Modern Times Group Q2 2020 Interim Report

Key insights

6 takeaways

01
Modern Times Group achieved a significant increase in adjusted EBITDA to SEK 167 million in Q2 2020, up from SEK 88 million in the same period of 2019.See it on page 7
02
The gaming segment grew net sales by 15 percent to SEK 743 million, driven by increased user engagement and monetization at InnoGames during global lockdowns.See it on page 11
03
The esports division experienced a 21 percent decline in net sales to SEK 353 million due to the forced transition from live tournaments to online-only formats.See it on page 8
04
Despite the revenue decline in esports, the segment improved its adjusted EBITDA to SEK -15 million through rigorous cost control measures.See it on page 8
05
The group maintained a robust liquidity position with SEK 1,571 million in cash and cash equivalents by the end of the quarter.See it on page 14
06
Leadership remains committed to the strategic separation of the gaming and esports businesses to unlock long-term shareholder value.See it on page 3

Summary

Modern Times Group demonstrated a resilient financial performance during the second quarter of 2020, characterized by a strategic divergence between its gaming and esports verticals amidst the global COVID-19 pandemic. The group achieved a significant increase in adjusted EBITDA, rising to SEK 167 million from SEK 88 million in the same period the previous year. This growth was underpinned by disciplined cost management and a favorable revenue mix, which allowed the company to maintain a robust liquidity position of SEK 1,571 million in cash and cash equivalents by the end of the quarter.

The gaming segment served as the primary engine for growth, recording a 15 percent increase in net sales to SEK 743 million. This performance was driven by heightened user engagement and monetization, particularly within InnoGames, as global lockdowns catalyzed increased customer inflow. Conversely, the esports division faced substantial operational headwinds, resulting in a 21 percent decline in net sales to SEK 353 million. The mandatory transition from live, in-person tournaments to online-only formats disrupted traditional revenue streams, though the segment successfully improved its adjusted EBITDA to SEK -15 million through rigorous cost control measures.

Looking forward, leadership remains committed to the strategic separation of the gaming and esports businesses to unlock long-term shareholder value once market conditions stabilize. While the pandemic continues to influence operational dynamics, expectations for 2021 include a gradual return to live esports events and a normalization of seasonal patterns within the gaming portfolio. The board maintains that these results accurately reflect the company’s financial standing and risk profile, providing a stable foundation for navigating the ongoing volatility within the global digital entertainment landscape.