Modern Times Group MTG AB (publ)

All right. Good morning, everyone. And thank you for joining us today for our Q4 and full year 2025 results. My name is Anton Gorman and I'm the VP of Investor Relations at MTG. Hosting this call today are our CEO, Maria Redin, and CFO, Nick Hopkins. There will be opportunities to ask questions after the presentation. Please use the online form if you want to add questions to the live stream or follow the instructions from the operator if you're dialing in by phone. I now hand over to Maria. So, Maria, please go ahead.

Thank you, Anton, and hello, everyone. We're now close to 2025, and I'm really proud to report a great finish to what has been a great year. We've taken big steps forward to evolve our group while delivering all-time high revenues and profits. And as I said, we truly had a transformative year, and MTG is bigger, better, and stronger today than ever before. The acquisition of Plarium has significantly boosted our scale and critical mass, and adding also a strong lineup of games, most notably Raid Shadow Legends, to our already high-quality portfolio games. The consolidation of Playroom's tech and tools is also enabling us to take a major step forward in our vision of creating one of the best mobile gaming groups out there, where we are becoming stronger and better together and elevating the best of both companies. The acquisition has also enabled us to build up what we call a new district model, where we have both a mid-core district and cashier district. In our mid-core district, we are now well underway on our journey to create a state-of-the-art shared platform service where we can support and empower our game studios. And in our cashier district, we've set out and we're executing on a new long-term growth strategy, and we've also conducted an IPO study for a potential listing of Play Simple in India. On top of this, we also deliver 9.4% organic growth for the year, which is slightly higher than the top end of our 79% guided range. And we have more or less doubled our year-over-year revenues in constant currencies. We finished the year with an 8% organic growth year-over-year in the fourth quarter, and we reported record quarterly total revenues of 3.1 billion krona. We also reported 11.6 billion kronor in total revenues, which is equivalent to around $1.2 billion, which is also in the upper half of our full year guidance range of 11.4 to 11.7 billion kronor, including plurium. And this is despite the negative impact we see on FX movement, where the dollar has lost versus the Swedish kronor. We continue to invest in marketing levels and attract the returns. Our original studios increased their marketing investment by 25% year-over-year in Q4. And we also had an all-time high 1.2 billion krona in user acquisition spend in Q4. That is equivalent to 38% of our revenues. Despite this continuous user acquisition investment, which gives us a great momentum as a start in 2026 as well, we generate a record quality adjusted EBITDA of 707 million kronor in Q4. This is equivalent to a margin of 23%, both for Q4 and the full year. Again, delivering in the upper half of our guided margin range of 21 to 24%. Looking at the cash flow, we generate 878 million in unleveraged free cash flow in Q4. We do have some positive working capital effects in the quarter. These will bounce out in Q1, and Nick will take and talk to you about this later. For the full year, we delivered strong unlevered cash conversion of 66%, which reflects the strength of our underlying operational cash flow generation and was well in line with our medium-term target of cash conversion over 60%. A quick look into our total sales before we go into the franchise reportings. As a quick recap, we reported record revenues of 3.1 billion kronor in Q4 and 11.6 billion kronor for the full year of 2025. This represents an increase of 108% year-over-year in Q4 and 107% for the full year in constant currencies. Our reported sales were up 84% and 92% year-over-year, respectively. On a like-for-like basis, we had a negative 12% currency impact, and that is roughly half of what we report as a negative currency effect at 23% in the quarter. And if you also look at our like-for-like revenues, when we include our original studios and Plarium on a constant currency basis, we were up 3% for both the full year and for the quarter. So moving forward then, and let's look at the performance of our franchises and key games. Just as a reminder before going into this, we will start per Q1 a new segmental report and disclosure that will reflect the two districts that we're moving into. So Q4 report is the last time we present the information in this way. Starting then, and let's look at Polarium. RAID Shadow Legends delivered a strong Q4, and we managed to set a new record for daily revenues in December, which is an impressive achievement. The team delivered another successful IP partnership with Alien and Predator. They also executed on an ambitious pace of both in-game events and live ops, and they were supported by a Black Friday sale. As a result, RAID delivered revenues on par with a highly successful Q4 2024, which we're really glad to see. Raid's strong performance in Q4 has also continued a positive momentum going into Q1, where we also supported the game with high levels of UA, which is an encouraging start of the year. If looking at Playroom as a whole, revenues were down by low single digits on a comparable basis year over year, and that reflects lower revenues from the rest of the portfolio that is offsetting the positive performance we're seeing in Raid. Our word games franchise delivered another quarter of outstanding growth. Franchise revenues were up 23% year over year in constant currencies and by 17% for the full year. This performance was largely driven by the rapid scaling of our four new games, Crossword Go, Tilematch, World Tour and Cryptogram. And this is indeed encouraging as we look into 2026 and onwards that we have so many new games that we can successful marketing and scale. The growth for the full year also benefited from the geographic expansion and localization of our established word games, which primarily then took part during the first half of the year, but we've been scaling them successful thereafter as well. And what I find really exciting as we look towards the end of the year is that PlaySimp has continued to drive growth, both in its core word games, but equally exciting to see that they're moving into the adjacent puzzle category, which opens new addressable markets for them. Moving into our strategy and simulations, the segments were down 10% year over year in Q4, but it was up 3% for the full year in constant currencies. Revenues in Forge of Empires were down year over year despite several in-game events for Q4. We should remember that Forge is turning 14 years old, which is an amazing achievement. It is one of our longest standing evergreen games, and we are firm committed to that it will continue to be a cornerstone of our portfolio for many years to come. And we know that speaking to the team, they have an engaging discussion on how to optimize the games for many years to come. Heroes of History, which is now just over one year old, grew significantly year over year as it continues to scale. Remember, this is also a sequel to Forge of Empires. The game team maintained a high pace of new content in Q4, with multiple in-game seasons, events, and a new city for players to explore. Moving to Snowprint and Warhammer 40k Tacticus had a fantastic year, and the team has delivered strong double-digit growth for the full year basis. The game continued to scale significantly during the year, and the cadence with new contents and events has been driving the performance. And besides this, the team has also been focused on improving the game's direct-to-consumer monetization capabilities, which is something that is also a priority for us as a group, and enhancing also the offering in its web store. Tactical's revenues were down in Q4, and this comes from a mix of significantly weakened dollar versus SEC. It had challenging comps from last year, but we're really happy to see that the team has one of the most exciting game lines that we're looking into next year, and it also strongly finished the year with all-time high revenues and strong performance in December. We remain very actively excited when we look at the pipeline as we look forward. Moving to our racing franchise, revenues were up 43% year-over-year in Q4, and by 19% for the full year in constant currencies. It's been great to see the franchise coming back to growth, and the team has done a great job delivering the season reset for Formula 1 Clash earlier this year in May. We maintained excellent momentum in Formula 1 during the year, and we also had a strong finish as the season racing came to a conclusion in the beginning of December. Top drives also grew year-over-year in Q4, supporting the overall racing franchise performance. Last but not least, the Tower Defense franchise revenues were up 4% year-over-year in Q4, but down 8% for the full year in constant currencies. The active player base in Bloons TD6 has continued to decline, even though player engagement remains high, and we had an active content release schedule in the game. I'll now hand over to Nick and we'll talk about more operational performance and the overall financial performance.

Thank you very much, Maria. So, as discussed in previous quarters, the consolidation of Playrium shifted our overall revenue mix towards a high proportion of in-app purchases in 2025 relative to 2024. And in Q4, 74% of our revenues were from in-app purchases. We had a slight uptick in contribution of revenues from in-app advertising in the quarter, up from 20% in Q3 to 22% in Q4, and this was driven by the outstanding growth of our word games franchise that Maria just spoke about. Direct-to-consumer, or D2C as we call it, remains a core strategic focus for us as a group. In Q4, we generated 32% of our revenues from D2C, and this compares to 26% in the third quarter of 2025 and 19% in the fourth quarter of 2024. which was the last quarter before we consolidated Playroom. The approximate 600 basis points sequential growth from Q3 into Q4 was primarily driven by the introduction of direct payments in Raid Shadow Legends, as well as other DTC initiatives such as Warhammer 40k Tactics' web store. We had 9.4 million daily active users in Q4, up from 8.9 million in Q3. And again, this reflects the very strong performance of our word games as we continue to scale new titles. ARPDAU, or Average Revenue Per Daily User, was broadly stable quarter on quarter. This reflected higher ARPDAU in our strategy and simulation and tower defense franchises, being offset by the mix impact from the growing contribution of our slightly lower ARPDAU word games. Now, if we turn and have a look at user acquisition. As Maria said, Q4 was a quarter of many records, one of which being UA spend. We invested a record 1.2 billion sec in user acquisition in the quarter, bringing our total marketing spend to 4.3 billion sec for the full year. Our total group UA spend has broadly doubled, up 98% year-on-year in constant currencies in Q4, and up by 109% for the full year, again in constant currencies. We have continued to invest in UA to underpin both near-term and medium-term growth at attractive return levels. We have continued to do so with a very disciplined and holistic approach, prioritising both the allocation of spend where we see the highest levels of return and into scaling new games. UA spend in our original studios was therefore up by 25% year-on-year in the quarter in constant currencies. We also continue to scale investment behind Raid in the quarter to capitalise on the game's positive momentum, which has continued into 2026, which is very encouraging to see. UA spend therefore represented 38% of group revenues in Q4 and 37% for the full year basis. So now let's look at our profitability. We reported a record 717 million sec in adjusted EBITDA in Q4 and 2.6 billion sec for the full year, equivalent to around $280 million. This represents a 58% increase year-on-year in Q4 and a 59% increase for the full year. As per revenue, the significant weakening of the US dollar against the SEC has a flow-through effect on our profits. And it's worth noting that our adjusted EBITDA growth in the quarter would have been closer to around 80% on an FX neutral basis. And on a full year basis, our total adjusted EBITDA would have been in excess of 2.8 billion SEC in constant currencies. This increase in the adjusted EBITDA reflects both the flow-through impact from our organic revenue growth as well as the consolidation of Plarium from the start of February. Despite our record levels of UA investment that I spoke to on the prior slide, we delivered adjusted EBITDA margins of 23% for both Q4 and for the full year 2025, which, as Maria mentioned earlier, this is in the upper half of our guided full year range of 21% to 24%. So we're incredibly proud to have delivered on this achievement, in particular in the context of our total revenue also being in the upper half of our guided range. This really demonstrates our ability to deliver on both growth and on margins through disciplined UA investments and our portfolio management. Our adjustments to reported EBITDA in the quarter amounted to 114 million SEC. These included 82 million SEC of M&A transaction costs related to the performance-based revaluation of put call options for Snowprint, 25 million SEC in restructuring costs related to the mid-core transformation programme, and finally 6 million SEC in adjustments for non-recurring bonus structures for a multi-year employee share options programme in PlaySimple. I'd like to finish by looking at our cash flow and at our leverage. We delivered cash flow from operations of 840 million sec in Q4. This was comprised of income before tax adjusted for items not included in cash flow of 668 million sec, taxes paid of 75 million sec and positive working capital contribution of 240 million sec. Our cash flow from operations in Q4 was boosted by elevated working capital levels, which are primarily timing-related and expected to reverse in Q1 2026. Our capex remained low at 52 million sec, reflecting both the asset-light nature of our business and our prudent approach to how we capitalise our game development. We had 20 million sec of realised currency FX, and we paid 70 million sec in interest in the quarter, therefore generating unlevered free cash flow of 878 million sec in Q4. On a full year basis, we generated 1.7 billion SEC in unlevered cash flow, which is equivalent to around $180 million. And this corresponds to a 66% unlevered cash conversion rate for the full year, which is in line with our medium-term guidance that we presented at our Capital Markets Day of achieving cash conversion in excess of 60%. Whilst our unlevered cash conversion was slightly higher in the quarter due to the working capital movements that I've already mentioned, excluding those one-off timing effects, we still would have also delivered unlevered cash conversion in Q4 of excess of 60%. Whilst we reported net income of negative 62 million sec for the full year, if we look at the underlying adjusted figure where we exclude non-cash items and amortisation related to PPA from our M&A activities, we delivered 1.4 billion sec in adjusted net income for 2025 on a full year basis. We therefore delivered an adjusted EPS of 11.33 kroner for the full year and unlevered cash flow per share of 14.16 kroner. Our financial net debt amounted to 2.5 billion SEC at the end of the year, which comprised external financing of 3.5 billion SEC and lease liabilities of 253 million SEC against 1.2 billion in cash and cash equivalents. So our financial leverage ratio therefore amounted to 1.02 turns based on our full year EBITDA, including Plarium. If we then look at our total net debt at the end of the year, this amounted to 3.9 billion sec. This comprised our financial net debt as well as earn-out liabilities of 1.1 billion sec and put call options of 250 million sec. And so, therefore, our leverage ratio amounted to 1.58 times our full-year EBITDA, again, including Playroom. So, with that, thank you, and I'll hand back over to Maria to conclude.