Media and Games Invest (MGI) erhöht Umsatzprognose für 2022

Dienstag, 15. November 2022

Adhoc-Mitteilung der Media and Games Invest SE:

Media and Games Invest SE reports strong revenue growth of 39% in the third quarter 2022 and raises its full-year revenue guidance for 2022

– Net Revenues in Q3 2022 amounted to 87.6 mEUR (Q3 2021: 62.9 mEUR), an increase of 39%.

– Adj. EBITDA² in Q3 2022 amounted to 23.0 mEUR (Q3 2021: 19.0 mEUR), an increase of 21%.

– Strong Organic Revenue Growth¹of 23%, driven by a 34% year-on-year growth of Software Clients with revenues of more than EUR 100k.

– Based on the strong YTD performance and the positive outlook for Q4 2022 management expects the company to exceed its current full year 2022 revenue target range and updates the revenue guidance to EUR 315-325 million (previously EUR 295-315 million). The adj. EBITDA guidance remains unchanged at EUR 83-93 million.

Media and Games Invest SE (“MGI” or the “Company”, ISIN: MT0000580101; ticker M8G; Nasdaq First North Premier Growth Market and Scale Segment Frankfurt Stock Exchange; OTCQX ticker: MDGIF) closed the third quarter 2022 with 87.6 mEUR in Net Revenues, corresponding to an increase of 39% compared to Q3’21. 23% of the Net Revenue growth was contributed by Organic Revenue Growth. The adj. EBITDA for the third quarter 2022 increased by 21% to EUR 23.0 million compared to Q3’21. Despite the macroeconomic headwinds that caused many advertisers to cut their marketing budgets, MGI managed to increase the number of new software³ clients both year-on-year (+34%) and quarter-on-quarter (+6%). In addition, revenue from existing customers also increased by 4% year-on-year (as shown by a Net Dollar Expansion Rate of 104%⁴), which is a strong signal despite the backdrop of overall reduced media budgets and lower Cost-Per-Mille (CPMs) in the advertising market. MGI is also further working on realizing the synergies with mobile and casual games studios. They add substantial value via unique advertising spaces, first party opt-in data as well as for testing ownmedia products, resulting in faster testing and optimization cycles. This provides MGI with a leading position in an industry that is shifting towards privacy by using contextual signals and other AI routines which do not rely on identifiers. Based on the strong YTD 2022 and especially Q3 2022 performance in combination and the positive outlook for Q4 2022, management expects the company to exceed it’s current full year 2022 revenue target range and uplifts the revenue guidance to EUR 315-325 million (previously EUR 295-315 million). The adj. EBITDA-guidance remains unchanged at EUR 83-93 million.

-End of ad-hoc announcement-

– Start explanatory section-

HIGHLIGHTS Q3 2022

NetRevenuesamountedto 87.6 mEUR(Q3 2021:62.9mEUR),anincreaseof 39%comparedtoQ3 2021, whereof23% wascontributedbyOrganicRevenueGrowth.
Adj.EBITDAamountedto 23.0mEUR(Q3 2021:19.0mEUR),anincreaseof 21%.
Adj.EBIT⁵amountedto 18.5 mEUR(Q3 2021:15.0mEUR),anincreaseof 24%.
Adj. Net Result⁶amountedto 6.7 mEUR(Q3 2021:6.5mEUR),anincreaseof 4%.
EarningsPerShare(EPS)amountedtoEUR0.02 (Q3 2021: EUR 0.02). EPS adjusted for PPA-amortization⁷ amounted to EUR 0.04 (Q3 2021: EUR 0.04).

HIGHLIGHTS FIRST 9 MONTHS 2022

Net Revenues amounted to 231.5 mEUR (Q1-Q3 2021: 172.0 mEUR), an increase of 35%.
Adj. EBITDA amounted to 61.7 mEUR (Q1-Q3 2021: 47.8 mEUR), an increase of 29%.
Adj. EBIT amounted to 48.5 mEUR (Q1-Q3 2021: 35.4 mEUR), an increase of 37%.
Adj. Net Result amounted to 18.8 mEUR (Q1-Q3 2021: 17.3 mEUR), an increase of 9%.
Net Interest-Bearing Debt⁸ as of September 30, 2022 amounted to 307.5 mEUR (December 31, 2021: 198.6 mEUR).
Leverage Ratio⁹amounted to 3.6x as of September 30, 2022 (2.8x as per December 31, 2021 and 3.7x as of June 30, 2022). At the end of Q3 2022, this ratio includes five months of AxesInMotion EBITDA as well as three months of Dataseat EBITDA and is therefore overstated. Mid-term, the Company intends to de-lever to below 3.0x.
Cash and Cash Equivalents amounted to 118.4 mEUR (December 31, 2021: 180.2 mEUR) and decreased due to the final earn-out and deferred purchase price payments related to the KingsIsle acquisition as well as the initial purchase price payments for the AxesInMotion and Dataseat acquisitions.
Earnings Per Share (EPS) amounted to EUR 0.06 (Q1-Q3 2021: EUR 0.06). EPS adjusted for PPA-amortization amounted to EUR 0.12 (Q1-Q3 2021: EUR 0.12).

SELECTED KEY PERFORMANCE INDICATORS, MGI GROUP

In mEUR	Q3 2022	Q3 2021	Q1-Q3 ’22	Q1-Q3 ’21	FY 2021
Net Revenues	87.6	62.9	231.5	172.0	252.2
*YoY Growth in Revenues*	39%	80%	35%	88%	80%
EBITDA¹⁰	21.4	17.5	58.3	44.1	65.0
*EBITDA Margins*¹¹	24%	28%	25%	26%	26%
Adj. EBITDA	23.0	19.0	61.7	47.8	71.1
*Adj. EBITDA Margins*¹²	26%	30%	27%	28%	28%
Adj. EBIT	18.5	15.0	48.5	35.4	54.8
*Adj. EBIT Margins*¹³	21%	24%	21%	21%	22%
Adj. Net Result	6.7	6.5	18.8	17.3	28.0
*Adj. Net Result Margins*	8%	10%	8%	10%	11%

The Q3 2022 interim report is available on MGI’s corporate website at https://mgi-se.com/investor-relations/financial-reports-and-presentations/ in the Investor Relations section. All financials are consolidated group figures and reviewed but not audited.

A Word from Remco Westermann, CEO

“I am very pleased to announce that we were able to deliver a very strong quarter with 39% revenue growth and 21% adj. EBITDA growth despite macroeconomic headwinds. Even more importantly, we were able to continue our strong Organic Revenue Growth and realized 23% in this third quarter. On a rolling last twelve-month basis we generated EUR 312 million in revenues and EUR 85 million in adj. EBITDA and are already well within the range of our full-year 2022 Guidance of EUR 295-315 million in revenues and EUR 83-93 million in adj. EBITDA. Based on our strong year-to-date performance, while at the same time remaining cautious regarding our forecasts based on current market headwinds, we expect that we will exceed our revenue target and herewith update our revenue Guidance 2022 to be in the range of EUR 315-325 million. Our adj. EBITDA Guidance remains unchanged at 83-93m.

MGI’s strong performance was achieved despite several headwinds in our markets. July, according to industry analysts, was the worst month in terms of advertising spend since the harsh cuts at the onset of the Covid-19 pandemic. Accordingly, we saw only moderate revenue growth in our existing Software Clients with a Net Dollar Expansion Rate equaling 104%. However, we believe this moderate growth is a very strong signal as growing advertising budgets in the current market environment can certainly not be taken for granted. A Net Dollar Expansion rate above 100% indicates that existing Software Clients increased their revenues on our platform versus the same period last year. Despite many advertisers across many industries decreasing their marketing budgets, we managed to overall increase the volume of ads served for our Software Clients. This positive effect, however, was partially mitigated by the negative market impact from lower CPMs (cost per thousand ad impressions) caused by overall lower advertiser demand which led to reduced margins.

Since we were able to substantially add new customers, we delivered almost as many ads in Q3’22 than in the (seasonally always much stronger) Q4 of last year. The number of ad impressions we served showed a strong year on year growth of 27% leading to 172 billion ad impressions in Q3’22 alone. In Q3’22, we were able to grow the ad spend on our platform by 54% and therefore gained market share and continued our overall growth path. For the upcoming quarters, we will further focus on organic growth by launching new products, by further increasing return on ad spend for our customers and by adding new customers. Additionally, we can expect strong tailwinds for our revenues if CPMs are increasing again.

We were also able to substantially grow our adj. EBITDA (+21% in Q3’22). We continue working on integrating and optimizing our platforms as well as our product and services portfolios. While we added extra manpower to drive more innovation, we reduced manpower needs due to streamlining our platforms and other activities. On the other hand and based on large corporate projects such as improving our internal control systems and preparing our relocation to Sweden we saw administrative costs increasing. While we have already generated substantial synergies from optimizations, we have further headroom on the cost optimization side.

I have been frequently asked how I see the coming quarters and what a recession means for our company, and I would like to take this opportunity to share my views with you.If I were to sum it up in a headline, it would be: “Acknowledge, adapt quickly and overtake.”

In more detail: we are currently in an economic environment with a high level of uncertainty caused by various disruptions due to the pandemic, high energy prices due to the war in Ukraine, persistent issues in the supply chain and a high level of inflation triggering increasing interest rates. To effectively battle inflation central banks intend to slow down demand. The uncertainty as well as the slow-down in economic activity led to cuts in advertising budgets, which in turn leads to less demand and, thus, to lower CPMs.

I expect that this situation will continue well into next year and perhaps even longer. We have accepted this reality and have adapted accordingly. Focus is now on growing our customer base and on increasing the effectiveness of our ad-software platform. In the meantime, we are also focusing on cost-efficiency, further integrating our recently acquired assets and gaining synergies based on our flywheel approach. For the time being, we have also decided to not focus on further M&A activity. Increased revenues and cost discipline will further lead to deleveraging. The aim of these measures is to secure our cash position, further strengthen cash flow and to generate additional organic growth through targeted investments in our core strengths.

It is well-known that it is not the strongest species that survives, nor the most intelligent, but the one most responsive to change. Consequently, we have acknowledged the new environment we operate in, we are fast in adapting and we are focusing on our strengths. We see the current market characteristics as a significant opportunity, and we have set ourselves the goal to use this opportunity to gain market-share and become stronger.

You do not have to be an optimist to see that the market will recover and that this time, too, the crisis will not be followed by the end of the world. The economy will pick up again after the recession, and companies will invest more in advertising again which will also lead to rebounding CPMs.

The advertising market is huge and, according to all analysts, will grow in the medium and long term. The key point to understand is that the overall industry landscape is shifting more and more from traditional advertising channels such as television and newspapers to digital channels. It is moving away from manual work to efficient and automated processes controlled by artificial intelligence; and, very importantly, it is moving away from a lack of transparency in the use of data to transparent and privacy-compliant processes. It is precisely this area, precisely this new world of advertising, that we have in recent years positioned ourselves in, and we have been able to secure significant market share ever since.

How have we done that? Starting from building a portfolio of games with long-term sustainable revenues and first party data, then adding an end-to-end multi-channel programmatic ad-platform enabling us to optimally connect advertisers and publishers via programmatic bidding. This was followed by investing into data and artificial intelligence capabilities building a competitive edge for a world without identifiers. These three elements of our ad software platform allow us to deliver innovative products, as well as high transparency and efficiency and a high return on advertising spend. That we possess these capabilities is also demonstrated by the fact that we have been ranked number one on Pixalate’s Sellers Trust Index in mobile SSP four consecutive times.

The first party opt-in data of our own games content serve as a laboratory to test new innovative products and to feed and improve our algorithms while additionally generating good returns via item sale, subscription, and ad-based revenue models. In the meantime, we are also growing our existing games and launching new games. We use data solutions to adopt and excel in the new and upcoming privacy first environment with less, or even no, identifiers. We have developed future-proof solutions such as Moments A.I. and ATOM which rely on context and segments and that are fully privacy compliant. Our end-to-end Ad-Software-Platform connects the entire value chain between advertisers and publishers. On the one hand, this obviously has a positive effect on margins and efficiency, since instead of up to five different middlemen, there is only one between the advertiser and the publisher. More importantly, however, the high degree of transparency that can be achieved by eliminating middlemen and by using proprietary first party data, has an extremely positive impact on the quality and efficiency we can offer.

Especially during a recession, advertisers will focus even more on the outcome of their campaigns to make the most out of their reduced budget and also have a higher willingness to switch. With our end-to-end set-up, first-party data as well as innovative and privacy compliant products, we have the means and the knowledge to support advertisers in this endeavor and, thus generate customer growth also in a more challenging environment.

There is one important variable I have not mentioned yet which is our strong and highly motivated team: Our team has put a lot of work and dedication into building, improving and innovating our platform over the past few years, which has brought us to where we are today -one of the largest mobile exchanges/SSPs worldwide- that is known for setting standards in terms of quality, transparency, and efficiency.

With our strong cash position of well above €100 million and our strong cash flow from operations in combination with the strong market position which we were able to build over the last few years, we have an excellent foundation for further growth. Being well positioned in a market that is changing rapidly and growing dynamically long term, I can hardly describe how excited I am to continue this journey with my team and together with you.

Overall, I remain very positive about Media and Games Invests future. And as Ayrton Senna once said: “You cannot overtake 15 cars when it is sunny, but you can when it’s raining”. We are ready to do so!

Next to further profitable growth we are also actively improving our governance and sustainability performance, such as preparing our relocation to Sweden and have extended the board of directors. As part of these changes, I no longer act as Chairman of the board of directors, now being a regular member of the board fully concentrating on my CEO role.”

GUIDANCE FOR THE FINANCIAL YEAR 2022

On February 28, 2022 Media and Games Invest SE published its initial guidance for the financial year 2022:

	FY 2021 (A)	Guidance 2022
Revenue (in €m)	252	290 – 310¹⁴
Growth	80%	15 – 23%
Adj. EBITDA (in €m)	71	80 – 90
Growth	143%	13 – 27%

On April 28, 2022 Media and Games Invest SE published its updated guidance for the financial year 2022 taking into consideration the acquisition of AxesInMotion:

	FY 2021 (A)	Updated Guidance 2022
Revenue (in €m)	252	295 – 315¹⁴
Growth	80%	17 – 25%
Adj. EBITDA (in €m)	71	83 – 93
Growth	143%	17 – 31%

On November 15, 2022 Media and Games Invest SE published its updated guidance for the financial year 2022 taking into consideration the revenues and EBITDA performance for the first nine months and the outlook of Q4 2022:

	FY 2021 (A)	Updated Guidance 2022
Revenue (in €m)	252	315 – 325¹⁴
Growth	80%	25 – 29%
Adj. EBITDA (in €m)	71	83 – 93
Growth	143%	17 – 31%