YEAR-END REPORT February 16 th, 2018 Stockholm. Vlad Suglobov, CEO

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1 YEAR-END REPORT 2017 February 16 th, 2018 Stockholm Vlad Suglobov, CEO 1

2 Q4 HIGHLIGHTS Sequentially, revenue grew 33% from Q3, one of the highest sequential increases ever recorded by the company High MAGRPPU of $42.7 USD, a record figure for the company Acquired full rights to The Secret Society, thereby resolving the dispute with MyTona and adding another game to the company s wholly owned portfolio Continued growth in absolute terms across all geographic regions, with Asia growing the fastest at 260% y-o-y Portfolio of own games grew at a faster pace than licensed games during the period The board proposes a dividend of SEK 2.50 per share, more than 3 times the 2016 amount 2

3 FINANCIAL SUMMARY Net turnover SEK M, growth 93% Own games grew at a faster pace than licensed games during the period Trend of strong growth in Asia continued Higher % of revenue continued to come from small-screen devices (phones, not tablets) Operating profit (EBIT) SEK 15.9 M, EBIT-margin 4.5% Write-downs of intangible assets and goodwill impacted the period with SEK -4.5 M, adjusted EBIT margin is 5.7 (4.4) % Other operating income/expenses impacted the period with SEK 2.1 M Cash flow SEK -7.4 M Investment activities increased significantly during the quarter with the acquisition of The Secret Society Game Cash and cash equivalents amounting to SEK 91.2 M at the end of the quarter 3

4 HEALTHY GEOGRAPHIC REVENUE MIX 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Geographic Revenue Distribution Q4'15 Q1 16' Q2 16' Q3 16' Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 North America Asia Europe ROW Revenue has continued to grow across all regions in absolute terms, creating a healthy revenue mix Biggest growth has come from Asia, 260% y-o-y Asia now accounts for 28% (15%) of total revenue, with the majority coming from Japan Finding opportunities in high ARPU countries where we saw both revenue growth, and increased MAGRPPU ($42.7 USD) for the quarter Total Revenue by Region (SEK M) Q4'16 Q4'17 Y-0-Y North America % Asia % Europe % ROW % 4

5 GROSS REVENUE Gross Revenue, SEK K 93% top-line growth in Q4 400, , , , , , ,000 50,000 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Free-to-play Unlockable Own games grew at a faster pace than licensed games during the period The growth of licensed games continued to be driven by Hidden City, the #1 hidden object game by revenue in the world During the quarter, The Secret Society surpassed $100 M USD in lifetime revenue, the 2 nd game in our portfolio to reach this level Mahjong Journey remains ranked #3 by revenue of all Mahjong solitaire games Soft launch of Pirates & Pearls continues to be encouraging F2P growing by 98% Holiday updates and increased opportunities for user acquisition provided a strong uplift in revenues during the quarter Record MAGRPPU ($42.7) contributed to revenue growth Unlockable games down to 1% (3%) of total revenue 5

6 OPERATIONAL COSTS 180, ,000 Operational Costs, SEK K 50% 45% Operational Costs as % of revenue 140, , ,000 80,000 60,000 40,000 20,000 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Administration Research and development Sales and marketing 40% 35% 30% 25% 20% 15% 10% 5% 0% 18% 22% 19% 27% 19% 27% 27% 26% 35% 12% 11% 12% 11% 9% 8% 7% 7% 6% 8% 7% 7% 7% 5% 4% 4% 4% 4% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Administration Research and development Sales and marketing 6

7 EBIT EBIT MARGIN EBIT, SEK K EBIT SEK 15.9 M % 12% Earnings impacted by high costs for user acquisition as we viewed Q4 as the booster quarter given the opportunities for growth % 8% 6% Earnings impacted by write-downs of goodwill of SEK 2.3 M, and write-downs of intangible assets of SEK 2.2 M EBIT for the full year increased by 167% on full year revenue growth of 120% % EBIT margin 4.5% (4.0) Adjusted EBIT Margin 5.7% (4.4) % Similar to last year, EBIT margin decreased from Q3 as the company pushed growth to higher levels Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q EBIT EBIT-margin 0% -2% EBIT margin before costs for UA was 38.5% compared to 30% in Q4 last year, demonstrating the inherent leverage in the business module Despite lower EBIT margin in Q4, EBIT margin for the full year increased to 9% from 7.4% in

8 NET CAPITALIZATION Net Capitalization, SEK K 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Capitalization net of amortization amounted to SEK 8.4 M Capitalization increased significantly compared to 2016 with the increase in development staff Amortization has increased due to the increased size of the games portfolio, but did not compensate for the higher capitalization Games portfolio SEK M F2P representing 99% of total value 8

9 CASH FLOW Total Cash flow SEK -7.4 M (KSEK) Q4-17 Q Cash flow Purchase of TSS Changes in working capital Underlying cash flow Initial payments for the purchase of TSS amounted to MSEK Positive impact from changes in working capital Underlying cash flow stable Investing activities increased y-o-y and q-o-q Ongoing development of both new and existing games contributed to increase in investing activities 9

10 Q&A

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