Modern Times Group MTG AB (publ)

Good afternoon, everyone. Thank you for joining MTG's livestream and teleconference for our results for the first quarter of 2024. I will now hand over to our CEO, Maria.

Hello, everyone. Today we deliver a strong set of results. Our net revenues were up 11% year-over-year, including a 1% currency effect to amount to 1.4 billion kronor. Our revenues reflected the focus on the quality of our portfolio and were driven by PlaySimple, EnoGames and Snowprint. We also continue to execute actively on our M&A agenda to optimize our portfolio in the quarter. First, we divested Kongate in early Q1 through the merger of the studio with Monumental, and that benefited, of course, our growth trajectory. And then after the end of the quarter, we also completed a roll-up deal to buy AutoAttack Games. AutoAttack is a small game studio responsible for Legion TD2, a successful tower defense game available on Steam. We also reported a strong adjusted EBITDA of 396 million kronor in Q1, which represented a 51% increase year-over-year and enabled us to deliver a 27% operating margin in the quarter. Our strong profits reflected the increased scale within our operations and PlaySimple in particular, and that was combined with an active focus on managing our cost base and a prudent UA philosophy focused on healthy returns. When we look at our studios, we have a strong pipeline of new games and localization ahead of us, which also gives us the ability to push more UA as we are ready. We further also had very strong profits in InnoGames, and that is thanks to the lower cost base following the restructuring last year, but also the growing browser revenues that we have once again by strong events engaging our established players in Forge of Empires. We continue to generate strong cash flow and generate the 293 million kronor in cash flow from operations. And that enabled us to deliver a 62% cash conversion for the 12 months period that ended on 31st March 2024. This again highlights the strength and the health of our assets. And as you may have seen, we also announced a new share buyback program this morning, and we have started to buy back shares already today. Our intention is also to then launch a new share buyback program following AGM in May, assuming, of course, we receive the necessary approvals from our shareholders. If we then look forward for the year, our outlook for the full year 2024 is based on our operational expectations as well as what we are seeing on the in-app purchase and the in-app advertising markets. At this stage, we have not observed any significant changes to the trends that we previously observed in the in-app purchase environment. Market analysis firm Newso also continues to expect similar like us, the market to grow by low to mid single digit percentage points in 2024. As I said, our own expectations are pretty much aligned with these assumptions. At the same time, the cash-in segment has been outgrowing the mid-core parts of the market for quite some time, and we do expect the broader dynamics of this to continue. But there are some factors, however, that makes us adapt a bit more cautious view for 2024 in isolation. These include, amongst other things, the recent move to real-time bidding, along with some upcoming new privacy changes to consume that Google is putting into place. And we therefore feel that the visibility of the digital ad market is currently somewhat reduced for us. At the same time, when we look at our companies, we do have a strong core of live games and we have an encouraging numbers of new games in the pipeline. The new games are however slightly delayed and the timing of these new game launches and new features will affect when and how much we can accelerate user acquisition investment to help also accelerate our growth. That means that we will have the ability to scale our UA when we see the right opportunities. but we will only do so when we can generate the right levels of returns on our spending and have better visibility on the market. Growth remains our main priority and focus, but you can also expect us to maintain our disciplined approach to marketing, focus on reasonable returns on the marketing levels. That means that when we continue to deliver high operating margins, well, we continue to work towards the next growth phase. Our outlook for this year reflects this thinking and we therefore expect our reported revenues adjusted for FX to be up between 1 and 5% and an adjusted EBITDA margin to 26 and 29% for the full year of 2024. So if you then look forward and we look at our sales, which were up 10% year-over-year at constant exchange rate in Q1, that was driven by our established portfolio of 37 live games. Sales were further up 7% if you look at the performer basis, which is when we exclude concrete for last year, and we include snow print in the calculations instead. Our sales in the quarter was driven by our Play Simple, Indie Games and Snowprint. And I'm really proud to add that we also had an all time high revenues if you look on the last 12 months basis. If you then look into our sales in more detail and we look at our different franchises, our organic growth in the quarter was driven by the word games and strategy simulation games. Sales for the word game franchise were up 11% year-over-year in constant currencies and PlaySimple continued to optimize the portfolio and added new features to our established word game titles. Word Search, which we now consider being an established title after a fantastic growth journey the last year, remained a strong performance, and it actually now represents just over 15% on the franchise revenues in Q1. PlaySimple is working on several new games and is also working on localized versions of our established titles, which we are expecting to release further down the line this year, and that will enable them to scale further. The sales for the strategy simulation franchise were up nearly 40% year-over-year, which mainly reflected the recent inclusion of Warhammer 40k Tacticus in the franchise. If you look on the in-game side, Forge of Empires reported strong quarter, driven by in-game events, which once again successfully engaged our established player and driving in particular the browser revenues. And what is also exciting when we look at the older games, Tribal Wars had a really strong quarter, and again, thanks to the engaged and well-established players community. And Snowprint, which is the new player in the group, continued to add features and content to Tacticus during the quarter, which includes updates and Guild Wars features, which has been very well received by players, and also the introduction of a new in-game faction, which made the game perform really strong. Sales for the Tower Defense franchise were down 8% year-over-year, reflecting the lower levels of new incoming players. And that is coming particularly from Q4, but also Q1, as we didn't have a Q4 Steam sale. The team at Nier Kiwi has a very active pipeline of content for Bloon City 6, and we deliver two major updates now in Q1. Following the quarter, we also had an April update, which was followed by a Steam sale on Steam, and that included brand new features designed to offer players a new share of the revenues from content that they create within the game. Sales for the racing franchise were down 10% year-over-year in constant currencies. The team at Hutch is making really good headway on the upcoming season launch on the Formula One Clash, and is exploring options also for top drives. The team has further and continued to work on Forza Customs, which they launched in Q4 last year. Hutch typically launches new titles in an early stage of development, and the team is thereafter scaling marketing up and down. And as they learn more about the game and the performance, they also work on adding new features and content. And the Hutch team is in the middle of this process. They further launched NASCAR Manager, and that was launched in February, and that is showing early promising numbers, which is really exciting. But again, UA is scaled very moderately on this one, and we're following its progress very closely. We continue to be excited by the pipeline of our new key content and new games. And as you can see, we have new initiatives across our whole portfolio, which is really exciting, even though launches and scaling of some of these titles has been delayed, as I discussed. If we look at our existing titles, we expect Blooms TD6 to shortly launch on PlayStation, and we do expect to also expand it to Nintendo Switch later in the year. We further expect to re-vamporize a culture that InnoGames has been working on to come back later to the market in a new shape and form. And we also expect PlaySimple to launch localized version of several of their established Wargame franchises and titles during the year, which also could provide us new growth opportunities in new markets. Snowprint, which we acquired in the end of last year, will continue to scale Warhammer 40K Tacticus, and they will continue, like in the Quartet, to add more content to the game and scale UA accordingly. And further, as I mentioned, Hutch is evolving Forza Customs to implement their learnings from the early launch before they begin to scale the game further, and they will continue to test the potential of Nazca Manager to determine when the time is right to begin scaling the game more aggressively. And then when it comes to new titles, Play Simple continued to work on Tilematch, 2048 and Word Trip Search. The three games are all available on Android and they will gradually be introduced on iOS later this year. Play Simple is evaluating their early performance and iterating based on the learning and development and will move to commercial launch as they feel the games are ready. In a key way, similar making good progress on the Bloons ConStorm, which is now we expect to launch in H2. And they also have yet another title yet to be announced to be launched in the second half of the year. So we then move forward and we look at some of our performance indicator in Q1. We generate some 59% of our revenues from in-app purchases in Q1 and 35% from advertising. The slight decline in revenues from third-party platforms mainly reflected Warhammer 40k Tacticus being added to our portfolio and the continuous scaling of our advertising revenues. Our daily active users were stable sequentially, which reflected higher DAO in our racing franchise, driven by the new games Forza Customs and NASCAR Manager and the addition of Tacticus to our portfolio. This growth partially were offset by the lower DAO levels in our world game franchise, whilst PlaySimple continued to work on the new games and some key content launches. Our average revenue per daily active users, or ARPDAU, was down sequentially in the seasonally weaker first quarter. ARPDAU level, however, was up year over year, which mainly reflected the higher spending in Indie games, driven by Forge of Empire and the successful events, together with the addition of Tacticus to our portfolio. This was somewhat offset by the lower ARPDAU level that we saw in our racing franchise, while Hutch is working on the season reset on the Formula One Clash and on evolving on the new games titles. Now I will hand over to Nils, so he will walk through our UA spend and our financial performance.

Thank you, Maria. Looking at our UA, you can see that we continue to maintain our disciplined approach to return on advertising spend. In total, we spent 527 million SEK on UA this quarter, which represented 36% of our revenues, and which was down from 41% in Q1 last year. In absolute terms, year spend was only down 10 million year over year, and this reflected the fact that we are awaiting key features and new games before we start scaling UA again. If we look at UA on a rolling 12-month basis, however, we have spent 38% of revenues on UA, and these levels were stable if you compare it on a year over year basis. Going forward, we will scale up UA for our games where we see the right opportunities. And as you know, our UA spend is not evenly distributed throughout our portfolio. Ninja Kiwi, on the one hand, has almost no UA spending as they are focused on organic growth through their community. And while PlaySimple, on the other hand, spends most of all of our studios. PlaceSimple's UA spend in this quarter was also lower year on year as the studio focused on healthier ROAS levels from its established portfolio while they evaluate the potential impact from the changes to the digital ad market that Maria just went through. Let's look at the EBITDA then. Our adjusted EBITDA grew by over 50% year-over-year to 396 million SEC with a good operating margin of 27%. And we had an all-time high adjusted EBITDA on a rolling 12-month basis with a margin of 28%. So the main drivers of our strong results were, firstly, the strong growth and operational leverage at PlaySimple. Secondly, the lower cost base at InnoGames following the reorganization in April last year, and the ongoing trend of successful events in Forge of Empires, driving browser revenues from established users, as Maria mentioned before. And thirdly, we spent less UA, but also we kept our overall costs flat. And the good result flows through to our cash flow. We had good cash flows in the quarter, as you can see, and last 12 months as well, driven by the strong underlying operational result. We saw also positive working capital effects and a lower capex year over year. This enabled us to deliver 69% cash conversion rate in the quarter, but more importantly, on a rolling 12-month, 62% cash conversion rate. which is slightly above our guidance between 50 to 60%. As you can see, we continue to have a good flow through from the operating result and the positive working capital effects both from LT on last 12 months, but also in the quarter. There's always some timing effects, as I mentioned, and they can go fluctuate around zero, sometimes minus, sometimes plus. A word on capex. Our capex is expected to be lower going forward, in particular because Kongregate has left the group. Historically, as we mentioned before, they have been a major driver of our capex and represented slightly less than half of our capex for 2023. So by that, back to Maria.