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Interim Results IGG INC August 2020
Interim Results
IGG INC August 2020
Disclaimer
Interim Results 1
This presentation and the accompanying slides (the “Presentation”) do not constitute any offer orinvitation to purchase or subscribe for any securities, and shall not form the basis for or be relied on inconnection with any contract or binding commitment whatsoever. This Presentation has been preparedby the Group based on information and data which the Group considers reliable, but the Group makesno representation or warranty, express or implied, whatsoever, on the truth, accuracy, completeness,fairness and reasonableness of the contents of this Presentation. This Presentation may not be all-inclusive and may not contain all of the information that you may consider material. Any liability inrespect of the contents of or any omission from this Presentation is expressly excluded.
Certain matters discussed in this presentation may contain statements regarding the Group’s marketopportunity and business prospects that are individually and collectively forward-looking statements.Such forward-looking statements are not guarantees of future performance and are subject to knownand unknown risks, uncertainties and assumptions that are difficult to predict. The Group’s actualresults, levels of activity, performance or achievements could differ materially and adversely fromresults expressed in or implied by this Presentation, including, amongst others: whether the Group cansuccessfully penetrate new markets and the degree to which the Group gains traction in these newmarkets; the sustainability of recent growth rates; the anticipation of the growth of certain marketsegments; the positioning of the Group’s products and services in those segments; the competitiveenvironment; and general market conditions. The Group is not responsible for any forward-lookingstatements and projections made by third parties included in this Presentation. All references to “IGG”and “the Group” used in this presentation refer to IGG INC and its subsidiaries.
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Agenda
1
2
3
IGG Overview
Financial Review
Prospects
Interim Results 2
Interim Results
IGG Overview
3
Global Market
Global R&D
Global Operation
GlobalInvestment
IGG Overview
Hit Titles
Interim Results
A leading global developer and publisher of mobile games
• Games in 23 languages
• Users across 200+countries & regions
• Registered users:720mn, MAU:30mn+
• R&D talents & technical partners located in 16 countries & regions
• Operation teams located in 15 countries
• Long-term relationship with 100+ distribution platforms & promotional partners
• Strategic investments in the mobile internet and gaming industries
Note: Data as at 30 June 2020 4
Global Branches In 1H20, the Group has over 1,600 employees, and R&D accounts for over 50% of headcount.
Asia America Europe & others
North America revenue %30%
24%
40%Asia revenue %
Europe revenue %
Interim Results
Greater ChinaR&D, operation & IT support
South KoreaLocalized operation support
JapanLocalized R&D & operation support
PhilippinesCustomer service center
IndonesiaLocalized operation support
ThailandLocalized operation support
United Arab Emirates(Dubai)
Localized operation support
USAIT & localized operation supportCanadaLocalized R&D & operation supportBrazilLocalized operation support
SpainLocalized operation supportItalyLocalized R&D training & operation supportBelarusLocalized operation supportTurkeyLocalized operation support
SingaporeGroup headquarters; R&D & operation center
Note: Data as at 30 June 2020 5
Global RankingListed among the “Top 52 Publishers” for six consecutive years
Interim Results 6
Financial Review
Interim Results 7
Revenue & Profit Performance
91.9 112.7 103.8 98.7 126.0196.1
273.5333.8
388.5 360.3 354.7 312.9 312.3
0
200
400
600
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20
Historical Performance of Revenue
32.9 33.5 24.8 16.4 25.046.6
76.2 78.998.4 90.9
70.794.1
132.8
0
200
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20
Historical Performance of Net Profit
Net profit hit record high in 1H20, surged 88% YoY, and increased 41% HoH.Excluding fair value gain on investments, net profit achieved US$78.5M, increased 10% YoY and up 16% HoH.
Interim Results
(US$ million)
(US$ million)
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Gross Billing
Castle Clash & Other Games
$9M
Lords Mobile
$48M
$57M
Interim Results
Consol.avg. monthly gross billing
Monthly Gross Billing of the Group and Hit Titles in 1H20
0
10
20
30
40
50
60
70
80
IGG Lords Mobile Castle Clash & Other games
(US$ million)2020
Lords Mobile’s monthly gross billing hit a new record high of US$60M in July.
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Operational Data
Lords Mobile
• Strategy/RPG Game
• Launched in Mar. 2016
• Available in 20 languages
• Registered users: 320mn
• MAU: 13mn
• 84% of IGG’s revenue
Castle Clash
• Strategy/TowerDefense Game
• Launched in Jul. 2013
• Available in 16 languages
• Registered users: 260mn
• MAU: 4mn
• 8% of IGG’s revenue
Mobile Royale
• Strategy/RPG Game
• Launched in Dec. 2018
• Available in 21 languages
• Registered users: 7.8mn
• MAU: 220k
• Less than 5% of IGG’srevenue
Conquerors
• Strategy Game
• Launched in Jul. 2017
• Available in 9 languages
• Registered users: 13.6mn
• MAU:600k
• Less than 5% of IGG’s revenue
Interim ResultsNote: Data as at 30 June 2020 10
New Titles
Dress Up! Time
Princess
Stylish costumes
Multiple ending stories
CharactercustomizationClothing
DIY
• Female-oriented dress-up game• Launched in May 2020• Available in 3 languages• Registered users: 100k• Featured on Google’s Google Play in multiple countries
Interim ResultsNote: Data as at 31 July 2020
Fair team competition
Distinctheroes
withuniqueabilities
Variousmodes
• Battle royale shooter game• Launched in July 2020• Available in 2 languages• Registered users: 3mn• Featured on Apple’s App Store and Google’s Google Play in many countries
Omega Legends
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Utility Apps
KeepLock
• Cleanup and Speedup
• Launched in Nov. 2019
• Registered users: 27mn
• Technology-driven and customized acceleration app
• Highlights: junk clean, speed up, CPU cooler and app management, etc.
• Applock and privacy guard
• Launched in Jan. 2019
• Registered users: 7.5mn
• Highlights: app lock, system lock, photos and videos vault, intruder snapshot
KeepClean
Security
Lowconsumption
Spacesaving
Easy to use
Interim ResultsNote: Data as at 31 July 2020 12
IGG revenue by platforms
Revenue Distribution
Contribution from Android continues to increase
Contribution from Android continues to increase
iOS35%
Others 5%
Android60%
iOS36%
Others 5%
Android59%
Lords Mobile revenue by platforms
Interim Results
Note: Data of 1H20
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(US$ million) 1H19 2H19 1H20 YoY (%) HoH (%) Notes
Revenue 354.7 312.9 312.3 -12% -“Lords Mobile” experienced a resurgence with monthly gross billing rising to US$54M and hitting a new record high of US$60M in July
Lords Mobile 282.1 256.9 263.6 -7% +3%
Castle Clash & Other games 72.6 56.0 48.7 -33% -13%
Gross Profit 246.2 216.6 216.7 -12% -Gross profit declines as revenue declines
GP margin (%) 69% 69% 69% - -
Other net income 2.7 29.9 55.4 +1,952% +85%Fair value gain from the Group’s investments in XD Inc. and other mobile internet and gaming related companies
Selling & distribution exp. 99.6 65.3 67.5 -32% +3%Continuous optimization of marketing resources
% of revenue 28% 21% 22% -6ppts +1ppts
Administrative exp. 20.6 24.9 18.3 -11% -27% Continuous budget control of administrative expenses% of revenue 6% 8% 6% - -2ppts
R&D exp. 42.9 49.6 36.9 -14% -26%R&D resource optimization
% of revenue 12% 16% 12% - -4ppts
Income tax exp. 13.3 11.9 14.9 +12% +25% Increase in profit before taxation
Net profit 70.7 94.1 132.8 +88% +41%Profit increase in the Group’s gaming business and remarkable performance of the Group’s investments
NP margin (%) 20% 30% 43% - -
NP excluding fair value gain on investments 71.4 67.8 78.5 +10% +16%
EPS (basic, US$) 0.056 0.076 0.108
1H20 Financial Analysis
Interim Results 14
28.3
0.80
10
20
30
1H19 1H20
Purchase of Intangible AssetsPurchase of PP&E
307.1339.9
0
100
200
300
400
Dec. 2019 Jun. 2020
Strong Cash Position
Interim Results
Capital Expenditures
(US$ million)
• Capex 1H19： 6.3% of total assets 1H20： 0.1% of total assets
(US$ million)
Cash & Cash Equivalents
• Dividend payment of US$27.9M and spent US$14.1M on share buyback.
• Dividend + share buyback amounted to US$42.0M in 1H20.
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399.4476.5
318.5243.4220.1
588.4
0
100
200
300
400
500
600
700
Dec. 2015 Dec. 2016 Dec. 2017 Dec. 2018 Dec. 2019 Jun. 2020
Non-current assets Current assets
Total Assets
Interim Results
Total Assets (US$ million)
• As at 30 June 2020, the Group’s total assets amounted to nearly US$600M Current assets of nearly US$410M, including cash and cash equivalents, and funds receivable amounting
to a total of nearly US$400M Non-current assets of nearly US$180M
Other financial assets increased to nearly US$130M, including successful investments in XD Inc. as well as other mobile internet and gaming related companies
Property, plant and equipment of nearly US$40M
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Dividend
Dividend typeDividend per
share(HK, cents)
Total amount(HK$, million)
Dividend payout ratio(% of the corresponding
period net profit)Payment date
2020
1st interim dividend 25.1 308.8 30%
Sep. 4, 2020Special dividend 25.1 308.8 30%
Total 50.2 617.6 60%
Interim Results
• First interim dividend and special dividend declared, plus share buy-back accounted for 71% of 1H20 net profit.
• The future dividend payout ratio will be formulated in consideration of the Group’s profitability and funding need for M&A.
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Preferential Corporate Tax Rate
0%
2%
4%
6%
8%
10%
12%
2016 2017 2018 2019 2020 2021
10.5% 10.5%10%10%10%
5%
17%
10.5%
Interim Results
IGG Singapore (Intellectual Property holding company) enjoys preferential tax treatment, subject to requirements as specified by Singapore Economic Development Board.
The prevailing corporate tax rate: 17%
The preferential corporate tax rate for IGG Singapore: 10%-10.5%
The prevailing corporate tax
The preferential corporate tax
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•The global games market is expected to hit US$159.3 billion in 2020
•Mobile games are expected to grow to US$77.3 billion, 49% of global games market
•Console games are expected to grow to US$45.2 billion, 28% of global games market
•PC games are expected to grow to US$36.9 billion, 23% of global games market
0
50
100
150
200
250
2019 2020 2021 2022 2023
Global Games Market Overview
Global Games Market Trend
Asia Pacific49%North
America25%
Europe, Middle East
& Africa22%
4%
$145.7Bn $159.3Bn$174.2Bn
$187.8Bn$200.8Bn
Interim Results
Global Games Market (by Regions)（US$ billion）
Source：Newzoo Global Games Market report, 2020
Latin America
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Prospects
Interim Results 20
Prospects
Interim Results
• Continue to refine new products and release a diverse portfolio of games.
Strive for excellenceand diversification
Strengthen competitiveness
Seek out global investmentopportunities
Strengthencompetitive edge
Diversified marketingstrategies
Localized marketingcampaigns
R&D Operation
• Explore strategic investment opportunities globally.
• In-depth cooperation with high-quality global R&D teams.
• Deliver innovative and diversified product portfolio.
• Maintain our competitive edge by grasping opportunities in the “home-
based” economy• Expand the scale and width of our
marketing initiatives across the globe
• Tap into diversified marketing strategies to drive
games to new heights
• Establish local teams and release localized marketing
campaigns
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