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EUR274m
Research: TMT
Media and Games Invest (MGI) showed continued strong growth in Q321, with improving margins as the business scaled. Q321 net revenues rose by 80% to €62.9m, with 41% year-on-year organic revenue growth. Benefiting from operating leverage, adjusted EBITDA tripled to €19.0m as margins rose to 30% (Q320: 18%). In Q321, MGI placed a further €80m bond and, at 30 September 2021, had net interest-bearing debt of €172.8m, with leverage of 3.0x (2.5x on a pro forma basis). Management guidance is for FY21 revenues of €234–254m and adjusted EBITDA of €65–70m, which looks very achievable ahead of the seasonally strong Q4. Driven by sustained growth (guidance implies 70%+ growth for FY21), MGI trades at a justified premium to its European games peer group but at a material discount to its US adtech peers.
Written by
Media and Games Invest |
Q321 results, 41% y-o-y organic growth
Software & computer services |
Scale research report - Flash
18 November 2021 |
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Media and Games Invest (MGI) showed continued strong growth in Q321, with improving margins as the business scaled. Q321 net revenues rose by 80% to €62.9m, with 41% year-on-year organic revenue growth. Benefiting from operating leverage, adjusted EBITDA tripled to €19.0m as margins rose to 30% (Q320: 18%). In Q321, MGI placed a further €80m bond and, at 30 September 2021, had net interest-bearing debt of €172.8m, with leverage of 3.0x (2.5x on a pro forma basis). Management guidance is for FY21 revenues of €234–254m and adjusted EBITDA of €65–70m, which looks very achievable ahead of the seasonally strong Q4. Driven by sustained growth (guidance implies 70%+ growth for FY21), MGI trades at a justified premium to its European games peer group but at a material discount to its US adtech peers.
Media – starting to deliver on its platform promise
Q321 was the first quarter where media represented the majority (55%) of group revenues, following the acquisition of Smaato, completed on 1 September 2021. Benefiting from investment and increasing scale, despite the closure of the low-margin influencer platform, Q321 revenues grew 105% y-o-y to €34.8m. Adjusted EBITDA rose sixfold to €8.3m, a margin of 24% (Q320: 8%). As well as starting to integrate the acquisitions of Beemray and Smaato, Verve formed partnerships with LiveRamp (a bidding platform for addressable inventory) and Pixalate (a global ad fraud intelligence and marketing compliance platform). Management also enhanced Verve’s senior management team, with new co-CEOs and multiple senior hires.
Gaming – continuing with its proven formula
Gamigo recorded Q321 revenues of €28.1m, y-o-y growth of 56%. Adjusted EBITDA margins rose to 38% (Q320: 28%), partly reflecting the high-margin contribution from KingsIsle’s Wizard101, with Q321 adjusted EBITDA of €10.7m. Gamigo’s strategy remains to avoid high-risk development, preferring to acquire established games and licences. Having licensed Heroes of Twilight and Golf Champions in H121, gamigo licensed two more properties in Q321: Fantasy Town (an Asian mobile game signed for western audiences) and an as yet unnamed open world MMORPG. Existing title, ArcheAge, was sold back to the developer, with Atlas Rogues and Skydome discontinued following audience testing.
Valuation: Underpinned by market-leading growth
At the midpoint of management guidance (revenues of €244m and adjusted EBITDA of €67.5m), MGI is trading on c 15.2x EV/adjusted EBITDA and 4.2x EV/revenue in FY21e. This is at a premium to MGI’s European games peers, despite its superior growth rate, but at a material discount to its US adtech peers.
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Consensus estimates
Source: MGI accounts (historical figures), Refinitiv consensus (forecasts). Note: *EBITDA adjusted for one-off M&A and financing costs. |
Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
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Research: TMT
CREALOGIX is a leading, global digital banking engagement platform provider, based in Switzerland, offering front-end software solutions that enable ‘the digital bank of tomorrow’. The market is dynamic and fast-changing, with the group’s solutions used by traditional retail, private and commercial banks, as well as wealth managers that need to upgrade legacy systems to meet the challenge of digital banks. Traditional banks see the benefits of modular, customisable, single-platform solutions, offering lower maintenance and development costs, better content management and stronger security in a swiftly digitalising marketplace.