CO M PA N Y P R ES E N TAT I O N 5 . D e c e m b e r 2 0 1 9 C F O S t i a n D r a g e s e t
F U N C O M I N B R I E F T H E C O M P A N Y S E G M E N T S S U C C E S S F U L T U R N A R O U N D USDm Developer and publisher of 45 Share of revenue (2018) online games and massive open Revenue EBIT 34 35 world sandboxes for PC and consoles 50% 23 25 Founded in 1993, listed on Oslo 15 10 10 Stock Exchange since 2005 7 7 2% 5 49% Tencent acquired -5 2015 2016 2017 2018 29% in 2019 PC Console IP and sublease L O C A T I O N S A N D S T A F F G A M E S P O R T F O L I O O V E R V I E W Secret World Legends Conan Unconquered Relaunch: 2017 Release: Q2 2019 Funcom Oslo Trailer Funcom SE ZPX Employees Mutant Year Zero: Funcom Inc Road To Eden Age Of Conan 71 Release: 2018 Release: 2008 85 Trailer 30 Conan Exiles Moons of Madness Release: 2017 Release: 2019 Trailer Funcom locations Distribution/Local partners Development partners | 2
3 S T R A T E G I C S H I F T B E H I N D T H E S U C C E S S F U L T U R N A R O U N D B E F O R E T U R N A R O U N D T O D AY KGJI shipping Largest owners Internally developed, no IP ownership of Conan Publishing externally Publishing None developed games Console doubles market Console None at low cost 3-7 yr dev time 1-2 yr dev time Internal PC games Focus on 1 game 2 parallel games More launches and revenue streams, improved profitability | 3
F U N C O M I S W E L L P O S I T I O N E D I N I T S M A R K E T N I C H E S T R O N G P O S I T I O N I N M A R K E T N I C H E L A R G E A N D F A S T - G R O W I N G M A R K E T LESS COMPETITION FROM LARGER PLAYERS USD 150BN MARKET GROWING AT ~10% CAGR • Funcom’s main niche segment is open-world sandbox games Smartphone Console Downloaded/Boxed PC Tablet Browser PC 2017-2021 USDBn where larger industry players such as Blizzard, Ubisoft and EA are 180,1 180 165,9 +10.0% 10% not present 151,9 10% 150 137,9 • These players typically focus on the largest mainstream segments 18% 4% 10% 121,7 19% 10% 120 20% 10% 22% 21% 5% 22% 90 23% 24% 25% 60 27% 49% 19% 47% 44% 30 41% 36% 0 2017 2018 2019E 2020E 2021E VIDEO GAMING IS THE LARGEST ENTERTAINMENT INDUSTRY TECHNICAL BARRIERS FOR INDIE STUDIOS • Multi-player elements require highly technically skilled Relative revenues organizations as Funcom developed though MMOs • As a result, Funcom can choose niches that are too difficult for most small studios to operate within Recorded SVOD/VOD Physical Live music Cinema Consumer Video games music video home video books Source: Newzoo. | 4
B R O A D E N I N G P O R T F O L I O O F G A M E S | 5
D U N E S T R E N G T H E N I N G R E A C H T O A B R O A D S E T O F I P S E X C L U S I V E 6 Y R L I C E N S E J O I N T O P E R A T I O N F U L L Y O W N E D I P CONAN and 10+ lesser known IPs | 6
E X C L U S I V E A C C E S S T O D U N E I P H O L L Y W O O D B L O C K B U S T E R I N D E C ‘ 2 0 Exclusive six-year PC and console partnership Legendary and Warner Brothers working on high- profile film and tv adaptation with Denis Villeneuve • Dec ’20 blockbuster: 10+ Oscar winners /nominees • Sequel Dune film • TV series, Dune: The Sisterhood Funcom to publish several Dune games • Survival Open World Multiplayer • Maximizing synergies with films / tv-series | 7
T E N C E N T A C Q U I R E D 2 9 % O F F U N C O M C O M P E L L I N G T E N C E N T T H E S H A R E P U R C H A S E P A R T N E R S H I P • Highest online game • Acquired 29% of Funcom • Industry expertise revenue globally shares • Network • Strong track record • investing in growth: Riot China access • NOK 15.75/share, 22% Games, Epic, Supercell, above market price • Investor validation Ubisoft, Paradox, Frontier and Miniclip • Financially strong and • No cash infusion, shares • Strong industry reputation, growth-oriented owner bought from KGJ Capital AS no interference in operations | 8
9 Z P X A C Q U I S I T I O N - H I G H Q U A L I T Y , C O S T E F F I C I E N T D E V E L O P M E N T S T R A T E G I C R A T I O N A L E T H E C O M P A N Y T H E D E A L Game development service supplier Secures cost efficient, highly Acquisition: 50.1% of ZPX shares situated in Lisbon, Portugal skilled development capacity Consideration: EUR 150k paid as 15 talented employees at time of Independent service provider – 102 363 shares and undisclosed secures capacity, but still variable acquisition, doubled first year cash amount cost Quality and client focused attitude, range ZPX was profitable in 2018 Successfully delivered work on of clients Funcom games 2 years ahead of Cost savings first year cover acquisition purchase price MULTI-PLAYER CO-OP SHOOTER | 9
FINANCIALS | 10
H I G H E B I T D A M A R G I N S O V E R T I M E Revenue (MUSD) and EBITDA margin 12mth rolling revenue (MUSD) and EBITDA margin 40 60% 33.8 40.0 60% 52% 35 47% 52% 55%53% 50% 35.0 50% 46% 44% 43% 43% 30 39% 40% 41% 49% 30.0 23.2 40% 25 25.0 30% 30% 20 20.0 20% 22% 20% 12.6 15 15.0 10.2 10% 10% 3% 7.3 2% 10 10.0 5% -1% 4.3 3% 3% 0% 0% -6% 5.0 5 9.5 8.6 8.1 7.3 16.2 17.5 21.8 23.2 14.9 27.1 28.6 33.8 36.9 30.6 28.4 -5% 0.0 -10% 0 -10% 2013 2014 2015 2016 2017 2018 Rolling revenue Rolling EBITDA margin Revenue EBITDA • Stable high margins encouraging sign of • 2017, 2018 most profitable years to multi-launch strategy and Games as a date, turnaround successful service business model Note: Rolling revenue is sum last 12 months, rolling EBITDA margin is EBITDA margin for the last twelve months | 11
S I G N I F I C A N T C A S H P O S I T I O N D E S P I T E H I G H I N V E S T M E N T S Cash and debt (MUSD) Investments (MUSD) 5.8 5.6 20.919.919.620.3 5.3 18.3 16.5 16.3 4.1 4.3 3.6 14.2 2.9 3.0 10.3 7.8 8.5 7.7 1.4 1.2 1.4 1.2 1.4 5.1 3.7 5.2 0.4 0.2 3.4 1.0 0.0 Cash Debt • Strong cash position, 3Q19 decline due to • Growing investments game investments and currency effects Note: Debt is face value of interest-bearing debt | 12 Investments are investments in intangible assets and equipment in the relevant quarter, dominated by game development.
GAME ACTIVITIES & PIPELINE | 13
G A M E A C T I V I T I E S ( 1 ) GENRE : Survival Strategy GAMES: Anarchy Online, Age of Conan, IP : Conan The Barbarian Secret World Legends BUSINESS MODEL : Premium GENRE : MMORPG DEVELOPER : Petroglyph BUSINESS MODEL : Free-to-Play, Game as a PLATFORMS: PC Service DEVELOPER: Funcom Q3 ACTIVITY: Free update PLATFORMS: PC Q3 ACTIVITIES: Community events GENRE : Horror adventure BUSINESS MODEL : Premium DEVELOPER: Funcom PLATFORMS: PC, XBONE, PS4, Switch AFTER Q3 ACTIVITY: Switch Launch GENRE : Tactical Adventure IP : Mutant: Year Zero BUSINESS MODEL : Premium + DLC DEVELOPER : The Bearded Ladies PLATFORMS: PC, XB ONE, PS4, Switch Q3 ACTIVITIES : DLC, Switch & retail release (30 July), Epic free week | 14
G A M E A C T I V I T I E S ( 2 ) – C O N A N E X I L E S Q3 ACTIVITIES: ACTIVITIES AFTER 3Q: GENRE: IP: DEVELOPER: BUSINESS MODEL: DLC – Oct Blood & Sand DLC DLC, mounts, SFW 1 – Dec OPEN WORLD CONAN THE FUNCOM OSLO PREMIUM + DLC Steam Free Larger update 1H 2020 MULTIPLAYER BARBARIAN Weekend 1) SFW – Steam Free Weekend | 15 * Inspiration art piece, not necessarily representative of the game
M O O N S O F M A D N E S S R E L E A S E D 2 2 O C T O B E R ( A F T E R 3 Q ) P O S I T I V E T W I T C H T O P 1 0 , P O S I T I V E P S 4 & X B O N E P R E S S R E C E P T I O N P L A Y E R R E V I E W S R E L E A S E 2 1 . J A N ‘ 2 0 “Moons of Madness is a great tribute to Lovecraft's works that will immerse you in a • Good addition to broaden Funcom dark and terrifying story on the surface of portfolio Mars.” - Eurogamer Italy • PS4 and XB ONE release on 21 January “Moons of Madness is a wonderfully chilling 2020 • outing that blends horror and sci-fi to excellent More than 60,000 concurrent viewers • effect, delivering a palpable sense of dread.” Played extensively by key influencers - Gamespew like Lirik and CohhCarnage 75% positive reviews GENRE: Single-player horror/puzzle PLATFORMS : PC – XB ONE – PS4 RELEASE : PS4 - XB ONE, 21 Jan ‘20 STATUS : Released on PC | 16
N E W G A M E – D U N E O P E N - W O R L D GENRE: IP: DEVELOPMENT TIMELINE: DEVELOPER: BUSINESS MODEL: STAGE: OPEN WORLD Frank Herbert’s TBA FUNCOM OSLO PREMIUM MULTIPLAYER DUNE PRE-PRODUCTION Game as a Service | 17 * Inspiration art piece, not necessarily representative of the game
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