FULLTEXT DEL 1 AV 1
Kvartalsrapport Q3 2023
===== SIDA 1 =====
Q3 2023 Modern Times Group MTG AB 1
We are well on track to deliver on our full-year revenue outlook. Q3 revenues were up 6% year over year to SEK 1,494
million. Sales were up 1% year over year and up 2% from Q2 in constant currencies . Total user acquisition (UA)
spend amounted to 37% of revenues in Q3. The group delivered record-breaking quarterly adjusted EBITDA of SEK
449 million in Q3, with a strong margin of 30%. We are increasing the outlook for our full-year adjusted EBITDA
margin on the back of this strong performance and now expect the margin to be between 25% and 27% for the year.
We are also very excited about our acquisition of a majority stake in Snowprint Studios after the end of the quarter.
Net sales increased by 6% year over year to SEK 1,494 (1,412) million. Sales were up by 1% year over year in constant
currencies, and up 2% quarter over quarter
UA spend of SEK 554 (499) million corresponding to 37% (35%) of revenues
Adjusted EBITDA of SEK 449 (374) million with an adjusted EBITDA margin of 30% (27%)
Reported EBITDA of SEK 429 (325) million and EBIT of SEK 283 (193) million
Net financial items amounted to SEK 10 (304) million of which net interest amounted to SEK 44 (21) million and other
financial items amounted to SEK -33 (283) million including discounted interest on earnouts of SEK -52 million, gain
and loss from financial assets and liabilities of SEK -24 million, unrealized and realized exchange rate differences of
SEK 45 million and other items totaling SEK -2 million
Total net income of SEK 194 (336) million and total basic earnings per share of SEK 1.55 (2.75)
Cash flow from operations in the quarter of SEK 444 (291) million including a realized currency exchange gain
amounting to SEK 91 million and cash conversion of 69% in Q3 and 52% for the last 12 months (October 2022 to
September 2023)
Cash and cash equivalents at the end of the period amounted to SEK 3,989 (4,695) million. In addition, the group has
SEK 123 million in long-term bank deposits
Maintained full year revenue outlook. We continue to expect sales within the range of -3% to +2%, adjusted for currency
effects. We upgrade our adjusted EBITDA margin target for the year to a range of 25% to 27% (2023 outlook excludes
contribution from Snowprint Studios)
Acquired 70% majority stake in Snowprint Studios after the end of the quarter
===== SIDA 2 =====
Q3 2023 Modern Times Group MTG AB 2
We are very happy to report a
strong Q3. Our sales and
profitability were driven by a
mix of the positive operational
momentum we have been
building throughout the year,
combined with strong
operational execution. I am also proud that we have grown
sequentially in each of the quarters of the year, despite the
normally seasonally weaker Q3.
I am also excited to have closed our first major deal since
2021 – the acquisition of Snowprint Studios after the end
of the quarter. This enables us to add the fast-scaling mid-
core hit Warhammer 40,000: Tacticus to our portfolio and
lets us welcome a great team of game industry veterans
to our Gaming Village.
Our continuously improving performance and strong
operational dynamics mean that we are well on track to
delivering on our full year revenue goals, while also
enabling us to upgrade our full year margin outlook. This
upgrade is driven by the strength and ongoing scaling of
our casual portfolio, another quarter of highly successful
monetization of established users in Forge of Empires and
strong growth from Bloons TD6.
We reported record revenues of SEK 1 ,494 in Q3, which
represented 6% year-over-year growth, supported by
positive currency effects. We returned to organic growth in
the quarter, with revenues up 1% year-over-year and 2%
sequentially in constant currencies. The year-over-year
growth was driven by PlaySimple and Ninja Kiwi, while
nearly all our studios grew their sales on a sequential
basis. It’s also worth keeping in mind that PlaySimple
received the last of its platform incentive payments in Q3
last year, which means that our underlying growth is even
more encouraging.
PlaySimple is the largest studio in our portfolio and is now
beginning to benefit from the scale they have been
building over the last two years. The strong year-over-year
growth reflected the much larger user base for our word
games, as well as the strong performance of Word Search
and Crossword Jam in the quarter. PlaySimple’s revenues
were up slightly on a sequential basis , despite the
seasonally weaker third quarter. The studio continued to
work actively on optimization and live -ops in the quarter
and is making good progress on several new games.
InnoGames continued to stabilize its performance in the
quarter. Revenues from our largest title, Forge of Empires,
were up both year on year and quarter on quarter, thanks
to another period of strong execution on live-ops and key
events, as well as growing b rowser revenues . The
performance in the period further cement s Forge of
Empires as one of our most important evergreen titles and
we continued to see high engagement and healthy
spending levels from our established players in the
quarter. This once again highlights how InnoGames has
managed to energize and refocus its team following the
reorganization in April. The studio’s revenues were down
year over year, mainly due to lower marketing investments
in some titles while the team continues to work on the long-
term performance of their new games.
Ninja Kiwi’s revenues were up significantly year over year
and up slightly on a sequential basis in constant
currencies. The growth was driven by Bloons TD 6, which
continues to showcase the strength of Ninja Kiwi’s content
combined with highly successful platform and distribution
deals. The game also benefited from strong initial sales on
Xbox. After the end of the quarter Ninja Kiwi launched a
milestone update for Bloons TD 6, which included the
brand-new Map Editor feature. Early data has shown very
strong engagement for the Map Editor from both new and
established players. The update has generated significant
buzz in the Bloons community and was a strong driver of
engagement out of the gate , prompting players to spend
money in the app for the first time . At the end of
September, Ninja Kiwi also revealed that their next game
will be called Bloons Card Storm, a digital collectable card
game set in the Bloons universe which will be launched in
2024.
Hutch’s revenues were down year over year and
compared to the second quarter, with both F1 Clash and
Top Drives performing below our expectations. The game
teams are committed to return these titles to growth and
are exploring a range of options going forward. Hutch
successfully test-launched its new title Forza Customs in
four markets, with encouraging KPIs across the board .
The game is now available globally and Hutch is now
preparing for a full commercial launch of the game. Hutch
also announced that they have partnered with NASCAR to
develop a new standalone mobile game in 2024.
Kongregate’s sales were down year over year , but up
slightly sequentially. The studio continued to focus on Web
3.0 gaming, with multiple updates for Bit Heroes Quest
launched in the quarter . Kongregate also launched Bit
Heroes Runner on Android and IOS during the quarter and
added 29 new games to the Kongregate.com platform.
We invested a total of SEK 554 million in user acquisition
in Q3, which was equivalent to 37% of our total revenues
in the period. Our total UA spend was up year over year in
constant currencies. This increase primarily reflected the
strong growth and increased marketing spend in our
casual segment, while it has continued to be challenging
to bring in new players to our mid-core games.
We reported adjusted EBITDA of SEK 449 million in the
quarter, corresponding to a margin of 30%. This was a
significant increase compared to SEK 374 million and a
margin of 27% in Q3 last year , when our results were
boosted by the platform incentive payments in PlaySimple.
===== SIDA 3 =====
Q3 2023 Modern Times Group MTG AB 3
Our current profitability levels reflect our underlying
revenue growth in our Word Games and Tower Defense
franchises and higher monetization levels from
established players in Forge of Empires.
We delivered a cash conversion of 69% in Q3 and 52% for
the 12 -month period ending 3 0 September 2023. This
performance reflected the strong cash generation levels in
our high margin studios , somewhat lower CAPEX and
slightly positive working capital in the quarter.
On 5 October we announced that MTG had acquired a
70% majority stake in the fast-growing Swedish mobile
games’ developer Snowprint Studios, the team behind the
new and rapidly growing hit Warhammer 40,000: Tacticus.
The game was launched in August 2022 and is in the very
early stages of its growth journey.
We are convinced that we can help Snowprint accelerate
their growth by providing them with access to the business
intelligence and user acquisition toolkit available through
the Flow Platform, which will help unlock new potential,
and sharing our expertise in expanding games to new
platforms. Snowprint has a small and highly experienced
team in Stockholm and Berlin. The studio is led by three
industry veterans, each with over 15 years of experience
in mobile gaming.
The acquisition is closely aligned with our overall business
strategy and Snowprint proved to be a strong match with
our highly selective M&A framework. The acquisition
enables us to increase our relevant scale in the crucially
important mid-core segment. It is also closely aligned with
our belief in successful games based on powerhouse
global IP’s. I am excited about the additional strength in
our portfolio and the opportunities for growth and cross -
promotion we see from this in the future.
At the same time, we are continuing to buy back shares ,
on the back of the SEK 300 million repurchase program
we launched on 1 September. This program runs until the
end of the year, and our Board of Directors will evaluate
our next steps when the time comes.
We expect the North American and European in-app
purchase market to have been up by mid -single digits in
Q3, which suggests that our markets continue to recover
at a healthy rate. Given these positive dynamics, we now
expect our overall market to be slightly up year over year
in 2023, driven by the casual segment, while the mid-core
market remains challenging.
I’m excited be heading into the rest of Q4 in a great
position to deliver on our maintained revenue outlook and
increased margin expectations. The acquisition of
Snowprint adds another great studio to our Gaming Village
and improves our potential to drive long -term synergies
within the group.
We have a clear growth strategy, with transparent long -
term growth and profitability targets. Our growth will come
from our strong portfolio of established games and a very
exciting pipeline of new titles that will be launched in next
12 to 24 months. This will be supported by the Flow
Platform, and we continue to elevate the tools, experience,
and experts we have in our studios.
I am excited about our future and look forward to sharing
more news with you when the time comes.
Thank you,
Maria Redin
Group President & CEO, Modern Times Group MTG AB
===== SIDA 4 =====
Q3 2023 Modern Times Group MTG AB 4
MTG reiterates its revenue outlook for the full year 2023
but raises its margin expectations.
We continue to expect our full-year sales to be within the
range of -3% to +2% after adjusting for currency effects.
We now expect our adjusted EBITDA margin for the year
to be 25% to 27%, slightly above our long-term outlook of
23% to 25%.
The outlook for 2023 excludes the contribution from
Snowprint Studios, which was acquired on 5 October
2023.
March 28 – MTG increased its ownership in PlaySimple
to approximately 93%, with the remaining shares held by
PlaySimple founders. The group has consolidated 100%
of PlaySimple since 1 August 2021 and has a contractual
path to full ownership in place.
April 13 – MTG’s German gaming studio, InnoGames,
announced a strategic organizational realignment of its
business.
June 12 – MTG announced the appointment of Nils Mösko
as its new CFO. Nils has extensive experience in strategy
and financial management and most recently served as
Chief Strategy Officer and Head of Business Development
at the electric vehicle company Polestar.
June 15 – MTG’s racing-focused studio, Hutch, teamed
up with Turn 10 Studios, a well -known first -party video
game developer and the creators of the Forza franchise,
to release an exciting new mobile game targeting a broad
audience.
September 1 – MTG launched a SEK 300 million share
repurchase program, starting on 4 September and running
until 31 December 2023. The Board of Directors’ view is
that the program will increase the value created for MTG
shareholders.
September 15 – MTG’s wholly owned studio, Ninja Kiwi,
successfully launched the tower defense hit Bloons TD6
on Xbox. Ninja Kiwi will continue evolving the game over
time with additional features and content.
September 21 – Hutch announced a new partnership with
the recognized motorsport organization, NASCAR. The
partnership will see Hutch developing a standalone title for
mobile.
September 22 – Ninja Kiwi announced Bloons Card
Storm, a competitive digital collectible card game set
within the Bloons universe. The game will be launched on
mobile and PC during 2024.
October 5 – MTG acquire d a 70% majority stake in
Snowprint Studios, the studio behind Warhammer 40,000:
Tacticus. Snowprint Studios specializes in turn -based
tactics games, with Warhammer 40,000: Tacticus having
won several industry awards. The goal is to accelerate
Snowprint’s growth through the Flow Platform by offering
market-leading business intelligence and user acquisition
capabilities.
Further information about the group’s significant
events can be found on MTG’s homepage on
www.mtg.com
===== SIDA 5 =====
Q3 2023 Modern Times Group MTG AB 5
Group net sales were up 6% to SEK 1,494 million in Q3, supported by a 5% positive contribution from currency effects. Sales
were up 1% year over year and 2% quarter on quarter in constant currencies in Q3 , demonstrating the continued positive
momentum for the business as a whole. PlaySimple and Ninja Kiwi were the drivers of the group’s year-over-year growth in
Q3, while all the group’s studios besides Hutch increased their revenues quarter on quarter.
PlaySimple’s strong growth reflected the scaling of the user base in the last 12 months following investments in user
acquisition and ad tech . Year-over-year growth was also affected by Q3 2022 comparison figures, which included the final
platform incentive payment received by the studio.
Ninja Kiwi reported another quarter of strong year-on-year gr owth and grew sequentially thanks to the continued strong
performance of Bloons TD 6. InnoGames ’ sales were down year over year, but the positive momentum the studio has built
throughout the year continued in Q3 and the studio’s sales were up sequentially. The strong performance came from its key
title Forge of Empires, with revenues up both year over year and sequentially. The growth was driven by strong live-ops and
events driving the successful reactivation of established players, leading to improved monetization levels . Hutch reported
lower sales both year over year and quarter on quarter as key games continued to underperform. Kongregate’s sales were
down year over year but up slightly from the second quarter of this year.
MTG reported a 20% year-over-year increase in adjusted EBITDA to SEK 449 (374) million . The adjusted EBITDA margin
increased to 30% from 27% in Q3 last year. The improved profitability reflected the higher proportion of revenues from
PlaySimple and Ninja Kiwi, with margins also benefiting from the higher proportion of browser revenues and reactivation and
better monetization of established players in Forge of Empires . The group’s margin was also slightly positively affected by
smaller non-recurring effects in the quarter.
This was somewhat offset by higher user acquisition costs from our casual games as this part of the portfolio continues to
scale. Total acquisition costs in the quarter represented 37% of total revenues, compared to 35% last year. Total acquisition
costs were down from 39% in the second quarter in the seasonally weaker Q3. It is worth noting that the margin in Q3 2022
was also positively affected by the platform incentive bonus received by PlaySimple.
The group’s adjustments to reported EBITDA amounted to SEK 20 (49) million in the quarter. This included an adjustment for
non-recurring bonus structures of SEK 6 (29) million and an adjustment for M&A transaction costs of SEK 14 (3) million. The
group therefore reported EBITDA of SEK 429 (325) million and a margin of 29% (23) in the quarter. The adjustments for the
year to date included SEK 40 million relating to the restructuring program in InnoGames in Q2 2023.
===== SIDA 6 =====
Q3 2023 Modern Times Group MTG AB 6
Depreciation and amortization amounted to SEK 146 (132) million and included amortization of purchase price allocations
(PPA) of SEK 92 (90) million. Excluding PPA, depreciation and amortization amounted to SEK 54 (42) million.
Consolidated EBIT was SEK 283 (193) million in the quarter, which corresponded to an EBIT margin of 19% (14). Operating
costs before depreciation and amortization decreased by 2% year over year to SEK 1,065 (1,087) million.
The group’s total DAU (daily active users) declined by 2% while MAU (monthly active users) were up 1% on a sequential
basis. This performance reflected the fact that Q3 is normally a seasonally weaker quarter, combined with the ongoing
challenges to onboard new players to our mid-core games. DAU levels were flat and MAU levels were down slightly year over
year, which reflected the previously mentioned challenges in mid-core user acquisition offset somewhat by higher year over
year MAU and DAU levels in our Word Games and Tower Defense franchises.
Average Revenue per Daily Active User (ARPDAU) was up by 12% year over year and up 3% on a sequential basis, reflecting
the healthy levels of revenue generation from our established users in Forge of Empires in particular. Similar to the first two
quarters of the year , improved monetization was somewhat offset by a higher proportion of casual players in the group’s
overall player mix.
Forge of Empires, Word Trip, and Word Jam continued to be the group’s top three performing titles. The top three games
represented 46% of the group’s revenues in the third quarter, compared to 47% in the second quarter.
Mobile represented 75% (73%) of total revenues in the third quarter. The year over year increase in browser revenues
primarily reflected the strong browser performance in Forge of Empires.
===== SIDA 7 =====
Q3 2023 Modern Times Group MTG AB 7
Word Games franchise revenues were up 15% year over
year and up 1% sequentially in constant currencies. The
two new games in the franchise continued to perform
strongly in the quarter, with Word Search growing nearly
50% on a sequential basis.
Key franchise developments in the quarter included the
launch of Club Championship for Word Trip, a key
foundational feature which is expected to significantly
contribute to the game’s success going forward.
PlaySimple also launched new features to drive
engagement for Crossword Jam as well as improved
content for non-US geographies. PlaySimple continued to
optimize Crossword Explorer for early cohor ts and
launched a weekly quest event for the game.
Strategy & Simulation franchise revenues were down by
5% year over year in constant currencies but up 3% from
Q2. The sequential growth was once again driven by the
strong execution of live-ops and events in Forge of
Empires. This drove engagement from older players ,
leading to higher monetization and an increase in browser
revenues in the game, which grew both year over year and
sequentially. Key events for Forge of Empires included the
Fellowship event that began in June, as well as the Soccer
event and the Fall event which began in September.
The team continued to work on accelerating the
performance of Sunrise Village and tested several
features to drive onboarding and early retention in the
quarter. InnoGames also soft -launched the browser
version of Sunrise Village in August, with encouraging
early performance indicators. The Strategy & Simulation
franchise continued to face challenges with new user
acquisition in the quarter, with lower UA spending as a
result.
As previously mentioned, MTG signed an agreement in
October to acquire a majority stake in Snowprint Studios ,
the team behind Warhammer 40,000: Tacticus. The
game’s results, as well as Snowprint’s two other titles
Legend of Solgard and Rivengard will be reported as part
of the Strategy & Simulation franchise from the fourth
quarter of 2023.
Tower Defense franchise revenues were up 24% year
over year and up 6% from Q2 this year, thanks to the
continued strong performance of the franchise hero title
Bloons TD 6. The strong performance in the quarter
reflected growing distribution revenues, including from
Apple Arcade and Netflix, as well as the first Bloons TD 6
sales on Xbox . Revenues in the quarter were also
positively impacted by a payment from a third party, who
is exploring the possibility of developing a future version
of Bloons TD 6 for the Chinese market.
Ninja Kiwi has continued to deliver regular updates to the
Bloons TD 6 . This included one content update in July,
followed by another, major, update in October. The
October update included the long -awaited Map Editor
feature, which has been received very positively by the
community. Early data Indicates that the Map Editor is
driving high levels of player engagement, which is driving
in-game spending from players who have not paid for in-
app purchases before.
Ninja Kiwi continues to work on Battles 2 and introduced
a major update to the game with a range of important new
gameplay features. In September Ninja Kiwi announced
that their next game, due in 2024, is called Bloons Card
Storm, a digital collectable card game set in the Bloons
universe.
Racing franchise revenues were down 22% year over
year and were flat quarter on quarter as a result of weak
performance from both F1 Clash and Top Drives in the
quarter. The game teams have continued to work actively
on improving the performance of both games. F1 Clash
received a several updates during the quarter. Hutch also
partnered with Nexus, a platform for live services games
that helps game content creators connect with their
audiences and earn money from their content, based on a
revenue share model. Top Drives received several
updates during the quarter, and Hutch also launched the
web store for the game.
0
200
400
600
800
1,000
1,200
1,400
1,600
Q3'22 Q4'22 Q1'23 Q2'23 Q3'23
Word Games Strategy & Simulation
Racing Tower Defense
Other smaller franchises
===== SIDA 8 =====
Q3 2023 Modern Times Group MTG AB 8
Hutch has made significant progress on their new games
in the quarter. Forza Customs, which Hutch developed in
partnership with Turn 10 was successfully test-launched
in four international markets. Following a successful test
launch, Hutch is now preparing for a full commercial
launch of the game. In September Hutch also announced
that the studio has partnered up with NASCAR to develop
a new standalone mobile game.
Kongregate’s revenues were down year over year but up
slightly on a sequential basis in Q3. The studio continued
to invest in its growing Web 3.0 portfolio and also added
29 new games to the Kongregate.com platform in the
quarter. Bit Heroes Runner was launched on Android in
July and iOS in August , while Bit Heroes Quest received
5 events during the quarter.
Net financial items amounted to SEK 10 (304) million in
the quarter, of which net interest amounted to SEK 44
(21) million and other financial items to SEK -33 (283)
million. Other financial items consist of unrealized and
realized exchange rate differences (SEK 45 million), gain
and losses from financial assets and liabilities (SEK -24
million), discounted interest on earnouts (SEK -52 million)
and other items (SEK -2 million).
Unrealized and realized exchange rate differences
amounted to SEK 45 million, net , of which realized
exchange rate differences amounted to SEK 91 million
and unrealized exchange rate differences amounted to
SEK -46 million. Gains and losses from financial assets
and liabilities amounted to SEK -24 million, of which:
• SEK -58 million related to the revaluation of the
earnout liability
• SEK 32 million related to the valuation of a
financial liability pertaining to the acquisition of
the remaining outstanding 7.2% shares of Play -
Simple, (since the liability follows the value of a
fixed number of shares)
• SEK 2 million related to other changes.
The group’s tax amounted to SEK -99 (-112) million.
Net income for the quarter therefore amounted to SEK 194
(385) million.
MTG divested ESL Gaming to Savvy Gaming Group in
April 2022. As a result, the group’s esports vertical and
operations have been reclassified as discontinued
operations since Q1 2022 (including in this report). Further
information can be found in the 2022 Annual Report , as
well as in the 2022 quarterly reports.
To date, the MTG VC fund has invested a total of SEK 411
(USD 38.7) million in a total of 25 companies. VC
investments complement MTG’s majority stake
investment in Kongregate, InnoGames, Hutch, Ninja Kiwi,
PlaySimple and Snowprint.
The portfolio assets range from start-up game developers
across several game genres and game creation platforms
in the US and Europe to pure esports-focused companies.
VC investments related to esports remained in MTG after
the divestment of ESL Gaming.
===== SIDA 9 =====
Q3 2023 Modern Times Group MTG AB 9
Cash flow from operations before changes in working
capital and taxes paid amounted to SEK 535 (540) million.
This included a realized currency exchange gain amounting
to SEK 91 million in the quarter. Depreciation and
amortization amounted to SEK -146 (-132) million, of which
SEK -92 (-90) million pertained to amortization of PPA. Paid
taxes amounted to SEK -130 (-119) million.
The group reported a SEK 39 (-129) million change in
working capital in the quarter.
Net cash flow from operations therefore amounted to SEK
444 (291) million.
Total cash flow relating to investing activities amounted to
SEK -160 (-625) million in the quarter and mainly consisted
of an earnout payment of SEK -112 million to Hutch and
Ninja Kiwi. Capital expenditure on tangible and intangible
assets, mainly consisting of capitalized development costs
for games and platforms that have not yet been released,
amounted to SEK -43 (-63) million in the quarter.
Total cash flow relating to financing activities amounted to
SEK -75 (-2,898) million, of which SEK -54 million related
to the group’s repurchase of shares. The cash flow in Q2
2022 included the extraordinary cash value transfer to
MTG’s shareholders through a share redemption plan,
which entitled holders to a redemption of SEK 25.00 per
share and which was approved by the 2022 AGM.
The net change in cash and cash equivalents amounted to
SEK 210 (-3,232) million.
The group had cash and cash equivalents of SEK 3,989
(4,695) million at the end of the period.
Net debt refers to the sum of interest-bearing liabilities less
cash and cash equivalents. Interest -bearing liabilities such
as additional purchase considerations or lease liabilities are
not included.
Net debt as of September 30, 202 3, amounted to SEK
3,989 (4,695) million. The net debt calculation includes
external financing of SEK 0 (0) million less SEK 3,989
(4,695) million in cash and cash equivalents.
===== SIDA 10 =====
Q3 2023 Modern Times Group MTG AB 10
Modern Times Group MTG AB is the group's parent company and is responsible for group-wide management, administration,
and financing.
Net interest and other financial items for the quarter amounted to SEK -100 (373) million. Net interest amounted to SEK -8
(16) million. Unrealized and realized exchange rate differences amounted to SEK 2 (360) million and other financial items to
SEK -94 (-3) million.
The parent company had cash and cash equivalents of SEK 2,753 (4,085) million at the end of the period.
The total number of shares outstanding at the end of the period was 124,055,202 (125,251,164), excluding the 1,289,182
Class B shares and the 6,324,343 Class C shares held by MTG as treasury shares. In August, MTG cancelled 6,520,000
B-shares previously repurchased by MTG under its share repurchase programs.
===== SIDA 11 =====
Q3 2023 Modern Times Group MTG AB 11
This interim report has been prepared according to ‘IAS
34 Interim Financial Reporting’ and the Swedish Annual
Accounts Act’. The interim report for the parent company
has been prepared according to the Swedish Annual
Accounts Act – Chapter 9 ‘Interim Report’.
The group's consolidated accounts and the parent
company’s accounts have been prepared according to the
same accounting policies and calculation methods as
were applied in the preparation of the 2022 Annual Report.
Disclosures in accordance with IAS.34 16A appear in the
financial statements and the accompanying notes as well
as in other parts of the interim report.
No transactions between MTG and related parties that
have materially affected the Group’s position and earnings
took place during the period.
Significant risks and uncertainties exist for the group and
the parent company. These factors include the prevailing
economic and business environments; commercial risks
related to expansion into new territories; other political and
legislative risks related to changes in rules and regulations
in the various territories in which the group operates;
exposure to foreign exchange rate movements, and the
US dollar and euro -linked currencies in particular; the
emergence of new technologies and competitors; and
cyber-attacks.
The group’s game development businesses depend on
their ability to continue releasing successful titles that
attract paying customers, conditions that are not under the
group’s full control.
Risks and uncertainties are also described in more detail
in the 202 2 Annual Report, which is available at
www.mtg.com.
Stockholm, October 25, 2023
Maria Redin
Group President & CEO, Modern Times Group MTG AB
===== SIDA 12 =====
Q3 2023 Modern Times Group MTG AB 12
We have reviewed the condensed interim financial
information (interim report) of Modern Times Group MTG
AB (publ) as of 30 September 2023 and the nine -month
period then ended. The Board of Directors and the
Managing Director are responsible for the preparation and
presentation of this interim report in accordance with IAS
34 and the Annual Accounts Act. Our responsibility is to
express a conclusion on this interim report based on our
review.
We conducted our review in accordance with International
Standard on Review Engagements ISRE 2410 Review of
Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim
financial information consists of making inquiries, primarily
of persons responsible for financial and accounting
matters, and applying analytical and oth er review
procedures. A review is substantially less in scope than an
audit conducted in accordance with International
Standards on Auditing and other generally accepted
auditing practices and consequently does not enable us to
obtain assurance that we wou ld become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention
that causes us to believe that the interim report is not
prepared, in all material respects, for the Group in
accordance with IAS 34 and the Annual Accounts Act, and
for the Parent Company in accordanc e with the Annual
Accounts Act.
Stockholm 25 October 2023
KPMG AB
Helena Nilsson
Authorized Public Accountant
===== SIDA 13 =====
Q3 2023 Modern Times Group MTG AB 13
===== SIDA 14 =====
Q3 2023 Modern Times Group MTG AB 14
===== SIDA 15 =====
Q3 2023 Modern Times Group MTG AB 15
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Q3 2023 Modern Times Group MTG AB 16
Net income for the period is in line with total comprehensive income for the parent company.
===== SIDA 17 =====
Q3 2023 Modern Times Group MTG AB 17
The carrying amounts are considered to be reasonable approximations of fair value for all financial assets and liabilities,
except shares and participations in other companies and contingent considerations for which the valuation technique is
described below.
Shares and participations in other companies – acquisition cost is initially considered to be a representative estimate of
fair value. Subsequently, values are remeasured at fair value and gains/losses recognized when there is subsequent financing
through participation by a third -party investor, in which case the price per share in that financing is used, when there is a
realized exit or when there are indications that cost is not representative of fair value and sufficient, more recent information
is available to measure fair value. Listed holdings are valued at the current share price.
Contingent consideration – expected future values are discounted to present value. The discount rate is risk-adjusted. The
most critical parameters are estimated future revenue growth and future operating margin.
===== SIDA 18 =====
Q3 2023 Modern Times Group MTG AB 18
The purpose of alternative performance measures (APMs) is to facilitate the analysis of business performance and industry
trends that cannot be directly derived from financial statements. MTG uses the following APMs:
Adjusted EBITDA
Change in net sales from organic growth
Adjusted EBITDA is used to assess MTG’s underlying profitability. Adjusted EBITDA is defined as EBITDA adjusted for the
effects of items affecting comparability, non-recurring bonus structures, acquisition-related transaction costs and impairment
of capitalized internal work. Items affecting comparability refer to material items and events related to changes in the group’s
structure or lines of business, which are relevant for understanding the group’s development on a like -for-like basis. During
the second quarter of 2022 the group changed its definition of adjusted EBITDA. The new definition of adjusted EBITDA does
not include the group’s various operational incentive programs and only includes non-recurring bonus structures.
Since the group generates the majority of its sales in currencies other than the reporting currency (i.e., SEK, Swedish krona)
and currency rates have proven to be rather volatile, the group’s sales trends and performance are analyzed as changes in
organic sales growth. This presents the increase or decrease in the overall SEK net sales on a comparable basis, allowing
for separate discussions of the impact of exchange rates, acquisitions, and divestments. The following table presents changes
in organic sales growth as reconciled to the change in total reported net sales.
After the end of the period, MTG has acquired a 70% majority stake in Swedish mobile game development studio Snowprint
Studios, the purchase price is estimated to be USD 45 million. Snowprint is the studio behind the success of Warhammer
40,000: Tacticus and the deal is made on a cash and debt free basis, for a cash consideration which will reflect a 1.8x multiple
of 2023 revenues for Warhammer 40,000: Tacticus. The acquisition of Snowprint is closely aligned with the M&A -driven
element of MTG’s growth strategy and enables MTG to add a critically acclaimed game with high affinity to our existing titles
in our portfolio. The transaction is closed and MTG will consolidate Snowprint Studios from October.
There were no other events after the end of the reporting period.
===== SIDA 19 =====
Q3 2023 Modern Times Group MTG AB 19
EBITDA, adjusted for the effects of items affecting comparability, long -term incentive programs, acquisition -related transaction costs and
impairment of own work capitalized, which are referred to as adjustments.
Average revenue per daily active user.
Capital expenditures.
Operating cash flow in relation to adjusted EBITDA.
Daily active users.
Earnings per share is expressed as net income attributable to equity holders of the parent divided by the average number of shares.
Net income for the period from continuing operations before other financial items, net interest and tax.
Profit for the period from continuing operations before other financial items, net interest, tax and depreciation and amortization.
Items affecting comparability refers to material items and events related to changes in the group’s structure or lines of bus iness, which are
relevant for understanding the group’s development on a like-for-like basis.
Monthly active users.
The change in net sales compared with the same period last year, excluding acquisitions and divestments and adjusted for currency effects.
The change in net sales compared with the same period last year as if the company had fully consolidated its acquisitions and divestments
as of the previous period and adjusted for currency effects. The pro forma figures have been prepared with advice from external expertise in
order to restate a GAAP financial statement to IFRS and may include timing adjustments for both income and costs.
Revenue presented as if the company had fully consolidated its acquisitions and divestments. The pro forma figures have been prepared
with advice from external expertise in order to restate a GAAP financial statement to IFRS and may include timing adjustments for both
income and costs.
User acquisitions costs presented as if the company ha d fully consolidated its acquisitions and divestments as of the previous period. The
pro forma UA spend figures are presented in local GAAP for the respective portfolio companies from the time periods prior to being
consolidated by MTG.
The effect that foreign exchange rate fluctuations can have on a completed transaction prior to settlement. This refers to the exchange rate,
or currency risk associated specifically with the time delay between entering into a trade or contract and then settling it.
Converting one currency to another, often in the context of the financial results of foreign subsidiaries into the parent com pany’s and/or the
group’s functional currency.
User acquisition.
===== SIDA 20 =====
Q3 2023 Modern Times Group MTG AB 20
The Annual General Meeting will be held on 16 May 2024 in Stockholm. Shareholders wishing to have matters considered at
the Annual General Meeting should submit their proposals in writing either by post to the “Company Secretary”, Modern Times
Group MTG AB (publ), Annual General Meeting, P.O. Box 2094, SE-103 13 Stockholm, Sweden or by email to agm@mtg.com
at least seven weeks before the Annual General Meeting in order for the proposal to be included in the notice to the meeting.
Further details on how and when to register will be published in advance of the meeting.
Date
8 February 2024
24 April 2024
16 May 2024
18 July 2024
24 October 2024
Anton Gourman, VP Communications
Direct: +46 73 661 8488, anton.gourman@mtg.com
Follow us: mtg.com / Twitter / LinkedIn
MTG will host a livestream and conference call at 3.00 p.m. CEST today, on 25 October 2023. The call will be held in English.
How to join:
• To participate via livestream, please use this link.
• To join via phone, please register on this link . After you’ve registered, you’ll receive the dial -in number and
conference ID to access the teleconference.
• You can ask questions via phone during the teleconference or by using the livestream Q&A tool.
===== SIDA 21 =====
Q3 2023 Modern Times Group MTG AB 21
Modern Times Group MTG AB (publ.) – Reg no: 556309-9158 – Phone: +46 (0) 8-562 000 50
MTG (Modern Times Group MTG AB (publ.)) (www.mtg.com) is an international mobile gaming group that owns and operates
gaming studios with popular global IPs across a wide range of casual and mid -core genres. The group is focused on
accelerating portfolio company growth and supporting founders and entrepreneurs. MTG is an active driver of gaming industry
consolidation and a strategic acquirer of gaming companies around the world. We are born in Sweden but have an
international culture and global footprint. Our shares are listed on Nasdaq Stockholm (“MTGA” and “MTGB”).
This information is information that 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 above, at 7:30 a.m. CEST on October 25, 2023.
This interim report contains statements concerning, among other things, MTG’s financial condition and results of operations
that are forward-looking in nature. Such statements are not historical facts but, rather, represent MTG’s future expectations.
MTG believes that the expectations reflected in these forward -looking statements are based on reasonable assumptions;
however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause
actual results or outcomes to differ materially from those expressed in any forward-looking statement. Such important factors
include but may not be limited to MTG’s market position; growth in the gaming industry; and the effects of competition and
other economic, business, competitive and/or regulatory factors affecting the business of MTG, its group companies and the
gaming industry in general. Forward-looking statements apply only as of the date they were made, and, other than as required
by applicable law, MTG undertakes no obligation to update any of them in the light of new information or future events.