Report

Conference Call: Q1 2023

11 pages754 words

Summary

Modern Times Group’s first-quarter 2023 performance reflects a period of stabilization and strategic adjustment within its global gaming portfolio. The company reported revenues of SEKm 1,306, representing a 4% year-on-year decline in reported revenue and an 11% decrease in organic revenue. This contraction is primarily attributed to challenging year-over-year comparisons, specifically regarding post-pandemic demand for InnoGames and platform incentive payments received by PlaySimple in the first quarter of 2022. Despite these headwinds, the company maintained an adjusted EBITDA of SEKm 263, achieving a 20% margin that remained stable on a like-for-like basis. The portfolio demonstrates divergent performance across segments. PlaySimple and Ninja Kiwi delivered strong underlying growth, with Word Games maintaining its position as the company’s strongest franchise for the fifth consecutive quarter. Conversely, the Strategy and Simulation segment experienced a difficult start to the year, though it showed signs of gradual improvement toward the end of the quarter. User engagement metrics indicate that growth in the Word Games category successfully offset challenges in acquiring new players for the Strategy and Simulation titles during the early months of the period. Financially, the company retains a robust balance sheet, characterized by a strong cash position and significant debt capacity. This liquidity supports ongoing operational requirements and provides flexibility for future mergers, acquisitions, and shareholder value initiatives. While free cash flow was impacted by earnout payments, the underlying cash conversion rate remains healthy at 51% for the quarter. The company continues to leverage its diverse intellectual property across multiple genres to navigate shifting market conditions and stabilize performance across its international gaming operations.

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