Modern Times Group Q2 2023 Investor Presentation

Key insights

6 takeaways

01
Modern Times Group reported Q2 2023 revenue of SEKm 1,458, a 6% year-over-year increase, with an adjusted EBITDA of SEKm 397 and a 27% margin.See it on page 9
02
While organic revenues declined 2% year-over-year, four out of five studios achieved sequential growth, demonstrating operational resilience.See it on page 3
03
User acquisition spending accounted for 39% of total revenue, with significant investment directed toward scaling new titles within the PlaySimple platform.See it on page 8
04
The Word Games category emerged as a primary growth driver, while Strategy and Simulation titles saw a 10% sequential revenue increase at constant currencies.See it on page 4
05
Management reaffirmed full-year 2023 guidance, projecting sales between -3% and +2% at constant currency and an adjusted EBITDA margin of 23% to 25%.See it on page 10
06
The company maintained a 53% cash conversion rate in Q2 and is prioritizing a new game pipeline for 2024 and 2025 alongside planned share buybacks.See it on page 9

Summary

Modern Times Group’s second quarter 2023 performance reflects positive business momentum, characterized by strong sequential growth and healthy profit margins. The company reported revenues of SEKm 1,458, representing a 6% year-over-year increase, alongside an adjusted EBITDA of SEKm 397 and a 27% adjusted EBITDA margin. While organic revenues declined by 2% year-over-year, four out of five studios achieved sequential growth, signaling operational resilience across the portfolio.

The company’s growth is anchored by its diverse franchise segments, with the Word Games category emerging as a standout performer. Strategy and Simulation titles also demonstrated strength, with revenues rising 10% sequentially at constant currencies. Strategic initiatives, such as the launch of Bloons TD6 on Netflix and the successful scaling of new word-based titles, contributed to these results. User acquisition spending remained a significant focus, accounting for 39% of total revenues, primarily driven by investments in scaling new games within the PlaySimple platform.

Financial health remains stable, supported by a 53% cash conversion rate in the second quarter. Management maintains a positive outlook for the remainder of the year, reaffirming expectations for full-year sales to fall within a range of -3% to +2% at constant currency, with an adjusted EBITDA margin projected between 23% and 25%. The company continues to prioritize its long-term strategy, which includes a robust pipeline of new titles for 2024 and 2025 and a commitment to share buybacks following regulatory approval. Overall, the results underscore a successful focus on monetization and portfolio optimization despite ongoing challenges in new user acquisition for mid-core gaming segments.