Devolver Digital FY2024 H1 Investor Presentation
Download PDFSep, 2024 INVESTOR PRESENTATION
2024 1H RESULTS
Devolver Digital Investor Presentation 2 Devolver Digital Investor Presentation 2
SUMMARY
•
Return to EBITDA profit in 1H 2024 in line with previous guidance
•
Revenues up 18%, Gross Profit up 63%
1
, EBITDA profit v loss 1H 2023
•
Strong back catalogue sales driven by ongoing success of key titles,
1H-weighted platform deals, and System Era contribution
•
Strong 2H 2024 release schedule boosted by Plucky Squire success
•
System Era acquisition well integrated with solid 1H 2024 performance
•
Maintain full year 2024 guidance in line with current consensus
Note: 1) Adjusted Gross Profit after US$1.7m performance-related non-cash impairment
Devolver Digital Investor Presentation 3 Devolver Digital Investor Presentation 3
REVENUE
$
51.6
m
+18% vs 1H 2023
EBITDA
2
$
3.0
m
$(3.5m) in
1H 2023
GROSS PROFIT
1
$
15.3
m
+63
%
vs 1H 2023
TITLES RELEASED
3
CASH BALANCE
$
31.9
m
$41.3m cash balance at
31 August 2024
1H 2024 OVERVIEW
Note: 1) Adjusted Gross Profit after US$1.7m performance-related non-cash impairment; 2) Adjusted EBITDA after US$1.7m performance-related non-cash impairment
80
AVERAGE
METACRITIC
SCORE
76 in 1H 2023
FOCUSED DLC & PORTING STRATEGY
Devolver Digital Investor Presentation 4 Devolver Digital Investor Presentation 4
2024 TITLE RELEASES
Note: Scores as of 23 Sep 2024; title scores calculated as simple average of applicable platform scores; half year & year to date scores calculated as simple average of titles
Metacritic
Score
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
81
1H 2024 Metacritic Average Score: 80
79 79
80
73
80
78
Release date to be
announced
81
Devolver Digital Investor Presentation 5 Devolver Digital Investor Presentation 5
Devolver Digital Investor Presentation 6 Devolver Digital Investor Presentation 6
PROFIT & LOSS
1H 24 1H 23 FY23 FY22 US$’m
51.6 43.9 92.4 134.6
Net revenue
(34.6) (33.6) (65.4) (89.4) Cost of sales
(1.7) (0.9) (2.5) (22.8)
Impairment of capitalised development
cost
15.3 9.4
24.5 22.5
Gross profit (post impairment)
29.6% 21.4% 26.5% 16.7%
Gross margin
(21.4) (18.4) (38.5) (50.4)
Operating expenses
– – – (70.0)
Impairment of goodwill & IP
1.1 (0.6) 1.0 (0.5)
Other income / (loss)
(5.0) (9.6) (13.0) (98.5)
Operating profit / (loss)
(4.8) (8.6) (11.7) (98.8)
Pre-tax profit/(loss)
1
0.4 (1.4) (1.0) 7.3
Taxation
(4.5) (10.1) (12.7) (91.5)
Profit/ (Loss) for the period
4.7 (2.5) 1.7 23.2
Adjusted EBITDA pre-impairments
9.1% (5.7%) 1.8% 17.2%
Adjusted EBITDA margin
3.0 (3.5) (0.5) 13.9
Adjusted EBITDA
5.8% (7.9%) (0.5%) 10.3%
Adjusted EBITDA margin
•
• Overall revenues up 18% YoY to $51.6m
due to strong back catalogue performance
driven by ongoing success of key titles,
platform deals, and System Era contribution
(acquired 2H 2023).
• Royalty outpayments decreased YoY to
41.1% of revenue, down from 50.5% in
1H 2023.
• Gross margin increase to c. 30%, despite
$1.7m impairment of previously released
titles, boosted by high margin System Era
contribution.
• Operating loss nearly halved as total opex
increase eclipsed by revenue growth in 1H.
• Sequential trend of positive EBITDA
continues from 2H 2023 into 1H 2024.
COMMENTARY
Note: 1) Operating profit / (loss) less FX and interest
Devolver Digital Investor Presentation 7 Devolver Digital Investor Presentation 7
•
• The Group’s financial position is healthy,
with net assets of $154.8m as at 30 June
2024 with no debt.
• Cash holdings of US$31.9m at end of 1H
2024. This does not include the c. US$10m
gross proceeds from the early July
secondary share placement.
• Short-term accounts receivable increase
driven by recognition of end–of-period
platform deals.
• Non-current liabilities primarily comprises
deferred consideration relating to the
acquisition of System Era completed in 2H
2023.
1H 24 FY23 FY22 US$’m
Non-Current Assets
37.2 42.0 25.8
Intellectual property
60.3 53.9 40.1
Capitalised developments costs
31.9 32.0 19.2
Goodwill
12.6 9.6 10.7
Deferred tax assets and others
142.0 137.5 95.8 Total Non-Current Assets
3
Current Assets
31.9 42.7 79.5
Cash in bank
21.8 14.3 17.3
ARs, prepaid expenses & others
1.2 2.4 2.2
Prepaid Income tax
54.9 59.3 99.0 Total Current Assets
196.9 196.8 194.8 Total Assets
Current Liabilities
27.0 24.6 17.7 Trade, other payables & accrued
expenses
2.0 0.6 2.1
Deferred revenue
– – –
Amounts due to shareholders
1.7 0.7 0.3
Current Tax Payable & Other
30.8 26.0 20.1 Total Current Liabilities
11.4 12.8 4.1 Non-Current Liabilities
42.1 38.8 24.2 Total Liabilities
154.8 158.1 170.6 Total Equity
196.9 196.9 194.8 Total Equity & Liabiltities
BALANCE SHEET
COMMENTARY
Note: Subtotals may not cast due to rounding
Devolver Digital Investor Presentation 8 Devolver Digital Investor Presentation 8
• Operating cashflow was US$4.5m in 1H
2024, slightly up year-on-year.
• Continued investment into future pipeline:
$15m investment into software
development in 1H 2024.
• No purchase of intellectual property or
acquisitions in 1H 2024.
• Minimal net cash outflows from financing in
1H 2024.
• Cash at 30 June 2024 totalled $31.9m, not
including c.US$10m in gross proceeds from
$9.8m secondary share placement in July.
COMMENTARY
1H 24 1H 23 FY23 FY22 US$’m
Operating activities
4.6 4.7 12.3 31.2 Cash inflow from operations
(0.1) (0.4) (0.8) (2.1) Taxation paid
– – 2.4 0.0 Taxation received
4.5 4.3 14.0 29.2 Net cashflow from operating activities
Investing activities
(15.0) (12.6) (27.9) (32.6) Purchase of intangible assets
(0.1) – (0.1) (0.1) Purchase of tangible assets
– (0.6)
(18.0) –
Acquisitions (net of cash acquired)
(15.1) (13.2) (46.0) (32.7) Net cashflow from investing activities
Financing activities
– 0.0 0.1 0.8 Share capital issuance
– (7.2) (6.8) (2.5) Share repurchase transactions
0.3 0.9
1.3 0.4
Interest received
(0.1) (0.2)
(0.1) (0.0)
Interest paid
(0.1) –
(0.0) –
Repayment of lease liabilities
0.2 (6.2) (5.5) (1.4) Net cashflow from financing activities
(10.4) (15.1) (37.5) (4.9) Net cashflow
(0.3) 0.4 0.7 (1.8) Foreign Exchange movements
31.9 64.8 42.7 79.5 Closing cash
CASH FLOW
Note: Subtotals may not cast due to rounding
Devolver Digital Investor Presentation 9 Devolver Digital Investor Presentation 9
•
• 8% YoY increase in adjusted operating
expenses in 1H 2024, including full six
months of System Era opex (studio
acquired in 2H 2023).
• 12% increase in payroll expense due to
headcount additions from System Era
acquisition and group-wide salary inflation.
• Other cash operating expenses contained
in line with 1H 2023’s level.
• Non-cash share-based payment expenses
continue to fall: 3-year vesting of pre-IPO
options ends in 2024, replaced by lower
anticipated LTIP grant costs in future.
• Overall statutory opex future trend expected
to be steady.
COMMENTARY
OPERATING EXPENSES
Forward
Trend
1H 24 1H 23 FY23 FY22 US$’m
Slow rise 9.1 8.1 17.5 13.6 Payroll
Steady 1.6 1.4 3.4 4.6 Professional fees
Slow rise 10.7 9.5 20.9 18.3
Subtotal payroll &
professional fees
Steady 0.8 0.6 1.4 0.8 Travel and entertainment
Slow rise 1.9 2.2 4.1 4.0 Admin, office and others
Slow rise 13.3 12.3 26.3 23.1 Total adjusted opex
Slow fall 2.4 3.9 5.5 19.6 Stock compensation expense
Steady 5.0 1.9 4.1 5.5
Amortisation of IP and
depreciation of PPE
Fall 0.7 0.3 2.6 2.2 Exceptional costs
N/A (0.1) (0.3) 0.0 0.6 Foreign exchange movements
N/A – – – 70.0 Impairments – goodwill/IP
Steady 21.4 18.1 38.5 121.1 Total statutory opex
Note: Subtotals may not cast due to rounding
Devolver Digital Investor Presentation 10 Devolver Digital Investor Presentation 10
SALES MIX (BACK CATALOGUE v FRONT CATALOGUE)
Note: Excludes Fall Guys | 2018-2020 calculated on a cash accounting basis, 2021-2024 on an accruals basis | # releases excludes subsidiary titles released prior to acquisition
• Back catalogue mix increased to 89%
of total revenues, driven by strong
performance matched with a quiet 1H
release schedule
• Back Catalogue levers:
― Porting to new platforms, including
mobile
― Localisation in other languages
― Capitalising on sequel and franchise
release momentum
― Platform bundle agreements
― Publisher sales and discounting
― Chinese domesticated games
Back Catalogue
New Titles (front catalogue)
Back Catalogue
#
Titles Released (cumulative)
65 79 97 89
109 121 113 124
60%
62%
61%
64%
45%
83%
87%
89%
40%
38%
39%
36%
55%
17%
13%
11%
0%
20%
40%
60%
80%
100%
2018 2019 2020 2021 2022 2023 1H 23 1H 24
Devolver Digital Investor Presentation 11 Devolver Digital Investor Presentation 11
BACK CATALOGUE SALES +22% YOY
#
• Total back catalogue sales up 22%
YoY, driven by strong demand for
Cult of the Lamb and Inscryption,
frequent content updates, strong
performance with platform deals,
and 6 months contribution from
Astroneer (System Era title).
• Tier 1 titles (>US$1 million per year
in sales) account for nearly 80% of
all back-cat game sales in 1H 2024.
• Tier 2 titles (
account for c. 20% of total back
catalogue sales each year.
• Dedicated internal “Store Team”
focused on actively managing the
back catalogue and identifying
opportunities.
Back Catalogue
81%
74%
78%
69%
72%
74%
79%
79%
19%
26%
22%
31%
28%
26%
21%
21%
$0m
$10m
$20m
$30m
$40m
$50m
$60m
$70m
$80m
$0m
$10m
$20m
$30m
$40m
$50m
$60m
$70m
$80m
2018 2019 2020 2021 2022 2023 H1 2023 H1 2024
Note: Excludes Fall Guys | 2018-2021 calculated on a semi-accruals basis, 2022-2024 on an accruals basis | Tier 1 = revenue $0.5m+ for H1 2023 and H1 2024
15
16
16
17
# Tier 1 Back Catalogue
Titles (>$1M net revenue)
9
10
17
19
Tier 1 Back Catalogue Titles
Tier 2 Back Catalogue Titles
Devolver Digital Investor Presentation 12 Devolver Digital Investor Presentation 12
AN UPDATE ON SYSTEM ERA SOFTWORKS ACQUISITION
•
• Solid 1H 2024 EBITDA contribution.
• Smooth integration and knowledge-
sharing with the rest of the Devolver
Group.
• Astroneer’s first paid DLC, Glitchwalkers,
has built a strong wishlist on Steam
ahead of planned launch later in 2024.
• System Era has continued to produce
ongoing updates and support to the
Astroneer community.
• Work continuing on next title release for
System Era team.
COMMENTARY
Devolver Digital Investor Presentation 13 Devolver Digital Investor Presentation 13
2024 PORTS & DLCs + ADDITIONAL PAID CONTENT
PAID UPDATES/DLCs FREE UPDATES/DLCs
PORTS TO NEW PLATFORMS FOR
Devolver Digital Investor Presentation 14 Devolver Digital Investor Presentation 14
DIVERSE PIPELINE FOR 2025 AND BEYOND
Literal walking
simulator
Roguelike brawler loaded
with high-impact,
physics-based combat
Skate fast to destroy
demons and save other
tortured souls on
your journey
A slapstick
experience
unlike any other
Tactical kung-fu
fighting game with a
supernatural twist
Gritty combat
roguelike
Fast-paced
action side
scroller
And more to be
announced…
Devolver Digital Investor Presentation 15 Devolver Digital Investor Presentation 15
2024 1H RECAP
•
Profitability in 1H 2024 and strong 2H 2024 release schedule
•
System Era integration on track with full year contribution in FY 2024
•
Maintained high Metacritic scores:
record-matching 80 average in 1H 2024
•
Disciplined cost management in inflationary
environment, with revenue growth outstripping opex
Devolver Digital Investor Presentation 16 Devolver Digital Investor Presentation 16
OUTLOOK
•
Healthy pipeline: 30+ titles for 2024-2026
•
System Era to make a full year contribution in 2024
•
Back catalogue of >120 titles provides
opportunities for further monetisation
•
Healthy Balance Sheet with US$41.3m cash
holdings as of 31 August 2024
