MTG publishes Q3 July-September 2020 interim report
STOCKHOLM, November 4th 2020 — Modern Times Group MTG AB (publ) (“MTG”) today publishes its Q3 2020 interim report. MTG’s gaming vertical continues to deliver all-time high, record-setting results, while its esports vertical remains resilient to pandemic impact and has in part successfully offset the loss of live audience events through savings and improved efficiency.
“We’re pleased to see continued strong operational performance from our gaming vertical in the third quarter, as well as high levels of engagement from the player base. InnoGames stands out in particular, delivering an all-time high Adjusted EBITDA driven primarily by Forge of Empires. Despite rollbacks of lockdown restrictions in Q3 in several countries, players in-game spending remained at elevated levels, resulting in better-than-expected growth.,” states Maria Redin in the report, her first since becoming President and CEO of MTG in September 2020.
“I’m proud of how we and our (esport) portfolio companies have adapted to the new circumstances dictated by the coronavirus pandemic. We have changed our operations, continued to successfully convert live audience events to digital only, and retained high levels of fan engagement,” she continues.
MTG’s Q3 2020 interim report highlights follows below. For the full report please see the attached file or www.mtg.com.
Record-high profit for the Group & gaming vertical
- The gaming vertical delivered yet another strong quarter with record-high profit, on the back of continued strong user engagement and a return to normalized marketing spend. The positive performance was manifested through growing Average Revenue Per Daily Active User (ARPDAU) as a result of successful in-game campaigns for the InnoGames portfolio
- The ongoing coronavirus pandemic continued to impact the esport vertical with several properties either being cancelled or postponed in Q3 2020. However, through good cost control and a more favorable revenue mix with a larger media component, the results were better than anticipated
Q3 2020 financial highlights
- Net sales declined by 13% to SEK 912 (1,044) million where underlying net sales declined by 9 percent
- Adjusted EBITDA amounted to SEK 196 (31) million, with adjustments for Items affecting comparability (IAC) of SEK 13 (-) million, Impairment of own capitalized costs of SEK 9 (-) million, Long-term incentive (LTI) programs of SEK 50 (17) million and M&A transaction costs of SEK 1 (19) million
- EBITDA was SEK 124 (-5) million
- Operating income (EBIT) totaled SEK 54 (-82) million
- Net income from continuing operations was SEK -11 (-80) million
- Basic earnings per share amounted to SEK -1.00 (-1.47)
- Net cash flow from operations totaled SEK 93 (-33) million
| Financial overview | |||||
| (SEKm) | Q3 2020 |
Q3 2019 |
Nine months 2020 |
Nine months 2019 |
FY 2019 |
| Continuing operations | |||||
| Net sales | 912 | 1,044 | 2,932 | 3,079 | 4,242 |
| of which esport | 234 | 415 | 885 | 1,196 | 1,712 |
| of which gaming | 679 | 629 | 2,047 | 1,881 | 2,531 |
| of which central operations and eliminations | 0 | -1 | 0 | 3 | 0 |
| Costs before depreciation and amortization | -788 | -1,049 | -2,774 | -3,066 | -4,352 |
| Adjusted EBITDA 1) | 196 | 31 | 342 | 155 | 239 |
| Adjusted EBITDA margin | 22% | 3% | 12% | 5% | 6% |
| Adjustments | -72 | -36 | -183 | -142 | -349 |
| EBITDA | 124 | -5 | 159 | 13 | -109 |
| Amortization | -47 | -53 | -147 | -143 | -202 |
| Depreciation | -23 | -23 | -68 | -72 | -96 |
| of which PPA | -27 | -30 | -88 | -90 | -120 |
| EBIT | 54 | -82 | -56 | -201 | -407 |
| EBIT margin | 6% | -8% | -2% | -7% | -10% |
| Net income | -11 | -80 | -162 | -251 | -458 |
| Basic earnings per share (SEK) | -1.00 | -1.47 | -4.37 | -5.11 | -8.19 |
| Discontinued operations 2) | |||||
| Net income | - | -43 | - | 15,012 | 14,852 |
| Total operations | |||||
| Net income | -11 | -123 | -162 | 14,761 | 14,394 |
| Basic earnings per share (SEK) | -1.00 | -2.08 | -4.37 | 217.81 | 212.44 |
| Net cash flow from operations | 93 | -33 | 175 | -205 | -188 |
| CAPEX | 80 | 69 | 166 | 174 | 239 |
| Net sales growth y-o-y | |||||
| Organic growth | -9% | 2% | -5% | 7% | 7% |
| Acquisitions/divestments | - | 0% | - | -1% | -1% |
| Changes in FX rates | -4% | 4% | 0% | 5% | 4% |
| Change in reported net sales | -13% | 6% | -5% | 10% | 10% |
| 1) See page 24 for details of adjustments to EBITDA. Alternative performance measures used in this report are explained on page 25 | |||||
| 2) Consists of the adjusted result for NENT, Nova and Zoomin in 2019 | |||||
Guidance for H2 2020
Revenue in the esport vertical is expected to decline by approximately 27-32 (previously 30-40) percent in 2H 2020, compared with the corresponding period in 2019, as a result of the ongoing coronavirus pandemic and its impact on conducting physical live events with audiences, players and partners present. This decline is predominantly driven by most Own & Operated (O&O) and Esport Services (ESS) events being either moved online in H2 2020, postponed to 2021, or in a few instances canceled. MTG expects a return to a more normal operational performance starting from when borders are fully open, and when it is allowed to conduct large physical and live events under safe conditions.
ESL and DreamHack will continue to reduce both cost of goods and services sold and fixed costs. These savings will be at least SEK 325 (no change) million for H2 2020 vs H2 2019 and are designed to deliver operational efficiency and enhance the future potential of the operations when the current pandemic comes to an end.
Group-adjusted EBITDA for H2 2020 is expected to amount to between SEK 375–400 (earlier 250-300) million. The improvement is on the back of continued strong user engagement and successful in-game events in the gaming vertical where we continue to see a stronger momentum also post lock-down.
Financial calendar
| Interim financial report Q3 2020 | November 4th 2020 |
| Interim financial report Q4 2020 | February 4th 2021 |
| Interim financial report Q1 2021 | April 29th 2021 |
| Annual General Meeting 2021 | May 18th 2021 |
| Interim financial report Q2 2021 | July 20th 2021 |
| Interim financial report Q3 2021 | October 28 2021 |
Conference call
MTG AB will hold a conference call at 3.00pm CET which will be hosted by President and CEO Maria Redin and CFO Lars Torstensson.
Dial in details:
Sweden +46 856 618 467
UK: +44 (0) 844 481 9752
US: +1 646 741 3167
The access pin code for the call is 747 68 15.
To listen to a streamed webcast - listen only - of the conference call visit:
https://edge.media-server.com/mmc/p/s269wzsw
This information is information that MTG (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 below, at 02.00pm CET on November 4th 2020.
For more information:
Oliver Carrà, Public Relations Director
Direct: +46 70 464 44 44, oliver.carra (at) mtg.com
Reach us: communications@mtg.com
Download high-resolution photos: Flickr
Follow us: mtg.com / Twitter / LinkedIn
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About MTG
MTG (Modern Times Group MTG AB (publ.)) (www.mtg.com) is a strategic and operational investment holding company in esports and gaming entertainment. Born in Sweden, the shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).
