GDEV Inc FY2023 Q2 Earnings Release

Aug, 2023 1GDEV Inc.Q2’23 Financial Results28 August 2023

2DisclaimerForward-lookingstatementsCertainstatementsinthispresentationmayconstitute“forward-lookingstatements”forpurposesofthefederalsecuritieslaws.Suchstatementsarebasedoncurrentexpectationsthataresubjecttorisksanduncertainties.Inaddition,anystatementsthatrefertoprojections,forecastsorothercharacterizationsoffutureeventsorcircumstances,includinganyunderlyingassumptions,areforward-lookingstatements.Theforward-lookingstatementscontainedinthispressreleasearebasedontheCompany’scurrentexpectationsandbeliefsconcerningfuturedevelopmentsandtheirpotentialeffectsontheCompany.TherecanbenoassurancethatfuturedevelopmentsaffectingtheCompanywillbethosethattheCompanyhasanticipated.Forward-lookingstatementsinvolveanumberofrisks,uncertainties(someofwhicharebeyondtheCompany’scontrol)orotherassumptions.Youshouldcarefullyconsidertherisksanduncertaintiesdescribedinthe“RiskFactors”sectionoftheCompany’s2022AnnualReportinForm20-F,filedbytheCompanyonJune26,2023,andotherdocumentsfiledbytheCompanyfromtimetotimewiththeSecuritiesandExchangeCommission.Shouldoneormoreoftheserisksoruncertaintiesmaterialize,orshouldanyoftheCompany’sassumptionsproveincorrect,actualresultsmayvaryinmaterialrespectsfromthoseprojectedintheseforward-lookingstatements.Forward-lookingstatementsspeakonlyasofthedatetheyaremade.Readersarecautionednottoputunduerelianceonforward-lookingstatements,andtheCompanyundertakesnoobligationtoupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise,exceptasmayberequiredunderapplicablesecuritieslaws.PresentationofNon-IFRSFinancialMeasuresInadditiontotheresultsprovidedinaccordancewithIFRSthroughoutthispressrelease,theCompanyhasprovidedthenon-IFRSfinancialmeasure“AdjustedEBITDA”(the“Non-IFRSFinancialMeasure”).TheCompanydefinesAdjustedEBITDAasthetotalcomprehensiveincome/(loss)aspresentedintheCompany’sfinancialstatementsinaccordancewithIFRS,adjustedtoexclude(i)othercomprehensiveincome/loss,(ii)goodwillandinvestmentsinequityaccountedassociates’impairment,(iii)lossondisposalofsubsidiaries,(iv)incometaxexpense,(v)netfinanceincome/expense,(vi)changeinfairvalueofsharewarrantobligationsandotherfinancialinstruments,(vii)shareoflossofequity-accountedassociates,(viii)depreciationandamortization,(ix)share-basedpaymentsand(x)certainnon-cashorotherspecialitemsthatwedonotconsiderindicativeofourongoingoperatingperformance.TheCompanyusesthisNon-IFRSFinancialMeasureforbusinessplanningpurposesandinmeasuringitsperformancerelativetothatofitscompetitors.TheCompanybelievesthatthisNon-IFRSFinancialMeasureisausefulfinancialmetrictoassessitsoperatingperformancefromperiod-to-periodbyexcludingcertainitemsthattheCompanybelievesarenotrepresentativeofitscorebusiness.ThisNon-IFRSFinancialMeasureisnotintendedtoreplace,andshouldnotbeconsideredsuperiorto,thepresentationoftheCompany’sfinancialresultsinaccordancewithIFRS.TheuseoftheNon-IFRSFinancialMeasuretermsmaydifferfromsimilarmeasuresreportedbyothercompaniesandmaynotbecomparabletoothersimilarlytitledmeasures.Duetotheroundingthenumberspresentedthroughoutthisdocumentmaynotpreciselyadduptothetotals.Theperiod-over-periodpercentagechangesarebasedontheactualnumbersandmaythereforedifferfromthepercentagechangesifthosewouldbecalculatedbasedontheroundednumbersThefiguresinthisdocumentareunaudited.OurauditedconsolidatedfinancialstatementsfortheyearendedDecember31,2022,andthenotesthereto,areincludedinour2022AnnualReportinForm20-F,filedwiththeSecuritiesandExchangeCommissiononJune26,2023

3Key operating metrics used in the presentationIn this presentation, we use a number of key operating andnon-IFRS financial metrics which we believe accurately, in material aspects, reflect the principal parameters of our historic and projected performance. For further information, regarding our operating metrics, see our 2022 Annual Report in Form 20-F filed with the SEC.Operating metrics Monthly Paying Users (MPUs) are the number of individuals who made a purchase of a virtual item at least once on a particularplatform in the 30‐day period ending with the measurement dateAverage Bookings Per Paying User (ABPPU) is the total Bookings attributable to in-game purchases in a given period, divided by the number of months in that period, divided by the average number of MPUs during the periodBookings are sales contracts generated from in-game purchases and sales of advertisement in a given periodNon-IFRS measure Adjusted EBITDA. The Company defines Adjusted EBITDA as the net income/loss as presented in the Company’s financial statements in accordancewith IFRS, adjusted to exclude (i) other comprehensive income/loss, (ii) goodwill and investments in equity accounted associates’ impairment, (iii) loss on disposal of subsidiaries, (iv) income tax expense, (v) net finance income/expense, (vi) change in fair value of share warrant obligations and other financial instruments, (vii) share of loss of equity-accounted associates, (viii) depreciation and amortization, (ix) share-based payments and (x) certain non-cash or other special items thatwe do not consider indicative of our ongoing operating performance. Adjusted EBITDA is a non-IFRS financial measure and should not be construed as an alternative to net income/loss as an indicatorof operating performance as determined in accordance with IFRS.

4Q2’23 SummarySource: Company information, data.ai$127m$115mQ2’23Q2’22BookingsRevenueTotal comprehensiveIncomeSoft rebranding for mobile and PC versions to differentiate them and create a distinct identityExternal web shop launch for mobile players to provide an alternative monetization method10 million installs milestone and1.7 million MAU, continuing robust scaling>$6mln Q2’23 bookings, entering the top-10 grossing list of mobile farming gamesQ2’23 bookings+11% YoY and +5% QoQdue to LiveOps and monetization improvementsThe team is currently working on various experiment initiatives in Pixel Gun 3D franchise universeProduct updateFinancial and operating results$111mQ2’23$112mQ2’22$21m$33mQ2’23Q2’2216%24%36%24%EuropeUSAAsiaotherBookings by geo Bookings by platform 62%38%PCMobile$51m$35mQ2’23Q2’22Selling & marketingexpenses

5Key financial highlights (1/2)In the second quarter of 2023 our revenue decreased by $12 million (or 9%) YoY and amounted to $115 million, driven primarily by a decrease of $11 million in change of deferred revenues during Q2’23 YoY. Total comprehensive income of $21 million vs. $33 million in Q2 2022 primarily due to a substantial investment in user acquisition in Q2 2023.Adjusted EBITDA of $17 million compared to the $37 million in Q2 2022, similarly mainly due to a substantial growth of selling and marketing expenses in Q2 2023.Adjusted EBITDARevenueTotal comprehensive Income/ Loss127115Q2 2023Q2 2022$m$m$m5612H1 2023H1 2022253234H1 2023H1 20223321Q2 2022Q2 2023Source:Company information 565H1 2022H1 20233717Q2 2023Q2 2022

6Key financial highlights (2/2)Total Costs and Expenses, excl. D&A Selling and Marketing ExpensesG&A Expenses$m$m$mSelling and marketing expenses in Q2’23 increased by $16 million and amounted to $51 million. The growth was mainly due to substantially increased investments into new players in the second quarter of 2023 compared to a substantial decrease in marketing investments in 2022 driven by the general saturation of the market in 2022.General and administrative expenses remained relatively stable increasing by $0.5 million in Q2’23 vs. the same period of 2022. 3551Q2 2023Q2 2022+46%77Q2 2023Q2 2022+7%9199Q2 2022Q2 2023+8%91129H1 2023H1 2022+41%1515H1 2022H1 2023+0%199230H1 2023H1 2022+16%Source:Company information

7Key operating highlights Bookings remained relatively stable in Q2’23, decreasing slightly by $1 million in the second quarter of 2023 compared to the second quarter of 2022.Our significant investment into marketing in H1’23 led to an increase in MPU of 14% and 8% in the second quarter and first half of 2023, respectively, which in turn is expected to positively impact our bookings in the future.Average Bookings per Paying User of $87 declined in Q2’23 by 17% YoY due to an increased inflow of new payers.Source:Company information (1)The Company defines Monthly Paying Users, or MPUs, as the number of individuals who made a purchase of a virtual item at least once on a particular platform in the 30‐day period ending with the measurement date; Quarterly MPU is the average of MPUs for each month for the respective quarter(2)The Company defines Average Bookings Per Paying User, or ABPPU, as its total Bookings attributable to in-game purchases in agiven period, divided by the number of months in that period, divided by the average number of MPUs during the period343392Q2 2022Q2 2023+14%10487Q2 2023Q2 2022-17%112111Q2 2022Q2 2023-1%BookingsMonthly Paying Users (1)‘000 users$/month$mAverage Bookings Per Paying User (2)359387H1 2022H1 2023+8%10685H1 2023H1 2022-20%239214H1 2022H1 2023-11%

8Balance SheetAssetsNon-current assetsProperty and equipment786863 Intangible assets12,97710,763 Goodwill1,8361,836 Long-term deferred platform commission fees94,68283,197 Right-of-use assets1,4621,489 Deferred tax asset10859 Other non-current investments17,90318,533 Other non-current assets107107 Loans receivable -non-current3,317 0 Total non-current assets133,178116,847 Current assetsIndemnification asset2,512 2,512 Trade and other receivables45,372 41,125 Loans receivable517 478 Other investments50,365 69,308 Cash and cash equivalents 86,774 68,581 Prepaid tax3,326 3,305 Total current assets188,866 185,309 TOTAL ASSETS322,044 302,156 Liabilities and shareholders’ equityEquityShare capital0 0 Other reserves171,418 173,082 Accumulated deficit(320,194)(308,851)Equity attributable to equity holders of the Company(148,776)(135,769)Non-controlling interest0 0 Total equity(148,776)(135,769)Non-current liabilitiesLease liabilities -non-current444 110 Long-term deferred revenue96,887 100,549 Share warrant obligations13,035 2,430Put option liabilities27,475 6,685Other non-current liabilities577 70 Total non-current liabilities138,418 109,844Current liabilitiesLease liabilities -current743 771 Trade and other payables30,521 28,253Put option liabilities -current0 21,560Provisions for non-income tax risks1,336 1,336 Tax liability4,250 4,637Deferred revenue295,552 271,524 Total current liabilities332,402 328,081 TOTAL LIABILITIES470,820 437,925 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY322,044 302,156 ($ in thousands)Jun 30, 2023Dec 31, 2022Source:Company information

9Profit and Loss StatementSource:Company information (1)Based on a weighted average number of ordinary shares for basic and diluted earnings per share of 20,000($ in thousands)Revenue114,864 126,709 234,139 252,780 Costs and expenses, excluding depreciation and amortizationCost of revenue:Platform commissions(27,473)(35,388)(56,428)(68,839)Game operation cost(13,218)(11,230)(26,785)(20,540)Selling and marketing expenses(50,755)(34,696)(129,135)(91,289)General and administrative expenses(7,057)(6,605)(14,796)(14,808)Other operating income734 337 1,539376 Impairment loss on trade receivables and loans receivable(814)(3,587)(4,296)(3,919)Total costs and expenses, excluding depreciation and amortization(98,583)(91,169)(229,901)(199,019)Depreciation and amortization(1,496)(2,150)(2,903)(3,617)Profit/ (loss) from operations14,785 33,390 1,335 50,144 Finance income/ (expense), net(226)(5)1,050 (944)Change in fair value of share warrant obligations and other financial instruments5,286 576 10,,5477,268 Share of loss of equity-accounted associates0 (3,296)(515)(1,640)Profit/(loss) before income tax19,845 30,665 12,41754,828 Income tax expense(326)(1,338)(1,074)(2,090)Profit/(loss) for the period, net of tax19,519 29,327 11,34352,738 Attributable to equity holders of the Company19,519 29,634 11,34353,063 Attributable to non-controlling interest0 (307)0 (325)Other comprehensive income/(loss)1,391 3,458 1,007 3,177 Total comprehensive income/(loss) for the period, net of tax20,910 32,785 12,35055,915 Attributable to equity holders of the Company20,91033,092 12,35056,240 Attributable to non-controlling interest0 (307)0 (325)Earnings/(loss) per share:Basic and diluted earnings/(loss) per share, US$(1)0.100.15 0.060.27 H1 2023Q2 2023Q2 2022H1 2022

10Cash Flow StatementSource:Company information H1 2023Q2 2023Q2 2022H1 2022Operating activitiesProfit/(loss) for the period, net of tax19,51929,327 11,34352,738 Adjustments for:Depreciation and amortization1,496 2,150 2,903 3,617 Share-based payments expense496 964 1,044 2,029 Income from share option forfeiture(159)0(159)0Share of loss of equity-accounted associates0 3,296 515 1,640 Expected credit losses814 3,587 4,296 3,919 Property and equipment write-off0 0 0 313 Impairment of intangible assets0 241 0 241 Change in fair value of share warrant obligations and other financial instruments(5,286)(576)(10,547)(7,268)Unwinding of discount on the put option liability103 34 204 101 Change in fair value of other investments514 0 (564)0 Dividend on ETFs accrued(254)0 (469)0 Trade receivables write-off50 0 50 0 Foreign exchange loss/(gain)823 (2)1,595 779 Interest income(1,063)(236)(2,009)(335)Interest expense9 34 22 77 Income tax expense325 1,340 1,074 2,092 17,387 40,159 9,29859,943 Changes in working capital:Decrease/(increase) in deferred platform commissions 4,250 8,462 11,485 11,093 Increase in deferred revenue(4,103)(14,674)(20,366)(13,374)Increase in trade and other receivables37 842 2,393 (2,128)(Decrease)/increase in trade and other payables(5,552)(13,558)(2,631)(15,768)(5,368)(18,928)(9,119)(20,177)Income tax (paid)/received(145)(76)(265)(202)Net cash flows generated from/(used in) operating activities11,874 21,155 (86)39,564 Investing activitiesAcquisition of intangible assets(12)(100)(20)(107)Acquisition of property and equipment(114)(11)(211)(516)Acquisition of right of use1 0 (169)0 Acquisition of subsidiary net of cash acquired0 0 0 (50,022)Proceeds from repayment of loans198 125 470 125 Investments in equity accounted associates(515)1,586 (515)(15,000)Loans granted(348)(7,850)(447)(17,786)Proceeds from redemption of investments(1)0 35,546 0 Dividends received254 0 469 0 Interest received0 0 169 0 Acquisition of other investments(12,255)0 (53,640)0 Net cash flows used in investing activities(12,792)(6,250)(18,348)(83,306)Financing activitiesPayments of lease liabilities(243)(804)(765)(1,438)Proceeds from loans receivable78 0 0 0 Interest on lease(9)(36)(22)(77)Proceeds from borrowings0 165 0165 Net cash flows used in financing activities(174)(675)(787)(1,350)Net (decrease)/increase in cash and cash equivalents for the period(1,092)14,230 (19,221)(45,092)Cash and cash equivalents at the beginning of the period68,32683,704 86,774 142,802 Effect of changes in exchange rates on cash held1,3471,143 1,0281,367 Cash and cash equivalents at the end of the period68,581 99,077 68,581 99,077 ($ in thousands)

11Reconciliation of the net income/(loss)to the Adjusted EBITDA(US$ million)Q22023Q22022H12023H1 2022Total comprehensive income/(loss) for the year, net of tax21331256Add back:Items that are or may be reclassified subsequently to profit or loss(1)(3)(1)(3)Tax expense0.3112Finance (income)/expense, net0.20(1)0.9Change in fair value of share warrant obligations and other financial instruments(5)(0.6)(11)(7)Share of loss of equity-accounted associates030.52D&A1234Share based payments0.5112Impairment of intangible assets00.200.2Adjusted EBITDA1737556Source:Company information