MGI - Media and Games Invest SE: Resilient Organic Revenue Growth of 1%, EBITDA Margin Increased to 29% with Strong Free Cashflow. Company Notably Increased Market Share and Customer Base
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- Revenues amounted to 78.3 mEUR in Q3 2023 (Q3 2022: 87.6 mEUR)
- Organic Revenue Growth1 (FX-adjusted) amounted to positive 1%.
- Reported revenue unadjusted for divestments and FX in the amount of 10.2mEUR declined by 11% largely based on discontinued non-strategic games at the end of 2022.
- Adj. EBITDA2 amounted to 23.1 mEUR in Q3 2023 (Q3 2022: 23.0 mEUR)
- Adj. EBITDA margin increased from 26% to 29%.
- The increase is driven by efficiency gains following the executed cost saving program.
- Operating Cashflow amounted to 27.8 mEUR in Q3 2023 (Q3 2022: 22.2 mEUR)
- Operating Cashflow increased by 25% year-over year.
- Cash increased to 110.4 mEUR compared to 107.6 mEUR as of June 30, 2023 despite earn-out payments and bond buybacks driven by the strong free cashflow generation.
- MGI was able to notably increase its market share and its customer base
- MGI continued to gain market share and now holds the #1 position on Android and iOS in the U.S. with a market share of 11% and 28%, respectively3.
- MGI increased its total Software Client base by 9%, building a strong base for organic growth in coming periods.
November 30, 2023 - Media and Games Invest SE ("MGI" or the "Company", ISIN: SE0018538068; ticker M8G; Nasdaq First North Premier Growth Market and Scale Segment Frankfurt Stock Exchange) publishes its Interim Report Q3 2023.
A Word from The CEO Remco Westermann
“I am pleased to report a successful quarter for MGI. While the macroeconomic environment and, as a result, advertising expenditures, are having a challenging year, we continued to gain market share and now hold the #1 position on Android and iOS in the U.S. with a market share of 11% and 28%, respectively. We were also able to grow our revenues organically by 1%, compensating ad price decreases and overall lower ad budgets by adding new software clients to the platform. Our Adjusted EBITDA margin increased from 26% in the previous year to 29% in the third quarter of 2023 driven by the execution of our cost savings plan. Our operating cashflow came in with EUR 28 million in the third quarter, showing an increase of 25% year-over-year. Driven by the free cashflow and despite earn-out payments, we increased our cash position by the end of the quarter to EUR 110 million, underscoring the strong cash conversion of our business,” commented Remco Westermann, CEO of MGI Group.
HIGHLIGHTS Q3 2023
- Net Revenues amounted to 78.3 mEUR (Q3 2022: 87.6 mEUR), a decrease of -11% driven by divestments and FX headwinds in the amount of 10.2 mEUR. The FX-adjusted Organic Revenue Growth was positive and amounted to 1%.
- Adj. EBITDA amounted to 23.1 mEUR (Q3 2022: 23.0 mEUR), and therefore remained stable despite the decline in revenues. Year-over-year growth was driven by efficiency gains following the executed cost saving program.
- EBITDA adjustments were primarily made for the AxesInMotion earn-out release, post-M&A legal and advisory costs, as well as restructuring expenses following the announced cost saving plan (see table EBITDA adjustments and Notes 6 and 10 in the Interim Report Q3 2023 for further details).
- Adj. EBIT4 amounted to 18.4 mEUR (Q3 2022: 18.5 mEUR), a decrease of -1% driven by increased depreciation.
- Adj. Net Result5 amounted to 42.9 mEUR (Q3 2022: 6.7 mEUR), an increase of 537%. The increase was primarily driven by the release of the AxesInMotion earn-out. For further details on the earn-out release refer to Note 6 and Note 10 in the Notes section in the Interim Report Q3 2023.
- Earnings Per Share (EPS) amounted to EUR 0.25 undiluted / EUR 0.22 diluted (Q3 2022: EUR 0.02 undiluted / diluted). EPS adjusted for PPA-amortization amounted to EUR 0.27 undiluted / diluted 0.24 (Q3 2022: EUR 0.04 undiluted / diluted).
HIGHLIGHTS FIRST NINE MONTHS 2023
- Net Revenues amounted to 223.3 mEUR (Q1-Q3 2022: 231.5 mEUR), a decrease of -4%.
- Adj. EBITDA amounted to 63.5 mEUR (Q1-Q3 2022: 61.7 mEUR), an increase of 3%.
- EBITDA Adjustments amounted to -37.7 mEUR and were primarily made for the AxesInMotion earn-out release, post-M&A legal and advisory costs, as well as restructuring expenses following the announced cost saving plan (see table EBITDA adjustments and Notes 6 and 10 for details).
- Adj. EBIT amounted to 50.2 mEUR (Q1-Q3 2022: 48.5 mEUR), an increase of 4%.
- Adj. Net Result amounted to 49.9 mEUR (Q1-Q3 2022: 18.8 mEUR), an increase of 166%, largely driven by the release of the AxesInMotion earn-out.
- Net Interest-Bearing Debt6 as of September 30, 2023 amounted to 305.4 mEUR (December 31, 2022: 273.9 mEUR), and increased primarily driven by negative working capital effects.
- Leverage Ratio7 amounted to 3.2x as of September 30, 2023 (3.6x as of September 30, 2022 and 2.9x as of December 31, 2022) and improved year-over-year due to free cashflow and increased since the end of last year, mostly due to seasonality driven working capital effects which are expected to balance out until end of 2023. Target remains mid-term to be within 2.0x-3.0x leverage range.
- Cash and Cash Equivalents increased to 110.4 mEUR as of September 30, 2023, compared to 107.6 mEUR as of June 30, 2023 despite earn-out payments and bond buybacks driven by the strong free cashflow generation during the third quarter. Compared to December 31, 2022, the cash decreased primarily due to seasonal working capital effects as well as bond buybacks. Cash and cash equivalents remain strong, giving the Company a high degree of liquidity going forward.
- Earnings Per Share (EPS) amounted to EUR 0.26 undiluted / EUR 0.23 diluted (Q1-Q3 2022: EUR 0.06 undiluted / diluted). EPS adjusted for PPA-amortization amounted to EUR 0.31 undiluted / EUR 0.28 diluted (Q1-Q3 2022: EUR 0.12 undiluted / diluted).
The Q3 2023 interim report is available on MGI’s corporate website at https://www.mgi-se.com/wp-content/uploads/2023/11/MGI-Interim-Report-Q3-2023.pdf in the Investor Relations section.
SELECTED KEY PERFORMANCE INDICATORS, MGI GROUP
In mEUR | Q3 2023 | Q3 2022 | Q1-Q3 ‘23 | Q1-Q3 ‘22 | FY 2022 |
Net Revenues | 78.3 | 87.6 | 223.3 | 231.5 | 324.4 |
Y-o-Y Growth in Revenues | -11% | 39% | -4% | 35% | 29% |
EBITDA8 | 63.7 | 21.4 | 101.2 | 58.3 | 84.8 |
EBITDA Margins9 | 81% | 24% | 45% | 25% | 26% |
Adj. EBITDA | 23.1 | 23.0 | 63.5 | 61.7 | 93.2 |
Adj. EBITDA Margins9 | 29% | 26% | 28% | 27% | 29% |
Adj. EBIT | 18.4 | 18.5 | 50.2 | 48.5 | 76.6 |
Adj. EBIT Margins9 | 24% | 21% | 22% | 21% | 24% |
Adj. Net Result | 42.9 | 6.7 | 49.9 | 18.8 | 21.1 |
Adj. Net Result Margins9 | 55% | 8% | 22% | 8% | 6% |
Notes - All Notes are defined as in the Interim Report Q3 2023 of MGI
Note (1) Organic Revenue Growth: Organic revenue growth does include growth calculated on a year-over-year basis from companies being within the Company for twelve months or more. What is excluded is the revenue growth from acquisitions that have not been part of the group in the last twelve months, and the decline from sales stemming from closures / divestment of whole businesses.
Note (2) Adjusted EBITDA: Reported EBITDA excluding items affecting comparability. amounted to -40.6 mEUR and were primarily made for the AxesInMotion earn-out release, post-M&A legal and advisory costs, as well as restructuring expenses following the announced cost saving plan (see table EBITDA adjustments and Notes 6 and 10 in the Q3 Report for details).
Note (3) Pixalate: Mobile SSP Market Share Report Q3 2023.
Note (4) Adjusted EBIT: Earnings before interest and taxes excluding affecting comparability and PPA amortization10.
Note (5) Adjusted net result: Net result excluding PPA amortization.
Note (6) Net interest bearing debt: Interest bearing financial indebtedness excluding shareholder and related party loans minus cash and cash equivalents.
Note (7) Leverage ratio: Net interest-bearing debt divided by adjusted EBITDA for the past 12 months excluding shareholder and related party loans.
Note (8) EBITDA: Earnings before interest, taxes, depreciation, and amortization.
Note (9) EBITDA / Adjusted EBITDA / Adjusted EBIT / Adjusted Net Result margin: EBITDA / Adjusted EBITDA / Adjusted EBIT / Adjusted Net Result as a percentage of net revenues.
Note (10) PPA-amortization: IFRS Amortization on M&A-related purchase prices which are not tax deductible.
Invitation to investor presentation
MGI invites investors to participate in the presentation of the Q3 2023 results by Remco Westermann (CEO) and Paul Echt (CFO) on Thursday, November 30, 2022 at 10am CET. The presentation will be held in English and will also be available on-demand on the Company’s website www.mgi-se.com.
To participate via webcast, please visit:
https://ir.financialhearings.com/media-and-games-invest-q3-2023/register
To participate via phone, please register at the following link:
https://conference.financialhearings.com/teleconference/?id=5004717
Responsible parties
The information in this release has been made public through the agency of the responsible persons set out below for publication at the time stated by MGI's news distributor EQS Newswire at the publication of this release. The responsible persons below may be contacted for further information.
For further information, please contact:
Sören Barz
Head of Investor Relations
+49 170 376 9571
soeren.barz@mgi-se.com, investor@mgi-se.com
www.mgi-se.com
Danesh Zare
Senior Investor Relations Manager
+46 70 916 7932
danesh.zare@mgi-se.com
Jenny Rosberg, ROPA, IR contact Stockholm
+46707472741
Jenny.rosberg@ropa.se
Axel Mühlhaus / Dr. Sönke Knop, edicto GmbH, IR contact Frankfurt
+49 69 9055 05 51
mgi@edicto.de
About MGI - Media and Games Invest SE
MGI - Media and Games Invest SE (MGI) operates a fast-growing, profitable ad-software platform that matches global advertiser demand with publisher ad-supply while improving results through first party data from own games. MGI’s main operational presence is in North America and Europe. Through investments in organic growth and innovation, as well as targeted M&A, MGI has built a one-stop shop for programmatic advertising, enabling companies to buy and sell ad space across all digital devices (mobile apps, web, connected TV and digital out of home), with the mission to make advertising better. MGI is registered as Societas Europaea in Sweden (registration number 517100-0143) and its shares are listed on Nasdaq First North Premier Growth Market in Stockholm and in the Scale segment of the Frankfurt Stock Exchange. The Company has two secured bonds that are listed on Nasdaq Stockholm and on the Frankfurt Stock Exchange Open Market. The Company's certified advisor on Nasdaq First North Premier Growth Market is FNCA Sweden AB; info@fnca.se.
Forward-looking statements
This release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the group operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this release, including the pro-forma financial figures addressed therein, are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements and pro-forma financial numbers are reasonable it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this release (including the pro-forma financial figures) are free from errors and readers of this release should not place undue reliance on the forward-looking statements in this release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this release, unless it is so required by law or applicable stock exchange rules.