GDEV Inc.

Good day and thank you for standing by. Welcome to the GDEV Q2 2024 Endings Report conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Alternatively, you may submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Roman Safiulin, Chief Corporate Development Officer. Please go ahead.

Thank you. Hello everyone from the sunny island of Cyprus. And thank you for joining us today on the second quarter 2024 earnings result presentation for GDEF Inc. On today's call, our presenters will be Andrey Fadeev, Founder and CEO, Aleksandr Karavaev, Chief Financial Officer, and me, Roman Sofiulin, Chief Corporate Development Officer. Before we get started, I would like to remind you that today's discussion may contain forward-looking statements, which may not develop as we currently expect. We have posted a supplementary presentation at gdev.inc, which contains information and precautionary warnings on forward-looking statements, as well as our non-IFRS financial measures. And we will also post our prepared remarks. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC. With that, I'll pass it over to Andrey.

Andrey. So, Andrey Spadiv, CEO, founder of this machine. It's me. And we are back on air. After a nice long break, we're finally back in action. And you know what that means. We've recovered enough to show our faces again and fill you in on what's been going with us. If you have noticed that we've become more visible and are steadily growing our footprint, well, you are not wrong. We are making waves everywhere and we'll do it. Why? Because we are excited and eager to show the world that we are made of. And trust us, we are not stopping anytime soon. As I've said in my posts before, you can find it and link it in, for example, we are here to do things differently. Our mission? To pleasantly surprise, first and foremost, our users, and secondly, you, our dear current and future shareholders. I hope you will be our future shareholders now. I'm not here to talk about Q2 or H1. That's what my much more professional colleagues are for. I'm here to talk about the future with no promises, of course. And yes, we do have a future. And it's looking brighter by the day. Each of our game studios now has a clear plan on how they will create the number one game for their audience. Every single one of them. Our dreams of diversifying beyond a single asset are finally starting to take shape. Fortunately, we see strong growth potential for our flagship franchise, Hero Wars. And after our coaches' sometimes awkward first steps with the Pixel Gun 3D on Steam, we realized that buying that fantastic product was worth every penny. If you're curious, you can check out the success of our other studios on platforms like Data.ai. We are also seeing interest from top founders in the gaming industry who have expressed that they want to join us. It's incredibly gratifying to watch our long-time and long-term dreams slowly become reality. Sure, it takes time and it's not happening overnight, but If there is one thing you can count on from us, it's that we never give up. And we are in it for the long haul. So next will be Alexander Karamayev. Thank you, Andrey. Now a few words about our financial results. Overall, our Q2 results are on track. We have expected the numbers that we have achieved given seasonal factors and the current product mix. In the second quarter of 2024, we generated revenues of $106 million, compared to $115 million in the same period of 2023, mostly due to a decrease in the recognition of deferred revenue associated with bookings received in previous periods. Bookings, though, which we consider a very important metric for our business, remained relatively stable in the second quarter of 2024. They only decreased by 3% year-over-year, primarily due to a decline in advertising revenue. It's important to note that the amount of in-app purchases, which is our core revenue stream, was relatively stable year-over-year. Platform commissions decreased by 16% in the second quarter of 2024 versus prior year. This was driven by a decrease in revenues generated from in-game purchases, amplified by the higher share of revenues derived from our web platform. which are subject to lower platform commissions. Game operations cost decreased by $2 million in the second quarter of 2024. It was primarily driven by an optimization of employee headcount as a part of our ongoing program to optimize the costs. Selling and marketing expenses in the second quarter of 2024 decreased by $3 million and amounted to $47 million. This decrease is driven by a successful execution on our strategy of enhancing the efficiency of user acquisition in the second quarter of 2024. As a result, we managed to attract payers more efficiently in this quarter than in the respective period of 2023. In simple terms, it means that our core efficiency parameter, which is the lifetime value of a payer divided by the cost of a payer, increased in this quarter as compared with the second quarter of prior year. Moreover, we continue to execute on our strategy to enhance efficiency of our business. In the next couple of quarters, we plan to concentrate primarily on the product across all our titles and platforms. The primary goal is obviously to enhance the gaming experience and to increase the lifetime value of our players as a consequence. In this respect, we adhere, as we did in the past, to a disciplined approach towards the investments in user acquisition. We generally only aim to invest in the user cohorts that produce sufficient returns. And this is the primary reason why we are not scaling the marketing investments now. We're just saving the cash for future investments after we enhance our products the way we want them. It's also important to stress that one of the reasons why booking stagnated in 2024 can be traced back to the fact that we have not invested heavily in user acquisitions in 2022 and 2023. You might all be aware that the market was tough over the past couple of years, and we didn't want to waste our resources to require user cohorts that are not good enough from the internal rate of return point of view or not predictable enough. Starting from the second half of 2023, we noticed that the cycle started to change. First of all, we saw that the user behavior started to normalize. The same is true in respect of the costs of our user acquisition. The prices are getting less volatile and more predictable. These factors all together with our internal initiatives helped us to substantially increase the efficiency of the business in 2024. We also think that this trend is sustainable and it gives us the confidence regarding our future growth. As a result of our steps, we booked a profit for this period net of stocks of $15 million. The adjusted EBITDA amounted to $16 million, a slight increase of $600,000 compared with the same period in 2023. Cash flows generated from operating activities remained relatively stable at $11 million in this quarter. And the last, but not the least, our total cash position as of the end of Q2, which includes all our investments into highly liquid and low-risk governmental bonds, is $140 million. which is indeed a great resource to sustain our developments in the future. With that, I pass it over to our Chief Corporate Development Officer, Roman Tafiulin, who continues with the discussion of our operating metrics and the product updates. Roman. Thank you, Alexander.