Next Games Corporation: Half-Year Report January-June 2017

NEXT GAMES CORPORATION COMPANY RELEASE 14 JULY, 2017 AT 8.00 EEST

This release is a summary of the half-year 2017 report. The complete report is attached to this release and available at http://www.nextgames.com/ng/reports/

Next Games Corporation, Half-Year 2017 Report: Revenue Grew by 52%, EBIT Profitable, Notable New Games in Development

January-June 2017 in Short:

• Revenue grew 52% to 19.5 euros (€12.8M)
• Profitability increased, gross margin percentage was 36% (16%)
• EBIT was 0.2 million euros (-€3,6M). Profitability was affected by listing expenses of 0.5 million euros, and depreciations of 0.3 million euros related to capitalized listing fees.
• The company started the development of a new game with a new license holder during the reporting period, and now has  three new games in development with three different license holders.
• The acquisition of Lume Games Oy was carried out in February 2017 and the acquisition brought in new technology expertise to the company. One of the three new games in the development pipeline is an innovative mobile game that utilizes location-based and augmented reality (AR) technology
• Development costs for the reporting period amounted to 1 million euros and increased towards the second quarter. The company does not capitalize game development costs

KEY FINANCIAL FIGURES:

Gross Bookings does not include deferrals related to sales.
Adjusted EBITDA is defined as operating profit, adjusted for depreciations, deferrals related to sales, licenses and commissions, as well as adjusted for listing expenses.

KEY OPERATIONAL METRICS:

Definitions related to key operational metrics can be found at the end of the report.

CHIEF EXECUTIVE OFFICER TEEMU HUUHTANEN:

Next Games' January-June 2017 growth continued strong, driven by The Walking Dead: No Man's Land game. Revenue grew by 52% compared to the same period last year and was at 19.5 million euros.

It is extremely important for Next Games as a game developer and publisher to create a strong and diverse portfolio of different products to support growth and decentralize risks. During January-June we have focused in strengthening our game portfolio for the years ahead. In June 2017, we announced our collaboration with Alcon Entertainment to create a mobile game for the Blade Runner movie franchise. In addition, we have commenced developing a new game with a new, third license partner and we will continue to develop the game previously in the pipeline.

By acquiring Lume Games we secured superior AR (Augmented Reality) and location-based technology expertise. The game, which has been in development throughout January-June, is heavily based on utilizing these technologies. We believe this innovative game will be a great opportunity for Next Games to become one of the pioneers in this category, as there is less competition in comparison in the category. Lume Games' employees have been successfully integrated into this game's development team.

Our new games are all based on three different notable international entertainment franchises, developed with three different license holders. We continue to actively negotiate new license agreements and are firmly on track executing our strategy of publishing at least one game per year, starting from 2018.

The Walking Dead: No Man's Land received new content and functionality updates during January-June 2017. During this period, Next Games' ARPDAU was 0.20 euros with a growth of 0.03 euros compared to last year. For the fifth year in a row, The Walking Dead is the most watched TV drama among the 18-49 year old demographic, an achievement no other TV drama has reached in the history of television. The fact that the show has 50% more viewers than the next biggest show in the US, describes the scale of the show's popularity well. This creates a great basis for continuing to develop The Walking Dead game.

Next Games has continued to successfully attract key talent and strategic expertise into the company. Next Games staff grew by 24 employees to 93 employees. New employees, including business development and marketing talent, were mainly recruited to reinforce the new games' development teams.

I am extremely satisfied with the industry-recognition we have received from esteemed organizations. Receiving the international Webby Award and the most valuable award in licensing business: LIMA International Licensing Award, further increases the company's visibility and brand recognition among our current and potential licensing partners. In Finland, Next Games was selected as the No 1. growth company by Finland's leading business media Kauppalehti.

STRATEGY AND BUSINESS OUTLOOK:

According to its strategy, Next Games focused in developing new games based on entertainment franchises, such as movies and TV series, and the development of their main product The Walking Dead: No Man's Land during the reporting period. The company also put significant effort behind negotiating new license agreements, which led to one new game entering the concepting and prototyping phase in addition to the two games already in development.

Next Games continues to actively partner with new license holders to strengthen its product portfolio and bring new products into development. The company's guidance on its outlook remains unchanged. Next Games aims to launch at least one game every year starting from 2018.

UPCOMING EVENTS:

3rd of November  - Q3 2017 Business Review

Additional information:

Saara Bergström
CMO
saara.bergstrom@nextgames.com
+358 (0)50 483 3896

Certified Adviser: Danske Bank A/S, Helsinki Branch, tel. +358 10 546 7937

Statements are made in this report, which describe, inter alia, the current beliefs and expectations of the management of Next Games regarding the future plans and objectives concerning future activities and goals of Next Games. All such statements involve risks and uncertainties, which may cause the achievements of Next Games to differ materially from what has been expressed or implied in such statements.

Next Games

Next Games (Helsinki Nasdaq First North: NXTGMS) is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead: No Man's Land redefine the way franchise entertainment transforms into highly engaging service-based mobile games. The Walking Dead: No Man's Land, based on the popular AMC TV series, has been downloaded over 16 million times, with the game mirroring, in near real-time, events as they occur in the show. Currently Next Games is working on three new games based on popular entertainment franchises including a mobile game for the extremely popular Blade Runner franchise and the Blade Runner 2049 movie. Next Games employs over 90 people and is based in Helsinki, Finland.www.nextgames.com