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MTG reports “solid growth” in Q1

April 27, 2022

Modern Times Group (MTG) has published financial results for the first quarter of 2022.

The company reported Net sales of SEK 1,357 million (€130.3m) equal to pro forma YoY growth of 10 per cent, or 77 per cent reported revenue growth.

Operational highlights Q1, continuing operations

  • Strong performance underpinned by continued healthy growth of in-game ad revenues (IAA) and several popular gaming titles
  • Further investments in new games and content launches. In 2022 InnoGames began accelerating their investments in new titles, which are showing positive development and will support the group’s organic growth in the second half of the year
  • MTG is now a pure-play gaming group following the successful closing of the sale of ESL Gaming to Savvy Gaming Group on April 21st. The divestment is expected to generate net proceeds of $875 million for the group, with at least 40 per cent of the money returned to MTG’s shareholders

In a statement, Maria Redin Group President & CEO, Modern Times Group, said: “The solid growth in the first quarter of the year showcases the strength of the group’s diverse studio and IP portfolio, as the overall casual and mobile games markets enter a post-Covid phase. The acquisitions MTG made in 2021 continue to be our main engine of growth and supported the group’s 10 percent year-on-year pro forma sales growth in the quarter. As a result, our net sales from continuing operations were up 71 per cent year-on-year in the quarter in constant currencies.

Our organic sales declined by 9 per cent year-on-year in the quarter, as the overall games market continued to be affected by the ongoing return to normalcy after the pandemic, which has an ongoing dampening effect on in-app purchases. The group’s overall performance was also affected by the decline in the overall popularity of idle games, which have made up a significant part of Kongregate’s portfolio until now.

The group reported adjusted EBITDA of SEK 342 million in the quarter, which was an 88 per cent year-on-year increase from Q1. The group’s profitability continues to reflect the quality, range and diversity of our gaming portfolio and the healthy mix of product lifecycles among our games. Our adjusted EBITDA margin was 25 per cent in the quarter, as the group continues to invest in its studios, user acquisition and live-ops.

The first quarter represented an important and transformative time for MTG, as we kicked off our first year as a pure-play gaming group. We continued bolstering key capabilties that will help our gaming companies drive future user growth and increased play time across our wide range of gaming IPs.

Our pure-play gaming strategy is focused on helping our portfolio companies accelerate their commercial performance, while providing them with the freedom and autonomy to continue to create great games. We also continued our work to evolve key skills and capabilities across the group.

One of the key focus areas in the quarter has been to accelerate our marketing and user acquisition activities. Christian Pern, who has previously served as CMO of InnoGames, has now taken up the central CMO role at MTG. We have already put in place shared marketing infrastructure and Christian is now starting to work closely with several of our gaming studios to speed up user acquisition and increase marketing efficiency.

ESL Gaming and our esports vertical are reported as discontinued operations in Q1, following the announcement on January 24th that we had signed an agreement to divest our esports business. The transaction closed on April 21s, in line with our expectations.

We wish everyone at ESL Gaming success and the best of luck. We’re very proud of what we’ve accomplished together and I can’t wait to see what they do next. The merger of ESL Gaming and FACEIT is set to transform the esports and competitive gaming landscape yet again. I’m excited for what that means for ESL FACEIT Group, esports fans and players.

MTG is ready and excited for its journey as a pure-play gaming group. While we still believe that the gaming market will continue to grow, overall uncertainty is increasing due to the lingering pandemic, inflation, and the overall global macroeconomic and geopolitical situation.

Our focus going into the second quarter of the year is on scaling up the group’s new game launches and increasing our ongoing investments in user acquisition across the board. MTG’s organic growth is also expected to benefit from the growing player base in the second half of the year. This thanks to the titles launched by InnoGames during the quarter and Ninja Kiwi’s ongoing investment in scaling up their new game Bloons TD Battles 2. At the same time, the group’s overall ad revenues should continue to increase as the year progresses. We will also continue to invest in player retention and engagement activities through live-ops and drive performance by boosting our business intelligence capabilities.

At the same time, we remain committed to exploring additional M&A opportunities and to be a driving force in the ongoing consolidation of the gaming industry. We have a clearly defined strategy and acquisition criteria to ensure that we pursue high-quality M&A targets, where being part of the group would benefit the entrepreneurs as well as MTG and our portfolio companies.

On April 21st we successfully closed the transaction to divest ESL Gaming to Savvy Gaming Group. We will return at least 40 per cent of the proceeds from the deal to our shareholders through a combination of a share redemption and a share buyback programme. The rest of the proceeds will be used to accelerate our organic and non-organic expansion.

We have come a long way as a group, and we’ll continue to transform and reshape MTG in 2022 and beyond. We look forward to sharing more details with our shareholders, analysts and the market in June, when we will host a streamed capital markets update. I want to thank our team for their dedication and drive. I also want to thank our shareholders for their continued support and look forward to sharing more news and updates with you as the year progresses.”


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