Slide 1: Financial Presentation June 2018
FINANCIAL PRESENTATION JUNE 2018
Slide 2: We develop, publish and market multichannel videogames
WE DEVELOP, PUBLISH AND MARKET MULTICHANNEL VIDEOGAMES 2
Slide 3: Digital Bros - A Snapshot
DIGITAL BROS - A SNAPSHOT KUNOS SIMULAZIONI S.R.L. GLOBAL COMPANY, OPERATING ACROSS THE VIDEOGAMES ENTERTAINMENT MARKET DEVELOPMENT, PUBLISHING AND MARETING MULTICHANNEL VIDEOGAMES COMBINING PREMIUM GAMES AND FREE TO PLAY GAMES TO MAXIMISE THE BRAND PROFITABILITY ACQUISITION OF UNDERPERFORMING INTEL
Slide 4: Strategic challenges in the last 5 years and the next 5
IN THE LAST 5 YEARS THE STRATEGIC CHALLENGES WE FACED: TO REDUCE THE RELIANCE ON THE ITALIAN MARKET WE NEEDED TO GROW THE BUSINESS INTERNATIONALLY TO EXPAND THE BUSINESS INTO BECOMING A GLOBALLY INTEGRATED PUBLISHING AND DEVELOPMENT COMPANY TO INCREASE SIGNIFICANTLY THE PORTION OF DIGITAL REVENUES I
Slide 5: Evolution of the Videogame Market
EVOLUTION OF THE VIDEOGAME MARKET FROM TRADITIONAL RETAIL DISTRIBUTION TO DIGITAL, MOBILE & MULTICHANNEL GAAS (GAME AS A SERVICE) MULTICHANNEL MOBILE & SOCIAL Game as a service is a Gamers now access With the explosion in mobile community game that content across the web devices everyone is now a re
Slide 6: New Releases & Investments
NEW RELEASES & 6 INVESTMENTS
Slide 7: Planned Investments
PLANNED INVESTMENTS OUR SUCCESSFUL WE ENTERED INTO THE TO INVEST FOR LARGEST INVESTMENT PRODUCTS GROWTH PLAN THROUGH STRATEGIC GENERATED CASH ACQUISITIONS AND BRAND NEW PUBLISHING DEALS IPs OWNED LARGE PUBLISHING DEALS 7
Slide 8: Significant Releases for Premium and Free to Play
SIGNIFICANT RELEASES FOR PREMIUM AND FREE TO PLAY PREMIUM DIGITAL & RETAIL OVERKILL’S THE WALKING DEAD CONTROL MEMORIES OF MARS BLOODSTAINED TBA 2018 2019 2020 GEMS OF WAR HAWKEN CHINESE FREE TO PLAY GAMES FREE TO PLAY CONSOLE AND MOBILE 8
Slide 9: IP Portfolio June 2018
IP PORTFOLIO JUNE 2018 OWNED IP LONG TERM THIRD PARTY IP AGREEMENTS TBA 9
Slide 10: Globalization & Digitalization
GLOBALIZATION & DIGITALIZATION REVENUES TREND REVENUES TREND ITALY VS INTERNATIONAL RETAIL VS DIGITAL/MOBILE 2% 16% 14% 33% 40% 49% 42% 48% 51% 62% 72% 80% 82% 86% 79% 87% 98% 86% 84% 67% 60% 58% 51% 52% 49% 38% 28% 20% 18% 14% 21% 13% 2019 2019 ITALY RETAIL INTERNATIONAL DIGITAL/MOBILE FISCAL YEAR
Slide 11: Overkill's The Walking Dead
OVERKILL’S THE WALKING DEAD SMASH HIT COMIC SERIES AND TV SHOW (14.4M AVERAGE US VIEWERSHIP SEASON 5) ALL-NEW WALKING DEAD STORYLINES WRITTEN BY ORIGINAL AUTHOR ROBERT KIRKMAN NARRATIVE-DRIVEN CO-OPERATIVE 1ST PERSON SHOOTER DEVELOPED BY STARBREEZE OVERKILL (PAYDAY2) IN AN ALL-NEW CUSTOM BUILT GAME
Slide 12: Remedy
REMEDY CINEMATIC THIRD PERSON ACTION GAME BUILT ON REMEDY’S PROPRIETARY NORTHLIGHT® TECHNOLOGY DEVELOPED BY REMEDY ENTERTAINMENT, RENOWNED DEVELOPER OF AAA VIDEO GAMES (MAX PAYNE, ALAN WAKE AND QUANTUM BREAK) EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS EXPECTED RELEASE DATE IN FY19 FOR PLAYSTATION4, XBOX
Slide 13: Bloodstained
BLOODSTAINED THE LATEST CREATION OF KOJI IGARASHI, THE FORMER SERIES PRODUCER OF CASTELVANIA FRANCHISE THE SPIRITUAL SUCCESSOR OF THE BELOVED CASTLEVANIA SERIES WHICH HAS BEEN A TOP SELLER GAME IN THE LAST TWO DECADES THE SECOND LARGEST VIDEOGAME CROWDFUNDING KICKSTARTER CAMPAIGN IN 2015 WHICH HAS R
Slide 14: Assetto Corsa
ASSETTO CORSA NEW EPISODE ASSETTO CORSA COMPETIZIONE: OFFICIAL GAME OF THE BLANCPAIN GT SERIES 3 YEARS PARTNERSHIP WITH BLANCPAIN COMPETITION FULLY LICENSED GT CARS FROM TOP MANUFACTURER: FERRARI, LAMBORGHINI, MCLAREN EARLY ACCESS ON STEAM THIS SUMMER, UNIQUE SELLING POINTS: EXTRAORDINARY LEVEL OF S
Slide 15: Hawken
HAWKEN THE MECH GENRE IS AN UNDER-SERVED GENRE THAT PRESENTS A VIABLE MARKET OPPORTUNITY WITH SIGNIFICANT UNTAPPED POTENTIAL TAKING THE SUCCESSFUL ‘MECH’ GENRE & LAYERING IT WITH STRONG F2P SYSTEMS & IMMERSIVE PVE ELEMENTS THAT WILL APPEAL TO THE MECH PLAYER BASE: COLLECT, BUILD AND CUSTOMIZE YOUR M
Slide 16: Financials
FINANCIALS 16
Slide 17: Consolidated P&L - FY2018 Q3 YTD Actual
CONSOLIDATED P&L – FY2018 Q3 YTD ACTUAL €/1000 Q3 FY2018 YTD Q3 FY2017 YTD CHANGE CHANGE% GROSS REVENUES 61,968 92,173 (30,205) -32.8% NET REVENUES 57,598 87,473 (29,875) -34.2% EBITDA 5,472 9,590 (4,118) -42.9% EBIT (246) 4,656 (4,902) n.m. EBT (154) 10,413 (10,567) n.m. NET RESULT FROM CONTINUING
Slide 18: Premium Games - FY2018 Q3 YTD Actual
PREMIUM GAMES – FY2018 Q3 YTD ACTUAL €/1000 Q3 FY2018 YTD Q3 FY2017 YTD CHANGE CHANGE% GROSS REVENUES 43,124 70,749 (27,625) -39.0% NET REVENUES 40,505 67,740 (27,235) -40.2% EBITDA 9,179 14,002 (4,823) -34.4% EBIT 5,836 12,153 (6,317) -52.0% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS PAYDAY2
Slide 19: Free to Play - FY2018 Q3 YTD Actual
FREE TO PLAY – FY2018 Q3 YTD ACTUAL €/1000 Q3 FY2018 YTD Q3 FY2017 YTD CHANGE CHANGE% GROSS REVENUES 4,188 5,845 (1,657) -28.3% NET REVENUES 4,188 5,845 (1,657) -28.3% EBITDA 520 (18) 538 n.m. EBIT (1,096) (2,065) 969 -46.9% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS GEMS OF WAR REVENUES STAB
Slide 20: Italian Distribution - FY2018 Q3 YTD Actual
ITALIAN DISTRIBUTION – FY2018 Q3 YTD ACTUAL €/1000 Q3 FY2018 YTD Q3 FY2017 YTD CHANGE CHANGE% GROSS REVENUES 14.053 14.959 (906) -6,1% NET REVENUES 12.455 13.598 (1.143) -8,4% EBITDA 1.169 1.618 (449) -27,7% EBIT 878 1.029 (151) -14,7% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS DECREASE DUE T
Slide 21: Net Financial Position Over the Last Years
NET FINANCIAL POSITION OVER THE LAST YEARS 20,00 40,00 10,00 35,00 NET FINANCIAL POSITION 0,00 30,00 (10,00) INVESTMENTS* 25,00 (20,00) 20,00 (30,00) 15,00 (40,00) 10,00 (50,00) (60,00) 5,00 (70,00) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Slide 22: Outlook
OUTLOOK EXPECTED REVENUES FOR NEXT YEAR BETWEEN EURO 145 AND EURO 190 MILLION, THANKS TO THE RELEASE OF THE BIG FY2019 PRODUCTIONS: OVERKILL’S THE WALKING DEAD, BLOODSTAINED, CONTROL LAUNCH OF MEMORIES OF MARS IN THE LAST QUARTER OF FY18 FURTHER DECREASE OF FINANCIAL NET POSITION EXPECTED DUE TO THE
Slide 23: Appendix
APPENDIX 23
Slide 24: Organization Chart
ORGANIZATION CHART FREE TO PLAY PREMIUM GAMES STUDIOS HAWKEN ENTERNTAINMENT 24
Slide 25: International Presence
INTERNATIONAL PRESENCE 180* PEOPLE WORLDWIDE HEADQUARTERS: MILAN 142.4 M CHINA SHENZHEN REVENUES 2017 FRANCE LYON GERMANY REGENSBURG ITALY MILAN SPAIN MADRID UNITED KINGDOM MILTON KEYNES UNITED STATES LOS ANGELES *MARCH 2018 25
Slide 26: Our Milestones
OUR MILESTONES 1989 2000 2007 2012 2013 2015 2017 FOUNDATION MILAN RETAIL DIGITAL MOBILE MOBILE AND STOCK PUBLISHING PUBLISHING PUBLISHING CONSOLE DEVELOPERS EXCHANGE ACQUISITION 26
Slide 27: Market Size
MARKET SIZE THE WORLDWIDE GAMES MARKET WILL REACH $180.1 BILLION BY 2021 SOURCE: NEWZOO GLOBAL GAMES MARKET REPORT, APRIL 2018 UPDATE 27
Slide 28: Who Are Our Competitors
WHO ARE OUR COMPETITORS NAME RETAIL PUBLISHING DIGITAL PUBLISHING F2P DEVELOPMENT CAPCOM Ç Ç Ç Ç FOCUS HOME INTERACTIVE Ç Ç FRONTIER Ç Ç Ç GLU MOBILE Ç Ç PARADOX Ç Ç STARBREEZE AB Ç Ç THQ NORDIC AB Ç Ç Ç DIGITAL BROS Ç Ç Ç Ç SOURCE: DIGITAL BROS MARCH 2018 28
Slide 29: Console Developer Acquisition - March 2017
CONSOLE DEVELOPER ACQUISITION - MARCH 2017 KUNOS SIMULAZIONI S.R.L. ACQUISITION OF 100% OF ASSETTO CORSA DEVELOPER FOR 4.3 EUR MILLION, OF WHOM: EURO 1,375,000 ENTIRELY IN CASH ON THE CLOSING DATE EURO 1,375,000 ENTIRELY IN CASH WITHIN ONE YEAR FROM THE CLOSING DATE EURO 1,591,500 VIA THE ISSUE OF 1
Slide 30: Payday Rights Sold Back to Starbreeze
PAYDAY RIGHTS SOLD BACK TO STARBREEZE KUNOS SIMULAZIONI S.R.L. SOLD BACK FOR SEK 249.3 MILLION (APPROX. USD 30 MILLION) PAID IN 10.9 MILLION NEWLY ISSUED STARBREEZE B-SHARES AS A DEFERRED CONSIDERATION DIGITAL BROS WILL BENEFIT FROM A 33% REVENUE SHARE ON FUTURE PAYDAY3 UP TO 40 MILLION USD IMPACT O
Slide 31: Disposal of Pipeworks Inc.
DISPOSAL OF PIPEWORKS INC. SOLD TO NORTHEN PACIFIC GRUOP, US PRIVATE EQUITY FIRM FOR 20 MILLION US DOLLARS OF WHOM 2,5 MILLION US DOLLARS FOR 12,5% STAKE ON DECEMBER 21ST 2017, 5 MILLION US DOLLARS ON FEBRUARY 23RD 2018 FOR EXERCISING THE BUY OPTION, 12,5 MILLION US DOLLARS IN THREE ISTALLMENTS, AS
Slide 32: Margin Comparison
MARGIN COMPARISON RETAIL DIGITAL 32
Slide 33: Terraria
TERRARIA LICENSED TO IDREAMSKY GAMES THE EXCLUSIVE RIGHTS FOR TERRARIA FOR THE CHINESE MARKET DIGITAL BROS WILL RECEIVE A 50% ROYALTY ON NET SALES IDREAMSKY GAMES IS THE LARGEST INDEPENDENT MOBILE GAME PUBLISHING PLATFORM IN CHINA LISTED ON NASDAQ (DSKY) HEADQUARTERED IN SHENZHEN MARKET CAPITALISATI
Slide 34: Portal Knights
PORTAL KNIGHTS TERRARIA MEETS MINECRAFT AND LEGEND OF ZELDA INTERNALLY DEVELOPED CONCEPT AND FULLY-OWNED IP #1 SELLING GAME ON STEAM AT LAUNCH OF EARLY ACCESS END OF FEBRUARY 2016 Release date: May 2017 for PC, Mobile and consoles ASSIGNED TO DUOYI NETWORK CO. LTD. THE EXCLUSIVE RIGHTS FOR PORTAL KN