Forgame Holdings Limited

Transcription

1 Happiness anytime, anywhere Forgame Holdings Limited Management Presentation November 2013

2 Business Overview Unique Model Integrating Development and Publishing Attractive Financial Performance Development: No.1 Webgame Developer in China - 24% Market Share (1) - 24MM Monthly Active Users ( MAUs ) (2) Publishing: Top 10 Webgame Publisher in China - 179MM Registered Players (3) - 79 Self-developed and Licensed Games (3) Proven Track Record and Robust Pipeline Strong Revenue Momentum RMB MM ~8x Growth % % 34% 70% 95 66% 66% 48% 52% H'13 Game Development Game Publishing 37 Self-developed Webgames and 4 Mobile Games Launched as of September 30, st Mobile Game, The Era of Storms, Exceeded RMB 14MM of Gross Billings in August Launched Charmed Westward Journey mobile version in October Games in the Pipeline as of September 30, 2013 (4) 2 Healthy Profit Generation RMB MM H'13 Adjusted Net Profit / (Loss) (5) Notes 1. Market share in 2012 in terms of net revenue, according to iresearch 2. In the month of June As of June 30, Includes 15 webgames and 17 mobile games to be beta tested in Q4 13 and Adjusted net profit / (loss) excludes share-based compensation, fair value change of preferred shares and finance cost relating to issuance of preferred shares

3 Evolution of the Industry Cloud-based Games (1) 2016E Market Size: RMB 35Bn E CAGR: 38% Client-based Games 2016E Market Size: RMB 80Bn E CAGR: 13% Console Games Product Software Internet Service Note 1. Cloud computing technologies-enabled games, including both webgames and smartphone mobile games 3

4 Clear Opportunities for Cloud-based Games Client-based Games Cloud-based Games Hardware Requirements High Low and flexible Engagement Home / Internet cafe Anywhere Time Commitment High Low and flexible Development Cycle months 6 12 months Upfront Development Costs Update Frequency High Low Low High Source: iresearch Cloud-based Games Present A Large Market Opportunity with Lower Risks 4

5 Investment Highlights 1 Differentiated Model Integrating Development and Publishing at Scale 2 Proven Ability to Consistently Replicate Success 3 Scientific Approach to Game Development 4 High Level of Diversification 5 Visionary Management and High Retention Rate of Talent 5

6 1 Differentiated Model Integrating Development and Publishing at Scale 3 rd Party Publishing Partners Games Development Studios In-game Data Games Data + Beta Testing Self-owned Publishing Platform Player - Acquisition Related Data Games 3 rd Party Developers Live Service Players Games Are Continually Optimized Based on Comprehensive Data and Feedback 6

7 1 Empowered by A Leading Publishing Platform Rapidly Expanding User Base MAUs (MM) 20 Selfdeveloped Games Licensed Games H'13 and Higher Conversion MPUs (000s) Accumulated 179MM Registered Players H'13 Note: 1. Number of games and registered players on 91wan as of June 30,

8 2 Proven Ability to Consistently Replicate Success Undisputed Leadership (1) 2012 Q new Webgames 17 new Mobile Games Others #1 Market Share of 24% 1H 13 Q3 13 Source: iresearch New Games 34 Existing Games New Games 22 Existing Games New Games 5 Existing Games 12 New Games 12 Existing Games 4 New Games 2 New Games 2 Existing Games Webgames Mobile Games Close to 1,500 R&D Professionals Dedicated to Game Development (2) Notes 1. In terms of net revenue received by webgame developers in China 2. As of June 30,

9 3 Data-driven User Engagement and Monetization Official Website Registration Select Server Choose Character s Name Welcome Page Complete 1 st Task 60 Seconds of Game Play Live Data Feed to the Game Analytics Engine Detailed Analysis from Different Angles Ongoing Data Analysis Identify Potential Solutions Ongoing Game Optimization Key Focus: Retention, Paying User Conversion and ARPPU 9

10 4 High Level of Diversification Limited Platform Concentration 1H 13 Game Development Revenue Limited Title Concentration Total Revenue Games in Operation #1 3 rd Party Publishing Partner 80 21% 34% 48% 48% ~20% 60 Others % 66% 52% 52% H'13 Top 5 Games Others Low Platform Dependence - Delivering through 350+ Platforms Continued Launch of Successful Games 10

11 5 Visionary Management and High Retention Rate of Talent Kevin Wang Founder, Chairman & CEO Over 12 years of experience in the Internet industry Former CEO of ZCOM, an e-journal platform in China Dong Liao Co-founder Executive Director Responsible for publishing and marketing Founder of Jiyichang Network 8 years of entrepreneurial experience Kai Huang Co-founder Executive Director Responsible for research and development Over 7 years of experience in the Internet industry Jieguang Zhuang Co-founder Executive Director Responsible for research and development Seasoned entrepreneur in the Internet industry Tao Yang Co-Founder Chief Product Officer Responsible for research and development of webgame products Led the development of the Soul Guardian franchise Gary Ngan CFO Former Head, Hong Kong and China Internet Research, UBS AG Yiwei Cheng President of International Business Responsible for overseas expansion of Forgame 11

12 Our Growth Strategies 1 Further Expand into the Mobile Game Market 2 Broaden Reach into International Markets 3 Pursue Strategic Acquisitions and Partnerships 6 Extend Game Life Cycle and Enhance Monetization Capabilities 5 Launch New Games at A Faster Pace 4 Expand Our Leading Publishing Platform 12

13 Significant Mobile Game Market Opportunities Leverage Established Webgame Franchise Diversify into the Casual Game Market Soul Guardian Mobile Version Charmed Westward Journey Mobile Version Build Up Mobile Game Publishing Platform Strategic Investment Self-developed Games Licensed Games Forgame Publishing Platform Existing Webgame Players Published Over 350 Games (1) Acquired Games New Players Over 170MM Global Download (1) Note: 1. As of July

14 Broaden Reach into International Markets Product Strategy - Adaption of existing hit titles into international version - Change graphic design and storyline to fit in international market Talent Strategy - Build up talent pool including programming, graphic design, game development, marketing and operating, and international business development Marketing Strategy - Market segmentation: Europe and US, Japan, Brazil, Russia, Middle East, South East Asia - Market expansion by phases 14

15 Financial Overview

16 Attractive Revenue Momentum Total Net Revenue RMB MM % 574 ~8x Growth % 34% 70% 33% 66% 95 66% 67% 48% 52% H'12 1H'13 Game Development Game Publishing 16

17 Strong Underlying Drivers for Both Game Development and Publishing Game Development Average MPUs (1) 000s ARPPU (2)(3) RMB ~11x Growth H' H'13 Game Publishing Registered Players Average MPUs (1) ARPPU (2) MM ~4x Growth s ~4x Growth RMB H' H' H'13 Notes: 1. Monthly paying users 2. Average revenue per monthly paying user 3. Based on net revenue after revenue sharing with publishing partners 17

18 Healthy Gross Margin Gross Profit RMB MM 82% 90% 91% % 42% % % 66% 69% 40 89% 11% 34% 28% 31% 34% H'12 1H'13 Game Development Game Publishing Gross Margin 18

19 Strategic Spending Targets for Long-term Positioning Number of New Games Operating Expenses (1) RMB MM, as % of Revenue Adjusted Net Profit / (Loss) RMB MM 416 5% 347 8% % 33% 28% 166 4% 81 15% 26% 23% 8% 28% 25% 23% 21% 49% H'12 1H'13 R&D S&M 31% 36% 30% % (42%) H'12 1H'13 Adjusted Net Profit / (Loss) (2) Margin Administrative Notes: 1. Does not include other income (losses) 2. Adjusted net profit / (loss) excludes share-based compensation, fair value change of preferred shares and finance cost relating to issuance of preferred shares 19

20 Adjusted Net Margin Analysis % (2) 30 (3) (5) 20 (4) 10 0 Adjusted Net Margin (1H'12) Increase in Cost of Revenue as % of Revenue Increase in R&D Expenses as % of Revenue Increase in S&M Expenses as % of Revenue Increase in G&A Expenses as % of Revenue Adjustment for Increase in SBC as % of Revenue Others Adjusted Net Margin (1H'13) (1) (1) Note 1. Adjusted net profit excludes share-based compensation, fair value change of preferred shares and finance cost relating to issuance of preferred shares 20

21 Appendix A: Additional Company Information

22 Income Statement Summary RMB MM H 12 1H 13 Revenue % YoY Growth N.A. 304% 102% N.A. 65% Game Development % of Revenue 52% 66% 70% 67% 66% Game Publishing % of Revenue 48% 34% 30% 33% 34% Gross Profit % Gross Margin 42% 82% 90% 91% 89% Adjusted EBITDA (1) (39) % EBITDA Margin (41%) 37% 38% 45% 35% Operating Profit (40) % Margin (43%) 11% 37% 44% 29% Adjusted Net Profit (2) (40) % Adjusted Net Margin (42%) 30% 31% 36% 27% Net Profit (40) (243) % Net Margin (42%) 5% 28% 35% (42%) Notes: 1. Adjusted EBITDA excludes share-based compensation 2. Adjusted net profit excludes share-based compensation, fair value change of preferred shares and finance cost relating to issuance of preferred shares 22

23 Selected Balance Sheet Items RMB MM H 13 Cash and Cash Equivalents (1) Trade Receivable Other Assets Total Assets Trade Payable Deferred Revenue (2) Other Payables and Accruals Convertible Redeemable Preferred Shares Other Liabilities Total Liabilities ,010 Total (Deficit) / Equity (20) 95 (137) (342) Total Equity and Liabilities Receivable Days Payable Days Notes: 1. Including short-term investment 2. Including both current and non-current deferred revenue 23

24 Post-IPO Corporate Structure Post-Greenshoe (1) Kevin Wang Kai Huang Dong Liao Tao Yang Jieguang Zhuang TA Associates (Cayman) Qiming (Cayman) Ignition (Delaware U.S.) Public Investors 16.65% 7.17% 11.12% 0.80% 15.82% 10.47% 3.01% 0.92% 34.04% Forgame Holdings Limited (Cayman) % Foga Tech Limited (HK) % Offshore Ledong Technology Limited (HK) % PRC Guangzhou Feidong Software Technology Co., Ltd Contractual Arrangements PRC Operational Entities Reputable Private Equity / Venture Capital Shareholders Notes 1. Assuming pre-ipo options are not exercised 24

25 Disclaimer By attending this presentation, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by representatives of Forgame Holdings Limited (the Company ) for use in presentations by the Company at roadshow presentation held in connection with the proposed initial public offering of the Company. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither the Company, the underwriters, nor any of their respective affiliates, directors, officers, employees, agents, advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this presentation, which neither the Company nor its advisors or representatives are under an obligation to update, revise or affirm. The information communicated in this presentation contains certain statements that are or may be forward looking. These statements typically contain words such as "will", "expects" and "anticipates" and words of similar import. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Any investment in securities issued by the Company will also involve certain risks. There may be additional material risks that are currently not considered to be material or of which the Company and its affiliates, directors, officers, employees, agents, advisors or representatives are unaware. Against the background of these uncertainties, readers should not rely on these forward-looking statements. None of the Company, the underwriters, nor any of their respective affiliates, directors, officers, employees, agents, advisors or representatives assumes any responsibility to update forward-looking statements or to adapt them to future events or developments. This presentation and the information contained herein do not constitute or form part of any offer for sale or issuance of or solicitation or invitation of any offer to buy or subscribe for any securities of the Company. This presentation and the information contained herein may not be reproduced in any form or redistributed in any manner to any other person, in whole or in part. In particular, neither the information contained in this presentation nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in the United States, PRC, Canada, Australia, Japan, Hong Kong or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of U.S. or other national securities laws. No money, securities or other consideration is being solicited, and, if sent in response to this presentation or the information contained herein, will not be accepted. No invitation is made by this presentation or the information contained herein to enter into, or offer to enter into, any agreement to purchase, acquire, dispose of, subscribe for or underwrite any securities or structured products, and no offer is made of any shares in or debentures of a company for purchase or subscription. The securities of the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered, sold or delivered within the United States or to U.S. persons absent registration under or an applicable exemption from the registration requirements of the Securities Act. By reviewing this presentation, you are deemed to have represented and agreed that you and any customers you represent are either (a) a qualified institutional buyer (within the meaning of Rule 144A under the Securities Act), or (b) are outside of the United States. You are also deemed to have represented and agreed that you and any customer you represent are professional investors as defined in the Securities and Futures Ordinance (Cap 571 Laws of Hong Kong) and any rules made under that Ordinance. This presentation and the information contained herein are strictly confidential, are being furnished to you solely for your information. 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