MTG delivers a strong quarter of 7% pro forma net sales growth and a 26% adjusted EBITDA margin in Q2

MTG delivers a strong quarter of 7% pro forma net sales growth and a 26% adjusted EBITDA margin in Q2

July 20, 2022
07.30 CEST
The group delivered strong second quarter results, with year-on-year pro forma growth of 7 percent, in a market we expect to have declined. MTG continued to invest in user acquisition, supported by well-received content updates for several of our most important games. The group delivered an adjusted EBITDA margin of 26 percent in the quarter, which was higher than expected due to lower than initially planned marketing investments in the period. MTG also returned approximately SEK 3 billion to shareholders through a share redemption program which was completed after the end of the quarter as well as through ongoing share buy-backs. The group has a clear strategy focused on a combination of organic growth and selective, accretive M&A and is well positioned to continue increase its overall market share going forward.

Financial highlights Q2 continuing operations

  • Pro forma revenues up 7 percent year on year. Net sales growth of 70 percent year on year to SEK 1,379 (810) million, while organic revenues declined by 7 percent year on year but were up by 3 percent from the first quarter
  • Pro forma user acquisition spend of SEK 500 (383) million, 36 percent of revenue, down from SEK 576 million in Q1
  • Adjusted EBITDA of SEK 357 (203) million with an adjusted EBITDA margin of 26 (25) percent
  • Reported EBITDA of SEK 361 (189) million and EBIT of SEK 158 (100) million, including EBITDA adjustments of SEK 15 million of non-recurring bonus structures and SEK -19 million of M&A transaction costs
  • Net financial items amounted to SEK -264 (26) million mainly relating to a revaluation of the earnout liability of SEK -100 million, exchange differences of SEK -75 million and discounted interests of earnouts of SEK -59 million
  • Total net income of SEK 6,248 (-11) million and total basic earnings per share of SEK 56.88 (-0.26). Net income from discontinued operations amounted to SEK 6,328 million and reflected the divestment of ESL Gaming. Net income from continuing operations to SEK -80 million
  • Cash flow from operations in the quarter amounted to SEK 405 (52) million
  • Cash and cash equivalents at the end of the period amounted to SEK 8,182 (1,229) million, the increase is related to the divestment of ESL Gaming
  • SEK 2.7 billion was paid out as part of the share redemption program shortly after the end of the quarter. The share redemption program is reported as a current liability in the quarter

Financial overview

(SEKm) Q2 2022 Q2 2021 H1 2022 H1 2021 FY 2021
Continuing operations
Net sales 1,379 810 2,736 1,578 3,931
EBIT 158 100 244 166 505
EBITDA 361 189 600 337 978
Adjusted EBITDA 357 203 699 385 1,102
Net income -80 81 -191 66 -248
Basic earnings per share (SEK) -0.73 0.60 -1.74 0.49 -1.94
Diluted earnings per share (SEK) -0.73 0.60 -1.73 0.49 -1.94
Discontinued operations
Net income 6,328 -92 6,124 -201 -207
Total operations
Net income 6,248 -11 5,932 -135 -454
Basic earnings per share (SEK) 56.88 -0.26 53.87 -1.57 -3.94
Diluted earnings per share (SEK) 56.74 -0.26 53.74 -1.57 -3.93
Growth, continuing operations
Sales growth 70% 9% 73% 15% 47%
Changes in FX rates 9% -5% 8% -7% -4%
Sales growth at constant FX 61% 14% 66% 22% 51%
of which organic growth -7% -14% -8% -3% -9%
Pro forma growth 7% - 9% - 12%

A letter from our CEO

Hello and thank you for your interest in our results.

We are very happy to deliver 7 percent pro forma growth in the quarter. The results showcase the strength of our evergreen IPs and the diversity of games in our portfolio, as we continue to outperform the overall gaming market.

The main drivers of our pro forma growth this quarter were PlaySimple and Ninja Kiwi, which were both acquired in 2021. Some of our key content launches and updates in the quarter included new and well-received content for Rise of Cultures, Bloons TD 6 and F1 Clash. The growth rate is in the lower range of our top-line expectations for the quarter, but as we expect the gaming market to have declined, we continue to take market shares.

Our organic sales improved by 3 percent from the first quarter of the year but declined by 7 percent year on year. This mainly reflected the sequentially improved performance by InnoGames and Hutch, as well as the inclusion of Ninja Kiwi during the month of June, where the group returned to organic growth.  

During the quarter we continued to invest in user acquisition for key evergreen titles as well as our fast-growing anagram franchise games and Rise of Cultures. The group’s total marketing investment in the quarter was lower than initially planned, resulting in stronger profits during the period. The lower investments reflected tactical decisions made during the quarter to adapt to a combination of lower market visibility, the performance of our games and the ongoing effect of a return to normal after the pandemic. The group therefore invested a total of SEK 500 million in marketing during Q2, compared to SEK 576 million in the first quarter. Marketing spend represented 36 percent of revenues in the quarter, compared to 42 percent of revenues in the prior three months. 

As a result, MTG reported significantly improved profitability, with an adjusted EBITDA of SEK 357 million in the quarter and a margin of 26 percent. The reported margin outperformed the expectations previously set by the group, primarily as a result of the lower UA spending levels.

The group also delivered strong cash flow from operations of SEK 678 million in the first six months of the year, which represented a cash conversion of 61 percent. This reflected the strong underlying cash generation capabilities of our gaming portfolio and the well-established player bases for our evergreen franchises and titles.

Delivering on our commitment to create significant shareholder value

We successfully delivered on several major corporate initiatives during the quarter, which led to the creation of significant shareholder value. The most important one was the completion of the sale of ESL Gaming to Savvy Gaming Group, which generated net proceeds of SEK 8.3 billion for MTG. This enabled us to launch a SEK 2.7 billion share redemption program, distributing SEK 25 per share to our shareholders after the end of the quarter.

We concluded a SEK 117 million share buyback program on the June 7, 2022. Shortly after, we launched a second share buyback program, which aims to repurchase up to SEK 200 million worth of shares between now and October 2022.

In addition, we made significant progress towards a clear and transparent corporate structure by completing a minority share exchange for EHM Holding, the company co-owned by the founders of InnoGames. As a result, EHM became the largest single shareholder in MTG early in July.

Our vision and ambitions as a pure-play gaming group

As part of our ongoing work to explain our strategy and equity story, the group hosted a streamed capital markets update in June. The update was focused on explaining our approach to combining organic and M&A driven growth with building a common ecosystem that our gaming companies can tap into to accelerate.

We call this ecosystem The Flow Platform. It’s a long-term initiative that enables our game makers and studios to access knowledge, tools and skills that will help them accelerate in four critical business areas – user acquisition, business intelligence, ad monetization and cross promotion. The long-term ambition of our Flow Platform is to help us drive long-term growth and cost synergies and to amplify the positive effects of any future additions to our gaming village.

We’re making progress in this area and have now established a global User Acquisition and Business Intelligence function, where you find a small team of experts led by our CMO Christian Pern. The team is already working with several of our portfolio companies to help them build on their existing capabilities in these areas. We have also started to build out our cross promotion capabilities through the platform developed by PlaySimple and are running early cross promotion tests with multiple games in our portfolio.

Lastly, we also used the streamed update to reiterate that while M&A remains an important avenue for our long-term growth, we will continue to approach it with the same value creation-focused mindset we always have.

Looking towards the second half of 2022

We are facing an increasingly uncertain market. Overall visibility remains low due to several factors, including high inflation levels and the ongoing return to a post-pandemic ‘normal’. Yet, we continue to believe that our strategy and portfolio put us on a path to continue outperforming the industry and that the gaming industry could be somewhat more resilient than many other industries.

MTG has one of the best portfolios of well-established evergreen IPs and franchises on the market and our gaming studios will continue to engage players through ongoing live-ops initiatives and significant content updates in our key titles. We have a healthy pipeline of upcoming titles, and our aim is to continue building a balanced portfolio in terms of genres, playstyles and target audiences.

The group will also accelerate our expansion through selective and accretive M&A and we expect to find good opportunities for further industry consolidation. We have a strong balance sheet following the sale of ESL and are reviewing several potential targets.

We plan on holding the second part of our capital markets day in November, in London. This will be a day where investors, analysts and other stakeholders can get a deep dive into how our companies develop, launch and run their games.

This is only the beginning of our journey as a pure-play gaming group, and we have a talented and experienced team to help us succeed. Thank you for following our progress and I look forward to sharing more updates with you in the coming months.

Maria Redin

Group President & CEO, Modern Times Group MTG AB

Outlook for the full year 2022

The group notes the short-term limited visibility and uncertainty on the gaming market but reiterates its current outlook.

MTG expects to continue to grow faster than the overall gaming market thanks to its high-quality, highly diversified games portfolio. The group expects its pro forma growth rate for Q1 2022 to be indicative for the full-year pro forma growth rate. In terms of profitability, we expect the group to deliver long-term EBITDA margins around 23-25 percent and free cash flow (FCF) conversion levels of around 50-60 percent.

On a long-term basis, the group is well-positioned to capture above-market growth in a very attractive and growing market. As a result, we estimate that we will deliver a 7-10 percent organic long-term revenue CAGR, plus opportunities from M&A.

Financial calendar

The group will report its financial results for the third quarter of the year on the October 26, 2022.

For more information:

Anton Gourman, VP Communications and IR Direct: +46 73 661 8488,

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About MTG

MTG (Modern Times Group MTG AB (publ.)) ( is an international mobile gaming group that owns and operates gaming studios with popular global IPs across a wide range of casual and mid-core genres. The group is focused on accelerating portfolio company growth and supporting founders and entrepreneurs. MTG is an active driver of gaming industry consolidation and a strategic acquirer of gaming companies around the world. We are born in Sweden but have an international culture and global footprint. Our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).

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