Second Quarter 2019 1 Interim report Q2 2019 2019-08-15 - PowerPoint PPT Presentation

Second Quarter 2019 1 Interim report Q2 2019 2019-08-15

Stillfront – a market leader in online strategy games STILLFRONT AT A GLANCE GLOBAL PRESENCE Europe 49% • A global group of gaming studios in the free-to-play online strategy games genre • A diverse and evolving game portfolio with two common themes; loyal users and long lifecycle games North Am 24% • 5.9 million monthly active users, MAUs, and 1.3 million daily active users, DAUs 1) Asia 23% Main markets by revenue are US, Germany, MENA, France and UK 1) • Africa 1% • Headquartered in Stockholm with a group of twelve studios operating in South Am 2% Australia, Bulgaria, Canada, Germany, Jordan, Malta, Romania, Sweden, United Oceania 1% States and Vietnam with a total of +600 professionals Sales 1) Offices GAME STUDIOS MASSIVE TRACK RECORD Marketing spend All time €250m 500m with high ROI 1) users to date 1) Empire € ~2bn 5.9m MAU is one of the biggest in lifetime deposits avg. # of MAUs 1) strategy games of all time 2 Note 1: Not including KIXEYE Interim report Q2 2019 2019-08-15

FINANCIAL HIGHLIGHTS Q2 Revenue growth of 46% YoY • Adjusted EBIT margin of 32% • Long term goal of > 30% Adjusted EBIT LTM reached • UAC amounted to 99 MSEK or 21% in relation to net revenue • New debt financing in place and a successfully conducted share • issue supporting further growth OPERATIONAL HIGHLIGHTS Q2 • Strong live ops in many products, further improving monetization and margins • Solid profitability on marketing campaigns • Nida Harb 3 became largest product in group portfolio in Q2 • Acquisition of Kixeye, industry leader and strategy game pioneer • Significant synergies realizing in marketing and live ops 3 Interim report Q2 2019 2019-08-15

Portfolio update Q2 All three active product areas deliver a third quarter of sequential growth 36% 18% 46% <1% EMPIRE BRAND BIG BRAND CORE PRODUCTS OTHER • In total 25 products • Long tail products Four products: Empire, Four Kingdoms, Three products: Big Farm, Mobile • • Millennium, World War 3 Harvest and Skytopia In total more than 10 products • Q2 Q2 Q2 Low potential but still contributing • Deposits¹: 208 MSEK (+133% YoY) • • Deposits¹: 163 MSEK (-1% YoY) • Deposits¹: 80 MSEK (+9% YoY) • No investments or live ops UAC: 55 MSEK (+175% YoY) • UAC: 13 MSEK (-49% YoY) UAC: 32 MSEK (-37% YoY) • • Assets can be reused • Sequential growth; 1.6% Sequential growth; 1.5% • Largest products: Nida Harb 3 (88 • • MSEK), Shakes & Fidget (29 MSEK), Strike of Nations (17 MSEK) Strong monetisation through effective Big Farm: Mobile Harvest top 3 • • live ops products YoY driving organic growth Nida Harb 3 largest Stillfront product • during Q2 Very strong EBIT contribution • Game of Trenches launched in June • 4 Note 1: Deposits are unadjusted revenues from paying users Interim report Q2 2019 2019-08-15

Active User Base DAU ¹ Y-o-Y ’EMPIRE’ BRAND ’BIG’ BRAND CORE PRODUCTS (’000) 1411 1317 +29% 1140 1021 954 751 699 +184% 246 476 259 372 350 330 342 -10% 334 403 345 335 318 284 -29% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 M AU ² Y-o-Y COMMENTS Q1 2019 (’000) +39% 5874 5881 • MAU and DAU at stable levels near ATH 4770 4237 4098 3032 3141 +213% • Slight decline in DAU QoQ expected after two global launches early in Q1 and a 969 2040 1231 higher marketing spend in Q1 1543 1514 0% 1541 1476 1396 • Game of Trenches launch not driving much impact in DAU/MAU numbers 1725 1354 1337 -24% 1254 1309 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 5 Note 1: Average unique daily active users over the quarter – pertains to online games only Interim report Q2 2019 Note 2: Average unique monthly active users over the quarter – pertains to online games only 2019-08-15

Paying User Base M PU ¹ Y-o-Y ’EMPIRE’ BRAND ’BIG’ BRAND CORE PRODUCTS (’000) 205 192 +15% 184 167 153 87 83 38 71 +122% 38 53 51 48 44 48 -10% 76 69 67 67 60 -20% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 AR PM PU ² Y-o-Y COMMENTS Q2 2019 (SEK) +24% +21% +6% +20% 902 873 • MPU slight decline in line with general DAU/MAU decline 826 801 778 782 749 728 686 684 680 664 653 654 640 • ARPMPU record levels driven by very effective live ops during Q2, over all product 554 528 areas 516 468 460 • As a consequence of lower marketing spend and stronger focus on live ops, MPU in Empire declines, compensated by higher ARPMPU Empire Big Core Total 6 Note 1: Average unique monthly paying users over the quarter – pertains to online games only Interim report Q2 2019 Note 2: Average deposits per monthly paying user over the quarter – pertains to online games only 2019-08-15

Kixeye at a glance A perfect fit with strong profitability and loyal customer base PIONEERS IN FREE-TO-PLAY GAMING KIXEYE BLOCKBUSTER IPs • Founded in 2009, Headquartered in Victoria Canada with 120 FTEs • Offices in Canada, US, Vietnam and Australia • Active in same genre as Stillfront focusing on free-to-play games • Inventors of the multi-billion dollar genre MMORTS - A fusion of PC strategy genre with in-game economy • Holds the IP’s of #1 & #3 grossing game per user on Facebook • Innovators in monetization – mechanics created by KIXEYE are used industry- Cross platform wide #1 grossing game title – KIXEYE per user on formula works on Facebook mobile POTENTIAL SYNERGIES A number of potential synergies and increased growth opportunities identified; Marketing & Distribution • Excelling live ops • #3 grossing game First pure mobile Multi platform experience • per user on title with strong growth • Complementary geographic presence Facebook potential 7 Interim report Q2 2019 2019-08-15

Strong revenue growth and solid profitability NET REVENUE, UAC DEVELOPMENT COMMENTS Net Revenue, MSEK UAC, MSEK 1579 UAC, % of Net Revenue 1428 • Strong revenue growth of 46% YoY 1325 480 1243 1180 418 366 • High profitability: EBIT margin 32%: 329 315 – UAC of 99 MSEK or 21% in relation to net revenue – Higher share of mobile revenues 59% mainly as a result of continued 361 341 342 346 320 108 99 95 76 strong revenue growth in Nida Harb 3 64 29% 29% 29% – LTM EBIT margin of 31% reaches long term financial goal for the first 24% 24% 26% 22% 21% 21% 20% time Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 LTM LTM LTM LTM LTM • Strong live ops drives improved margin – Particularly Empire live ops improved monetisation and margin ADJ. EBIT DEVELOPMENT – Continued good monetisation of strong Q1 cohorts Adj. EBIT, MSEK 482 Adj. EBIT, % of Net Revenue • The Group strongly benefits from having a diversified 153 402 portfolio: 364 128 – Leveraging both strong live ops and marketing capabilities to drive 113 31% 257 238 89 both strong growth and high profitability 28% 27% 73 35% 32% 21% 28% 27% 20% 22% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 LTM LTM LTM LTM LTM 8 Interim report Q2 2019 2019-08-15

Income statement Q2 2019 M SEK 2019 2018 C O M M EN T S Apr-Jun Apr-Jun Deposits 451 MSEK IFRS effect 19 MSEK Net revenue 480 329 Other game related revenues 10 MSEK OWC 38 35 Gross Margin 75% Other revenue 57 14 Payment providers, platform fees, royalties 122 MSEK Total 575 378 Depreciation and Amortization 43 MSEK Other operating expenses -328 -225 • PPA items 14 MSEK • Capitalized development expenses 22 MSEK Personnel expenses -76 -59 • IFRS 16 Leases and fixed assets 7 MSEK EBITDA 171 94 Items affecting comparability 26 MSEK Depreciation, amortization and write- Transaction costs related to Kixeye 20 MSEK downs -43 -31 • Revaluation of conditional contingent liabilities in other costs 60 MSEK • EBIT 128 63 Revaluation of conditional contingent liabilities in other revenues - 54 MSEK • Financial items -23 -11 Net financial items: 23 MSEK • Interest net 11 MSEK EBT 105 52 • Fx impact and non-cash items interest charge on earn-outs 6 MSEK • Non-recurring costs related to bridge facility and bond issuance 6 MSEK Taxes for the period -31 -21 Net result for the period 73 31 9 Interim report Q2 2019 2019-08-15