INVESTOR PRESENTATION APR-JUN 2022 - EG7
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I N V E S T O R P R E S E N TAT I O N
APR-JUN 2022
• Global gaming group with a full suite of capabilities
• Game development and live service operations (PC, console, mobile)
• Digital and physical publishing and distribution
• Premier marketing and creative branding services
• Home of some of the most iconic brands in gaming:
• EverQuest
• Lord of the Rings Online
• DC Universe Online
• Magic the Gathering Online
• Geographic presence
• Net Revenue mix – 73% NA / 21% Europe / 6% RoW
• 16 offices across North America and Europe with 693 FTEs
• 8 game studios with 458 developers
• Size in numbers (LTM Q2 2022)
• Net Revenue of SEK 1.7 billion – 93% y-o-y growth
SUMMARY SNAPSHOT • Adjusted EBITDA of SEK 354 million – 108% y-o-y growth
Q2 2022
Financial Highlights from the Quarter
• Net Revenue of SEK 462.8 (311.1) million
• 49% y-o-y growth
• Strong organic growth of 41%
• Adjusted EBITDA of SEK 84.3 (81.1) million
• Solid cash flows with SEK 63.5 million of operating cash flows for the period
• Key takeaways:
• Strong results above expectations - consistently delivering
• Solid growth despite the market uncertainties – especially organic growth
463 84 49% 41 %
SEKm SEKm N et Re ve n u e Gro wt h Orga n ic
(Y - o - Y ) Gro wt h
N et Re ve n u e s Ad j E BIT DA (Y - o - Y )
Q2 2 0 2 2 Q2 2 0 2 2Operational Highlights – Service Segment
• Key figures
• Net Rev of SEK 192 million, representing 103% growth – all organic
• Adj EBITDA of SEK 26 million, representing 297% growth and 14% margin
• Operational highlights
• Fireshine continues strong performance
• Core Keeper has sold over 1mm units and boosted Q2 results
• Sniper Elite 5 release topped the charts for physical, adding to success
• Petrol showcased its industry leading creative and brand expertise with its
expanding relationship with Activision Blizzard
• Lead agency responsible from concept to execution for Call of Duty
Modern Warfare II
• Supporting Warzone live service marketing
• Leading the global brand initiative for Diablo Immortal, one of the
biggest industry hits in Q2Operational Highlights – Game Segment
• Financial performance highlights
• Net Rev of SEK 270 million, representing 25% growth – 14%
organic
• Adj EBITDA of SEK 72 million, representing 27% margin
• Highlights for the quarter included
• My Singing Monsters had its best quarter in history
• DAU increase by over 2,000% y-o-y during the period
• LOTRO celebrated its 15-year anniversary, resulting in the highest
player count since 2016
• DDO’s 7th expansion pack release and 55th update
• Piranha’s downloadable content release for MW5Operational Highlights – Group
• Innova sale update
• Making progress with target closing by end of Q3
• Board update
• New chairman of the board
• Jason Epstein, the 2nd largest shareholder of EG7
• Jason will be taking a more active role in driving growth
• New board member
• Shum Singh, a leading advisor and investor focused on the
gaming sector
• Shum brings further strategic depth and experience to the
board
• Significant insider investment
• SEK 40+ million investment by the leadership
• Firm indication of the leadership’s convictionQ2 2022 FINANCIAL DISCUSSION
Net Revenue and Adjusted EBITDA
MSEK
QUARTERLY LTM
2 000 100%
600 100%
1 800 1 716 90%
499 90%
1 564
500 463 1 600 1 468 80%
80%
400 70% 1 400 70%
400 354 1 165
60% 1 200 60%
311
300 50% 1 000 891 50%
40% 800 40%
200 26% 27% 30% 600 30%
20% 18% 21% 22% 22% 21%
18% 19%
107 20% 400 20%
100 81 71 92 84
325 351 354
10% 243
200 170 10%
- 0%
- 0%
2Q21 3Q21 4Q21 1Q22 2Q22
2Q21 3Q21 4Q21 1Q22 2Q22
Net Revenue Adjusted EBITDA Adj EBITDA Margin Net Revenue Adjusted EBITDA Adj EBITDA MarginLTM NET REVENUE
Net Revenue by Segment 2 000
MSEK 1 800
QUARTERLY NET REVENUE 1 600
708 1 400
556 611 1 200
454 1 000
268 192 818 876 800
144 779
104 429
95 613 600
912 953 1 007
420 711 400
250 231 256 270
216 462 200
-
2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22
Game Service Game Service Sustainable Revenue
QUARTERLY NET REVENUE MIX LTM NET REVENUE MIX
30% 29% 36% 38%
42% 39% 39% 41%
54% 48%
53% 53% 52% 51%
47%
70% 71% 64% 61% 62% 61%
58% 52% 59%
46%
2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22
Game Service Game Service Sustainable RevenueGame Segment – Q2 2022 Net Revenue and Adj EBITDA Mix
MSEK
2Q22 Game Segment Net Revenue Mix
1 ; 0%
23 ; 9% 43 ; 16%
Big Blue Bubble
Daybreak
Piranha
Toadman + AMG
203 ; 75%Service Segment – Q2 2022 Net Revenue and Adj EBITDA Mix
MSEK
2Q22 Service Segment Net Revenue Mix
50 ; 26%
Fireshine
Petrol
142 ; 74%Target and guidance 2022 June.
Incl: 45 MSEK
MSEK
MTGO
QUARTERLY
YoY Growth YoY Growth LTM Net Revenue MSEK
YoY Growth 25% 41%
28% 2 001 1 716
499
1 801
463
1 601
400
1 316
1 401
354
1 201
311
1 001
801
601
107
401
92
84
201
81
71
1
Jul Aug Sep Okt Nov Dec Jan Feb Mar Apr Maj Jun
2Q21 3Q21 4Q21 1Q22 2Q22
LY LTM CY LTM
Net Revenue Adjusted EBITDA
▪ SEK 1.6-1.7 billion Net Revenue in 2022
▪ Margins at new normalized level
▪ Net Revenue in July amounted to SEK 132.7Net Debt to EBITDA ratio and cash
MSEK
753
Q2 cash flow
800 0,7
694
700 0,6
600 546 534 557 Cash OB excl Innova 377
493 0,5
484
500 442 449 Operation +64
381 0,4 Investing - 114
400
0,3 Financing +34
300 0,28
Currency fluctuations in liquidity +21
0,25 0,2
200 Delta Cash +4
100 0,1 Cash CB 381
- -
Q2-2021 Q3-2021 Q4-2021 Q1-2022 A Q2-2022 A
Cash debt Cash at hand Net debt Full Leverage
Cash part of remaining purchase consideration is included in liability. INNOVA is Strong balance sheet
not included from 2022 Q2. EBITDA refers to LTM proforma adjusted EBITDA.LO O K I N G A H EA D
Looking Forward
Short-term Medium-term Long-term
Value Drivers Value Drivers Value Drivers
• Innova sale • Revamp of existing live games • New products based on owned IPs and
existing 3rd party IPs
• Removing geopolitical risk • LOTRO revamp
• Emphasis on long-term growth over
• Product drivers • DCUO revamp seeking immediate gratification through
• MSM’s 10th year anniversary in the fall • Magic Online update short-term bets
• Anticipated boost in LOTRO from • Ramping up development consulting • Investing in the “big picture” with
Amazon’s Rings of Power release business line significant upside over living by
quarter-to-quarter performance
• Upcoming annual expansion packs for • Large market opportunity for talented
EQ and EQ2 development teams • Our vision is to establish EG7 as one of
the leading GaaS companies and this is
• Upcoming seasonal peak in Q4 • Currently 244 developers across a long-term effort vs. short-term
Toadman, Antimatter and Piranha investor management exercise
• Well-positioned to face a volatile market
• Plan is to establish a consulting • Opportunistic M&A
• Bucking the trends and delivering solid business, leveraging some of the team
organic growth to take advantage of the • M&A worked great when the market
supply/demand imbalance for opportunity was there
• Cash flow is key during unpredictable
times and the group continues to development resources • No longer as attractive strategy for EG7
deliver strong cash flows • The combination of our available • We will always be “open” to exploring
talent, high consulting rates and our but our primary focus will be organic
lower labor cost should provide nice growth through smart investments for
revenue and profit potential long-term growthEG7 Investment Highlights • Consistently delivering strong results quarter after quarter • Outstanding organic growth despite the market challenges • Stable recurring revenues, consistently producing strong operating cash flows • Strong liquidity and credit profile critical especially during uncertain times • Portfolio of world class IPs with significant long-term product upside potential • Insiders fully aligned with investors with significant recent investment
Q&A
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