GGP Gaming Weekly — December 30

Highlights

Take-Two releases FQ2 2023 earnings report (link) 

• FQ2 2023 Results
  • FQ2 2023
    • Reported FQ2 2023 net bookings of $1,505M, representing a 53% increase YoY
    • Reported FQ2 2023 recurrent consumer spending of $1,204M, representing a 76% increase YoY
    • Reported FQ2 2023 digitally-delivered net bookings of $1,421M, representing a 62% increase YoY
    • Reported FQ2 2023 EBITDA of $65M, representing a 33% increase YoY
• Forward Guidance 
  • FQ3 2023 Guidance
    • Net bookings of $1,410M – $1,460M vs. consensus of $1,684M
    • EBITDA of $164M – $185M
  • FY 2023 Guidance
    • Net bookings of $5,400M – $5,500M vs. consensus of $5,885M
    • Net bookings by label: Zynga (45%), 2K (36%), Rockstar Games (18%), Private Division (1%)
    • EBITDA of $465M – $514M
• Portfolio Highlights
  • The Grand Theft Auto Series has sold-in over 385M units, with Grand Theft Auto V reaching $1B in retail sales faster than any entertainment release in history
    • The title is now the best-selling game of the past 10 years in the US based on both unit and dollar sales
  • Red Dead Redemption 2 has sold-in over 46M units worldwide to-date and the franchise has sold-in over 70M units worldwide to-date
  • NBA 2K has sold-in 130M units worldwide to-date
  • WWE SuperCard remains 2K’s highest-grossing Mobile game and has more than 27M downloads (unchanged from the previous quarter)
  • PGA Tour 2K23 successfully launched in October 2022, with Tiger Woods appearing exclusively in the franchise and serving as Executive Director / consultant through a long-term partnership
  • PGA Tour 2K21 sold-in over 3M units to-date
  • The Company’s Private Division announced that they signed a new publishing agreement with Wētā Workshop, best known for their work on Middle-earth for The Lord of the Rings film trilogy
  • Wētā is currently in the process of developing a new title set in the Middle-earth universe, and have been granted a broad creative license to interpret the underlying lore of the books
    • The title is in early development and is expected to launch during FY 2024
  • Rollic has achieved 2B+ LTD downloads, with 19 titles having reached the #1 or #2 most downloaded game position in the US App Store
  • Take-Two still plans to bring 87 titles to market through FY 2025

Activision Blizzard releases FQ3 2022 earnings report (link)

• FQ3 2022 Results
  • Reported FQ3 2022 Net Bookings of $1,829M, representing a (3%) decrease YoY
  • Reported FQ3 2022 Operating Income of $485M, representing a (41%) decrease YoY
  • Reported FQ3 2022 GAAP operating margin of 27% vs. 40% in FQ3 2021
  • Reported overall Activision Blizzard MAUs of 368M vs. 390M in FQ3 2021
  • Reported FQ3 2022 segment Net Revenues of $480M for Activision (28% of Net Revenue), $543M for Blizzard (32% of Net Revenue), and $692M for King (40% of Net Revenue)
  • Reported FQ3 2022 digital Net Revenue of $1,606M, representing a (13%) decrease YoY
  • Reported FQ3 2022 in-game Net Bookings of $1,356M, representing a 13% increase YoY
• FQ3 2022 Results vs. Consensus Estimates
  • Net Bookings of $1,829M vs. consensus of $1,720M
  • GAAP EPS of $0.55 vs. consensus of $0.48
  • Non-GAAP EPS of $0.68 vs. consensus of $0.50
• ATVI Business Segment Highlights
  • Activision:
    • Activision reported 97M MAUs in FQ3 2022, representing a (18%) decrease YoY
    • Activision’s FQ3 2022 financial performance was lower YoY, primarily reflecting reduced engagement for Call of Duty following the weaker reception for last year’s premium release.  Segment Revenue and Operating Income are expected to return to strong YoY growth in FQ4 2022 following the successful launch of Modern Warfare II
    • Since its October 28 launch, Call of Duty: Modern Warfare II has set new records for Activision’s largest franchise, becoming the fastest premium Call of Duty release to cross $1B in sell-through. 
  • Blizzard:
    • Blizzard reported 31M MAUs in FQ3 2022, representing a 19% increase YoY
    • Blizzard’s FQ3 2022 Revenue grew double-digits YoY 
    • Segment operating margin was lower YoY, due to marketing investment to support the strong release slate and the shift in business mix for FQ3 2022
    • Overwatch 2 launched in October, with a F2P model designed to allow more people to experience the action title. Over 35M people played in the first month, and the average daily player numbers for the first month was more than double of its acclaimed predecessor
  • King:
    • King reported 240M MAUs in FQ3 2022, representing a (2%) decrease YoY
    • King’s in-game Net Bookings increased 8% YoY, driven by the Candy Crush franchise. King’s payer numbers again increased by a double-digit percentage YoY
    • This November marks the 10-year anniversary of Candy Crush Saga, the original and largest title in the Candy Crush franchise. Candy Crush enters its second decade in strong health, with over 200M MAUs and with player investment at record levels

Playtika releases FQ3 2022 earnings report (link) 

• FQ3 2022 Financial Results
  • Reported FQ3 2022 Revenue of $648M, representing a 2% increase YoY and exceeding consensus by 1%
  • Reported FQ3 2022 Adj. EBITDA of $231M, representing a (7%) decrease YoY and exceeding consensus by 1%
  • Reported FQ3 2022 Credit Adj. EBITDA of $204M, representing a (6%) decrease YoY
  • Reported FQ3 2022 Net Income of $68M, representing a (15%) decrease YoY and falling short of consensus by (5%)
    • The Company attributed increased operating expenses to the acquisition of Reworks
  • Purchased $600M of shares via Tender Offer at a price of $11.58 per share, which has reduced outstanding shares by approximately 52M
• FQ3 2022 Portfolio Highlights
  • Reported Casual portfolio Revenue of $356M, representing a 14% increase YoY and comprising 55% of total Revenue
    • The Company’s Casual portfolio was led by solid performances from Bingo Blitz (15% increase YoY), Solitaire Grand Harvest (14% increase YoY), and June’s Journey (33% increase YoY)
  • Reported Social Casino portfolio Revenue of $292M, representing a (10%) decrease YoY and comprising 45% of total Revenue
    • The Company’s Social Casino portfolio exhibited mixed performance with regards to Slotomania (13% decrease YoY), House of Fun (21% decrease YoY), and World Series of Poker (8% increase YoY)
  • The Company’s Revenue contribution has shifted from 49% Casual and 51% Social Casino in FQ3 2021 to 55% Casual and 45% Social Casino in FQ3 2022
  • Reported Direct-to-Consumer Revenue of $151M, representing a 9% increase YoY and comprising 23% of total Revenue in FQ3 2022, compared to 22% in FQ3 2021
• FQ3 2022 KPIs
  • Reported 30.2M average MAUs across the Company’s portfolio, representing a (15%) decrease YoY from 35.4M in FQ3 2021
  • Reported 9.0M average DAUs across the Company’s portfolio, representing a (13%) decrease YoY from 10.4M in FQ3 2021
  • Reported 310k average Daily Paying Users across the Company’s portfolio, representing a 6% increase YoY from 293k in FQ3 2021
  • Reported 3.4% Daily Payer Conversion, up from 2.8% in FQ3 2021
  • Reported $0.78 ARPDAU, representing a 16% increase YoY from $0.67 in FQ3 2021
• FY 2022 Guidance
  • The Company maintained the previous quarter’s FY 2022 Revenue outlook to $2.60B – $2.66B
  • The Company maintained the previous quarter’s FY 2022 Adj. EBITDA outlook to $900M – $940M

PLAYSTUDIOS releases FQ3 2022 earnings report (link) 

• FQ3 2022 Results
  • Reported FQ3 2022 Revenue of $72M, representing a 2% increase YoY, and exceeding consensus of $68M
  • Reported FQ3 2022 AEBITDA of $10M, representing a 2% increase YoY, and exceeding consensus of $7M
• FY 2022 Guidance
  • Reported FY 2022 Revenue guidance of $275M – $285M (up from $270M – $285M from the previous quarter), compared to consensus of $277M
  • Reported FY 2022 AEBITDA guidance of $32M – $35M (up from $30M – $35M from the previous quarter), compared to consensus of $33M
• Business and Portfolio Highlights
  • Completed acquisition of Brainium, which is immediately accretive to AEBITDA margin
  • Advanced playAWARDS by adding AMC and Cinemark to the Company’s network. Overall partners growth was 43% QoQ with reward purchases reaching 553k units
  • Made considerable technological and design progress on Tetris and myVEGAS Bingo – both games are showing improving metrics and are primed to be positive contributors in 2023
  • playAWARDS is set to be fully integrated into Tetris and myVEGAS Bingo in 2023. Integration will also happen into Brainium’s suite of games in 2023
  • Continued to scale studios in Vietnam and Serbia, which now account for nearly 40% of total development capacity
• FQ3 2022 KPIs
  • Reported FQ3 2022 Average DAU of 1.5M, representing a 25% increase YoY
  • Reported FQ3 2022 Average MAU of 6.7M, representing an 87% increase YoY
  • Reported FQ3 2022 Average DPUs of 29k, representing a (12%) decrease YoY
  • Reported FQ3 2022 Average Daily Payer Conversion of 2.0%, down from 2.8% YoY
  • Reported FQ3 2022 ARPDAU of $0.52, representing a (20%) decrease YoY
  • Reported FQ3 2022 Retail Value of Purchases of $31.4M, representing a (16%) decrease YoY

Roblox releases FQ3 2022 earnings report (link) 

• FQ3 2022 Financial Highlights 
  • Reported FQ3 2022 Bookings of $702M, representing a 10% increase YoY 
  • Reported FQ3 2022 Revenue of $518M, representing a 2% increase YoY 
  • Reported FQ3 2022 Adj. EBITDA of $51M, representing a (63%) decrease YoY and a 7% margin on Bookings
  • Reported FQ3 2022 Net Cash Provided by Operating Activities of $67M, representing an (63%) decrease YoY
• Actuals vs. Consensus
  • FQ3 2022 Bookings of $702M vs. consensus of $693M
  • FQ3 2022 Adj. EBITDA of $51M vs. consensus of $64M
• FQ3 2022 KPIs
  • FQ3 2022 DAUs of 58.8M, representing a 24% increase YoY
  • FQ3 2022 hours engaged of 13.4B, representing a 20% increase YoY 
  • FQ3 2022 average Bookings per DAU (ABPDAU) of $11.94, representing an (11%) decrease YoY
  • FQ3 2022 average monthly returning payers of 10.4M, representing a 19% increase YoY
  • FQ3 2022 average monthly new payers of 2.5M, representing a 4% increase YoY
  • FQ3 2022 average Bookings per monthly unique payer (ABPMUP) of $18.11, representing a (5%) decrease YoY 
• October 2022 Key Metric Estimates (October 2022 Only)
  • Bookings between $231M – $235M, representing a 15% increase YoY 
  • Revenue between $184M – $187M, representing a 4% increase YoY 
  • DAUs of 57.8M for first 27 days of October, representing a 14% increase YoY 
  • Hours engaged of 3.6B for first 27 days of October, representing an 11% increase YoY

SciPlay releases FQ3 2022 earnings report (link) 

• FQ3 2022 Results
  • Reported FQ3 2022 Revenue of $171M, representing a 17% increase YoY and exceeding consensus by 3%
  • Reported FQ3 2022 Adj. EBITDA of $43M, representing a (4%) decrease YoY and falling short of consensus by (2%)
    • This represents an Adj. EBITDA margin of 25%, down from 31% in the same period of the previous year
  • Reported FQ3 2022 Operating Income of $33M, representing a (13%) decrease YoY and falling short of consensus by (5%)
  • Reported FQ3 2022 Net Income of $34M, representing a (9%) decrease YoY and exceeding consensus by 1%
    • This represents a Net Income margin of 20%, down from 25% in the same period of the previous year
  • Reported FQ3 2022 Cash and Cash Equivalents of $299M
    • Reported FQ3 2022 Available Liquidity of $449M
• FQ3 2022 KPIs 
  • Reported Mobile Penetration of 90%, up from 89% in the same period of the previous year
  • Reported Average MAUs of 5.9M, representing a (3%) decrease YoY
  • Reported Average DAUs of 2.2M, representing a (4%) decrease YoY
  • Reported ARPDAU of $0.80, representing a 16% increase YoY
  • Reported Average MPUs of 600k, representing a 20% increase YoY
    • Reported AMRPPU (Average Monthly Revenue per Paying User) of $95.45, representing a 2% increase YoY
  • Reported Payer Conversion Rate of 9.7%, up from 8.5% in the same period of the previous year

AppLovin releases FQ3 2022 earnings report (link) 

• FQ3 2022 Financial Highlights 
  • Reported revenue of $713M, representing a (2%) decrease YoY, against consensus of $728M
    • Reported Software Platform revenue of $307M, representing a 59% increase YoY
    • Reported Apps revenue of $407M, representing a (24%) decrease YoY
  • Reported Adjusted EBITDA of $258M (36% margin), representing a 35% increase YoY, against consensus of $268M
    • Software Platform Adjusted EBITDA of $190M (62% margin), representing a 46% increase YoY
    • Apps Adjusted EBITDA of $67M (17% margin), representing a 12% increase YoY
  • Reported LTM Net Dollar-Based Revenue Retention of 166%, in comparison to 184% in FQ3 2021
    • Net Dollar-Based Revenue calculated as current period revenue divided by prior period revenue for Enterprise Clients
• FQ3 2022 Key Metrics
  • Reported Software Platform Enterprise clients ($125k+ of run-rate revenue, TTM) of 538, representing an 84% increase YoY
  • Reported Revenue Per Software Platform Enterprise Client (Revenue per SPEC) of $1.9M, representing a 19% increase YoY
  • Reported $342M of Total Software Transaction Value, representing a 24% increase YoY
  • Reported $35M from AppLovin Apps business (10% of total TSTV), representing a (57%) decrease YoY
  • Reported Monthly Active Payers of 2.2M, representing a (24%) decrease YoY
  • Reported Average Revenue per Monthly Active Payer of $41, representing a (7%) decrease YoY
• Management Outlook
  • FQ4 2022:
    • Revenue in the range of $685M – $700M, against consensus of $788M
    • Adj. EBITDA midpoint of $250M – $265M, against consensus of $316M
    • Adj. EBITDA Margin of 36% – 38%, against consensus of 40%
  • FY 2022:
    • Revenue in the range of $2,800M – $2,810M, against consensus of $2,926M
    • Adj. EBITDA of $1,050M – $1,070M, against consensus of $1,131M
    • Adj. EBITDA Margin of 37% – 38%, against consensus of 39%

Unity releases FQ3 2022 earnings report (link) 

• FQ3 2022 Results
  • Reported revenue of $323M, representing a 13% increase YoY, lower than consensus of $326M and in-line with guidance of $315M-$335M
    • Operate Solutions: $172M, representing a (7%) decrease YoY
    • Create Solutions: $129M, representing a 54% increase YoY
    • Strategic Partnerships and Other: $23M, representing a 28% increase YoY
  • Reported a Non-GAAP Operating Loss of ($37M) compared to a Non-GAAP Operating Loss of ($6M) in FQ3 2021
  • Reported revenue breakdown by region as follows: US (25%), Greater China (14%), EMEA (35%), APAC (24%), Other Americas (3%)
• Metrics and Business Updates
  • 1,075 customers each generated more than $100,000 of revenue in the trailing 12 months (TTM) as of FQ3 2022, compared to 973 as of FQ3 2021
  • Dollar-based net expansion rate as of FQ3 2022 was 111% as compared to 142% as of FQ3 2021
    • Dollar-based net expansion rate is a calculation comparing Unity’s Operate and Create Solutions revenue from the same customers across comparable periods on a TTM basis
  • Unity Completes Merger with ironSource: 
    • Unity announced that it has completed the merger with ironSource, becoming the industry’s only end-to-end platform for mobile app creators. The transformational merger allows Unity to support developers through the entire development lifecycle as they build, run, and grow immersive, real-time games and 3D experiences into successful businesses. ironSource’s depth and breadth of tools and services are unmatched in the industry. The combined company is expected to be highly profitable and generate positive free cash flow
• Outlook
  • FQ4 2022:
    • FQ4 2022 revenue guidance of $425M-$445M versus consensus of $378, representing a YoY increase between 35%-41%FQ4 2022 Non-GAAP Operating Income guidance of $5M-$15M versus consensus of $4M
    FY 2022:
    • FY 2022 revenue guidance of $1,365M-$1,385M, compared to prior guidance of $1,300M-$1,350M during FQ2 2022, versus consensus of $1,314M, representing a YoY increase between 23%-25%FY 2022 Non-GAAP Operating Loss guidance of ($88M)-($98M), compared to prior guidance of ($95M)-($115M) during FQ2 2022

Griffin Gaming Partners has put nearly 30% of its investments into women-run game startups (link) 

• Nearly 30% of Griffin Gaming Partners’ deployed capital has been invested into game startups with women founders or cofounders
• Griffin celebrated its focus on women with a Women in Gaming dinner sponsored by Silicon Valley Bank, with 50 women attendees from top Gaming companies including Activision, Amazon, Electronic Arts, Lionsgate, Mattel, Roblox, Scopely, Super League, and Warner Bros.

M&A and Capital Raises

NCSoft invests $15M in Mysten Labs for Web3 Gaming infrastructure (link)

Mysten Labs is a portfolio company of Griffin Gaming Partners

• South Korean Gaming company NCSoft has invested $15M in Mysten Labs as part of a previously announced $300M funding round in September at a valuation of more than $2B
• The Company will use the proceeds to develop the Sui Layer 1 blockchain to serve as infrastructure for Web3 games and other projects
• NCSoft will become a strategic partner with Mysten Labs and will explore “future collaborations to create digital entertainment experiences that are more engaging and player-centric leveraging Sui”

Everybuddy raises $15M for Casual Mobile games like Lucky Buddies (link)

• Israeli game developer Everbuddy Games, the maker of the Casual slots title, Lucky Buddies, has raised $15M in funding to make Casual Mobile games
• The Company will use the proceeds to continue growing its team of 70 employees 
• Makers Fund led the round with additional participation from Key1 Capital and Gigi Levy Weiss

Anything World raises $7.5M to assist content creators using AI-based animation (link)

• Anything World has raised $7.5M to create an AI-based animation system that creators can use to be more expressive
• The Company is launching its high-fidelity 3D animation system that enables rigging and animations for any 3D model, which will be launched in stages, with the first version being available now
• Anything World also announced that its service is coming to Epic Games’ Unreal Engine in December, with a mission to lower the barriers to creativity in 3D, allowing users to access tools for making high quality animated videos using industry standard formats
• Investors in the round included Acrew Capital, Alumni Ventures, and Warner Music Group

Krafton acquires Neon Giant (link)

• During its earnings release, Krafton announced that it had acquired game studio Neon Giant in September, the developer of the cyberpunk Action-RPG The Ascent
• Neon Giant is also currently working on its second title, an open-world FPS game 
• The Ascent was first released in July 2021 on Xbox consoles and PC, and later on PlayStation systems this March

Other

League of Legends Worlds 2022 peaks at 5.15M viewers (link)

• According to Esports Charts, peak viewership reached nearly 5.15M for the finals, setting a new record for League of Legends esports, surpassing Worlds 2021’s 4M peak viewers
• This is the second highest peak viewership recorded for an esports event, only behind the Free Fire World Series 2021 at 5.4M
• League of Legends Worlds 2022 averaged 978k viewers throughout the tournament’s nearly 144 total hours of airtime

Gears of War joins list of games getting a Netflix adaptation (link)

• Netflix announced its latest game-to-show/movie adaptation, Gears of War 
• The streaming service partnered with The Coalition to make a live-action movie and an adult animation series, with potential for more
• While Netflix has given no details on the release of either property, Netflix mentions “Delta Squad, a ragtag fireteam led by disgraced sergeant Marcus Fenix, [charged] with leading humanity’s last stand”
• Netflix is also working on several other Gaming franchise adaptions, including a live-action BioShock movie, a Horizon Forbidden West show, and an Assassin’s Creed series

God of War Ragnarök sets franchise record for first week UK sales (link) 

• According to UK sales charts firm GfK, God of War Ragnarök has outpaced the first week of sales of every other game in the God of War series, including its chart-topper predecessor, God of War (2018)
• The firm also reported that Ragnarök PlayStation 5 bundle accounted for 55% of this week’s hardware sales for the PlayStation 5 console
• God of War 2018 was one of Sony’s best-selling games on the PlayStation 4, hitting 23M units sold as of November 1, 2022, and per Sony’s recent earnings report, Sony is expecting Ragnarök to sell equally well

Call of Duty: Warzone 2.0 features Al Mazrah map and DMZ extraction mode (link) 

• Call of Duty: Warzone 2.0 will debut a new free-to-play Battle Royale mode on November 16 with a new map and a new extraction experience called DMZ
• The game will feature Al Mazrah, a new map set in the Middle East that is built in the modern warfare setting of the original Call of Duty: Modern Warfare II
• The DMZ game mode takes players to an open-world, narrative focused extraction experience where operators have free reign to complete faction-based missions, take on additional side objectives, engage with enemy operators or AI combatants, and search for valuable items

Nintendo and DeNA forming joint venture company Nintendo Systems (link)

• Nintendo and DeNA are working together on the formation of a new joint venture company that will aim to “strengthen the digitization” of Nintendo’s business
• The new company will be called Nintendo Systems and will operate as a subsidiary of Nintendo, with Nintendo providing 80% of the capital required
• Nintendo Systems will begin operations in April 2023, based in Tokyo, and led by director and President Tetsuya Sasaki
• This joint venture builds on Nintendo’s seven-year partnership with DeNA, co-developing Mobile games and growing the company’s ecosystem beyond its own platforms, having helped Nintendo produce six Mobile games, including Miitomo, Super Mario Run, Fire Emblem Heroes, Animal Crossing: Pocket Camp, Mario Kart Tour, and Pokémon Masters

Sorare partners with 18 national teams, launches a new game (link)

• Sorare is partnering with 18 national soccer teams ahead of launching Sorare: Global Cup ’22, its brand new free-to-play game with social elements
• Players will be able to put together an eight-player squad of their favorite players from these 18 teams, competing for real rewards as the actual World Cup tournament progresses
• Teams added include the US Men’s National Team, Argentina, Belgium, Cameroon, Costa Rica, Croatia, France, Germany, Ghana, Netherlands, Qatar, Morocco, Serbia, Spain, Poland, Tunisia, Canada, and Wales

League of Legends and Teamfight Tactics Will Be Published by Riot Games in Southeast Asia for the First Time (link) 

• After a 12-year partnership with Garena, Riot Games will begin self-publishing League of Legends and Teamfight Tactics across Southeast Asia (Philippines, Malaysia, Singapore, Taiwan, Hong Kong, Macau, Thailand, and Vietnam) in January 2023
• Riot is planning to expand its efforts in other countries it currently publishes in such as Japan and India, along with establishing new local offices in key countries including the Philippines, Thailand, Indonesia, and Malaysia
• Players will receive a suite of in-game rewards as a gift for the transition, along with welcome events and local activities to further enhance the player experience

TiMi Studio Group and Capcom Co., Ltd. working on a new Monster Hunter Title (link) 

• TiMi Studio Group and Capcom are joining forces on a new Mobile game for the Monster Hunter series
• The game is currently in-development and will reproduce the hunting actions that define the Monster Hunter series, offering players a new game experience unique for Mobile

Virtuos on establishing presence in the Bay Area with new studio Calypte (link) 

• Creative services company Virtuos is opening a new co-development studio, Calypte, in the Bay Area
• The Company’s goal is to establish a presence in San Francisco to better collaborate with its North American partners
• Virtuos has been rapidly expanding over the course of the year, beginning 2022 with the acquisition of Ukrainian art studio Volmi Games, followed by production firm Glass Egg in May, and opening a new office in Malaysia in August

Nifty Games launches NBA Clash for Mobile gamers (link) 

• Nifty Games announced the launch of NBA Clash on iOS and Android platforms
• Featuring all 30 NBA teams and over 100 individual players, NBA Clash is a quick-session, real-time PvP Mobile game
• Gamers will be able to compete head-to-head in 3-on-3 games, featuring first to eleven scoring

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