Azerion publishes Interim Unaudited Financial Results Q4 2024 and Preliminary Unaudited Financial Results Full Year 2024

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Strong Platform performance driving profitability

Highlights of FY and Q4 2024

Our FY 2024 performance reflects the year long focus on efficiency and profitability driven by continued investment in the advertising platform: 

• FY 2024 Revenues up 13% from € 486.7 million¹ to € 551.2 million
• FY 2024 Adjusted EBITDA up 21% YoY from € 62.2 million¹ to € 75.1 million

Specifically in Q4 2024, we focused on driving synergies and eliminating redundant costs in the advertising platform: 

• Q4 2024 Adjusted EBITDA up 14% YoY from € 26.4 million to € 30.1 million 
• Core segment Platform outperformed the group with Adjusted EBITDA up 15% from € 22.8 million in Q4 2023 to € 26.2 million in Q4 2024
• Maintained Q4 2024 Revenues at € 168 million (-2%) while integrating and reorganising 2022 and 2023 acquisitions in order to phase out low margin revenues and focus on increased profitability

At the same time we used the last quarter to strengthen our position through new partnerships, acquisitions and further financing:

• Signed 90 new publishers and connected 3 additional SSPs and DSPs to expand our digital audiences across Europe and the Americas and further integrated our publisher monetisation tool OneFMS across regions.
• Finalised the acquisition of Goldbach Austria GmbH, one of the foremost digital and linear advertising brokers in the DACH region providing Azerion with additional digital out of home footprint and an annual revenue run rate of over € 20 million.  
• Entered new partnerships with Produpress in Belgium and Moneytizer in France to enrich the unique content and audiences that we make available for brands and agencies.
• Successfully completed the placement of additional bonds for an amount of € 50 million under Azerion's existing Senior Secured Callable Floating Rate Bond framework of € 300 million.

In addition, we further invested in our platform's multi-cloud infrastructure and AI capabilities:

• Added Huawei as cloud partner alongside AWS and Google in our Azerion multi-cloud setup reducing our reliance on single cloud vendors and decreasing our total cost of ownership.
• Migration of Eniro to the Azerion multi-cloud bringing them higher quality, lower latency service and annual cost savings of over € 1.5 million once fully implemented.
• Deployed our latest version of AI enhanced creative performance benchmark and outcome intelligence tools helping our advertisers and our operators to better understand which ads work best for various audiences in different circumstances and allowing for machine optimisation of campaigns.

¹ (excluding the divested social card games portfolio)

Selected KPIs

Financial Results - Azerion Group N.V.

in millions of €

¹⁾2023 figures for Premium Games contain results of the social cards game portfolio that was divested in Q3 2023. For detailed split of Premium Games results please refer to respective section below.

Message from the CEO 

Q4 was a strong quarter for us, marked by a clear focus on profitability. By maintaining operational discipline and executing on our strategic priorities, we successfully met our full-year 2024 guidance. This achievement reflects our commitment to sustainable growth and value creation for our shareholders.Throughout the year, we have dedicated significant time and resources to building an ecosystem that truly supports European publishers. Our platform empowers them to create engaging content, monetize effectively, and manage their resources with greater predictability. By fostering a high-performance environment, we are enabling European publishers to thrive in an increasingly competitive digital landscape by giving them a truly European choice.

Looking ahead, we continue to see AI as a major opportunity to drive further innovation and efficiency. Managing over 250,000 auctions per second gives us a unique vantage point to leverage data at scale. We have developed generative AI advertising solutions that enhance campaign performance, while our latest AI-powered creative performance benchmarks and outcome intelligence tools are delivering valuable insights to our partners. These advancements position us at the forefront of AI-driven advertising, helping our customers achieve better results with greater precision thanks to a long history of machine learning at the core of our platform.

At the same time, we also see an increasing number of opportunities to accelerate our growth through strategic partnerships and acquisitions. We have built a strong pipeline of actionable opportunities and are well-positioned to execute on them. Stay tuned to hear more about our expansion through partnerships throughout this year, alongside the continued deployment of our AI platform.

- Umut Akpinar

Financial overview

Revenue

Q4 2024

Revenue for the quarter amounted to € 168.0 million, down (2.2)% from € 171.8 million in Q4 2023, mainly driven by lower consumer spending in AAA game distribution. 

FY 2024

Revenue for FY 2024 amounted to € 551.2 million, up 13.3% from € 486.7 million in FY 2023 excluding the social card games portfolio divested in Q3 2023, mainly driven by higher advertising spend across the Platform Segment, particularly in Direct Sales and the integration of past acquisitions. 

Revenue was up 7.0% from € 515.0 million in FY 2023 including the revenue from the social card games portfolio of € 28.3 million in FY 2023.

Earnings 

Q4 2024

Adjusted EBITDA for the quarter was € 30.1 million compared to € 26.4 million in Q4 2023, an increase of 14.0% driven by improved performance in both Platform and Premium Games segments. Platform increase was largely due to the mix of Advertising Platform Revenue, increased share of Direct Sales and an increasingly efficient delivery operation. The Premium Games result was driven by the ongoing strong performance of Habbo Hotel Origins and product development across social casino and other metaverse titles, as well as further consolidation and integration efforts resulting in improved operational performance.

The operating profit for the quarter amounted to € 7.1 million, compared to a profit of € 6.1 million in Q4 2023, mainly due to the successful integration of acquisitions and the subsequent synergies and cost reductions that were realised in the Platform segment.

FY 2024

Adjusted EBITDA in FY 2024 was € 75.1 million compared to € 62.2 million in FY 2023 excluding the divested social card games portfolio, an increase of 20.7% driven by higher advertising spend across the Platform Segment and improved performance of Premium Games, specifically metaverse titles due to the release and ongoing strong performance of Habbo Hotel Origins and product development across the social casino titles, plus efficiencies from the integration of previous acquisitions.. 

Adjusted EBITDA in FY 2024 was up 4.5% from € 71.9 million in FY 2023 including the contribution from the social card games portfolio of € 9.7 million in FY 2023.

The operating loss in FY 2024 amounted to € (2.4) million, compared to € (8.2) million in FY 2023 (excluding gain on the sale and the result of the social card games portfolio of € 81.0 million), driven by increased Platform revenue and contribution from Direct sales, improved performance of Premium Games, specifically metaverse titles due to the release and ongoing success of Habbo Hotel Origins and product development across the social casino titles plus efficiencies from optimisation and consolidation efforts, and notwithstanding the one-off increase in operating expenses related to the settlement of a commercial dispute and renegotiation of contingent consideration terms for one of the acquisitions.

Cash flow

Q4 2024

Cash flow from operating activities in Q4 2024 was an inflow of € 10.0 million, mainly due to strong operating profit after cancellation of non-cash items of € 22.5 million, offset by movements in net working capital reflecting an increase in trade and other payables of € 4.9 million and an increase in trade and other receivables of € (7.6) million, net € (8.3) million paid in interest and € (1.2) million paid in income tax. 

Cash flow from investing activities was an outflow of € (18.2) million, due to payments for tangible and intangible assets of € (6.5) million and net cash outflow on acquisition of subsidiaries of € (11.7) million. 

Cash flow from financing activities was an inflow of € 31.5 million, mainly due to net proceeds in the amount of € 34.5 million (net of transaction costs) from additional bonds placed under the existing Senior Secured Callable Floating Rate Bond framework offset by repayments of external borrowings and the principal portion of lease liabilities amounting in total to € (3.0) million.

FY 2024

Cash flow from operating activities in FY 2024 was an inflow of € 7.0 million, mainly due to strong operating profit after cancellation of non-cash items of € 52.6 million, offset by movements in net working capital reflecting a decrease in trade and other payables of € (32.5) million and a decrease in trade and other receivables of € 19.9 million, utilisation of provisions of € (3.1) million, net € (25.7) million paid on interest and € (4.2) million paid in income tax. 

Cash flow from investing activities was an outflow of € (36.8) million, mainly due to payments for tangible and intangible assets of € (20.8) million and net cash outflow on acquisition of subsidiaries of € (27.7) million, partly offset by the receipt of net deferred consideration for the sale of social card games portfolio in amount of € 11.2 million. 

Cash flow from financing activities was an inflow of € 80.9 million, mainly due to net proceeds in the amount of € 92.1 million (net of transaction costs), consisting of € 82.7 million from additional bonds placed under the existing Senior Secured Callable Floating Rate Bond framework and a Revolving Credit Facility of € 9.4 million, offset by repayments of external borrowings and the principal portion of lease liabilities amounting in total to € (11.0) million.

Capex

Azerion capitalises development costs related to the internal development of assets, a core activity to support innovation in its platform. These costs primarily relate to developers' time devoted to the development of the platform, games and other new features. In Q4 2024 Azerion capitalised € 4.8 million, equivalent to 19.2% (Q4 2023: € 3.4 million, equivalent to 12.4%) of gross personnel costs excluding restructuring provision expense. In FY 2024 Azerion capitalised € 16.2 million, equivalent to 16.0% (FY 2023: € 17.5 million, equivalent of 16.2%) of gross personnel costs excluding restructuring provision expense.

Financial position and borrowing 

Net interest-bearing debt^*) amounted to € 203.8 million as at 31 December 2024, mainly comprising the outstanding bond loan with a nominal value of € 265 million (part of a total € 300 million framework) and lease liabilities with a balance of € 19.4 million less the cash and cash equivalents position of € 90.6 million.

^*)As defined in the Terms & Conditions of the Senior Secured Callable Floating Rate Bonds ISIN: NO0013017657. Please also refer to the Definitions section and the notes of this Interim Report for more information.

Platform Segment

Our Platform segment includes our digital advertising activities, AAA Game Distribution (formerly referred to as e-commerce), Casual Game Distribution (being the operation and distribution of casual games) and Azerion Sports. The Platform segment generates Revenue mainly by displaying digital advertisements in both game and general content, as well as selling and distributing AAA games. Advertisers are serviced through two models: i) Direct sales, which involve a direct engagement between Azerion's commercial teams and advertisers or their agencies in the placement of digital advertisements, and ii) Automated auction sales in which advertising inventory is purchased through the open market. Platform is also integrated with parts of our Premium Games segment, leveraging inter-segment synergies.

Selected business highlights in Q4 2024 include:

• Azerion rated as the leading advertising network in France by Médiamétrie in collaboration with NetRatings.
• 90 new publishers signed and launched including tuttocampo.it and allermedia.se providing greater reach for digital advertising.
• Eniro has deployed our Full Monetisation Solution which we are continuing to roll out across all our regions, including Italy in Q4 2024.
• Azerion Intelligence launched enabling new demographic segments in the Azerion DMP.
• Azerion DMP is now integrated with Magnite and OpenX SSPs and our audiences for CTV are available via Pubmatic SSP.
• Launched Smart AI Curation in the Azerion Marketplace further improving the ability to create custom audiences.
• Azerion Casual Games Distribution expanded its reach in Q4 by onboarding 40 new publishers, including third-party channels such as Samsung Instant Plays. By the end of the quarter, its casual games portfolio exceeded 21,000 titles, demonstrating steady year-over-year growth

Platform - Selected Financial KPIs

Financial results - Platform

In millions of €

Total Platform Revenue of € 153.2 million in Q4 2024, compared to € 157.7 million in Q4 2023, a decrease of (2.9)% mainly due to lower revenues in our AAA Game distribution. Total Platform Revenue of € 497.3 million in FY 2024, an increase of 13.7% compared to € 437.4 million in FY 2023, mainly due to growth in advertising revenue from Direct sales.

Advertising Platform Revenue of € 126.3 million in Q4 2024, almost flat compared to the € 126.0 million in Q4 2023, mostly the result of an offset between growth in the direct business and the integration of revenues from acquired businesses. In Q4 2024, Azerion's Direct sales contributed approximately 70% of Platform advertising revenue, with the balance provided by Automated auction sales. FY 2024 Advertising Platform Revenue came to € 412.3 million, up 18.3% compared to € 348.6 m in 2023.

In Q4 2024, AAA Game Distribution generated Revenue of € 26.9 million as compared to € 31.7 million in Q4 2023, a decrease of approximately (15.1)% due to fewer high-profile AAA game releases in Q4 2024 (for example Concord™ by PlayStation didn't get the consumer traction Sony expected and was subsequently pulled from 3rd party distribution) and optimising towards profitability rather than revenue which meant that the business sold smaller but higher margin titles.  In Q4 2024, AAA Game Distribution Revenue represented 17.6% of total Platform Revenue, as compared to 20.1% in Q4 2023. 

Total Platform Operating Profit of € 7.2 million in Q4 2024, compared to € 5.6 million in Q4 2023, a significant increase of 28.6% largely due to the successful integration of acquisitions and the subsequent synergies and cost reductions that were realised. Total Platform Operating Loss of € (1.7) million in FY 2024, compared to € (2.0) million in FY 2023, an improvement largely due the aforementioned results of our efforts to integrate acquisitions, create synergies and reduce costs throughout the year. 

Total Platform Adjusted EBITDA of € 26.2 million in Q4 2024, compared to € 22.8 million in Q4 2023, an increase of 14.9% largely due to the mix of Advertising Platform Revenue, increased share of Direct Sales and an increasingly efficient delivery operation. Total Platform Adjusted EBITDA of € 62.4 million in FY 2024, compared to € 53.2 million in FY 2023, an increase of 17.3% mainly as a result of growth in advertising revenue from Direct sales and the integration of previous acquisitions.

Advertising - Selected Operational KPIs

Advertising - Operational KPIs

¹⁾Average gross revenue per million processed ad requests across Azerion Platform is calculated by dividing gross advertising revenue (processed by Azerion's advertising auction and monetisation platforms) by a million advertisement requests processed by Azerion's advertising auction and monetisation platforms.

Note: Both Advertising Operational KPIs now include data relating to the Hawk acquisition as of Q4 2023.

The Average Digital Ads sold per Month increased to 14.1 billion in Q4 2024 from 13.9 billion in Q4 2023, an increase of 1.4%, reflecting the Platform's demand side growth due to the integration of past acquisitions and the consolidation of Azerion's monetisation technology into a single scalable media buying platform. 

The Average Gross Revenue per Million Processed Ad Requests across the Azerion Platform in Q4 2024 was € 24.3, compared to € 34.5 in Q4 2023, a decline year on year as we onboarded several high volume but relatively low revenue publishing partners in Q4 2024.   

Premium Games Segment

Since the end of Q3 2023, the Premium Games segment has consisted of social casino games and metaverse games. Azerion completed the sale of its social card games portfolio to Playtika Holding Corp. on 28 August 2023 and its contribution to the Premium Games segment ceased at that date. The segment generates revenue mainly by offering users the ability to make in-game purchases for extra features and virtual goods to enhance their gameplay experience. This segment aims to stimulate social interaction among players and build communities, offering an extended value proposition to advertisers and generating cross-selling opportunities with the Platform segment. 

Selected Q4 2024 business highlights

• Habbo Origins revenue has continued to progress several months after its release demonstrating solid long term potential and we have released new features such as Boom, a new game within Habbo Origins, which is intended to increase user engagement.
• ⁠New releases and packages for players of our Social Casino games such as dynamic bet sizes, bet roulette and Holiday themed collections.

Premium Games - Selected Financial KPIs

Financial results - Premium Games

In millions of € 

Revenue of € 14.8 million in Q4 2024, as compared to € 14.1 million in Q4 2023, an increase of 5.0%, mainly driven by the increased number of paying users in metaverse titles due to the ongoing strong performance of Habbo Hotel Origins combined with new Social Casinos sale features, improved discount strategies and increased partner user acquisition spend. Revenue was € 53.9 million in FY 2024, as compared to € 49.3 million in FY 2023 (excluding social card games), an increase of 9.3%, driven by social casino and metaverse performance and the factors previously described for Q4 2024, partly offset by the sale of Woozworld at the start of January 2024 (totaling € 1.7 million Revenue in FY 2023).

Adjusted EBITDA of € 3.9 million in Q4 2024, compared to € 3.6 million in Q4 2023, an increase of 8.3%, mainly driven by improved performance from metaverse titles due to the ongoing strong performance of Habbo Hotel Origins, consolidation and integration efforts resulting in improved operational performance and product development across the social casino and other metaverse titles. Adjusted EBITDA of € 12.7 million in FY 2024, as compared to € 9.0 million (excluding social card games), an increase of 41.1% compared to FY 2023 reflecting the increased performance of our metaverse titles due to the launch of Habbo Hotel origins, consolidation and integration efforts resulting in improved operational performance and product development across the social casino and other metaverse titles offset by the shift in new user generation to mobile in Azerion's social casino environment which has higher growth potential over time, but also higher transaction costs as compared to web.

Operating Loss of € (0.1) million in Q4 2024, compared to Operating Profit of € 0.5 million in Q4 2023, mainly driven by end of year adjustments in depreciation and amortisation.

Operating Loss of € (0.7) million in FY 2024, compared to € (6.2) million in FY 2023 (excluding social card games), an improvement once again reflecting the developments described for Adjusted EBITDA above.

Premium Games - Selected Operational KPIs

Premium Games - Operational KPIs

• The Average Time in Game per Day (min) decreased by (6)% in Q4 2024 to 89.3 minutes per day as compared to 95.0 minutes per day in Q4 2023 due to slightly shorter average game time in the newly released Habbo Origins title compared with the rest of the metaverse games.