Media and Games Invest SE Reports Strong Revenue Growth of 39% in the Third Quarter 2022 and Raises its Full-Year Revenue Guidance for 2022

Tuesday, November 15, 2022 - Disclosure of inside information according to Article 17 of the Regulation (EU) No 596/2014 (MAR)

• Net Revenues in Q3 2022 amounted to 87.6 mEUR (Q3 2021: 62.9 mEUR), an increase of 39%.
• Adj. EBITDA² in Q3 2022 amounted to 23.0 mEUR (Q3 2021: 19.0 mEUR), an increase of 21%.
• Strong Organic Revenue Growth¹ of 23%, driven by a 34% year-on-year growth of Software Clients with revenues of more than EUR 100k.
• Based on the strong YTD performance and the positive outlook for Q4 2022 management expects the company to exceed its current full year 2022 revenue target range and updates the revenue guidance to EUR 315-325 million (previously EUR 295-315 million). The adj. EBITDA guidance remains unchanged at EUR 83-93 million.

VALLETTA, MALTA / ACCESSWIRE / November 15, 2022 / Media and Games Invest SE ("MGI" or the "Company", ISIN: MT0000580101; ticker M8G; Nasdaq First North Premier Growth Market and Scale Segment Frankfurt Stock Exchange; OTCQX:MDGIF) closed the third quarter 2022 with 87.6 mEUR in Net Revenues, corresponding to an increase of 39% compared to Q3'21. 23% of the Net Revenue growth was contributed by Organic Revenue Growth. The adj. EBITDA for the third quarter 2022 increased by 21% to EUR 23.0 million compared to Q3'21. Despite the macroeconomic headwinds that caused many advertisers to cut their marketing budgets, MGI managed to increase the number of new software³ clients both year-on-year (+34%) and quarter-on-quarter (+6%). In addition, revenue from existing customers also increased by 4% year-on-year (as shown by a Net Dollar Expansion Rate of 104%⁴), which is a strong signal despite the backdrop of overall reduced media budgets and lower Cost-Per-Mille (CPMs) in the advertising market. MGI is also further working on realizing the synergies with mobile and casual games studios. They add substantial value via unique advertising spaces, first party opt-in data as well as for testing ownmedia products, resulting in faster testing and optimization cycles. This provides MGI with a leading position in an industry that is shifting towards privacy by using contextual signals and other AI routines which do not rely on identifiers. Based on the strong YTD 2022 and especially Q3 2022 performance in combination and the positive outlook for Q4 2022, management expects the company to exceed it's current full year 2022 revenue target range and uplifts the revenue guidance to EUR 315-325 million (previously EUR 295-315 million). The adj. EBITDA-guidance remains unchanged at EUR 83-93 million.

HIGHLIGHTS Q3 2022

• Net Revenues amounted to 87.6 mEUR (Q3 2021: 62.9 mEUR), an increase of 39% compared to Q3 2021, whereof 23% was contributed by Organic Revenue Growth.
• Adj. EBITDA amounted to 23.0 mEUR (Q3 2021: 19.0 mEUR), an increase of 21%.
• Adj. EBIT⁵ amounted to 18.5 mEUR (Q3 2021: 15.0 mEUR), an increase of 24%.
• Adj. Net Result⁶ amounted to 6.7 mEUR (Q3 2021: 6.5 mEUR), an increase of 4%.
• Earnings Per Share (EPS) amounted to EUR 0.02 (Q3 2021: EUR 0.02). EPS adjusted for PPA-amortization⁷ amounted to EUR 0.04 (Q3 2021: EUR 0.04).

HIGHLIGHTS FIRST 9 MONTHS 2022

• Net Revenues amounted to 231.5 mEUR (Q1-Q3 2021: 172.0 mEUR), an increase of 35%.
• Adj. EBITDA amounted to 61.7 mEUR (Q1-Q3 2021: 47.8 mEUR), an increase of 29%.
• Adj. EBIT amounted to 48.5 mEUR (Q1-Q3 2021: 35.4 mEUR), an increase of 37%.
• Adj. Net Result amounted to 18.8 mEUR (Q1-Q3 2021: 17.3 mEUR), an increase of 9%.
• Net Interest-Bearing Debt⁸ as of September 30, 2022 amounted to 307.5 mEUR (December 31, 2021: 198.6 mEUR).
• Leverage Ratio⁹ amounted to 3.6x as of September 30, 2022 (2.8x as per December 31, 2021 and 3.7x as of June 30, 2022). At the end of Q3 2022, this ratio includes five months of AxesInMotion EBITDA as well as three months of Dataseat EBITDA and is therefore overstated. Mid-term, the Company intends to de-lever to below 3.0x.
• Cash and Cash Equivalents amounted to 118.4 mEUR (December 31, 2021: 180.2 mEUR) and decreased due to the final earn-out and deferred purchase price payments related to the KingsIsle acquisition as well as the initial purchase price payments for the AxesInMotion and Dataseat acquisitions.
• Earnings Per Share (EPS) amounted to EUR 0.06 (Q1-Q3 2021: EUR 0.06). EPS adjusted for PPA-amortization amounted to EUR 0.12 (Q1-Q3 2021: EUR 0.12).

SELECTED KEY PERFORMANCE INDICATORS, MGI GROUP

The Q3 2022 interim report is available on MGI's corporate website at https://mgi-se.com/investor-relations/financial-reports-and-presentations/ in the Investor Relations section. All financials are consolidated group figures and reviewed but not audited.

A Word from Remco Westermann, CEO

"I am very pleased to announce that we were able to deliver a very strong quarter with 39% revenue growth and 21% adj. EBITDA growth despite macroeconomic headwinds. Even more importantly, we were able to continue our strong Organic Revenue Growth and realized 23% in this third quarter. On a rolling last twelve-month basis we generated EUR 312 million in revenues and EUR 85 million in adj. EBITDA and are already well within the range of our full-year 2022 Guidance of EUR 295-315 million in revenues and EUR 83-93 million in adj. EBITDA. Based on our strong year-to-date performance, while at the same time remaining cautious regarding our forecasts based on current market headwinds, we expect that we will exceed our revenue target and herewith update our revenue Guidance 2022 to be in the range of EUR 315-325 million. Our adj. EBITDA Guidance remains unchanged at 83-93m.

MGI's strong performance was achieved despite several headwinds in our markets. July, according to industry analysts, was the worst month in terms of advertising spend since the harsh cuts at the onset of the Covid-19 pandemic. Accordingly, we saw only moderate revenue growth in our existing Software Clients with a Net Dollar Expansion Rate equaling 104%. However, we believe this moderate growth is a very strong signal as growing advertising budgets in the current market environment can certainly not be taken for granted. A Net Dollar Expansion rate above 100% indicates that existing Software Clients increased their revenues on our platform versus the same period last year. Despite many advertisers across many industries decreasing their marketing budgets, we managed to overall increase the volume of ads served for our Software Clients. This positive effect, however, was partially mitigated by the negative market impact from lower CPMs (cost per thousand ad impressions) caused by overall lower advertiser demand which led to reduced margins.

Since we were able to substantially add new customers, we delivered almost as many ads in Q3'22 than in the (seasonally always much stronger) Q4 of last year. The number of ad impressions we served showed a strong year on year growth of 27% leading to 172 billion ad impressions in Q3'22 alone. In Q3'22, we were able to grow the ad spend on our platform by 54% and therefore gained market share and continued our overall growth path. For the upcoming quarters, we will further focus on organic growth by launching new products, by further increasing return on ad spend for our customers and by adding new customers. Additionally, we can expect strong tailwinds for our revenues if CPMs are increasing again.

We were also able to substantially grow our adj. EBITDA (+21% in Q3'22). We continue working on integrating and optimizing our platforms as well as our product and services portfolios. While we added extra manpower to drive more innovation, we reduced manpower needs due to streamlining our platforms and other activities. On the other hand and based on large corporate projects such as improving our internal control systems and preparing our relocation to Sweden we saw administrative costs increasing. While we have already generated substantial synergies from optimizations, we have further headroom on the cost optimization side.

I have been frequently asked how I see the coming quarters and what a recession means for our company, and I would like to take this opportunity to share my views with you. If I were to sum it up in a headline, it would be: "Acknowledge, adapt quickly and overtake."

In more detail: we are currently in an economic environment with a high level of uncertainty caused by various disruptions due to the pandemic, high energy prices due to the war in Ukraine, persistent issues in the supply chain and a high level of inflation triggering increasing interest rates. To effectively battle inflation central banks intend to slow down demand. The uncertainty as well as the slow-down in economic activity led to cuts in advertising budgets, which in turn leads to less demand and, thus, to lower CPMs.

I expect that this situation will continue well into next year and perhaps even longer. We have accepted this reality and have adapted accordingly. Focus is now on growing our customer base and on increasing the effectiveness of our ad-software platform. In the meantime, we are also focusing on cost-efficiency, further integrating our recently acquired assets and gaining synergies based on our flywheel approach. For the time being, we have also decided to not focus on further M&A activity. Increased revenues and cost discipline will further lead to deleveraging. The aim of these measures is to secure our cash position, further strengthen cash flow and to generate additional organic growth through targeted investments in our core strengths.

It is well-known that it is not the strongest species that survives, nor the most intelligent, but the one most responsive to change. Consequently, we have acknowledged the new environment we operate in, we are fast in adapting and we are focusing on our strengths. We see the current market characteristics as a significant opportunity, and we have set ourselves the goal to use this opportunity to gain market-share and become stronger.

You do not have to be an optimist to see that the market will recover and that this time, too, the crisis will not be followed by the end of the world. The economy will pick up again after the recession, and companies will invest more in advertising again which will also lead to rebounding CPMs.

The advertising market is huge and, according to all analysts, will grow in the medium and long term. The key point to understand is that the overall industry landscape is shifting more and more from traditional advertising channels such as television and newspapers to digital channels. It is moving away from manual work to efficient and automated processes controlled by artificial intelligence; and, very importantly, it is moving away from a lack of transparency in the use of data to transparent and privacy-compliant processes. It is precisely this area, precisely this new world of advertising, that we have in recent years positioned ourselves in, and we have been able to secure significant market share ever since.

How have we done that? Starting from building a portfolio of games with long-term sustainable revenues and first party data, then adding an end-to-end multi-channel programmatic ad-platform enabling us to optimally connect advertisers and publishers via programmatic bidding. This was followed by investing into data and artificial intelligence capabilities building a competitive edge for a world without identifiers. These three elements of our ad software platform allow us to deliver innovative products, as well as high transparency and efficiency and a high return on advertising spend. That we possess these capabilities is also demonstrated by the fact that we have been ranked number one on Pixalate's Sellers Trust Index in mobile SSP four consecutive times.

The first party opt-in data of our own games content serve as a laboratory to test new innovative products and to feed and improve our algorithms while additionally generating good returns via item sale, subscription, and ad-based revenue models. In the meantime, we are also growing our existing games and launching new games. We use data solutions to adopt and excel in the new and upcoming privacy first environment with less, or even no, identifiers. We have developed future-proof solutions such as Moments A.I. and ATOM which rely on context and segments and that are fully privacy compliant. Our end-to-end Ad-Software-Platform connects the entire value chain between advertisers and publishers. On the one hand, this obviously has a positive effect on margins and efficiency, since instead of up to five different middlemen, there is only one between the advertiser and the publisher. More importantly, however, the high degree of transparency that can be achieved by eliminating middlemen and by using proprietary first party data, has an extremely positive impact on the quality and efficiency we can offer.

Especially during a recession, advertisers will focus even more on the outcome of their campaigns to make the most out of their reduced budget and also have a higher willingness to switch. With our end-to-end set-up, first-party data as well as innovative and privacy compliant products, we have the means and the knowledge to support advertisers in this endeavor and, thus generate customer growth also in a more challenging environment.

There is one important variable I have not mentioned yet which is our strong and highly motivated team: Our team has put a lot of work and dedication into building, improving and innovating our platform over the past few years, which has brought us to where we are today -one of the largest mobile exchanges/SSPs worldwide- that is known for setting standards in terms of quality, transparency, and efficiency.

With our strong cash position of well above €100 million and our strong cash flow from operations in combination with the strong market position which we were able to build over the last few years, we have an excellent foundation for further growth. Being well positioned in a market that is changing rapidly and growing dynamically long term, I can hardly describe how excited I am to continue this journey with my team and together with you.

Overall, I remain very positive about Media and Games Invests future. And as Ayrton Senna once said: "You cannot overtake 15 cars when it is sunny, but you can when it's raining". We are ready to do so!

Next to further profitable growth we are also actively improving our governance and sustainability performance, such as preparing our relocation to Sweden and have extended the board of directors. As part of these changes, I no longer act as Chairman of the board of directors, now being a regular member of the board fully concentrating on my CEO role."

GUIDANCE FOR THE FINANCIAL YEAR 2022

On February 28, 2022 Media and Games Invest SE published its initial guidance for the financial year 2022:

On April 28, 2022 Media and Games Invest SE published its updated guidance for the financial year 2022 taking into consideration the acquisition of AxesInMotion:

On November 15, 2022 Media and Games Invest SE published its updated guidance for the financial year 2022 taking into consideration the revenues and EBITDA performance for the first nine months and the outlook of Q4 2022:

Notes - All Notes are defined as in the Interim Q3 2022 Report of MGI

_{Note (1) Organic Revenue Growth: Organic revenue growth does include growth calculated on a year-over-year basis from companies being within the Group for twelve months or more. What is excluded is the revenue growth from acquisitions that have not been part of the group in the last twelve month, and the decline from sales stemming from closures/divestment of whole businesses.}

_{Note (2) Adjusted EBITDA: Reported EBITDA excluding one-time costs. EBITDA adjustments amounted to 1.6 mEUR and were made largely for one-time costs and costs associated with the relocation, M&A as well as the ESOP program.}

_{Note (3) Number of new software clients: Software Clients with >100k gross revenues.}

_{Note (4) Net dollar expansion rate: The net dollar expansion rate measures the development of gross revenue of the Q3 2021 customer cohort in both Q3 2021 and Q3 2022. A rate above 100% represents increased revenues of the customer cohort. A rate below 100% represents decreased revenues of the customer cohort. The net dollar expansion rate accounts for customer churn.}

_{Note (5) Adjusted EBIT: Earnings before interest and taxes excluding EBITDA adjustments mentioned above plus PPA amortization in the amount of 3.6 mEUR.}

_{Note (6) Adjusted Net Result: Net Income excluding PPA amortization}

_{Note (7) PPA-amortization: amortization on M&A related purchase prices which are not tax deductible}

_{Note (8) Net interest bearing debt: Interest bearing Financial Indebtedness excluding Shareholder and Related Party Loans minus Cash and Cash Equivalents.}

_{Note (9) Leverage ratio: Net Interest-Bearing Debt divided by adjusted EBITDA for the past 12 months.}

_{Note (10) EBITDA: Earnings before interest, taxes, depreciation, and amortization.}

_{Note (11) EBITDA margin: EBITDA as a percentage of net revenues.}

_{Note (12) Adjusted EBITDA margin: Adjusted EBITDA as a percentage of net revenues}

_{Note (13) Adjusted EBIT margin: Adjusted EBIT as a percentage of net revenues}

_{Note (14) Revenue (Guidance): takes into account the discontinuance of MGI's affiliate and influencer marketing business with a negative revenue impact of c. 20 mEUR}

Invitation to investor presentation

MGI invites investors to participate in the presentation of the Q3 2022 results by Remco Westermann (CEO) and Paul Echt (CFO) on Tuesday, November 15, 2022 at 10am CET. The presentation will be held in English and will also be available on-demand on the Company's website www.mgi-se.com.

To participate via webcast, please visit:

https://ir.financialhearings.com/media-and-games-invest-q3-2022

To participate via phone, please call:
DE: +49 6913803430
SE: +46 856642651
UK: +44 3333000804
US: +1 6319131422

PIN: 74136975#

Responsible parties

This information is such information Media and Games Invest SE is obliged to make public in accordance with the (EU) Market Abuse Regulation 596/2014. The information in this release has been made public through the agency of the responsible persons set out below for publication at the time stated by MGI's news distributor EQS Newswire at the publication of this release. The responsible persons below may be contacted for further information.

For further information, please contact:

Sören Barz
Head of Investor Relations
+49 170 376 9571
soeren.barz@mgi-se.com, investor@mgi-se.com
www.mgi-se.com

Jenny Rosberg, ROPA, IR contact Stockholm
+46707472741
Jenny.rosberg@ropa.se

Axel Mühlhaus / Dr. Sönke Knop, edicto GmbH, IR contact Frankfurt
+49 69 9055 05 51
mgi@edicto.de

About Media and Games Invest SE

Media and Games Invest SE ("MGI") is an advertising software platform with strong first party games content. MGI's main operational presence is in North America and Europe. The company combines organic growth with value-generating synergetic acquisitions, which has demonstrated continuous strong profitable growth with a revenue CAGR of 77% (2018 -2021). Next to strong organic growth, the MGI Group has successfully acquired more than 35 companies and assets in the past 6 years. The acquired assets and companies have been integrated and amongst others cloud technology is actively used to achieve efficiency gains and competitive advantages. MGI is registered as Societas Europaea in Malta (registration number SE 15) and its shares are listed on Nasdaq First North Premier Growth Market in Stockholm and in the Scale segment of the Frankfurt Stock Exchange. The Company has two secured bonds that are listed on Nasdaq Stockholm and on the Frankfurt Stock Exchange Open Market.

The Company's certified advisor on Nasdaq First North Premier Growth Market is FNCA Sweden AB; info@fnca.se.

Forward-looking statements

This release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the group operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this release, including the pro-forma financial figures addressed therein, are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements and pro-forma financial numbers are reasonable it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this release (including the pro-forma financial figures) are free from errors and readers of this release should not place undue reliance on the forward-looking statements in this release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this release, unless it is so required by law or applicable stock exchange rules.

SOURCE: Media and Games Invest SE