C O M PA N Y PRESENTATION 5. December 2019 CFO Stian Drageset FUNCOM IN BRIEF THE COMPANY SEGMENTS SUCCESSFUL TURNAROUND USDm 45 Developer and publisher of Share of revenue (2018) online games and massive open Revenue EBIT 35 34 world sandboxes for PC and consoles 50% 23 25 Founded in 1993, listed on Oslo 15 10 10 Stock Exchange since 2005 7 2% 7 5 49% Tencent acquired -5 2015 2016 2017 2018 29% in 2019 PC Console IP and sublease LOCATIONS AND STAFF GAMES PORTFOLIO OVERVIEW Conan Unconquered Secret World Legends Relaunch: 2017 Funcom Oslo Release: Q2 2019 Funcom SE Trailer ZPX Funcom Inc Employees Mutant Year Zero: 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 STRATEGIC SHIFT BEHIND THE SUCCESSFUL TURNAROUND BEFORE TURNAROUND TODAY Largest owners KGJI shipping 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 FUNCOM IS WELL POSITIONED IN ITS MARKET NICHE STRONG POSITION IN MARKET NICHE LARGE AND FAST - GROWING MARKET LESS COMPETITION FROM LARGER PLAYERS USD 150BN MARKET GROWING AT ~10% CAGR • Funcom’s main niche segment is open-world sandbox games USDBn Smartphone Console Downloaded/Boxed PC Tablet Browser PC 2017-2021 where larger industry players such as Blizzard, Ubisoft and EA are 180 180,1 165,9 10% +10.0% not present 151,9 150 10% 137,9 10% 18% 4% • These players typically focus on the largest mainstream segments 121,7 10% 19% 120 20% 10% 21% 22% 5% 22% 90 23% 24% 25% 60 27% 47% 49% 19% 30 44% 36% 41% 0 2017 2018 2019E 2020E 2021E TECHNICAL BARRIERS FOR INDIE STUDIOS VIDEO GAMING IS THE LARGEST ENTERTAINMENT INDUSTRY • Multi-player elements require highly technically skilled Relative organizations as Funcom developed though MMOs revenues • 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 BROADENING PORTFOLIO OF GAMES | 5 DUNE STRENGTHENING REACH TO A BROAD SET OF IPS EXCLUSIVE 6YR LICENSE JOINT OPERATION FULLY OWNED IP CONAN and 10+ lesser known IPs | 6 EXCLUSIVE ACCESS TO DUNE IP HOLLYWOOD BLOCKBUSTER IN DEC ‘20 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 TENCENT ACQUIRED 29% OF FUNCOM COMPELLING TENCENT THE SHARE PURCHASE PARTNERSHIP • Highest online game • Acquired 29% of Funcom • Industry expertise revenue globally shares • Network • Strong track record investing in growth: Riot • NOK 15.75/share, 22% • China access 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 no interference in bought from KGJ Capital AS operations | 8 9 ZPX ACQUISITION - HIGH QUALITY, COST EFFICIENT DEVELOPMENT STRATEGIC RATIONALE THE COMPANY T H E D E A L Secures cost efficient, highly Game development service supplier Acquisition: 50.1% of ZPX shares skilled development capacity situated in Lisbon, Portugal Consideration: EUR 150k paid as Independent service provider – 15 talented employees at time of 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 HIGH EBITDA MARGINS OVER TIME Revenue (MUSD) and EBITDA margin 12mth rolling revenue (MUSD) and EBITDA margin 40 60% 33.8 40.0 60% 35 52% 50% 52% 55% 47% 53% 35.0 46% 50% 30 43% 44% 43% 39% 40% 30.0 41% 49% 40% 25 23.2 30% 25.0 30% 20 20.0 20% 22% 20% 15 12.6 10.2 15.0 10% 10% 10 7.3 10.0 2% 3% 5% -1% 4.3 3% 3% 5 0% 5.0 -6% 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 0 -10% 0.0 -10% 2013 2014 2015 2016 2017 2018 Rolling revenue Rolling EBITDA margin Revenue EBITDA • 2017, 2018 most profitable years to • Stable high margins encouraging sign of date, turnaround successful multi-launch strategy and Games as a service business model Note: Rolling revenue is sum last 12 months, rolling EBITDA margin is EBITDA margin for the last twelve months | 11 SIGNIFICANT CASH POSITION DESPITE HIGH INVESTMENTS Cash and debt (MUSD) Investments (MUSD) 5.8 20.9 5.6 19.919.620.3 5.3 18.3 16.5 16.3 4.1 4.3 3.6 14.2 3.0 10.3 2.9 7.8 8.5 7.7 5.1 1.4 1.4 1.2 1.4 1.2 3.7 5.2 1.0 3.4 0.4 0.2 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 GAME ACTIVITIES (1) GENRE: Survival Strategy GAMES: Anarchy Online, Age of Conan, Secret World Legends IP: Conan The Barbarian GENRE: MMORPG BUSINESS MODEL: Premium BUSINESS MODEL: Free-to-Play, Game as a DEVELOPER: Petroglyph Service PLATFORMS: PC 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 GAME ACTIVITIES (2) – CONAN EXILES Q3 ACTIVITIES: GENRE: IP: ACTIVITIES AFTER 3Q: DEVELOPER: BUSINESS MODEL: DLC – Oct Blood & Sand DLC 1 OPEN WORLD CONAN THE DLC, mounts, SFW – Dec 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 MOONS OF MADNESS RELEASED 22 OCTOBER (AFTER 3Q) P O S I T I V E TWITCH TOP 10, POSITIVE PS4 & XB ONE PRESS RECEPTION PLAYER REVIEWS RELEASE 21. JAN ‘20 “Moons of Madness is a great tribute to Lovecraft's works that will immerse you in a dark and terrifying story on the surface of • Good addition to broaden Funcom Mars.” portfolio - Eurogamer Italy “Moons of Madness is a wonderfully chilling • PS4 and XB ONE release on 21 January outing that blends horror and sci-fi to excellent • More than 60,000 concurrent viewers 2020 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 - WORLD 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 * Inspiration art piece, not necessarily representative of the game | 17 T H E OPEN WORLD SURVIVAL GENRE HAS LARGE POTENTIAL LARGE POTENTIAL FUTURE GROWTH BEYOND EXILES TODAY CURRENT STATUS POTENTIAL • Gamer excitement around • History suggests the next survival & crafting in open- breakout genre likely a multi- world in initial innovation and player genre existing today, that growth phase needs refinement • All games being hard to learn • Solving issues in today’s Open and clunky with bugs has so far World Survival games can bring prevented mass market success it to the mass market • • Despite Exiles success other No single game dominates games in genre have more concurrent users • Exiles suffers from initial shoestring development Dune to leverage Exiles learnings and address shortcomings of today’s open world games | 18 N E W G A M E – CO- O P S H O O T E R GENRE: IP: DEVELOPMENT TIMELINE: DEVELOPER: BUSINESS MODEL: STAGE: MULTIPLAYER MUTANT 2020 FUNCOM INC PREMIUM CO-OP SHOOTER CHRONICLES PRODUCTION Game as a Service * Inspiration art piece, not necessarily representative of the game | 19 UPCOMING PUBLISHING RELEASES REVEALED GAMES NOT YET REVEALED GAMES GENRE : Single & Multiplayer Rogue-like” PLATFORMS : PC – DEVELOPER: XBONE – PS4 - Switch RELEASE : Q1 2020 STATUS : In Production GENRE : Single-player horror/puzzle PLATFORMS : PC - XBOX ONE – PS4 RELEASE : PS4 - XBONE, DEVELOPER: 21 Jan ‘20 STATUS : Released on PC 10 active projects: 5 new + 5 existing game projects | 20 SUMMARY AND OUTLOOK SOLID FINANCIALS BROADENING PORTFOLIO STRONG IPs FOR GAMES NEW LARGE OWNER 12mth rolling revenue (MUSD) and EBITDA margin 40.0 60% 52% 55% 4… 53% 35.0 46% 50% 44% 43% 39% 30.0 41% 49% 40% 25.0 30% 20.0 22% 20% 15.0 3% 10% 10.0 2% -1% 5.0 -6% 0% 29% at 15.75 NOK 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 0.0 -10% Rolling revenue ONLINE Rolling EBITDA margin Industry expertise SHOOTER Cash and debt (MUSD) 20.9 Network 19.919.620.3 18.3 16.5 16.3 14.2 10.3 China access 8.5 7.8 7.7 5.1 5.2 3.7 DUNE 1.0 3.4 Financially strong 0.0 OPEN 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 growth investor WORLD Cash Debt JOIN US ON OUR JOURNEY! | 21 CONTACT DETAILS SIGN UP FOR INVESTOR NEWS ON OUR WEBSITE: STIAN DRAGESET HTTP://INVESTORS.FUNCOM.COM [email protected] | 22 QUESTIONS? | 23.