Modern Times Group MTG AB (publ)

Good morning, everyone. Hello, and thank you for joining us today to discuss our results for Q4 and the full year 2024. My name is Anton Gorman, and I'm the VP of Investor Relations at NTG. With me and hosting this call, I have Maria Redin, our President and CEO. After the presentation, there will as always be an opportunity to ask questions, both over the phone and via the web chat. If you are dialing in, please follow the instructions from the operator. Otherwise, please use the online forum for your questions. And with that, I hand over to Maria. Maria, please, over to you.

Thank you, Anton. And hello, everyone, and thank you for joining us today. I'm very happy to present the strong set of results, and that is on back of great games performance that allowed us to finish the year on an all-time high. Our students have maintained a very high level of activity in Q4, both with strong events and a higher number of events in total, along with the geo-expansion through localized game and new titles that we've seen in Play Simple. We reported total Q4 sales of 1.7 billion krona, representing a 6% increase year-over-year in constant currencies. And our sales were also up 3% for the full year in constant currencies, and we have therefore delivered in the middle of our guided range for the full year. Our sales were also up 15% in constant currencies for Q3, which shows the strong activity that we had in the quarter and also the fact that Q4 is the season's strongest quarter of the year. On the advertising side, overall eCPM dynamics continue to be somewhat muted in Q4. We did see an uplift in Q4, which we should expect given the season, but in the period after Thanksgiving, it was lower overall than what we saw in 2023. And I would say in general, the lower eCPM levels is something that we've seen throughout the year. And that is also something that the team in place Simpa is focused on mitigating throughout the year. And we will also touch upon this shortly. We reported 455 million krona of adjusted EBITDA in the quarter, which is a record quarter and it's up 4% year over year. Our adjusted EBITDA was also up 8% for the full year and we reported operating margins of 27% in Q4 and 28% for the full year. This means that we also delivered in the upper range of our margin guidance for the full year and it's also in line with what we said when we reported our Q3 results. We generated 288 million krona in free cash flow in the quarter and 1.2 billion krona for the full year. We continue to be highly cash generative and we delivered a 71% cash conversion for the full year 2024, which is higher than the 50 to 60% range that we expect long term. Before also we get into the nitty-gritty of our results, I would like to briefly spend some time on our acquisition of Plarium, the makers of Raid Shadow Legends. We signed the deal, as you may remember, in November, and we do expect to close it in a couple of weeks at the most. The acquisition of Playroom is a major milestone in our journey to become a leading gaming group, and it's a major catalyst for us to realize our ambitions to build an international gaming village where game makers can thrive. Both for me personally, and I think I can say for the whole team, we're all very excited to get our new colleagues on board, and we look forward then to also come back to more information to you, our audience, with the plans once we close the deal and go further into the work with the onboarding. So next up, let's look at our sales. Our revenues in reported currencies were up 8% year over year in the quarter, and they were up 3% for the full year 2024. Revenues were up 6% and 3% respectively in constant currencies, as I mentioned for the two periods. As you may recall, we did say at our Q3 results that we had an exciting and a busy period ahead of us. So today, I'm really happy to be able to report that our organic revenues were up 9% year-over-year in Q4, which meant that our events and activities that we had planned performed very strong. And this was driven by fantastic growth of Snowprint, a strong operational performance in InnoGames, and a healthy momentum in Play Simple. Our organic revenues were down 1% for the full year, reflecting the slower Q2 and Q3 that we've seen after a solid Q1. Let's now look deeper into our franchises. As I've said, I'm very happy with our overall performance. As always, we will have things to do, but there's nothing different from previous quarter. When you look at the now Q4 results, it's worth keeping in mind that, as I said before, Q4 is the most important quarter for us seasonally, both on the mid-core side as we can do more events and activities, especially coming up to the Christmas sales, but also on the casual side where we see increases on the ECPM levels. Sales for the World Game franchise were up 4% year-over-year in Q4 and 17% from Q3 2024. This reflected the agility and the speed of the Play Simple team. The results were driven by the success of the geographic expansion of the localized version of Crossword Jam and Word Search Explorer, and by the growth of the new puzzle games, including Tilematch and 2048 Numbers Merge. This was even more encouraging considering that we do see continued muted eCPM environment, as I just mentioned. Whilst we saw an uplift around the Halloween season, we didn't see the same boost following. The sequential uplift in sales was also affected by a slight delay in the booking of some third-party revenues from the third into the fourth quarter, which we mentioned in our Q3 results call. The strategy and simulation franchise had a very strong quarter. Franchise revenues were up 25% year-on-year and were up 28% on a sequential basis in constant currencies. Our success was driven by very strong performance in Warhammer 40k Tacticus, which once again delivered all-time high sales in the quarter. The team has continued to deliver successful live ops while supporting the game with well-received stream of content like new characters and faction. And the team is also working on future PC and Mac versions of the game, which will be launched this year. We also continue around the game to benefit from the overall broader mainstream interest in the Warhammer 40 game franchises that comes from everything that's happening in the broader market around the franchise. Forge of Empires also continues to perform strongly in the quarter. They had three game events in the quarter 2024 compared to two events last quarter. The events were also well received by our players, which means we execute them well. We compounded the positive effects with more events and successful events. And it's also worth mentioning that the October was the best month that we've had in the last two years, which means that since COVID, Tribal Wars, which is now a 21-year-old game, one of the first games that InnoGames launched, actually delivered its best year ever in 2024 and even outperformed the revenues we saw during the lockdown in COVID times 2020. So this again shows the longevity of strong old franchises. And overall, I would say we had a very strong performance from our largest mid-core titles, and it was a great effort by the InnoGames teams. The racing franchise went down 14% year-over-year and down 17% sequentially in constant currencies. The team continued to add content and improve the gameplay in both Formula One Clash and top drives during the quarter. The content was well received by the players and community and we saw a good ARPDAU increase, but we are, however, still affected by the lower number of players that we see in the games year-over-year. Our newly game, Forza Custom, has not performed in line with our expectations, so the team is currently working on major changes to turn the game around. And the Hutch also introduced one of their older games, Hot Wheels, on Apple Arcade in the quarter. Again, interesting to see one of our older games coming back to the market again. Hutch also saw some leadership changes after the end of the year, as Oliver Bullis, who is MTG's chief product officer, has become the interim co-CEO. Sean Rutland, who is a co-founder and the previous co-CEO of Hutch, has now stepped up to become the executive chairman of the studio. And he continues to work closely with Oliver and us in the management team to continue to improve the future performance of the racing franchise. Our defense franchise revenues were down 25% year-over-year and down 15% sequentially in constant currencies. Our flagship title Bloons TD6 received two smaller updates in the quarter as the team was fully focused to polish and launch a major paid DLC priced at $9.99 that went live earlier this week. So far it's still early days, but the community has been very positive about the new content and I'm really excited to see how it continues to perform. Nidakee will also continue to evolve its Bloom Conch Storm, which was soft launched in October 2024. Again, similar here, early days. So we look forward to see what the games will bring. Next, let's take a look at the early scaling games and our pipeline of new games. Today, we have a total of 18 games that are either in early scaling or in development in our pipeline. 11 of these titles are already fully available across platforms, and together they represent 21% of our revenues in Q1, and it was mainly driven by the Warhammer 40K Tacticos. As we said before, Snowpin continues to be on an amazing trajectory with Tacticos, and we're very happy that we can continue to support them on the growth journey. We believe that the game has continued potential to be even more exciting and we look forward to see the game scaling it in 2025 and beyond. Endgame's latest title, Heroes of History, which was soft launched in Q3 last year, has continued to show encouraging results, and it is outperforming its predecessor, Rise of Culture, on a like-for-like basis. The team behind Heroes continued to evolve the gameplay and add content to the game, and also made the game experience fully available on browser during the quarter. As I said before, Ninja Kiwi continues to evolve Bloom's Cardstorm. After its soft launch, we are improving the gameplay and features in preparation for the commercial launch further down the line. And as you probably know, the collectible card game attracted a passionate community of players, and this is a new genre for Ninja Kiwi, and it's also a game that is free to play rather than a premium game like the BTD6. Now as we're getting ready to scale and deploy UA, we will now come to the second phase of the game launch. So we're excited to see its future potential. Nindakivi also announced two new game titles in the quarter, one of them being Fightland, that is a battle arena game which will be launched later this year. And the second one is Zombie Assault Resurgence, which will be a sequel to the successful SAS Zombie Assault 4, which was a shooter game from 2017 and is still in the early phase of development. Play Simple, as always, continue to expand its portfolio in the quarter. The latest addition is Crossword Go, and they now have up to seven games in the portfolio that they're working on and starting to test scaling on back of it. Let's now move on and look at our performance indicators for the quarter. 60% of our revenues was from in-app purchases and 36% of our revenues was from in-app advertising. The increased revenues from in-app advertising mainly reflected PlaySimple's successful geographical expansion of the key titles. This drove Dow and helped mitigate the negative effects on the CPMs from Google Shift to real-time bidding that we discussed earlier in the call. Our daily active users continued to increase sequentially and were up year over year, driven by the world games players in the new geographies, as well as new puzzle titles. The sequential increase also reflected the newly launched Heroes of History from Indie Games, successful events in Fort of Empires, and the overall scaling of Warhammer 40k Tacticus. Looking at our average revenue per daily active user, we saw a clear uplift, both sequentially and year-over-year. And I'm really happy to say that we have increased our ARPDAU at the same time that we increased our number of daily active users. ARPDAU levels grew sequentially in four out of our five studios. The year-over-year increase reflected strong performance from Ender Games and Hutch. And I also want to highlight that Snowprint, they have grown their ARPDAU levels every quarter since acquisition a year ago. I will now hand over to Anton, who will walk you through the UA spend, profitability, and financials.

Thank you very much, Maria. So, we spent nearly 680 million SEC on user acquisition in Q4. This was an all-time high, representing an 11% increase year over year, and a 21% sequential increase from Q3. In total, we invested over 2.2 billion SEC in user acquisition for the full year, as we saw progressively better traction in the second half of the year. Our total user acquisition spend represented 40% of our revenues in the quarter, which, as Maria mentioned, is the seasonally largest one. This was an increase from 38% both in Q3 last year and in Q4 2023. As a result, we spent 37% of our revenues on UA during the full year 2024. Our year-on-year increase in UA was more or less evenly split between Snowprint, InnoGames and PlaySimple. On a quarterly basis, PlaySimple represented the largest increase, but both Snowprint and InnoGames also increased their UA from Q3. Play Simple's increases in marketing was driven by the newly localized word games and several of their new puzzle titles. Snowprint, of course, continued to push content and live ops in Warhammer 40k Tacticals, like Maria said, which enabled significantly more marketing. And last, but obviously not least, InnoGames capitalized on their strong events and on the positive traction of Heroes of History, which was soft launch in Q3. So we're happy to be able to invest more as this builds momentum for future organic growth. I also want to note that we continue to have a disciplined approach to UA as we have always had and investments continue to be profitable in our marketing. So when it comes to our profits, we reported a record adjusted EBITDA of 455 million SEC in Q4, which was up by 4% from Q4 2023 and nearly 1.7 billion SEC for the full year. The increase mainly reflected scaled mobile revenues across our studios, supported by growing browser revenues as well. This was driven by more unsuccessful events, as well as the fact that eCPMs are typically stronger in the seasonally important Q4. Our profits also benefited somewhat from the delay, like Maria said, of a booking of third-party revenues from Q3 into Q4 last year, which you mentioned already. So all in all, we delivered a strong operating margin of 27% in the quarter and sustained our high profitability levels despite increased UA, thanks to the factors I just mentioned. Our operating margin for the full year amounted to 28%, and we therefore delivered in the upper range of our guided interval, as Maria mentioned earlier. So next, let's take a look at our financials. We continue to have very strong cash generation and cash conversion levels in the fourth quarter, and we reported free cash flow of nearly 290 million SEC. This enabled us to finish the year with a high cash conversion level of 71%, which once again is above our guided long-term range of 50% to 60%. And all in all, this reflected positive working capital timing effects and boosts from interest income in the quarter, our disciplined capital allocation, low capex levels, which all enabled healthy underlying profit to cash conversion. Also, as you can see, the timing effects worked in our favor in Q4, but we expect them to fluctuate throughout 2025. We once again had positive working capital in Q4, which included transaction costs of 72 million krona, as well as timing effects in both receivables and payables, reservations for incentive plans and tax refunds. The increases in accounts payables primarily reflected increased UA spend in PlaySimple. I would then also like to comment on our 325 million SEC net financial items in the quarter. we had other financial items of 359 million krona, out of which 216 million SEK comprised discounting effects and revaluation exchange rate differences on earn-out liabilities. These charges in the quarter were largely non-cash items and were driven by FX and the increased price of the MTG share. So while we do have somewhat of a natural hedge on these items, it's only partially reflected in the P&L, and this is because both our liabilities and the cash reserves that are held on the IHQ level are in US dollars, which partially offsets the currency effect, but the rest of our cash is held in our studios in local currency, and only the balance revaluations on the cash held in HQ impact our financial net. And the locally held balances are reported as part of our other comprehensive income. When we then look at CapEx, it was down slightly year-over-year in Q4 and was down significantly for the full year. The full-year dynamics were mainly driven by the divestment of Kongregate in February 2024, whereas the low levels of CapEx in Q4 continue to reflect where we are in our current development cycle, as several of our new games are now in soft launch or early scaling and therefore part of our OPEX. Thank you. That was all from me, and I will now hand over to Maria for a summary.