financial report 1q 2017 - funcomcdn.funcom.com/investor/2017/funcom_1q17_presentation.pdf · 2017....

Financial Report - 1Q 2017

Activity report – February to May 2017

This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking. You should not place undue reliance on these forward-looking statements for many reasons.

These forward-looking statements reflect current views with respect to future events and are by their nature subject to significant risk and uncertainties because they relate to events and depend on circumstances that will occur in future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity or performance will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Unless we are required by law to update these statements, we will not necessarily update any of these statements after the date of this presentation, either to conform them to actual results or to changes in our expectations.

E-mail questions to [email protected]

1Q 2017 represents a major turnaround for Funcom when compared to the very precarious situation of 1Q 2016 and is the most profitable

quarter in Funcom’s history


in USD 1Q 2017 1Q 2016 Variance

Cash position 10,287k 1,015k 9,272k

Equity 10,179k -9,953k 20,132k

Interest bearing debt* 6,838k 13,628k -6,790k

Revenue 10,921k 2,048k 8,243k

EBITDA 6,707k 263k 6,444k

EBIT 5,975k -660k 6,635k

EAT 6,129k -761k 6,890k

* Decreased further in 2Q17 through the conversion of USD 3.5 million (plus accrued interest) of the convertible bond.

• More than 25 updates have been made to the game since launch– Numerous critical bugs and exploits have been addressed

– New content has been released, such as a new dungeon and a dyeing system among others

• The PR and Community team has been engaged in several events and activities, such as attending GDC and PAX and meeting with fans, featuring works by the community, arranging questions and answers sessions, a survey, promoting updates, and many blog updates about the game

• An Exploit Hunter program was launched to encourage players to report “exploits” that can be used to cheat in the game


• On 29 April, it was announced that The Secret World is relaunching as Secret World Legends with a free-to-play (F2P) business model

• The relaunch is planned to happen on 26 June 2017– Development is on track to meet the planned relaunch date

– Due to crowded market conditions with multiple MMO releases in May/June on Steam, the Company has decided to hold back

the Steam launch until 31st of July• The major competitive MMO releases being the Steam release of Black Desert

Online and new expansion launches for Elder Scrolls Online and Final Fantasy XIV

– The launch through our own channels will go ahead as planned

on the 26th of June

• Secret World Legends is in closed beta stage and the team is taking into consideration the feedback from both new and old TSW players


Q1 2017 FINANCIALS

< The main source of revenues was Conan Exiles

< The increase of operating expenses was in line with internal forecasts

< Depreciation and financial items have improved in 1Q17 over 1Q16.

Notes

in K USD 1Q FY17 1Q FY16

Revenues 10,921 2,048

EBITDA 6,707 263

EBIT 5,975 (660)

EAT 6,129 (761)


Key Financial Summary, 1Q 2017 - Revenue

2 048 1 718 1 728 1 827

10 921

0

2 000

4 000

6 000

8 000

10 000

12 000

1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017

Quarterly Revenues (TUSD)

< Very successful Early Access launch of Conan

Exiles during 1Q 2017

< Other current live games

are still contributing positively to the company’s revenues

Notes


Key Financial Summary, 1Q 2017 – EBITDA

< Very significant

increase of the EBITDA, with operating expenses increasing to a smaller

extent than revenues

< The increase in

operating expenses in 1Q 2017 is mainly due to royalty, marketing,

outsourcing and other development expenses directly related to the

Early Access launch of Conan Exiles

Notes

263 (412) 97

282

6 707

-1000

0

1000

2000

3000

4000

5000

6000

7000

1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017

Quarterly EBITDA (TUSD)


• 1Q 2017 is the most profitable quarter ever in Funcom’s history

• Operating result (EBIT) and net result (EAT) from continuing operations improved significantly compared to 1Q16

• The equity increased significantly in 1Q17 compared to 4Q16 mainly due to positive quarterly result

• The cash balance increased greatly in 1Q17 compared to 4Q16 mainly due to sales proceeds from Conan Exiles

• The total liability carried by the Company as of 1Q17 is half of what it was one year before. It is even further decreased in 2Q17 following the conversion of convertible bonds.


THE WAY AHEAD

• The Conan Exiles development team has three main production tracks:

– Critical bug fixing and small content updates– Creation of the new “biome” expansion

• The new Highlands biome will increase the playable area and amount of content by roughly 40%

– Optimizing and porting the game to Xbox One

• Development is on track for release of the new “biome” expansion and Xbox One Game Preview during 3Q 2017, in the August/September timeframe

• Full launch on all platforms, including PlayStation 4, continues to be scheduled for Q1 2018


• Development is well underway in preparation for the relaunch

• The Company expects the majority of players after launch to be newcomers to the game, but is also working to make it worthwhile for as many veterans of The Secret World as possible to continue playing Secret World Legends

• Due to the high uncertainty regarding a Free to Play business models the Company expects the development team to need to tweak the monetization mechanisms of the game in the months following launch.

• Paid User Acquisition will gradually be tested and introduced in tandem with the monitoring and tweaking of the game’s monetization KPIs


• Two new projects are in early concept stages and will enter pre-production at the earliest during the second half of 2017:– In Funcom Oslo:

• New game concept using the “Conan the Barbarian” IP• Pre-production pushed due to success of Conan Exiles

– In Funcom North Carolina:• New project that has been in early concepting stage and will continue after Secret World Legends

relaunch

• Additional staffing to happen throughout the year in both studios to support the existing and the new projects

• Lawrence Poe, VP of Digital Products and Executive Producer for Conan Exiles, will move to Funcom Inc, in North Carolina, USA, this summer, to help strengthen and build the studio in conjunction with the full rollout of the new strategy

• Planned personnel count by the end of 2017 of around 120-130 employees vs. current 110


LAST SLIDEE-mail questions to [email protected]

financial report 1q 2017 - funcomcdn.funcom.com/investor/2017/funcom_1q17_presentation.pdf · 2017....

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