Financial Presentation March 2017 We Develop, Publish and Market Multichannel Videogames
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FINANCIAL PRESENTATION MARCH 2017 WE DEVELOP, PUBLISH AND MARKET MULTICHANNEL VIDEOGAMES 2 ORGANIZATION CHART PREMIUM GAMES FREE TO PLAY ITALIAN DISTRIBUTION DIGITAL & RETAIL 3 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 4 EVOLUTION OF THE VIDEOGAME MARKET FROM TRADITIONAL RETAIL DISTRIBUTION TO DIGITAL, MOBILE & MULTICHANNEL GAAS MOBILE & SOCIAL (GAME AS A SERVICE) With the explosion in mobile Game as a service is a devices everyone is now community game that MULTICHANNEL a gamer, the size of the retains gamers through market opportunity in Social the continuous delivery of Gamers now access content across and Mobile gaming has additional contents the web through all available digital increased exponentially channels including consoles, smartphones and tablets 5 EVOLUTION OF OUR CURRENT AND FUTURE PREMIUM GAMES FY 2016 FY 2017 FY 2018 FISCAL YEAR ENDING 30TH JUNE 6 EVOLUTION OF OUR CURRENT AND FUTURE FREE TO PLAY GAMES FY 2016 FY 2017 FY 2018 FREE TO PLAY GAMES’ LIFE IS SIGNIFICANTLY LONGER THAN PREMIUM GAMES FISCAL YEAR ENDING 30TH JUNE 7 GLOBALIZATION & DIGITALIZATION REVENUES TREND REVENUES TREND ITALY VS INTERNATIONAL RETAIL VS DIGITAL/MOBILE 2% 16% 14% 33% 40% 49% 42% 62% 72% 80% 82% 85% 98% 84% 86% 67% 60% 51% 58% 38% 28% 20% 18% 15% ITALY RETAIL INTERNATIONAL DIGITAL/MOBILE FISCAL YEAR ENDING 30TH JUNE 8 CONSOLIDATED FY 2017 REVENUES ACTUAL + FORECAST BY OPERATING SEGMENT 14,5 % ITALIAN DISTRIBUTION 6,0 % STUDIO 0,7 % OTHER ACTIVITIES 70,5 % PREMIUM GAMES 8,3 % FREE TO PLAY FISCAL YEAR ENDING 30TH JUNE 9 CONSOLIDATED FY 2017 REVENUES ACTUAL + FORECAST BY COUNTRY 5,6 % GERMANY 15,2 % ITALY 4,2 % 48,0 % IBERIA NORTH AMERICA 18,8 % UK 5,7 % FRANCE 2,5 % FISCAL YEAR ENDING 30TH JUNE ASIA & PACIFIC 10 NEW RELEASES & INVESTMENTS 11 PLANNED INVESTMENTS OUR SUCCESSFUL WE ENTERED INTO THE LARGEST PRODUCTS TO INVEST FOR GROWTH INVESTMENT PLAN THROUGH GENERATED CASH STRATEGIC ACQUISITIONS AND BRAND NEW PUBLISHING DEALS 12 SIGNIFICANT RELEASES FOR PREMIUM AND FREE TO PLAY ASSETTO CORSA PORTAL KNIGHTS OVERKILL’S THE WALKING DEAD HOW TO SURVIVE 2 DISTRIBUTION DEALS BLOODSTAINED PREMIUM DIGITAL & RETAIL 2017 2018 FREE TO PLAY CONSOLE AND MOBILE BATTLE ISLANDS COMMANDERS HAWKEN PROMINENCE POKER 13 “Assetto Corsa is a shining masterpiece of virtual motorsport, a new standard for ASSETTO CORSA the future of driving simulators and an all-Italian pride” 95/100 IGN Italia CRITICALLY ACCLAIMED FULLY-LICENSED NEXT GENERATION RACING SIMULATOR #1 PC RACING ON STEAM PLATFORM – OVER 1.4 MILLION DOWNLOADS 100 FULLY LICENSED RACING CARS FROM THE WORLD’S TOP CAR MANUFACTURERS INCLUDING: FERRARI, LAMBORGHINI, MCLAREN AND PORSCHE ACQUISITION OF 100% OF THE ITALIAN DEVELOPER KUNOS SIMULAZIONI S.R.L. ACQUISITION VALUE: 4.3 EUR MILLION 14 14 PORTAL KNIGHTS TERRARIA MEETS MINECRAFT MEETS LEGEND OF ZELDA INTERNALLY DEVELOPED CONCEPT AND FULLY-OWNED IP #1 SELLING GAME ON STEAM AT LAUNCH OF EARLY ACCESS END OF FEBRUARY 2016 NUMBER OF DOWNLOAD AT 31 DECEMBER 2016: 350 K Release date: Spring 2017 for PC, Mobile and consoles 15 15 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 ENGINE EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS TO FULLY LICENSED CONSOLE GAME WITH OVERALL INVESTMENT OF USD 20 MILLION Expected release date FY 2018 for PS4 and XBOX ONE 16 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 RAISED 5.5 USD MILLIONS TO DATE FROM 65K BACKERS EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS ACROSS MULTIPLE FORMATS WITH A TOTAL INVESTMENT OF 4,4 USD MILLIONS Expected release date on the first half of 2018 for PS4, XBOX ONE, PSVita, Wii U, PC Windows, Linux and OSX 17 17 INTERNATIONAL CONSOLE RETAIL DISTRIBUTION DEALS PUBLISHED BY CHUCKLEFISH GAMES - DEVELOPED BY CONCERNEDAPE LLC RELEASE DATE APRIL 2017 FOR PS4 AND XBOX ONE DEVELOPED BY 34BIGTHINGS RELEASE DATE ON 2017 FOR PS4 AND XBOX ONE PUBLISHED BY STARBREEZE AB - DEVELOPED BY BEHAVIOUR INTERACTIVE RELEASE DATE WITHIN FY ENDING JUNE 2017 FOR PS4 AND XBOX ONE PUBLISHED BY STARBREEZE AB - DEVELOPED BY LION GAME LION RELEASE DATE SUMMER 2017 FOR PS4 AND XBOX ONE 18 HAWKEN #1 FREE-TO-PLAY MECH SHOOTER ON PC STEAM LARGE AND DEVOTED PC COMMUNITY BUILT UP OVER 3+ YEARS AVAILABLE ON PS4 AND XBOX ONE OVER 3 MILLION DOWNLOAD ON STEAM PLATFORM Released on July 2016 for PS4 and XBOX ONE 19 19 FINANCIALS 20 CONSOLIDATED P&L – FY2017 H1 ACTUALS €/1000 H1 FY 2017 H1 FY 2016 CHANGE CHANGE% GROSS REVENUES 65,142 45,290 19,853 43.84% NET REVENUES 61,689 42,893 18,796 43.82% EBITDA 7,510 2,498 5,013 n.m. EBIT 3,911 870 3,041 n.m. EBT 10,673 1,977 8,696 n.m. NET PROFIT 7,395 1,250 6,145 n.m. FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS SALES DRIVEN BY NEW PRODUCTS LAUNCHED IN F2P AND PREMIUM GAMES ROCKET LEAGUE PERSISTENTLY IN THE SALES CHART 21 PREMIUM GAMES – FY2017 H1 ACTUALS €/1000 H1 FY 2017 H1 FY 2016 CHANGE CHANGE% GROSS REVENUES 47,535 28,218 19,317 68.5% NET REVENUES 45,201 26,890 18,312 68.1% EBITDA 9,485 6,459 3,026 46.9% EBIT 8,271 5,884 2,387 40.6% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS SIGNIFICANT BOOST OF NEW PREMIUM GAMES, ASSETTO CORSA (€9.1 M), ABZU (€2.9 M) AND ROCKET LEAGUE (€14 M) CONTINUOUS FLOW OF REVENUES FROM PREVIOUS YEARS’ BLOCKBUSTERS PAYDAY 2 (€7.5 M) AND TERRARIA (€7.4 M) 22 STUDIO – FY2017 H1 ACTUALS €/1000 H1 FY 17 H1 FY 16 CHANGE CHANGE% GROSS REVENUES 2,863 916 1,947 n.m. NET REVENUES 2,863 916 1,947 n.m. EBITDA 633 49 584 n.m. EBIT 337 (252) 589 n.m. FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS FOCUS ON EXTERNAL CUSTOMERS VS INTERNAL DEVELOPMENT TRIPLED REVENUES AND INCREASED PROFITABILITY 23 ITALIAN DISTRIBUTION – FY2017 H1 ACTUALS €/1000 H1 FY 17 H1 FY 16 CHANGE CHANGE% GROSS REVENUES 10,475 13,937 (3,462) -24.8% NET REVENUES 9,581 12,913 (3,332) -25.8% EBITDA 1,497 1,284 213 16,6% EBIT 990 1,198 (208) -17.4% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS 24 FREE TO PLAY – FY2017 H1 ACTUALS €/1000 H1 FY 17 H1 FY 16 CHANGE CHANGE% GROSS REVENUES 3,866 1,883 1,983 n.m. NET REVENUES 3,866 1,883 1,983 n.m. EBITDA 114 (630) 744 n.m. EBIT (1,175) (1,126) (49) 4.4% FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS NEW PRODUCT REVENUES POSITIVELY IMPACTED H1, PROMINENCE POKER (€547 THOUSAND) AND HAWKEN (€497 THOUSAND) THE EVERLASTING GEMS OF WAR REALIZED THE BEST PERFORMANCE (€1.5 M) 25 NET FINANCIALS OVER THE LAST YEARS 10,00 35,00 0,00 30,00 (10,00) 25,00 (20,00) 20,00 (30,00) 15,00 (40,00) NET FINANCIAL ASSETS 10,00 (50,00) INVESTMENTS CASH FLOW (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 Q3 16 Q4 16 Q1 17 Q2 17 26 OUTLOOK PORTAL KNIGHTS IN PREMIUM GAMES AND BATTLE ISLANDS COMMANDERS IN F2P, FULLY OWNED GROUP’S IP, EXPECTED IN H2. OPPORTUNISTIC RETAIL PUBLISHING AGREEMENTS WILL HAVE AN IMPACT ON A SHORT-TERM BASIS STUDIO EXPECTS TO CONTINUE FOCUS ON PROJECTS FOR THIRD PARTY CUSTOMERS EXPECTED IMPROVEMENT OF ITALIAN DISTRIBUTION AND F2P SEGMENTS RESULTS IN H2 THE DFS FANTASFIDA WILL REDUCE NEGATIVE MARGINS COMPARED WITH PREVIOUS FISCAL YEAR INCREASED EXPECTATIONS AT FISCAL YEAR-END BUT STILL BELOW THE EXTRAORDINARY RESULTS OF PREVIOUS FY INCREASED NWC REQUIREMENTS IN RESPECT OF HIGHER REVENUES WILL TEMPORARILY INTERRUPT THE INCREASE OF THE NET FINANCIAL ASSETS 27 DIGITAL BROS INVESTMENT HIGHLIGHTS LEADING INDEPENDENT INTERNATIONAL PUBLISHING AND DISTRIBUTION BUSINESS. INTERNATIONAL SALES & MARKETING INFRASTRUCTURE IN PLACE. INCREASING AMOUNT OF FULLY OWNED IP BOTH IN PREMIUM (PORTAL KNIGHTS, INDIVISIBLE), F2P (BATTLE ISLAND) GROWTH BEING DRIVEN BY NEW PRODUCTS CYCLE. LAUNCH ON NEW TITLES GIVE STRONG SALES VISIBILITY (OVERKILL’S THE WALKING DEAD) GROWTH SUPPORTED BY ACQUISITION STRATEGY BASED ON AAA AND AA TITLES (OVERKILL’S THE WALKING DEAD, BLOODSTAINED) AND ALSO OPPORTUNISTIC DISTRIBUTION AGREEMENTS (DEAD BY DAYLIGHT, RAID, STARDEW VALLEY) SIGNIFICANT FREE CASHFLOW GENERATION USED TO REDUCE DEBT AND SUPPORTING DIVIDEND POLICY AND ACQUISITIONS MANAGEMENT ALIGNED WITH SHAREHOLDERS BY LONG TERM INCENTIVE PROGRAM 28 APPENDIX 29 OUR MILESTONES 1989 2000 2007 2012 2013 2015 FOUNDATION MILAN RETAIL DIGITAL MOBILE MOBILE AND STOCK PUBLISHING PUBLISHING PUBLISHING CONSOLE EXCHANGE DEVELOPER 30 INTERNATIONAL PRESENCE 245* PEOPLE WORLDWIDE GERMANY UK OREGON 110.1 M REVENUES 2016 SPAIN CHINA CALIFORNIA FRANCE *31TH DECEMBER ITALY 31 MARKET SIZE THE WORLDWIDE GAMES MARKET WILL REACH $118.6 BILLION BY 2019 $118.6Bn $112.5Bn $106.5Bn $99.6Bn 25% $91.8Bn 26% 26% 27% 4% 4% 28% 5% 5% 26% 6% 27% 28% 29% 1% 30% 1% 11% MOBILE 1% 11% MOBILE $52.5 2% 10% MOBILE $47.4 3% 10% MOBILE $42.5 Bn 9% MOBILE $36.9 Bn $30.4 Bn 34% Bn 30% 32% 24% Bn 27% 2015 2016 2017 2018 2019 SMARTPHONE TABLET HANDHELD TV/CONSOLE CASUAL WEBGAMES PC/MMO SOURCE: NEWZOO GLOBAL GAMES MARKET REPORT Q2 2016 32 CONSOLE DEVELOPER ACQUISITION - MARCH 2017 KUNOS SIMULAZIONI S.R.L.