M&A Announcement

Jul 14, 2021

For the first part of this call, all participants will be in a listen only mode and afterwards there will be a question and answer session. Today, I'm pleased to present CEO, Remco Vestermann. Please begin your meeting. Thank you very much. Good afternoon. I would like to welcome all investors, analysts who are online, and we have also some special guests from the sellers in China. And I would like to start at Page 3 of the presentation with quickly introducing the presenters. But before that, a few words. Yes, 2021 is already now a special year for us. We did a very transforming transaction early in the year with Kingsisle. And we again do a transforming transaction, meaning that it's really substantial revenue and substantial EBITDA that we are doing by this acquisition, and we're really, really happy with this. We would like to, yes, guide you through the presentation. Company is called Smarter that we are acquiring. And we have Some backgrounds on the company, and we'll take you through the presentation. And at the end of the presentation, of course, there's time for questions. The presenters, Page 3, Today, we have 2, yes, let's say, specialists of the sector and who are running our media part, Verve. Verve is the media segment of Media and Games Invest, well, we have Camigo as the gaming segment. And on the Media side, it's Yonath Gjibutaro, Very experienced EdTech pioneer, I would say, many years in the industry, has worked before also in the gaming, electronic arts, Uplift and was the founder of Popnative, a company that we acquired roughly 2 years ago. He's the CPO of Firth Group, responsible for product and technology. Then we have also on the line Sambia Sandli, who has even more years of experience in the sector and also a long term veteran Worked before, he worked with us with InMobi, also with Opera, Ground Truth and also has, yes, a lot of experience in the sector. He's the CRO, so taking care of the commercial part of the Perth Group. Then we have, who know most people know already, Paul Ekcht, our CFO, who's with the company since 2018, Was previously worked in banking, done a lot of transactions and is with us now for a few years. And then myself, yes, Doing this now for a bit over 8 years, buying Gamigo and since then having prior buying build, building this company. Shareholders, I would not go into detail. You see that on the right side, but I would go over to the next page, Page 4. And here we, yes, have some headlines of the transaction. We will go more in detail on the next slides. But just to give you a rough overview, It's a highly accretive transaction. It will increase our EBITDA on a pro form a basis for 2020 by 29%. We are getting long term client relationships in, which means rising revenues, strengthening the qualities of earnings of the Media segment. The acquisition adds critical mass to MGI's Media segment via additional demand and supply. Demand are the advertisers, Supply are the people that have ads that they want to sell and substantial revenue synergies for our games part but also for our media part. And then, yes, last point, I think you know that we love to have long term recurring revenue streams. And also here, we talk about the SaaS play. So really, yes, a company that's having long term relationships, where basically all is done technology wise and repetitive. Yes. Who are they working for? You see below a few examples, the game sector, but also outside of the game sector, Several well known brand names. And on the right bottom side, you see some of the numbers or some of the financials that we expect for this year, and Paul will go into more detail. But we expect €39,000,000 of revenues for 2021, €30,000,000 EBITDA for 2021. They have shown a strong growth On a year on year basis, so that's also good. The company is growing, so we expect also further growth. And we're acquiring the company, and that's what we're really happy about, €40,000,000 which is a 10.7 EV EBITDA multiple, which is for acquiring a company in the ad tech sector an extreme good multiple. We are priring here in China where the multiples are a bit lower than they are. And I mean, in U. S, they are sky high. In Europe, they are also higher. But therefore, really happy with this. And taking into account the growth, the multiple will even be lower. We have Mr. Chen on the telephone. And, yeah, he speaks Mandarin fluently, which I don't do. That was also a bit of a challenge in the, how do you say it, in the negotiations. But this is Lia, who is also on the phone, is, yes, very experienced. She works with Smarter also for a long time and with Mr. Chen, And Shifu will say a few words in the names of the shareholders we're selling. Lia, over to you. Yes. Thank you, Renko. And, Yagun, first of all, we are very pleased that the deal with MGI is finally signed yesterday. And during the whole process, We are impressed by the professionalism of MGI team and the positive chemistry between both sides. As Mr. Sheng says, the sale of SMARTO to MGI is not only a successful conclusion to the investment for the existing shareholder of SMARTO, It is also the perfect opportunity for SMARTO to continue to grow and be successful in the long term. SmartHo has achieved RevCorp breaking growth in both revenue and probability in the first half of twenty twenty one. And with these achievements, we believe Smarto is now ready for its new chapter. And the Smarto team is Also very excited to be become part of MGI family and look forward to the tremendous synergies within the group. That's from my side, Remco. Thank you very much, Lija. And also from our side, it was really an extremely good process, very neutral. And, yes, it would be nice if all our M and A processes would go as smooth as this one. Then I would come to the next slide For the next part, and that's the introduction to SMARTO. And I would hand over to the next speaker. Thank you, Renko. Yonit here. Hi, everyone. So a quick introduction about SMARTO and what And the platform actually does. So it's an omni channel self serve monetization solution and an ad server. What does that mean? That means It offers monetization technology for publishers to maximize yield on their properties, basically maximize the ad spend, and that is managed through a self serve interface we're going to talk about More importantly, it's just a omni channel, although it started as mobile first and it reached significant scale Through the years, with a global footprint of more than 1,300,000,000 users on a monthly Basics. More important than the product or equally as important as the product is the strong team of around 1 150 employees, with most of them being mobile native, in, I would say, such a young industry, That's quite impressive to have most of the employees working in mobile from day 1, with With a certain percentage working in supply side for more than 10 years. Important to note is that it's a product Driven organization, what that means is that it tries to solve customer problems By introducing new products, new features that simplify their operations or increase their yield or solve Certain problems that the publisher might have or changes that they might face, and that is At no direct cost. So that's an important part of the business model. Now if we move into the next slide, A bit of the history of Smarto and how it got there. Smarto is actually one of the pioneers Mobile advertising on the supply side was founded in 2005 in Silicon Valley. And it soon launched its mobile supply side platform in 2006. And in 2012, the real time bidding ad exchange. Now we know that most of the advertising Runs through to programmatic pipes and real time bidding, but that was obviously not the case in the early 2000s. But in 2012, They became one of the first mobile real time exchanges. Then soon after, so the self serve interface for publishers have been launched, which is called the Smagl Publisher Platform or SPX. And soon after, as it reached scale and growth, we started collaboration With the largest companies in our sector such as Google, integration with AdMob and DoubleClick for Publishers or Google Ad Manager as it's called now, And with Amazon, with Amazon Publisher Services. It also developed, I think, around 2016, The self serve interface for demand partners, what that does is allows advertisers to choose the inventory Enrich, they want to access along themselves with this controls, which is actually quite a unique feature in the marketplace. So Ron, that time it got acquired by the Shanghai based fund, Quikou Investment Partnerships and its general partner, Shenzhen QS Fund Management, which we just heard the words from Naya. And so the notes from Mr. Shen. What's important is that it allows us to further develop and expand in the APAC, in the APAC region. And last but not least and more recent developments, As the platform evolved and matured, it starts focusing on automation and algorithms. And some of those include AI ML models for automated traffic creation, what that means is that Only the most valuable impressions are delivered to each of the advertisers or demand partners In an automated fashion without a need for manual control. So that's one part, Automation and machine learning. But the other part is also expanding horizontally into OTT and CTV and having one of The larger partners utilizing the full SaaS platform with over 150,000,000 subscribers. So a quick deep dive into the product overview. We mentioned it before as one of the core Part of Osmarter as a productive organization. But what's very important It's how easy it is for publishers, right, app developers, game developers to integrate the solution. So, of course, it's self serve, But as it includes, let's say, software development kits, SDKs and APIs, it's not always as straightforward. So what Smarter really did well is make the integration as smooth As frictionless as possible, then outside of the integration Comes the value creation. So we're talking about the unified marketplace. What this means is that on demand Competes in real time, in order on a server side option, in order to maximize yield. You might see this called header bidding or in app bidding. Smartho has its own version of it called the unified Marketplace. Now outside of that and talking continuing on the value creation part, Flexible formats, obviously publishers monetize with different ad units from banners to videos to native, which we're going to talk in a bit. But the idea is to offer a holistic solution that tailors to all of those formats. And yes, as I mentioned, as a product driven organization, it evolves to satisfy the publisher needs, Started with mobile, but then expanded across other channels that the publishers, game or app developers might be active in, Such as OTT and so on. And talking about publishers, maybe one part started. They are at the core of the Smarto platform, and I would say the Smarto business. There's a lot of tooling and automation being built, both for controls in terms of the demand, so advertisers spend And the type of demand and categories that can be advertised or not, but also reports And analytics in order to better understand which decision to be made in order to maximize yield. And that is, of course, supported By an experienced team, as we just discussed before, which is available actually on 20 fourseven. So, yes, publishers are at the core and they are the main customer Sure, Smato. Moving on to the next slide. A bit more details in terms of the formats. I did mention a few. What's important is that on the display, we have banners and interstitials. Display means Usually static or HTML creative that are being displayed in certain Starts both on mobile or on web in mobile web. Then that's followed by In stream or out stream video, what that means, means that some could be within a video. So as you watch the video on a TV screen or connected TV screen, the video will be interrupted at some point by a video that's called in stream or for example as you browse the page When you browse the content somewhere in between, you will see a video ad That could be autoplay. And that's just mainly on web. So more specifically for games, you will have rewarded video and native video as well. The percentage of revenues are mostly on display. We're close to 70%. But video is probably the fastest growing on the platform right now. A lot of investment being made in that direction with close to 20% with the rest being Thank you, Badri. With that being said, I would like to hand it over to Samir, who's going Thank you over some of the customers' case studies. Thanks, Yonath. As Ram introduced myself Sameer. I'm the Chief Revenue Officer for Verve Group. And we are super excited to actually include Smaato in the family. I'll give a glimpse of the things which are really important. Companies like us build products, but ultimately, it's the feedback that really comes from the customers. So just a few notes from a couple of top partners. On the demand side, Liftoff is a performance based DSP and the team has been very consistently working very closely with them because The KPIs, the measurements for making the advertiser base represented by Liftoff And this was a word of appreciation given by the Liftoff team that the performance of the campaigns were very well. Moving on to the next coverage is Ground Truth. Now Ground Truth is was extremely again one of the happy Demand side partners to spend more and more because of the premium in app publishers suite of publishers that was presented by The SMARTO platform and it's Ground Truth is a location based Platform and the quality of signals, the audience representation was again very well appreciated by Crown Truth As one of the successful demand side partners. On the publisher side, Pingur is a very large based Premium app in the U. S. Primarily used in the U. S. And the advanced mobile ad offerings from the SMARTO platform was again very well acclaimed for a wide variety of range of formats and different geographies that just Europe mentioned. So, this is a quick glimpse of a few partners on both sides appreciating the words and we'll go to the next slide. Now, as we have seen the growth matrix, again, this slide really represents The rising volume of the top publishers on the platform and you can see that there is a very healthy growth patterns. Mobile games and the advertising companies from 2017 onwards took a small dip, but then Substantial growth in 2020 and in fact, in 2021 as well, which is not covered here. Mobile casual game developers, Again, a very healthy mix on the set of publisher base that has grown. And really in the last few years where the brand advertisers coming and performance advertisers coming behind the big DSPs, They had a big affinity across the users, you know, across the mobile games. Also on the social media side, the entertainment app developers, It's again a very, very healthy growth that has been seen across the platform. We'll go to the next slide. Now, as we saw, there is a substantial growth in the publisher mix, but we can also really see the volumes of ad request That, of course, apparently is growing because of the user base and more downloads, whether they are organic or not. But the publisher request patterns again from 2018 towards the trend of 2021, The reach and scale like is in the order of magnitude. We also look in for the revenues on 1 of the top 50 publishers. You can see how consistently the revenues have been growing because of You can see how consistently the revenues have been growing because of the diversified set of advertisers, Demand really chasing the best set of publishers, platform offerings, optimization algorithms, audience combination, curation, etcetera, Right. That really contributes towards revenue growth. And we can also see that how the request actually really went up From one of the top 50 publishers consistently going up. And the quality of ads Being presented within any app is and is a big contributor indirectly towards organic or non organic growth of a publisher. So this is a decent representation of the rising volumes of the top publishers. We'll move to the next. I would love to share some of the case studies. And this is Veraxin is a mobile app game. Jigsaw is one of the biggest game representation. And we how the how they started engaging with the SMARTO teams, how The impression level bidding, which is a sophisticated form of the SDX, which SMARTO brought in, And the tiered level impressions was like an amazing identification for a strategy to really monetize every single ad request to the best possible extent. And then of course the core feature of price optimization. So this result was again really appreciated by this big customer of the platform Where we can see that the total revenue and not only the total revenue increase, the CPM adds increased and at the same time a very healthy mix of Demand partners identifying the uses of their need across the combination of audience representation in the platform capabilities. So, voraxone case study has been a good one and this is a big customer out there in the industry. And I'll cover one more use case. Fundcorp is again a very large global app and How the inventory identification approving and the prepackaged deals, the packaging of it was presented to the demand side partners on the platform. So one great feature of the platform is where the curation of the inventory was done. And again, this is a very high quality target Targeted inventory means and mechanisms for the DSPs to identify. Viewability is a very important factor when it comes to various formats of ads. That's one good means of identifying Whether the ad impressions were really seen well above a stipulated back time. So the viewability measurement results were great. And then the dynamic Like updating was again one feature where the ad space is updated and added to the relevant IaaS and mode packages. So again, The customer really appreciated the increase of total revenue, CPM increase. And again, this was a good case study being shared with the industry partners. There are many more cases, but I'll end it and present to the next presenter, please. Yes. Thank you very much, Yonath So, sorry, Jan and Samir. And I would like to take over the growth strategy part, which is the next chapter, and starting on Page 17. And maybe before I start with this slide, because this slide is about our media parts, about our ad tech. To just go 2 steps back, we started this company 8 years ago with the acquisition of Gamigo Gaming Company have after that been acquiring several gaming companies and building critical mass By integrating those companies and further growing in the game sector organically also, next to the M and A part. And 3 years ago, we said, okay, to be really Even more successful in gaming, we need to become much stronger on the media side, on the user acquisition side, but also on monetizing the apps that we have in the games. And that's the reason that we said, okay, instead of working with external partners, we want to build it ourselves because we didn't find the ideal partner To do the media part for us as a gaming company. That's when we started also doing a buy and build on the media side to really strengthen our gaming arm and segment by itself, with a lot of growth in the market and a lot of growth opportunity, also changes, IGFA going out of the market, One of the topics being discussed and many more things happening. So it isn't a very tech driven sector, but very interesting And with good ways to position a company and also with a lot of consolidation opportunities because a lot of companies that are just too small, Only in a part of the value chain and as such not really driving optimal efficiency. So what we have been doing and that's what you see here on page 17, we built a matrix Ticked the box kind of slide where we said this is what we want, which is a full vertical, adtech platform, omni channel. Omnichannel means in different channels active. So in app, mobile, web, CTV, digital outcome, which you see on the top. And then making sure that We do the whole vertical parts that are used or let's say that are needed in this market and yes, building this. And instead of building it greenfield, we decided also with the experience we have from the gaming side to do it via M and A. So we've acquired several companies, now over 10 media companies altogether. And here you see on this slide our acquisitions from this year. So BeamRay Acquisition that we did a few months ago is more on the data side, D and P side. So there you had a new tick the box. Liquid, What you see on the right side is a connected TV company, which we acquired beginning of the year, which was adding the CTV capabilities. And with Smarto now, we see basically 2 things. It's adding new capabilities. So Smarto is adding, as you see on the mobile web and web part, The open exchange network, the SSP part and also the data part. So there we now can also make a tick to box. And on the other side, it's also adding critical mass on things that we already had, but where it's we now get much bigger or much more substantial, which you see on the in app side, We already had the let's say, an open exchange and an SSP, but there we are now really much stronger and becoming really one of the dominant players or one of the top players in the market. This is good to see. And you see that we still haven't ticked all the boxes. Part of it, we might also build organically. But still, we are looking at The right acquisition candidates to tick the further boxes, but the core of the platform is pretty strong. We were already really strong in in app. With the acquisition of Smarter, we're also getting very Potential now on the web part and the CTV part with liquid, we also have a substantial position. So still more acquisitions to come, more targets to look for, But really happy with the addition of SMARTO, which is really adding a lot of critical mass, but also new capabilities. Coming to the next slide. Yes. What are the growth levers? How do we want to further grow? Basically, there's two sides of the value chain, the publisher, so the one who has the ad advertising spots. We want to serve them in the best way. So we give them controls to monetize their ad stack. We have now all major pubs Connected. Also, that is something that SMARTO brings. We had some that were missing, which are also now so all the big ones in the market we have, but there's still lots of smaller ones that we're, of course, going for. And, yes, we are now, let's say, with SMARTO, especially on the mobile website and on the website, Adding publishers, which was before where we were not as strong. Then on the advertiser side, so that is people that are spending money for ads To acquire new users or to get new installs for the app, we have extended the global reach also with SMARTO. Both companies, SMARTO and VERIF are strong in the U. S, have an okay position in Europe. Smarter especially brings us a lot of Chinese possibilities. And also in Indonesia, they have a strong position with a joint venture with a local telco. We see really good extension into Asia with this. Then, yes, building preferred relationships via P and P, that's what both companies were doing. So that's also being strengthened by this. That's yes, preferred relationships, 1 to 1 relationships, where there's a close connection between the advertiser and the publisher. Then, yes, limited ad tracking inventory and other important part. It's also here building the value, Which means because to identify going out to market, make sure that we have other ways to do this, cover that later, and improve the sales efficiency with the global sales force. Verve has a strong global sales force, SMARTO also, but it's covering other countries. So also here, it's very, yes, accretive. Then Video CTV, as already mentioned before, by Jan Zimmer, a very fast growing part of the market. So here also, the adoption the video ad server built, Smarter is working on the segment. It was not on the tick the box that you saw before because it's not substantial revenues yet. But they also built some nice technology That we're really adding here while we would liquid the acquisition we did. We already have quite a nice customer base. So also here, we see a lot of synergy. Then on the product and technology side, yes, first of all, scale, of course. It means we get bigger, so we also can get better tech contracts, I have a bit more angle to negotiate with AWS or with GCP, the Google platform. We can invest. The bigger we are, let's say, the more money also we make with this, the easier it is to invest in new technology and people that build it. We're really getting a lot of good experts on board with it. Then machine learning techniques, that's something that both companies, so for Entesmarter, we're already looking into. Together, we also hear stronger because that's Really driving efficiency for the future. And IDFA, I covered already. Yes, there, as you all know, Verve has a very nice innovation, which is Atom, And that's also something that we can now roll out on the Smarter side. Then efficiencies, yes, accounts for itself, already mentioned a few before. On the cost side, of course, we will look at processes at optimizing. And also mostly on the technology side, we expect that we will see some savings. We don't expect too much on the personnel side because both companies are growing so fast that we are really needing personnel, extra personnel. So the efficiency in personnel will be compensated or let's say, will be used for further growing. And then on the rest, yes, the growth part just mentioned, Growing, growing, that's very important. We can, with a bigger sales force, grow faster. And as also with connecting the platforms, we have done previously also with previous acquisitions, we also expect to already see a boost in revenues. So that's a bit on the synergies. Then coming on Page 19, The geographic coverage, yes, it's both have a good reach, similarly size. So Verve has a 1 point €4,000,000,000 user reach, Smartdoor 1.3, so they are similar. And there is some overlap in it, but that means that we get stronger towards those customers. And there is, let's say, also an addition here. So altogether, there's 30% increase in user reach. But it makes us mostly stronger. So there's a lot Of critical mass that we're building here. And that's what you see on the right, which will mean a strong growth in the number of impressions and also the omni channel delivery. So even having more capabilities Both sides is going to make it stronger. Maybe something about where the company is positioned. The headquarter of Smartho is the Bay Area, California, 2nd largest office is in Hamburg in Germany, and they have 2 tech centers in India, 1 in Pune and the other one in Hyderabad. And as said before, also focusing on China and Indonesia. So those are also important areas to look at. Then coming to the next page, Page 20, yes, SMARTO has a full pipeline. They're negotiating a lot of deals. There's a lot of people that are in the qualification process, a lot of prospective customers, Doesn't make sense to go through, but the market is huge. I mean, everybody is advertising or has to advertise to make this product known. And of course, there's a big pipeline on Smarter side. There's also a big pipeline on the work side. And together, we are also here stronger. Then coming to the next page, Page 21. And this is just taking the qualitative approach on it. We have MGI stand alone. Then we get SMARTO stand alone on top, which you see on the left side. Together, it will just add quite something, but then we get also the synergy part. And as you all know, we are a company that's always looking for synergies That's also very strong in this deal. And there is 2 ways of or 2 kinds of synergies. The one is the synergies with the Werf Group, so the media parts amongst each other. And the second one is also with the gaming part, which is in here. So we expect a 10% to 15% increase of revenues due to the synergies in both segments, On the right side, you see the value chain. So gaming company is the advertiser, which you see on top. Gaming company is the publisher. So that's also what Gamigo, our Again, Arm is doing. And here you see that Smaato is especially strong on the data and the supply side, whereas the whole Verve platform is Covering the whole parts also including the demand side platform. Then I'm handing over to Paul for the financial section. Paul? Here we can see actually that MGI, the €140,000,000 revenues €29,000,000 EBITDA in 2020. SmartHo did €33,000,000 revenues €8,000,000 EBITDA, very strong EBITDA margin of 25% due to their quite good scale. And then we had 100 on a combined basis, MGI would look like €173,000,000 revenues and €37,000,000 EBITDA already, Which would have added 24% revenues and 29% EBITDA for 2020. Coming now to Page 24. And here we see how the Werf Group actually would have looked like on a combined basis. And here we see that it would have been a Truly transforming acquisition or it is actually a truly transforming acquisition, especially also for the Wealth Group, which did €65,000,000 revenues €6,000,000 EBITDA in 2020, Smarto on top of their €33,000,000 revenues €8,000,000 EBITDA would have really bring the company to almost €100,000,000 revenues already for 20.20 €40,000,000 EBITDA and also the EBITDA margin would have been increased from 9% to 15%. And as you know, 15% is actually the financial target, which we had for the growth group. And on a combined basis for 2020 would have been here already, Well, we're now actually looking into even higher targets. And yes, truly transforming acquisition for Wirth Group as we would have added 51% revenues and 140 percent EBITA and therefore, yes, creating a lot of critical mass, increasing margins quite a bit and also the EBITA. Coming on now to Page 25. And here, we also see a little bit of the outlook, which we gave already also during the press release. On the left side, we see some publisher KPIs. And what also Samir just mentioned, we have seen a very strong increase also in publisher accounts. So 117% total increase in software as a service accounts. And looking at top publishers, there we actually I have increased the number from 96 in 2019 to 173 in 2020. And at the same time, We expect a very strong organic growth of approximately 20% for 2021. And that actually brings us also to the forecast Well, we expect an increase from €33,000,000 revenues to €39,000,000 for 2021 and then even stronger EBITDA increase of 60% from €13,000,000 as the company is really scaling now, the cost the fixed costs are quite stable. Revenues are going up quite nicely, and therefore, we create a lot of And also important to mention, the retention rate of publishers, 99% in 2020, And that's comparable to our 92%, which we had in the Wealth Group. And therefore, we're really looking at a lot of recurring long term revenues here. And that also showed us that we're looking really into a high quality company here and was a very important part of the acquisition due diligence. Coming now to Page 26. Here, we also see what we can expect and what our midterm plan for SmartHo is a little bit more in numbers in terms of EBITDA. So as Remco mentioned at the beginning, we expect EUR 13,100,000 EBITDA for 2021 and looking at the purchase price, so enterprise value of €140,000,000 That would have that would brings us actually to a 10.7x EVEBITDA multiple. And as you know, we We have a target to acquire companies at around 6 times. And here, it's clearly about the synergies. So we expect to really grow the EBITDA substantially Already in 2022, due to strong organic growth on the revenue side, and that's due to realization also of synergies within the Werth Group. And therefore, also really scaling the EBITDA up to €25,500,000 And that actually brings us then to EV EBITDA multiple of 6.8 times, including synergies. And I think that really shows already that we have a pretty return on invest here and being in the perspective what we have also given to the market in the last quarters As a kind of guidance where we want to make acquisitions on. Coming now to the Page 27. And here also, we see a benchmarking, especially also compared to U. S. Peers, we are quite some companies have just IPO ed in the last quarters like EBLAVEN, IRONSOARS, Which are quite comparable with the MGI business model also combining media and games. And then we have some other pure ad tech players, Which are more comparable also to the SMARTO acquisition. And here, we see actually that the peers on the revenue side Trade at an average of 14.7 times revenues compared to the SMARTO deal, which we acquired for 3.5 times, which then That relates to a discount of 80%, and therefore, has been a pretty attractive deal from a financial perspective. And also on the EV EBITA side, The average of the benchmarking companies is 56.2 times EV EBITA for 2021, Well, we have acquired the company now for 10.7 times, so also pretty strong discount compared to quite some U. S. Peers. And therefore, we're creating a lot of shareholder value also for the MGI shareholders. And that can also be seen as we acquired Smaato At a lower multiple than MGI is currently trading on. Coming now to the next slide, 28. And here we see the outlook for the MGI Group for 2021. And we just announced 2 weeks ago our initial guidance, Where we increased actually our revenue target to EUR 220,000,000 to EUR 240,000,000 revenues for 2021 And our EBITDA target to €60,000,000 to €65,000,000 which already shows a very strong growth compared to the 2020 numbers. And now including SmartHo, where we expect the first time consolidation on the 1st October 2021, we Revenues of €234,000,000 to €254,000,000 and an EBITDA of €65,000,000 to €70,000,000 That means a very strong revenue growth of 67% to 81% compared to 2020 and even stronger EBITA growth of 120 For 2021 and even stronger now, including the SMARTO deal. And as you could see also for 2022, there is much more synergies, which we expect to realize Within the deal and on top some further organic growth also of the MGI Games and World Group segment. And therefore, yes, 2022, we also expect further very strong growth. And that actually brings us Then I would hand over to the moderator for the questions. Thank you. We have a question from the line of Sven Sauer from Kepler Cheuvreux. Please go ahead. Hello, gentlemen. Congratulations on the acquisition. Just one quick question from my side Regarding the historical development of Xmato, on 2 or 3 different slides, you showed The rising volume and rising requests from the top publishers in the past years. But if I take a look at the financial statements of Smarter, which are, as you probably know, available on Bundes Ansega. The revenue at group level declined Year over year from 2018 to 2020, I was just wondering how can we understand this contrary development? Yes, I can take this and I think Paul can also comment on that. Thanks Sven for the question. If you look at SMARTO, they were a very Early company in this EdTech segment and have, let's say, been extremely strong focusing on mobile from the beginning. And then when the market was changing, they have also, let's say, been rebuilding the platform and the focus. So they have become to, as you see saw in the presentation, omni channel. And that has led to intermediate also a period where the revenues were a bit lower. And they've also, let's say, restructured quite a bit. So in the beginning, it was a full German company. It was founded in Germany, and then they also moved over quite a bit to the U. S. I'm not sure how that shows in consolidates the data statement, but maybe Paul can comment on that. But altogether, let's say, the company is now on a really steady good growth track and at an, let's say, lower personnel level than it had for many years. So as such, also very profitable. And so yes, we have also seen there is a certain, let's say, correction phase in the numbers. But yes, based also on the due diligence, we see a really steady good growth. And as said, there's a lot of synergies that we will also be able You have to get out of the deal. So altogether, very positive effect expected also for the future. Paul, you maybe want to say also a few words on this. Yes. Maybe to add 1 or 2 to KPIs. So what we showed also on one of the slides where we also based the forecast on Is that we actually saw a very strong increase in new accounts then from 2019 to 2020 already. And then we also Saw a very strong increase in terms of average revenue per publisher and that also new publishers were onboarded. And that actually brings us now due to the new product, Which is also well received by the market to comparable growth numbers, also retention rates, which we currently see in the Wealth Group. And therefore, doing the due diligence, we quite had a pretty good database that we're currently looking at a completely different company now than it was in 2018, 2019. And the change was started in 2019 with the product change. Then also the new publishers were onboarded, and they're really scaling now. And therefore, we have a pretty strong organic growth outlook for the coming years for that company. But your observation, Sven, was correct. But I hope that actually answers the questions. Great. Yes. Thank you and congratulations again. Thank you very much. And there are no further audio questions. Then I would give 2 more minutes In case people have other questions and otherwise, yes, I hope that we were able to show you that this is a really very nice So for the last year's and also EBITDAs are improving on the media side and that will be further also with this deal, with the credit performance that we're adding. So we are really happy with the deal. And yes, still did any new questions come in? We have a question via e mail, which is, is the plan to put all companies into SmartUs platform? And will it save the company money and costs, Okay. I can answer that. No, we are not going to integrate the platforms, at least not on a short notice, Because we see that there is so much growth opportunities in the market that we would, let's say, if we start full platform integrations, We would not lose a lot of traction by only getting internal focus. What we will do is connecting the platforms. That's what the same that we have also done Liquid, for example, and PubNative and Verve that were acquired before. So that's the much faster strategy really linking the platforms to each other instead of doing full migrations. On the longer term or mid term, let's say, we are when we're doing innovations, we are modularizing the platforms. So then we will be also, of course, making sure that there will be only one module for a single thing. But that's, let's say, part of the Future strategy, we're also building new features into the platforms, and there will be not now and just, yeah, hard Integration of the platforms. Short term, it might, let's say, lead to a bit more cost savings if we would do so, but it would distract us so much from the market growth that we're having at the moment that we are not in favor of doing this kind of hard integrations, but rather keep the platforms connected or let's say, connect them and grow by that. And if there's no audio question, we at least have one further question by email. Then which is, SMARTO has a partnership with the in game advertiser, Adverdi. How will this be affected with the purchase? Will MGI work more closely with Adverdie in the future? I'm not sure. Yonath or Sundar Samu, you can take this one, I think. Yes. So, see guys, this is a very early stage. What our plans are to very closely analyze all the Overlaps existing demand or supply side partnerships. But I can at least say that as we take further deep dives into many Existing large or scaling growing overlaps or existing customers. So the answer is absolutely yes. There will be more synergies and identification of how we can further scale the existing business and get more synergies from our gaming side of the business as well. And maybe one thing to add, as well. And maybe one thing to add, the market is consolidating the ad tech market. And what we also see on the side of the publishers as well as on the advertiser side That they want to work with fewer partners. And this is, of course, for us a very good opportunity by becoming roughly double as big as we were before. We're getting easier into the relevant set, being now really one of the large players in this field. So as such, if we are already working for a partner, Demand side or supply side. And together, we are so much bigger now that we will not be the first ones who are kicked out or rather be the ones that they will concentrate on to So that's also the expectation. So in the market at the moment, there is an yes, going for scale kind of thing and People don't want to work with 50 partners, but rather a few selected ones. And in that sense, this deal will also add a lot of strength Also in a case like or let's say in the case that we showed before, that's what we expect here. But as said as Samir also said, we We have just signed the transaction, so it's now time to really look into where can we improve, where can we grow, what can we do Where are we together stronger and how can we bring it forward? So also having this question answered, any more questions? We just had 2 audio questions. One is from Ken Romp from Jefferies. Please go ahead. Hi, everybody. Had a kind of specific and a general question. Specifically, just looking at your guidance for this year, It does sort of indicate that the Q4 is a bigger share of the full year. I guess, firstly, that's natural as the business is growing. But is that to what extent is that a kind of the Q4 is an exceptional quarter? Is that always the pattern? It often is in advertising, but and then the second question more generally was relates to kind of Remco's last comment about the kind of Shake out and consolidation in Ad Tech. What do you think is driving the kind of winners and losers? Is it scale? Is it the quality of relationships? Is it the ability to do maybe private marketplace deals? Is it Take rates, is it going to be a kind of price competition? So what would be your comment on kind of the success factors, if you like, or indeed The things that are going to fail. Thanks. Or is it technology? Carry on. Okay. Paul, you want to take the first one? Then I can take the second one. The first one was again sorry, Ken. Sorry, about the Q4 being a kind of unusually large quarter Because the figures that you're indicating, it's like $14,000,000 of sales and $5,000,000 of EBITDA based on your kind of range is added in, in the 4th So which is obviously more than a quarter of the annual sales now growth is part of that. But I guess the 4th quarter is also Kind of a big quarter seasonally? Or is that is it just growth? Yes. So exactly. So thanks for the question and for repeating it again. So in terms of the EBITDA share, so that's roughly 40% to 50% of the full year. So it's the strongest quarter in terms of revenues, but also in terms of EBITDA. While I would not say it's actually a fully outstanding one, we also The that the Q4 is always the strongest quarter, and that here is more in line what we also expect for the Werf Group, for example, That we are also scaling up revenues quite nicely. What we actually have also seen, as you might remember, in the last Q4 of our Media segment. And therefore, Q4 is very strong. The large chunk of the overall Yes, it cannot be seen as a run rate, so to say. But yes, it's more Normal growth would be expected, not a fully outstanding one. Maybe to compare us to Gaming. For Gaming, Q4 is also the strongest quarter, there, we have a bit different seasonality. So in Gaming, Q1 is the 2nd strongest quarter. Then Q2 and Q3, mostly pretty similar, Except for the COVID year, last year where Q2 was exceptionally good. And on the media side, normally it's building up. So Q1, the lowest Q2 better Q3 stronger and Q4, the strongest. Then maybe coming to your other question, which is really, yeah, what's driving this market. And there's a few big, let's say, drivers altogether. The one is the total market. A lot of volume is moving towards programmatic. We've talked about the €650,000,000,000 total worldwide advertising market, where let's say, over 50% now is on programmatic And the rest still is traditional. What we see is that traditional TV is going to programmatic to CTV, for example. So there is a movement, which is bringing market growth altogether in the programmatic part. Then within the programmatic part, what you see strongly there is, let's say, a few big players like Google, Facebook, Apple, that are taking substantial chunk of the market that used to be, how to say it, open market players, But that are more and more getting into walled gardens, which means they don't make the identifiers available anymore like Apple now does. Also Google has announced it, although they delayed it a bit. But we see also within the market segments that the big tech giants are getting a bit more, yeah, internal focused, don't show a lot of numbers or a lot of Insights to their customers basically being black boxes. And that's also driving a lot of advertising in the market at the moment to look outside of the Googles and the Facebooks to see what else is in the market. And then we can come to the open Internet segment, where there's really thousands of players, Often very focused on the vertical part, so only doing the demand side and then partly even only focused on a certain segment Or only doing the supply side. And what we see now with Identify as getting out of the market, it makes a lot of sense to have a full vertical tech stack like we have, Where you have full transparency and can, let's say, steer your combined campaigns or can optimize your campaigns much better. There's not that many players in the open market that have something like that. So that's those are, let's say, a few general developments. Then yes, critical mass is a very big one because you get more efficient and cheaper or let's say, You just make more money if you are larger. So that's driving it. Also, as said before, the advertisers and the publishers don't want to work with too many partners. But a very big one, and that's also one that you gave already before, is innovation. This market is changing. It's about efficiency. And there's still a lot of inefficiencies in this market. So the better technical players and those that really innovate that are going into machine learning, artificial intelligence For optimizing, really are able to, let's say, we have open source software, for example, that is much more trusted by the customers. Those are the ones that we expect to be the winners in this, and that's also where we are focusing a lot on to really innovate like we did with Atom. And Yes, we have an advertiser cloud. So there's many products that we're also innovating because in the end, there is a lot of me too in the market at the moment. And the market is huge and because of the market growth, Still everybody is growing, but there will, due to the consolidation, come a time where the used fees are more important, and that's what we are investing in Apart from, of course, also growing quite fast with adding new customers and all the sites. So I hope that answers your question. Yes, great. And is there other trends in take rates declining? Or indeed, as an end to end provider, Can you kind of offer, if you like, a lower combined take rate, but make better money due to that kind of process efficiency? Jon, do you want to take that one? Yes. I will take that one. Yes. So take rates Per let's say, for the point solutions do decrease over year over years, even Google's 0.5 per year or something along those lines. But that happens only when the channel It's matured, right? And let's say, a mature channel would be web. Mobile, I would say, it's a rather mature channel, but it hasn't reached The same kind of maturity than web. So it's still growing, right? Mobile, there's more consumption on mobile than it has been on the web In CTV, you could or OTT, you could say just started, right? So there's probably even margin expansion possibilities for those 2 channels, Right. But to come to your point about the increase going down. Yes, when the acquisition matures, they go slowly down for the point solution. So if you're an You're competing on price. Of course, you need to add features, but in the end, you will also be judged on price provided everything equal, right? Same on the demand side. What we're trying and what we're what our strategy is to reinforce points is to unify the full stack, yes? So actually, our take rate Could be higher than any of the point solution, considerably higher, while our cost for developing and running it will be considerably lower, yes? So Let's say we took a different approach to margin management, if you want, or creating and extracting value from the market. So I hope that that's answered, but happy to clarify further. Yes. No, that's great. Look, thanks very much and congratulations on getting it over the line. Thank you very much. And I think the last question and the last answer show that also we are talking really about a very technical segment here with a lot of specialties. I would also like to point out we had a media seminar a few weeks ago, which is also online available, where we explain a lot more about the media part And what we're doing there. So also everybody happily invited to look at that podcast that we have. Then any more questions? We have one more question from the line of Joop van Broeken from Kepler Cheuvreux. Please go ahead. Good afternoon, gentlemen. Thanks for taking my question. Still a bit puzzled by the low multiple you pay for this kind of Atech Company, could you still, let's say, elaborate a little bit more about how did you get to this kind of lower multiples? Paul, was there some sort of exclusivity in your negotiation? And in relation to that, I understand that you're buying All the shares except for 1 were still a call option on that. Could you also tell us a little bit about the conditions on the exercise of that one? Thank you very much. Yes, I can thank you for the question. I can take that one. Yes, the market is extremely and transparent, and we see partly multiples being paid where we are really Raising our eyebrows and say, wow, this is just insane. There is especially in the U. S. At the moment, there is a raise for Extremely high multiples, which, yes, I think are not really materializing or is difficult to materialize them on the long term. But also here, same as in the Gaming side, it depends if there is a competitive process versus if you have a 1 by 1 process. And To buy the asset, with let's say, yes, good upside. We had exclusivity on it. Also during negotiating the deal, the company was performing very well. And let's say, looking into the future with the synergies that we're also generating, we are even getting very close to our, yes, 6 times EBITDA, EV EBITDA target that we like to do when we do acquisitions. So it fits very well into our pattern. And yes, it's in the very attractive deal that we're doing. But on the other hand, also the funds are really happy with the deal. They made their returns. And as such, yes, you know that also the fund side is And it was a bit complex with a lot of translation stuff, a lot of lawyers involved, but in the end, very, very good. And the Second question, sorry, if you can repeat that one. On the co option, the remaining one share, what are the conditions on that one? Thank you. Yes, the remaining one share is basically a protection for the seller for the warranty period. And after the warranty period is Finished, it's finalized, which will be in 3 quarters of the year roughly. We are also able to buy the launch here At a normal condition, so nothing really high or exceptional here. Okay. I got it. Thank you very much. Good. Then I would like to thank I'm sorry, go ahead. Sorry, just one more question from the line of Tim Wondellich from Hauckenauforsa. Please go ahead. Yes. Thank you for taking my question. Guys, you have you talked a lot about the EBITDA margin. Maybe I missed it, but can you give us Can you talk about the EBIT margin of the business? So what is D and A? And possibly, I also missed the other metric. I mean, adjusted EBITDA margin, that's what you're talking about for SMARTO. So what is the adjustment for? Thank you. Paul? Let me take the question. So we have not given any guidance yet in terms of the EBIT because there's still Some purchase price allocations to be done and also in terms of the allocation to the asset and these kind of things. And therefore, We did not give any guidance on that yet, but therefore, have been pretty diligent, I think, giving the EBITDA guidance where We were pretty open already. And then on the other question, in terms of the adjustments, So there is some adjustments included for realizing the synergies. That's approximately €1,000,000 For the year 2020, euros 2,000,000 to €3,000,000 for 2022. And that also relates to the full integration also on the tech etcetera. And but the adjusted EBITA then can be seen as a kind of future EBITA and cash generation, which we Also on a normal level after we have integrated the company. Okay, understood. And it seems that there are some minority interest in the business. Is that approximately 15% Of EBITDA, is that a right ballpark estimate? So we acquired 99.9% of the company, except for one share. That's what Remco just lined out. And this kind of minority position is out with the transaction. Okay. But just when I look at Bundestan Steiger and I look at the annual report 2019, there's some minority interest in the equity. So that is Exactly. You acquired that as well? Yes, exactly. So we acquired that as well, and we acquired The Hong Kong entity, which you can find also in the press release, and this entity holds 100% of The SMARTO Holding GmbH and also 100% of the SMARTO U. S. SMARTO Inc. And therefore, we acquired up 99.9 And that's a Chinese holding company, and therefore, the minority is out with exception for that one share. All right. Let's see you then. Thank you. Thanks, Dan. Great. That brings us then to the end of our Session today. Yes, I would like to thank everybody very much. And of course, the management, we are available for answering further questions also apart from today. And yes, we're going to work on further acquisitions on our organic growth and also on working together with this matter team. Thank you all very much. And also special thanks to Mr. Chen for attending this meeting together with Lia. Thank you very much.