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Modern Times Group Q1 2019 Financial Results

Key insights

7 takeaways

01
Modern Times Group reported a 3.9% increase in total sales for Q1 2019, though organic sales saw a 1.7% decline.See it on page 6
02
The esports division achieved a 9.6% organic sales increase, supported by 230 million daily unique viewers and 1.2 million peak viewers for the Intel Extreme Masters.See it on page 3
03
The sale of Nova in April 2019 generated SEK 1.8 billion in cash, strengthening the balance sheet for future acquisitions and venture capital investments.See it on page 8
04
Mobile platforms now account for over 50% of total gaming revenue, with InnoGames showing steady growth and Kongregate's turnaround strategy yielding positive results.See it on page 4
05
The company recorded a net income loss of SEK 150 million from continuing operations, largely due to costs associated with the NENT Group corporate split.See it on page 7
06
Management maintains a full-year outlook targeting mid-teens organic growth and mid-single-digit adjusted EBITDA margins, with performance weighted toward the second half of 2019.See it on page 9
07
The company's venture capital fund has surpassed $20 million in total investments as part of its ongoing capital allocation strategy.See it on page 8

Summary

Modern Times Group’s first quarter of 2019 financial results demonstrate a strategic transition following the successful split and listing of the NENT Group. The organization reports a 3.9% increase in reported sales, though organic sales declined by 1.7%. Despite this, the company achieved an adjusted EBITDA margin of 2.5%, reflecting improved operational efficiency and a return to growth within its core esports and gaming segments. The sale of Nova in April provided a significant cash infusion of SEK 1.8 billion, strengthening the balance sheet to support future acquisitions and investment activities.

The esports division experienced a notable recovery, with organic sales rising 9.6% following a 2018 strategic refocus. This growth was largely driven by owned and operated properties, which saw increased engagement, including 230 million daily unique viewers and 1.2 million peak viewers for the Intel Extreme Masters. Simultaneously, the gaming segment benefited from a shift toward mobile platforms, which now account for over 50% of revenue. InnoGames saw steady growth, while the Kongregate turnaround strategy, characterized by a focus on fewer, higher-performing titles, began to yield positive results.

Financial performance for the quarter included a net income loss of SEK 150 million from continuing operations, impacted by costs associated with the corporate split and long-term incentive programs. However, the company maintains a positive outlook for the remainder of the year. Management remains committed to achieving mid-teens organic growth and mid-single-digit adjusted EBITDA margins, with performance expectations weighted toward the second half of the year. The firm continues to prioritize capital allocation through its venture capital fund, which has surpassed $20 million in total investments.