MTG Q2 2020 Financial Results

Key insights

6 takeaways

01
MTG reported stable net sales of 1,096 MSEK for Q2 2020, while adjusted EBITDA nearly doubled to 167 MSEK, representing a 15% margin.See it on page 2
02
The gaming vertical achieved record performance with a 15% increase in net sales to 743 MSEK, driven largely by InnoGames' 10% growth in daily active users and 17% rise in ARPDAU.See it on page 2
03
The esports vertical saw a 21% decline in net sales to 353 MSEK due to pandemic-related event cancellations, though adjusted EBITDA losses narrowed to -15 MSEK through cost-cutting measures.See it on page 6
04
Management projects a 30-40% revenue decline for the esports sector in the second half of 2020 as events remain online or postponed.See it on page 9
05
To offset ongoing esports volatility, the company has committed to at least 325 MSEK in cost savings for the remainder of 2020.See it on page 9
06
MTG maintains a strong liquidity position with 1,571 MSEK in cash and cash equivalents to support business continuity and digital asset commercialization.See it on page 7

Summary

The second quarter of 2020 financial results for MTG demonstrate a period of strategic resilience, characterized by record-breaking performance in the gaming vertical that offset pandemic-related disruptions in the esports sector. The group maintained stable net sales of 1,096 MSEK, consistent with the previous year, while significantly improving its adjusted EBITDA to 167 MSEK, up from 88 MSEK in the same period of 2019. This margin expansion to 15% was primarily driven by robust gaming monetization and enhanced operational efficiencies within esports.

The gaming vertical achieved its strongest quarter to date, with net sales rising 15% to 743 MSEK. InnoGames served as a primary growth engine, reporting a 10% increase in daily active users and a 17% rise in average revenue per daily active user compared to the prior year. Conversely, the esports vertical experienced a 21% decline in net sales to 353 MSEK, as the Covid-19 pandemic necessitated the cancellation or transition of live events to online formats. Despite this revenue contraction, the esports division improved its adjusted EBITDA loss to -15 MSEK through rigorous cost control and a shift toward a more favorable media-heavy revenue mix.

Looking ahead to the second half of 2020, the company anticipates continued volatility in the esports sector, projecting a 30-40% revenue decline as properties remain online or postponed. To mitigate these impacts, management has committed to at least 325 MSEK in cost savings for the remainder of the year. The group maintains a strong liquidity position, with 1,571 MSEK in cash and cash equivalents, and remains focused on business continuity, operational efficiency, and the continued commercialization of its digital gaming and esports assets.