? Acquisition
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Sweden-based game developer, publisher, and distributor Thunderful Group (NASDAQ OM: THUNDR) has completed acquisition of Headup GmbH, Germany-based multi platform video game publisher and developer
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The overall maximum price to be paid for the purchase is $13m. It is scheduled to be finished by March 31st, 2021
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Headup’s estimated revenue over 2020 amounts to $5m
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Thunderful paid $5.9m upfront in relation to this deal. Additionally, the earn-out payments tied to Headup’s 2021-2023 performance are limited to $7.1m, up to $2.9m of them being paid in Thunderful shares at their closing price at 12.03.2021
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Dieter Schoeller, the CEO of Headup, has been appointed the Head of Publishing within the Thunderful Group, and is now in charge of Thunderful’s publishing operations in Sweden and Germany
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The acquisition serves to enhance Thunderful’s international presence, expand its network to include more production studios, and bring synergies to its publishing activities
? Strategic Rationale
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Initially active in gaming accessories and boxed games niche, the company follows its plans to obtain complementary businesses and IP rights. It intends to continue growing by making investments in video game development and in established developers with strong IP and proven track records of growth
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The Group continues its shift towards gaming industry, having previously purchased game developer studios, such as Station Interactive, who were acquired in November 2020, Coatsink, bought in October of 2020, Guru Games (February 2020) and Rising Star Games (July 2018)
? Products
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Headup’s titles include the award-winning games Bridge Сonstructor, Trüberbrook and Pumpkin Jack. The company has also published special editions of LIMBO, The Binding of Isaac, QUBE, and Terraria
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Headup now has an undisclosed game in development. The company is also part of other development and publishing projects: in summary, they would reinforce Thunderful’s pipeline
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Headup’s most successful title, Bridge Constructor, has been downloaded approximately 14.3m times in total, peaking at more than 900k downloads in February 2016. The downloads dynamics shows the greatest audience interest evinced around 2015-2016, then the graph gradually decreases, leaping up abruptly in mid-2018
? Thunderful Group’s Previous Acquisitions
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Thunderful Group has bought Station Interactive, a multiplatform game developer based in Sweden, for an unstated amount in November 2020
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Thunderful Group has acquired Coatsink, a UK-based game designer and publisher, for approximately $84.8 million, in October 2020
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Thunderful Group has purchased Guru Games, a game developer based in Sweden, for an undisclosed sum in February 2020
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Rising Star Games, a UK-based game developer and publisher, was acquired by Thunderful Group in July 2018 for an undisclosed price
? Thunderful Group’s Financial Performance
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Over the period of 2020, the net revenue of the group is increased by 45.6% to $362m, compared to $248.5m in 2019
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In 2020, the Games segment saw a 54.8% increase in revenue to $18.3m ($11.8m in 2019), while the Distribution segment saw a 46.3% increase to $339.6m ($232.1m in 2019).
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Gross profit during 2020 equals to $75.5m ($58.7m in 2019) corresponding to an increase of 38.7%.
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2020 gross profit margin amounts to 22.5% (23.6% in 2019). The margin decrease is due to the company’s subsidiary, Amo Toys, decrease in net sales
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COGS increased over 2020 by 50.3% to –$336m. The key drivers are increased logistics costs at Thunderful Distribution, growing personnel expenses, and additional depreciation of Publishing and Distribution Rights
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2020 EBITDA is $32.6m (9.1% EBITDA margin), while 2019 EBITDA is $27m (11.1% EBITDA margin). The marginal decline is caused primarily by operating (EBIT) margin decline. The latter change is due to absence of significant game releases in 2020 Q1-Q3, while Q2 saw one
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Operating cash flow reached $5.7m over the year ($16.7m in 2019), representing a –65.6% decline. This KPI is adversely affected by acquisitions worth $14.5m
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Cash flow from financing activities during the whole year rose to $59.9m (–$5.2m in 2019)
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Total cash flow over the year is $31.1m (versus $4.1m in 2019)
Sources: THUNDERFUL PRESS RELEASE, FINANCIAL REPORT
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