16^th December 2022

Devolver Digital, Inc.

("Devolver Digital", "Devolver" or the "Company", and the Company together with all of its subsidiary undertakings "the Group")

LTIP Adoption, Grant of Awards and PDMR Dealing

Devolver Digital, an award-winning digital publisher and developer of independent ("indie") video games, is pleased to announce the terms of a long-term incentive plan for its senior leadership and group employees charged with delivering on the Group's strategic objectives for the three years to end 2024 (the "2022 LTIP"). This follows the outcome of a Special Meeting held on December 12, 2022 where shareholders voted in favour of the two resolutions within the Shareholder Circular, which was distributed to all shareholders of record. The resolutions approved the adoption of the LTIP plan and rules, as well as grants to be made in 2022 under the plan.

The 2022 LTIP is designed to reward employees at all levels of the Company for performance that delivers value for shareholders, through the award of long-term incentive shares ("LTIP Shares"). The Remuneration Committee, made up entirely of Independent Non-Executive Directors, worked with independent consultants Alvarez and Marsal throughout the development of the LTIP.

All LTIP Shares awarded to management are subject to a three-year cliff vesting period from the date of award, with a two-year cliff vesting period for all other employees. The LTIP Shares are made up of Performance Stock Units ("PSUs"), award of which are, amongst other things, subject to achieving ambitious financial targets, and Restricted Stock Units ("RSUs"), award of which are, amongst other things, subject to certain performance criteria for management and senior employees. In addition to the above, a grant of shares was recommended for the CEO and CFO, and a grant of RSUs was recommended to a small employee cohort who have joined the company since IPO.

The Remuneration Committee recommended the following 2022 grants to the Board, laid out in the tables below. These initial 2022 awards granted under the 2022 LTIP plan will amount to, in aggregate, 7,913,563 shares (on the assumption that all vest), representing 1.8 per cent. of the issued and outstanding share capital. Total dilution from the outstanding options (i.e. excluding options previously exercised within the EBT) and these initial grants would therefore amount to 10.5 per cent. of the issued and outstanding share capital.

The following awards have been made to Directors of the Company:

The following awards have been made to other management and employees of the Group:

For the majority of the grants, the effective date for the award of these LTIP shares would be 1st January 2022, i.e. shares with a two-year cliff will vest on 31st December 2023. In addition to the two-year and three-year cliffs for vesting, the LTIP shares are subject to a range of further vesting conditions specified at the time of award, and likewise will lapse if these conditions are not met. For the PSUs, these include the following performance conditions:

(i)    the attainment of specified Group revenue targets at the end of a three-year period, and;

(ii)   the attainment of specified Group EBITDA targets at the end of a three-year period.

The Company has set challenging financial targets (based upon EBITDA and revenue metrics) for the PSUs, based upon the Group's internal budgets. Targets are based on organic growth only and exclude any potential M&A uplift. The PSUs only begin to be earned once 90% of 2024 Revenue and EBITDA targets are achieved, and management need to deliver 110% of the target to realise the full award.

The metrics in the table below apply to actual 2024 Group performance versus the prescribed targets for revenue and EBITDA in 2024:

The RSUs for senior management, including the CEO and CFO, require at least 60% of the 2024 EBITDA target to be achieved in order for any LTIP Shares awarded under the 2022 grant to vest. 2024 EBITDA performance below this target level will result in all the 2022 RSU grants for senior management lapsing. For other management and senior employees, this only applies to 50% of their RSU grant. These targets do not apply for all other employee grant recipients.

Of the 3,640,341 RSUs awarded to other management and other employees, 1,130,566 RSUs relate to the grant to the cohort of employees who have joined the company since IPO. These RSUs vest on a quarterly basis over 3 years with an effective date for award between 31st December 2021 and 30th September 2022.

The RSU and PSU share grants for management and senior employees, including Douglas Morin (CEO) and Daniel Widdicombe (CFO) are made up of PSUs (2/3) and RSUs (1/3), with the number of shares to be awarded calculated using a notional price of £1.20 (86% higher than the current share price of £0.65, to reflect the currently depressed share price) and need to be held for three years before vesting. The award for Douglas Morin (CEO) is 154,454 RSUs and 308,908 PSUs to a total of 463,362 LTIP Shares. The award for Daniel Widdicombe (CFO) is 119,684 RSUs and 239,368 PSUs to a total of 359,052 LTIP Shares.

The Remuneration Committee also recommended in the first half of 2022 that Douglas Morin (CEO) and Daniel Widdicombe (CFO) should be awarded 338,893 and 354,498 common shares of $0.0001 each ("IPO Award Shares") respectively in recognition of their contribution to the successful listing of the Company in 2021. These are included in the above table as Other Stock or Cash-Based Awards. There are no performance, vesting or other conditions attached to these shares. These shares will be issued on a net settlement basis, where value of the shares received is equal to the post-tax (i.e. net) value that would have been received on a sell-to-cover basis, had all the shares been issued but some sold immediately to cover the income taxes and social security taxes due. This reduces the number of shares issued and resulting dilution. On a net-settled basis, Douglas Morin (CEO) will be awarded 267,174 common shares, and Daniel Widdicombe (CFO) will be awarded 187,884 common shares.

The cohort of employees who have joined the company since IPO will also receive net-settled shares for the already-vested first four or fewer quarters, where applicable, of the 3-year vesting period. The total net-settled share amount is 166,840 shares. Taken together with the CEO and CFO net-settled IPO Award Shares, the total number of shares to be immediately issued is 621,898 shares.

It should be noted that the co-founders of Devolver who are fully employed at the company, including Executive Chairman Harry Miller, without exception, declined to receive any share awards under the 2022 LTIP.

Further information regarding the LTIP Shares and the Group's remuneration framework will be set out in the Group's annual report for the year ending 31 December 2022.

Devolver has made application to the London Stock Exchange for the issue of securities in respect of 621,898 new common shares to be admitted to trading on AIM in relation to the IPO Share Awards and it is expected that admission will become effective on or around 21 December 2022. Following the admission of the new common shares, the Company's issued share capital will comprise 444,384,250 common shares and may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

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Devolver Digital overview

Devolver Digital is an award-winning video games publisher in the indie games space with a balanced portfolio of third-party and own-IP. The Company has an emphasis on premium games and has a back catalogue of over 100 titles, with more than 30 titles in the pipeline. Through recent acquisitions, Devolver now has its own-IP franchises, in-house studios developing first-party IP and two publishing brands. The Company is registered in Wilmington, Delaware, USA.

The notification set out below is provided in accordance with the requirements of Article 19 of the UK Market Abuse Regulation.

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them.