Presentation Q1 Report May 16, 2017
Stillfront Group in brief Strong fundamentals for future development • Approximately 500.000 MAUs and 150.000 DAUs with exceptional loyalty and spending. Growing rapidly. Our Consumers • Global reach with consumers from over 100 countries • Major markets are US, Germany, MENA, France, UK and Scandinavia • Six studios in six countries in three continents Our Group • ~120 highly skilled and experienced game professionals • Combines small indie studios’ agility with the strength of a professional public structure • Strong ownership structure; • ~30% owned by active key individuals in our studios Our Owners • Key industry institutions hold significant positions. Institutional interest built for further investments • Good retail spread (~1500 shareholders) • Strong growth: CAGR 2012 – 2016 of 53% Our Performance • Solid operational profitability of 25 – 35% rolling LTM EBITDA since listing • Diversified portfolio and strong mix of studios and games render a financial stability and lowers risk Our Brands and our Publishing • Many million consumers have played our games whereof many are very loyal to our brands • Majority of current brands are long term free-to-play strategy games • ~80% of run rate revenues are from own brands and self-publishing • Unravel is published and owned by EA (one of very few chosen) 2
SelectedhighlightsQ1 report Stillfront portfolio shows strengthand stability Investments have built a strong pipeline High level of investments in Q3, Q4 and 28 consecutive Q1 have built a very strong pipeline Q1 months of ATH Solid net revenues Out of total 8 ongoing dev projects, 5 are in LTM revenues margin of SEK 30 m products to be fully launched in Q2 26% CoN had already in March revenues of our revenues are QoQ 22 % EBITDA ~ 76 % qualifying to be a Core Product growth own brands and Organic investment pace, in relation to self-published revenues, to decrease gradually from 2H Solid financial development Debt financing is being examined Net revenues rolling LTM EBITDA rolling LTM Solid performance and goodtraction- ready to gear up 100 40 40% 90 Advisors have beenengagedto investigatethe possibilities 80 30 30% 70 to issue bonds on the Nordic corporate bondmarket 60 50 20 20% 40 Would enable to accelerateM&A activities… 30 10 10% 20 …and get strong leverage on equity coming years 10 0 0 0% Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 3
Business Overview Strategy Contents Financials Outlook 2017
The gaming market is exciting but contains some specific challenges Balancing reward and risk… … is key Stillfront’s reward/risk profile • The largest entertainment market globally exceeding USD 100bn and still growing by Thrilling market ~6.6% p.a. 1 Less volatility and lower risk • Dynamic with many new areas evolving • Fragmented and unstructured market • High volatility for most companies with title Uncertainties risks, tech shifts and fast moving consumers before launches • Significant CAPEX needed with little ROI- predictability Blockbuster game? Blockbuster game? • By nature high profitability in already fairly successful products Revenues Profitable • Large number of small and product-driven launched products companies that are underexploited • Some CAPEX needed also for proven titles, but with higher ROI-predictability • Stillfrontworks systematically by utilizing the opportunities in the market to form a sound and predictable business • Multidimensional opportunities for M&A and • Stillfrontcombines small indie studios’ agility with the strength of a alliances in the existing market Consolidation professional public structure • Hard to invest without detailed industry opportunities knowledge, operational experience and • Stillfrontwould like to participate and create value in the consolidation of the personal network gaming market in the coming 3-5 years Stillfront targets a low-risk segment of the gaming industry 1) Newzoo’s “2016 Global Games Market Report” 5
Stable long life games portfolio to gear up reward/risk Launch in: 2009 Q2 2015 Q1 2016 26% of group revenues 24% of group revenues* 12% of group revenues 2% of group revenues Launched February 9, 2016 Still stable high revenues after 8 years Our highest grossing brand in 2016 New war strategy game based on Winner of 20+ awards world wide December 2016 revenues highest Life time grossing is 55 mSEK the successful Bytro engine since July 2015 and Q1’16 ATH Built for a long life similar to Fully launched in April Very strong sales Royalties in Q1 exceeding expectations Life time grossing is 94 mSEK Supremacy 1914 Total cumulative sales is 0.7 mSEK Sequel under development MAU: 66,046 DAU: 19,289 MAU: 153,565 DAU: 30,259 MAU: 15,400 DAU: 1,855 Q2 2016 Q3 2001 1987 & 1996 Q4 2014 5% of group revenues 13% of group revenues 13% of group revenues 5% of group revenues Admiral has stable revenues after 1 year Asefat Adebabat (Tank Storm) has stable 14-year life-cycle – still stable Developed in several generations Life time grossing exceeds to date 0.7 mUSD high revenues after 2.5 yrs revenues Still growing after 29 years Strong customer loyalty and ARPPU Fully mobile playable version Life time grossing exceeds to date 5mUSD Exceptional customer loyalty and ARPU MAU: 17,410 DAU: 2,514 Exceptional customer loyalty and ARPPU MAU: 31,840 DAU: 15,842 MAU: 6,834 DAU: 2,775 MAU: 19,252 DAU: 4,863 * Contains Coldwood’s total revenues which is mainly from Unravel 6
Risk goes down and financials go up – our strategy kicks in Significant development at decreased risk… …through increased diversification Revenue per game Q1 2016 Revenue per game Q1 2017 Stillfront risk-balancing achievements: Diversified platform mix with mobile growing fastest 5% 2% 5% No of studios up by 50% and no of core products up by 125% 5% 26% 5% 19% Broader geographical presence and distribution 46% 8% 12% Risk-weighted revenues and earnings increase 30% 24% 13% Rolling 12 months revenues at ATH for the 28 th consecutive month Call of War Coldwood Tank Storm Supremacy 1914 Call of War Coldwood Stillfront’s strategy has proven to work GemStone ManagerZone DragonRealms Admiral performing strong growth and margins with lower risk Supremacy 1914 ManagerZone Conflict of Nations LTM net revenue development Quarterly net revenue development per game 30 28.5% 36.1% 26% 140 25 120 20 100 80 SEKm 15 60 10 40 20 5 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0 2013 2014 2015 2016 2015 2016 2017 Supremacy 1914 ManagerZone Coldwood Call of War EBITDA margin for the full year 2015 & 2016 and for Q1 2017 Conflict of Nations GemStone DragonRealms Tank Storm Admiral GRAND TOTAL Expon. (GRAND TOTAL) 7
Business Overview Strategy Contents Financials Outlook 2017
Business strategy based on three pillars The strategy pillars have different purposes Product strategy Growth strategy Market strategy 1 2 3 P P H Publishing Portfolioof Hi Growth studios & games by leveraging L Long life cycle u i & Scalability, games Engines for E B Structure of Brands G scalability organization and X S 3 X (cross) platform Systematic M&A Untapped potential in 3 rd party Publishing Increase own Brands • Grow to higher profitability • Improve risk/reward • Improve risk/reward • Increase relevance for investors Increase gross margin • • Create scalability • Increase relevance for partners • Improve barriers of competition Stillfront’s strategy has proven to be a powerful tool for reaching new targets and achieving progress 9
Business Overview Strategy Contents Financials Outlook 2017
Strong financials Net revenue growth (SEKm) • 22% growth Q1’17 over Q4’16 • Growth mainly from +22% • Successful development for Call of War Good momentum at Simutronics • • Strong growth in Coldwood • Babil acquisition • 53% CAGR from 2012 to 2016 attributable to both organic and 24,6 30,0 acquisition growth Q4 2016 Q1 2017 Revenues and margins 12 months (SEKm) • Solid 12 month revenue and EBITDA development 120 LTM: Revenues: 100 mSEK and EBITDA: 31 mSEK • 100 • Run rate: Revenues: 120 mSEK and EBITDA: 31 mSEK 95 • Q1: Revenues: 30.0 mSEK and EBITDA: 7.7 mSEK 55 Q1 was hurt by a couple of non-regular costs • 29 34 31 31 • 0.3 mSEK related to IFRS conversion 16 • 0.4 mSEK related to acquisitions 5 2014 2015 2016 LTM Run-rate Q1 2017 Q1 2017 11
Balance Sheet • Intangible assets mainly consists of Capitalized product • development • Acquired products • Goodwill Deferred tax mainly attributable to • accumulated losses • Non-current liabilities mainly attributable to expected earn-out payments • • tax related to subsidiaries not capitalizing product development 12
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