Ten Square Games FY2024 Q3 Earnings Release

November 14th, 2024

maximizing the chances of success with 2
prototypes
Q3 2024 HIGHLIGHTS
3
MJ
Q2’24 / Q3’24
Bookings
PLN
96.2M
+6.3% q-o-q
PLN
102.3M
Q2’24 / Q3’24
Adj. EBITDA
PLN
27.3M
PLN
26.5M
-3.0% q-o-q
Q2’24 / Q3’24
Net cash flow
from operating activities
PLN
26.8M
PLN
28.1M
Prototyping for success
Focus on anti-churn strategy
Focus on monetization strategy (LiveOps)
Acceleration of growth in Wings of Heroes
Execution of the plan to unlock the growth
potential of main titles
Investment in UA before unpredictable
Q4 ad market
+4.6% q-o-q

5
*Average Bookings Per User
M PLN
Users in M
PLN
Fishing clash: Growth of Bookings and No. of users
AI
■
Q3’24 bookings increased by 4.3% q-o-q . Main focus of the team was on
improvement of quality of user experience and LiveOps operations based
on feedback from users
■
Implementation of anti-churn strategy and tests of frequency of new
fisheries in the game with focus on changes in the game’s economy,
optimization of players’ segments, and testing new monetization
solutions
Plans for Q4’ 24 include:
■
new progression system in game
■
introduction of new monetization solution
■
continuation of anti-churn strategy
■
Bookings in October on a similar level as in September; TSG Store’ share
in bookings exceeded 19% .

6
■
Bookings increased by 3.9% q-o-q in Q3’24.
■
Focus of the team was on implementation of changes in LiveOps operations to
support game’s monetization. First positive results especially in quality & diversity of
events, Also, new features supporting user engagement with good KPI results.
■
Testing new strategies in the game with ech new location and preparing new
mechanics to be introduced in Q4’24.
■
Positive results of anti-churn strategy.
■
Increasing share of TSG Store in bookings as a result of offer integration efforts;
experiments with new approach to targeting players.
■
Q4’24 brings new in-game mechanics with each new location f.ex.: different hunting
spots, new game mode.
■
Growth of bookings in October by 2.6% m-o-m. TSG Store’s share grew to 11%.
*Average Bookings Per User
M PLN
Users in M
PLN
Hunting clash: Growth of bookings and
profitability
AI

7
M PLN
Wings of Heroes flying high with consistent growth
AI
■
Growth of bookings by 61.4% q-o-q in Q3’24
■
Focus on building monetization depth of the game and introduction of
wheel of fortune feature
■
Increased UA spending due to improvement in monetization
■
Growth of bookings in October by 12.5% m-o-m
■
In the beginning of October squadron wars feature was introduced to
add next layer of competition and monetization depth
■
Development plans include: introduction of plane traits, rarities, and
new game mode.

TSG STORE: new initiatives to further boost the growth
8
TSG Store % share in Group’s bookings
14.0%
share of TSG Store bookings
(October 2024)
Growth of revenues flow
through TSG Store in both products
JD
Positive effects of tests and adjustments
introduced in Q3 2024
Finalizing the tests of
special currency
integrating better FC offer & TSG Store
New approach to promotion of TSG Store in
games

PROTOTYPES: MAXIMIZING CHANCES OF SUCCESS
10
TROPHY HUNTER
AI
Flying Next
adding and testing monetization features Q4’24
development in line with plan
team of 2-3 people
first market test
planned in 2025
developed by Rortos
good initial retention KPIs
Results of gameplay tests
profitable UA cost
Next steps
decision on further development early 2025
testing game concepts with low financial risk
data from real players vs closed studio
environment
fast & effective selection process of the most
promising projects based on market KPIs
ability to respond to dynamic changes
in players’ needs
short development process vs long one
small internal team vs large team
Prototyping approach
decision on further development
early 2025

Decision to stop further tests
of Fishing champions
11
TROPHY HUNTER
AI
After the tests of gameplay we decided to stop further work on
Fishing Champions due to unsatisfactory
retention KPI’s acquisition costs
Write down of PLN 1.2m in Q4’24
Focus on the most prospective projects
with the best KPIs
limiting the financial risk
the most effective use of TSG’s assets while
testing new ideas
maximizing the chances of investment in the
most prospective project(s)

Profit and loss dynamics
13
MJ
Q3’24 Q2’24 Q1’24 2023 Q4’23 Q3’23 Q2’23 Q1’23 PLN m
94.0 98.0 100.1 436.0 108.1 105.6 104.9 117.4 Revenues from sales
102.3 96.2 99.7 443.7 108.5 110.4 101.2 123.6 Bookings
78.2 82.1 80.7 363.3 91.4 87.8 86.0 98.1 Gross profit on sales
83% 84% 81% 83% 85% 83% 82% 84% margin
55.9 52.0 55.0 239.5 54.3 56.4 59.8 69.0 Selling costs, including:
24.7 19.4 19.8 86.8 18.6 19.8 21.2 27.2 User Acquisition costs
25.0 26.4 28.4 123.6 29.9 29.6 30.5 33.6 Commissions
6.7 7.1 7.5 38.7 7.2 6.6 8.1 16.8
General and
Administrative costs
0 0 0 78.2 46.5 0 5.1 26.6 Write-downs
26.5 27.3 27.5 118.5 35.3 33.7 21.9 27.6 Adjusted EBITDA
28% 28% 27% 27% 33% 32% 21% 24% margin
12.5 22.0 17.9 15.2 -1.7 22.1 7.6 -12.8 Net Profit/Loss
1.b
2
3
4
Increase in bookings (up by 6.3%) q-o-q ,
thanks to better performance in main titles
and 4th consecutive quarter of growth in
Wings of Heroes as well as growing revenues
in RFS.
Lower revenue due to higher booking of
deferred revenue (according to IFRS). This is
non-cash adjustment.
User Acquisition costs increased in Q3’24.
Good market KPIs allowed for UA investment
before unpredictable Q4. Growth in Fishing
Clash and Wings of Heroes.
General and Administrative costs kept under
control
Adjusted EBITDA in Q3’24 slightly lower due to
UA investment.
Net profit lower q-o-q mainly due to higher
than usual deferred revenues.
__________________________________
In the long term a possible positive impact on
results may have the release of PLN 12.5 tax
provision .
1
2
3
4
5
5
1.a

Deferral of revenue is required by financial standards ( ifrs 15 )
it means we need to recognise revenue according to players’ lifetime
14
recognized at the moment when a player
purchases virtual currency in a game
(cash inflow)
Step 1.
Bookings
Step 2.
Model calculation
TSG needs to estimate the average
player lifetime, the % of durables &
consumables in the bookings position
Step 3.
Deferred revenue
unused part of virtual goods needs to be
presented as deferred revenue (unearned
revenue). Non-cash adjustment.
period 1
USD 100
100 USD
cash
(purchase of
virtual
currency)
net revenue
accounting
position
(usage of virtual
good over time)
USD 20 USD 20 USD 20 USD 20 USD 20
Deferred revenue Revenue
period 1 period 2 period 3 period 4 period 5
A portion of revenue is
recognized based on average player
lifetime
Deferred revenue is recognized over
subsequent periods as players continue
to use durable/consumable items
MJ

MJ
Cash flow generation with a strong cash pool
Q3’24 Q2’24 Q1’24 Q4’23 Q3’23 Q2’23 Q1’23 M PLN
26.5 27.3 27.5 35.3 33.7 21.9 27.6 Adjusted EBITDA
28.1 26.8 32.4 30.5 32.5 28.6 29.9
Net Cash Flows from Operating
Activities
(1.4) (12.5) (1.4) (0.3) (2.0) (9.5) (14.7)
Net Cash Flows from Investing
Activities
(1.0) (0.7) (114.4) (1.4) (1.3) (54.3) (1.5)
Net Cash Flows from Financing
Activities
25.7 13.6 (83.4) 28.8 29.2 (35.2) 13.7 Total Net Cash Flows
121.4 95.0 76.8 162.8 133.8 105.4 140.2 Cash and cash equivalents
15
Strong cash position at the end of Q3’ 2024 – PLN 121.4 M despite substantial cash outflows in previous quarters of 2024:
– the execution of record high buyback program of PLN 114.6M in Feb. 2024,
– earnout payment to Rortos’ shareholders of PLN 11M in April 2024.

TSG’s approach to DiSTRIBUTION of profit TO shareholders
16
MJ
TSG’s dividend policy
allocation of up to 75% of consolidated net profit
d
epending on the needs in terms of liquidity and investment plans of the company
(on condition that the standalone net profit allows payment of such an amount).
Forms of possible profit distribution
dividend
payment
buyback
and / or

History of profit DiSTRIBUTION TO shareholders*
17
*TSG became publicly listed company in May 2018. Presented profit distribution does not include dividends paid out before TSG became listed company.
PLN 255 M
of dividend
MJ
PLN
390
M
distributed to shareholders
Total of:
PLN 133 M
of buyback

19
sUMMARY: on the strategic path
Cost discipline & financial efficiency
AI
first positive results of anti-churn strategy
in Fishing Clash and Hunting Clash
Focus on unlocking growth
in main products
Wings of Heroes & TSG Store
effective selection of the most prospective projects
in the second round of tests
Acceleration of growth
Prototyping for success

Investor’s calendar
21
Company news flow:
■
Q4 2024 Sales Update – early January 2025
■
Reporting calendar for 2025 – early January 2025 Investors’ conferences:
■
Wood’s Winter Wonderland
Investor Conference
– December 5th, 2024
■
2025 Business Outlook by BoŚ – January 13th, 2024
NG

Contact details:
Nina Graboś
– IR, PR & ESG Director
nina.grabos@tensquaregames.com

Profit and loss report
Q3’24 Q2’24 Q1’24 2023 Q4’23 Q3’23 Q2’23 Q1’23 Selected positions in k PLN
93,979 97,998 100,118 436,076 108,122 105,572 104,932 117,450 Revenues from sales
62,158 59,597 61,219 274,232 68,743 69,738 63,194 72,558 Fishing Clash
1,609 1,763 1,732 7,529 1,890 1,614 1,852 2,172 Let’s Fish
1,898 2,033 2,209 8,131 1,967 1,813, 1,998 2,353 Wild Hunt
22,979 22,109 23,732 110,497 26,377 27,311 24,412 32,396 Hunting Clash
5,639 3,495 2,922 11,526 1,928 1,757 2,072 5,769 Wings of Heroes
8,021 7,231 7,845 31,767 7,558 8,166 7,698 8,346 Others
-8,327 -1,769 -457 -7,606 -340 -4,827 3,706 -6,143 Deferred revenues
15,785 15,863 19,389 72,717 16,679 17,809 18,901 19,328 COGS
78,193 82,136 80,728 363,359 91,442 87,762 86,032 98,122 Gross profit on sales
83% 84% 81% 83% 87% 83% 82% 84% GPS margin
55,896 51,954 54,950 239,574 54,347 56,409 59,814 69,004 Selling costs
59% 53% 55% 55% 50% 53% 57% 59% As % of revenues
6,683 7,058 7,509 38,613 7,193 6,566 8,082 16,771 G&A costs
0 0 0 78,306 46,616 – 5.1 26.6 Write-downs
15,607 23,278 19,108 3,518 (16,739) 25,032 9,639 -14,414 EBIT
19,560 27,707 23,614 101,531 34,598 30.001 19.795 17,137 EBITDA
21% 28% 24% 23% 26% 28% 18% 15% EBITDA margin
12,505 22,023 17,939 15,207 (1,662) 22,150 7,654 (12,845) Net profit
13% 22% 18% 3% – 21% 7.3% – Net profit margin
26,516 27,343 27,489 118,583 35,348 33,662 21,940 27,634 Adjusted EBITDA

Balance sheet
30.09.2024 30.06.24 31.03.24 31.12.23 30.09.23 30.06.23 31.03.23 Selected positions in k PLN*
ASSETS
208,412 212,420 214,234 215,778 285,981 279,861 297,613 Fixed assets
32,760 33,742 36,253 38,937 36,293 31,606 41,096 Receivables
121,389 94,971 76,784 162,826 133,826 105,379 140,249 Cash and cash equivalents
187,623 158,748 152,186 242,325 215,517 180,653 225,594 Current assets
396,035 371,168 366,420 458,103 501,498 460,514 523,207 Total assets
EQUITY AND LIABILITIES
228,612 217,607 194,689 291,011 308,155 275,603 332,534 Equity
6,191 6,863 7,420 1,379 2,621 3,357 4,537 Lease liabilities
24,364 24,223 34,881 29,465 48,867 46,659 47,986 Total long term liabilities
15,421 10,251 16,093 10,422 13,501 12,856 21,290 Trade payables
143,059 129,338 136,850 137,627 144,476 135,252 142,687 Total short term liabilities
167,423 153,561 171,731 167,092 193,343 184,911 190,673 Total liabilities
396,035 371,168 366,420 458,103 501,498 460,514 523,207 Total equity and liabilities
26
*restated data

Cash flow report
Q3’24 Q2’24 Q1’24 Q4’23 Q3’23 Q2’23 Q1’23 Selected positions in k PLN
OPERATING ACTIVITIES
13,888 23,266 20,720 (0,184) 23,205 10,049 (16,022) Profit/loss before tax
16,397 (1,784) 13,803 27,985 11,372 9,273 49,203 Total adjustments
3,953 4,429 4,506 4,809 4,969 5,143 5,289 Amortisation
30,285 21,482 34,523 27,801 34,577 19,321 33,181 Cash from operations
-2,225 -5,346 -2,077 2,718 -2,110 9,320 -3,305 Income tax paid
26,828 26,828 32,446 30,519 32,466 28,642 29,878 Net cash flows from operating activities
INVESTMENT ACTIVITIES
21 13 306 105 79 9 2.219 Inflows
-1,384 -12,527 -1,739 -449 -1,477 -2.077 -16,906 Outflows
-1,363 -12,514 -1,433 -343 -1,998 -9,541 -14,687 Net cash flows from investing activities
FINANCIAL ACTIVITIES
0 265 1,184 0 0 0 0 Inflows
-979 -967 -115,576 -1,404 -1,292 -54,274 -1,471 Outflows
– – – – – -52,307 0 Dividends
-979 -702 -114,391 -1,404 -1,292 54,274 1,471 Net cash flows from financing activities
25,718 13,611 -83.378 28,772 29,176 -35,173 13,721 Net cash flows total
27

Method of determining adjusted EBITDA
28
Q3’24 Q2’24 Q1’24 Q4’23 Q3’23 Q2’23 Q1’23
Selected items of the P&L Statement in
k PLN
15,607 23,278 19.108 (16,739) 25,032 9,639 (14,414) Operating profit IFRS
+3,953 +4,429 +4,506 +4,809 +4,969 +5,039 +4,978 Amortisation
0 0 0 +46,529 – +5,117 +26,573 Write-down for impairment
19,560 27,707 23,614 34,598 30,002 19,795 17,137 EBITDA IFRS
Adjustments:
+441 +311 +2,855 +493 +164 0 +6,033
Non-cash impact of the incentive
programs
+6,515 -675 +1,331 +239 +3,379 -2,594 +4,300
Deferred result (unused virtual
currency and durables)
– – -310 – – +571 +163 M&A costs
0 0 0 +20 +117 +4.169 – Other
26,516 27,343 27,490 35,348 33,662 21,940 27,634 Adjusted EBITDA

General AND administrative costs
29
Q3’24 Q2’24 Q1’24 2023 Q4’23 Q3’23 Q2’23 General administrative costs (PLN k)
6,453 6,905 6,288 31,398 6,860 6,454 7,510 Recurring costs
3,081 3,011 3,039 14,495 3,070 3,207 3,683 Salaries, subcontractor services
1,000 1,024 926 4,794 ,972 1,074 1,135 Subsidiaries costs
674 705 561 3,624 789 749 986 Office rental and maintenance
1,698 2,165 1,762 8,485 2,209 1,424 1,706 Other
230 153 1,221 7,215 333 112 572 Non – recurring costs
230 153 1,531 6,478 333 111 0 MSOP cost
0 0 -310 737 0 1 572 M&A cost
0 0 0 0 0 0 0 Other one-off costs
6,683 7,058 7,509 38,613 7,193 6,566 8,082 General and administrative costs
MJ

Accounting principles for revenues – IFRS 15
30
Virtual currency
„Durable”
Bookings
Sales revenue
Deferred revenue/
Unearned revenue
•
Revenue -> the player uses the virtual currency to purchase a
virtual goods (e.g. rods, lure packs)
•
Deferred revenue -> unused balance of virtual currency booked
as „Unearned revenue” on the balance sheet
•
Payment -> a player purchases virtual currency
+ / –
Booking
Period 1
Period X
Period 1 – user makes a payment for a durable good in a game (e.g., a fishing rod) – a cash flow is generated. The revenue for
the period is the value of the payment divided by X; the remaining value of the payment is booked as deferred revenue.
Periods from 2 to X – in each period the same value (equal to revenue recognized in period 1) is reclassified from deferred
revenue to current period revenue.
X – the number of periods that paying players on average stay in a game

Marketing expenses policy
Marketing expenses model
cumulative approach
•
The Group invests in marketing at point „0”. Cohort acquired in this
period analyzed throughout user lifetime (period „0” to „n”)
•
The Group monitors the current performance of acquired user
cohorts
•
Decision regarding marketing expenses based on several basic
variables (user profitability, user acquisition cost, user life cycle)
Marketing expenses
„We invest in marketing provided we get positive returns throughout user lifetime”
0 1 2 3 4 5 n
Cumulative
payments
Marketing
expenses
31

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32
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