Modern Times Group MTG AB (publ)

Good morning, everyone. Thank you for joining our live stream for our second quarter 2024 results. This event is hosted by our group president and CEO, Maria Redin, and our CFO, Nils Möskow. After the presentation, there will be an opportunity to ask questions. If you are watching through the live stream, please use the questionnaire feature to submit your questions. If you are dialing in by phone, please follow the instructions of the operator when the presentation section of the call is over. I now hand over to our CEO, Maria. Maria, over to you.

Thank you, Anton, and welcome everybody to our Q2 results for this year. Looking at the quarter and our Q2 results, you can see that our Q2 result shows that we're progressing well towards our guidance for the full year. We've had in the quarter a strong profitability and cash flow generation, and we have made sure to maintain marketing discipline while we get ready to scale our marketing again in the second quarter of the year, or second half of the year and onwards. In the quarter, we reported sales of 1.4 billion kronor in a softer Q2, and that is corresponding to a decline of 1% in constant currencies. Our Q2 was focused on operation execution and a wide range of initiatives to improve our momentum during the rest of the year. We are facing a challenging market environment. If you're looking on the ad side of things, Google's transition to real-time bidding for the digital inventory has resulted in lower eCPM levels for our advertising business. We are of course working hard to explore what we can do to mitigate these effects, but this is just the new reality of the digital ad markets. On the in-app purchase side of things, we have not seen any change in the overall trends that we have observed now for quite some time. The mid-core segment is and will continue to remain extremely competitive. And that means that we, of course, need to remain laser focused on our operations and execution to ensure that we retain and entertain the customers and players who choose to spend the time and money in our games. Again, looking at Q2, we reported another quarter of very strong profits. Our adjusted EBITDA was up 7% year-over-year in Q2 to 426 million kronor, and our operating margin increased to 30% in the quarter. We also, again, reported an all-time high adjusted EBITDA on a 12-month rolling basis, which we're very proud of. Our strong profits were primarily driven by lower short-term user acquisition spend in Play Simple, primarily in April and May, along with lower UAS spend in InnoGames. If you look down at operations, we feel that they continue to be robust. Our business model has a strong optionality to deliver high returns in period when we're getting ready to scale up to growth again. As I said, the execution across the businesses remains very high. And that means also that we remain confident in delivering our full-year outlook of 1-5% reported growth, excluding currency effects, and an adjusted EBITDA margin of 26-29%. Moving on to the next slide and looking at our sales, that was down 1% year-over-year in constant currencies. We have currently 37 live games in our portfolio, and that also includes the newly launched and upcoming titles in the pipeline. As said, while our Q2 sales were somewhat softer overall, we also saw more positive dynamics at the end of the quarter, which is important to highlight. We talked about the challenges PlaySimple have had, but they did actually grow year over year again in June, and that is thanks to the localization of the two current popular word games and an increased focus across the company on data science and AI to accelerate their execution, both towards existing and new customers. Snowprint overall had a very strong quarter and continued to successfully scale Warhammer 40K Tacticus. And that has now grown so well, so it's now our third largest game. And we're very excited to see how it's progressing. And looking also at Hutch, who you know have had some tough quarters behind them, they're now showing better trends. And thanks to the successful reset of Formula One Clash, they also had a very strong finish of the quarter. Drilling then down one level further and looking at our franchise sales. If you're then looking at the word game franchise, sales were down 6% year over year in constant currencies, and it was down 5% from Q1. The performance reflected the effect that the Google move to real-time bidding has had on digital inventory on the ECPM levels. During the quarter, they have launched localized version of both Crossword Jam and Word Search in several countries. And the games are scaling well in terms of install, DAOs, and revenues in these tours, which are very exciting to see, and that also helped us going out of the quarter. So thanks to these efforts, PlaySimple saw improvements in its revenue momentum, as I said, towards the end of the quarter, with June sales franchises were actually up year over year. Looking then at our strategy simulation franchise, sales were up 20% year-over-year in constant currencies, driven by the consolidation of Snowprint in December last year and the ongoing scaling of Warhammer 40k Tacticus franchise. Franchise revenues were however down 4% from Q1 this year and Tacticus received many updates during the quarter and continue to have a very active pipeline going forward which includes a games two-year anniversary event which we all look forward and we also come with more playable characters. Indie Games on their end had a softer Q2 and their sale was down from last year, as the events now in Q2 didn't reach the same high level and the uplift that we achieved last year. Also worth mentioning as we look forward for Indie Games, last Q3 we had very tough comps because we had some of our most successful events in June, July last year, which means going into the new quarter, even though we are expecting Indie Games to continue to improve their performance, it's going to be tough comps. Looking at the end of games and their efforts to make sure we continue to improve performance, they have now added a second team to Forge of Empires that will focus on growth initiatives. And on top of that, they're also launching new Guild Raid features that is designed to drive revenues and engagement between the major events that we're having once per month. Moving on to tower defense franchises, they were down 10% year-over-year in Q2, but they were also up 3% versus Q1. The franchise continues to be affected by the lower intake of new customers we saw in the beginning of the year, although the inclusion of the blue TD6 in the April steam sale mitigates that somewhat. BTD6 was also included in the summer sale on Steam, which turned out to actually become our second highest, most successful download event that we've had together with Steam, which was really exciting to see. Nidakibi also tried some new things in the quarter, where they tested a major influencer campaign with MrBeast. He is one of the biggest YouTube stars in the world. And the campaign helped to reactivate already existing players in BTD6, and it also drove in our purchases in the quarter. Ninja Kiva continued to add strong content to BTD6 and has an exciting pipeline for the rest of the year, and that includes both a new tower as well as new features enabling players to generate and share their own in-game content in the games. The racing franchises were stable year over year and were up 26% on a sequential basis in constant currencies. The improved performance was driven by a well-executed season reset of Formula 1 Clash. And we're also starting to see a positive momentum from the new game NASCAR Manager, but the revenue contribution is still quite limited as the game was launched in February this year. Moving on then to the new games pipeline. Of course, we talked about our franchises and our day-to-day focus remains, of course, making sure that we continue to entertain the players in our established games. But new games are crucial to drive our long-term growth. We're therefore really excited to see our strong pipeline on new games that we actually have across all the studios. Some of the new games are already available in the App Store, so you can actually play them, but they're not yet full commercial launch, which means we don't deploy that much UA behind them. And these games includes three new games from Play Simple, Time Match, Word Trip, Search, and Two Square 2048. And we further have two new titles from Hutch, just mentioned one of them, NASCAR Manager, and Forza Customs. And they've been around for a while, so we are now iterating the games based on the data that we gathered from the launch. For these new games, once we see the right performance, which we hope to see now coming through in H2, we will begin to accelerate UA spend in the second half of the year. Ninja Kiwi is also due to launch BTD6 on PlayStation in Q3 and on Switch in Q4. And that is following the successful launch we saw on Xbox last year in Q3. We also look forward to the launch of several brand new titles. The first one out, we expect Indie Games to launch a fully revamped successor to Rise of Culture, now in Q3. And thereafter, we do expect Nidekiwi to launch Bloons Card Store, and that is a new collectible card game. And that launch will expand on the Bloons IP franchise to a new title and also add a new genre to our portfolio. In addition, Nidakivi also have two more titles in the pipeline and they plan to launch the first of them hopefully at the end of the year and the next one to come next year. Looking then at some of our more detailed KPIs and performance indicators, we generated 61% of our revenues from in-app purchases in Q2 and 33% from advertising. This is a slight short-term shift from the previous quarters, which reflects the advertising environment I mentioned earlier, together with the addition of Snowprint Games to our portfolio. Looking at our daily active users, they were down both year over year and sequentially, and this is mainly driven by the divestment of Congregate in Q1 this year. If then looking at our DAO excluding Congregate, it is only down slightly from both Q2 last year and also from Q1 this year. And this is then reflecting the higher DAOs in the word game being offset by lower DAOs in the other franchises. Looking then at the average revenue per daily user, or ARPDA, that was up 11% year over year, and this is again mostly driven by the divestment of Kongigate, which primarily had lower ARPDA customers, but also then from strategy simulation and tower defense, where ARPDA was up from Q2 last year, and sequentially, and while raising, ARPDA was up significantly from Q1. So now with that, I will then hand over to Nils, who will take us through the user acquisition, profitability and the financials.

Thank you, Maria. We spent a total of 470 million SEC on user acquisition in the quarter and just under 2.2 billion SEC during the last 12 months. This represents 33% of revenues in Q2, down from 39 last year, and 35% in the first half of this year, which was down from 40% last year H1. And if we look at the rolling 12-month period, we spent around 36% of revenues on UA. The main drivers of this decline was lower investment into UA at PlaySimple during the first two months of Q2 as they continued to work on localization of established games and optimizing their new titles. We saw, however, positive effects of this work already in June when PlaySimple began slowly increasing UA spend again. which enabled them to also report a year-over-year revenue growth in June. We continue to have a disciplined approach to marketing, as you can see, but we also are flexible and can rapidly scale up marketing spend again when we see the opportunities. This provides us our business model with optionality to deliver high profits and margins for our shareholders in periods when we prepare for growth. But it also means that we can invest more into UA when the time is right to scale our business again. Looking at profits, adjusted our operating margin increased by 7% year over year in Q2 to 426 million sec and was up 25% in H1. The 12-month rolling adjusted EBITDA again was at an all-time high, so we reported an increased operating margin of 30% in the quarter and 28% for the first half of the year. This time, the main driver of our high margin in Q2 was lower UA spend, driven by our disciplined approach to marketing, but our performance was also supported by a focus on cost control. This obviously reflects the high optionality in our business as mentioned before, but our ambition is of course to begin investing more into growth when we see the right opportunities. We also continue to have a healthy cash generation and cash conversion levels. We reported a free cash flow of 295 million SEC in Q2, which enabled us to deliver a high cash conversion of 66% for the rolling 12-month period. This is higher than our guidance of 50 to 60%. This quarter we had positive working capital effects, both in the quarter and for the rolling 12-month period. And in the quarter we had positive effects on both the payables and receivables. And it's good to keep in mind that these time effects may vary between quarters. We also had significantly lower capex in the quarter, around 1.5% of revenues, driven both by the divestment of congregate in Q1, but also because we are ending in a capex cycle where several of our new games are developed and on soft launch. All this enabled us to deliver a high cash conversion level of 66% for the last 12-month rolling period. With that, back to you, Maria.