Ten Square Games Sa · GPW:TEN
Ten Square Games Sa — Q2 2022 Earnings Presentation
31 slides from Ten Square Games Sa's earnings presentation, Sep 6, 2022
Slide 1: Q2 2022 results
Q2 2022 results September 6th, 2022
Slide 2: Q2 2022 highlights
Q2 2022 highlights
Slide 3: Q2 2022 highlights
Q2 2022 HIGHLIGHTS Market Quarterly 1 slowdown 2 performance 3 Current portfolio 4 New games Mobile game consumer Q1’22 / Q2’22 Combined bookings of TSG Bookings (PLN M) Clash portfolio (PLN M) Discontinued spending (USD bn) -13% q-o-q +28% -7% y-o-y Preparing for global launch 142.6 39.8 41.5 Prepa
Slide 4: Performance update
Performance update
Slide 5: Fishing Clash performance
Fishing clash performance Bookings and marketing expenses (PLN M, excl. FC China) 60 Bookings Marketing expenses 50 +30% 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 44.4 20 37.3 39.1 39.0 38.2 39.2 35.7 40.3 32.7 35.5 32.7 31.7 32.4 30.0 31.8 28.6 29.5 28.8 28.3 24.4 24.4
Slide 6: Hunting Clash performance
Hunting Clash performance Bookings and marketing expenses (PLN M) • 23% decrease in bookings q-o-q in Q2’22 due to 14 Bookings market conditions, lower UA and modest content Marketing expenses production • Strong recovery of bookings in Q3’22 12 • Lower UA spend in Mar’22 and Apr’22, with 11.1 11.1
Slide 7: Acquired portfolio update – Rortos
Acquired portfolio update – rortos Rortos gross bookings (PLN k) 4,000 +55% Performance of acquired studio – Rortos’ Q2’22 bookings 3,500 increased ca. 11% q-o-q, with Jul’22 and Aug’22 1 performance following the growth trend. Aug’22 bookings increased approx. 32% in comparison to May’22 3,000 2,50
Slide 8: Acquired portfolio update – Gamesture
Acquired portfolio update – gamesture Gamesture gross bookings (PLN k) Current state 2,000 +229% Strong bookings growth since investment – 1,800 1 Gamesture’s Q2’22 bookings increased approx. 46% q- o-q, with Jul’22 performance following the growth trend 1,600 Transaction 1,400 closed Robust pipelin
Slide 9: Production pipeline update
PRODUCTION PIPELINE UPDATE Expected Game Description / Current status soft launch* • After the release of the first playable version of the game in Q1’22 and internal discussions we decided to freeze the development of the game On hold • After the soft launch in Q2’22 and the resulting game metrics,
Slide 10: Stabilization in production capacity
stabilization in production capacity Headcount per team* Dec 2021 Mar 2022 Jun 2022 Game Development 297 319 315 • Headcount and cost Game Support 38 39 39 base optimized according to market conditions BI, R&D, Technology 41 51 55 • Stabilization of headcount with no significant Growth, Consumer rec
Slide 11: Financial results
Financial results
Slide 12: Bookings breakdown and dynamics
Bookings breakdown and dynamics Bookings (PLN M) Bookings breakdown – geographies and products in H1 2022 70 6% 60 North America 13% Europe 44% 50 Asia 40 38% Others 30 5% 20 Fishing Clash 6% 10 Hunting Clash 22% 0 Rortos games 68% Jan-22 Feb-21 Jun-20 Jun-22 May-22 Jan-20 May-20 Sep-20 Dec-20 Jan-2
Slide 13: Operating expenses analysis
Operating expenses analysis Operating expenses excluding selling costs1 Main selling costs1 50 9.5% 10% 100 80% 7.7% 55% 59% 90 54% 54% 54% 45 8% 47% 60% 5.0% 5.1% 80 40 6% 40% 2.6% 3.2% 70 35 4% 40.1 42.4 60 33.9 20% 30 2% 23.0 30.1 PLN M PLN M 25 0% 50 24.6 0% 11.8 20 8.5 11.0 -2% 40 -20% 5.0 15 -
Slide 14: Standardized operating results
Standardized operating results Adjusted EBITDA Net profit IFRS 80 Adj. EBITDA Adj. EBITDA/bookings 60% 60 70 • Q-o-q adjusted EBITDA in 50% 50 Q2’22 declined by 32%. 60 38.5% 40.2% Profitability in Q2’22 40% 40 50 34.8% affected by revenue decline and increased cost PLN M PLN M 30.2% 29.6% 40 30% 30
Slide 15: Strong balance sheet with significant cash pool
Strong balance sheet with significant cash pool Cash flow (M PLN) Balance sheet (M PLN) FCF conversion 77% 122% 84% 69% 127% 108% ratio 600 • Lower cash flow from 100 81.8 74.9 operations due to weaker core 66.8 400 66.0 64.3 149.3 titles performance in Q2’22, but 50 139.6 90.9 49.9 57.8 46.3 46.4 5
Slide 16: Current focus
Current focus
Slide 17: Current focus
Current focus PORTFOLIO PERFORMANCE Working on the growth of current portfolio. Recovery in July and August, but market uncertainty remains PIPELINE LAUNCH Focus on delivering a development pipeline in Q4’22. Wings of Heroes is ready for scaling globally, while Undead Clash and Fishing Masters are m
Slide 18: Expansion
Strategy status 2011 2017 2020 2021 2022 2023+ The Next Big Clashes Wroclaw More Sims Core Game Development Studios More New Games Expansion Expansion WARSAW BERLIN BUCHAREST M&A More M&A Talent pool 110 215 318 483* 517* Dec’17 Dec’19 Dec’20 Dec’21 Jun’22 MZ *Excluding Rortos and Gamesture teams 18
Slide 19: Investor's calendar
Investor’s calendar
Slide 20: Investor's calendar: company news flow
Investor’s calendar Company news flow: • Q3 2022 Sales Update – early October 2022 • Q3 2022 Financial Report – November 21st 2022 (conference on November 22nd) BP 20
Slide 21: Q&A session
Q&A session
Slide 22: Thank you!
Thank you! IR contact ir@tensquaregames.com
Slide 23: Backup
backup
Slide 24: Profit and loss report
Profit and loss report Selected positions in k PLN 2020 Q1’21 Q2’21 Q3’21 Q4’21 2021 Q1’22 Q2’22 Revenues from sales 578,195 174,114 164,885 147,951 147,095 634,045 150,335 124,143 Fishing Clash 562,335 131,659 114,983 114,371 121,868 482,882 95,827 84,385 Let’s Fish 16,478 4,208 3,711 3,110 3,445 1
Slide 25: Balance sheet
Balance sheet Selected positions in k PLN Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 ASSETS Fixed assets 11,215 11,604 14,395 16,101 19,091 23,994 291,171 298,866 320,497 326,192 Receivables 34,447 58,724 57,205 47,589 57,331 45,946 50,624 62,041 38,709 33,613 Cash and cash equivale
Slide 26: Cash flow report
Cash flow report Selected positions in k PLN Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 OPERATING ACTIVITIES Profit before tax 39,192 28,814 65,849 37,091 58,432 37,034 31,291 35,225 30,975 18,289 Total adjustments -7,735 -6,675 2,220 49,366 5,172 22,152 16,339 12,481 26,739 19,970
Slide 27: Method of determining adjusted EBITDA
Method of determining adjusted EBITDA Selected items of the Profit and Loss Statement in k PLN Results Q2 2022 Operating profit IFRS 17,444 Amortisation +3,725 Write-down for impairment +8,647 EBITDA IFRS 29,637 Corrections: Non-cash impact of the incentive programs -237 Deferred result (unused virt
Slide 28: General administrative costs and one-offs
General administrative costs and one-offs General administrative costs (PLN k) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 One-off costs MSOP 7,291 7,294 7,294 9,361 11,305 761 M&A 0 0 3,669 18 1,760 3 Croatia costs 0 0 2,054 0 0 0 Normal costs Salaries 1,872 3,097 2,284 4,117 5,463 4,675 Subsidiaries costs
Slide 29: 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 30: 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 31: 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