Q1 2019 Interim report January-March

May 9 2019

Higher reported net sales driven by esports growth

  • Esports “Owned & Operated” sales up 17%
  • Organic sales growth of 9.6% in esports, including growth in “Esports Services”
  • Positive revenue and margin trends in Gaming

 Q1 2019 financial highlights

  • Sales growth of 3.9% to SEK 967m (SEK 931m) with -1.7% organic growth
  • Adjusted EBITDA of SEK 25m (SEK 8m), including SEK 14m due to impact of IFRS 16
  • EBITDA of -SEK 54m including adjustments for IAC of -SEK 54 and for LTI of -SEK 25m(1)
  • Operating income (EBIT) of -SEK 126m (-SEK 79m)
  • Net income of Continuing Operations of -SEK 150m and basic earnings per share of -SEK 2.71
  • Total net income of SEK 13,465m incl. capital gain of SEK 13,420 on the distribution of NENT Group shares
  • Net cash in Continuing Operations of SEK 349m

President & CEO’s comments

MTG split completed successfully
In February shareholders approved our plans to split the company into two, and we completed this successfully in March, distributing NENT Group shares to all of our shareholders, and listing them on Nasdaq Stockholm on 28 March. This was the culmination of more than a year of intensive preparation and thanks are due to everyone who played a part in this process and helped bring it to a successful conclusion.

The split created two strong companies which both have bright futures ahead. MTG is a unique play on global esports and online gaming, which are markets with huge growth potential. Our Build-and-Buy strategy can deliver on this potential, by driving performance in our existing companies to generate profitable and sustainable growth, and by adding strategic assets with strong IP to our portfolio. Our sole focus now is to execute on this strategy.    

Esports returns to growth
Following the decline in esports revenue during the second half of 2018, resulting from our strategic decision to focus on our owned and operated (“O&O”) properties and pursue only selected esports services (“ESS”) business, the esports vertical returned to growth in the first quarter, delivering organic sales growth of 9.6%. The rate of growth was constrained by ESL having two fewer Masters properties than in the first quarter last year, but the two Masters properties that were activated generated revenues substantially higher than in the previous year, and we also delivered four more Challenger properties this year. Our properties featured Fortnite for the first time, generating strong interest from fans. Dreamhack’s newly launched e-FIFA leagues in Denmark and Sweden delivered strong incremental revenues.    

Gaming delivers good mobile growth
InnoGames achieved good growth in mobile sales, with more than half of Forge of Empires revenue coming from mobile for the first time. InnoGames also launched God Kings, a new mobile game that is showing strong initial results. The start of the turnaround in Kongregate drove an improvement in the revenue performance in Gaming, compared to the sharp decline we saw in the previous quarter, and the Adjusted EBITDA margin also improved sequentially, both of these reflecting Kongregate’s focus on a smaller number of successful games.

Jørgen Madsen Lindemann
President & Chief Executive Officer

“Our world-leading esports business returned to growth in the quarter, with both of ESL’s Masters properties and Dreamhack’s e-FIFA leagues delivering record numbers of viewers and attracting a growing range of high-quality sponsors and media partners. InnoGames had a solid quarter and we also saw the performance of Kongregate start to turn around. With Nova now sold, we can focus fully on expanding our portfolio of successful games companies.”

Outlook & FY 2019 ambition

No change to previously announced ambition
The Group’s ambition for the full-year 2019 remains as stated at the Capital Markets Day in March, being to deliver organic sales growth of mid-teens percent and an Adjusted EBITDA margin in mid-single digits, after Group central costs and excluding the impact of IFRS 16. The performance will be second-half weighted, driven by better monetisation of Owned & Operated esports properties, the continuing strong performance of InnoGames, and the operational turnarounds being implemented in Kongregate and Zoomin.

Shareholders information

2019 Annual General Meeting
The 2019 Annual General Meeting will be held on 21 May 2019 in Stockholm.

The notices to the Meeting and related materials can be found at www.mtg.com.

Financial calendar

Annual General Meeting 2019      21 May 2019
Q2 results announcement            22 July 2019
Q3 results announcement            29 October 2019

Questions?

press@mtg.com
investors@mtg.com (or David Boyd, Head of Investor Relations; +46 73 699 29 99)

Download high-resolution photos: Flickr

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Conference call

The company will host a conference call today at 9:00 Stockholm local time. To participate in the conference call, please dial:

Sweden:         +46 850 692 180
UK:                +44 844 571 8892
US:                +1 631 510 7495

The access pin code for the call is 6195816.

To listen live to the conference call online please visit https://edge.media-server.com/m6/p/y2rkjyz7

For further information, please visit www.mtg.com 

Modern Times Group MTG AB (Publ.) – Reg no: 556309-9158 – Phone +46 562 000 50 – mtg.com

MTG (Modern Times Group MTG AB (publ.)) is a strategic operational and investment holding company in esports and gaming entertainment. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’). 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 person set out above, at 07:30 CET on 9 May, 2019.

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