Q2 INVESTOR PRESENTATION - AUGUST 2021 - EG7
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TABL E O F CONTENTS 1. Q2 HIGHLIGHTS 2. COMPANY OVERVIEW 3. HISTORICAL RECAP 4. EG7 TODAY 5. FUTURE GROWTH INITIATIVES
Q2 2021 RECAP • Highest revenue and profit in the history of the company. • Total revenue of SEK 422.5 million, a growth of 160% compared to Q2 2020. • EBITDA of SEK 96.8 million, a growth of 360% compared to Q2 2020. • Adjusted EBITDA of SEK 111.8 million, considering a SEK 5 million cost of M&A in the quarter and SEK 10 million of one-time retention bonuses. • Piranha Games and Innova, acquisitions closed in Q1 2021 now fully integrated. • Successfully relaunched MechWarrior 5. 422.5 96.8 23% 160% SEKm SEKm EBITDA MARGIN T O T A L R E V E NUE T O T A L R E V E NUE EBITDA Q2 2021 GROWTH Q2 2021 Q2 2021
EG7 IN S HO RT EG7 is a unique eco-system within the video games industry consisting of: 769 SEKm 1. An IP-portfolio consisting of world-class live and premium titles: REVENUE o EG7 holds a diversified portfolio of live services such as EverQuest, Lord of the Rings, H1 2021 PlanetSide, DC Universe, Dungeons and Dragons and My Singing Monsters. o This Games-as-a-Service (“GaaS”) portfolio accounts for the majority of the revenues and profits with predictable recurring monthly revenues. o Majority of capex is “bolt-on” as opposed to “premium product” over 3-5 years. o In excess of 80% of the revenue originates from live titles as opposed to new releases. 2. Proprietary game distribution platform: o Traditional game distribution platform margin loss: 15-30% o EG7 proprietary platform margin loss: Less than 5% 184 o Own platform results in ownership of user information and controlling all consumer messaging and marketing. SEKm EBITDA o Own current and future EG7 titles to be included in proprietary platform allowing for cost H1 2021 synergies and margin expansion. o In excess of 90% of the revenue originates from live titles on the platform as opposed to new releases. 27% 3. World class service platform: o Marketing, publishing and distribution for both internal and external projects. o Petrol, the number one gaming marketing agency which is leveraged by combining ownership of consumer messaging with ownership of user data. EBITDA MARGIN o The services side of the eco-system is a powerful tool in assisting EG7’s game developing companies and a key aspect in procuring M&A. o In excess of 70% of the revenue originates from repeat clients as opposed to new clients. 845 80% 20% EMPLOYEES Recurring Revenue Non-Recurring
HIS TO RY & FINANCIAL S Acquired gaming +302% IP and game platform Revenue per Year SEK 2,061.0 companies (Pro-forma Revenue) Revenue Growth per Year Acquired service platform +573% Company went Contract worth public SEK 512.4m Consulting in SEK 40m with (Pro-forma Revenue) Development Leyou +52% -3% +586% SEK 7.5m SEK 11.4m SEK 11.1m SEK 76.1m 2015-08 2016-08 2017-08 2018-121 2019-12 2020-12 1) Changed to calendar year. 2018 figures referring to 2017/09/01-2018/12/31, i.e. 16 months.
HIS TO RICAL QU ARTERL Y GRO WTH¹ QUARTERLY REVENUE (SEKm) QUARTERLY EBITDA (SEKm) 423 347 210 164 163 121 97 87 73 60 14 17 12 18 15 12 19 23 5 12 5 5 13 2 Q1 Q2 Q3 Q4 Q1 Q2 -1 Q3 -3 -5 -17 Q4 2018 2019 2020 2021 2018 2019 2020 2021 1) Reported total revenue and EBITDA
REV EN U E BY S EG MEN T DEVELOPMENT OF SEGMENT TOTAL REVENUES (SEKm) DEVELOPMENT OF SEGMENT EBITDA (SEKm) 422.5 120 450 96.8 400 100 346.5 84.7 350 168.2 2.3 80 29.4 300 87.9 250 60 200 150 40 84.7 258.6 254.2 67.4 100 20 50 0 0 Q1 2021 Q2 2021 Q1 2021 Q2 2021 Games Services Games Services STRONG QUARTER ON QUARTER GROWTH – STABLE GAME REVENUES
THE CO MPANY TO D AY WE CONTROL THE ENTIRE VALUE CHAIN DEVELOPING MARKETING PUBLISHING DISTRIBUTION/ PLATFORM • Daybreak, owner of 7 IP's that are live and account for 50% of the revenue, mainly PC and Console. Distributed mainly through our own platform. • Big Blue Bubble, owner of My Singing Monsters, • Innova, via own platform 4Game. Has 12 mainly mobile. Distributed mainly via Appstore and Petrol, one of the most prominent live games today. Google Play. Sold Out, first and third party game video game marketing agencies in publisher and distributor the western world • Daybreak, via own platforms. Has 7 live • Piranha, holds the MechWarrior license, mainly PC games today. and Console, Distributed mainly via Epic Store, Steam and Xbox Live. • Toadman Studios, developer of new IP and content, mainly PC and Console.
O U R GAMES RELEASED 1999 RELEASED 2012 RELEASED 2015 RELEASED 2012 RELEASED 2007 RELEASED 2011 RELEASED 2006 RELEASED 2004
WEL L D IV ERS IFIED L IV E S ERV ICE PO RTFO L IO MY SINGING EVERQUEST PLANETSIDE 2 H1Z1 MONSTERS RELEASE DATE 1999 2012 2015 2012 LIVE-SERVICE GAMES % OF TOTAL GROUP PRO FORMA 2 0 2 0 R E V E N UE DESCRIPTION Fantasy MMORPG Sci-Fi MMOFPS Battle Royale MMO Casual Simulation PLATFORM PC PC, Console PC, Console Mobile, PC IP OWNERSHIP Original IP Original IP Original IP Original IP 50% METACRITIC 85 84 70 91 LORD OF THE RINGS DUNGEONS AND DC UNIVERSE ONLINE EVERQUEST 2 ONLINE DRAGONS ONLINE RELEASE DATE 2007 2011 2006 2004 OTHER GAMES % OF TOTAL GROUP PRO FORMA 2 0 2 0 R E V E N UE DESCRIPTION Fantasy MMORPG Superhero MMORPG Fantasy MMORPG Fantasy MMORPG PLATFORM PC PC, Console PC PC IP OWNERSHIP Licensed IP Licensed IP Licensed IP Original IP 12% METACRITIC 88 75 74 83
PROPRIETARY GAME DISTRIBUTION PLATFORM • 4Game is EG7’s proprietary game distribution platform with 12 licensed games and counting. • Strong own technology/platform similar to Steam. 16% • Holds game licenses in EU and CIS. 4GAME % OF TOTAL GROUP PRO FORMA 2020 • Revenue is only generated from live-service R E V E N UE games on the platform, similar to the portfolio of live-service games EG7 owns. SELECTION OF GAMES
WORLD-CLASS SERVICES 22% • Creative marketing • First and third-party studio with 40+ ongoing publisher that has marketing projects. never had an SERVICES % OF Previous projects - Call unprofitable release. TOTAL GROUP PRO of Duty Warzone, Far FORMA 2020 Cry 6 and Assassin’s • Frontier, Team17 and REVENUE Creed Valhalla. Rebellion among other are repeat • Activision, Embracer, clients of Sold Out. Ubisoft among other are repeat clients of Petrol.
O U R O FFICES BIG BLUE BUBBLE ARTPLANT NORWAY DEVELOPER & PUBLISHER GAME DEVELOPER TOADMAN HQ INNOVA GAME DEVELOPER PIRANHA GAMES PUBLISHER DEVELOPER BIG BLUE BUBBLE DEVELOPER & ANTIMATTER GAMES INNOVA HQ ARTPLANT RUSSIA PUBLISHER GAME DEVELOPER PUBLISHER GAME DEVELOPER PETROL DAYBREAK MARKETING SOLDOUT DEVELOPER & PUBLISHER PUBLISHER & TOADMAN BERLIN DISTRIBUTOR GAME DEVELOPER
AL IGNED INCENTIV ES BETWEEN MANAGEMENT AND INV ES TO RS DAN STEN OLSSON GEORGY CHUMBURIDZE Shares: 6,912,000 Shares: 9,726,053 BOARD REPRESENTATION VIA ERIK NIELSEN FOUNDER INNOVA JASON EPSTEIN ALEXANDER ALBEDJ Shares: 6,910,000 Shares: 1,277,706 BOARD CHAIRMAN ROBIN FLODIN JAMES CATO Shares: 2,905,255 Shares: 1,507,162 CEO EG7 CO-FOUNDER SOLD OUT RASMUS DAVIDSSON GARRY WILLIAMS Shares: 2,872,743 Shares: 1,507,162 CO-FOUNDER EG7 CO-FOUNDER SOLD OUT ALAN HUNTER RUSS BULLOCK Shares: 1,835,876 Shares: 404,040 CO-FOUNDER PETROL CEO PIRANHA BEN GRANADOS JI HAM Shares: 1,769,317 Shares: 926,376 CO-FOUNDER PETROL CEO DAYBREAK DAMIR SLOGAR OLA NILSSON Shares: 1,298,256 Shares: 770,000 FOUNDER AND CEO BIG BLUE BUBBLE HEAD OF STUDIO TOADMAN TOTAL BOARD AND MANAGEMENT OWNERSHIP: 49% 1) Holdings as of June 30, 2021
FUTURE GROWTH INITIATIVES M&A PIPELINE GAME EXPANSIONS AND NEW TITLES GEOGRAPHICAL PLATFORM EXPANSION OWN IP INTO PLATFORM
CURRENT AND FUTURE TITLES TO BE INCLUDED IN 4GAME PLATFORM LIVE-SERVICES UPCOMING GAMES TITLES
GEO GRAPHICAL PL ATFO RM EXPANS IO N STRONG IN EUROPE AND CIS – POTENTIAL FOR GEOGRAPHIC EXPANSION
GAME EXPANS IO NS AND NEW TITL ES GAME EXPANSIONS NEW TITLES FUTURE POTENTIAL Unannounced AAA-MMO • Bolt-on investments into existing portfolio is a beneficial method of achieving a more immediate pay-off than the typical premium product investment. • Investments in new IP can create significant value if the title is successful, both in terms of positive cash-flow and the value of the IP/brand.
M& A S TRATEGY We employ a selective M&A strategy due to our semi-active approach. We want to successfully integrate the companies into the group and thereby creative synergetic value. Add-on acquisition X Acquisition targets become significant shareholders¹ 8.0x EV/EBITDA multiple 9.7x EV/EBITDA multiple 3.7x EV/EBITDA multiple 4.6x EV/EBITDA multiple 4.6x EV/EBIT multiple 4.9x EV/EBIT multiple 0.3x EV/EBIT multiple 0.5x EV/EBIT multiple 1) Entrepreneurs are usually paid in a mix of cash and shares in order to minimize negative cash flow and align incentives
K EY INV ES TMENT HIGHL IG HTS 1. Unique world-class gaming eco-system. 2. EG7 holds some of the strongest game IP’s in the world. 3. Proven shareholder value through acquisitions. 4. Diversified risk through stable cash-flow, low-risk, profitable STRONG services division and experienced game development division. REASONS TO INVEST 5. High potential through a games division with a massive pipeline of strong titles. 6. Incentivized management and board that controls 49% of the shares. 7. Experienced team.
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