MTG Q1 2018 Financial Results

Key insights

6 takeaways

01
MTG plans to split into two separate publicly listed entities on the Nasdaq Stockholm in the second half of 2018, separating its digital entertainment assets from its traditional Nordic media business.See it on page 11
02
The company achieved 9% organic sales growth and a 73% increase in profit in Q1 2018, marking the seventh consecutive quarter of at least 5% organic growth.See it on page 3
03
Digital segment sales surged by 88% during the quarter, growing to represent 35% of total group revenue.See it on page 11
04
The MTGx division, which includes esports and online gaming, achieved 27% organic sales growth and transitioned from an EBITDA loss to a profit following the consolidation of InnoGames and Kongregate.See it on page 8
05
Nordic Entertainment delivered record first-quarter profits, while the International Entertainment segment reported a 14% organic sales increase and a 90% rise in EBIT.See it on page 5
06
MTG Studios experienced a slight decline in organic sales during the quarter, attributed to production scheduling and lower event-related revenue.See it on page 6

Summary

MTG’s financial results for the first quarter of 2018 demonstrate robust growth and a strategic pivot toward a structural split of the organization. The company achieved 9% organic sales growth and a 73% increase in profit, marking the seventh consecutive quarter of at least 5% organic growth. A primary driver of this performance was the digital segment, which saw sales surge by 88%, ultimately accounting for 35% of total group revenue. These results underscore the company’s successful transition toward a digital-first entertainment model.

The operational performance across segments was largely positive, with Nordic Entertainment delivering all-time high first-quarter profits and International Entertainment reporting a 14% organic sales increase alongside a 90% rise in EBIT. The MTGx division, encompassing esports and online gaming, experienced significant momentum with 27% organic sales growth and a successful transition from an EBITDA loss to a profit, bolstered by the consolidation of InnoGames and Kongregate. Conversely, MTG Studios faced a slight decline in organic sales due to production scheduling and lower event-related revenue, though the underlying demand for scripted drama remains strong.

A central development for the firm is the planned separation into two distinct, publicly listed entities during the second half of 2018. MTG will retain its focus on digital entertainment, including esports and online gaming, while the newly formed Nordic Entertainment Group will house the company’s traditional Nordic media assets, including broadcasting, radio, and production studios. This strategic reorganization is intended to streamline operations and clarify the investment profiles of the two resulting companies as they move forward independently on the Nasdaq Stockholm.