G5 Entertainment AB (publ)

Morning, everyone. We'll give it a minute or so to just see that the attendee list has loaded properly. I see people kind of flowing into the meeting. We'll just give it a few seconds and see when it kind of stops. It seems to have stabilized. Well then, welcome everyone. As usual, you will be in listen-only mode in the beginning of the, during the presentation. And then when we get to the Q&A, you can either raise your hand and ask a question verbally, or you can post a question in the Q&A box and we'll read them up and answer them accordingly. And yeah, with that, I will hand over to our CEO, Vlad Sugdoval.

Thank you, Stefan. And very good morning, everyone. And welcome to G5's Q3 call. We'll take about 10, 15 minutes to run through the presentation of the results, and then we'll open the line for questions. And you can type your questions into the Q&A box. You can find one. So I'll start a brief overview of this morning's report. Revenue was 270 million SEC, which was 17% lower than last year in Swedish kronor. and 14% lower in USD terms. Our active games also fell by about 14% in USD terms, with monetization metrics actually improving year over year. Active games are the games that are our own, which are actively managed and thus receive regular updates, as opposed to the small portion of games we have in our portfolio in what we call a harvest mode. Um, monthly average gross revenue per paying user was continuously strong at 64.9 USD. Um, G5 store, a big bright spot. for us continues to show strong growth and now makes up 17.1% of total net revenue versus 12.1% a year ago. As you know, G5 store has low processing fees, lower than alternatives, alternative stores that we use, which charge an average or anywhere between 12 to 30%. And growth for G5 store was 22% year over year in SEC and 26, sorry, 27% in USD terms. And sequentially G5 store grew 6% in SEC and 8% in USD terms, Q2 to Q3. So quite impressive growth year over year, but also sequentially. And obviously it helps expand our gross margins because the store fees are lower in G5 Store. Our UA was 19% of revenue versus 19% last year. So about the same level. And again, thanks to G5 Store, our gross margin increased to an all-time high of 68.8% compared to 68.1% last year. We also launched an interesting new initiative that we call G5 Store WebBank for our mobile audience, which allows people who play on mobile devices to make payments to G5 directly through G5 store web interface rather than through the platform shops. It is off to a good start, and we just launched it a couple of weeks ago. And in the future, this can also contribute to the expansion of the gross margin if we're able to get more revenue flowing through that monetization channel. Earnings per share was 3.14 SEC for the quarter compared to 3.83 last year. Our cash position at the end of the quarter stood at a record high 246 million SEC compared to 184 million SEC last year. We have zero debt and a solid cash flow, something we are very proud of. Now let's look at the strong performance and gross margin of Q3. Our own games stood for over 70% of net revenue during the quarter, basically on the same level as in the third quarter last year. Active games made up 63% of the quarter's revenue in line with the 63% in Q3 last year. So no changes there. Gross margin, again, came in at an all-time high of 68.8%, rising from 68.1% the year before. And this is primarily driven by the fast growth of G5 store. And monthly average gross revenue per paying user was strong at 64.9 USD compared to 63.2 one year ago. Let's continue with G5's operating margin. Our operating profit or EBIT was 22.9 million SEC compared to 22.3 million a year before. This gave us an EBIT margin of 8.5% in Q3. And during the quarter, EBIT was negatively impacted by some revaluations related to FX, primarily from SEC USD exchange rate, but it was a small amount. And at the same time, net capitalization impacted earnings with minus 5.4 million SEC compared to minus 13.1 million a year ago. Now let's talk about our cash position. We pride ourselves, of course, on having a strong balance sheet and this quarter was no exception. Movement of working capital was positive 27.2 million SEC compared to a negative last year of minus 17.5. Our capitalization impact on cash flow was minus 25.5 million SEC versus minus 27.5 million last year. And the total cash flow during the third quarter was 53.3 million SEC compared to 9.7 million last year. Total cash at the end of the period stood at a record high, 246 million SEC, up from 184 million a year before. And you can see that even if we adjust for the movement and the working capital, it still remains a record amount for the third quarter. So let's start to wrap it up. And... have a look at some final thoughts here. So we continue to focus on the development of our new games and active portfolio. And we are optimistic that our operational efficiency and strategic adjustments will continue to drive profitability. We now have 30 game ideas in pre-production and early development stages. In the quarter, we made 14 iterations on various games. some have moved in the funnel and some have been further refined in order to progress to the next stage during the quarter we stopped the development of one game meaning one of the games in the soft launch but at the same time we filled up the pipeline with a new game and so there's a lot of work ongoing with regard to a new product portfolio a lot of internal iterations a lot of design testing, trying to converge on a game or several games that we could launch globally. Another point, as you can see from the figures, G5 Store is continuing to grow fast and continues to drive higher margins, something we expect to continue in the future as well. We are also optimistic about monetizing our mobile audience through the G5 Store web bank. It's a little early, but we'll have more information on how that goes the next quarter. We have maintained In the range, we have announced 17% to 22%, and we intend to continue to do so. We retain a strong cash position. We are profitable, cash flow positive, and we have zero debt. With the strongest September to October revenue increase that we've seen since 2020, we see positive momentum going into the seasonally strong Q4 range. and Q1 and obviously a very welcome sign for us. Um, and that I would like to thank you and, uh, thank all involved, uh, teams at G5 for the hard work on our new games and our existing portfolio. And, uh, I look forward to the prosperous future of the company and, uh, thank you for, for following G5 and, uh, connecting to our call today. So this is the end of the presentation. And let's open the line for questions. Stefan, do we do like voice questions and then?

Yes, let's. I see we have already here. We have Zalma from Red Eye. You are...