I N V E S T O R P R E S E N TAT I O N J A N U A R Y

Transcription

1 I N V E S T O R P R E S E N TAT I O N J A N U A R Y

2 F u n c o m i n b r i e f T H E C O M P A N Y S E G M E N T S S U C C E S S F U L T U R N A R O U N D Norway and US based games developer and publisher focusing on online games and massive open world sandboxes for PC and consoles Share of revenue (Jan-Sep 2018) 48% 2% 50% PC Console IP and office rental USDm Revenue EBIT EBIT-margin -60% 7-22% 29% 23 34% (YTD) 40% 20% 0% -20% -40% -60% -80% L O C A T I O N S A N D S T A F F G A M E S P O R T F O L I O O V E R V I E W Funcom Oslo Conan Unconquered Release: Q Secret World Legends Relaunch: 2017 Funcom NV Trailer Funcom Inc ZPX Employees Mutant Year Zero: Road To Eden Release: 2018 Trailer Age Of Conan Release: 2008 Conan Exiles Release: 2017 Anarchy Online Release: 2001 Funcom locations Distribution/Local partners Development partners Trailer 2

3 H i s t o r y o f F u n c o m The business that is now Funcom was founded by Erik Gøersem, Tyr Nielsen, Andre Backen, Gaute Godager and Olav Mørkrid In 2000 the company is incorporated as Funcom N.V COMPANY FOUNDED Funcom is listed on the Oslo Børs in marked a year of general growth. The company had close to 200 skilled employees in Funcom s offices in Norway, China, USA and Switzerland 2006 LISTING ON OSLO BØRS Lowers the priority traditional offline product distribution Age of Conan is Released in 2008 Establish new development studio in Montreal New management and Rui Casais is appointed as the new CEO in 2015 Implementing new strategy including reduced development time and focus on the console market Private placement of NOK 52,8 million and refinancing DIGITAL DISTRIBUTION TURNAROUN D Publishing of third party developed games Acquisition of IP ownership Today Funcom have a strong pipeline with 5 games ENHA STRA 3

4 4 S t r a t e g i c s h i f t b e h i n d t h e s u c c e s s f u l t u r n a r o u n d IP Royalties Console games - internal Publishing externally developed games Xbox and PS4 More frequent launches More revenue streams More stable profits PC games internal From 3-7 yr development time... to 1-2 yr development time From 1 game in development at a time to 2 internal games in development at a time

5 I n c r e a s e d d i v e r s i t y i n h i g h q u a l i t y I P p o r t f o l i o O W N E D C O N T E N T 1 G A M E S I N O P E R A T I O N 2 ~10 known IPs, ~20 minor IPs ~30 GAMES RELEASED IP rights ownership through Heroic Signatures Conan Exiles, Jan 2017, May 2018 Mutant YZ, December 2018 Conan Unconquered, Q Royalty revenue, strategic control of key IPs, strengthening publishing position Negligible cost and high margins 0.5M units sold first month 1.0M units sold before full launch 3 1.4M units sold two weeks after launch 3 PCGAMER 81/100 GAMESPOT 9/10 GAMEREACTOR 8/10 GAMESTAR 83/100 22,000 live viewers when revealed +300K trailer views on YouTube the following days +450 sites wrote about the announcement Successful releases building strong franchises with loyal fanbase to capitalize o releases Note (1) Titles are owned 50% through the acquisition made in February 2018; (2) Games developed internally and externally; (3) PC refunds not excluded. 5

6 F u n c o m s m o s t p r o f i t a b l e y e a r, b e t t e r Revenue and EBITDA margin C O M M E N T S % 43% % 3% 3% -5% Q18 YTD 60% 50% 40% 30% 20% 10% 0% -10% Strong 2017, 43% EBITDA margin 2018 better than 2017 already after 3Q18 Increased profitability despite falling revenue due to intense cost cutting Revenue EBITDA 6

7 7 D e b t f r e e f r o m O c t o b e r 1 8, s t r o n g c a s h p o s i t i o n Cash and debt (MUSD) C O M M E N T S Last part of convertible bond converted on 4 October Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4 Oct Cash from USD 1.0 m to USD 20.9 m Cash Debt* *) Face value of interest bearing debt 7

8 F i n a n c i a l s S T R O N G R E V E N U E A N D P R O F I T D E V E L O P M E N T Revenue musd 25 Revenue, EBITDA and EBIT 25 3Q18 YTD better than full year Q-3Q 17 1Q-3Q 18 Successful full launch of Conan Exiles key driver Revenue EBITDA EBIT 8

9 I n c r e a s e d d i v e r s i t y i n h i g h q u a l i t y I P p o r t f o l i o ADDITIONS / YEAR INVESTMENT SIZE MARGIN STRATEGIC VALUE INTELLECTUAL PROPERTY LICENSES +1-4 VERY LOW VERY HIGH IP control Value creation by IP development Additional revenue sources NEW PUBLISHING GAMES +2-3 LOW-MID MEDIUM Frequent releases Low fixed employee cost impact Finding long term partners NEW INTERNALLY DEVELOPED GAMES +1 MID-LARGE HIGH Large upside Build and leverage competitive advantages GAMES IN OPERATION & BACK CATALOGUE +3 VERY LOW HIGH Baseline cash contribution IP Value maintenance Strengthen community PLATFORMS For Publishing: PC, Xbox One, PlayStation 4, Switch For IP licenses: All DEVELOPMENT TIME 1 to 2 years of Full production BIZ MODEL Premium with additional monetization GLOBAL DISTRIBUTION NA and Europe: direct Other regions: with partners 9

10 S t r o n g p i p e l i n e o f n e w g a m e s External PLATFORM : PC RELEASE : Q STATUS : In Production PLATFORMS : PC - XBOX ONE PS4 RELEASE : Halloween 2019 STATUS : In Production Internal MULTI-PLAYER CO-OP SHOOTER OPEN WORLD MULTI-PLAYER PLATFORMS : PC - XBOX ONE PS4 RELEASE : TBA STATUS : In Production FUNCOM INC PLATFORMS : PC - XBOX ONE PS4 RELEASE : TBA STATUS : In Pre-Production FUNCOM OSLO AS PLATFORMS : PC - XBOX ONE PS4 RELEASE : TBA STATUS : In Concept FUNCOM OSLO AS 10

11 F u n c o m i s w e l l p o s i t i o n e d i n i t s m a r k e t n i c h e S T R O N G P O S I T I O N I N M A R K E T N I C H E L A R G E A N D F A S T - G R O W I N G M A R K E T LESS COMPETITION FROM LARGER PLAYERS Funcom s main niche segment is open-world sandbox games where larger industry players such as Blizzard, Ubisoft and EA are not present These players typically focus on the largest main stream segments TECHNICAL BARRIERS FOR INDIE STUDIOS Multi-player elements require highly technically skilled organizations as Funcom developed though MMOs As a result, Funcom can choose niches that are too difficult for most small studios to operate within STABLE PROFITABLE GROWTH USDBn ~USD 150BN MARKET GROWING AT 10% 36% VIDEO GAMING IS THE LARGEST ENTERTAINMENT INDUSTRY Relative revenues 2017 Smartphone Console Downloaded/Boxed PC Tablet Browser PC 121,7 10% 23% 27% 137,9 10% 21% 25% 151,9 10% 20% 24% 41% 44% 165,9 10% 19% 22% 180,1 10% 18% 22% 47% 49% E 2020E 2021E CAGR % 4% 5% 19% Strong position and specialization in 1-3 selected niches (e.g. openworld sandbox, horror, real-time strategy, turn-based strategy and co-op shooter). Funcom leverages strategic advantages and build on previous games to improve quality and reduce cost of future games to generate significant level of stable revenues from high number of games and brands, some as games as a service, prolonging revenue. Recorded music SVOD/VOD video Physical home video Live music Cinema Consumer books Video games Source: Newzoo. 11

12 S u m m a r y New strategy increasing revenue and robustness Lower development time, multiple internal games Market doubled by launching on console in addition to PC New revenue streams: Publishing externally developed games, acquired IP Turnaround successful 2017 most profitable ever, EBITDA USD 10m 2018 better already after 3Q18, YTD EBITDA USD 13m 3Q18 EBITDA margin of 62% Debt free and strong cash position Promising pipeline with five new game projects Conan Unconquered Trailer 12

13 CONTACT DETAILS R U I C A S A I S R U F U N C O M. C O M S I G N U P F O R I N V E S T O R N E W S O N O U R W E B S I T E : H T T P : / / I N V E S T O R S. F U N C O M. C O M C o n a n U n c o n q u e r e d Tr a i l e r S T I A N D R A G E S E T S T I A N D F U N C O M. C O M

14 QUESTIONS?