GDEV Inc FY2023 Q3 Earnings Release

Nov, 2023 1GDEV Inc.Q3’23 Financial Results21 November 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”).TheCompanydefinesAdjustedEBITDAasprofitfortheperiod,netoftax,aspresentedintheCompany’sfinancialstatementsinaccordancewithIFRS,adjustedtoexclude(i)goodwillandinvestmentsinequityaccountedassociates’impairment,(ii)lossondisposalofsubsidiaries,(iii)incometaxexpense,(iv)financeincome,(v)financialassetsmeasuredatfairvaluethroughprofitorloss,(vi)interestexpense,(vii)unwindingofdiscountontheputoptionliability,(viii)changeinfairvalueofsharewarrantobligationsandotherfinancialinstruments,(ix)shareoflossofequity-accountedassociates,(x)depreciationandamortization,(xi)share-basedpaymentsand(xii)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 profit for the period, net of tax, as presented in the Company’s financial statements in accordance with IFRS, adjusted to exclude (i) goodwill and investments in equity accounted associates’ impairment, (ii) loss on disposal of subsidiaries, (iii) income tax expense, (iv) finance income, (v) financial assets measured at fair value through profit or loss, (vi) interest expense, (vii) unwinding of discount on the put option liability, (viii) change in fair value of share warrant obligations and other financial instruments, (ix) share of loss of equity-accounted associates, (x) depreciation and amortization, (xi) share-based payments and (xii) certain non-cash or other special items that we 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 indicator of operating performance as determined in accordance with IFRS.

4Q3’23 SummaryQ3’22Q3’23$128m$121mTotal comprehensive incomeRevenueAdj. EBITDA Our flagship global mid-core franchise celebrates the 7th anniversary of its mobile version (Hero Wars: Alliance) and the 5th anniversary of its PC version (Hero Wars: Dominion Era).Since their respective launches, HW:A has accumulated over $1.2 billion in bookings, while HW:DE has exceeded $350 millionIsland Hoppers, our casual farming adventure franchise, was launched into global release. The game accumulated over $30 mlnin bookings and more than 12 mlndownloads, placing 7th in the Farming games category by revenue and 4thby downloads during its soft launch period”.Pixel Gun 3D announcedplanned release on Steam in Q1‘24 with about 260,000 fans having already added it to their wishlists’. PG3D is celebrating 10th anniversary in 2023, accumulating 185 mlndownloads and $200 mlnin bookings.Product updateFinancial highlightsQ3’22Q3’23$45m$29m16%23%35%26%otherAsiaUSAEuropeBookings by geo Bookings by platform 63%37%MobilePCQ3’22Q3’23$21m$43mSelling & marketingexpensesQ3’22Q3’23$31m$24m36%margin24%24%margin20%Source: Company information, data.ai, Appmagic. ‘Total wishlists in Steam as of November 2023 ”October 2023, AppMagic data

5Key financial highlights (1/2)In the third quarter of 2023, our revenue decreased by $7 million (or 5%) YoY and amounted to $121 million, driven primarily by a decrease of $6 million in bookings in the third quarter of 2023 vs the same period in 2022Total comprehensive income of $24 million vs. $31 million in Q3 2022 considerably more investments into new players in the first nine months of 2023 compared to the substantial decrease in marketing investments in 2022Adjusted EBITDA amounted to $29 million, a decrease of $16 million compared to the respective period of 2022.Adjusted EBITDARevenueTotal comprehensive Income/ Loss128121Q3 2023Q3 2022-5%$m$m$m87369M 20239M 2022-58%3813559M 20239M 2022-7%3124Q3 2023Q3 2022-22%Source:Company information 100339M 20239M 2022-67%4529Q3 2023Q3 2022-35%Profit for the period,net of tax84359M 20239M 2022-58%3224Q3 2023Q3 2022-25%$m

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 the second quarter of 2023 increased by $22 million, amounting to $43 million. General and administrative expenses decreased by $6 million in the third quarter of 2023 vs. the same period in 2022. The decrease was primarily driven by the loss on disposal of our former Russian subsidiaries in the amount of $5 million in the third quarter of 2022 vs. nil in the third quarter of 2023.2143Q3 2023Q3 2022>100%137Q3 2023Q3 2022-45%8291Q3 2023Q3 2022+10%1121729M 20239M 2022+53%28229M 20239M 2022-21%2813209M 20239M 2022+14%Source:Company information

7Key operating highlights Bookings of $102 million declined by 6% YoYIncrease in MPU by 23% and 13% in the third quarter and first nine months of 2023, respectively, which in turn is expected to positively impact our bookings in the future.Average Bookings per Paying User of $84 declined in Q3’23 by 26% YoYSource:Company information (1)The Company defines Monthly Paying Users, or MPUs, as the number of individuals who made a purchase of a virtual item at least once on a particular platform in the 30‐day period ending with the measurement date; Quarterly MPU is the average of MPUs foreach month for the respective quarter(2)The Company defines Average Bookings Per Paying User, or ABPPU, as its total Bookings attributable to in-game purchases in agiven period, divided by the number of months in that period, divided by the average number of MPUs during the period305375Q3 2023Q3 2022+23%11384Q3 2023Q3 2022-26%108102Q3 2023Q3 2022-6%BookingsMonthly Paying Users (1)‘000 users$/month$mAverage Bookings Per Paying User (2)3413839M 20239M 2022+13%108859M 20239M 2022-22%3473169M 20239M 2022-9%

8Balance SheetAssetsNon-current assetsProperty and equipment786943 Intangible assets12,9779,611 Goodwill1,8361,836 Long-term deferred platform commission fees94,68276,872 Right-of-use assets1,4623,214 Deferred tax asset108103 Other non-current investments17,90316,211 Other non-current assets107107 Loans receivable -non-current3,317 0 Total non-current assets133,178108,897 Current assetsIndemnification asset2,512 2,435 Trade and other receivables45,372 47,541 Loans receivable517 410 Other investments50,365 83,930 Cash and cash equivalents 86,774 61,003 Prepaid tax3,326 3,300 Total current assets188,866 198,619 TOTAL ASSETS322,044 307,516 Liabilities and shareholders’ equityEquityOther reserves171,418 173,656 Accumulated deficit(320,194)(285,168)Equity attributable to equity holders of the Company(148,776)(111,512)Total equity(148,776)(111,512)Non-current liabilitiesLease liabilities -non-current444 966 Long-term deferred revenue96,887 113,693 Share warrant obligations13,035 3,038 Put option liabilities27,475 0 Other non-current liabilities577 0 Total non-current liabilities138,418 117,697 Current liabilitiesLease liabilities -current743 1,242 Trade and other payables30,521 25,287 Put option liabilities -current0 28,637 Provisions for non-income tax risks1,336 1,342 Tax liability4,250 5,833 Deferred revenue295,552 238,990 Total current liabilities332,402 301,331 TOTAL LIABILITIES470,820 419,028 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY322,044 307,516 ($ in thousands)Sep 30, 2023Dec 31, 2022Source:Company information

9Profit and Loss StatementSource:Company informationReflects a correction to the amount reported in the Company’s unaudited interim condensed consolidated financials statements forthe nine months ended September 30, 2023 in order to correct the classification of the financial results of the Russian subsidiaries to the continuing operations. For further information, see Note 4 (Accounting judgments, estimates and assumptions —Correction of errors) to the Company’s unaudited interim condensed consolidated financials statements for the ninemonths ended September 30, 2023.(1)Based on a weighted average number of ordinary shares for basic and diluted earnings per share of 20,000($ in thousands)Revenue121,295 128,015 355,434 380,795 Costs and expenses, excluding depreciation and amortizationCost of revenue:Platform commissions(27,721)(35,830)(84,149)(104,669)Game operation cost(12,199)(10,273)(38,984)(30,813)Selling and marketing expenses(42,599)(20,914)(171,734)(112,203)General and administrative expenses(7,356)(13,264)(22,152)(28,072)Other operating income497 86 2,036 462 Goodwill and investments in equity accounted associates impairment0 0 0 0 Impairment loss on trade receivables and loans receivable(1,211)(1,949)(5,507)(5,868)Total costs and expenses, excluding depreciation and amortization(90,589)(82,144)(320,490)(281,163)Depreciation and amortization(1,749)(1,742)(4,652)(5,359)Profit/ (loss) from operations28,957 44,129 30,292 94,273 Finance income/ (expense), net(2,848)(1,190)(1,798)(2,134)Change in fair value of share warrant obligations and other financial instruments(843)(4,783)9,704 2,485 Share of loss of equity-accounted associates0(4,205)(515)(5,845)Profit/(loss) before income tax25,266 33,951 37,683 88,779 Income tax expense(1,583)(2,319)(2,657)(4,409)Profit/(loss) for the period, net of tax23,683 31,632 35,026 84,370 Attributable to equity holders of the Company23,683 31,200 35,026 84,263 Attributable to non-controlling interest0 432 0 107 Items that are or may be reclassified subsequently to profit or loss338 (869)1,345 2,308 Total comprehensive income/(loss) for the period, net of tax24,021 30,763 36,371 86,678 Attributable to equity holders of the Company24,021 30,331 36,371 86,571 Attributable to non-controlling interest0 432 0 107 Earnings/(loss) per share:Basic and diluted earnings/(loss) per share, US$(1)0.120.16 0.180.43 9M 2023Q32023Q320229M 2022

10Cash Flow StatementSource:Company information 9M 2023Q3 2023Q3 20229M 2022Operating activitiesProfit/(loss) for the period, net of tax23,683 31,632 35,026 84,370 Adjustments for:Depreciation and amortization1,7491,7424,652 5,359 Share-based payments expense6789781,722 3,007 Income from share option forfeiture and cancellation(449)0(608)0Share of loss of equity-accounted associates04,205515 5,845Expected credit losses1,2111,9495,507 5,868Property and equipment write-off0890402Impairment of intangible assets02510492Change in fair value of share warrant obligations and other financial instruments8434,783(9,704)(2,485)Change in fair value of other investments2,13801,574 0Unwinding of discount on the put option liability8671290 172Trade and loan receivables write-off60560Interest income(1,101)(536)(3,110)(871)Interest expense292551 102Lease modification gain/(loss)216(27)47 (27)Loss on sale of subsidiaries04,96904,969Dividend income(268)0(737)0Foreign exchange loss1,8761,5593,471 2,338Income tax expense1,5832,3192,657 4,409 32,280 54,009 41,409 113,950 Changes in working capital:Decrease in deferred platform commissions6,3259,01917,810 20,112 Decrease in deferred revenue(19,390)(20,066)(39,756)(33,440)Decrease/(increase) in trade and other receivables(7,737)10,980(5,344)8,852 Increase/(decrease) in trade and other payables(2,895)6,208(5,526)(9,560)(23,697)6,141 (32,816)(14,036)Income tax paid(368)(431)(633)(633)Net cash flows generated from/(used in) operating activities8,215 59,719 7,960 99,281 Investing activitiesAcquisition of intangible assets016(16)(91)Acquisition of property and equipment(161)(324)(372)(840)Acquisition of right of use0000Acquisition of subsidiary net of cash acquired0(4,090)0(54,112)Investments in equity accounted associates0(2,970)(515)(17,970)Loans granted(749)(13,703)(1,196)(31,489)Proceeds from repayment of loans142182612307Disposal of subsidiaries, net of cash disposed of0(4,529)0(4,529)Acquisition of other investments(44,008)0(97,648)0Proceeds from redemption of investments29,900065,446 0Interest received2370406 0Dividends received2680737 0Net cash flows used in investing activities(14,371)(25,418)(32,546)(108,724)Financing activitiesPayments of lease liabilities(1,174)(462)(1,939)(1,900)Proceeds from borrowings02090374Interest on lease(22)(25)(44)(102)Net cash flows used in financing activities(1,196)(278)(1,983)(1,628)Net (decrease)/increase in cash for the period(7,352)34,023 (26,569)(11,071)Cash at the beginning of the period68,58199,07786,774 142,802 Effect of changes in exchange rates on cash held(226)(1,574)798 (205)Cash at the end of the period61,003 131,526 61,003 131,526 ($ in thousands)

11Reconciliation of the profit for the period to the Adjusted EBITDA(US$ million)Q32023Q320229M20239M 2022Profit for the period, net of tax24323584Adjust for:Income tax expense2234Finance income(0.8)(0.5)(4)(0.9)Financial assets at FVTPL -net change in fair value2020Interest expense000.10.1Unwinding of discount on the put option liability0.10.10.30.2Change in fair value of sharewarrant obligations and other financial instruments0.85(10)(2)Share of loss of equity-accounted associates040.56Depreciation and amortization2255Share-based payments0.7123Impairment of intangible assets00.300.5Adjusted EBITDA294533100Source:Company information