STOCKHOLM, November 4th 2020 — Modern Times Group MTG AB (publ) (“MTG”) today publishes its Q3 2020 interim report. MTG’s gaming vertical continues to deliver all-time high, record-setting results, while its esports vertical remains resilient to pandemic impact and has in part successfully offset the loss of live audience events through savings and improved efficiency.
“We’re pleased to see continued strong operational performance from our gaming vertical in the third quarter, as well as high levels of engagement from the player base. InnoGames stands out in particular, delivering an all-time high Adjusted EBITDA driven primarily by Forge of Empires. Despite rollbacks of lockdown restrictions in Q3 in several countries, players in-game spending remained at elevated levels, resulting in better-than-expected growth.,” states Maria Redin in the report, her first since becoming President and CEO of MTG in September 2020.
“I’m proud of how we and our (esport) portfolio companies have adapted to the new circumstances dictated by the coronavirus pandemic. We have changed our operations, continued to successfully convert live audience events to digital only, and retained high levels of fan engagement,” she continues.
MTG’s Q3 2020 interim report highlights follows below. For the full report please see the attached file or www.mtg.com.
Record-high profit for the Group & gaming vertical
The gaming vertical delivered yet another strong quarter with record-high profit, on the back of continued strong user engagement and a return to normalized marketing spend. The positive performance was manifested through growing Average Revenue Per Daily Active User (ARPDAU) as a result of successful in-game campaigns for the InnoGames portfolio
The ongoing coronavirus pandemic continued to impact the esport vertical with several properties either being cancelled or postponed in Q3 2020. However, through good cost control and a more favorable revenue mix with a larger media component, the results were better than anticipated
Q3 2020 financial highlights
Net sales declined by 13% to SEK 912 (1,044) million where underlying net sales declined by 9 percent
Adjusted EBITDA amounted to SEK 196 (31) million, with adjustments for Items affecting comparability (IAC) of SEK 13 (-) million, Impairment of own capitalized costs of SEK 9 (-) million, Long-term incentive (LTI) programs of SEK 50 (17) million and M&A transaction costs of SEK 1 (19) million
EBITDA was SEK 124 (-5) million
Operating income (EBIT) totaled SEK 54 (-82) million
Net income from continuing operations was SEK -11 (-80) million
Basic earnings per share amounted to SEK -1.00 (-1.47)
Net cash flow from operations totaled SEK 93 (-33) million
Financial overview
(SEKm)
Q3
2020
Q3
2019
Nine
months
2020
Nine
months
2019
FY
2019
Continuing operations
Net sales
912
1,044
2,932
3,079
4,242
of which esport
234
415
885
1,196
1,712
of which gaming
679
629
2,047
1,881
2,531
of which central operations and eliminations
0
-1
0
3
0
Costs before depreciation and amortization
-788
-1,049
-2,774
-3,066
-4,352
Adjusted EBITDA 1)
196
31
342
155
239
Adjusted EBITDA margin
22%
3%
12%
5%
6%
Adjustments
-72
-36
-183
-142
-349
EBITDA
124
-5
159
13
-109
Amortization
-47
-53
-147
-143
-202
Depreciation
-23
-23
-68
-72
-96
of which PPA
-27
-30
-88
-90
-120
EBIT
54
-82
-56
-201
-407
EBIT margin
6%
-8%
-2%
-7%
-10%
Net income
-11
-80
-162
-251
-458
Basic earnings per share (SEK)
-1.00
-1.47
-4.37
-5.11
-8.19
Discontinued operations 2)
Net income
-
-43
-
15,012
14,852
Total operations
Net income
-11
-123
-162
14,761
14,394
Basic earnings per share (SEK)
-1.00
-2.08
-4.37
217.81
212.44
Net cash flow from operations
93
-33
175
-205
-188
CAPEX
80
69
166
174
239
Net sales growth y-o-y
Organic growth
-9%
2%
-5%
7%
7%
Acquisitions/divestments
-
0%
-
-1%
-1%
Changes in FX rates
-4%
4%
0%
5%
4%
Change in reported net sales
-13%
6%
-5%
10%
10%
1) See page 24 for details of adjustments to EBITDA. Alternative performance measures used in this report are explained on page 25
2) Consists of the adjusted result for NENT, Nova and Zoomin in 2019
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Guidance for H2 2020
Revenue in the esport vertical is expected to decline by approximately 27-32 (previously 30-40) percent in 2H 2020, compared with the corresponding period in 2019, as a result of the ongoing coronavirus pandemic and its impact on conducting physical live events with audiences, players and partners present. This decline is predominantly driven by most Own & Operated (O&O) and Esport Services (ESS) events being either moved online in H2 2020, postponed to 2021, or in a few instances canceled. MTG expects a return to a more normal operational performance starting from when borders are fully open, and when it is allowed to conduct large physical and live events under safe conditions.
ESL and DreamHack will continue to reduce both cost of goods and services sold and fixed costs. These savings will be at least SEK 325 (no change) million for H2 2020 vs H2 2019 and are designed to deliver operational efficiency and enhance the future potential of the operations when the current pandemic comes to an end.
Group-adjusted EBITDA for H2 2020 is expected to amount to between SEK 375–400 (earlier 250-300) million. The improvement is on the back of continued strong user engagement and successful in-game events in the gaming vertical where we continue to see a stronger momentum also post lock-down.
Financial calendar
Interim financial report Q3 2020
November 4th 2020
Interim financial report Q4 2020
February 4th 2021
Interim financial report Q1 2021
April 29th 2021
Annual General Meeting 2021
May 18th 2021
Interim financial report Q2 2021
July 20th 2021
Interim financial report Q3 2021
October 28 2021
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Conference call
MTG AB will hold a conference call at 3.00pm CET which will be hosted by President and CEO Maria Redin and CFO Lars Torstensson.
Dial in details:
Sweden +46 856 618 467
UK: +44 (0) 844 481 9752
US: +1 646 741 3167
This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 02.00pm CET on November 4th 2020.
For more information:
Oliver Carrà, Public Relations Director
Direct: +46 70 464 44 44, oliver.carra (at) mtg.com
About MTG MTG (Modern Times Group MTG AB (publ.)) (www.mtg.com) is a strategic and operational investment holding company in esports and gaming entertainment. Born in Sweden, the shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).
