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Solid Clouds hf. Investor Presentation 2023
8579_rns_2023-08-31_b484bb64-6351-4df3-8f24-d3e90b05b0d3.pdf
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SOLIDCLOUDS
Operational update and proposed share capital increase
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DOWNGOOD
CONFIDENTIAL
DMPTT
LEGAL DISCLAIMER
The presentation is prepared and provided for information purposes only in connection the Company's share capital increase. This presentation is based solely on public information on the Company and information from the Company itself.
The Company, and it's advisors as applicable, shall not be held responsible for the quality, reliability, or accuracy of the presentation. The Company, the Company's employees or it's advisors as applicable, shall not be held responsible for the information, forecasts or analysis that may be included in the presentation or the information provided in connection with it. Neither the Company nor it's advisors as applicable, assume any responsibility for future developments and / or operations will be in line with the presentation. Neither the Company, nor it's advisors as applicable, shall by the delivery of the presentation, or in any other way, be deemed to have assumed any responsibility regarding the information provided by the presentation, the criteria on which the presentation is based, or that the results of the presentation are in any way comprehensive, fair and complete. Furthermore, the Company shall not be held responsible if the content of the presentation proves to be incorrect in any way in this connection.
All recipients of this presentation are strongly encouraged to carry out their own analysis of the events and circumstances of the presentation, as well as the Company, and the measures described in the presentation, and to independently evaluate these aspects on the basis of such analysis.
Recipients of this presentation are not allowed to share information from the presentation with third parties or make copies of it without a written consent from the Company.
Recipients of this presentation shall be deemed to have accepted these terms by accepting this presentation.
SOLIDCLUUDS
WHERE GAMING MEETS GROWTH
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COMPARISON
COMPONENTS
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Solid Clouds was founded in Reykjavik, Iceland, and presently boasts a cohesive and experienced team of approximately 30 team members with game releases across multiple genres and platforms. Having released its first PC game in 2020, the company is close to Scaling its second game, Starborne FRONTIERS.
Starborne FRONTIERS entered its soft launch phase in February 2023 and has since then had multiple updates and significant polish. Starborne Frontiers has outstanding graphics and gameplay which is garnering notable attention, with promising reviews attesting to its potential.
Solid Clouds has built its own technological framework enabling accelerated production times, which significantly reduces development costs and other associated risk factors for its future games.
SOLIDCLUDS
GLOBAL GAMING MARKET
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After realising significant growth in recent years, the global gaming market size is on track for $188Bn in 2023, targeting $211Bn by 2025, exceeding the combined revenues of the TV, film and music industries.
Revenues from in-game spending are expected to generate a staggering $90Bn in 2023 covering 97% of the mobile segment’s global revenues.
Video game players in the world in 2023 were about 3.4BN and that number is projected to increase to 3.8BN in 2027, where mobile gamers are expected to account for the majority of these new players.
Solid Clouds offers free to download mid-core games for Mobile and PC focused on in-game spending, targeting North America, Europe, and Latin America.
Solid Cloud’s total addressable market is estimated to be:
10-15BN USD
Resource: Newzoo.com
SOLIDCLAUDS
STARBORNE: FRONTIERS
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COMMANDS
COMMANDS
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Frontiers is a mid-core tactical hero collector where players assemble and upgrade fleets to explore and conquer the Starborne universe. Players engage in battles with strategic and skillful gameplay on a multiplatform experience, which plays well on both PC and Mobile.
Frontiers' visual style is designed for a Western audience in Gacha style monetization and progression systems, that have been popularized and well established in games like Summoners Wars, Genshin Impact and Raid: Shadow Legends which are among the world's leading mobile games in terms of popularity and revenue generation.
User feedback on recent game updates has been positive, leading to a notable increase in Google Play ratings now at 4.5 with 1.040 votes, where the majority of marketing spend is deployed. Current IOS APP store rating is at 4.6 with 180 votes.
SOLIDCL OUDs
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CATHYRANOS
COMPTENED
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SOFT
DEVELOPMENT PROGRESS
Soft launch started in February 2023 where the focus was to get user data on both Apple and Android devices.
Many of the key features are completed and the remaining ones are well on their way.
We are now in the Stabilize phase which is the final development stage. In this phase we are adding new game modes, live operations systems and more monetization systems. These features will enable us to keep players playing for the long run and maximize Starborne FRONTIERS revenue potential.
Scaling will begin with a large strategic and targeted marketing campaign after the completion of the Stabilize phase. Our marketing funnel is set to be optimized and ready to scale, where initially in the Scaling process we aim to increase our daily installs tenfold.
SOFT LAUNCH LEARNINGS
integrated continuously until Scaling, to optimize monetization when marketing efforts start
COMPLETED
- Frontiers soft launched
- Store integrations
- Visual quality achieved
- Server scalability
- Support tools
IN PROGRESS
| Progression layers | 85% |
|---|---|
| Art production | 10% |
| Onboarding optimization | 75% |
| Game balance | 70% |
| Game content | 60% |
| Marketing material | 40% |
SOLIDCLOUDS
图
STARBORNE FRONTIERS KPI'S AND PLAYER STATS
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CONFERENCE
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NUMBER OF PLAYERS
57,670
Started tutorial
22,020
Completed tutorial
TIME SPENT
Total play time: 237,837 H
Average sessions per active player*: 2.57
Average daily session length per active player*: 39.6 MIN
*A player that has logged in at least once before.
Most games' average session length is around 20 min
CONVERSION RATE
First buy: 3.44%
Average daily: 3.13%
Total number of monetary transactions: 8,160
Average numbers since the start of the soft launch on the 13th of February 2023, last updated 20th August 2023.
GEOLOCATION OF PLAYERS
North America 66%
Europe 17%
Asia 9%
Latin America 3%
Other 5%
0.00% 20.00% 40.00% 60.00% 80.00%
TOTAL REVENUE:
$74,000.00
SOLIDCLONDS
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GRAPHIC
CONTINUED
DMPTY
PROMISING TIMES AHEAD
Starborne FRONTIERS already has highly engaging gameplay that readily converts new players into paying customers.
Additional content for long term player retention is being developed with a clear path towards the full scale marketing efforts of Starborne FRONTIERS.
A PC version is scheduled to go live in Q1 next year enabling broader accessibility and improving customer acquisition efforts while reducing costs associated with third-party vendors like Apple and Google.
STARBORNE FRONTIERS will be ready for Scaling in Q2 2024
The technical framework and team experience has grown significantly during the development of Starborne FRONTIERS and we are equipped and ready to explore new opportunities once Starborne FRONTIERS enters into live operation.
图
1
1
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CONFIDENCE
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2023
FINANCIAL HIGHLIGHTS
Solid Clouds has invested significantly in recent years, with capitalized development costs close to ISK 1BN on 30 June 2023. With the proposed share capital increase of up to ISK 600 million fully invested, Solid Clouds is sufficiently capitalized towards the full Scaling of Starborne FRONTIERS in Q2 2024.
| Figures in ISK millions | 2021 | 2022 | 1H 2023 | 2023 E | 2024 E |
|---|---|---|---|---|---|
| Operating revenues | 14 | 12 | 10 | 27 | 890 |
| Grants and R&D tax credits | 102 | 112 | 4 | 135 | 130 |
| Total revenues | 116 | 124 | 14 | 161 | 1020 |
| Development cost | 286 | 351 | 179 | 362 | 400 |
| Other operating expenses | 32 | 44 | 32 | 68 | 750 |
| Total operating expenses | 318 | 365 | 211 | 430 | 1150 |
| Financial income | 1 | 12 | 52 | ||
| Cash in year end | 567 | 310 | 119 |
The company estimates following substantial marketing efforts during scaling that total revenues will amount to approximately 800 million in 2024.
Solid Clouds already has a R&D tax credit approved from Rannis for 2022, that will be reimbursed in 2H 2023.
Game revenues start to take off
- Scaling starts generating revenues in April.
Marketing spend strategy
- Large scale marketing effort when Scaling starts in 2024.
- Marketing cost is front loaded. Each dollar spent on marketing is expected to generate game revenues over longer time periods.
- All excess generated revenues are expected to be spent on further marketing efforts during 2024.
Figures in ISK millions
30.06.2023
| Assets | Pre-increase | Post-increase |
|---|---|---|
| Capitalized development costs | 993 | 993 |
| Rental properties | 7 | 7 |
| Income tax credit | 117 | 117 |
| Total fixed assets | 1117 | 1117 |
| Receivables | 7 | 7 |
| Other receivables | 7 | 7 |
| Cash and cash equivalents | 119 | 719¹ |
| Total current assets | 133 | 733 |
| Total assets | 1250 | 1850 |
| Total liabilities | 43 | 43 |
| Total equity | 1207 | 1807 |
| Total equity and liabilities | 1250 | 1850 |
¹Excluding transaction costs and other related costs to the proposed share capital increase
For further information, please see the full financial statement for 1H 2023 at Solid Cloud's investor relations website.
SOLIDCLAUDS
23 03
15.0
COMPARABLE PEER GROUP
Trading multiples from 30.8.2023
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| Name | Description | Market Cap. Mo./SX | EV / Sales |
|---|---|---|---|
| TIER I COMPARABLES | |||
| VESPA Inc. | Engages in the gaming business worldwide. | 2.6 | 12.9x |
| Gliwi Games AB | Develops and publishes games for mobile platforms in Sweden. | 1.6 | 3.2x |
| Red Dev Studio S.A. | Develops games for mobile and non-mobile platforms. | 0.8 | 30.4x |
| Boom8it S.A. | Develops and publishes computer games. | 5.1 | 0.4x |
| Median of Tier 1 comparables | 8.0x | ||
| Average of Tier 1 comparables | 11.7x |
TIER 2 COMPARABLES
| Incuio S.A. | Develops games worldwide. The company offers desktop, console oriented, and mobile games. | 1.2 | 1.5x |
|---|---|---|---|
| Ovid Works S.A. | Develops video games for personal computers, consoles, and virtual reality. | 0.1 | 4.5x |
| Duality S.A. | A game development studio, produces and publishes video games for PC/steam platforms. | 0.2 | 3.1x |
| PopReach Corporation | Operates as a multi-platform technology company. | 6.5 | 0.7x |
| Median of Tier 2 comparables | 2.3x | ||
| Average of Tier 2 comparables | 2.4x |
TIER 3 COMPARABLES
| The Dust S.A. | Produces and distributes games for electronic devices. | 1.0 | 8.5x |
|---|---|---|---|
| ECC Games S.A. | Operates as a game development studio. It creates automotive games. | 0.6 | 6.0x |
| Image Power S.A. | Engages in the production, publishing, and marketing of games for desktop computers worldwide. | 0.6 | 17.5x |
| ManyDev Studio SE | Engages in the gaming business in Poland. | 0.6 | 60.1x |
| Jujubee S.A. | Engages in the production and sale of video games in Poland. | 0.3 | 10.4x |
| Polyslash Spółka Akcyjna | Engages in the producing and publishing of computer games worldwide. | 0.3 | 12.6x |
| Atomic Jelly S.A. | Develops and publishes computer games. | 0.2 | 1511x |
| Detalion Games S.A. | Operates as game development company in Poland. | 0.2 | 170.2x |
| StemGen, Inc. | Engages in the community offering and management of online competitions in the motorsports arena. | 0.6 | 269.1x |
| Virtual Interactive Technologies Corp. | Operates as a next-generation game and metaverse developer | 0.4 | 26.4x |
| E-Play Digital Inc. | Develops and operates broadcast and live video technologies in Canada. | 0.1 | 53.8x |
| Gaming Technologies, Inc. | Engages in online gaming business in Mexico. | 0.1 | 20.6x |
| Median of Tier 3 comparables | 23.5x | ||
| Average of Tier 3 comparables | 66.0x |
[ ]
Median of Tier 1,2,3
11.3x
Average of Tier 1,2,3
26.7x
Resource: S&P Capital IQ
SOLIDCLUUDS
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DOWNS
COMPOUND
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INVESTMENT OPPORTUNITY
CURRENT MARKET SIZES
All numbers in millions and accounting for a full use of potential share capital increase
| 2023 E | 2024 E | |
|---|---|---|
| Number of shares POST | 270 | 270 |
| Price per share ISK | 7.0 | |
| Market capitalization POST ISK | 1,889 | |
| Net interest bearing debt | -76 | |
| Enterprise value (EV) | 1,813 | |
| Revenues - estimated | 161 | 890 |
| EV/Sales - estimated | 11.3x |
IMPLIED VALUATION BASED ON PEERS
All numbers in millions and accounting for a full use of potential share capital increase
| 2023 E | 2024 E | |
|---|---|---|
| Peer group EV/Sales | 11.3x | |
| Implied EV/Sales forward | 7.0x | |
| Implied Enterprise value (EV) | 6,230 | |
| Implied Net interest bearing debt | +76 | |
| Implied Market capitalization | 6,306 | |
| Implied Price per share | 23.9 | |
| Implied Money multiple | 3.4x |
This slide is based on estimated financial information and public trading multiples. Potential investors are strongly encouraged to carry out their own analysis and valuation.
SOLIDCLUUDS
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USE OF PROCEEDS
The future of the gaming market is exciting, demonstrating strong growth in an ever-growing sector. Solid Clouds has consistently received positive feedback from users, representing the accomplishments achieved and driven by the company's experienced team.
With the proposed share capital increase in hand, the funds will be used to generate revenues as they play a key role in the marketing efforts during Scaling. In addition, the funds will support the final stages of development of Starborne FRONTIERS by the creation of additional game content, ensuring player retention and achieving our revenue potential.
STRONG FOUNDATION
supports future success
LARGE and GROWING market
Business model with HIGH MARGIN POTENTIAL
FUNDING OF SOLID CLOUDS
SOLIDCLOUDS
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APPENDIX
SOLIDCLONDS
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CATHYRANOS
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POTENTIAL TAX BENEFITS
Related to the issuance, individuals that are residents in Iceland for tax purposes and invest in Solid Clouds are applicable for tax deduction from their income tax/capital gains base of up to 75% of their investment.
The minimum investment is 300 thousand and the maximum deductible investment is ISK 15 million per individual, not legal entities.
For tax benefits to be valid investors need to hold on to the shares for at least three years. If not, the tax deduction is reversed with a +15% surcharge on the initial investment.
Investors are encouraged to seek assistance from tax specialists for further information. Other conditions from Iceland Revenue and Customs may apply.
See rules here: https://www.skatturinn.is/einstaklingar/tekjur-og-fradrattur/hlutabrefafradrattur/
See calculator here: Áhrif skattfrádráttar vegna hlutabréfakaupa í Solid Clouds – GRID
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COMPARABLE COMPANIES ANALYSIS
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COMPARABLE
COMPANIES
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From 180 companies in the interactive home entertainment sector
EV / EBITDA
Resource: S&P Capital IQ
SOLIDCLUUDS