EVPL.L

LLM Evaluations

Transcript Summary

Everplay Group PLC delivered a robust performance in fiscal year 2025, characterized by a 5% increase in core revenue and an 11% rise in adjusted EBITDA to GBP 48.5 million. The results reflect the successful integration of a new management team, led by CEO Mikkel Weider, and a strategic pivot toward first-party IP and high-margin digital sales. Team17 reached record revenues exceeding GBP 100 million, while StoryToys saw a 25% surge in revenue through lucrative partnerships with Netflix and Apple. Despite a downturn at astragon following the exit from physical distribution and softer new releases, the group remains optimistic for 2026. The upcoming pipeline is substantial, featuring over 15 new titles including Hell Let Loose: Vietnam and Wardogs. Management is prioritizing capital investment in owned franchises, with development spending forecasted at GBP 45 million for the next year. Furthermore, the company is leveraging AI to streamline production and enhance game discoverability in an increasingly crowded market. With a strong back catalog contributing 75% of revenue and a healthy cash balance of GBP 52 million, Everplay is well-positioned for sustainable growth and potential M&A activity.

Full Earnings Call Transcript — Q4 • 2026-03-31

Operator: Good afternoon, ladies and gentlemen, and welcome to the everplay group plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from everplay group plc. Mikkel, good afternoon, sir.
Mikkel Weider: Good afternoon, and thank you very much. And welcome, everyone, to this 2025 results presentation. I am, as mentioned, Mikkel Weider, I'm the CEO of everplay; and with me is, Rashid Varachia, our CFO. We'll take you through the year of 2025 and look a little ahead. But since most of you probably haven't met me before, I should probably say just a few words about myself. So I have started several gaming companies during my life, including Nordisk Games, which grew to 1,300 employees via M&A and organic growth. I was the founder and CEO for 7 years. So we invested in or acquired 9 different game studios, including Avalanche, Supermassive, Raw Fury and MercurySteam. I have been at something like 15 different boards, mostly game companies and worked with games of all sizes from indie games and UGC to AAA. So when they called last year from everplay, I was engaged with a handful of different game companies, but I thought the opportunity sounded a little too exciting. So I really like the strategy and the people I met during the process. So I said, yes. And I started on January 5, just a couple of months ago, and I will talk a little about my early findings and thoughts later in the presentation. But first, let's look at 2025. So 2025 saw solid revenues of GBP 166 million, which is up 5% when excluding physical distribution and the performance of our new releases were really good. We saw an 11% growth in adjusted EBITDA for the year, reaching GBP 48.5 million, of course, which represents a 29% margin, which is up 3.1% from the previous year. We will pay a total dividend for the year of 2.9p per share, representing a payout of GBP 4.2 million in total. We ended the year with almost GBP 52 million in cash despite active M&A activities and dividend payouts. Overall, we are set to grow. We have a very nice pipeline of games coming out, many new partnerships and a strong back catalog. So our strategy remains on track. So what happened more in 2025? Well, we launched 11 new titles. They overall performed very well. They actually generated 80% more revenues than all the new titles in the past year. We signed several new large partnerships. We took a minority stake in Super Media Group connected to a strategic partnership with Bulkhead. We acquired the rights of the popular Hammerwatch franchise, including a range of long-term publishing rights. Now if we look a little at the specific companies, Team17, our largest company, had a very nice year, reached more than GBP 100 million in revenue and 20 million units sold. I would also say the quality of our new releases in 2025 were a lot higher than the previous year, reaching an average user score of 87% compared to only 61% the year before. So a big shout out from me to everyone who worked on these games. Date Everything! was the breakaway hit of the new releases with more than 750,000 copies sold. Yet our back catalog still accounted for 75%, which I think is really good and very high compared to most game studios out there. And I would say it's fair to say that 2026 looks even better with more than 10 new games coming out, which is more than twice the releases of last year and also including some really big ones, Hell Let Loose, Golf With Your Friends 2 and Wardogs. It's worth mentioning that the brunt of releases will come out in the latter part of the year. Now astragon, on the other hand, had a less good year than Team17. We terminated the physical distribution business, which hurt the top line, but streamlined our business. But we also saw underwhelming launches of the 2 main new titles during the year. Seafarer had a rocky launch in early access with several box and issues and Firefighting Simulator: Ignite was a better launch, but still saw less traffic and sales than we hoped for. So we are currently improving and adding content to both games. Seafarer will come out of early access and into full launch at the end of the year and should be in a much better shape at that point. We also lacked important large update for our main titles, which we are changing now onwards. In 2026, we look forward to several new releases, whereas not all have been announced yet. We are cautiously optimistic for the year. Lessons have been learned and more content is coming out. As for Team17, the larger launches will also fall in the second half of the year. So of course, when one company is under delivering, it's, of course, nice to have a portfolio of companies. So we are not too dependent on a few launches. And StoryToys had a really, really great year. Revenues rose an impressive 25% to GBP 30 million. And StoryToys did 740 updates during the year, which is about 3 launches per workday and 40% more than the previous year. And we ended the year with 376,000 active subscribers. Growth came from several places. StoryToys had a highly successful launch of the LEGO DUPLO app, LEGO Bluey app, which had more than 1 million downloads in the first month and also reached #1 in the app stores. StoryToys also secured several new partnerships and license agreements, including some large partnership with both Netflix and Apple. If we look ahead, 2026 has started well. We crossed 300 million downloads in the beginning of the year, and we have a lot of content coming out mostly on existing apps, but also a couple of new and unannounced apps. And now over to Rashid for a more financial review.
Rashid Varachia: Lovely. Thank you, Mikkel. Hi, everyone. So group revenues were broadly flat year-on-year at GBP 166 million, but excluding the physical distribution, which we exited during the year, they were 5% up year-on-year. And the growth drivers coming from the success of our new title releases such as Date Everything!, Bluey, Worms Across The Worlds and Apple Arcade and then the new strategic partnership deals with Netflix Games. Team17, as mentioned by Mikkel, was 8% up year-on-year, reaching a record GBP 106 million with 20 million units sold. Six new games drove a 700% increase in new release revenues and outstanding performance from titles such as Date Everything!. Other titles included SWORN and Worms Across The Worlds and Apple Arcade. Back catalog contracted by 13%, mainly due to strong performance from Dredge in 2024 and revenue generated from fewer new title releases in the prior year. astragon was the only division which contracted with a decline of 33%, in part driven by a strategic decision to exit low-margin direct physical distribution. Excluding physical distribution, astragon revenues decreased by 18%. Two new titles were released during the year, Firefighting Simulator: Ignite and Seafarer: The Ship Sim, both performing unfortunately below expectations. But we're expecting the business to bounce back in 2026. And then finally, on StoryToys, outstanding performance where revenues were up 25% to GBP 30.4 million. They released 740 app updates. Subscriber numbers increased to 376,000 with peak monthly active users of 12.9 million, reaching 286 million lifetime downloads. Performance driven by a major new Netflix and Apple game partnerships, including LEGO DUPLO World and Barbie Color Creations, along with 3 launches on Apple Arcade Greats. Next slide, please. Thank you. New release revenue increased 80% to GBP 41 million versus GBP 23 million in FY '24 due to an increased number of titles and stellar performance of Team17 titles and LEGO Bluey from StoryToys. Our back catalog contributed 75% of group revenues, which was in line with its 5-year average. The total back catalog revenue were GBP 125 million, which was a 13% decline versus prior year. This was on the back of an exceptionally strong FY '24, which grew by 27%. First-party IP revenue declined 9% to GBP 56 million, reflecting a softer performance at astragon. Team17 was up 2%, supported by Hell Let Loose and Golf With Your Friends. And finally, on this slide, third-party revenue grew 4% to GBP 110 million with strong contributions from the overcooked franchise, Date Everything!, Dredge and LEGO DUPLO World. Gross profit increased significantly by 10% to GBP 76.3 million, where gross margins increasing by 4.4% to 46%, mainly due to exit from physical distribution business and no material impairment. And just as a reminder, during FY '24, a GBP 4.6 million charge was booked for title impairment. Overall, royalty payments were lower year-on-year due to a favorable sales mix at Team17 and a higher weighting of StoryToys revenue, which carry lower royalty levels. And then finally, expense development costs increased modestly to support expansion onto new subscription services, for example, Worms Across The Worlds on Apple Arcade and LEGO DUPLO World. Significant improvements on adjusted EBITDA, which grew just over 11% to GBP 48.5 million. Adjusted EBITDA margin also increased 3.1%, reflecting higher gross margin and flat admin costs. Acquisition-related adjustments declined from 13.8% to GBP 12.1 million due to the end of acquisition-related incentive payments. And net finance income increased to over GBP 1.2 million, and the effective tax rate increased from 24% to 25.5%. And then finally, adjusted EPS increased 7% to 25.7p. There was an GBP 8.2 million increase to GBP 33.3 million on capitalized development costs. This was due to Team17 and the new titles such as Golf With Your Friends 2, Hell Let Loose: Vietnam and astragon, both Police Sim and Ranger's Path. The current year for cap dev in terms of FY '26 is forecasted to be GBP 45 million. Again, this is mainly due to the investments in first-party IP such as Wardogs, the Hell Let Loose franchise, which we have much better visibility over. However, this has led to an increase in terms of cap dev. And then finally, on cash, our cash position was GBP 51.9 million versus last year and increases were driven by our dividend payment during the year, increased tax and then also increase in acquisition-related payments. But overall, our variances included working capital and capital development. And as mentioned earlier by Mikkel, I'm pleased to announce a 2.9p per share dividend.
Mikkel Weider: Yes. And now I wanted to say a couple of words about my first 3 months. It's, of course, always interesting to start in a new business and coming into a company with fresh eyes, so -- and see a little from the outside. So I wanted to take this opportunity to give my view on the company after close to 3 months in. So yes, it's always a little exciting to start a new job. Is everything as good as they told you in the hiring process? Or do you uncover larger problems once you're on the inside? Well, fortunately, I can say that the company is in better shape than I had hoped for. Yes, there is stuff to work on for sure. But overall, I'm very impressed with the company and the organization despite the stock being pretty weak in the recent weeks. There is a good energy, I think, in the company and the culture is strong. While there has been several changes in the management in the last years, especially in Team17, I feel we have a range of great people now to take the company to the next level, and we are well positioned for growth. The back catalog is also as strong as I could have hoped for, which creates stable cash flows and predictability, which is really nice, of course. I already like the vertical strategy of the company with focus divisions before I joined. But getting on the inside, I can really appreciate the focus of each division. If you like an astragon or StoryToys game, you'll most likely like the new games coming out from them as well, and Team17 can also do a lot of cross-promotion between titles. Some of the stuff I would like to focus more on in the coming years are to have a stronger tech focus, including AI. I also like to look more at processes and reutilization. So we want to add more service elements and upsells for evergreen titles, for example, having more paid DLCs attached to our bigger games. And I'm also looking at how we can work more together and create synergies across the group. And of course, we want to do more M&A. So over the last 18 months, my predecessors have worked with different strategic pillars. And I think there overall has been good progress on these pillars in 2025, and these are pillars that I support as well. So there was an ambition to strengthen our first-party IPs that is IPs and games we fully own ourselves, something I definitely think is a good idea. And in 2025, we launched 2 new titles with first-party IPs. And we have 10 projects in the pipeline for our owned IP. So I think there has been good progress there. Another focus has been to find and grow new innovative third-party games that is games made by other companies with their IPs. There has been solid progress here as well. Date Everything! was a breakaway hit, and we have more than 10 new third-party games coming out already in 2026. A third focus has been to be very mindful of costs and to improve margins. Gross margins, they are up 4.4% and adjusted EBITDA was up 3.1%, which makes the company a very profitable one compared to a lot of our peers. And finally, we wanted to drive more growth. Well, adjusting for the removal of physical distribution, the company did see growth after all, and we also managed to acquire IPs and games for the future back catalog. On the organization side, there has been several changes. Aside from having a new CEO, me, if you're in doubt, Team17 promoted Harley Homewood to be the General Manager in November, and he's really doing a good job so far. In Team17, we have recently regrouped our games in 3 overall pillars with a franchise director for each, so we more easily can reutilize knowledge, technology and do cross-promotion within the clusters. In astragon, we have exited the distribution business, but also slimmed the organization overall to focus on the core titles, and we now have a more simplified organization, making it easier to get higher margins again. In general, we want to scale without adding proportionally more people. I think it's important to stay nimble and agile and use technology and processes in smarter ways. An example of that, Team17 has more than twice the amount of launches in 2026 compared to last year, while not adding to the total headcount. I think that is quite impressive. Finally, we have hired a few additional central resources to assist all divisions. And overall, we are creating a stronger foundation for organic growth and acquisitions. As mentioned, I want us to become stronger in tech and AI. And as many of you know, AI has evolved a lot the last months, really empowering developers in tech. New tools and AI will allow us in everplay to, a, create more and larger and richer games while not adding costs; and b, also help us optimize our internal processes and logistics. In general, I actually think AI will result in a greater demand for publishers like us, someone who can help developers games to stand out in the crowd. With more games being launched, discoverability will definitely be key onwards. So in many ways, AI strengthens our reasons to be. In the meantime, it's, of course, very important we follow the evolution closely to reap the fruits, we need to be at least early adopters. We need to be stellar in marketing and publishing, and we need to be very agile and adapt to changing technologies while still doing it in an ethically correct way. We've been working with AI for a while. We have an AI council and AI tools for all our people. And we have various cases across the group, cases we want to expand on and distribute across the group. Some examples, StoryToys are actively using AI in engineering, doing 40,000 lines of code per month. We're also using AI in QA several places, for example, for performance testing and [ automatization ]. But as mentioned overall, we can go further, and I want to empower our employees even more. And now a short break from talking. Let's watch a show reel of some of the games coming out this year. [Presentation]
Mikkel Weider: A lot of nice games, if you ask me. So some of the bigger titles this year are Hell Let Loose: Vietnam, Golf With Your Friends 2, Bus Simulator, Silver Pines, Wardogs and some pretty interesting unannounced titles we look forward to presenting later in the year. And now for the last slide of the presentation. Overall, I believe we are well positioned to continue the growth with a strong pipeline and back catalog. As mentioned earlier on, some of the larger games are scheduled for the second part of the year, which gives some additional weight to H2 results. But overall, we are confident we can deliver the adjusted EBITDA for 2026 in line with the current market expectations. Looking to the midterm, we are investing in several of our larger first-party franchises with games coming out over the next couple of years. We are very happy about these investments, and we think they will bring great returns and strengthen our portfolio considerably. And with these words, I think we can conclude the presentation. We will now take questions hosted by James Targett, our Head of Investor Relations. So James, come on board and tell us if you have some questions already.
James Targett: Yes. Thank you, Mikkel. I do have some questions, which have come in from shareholders. First of all, your thoughts on capital allocation, particularly how you think about M&A versus share buybacks currently?
Mikkel Weider: Do you want to say some words on that, Rashid?
Rashid Varachia: Yes. Obviously, capital allocation, very important to us. We're hugely cash generative, and we're always very conscious in terms of how that cash has been deployed. But we also -- it's also important to note last year was the first year whereby we actually reported a dividend payment. And so we will continue in terms of our journey in terms of capital allocation. We want to do M&A, and it's great that we have the funds to do M&A. But in terms of share buyback, it's very unfortunate where we find ourselves with our share position and share price position this week. And it's something that the Board will continue to review and discuss, but no immediate plans for any action on that at the moment.
James Targett: Thanks, Rashid. Mikkel, one for you on AI. There's been a lot of narrative over the last few months that AI will disintermediate software businesses, make them less relevant. Could you address that directly for everplay and outline why developers won't be able to go straight to players and bypass Team17 or everplay?
Mikkel Weider: Yes. No, no, I think it's a very interesting topic. So first of all, we don't see clear indications that there will be like one person in a basement ticking a button and suddenly having a wonderful game. There will certainly be a lot of low-quality games out there, but games of a certain quality will need like a team around them. However, that -- those teams, they can really be empowered by AI. And we are very used to working with small and agile teams of like 3, 4, 5, 7 people. And I think that's really what you need to make a quite powerful games -- game these days. I would be a little more worried if we had like 300 people working on a AAA game, and we've been working on it for 3 years on a very old engine, and it's coming out in 2 years or something like that. But I actually think we are really well positioned to work with smaller agile teams using powerful tools. Now of course, yes, there will be -- I'm sure there will be a lot more content coming out, but then it will be super important to have someone help kind of like connect the gamers with this content. And here, I think we are, again, really well positioned, helping teams out there where they can focus on making cool games, and we can get them in front of a much bigger audience. So maybe a little like today where everyone of us on this call, we can easily upload a video to YouTube, but is it going to be watched very much? Well, most likely not. And whereas there are some really big content creators out there who are very professional in their output. And that's where we want to be, like either the professional YouTubers or the -- or like closer to the Netflix. And it's not like Netflix has not been able to grow while YouTube was there. So I think we're going to live pretty well actually in that intersection, you can say. But again, we have to be on the top of our game here, like we can't just sit and wait for this to happen, like we're going to actively embrace it. And hopefully, we'll be a disruptor instead of getting disrupted ourselves. I think we have a good chance of that.
James Targett: Thanks, Mikkel. Rashid, one for you. Are you concerned about the rise in development costs compared to the previous years? And how does this support the midterm growth?
Rashid Varachia: Yes. So not concerned, James, because there's reasons for the increase. We came off the back of '24, whereby it was an all-time low in terms of cap dev. We had impairments back in '23, early part of '24. But this is a growth for our future. So I'm hugely excited. We've got some fantastic new games coming. We've already said this year, there's going to be at least 15 games, 15 new games. And it's investment, as I said earlier, into our first-party titles. And towards the end of last year, we invested in the Super Media Group, the Bulkhead team who are responsible for Wardogs, a fantastic game, massively excited. The games coming out later this year, but that does require capital investment. So a combination of Wardogs, our own IP and the team at StoryToys are also growing significantly. Unfortunately, we can't announce everything on this call, but there's some really great games coming from the StoryToys team as well. So that has led to an increase in cap dev, and the way we like to -- well, how I like to forecast is I'm fairly conservative. That's reflected in the numbers, and we should see growth in future years. Last year, we had 3 upgrades. So all being well, we'll beat the current expectations.
James Targett: Thanks, Rashid. A question on how we decide about acquiring IP versus building IP internally. Maybe that's more for you, Mikkel.
Mikkel Weider: We'll do both, you could say. Our core business is to build our own like to grow organically and invest in games that we -- as we do today. And then, as Rashid also mentioned, sometimes when we know something is working, we can take -- we can do a bigger investment in that title based on like, let's say, Hell Let Loose. It's such -- there's such a huge fan base. So it feels much more safe to kind of like do more within that IP than trying something completely new. On the M&A side, we are interested in looking around, and we're going to be super structured about it. And we're going to be highly picky with what we potentially buy. We're going to say no and no and no and no, and then maybe we're going to say yes to something because it has to sit really well with us for us to buy something. We are -- would potentially like to buy IPs and games, so assets because we can actually handle assets in our company, which is much better than in my previous company, for example, where we always had to buy like a full team that can handle everything themselves. This time around, we can buy assets and then take care of them for the next 5, 10 years. We can also buy a studio or a company, but then it has to be really fitting with our values and it has to -- that our due diligence has to be very thorough whether we want to take them in or not. And you could say that we -- on our wish list are titles that can bolster our existing divisions and to make a new kind of like forest division would require that it's like really like a standout opportunity. So we'll be active, but very cautious on what we potentially would be buying. And now I'm going to -- I saw a question on the list here as well. And we can, of course, evaluate whether we should buy shares in our own company if we think we are more attractive than anything out there. That's, of course, something to -- we'll be considering along the way as well to get most bang for the buck.
James Targett: Rashid, what is the amortization policy for capitalized development costs on larger first-party titles such as Hell Let Loose: Vietnam and Golf With Your Friends 2?
Rashid Varachia: Yes, it's very conservative, James. It's 2 years with month 1 being 30% and that hasn't really changed. And it's something which I reviewed when I first came on board. We've taken feedback from PwC as well. And the expectation was we would increase that. But again, with the very nature of how I tend to do things, I'd like to leave it conservative. The Board agrees, we should leave it how it is. But the tail for our titles is much longer than it's ever been. And I think it's a good point -- good place to mention our back catalog because as we said earlier, our back catalog represents nearly 75% of our total revenue. And when we look at our back catalog and we look at the aging of our back catalog, there's still over 50% of our back catalog, which is coming from titles, which is 4 years plus. So a, demonstrating the longevity of our titles, but also the number of titles that we have actually, what I call in the hopper, which is 150-plus titles that we have. So there's no concerns there in terms of our amortization policy.
James Targett: Thanks, Rashid. A question from Mikkel. How does everplay, specifically Team17 and astragon focusing on the PC and console business aim to stand out among the growing number of indie and AA releases every year?
Mikkel Weider: Well, several answers to that one. One is that we can -- as opposed to most other, we can actually do cross-promotion. So hey, if you like Construction Simulator, you might really like Bus Simulator, for example, like where we stick within our verticals. If you like Hell Let Loose, maybe you're going to love Wardogs. So I think cross-promotion is something that we can do and which is harder for the other. We are great in kind of like getting to a bunch of different platforms, which is quite hard for smaller entities like you don't just immediately get on Xbox or PlayStation or new consoles coming up. So I think the distribution is we have more direct consumer access than a developer typically would have. We know how to operate social media and marketing and outreach and where it gives the most bang for the bucks. Honestly, most developers, they are not very interested in a lot of these things that we are doing, and they are not -- therefore, not very good at it. And we just need to keep being at the forefront of marketing and getting games in front of eyes of other people. So we are also strengthening actually our marketing department, for example, in Team17 because this will be core for us in the future. And then maybe we'll have technology handle some of the -- be more active in other parts of the organization, where -- which is not our core focus. So yes, it's -- we need to keep improving, of course, and being at the forefront.
James Targett: Okay. And actually, our last question, maybe one you could both answer to finish with. Is there any particular game this year that you're most excited about?
Mikkel Weider: What do you say, Rashid? What are you excited about?
Rashid Varachia: I say one, James. I'm going to say 2. I'm going to go Wardogs because it looks fantastic, and it's a bit of me, love a bit of shooting. And then I'm going to go Golf With Your Friends because I'm rubbish playing it. I need to practice a little bit more.
Mikkel Weider: You mean you are obviously playing it in real life. Okay. Yes. Okay, then Golf With Your Friends 2 is a little more. Yes, those are good titles. I'm also personally excited about, of course, the Hell Let Loose that we mentioned. I think that like a classical franchise like Bus Simulator has been with us for so many years. And sometimes instead of killing dragons and shooting some, it is actually very, very relaxing and soothing to drive a bus instead. So I think that's going to be good fun. And then, of course, some of the more like indie titles like Silver Pipes, for example, I think looks really exciting.
James Targett: Okay. Well, yes, plenty to look forward to. Well, that's all the questions. So yes, Mikkel, over to you.
Mikkel Weider: Well, thank you very much, everyone, for joining this call. It's been a pleasure, and thank you so much for banking everplay.
Operator: Perfect, guys, if I may just jump back in at this point, and thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of everplay group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.