“We’re pleased to see continued strong operational performance from our gaming vertical in the third quarter, as well as high levels of engagement from the player base. InnoGames stands out in particular, delivering an all-time high Adjusted EBITDA driven primarily by Forge of Empires. Despite rollbacks of lockdown restrictions in Q3 in several countries, players in-game spending remained at elevated levels, resulting in better-than-expected growth.,” states Maria Redin in the report, her first since becoming President and CEO of MTG in September 2020.

“I’m proud of how we and our (esport) portfolio companies have adapted to the new circumstances dictated by the coronavirus pandemic. We have changed our operations, continued to successfully convert live audience events to digital only, and retained high levels of fan engagement,” she continues.

MTG’s Q3 2020 interim report highlights follows below. For the full report please see the attached file or www.mtg.com.

Record-high profit for the Group & gaming vertical

• The gaming vertical delivered yet another strong quarter with record-high profit, on the back of continued strong user engagement and a return to normalized marketing spend. The positive performance was manifested through growing Average Revenue Per Daily Active User (ARPDAU) as a result of successful in-game campaigns for the InnoGames portfolio
• The ongoing coronavirus pandemic continued to impact the esport vertical with several properties either being cancelled or postponed in Q3 2020. However, through good cost control and a more favorable revenue mix with a larger media component, the results were better than anticipated

Q3 2020 financial highlights

• Net sales declined by 13% to SEK 912 (1,044) million where underlying net sales declined by 9 percent
• Adjusted EBITDA amounted to SEK 196 (31) million, with adjustments for Items affecting comparability (IAC) of SEK 13 (-) million, Impairment of own capitalized costs of SEK 9 (-) million, Long-term incentive (LTI) programs of SEK 50 (17) million and M&A transaction costs of SEK 1 (19) million
• EBITDA was SEK 124 (-5) million
• Operating income (EBIT) totaled SEK 54 (-82) million
• Net income from continuing operations was SEK -11 (-80) million
• Basic earnings per share amounted to SEK -1.00 (-1.47)
• Net cash flow from operations totaled SEK 93 (-33) million

Guidance for H2 2020

Revenue in the esport vertical is expected to decline by approximately 27-32 (previously 30-40) percent in 2H 2020, compared with the corresponding period in 2019, as a result of the ongoing coronavirus pandemic and its impact on conducting physical live events with audiences, players and partners present. This decline is predominantly driven by most Own & Operated (O&O) and Esport Services (ESS) events being either moved online in H2 2020, postponed to 2021, or in a few instances canceled. MTG expects a return to a more normal operational performance starting from when borders are fully open, and when it is allowed to conduct large physical and live events under safe conditions.

ESL and DreamHack will continue to reduce both cost of goods and services sold and fixed costs. These savings will be at least SEK 325 (no change) million for H2 2020 vs H2 2019 and are designed to deliver operational efficiency and enhance the future potential of the operations when the current pandemic comes to an end.

Group-adjusted EBITDA for H2 2020 is expected to amount to between SEK 375–400 (earlier 250-300) million. The improvement is on the back of continued strong user engagement and successful in-game events in the gaming vertical where we continue to see a stronger momentum also post lock-down.

Financial calendar

Conference call

MTG AB will hold a conference call at 3.00pm CET which will be hosted by President and CEO Maria Redin and CFO Lars Torstensson.

Dial in details: Sweden +46 856 618 467 UK: +44 (0) 844 481 9752 US: +1 646 741 3167

The access pin code for the call is 747 68 15.

To listen to a streamed webcast - listen only - of the conference call visit: https://edge.media-server.com/mmc/p/s269wzsw

This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 02.00pm CET on November 4th 2020.

For more information: Oliver Carrà, Public Relations Director Direct: +46 70 464 44 44, oliver.carra (at) mtg.com

Reach us: communications@mtg.com Download high-resolution photos: Flickr Follow us: mtg.com / Twitter / LinkedIn

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About MTG MTG (Modern Times Group MTG AB (publ.)) (www.mtg.com) is a strategic and operational investment holding company in esports and gaming entertainment. Born in Sweden, the shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).

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