Azerion Group N.V · EURONEXT:AZRN
Azerion — Q1 2020 Earnings Presentation
39 slides from Azerion's earnings presentation, Jun 15, 2020
Slide 1: Azerion Q1 Update
a azerion Azerion Q1 Update June 2020
Slide 2: Azerion's Leadership
AZERION’S LEADERSHIP HIGHLY EXPERIENCED MANAGEMENT TEAM WITH FOUNDERS STILL ACTIVE IN THE GROUP Atilla Aytekin Presenting today Umut Akpinar Group CEO & Co-founder, Chairman of the Board Group CEO & Co-founder, Chairman of the Board • Serial entrepreneur for more than 20 years • Serial entrepreneur
Slide 3: Agenda
AGENDA 1. Introduction 2. Leading Global Gaming and Monetization Company 3. Stellar and Profitable Financial Growth 4. A Global Gaming Company – Strong owned and 3rd Party Casual Gaming 5. Owned Monetization Technology 6. Azerion Philosophy 7. Azerion Growth Strategy 8. Azerion Financials 9. Outlook
Slide 4: Q1 Financial Highlights
Q1 FINANCIAL HIGHLIGHTS Q1 2019 vs Q1 2020 REVENUE EBITDA MAU ARPDAU eCPM +16% +25% +18% +33% -23% 41.3m to 48m EUR 1.8m to 2.2m EUR 66.9m to 78.8m 0.026 to 0.035 EUR 1.23 to 0.95 EUR BOND ACQUISITIONS COVID IMPACT 4
Slide 5: COVID-19 Update
COVID-19 UPDATE INSTALLS DAU’S 1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16-Mar31-Mar 15-Apr 30-Apr 15-May30-May 1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16-Mar31-Mar 15-Apr 30-Apr 15-May30-May GAMEPLAYS eCPM 1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16-Mar31-Mar 15-Apr 30-Apr 15-May30-May 1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16
Slide 6: Azerion at a Glance
AZERION AT A GLANCE A LEADING GLOBAL GAMING AND MONETIZATION TECHNOLOGY COMPANY Gaming and Monetization Company Strong Owned and 3rd Party Casual Gaming IP’s GLOBAL GAMING 24 OFFICES 350M GAMEPLAYS +950 EMPLOYEES 80M MAU Owned Monetization Technology/Infrastructure Stellar Growth and Profitable TECH
Slide 7: Leading Global Gaming and Monetization Company
LEADING GLOBAL GAMING AND MONETIZATION COMPANY
Slide 8: Azerion: A Global Gaming and Monetization Company
AZERION A GLOBAL GAMING AND MONETIZATION COMPANY 46% 15% E 22% NA 73% A 14% 2% 1% A 15% HQ (Amsterdam) 1% OFFICES SA 1% GAMES TRAFFIC (Gameplays) O 9% 1% ADTECH TRAFFIC (AdImpression) 8
Slide 9: Stellar and Profitable Financial Growth
STELLAR AND PROFITABLE FINANCIAL GROWTH
Slide 10: Stellar & Profitable Financial Growth
STELLAR & PROFITABLE FINANCIAL GROWTH 188.8 182.1 17.1 17.5 126.9 7.5 23.1 3.1 9.9 1.2 1.5 7.1 2015 2016 2017 2018 2019 LTM Q12020 2015 2016 2017 2018 2019 LTM Q12020 Net Revenue (EURm) Adjusted EBITDA (EURm) 10
Slide 11: Stellar & Profitable Financial Growth Q-Comparison
STELLAR & PROFITABLE FINANCIAL GROWTH Q-COMPARISON 35% 25% 20% 20% 48.0 Q1 Q2 Q3 Q4 41.3 Average organic seasonality 2015-2019 23.8 2015 48.0 2016 2017 2018 5.3 2019 1.8 2.3 2020 Q1 Q2 Q3 Q4 11 Revenue per quarter 2015-2019 in mEUR Year-over-year revenue per quarter 2015-2019
Slide 12: A Global Gaming Company
A GLOBAL GAMING COMPANY STRONG OWNED AND 3RD PARTY CASUAL GAMING
Slide 13: Global Gaming Landscape
GLOBAL GAMING LANDSCAPE REVENUE (EURbn) REVENUE (EURbn) Browser PC 196 USD 3.5bn 178 165 152 139 2% 122 41% 40% Console 101 38% 92 36% USD 47.9bn 32% 35% 8% Smartphone 36% 8% 1% 2019E REVENUES 36% 28% 9% 8% 2% 1% USD 54.9bn 24% 9% 3% 2% USDbn 152.1 10% 10% 12% 4% 31% 31% 6% 5% 32% 31% +9.6% Y-o-Y 31
Slide 14: Gaming Landscape at Azerion
GAMING LANDSCAPE AT AZERION PORTFOLIO REACH REVENUE SOURCES LARGE GAMES (15) In-App Revenue 80m 10% 3% MAU 10% eCommerce 55% 22% Ad Revenue (own content) F2P GAMES (400) F2P PORTALS (150) +5m Ad Revenue (partner content) DAU Subscription/Other Gross margins 72% +350m 53% 50% MONTHLY 25% DISTRIBUTION
Slide 15: Gaming Key Financial Parameters
GAMING KEY FINANCIAL PARAMETERS Revenue by category MAU by category 1% 9% Mid-core (Board&Card) 3% Mid-core (Board&Card) 24% 43% 14% Social Games Social Games 19% 87% Casual Casual eCommerce eCommerce Revenue trend MAU & ARPPDAU trend 8 100 40 mEUR 7 ARPPDAU in EUR 6 80 30 MAU in m 5 Mid-core 60 4 2
Slide 16: Owned Monetization Technology
OWNED MONETIZATION TECHNOLOGY
Slide 17: Azerion New Segmentation
AZERION NEW SEGMENTATION OLD SEGMENTATION NEW SEGMENTATION CONTENT CONTENT ADTECH MONETIZATION TECH ADSALES
Slide 18: Monetization Technology Landscape
MONETIZATION TECHNOLOGY LANDSCAPE Digital Media Spend Earning Money from Online Advertisement 59% 61% 57% 54% 518 479 50% 436 385 333 2018 2019 2020 2021 2022 Digital ad spending (USD billions) % of total media ad spend Programmatic Ad Spend 68% 65% 62% 98 57% 84 51% 70 57 43 2018 2019 2020 2021 202
Slide 19: Monetization Technology Landscape at Azerion
MONETIZATION TECHNOLOGY LANDSCAPE AT AZERION MONETIZATION SERVICES FOR AZERION AS PUBLISHER AND OTHER PUBLISHERS PORTFOLIO REACH REVENUE SOURCES LARGE GAMES PORTFOLIO BRANDS +230m devices per day 43% 57% +25,000 SELECTEDFREE MEDIA AGENCIES TO PLAY domains Programmatic Direct Sales Gross margins 5.5b
Slide 20: Monetization Technology Key Financial Parameters
MONETIZATION TECHNOLOGY KEY FINANCIAL PARAMETERS REVENUE BY CATEGORY ADVERTISER BY INDUSTRY Gaming & Entertainment Automotive 21% 21% 38% 11% 19% Telco 62% Agency 13% 15% FMCG Direct Electronics Other ADIMPRESSION VS ECPM 8.0 2.0 6.0 1.5 4.0 1.0 +1,500 +30k +100 AdImpression PUBLISHERS ADVERTISERS A
Slide 21: Azerion Philosophy
AZERION PHILOSOPHY
Slide 22: Azerion Philosophy: Ecosystem
AZERION PHILOSOPHY: ECOSYTEM MORE UPLIFT IN GAMING REVENUE AND CREATING UNIQUE ENTERTAINMENT OFFERING TO PUBLISHERS OWNED & OPERATED CONTENT UNIQUE MEDIA OFFERING ECOSYSTEM MONETIZATION CONTENT TECH UA REACH INCREASED MARGINS 22
Slide 23: Azerion Growth Strategy
AZERION GROWTH STRATEGY FROM ACQUISITION TO ORGANIC
Slide 24: Azerion Growth Strategy
AZERION GROWTH STRATEGY ORGANIC ACQUISITIONS PROFITABILITY 1 2 3 ECOSYSTEM CONTRIBUTION ENTREPRENEURSHIP PROFITABLE GROWTH
Slide 25: Azerion Growth Strategy: Organic Growth
AZERION GROWTH STRATEGY ORGANIC GROWTH CURRENT CONTENT NEW BUSINESS CONCEPTS NEW MARKETS NEW TITLES SUBSCRIPTION PORTAL FOR GAMES ASIAN LAUNCH NEW FEATURES TELCO ALLIANCES NEW ECOMMERCE DOMAINS INCREASED UA AJAX E-SPORTS ALLIANCE ORGANIC
Slide 26: Azerion Growth Strategy: Acquisitive Growth
AZERION GROWTH STRATEGY ACQUISITIVE GROWTH STRONG M&A TRACK RECORD BUSINESS-DRIVEN M&A STRATEGY NEED 9 9 GROW 35 37 5 26 4 4 4 17 2 12 4 8 ACQUIRE INTEGRATE No. of completed acquisitions No. of Group Companies ACQUISITIONS 26
Slide 27: Over 40 Successful M&A Events in Five Years
OVER 40 SUCCESSFUL M&A EVENTS IN FIVE YEARS NEED FOUNDATION GAMING EXPANSION DISTRIBUTION AD EXPANSION GEO EXPANSION SCALING UP SUSTAINABILITY 2014 2015 2016 2017 2018 2019 2020 ACQUIRED
Slide 28: Azerion Financials
AZERION FINANCIALS 28
Slide 29: Q1 Financial Highlights
Q1 FINANCIAL HIGHLIGHTS Revenue growth +16.2% (or EUR 6.7m) Adjusted EBITDA EUR 2.2m (4.7% margin) EUR 60m bond issuance Timely adjustment to Covid-19 impact
Slide 30: Q1 Financial Overview – Current Segmentation
Q1 FINANCIAL OVERVIEW – CURRENT SEGMENTATION Q1 Net revenue development Q1 Net revenue split EURm 48.0 30% 32% 41.3 Q1 2019 38% 10.8 12.3 Content AdTech AdSales 19.6 15.5 22% 37% 17.6 13.4 Q1 2020 41% Q1 2019 Q1 2020 Content AdTech AdSales Content AdTech AdSales 30
Slide 31: Q1 Adjusted EBITDA and P&L Ratios
Q1 ADJUSTED EBITDA AND P&L RATIOS Q1 Adjusted EBITDA development Q1 P&L ratio development EURm Gross margin % Change -196bps 2.2 +0.4 36.0% 34.1% Q1 2019 Q1 2020 1.8 Opex/ Revenue % +1.0 -64bps 3.5 2.5 31.7% 31.1% +0.2 Q1 2019 Q1 2020 -0.1 0.1 -0.6 Adj. EBITDA margin % -1.4 -0.8 +34bps 4.3% 4.7% Q1
Slide 32: Q1 Financial Overview – New Segmentation
Q1 FINANCIAL OVERVIEW – NEW SEGMENTATION Q1 Net revenue development Q1 Adjusted EBITDA development EURm EURm Change 48.0 2.2 +0.4 41.3 1.8 30.3 3.5 +1.1 27.9 2.5 -0.7 17.6 -1.3 -0.6 13.4 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Gaming Monetization Tech Gaming Monetization Tech 32
Slide 33: Q1 Cash Flow
Q1 CASH FLOW Q1 2020 cash flow development EURm Operating CF EUR 4.0m Investing CF EUR 17.7m 1.9 -2.2 4.1 -2.0 -7.7 9.9 9.6 13.5 -7.8 Cash ending EBIT Change in Other op. CF R&D Capex Acquisitions Other capex Financing CF Cash ending FY19 NWC Q1 20 33
Slide 34: Q1 Balance Sheet
Q1 BALANCE SHEET Q1 Balance sheet Assets (EURm) Liabilities (EURm) 9.6 70.9 117.7 25.7 192.2 5.1 192.2 80.8 69.9 0.2 4.4 Intangible Tangible Financial Current Cash Total fixed fixed fixed assets assets Total Provisions Non-current Current Total assets assets assets protective liabilities liabilities
Slide 35: Q1 Income Statement
Q1 INCOME STATEMENT Income statement Observations Income statement (EURm) Q1 20 Q1 19 • Net revenue increase driven by: Net Revenue 48.0 41.3 COGS (31.6) (26.4) o Consolidated acquisitions in Content Gross margin 16.3 14.9 o Accelerated organic growth in Content Personnel expenses 11.6 o Significant
Slide 36: Q1 Cash Flow Statement
Q1 CASH FLOW STATEMENT Cash flow development Observations Cash flow statement (EURm) Q1 20 • Operating cash flow from operating activities amounted to EUR Cash flow from operating activities 4.0m Operating result (2.0) o Net working capital accounted for EUR4.1m driven by volume increase of both acc
Slide 37: Q1 Balance Sheet
Q1 BALANCE SHEET Balance sheet Observations Balance sheet (EURm) Q1 20 FY19 • Intangible fixed assets mainly consists of: ASSETS Intangible fixed assets 80.8 68.1 o Goodwill (EUR 44.1m) Tangible fixed assets 5.1 3.1 Financial fixed assets 25.7 2.3 o Capitalised development costs (EUR 4.0m) Current a
Slide 38: Outlook Q2-2020
OUTLOOK Q2-2020
Slide 39: Outlook – Financial Guidance Reiterated
OUTLOOK – FINANCIAL GUIDANCE REITERATED Covid Impact on Revenue, EBITDA and Organization Business Ecosystem roll-out; commercial focus on own content and tech Organization Organizational simplicity and agility Q2 2020 Adj. EBITDA: EUR 7.5m FY 2020 Adj. EBITDA: EUR 25.5m