Modern Times Group Q2 2024 Investor Presentation

Key insights

7 takeaways

01
Modern Times Group reported Q2 2024 adjusted EBITDA of 426 million SEK, a 7% year-over-year increase, achieving an operating margin of 30%.
02
Net sales for Q2 2024 were 1,437 million SEK, representing a 1% decline in constant currencies compared to the previous year.
03
The company maintained a disciplined approach to user acquisition (UA) spending, which decreased to 33% of revenue in Q2 2024 compared to 36% for the last twelve months.
04
LTM cash conversion reached 66%, with 1,133 million SEK in free cash flow, supporting the company's ongoing 400 million SEK share buyback program.
05
Strategy & Simulation and Tower Defense segments drove growth in average revenue per daily active user (ARPDAU), which reached 5.0 SEK in Q2 2024.
06
Management reaffirmed its 2024 outlook, targeting 1-5% reported sales growth and an adjusted EBITDA margin between 26% and 29%.
07
The company is expanding its gaming portfolio with a pipeline that includes new content for 'Warhammer 40K: Tacticus' and 'Forza Customs', alongside planned scaling for early-phase titles.

Summary

Modern Times Group’s Q2 2024 investor presentation outlines a period of disciplined operational focus, characterized by stable revenue and significant growth in profitability. The company reported net sales of 1,437 million SEK, representing a marginal 1% decline in constant currencies, while adjusted EBITDA rose 7% year-over-year to 426 million SEK. This performance resulted in an all-time-high 12-month rolling adjusted EBITDA margin of 28%, with the quarterly margin reaching 30%.

The financial results were driven by a strategic emphasis on Return on Ad Spend (ROAS) discipline, which led to a reduction in user acquisition (UA) spending across most studios. While UA spend decreased to 33% of revenue in the second quarter, the company maintained a stable average revenue per daily active user (ARPDAU) and saw positive momentum in its racing and word game franchises. The divestment of Kongregate impacted daily active user (DAU) levels, but the company continues to leverage its core portfolio, including titles like Warhammer 40K Tacticus and various Bloons TD iterations, to anchor its revenue streams.

The company maintains a strong balance sheet, reporting a 66% cash conversion rate for the last twelve months and a net cash position of 1.4 billion SEK. This liquidity supports ongoing capital allocation priorities, including a 400 million SEK share buyback program and potential future mergers and acquisitions. Looking ahead, the company remains confident in its 2024 outlook, projecting 1–5% currency-adjusted sales growth and an adjusted EBITDA margin between 26% and 29%. Management intends to scale marketing investments in the second half of the year as new content and game pipeline opportunities emerge.