Huuuge Games FY2024 Q2 Earnings Release
Download PDFSep, 2024 Q2 2024
PRESENTATION
SEPTEMBER 2024
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Wojciech Wronowski
Chief Executive Officer
Marek Chwałek
Treasurer, EVP Finance
To learn more please visit:
https://ir.huuugegames.com/governance
TODAY’S PRESENTERS
Core franchises: DAU stabilizing, ARPPU remains strong
DAU QoQ slight decline and YoY increase
$
63
m
Revenue
-8.4% YoY, -5.4% QoQ
$
19
m
Adj. EBITDA
-29.3% YoY, -11.4% QoQ
H1 feature roadmap pushed to H2 2024
Q2’24 revenue decline driven by a weaker social casino market;
H1 feature roadmap pushed to H2; peak revenue impact expected in Q4
Huuuge Casino and Billionaire Casino surpassed $2B
lifetime revenue
Direct-To-Consumer channel growth
DTC responsible for 12% of sales in Q2’24
Q2 2024 HIGHLIGHTS
Delivering strong cash flows, maintaining profitability focus
$32.7m net cash flows from operations generated in H1’24
31%
Adj. EBITDA Margin
-9.1pp YoY, -2.1pp QoQ
$
18
m
Net Operating Cash Flow
-10.6% YoY, +27.1% QoQ
BUSINESS
UPDATE
Q2 2024 CORE FRANCHISES
●
Core franchise revenue in H1 2024 declined YoY due to the social casino
market weakness
●
User acquisition (UA) spend for core franchises increased by 71% YoY in H1
2024, remaining flat QoQ in Q2 2024
●
DAU increased by 2.7% YoY, decreased by 1.7% QoQ
●
ARPDAU decreased by 8.6% YoY and 3.6% QoQ
●
ARPPU increased by 3.1% YoY and 4.1% QoQ
We plan to reduce marketing spend in H2 2024 to align with new feature releases and ensure strict payback discipline
Maintaining stable and long-term profitability of the core portfolio remains our focus
●
DTC revenue reached almost 12% of the total
revenue in Q2 2024
●
We continue to invest further in this channel
and we expect more long-term upside, with DTC
as % of revenue
expected to reach low to mid-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
CORE FRANCHISES: DTC CHANNEL GROWTH
Direct-To-Consumer channel share in revenue reached almost 12% in Q2 2024
●
Several pods are currently working on new
games, with a total headcount of fewer than
40 FTEs
●
Development is still in the early stages. We
tested several prototypes in Q2 2024 and are
planning two MVP/tech launches in H2 2024.
●
When any of these products reach commercial
viability, we will prudently increase marketing
investments to support them
●
We have invested in Empire Games, a strong
team that we now consider a new external
pod, further extending our capabilities in
developing new games
HUUUGE PODS
Multiplayer, multiplatform
games for worldwide audiences
FINANCIAL
UPDATE
$ m
Q2 24
Q2 23
YoY
Q1 24
QoQ
Core Franchises
61.7
66.1
-6.6%
65.1
-5.2%
Other
1.6
3.1
-48.2%
1.9
-14.2%
Revenue
63.4
69.2
-8.4%
67.0
-5.4%
Gross profit/(loss) on sales
45.7
48.9
-6.5%
47.9
-4.6%
Sales and marketing expenses
-15.6
-11.1
40.0%
-15.1
3.1%
Research and development expenses
-5.9
-5.8
1.9%
-5.7
3.0%
General and administrative expenses
-7.8
-7.6
2.7%
-8.0
-2.8%
Operating result
16.5
24.4
-32.3%
18.1
-9.0%
Finance income/expense, net
1.9
2.1
-9.3%
2.0
-6%
Profit/(loss) before tax
18.4
26.5
-30.5%
20.1
-8.7%
Income tax
-3.3
-4.7
-30.4%
-3.6
-7.9%
Net result for the period
15.1
21.7
-30.6%
16.5
-8.9%
Adjusted EBITDA
19.4
27.5
-29.3%
21.9
-11.4%
Effective tax rate in Q2 24 at 18% (vs 17% in FY 23)
04
03
02
01
In line with our prior guidance for the first half of the
year, overall Q2 24 revenue declined YoY and QoQ
driven by both core and new franchises. Gross
profit decline mitigated by the strong D2C
performance
Q2 24 UA expenses were significantly higher YoY
(and flattish QoQ)
Operating result decrease mainly due to revenue
decline and higher UA expenses
02
03
01
05
Q2 24 EBITDA decrease YoY driven mainly by
higher UA spend
05
04
FINANCIAL PERFORMANCE
$ m
June 30, 2024
December 31, 2023
Non-current assets
32.1
29.8
Current assets
141.0
187.6
Total assets
173.1
217.4
Total equity
138.4
177.1
Non-current liabilities
5.5
7.2
Current liabilities
29.2
33.2
Total equity and liabilities
173.1
217.4
01
02
02
01
Includes mainly intangible assets, office leases,
and a $3.5m long-term investment in Bananaz
Studios
Primarily cash and cash equivalents ($109.6m,
or 78% of current assets as of June 30, 2024;
$70m buyback executed on April 23, 2024)
BALANCE SHEET
03
03
Total equity decreased by $38.7m due to a
$70m
share buyback executed in H1 2024, partially
offset by $31.6m in current year earnings
03
02
Pre-tax profit decreased YoY in H1 2024 mainly as a
result of increased UA spend and lower revenue
The negative investing CF in H1 2024 was mostly
driven our $3.5m investment in Bananaz Studios and
was partially offset by interest received on short-term
bank deposits and money-market mutual funds
$ m
H1 24
H1 23
Q2 24
Q2 23
Pre-tax profit
38.5
52.5
18.4
26.5
Net Operating CF
32.7
37.4
18.3
20.5
Net Investing CF
-2.5
2.6
0.1
1.2
Net Financing CF
-72.5
-2.0
-71.4
-1.0
Change in cash
-42.2
38.0
-53.0
20.6
Cash End of Period
109.6
259.6
109.6
259.6
01
02
03
01
Net operating CF decreased YoY in H1 2024, but
profit-to-OCF conversion was significantly better
compared to H1 2023
CASH FLOWS
04
04
The negative financing CF in Q2 2024 was mostly
driven by the repurchase of common shares under
Share Buyback Scheme
In H1 2024 we delivered
adjusted EBITDA of $41.4m
and net operating cash flow of $32.7m
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)
Even after returning around
$220 million
to our
shareholders
within 9 months
, we maintain a strong
cash balance, allowing us to pursue inorganic growth
opportunities
We are increasingly focused on M&A and finding
game-changing acquisitions
HIGHLY CASH GENERATIVE BUSINESS
MARKET POSITIONING
Maintaining high profitability despite weaker revenue
KEY HIGHLIGHTS
●
Negative impact on player behavior from the macroeconomic
environment and roadmap pushed to H2
●
Feature roadmap for H2 2024 is exciting, laying a strong foundation
for next year
●
Marketing spend in H2 2024 will be reduced in order to align
investment with product performance. Maintaining strict payback
discipline remains a priority
●
Continually seeking operating cost efficiencies across the company,
and expect to realize further savings in H2 2024
●
High confidence that these measures will lead to solid Adjusted
EBITDA and high profitability, even with lower-than-expected revenue
Revenue
Marketing spend
Opex (non-marketing)
Adjusted EBITDA
Adjusted EBITDA margin (%)
DECLINE
DECLINE
DECLINE
GROWTH
DECLINE
New Guidance for 2024 (% YoY dynamics)
Delivering strong cash flows
$32.7m net cash flows from operations generated in H1’24
Core franchises: DAU stabilizing,
ARPPU remains strong
For more information, please visit
ir.huuugegames.com
THANK
YOU
Direct-To-Consumer channel growth
DTC responsible for 12% of sales in Q2’24
H2 roadmap – strong release schedule
Peak revenue impact expected in Q4
Strong balance sheet enables pursuit of
high quality M&A
A
Actively seeking game-changing acquisitions
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
