G5 Entertainment Investor Presentation December 2022 - NASDAQ OMX: G5EN.ST OTCQX: GENTF
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G5 Entertainment Investor Presentation December 2022 NASDAQ OMX: G5EN.ST OTCQX: GENTF
G5 Entertainment in brief
Revenue (MSEK)
• Developer and publisher of casual free-to-play (F2P) 450
games for tablets, smartphones and PCs
400
Q3
• Serving the $90+ billion market for global market for 350
mobile games 300
250
• 11 offices worldwide each serving a strategic purpose and 200
providing a competitive advantage
150
• Strong history in creating and publishing games: 100
• The Secret Society > USD 142 million in sales 50
> 27 million downloads 0
• Hidden City > USD 416 million in sales 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
> 52 million downloads Gross Margin (%)
• Focused on games for a female audience age 35+ 70% 68%
• Founded 20 years ago and listed on Nasdaq Stockholm
since June 2014 and public since October 2006 60%
50%
40%
2013 - 2018 2017 - 2020 2nd best share of Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
the decade
2017 2018 2019 2020 2021 2022 2
Operating Locations
Employees
+900
11
Countries
Up and coming
Cyprus (Development Office)
Kazakhstan (Development Office)
3
Mobile Gaming Industry
4
Global Gaming: Historical Growth 1970-2020
5
Global Mobile Gaming: A Growth Market
2016 – 2024 Global Mobile Games Market Revenues Bn USD
• Mobile gaming is a fast-growing segment of the overall gaming 120
market, with global revenues expected to reach $116.4 Bn USD by
2024, a CAGR of 11% 100
80 116
114
• 53% of 2022 global game revenue will come from mobile
gaming 60 104
96
40 86
62 69
• With almost 3.2 billion gamers worldwide today, and 3.5 billion 43
57
20
gamers projected by 2025, mobile gaming has more players
than any other gaming segment 0
2016 2017 2018 2019 2020 2021 2022F
• Asia is the biggest market, accounting for almost 64% of total 2023F 2024F
revenues for the industry in 2021, followed by the US *NEWZOO market data
G5 Revenue breakdown by geography Q3 2022
• Mobile gamers are spending more money than ever before, with
ROW
Japanese gamers spending the most per player
Asia 6%
9%
• G5:s main market is North America, followed by EU and Japan
North
Europe
America
22%
64%
6
G5 Development: 2014-2022 2 NEW games
released
5 NEW games
released
2022
8 NEW games 2021
released
5 NEW games New Generation Games
released 2020 67% of Revenue
Sherlock: 13% of revenue in Q4
Two hidden object 2019
games gross
>$100M lifetime 31.0 million
Hidden City exits
2018 • Sherlock
• Jewels of Egypt
soft launch phase • Jewels of Wild West
Accumulated 2017 22.1 million Investment: G5 Store
downloads of group
games in H1: 210 million
2016
Starts trading on Expansion & Investment: New Generation Games
NASDAQ Development teams and • Jewels of Rome
Stockholm: G5EN
2015 new portfolio of games • Wordplay
2014
7
G5’s Portfolio & Lifecycle
8
Target Audience and Game Genre
Hidden Object Match-3
A Unique Market:
Women Age 35+
Growing demographic
Underserved market
Very loyal audience
Strong paying
audience $
Mahjong / Solitaire New Genres
G5 Friends Network
9
New Games Development Funnel
Early
Harvest Mode
Game Idea development / Scaling Peak revenue Maturing
Long-tail revenue
Soft Launch
_ revenue
Very limited revenue
from soft launch in
_ user acquisition
select markets
In this stage the Game is released in After global release, UA and Growth: As revenue In time, growth may slow as Harvest mode games
argument for the limited markets and we invest in growing grows, games are the game reaches a more do not have a
new product is tested against the game’s revenue. optimized, user acquisition mature state. Cross-selling dedicated team and
developed benchmarks. Usually Game continues to be is increased, and games with the rest of the G5 games only very limited UA is
through extensive iterative process to find analyzed and updated are scaled to higher portfolio helps extend the long done on the games.
marketing tests the best product/market to find the best game revenue levels tail of revenue These games bring in a
fit. The game either balance for worldwide healthy cash flow that
clears benchmarks for audience. Often during the growth can be invested in new
Global release or gets phase, games appear to or active games.
canceled. We expect 5-6 have reached a plateau,
to reach this stage and however improvements The games have very
1-2 to be released can be made to the game limited updates through
Globally every year and/or the marketing one shared team
strategy to achieve a higher
peak level
10Our Portfolio Approach
Own/licensed revenue (MSEK) | Own games share (%)
400 80%
33%
73%
• Strengthened the development teams giving the 350 70% 70% 70%
company full control over game development and 67%
66%
quality combined with tougher approach to 63% 64%
62% 61%
underperforming games 300 60%
54%
• Revenue from Own games have consistently grown 250 50%
and is now >73% of the total revenue
45%
• Eight games released in 2020,, five games in 2021, five 200 40%
currently in soft launch and two released globally in
2022. Building on previous technology and game play 150 30%
foundation with an emphasis on engaging storylines
and immersive meta-mechanics
100 20%
• Balanced and diversified portfolio with games in
different stages in their lifecycle creates a balance 50 10%
between profitability and growth
0 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2020 2021 2022
New Generation Old own Licensed Own games %
11New Generation Games
• Games released from 2019 onwards Revenue (MSEK)
250
• 23 new titles +8 Y/Y%
• 2 games released globally in 2022 & 5 in soft launch 200
• Game play foundation with an emphasis on 150
engaging storylines and immersive meta-
mechanics: 100
• Hidden Object
• Match-3
50
• Mahjong/Solitaire
• New Genres
0
• Q3 2022: Accounted for 60% of revenue Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2020 2021 2022
• Highlighted game: Sherlock
• SEK 81 M & 23% of revenue A few of our titles:
• +148% Y/Y & +21% Q/Q Jewels of Rome Sherlock
• 7.5 million acc downloads Jewels of the Wild West Mary’s Mahjong
Crime Mysteries Unexposed
Pyramid of Mahjong Jewels of Orient
• UA efficiency and M.A.R.S UA suite tools accelerated
Sheriff of Mahjong Martha’s Mystery (2022)
growth of earnings Jewels of Egypt Mystery Estate (2022)
Mayor Match Bayside Merge (2022)
• Building a foundation for long-term future growth
12Financials
13Financial Summary: Q3 2022 Own/Licensed revenue (MSEK) | Own games share (%)
400 80%
Revenue SEK 360 M (328), +10% Y/Y
300 60%
• Own games >73% of net revenue (66)
• New Generation games: 60% of net revenue (50) 200 40%
Now, our biggest segment of the portfolio 100 20%
• Sherlock +104% Y/Y >23% of revenue (10)
0 0%
• MAGRPPU $61.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2020 2021 2022
New Generation Old own Licensed Own games %
Strong gross margin 70%
Gross Margin (%)
• Gross Margin reached new high 68% (64) due to growing share
from Own games, G5 Store, and advertising revenue 60%
• Operating profit (EBIT) SEK -22.8 M, EBIT margin -6.3% (adjusted for fx)
50%
• EBIT margin decline related to UA boost, and one-time write-off
related to change in company’s development process
40%
• Adjusted for write-offs EBIT SEK 49.7 M and EBIT margin 14% (17) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019 2020 2021 2022
Continued strong cash position Cash & Cash Equivalents (MSEK)
250
• Capitalization impact on cash flow SEK -45.2 M (-41.3)
200
• Financing activities impacted by buybacks SEK -28.2 M (-88.8)
150
• Non-cash write-offs related to changes in our publishing process
100
SEK 72.5 M (0.0)
50
• Total cash flow SEK -50.9 M (-39.2)
Total cash at end of period SEK 182.3 M (130.9), the highest end cash 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
position for the third quarter
2020 2021 2022
14Outlook for 2022/2023
• Sherlock and New Generation games revenue expected to grow New Generation (MSEK) | Own Games (%)
• Gross Margin to expand as Own Games become higher percentage of 250 80%
revenue and G5 Store continues to grow
70%
• New development process will drive 1-2 new games globally every year 200
60%
• Under the new development process, we will no longer announce
games in Soft Launch 150
50%
• As of September 1, we no longer capitalize expenses on new games 40%
until they are launched globally 100
30%
• UA back to normalized range 17-22%
20%
50
• Expected EBIT margin of 13-15% in Q4 10%
• Strong cash position 0 0%
Profitable, cash flow positive, zero debt
2019 2020 2021 2022
• We continue to follow our strategy and see positive momentum going New Generation Own games %
into seasonally strong Q4 and Q1
15Contact
Stockholm Headquarters
G5 Entertainment AB
Birger Jarlsgatan 18
114 34 Stockholm
Sweden
Email: investor@g5e.com
www.corporate.g5e.comYou can also read
