Modern Times Group Q4 2022 Investor Presentation

Modern Times Group’s Q4 2022 investor presentation outlines a fiscal year defined by resilience in a challenging, low-visibility gaming market. The company successfully met its full-year sales guidance while slightly outperforming margin expectations, largely due to lower-than-anticipated marketing expenditures during the final quarter. Despite a 4% year-over-year decline in organic sales during Q4, the group achieved 5% pro forma organic growth for the full year 2022, reporting total revenue of SEK 5,537 million.

Performance across the portfolio was mixed, with growth in the Tower Defense, Racing, and Word Game segments—driven by PlaySimple, Ninja Kiwi, and Hutch—offset by declines in the Strategy and Simulation segments, specifically within InnoGames and Kongregate. The company maintained an adjusted EBITDA margin of 25% for the full year, though this dipped to 22% in Q4. User acquisition (UA) spending increased to 40% of revenue in the fourth quarter, reflecting a strategic, albeit cautious, approach to marketing amidst a market environment where players increasingly favor casual titles over mid-core strategy games.

The company’s financial position remains stable, with a 47% cash conversion rate for the year and a strong balance sheet that supports potential future acquisitions. While management declined to provide a 2023 outlook due to limited market visibility and broader industry uncertainty, the long-term thesis remains anchored in favorable demographic trends and a diversified pipeline of games across various lifecycle stages. The company continues to prioritize a disciplined investment strategy, utilizing clearly defined return-on-ad-spend thresholds to navigate current market volatility.