and products in Q3 2021 70 5% 60 North America 17% Europe 41% 50 Asia 40 36% Others 30 2% 20 Fishing Clash 2% 1% 5% Hunting Clash 18% 10 Rortos games Let's Fish 0 Wild Hunt 72% Feb-21 Jan-20 May-20 Jun-20 Jul-20 Sep-20
Slide 16: Operating expenses analysis
Operating expenses analysis Operating expenses excluding selling costs1 Main selling costs1 50 10% 140 100% 75% 45 6.8% 8% 80% 120 55% 55% 59% 5.0% 49% 53% 54% 40 6% 51% 60% 3.6% 3.8% 2.9% 2.6% 2.6% 3.2% 100 35 2.2% 4% 40% 30 2% 72.8 80 20% M PLN M PLN 25 0% 40.4 32.3 40.1 42.4 0% 60 33.9 20 10.7 -2
Slide 17: Standardized operating results
Standardized operating results Adjusted EBITDA Net profit IFRS 70 90 60% Adj. EBITDA 60 80 Adj. EBITDA/bookings • Adjusted EBITDA 50% 70 43.9% 43.1% 50 amounted to PLN 54.8M 41.0% 40.2% 38.5% (+17% qoq) 60 40% 34.7% 40 • Net profit is strongly M PLN M PLN 50 30.2% 30% impacted by the IFRS 40 30 58.8
Slide 18: Significant cash pool available for investment in growth
significant cash pool available for investment in growth Cash flow (M PLN) Balance sheet (M PLN) 600 fixed assets CF operating 150 cash CF investment other current assets • Rortos acquisition (PLN 400 equity 64.3 210M) financed by 100 CF financial 66.0 liabilities 82.9 107.6 cash, resulting in fixed
Slide 19: High profitability and cash generation
HIGH profitability and cash generation Profitability and Cash Flow KPIs Adjusted EBITDA Free Cash Flow - Operations Adj EBITDA/Bookings Adj EBITDA to FCF OP conversion 70 140% 123.5% • High profitability and free cash flow 60 120% generation 50 100% • Adjusted EBITDA* to Bookings 84.5% margin increa
Slide 20: Strategic overview
Strategic overview
Slide 21: Strategic options review conclusion
Strategic options review conclusion Rationale Process Outcome Comprehensive review of TSG strategy and growth options Continue pursuing current together with market leaders diversification strategy, as an entity and advisors listed on WSE >10 Look in the strategic mirror Expected by large shareholde
Slide 22: Strategy status
Strategy status 2011 2017 2020 2021 2022 2023 + The Next Big Clashes Play Sports Wroclaw Core Game More Sims Development Additional International Studios Studios Expansion Project Expansion More New Games WARSZAWA BERLIN BUCHAREST ’Osaka’ M&A More M&A Talent pool 110 215 318 500+ Dec 2017 Dec 2019 D
Slide 23: Current management focus
CURRENT management focus CORE PORTFOLIO Fishing Clash and Hunting Clash road-map execution after strengthening teams, allowing to further diversify portfolio NEW PRODUCTS Further diversification of portfolio thanks to abundant development portfolio with 4 titles planned for launch in 2022 PLATFORM I
Slide 24: Investor's calendar
Investor’s calendar Events we’re attending: • WOOD’s Winter Wonderland – Wood & Company – December 07-09th 2021 – Prague, Czech Republic Company news flow: • Q4 2021 Sales Update – early January 2022 • 2021 Full Year Financial Report – March 2022 (dates of reporting for 2022 will be published in Dec
Slide 25: Q&A session
Q&A session
Slide 26: Thank you!
Thank you! IR contact Bartłomiej Piekarski bartlomiej.piekarski@tensquaregames.com +48 667 872 742
Slide 27: Backup
backup
Slide 28: Profit and loss report
Profit and loss report Selected items of P&L in k PLN 2018 2019 Q1’20 Q2’20 Q3’20 Q4’20 2020 Q1’21 Q2’21 Q3’21 Revenues from sales 115 258 241 133 95 018 169 622 179 258 134 296 578 195 174 114 164 885 147 951 Fishing Clash 88 763 206 501 84 678 158 044 164 256 155 357 562 335 131 659 114 938 114 37
Slide 29: Balance sheet
Balance sheet Selected positions in k PLN Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 ASSETS Fixed assets 3 733 4 433 5 176 4 936 11 215 11 604 14 395 16 101 19 091 23 994 291 171 Receivables 16 249 15 652 24 012 20 737 39 282 68 383 71 349 55 165 68 550 55 690 50 624 Cash and
Slide 30: Cash flow report
Cash flow report Selected positions in k PLN Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 OPERATING ACTIVITIES Profit before tax 12 674 15 944 22 316 33 691 39 192 28 814 65 849 37 091 58 432 37 034 31 291 Total adjustments -299 -1 589 -7 197 671 -7 735 -6 675 2 219 49 366 5 172
Slide 31: Results reconciliation
Results reconciliation Q3 2021 bookings to IFRS revenues (PLN m) Q3 2021 motivation scheme non cash costs (PLN m) 9 8 Pre 2021 7 motivation scheme 6 2021-2022 motivation scheme 5 PLN m PLN m General 4 Administrative costs 3 Costs of services sold 2 Selling costs 1 0 Programme type PnL impact 31
Slide 32: Method of determining adjusted EBITDA
Method of determining adjusted EBITDA Selected items of the Profit and Loss Statement in thousand PLN Results Q3 2021 Operating profit IFRS 31 192 Amortisation +3 294 Write-down for impairment +0 EBITDA IFRS 34 486 Corrections: Non-cash impact of the incentive programs +7 695 Deferred result (unused
Slide 33: Accounting principles for revenues – IFRS 15
Accounting principles for revenues – IFRS 15 Virtual currency • Payment -> a player purchases virtual currency Payment Sales revenue • Revenue -> the player uses the virtual currency to purchase a +/ - virtual goods (e.g. rods, lure packs) Deferred revenue/ Unearned revenue • Deferred revenue -> unu
Slide 34: Marketing expenses policy
Marketing expenses policy Marketing expenses „We invest in marketing provided we get positive returns throughout user lifetime” Marketing expenses model cumulative approach • The Group invests in marketing at point „0”. Cohort acquired in this period analyzed throughout user lifetime (period „0” to
Slide 35: Rortos recognition
RORTOS RECOGNITION Separate financial statement Amount Consolidated financial statement Amount Cash payment EUR 46 696k Identified assets EUR 14 584k Discounted earn-out payments EUR 9 800k Amortisation EUR 41 912k Value of acquired shares EUR 56 496k Settlement value EUR 56 496k FX EURPLN rate at t
Slide 36: Legal disclaimer
Legal disclaimer • Neither this presentation (the “Presentation”, references to which shall be deemed to include any information which has been or may be supplied in writing or orally in connection herewith or in connection with any further enquiries) nor any copy of it nor the information contained