G5 Entertainment AB (publ)

Morning, everyone. We'll give it a few seconds to have the attendee list loading up. So we'll start in just a few seconds, a minute or so. All right, two minutes passed. I see the attendee list has stopped counting. So let's get this show on the road. I hand over to Vlad Suglobov.

Good morning, everyone. Welcome to the Q1 2024 presentation of G5 Entertainment. I'm Vlad Suglobov, as Stefan mentioned, the CEO of the company. And we have also Stefan, the CFO, with us. So we're going to go through the presentation for about 15 minutes and then we'll open the line for questions. So I'll start with a brief overview of this morning's report. Revenue was 298 million SEK, which was 14% lower than last year in Swedish kronor and in USD terms as well. We saw stable performance in our actively managed portfolio, which are all of G5's games which receive regular updates, as opposed to the games that we call in harvest mode. The active games fell 3% sequentially in USD terms, with, on the other hand, audience metrics improving sequentially for the first time in a long while. Monthly average gross revenue per paying user was continuously strong at 63.5 USD, and G5's store continued to show strong growth and now makes up 13.5% of total net revenue. This is compared to 7.9% a year ago, so close to doubling its revenue share in a year. As you know, G5 Store has lower processing fees than alternatives. They are low single digits compared to the 12% to 30% third-party application store fees. Growth for G5 store was 55% year over year in both tech and USD. And it was up 2% sequentially in Swedish kronor and 5% sequentially in USD terms. User acquisition expenses were at 17% versus 18% last year. Our gross margin came back to record levels from the third quarter at 68.1% versus 67.4% last year. We had a strong start of the year, which led to a record cash position of 256 million kroner, up from 205 million kroner last year. And I believe this is the record amount of cash we've ever had at the end of the period. We have zero debt and a solid cash flow, something we are very proud of. And in the first quarter, our earnings per share were 4.76 SEC compared to 5.85 last year. We also repurchased 101,000 shares for 13 million Swedish kronor in the quarter. So now let's move on to the next slide. And I'd like to talk about the strong gross margin and stable performance in Q1. Our own games made up about 71% of net revenue during the quarter on the same level as the first quarter of 2023. G5's active games were responsible for 63% of the quarter's revenue in line with the 62% last year. Gross margin came in at 68.1%, rising slightly from the 67.4% a year before, mainly increasing thanks to the fast growth of G5 Store, which continues to be a welcome development for us. Monthly average gross revenue per paying user was strong at 63.5 USD versus $61.8 in Q1 2023. Let's continue on the next slide with G5's operating margin during the quarter. We see a strong EBIT margin during the first three months of the year. Our operating profit or EBIT was 39.2 million Swedish kronor versus 39.8 million a year before. This gave us a strong EBIT margin of 13.2% in Q1. During the first quarter, the EBIT got a boost from revaluations related to currency effects, primarily from SEC-USD pair. When we adjust for that positive income, the EBIT margin would be 10% versus 11.2% a year prior. So even with FX taken out, we still had a very healthy EBIT margin in the first quarter. At the same time, net capitalization impacted earnings with 11.1 million kroner negatively compared to 8.8 million negatively last year. Now let's talk about our cash position. Again, we pride ourselves on being financially strong, and this quarter was no exception. We had record cash in Q1. Our capitalization impact on cash flow was 25.7 million kroner versus 28.3 million last year. Cash flow before financing activities was 84.7 million SEC compared to 40.3 million last year. Cash flow was impacted significantly by working capital, which added 30 million almost, 30 million SEC in Q1 2024 compared to negative effect of about 12 million SEC in previous year. As a consequence, total cash flow during the first quarter was 71.4 million SEC compared to 26.3 million last year. And this was after repurchases of SEC 13 million versus 14 million last year. As I said, this was a record cash position for us in the history of the company. We had 256 million kroner up from 205 million kroner a year before. So let's start to wrap it up. With some final thoughts, and let's shift focus to the rest of 2024. We started the year with stable revenue generation of the games in our actively managed portfolio. As has been demonstrated during the first quarter, we continue to maintain a disciplined approach to costs. Our growth and gross margins and profitability will continue to get a nice boost from the success of our G5 store. New games are key to success, and executing on the new development funnel process will continue to strengthen our teams and build a promising pipeline of future games. This means we are on track to release one to two games globally in 2024, and we will continue to keep our UA spend at a sustainable range of between 17% and 22%. With new games in the pipeline, G5 Store doing well in the disciplined approach to costs, we expect a strong balance sheet through robust cash generation. I would like to end by thanking you for following G5, but also thanking the whole G5 team for their outstanding efforts. So this concludes our presentation, and I'd like to open the line for questions.

Okay, and you can either ask questions by raising your hand, and you can ask the questions by voice, or you can type the questions in the Q&A box that you have available as well. We start here with Hjalmar Ahlberg. Hjalmar, I think we should be able to hear you very well.