CEO’s Review 2020: Ready for growth

“Our strategy to make games based on well known brands is the cornerstone of profitably growing our market share.“

Next Games’ year 2020 ended on a positive note, reaching EBITDA profitability of EUR 0,5 million. The main theme of the past year was our turnaround in profitability. Publishing Operations profitability doubled as compared to the previous year. We also held a successful Capital Market Day for investors in the fall, where we refined our strategy and announced our new, mid-term financial targets of achieving yearly revenues of EUR 250 million, reaching EBITDA of over 23 % and an EBIT level of over 18%. Our growth goals are supported by our games as a service focus, and continued development and support of our full portfolio of games. The spearhead of new releases is our latest game based on the well-known brand; Stranger Things. We will grow revenues through scaling marketing investments in the upcoming year.

Our revenue was EUR 27,2 million (34,7). Our Publishing Operations, i.e. the profitability of published games as measured by EBITDA, improved to EUR 6,4 (3,8) million and the corresponding EBITDA margin to 24% (11%): Our published games enable a stable and profitable business, as well as investments in the future.

We benefit from our strong market position in the large and growing mobile gaming market; the fastest growing segment in gaming, reaching 100 billion dollars in revenues within a few years. Interest in games is steadily growing with the global gaming market already larger than the film and music industry combined. Next Games benefits from this market development and we are already one of the largest publishers in our genres (Geolocation and Turned Based RPG) in our main market area; North America.

Our strategy to make games based on well known brands is the cornerstone of profitably growing our market share. The use of well-known brands, enables us to attract players with lower user acquisition costs compared to publishers who rely solely on user acquisition. With our advanced analytics, we are both able to scale efficiently and to optimize the in-game experience for our players.

Over the past year, we have invested heavily in our own technology platform as well as in analytics and processes, i.e. our unified infrastructure. We continue strengthening our strategic partnerships with various partners, and our product development pipeline is working on a number of promising games based on well-known international brands. More than half of our staff worked on upcoming games, and at the heart of our development is our focus on tailoring a player-centric purchase and engagement experience in our games.

We strongly believe that the best people make the best games, which is why we have invested in both international recruitment and professional development. At the end of the year, Next Games employed more than a hundred professionals from 22 different countries. Our newly appointed (end of 2020) and strengthened management team is also a key factor in supporting and accelerating growth.

In many ways the past year has been challenging for all of us, due to the concerns of the COVID-19 pandemic. However despite this challenging situation, we have been able to improve the profitability of our business as well as further the development of our new games, in accordance with our strategy. Our efforts will bear fruits in 2021, and we will continue to develop our business for long term success in the incoming years.

I would like to thank our whole team at Next Games, all our partners and our shareholders for the past year. In particular, I would like to thank our players for their continued commitment to our games. We will continue to invest in players first, now and in the future.

Teemu Huuhtanen