Next Games Corp Company Release January 30, 2018 at 08:00 a.m. (EET)
Next Games Corporation's Financial Statements Bulletin for 1 January - 31 December 2017 contains financial data for H2/2017 and full-year 2017. Next Games' Financial Statement and Annual Report 2017 has been published. Financial Statement is attached to this release and Annual Report 2017 is available at www.nextgames.com/reports
January - December 2017 in brief (*):
- Revenue grew 4.5% to 32.5 million euros (31.1 million euros)
- Gross margin improved and was 37% (27%)
- EBIT was -6.4 million euros (-1.6 million euros).
- EBIT was impacted by investments in new game development, business development and scaling the organization in addition to listing expenses.
- Product development costs were 3.4 million euros (0.5 million euros), of which 2.3 million euros were employee expenses and purchased outsourced services amounted to 1.1 million euros. Next Games does not capitalize its R&D expenses related to game development.
- Listing expenses amounted to 1.3 million euros
- The company has succeeded in recruiting new talent. The organization grew to 119 people (66)
(January-December 2016 comparison in brackets)
July - December 2017 in brief (*):
- Revenue from the period was 13.0 million euros (18.3 million euros)
- Gross margin improved and was 37% (34%)
- EBIT was -6.5 million euros (2.0 million euros). EBIT was impacted by investments in new game development, business development and scaling the organization in addition to depreciations of listing expenses 0.5 million euros.
(July-December 2016 comparison in brackets)
* 2017 Key Financial Figures are calculated based on Next Games Group figures. In 2016, Next Games was not required to prepare consolidated financial statement and figures presented are Next Games Oyj parent company figures.
Key Financial Figures (*)
| (EUR 1000) | 01-12/2017 | 01-12/2016 | |
| Revenue | 32 497 | 31 112 | |
| Gross bookings | 30 930 | 33 593 | |
| Gross margin | 11 950 | 8 252 | |
| Operating profit (-loss) (EBIT) | -6 379 | -1 582 | |
| EBITDA | -4 827 | -1 155 | |
| Adjusted EBITDA | -5 168 | -709 | |
| Earnings per share, undiluted (€) | -0.37 | 0.06 | |
| Earnings per share, diluted (€) | -0.35 | 0.06 | |
| As percentage of revenue | |||
| Gross margin (%) | 37% | 27% | |
| EBITDA margin (%) | -15% | -4% | |
| Operating result (%) | -20% | -5% | |
| As percentage of gross bookings | |||
| Adjusted EBITDA margin (percent) | -17% | -2% | |
* 2017 Key Financial Figures are calculated based on Next Games Group figures. In 2016, Next Games was not required to prepare consolidated financial statement and figures presented are Next Games Oyj parent company figures.
Gross Bookings does not include deferrals related to sales
Adjusted EBITDA is defined as operating profit, adjusted for depreciations, deferrals related to sales, licenses and commissions, as well as adjusted for listing expenses.
Key Operational Metrics
| 1-12/2017 | 1-12/2016 | ||
| DAU | 432 241 | 438 068 | |
| MAU | 1 326 318 | 1 633 052 | |
| ARPDAU (USD) | 0.22 | 0.23 | |
| ARPDAU (EUR) | 0.20 | 0.21 |
CEO, Teemu Huuhtanen:
2017 has been a year of building the foundations for our future growth and we have successfully reached many milestones we set for ourselves this year.
An incredibly important milestone for us, but also for the whole Finnish games industry, was our IPO in March, making us the first publicly listed games company in Finland. Our listing plays a key role in supporting Next Games' growth into an even stronger mobile game company. The success of our IPO is a clear indication of the credibility of our growth strategy amongst both international and Finnish investors, as well as among our pre-IPO VC investors, all of them deciding to firmly stay onboard with Next Games.
We had two major focus areas in 2017, both directly contributing to building a strong foundation for our future growth. We focused on strengthening our product pipeline and invested in building our Games-as-a-Service technology platform, which all our games will rely on.
In 2017 we signed a second The Walking Dead title with AMC to create the unique location-based AR game, The Walking Dead: Our World and commenced development of a mobile game based on the Blade Runner movie franchise with Alcon Entertainment. In addition in 2017, we signed a brand new license with a new partner, and another one in January 2018 after the reporting period, both projects we are thrilled to be working with. In total, we now have four games in our product development pipeline. To support the business development operations, we started preparing a more permanent presence in the United States and decided to set up an office in Los Angeles during the first quarter of 2018.
We are excited for the upcoming The Walking Dead: Our World launch as the game has entered the first stage of soft launch in December 2017, continued by opening it for testing in one market in January 2018. The game is expected to launch globally during Q2 2018. The Blade Runner game will enter soft launch phase during the first half of 2018. The two yet unannounced games are in concepting and pre-production phases.
In October, our first IP-based game, The Walking Dead: No Man's Land turned two years old and continued delivering an immersive tie-in with the TV show for season 8. This game continues to spearhead how big entertainment IP transforms into a mobile game and plays a key role in creating a direct, day-to-day connection in between the franchise fans and the game. AMC also announced the renewal of The Walking Dead TV show for season 9, already during the mid-season break of season 8. The continuation of the show will provide strong support for our The Walking Dead games in the future as well.
The Walking Dead: No Man's Land has been our only product generating significant revenue in 2017, and it has sustained itself and the team developing it during the year. The Walking Dead: No Man's Land will continue to generate revenue, but currently Next Games prioritizes new games over this product when allocating the company resources in between projects. At the end of 2017 approximately 24% of our staff was working on The Walking Dead: No Man's Land (approx. 64% in 2016), the rest of the company was working on the four new projects, except for approximately 7% of staff in general administration (approx. 7% in 2016).
As resources and focus shifted towards our future projects, as a consequence, there were fewer impactful updates in The Walking Dead: No Man's Land during 2017 in comparison to 2016. This shows as a decline in our key performance indicators. Our daily active users number was down by 1.33% and monthly active users by 18.7% from 2016. The investments in our future projects is reflected as a slowing down of our year-on-year revenue growth to 4.5% and -6.4 million euro EBIT, thus Next Games is willing to forgo short term gains over long term profit.
During 2017, we've also seen major developments in what goes under the hood in our games. Our Games-as-a-Service (GaaS) platform has been further iterated as we've gathered learnings from The Walking Dead: No Man's Land, and it will help secure a solid operational stability going forward. Our proprietary analytics platform has been another major technology investment in 2017. This robust analytics platform allows us to have full ownership of our data, enabling a rapid feedback loop to our game development process and keeps player feedback at the core of our decision-making.
I'm pleased that our hard work has been recognized by esteemed industry organizations both on our home turf and internationally. To name a few, we received the international Webby Award and International Licensing Award (LIMA) for The Walking Dead: No Man's Land. I'm confident we can continue delivering authentic, fans-first gaming experiences, appreciated by the players with our future products too.
Finally, personally I was extremely happy to see how well we did in this year's Great Place to Work survey, being the only games company on the list from Finland. By building an environment of trust and sharing our potential success by including our employees into stock-option programs and bonus plan, we believe we can attract the best talent in the industry. We take building the company culture and values very seriously.
Income Statement (FAS)
| Next Games Oyj, parent company | Next Games Oyj, parent company | Next Games Group | ||
| 2017 | 2016 | 2017 | ||
| EUR thousand | (audited) | (audited) | (audited) | |
| Revenue | 32 497 | 31 112 | 32 497 | |
| Capitalized development for entity's own use | 0 | 254 | 0 | |
| Other operating income | 19 | 1 238 | 22 | |
| Raw materials and services | -20 547 | -22 860 | -20 547 | |
| Personnel expenses total | -6 679 | -4 802 | -6 656 | |
| Depreciation, amortisation and write-offs total | -1 232 | -427 | -1 552 | |
| Other operating expenses | -10 138 | -6 096 | -10 143 | |
| Operating profit (loss) | -6 080 | -1 582 | -6 379 | |
| Financial income and expenses | -470 | -62 | -470 | |
| Profit (loss) before tax and appropriations | -6 550 | -1 644 | -6 849 | |
| Deferred tax | 450 | 2 400 | 468 | |
| Profit (loss) for the financial year | -6 100 | 756 | -6 381 |
| Next Games Oyj, parent company | Next Games Oyj, parent company | ||
| 07-12/2017 | 07-12/2016 | ||
| EUR thousand | (unaudited) | (unaudited) | |
| Revenue | 13 045 | 18 326 | |
| Capitalized development for entity's own use | 0 | 206 | |
| Other operating income | 16 | 1 236 | |
| Raw materials and services | -8 173 | -12 124 | |
| Personnel expenses total | -3 712 | -2 237 | |
| Depreciation, amortisation and write-offs total | -734 | -220 | |
| Other operating expenses | -6 674 | -3 207 | |
| Operating profit (loss) | -6 232 | 1 980 | |
| Financial income and expenses | -311 | 50 | |
| Profit (loss) before tax and appropriations | -6 542 | 2 030 | |
| Deferred tax | 466 | 2 400 | |
| Profit (loss) for the financial year | -6 076 | 4 430 |
Balance Sheet (FAS)
| Next Games Oyj, parent company | Next Games Oyj, parent company | Next Games Group | ||
| 31.12.2017 | 31.12.2016 | 31.12.2017 | ||
| EUR thousand | (audited) | (audited) | (audited) | |
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Intangible assets | 5 548 | 611 | 6 820 | |
| Tangible assets | 133 | 143 | 136 | |
| Investments | 2 662 | 1 101 | 1 074 | |
| NON-CURRENT ASSETS TOTAL | 8 343 | 1 855 | 8 030 | |
| CURRENT ASSETS | ||||
| Long-term debtors | ||||
| Amounts owed by group undertakings | - | 14 | ||
| Other debtors | 820 | 258 | 822 | |
| Prepayments and accrued income | 480 | 480 | 480 | |
| Deferred taxes | 2 850 | 2 400 | 2 850 | |
| Long-term debtors total | 4 149 | 3 152 | 4 152 | |
| Short-term debtors | ||||
| Trade debtors | 2 686 | 4 044 | 2 686 | |
| Other debtors | 244 | 86 | 245 | |
| Prepayments and accrued income | 1 560 | 1 786 | 1 574 | |
| Short-term debtors total | 4 490 | 5 916 | 4 505 | |
| Cash in hand and at banks | 26 314 | 3 638 | 26 377 | |
| CURRENT ASSETS TOTAL | 34 953 | 12 706 | 35 034 | |
| ASSETS TOTAL | 43 296 | 14 561 | 43 064 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Share capital | 80 | 3 | 80 | |
| Invested unrestricted equity reserve | 53 277 | 15 783 | 53 277 | |
| Retained earnings (loss) | -10 377 | -11 133 | -10 373 | |
| Profit (loss) for the financial year | -6 100 | 756 | -6 381 | |
| EQUITY TOTAL | 36 879 | 5 408 | 36 602 | |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Loans from credit institutions | 691 | 775 | 691 | |
| Deferred tax liability | 74 | |||
| Non-current liabilities total | 691 | 775 | 765 | |
| Current liabilities | ||||
| Loans from credit institutions | 84 | - | 84 | |
| Advances received | 914 | 2 482 | 914 | |
| Trade creditors | 1 162 | 1 178 | 1 162 | |
| Other creditors | 234 | 128 | 205 | |
| Accruals and deferred income | 3 331 | 4 591 | 3 331 | |
| Current liabilities total | 5 725 | 8 378 | 5 697 | |
| LIABILITIES TOTAL | 6 416 | 9 153 | 6 462 | |
| EQUITY AND LIABILITIES TOTAL | 43 296 | 14 561 | 43 064 |
Cash Flow Statement (FAS)
| Next Games Oyj, | Next Games Oyj, | Next Games | ||
| parent company | parent company | Group | ||
| 1.1-31.12/2017 | 1.1-31.12/2016 | 1.1-31.12/2017 | ||
| EUR thousand | (audited) | (audited) | (audited) | |
| Net cash flows from operating activities | -6 766 | -879 | -6 746 | |
| Net cash flows from investing activities | -223 | -423 | -179 | |
| Net cash flows from financing activities | 30 099 | 356 | 30 099 | |
| Net change in cash and cash equivalents | 23 110 | -946 | 23 174 | |
| Cash and cash equivalents at beginning of the period | 3 638 | 4 624 | 3 638 | |
| Foreign exchange rate differences | -435 | -40 | -435 | |
| Cash flow from the merger | - | - | - | |
| Net change in cash and cash equivalents | 22 675 | -986 | 22 739 | |
| Cash and cash equivalents at the end of the period | 26 314 | 3 638 | 26 377 | |
| Next Games Oyj, | Next Games Oyj, | ||
| parent company | parent company | ||
| 1.7-31.12/2017 | 1.7-31.12/2016 | ||
| EUR thousand | (unaudited) | (unaudited) | |
| Net cash flows from operating activities | -5 232 | 1 042 | |
| Net cash flows from investing activities | -120 | -206 | |
| Net cash flows from financing activities | 21 | 355 | |
| Net change in cash and cash equivalents | -5 331 | 1 191 | |
| Cash and cash equivalents at beginning of the period | 31 939 | 2 377 | |
| Foreign exchange rate differences | -294 | 70 | |
| Net change in cash and cash equivalents | -5 625 | 1 261 | |
| Cash and cash equivalents at the end of the period | 26 314 | 3 638 | |
Statement of Equity Changes
Parent company's Equity Changes
| EUR thousand | Share Capital | Invested unrestricted equity reserve | Retained earnings (loss) | Profit (loss) for the financial year | Total equity | |
| Equity 1.1.2016 | 3 | 15 776 | -11 133 | - | 4 646 | |
| Option plan based share compensation | 7 | 7 | ||||
| Profit (loss) for the financial year | 756 | 756 | ||||
| Equity 31.12.2016 | 3 | 15 783 | -11 133 | 756 | 5 408 | |
| Equity 1.1.2017 | 3 | 15 783 | -10 377 | - | 5 408 | |
| Share capital increase | 78 | -78 | - | |||
| Shares issued | 37 541 | 37 541 | ||||
| Option plan based share compensation | 30 | 30 | ||||
| Profit (loss) for the financial year | -6 100 | -6 100 | ||||
| Equity 31.12.2017 | 80 | 53 277 | -10 377 | -6 100 | 36 880 |
Statement of Group's Equity Changes
| EUR thousand | Share Capital | Invested unrestricted equity reserve | Retained earnings (loss) | Profit (loss) for the financial year | Total equity | |
| Equity 1.1.2017 | 3 | 15 783 | -10 373 | - | 5 412 | |
| Share capital increase | 78 | -78 | - | |||
| Shares issued | 37 541 | 37 541 | ||||
| Option plan based share compensation | 30 | 30 | ||||
| Profit (loss) for the financial year | -6 381 | -6 381 | ||||
| Equity 31.12.2017 | 80 | 53 277 | -10 373 | -6 381 | 36 602 |
Certain Quarterly Financial Information
For the three months ended
| 1 000 euroa | Mar. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | |
| Revenue, gross bookings and gross Margin | |||||||||
| Revenue | 5 586 | 7 200 | 6 935 | 11 390 | 10 932 | 8 520 | 6 385 | 6 660 | |
| Gross bookings | 6 852 | 6 914 | 7 266 | 12 562 | 10 432 | 7 857 | 6 162 | 6 479 | |
| Gross Margin | 54 | 1 996 | 2 421 | 3 781 | 3 938 | 3 141 | 2 128 | 2 744 | |
| Operating profit, EBITDA and adjusted EBITDA | |||||||||
| Operating profit (loss) | -3 107 | -455 | 418 | 1 563 | 369 | -218 | -2 271 | -4 259 | |
| Depreciation and amortisation | -99 | -107 | -110 | -110 | -170 | -328 | -330 | -724 | |
| EBITDA | -3 008 | -348 | 528 | 1 672 | 539 | 110 | -1 941 | -3 535 | |
| Adjusted EBITDA | -2 283 | -519 | 718 | 1 375 | 797 | -274 | -2 076 | -3 614 | |
| As percentage of revenue | |||||||||
| Gross Margin (%) | 1 % | 28 % | 35 % | 33 % | 36 % | 37 % | 33 % | 41 % | |
| EBITDA margin (%) | -54 % | -5 % | 8 % | 15 % | 5 % | 1 % | -30 % | -53 % | |
| Operating profit margin (%) | -56 % | -6 % | 6 % | 14 % | 3 % | -3 % | -36 % | -64 % | |
| As percentage of gross bookings | |||||||||
| Adj. EBITDA margin (%) | -33 % | -8 % | 10 % | 11 % | 8 % | -3 % | -34 % | -56 % | |
| Mar. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2017 | Sep. 30, 2017 | Dec. 30, 2017 | ||
| DAU | 446 483 | 422 883 | 350 763 | 532 276 | 537 659 | 458 370 | 371 437 | 363 984 | |
| MAU | 1 944 265 | 1 581 215 | 1 225 174 | 1 781 553 | 1 613 571 | 1 325 167 | 1 102 897 | 1 195 822 |
Audiocast and phone conference:
We will hold an audiocast and a phone conference both in Finnish and in English. Next Games' 2017 review will be presented by CEO Teemu Huuhtanen and CFO Annina Salvén.
The Finnish audiocast starts at 09:30 a.m. EET. You can join the audiocast using the following link: http://nxtg.ms/2BkwefT
The Finnish telephone conference can be joined by calling your location's phone number couple of minutes before the start and using confirmation code: 3037817
| Location | Phone Number |
| Finland | +358 (0)9 7479 0404 |
| Germany | +49 (0)69 2222 2018 |
| Sweden | +46 (0)8 5065 3942 |
| United Kingdom | +44 (0)330 336 9411 |
The English audiocast starts at 10:30 a.m. EET. You can join the audiocast using the following link: http://nxtg.ms/2F30WN0
The English telephone conference can be joined by calling your location's phone number couple of minutes before the start and using confirmation code: 9927238.
| Location | Phone Number |
| Finland | +358 (0)9 7479 0361 |
| Germany | +49 (0)69 2222 13420 |
| Sweden | +46 (0)8 5033 6574 |
| United Kingdom | +44 (0)330 336 9105 |
Upcoming events:
- Business Review for January-March 2018 on Friday 27 April 2018
- Next Games' Annual General Meeting on 17 May 2018
Additional info:
Saara Bergström
CMO
saara.bergstrom@nextgames.com
+358 (0)50 483 3896
Certified Adviser: Danske Bank A/S, Helsinki Branch, tel. +358 10 546 7937
Next Games
Next Games (Helsinki Nasdaq First North: NXTGMS) is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead: No Man's Land redefines the way franchise entertainment transforms into highly engaging service-based mobile games. The Walking Dead: No Man's Land, based on the popular AMC TV series, has been downloaded over 20 million times, with the game mirroring events as they occur in the show. Currently Next Games is working on four new games based on popular entertainment franchises including a mobile game for the popular Blade Runner franchise and an innovative location-based augmented reality game, The Walking Dead: Our World. Next Games employs over 100 people and is based in Helsinki, Finland. www.nextgames.com