Resilient business model reflected in revenue and gross margin expansion
The summary provided below relates to the Q2 and H1 2022 results of Azerion Holding B.V., which is the main operational holding subsidiary of Azerion Group N.V.
Highlights of Q2 2022
Net Revenue of EUR 104 million, nearly doubling Q2 2021, driven by acquisitions and organic growth.
Adjusted EBITDA approaching EUR 12 million, up by 70% compared to Q2 2021, primarily boosted by improved net revenue and gross profit margin.
Accelerated the integration of acquisitions, pointing to further synergies and productivity upside; increased focus on operational efficiencies and costs to strengthen our resilience.
Partnership with ITV studios, with Love Island opening a virtual villa in Hotel Hideaway.
Partnerships with Cyberkongs, Metaverse HQ and Metakey to increase the utility of NFTs within Habbo.
In July, completed the acquisition of Madvertise’s subsidiaries in Germany and France, bolstering in-app digital advertising capabilities.
Highlights of H1 2022
Net Revenue of over EUR 198 million, more than doubling H1 2021, mainly driven by acquisitions and organic growth.
Adjusted EBITDA approaching EUR 18 million, up by more than 83% compared to H1 2021, primarily boosted by improved net revenue and gross profit margin.
Selected Financial KPIs
Azerion Holding B.V. Q2 H1
EURm 2022 2021 2022 2021
Net Revenue 103.9 52.7 198.3 98.3
Gross profit 41.9 20.8 74.8 35.8
Operating expenses (46.5) (15.9) (74.0) (29.3)
Operating profit / (loss) (16.1) 1.3 (28.1) (1.8)
EBITDA (7.4) 5.6 (11.3) 6.9
Adjusted EBITDA 11.7 6.9 17.6 9.6
Revenue growth % 97.1% 101.7%
Gross profit margin % 40.3% 39.5% 37.7% 36.4%
Adjusted EBITDA growth % 69.6% 83.3%
Adjusted EBITDA margin % 11.3% 13.1% 8.9% 9.8%
As of Q2 2022, proforma metrics are reported directly to the agent as per terms and conditions of the senior secured callable fixed rate bonds ISIN: SE0015837794.
Co-CEO Umut Akpinar said: “This quarter our delivery remained strong and we are increasing our focus on costs to strengthen our resilience in the evolving macroeconomic environment. At the same time, our priority remains to offer the best service and products to our customers, continuously improving our operational efficiency and excellence. With a focus on value over volume, we are also growing direct sales from our local offices to advertisers and high-grading our publisher inventory. As we accelerate the integration of acquisitions, we expect more value to be unlocked for Azerion. We remain on track to deliver at least EUR 450 million revenue this year.”
Co-CEO Atilla Aytekin said: “In the second quarter we continued actively working on our acquisition funnel to complement our organic growth with a strong forward visible pipeline, which is demonstrated by the acquisitions we have completed so far this year. We also raised capital and will continue exploring options to fund acquisitions, including raising more equity.”
Azerion Holding B.V. - Financial overview Q2 2022
Revenue
Q2 2022 Net Revenue amounted to EUR 103.9 million, compared to EUR 52.7 million in Q2 2021. This reflects higher revenue from both the Platform and Premium Games segments, driven by acquisitions and organic growth.
Earnings
Adjusted EBITDA was EUR 11.7 million in Q2 2022, compared to EUR 6.9 million in Q2 2021, reflecting improved net revenue and gross profit margin.
The operating loss amounted to EUR 16.1 million, which includes a charge of EUR 16.1 million related to De-SPAC expenses, compared to an operating profit of EUR 1.3 million in Q2 2021.
Cash flow
Cash flow from operating activities in Q2 2022 was EUR 10.9 million, excluding the impact of employee SARs related cash outflows associated with the De-SPAC transaction, which amounted to EUR 5.9 million. Including those employee SARs related cash outflows, cash flow from operating activities was EUR 5.0 million. Cash flow from investing activities was an outflow of EUR 41.6 million, mainly due to acquisitions. Cash flow from financing activities totalled EUR 33.3 million.
Capex
We capitalize development costs related to asset development, a core activity to support innovation in our platform. These costs primarily relate to developers’ time devoted to the development of games, platforms and other new features. In Q2 2022 we capitalized EUR 4.2 million, which is equivalent to 17.0% of gross personnel costs.
Financial position and financing
Our net interest-bearing debt1 amounted to EUR 183.7 million as at 30 June 2022, mainly comprising our outstanding bond loan with a nominal value of EUR 200 million (part of an in total EUR 300 million framework) and lease liabilities with a balance of EUR 17.5 million less the cash and cash equivalents position of EUR 39.0 million.
Azerion Holding B.V. - Segment information Q2 2022
Platform
Our Platform segment includes casual games distribution, advertising and e-commerce, which are fully integrated through our technology. It generates revenue mainly by displaying digital advertisements in both game and non-game content, as well as selling and distributing AAA games through our e-commerce channels. Platform is also integrated with our Premium Games segment, leveraging inter-segment synergies.