MAG Interactive AB (publ)

Hello and welcome to the presentation of MAG's Q1 report. It's September through November we're going to talk about today. So this time around, we're doing it from home. So this is a recording. We will have the Q&A on Twitter instead of having the live Q&A. So here to present is myself, Daniel, the CEO of MAG.

And me, Magnus Wiklander, the CFO.

And yeah, MAG, we've been making mobile games for about 10 years now, and we are 100 people working on those games here in Stockholm and in Brighton. And today we're going to talk about the highlights from the report. And we're very happy to see the continued growth of revenues that have been going on for several years now. And also that the improved margins we've seen the last few quarters is still showing in a great way. We had a 25% EBITDA margin this quarter.

We will continue to look at our ARPDAU journey, which we're happy to show our progress in.

And we also mentioned in the Q4 presentation that we had a few exciting updates coming in new quiz tool for the Q1 period. And it's great to see that those updates did ship and have performed really well. So we're going to come back to that as well in a couple of minutes. So, ARPDAU is something that we've been focused on for the last couple of years as a company. We think there's a lot of room for improvement in the monetization of our games, and we saw that potential a long while ago. And in this picture here, we can see the long-term positive trend. And this quarter, we improved the ARPDAU by 38% versus one year ago. And that also helped us improve the revenues, so the revenue grew by 11%.

Then we're going to have a look at our KPIs, starting out with our financial KPIs, where net sales first comes in at 70 million SEC, which is 11% up, as just mentioned. And that concludes our ninth consecutive quarter with double digit growth. Our user acquisition is down year over year, and we're working continuously to bring that up. And the way forward is to create products with strong LTV and have an effective process for ad creative creation. This leaves us with a contribution of 48 million, which is strong and leaves us with a positive EBIT and positive cash flows. And going to our operational KPIs, where we have our audience metrics, Dow and Mao, coming down. Mao is at 5.1 million and Dow at 1.5, which compared to last quarter's 1.6 is down 100,000. We attribute the decline here from our couple of quarters of lower volume UA in combination with higher quality users that come in at a higher cost as well. We're seeing a strong ARPDAU up 38% year-over-year, which again we see coming from portfolio-wide improvements and specifically QISTU with these improvements in the last couple of quarters coming in and contributing to this increase in ARPDAU.

Yeah, and it's just worth mentioning in general with our user acquisition efforts that it's always targeting revenue growth and return on investment rather than specific DEU targets. So as such, it's not a concern for us that DEUs can decline if we see that we get that revenue growth. So if the higher quality, higher price thing means better ROI, that's just a good thing. So again, looking at longer term trends here, we can see our revenues and EBITDA margins over the last couple of years. And it's of course very positive to see that the we also have improved margins. So it shows the scalability of the business. So the margin starts to come clear. We have a really good margin on each and every game. And now as the revenue grows, it also covers the operational costs and you start seeing the profit margin. So 25% EBITDA margin and the 6% EBIT margin this quarter. So let's look a bit at the product mix.

Yeah, and we usually talk about our evergreens, which is a part of the portfolio where we have the higher revenue games with the long tail revenues and high margins. And specifically, we have world domination there now for a full quarter. And it's nice to see a quarter where this really delivers with, for example, Birdbrain, a 2014 game, which has its highest quarter revenues in a couple of years. So that underlines our strategy on that part of the portfolio.

Yeah and also I think this move to live ops with several games have freed up developers and artists and game designers and so on to work on new games and that's a trend we've seen over the last couple of quarters and more and more people are in the new games department of MAG and it's also good to see the result of that now and more and more games being in market tests so In Q4 we talked about having four games out being tested and in Q1 we had six games. Some of those are survivors from Q4 still being in testing Q1 and obviously a few additional ones. And this is a kind of focused exploration. We of course always have new games in the world game segment that we're testing but we now have multiple games in a new category that we're testing and this is a way to kind of build up momentum and expertise in a specific category that might be the third one together with word and trivia for us. So it's a very exciting time for us. And of course, we also have the growth department here with the question and words being the biggest games in that segment. And the growth games are where we invest more efforts and bigger teams and investing in user acquisition. And there's a lot of exciting stuff going on there. So we mentioned in the last presentation that we had done changes to the arena mode. So that's mainly changes to the in-game economy and how you use in-game currencies in this case, the ticket system. So when that's used more efficiently, people also replenish and then spend real money to buy more tickets. And that had a great effect in Q1. We also see this on the middle picture here from a solo mode. That's a time-limited mode that lights up in the game during certain periods. So we did tests in Q4 in Germany. And now in Q1, we did the second version of this solo mode based on the learnings from the summer test. And that worked even better. And now actually in In the next course, beginning of Q2 in December, we launched Solomert version three. So that's another iteration. And this time we launched it globally. So it had an effect in all the crystal markets. And we also see the QD live, so the live show we have integrated in the German market is continuously growing. So it's up almost 50% in terms of viewership if we compare January to September. So it's kind of a steady positive trend, which is, of course, good to see. And there's, as I mentioned, it's a big team. It's our biggest teamwork on new quiz deals. There's a lot of other stuff. lot of fun stuff for the players and hopefully even more fuel to the ARKDAO improvements of the game.

We're going to continue to leverage our ARKDAO potential going forward. We don't think we're done there and specifically we have more to do in QuizDuel in the upcoming quarters.

Yeah, so I guess it's summarizing what we talked about just very recently here, but it's really about those two main things for us. So getting new games out to the market and using all this potential where we have a really big user base and great teams working on ideas we really believe in here. And for the new games, of course, having games in test as to global launch. And we talk about that in today's report as well, that our ambition is to get games out this year that really have a significant positive impact on our business. So that's what we aim for. Yes, and as I mentioned in the beginning here, this is not a live stream, so we're recording this from home. That means that the Q&A section will be only online on Twitter today. So please post any questions you have on the MAG Interactive Twitter account and we will answer those questions throughout the day. So thank you so much for watching this.