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30.11.2023 07:15:05 - dpa-AFX: GNW-Adhoc: Azerion publishes interim Q3 2023 results
Platform growth and improved efficiency driving profitability growth of +48% YoY
Highlights of Q3 2023
* Adjusted EBITDA of approximately EUR 18.3 million, up +48% from approximately EUR 12.4 million in Q3 2022 due to improved margins due to increased Platform
consideration of EUR 81.3 million, subject to customary adjustments, with an
Highlights YTD Q3 2023
* Net revenue of approximately EUR 343.2 million YTD Q3 2023, up +13% from
approximately EUR 303.8 million YTD Q3 2022 mainly driven by Platform growth,
approximately EUR 30.0 million YTD Q3 2022 reflecting improved margins due to
Selected KPIs
Financial results - Azerion Group N.V. - Q3 2023
in millions of EUR
+---------+-----------------------------+--------------------------+-------+--------+
| |Q3 2023 |Q3 2022 | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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% |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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 EUR 72.6 million.
Financial results - Azerion Group N.V. - YTD 2023
in millions of EUR
+---------+-----------------------------+--------------------------+-------+--------+
| |YTD 2023 |YTD 2022 | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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% |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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 EUR 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 EUR
75 million, with Net Revenue for the year now expected to be around EUR 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 EUR 108.5 million compared to EUR 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 EUR
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 EUR 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 EUR 343.2 million compared to EUR 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 EUR 41 million,
particularly in advertising revenue from Direct sales and the integration of
previous acquisitions.
Earnings
The operating profit for the quarter amounted to EUR 77.3 million, compared to a
profit of EUR 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 EUR 72.6 million.
Adjusted EBITDA was EUR 18.3 million for the quarter compared to EUR 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 EUR 66.7 million, compared to a loss
of EUR 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 EUR72.6 million and the
EUR144.8 million of De-SPAC related expenses incurred in 2022, but not present in
2023.
Adjusted EBITDA was EUR 45.5 million YTD Q3 2023 compared to EUR 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 EUR
(15.8) million, mainly due to movements in net working capital, reflecting a
decrease in trade and other payables of EUR (18.0) million and increase in trade
and other receivables of EUR (5.1) million. Cash flow from investing activities
for the period was an inflow of EUR 46.9 million, mainly due to the net proceeds
from the sale of the social card game portfolio EUR 66.0 million, offset in part
by payments for intangibles of EUR (7.6) million and deferred payments and earn-
outs relating to past acquisitions of EUR (8.1) million. Cash flow from financing
activities in the period amounted to an outflow of EUR (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 EUR 18.9
million, mainly due to movements in net working capital, reflecting a decrease
in trade and other receivables of EUR 18.6 million and a decrease in trade and
other payables of EUR (10.2) million. Cash flow from investing activities was an
inflow of EUR 9.3 million, mainly due to EUR 66.0 million of proceeds from the sale
of the social card games portfolio offset in part by payments for intangibles of
EUR (19.6) million and deferred payments and earn-outs relating to past
acquisitions of EUR (33.1) million. Cash flow from financing activities totalled
an outflow of EUR (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 EUR 3.9 million, equivalent to
16.1% (2022: 16.9%) of gross personnel costs excluding restructuring provision
expense. For YTD Q3 2023 Azerion capitalized EUR 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 EUR 152.3 million as of 30 September
2023, mainly comprising the outstanding bond loan with a nominal value of EUR 200
million (part of a total EUR 300 million framework), which became a current
borrowing as at April 2023 and lease liabilities with a balance of EUR 14.7
million less the cash and cash equivalents position of EUR 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 EUR
+---------------------------+-------+-------+-------+--------+
| | 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 EUR 90.8 million in Q3 2023, compared to EUR 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 EUR 279.7 million for YTD Q3 2023 , compared to EUR 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 EUR 13.5 million in Q3 2023, compared to EUR 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 EUR 30.4 million for YTD Q3 2023, compared to EUR 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:
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|23.9 |32.8 |30.0 |36.3 |30.4 | |auction platform (EUR) | | | | | |
+--------------------------------------+-------+-------+-------+-------+-------+
|Previous reported figures (EUR) |11.2 |16.7 |11.2 |15.5 |13.4 |
+--------------------------------------+-------+-------+-------+-------+-------+
|Additional formats (EUR) |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 EUR 30.4 in Q3
2023, compared to EUR 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 (EUR) 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 EUR
+------------------------------------------+-------+-----+------+-----+
| |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 portfolio(1)())|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 EUR
72.6 million.
Premium Games
Net revenue of EUR 17.7 million in Q3 2023, as compared to EUR 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 EUR 11.0 million in Q3 2023, as compared to EUR 12.0 million in Q3
2022, a decrease of (8.3)% mainly driven by lower revenue in our metaverse
environments.
Net revenue of EUR 63.5 million for YTD Q3 2023, as compared to EUR 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 EUR 35.2 million, as compared to EUR 38.1 million for YTD
Q3 2022, a decrease of (7.6)% mainly driven by lower revenue in our metaverse
environments.
Adjusted EBITDA of EUR 4.8 million in Q3 2023, as compared to EUR 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 EUR 2.7 million in Q3 2023, as compared to EUR 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 EUR 15.1 million for YTD Q3 2023, as compared to EUR 12.9 million
for YTD Q3 2022, an increase of 17.1% mainly due to improved performancein 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 EUR 5.4 million, as compared to EUR 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 (EUR) |0.42 |0.45 |0.42 |0.42 |0.44 |
+-------------------------------+-------+-------+-------+-------+-------+
* The Average Revenue per Daily Active User (ARPDAU) increased by almost 5% in
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 EUR 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 EUR 520 million, up
from EUR 452.6 million FY 2022, as compared to previous expectations of around EUR
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 EUR
+--------------------------------------+-----------------+----------------+
| |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 EUR
+--------------+---------------------------------------------------------------+
| |Q3 | +--------------+--------------------------------+------------------------------+
| |2023 |2022 | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
| |Azerion |Premium |Platform|Other|Azerion|Premium|Platform|Other| | |Group |Games | | |Group |Games | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Profit / | | | | | | | | | |(loss) for the|54.4 | | | |(5.2) | | | | |period | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Income Tax |18.1 | | | |1.1 | | | | |expense | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Profit / | | | | | | | | | |(loss) before |72.5 | | | |(4.1) | | | | |tax | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Net finance |4.8 | | | |4.3 | | | | |costs | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Operating | | | | | | | | | |profit / |77.3 |73.3 |4.0 |- |0.2 |1.7 |(0.4) |(1.1)| |(loss) | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Depreciation &|11.3 |3.0 |8.2 |0.1 |9.6 |2.9 |6.5 |0.2 | |Amortization | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|De-SPAC | | | | | | | | | |related |- |- |- |- |0.1 |0.1 |- |- | |expenses | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Other(1)()) |(72.6) |(72.7) |0.1 |- |0.8 |0.1 |- |0.7 | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Acquisition |2.8 |1.2 |1.7 |(0.1)|1.6 |0.2 |1.2 |0.2 | |expenses | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Restructuring |(0.5) |- |(0.5) |- |0.1 |0.2 |(0.1) |- | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Adjusted |18.3 |4.8 |13.5 |- |12.4 |5.2 |7.2 |- | |EBITDA | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
(1)()) Other mainly includes the net gain from the sale of the social card games
portfolio for EUR 72.6 million.
Reconciliation of net income to Adjusted EBITDA - YTD
in millions of EUR
+--------------+---------------------------------------------------------------+
| |YTD | +--------------+------------------------------+--------------------------------+
| |2023 |2022 | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
| |Azerion|Premium|Platform|Other|Azerion|Premium|Platform|Other | | |Group |Games | | |Group |Games | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Profit / | | | | | | | | | |(loss) for the|32.3 | | | |(150.0)| | | | |period | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Income Tax |21.4 | | | |2.4 | | | | |expense | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Profit / | | | | | | | | | |(loss) before |53.7 | | | |(147.6)| | | | |tax | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Net finance |13.0 | | | |(0.2) | | | | |costs | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Operating | | | | | | | | | |profit / |66.7 |74.3 |(7.6) |- |(147.8)|1.1 |(14.8) |(134.1)| |(loss) | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Depreciation &|32.5 |9.6 |22.9 |- |26.3 |8.6 |17.7 |- | |Amortization | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|De-SPAC | | | | | | | | | |related |- |- |- |- |144.8 |2.4 |9.4 |133.0 | |expenses | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Other(1)()) |(71.1) |(71.7) |0.6 |- |1.1 |0.4 |(0.2) |0.9 | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Acquisition |10.5 |1.2 |9.3 |- |4.2 |0.2 |3.8 |0.2 | |expenses | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Restructuring |6.9 |1.7 |5.2 |- |1.4 |0.2 |1.2 |- | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Adjusted |45.5 |15.1 |30.4 |- |30.0 |12.9 |17.1 |- | |EBITDA | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
(1)()) Other mainly includes the net gain from the sale of the social card games
portfolio for EUR 72.6 million.
Operating expenses
Breakdown of Operating expenses
in millions of EUR
+------------------------------------------------+-------------+---------------+
| |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- |- |- |- |(9.9) | |based payment expense | | | | | +------------------------------------------------+------+------+-------+-------+
|De-SPAC early exercised share-based payment |- |- |- |(10.3) | |expense | | | | | +------------------------------------------------+------+------+-------+-------+
|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 EUR 2 million to EUR 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 EUR 200 million, within a total framework amount of EUR 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 EUR
204.7 million, comprising EUR 200 million of nominal amount of the bonds plus call
premium of EUR 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 EUR 76.2 million and cash from Azerion of EUR 45.1 million.
On 14 September 2023, Azerion announced that it had successfully placed EUR 165
million of senior secured floating rate bonds, within a total framework amount
of EUR 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 EUR
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 EUR 150 million. At completion Azerion received net proceeds of
approximately EUR 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 EUR 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 EUR 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 EUR
+------------------------------------------------+-------------+---------------+
| |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 |(0.3) |- |(0.3) |(1.3) | |operations | | | | | +------------------------------------------------+------+------+-------+-------+
|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 EUR) | | |0.26 |(1.33) |
+------------------------------------------------+------+------+-------+-------+
|Diluted profit/(loss) per share (in EUR) | | |0.20 |(1.33) |
+------------------------------------------------+------+------+-------+-------+
Condensed consolidated statement of financial position
Condensed consolidated statement of financial position
in millions of EUR
+-----------------------------------------+-----------------+----------------+
| |30 September 2023|31 December 2022|
+-----------------------------------------+-----------------+----------------+
|Assets | | |
+-----------------------------------------+-----------------+----------------+
+-----------------------------------------+-----------------+----------------+
|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 liabilities(1)()) |92.9 |103.7 |
+-----------------------------------------+-----------------+----------------+
|Current tax liabilities |16.3 |5.4 |
+-----------------------------------------+-----------------+----------------+
|Lease liabilities |4.2 |4.9 |
+-----------------------------------------+-----------------+----------------+
|Other current liabilities(1)()) |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 EUR
+-------------------------------------------------+------+------+------+-------+
| |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 |(5.1) |(10.1)|18.6 |(1.6) | |receivables | | | | | +-------------------------------------------------+------+------+------+-------+
|Increase (decrease) in trade
Highlights of Q3 2023
* Net revenue of approximately EUR 108.5 million, up +2.8% from approximately EUR
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 EUR 18.3 million, up +48% from approximately EUR 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 EUR 13.5 million, an
increase of +88% compared to EUR7.2 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 EUR 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 EUR 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 EUR 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 EUR 200
million bonds with a new issuance of senior secured callable floating rate
bonds for a nominal amount of EUR 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 EUR 343.2 million YTD Q3 2023, up +13% from
approximately EUR 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 EUR 45.5 million YTD Q3 2023, up +52% from
approximately EUR 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 EUR
+---------+-----------------------------+--------------------------+-------+--------+
| |Q3 2023 |Q3 2022 | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
| |Net |Operating |Adjusted|Net |Operating|Adjusted|Net |Adjusted| | |revenue|profit / |EBITDA |revenue|profit / |EBITDA |revenue|EBITDA | | | |(loss)(1)())| | |(loss) | |growth |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 |17.7 |73.3 |4.8 |21.3 |1.7 |5.2 |(16.9)%|(7.7)% | |Games | | | | | | | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|of which | | | | | | | | | |social | | | | | | | | | |card |6.7 |74.7 |2.1 |9.3 |3.2 |3.7 | | | |games | | | | | | | | | |portfolio| | | | | | | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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 EUR 72.6 million.
Financial results - Azerion Group N.V. - YTD 2023
in millions of EUR
+---------+-----------------------------+--------------------------+-------+--------+
| |YTD 2023 |YTD 2022 | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
| |Net |Operating |Adjusted|Net |Operating|Adjusted|Net |Adjusted| | |revenue|profit / |EBITDA |revenue|profit / |EBITDA |revenue|EBITDA | | | |(loss)(1)())| | |(loss) | |growth |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 |63.5 |74.3 |15.1 |65.0 |1.1 |12.9 |(2.3)% |17.1% | |Games | | | | | | | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|of which | | | | | | | | | |social | | | | | | | | | |card |28.3 |80.6 |9.7 |26.9 |7.6 |9.1 | | | |games | | | | | | | | | |portfolio| | | | | | | | |
+---------+-------+------------+--------+-------+---------+--------+-------+--------+
|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 EUR 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 EUR
75 million, with Net Revenue for the year now expected to be around EUR 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 EUR 108.5 million compared to EUR 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 EUR
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 EUR 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 EUR 343.2 million compared to EUR 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 EUR 41 million,
particularly in advertising revenue from Direct sales and the integration of
previous acquisitions.
Earnings
The operating profit for the quarter amounted to EUR 77.3 million, compared to a
profit of EUR 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 EUR 72.6 million.
Adjusted EBITDA was EUR 18.3 million for the quarter compared to EUR 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 EUR 66.7 million, compared to a loss
of EUR 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 EUR72.6 million and the
EUR144.8 million of De-SPAC related expenses incurred in 2022, but not present in
2023.
Adjusted EBITDA was EUR 45.5 million YTD Q3 2023 compared to EUR 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 EUR
(15.8) million, mainly due to movements in net working capital, reflecting a
decrease in trade and other payables of EUR (18.0) million and increase in trade
and other receivables of EUR (5.1) million. Cash flow from investing activities
for the period was an inflow of EUR 46.9 million, mainly due to the net proceeds
from the sale of the social card game portfolio EUR 66.0 million, offset in part
by payments for intangibles of EUR (7.6) million and deferred payments and earn-
outs relating to past acquisitions of EUR (8.1) million. Cash flow from financing
activities in the period amounted to an outflow of EUR (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 EUR 18.9
million, mainly due to movements in net working capital, reflecting a decrease
in trade and other receivables of EUR 18.6 million and a decrease in trade and
other payables of EUR (10.2) million. Cash flow from investing activities was an
inflow of EUR 9.3 million, mainly due to EUR 66.0 million of proceeds from the sale
of the social card games portfolio offset in part by payments for intangibles of
EUR (19.6) million and deferred payments and earn-outs relating to past
acquisitions of EUR (33.1) million. Cash flow from financing activities totalled
an outflow of EUR (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 EUR 3.9 million, equivalent to
16.1% (2022: 16.9%) of gross personnel costs excluding restructuring provision
expense. For YTD Q3 2023 Azerion capitalized EUR 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 EUR 152.3 million as of 30 September
2023, mainly comprising the outstanding bond loan with a nominal value of EUR 200
million (part of a total EUR 300 million framework), which became a current
borrowing as at April 2023 and lease liabilities with a balance of EUR 14.7
million less the cash and cash equivalents position of EUR 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 EUR
+---------------------------+-------+-------+-------+--------+
| | 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 EUR 90.8 million in Q3 2023, compared to EUR 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 EUR 279.7 million for YTD Q3 2023 , compared to EUR 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 EUR 13.5 million in Q3 2023, compared to EUR 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 EUR 30.4 million for YTD Q3 2023, compared to EUR 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|23.9 |32.8 |30.0 |36.3 |30.4 | |auction platform (EUR) | | | | | |
+--------------------------------------+-------+-------+-------+-------+-------+
|Previous reported figures (EUR) |11.2 |16.7 |11.2 |15.5 |13.4 |
+--------------------------------------+-------+-------+-------+-------+-------+
|Additional formats (EUR) |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 EUR 30.4 in Q3
2023, compared to EUR 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 (EUR) 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 EUR
+------------------------------------------+-------+-----+------+-----+
| |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 portfolio(1)())|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 EUR
72.6 million.
Premium Games
Net revenue of EUR 17.7 million in Q3 2023, as compared to EUR 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 EUR 11.0 million in Q3 2023, as compared to EUR 12.0 million in Q3
2022, a decrease of (8.3)% mainly driven by lower revenue in our metaverse
environments.
Net revenue of EUR 63.5 million for YTD Q3 2023, as compared to EUR 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 EUR 35.2 million, as compared to EUR 38.1 million for YTD
Q3 2022, a decrease of (7.6)% mainly driven by lower revenue in our metaverse
environments.
Adjusted EBITDA of EUR 4.8 million in Q3 2023, as compared to EUR 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 EUR 2.7 million in Q3 2023, as compared to EUR 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 EUR 15.1 million for YTD Q3 2023, as compared to EUR 12.9 million
for YTD Q3 2022, an increase of 17.1% mainly due to improved performancein 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 EUR 5.4 million, as compared to EUR 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 (EUR) |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 EUR 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 EUR 520 million, up
from EUR 452.6 million FY 2022, as compared to previous expectations of around EUR
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 EUR
+--------------------------------------+-----------------+----------------+
| |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 EUR
+--------------+---------------------------------------------------------------+
| |Q3 | +--------------+--------------------------------+------------------------------+
| |2023 |2022 | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
| |Azerion |Premium |Platform|Other|Azerion|Premium|Platform|Other| | |Group |Games | | |Group |Games | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Profit / | | | | | | | | | |(loss) for the|54.4 | | | |(5.2) | | | | |period | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Income Tax |18.1 | | | |1.1 | | | | |expense | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Profit / | | | | | | | | | |(loss) before |72.5 | | | |(4.1) | | | | |tax | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Net finance |4.8 | | | |4.3 | | | | |costs | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Operating | | | | | | | | | |profit / |77.3 |73.3 |4.0 |- |0.2 |1.7 |(0.4) |(1.1)| |(loss) | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Depreciation &|11.3 |3.0 |8.2 |0.1 |9.6 |2.9 |6.5 |0.2 | |Amortization | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|De-SPAC | | | | | | | | | |related |- |- |- |- |0.1 |0.1 |- |- | |expenses | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Other(1)()) |(72.6) |(72.7) |0.1 |- |0.8 |0.1 |- |0.7 | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Acquisition |2.8 |1.2 |1.7 |(0.1)|1.6 |0.2 |1.2 |0.2 | |expenses | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Restructuring |(0.5) |- |(0.5) |- |0.1 |0.2 |(0.1) |- | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
|Adjusted |18.3 |4.8 |13.5 |- |12.4 |5.2 |7.2 |- | |EBITDA | | | | | | | | | +--------------+--------+--------+--------+-----+-------+-------+--------+-----+
(1)()) Other mainly includes the net gain from the sale of the social card games
portfolio for EUR 72.6 million.
Reconciliation of net income to Adjusted EBITDA - YTD
in millions of EUR
+--------------+---------------------------------------------------------------+
| |YTD | +--------------+------------------------------+--------------------------------+
| |2023 |2022 | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
| |Azerion|Premium|Platform|Other|Azerion|Premium|Platform|Other | | |Group |Games | | |Group |Games | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Profit / | | | | | | | | | |(loss) for the|32.3 | | | |(150.0)| | | | |period | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Income Tax |21.4 | | | |2.4 | | | | |expense | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Profit / | | | | | | | | | |(loss) before |53.7 | | | |(147.6)| | | | |tax | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Net finance |13.0 | | | |(0.2) | | | | |costs | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Operating | | | | | | | | | |profit / |66.7 |74.3 |(7.6) |- |(147.8)|1.1 |(14.8) |(134.1)| |(loss) | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Depreciation &|32.5 |9.6 |22.9 |- |26.3 |8.6 |17.7 |- | |Amortization | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|De-SPAC | | | | | | | | | |related |- |- |- |- |144.8 |2.4 |9.4 |133.0 | |expenses | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Other(1)()) |(71.1) |(71.7) |0.6 |- |1.1 |0.4 |(0.2) |0.9 | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Acquisition |10.5 |1.2 |9.3 |- |4.2 |0.2 |3.8 |0.2 | |expenses | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Restructuring |6.9 |1.7 |5.2 |- |1.4 |0.2 |1.2 |- | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
|Adjusted |45.5 |15.1 |30.4 |- |30.0 |12.9 |17.1 |- | |EBITDA | | | | | | | | | +--------------+-------+-------+--------+-----+-------+-------+--------+-------+
(1)()) Other mainly includes the net gain from the sale of the social card games
portfolio for EUR 72.6 million.
Operating expenses
Breakdown of Operating expenses
in millions of EUR
+------------------------------------------------+-------------+---------------+
| |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- |- |- |- |(9.9) | |based payment expense | | | | | +------------------------------------------------+------+------+-------+-------+
|De-SPAC early exercised share-based payment |- |- |- |(10.3) | |expense | | | | | +------------------------------------------------+------+------+-------+-------+
|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 EUR 2 million to EUR 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 EUR 200 million, within a total framework amount of EUR 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 EUR
204.7 million, comprising EUR 200 million of nominal amount of the bonds plus call
premium of EUR 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 EUR 76.2 million and cash from Azerion of EUR 45.1 million.
On 14 September 2023, Azerion announced that it had successfully placed EUR 165
million of senior secured floating rate bonds, within a total framework amount
of EUR 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 EUR
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 EUR 150 million. At completion Azerion received net proceeds of
approximately EUR 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 EUR 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 EUR 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 EUR
+------------------------------------------------+-------------+---------------+
| |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 |(0.3) |- |(0.3) |(1.3) | |operations | | | | | +------------------------------------------------+------+------+-------+-------+
|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 EUR) | | |0.26 |(1.33) |
+------------------------------------------------+------+------+-------+-------+
|Diluted profit/(loss) per share (in EUR) | | |0.20 |(1.33) |
+------------------------------------------------+------+------+-------+-------+
Condensed consolidated statement of financial position
Condensed consolidated statement of financial position
in millions of EUR
+-----------------------------------------+-----------------+----------------+
| |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 liabilities(1)()) |92.9 |103.7 |
+-----------------------------------------+-----------------+----------------+
|Current tax liabilities |16.3 |5.4 |
+-----------------------------------------+-----------------+----------------+
|Lease liabilities |4.2 |4.9 |
+-----------------------------------------+-----------------+----------------+
|Other current liabilities(1)()) |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 EUR
+-------------------------------------------------+------+------+------+-------+
| |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 |(5.1) |(10.1)|18.6 |(1.6) | |receivables | | | | | +-------------------------------------------------+------+------+------+-------+
|Increase (decrease) in trade
| Name | WKN | Börse | Kurs | Datum/Zeit | Diff. | Diff. % | Geld | Brief | Erster | Schluss | |
|---|---|---|---|---|---|---|---|---|---|---|---|
 |
AZERION GROUP EO-01 | A2QSAE | Frankfurt | 1,502 | 18.06.24 09:22:48 | +0,002 | +0,13% | 1,504 | 1,738 | 1,502 | 1,500 |
