MTG benefits from acquisitions
February 7, 2022
Modern Times Group published its fourth quarter 2021 interim financial results with ‘a record operational result.’ MTG’s gaming vertical delivered a strong quarter driven by stellar performance from the newly acquired companies, Ninja Kiwi and PlaySimple, with net sales amounting to SEK 1,272 million (€115m) – and a year-over-year pro forma growth of 13 per cent.
MTG’s Group President and CEO, Maria Redin, commented: “The past year has seen us make company history time and time again. There are many areas to highlight, but two things make me particularly proud. The first one is our ability to scout the market, execute on M&A and onboard new companies. As a result, three great new gaming studios joined our “family” in 2021, enabling us to significantly diversify our gaming vertical. The second is the in-depth strategic work and preparation building up to the announcement of us divesting ESL Gaming to Savvy Gaming and transforming MTG into a pure-play gaming company. It showcases our ability to turn our deep understanding of the industry into significant shareholder value. It has also allowed us to create the first ever esports unicorn and enable the merger between ESL Gaming and FACEIT together with Savvy Gaming Group.
The performance of our gaming vertical reflects our continued efforts to create a more diversified portfolio that does not depend on a single studio or game. We saw accelerated growth of 13 per cent on a pro forma basis, which clearly demonstrates the value of a diverse portfolio of games across a wide range of genres and in different stages of their life cycle. And despite accelerating our growth, we continued to maintain our margins, which highlights the robustness of this business and its future potential.
As a result of the divestment of ESL Gaming, we find ourselves at a transformative moment in time. Our Board of Directors will propose to return at least 40 per cent of the net proceeds from the transaction to our shareholders, whom we remain grateful to for their support throughout our journey. The remaining proceeds will be used to accelerate our Buy & Build strategy in gaming. We enter 2022 as a pure-play gaming company. We have a proven growth strategy in place and will use our strengthened balance sheet to both accelerate our organic growth and look for new and exciting M&A opportunities around the world.”
- The gaming vertical delivered record growth on the back of a more diversifed gaming portfolio. Net sales amounted to SEK 1,272 million, resulting in year-over-year growth of 100 per cent, and a pro forma growth of 13 per cent
- The esports vertical hosted five Master properties, all produced as studio or online events. ESL Gaming continued to enhance its offerings and improve its strategic position by investing into areas such as mobile gaming
- On January 24th, MTG divested ESL Gaming to Savvy Gaming Group for $1,050 million (approximately SEK 9,723 million) to combine with FACEIT and create a global leader in competitive gaming. The transaction is expected to close during the second quarter 2022
- Net sales increased by 56 per cent to SEK 1,658 (1,064) million. Pro forma growth amounted to 7 per cent
- Adjusted EBITDA of SEK 346 (193) million. Adjustments included long-term incentive programs (LTI) of SEK 15 (-10) million and total M&A transaction costs of SEK 28 (40) million
- EBITDA of SEK 303 (160) million and EBIT of SEK 121 (91) million
- Net financial items amounted to SEK -403 (51) million, mainly driven by revaluation of the earnout liability as a result of a significant overperformance by Ninja Kiwi
- Tax cost amounted to SEK -83 (-77) million
- Net income of SEK -365 (66) million and basic earnings per share, before dilution, of SEK -2.65 (0.87)