Huuuge Games FY2023 Q3 Earnings Release
Download PDFNov, 2023 Q3 2023
PRESENTATION
NOVEMBER 2023
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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
First HC & BC QoQ revenue growth in several quarters
Seasonally the strongest Q4 still ahead of us
supported by HC economy upgrade, stable marketing spend
and a strong calendar of events and sales
Another quarter of growing Direct-To-Consumer channel
cost of sales almost flat QoQ
$
72
m
REVENUE
vs.
$78m
Q3 ’22
$
27
m
Adj. EBITDA
vs.
$24.5m
Q3 ’22
Q3 2023 HIGHLIGHTS
According to Eilers&Krejcik Social Casino Gaming Tracker – Q3 ’23
$
1.88
ARPDAU
vs.
$1.77
Q3 ’23
T12M Adj. EBITDA reached $112m and Net OCF $86.5m
consistently delivering high profitability and strong cash generation
HC & BC QoQ revenue growth of 4.2%
outperforming the declining social casino market
(-2.2% QoQ)*
BUSINESS
UPDATE
First QoQ revenue & DAU growth in a year
CORE FRANCHISES IN Q3 2023
●
Our
marketing spend in Q3 2023 was higher QoQ
as we have been able to increase spend and
maintain paybacks within our risk tolerance
●
Best in class monetization metrics have increased
(conversion, ARPDAU and ARPPU) thanks to
increasing UA spend and our clubs and social
features
●
Extraordinary
retention of our most valuable
players
●
Focus going forward on
profitability and longevity
:
quality vs quantity
●
UA spend in Q4 2023 should be at a similar level as
in Q3,
but we monitor performance on an ongoing
basis and might tweak it further
MAU Core franchises +17%
(since February 2023)
Positive shift in user base trajectory is a
result of improvements in both our product
and marketing efforts. Average monthly
installs have increased by 12.2% since the
beginning of the year
Loyalty program
Positive impact on player engagement metrics
Recent HC economy upgrade, new loyalty program and higher marketing spend had a
positive impact on our player metrics in Q3 2023
CORE FRANCHISES: PLAYER METRICS IMPROVEMENT
Core franchises’ main KPIs
improvement
DAU +1% QoQ, ARPDAU +3% QoQ,
DPU +3% QoQ
●
Webshop
performance YTD has exceeded our
internal expectations
●
DTC revenue reached almost 7% of the total
revenue in Q3 2023 with the ratio improving further
to around 8% in the most recent months
●
We
continue to invest further in this channel
and we expect more long-term upside
●
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
Progress has accelerated rapidly over the past few months
CORE FRANCHISES: DIRECT-TO-CONSUMER
CHANNEL SUCCESS
●
Four Pods are operational with a goal of
driving new growth for Huuuge
– new games,
new audiences. We need to acknowledge
however that it is a
multi-year plan and we are
at an early stage
●
We anticipate bringing
multiple projects to
test markets
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 for T12M ended September
30th 2023 we have generated
adjusted EBITDA of USD
112m and net operating cash flow of USD 86.5m
Cash is king in an uncertain environment and
we are a
fundamentally strong business
in an extremely
fortunate position
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)
We created a $1.7 million provision for a unique
legal case in California related to advertising
services, anticipating it won’t affect other legal
actions, and deems the reserved amount
adequate for potential financial exposure
04
03
02
01
FINANCIAL
PERFORMANCE
Overall revenue decline was driven mostly by no
longer supported Traffic Puzzle revenue (game no
longer supported). Reversal of the declining trend in
core franchises quarterly revenues (+4.2% QoQ).
While the UA campaigns expenses were significantly
lower YoY, we started ramping up spend in Q2 2023
(up 22% QoQ) and in Q3 2023 (up 40% QoQ) as
paybacks exceeded our expectations.
The savings in R&D & G&A expenses are mostly
driven by lower headcount (result of
optimisations programs carried out in Q1 2023)
USD m
9M 23
9M 22
YoY
Q3 23
Q3 22
YoY
Core Franchises
203.0
215.2
-5.7%
68.9
71.0
-2.9%
Traffic Puzzle
7.6
22.1
-65.8%
1.8
5.7
-67.4%
Other
1.6
3.6
-56.4%
0.5
0.9
-49.1%
Revenue
212.1
240.9
-12.0%
71.2
77.5
-8.2%
Gross profit/(loss) on sales
150.1
167.7
-10.5%
50.6
53.8
-5.9%
Sales and marketing expenses
(35.7)
(75.0)
-52.4%
(15.3)
(17.7)
-13.3%
Research and development expenses
(17.5)
(23.1)
-24.4%
(4.8)
(6.3)
-22.9%
General and administrative expenses
(25.6)
(29.9)
-14.4%
(7.6)
(11.6)
-34.7%
Other operating income/(expense), net
0.1
0.6
-80.7%
(0.2)
0.4
n/a
Operating result
71.4
40.4
76.9%
22.5
18.5
21.7%
Finance income/expense, net
3.9
(1.1)
n/a
0.4
0.1
n/a
Profit/(loss) before tax
75.4
39.3
91.9%
22.9
18.6
23.5%
Income tax
(12.6)
(6.4)
96.5%
(4.3)
(3.3)
30.4%
Net result for the period
62.8
32.9
91.0%
18.7
15.3
22.0%
Adjusted EBITDA
82.1
52.6
56.2%
27.0
24.5
10.5%
02
03
01
04
USDm
September 30, 2023
December 31, 2022
Non-current assets
30.5
37.4
Current assets
163.5
248.9
Total assets
194.0
286.3
Total equity
153.7
240.7
Non-current liabilities
7.5
10.0
Current liabilities
32.8
35.6
Total equity and liabilities
194.0
286.3
01
02
03
03
02
01
BALANCE
SHEET
Includes mainly intangible assets and office
leases
Primarily cash and cash equivalents ($127.7m,
or 78% of current assets).
Strong net cash
position even after the $150m SBB settlement
Slight decline driven mostly by lower trade
payables (payout of 2022 performance bonus
and settlement of liabilities related to the
strategic options review)
03
02
01
CASH
FLOWS
Net operating CF increased significantly YoU both
in 9M’23 and Q3’23, but was negatively affected by
income tax paid by Group companies
The positive investment CF both in 9M’23 and
Q3’23 was mostly driven by interest received
from bank deposits and money market funds
as we have been gradually rolling our cash
balance to higher yields
Financing CF both in 9M‘23 and Q3’23 was
mostly affected by share buyback settlement
($150m)
USDm
9M 23
9M 22
Q3 23
Q3 22
Pre-tax profit
75.4
39.3
22.9
18.6
Net Operating CF
57.6
42.1
20.2
15.8
Net Investing CF
3.2
-32.0
0.5
-5.3
Net Financing CF
-153.9
-21.1
-151.9
-4.8
Change in cash
-93.1
-11.0
-131.2
5.7
Cash End of Period
127.7
193.2
127.7
193.2
01
02
03
●
We reiterate our 2023 directional outlook presented during our FY2022
and upheld during recent quarterly investor calls
●
With headcount now lower by over 20% vs 2022, materially lower costs
will be fully visible in FY 2023
●
Q4 2023 revenue should at least match or exceed Q3 2023 as a result of
the recent HC economy upgrade, higher marketing spend and a seasonally
strong calendar of events and sales
●
We expect our marketing spend in the coming quarter to be at a similar
level vs Q3 2023
●
The above factors should translate into another quarter of similarly strong
Adjusted EBITDA in Q4 2023
KEY HIGHLIGHTS
2023 OUTLOOK (YoY)
Revenue
Marketing spend
Opex (non-marketing)
Adjusted EBITDA
Adjusted EBITDA margin (%)
SIGNIFICANT
GROWTH
SIGNIFICANT
GROWTH
SLIGHT
DECLINE
SIGNIFICANT
DECLINE
SLIGHT
DECLINE
OUTLOOK FOR 2023 – REITERATING OUR VIEW
T12M Adj. EBITDA reached $112m
and Net OCF $86.5m
consistently delivering high profitability and strong cash
generation
Strong cash position
$128m as of 30.09.2023
HC & BC QoQ revenue growth of 4.2%
outperforming the declining social casino market (-2.2% QoQ)*
For more information please see
ir.huuugegames.com
THANK
YOU
Cash distribution to shareholders
strong and growing cash position allows us to explore
investment opportunities not excluding an option of cash
distribution to shareholders next year
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
To learn more please visit:
https://ir.huuugegames.com/governance
GOVERNANCE DETAILS
Shareholders
AGM
Audit committee
Remuneration committee
Board of Directors
5 members: 1 executive and 4 non-executive (incl. 2 independent)
CEO
Global Management
VOTES
ELECTION
For more information please see
ir.huuugegames.com
THANK YOU
