Qiiwi Games AB (publ)

Welcome to the KiwiGames webcast and presentation for the first quarter of 2024. My name is Erik Dahl-Rundberg, CEO and founder of KiwiGames. I'm here today as The other people to help with the presentation are Marcus Dahle, who works as CTO and technical manager, also co-founder of Kiwi Games, and Daniel Svensson, who is Head of New Games and also one of the co-founders of Kiwi Games. The agenda for today looks as follows. We have first a breakthrough for Q1 2024. There we go through today's report that I have released, the focus that has been during the quarter and in advance. And then we have a follow-up Q&A question time where it is possible to ask questions to us. So we start there. And I would also like to mention that the webcast will be recorded there and will be made available afterwards on our website. If we sit on the first quarter here, I summarize it as a very eventful quarter in several ways. We have had our strategic reorganization and cost savings. which we informed about at the end of January, which has been a big part of the quarter. A lot of work related to that, to this reorganization. It mainly includes our implementation of our new strategy and our updated vision that we have taken forward to build Kiwi Game Start in the long term. And it feels very good that this reorganization is now largely done, and that we can now focus more on our core business. And that is to create experiences within our new vision and strategy, where we want the experiences to make sense heard among the players. And our new slogan, which is Where Minds Thrive, If we look at the results, revenue and results, we reach an increased revenue and an improved result compared to the same period last year. We reach a revenue increase of about 18%. And it is above all great for Extreme Makeover, which was launched in August 2023, which has been the largest contributor during the quarter. And if we look at the three largest contributors, combined with their revenues, there has been Extreme Makeover, which has been 48%, Worthington, 25%, and Midsomer Murders, 8%. And we also have an improved EBIT result with about 600,000 SEK, even though we have invested more in UAV investments compared to the same period last year. And the improved EBIT result is primarily related to that we see lower costs related to staff in and with our reorganization. As mentioned, the turnover increased by about 18% compared to Q1 2023. And if we look at the number of employees, it has decreased by about 61% compared to Q4 2023, when there were 46 employees within the group. Now, at the beginning of Q1, we are 18. This The reduction of staff is estimated to give about 12 million SEK in total annual reduced cost base. And if we look at what we can expect for staff costs in the coming quarter, from the second half of 2024, we expect to have staff costs of about 2.5 million SEK. And we have already started to see effects of it, and we see effects as well. Continuous effects of it in Q2. So that's why we say from the second half that you should get a clear picture of exactly when the reorganization costs and the effects have completely passed through. If we look at the market performance in the UAE, We invested 5-6% more during the first quarter of the year compared to 2023. It is especially wonderful that we are still marketing Extreme Makeover. We did not have Extreme Makeover in our game portfolio during the previous year. We worked a lot with the game to launch it. If we look at the results regarding the marketing and the UAE, during the quarter, we have managed to reach our short-term target, return on ad spend, for Extreme Makeover. This was something we struggled with a lot during Q4. And a result of reaching these short-term goals is that we have implemented reward announcements in the game, which means that we can run a different type of user acquisition campaigns, which has proved to be promising. And that we reach these short-term goals is that It indicates that we reach 100% return on investment within 365 days, one year, which is our goal. And beyond Extreme Makeover, we focus our investment on Midsummer Murders and Worthington. So it's primarily these three games that are our main focus. If we look at how we work within UA, we have a new workflow from the first quarter, where we work with a new type of analysis of our UA work. This has given us better insights into how the performance of our UA campaigns is, which is very positive. And we are constantly working very actively to examine how this constantly changing UA climate is changing as both Apple and Google introduce new types of integrity protection for their users. Which makes it harder to track and follow up campaigns. So we are working very actively with that. If we look at the geographical distribution of income, it is very similar to what it looked like under Q4 2023. The dominant market is still the US, where we have 64% of our income. Then it is very evenly distributed. Great Britain stands out with 10%. If we look at income distribution, It has changed a bit compared to Q4 2023, and that has more or less to do with the fact that we have implemented reward announcements in Extreme Makeover, which means that we get significantly more announcement revenue from that game title now than we did earlier. And that means that the Inner Purchase part goes down, but the announcement revenue part goes up. Income through in-a-purchase, i.e. purchase in the game, stood for 45% and ad revenue for 55%. We will talk a little more about this in future slides in Live Operations. If we look at the summary of the financial results, we see an increase in revenues. We also see an improved EBIT result. If we look at liquid funds, we have about 21 million SEK at the start of the first quarter. In the balance sheet it says that the cash is at 6 million SEK and then 15 million SEK is in a mortgage fund, so it is important to take that with you. But the total liquid funds is about 21 million SEK. And if we take a closer look at live operations, this is the game portfolio and the players who will be taken to the positive cash benefit, which is our main goal before the end of the year. And here we have a very clear outline of what we need to achieve per game title to achieve this goal. I'm going to hand it over to Marcus who can talk further about live operations.

Yes, good morning. There seems to be some problems with starting the video. You can hear me, hopefully. Yes, perfect. During the first quarter, we have, in what we call live operations, or actually all games we have live in the store right now, focused on increasing revenue per player. As Erik said, this is what we see can take us towards break-even in the near future. Vi väljer att fokusera på de områdena där vi ser att vi har många spelare aktiva och således kan få en stor effekt av de förändringar vi gör. Om vi kollar lite mer specifikt på vad vi faktiskt har gjort under kvartalet så kan vi börja med Wordington, där vi har släppt flera nya kapitel till berättelsen i spelet. Vi har även lanserat samlarkorts- funktionalitet, vilket gör att spelarna kan clear word puzzles to collect collecting cards. Players who want all collecting cards will need to clear a lot of word puzzle levels to find all. This is a function that we tested during the quarter and also rolled out to all players. In Extreme Makeover, we have released two new families during quarter one. Another one is in progress that we will release now at the beginning of the second quarter. Detta kommer ta antalet aktiva familjer i spelet till åtta. Det kommer täcka runt 3000 match-3-nivåer för de som ska klara alla. Vi har under kvartalet lagt till över 1000 nya nivåer samtidigt som vi har balanserat de befintliga nivåerna i spelet. Och sen så likt Wordingtons samlarkortfunktionalitet så har vi återanvänt den funktionen därifrån och påbörjat implementeringen i Extreme Makeover. This is when we saw that the function worked very well in Worthington and then decided to implement it in Extreme Makeover. It is now implemented and will start rolling out during the second quarter. In Extreme Makeover, we also rolled out, as Erik said, reward ads to all players during the first quarter, which affected in-app purchase to ads revenue distribution. In Midsommar Murders, we released another murder case during the second quarter, which took a total of 12. We also rolled out and tested a function that we call voiceovers in the game, which means that if you play in English, you get the whole story read by the different characters in the game. This function has really been appreciated by players, and it gives a much deeper insight when you play through the murder case. We also implemented teams, which means that you can go together as a group of different players and compete together to rank on different top lists. You can ask your teammates for energy and it increases the social feeling and gets an increased engagement in the game. In addition to these three games, all the other games we have in the store have received regular updates with stability improvements, user experience improvements, etc. Fokus framigenom nu kommer vara att vi fortsätter jobba på ett dedikerat sätt, vi använder resurser och återanvänder bra funktionalitet från de olika spelen på ett sätt där vi kan få den absolutt bästa potentiella outputen för att öka prestandan och utfallet av våra live operations spel. Det lämnar jag tillbaka till Erik.

Tack så mycket. What is also very interesting in live operations, and with the focus we have had over the past year on Midsomer Murders, And during the first quarter, we also see that Midsummer Murders increased its ARPDA and then average income per day in active players with a whole 61% compared to the same period previous year. So the effects of the work we do in that title makes a very big effect. And it's a very exciting title that we have talked about for many quarters and that we really now hope to be able to bloom out more so that we can få till en bättre omsättning och lönsamhet ifrån speltiteln. Den är ju väldigt särregen också på marknaden inom morspelsgenren och ger väldigt bra möjligheter att marknadsföra speltiteln också med sitt crime, mordfallsinslag. Vi ser också även i Extreme Makeover att de insatserna vi har gjort med att implementera belöningsannonser har ökat ARPDAO-en compared to the fourth quarter with 13%. So it's always the case that the new things we roll out in our games, which are bigger changes that can affect monetization and the economy in the game, and A and B are tested during a under en rätt så lång period, beroende på vad det är för feature. Men till exempel belöningsannonserna ser vi att det generella ARPDAV-värdet ökar jämfört med att vi inte skulle ha rullat ut det. For example, to only have in-app purchases. It's a positive effect in Extreme Makeover, even if the conversion rate for buyers decreases, the ARP rate has increased by 16%, which is the primary key that we're looking at. And moving on to New Games, I'm going to hand over the floor to Daniel.

Thank you Erik. I hope you can hear me. My name is Daniel Svensson and I lead the work in Kiwi's New Games unit. In the first quarter, the New Games team has focused on exploring a new prototype. In the development, we follow our work process, which we call MVP process. And that has meant that the prototype, during the period, has gone through several iterations. Where we test different variants of the game mechanics and made adjustments. And it is then based on feedback from players from our focus group. Prototypen är i triviagenren och det är i linje med vår nya vision och strategi som vi presenterade tidigare i år. Det är även en genre där vi tidigare har erfarenheter från titlarna Quiz Me och Backpacker. Huvudfokuset med våra tester har varit att hitta synergier mellan trivia och i dagens läge populära spelmekaniker. Vi vill hitta de här kombinationerna för att kunna sticka ut och ta marknadsandelar. Right now, the team is working towards reaching an alpha stage. And in the alpha stage, we market the game on a small scale in order to get insights and evaluate key figures. In addition to the trivia prototypes we've worked with, we have another title in an early stage in our MVP process. It's a title called Word Me. Den arbetade vi med i början av 2023 men pausade till förmån för utvecklingen av Xtreme. Men WordMe har nått vad vi kallar ett alfastadie och planen är att återuppta arbetet under andra kvartalet 2024 för att fortsätta utvärdera potentialen i speltiden. Jag tänkte berätta lite mer om vår MVP-process som jag nämner här. MVP-process står för Minimum Viable Product och en arbetsmetodik vi följer kan översättas till en lägsta livskraftig produkt. Det är att vi jobbar mot en version med precis tillräckligt med funktioner för att kunna användas av kunder som sedan då kan ge feedback for future development. So we want to get the game ideas out to players as soon as possible in order to get early indications about the ideas and potential, if it's something we need to adjust. And in every stage in the MEP process, as we see, the game title passes through all these different phases. And in each phase we do an analysis of what we need to find out in our tests and then also what functions we need to be able to give us answers to these questions. So as you can see, we have the two titles, a trivia game that is currently in market research, but we are working on an alpha prototype and we have WordMe in an alpha prototype. Och där har vi tröskelvärlden. Vi vill nå upp i alla de här stadierna och arbeta då mot att klara av det för att kunna fortsätta processen till nästa stadie. Så det var från Newgay som du vill ta över Erik.

Yes, tack så mycket. Och för att summera kvartalet så har den här strategisk omorganiseringen som vi jobbat med nu intensivt verkligen börjat ge resultat. Det har varit ett utmanande kvartal också med många tuffa beslut. Framförallt kopplat till nedskalning av personal. Men vi är övertygade om att Det här är det sättet vi verkligen kan bygga bolaget starkt på längre sikt på. Vi ser de här tydliga tecknen på att vi får till ett bättre teamarbete, vi får till en bättre effektivisering och ett snabbare beslutsfattande, vilket är en nyckel för att kunna göra bra spel framöver, tror vi. Vi har ju som sagt en riktigt stor revanschlust. Den är extremt stor, både inom ledningsgrupp, personal, styrelse och det är ett väldigt bra driv. Så vi jobbar ju nu såklart väldigt målmedvetet på att nå de uppsatta målen vi har för 2024. And then I also want to mention that there are slides in the report for Live Operations and New Game that you want to read more carefully about the updates that we have given. I think we'll go over to Q&A and question time and see if we have received Några frågor här annars så kan man också skicka in men det har kommit in en fråga här kring hur går er UA marknadsföring och As we mentioned in the report, we see an improved result regarding the U-work, where we reach our short-term ROAs, significantly better than during the first quarter compared to what we did during the fourth. This is a good indication that we will reach Our annual goal of 305 days is the ROI goal for the game titles. It's not just about Extreme Makeover, but we also see good results on Midsommar Murders and Worthington. But it's mostly Extreme Makeover and Midsommar that contain the most part of our UAV investments. And there we work... active with several marketing channels. Primarily during the first quarter we have gone over to marketing our games more on Google Ads, where we have seen good performance. And we also work primarily with Facebook and Unity Ads. Then we have a question. Can you manage the drift of your live operations games with so much less staff? And I don't know if there's anything you can answer, Marcus, as responsible for the lab operations part. How do you think it feels now in the first quarter here?

Yes, absolutely. It feels good. It is of course a hindrance to not have as many resources, but it is also about focusing on the resources we have in the right way. And I think we have taken significant steps during the first quarter. We showed that through improved ARPDAU in the games we have fought for. We developed the function in a reusable way. For example, the Teams function that we have added in Midsommar, it was developed from the beginning in Xtreme. The collection card functionality that we added in Xtreme was developed from the beginning in Wordington. So that we work in a smarter way and we work more focused so that the reduced amount of resources is not affected in the same way. Exactly.

Vi hade ju en väldigt tydlig vision och bild för oss att när vi gjorde den här nedskalningen av personal att vi med vårt nya arbetssätt skulle kunna jobba effektivare med en mindre manskapacitet. Jag tycker det är verkligen något som syns väldigt tydligt. that with a smaller team and smaller decision paths, it is much easier to get more updates, more features and get out with functions faster. The answer is that we are definitely able to operate the Lab Operations part with fewer staff. Then we have some other questions here. How will Extreme Makeover Home Edition not be downloaded more? Thai marketing is not considered helpful. Yes, most of the download to mobile games today comes from marketing the game via user acquisition. Thai Pennington's marketing We have helped primarily by having him in the advertising material and that he is in the game as a person. Since the marketing game at a number of occasions per year in his social media. Then it is very difficult, in general, for influencers, even for giant influencers, to influence download of games over longer periods of time through posters on their social media platforms. However, his integration with marketing and his The mix-up in the game has been A and O to get good results on the U-work. That's where Ty Pennington's contribution makes a big impact in this game. But to get more downloads to Xtreme, we would need to market the game more. But there are obstacles that make us have to invest smartly. where we see that we can get back the capital that we invest as well. And there we see improvements during the first quarter compared to previous quarters. So Extreme Makeover has developed positively and hopefully we can turn the download trend to more and more installations and get more and more players active in Extreme Makeover Home Edition. Sen har vi en fråga. Kapitalet tycks räcka året ut. Kommer ni inte behöva ta in mer kapital under Q4 för att ha 12 månaders kapitaltillgångar? Vårt mål är ju att nå ett positivt kassaflöde mot senare delen av året och med den här nedskalningen av personal så har vi ju och kommer framöver markant minska vår kostnadsbas och vi ser inte några sådana behov i dagsläget överhuvudtaget. Jag tror att det var de frågorna vi hade här nu. This presentation will be posted on our website under Reports and Presentations, in order to take part in the future. Since we are done with the presentation and we don't have any more questions right now, Avslutar vi presentationen här och önskar alla en trevlig dag. Tack för att ni tog er tid och lyssnade in på vår presentation. Och för att ni följer med på vår resa.