Modern Times Group MTG AB (publ)

Good morning everyone and thank you for joining us for our Q2 and half year 2026 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 an opportunity 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 are dialing in by telephone. I now hand over the call to Maria. Maria, please go ahead.

Thank you, Anton, and hello, everyone. I'm very happy to deliver a second quarter with continuing good business momentum. And before we go into the detailed number, there are three things I want to call out that I'm particularly proud of. The first one is another quarter of strong financial results, combining organic growth, healthy margins, and high cash generations. This demonstrates that our portfolio and our district strategy works well. Our key growth highlights in the quarter were Play Simple, which has delivered another outstanding quarter from scaling new games, and also Raid Shadow Legends, which had a strong second quarter after the exceptional Q1 that we saw. The second is the progress that we're making across our strategic priorities, including our rapid pace of AI adaptation and also our direct consumer initiatives. By integrating AI directly into our internal tech and tools and leveraging our vast amount of data, we are accelerating and amplifying work in our marketing and data platforms in the mid-core district as well as the PlaySimple technology platforms. And to give you just one concrete example, on the marketing side, one of our best performing marketing creatives in RAID this quarter was actually produced entirely with AI tools. The third that I want to highlight is the progress that we are making on our key value-creating initiatives. We continue to make strides with the transformation of the mid-core district, with shared central services now live and supporting our studios. We have also developed a new brand identity for the district, which I look forward to unveiling to you later this year. And on the casual side, the preparatory work to list Play Simple is continuous. We work towards a potential listing in the second half of the year. This progress that we're seeing across our different studios and the group continue to showcase the strength of our people and the quality and the longevity of our games. But let's now turn to our financial results. We reported nearly 3 billion in net sales or approximately 312 million US dollars in Q2. That is representing a 6% year-over-year increase in constant currencies or 2% in reported currencies. This growth is all organic, so therefore the pro forma growth rates are the same this quarter as we began consolidating Plarium from February 2025. However, as we talked to year-to-date rates, they are different with 10% pro forma and 9% organic growth in H1. So we will therefore continue to report on both organic and pro forma growth throughout 2026. Q2 also marks our seventh sequential quarter of organic growth. We're very happy to see that we continue to find good opportunities to invest in marketing at attractive return levels in the quarter. We invested a total of 1.2 billion kronor in marketing, and that is just above 120 million US dollars, which was a 15% year-over-year increase on a constant currency basis, representing 39% of total net sales. This level is a step up of three percentage points from last year, and it primarily reflects two things. The first is a ramp up in marketing behind rain during the last year to help unleash the full potential of the game. And the second is a rapid scaling of, for example, new games driving the growth we keep seeing in our cashier district. As to EBITDA, we reported 707 million krona in adjusted EBITDA in Q2. That is equivalent to roughly 74 million US dollars with a strong 24% EBITDA margin in the quarter and 25% for the year to date. Adjusted EBITDA was up 10% year-over-year in Q2 and 20% in the first half. We generated 474 million krona in unlevered free cash flow in the quarter, that is equivalent to $50 million, which corresponds to a cash conversion of 81% on a rolling 12-month basis, which again exemplifies our capital-light and capital-disciplined business model. So let's now take a closer look at our revenues and our largest games. As I just mentioned, our revenues were up 6% year-over-year in pro forma terms for the quarter and 10% for the first half. Our mid-core district generated 75% of our revenues in the quarter and the cashier district contributing 25% versus 78% and 22% respectively in the first quarter. Our three largest games, Shadow Legends, Forge of Empires, and Warhammer 40K Tacticus, together accounted to 48% of total revenues. That is down from 53% in the first quarter. This mixed dynamics reflect the fantastic growth momentum we are seeing in Play Simple, with a continued rapid scaling of several new casual titles, albeit still with solid growth in the mid-core district. Let's go further into the different games then. So starting with Raid Shadow Legends, reported revenues just under 1.1 billion kronor in the quarter. That is growing 9% year over year in constant currencies. And I'm particularly pleased with this performance, which was underpinned by the ramp up in the user acquisition in the last year I just mentioned, as the game deliberately had a more measured pace of new content in the quarter, following the exceptionally strong Q1 that we delivered. Highlights in the quarter included a launch on new champions, the second iteration of our He-Man IP partnership, and double mythic Void Shard events. Looking forward, Raid has an exciting content slate for the remainder of the year, and the plan is to step up the pace of new content during the second half of the year and into the important fourth quarter, as we have previously mentioned. Moving on to Forge. Forge Vampire revenues were down 22% year-over-year in the constant currencies to 189 million kronor. This shows an improved projection from the first quarter where we saw a 30% decline in revenues. And as we discussed last quarter, the team is focused on delivering new content aimed at retaining and engaging our long-term players. And we do expect to see this being deployed and give effect starting from Q3 and onwards. And in the meantime, the team is remaining focused on having an active live-op schedule, and that included in this quarter the new King Arthur events. Revenues in Warhammer 40K Tacticals were up 5%, year-over-year in constant currencies to 169 million kronor, and was up high single digits in the underlying US dollar currency. The game delivered a very strong June on back of a well-received event following a slightly slower April and May. The team continued to expand the game's content, including the Thousand Sun survival-style season events and the major Skull events, and in June, celebration of the launch of the 11th edition of Warhammer 40K, the latest version of the game's workshop's tabletop wargame, with a dedicated in-game event. Looking across the broader group, the revenues from our other games were up 10% year-over-year in constant currencies, and this mainly reflected the continued rapid scaling of Play Simples, new titles, Crossword Go, Cryptogram and Tilematch, which are now included in other games. We will look closer at our cashier game performance when we discuss the cashier district with Nick. Moving forward and then looking at the revenue streams, Our revenue mix reflects the dynamics that I've already alluded to. 74% of the Q2 revenues came from in-app purchases, whilst 23% came from in-app advertising, with 3% of point increase in the in-app advertising contribution from Q1, reflecting again the rapid growth we're seeing in Play Simple. We continue to focus on the direct-to-consumer revenues to drive lower platform fees, and this is one of our key strategic priorities we have been talking to you about. We're therefore happy to see the proportion of our total revenues coming from G2C within our MidCo district, which include direct-to-user billing, web stores, the play-and-play launcher, to be up 51% in the quarter. And that was 49% in Q1, and significantly up from the 31% we had in Q2 last year. The increase reflects major D2C initiatives in Raid and Warhammer Tacticos in particular. At a group level, the proportion of total revenues coming from D2C was broadly flat quarter on quarter, given the PlaySimple growth. And as a result, total platform fees has been reduced from 17% of total revenues in Q2 last year to 12% in Q2 this year. Next, let's look at our user acquisition dynamics, to which I will hand over to Nick.

Thank you very much, Maria, and hello, everyone. So, in the quarter, we invested nearly 1.2 billion SEC, or over US$120 million, in user acquisition in the second quarter, and this represents a 15% year-over-year increase in constant currencies, or a 10% increase on a reported basis. Our total UA spend therefore represented 39% of total revenues in the quarter, up from 36% a year ago. This increase of around 300 basis points was driven by higher marketing spend in both of our districts. So in the mid-core district, we increased marketing spend by 5% in constant currencies in Q2, and this largely reflected higher marketing spend to support continued momentum in RAID, offset somewhat by lower UA spend in Forge of Empires and select other games. Double-clicking on Raid, the game had very good momentum in the quarter, as Maria has already mentioned, after an exceptional Q1, and that is in part driven by the user acquisition investments we have made in prior quarters, which were successful in attracting high-value players. This is a great case study of our UA philosophy. We invest behind titles when our data and our algorithms point towards strong player LTVs. This is a long-term mindset where we are able to translate UA spending into value and returns over multiple years. It is also why we stay disciplined in our spend and maintain a holistic portfolio approach to how we spend across titles and channels over time in order to optimize the pace and channel of investment and therefore our returns. The casual district scaled UA spend by 36% in constant currencies, in particular to support the continued scaling of new games, including Crossword Go and Cryptogram in the word genre and Tilematch in the non-word genre. There is a similar dynamic at play here, as per the mid-core district, with users acquired into these newer titles in recent quarters, delivering higher monetization when compared to some of our more established casual games. and this is underpinned by PlaySimple's AI-enabled platform Little Engine which enables faster time to market and at a lower unit cost, again driving higher returns. So now let's turn to profitability. As Maria mentioned, we reported adjusted EBITDA of 707 million SEC in Q2, which is equivalent to approximately 74 million US dollars. This represents an increase of 10% year over year with an adjusted EBITDA margin of 24% in the quarter, up from 22% in Q2 last year, despite the increased UA investment that I just spoke about. The year-on-year margin improvement was primarily driven by the strong growth momentum in RAID, as well as the positive margin impact of our DTC initiatives that Maria already just talked through. Our adjustments to reported EBITDA came to 17 million sec, and these related to adjustments for M&A transaction costs, which mainly reflected the performance-based revaluation of put call options related to the acquisition of Snowprint. So now let's turn to the performance of each of our two districts. The mid-core district reported total revenues of just over 2.2 billion sec in the quarter. This represented revenue growth of 1% year-over-year in Q2 and 5% for H1 on a pro forma basis. Growth of Raid Shadow Legends and Warhammer 40K Tacticus more than offset that a continued decline in Forge of Empires and certain other games that Maria mentioned earlier. The mid-core district delivered a strong adjusted EBITDA of 581 million SEC in Q2, up 9% from 534 million last year, with a margin of 26% up from 23% in Q2 last year. This margin expansion reflects two main drivers. Firstly, the healthy player base in RAID, with engaged long-term players who drive an increase in ARPDAU in the game when we have strong content, as most acutely seen in our Q1 results. And second, the continued strong growth in our margin accretive DTC revenues, where the savings on platform fleas directly flow through to the bottom line, of which we partially reinvest those into disciplined user acquisition. On that point, I'd like to reiterate the milestone that Maria just mentioned earlier, whereby the mid-core district generated over 50% of its revenue from direct-to-consumer sales in Q2. Daily active user levels for the district was stable year-over-year at 4 million, and ARPDAU came in at 6.1 sec, down 2% from 6.3 last year. This was driven by lower ARPDAU in several games, more than offsetting ARPDAU growth in RAID. Now let's turn to the casual district. The casual district reported revenues of 736 million second Q2, up 29% in constant currencies. This continued outstanding performance was driven mainly by the rapid scaling of crossword go and cryptogram within the word genre, and by the rapid growth of non-word games, in particular tar merge. But it was also driven by growth in several of our established titles. The district reported an adjusted EBITDA of 177 million sec in Q2, up from 151 million last year, and this corresponds to a margin of 24%. Despite significantly higher UA spend, PlaySimple's margin was only down slightly year over year, as this increase in UA was offset by slightly lower than expected operating expenses in the quarter. PlaySymbol had 4.5 million DAO in the quarter, down from 4.7 million last year as the rapid user intake in new games was offset by lower player counts in some of the established titles. Now, just as a housekeeping note, our historical casual district DAO figures for 2025 have been updated to align with the calculation and disclosure in PlaySimple's draft red herring prospectus, which reflects PlaySimple's internal data rather than third-party measurement. Q1 and Q2 2026 have already been calculated with the new methodology, so this only impacts 2025 numbers. ARPDAL was up 28% year-over-year to 1.8 SEC and this dynamic reflects the evolution of PlaySimple's portfolio as the new rapidly scaling games typically have higher levels of monetization enabled by Little Engine and are also predominantly focused on higher ARPDAL Tier 1 markets. Now let's look at our cash flow and balance sheet. We delivered cash flow from operations of 471 million SEC in Q2, and this comprised income before tax adjusted for items not included in cash flow of 621 million SEC, taxes paid of 187 million SEC, and a positive contribution from changes in working capital of 36 million SEC. Our capex remained consistently low at 66 million SEC, primarily comprising capitalized development costs. Our consistently low capex levels reflect the asset-like nature of our business model that Maria mentioned at the start and our prudent approach to capitalisation. ADDING BACK BOTH REALIZED CURRENCY EFFECTS AND INTEREST PAID, WE GENERATED UNLEVERED FREE CASH FLOW OF 474 MILLION SEC IN Q2 AND THEREFORE ON A ROLLING 12 MONTH BASIS WE HAVE NOW GENERATED OVER 2.3 BILLION SEC IN UNLEVERED FREE CASH FLOW WHICH CORRESPONDS TO AN UNLEVERED CASH CONVERSION OF 81% OF ADJUSTED EBITDA. AND THIS IS WELL ABOVE OUR MEDIUM TERM GUIDANCE OF CONVERSION IN EXCESS OF 60%. This strong performance reflects robust underlying cash generation across the Group complemented by the timing of certain working capital items mainly related to accounts receivables. We therefore continue to expect some quarter to quarter variation during the remainder of the year due to both the natural seasonality of our business and the timing of working capital items. But for the full year we expect unlevered cash conversion to remain materially above our medium term guidance. We also delivered adjusted net income of just under 1.8 billion sec on a rolling 12-month basis, and this translates into an adjusted EPS of 14.72 sec and an unlevered free cash flow per share of 19.56 sec, up from 13.54 and 18.5 respectively when we spoke to you this time last year. And then turning to the balance sheet, this was an important quarter as it relates to paying our acquisition-related commitments. During the quarter, we paid US$52 million to the sellers of Playroom, which is a combination of the deferred consideration from the 2025 acquisition and also the first performance-based earn-out which has now been fulfilled. We will also have exercised the final put call option for Snowprint by the end of July, after which we will own 100% of the studio. As a result of these, as well as the final earn out payment to the founders of PlaySimple in Q1, all major acquisition related commitments on our balance sheet will have been resolved by the end of July. This reinforces our financial flexibility and further strengthens our ability to drive returns and shareholder value going forward. So our financial net debt amounted to 3.4 billion SEC at the end of the quarter, corresponding to a financial leverage ratio of 1.29 times based on our LTM EBITDA, whilst our total net debt, including the remaining earn-out liabilities and put-call options, amounted to 3.8 billion SEC and corresponds to a leverage ratio of 1.45 times. So thank you for listening. And with that, I'll hand back over to Maria to conclude the presentation.

Thank you, Nick. Before we move back to Q&A, I would just like to summarize where we stand now that we are halfway throughout the year. As you will have seen from the report and also heard on this call, we are very happy with our performance this quarter and for the first six months of the year. We continue to make good progress across our key strategic and operational initiatives, and we have equally an exciting second half ahead of us. This includes several games going to soft launch, major new content going live into some of our biggest titles, and continued evolution of our service organization in the mid-core district. We have a strong balance sheet with low leverage reinforced by a highly cash-generated business. And as you just heard, we've also just closed all our significant M&A-related commitment and earn-outs that we had on the balance sheet by the end of July, which means that going forward, the cash we generate will provide us with increased optionality when it comes to executing on our strategy and driving direct returns for our shareholders. We will also continue to execute our share buyback program, which was approved by our AGM this year, which is 25% larger than the program that we delivered on last year. On back of the performance we're seeing, we reiterate our full year 2026 outlook, and we remain equally committed to deliver on the medium term targets that we presented at our capital markets day. Last but not least, also we continue to work towards the potential listing of Play Simple in India during the second half of the year. And that concludes the presentation from me and Nick. And operator, we are now ready to move to questions.

If you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Jacob Edler from Danske Bank. Please go ahead.

Hi, Maria, Nick and Anton. Thanks for taking my questions. I have a couple of questions, but I'll take them one by one, starting a bit on cost control. I mean, it was very good cost control in the quarter despite the nice increase in US acquisition. Just one question I have there. You talked a bit about lower than expected costs within the cash flow segment. And I note, for example, that personnel expenses were down 50 million roughly quarter on quarter. So I'm just trying to get some more flavor on, you know, how big that delta was versus your expectations in cash flow and how much was driven by, you know, the cost savings you announced at the end of last year for mid-core.

Thanks for the question. So if you look overall at our personnel costs as a group, as you rightly point out, those have been on a downward trajectory. And in particular, if you do a comparison against Q4 last year when they're at their peak, you are now starting to see the benefits flow through from that run rate cost savings that we've been executing on. And you can see that in our quarterly performance. And so the large part of that personnel cost reduction does relate to that cost out program. There is also then the offsetting impact that you mentioned to within Play Simple. We did have a reversal of some personal related costs, but that is a less material part of the quantum compared to the overall cost savings that we're achieving across the group.

Very good and clear. Just speaking a bit about DTC then and focusing on mid-core, it continued to expand as a percentage of sales here sequentially, up from 49% to 51% of sales. And would you say, I mean, given all the nice work you've done in Raiden Tacticus already, would you say this is kind of a good level plus minus, you know, a percentage point or two to expect here for the remainder of the year at this level?

Thank you for the question. I think we said last time as well, there is not a perfect percentage point. I think that we are always trying to get the customers to come through our channels, but we also respect that there's a freedom of choice and they should use a channel they prefer. I think the one thing that is outstanding a little bit is a ruling now in the second half that we are waiting to see, especially on the Google platforms. So I think that is one part that could potentially impact the levels that we are seeing. But I think what we are excited about is sort of how our web stories and the play and play progress is going. And I think that's an exciting avenue for us that we will continue to try to double down our initiatives on backup.

Thank you. Another question. If I try to work out the residual within other games for mid-core, it was a bit on the weaker side this quarter. Are you able to add any flavor on the Formula One Clash performance this quarter or any of the other non-core titles within Plarium? I guess maybe Formula One Clash has been impacted a bit by all the turbulence for the season with the Middle East conflict and also the World Cup. Any flavor there? And also Plarium?

Yeah, I think it's a fair assessment that you're saying. I think on a good note, our top titles and franchises performing extremely strong, which we're happy about. I think there is more that we would like to see in some of our smaller games. And I think the work that the team are doing for the second half of the year should hopefully drive progress. When it comes to Formula One in particular, you're absolutely right. I think that the start of the season provided a challenging start in the sense that it was races that was cancelled and so forth. So that created a hiccup in the excitement around it. And I think also in general, I think this has been a season that has created probably less excitement compared to last year, when I think the excitement around the season was extremely high. . . . . . The focus on the momentum is there, but for sure we would like to see better progress in the game there. And there are a few smaller games that we would like to see it as well. I think on a positive note, I think we have stabilized in IndieKiwi and BTG6, which is driving growth, which is positive to see. So I think you see it's still a mixed bag, but I think some of the titles that are in the bigger games and the other games has not performed as well as we would like to see them. But that gives us something to work on.

Yes. Very good. Just a question on casuals or, for example, organic growth here. I mean, it was really strong, you know, keeping the same number as in Q1 at 29%, despite the more challenging comps. Comps are getting a tad more challenging here in H2, but, I mean, given the ARP DAO trends and the scaling of new games, is there anything we should be aware of when we look at the Q2 growth rate here outside of the comps as we head into H2?

I do believe what you should remember is that Crossword Go and Cryptogram, which are the two key games, are scaling. We started to scale up in the second half of the year last year, which means that we are getting into tougher comps in the second half of the year, which also will impact the year-over-year growth. Having said that, of course, Play Simple has a really exciting slate of new games. But it's always that sort of question about when and which game will they be ready to start scaling. So I think that is what can drive the incremental growth above and beyond. But I think that growth you should expect are getting into tougher comps in the second half versus the first half of the year.

Very good. And just a last question without getting into too much details, but just summarizing the outlook for mid-core, I guess what you're trying to say here is that, you know, good growth opportunities for H2. However, I guess we should be aware of that, you know, you have plus 11 in comp in Q3 and it's minus 2 in Q4. So the growth prospect for Q4 should look a bit stronger relative to Q3, if I understand it correctly.

Yeah, if you're moving out to mid-core, I think that Q3 is a quarter where we will have the toughest comps for sure.

Yes, yes. Great. Thank you so much for your answers.

Thank you.

Thanks.

The next question comes from Simon Johnson from ABG Sundal Collier. Please go ahead.

Good morning, everyone, and thanks for taking my questions. So, first of all, on Casual and maybe a bit of a follow-up here on Jacob's question. on the growth. But can you maybe explain a bit more about the dynamics between organic sales trends and use acquisition costs, what we're seeing here for the segments? Because when we look at recent quarters, you of course invested in the second half of last year and you saw also a quite significant step up in sales because of that, and you've carried that into Q1 and Q2, maintaining a sort of higher sales base, but the use acquisition is down a bit. So I guess my question is if you've been able to sustain flat sales here throughout Q2, or if you have seen sort of sales fading a bit through the quarter here, given SLIGHTLY LOWER BASE OF USE ACQUISITION COSTS.

I THINK THAT WHAT YOU NEED TO REMEMBER IS THAT THE TWO KEY GAMES OR THREE YOU CAN ARGUE CROSSWARE GO CRYPTOGRAM AND TILE MATCH THEY WERE ALL LAUNCHED IN THE SECOND HALF OF THE LAST YEAR AND THAT'S ON BACK OF THOSE THREE GAMES IN PARTICULAR THAT WE SCALE UP MARKETING. That means even though we are keeping marketing at a higher run rate going forward, I mean, you're just simply pure math. You're going to come into tougher comps in the second half of the year. So even though we continue to scale marketing at the same high levels, I mean, the year-over-year comps will just be more difficult to achieve these growth levels that we've seen in the last two quarters in particular. Then I think that the other part that also, of course, fits in is in general the marketing environment to make sure that you can also deliver the marketing spend with healthy ROAs, and that is incrementally to the new games opportunities that we're seeing and the existing games opportunities. We also need to make sure that we deliver the ROAs I think you covered it well.

Alright, so if I understand correctly, it's fair to assume that absolute sales levels could be relatively flat, excluding new games, that is.

Yeah, I mean, we don't provide kind of very specific guidance on a kind of segmental basis, but it's fair to characterize that, as Maria just alluded to, given the natural kind of growth phases of those games, which we really start to scale up in H2 last year, kind of if we do look forward into kind of key growth drivers for the rest of the year and moving into 2027 and that positive momentum, it is going to become kind of increasingly incumbent on those new games coming in to be the primary drivers of that growth as we look forward, but not the total drivers of that growth.

Alright, thanks for that. Then just one more from me on mid-core and I'm curious to hear a bit more about the productivity gains you talked about coming from AI tools. You have shared some examples and all that, but I'm curious if you can be a bit more specific on the tangible results that you expect from this. Is it going to be mainly on the growth side and player retention, or will it ultimately be more of a factor driving cost savings, you think, if we look, you know, coming year or coming years, basically?

Yeah, I'm happy to say with that. I think ultimately it will hopefully be a combination of both, but where our primary focus is, is more on the growth side. So it is about achieving kind of more with the same teams rather than kind of reducing the size of the teams. And to give a couple of kind of context and examples around that, that is, for example, as we look at the new games pipeline and how the studios are setting themselves up around kind of early stage development of new games, that is with a kind of very AI native approach to it, so much smaller, leaner teams. EXPLORING MORE PROJECTS SO THAT WE CAN THEN ACTUALLY HAVE MORE SHOTS ON GOAL OVER TIME BUT IT ALSO HOLDS TRUE FOR SOME OF OUR EXISTING GAMES AS WE THINK ABOUT EITHER CONTENT FOR THOSE GAMES OR CREATIVE CAMPAIGNS AS MARIA JUST LEADED TO FOR EXAMPLE THE RAID CAMPAIGN CREATIVE CAMPAIGN THIS YEAR WHICH WAS MADE EXCLUSIVELY USING AI TOOLS So it's more about primarily doing more with the same size teams. That being said, of course, we will evaluate if there are actual opportunities to drive underlying cost efficiencies, which you can take down to the bottom line and or reinvest in other areas of the business. We do believe that there will be those opportunities over time, but that's not the primary near term focus.

All right. And then maybe a more philosophical follow up on that longer term, given that Most likely, most of the competitors have tools to be more efficient. So how do you actually view the long-term potential to, you know, what the actual benefit will be of producing more if everyone else is doing more compared to focus more on the cost side?

No, but I think it comes back to saying what do we believe we are great at and what's our sort of reason to win and why do the players play our games? Well, it is because we have an amazing team creating amazing content and the talent and the creativity that these teams sit at. And I think that's something that AI does not have today, the creativity and the experience that our team have. And I think that is what sort of sets our games apart because there's a lot of games out there But the players keep coming back to our games and I think that's a testament to the teams that we're having and the vast amount of data that also we collect and how the team together with AI in all fairness analyzing that data to continue to enhance the player experience. So I do believe that is a true skill set together with the marketing sort of publishing platform that we're having. So I think that if we use AI in the right way, it will amplify everything that we do. But I don't think in any short to mid-term that will take away the need of the creativity and the talent that our teams bring. And I think it's a mix of the two that's going to make it great.

Right. Thanks for that. Makes a lot of sense. So that's all for me. Thank you.

Thank you. The next question comes from Jesper Stu Gimo from Handelsbanken. Please go ahead.

Yes, good morning, Marianne and Anton. So a few questions from me. Looking at PlaySimple here, the growth looks to be rather more on the monetization led instead of the audience. So what are the key drivers for higher ARP DAO here? Do you see traction from earlier localization initiatives or what are the key drivers? What do you say?

And just a nuance on that one, what I'd actually say is whilst it's not necessarily an increase in audience growth from DAO, it is a DAO shift. And so as we commented on, we have seen a kind of significant increase in DAO across our rapidly scaling new games. And so therefore, whilst overall DAO numbers, we haven't seen a material increase, we have seen that shift in DAO from some of our older, more established titles to these new rapidly scaling games. And those new rapidly scaling games, there are two items to it. One is they overall do have higher monetization levels just by the way the way the actual games are developed using little engines. So they do have higher monetization. But then also, whilst we do continue to explore further localization and attacking kind of tier two and tier three markets, These new games, their primary focus at launch and in that early rapid scaling phase is primarily in tier one markets such as the US, where also those tier one markets do have higher monetization levels. So overall, that ARPDAL mix increase that you're seeing is actually from a kind of DAO mix shift, these higher monetization games targeting higher ARPDAL geographies as well.

Okay, thank you for that clarification. And on mid-core then, the ARP DAO is declining, but shouldn't this come up as well as we are seeing higher DTC revenue mix?

Well, sorry, just two things. One is we actually are overall delivering within some of our select games. So, for example, Raid has continued to deliver ARPDAL growth. Overall mid-core ARPDAL is just, again, due to a mixed impact. So, for example, the 22% decline in Forge of Empires within the quarter on a constant currency basis has an impact, therefore, on our overall ARPDAL for the mid-core segment. So, It's a mixed impact driven by, in particular, the decline in InnoGames and select other games which have high up-down monetization, which is offsetting that kind of rate growth and some of the other impacts from initiatives we're pushing through.

Yeah, okay. And on Fortune Empire here, do you see this as a structural decline or is this 22% negative growth in Q2A more related to less content in H1? And do you think that you have, do you have confidence in offsetting this negative territories that we have seen in H1 going into H2 with new content as you highlighted for Q3 etc.

Yeah, I do believe that adding the content for the more mature players gives us the ability to do so. I mean, there's never any such thing as a guarantee. The team has done it before. I think this, and I said it as well at the Q1 results, that we should have done better. I mean, we should have seen this one happening. So, again... That's on us. Now we're getting it right. So I think through CRM initiatives and active campaigns around it, I think it gives us a good opportunity to actually bring these engaged players back into the game and actually start to also both enjoy the new content, but also enjoy our events and key activities in the game as well. So I think it gives us a good opportunity to do so. I think the team is highly motivated to see it. I think they were excited coming out from a good event now in June in the game. So clearly we see that when we do good things in the game, the players respond very well.

All right, thank you. And one last question for me. The platform fees declined from 140 million year-on-year. How much of this was the DTC benefit? How much did this mix benefit the EBTA versus reinvested in user acquisition and how much further upside do you think you will have from this on the margins?

Yeah, I mean, to put it in a relatively simplistic term, so our platform fees, as we spoke about, is roughly down by 500 basis points year on year versus our user acquisition spend is up 300 basis points year on year. I appreciate that's not a perfect comparison because platform fees is really only related to our mid-core district, whereas I was giving kind of the UA figures for our overall group. But you can see, therefore, that we have been broadly reinvesting half of those kind of platform savings into incremental UA spend, albeit a lot of that incremental UA spend has been buy and play simple, but also rate and select other games. We will continue to evaluate whether there are opportunities to further increase UA spend in particular as we've spoken about there is new content coming across for a lot of our established games in Q3 and into particular the kind of Q4 critical quarter and then there are the new games pipeline coming through where we want to spend UA so we'll continue to explore ways to increase UA spend to support those attractive rise levels but if we do not find those opportunities then we will just take down any kind of DTC or other savings down to the bottom line.

Okay, thank you very much for that. I wish you a great summer. Thank you.

The next question comes from Rasmus Engberg from Kepler Chew Reacts. Please go ahead.

Hi, guys. Just coming back to the previous question on platform fees declining, if I look at mid-core, which, you know, it will be I guess a bit harder to transfer savings from platform themes in mid-core to UA in cash flow going forward if the IPO happens. So how do you think about that going forward? Because if you look at the first half of the year, UA spend in mid-core is pretty flattish. Even though you had a lot of content in Q1, but not so much in Q2. So how should we think about that for the second half of the year?

Thanks for the question. I think just one thing to clarify is if you look at, and I know Maria mentioned this during the results, is if you look at the ramp up in spend that we've done on RAID over the course of the last year, it is material. And so therefore, I'd say that the The redirectment or reinvestment from those DTC savings has been twofold. It has been RAID, which also just given the size of that within our group, that is very material. And then also the other aspect has been that 36% constant currency increase in US spend behind Play Simple. And so, therefore, I do believe that if we are able to generate further savings from DTC initiatives or other initiatives, then we should be able to see opportunities to continue to hopefully increase that UA spend behind RAID. In particular, as we do have that new content release slate coming through in Q3 and Q4 this year. So, we do believe there is opportunity to really kind of continue to drive UA within mid-core. And it is not that kind of DTC savings goes across into Paysimple or the casual district. We do continue to see opportunities there. But as we spoke about it also on the kind of casual side, even in and of itself, if we are able to scale those new games, that is part of the reason that we do have that kind of medium term guidance out there as to where we believe the margin go to, that we do have that flexibility, that we can also drive incremental UA investment required to scale those new play simple games, even if we are not able to generate further DTC savings.

Can you update us a little bit in terms of new games? What's your current thinking? Is there anything in the second half or does it come mainly in next year?

We did call out that there are a few games coming out in the second half now, especially two from Ninja Kiwi. Bloonsplits is the first one coming out. That is probably not as big as we also gave a teaser that Plerem is working on a new game and that is due to come out in January. So that will be one of the sort of bigger games. So I think that's a mix. I think the game slate that we have for the second half is probably some of the smaller games in size. I mean, still equally exciting. And then you have a really big one potentially then early next year. And for Play Simple, it's a little bit different because they always have games in the slate and the pipeline. They probably have between six to ten games always that they're testing, iterating. So, of course, we would love to see one of those coming out both in soft launch and global launch during the second half of this year. But I think that's what we should wait and see which game and when.

And on the cash flow side, I know it's almost a bit difficult to talk about recovering your UA spend, but in what timeframe, when you do the calculations, in what timeframe do you expect the payback or how soon is the recovery of the UA investment in cash flow?

Yeah, I think that, in particular, I hope you can appreciate with everything that we're going on with the potential listing as well, for us to kind of give disclosure around returns or recoup levels is probably something we're not in a position to be able to give much disclosure around at this point in time.

But I think what's fair to say is that, I mean, when we talk about the mid-core titers, we talk about two to three-year sort of return on ad spend models. And I think on the cashier side, we look at one year. So I think that's how you should look at them in a different way. But I think where the team has shown, I think across the studio, we've shown extremely high discipline to make sure that we always keep high accuracy in the raw calculations to make sure we can allocate spend accordingly. And I think now, being both a casual and a mid-core district, we also have the benefit of, as we're seeing savings on DTC, we can shift them both to casual and mid-core, subject to we see the best return for the group, still optimizing each individual game.

Just a final, like a kind of a housekeeping question. Nick, can you give us an outlook for PPA amortization in the second half of the year?

Well, let me come back to you separately on that, Rasmus. Okay, thanks.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Thank you, operator. We have no written questions at this time. So I would like to thank the speakers. I would like to thank you everyone for joining us today in the summer. And we hope to speak to you again as and when the time is right coming forward. Thank you.