Embracer Group Ab Class B · OMXSTO:EMBRAC_B
Embracer Group Ab Class B — Q3 FY22/23 Earnings Presentation
44 slides from Embracer Group Ab Class B's earnings presentation, February 2023
Slide 1: Q3 FY 22/23 Embracer Group Interim Report
Q3 FY 22/23 EMBRACER GROUP INTERIM REPORT OCTOBER – DECEMBER 2022
Slide 2: Disclaimer
EMBRACER GROUP – INTERIM REPORT FY 22/23 Disclamer IMPORTANT INFORMATION – PLEASE READ THE FOLLOWING BEFORE CONTINUING READING representation or warranty, express or implied, is made by the Company or any of its affiliates, directors, advisors, employees and representatives as to the accuracy, compl
Slide 3: Embracer Group at a glance
MILWAUKIE, USA (OR) SAN MATEO, USA (CA) MONTRÉAL, CANADA PARIS, FRANCE SKÖVDE, SWEDEN Embracer Group is a parent company of businesses led by entrepreneurs in PC, console, mobile and board games and other related STOCKHOLM, SWEDEN media. OPERATIVE GROUPS BERLIN, GERMANY 12 MUNICH, GERMANY TOTAL HEAD
Slide 4: Interim Report Q3 FY 22/23 Brief Summary
BRIEF SUMMARY Interim Report Q3 FY 22/23 Net Sales Group YOY GROWTH SEK 11,622m 128% Change of listing venue GROUP ORGANIC GROWTH GROUP PRO FORMA GROWTH -3% -3% On schedule for Cash flow drivers PC/Console Adjusted EBIT SEK 2,009m YOY GROWTH 78% ROI Adjusted EPS AFTER FULL DILUTION 31 AAA Partnershi
Slide 5: Continued growth
INTERIM REPORT Q3 FY 22/23 Continued growth FINANCIAL GROWTH (Q3 TTM) SEKm OPERATIONAL GROWTH TOTAL HEADCOUNT 35,000 300 16,243 16,000 6.00 16,243 33,547 30,000 14,000 INTERNAL STUDIOS 134 250 5.00 ON-GOING PROJECTS 224 216 12,000 4.59 224 25,000 200 4.00 10,000 20,000 3.71 9,524 8,000 150 150 134 3
Slide 6: 1. Segments
1. Segments
Slide 7: Operative Groups by segment
SEGMENTS Operative Groups by segment PC / CONSOLE GAMES Internal Headcount: 9,961 | Internal Studios: 98 | IP: 256 MOBILE GAMES Internal Headcount: 1,157 | Internal Studios: 11 | IP: 47 NET SALES SPLIT | Q3 FY 22/23 ADJUSTED EBIT SPLIT | Q3 FY 22/23 9% 20% ENTERTAINMENT & SERVICES 31% 28% Internal H
Slide 8: PC/Console Games
PC/Console Games NET SALES REVENUE SPLIT SEKm & ADJUSTED EBIT MARGIN BACK CATALOG SALES SEKm 4,500 3,575 2,107 2,500 50 4,000 45% 44% 45 3,500 40% 40 2,000 3,000 35% 34% 35 32% 1,500 30 2,500 26% 26% 25 ATH 2,000 1,000 20 1,500 16% 15 1,000 579 SEKm 500 10 500 5 0 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q
Slide 9: Mobile Games
Mobile Games NET SALES & ADJUSTED EBIT MARGIN NET SALES DRIVERS 2,000 50 1,759 1,545 1,573 1,488 1,441 40 1,500 Jigsaw Puzzle Nonogram.com Sudoku.com 29% 30 28% 1,000 23% 22% 19% 20 500 10 PIMD Number Match Blockudoku 0 0 Q3 Q4 Q1 Q2 Q3 FY 21/22 FY 22/23 Net sales, SEK m Adjusted EBIT, margin % Easy
Slide 10: Tabletop Games
Tabletop Games NET SALES SEKm & ADJUSTED EBIT MARGIN STRONG PIPELINE 4,500 4,146 40 4,000 35 3,500 3,247 30 3,000 2,665 25 2,500 21% 20 2,000 17% Descent and Exploding Challengers nominated for As 14% d’Or in Experienced Player Kittens VR signed with 15 1,500 13% 1,000 Saber category 10 571 500 5 0
Slide 11: Asmodee Q3 Highlights
Deep Dive Q3 Asmodee Q3 Highlights Market Net sales and Adj. EBIT Working capital and cash 1 3 5 Tabletop market stable in Solid topline performance in Inventory decreased as challenging socio-economic seasonally strongest quarter expected in Q3, unwinding is context on track 2 4 6 Tabletop games re
Slide 12: Resilient market in challenging context
Deep Dive Q3 Resilient market in challenging context In a challenging global socio-economic context, the Tabletop market shows a resilient performance with strong growth in TCG segment and moderate decline in Games against record high comparators Tabletop Mass Market (1) Q3 YTD Since pre-Covid : Tot
Slide 13: Solid P&L performance driven by TCG growth
Deep Dive Q3 Solid P&L performance driven by TCG growth and benefitting from seasonality vs Q2 Q3 YTD +28% vs Q2 ’22/23 Net Sales Net Sales +5% vs last year (1) 4,146m SEK -2% vs Q3 ’21/22 (1) 10,058m SEK +76% vs Q2 ’22/23 Adj. EBITDA Adj. EBITDA -3% vs last year (2) 928m SEK -3% vs Q3 ’21/22 (2) 1,
Slide 14: Unwinding of inventory on-track and driving strong Q3 cash generation
Deep Dive Q3 Unwinding of inventory on-track and driving strong Q3 cash generation, further expected in Q4 Reminder from Q2 Asmodee Historic Asmodee Free Seasonal unwinding of stock to year end Inventory Cycle Cashflow historic split with ~70m€ of temp effects unwinding over H1/H2 next 12 months Sea
Slide 15: Other business updates
Deep Dive Q3 Other business updates Key new releases in Q3… M&A Update • 5 active discussions underway • Solid pipeline of quality targets Asmodee strategic priorities 2023/24 • Return to high pace of new releases and novelties • Organic growth on back catalog … and strong pipeline in place for 2023
Slide 16: Entertainment & Services
Entertainment & Services NET SALES SEKm & ADJUSTED EBIT MARGIN 2,500 2,328 16 14% 14 2,000 13% 12 ATH 1,360 10 1,500 9% 8% 8% 8% 8 813 811 784 1,000 6 671 429 466 465 4% 4 3% 500 2 1% 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY20/21 FY21/22 FY22/23 Net sales Adjusted EBIT margin, % Middle-earth Enterprises |
Slide 17: Market update
SEGMENTS Market update GLOBAL VIDEO GAMES MARKET REVENUE FORECAST GLOBAL MARKET USD billion Forecast PC * Console * 211 expected to grow by expected to grow by 203 +1% +9% 193 194 179 184 144 in 2023 in 2023 Mobile * Tabletop *** expected to grow by all-time record month +5% +2% 2019 2020 2021 2022
Slide 18: 2. Financial Performance
2. Financial Performance
Slide 19: Key PNL Metrics
FINANCIAL PERFORMANCE Key PNL Metrics Q3 Q3 YOY YOY YOY SEK million FY 22/23 FY 21/22 GROWTH ORGANIC GROWTH PRO FORMA GROWTH Net sales 11,622 5,091 128% -3% -3% Net sales – PC / Console Games 3,575 2,187 64% -6% -5% Net sales – Mobile Games 1,573 1,545 2% -14% -15% Net sales – Tabletop Games 4,146 -
Slide 20: Financial development
FINANCIAL PERFORMANCE Financial development GROSS MARGIN DEVELOPMENT SEKm DEVELOPMENT OF MARKETING COSTS SEKm 12,000 120% 1,400 40% 11,622 1,200 10,000 35% 100% 1,000 733 30% 8,000 76% 76% 80% 73% 25% 66% 65% 66% 800 6,000 60% 60% 56% 60% 20% 20% 20% 600 17% 16% 4,000 15% 13% 13% 40% 400 10% 10% 2,0
Slide 21: Cash flow and investments
FINANCIAL PERFORMANCE Cash flow and investments FY22/23 FY21/22 TTM • Solid cash flow generation in the quarter driven by reduced SEK million Q3 Q3 Q3 inventory and cash inflow from notable customer contracts. Adjusted EBITDA 3,005 1,542 9,456 • Actions initiated in previous quarter to focus on work
Slide 22: Forecast
FINANCIAL PERFORMANCE Forecast WE REITERATE OUR ADJUSTED EBIT FORECAST FORECAST ADJUSTED EBIT Financial Year 22/23 SEK 8,000 – 10,000 million Financial Year 23/24 SEK 10,300 – 13,600 million • For the PC/Console Games segment, we see a continued stable performance for live game services and for our
Slide 23: Q&A
Q&A Moderated by Simon Jönsson, ABG Sundal Collier, until 10:00 CET This will be followed by Session 2: Deep Dives & Other Presentations
Slide 24: 3. Deep Dives & Other Presentations
3. Deep Dives & Other Presentations
Slide 25: We continue to build scalable corporate capabilities at the parent company
NEW COLLEAGUES AT EMBRACER GROUP AB We continue to build scalable corporate capabilities at the parent company Recent new hires 55 Headcount 9 2018 2023 Parent Company Team Global Finance Team What do we do? Corporate Finance: 26 • Administration • Consumer & IP Legal • Management • Brand & Communic
Slide 26: Careen Yapp
NEW COLLEAGUES AT EMBRACER GROUP AB Careen Yapp • Joined Embracer Group as Senior • Lead business development at group level Executive in January 2023 • Drive business synergies and • Based in Los Angeles, California collaborations across the group. • + 20 years of experience in the industry • Help
Slide 27: 224 games in the pipeline
DEEP DIVES & OTHER PRESENTATIONS 224 games in the pipeline Based on local management estimates on 15.02 2023 PROJECT / DEVELOPER SPLIT PROJECT SPLIT PER OPERATIVE GROUP 33 9 75 Porting projects / New platforms Major new DLC / New content TOTAL PROJECTS AA, A & Indie <40 SEKm 224 AA, A & Indie >40 SE
Slide 28: 94 games in the pipeline for FY 23/24
DEEP DIVES & OTHER PRESENTATIONS 94 games in the pipeline for FY 23/24 Based on local management estimates on 15.02 2023 94 PROJECTS 3063 DEVELOPERS (of 58 unannounced) 250 7 20 362 28 8 528 14 median # of developers 32 TOTAL PROJECTS 1328 42 119 30 595 152 4 # of projects # of developers AAA projec
Slide 29: 31 AAA games in the pipeline up to FY 27/28
DEEP DIVES & OTHER PRESENTATIONS 31 AAA games in the pipeline up to FY 27/28 Based on local management estimates on 15.02 2023 AAA PROJECT DEVELOPMENT STATUS AAA RELEASE WINDOW AAA PROJECTS COUNT PER OPERATIVE GROUP 8 8 5 7 5 8 1 4 4 17 9 11 6 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 Full produc
Slide 30: Project ROI (Contribution / Investment)
DEEP DIVES & OTHER PRESENTATIONS Project ROI – PC/Console PROJECT ROI (CONTRIBUTION/INVESTMENT) >100.0 • Based on reported numbers until Average title project data: 10.0 Sales 267 SEKm, Contribution 188 SEKm 31 December 2022 and Investment 77 SEKm. • Sample includes projects with sales 9.0 above SEK
Slide 31: Asmodee – a proven value accretive M&A strategy
Deep Dive Asmodee – a proven value accretive M&A strategy Value-accretive M&A acquisition strategy Dozens of IPs acquired through the acquisition of studios including iconic brands 2014 2015 2016 2017 2018 2019 2020 2021 2022 such as: Acquisition 3 3 8 2 7 8 3 5 1 IPs & Studios Local distribution In
Slide 32: Asmodee – pro-forma adjusted results reflect forward looking contribution
Deep Dive Asmodee – pro-forma adjusted results reflect forward looking contribution of the acquired asset In m€ In m€ 22% EBITDA margin EBITDA – Personnel costs Pro forma Non-recuring import duties Latest estimate Consolidated related to 2021 Pro forma Adj EBITDA Statutory acquisitions acquisitions
Slide 33: Ghost Ship Games Strategy Update
Ghost Ship Games Strategy Update Søren Lundgaard – CEO & Co-founder
Slide 34: July 2021
POST DEAL STRUCTURE EMBRACER* GROUP Ghost Ship Games will remain independent as a sister company to Coffee Stain ——
Slide 35: November 2021
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Slide 36: January 2022
ge PlayStation.Plus ath (oWmmeT (ay —e. ey oa 2 DARRAGEE Say AR } MONTHLY age =n SS For PlayStation Plus members Deep Rock Galactic Passes 10 Million Players Thanks To PlayStation Launch That's more than double the p and PC as of last November
Slide 37: February 2022
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Slide 38: April 2022
Zoom Iw im 3m 6m ty 3y_ all v sults Jan "19 Jul19 Jan ‘20 Jul'20 Jan '21 Jul'21 Jan 22
Slide 39: November 2022
November 2022 | Lifetime player count history Zoom tw Im 3m 6m ty 3y all v sul8 Jan 19 ul 19 Jan ‘20 Jul'20 Jan'21 jur21 Jan "22 sul'22 Jan'23
Slide 40: January 2023 – 2022 Year in Review
January 2023 C mame Tc | DANGER. DARKNESS. DWARVES. 2022 YEAR IN REVIEW USER BASE HAS ALMOST TRIPLED SINCE 2019 => DAU 30000 - pote) zogpan|- ea ‘eam 1,000 00 USER BASE IN 2022 ssteanon DAILY ACTIVE USERS. 113,700 (up FROM 75400 In 2021) MONTHLY ACTIVE USERS: 827,890 (up FROM 541,036 In 2021) AVERAG
Slide 41: Ghost Ship Games minority investments
Ghost Ship Games Minority investments to support the Danish gaming ecosystem Ugly Duckling Games Game-based products for the EdTech sector Half Past Yellow Indie-games for Steam and Switch Bolverk Games Specialists in VR games – working on Genotype for Quest 2
Slide 42: Ghost Ship Publishing
- ANNOUNCING - GHOST SHIP PUBLISHING OPEN FLEXIBLE SOLID DEVELOPMENT DESIGN BUSINESS Community Driven Endlessly Equal Partnerships Expandable Steam Early Access Full Transparency Worldbuilding Passion & Personal Consumer-friendly Deep Systems Business Models
Slide 43: Ghost Ship Games Strategy Update
Ghost Ship Games Strategy Update Søren Lundgaard – CEO & Co-founder
Slide 44: Q&A
a. y y Q&A Until 11:00 CET ~@\