Modern Times Group Q2 2019 Financial Results

Key insights

6 takeaways

01
Modern Times Group reported an 11% increase in total sales for Q2 2019, with its core esports and gaming verticals achieving a combined 14% growth.See it on page 2
02
The gaming division grew sales by 19% with an adjusted EBITDA margin of 29%, driven largely by mobile gaming and the title Forge of Empires, which surpassed EUR 500 million in lifetime revenue.See it on page 4
03
The divestment of Nova in April generated SEK 1.8 billion in cash, bringing the company's total cash balance to SEK 2.1 billion to fund future strategic acquisitions.See it on page 9
04
The esports vertical recorded 15% growth in owned and operated property sales, supported by strong viewership for DreamHack and Dota 2 events.See it on page 3
05
The company's venture capital fund invested SEK 22 million across three companies in Q2, bringing its total portfolio to 16 companies with SEK 195 million deployed.See it on page 9
06
Management maintains a full-year sales growth target of 8% to 12% for its core verticals, alongside a mid-single-digit adjusted EBITDA margin goal.See it on page 2

Summary

Modern Times Group demonstrated strong operational momentum during the second quarter of 2019, characterized by an 11 percent increase in reported sales and a significant improvement in profitability. The company’s two primary business verticals, esports and gaming, achieved a combined sales growth of 14 percent. This performance was bolstered by the divestment of Nova in April, which generated SEK 1.8 billion in cash, resulting in a robust total cash balance of SEK 2.1 billion intended to support future strategic acquisitions.

The gaming division served as a primary growth engine, reporting a 19 percent increase in sales and an adjusted EBITDA margin of 29 percent. Mobile gaming accounted for over half of the segment's revenue, with the title Forge of Empires surpassing EUR 500 million in lifetime revenue. While monthly active users saw a slight decline, the division successfully increased its average revenue per daily active user to 2.8 SEK. Simultaneously, the esports vertical continued its strategic expansion, recording a 15 percent growth in owned and operated property sales, highlighted by strong viewership metrics for major Dota 2 and DreamHack events.

Investment activity remained a core component of the corporate strategy, with the venture capital fund deploying SEK 22 million across three growth-stage companies during the quarter. By the end of the period, the fund had invested a total of SEK 195 million across 16 companies, primarily within the United States and Germany. Looking ahead, the company maintains a full-year sales growth ambition of 8 to 12 percent for its core verticals, with an adjusted EBITDA margin target in the mid-single digits, signaling a continued focus on operational efficiency and portfolio development.