Modern Times Group MTG AB (publ)

Good morning, everyone, and thank you for joining us today to discuss the results for the first quarter of 2025. My name is Anton Gorman, and I am the VP of Investor Relations at MTG. With me and hosting this call is our CEO, Maria Redin. After the end of the presentation, there will be an opportunity to ask questions, which you can do over the phone, if you prefer, or via the web chat. If you're dialing in, please follow the instructions from the operator. Otherwise, please use the online form for your questions, as usual. Thank you, and I now hand over to Maria. Maria, please go ahead.

Thank you, Anton. Hello, everyone, and thank you for joining us today. Q1 was a historic quarter for MTG, and in February, we successfully closed the transformative deal to acquire Plarium. We consolidated the business from the 1st of February, and I'm very excited about the opportunities that this acquisition creates for our group. The deal significantly strengthens our game portfolio. The biggest addition is, of course, Shadow Legends, which is one of the clear category leaders in the turn-based RPG genre. But also, our lineup now includes games like Mech Arena and Merge Gardens, which we're very excited to have on board. Playroom is also more than its game. They have their own suite of strong proprietary tech and tools like the Go game and the Play and Play platform. And we've already begun to work to evaluate the opportunities for the commercial synergies and the improved collaboration in key fields like business intelligence, marketing, and games distribution. There is indeed a lot to be done across our expanded groups in regards to knowledge sharing, industry knowledge and consumer insights. And we are firm believers that both our original studios and Plarium will be able to benefit of the combined merger. I truly believe that we can achieve great things and be even better together as a scaled global gaming group. There will be a whole lot more to say about Plarium, and we continue to plan on how we can be better working together. And we will tell you all about that as we host our Captain Markets Day later in the year. But for now, let's look at the first quarter in more detail. I'm very happy to kick off the year by delivering a 6% organic growth. We continue to both deliver strong live ops and in-game content in our games. We also continue to scale our key new games to ensure that we can deliver future growth, not just today, but also tomorrow. And these games include the Warhammer 40k Tacticus, Heroes of History, and our localized world games from Play Simple that we now unbarred on a geo expansion. We consolidated Plarium from the 1st of February and we therefore reported 2.6 billion kronor in net sales for the period and with an adjusted EBITDA of 660 million kronor. This amounts to a 24% operating margin in a quarter where we continue to have high levels of UA spend on key establish and new titles from our original studios. We generate 143 million krona in free cash flow in Q1. That means delivering a 56% cash flow conversion for the 12 months period ending 31st of March 2025. This is indeed lower than the elevated cash conversion levels that we reported throughout last year, but it's still comfortably within our current long-term guided range of 50 to 60%. The Q1 levels reflected significant working capital adjustments during the second half of last year, which were then partially reversed as we now entered into Q1, thus leading to the negative working capital in the quarter. In addition, our cash conversion was also affected by higher tax payments and the non-cash IFRS adjustments of deferred revenues that occurred in player after the closing of the acquisition. Moving forward then, let's have a look at our sales in the quarter. Our revenues in reported currencies were up 77% year over year, and this is a result of the consolidation of Plarium. In this quarter, we did see a negative impact from the currency effect as the corona has strengthened, and the total sales in constant currencies were therefore up 79% year over year. As we mentioned on the previous slide, we delivered 6% organic growth, which underscores the strength and the focus of our original portfolio and the live games. Going then into further details, let's look at the performance of our gaming franchises. As you can see from the slides, we're showing Playroom's games as a separate franchise, and you can expect us to do this also for Q2. Our plan thereafter is to present a new reporting structure at our upcoming Captain Markets Day, and therefore Q3 results will be the first quarter when we then introduce the new way of reporting. If we then look at our original gaming franchises, I'm very happy with what we delivered. As always, there is more work to be done, but I think we demonstrated a very strong quarter. And it's also worth keeping in mind when looking at the sequential performance that Q4 is seasonally the most important quarter for our games. And in combination, we also did have a very strong Q4 last year across the board in all companies. Normally, on the other hand, Q1 is the seasonally smallest quarter for us. Sales for the word games franchise were up by 7% year over year, despite relatively tough comps last year. This reflected the continued success of the geographical expansion of our word games in local languages, combined with very attractive content and feature pipeline for the live games. And this was supported by then increased user acquisition spending for all keyword games. The digital ad market is now also operating more on a like-for-like basis after Google's transition last year to the real-time bidding that took place in Q1. Strategy and simulation franchise were up 10% year-over-year. This strong performance was driven by the continued growth in the Warhammer 40K Tacticus, which is now going into this third year of being. And Heroes of History was also soft launched in Q3 last year. Tactico has continued to scale well, thanks to updated stream of new game in content, and Snowprint is also focused on diversifying the revenue stream for the games. Tactico is now also available on PC and Mac, and recently launched the Tactico Store, which now generates over 5% of the game's revenues in March. Heroes of History is still in a very early stage of its development, and the team is continuously adding new content and characters to drive player engagement. Forge of Empires, which is our second largest game after the addition of Raid Shadow Legends, was down slightly year over year, despite the very active and rather successful content calendar with three in-game events. It's quite exciting, Forge is celebrating its 13th birthday this year, and we continue to have a dedicated and passionate players community around the game, which of course we continue to nurture over the long run. Sales for the Tower Defense franchise were up 3% year over year. It's also worth noting that the sales were up by 15% from Q4. This strong performance reflected the launch of the Legends expansion for the Bloons TD6. This expansion offers players a totally new way to play the game. It has been very well received by the player community, and it's something we can continue to build on in future updates to the game. Nini Kivi's new title, Blooming's Cornstorm, that was soft launched in the end of last year, is still in early stages of its development. The team is beginning to start doing small marketing tests, and as they see the right rejection, they're hopefully going to be able to start to scale the game further. Racing franchise sales were down 12% year-over-year, and it's driven by declining sales from some of the legacy games, and also the active decision to move resources and focus from Forza Customs to the new title, Match Creek Motors. Match Creek has been developed by using what the team has learned from Forza Customs, but it aims to rather offer a more casual Match 3 experience, still based around cars, targeting an older demographic. We also continue to be happy on how well Formula One Clash is performing. The game delivers strong performance in the off-season, and this is thanks to the focused efforts by the team to drive player engagement with strong key content. And of course, we look forward then to the new season reset coming up within soon. Players' games continue to contribute two months now in Q1 results, and it amounted to just over one billion krona in Q1. Raid Shadow Legends celebrated its sixth year anniversary with a large in-game event called the Festivals of Creation. This was well received by players and resulted in March being the fourth highest grossing month ever for the game, and it actually delivered an all-time high revenues for a single day within the month. Raid was also expanded with five new champions inspired by Alice in Wonderland, which further boosted engagement. The other games within PlayerMech Arena received a St. Patrick's Day celebration event and launched a new in-game season with new weapons, a new map and new skins. And further on the casual side, Merch Gardens also continued to expand live ops in the quarter and the team launched a Valentine's Day event with a wide variety of content and introduced a new game mode and a new monetization system. So that was a more established game. So if we then look at the new games pipeline that covers both new games and upcoming projects across our portfolio. Today, we have 20 games in early scaling or early development. 13 of these games are already fully available on the app stores. And if you take these together, this game represents 13% of our total group revenues in Q1, driven mainly by Warhammer 40k Tacticals and Heroes of History, which I talked to you earlier about. We further than expect Nidakevi to launch Fightland, which is a new IP later this year, and also Zombie Assault Resurgence, which actually builds on a very successful IP they previously launched, Zombie Assault IP, and that is coming at the end of the year. I also mentioned earlier, talking about Hutch, that we launched a new title, Match Creek Motors, in Q1 now, utilizing the learnings from Forza Customs. And still very early days on the games, and they're monitoring the KPIs, whether we can scale that up further or not. And last but not least, on the Playroom side, they have several games in the development and continue to evaluate and improve the performance of the new title, Elf Island, which has been soft launch for quite some months now. And then moving to the key performance indicators for the quarter. As you can see, the revenue shift is slightly balancing post the consolidation of Plarium. This means that we now have 76% of our revenues coming from in-app purchases in the quarter, whilst approximately 21% is coming from in-app advertising and 3% from third-party platforms. We significantly increased our daily active users to 9 million daily active users, and with an ARP DAO of just over 3 kroner. The increase in DAO was driven both by the consultation of Plarium, but also on the success of the PlaceSimple's geographic expansion, driving more users to the companies, and also supported by the growth of Warhammer 40k Tacticals, where we continue to see an active scaling. We did have a healthy uplift in ARPDAU for our original studios in the quarter, driven by Hutch, Ninda Kiwi and InnoGames. And with that, I will now hand over to Anton that will look into user acquisition, profitability and our financials.

Thank you very much, Maria. So, looking at the UA, we invested 38% of our total revenues in user acquisition in Q1, up from 36% in Q1 last year. Our total UA spend in the quarter amounted to 960 million, which reflected the consolidation of Plarium and the scaling of UA in key current and new games. Our EU spend from our original studios was up 26% year-over-year, and the largest part of the increase in UA from our original studios came from Play Simple, as the team continued to invest into the geographical expansion of key titles like Word Search Explorer and Crossword Jam. InnoGames also significantly increased their UA spend year-over-year, mainly driven by the rapid growth of Heroes of History, which Maria mentioned. And that continues to perform well and is showing strong early KPIs. Now, Snowprint, of course, also continue to invest in UA at high levels for Warhammer 40k Tacticus in the quarter. All in all, when it comes to UA, we are happy to deliver another quarter of good traction in our marketing and to continue to invest in our momentum to drive future growth. If we then move on to look at our profitability, we reported 616 million in adjusted EBITDA in the quarter. This represented a 56% year-over-year increase in absolute terms, of course, primarily reflecting the consolidation of Plarium, together with lower adjusted EBITDA levels in three of our studios, driven by the continued scaling of key current and new titles to drive growth, as I just mentioned. As a result, we reported a 24% operating margin in the first quarter. If we quickly look at our adjustments to reported EBITDA, they amounted to 21 million krona in the quarter compared to 19 million in Q1 last year, so pretty stable. So this included an adjustment for non-recurring bonus structures of 7 million and an adjustment for M&A transaction costs of around 14 million krona. Our depreciation and amortization amounted to just over 300 million krona in Q1. This was more than a doubling of what we reported in Q1 last year, and this increase was driven by the purchase price allocation from the Plarium acquisition, as around 70% of the PPA was allocated to intangible assets, of which Raid Shadow Legends is the key asset, followed by their other core games and the tech stack, which in turn, as you can see, drives our DNA. So next, let's touch upon our financials for the quarter. We generated 538 million krona in cash flow from operations and reported free cash flow of just over 140 million krona. This enabled us to deliver a cash conversion of 56% for the 12-month period and the 31st of March 2025, as Maria mentioned before, which, of course, sits quite squarely in the middle of our guided long-term range. And as Maria mentioned, this means that we are coming down from the rolling 12-month levels reported throughout last year, which were clearly above the long-term range that we have set. And I think this dynamic overall is quite in line with what we have signalled before for the quarter. The Q1 levels reflected the reversal of positive working capital trend we had in the second half of last year, combined with costs related to the Plarium acquisition, and then a negative effect arising from the revaluation of revenues deferred at the time of acquisition of Plarium and higher tax payments in the quarter. Our net financial items in the quarter amounted to minus 85 million krona. This included 19 million krona in net interest and other financial items of negative 67 million. Of these, there's a mix of positive and negative effects. The negative effect included the revaluation of C shares following the increase in NTG share price and then the final revaluation of an incentive programme in Play Simple that we took over when we acquired the studio. and got paid for at the time of the acquisition. So on the positive side, which only partially then offset the total, this included primarily a positive revaluation of our earned liabilities driven by currency, some currency exchange fluctuations and exchange rate differences. Our paid taxes in the quarter amounted to 214 million krona compared to 78 million krona in Q1 last year. And this increase reflected normal paying taxes combined with payments of a deferred tax item from 2023 in one of our studios and the payment of withholding tax in the quarter. If we then look at our total net income in the quarter, that amounted to 65 million kroner. But it may be a better indication to look at how we're actually performing as a group if we look at the underlying number without non-cash items and amortization related to our M&A activities. And then if we look at that, our operational net income therefore amounted to 377 million krona, which demonstrates the health of our business. When we then look at our capex, that was up year over year in Q1, which reflected the consolidation of Plarium and our capex, when you look at our original studios, was stable. So lastly, as you can see, we are now in net debt following the closing of the Plarium acquisition. Our financial net debt at the end of the period amounted to 2.5 billion krona. which comprised external financing of 4.4 billion and 253 million krona in leasing costs, reduced by 2.2 billion krona in cash and cash equivalents. Our financial leverage ratio therefore amounted to 0.8 times based on EBITDA for the rolling 12-month period and the 31st of March 2025. Our total net debt amounted to just over 5 billion krona and comprised 4.7 billion in interest-bearing liabilities, 2.2 billion of earn-out liabilities and 322 million in put-call options, then offset by 2.2 billion krona in cash and cash equivalents, which leads us to a leverage ratio of 1.7 times based on the net debt versus 12 months rolling EBITDA, including Plarium. Thank you. That was all from me and I now hand over back to Maria to discuss our outlook for 2025 and some closing remarks.