Media and Games Invest SE: Strong Q4 2022, 16% Total and 13% Organic Revenue Growth, 34% Adj. EBITDA Margin, Net Leverage Reduced to 2.9x, One-Off Amortization of Non-Core Games Assets and EG7 Sale

MGI - Media and Games Invest SE: Strong Q4 2022, 16% Total and 13% Organic Revenue Growth, 34% Adj. EBITDA Margin, Net Leverage Reduced to 2.9x, One-Off Amortization of Non-Core Games Assets and EG7 Sale

• Net Revenues of 92.9 mEUR in Q4 2022 (Q4 2021: 80.2 mEUR)

• 16% overall increase; 13% of which from strong Organic Revenue Growth1.
• Organic growth largely driven by 133 Software Clients2 onboarded in 2022 (+32%).
• Stable revenues from existing customers with a net dollar expansion rate of 96% despite challenging sector-wide CPM decreases.

• Adj. EBITDA3 of 31.5 mEUR in Q4 2022 (Q4 2021: 23.3 mEUR)

• A significant increase in the adj. EBITDA margin4 to 34% (Q4 2021: 29%).
• Driven a.o. by economies of scale and cost synergies of the media and games activities.

• Net Leverage5 Reduced to 2.9x (Pro Forma 2.7x) as of December 31, 2022 vs. 3.7x as of June 30, 2022

• Strong operating cash flow supported by true sale of receivables on a non-recourse basis.
• Net leverage is now within target range of 2.0-3.0x, further de-leveraging to 2.7x on a pro forma basis through the EG7 divestment.
• 150mEUR cash on hands as of December 31, 2022 creates the flexibility for potential bond buybacks to further reduce interest expenses, overall indebtedness, and leverage.

• Sharpened Focus on Advertising and Synergetic Games Only

• Reduction of games workforce by approximately 50 FTEs to increase efficiency and free cash flow.
• One-time amortization of non-core games assets in the amount of 23.6 mEUR.
• Invest in mobile and casual PC games providing first-party data serving the ad platform.
• Divestment of EG7 minority stake in-line with advertising and mobile games strategy.

• Well Set Up to Continue to Generate Profitable Growth, Organically as well as Through Selective M&A

• Driving further organic growth from new and existing software clients based on the strong competitive position of an integrated ad-software-platform with access to first-party data.
• Selectively reviewing selective M&A opportunities since valuations have decreased but will clearly stay within a maximum net leverage target range of 2.0-3.0x.

February 28, 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) closes the full-year 2022 with 324.4 mEUR revenues, which is at the top end of the 315-325 mEUR range of the revenue guidance for 2022. 70% of the revenues were generated in North America and 17% in Europe. The adj. EBITDA in financial year 2022 amounted to 93.2 mEUR and is at the top end of the EBITDA guidance for 2022 of 83-93 mEUR. In addition to potential bond buybacks and subject to market conditions, a new bond issue may also be considered in order to extend the maturity profile of MGI’s outstanding debt instruments. 

HIGHLIGHTS Q4 2022

• Net Revenues amounted to 92.9 mEUR (Q4 2021: 80.2 mEUR), an increase of 16% compared to Q4 2021, of which 13 percentage points were contributed by organic revenue growth.
• Adj. EBITDA amounted to 31.5 mEUR (Q4 2021: 23.3 mEUR), an increase of 35%.
• Adj. EBIT6 amounted to 28.1 mEUR (Q4 2021: 19.4 mEUR), an increase of 45%.
• Adj. Net Result7 amounted to 2.3 mEUR (Q4 2021: 10.7 mEUR), a decrease of -78%, driven by higher tax and interest expenses (the recurring cash interest for Q4’22 amounted to 7.4 mEUR)
• Earnings Per Share (EPS) amounted to EUR -0.18 undiluted and EUR -0.16 diluted (Q4 2021: EUR 0.05 undiluted / diluted). EPS adjusted for PPA-amortization12 amounted to EUR 0.01 undiluted / diluted (Q4 2021: EUR 0.07 undiluted / diluted).

HIGHLIGHTS FULL-YEAR 2022

• Net Revenues amounted to 324.4 mEUR (FY 2021: 252.2 mEUR), an increase of 29%, of which 18% were contributed by organic revenue growth.
• Adj. EBITDA amounted to 93.2 mEUR (FY 2021: 71.1 mEUR), an increase of 31%.
• Adj. EBIT amounted to 76.6 mEUR (FY 2021: 54.8 mEUR), an increase of 40%.
• Adj. Net Result amounted to 21.1 mEUR (FY 2021: 28.0 mEUR), a decrease of -25% driven by higher tax and interest expenses (the recurring cash interest for FY 2022 amounted to 23.4 mEUR).
• Net Result decreased to -20.4 mEUR (FY 2021: 16.1 mEUR) driven by the one-off amortization related to non-strategic games assets in the amount of 23.6 mEUR as well as increased tax and interest expenses.
• Net Interest-Bearing Debt8 as of December 31, 2022 amounted to 273.9 mEUR (December 31, 2021: 198.6 mEUR).
• Leverage Ratio amounted to 2.9x as of December 31, 2022 (3.7x as of June 30, 2022 and 2.8x as of December 31, 2021) and improved significantly due to the strong free cash flow in combination with the true sale of receivables included in the new securitization program, leading to a net working capital structure well-suited to our ad-software focused business model. Considering the proceeds from the divestment of the Enad Global 7 shares completed mid-February 2023, the pro forma leverage ratio further improved to 2.7x.
• Cash and Cash Equivalents amounted to 150.0 mEUR (December 31, 2021: 180.2 mEUR) and remained strong despite the final earn-out and deferred purchase price payments related to the KingsIsle acquisition as well as the initial purchase price payments for the AxesInMotion and Dataseat acquisitions during the year of 2022.
• Earnings Per Share (EPS) amounted to EUR -0.13 undiluted and EUR -0.12 diluted (Q1-Q4 2021: EUR 0.11 undiluted / diluted). EPS adjusted for PPA-amortization amounted to EUR 0.13 undiluted and EUR 0.12 diluted (Q1-Q4 2021: EUR 0.20 undiluted / diluted).

SELECTED KEY PERFORMANCE INDICATORS, MGI GROUP

The Year-End 2022 report is available on MGI’s corporate website at www.mgi-se.com in the Investor Relations section. All financials are preliminary and reviewed but not audited.   

A Word from Remco Westermann, CEO

“MGI ends the year 2022 at the high end of its increased guidance, with 324mEUR revenues and 93mEUR adj. EBITDA, reflecting a solid financial performance and profitability. Our business continued to generate significant cash flows and we reduced our net leverage to 2.9x as of 31 December 2022. In 2022, growth mainly came from new customers, we added 133 new software clients to our active portfolio, which now consists of 551 Software Clients. Existing customer cohorts were due to the market headwinds rather flat which is reflected in our net dollar expansion rate of 96% in Q4 2022. By onboarding new software clients, we were able to grow and increase our market share considerably. Regarding our own games content, we continued to shift our strategy towards games with substantial advertising income as well as access to customer data, away from smaller desktop-based PC games. As part of the portfolio streamlining, we reduced our games workforce by approximately 50 FTEs, recognized a one-time amortization in the amount of 23.6 mEUR and decided to sell our EG7 stake, which was realized in mid Q1 2023. MGI is now streamlined, more efficient than ever, ready for the future and will continue to focus on its ad-software platform supported by accretive games with a large amount of first-party data. While we expect the advertising markets to recover, we are also well-positioned to grow even in the current difficult environment, by constantly adding new software clients to our portfolio. We are eager to show further growth and value creation for our shareholders in 2023 and for many years to come.” commented Remco Westermann, CEO MGI Group.

Notes - All Notes are defined as in the Year End Report 2022 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) Number of new software clients: software clients with gross revenues exceeding 100k USD

Note (3) Adjusted EBITDA: Reported EBITDA excluding one-time costs. EBITDA adjustments amounted to 5.1 mEUR in Q4 2022 and were made largely for one-time costs M&A related costs as well as the ESOP program.

Note (4) Adjusted EBITDA margin: Adjusted EBITDA as a percentage of net revenues.

Note (5) Leverage ratio: Net interest-bearing debt divided by adjusted EBITDA for the past 12 months excluding shareholder and related party loans.

Note (6) Adjusted EBIT: Earnings before interest and taxes excluding one-time costs and PPA-amortization resulting from M&A related purchase price allocations. For adjustments, please see footnote 3 above.

Note (7) Adjusted Net result: Net result excluding PPA amortization

Note (8) Net interest bearing debt: Interest bearing financial indebtedness excluding shareholder and related party loans minus cash and cash equivalents.

Note (9) EBITDA: Earnings before interest, taxes, depreciation and amortization.

Note (10) EBITDA margin: EBITDA as a percentage of net revenues.

Note (11) Adjusted EBIT margin: Adjusted EBIT as a percentage of net revenues.

Note (12) PPA-amortization: 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 Year End results by Remco Westermann (CEO) and Paul Echt (CFO) on Tuesday, February 28, 2023 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-q4-2022

To participate via phone, please call:
​SE: +46 8 505 163 86
​UK: +44 20 319 84884
For other country participants please use (toll-free): +1 412 317 6300
Pin code: 0436867#

Responsible parties

This press release contains inside information that MGI - Media and Games Invest SE is required to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted for publication, through the agency of the contact persons set out below, at the time stated by MGI's news distributor EQS Newswire upon publication of this press release.

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

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.