Huuuge Games FY2023 Earnings Release
Download PDFMar, 2024 FY 2023
PRESENTATION
MARCH 2024
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DISCLAIMER
Wojciech Wronowski
Chief Executive Officer
Marek Chwałek
Treasurer, EVP Finance
TODAY’S PRESENTERS
To learn more please visit:
https://ir.huuugegames.com/governance
2023 results driven by our profit-oriented strategy
Core franchises: main KPIs stabilize
Marketing spend to increase in 2024
$
71
m
REVENUE
vs.
$72m
Q3 ’23
$
26
m
Adj. EBITDA
vs.
$27m
Q3 ’23
HIGHLIGHTS
$
1.81
ARPDAU
vs.
$1.43
2022
FY 23 Adj. EBITDA reached $108m and Net OCF $82m
Consistently delivering high profitability and strong cash generation
$70m Share Buyback announced on 14th March 2024
Second SBB in 9 months with the combined total value of up to $220m
Direct-To-Consumer channel triples revenue in 2023
DTC responsible for 8% of sales in Q4
BUSINESS
UPDATE
Q4 2023 Revenue remained flat QoQ while Sales Profit slightly improved
CORE FRANCHISES
●
Core franchises revenue in Q4 2023 remained flat
QoQ and has been largely
stable in the last four
quarters
.
●
UA spend for core franchises in FY2023 decreased
by 22% YoY, while in Q4 it was 15% lower QoQ.
UA
spend in Q1 2024 should be higher comparing to
Q4 2023
as we continue to optimize our marketing
mix and expected paybacks remain within our
internal targets
●
Sales profit
for Core franchises in Q4 2023 grew by
5% QoQ,
with fluctuations throughout the year
largely following marketing spend.
Player base trend reversal
Stabilization of our player base is a result
of increased marketing spend. Average
monthly installs have increased
by 68% since the beginning of the year.
Improving engagement
& monetization
Loyalty program & positive impact of the
economy upgrade (rolled out in Q3 2023).
Our core games stabilized in 2023: operating KPIs flattened. Stabilization of DPU over the last three quarters
CORE FRANCHISES: MAIN KPIs STABILIZE
Core franchises’ main KPIs stabilize
Q4 2023 DPU -1% QoQ, ARPPU +1% QoQ.
●
DTC revenue reached over 8% of the total revenue
in Q4 2023 with the ratio improving further
to almost 9% in the most recent months.
●
We
continue to invest further in this channel
and we expect more long-term upside, with
DTC
as % of revenue expected to reach low teens
in 2024.
●
We are exploring new third party solutions in order
to
improve our offering in terms of UX, geographical
coverage, number of payment providers and login
systems.
We are in the testing phase and will report
more on progress in due course.
Direct-To-Consumer (Webshop) Revenue as % of Total Revenue
DTC channel revenue growth tripled from USD 5.6m in 2022 to USD 16.5m in 2023
CORE FRANCHISES: DIRECT-TO-CONSUMER
CHANNEL GROWTH
●
Four Pods working on new games
for new
audiences. We need to acknowledge however
that it is a
multi-year plan and we are at an
early stage.
●
We expect to
test multiple games
(tech / soft
launch)
in the coming years.
●
We are happy with the current progress,
two games are being tested at the moment.
●
When any of these products reach commercial
viability, we will prudently increase marketing
investments to support these games.
Multiplayer multiplatform
games for worldwide audiences
HUUUGE PODS
FINANCIAL
UPDATE
HIGHLY CASH
GENERATIVE
BUSINESS
We are proud to report that in 2023 we delivered
adjusted EBITDA of $108m and net operating cash
flow of $82.4m
We recognize that we are one of the most cash
generative businesses in the games industry
(as
measured by Net OCF to adjusted EBITDA conversion)
This positions us well to proceed with another share
buyback of
$70 million
Despite returning up to
$220 million
to our
shareholders
within 9 months
, we will maintain a
strong cash balance, allowing us to pursue inorganic
growth opportunities
Effective tax rate in 2023 at 17% (vs 18% in
2022).
04
03
02
01
FINANCIAL
PERFORMANCE
Overall 2023 revenue decline was driven mostly by
Traffic Puzzle revenue decrease (game no longer
supported). Q4 2023 revenue remained stable QoQ.
While the full year UA expenses were significantly
lower YoY, we were ramping up spend throughout the
year as we continue to optimize paybacks.
The 2023 savings in R&D and G&A expenses are
primarily due to a lower headcount, a result of
restructuring carried out in Q1 2023.
$ m
12M 23
12M 22
YoY
Q4 23
Q3 23
QoQ
Core Franchises
272.2
288.1
-5.5%
69.3
68.9
0.6%
Traffic Puzzle
9.3
26.2
-64.6%
1.7
1.8
-7.8%
Other
1.9
4.4
-55.5%
0.4
0.5
-21.0%
Revenue
283.4
318.6
-11.0%
71.3
71.2
0.2%
Gross profit/(loss) on sales
200.9
221.7
-9.4%
50.8
50.6
0.5%
Sales and marketing expenses
(50.2)
(88.8)
-43.5%
(14.5)
(15.3)
-5.8%
Research and development expenses
(22.0)
(29.6)
-25.6%
(4.5)
(4.8)
-6.4%
General and administrative expenses
(34.5)
(39.6)
-13.0%
(8.9)
(7.6)
17.0%
Other operating income/(expense), net
(0.2)
1.0
-118.3%
(0.3)
(0.2)
22.5%
Operating result
94.1
38.6
143.7%
22.6
22.5
0.4%
Finance income/expense, net
4.7
0.4
–
0.7
0.4
78%
Profit/(loss) before tax
98.8
39.1
152.9%
23.4
22.9
1.8%
Income tax
(16.6)
(7.0)
135.4%
(3.9)
(4.3)
-8.2%
Net result for the period
82.2
32.0
156.7%
19.4
18.7
4.1%
Adjusted EBITDA
108.2
82.3
31.5%
26.1
27.0
-3.4%
02
03
01
05
2023 EBITDA growth driven mainly by OPEX and
UA spend optimization.
05
04
$ m
December 31, 2023
December 31, 2022
Non-current assets
29.8
37.4
Current assets
187.6
248.9
Total assets
217.4
286.3
Total equity
177.1
240.7
Non-current liabilities
7.2
10.0
Current liabilities
33.1
35.6
Total equity and liabilities
217.4
286.3
01
02
03
03
02
01
BALANCE
SHEET
Includes mainly intangible assets and office
leases.
Primarily cash and cash equivalents ($152.1m,
or 69% of current assets as of Dec 31, 2023),
strong net cash position even after the $150m
SBB settled in Q3 2023.
Decline in total equity driven mostly by the Share
Buyback partially offset by net profit generated
in
FY’23.
04
03
02
CASH
FLOWS
Pre-tax profit increased significantly YoY in 2023
mainly as a result of the profit-oriented strategy
implemented at the beginning of the year.
The positive investing CF in 2023 and Q4’23 was
mostly driven by interest received on short-term
bank deposits and money-market mutual funds and
was offset by expenditures on software and
equipment.
Financing CF in 2023 and was mostly affected by
share buyback settlement ($150m) completed in Q3.
$ m
12M 23
12M 22
Q4 23
Q3 23
Pre-tax profit
98.8
39.1
23.4
22.9
Net Operating CF
82.4
71.0
24.8
20.2
Net Investing CF
4.1
(32.6)
0.9
0.5
Net Financing CF
(155.0)
(21.8)
(1.1)
(152.0)
Change in cash
(68.5)
16.6
24.7
(131.2)
Cash End of Period
152.1
222.2
152.1
127.7
01
02
03
04
01
Net operating CF increased significantly YoY both in
2023 and Q4’23, largely following the trends of
adjusted EBITDA
●
Adjusted EBITDA and Adjusted EBITDA margin (%) to decrease
mostly due to investments in future growth, but we still aim to
maintain high profitability
●
In the first half of the year, we expect our revenue to decrease
slightly, with a projected recovery in the second half, driven by the
new feature release calendar. Overall, we anticipate our revenue for
2023 to remain flat
●
Marketing spend increase follows the paybacks observed in the
second half of 2023 (and expected in 2024) – we keep optimizing
our UA strategy in the post-IDFA reality
●
We anticipate operating expenses to remain stable, with no major
shifts in our employment structure planned
KEY HIGHLIGHTS
2024 OUTLOOK (YoY)
Revenue
Marketing spend
Opex (non-marketing)
Adjusted EBITDA
Adjusted EBITDA margin (%)
DECLINE
DECLINE
FLAT
SIGNIFICANT
GROWTH
FLAT
Keeping our profitability on high levels
2024 OUTLOOK – INVESTING IN FUTURE GROWTH
2023 Adj. EBITDA reached $108m
and Net OCF $82m
Outstanding results driven by our profit-oriented strategy
Core franchises’ KPIs stabilize
DAU QoQ improvement for 3 consecutive quarters
For more information please see
ir.huuugegames.com
THANK
YOU
Cash distribution to shareholders
$70m Share Buyback announced
2024 – investment in core franchises
Marketing budget increase starting from Q1 2024
FINANCIAL DATA
APPENDIX – KPI’S
ARPDAU
Average revenue per daily active user.
ARPPU
Average revenue per paying user.
DAU
The number of individual users who played a game on a particular day.
DPU
The number of players (active users) who made a purchase on a given day.
EPS
Earnings per share
Live Ops
Activities aimed at increasing the player engagement, among others, by adding new features to games, recurring and one-off virtual events in which players
can participate, and active management of promotions within the game.
MAU
The number of individual users who played a game during a particular month.
Monthly Conversion
The percentage of MAU that made at least one purchase in a month during the same period In-app purchases. Payments made by users after downloading a
game, in connection with the purchase of additional game features. In-app purchases can be made through various non-cash payment instruments (e.g.
payment card, transfer), various electronic channels (e.g. e-banking, mobile phone) or using payment service providers (e.g. PayPal).
MPU
MPU is defined as the number of players (active users) who made a purchase at least once in a given month.
Retention
The number of users who continued to use the game after a certain period of time after downloading the application.
UAMC
User acquisition
marketing campaigns
Process of the acquisition of users through paid campaigns or promotional offers
APPENDIX – GLOSSARY
