Stillfront Group Ab · OMXSTO:SF
Stillfront Group Ab — Investor Day (November 2019)
73 slides from Stillfront Group Ab's investor day presentation, Nov 27, 2019
Slide 1: Capital Markets Day
Capital Markets Day Stockholm, 27 november 2019
Slide 2: Agenda
Agenda Session 1 Session 2 13.30 Group Strategy & Overview 15.00 Dynamics of an evergreen game Jörgen Larsson, Founder & CEO Phillip Knust, CPO 14.00 Entrepreneurship, Scale and Structure 15.30 Kixeye – Pioneers of the free-to-play industry Alexis Bonte, COO Clayton Stark, CEO Kixeye 14.30 Opportuni
Slide 3: Overview & Strategy
Overview & Strategy Jörgen Larsson, Founder & CEO
Slide 4: Our growth vision: 3x revenue within 5 years
OUR GROWTH VISION 3x revenue within 5 years
Slide 5: Stillfront at the forefront of the converging gaming industry
STILLFRONT 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
Slide 6: Stillfront is unique. Proven models for acceleration.
STILLFRONT AT THE FOREFRONT OF THE CONVERGING GAMING INDUSTRY Stillfront is unique. Proven models for acceleration. A free-to-play Entrepreneurship, Leading risk/reward powerhouse Scale & Structure creation model
Slide 7: Share of revenue in top grossing by genre
SHARE OF REVENUE IN TOP 200 ESTIMATED BY DATAMAGIC DECISIVE FACTORS TO TAKE A LEADING POSITION ✓ Idea and operational leadership ✓ Size will matter even more Mid-core Casual 43% 40% ✓ Increase addressable market ✓ Genre broadening Casino ✓ Agile to consumer preferences 17% Casual and Mid-core are si
Slide 8: What does it take to be a leading free-to-play powerhouse?
BUSINESS MODEL Data & Tech & Dev Creativity capabilities What does it Evergreen IP's / franchises Live ops´ take to be a leading Free-to-play Performance marketing & publishing Powerhouse?
Slide 9: Operational model: entrepreneurship and scale & structure
OPERATIONAL MODEL ENTREPRENEURSHIP → Decentralization → Entrepreneurial Spirit → Structured Governance → Empowering Culture SCALE STRUCTURE → Positive Scaling
Slide 10: Realizing synergies
REALIZING SYNERGIES 1 Centre of excellences: Influencer Cross Performance Live ops’ group Marketing platform Marketing 12 36 studios games Data sharing Product development 600m players Payment shop Anti-fraud solution
Slide 11: From acquired to organic growth
FROM ACQUIRED TO ORGANIC GROWTH Part of Stillfront since 2016 Part of Stillfront since 2013 135% CAGR %, revenue 256% CAGR %, EBITDA 29% CAGR %, revenue 153% CAGR %, EBITDA Unique market position, Performance Engine for unique Cross platform MENA marketing strategy games publishing Platform extensio
Slide 12: Financial model – updated financial targets
FINANCIAL MODEL – UPDATED FINANCIAL TARGETS GROWTH PROFITABILITY LEVERAGE NET REVENUE ADJ. EBIT MARGIN NET DEBT / ADJ. EBITDA RATIO 4,000 ~35% <1.5x MSEK 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 4,000 MSEK by
Slide 13: Sustainability part of the model
SUSTAINABILITY PART OF THE MODEL Smart resource use 1. Framework for our decentralised business model 2. To be incorporated in core processes Creating games for all 3. Tool kit supporting the studios Living our values
Slide 14: Wake up. Kick ass. Repeat
Wake up. Kick ass. Repeat 2019-03-27
Slide 15: Stillfront Group
STILLFRONT GROUP
Slide 16: Entrepreneurship, Scale & Structure
Entrepreneurship, Scale & Structure Alexis Bonte, COO
Slide 17: We are unique
STILLFRONT´S WAY We are unique How do we scale and keep our unique entrepreneurial DNA?
Slide 18: Power to the studios!
STILLFRONT´S WAY DNA Power to the studios! An alliance of semi-autonomous studios No forced integration Scalable organization a Group a Studio of Studios Ownership Entrepreneurial DNA BUILT FOR DECENTRALIZATION Securing: speed, market proximity and agility Proven highly efficient model that is Group
Slide 19: Entrepreneurial platform
STILLFRONT´S WAY DECISION PROCESS Entrepreneurial platform Game Teams Not Hierarchal: Ownership, Empowerment, Responsibility Studio Heads Key to attracting and retaining the best entrepreneurial talent superior outcomes HQ Least powerful COO & CEO: support, governance & connecting the dots Remove ob
Slide 20: Growth acceleration engine
DISTRIBUTED III MODEL GROWTH ACCELERATION ENGINE 1. Leveraging collective intelligence: • Shared Data, Tech & Platforms • Collaborations with true alignment • Studio centers of excellence • Direct access to top talent 2. Light, agile top-talent group services & support Centre of excellences: • Group
Slide 21: Superior opportunities for continued success
BECOME A MEMBER OF THE STILLFRONT FAMILY: 4 KEY COMPETITIVE ADVANTAGES YOU RECEIVE Attractive governance and deal Best tools/services supporting models – retaining operational further growth independence Superior opportunities for continued success Broad and extensive network & Value creation and re
Slide 22: Scaling our decentralized organization with technology and tools
SCALING OUR DECENTRALIZED ORGANIZATION, WITH TECHNOLOGY AND TOOLS Stilltalent Stillrules Stillbase DISTRIBUTED GOVERNANCE BUSINESS SUPPORT OPERATIONS & MANAGEMENT AND INTELLIGENCE AND SCALING FOR ALL STUDIOS & GROUP
Slide 23: Stillbase: Powering collaboration, growth & governance
STILLBASE Powering Collaboration, Growth & Governance at Stillfront
Slide 24: Stillbase is my go-to source for information
”STILLBASE IS MY GO-TO SOURCE FOR INFORMATION”
Slide 25: Stillbase
STILLBASE STILLFRONT GRour
Slide 26: Stillbase answers most of my questions
“I’M PRETTY NEW AT STILLFRONT AND STILLBASE IS GREAT AT ANSWERING MOST OF THE QUESTIONS I HAVE”
Slide 27: Stillbase expert search
”I’M THE ONLY UI EXPERT IN OUR STUDIO, A SEARCH ON STILLBASE SHOWED ME WHO ELSE COULD HELP FROM THE STILLFRONT FAMILY”
Slide 28: Common live dashboards to drive organic growth
STILLBASE Common live dashboards to drive organic growth: • Superpower of real-time data insights • Benchmarks from 35 live games instead of 1 to 3 for individual studios
Slide 29: Common studio management dashboard views
STILLBASE Common studio management dashboard views for quick comparisons. Its not about how many KPI’s its about tracking the key ones in the correct way: • Gold for a Studio head or Game team • Powerful insights and governance tool for Group • Better quality exchanges between studios • Better quali
Slide 30: Stillfront Group
STILLFRONT GROUP
Slide 31: Slide 31
Slide 32: Dynamics of an Evergreen Game
Dynamics of an Evergreen Game Phillip Knust, CPO
Slide 33: Experience from previous projects
EXPERIENCE FROM PREVIOUS PROJECTS Followed from first concept to maturity state Launched in October 2017 Scaled to 1.9m € Bookings in September 2019 (+55% YoY)
Slide 34: What is an evergreen game?
WHAT IS AN EVERGREEN GAME? A true evergreen game is a product that has its players enjoying the game for many years. Once established, it is almost impossible to copy an evergreen.
Slide 35: Highlights of dynamics of an evergreen game
HIGHLIGHTS OF DYNAMICS OF AN EVERGREEN GAME Moats Longevity LiveOps
Slide 36: Moats
MOATS Moats Longevity LiveOps
Slide 37: Modern evergreens are always-online multiplayer games
MOATS Modern evergreens are always-online multiplayer games which are played all around the world Thousands of Massive user base from interactions all around the world in real time
Slide 38: Modern evergreens are always-online multiplayer games
MOATS Modern evergreens are always-online multiplayer games which are played all around the world Massive user base from Thousands of all around interactions the world in real time
Slide 39: Modern evergreens are always-online multiplayer games
MOATS Modern evergreens are always-online multiplayer games which are played all around the world Massive user base from Thousands of all around interactions the world in real time
Slide 40: Build on strong foundations
MOATS … build on strong foundations … Scaling Wide device coverage Analytics for data- Complex Economy systems built driven decisions and that always evolves for high load real-time triggers
Slide 41: ... and expert marketing
MOATS … and expert marketing Data driven revenue Complex Constant Source prediction targeting testing diversification
Slide 42: Longevity
LONGEVITY Moats Longevity LiveOps
Slide 43: Cater to the most valuable target audience long-term
LONGEVITY Our best Average Empire players are pay-users plays for Cater to the most 40+ 821 valuable target days* audience long-term Keep players engaged for years with ROI within 180 days: Profit in the years LiveOps afterwards *Avg lifetime of Goodgame Empire paying users who registered in 2013
Slide 44: Live Ops
LIVE OPS´ Moats Longevity Live Ops´
Slide 45: Content is king, know how to manage that
LIVE OPS´ Content is king, know how to manage that Data driven decision process Efficient content production Clever content management Events and Offers Personalized content Never stop improving
Slide 46: Live ops – events
LIVE OPS´ – EVENTS Q1 – 2019 48 days runtime 1.95m €* Q2 – 2019 66 days runtime 3.16m €* Q3 – 2019 68 days runtime 2.05m €* Total Q1-Q3 – 2019 7.17m €* *Bookings directly attributed to the Outer Realms event in Goodgame Empire and Empire: Four Kingdoms
Slide 47: Live ops – LTV-pay optimizations
LIVE OPS´ – LTV-PAY OPTIMIZATIONS LTV-Pay Day 14* +67% 18.17€ 10.90€ October 2017 October 2019 *Average lifetime value after 14 days of a single paying user in Big Farm: Mobile Harvest acquired by Facebook advertising in US
Slide 48: Live ops – new revenue streams
LIVE OPS´ - NEW REVENUE STREAMS +103% Y-o-Y >120 k€ 288 €k Monetize 259 €k 256 €k 255 €k 262 €k 266 €k non-paying users 221 €k 152 per month Only used on 118 123 In Game-Advertising deposits 132 126 116 mobile-games 178 €k 162 €k 161 €k 108 139 €k 131 €k 129 €k 72 67 63 49 >140 k€ 60 47 20,000 activ
Slide 49: Making evergreen games is very hard
Making evergreen games is very hard We need a strong group of gaming studios collaborating and sharing knowledge to succeed
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Slide 51: Introducing KIXEYE
Introducing KIXEYE ● Founded in 2007 in San Francisco ● Brought midcore gaming to the F2P market ● Created monetization mechanics now used industry-wide ● Developed live operations strategies that resulted in ultra-long term retention ● Over US$850 million in bookings so far
Slide 52: KIXEYE today
KIXEYE today ● ~150 employees, headquartered in Victoria, Canada ● Operating four live games with high profit margins ● Poised for growth through marketing and distribution ● Developing new titles following our established formulae
Slide 53: KIXEYE games - Battle Pirates
KIXEYE games - Battle Pirates ● Launched in 2011 ● High average spend across all active players ● High LTV across all installs ● Continues to convert new organic installs well ● Highest profit margin game #1 Grossing game per user on FB Lifetime Bookings over US $400mm in the portfolio
Slide 54: KIXEYE games - War Commander
KIXEYE games - War Commander ● Launched in 2012 ● Average active player has played for about four years ● Average active spender has played for almost six years ● Consistent profit margin #3 Grossing game per user on FB year after year Lifetime Bookings over US $260mm
Slide 55: KIXEYE games - Vega Conflict
KIXEYE games - Vega Conflict ● Launched in 2013 ● First cross-platform KIXEYE game, played across Facebook, kixeye.com, iOS, Android and Steam ● Consistently high player Cross-platform title that proved the KIXEYE sentiment year after year formula works on mobile.
Slide 56: KIXEYE games - Rogue Assault
KIXEYE games - Rogue Assault ● Launched in late 2016 ● Best-in-class combat, highly differentiated in graphic presentation and depth of play ● Highest revenue per spender in the portfolio First pure mobile title, highly differentiated ● 4.5 star iTunes/Google graphics and battle. Play
Slide 57: KIXEYE games - kixeye.com
KIXEYE games - kixeye.com ● Launched in 2013, not updated materially since, and no marketing spend applied (ever) ● Designed and built to host 3rd party games, but only KIXEYE games were put on the site (prior to joining Stillfront) ● Represents 20%+ of revenue for Battle Pirates and War Commander (
Slide 58: KIXEYE - looking ahead
KIXEYE - looking ahead ● Re-ignite new user acquisition ○ Vega Conflict, Battle Pirates and War Commander have not received any new UA spend for many years ● Distribution focus ○ Cross-promotion & distribution with Stillfront family partners ● Battle Pirates and War Commander on HTML5 ○ Battle Pirat
Slide 59: KIXEYE - performance marketing
KIXEYE - performance marketing ● Partnered with Goodgame Studios for all User Acquisition and performance marketing efforts ● War Commander: Rogue Assault user acquisition is underway and showing stronger metrics than KIXEYE was able to achieve on its own ● Vega Conflict user acquisition has now beg
Slide 60: KIXEYE - massive distribution
KIXEYE - massive distribution ● Partnered with Babil Games to release a culturalized version of War Commander: Rogue Assault into the Middle East and North Africa market ○ Release of this game is imminent ○ Again partnered with Goodgames for UA
Slide 61: KIXEYE - leveraging kixeye.com
KIXEYE - leveraging kixeye.com ● kixeye.com integration & promotion of Stillfront games ● Imperia Online launched ● Extremely low integration and operating cost ● When a player wants to play something new, it should be another Stillfront game!
Slide 62: KIXEYE - new games
KIXEYE - new games ● We are working on the next title, with plans for multiple new games as we move forward ● On its own, the KIXEYE formula for live ops strategy games is proven and refined over many years in the market ● The collective expertise of Stillfront Group companies adds considerably to w
Slide 63: KIXEYE
clayton@kixeye.com KIXEYE
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Slide 65: Financial Overview
Financial Overview Andreas Uddman, CFO
Slide 66: Financial development 2018-2019: strong momentum in group performance
FINANCIAL DEVELOPMENT 2018-2019 STRONG MOMENTUM IN GROUP PERFORMANCE NET REVENUE (MSEK) ADJ. EBIT* (MSEK) NET DEBT/ADJ. EBITDA RATIO 904 603 851 527 441 397 525 521 485 1782 281 386 254 254 355 1579 34% 31% 33% 1428 30% 1325 1180 1243 23% 22% 23% 1113 1,4 1,4 1,0 1,0 0,9 0,8 0,9 Q1’18 Q2’18 Q3’18 Q4
Slide 67: Financial targets from 2017 achieved in 24 months
FINANCIAL TARGETS FROM 2017 ACHIEVED IN 21 MONTHS FORMER FINANCIAL TARGETS (DECEMBER 2017) Yearly organic growth target above 246 market growth Growth ~10% Acquired 1 536 1 243 Organic growth Q3’18 LTM Q3’19 LTM EBIT* Margin Profitability >30% 21% 30% Q3’18 LTM Q3’19 LTM Net debt / Adj. EBITDA ratio
Slide 68: Financial targets achieved after 24 months
FINANCIAL TARGETS ACHIEVED AFTER 18 MONTHS FORMER FINANCIAL TARGETS (DEC 2017) Yearly organic growth target above 246 market growth Growth ~10% Acquired 1 536 1 243 Organic growth Q3’18 LTM Q3’19 LTM EBIT* Margin Profitability Are you still watching? >30% 21% Q3’18 LTM 30% Q3’19 LTM Acquired Organic
Slide 69: Financial targets 2020-2022
FINANCIAL TARGETS 2020-2022 FINANCIAL TARGETS 2020-2022 COMMENTS Net revenue 4,000 • Growth is to be achieved organically as well as through acquisitions. Growth • Last 12 months, net revenue growth of 539 MSEK, of which acquired growth was 46 percent MSEK 2022 Adj. EBIT Margin1 • The adjusted EBIT
Slide 70: Key drivers for achieving growth and profitability targets
KEY DRIVERS FOR ACHIEVING GROWTH AND PROFITABILITY TARGETS NET REVENUE, UAC DEVELOPMENT ARPMPU* Y-o-Y Net Revenue, MSEK UAC, MSEK UAC, % of Net Revenue (SEK) +7% +30% +6% +21% 517 1782 480 1579 902 873 923 826 418 1428 801 782 800 1243 1325 749 737 366 686 640 684 664 654 680 315 609 528 516 554 468
Slide 71: Key drivers behind achieving our leverage target
KEY DRIVERS BEHIND ACHIEVING OUR LEVERAGE TARGET CASH GENERATIVE PLATFORM, MSEK COMMENTS 399 386 • Highly cash generative profile evidenced by the 247 235 210 192 195 218 solid and increasing cash flow due to organic 124 160 growth and increased monetization • Cash flow from more mature products gen
Slide 72: Stillfront Group
STILLFRONT GROUP
Slide 73: Slide 73