Azerion publishes interim Q3 2023 results
Platform growth and improved efficiency driving
profitability growth of +48% YoY
Highlights of Q3 2023
- Net revenue of approximately € 108.5 million,
up +2.8% from approximately € 105.5 million
Q3 2022 mainly driven by Platform growth, particularly in
advertising revenue from Direct sales, and the integration of
previous acquisitions.
- Adjusted EBITDA of approximately € 18.3
million, up +48% from approximately € 12.4 million
in Q3 2022 due to improved margins due to increased Platform
revenue and contribution from Direct sales, continued integration
of previous acquisitions and ongoing cost optimisation.
- Platform segment Adjusted EBITDA of
approximately € 13.5 million, an increase of +88%
compared to €7.2 million in Q3 2022, reflecting improved
margins due to increased Platform revenue and contribution from
Direct sales, continued integration of previous acquisitions and
ongoing cost optimisation.
- On track to deliver expected annualized cost savings of
at least € 20 million, excluding any effects from foreign
exchange. The expected savings are compared to the January 2023
baseline.
- Completed the sale of the social card games
portfolio for an initial cash consideration of € 81.3 million,
subject to customary adjustments, with an earnout based on the
performance of the acquired business that could take the total
consideration up to a maximum of € 150 million.
- Signed 58 new publishers to expand Azerion’s
supply footprint across Europe and Americas and 3 new
Direct Demand Side Platforms creating new revenue
opportunities for our publisher partners.
- In October, completed the refinancing of the
Company’s outstanding € 200 million bonds with a new issuance of
senior secured callable floating rate bonds for a nominal amount of
€ 165 million.
- In October, completed the acquisition of Hawk,
a demand side advertising technology platform that provides
advertisers and agencies with easy access to large audiences in
growth formats such as digital out of home, audio and connected TV
through a single, multi-channel buying platform.
Highlights YTD Q3 2023
- Net revenue of approximately € 343.2 million YTD Q3 2023, up
+13% from approximately € 303.8 million YTD Q3
2022 mainly driven by Platform growth, particularly in advertising
revenue from Direct sales, and the integration of previous
acquisitions.
- Adjusted EBITDA of approximately € 45.5 million YTD Q3 2023, up
+52% from approximately € 30.0 million YTD Q3 2022
reflecting improved margins due to increased Platform revenue and
contribution from Direct sales, continued integration of previous
acquisitions and ongoing cost optimisation.
Selected KPIs
Financial results - Azerion Group N.V. - Q3 2023
in millions of €
|
|
Q3 2023 |
Q3 2022 |
|
|
|
|
Net revenue |
Operating profit /
(loss)1) |
Adjusted EBITDA |
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue growth |
Adjusted EBITDA growth |
|
Group |
108.5 |
77.3 |
18.3 |
105.5 |
0.2 |
12.4 |
2.8% |
47.6% |
|
Platform |
90.8 |
4.0 |
13.5 |
84.2 |
(0.4) |
7.2 |
7.8% |
87.5% |
|
Premium Games |
17.7 |
73.3 |
4.8 |
21.3 |
1.7 |
5.2 |
(16.9)% |
(7.7)% |
|
of which social card games portfolio |
6.7 |
74.7 |
2.1 |
9.3 |
3.2 |
3.7 |
|
|
|
Other |
- |
- |
- |
- |
(1.1) |
- |
|
|
1) The operating profit of the Group, Premium Games and social
card games portfolio includes the net gain from the sale of the
social card games portfolio for € 72.6 million.
Financial results - Azerion Group N.V. - YTD 2023
in millions of €
|
|
YTD 2023 |
YTD 2022 |
|
|
|
|
Net revenue |
Operating profit /
(loss)1) |
Adjusted EBITDA |
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue growth |
Adjusted EBITDA growth |
|
Group |
343.2 |
66.7 |
45.5 |
303.8 |
(147.8) |
30.0 |
13.0% |
51.7% |
|
Platform |
279.7 |
(7.6) |
30.4 |
238.8 |
(14.8) |
17.1 |
17.1% |
77.8% |
|
Premium Games |
63.5 |
74.3 |
15.1 |
65.0 |
1.1 |
12.9 |
(2.3)% |
17.1% |
|
of which social card games portfolio |
28.3 |
80.6 |
9.7 |
26.9 |
7.6 |
9.1 |
|
|
|
Other |
- |
- |
- |
- |
(134.1) |
- |
|
|
1) The operating profit of the Group, Premium Games and social
card games portfolio includes the net gain from the sale of the
social card games portfolio for € 72.6 million.
Message from the CEO
"We are pleased with the relative resilience of our business
model to the market conditions during Q3 and in particular the
growth in our Platform revenue and increased contribution from our
Direct sales teams. We continue to see the benefits of our ongoing
consolidation and integration projects reflected in our improving
Adjusted EBITDA margins. The recent acquisition of Hawk will help
us to integrate and consolidate even further, while expanding our
services in channels such as audio, digital out of home, drive to
store and connected TV.
For the full year 2023, we continue to expect Adjusted EBITDA to
be at least € 75 million, with Net Revenue for the year now
expected to be around € 520 million, reflecting recent market
conditions.
Having focused on integration and cost optimisation for the
first three quarters of the year, the market conditions are
presenting increasingly attractive opportunities to further grow
our business through partnerships and strategic
investments.’’
- Umut Akpinar
Financial overview
Net revenue
Net revenue for the quarter amounted to € 108.5 million compared
to € 105.5 million in Q3 2022, an increase of approximately 2.8%.
The increase in Net Revenue year on year came from growth in the
Platform segment of approximately € 6.6 million, particularly in
advertising revenue from Direct sales and the integration of
previous acquisitions, offset by a reduction in Net Revenue in
Premium Games between the same periods of approximately € 3.6
million, largely due to the completed sale of the social card games
portfolio during Q3 2023.
Net revenue YTD Q3 2023 amounted to € 343.2 million compared to
€ 303.8 million in YTD Q3 2022, an increase of approximately 13.0%,
mainly due to growth in the Platform segment between the same
periods of approximately € 41 million, particularly in advertising
revenue from Direct sales and the integration of previous
acquisitions.
Earnings
The operating profit for the quarter amounted to € 77.3 million,
compared to a profit of € 0.2 million in Q3 2022 mainly explained
by gain on the sale of the social card games portfolio completed on
28 August 2023 of € 72.6 million.
Adjusted EBITDA was € 18.3 million for the quarter compared
to € 12.4 million in Q3 2022, an increase of approximately 47.6%
due to increased Net revenue from the Platform segment at higher
margins driven by increased contribution to advertising revenue
from Direct sales, continued integration of previous acquisitions
and ongoing cost optimisation, and notwithstanding the loss of
earnings due to the sale of the social card games portfolio
completed on and as from 28 August 2023.
The operating profit YTD Q3 2023 amounted to € 66.7 million,
compared to a loss of € 147.8 million YTD Q3 2022 mainly explained
by the gain on the sale of the social card games portfolio
completed on 28 August 2023 of €72.6 million and the €144.8 million
of De-SPAC related expenses incurred in 2022, but not present in
2023.
Adjusted EBITDA was € 45.5 million YTD Q3 2023 compared to €
30.0 million YTD Q3 2022, an increase of approximately 51.7%, due
to increased revenue from Platform business at higher margins
coupled with efficiencies from cost optimisation and the
integration and consolidation of previously acquired
businesses.
Cash flow
Cash flow from operating activities in Q3 2023 was an outflow of
approximately € (15.8) million, mainly due to movements in net
working capital, reflecting a decrease in trade and other payables
of € (18.0) million and increase in trade and other receivables of
€ (5.1) million. Cash flow from investing activities for the period
was an inflow of € 46.9 million, mainly due to the net proceeds
from the sale of the social card game portfolio € 66.0 million,
offset in part by payments for intangibles of € (7.6) million and
deferred payments and earn-outs relating to past acquisitions of €
(8.1) million. Cash flow from financing activities in the period
amounted to an outflow of € (4.0) million, mainly relating to early
cancellation and payments relating to lease liabilities.
Cash flow from operating activities in YTD Q3 2023 was an inflow
of € 18.9 million, mainly due to movements in net working capital,
reflecting a decrease in trade and other receivables of € 18.6
million and a decrease in trade and other payables of € (10.2)
million. Cash flow from investing activities was an inflow of € 9.3
million, mainly due to € 66.0 million of proceeds from the sale of
the social card games portfolio offset in part by payments for
intangibles of € (19.6) million and deferred payments and earn-outs
relating to past acquisitions of € (33.1) million. Cash flow from
financing activities totalled an outflow of € (10.0) million,
mainly relating to repayment of external borrowings, early
cancellation of and payments relating to lease liabilities.
Capex
Azerion capitalizes development costs related to internal
development of assets, a core activity to support innovation in its
platform. These costs primarily relate to developers’ time devoted
to the development of games, platforms, and other new features. In
Q3 2023 Azerion capitalized € 3.9 million, equivalent to 16.1%
(2022: 16.9%) of gross personnel costs excluding restructuring
provision expense. For YTD Q3 2023 Azerion capitalized € 14.1
million, equivalent to 17.5% (2022: 16.6%) of gross personnel costs
excluding restructuring provision expense.
Financial position and financing
Net interest bearing debt*) amounted to € 152.3 million as of 30
September 2023, mainly comprising the outstanding bond loan with a
nominal value of € 200 million (part of a total € 300 million
framework), which became a current borrowing as at April 2023 and
lease liabilities with a balance of € 14.7 million less the cash
and cash equivalents position of € 69.2 million.
*) As defined in the Terms & Conditions of the Senior
Secured Callable Floating Rate Bonds ISIN: NO0013017657. Please
also refer to the Definitions section and the notes of this Interim
Report for more information.
Platform Segment
Our Platform segment includes our digital advertising
activities, e-commerce, the operation and distribution of casual
games and Fanzone. It generates Net revenue mainly by displaying
digital advertisements in both game and general content, as well as
selling and distributing AAA games through our e-commerce channels.
Advertisers are serviced through two models: i) Direct sales, which
involve a direct engagement between Azerion’s commercial teams and
advertisers or their agencies in the placement of digital
advertisements, and ii) Automated auction sales in which
advertising inventory is purchased through real-time auctions.
Platform is also integrated with parts of our Premium Games
segment, leveraging inter-segment synergies.
Platform – Selected Financial KPIs
Financial results - Platform
in millions of €
|
|
Q3 |
Q3 |
YTD |
YTD |
|
|
2023 |
2022 |
2023 |
2022 |
|
Net revenue |
90.8 |
84.2 |
279.7 |
238.8 |
|
Operating profit / (loss) |
4.0 |
(0.4) |
(7.6) |
(14.8) |
|
Adjusted EBITDA |
13.5 |
7.2 |
30.4 |
17.1 |
|
Net revenue growth % |
7.8% |
|
17.1% |
|
|
Adjusted EBITDA growth % |
87.5% |
|
77.8% |
|
|
Adjusted EBITDA margin % |
14.9% |
8.6% |
10.9% |
7.2% |
Net revenue of € 90.8 million in Q3 2023, compared to € 84.2
million in Q3 2022, an increase of 7.8%, driven by increased
contribution from Direct sales, integration of past acquisitions
and global sales teams, combined with the roll out of new ad
formats on the Platform. In Q3 2023, Azerion’s Direct sales teams
contributed approximately 65% of Platform advertising Net revenue,
with the balance provided by automated auction sales, as compared
to approximately 55% in Q3 2022.
Net revenue of € 279.7 million for YTD Q3 2023 , compared to €
238.8 million YTD Q3 2022, an increase of 17.1%, similarly driven
by increased contribution from Direct sales, integration and
consolidation of past acquisitions and global sales teams, combined
with the roll out of new ad formats on the Platform.
Adjusted EBITDA of € 13.5 million in Q3 2023, compared to € 7.2
million in Q3 2022, an increase of 88% due to growth in higher
margin Direct sales, improved spend on higher-impact ads in
channels such as audio, connected TV and digital out of home,
increased monetisation of exclusive partnerships and owned and
operated content, together with ongoing consolidation and
integration of previously acquired businesses and cost
optimisation.
Adjusted EBITDA of € 30.4 million for YTD Q3 2023, compared to €
17.1 million for YTD Q3 2022, an increase of more than 78%, mainly
as a result of higher margin sales mix and ongoing consolidation
and integration of previously acquired businesses and cost
optimisation.
Selected business initiatives in Q3 2023
include:
- Successfully consolidated previous acquisitions in the US to
create Azerion US.
- Azerion Fanzone progressing well with 4 new club partners added
in Q3, taking Fanzone’s total club partnerships to 21.
- Launched ’Join the Planet,’ an initiative promoting
environmental awareness through gaming and VR experiences through
collaboration with Verse Estate.
- Partnership with Dag en Nacht Media on programmatic
advertising.
- Collaboration with Flashtalking by Mediaocean to bring dynamic
creative to high-impact, video and gaming formats.
- Azerion JAPAC, Lifesight, and New Balance collaborate on
innovative in-game advertising campaign.
Advertising - Selected Operational KPIs
Advertising - Operational KPIs
|
|
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 2023 |
Q3 2023 |
|
Avg. Digital Ads Sold per Month (bn) |
9.6 |
10.7 |
12.2 |
13.0 |
12.2 |
|
Advertising auction platform (bn) |
4.3 |
5.4 |
5.1 |
6.1 |
5.4 |
|
Publisher monetisation services (bn) |
5.3 |
5.3 |
7.1 |
6.9 |
6.8 |
|
Avg. Gross Revenue per Million Processed Ad Requests from
advertising auction platform (€) |
23.9 |
32.8 |
30.0 |
36.3 |
30.4 |
|
Previous reported figures (€) |
11.2 |
16.7 |
11.2 |
15.5 |
13.4 |
|
Additional formats (€) |
12.7 |
16.1 |
18.8 |
20.8 |
17.0 |
The Average Digital Ads Sold per Month (bn)
increased to 12.2 billion from 9.6 billion in Q3 2022, reflecting
the growth of the Platform business through increased ad format
offerings and the integration of previous acquisitions. As of Q1
2023 the reported number of average digital ads sold per month
include the following previous acquisitions: Adplay, Adverline,
Monolith, Hybrid Theory, MMedia, Takerate, Targetspot and
Vlyby.
The Average Gross Revenue per Million Processed Ad
Requests was € 30.4 in Q3 2023, compared to € 23.9 in Q3
2022, demonstrating our ability to grow and manage the advertising
auction platform efficiently and profitably whilst providing an
attractive proposition for advertisers and publishers. New ad
formats integrated into the platform have also contributed to
higher margins.
Previously reported figures of Average Gross Revenue per Million
Processed Ad Requests (€) were of advertising auction platform
Improve Digital. Additional ad formats: Headerlift, Pubgalaxy,
Sublime, Inskin, Strossle, Keymobile, Delta Projects, Admoove and
Quantum have been included from Q1 2022, Infinia was included in
figures as of Q3 2022 and Madvertise as of Q3 2022. Additional new
ad formats have been included as of Q1 2023, these include Adplay,
Adverline, Monolith, Hybrid Theory, MMedia, Takerate, Targetspot
and Vlyby. In Q4 2022, the Average gross revenue per million ad
requests was revised to exclude ad requests that are rejected
before entering our advertising auction platform.
Premium Games Segment
Up until 28 August 2023, the Premium Games segment included
social card and casino games, as well as metaverse games. Azerion
completed the sale of its social card games portfolio to Playtika
Holding Corp. on 28 August 2023 and its contribution to the Premium
Games segment ceased at that date. The segment generates revenue
mainly by offering users the ability to make in-game purchases for
extra features and virtual goods to enhance their gameplay
experience. This segment aims to stimulate social interaction among
players and build communities, offering an extended value
proposition to advertisers and generating cross-selling
opportunities with the Platform segment.
Premium Games – Selected Financial KPIs
Financial results - Premium Games
in millions of €
|
|
Q3 |
Q3 |
YTD |
YTD |
|
|
2023 |
2022 |
2023 |
2022 |
|
Net revenue |
17.7 |
21.3 |
63.5 |
65.0 |
|
of which social card games portfolio |
6.7 |
9.3 |
28.3 |
26.9 |
|
Operating profit / (loss)1) |
73.3 |
1.7 |
74.3 |
1.1 |
|
of which social card games portfolio1) |
74.7 |
3.2 |
80.6 |
7.6 |
|
Adjusted EBITDA |
4.8 |
5.2 |
15.1 |
12.9 |
|
of which social card games portfolio |
2.1 |
3.7 |
9.7 |
9.1 |
|
Net revenue growth % |
(16.9)% |
|
(2.3)% |
|
|
Adjusted EBITDA growth % |
(7.7)% |
|
17.1% |
|
|
Adjusted EBITDA margin % |
27.1% |
24.4% |
23.8% |
19.8% |
1) The operating profit of Premium Games and social card games
portfolio includes the net gain from the sale of the social card
games portfolio for € 72.6 million.
Premium Games
Net revenue of € 17.7 million in Q3 2023, as compared to € 21.3
million in Q3 2022, a decrease of (16.9)%, mainly due to the
revenue loss in September resulting from the sale of our social
card games portfolio. The Net revenue of the remaining Premium
Games titles across our social casino and metaverse portfolios was
€ 11.0 million in Q3 2023, as compared to € 12.0 million in Q3
2022, a decrease of (8.3)% mainly driven by lower revenue in our
metaverse environments.
Net revenue of € 63.5 million for YTD Q3 2023, as compared to €
65.0 million for YTD Q3 2022, a decrease of (2.3)% predominantly
due to the loss of revenue in September from the sale of our social
card games portfolio. The Net revenue for YTD Q3 2023 of the
remaining Premium Games titles across our social casino and
metaverse portfolios was € 35.2 million, as compared to € 38.1
million for YTD Q3 2022, a decrease of (7.6)% mainly driven by
lower revenue in our metaverse environments.
Adjusted EBITDA of € 4.8 million in Q3 2023, as compared to €
5.2 million in Q3 2022, a decrease of (7.7)%, mainly due to the
contribution lost in September from the sale of the social card
games portfolio. The Adjusted EBITDA of the remaining Premium Games
titles across our social casino and metaverse portfolios was € 2.7
million in Q3 2023, as compared to € 1.5 million in Q3 2022, an
increase of approximately 80% mainly driven by improved performance
in the social casino portfolio and cost optimisation across the
segment.
Adjusted EBITDA of € 15.1 million for YTD Q3 2023, as compared
to € 12.9 million for YTD Q3 2022, an increase of 17.1% mainly due
to improved performance in both the social cards and social casino
portfolios and cost optimisation across the segment, more than
offsetting the contribution lost in September from the sale of our
social card games portfolio. The Adjusted EBITDA for YTD Q3 2023 of
the remaining Premium Games titles across our social casino and
metaverse portfolios was € 5.4 million, as compared to € 3.8
million for YTD Q3 2022, an increase of approximately 42% mainly
driven by improved performance in the social casino portfolio and
cost optimisation across the segment.
Premium Games – Selected Operational KPIs
Premium Games - Operational KPIs
|
|
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 2023 |
Q3 2023 |
|
Avg. Time in Game per Day (min) |
80 |
79 |
84 |
84 |
79 |
|
Avg. DAUs (thousands) |
556 |
559 |
601 |
558 |
454 |
|
Avg. ARPDAU (€) |
0.42 |
0.45 |
0.42 |
0.42 |
0.44 |
- The Average Time in Game per Day (min)
remained relatively flat in Q3 2023 as compared to Q3 2022 at 79
minutes per day.
- The Average Daily Active Users (DAUs)
decreased by (18)% in Q3 2023 as compared to Q3 2022, mainly due to
the loss of active players in September from the sale of the social
card games portfolio.
- The Average Revenue per Daily Active User
(ARPDAU) increased by almost 5% in Q3 2023 as compared to
Q3 2022, mainly due to a stable loyal user base spending more in
game.
Selected operational KPIs include the results from the social
card games portfolio for July and up until the completion of the
sale on 28 August 2023 only.
Outlook
Adjusted EBITDA for full year 2023 is still expected to be at
least € 75 million, supported in particular by continued progress
in the integration of previous acquisitions and ongoing cost
optimisation.
Net Revenue for full year 2023 is now expected to be around €
520 million, up from € 452.6 million FY 2022, as compared to
previous expectations of around € 540 million. The reduction in Net
Revenue expectations for the full year reflects recent market
conditions leading to lower anticipated growth in automated auction
sales than originally envisaged for H2 2023.
Having focused on integration and cost optimisation for the
first three quarters of the year, the market conditions are
presenting increasingly attractive opportunities to further grow
our business through partnerships and strategic investments.
As a result, the previously communicated medium term guidance is
retained: expected annual Net revenue growth of around 15% and
annual Adjusted EBITDA margins expected to be in the range of 14%
to 16%.
Other information
Interest Bearing Debt
Interest Bearing Debt
in millions of €
|
|
30 September 2023 |
31 December 2022 |
|
Total non-current indebtedness |
13.4 |
215.8 |
|
Total current indebtedness |
208.1 |
12.8 |
|
Total financial indebtedness |
221.5 |
228.6 |
|
Deduct Zero interest bearing loans |
- |
(0.1) |
|
Interest Bearing Debt |
221.5 |
228.5 |
|
Less: Cash and cash equivalents |
(69.2) |
(50.9) |
|
Net Interest Bearing Debt (Bond terms) |
152.3 |
177.6 |
References to bond terms in the table above refer to the terms
as defined in the Senior Secured Callable Floating Rate Bonds ISIN:
NO0013017657
Reconciliation of net income to Adjusted
EBITDA
Reconciliation of net income to Adjusted EBITDA - Q3
in millions of €
|
|
Q3 |
|
|
2023 |
2022 |
|
|
Azerion Group |
Premium Games |
Platform |
Other |
Azerion Group |
Premium Games |
Platform |
Other |
|
Profit / (loss) for the period |
54.4 |
|
|
|
(5.2) |
|
|
|
|
Income Tax expense |
18.1 |
|
|
|
1.1 |
|
|
|
|
Profit / (loss) before tax |
72.5 |
|
|
|
(4.1) |
|
|
|
|
Net finance costs |
4.8 |
|
|
|
4.3 |
|
|
|
|
Operating profit / (loss) |
77.3 |
73.3 |
4.0 |
- |
0.2 |
1.7 |
(0.4) |
(1.1) |
|
Depreciation & Amortization |
11.3 |
3.0 |
8.2 |
0.1 |
9.6 |
2.9 |
6.5 |
0.2 |
|
De-SPAC related expenses |
- |
- |
- |
- |
0.1 |
0.1 |
- |
- |
|
Other1) |
(72.6) |
(72.7) |
0.1 |
- |
0.8 |
0.1 |
- |
0.7 |
|
Acquisition expenses |
2.8 |
1.2 |
1.7 |
(0.1) |
1.6 |
0.2 |
1.2 |
0.2 |
|
Restructuring |
(0.5) |
- |
(0.5) |
- |
0.1 |
0.2 |
(0.1) |
- |
|
Adjusted EBITDA |
18.3 |
4.8 |
13.5 |
- |
12.4 |
5.2 |
7.2 |
- |
1) Other mainly includes the net gain from the sale of the
social card games portfolio for € 72.6 million.
Reconciliation of net income to Adjusted EBITDA - YTD
in millions of €
|
|
YTD |
|
|
2023 |
2022 |
|
|
Azerion Group |
Premium Games |
Platform |
Other |
Azerion Group |
Premium Games |
Platform |
Other |
|
Profit / (loss) for the period |
32.3 |
|
|
|
(150.0) |
|
|
|
|
Income Tax expense |
21.4 |
|
|
|
2.4 |
|
|
|
|
Profit / (loss) before tax |
53.7 |
|
|
|
(147.6) |
|
|
|
|
Net finance costs |
13.0 |
|
|
|
(0.2) |
|
|
|
|
Operating profit / (loss) |
66.7 |
74.3 |
(7.6) |
- |
(147.8) |
1.1 |
(14.8) |
(134.1) |
|
Depreciation & Amortization |
32.5 |
9.6 |
22.9 |
- |
26.3 |
8.6 |
17.7 |
- |
|
De-SPAC related expenses |
- |
- |
- |
- |
144.8 |
2.4 |
9.4 |
133.0 |
|
Other1) |
(71.1) |
(71.7) |
0.6 |
- |
1.1 |
0.4 |
(0.2) |
0.9 |
|
Acquisition expenses |
10.5 |
1.2 |
9.3 |
- |
4.2 |
0.2 |
3.8 |
0.2 |
|
Restructuring |
6.9 |
1.7 |
5.2 |
- |
1.4 |
0.2 |
1.2 |
- |
|
Adjusted EBITDA |
45.5 |
15.1 |
30.4 |
- |
30.0 |
12.9 |
17.1 |
- |
1) Other mainly includes the net gain from the sale of the
social card games portfolio for € 72.6 million.
Operating expenses
Breakdown of Operating expenses
in millions of €
|
|
Q3 |
YTD |
|
2023 |
2022 |
2023 |
2022 |
|
Personnel costs |
(19.8) |
(20.2) |
(73.6) |
(83.3) |
|
Includes: |
|
|
|
|
|
Restructuring related expenses |
0.5 |
(0.1) |
(6.9) |
(1.4) |
|
Azerion Founder Warrants, reported as share-based payment
expense |
- |
- |
- |
(9.9) |
|
De-SPAC early exercised share-based payment expense |
- |
- |
- |
(10.3) |
|
Other expenses |
(4.9) |
(7.9) |
(28.6) |
(150.0) |
|
Includes: |
|
|
|
|
|
De-SPAC transaction related expenses |
|
|
|
(121.4) |
|
Operating expenses |
(24.7) |
(28.1) |
(102.2) |
(233.3) |
|
Of which: |
|
|
|
|
|
Platform |
(19.2) |
(21.4) |
(81.3) |
(76.9) |
|
Premium Games |
(5.9) |
(6.5) |
(21.2) |
(23.1) |
Restructuring
In relation to ongoing consolidation and integration,
restructuring charges across the next two quarters are expected in
total to be in the range of approximately € 2 million to € 3
million. These costs impact the reported operating profit / loss,
but are removed from Adjusted EBITDA.
Bond Refinancing
On 8 April 2021 Azerion issued senior secured callable fixed
rate bonds for a total of € 200 million, within a total framework
amount of € 300 million (ISIN: SE0015837794). The maturity date of
the bonds was 28 April 2024 and the bonds carried a fixed interest
rate of 7.25% per annum. On 31 October 2023, Azerion announced that
these bonds had been fully redeemed at a redemption price of
100.725% of the nominal amount of the bonds. The total redemption
amount was € 204.7 million, comprising € 200 million of nominal
amount of the bonds plus call premium of € 1.45 million and accrued
but unpaid interest. After roll-overs from these bonds to newly
issued bonds (see below), the balance outstanding for redemption
was settled through a combination of net proceeds of this new bond
issue of € 76.2 million and cash from Azerion of € 45.1
million.
On 14 September 2023, Azerion announced that it had successfully
placed € 165 million of senior secured floating rate bonds, within
a total framework amount of € 300 million to qualified
institutional investors internationally (ISIN: NO0013017657). The
new bond issuance was a post Q3 2023 event that was completed at
the end of October 2023. The newly issued bonds have a 3-year
tenor, will carry a floating rate coupon of 3 months EURIBOR plus
6.75 per cent per annum and were issued at 98.5 per cent of par.
The net proceeds of this bond issue, in combination with cash from
Azerion, have been used to fully redeem the bonds issued on 8 April
2021 (ISIN: SE0015837794), as mentioned above.
Sale of social card games portfolio
Playtika Holding Corp and Azerion announced on 1 August 2023
that they had entered into a definitive agreement for Playtika to
acquire from Azerion its social card games portfolio.
The sale was completed on 28 August 2023, for an initial cash
consideration of € 81.3 million, subject to customary adjustments,
with an earnout based on the performance of the acquired business
that could take the total consideration up to a maximum of € 150
million. At completion Azerion received net proceeds of
approximately € 66 million and approximately 15 months after the
completion date Azerion will receive the remaining proceeds
relating to the performance based earnout and other contractual
terms, subject to the terms of the asset purchase agreement.
The earnout consideration is based on the Adjusted EBITDA
results, as defined in the asset purchase agreement, of the social
card games portfolio for the period running from 1 October 2023
until 30 September 2024 (the “Earnout Period”), and calculated by
multiplying the incremental Adjusted EBITDA of the social card
games portfolio above the "Baseline" (as defined below) by a
multiple of between 6 and 7 (both inclusive); the specific multiple
to be applied is contingent upon the revenue growth of the social
card games portfolio achieved during the Earnout Period. The
"Baseline" is defined as the last twelve months Adjusted EBITDA on
a carve-out basis of approximately € 13.5 million.
The gain on sale before income tax that includes the received
proceeds at completion, an estimate of the remaining proceeds,
derecognized fixed assets and related transaction costs, amounted
to € 72.6 million.
Condensed consolidated statement of profit or loss and other
comprehensive income
Condensed consolidated statement of profit or loss and other
comprehensive income
in millions of €
|
|
Q3 |
YTD |
|
|
2023 |
2022 |
2023 |
2022 |
|
Net revenue |
108.5 |
105.5 |
343.2 |
303.8 |
|
Costs of services and materials |
(67.7) |
(67.0) |
(214.4) |
(190.6) |
|
Personnel costs |
(19.8) |
(20.2) |
(73.6) |
(83.3) |
|
Depreciation |
(2.0) |
(1.7) |
(5.9) |
(4.9) |
|
Amortization |
(9.3) |
(7.9) |
(26.6) |
(21.4) |
|
Other gains and losses |
72.5 |
(0.6) |
72.6 |
(1.4) |
|
Other expenses |
(4.9) |
(7.9) |
(28.6) |
(150.0) |
|
Operating profit / (loss) |
77.3 |
0.2 |
66.7 |
(147.8) |
|
|
|
|
|
|
|
Finance income |
2.1 |
1.0 |
7.5 |
17.2 |
|
Finance costs |
(6.9) |
(5.3) |
(20.5) |
(17.0) |
|
Net Finance costs |
(4.8) |
(4.3) |
(13.0) |
0.2 |
|
|
|
|
|
|
|
Profit / (loss) before tax |
72.5 |
(4.1) |
53.7 |
(147.6) |
|
|
|
|
|
|
|
Income tax expense |
(18.1) |
(1.1) |
(21.4) |
(2.4) |
|
Profit / (loss) for the period |
54.4 |
(5.2) |
32.3 |
(150.0) |
|
Attributable to: |
|
|
|
|
|
Owners of the company |
54.1 |
(5.1) |
31.6 |
(149.8) |
|
Non-controlling interest |
0.3 |
(0.1) |
0.7 |
(0.2) |
|
|
|
|
|
|
|
Exchange difference on translation of foreign operations |
(0.3) |
- |
(0.3) |
(1.3) |
|
Total other comprehensive income |
(0.3) |
- |
(0.3) |
(1.3) |
|
|
|
|
|
|
|
Total comprehensive income/(loss) |
54.1 |
(5.2) |
32.0 |
(151.3) |
|
Attributable to: |
|
|
|
|
|
Owners of the company |
56.5 |
(5.1) |
31.3 |
(150.4) |
|
Non-controlling interest |
(2.4) |
(0.1) |
0.7 |
(0.9) |
|
|
|
|
|
|
|
Loss per share for losses attributable to the ordinary equity
holders of the company: |
|
|
|
|
|
Basic profit/(loss) per share (in €) |
|
|
0.26 |
(1.33) |
|
Diluted profit/(loss) per share (in €) |
|
|
0.20 |
(1.33) |
Condensed consolidated statement of financial position
Condensed consolidated statement of financial position
in millions of €
|
|
30 September 2023 |
31 December 2022 |
|
Assets |
|
|
|
Non-current assets |
428.6 |
429.3 |
|
Goodwill |
169.0 |
184.2 |
|
Intangible assets |
168.8 |
186.2 |
|
Property, plant and equipment |
17.7 |
20.5 |
|
Non-current financial assets |
71.8 |
36.8 |
|
Deferred tax asset |
1.2 |
1.5 |
|
Investment in joint venture and associate |
0.1 |
0.1 |
|
|
|
|
|
Current assets |
201.8 |
209.2 |
|
Trade and other receivables |
132.0 |
157.3 |
|
Current tax assets |
0.6 |
1.0 |
|
Cash and cash equivalents |
69.2 |
50.9 |
|
Total assets |
630.4 |
638.5 |
|
|
|
|
|
Equity |
|
|
|
Share capital |
1.2 |
1.2 |
|
Share premium |
141.0 |
130.8 |
|
Treasury shares |
(0.8) |
0.0 |
|
Legal reserve |
27.5 |
25.2 |
|
Share based payment reserve |
12.7 |
13.7 |
|
Currency translation reserve |
(1.7) |
(1.3) |
|
Other equity instruments |
15.0 |
29.0 |
|
Retained earnings |
(77.3) |
(104.8) |
|
Shareholders’ equity |
117.6 |
93.8 |
|
Non-controlling interest |
4.6 |
2.4 |
|
Total equity |
122.2 |
96.2 |
|
|
|
|
|
Liabilities |
|
|
|
Non-current liabilities |
60.7 |
257.7 |
|
Borrowings |
2.9 |
201.5 |
|
Lease liabilities |
10.5 |
14.3 |
|
Provisions |
1.4 |
1.6 |
|
Deferred tax liability |
34.3 |
25.3 |
|
Other non-current liability |
11.6 |
15.0 |
|
|
|
|
|
Current liabilities |
447.5 |
284.6 |
|
Borrowings |
203.9 |
7.9 |
|
Provisions |
1.9 |
0.9 |
|
Trade payables 1) |
92.2 |
111.9 |
|
Accrued liabilities1) |
92.9 |
103.7 |
|
Current tax liabilities |
16.3 |
5.4 |
|
Lease liabilities |
4.2 |
4.9 |
|
Other current liabilities1) |
36.1 |
49.9 |
|
Total liabilities |
508.2 |
542.3 |
|
Total equity and liabilities |
630.4 |
638.5 |
1) Trade, other payables and accrued liabilities have been
reclassified to Trade payables, Accrued liabilities and Other
current liabilities to better reflect the reporting by nature
Condensed consolidated statement of cash flow
Condensed consolidated statement of cash flow
in millions of €
|
|
2023 |
2022 |
2023 |
2022 |
|
|
Q3 |
Q3 |
YTD |
YTD |
|
Operating profit / (loss) |
77.3 |
0.2 |
66.7 |
(147.8) |
|
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
Depreciation and amortisation |
11.2 |
9.6 |
32.5 |
26.4 |
|
Movements in provisions per profit and loss |
1.3 |
0.3 |
7.9 |
1.8 |
|
Gain on sale of social card game portfolio |
(72.6) |
- |
(72.6) |
- |
|
Share-based payments expense |
0.1 |
0.5 |
0.7 |
22.9 |
|
De-SPAC related expenses |
- |
0.1 |
- |
14.6 |
|
De-SPAC listing expense |
- |
- |
- |
107.1 |
|
Other non-cash items |
(2.9) |
(2.2) |
(2.9) |
(0.1) |
|
|
|
|
|
|
|
Changes in working capital items: |
|
|
|
|
|
(Increase)/Decrease in trade and other receivables |
(5.1) |
(10.1) |
18.6 |
(1.6) |
|
Increase (decrease) in trade payables and other payables |
(18.0) |
20.7 |
(10.2) |
16.3 |
|
|
|
|
|
|
|
Utilization of provisions |
(1.6) |
(0.9) |
(6.8) |
(1.6) |
|
Interest paid |
(5.1) |
(4.6) |
(14.0) |
(14.0) |
|
Income tax paid |
(0.4) |
(0.7) |
(1.0) |
(1.2) |
|
Net cash provided by (used for) operating activities |
(15.8) |
12.9 |
18.9 |
22.8 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Net proceeds from sale of business |
66.0 |
- |
66.0 |
- |
|
Payments for property, plant and equipment |
(0.8) |
(0.5) |
(1.4) |
(1.4) |
|
Payments for intangibles |
(7.6) |
(4.5) |
(19.6) |
(14.2) |
|
Net cash outflow on acquisition of subsidiaries |
(8.1) |
(6.2) |
(33.1) |
(45.4) |
|
Net cash outflow on acquisition of securities and equity
investments |
(2.6) |
- |
(2.6) |
- |
|
Net cash provided by (used for) investing activities |
46.9 |
(11.2) |
9.3 |
(61.0) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from external borrowings |
0.4 |
- |
0.5 |
- |
|
Repayment of external borrowings |
(0.8) |
1.2 |
(3.6) |
(2.0) |
|
De-SPAC related expenses |
- |
(0.2) |
- |
(33.4) |
|
Payment of principal portion of lease liabilities |
(1.7) |
(2.1) |
(5.0) |
(5.2) |
|
Early cancellation of lease liability |
(1.5) |
- |
(1.5) |
- |
|
Dividends paid to shareholders of non-controlling interests |
(0.4) |
- |
(0.4) |
- |
|
Proceeds from De-SPAC transaction |
- |
- |
- |
404.1 |
|
Settlement of De-SPAC transaction |
- |
- |
- |
(310.9) |
|
Net cash provided by (used for) financing activities |
(4.0) |
(1.1) |
(10.0) |
52.6 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
27.1 |
0.6 |
18.2 |
14.4 |
|
Effect of changes in exchange rates on cash and cash
equivalents |
(0.1) |
(0.2) |
0.1 |
(0.5) |
|
Cash and cash equivalents at the beginning of the period |
42.2 |
48.8 |
50.9 |
35.3 |
|
Cash and cash equivalents at the end of the period |
69.2 |
49.2 |
69.2 |
49.2 |
Definitions
Adjusted EBITDA represents operating Profit /
(Loss) excluding depreciation, amortization, impairment of
non-current assets, restructuring and acquisition related expenses
and other items at management discretion.
Adjusted EBITDA Margin represents Adjusted
EBITDA as a percentage of Net revenue
Average gross revenue per million processed ad requests
from the advertising auction platform is calculated by
dividing gross advertising revenue by a million advertisement
requests running through advertising auction platform Improve
Digital. Not all advertisement requests are processed and become
eligible to be fulfilled as an advertisement sold, therefore this
metric measures the efficiency and overall profitability of the
digital advertising auction platform, demonstrating that the
revenue generated by the advertisements that are sold also
remunerate and more than cover the costs of all the advertisement
requests.
Average time in game per day measures how many
minutes per day, on average, the players of Premium Games spend in
the games. This demonstrated their engagement with the games, which
generates more opportunities to grow the ARPDAU.
Average DAUs represents average daily
active users, which is the number of distinct users per day
averaged across the relevant period.
Average ARPDAU represents Average Revenue per
Daily Active User, which is revenue per period divided by days in
the period divided by average daily active users in that period and
represents average per user in-game purchases for the period.
Financial Indebtedness represents as defined in
the terms and conditions of the Senior Secured Callable Floating
Rate Bonds ISIN: NO0013017657 any indebtedness in respect of:
- monies borrowed or raised. including Market Loans;
- the amount of any liability in respect of any Finance
Leases;
- receivables sold or discounted (other than any receivables to
the extent they are sold on a non-recourse basis);
- any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect of
a borrowing;
- any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price
(and, when calculating the value of any derivative transaction,
only the mark to market value shall be taken into account, provided
that if any actual amount is due as a result of a termination or a
close-out, such amount shall be used instead);
- any counter indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or any
other instrument issued by a bank or financial institution;
and
- (without double counting) any guarantee or other assurance
against financial loss in respect of a type referred to in the
above paragraphs (1)-(6).
Net Interest Bearing Debt as defined in the
terms and conditions of the Senior Secured Callable Floating Rate
Bonds ISIN: NO0013017657 means the aggregate interest bearing
Financial Indebtedness less cash and cash equivalents (including
any cash from a Subsequent Bond Issue standing to the credit on the
Proceeds Account or another escrow arrangement for the benefit of
the Bondholders) of the Group in accordance with the Accounting
Principles (for the avoidance of doubt, excluding any Bonds owned
by the Issuer, guarantees, bank guarantees, Subordinated Loans, any
claims subordinated pursuant to a subordination agreement on terms
and conditions satisfactory to the Agent and interest bearing
Financial Indebtedness borrowed from any Group Company) as such
terms are defined in the terms and conditions of the Senior Secured
Callable Floating Rate Bonds ISIN: NO0013017657.
Operating expenses are defined as the aggregate
of personnel costs and other expenses as reported in the statement
of Other comprehensive income. More details on the cost by nature
reporting can be found in the published annual financial statements
of 2022.
Disclaimer and Cautionary Statements
This communication contains information that qualifies as inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
This communication may include forward-looking statements. All
statements other than statements of historical facts are, or may be
deemed to be, forward-looking statements. Forward-looking
statements include, among other things, statements concerning the
potential exposure of Azerion to market risks and statements
expressing management’s expectations, beliefs, estimates,
forecasts, projections and assumptions. Words and expressions such
as aims, ambition, anticipates, believes, could, estimates,
expects, goals, intends, may, milestones, objectives, outlook,
plans, projects, risks, schedules, seeks, should, target, will or
other similar words or expressions are typically used to identify
forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management’s
current expectations and assumptions and involve known and unknown
risks, uncertainties and other factors that are difficult to
predict and that could cause the actual results, performance or
events to differ materially from future results expressed or
implied by such forward-looking statements contained in this
communication. Readers should not place undue reliance on
forward-looking statements.
Any forward-looking statements reflect Azerion’s current views
and assumptions based on information currently available to
Azerion’s management. Forward-looking statements speak only as of
the date they are made and Azerion does not assume any obligation
to update or revise such statements as a result of new information,
future events or other information, except as required by law.
The interim financial results of Azerion Group N.V. as included
in this communication are required to be disclosed pursuant to the
terms and conditions of the Senior Secured Callable Floating Rate
Bonds ISIN: NO0013017657.
This report has not been reviewed or audited by Azerion’s
external auditor.
Certain financial data included in this communication consist of
alternative performance measures (“non-IFRS financial measures”),
including Adjusted EBITDA. The non-IFRS financial measures, along
with comparable IFRS measures, are used by Azerion’s management to
evaluate the business performance and are useful to investors. They
may not be comparable to similarly titled measures as presented by
other companies, nor should they be considered as an alternative to
the historical financial results or other indicators of Azerion
Group N.V.’s cash flow based on IFRS. Even though the non-IFRS
financial measures are used by management to assess Azerion Group
N.V.’s financial position, financial results and liquidity and
these types of measures are commonly used by investors, they have
important limitations as analytical tools, and the recipients
should not consider them in isolation or as a substitute for
analysis of Azerion Group N.V.’s financial position or results of
operations as reported under IFRS.
For all definitions and reconciliations of non-IFRS financial
measures please also refer to www.azerion.com/investors.
This report may contain forward-looking non-IFRS financial
measures. The Company is unable to provide a reconciliation of
these forward-looking non-IFRS financial measures to the most
comparable IFRS financial measures because certain information
needed to reconcile those non-IFRS financial measures to the most
comparable IFRS financial measures is dependent on future events
some of which are outside the control of Azerion. Moreover,
estimating such IFRS financial measures with the required precision
necessary to provide a meaningful reconciliation is extremely
difficult and could not be accomplished without unreasonable
effort. Non-IFRS financial measures in respect of future periods
which cannot be reconciled to the most comparable IFRS financial
measure are calculated in a manner which is consistent with the
accounting policies applied in Azerion Group N.V.’s consolidated
financial statements.
This communication does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities or any other
financial instruments.
Contact
Investor Relations: ir@azerion.comMedia relations:
press@azerion.com
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