Qiiwi Games AB (publ)

We welcome you who have joined the Kivvigames webcast and presentation for the first quarter of 2024. My name is Alvaro Berger, CEO and founder of Kivvigames. I have with me here today as the other people to help with the presentation. Marcus Dahlö who works as CTO and technical chief and also owns the Kivvigames foundation. Daniel Svensson who is head of New Games and also one of the members of Kivvigames. The agenda for today looks like this. We have a first quarter of 2024, where we go through today's report that we have released, the focus that has been during the quarter and forward. 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 is recorded there and will be made available later on our website. We are sitting on the first quarter here, so I summarize it as a very eventful quarter in several ways. We have had our strategic reorganization and cost savings that we informed about at the end of January, which has been a big part during the quarter, a lot of work related to that reorganization. It includes primarily our implementation of our new strategy and our updated vision that we have taken forward to build Kivvigames there in the long run. And it feels so nice that this reorganization is now in large part 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 the mind grow with the players and our new slogan, which is World Minds Thrive. If we look at the results, the turnover and the results, we have an increased turnover and an improved result compared to the same period before the year. We reach a turnover increase of about 18%. And it is primarily due to Extreme Makeover, which was launched in August 2023 and has been the largest contributor during the quarter. And if we look at the three biggest contributors, linked to the turnover period, it has been Extreme Makeover, which has been 48%, Wordington 25% and Midsummer Murders 8%. And we have also improved the EBIT result with about 600,000 SEK, despite having invested more in the U of A compared to the same period before the year. And the improved EBIT result is primarily related to the fact that we see lower costs linked to staff in our reorganization. And as I mentioned, the turnover is 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, which was 46 employees within the concern. Now, at the beginning of Q1, we are 18. This reduction in 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 staff costs to be about 2.5 million SEK. And we have already begun to see effects, and we see effects, continued effects of it in Q2. That is why we say that we expect a clear picture of the other half when reorganization costs and the effects have completely been knocked out. If we look at the market share in the U of A, we invested 56% more during Q1 this year compared to 2023. And it is especially wonderful that we market continue Extreme Makeover. And we did not have Extreme Makeover in our game portfolio at the same time as before. We worked a lot with the game to launch it. If we look at the results of the market share in the U of A, we have, during the quarter, returned to reach our short-term goals for the year, return on ad spend for Extreme Makeover. This is something we fought very hard with during Q4. And a result of us now reaching these short-term goals is that we have implemented paid announcements in the game, which means that we can run a different type of use-requisition campaign, which has proved to be successful. And that we reach these short-term goals is that it indicates that we reach 100% return on investment within 365 days a year, which is our goal. And beyond Extreme Makeover, we focus our U of A investments on Midsummer Murders and Wordington. So it is primarily these three games that are our hubbards focus. Looking at how we work within U of A, we have a new work style from the first quarter, where we work with a new type of analysis of our U of A work. This has given us better insights on how iOS performance is on our U of A campaigns, which is very positive. We are constantly working to examine how this constantly changing U of A climate is changing, because both Apple and Google are introducing new types of integrity protection for their users, which makes it difficult to track and follow up campaigns. So we are very active with this. Looking at the geographical distribution of revenues, 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 revenues. Then it is very evenly distributed. The UK is sticking out a figure of 10%. Looking at revenue distribution, it has changed a bit compared to Q4 2023. This has more or less to do with the fact that we have implemented paid announcements in Extreme Makeover, which means that we get much more ad revenue from that game than we got earlier. This means that the purchase part goes down, but the ad revenue goes up. Revenues via in-app purchase, which is the purchase in the game, was 45% and ad revenues was 55%. We will talk more about this in the coming slides in Live Operations. If we look at the financial results, we see a change in revenue. We also see an improved result on EBIT. Looking at the equal funds, we have at the beginning of Q1 about 21 million SEK. In balance, it says that the cash is at 6 million SEK and then there is 15 million SEK in a pension fund, so it is important to take that with you. The total of the equal funds is about 21 million SEK. Looking closer at Live Operations, this is the game portfolio and the players who will take us to the positive cash flow, which is our main goal in the future, before the end of the year. Here we have a very clear goal of what we need to achieve per game title to achieve this goal. I will hand over to Marcus who can continue to talk about Live Operations.

Good morning. I think I have a little problem with the video. You can hear me, hopefully. During the first quarter, we have in what we call Live Operations or actually all games we have live at the store right now, focused on increasing the revenue per game. As Erik said, that is what we see can be taken towards break even in the near future. We are looking to focus on the areas where we see that many players are active and so that we can get a big effect of the changes we make. If we look a little more specifically at what we have done during the quarter, we can start with Wordington, where we have released several new chapters for the story in the game. We have also launched a collection of card functionality, which allows players to clear word puzzles to collect collectable cards. Players who want to have all collectable cards will need to clear a lot of word puzzle levels to find all. This is a function we tested during the quarter and also rolled out to all players. In Extreme Makeover, we have released two new families during the quarter and one more is in progress, which we will release now in the beginning of the second quarter. This will take the number of active families in the game to 8 and will cover around 3000 max three levels for those who will clear all. We have in the quarter added over 1000 new levels while we have balanced the existing levels in the game. And then like Wordington's collection of card functionality, we have reused the function from which they started the implementation in Extreme Makeover. We saw that the function worked very well in Wordington and also implemented in Extreme Makeover. Once implemented, it will begin to roll out during the second quarter. In Extreme Makeover, we also rolled out, as Erik said, reward winners to all players during the first quarter, which affected in-app purchase to ad revenue distribution. In Midsummer Murders, we released another murder case in the game during the second quarter, which took the total amount of time to 12. We also rolled out and tested a function called voiceovers in the game, which means that if you play in English you will get the whole story read out by the different characters in the game. This function has really been appreciated by players and it gives a much deeper experience when playing through the murder case. We also implemented teams or teams which means that you can go together as a group of different players and compete together in ranking on different top lists. You can ask a team mate for energy and it increases the social feeling and you get an increased engagement in the game. In addition to these three games, all other games we have at the store have received regular updates with stability improvements, user experience improvements, etc. The focus in the future will be to continue to work in a dedicated way. We use resources and use good functionality from the different games in a way that we can get the best output possible to increase the performance and the performance of our live operations game. I'll hand it back to Erik.

Thank you very much. What is also very interesting in live operations, and with the focus we have had over the past year around Midsummer Murders and the first quarter is that we also see that Midsummer Murders increased its ARPDAW, which is average per day active player, with 61% compared to the same period last year. The effects of the work we do in that title is very big. It is a very exciting title that we have talked about for many quarters and that we really hope to be able to bloom more and that we can get a better turnover and efficiency from the game title. It is also very unique on the market within the genre of murder games and gives a very good chance to market the game title with its crime, murderous content. We also see in Extreme Makeover that the efforts have been made to implement the salary announcements and ARPDAW has increased by 13% compared to the fourth quarter. It is always the case that the new things we roll out in our games are larger changes that can affect monetization and the economy in the game and AOB is tested here for a fairly long period, depending on what it is for a feature. But for example in the salary announcements we see that the general ARPDAW value increases compared to the fact that we would not have rolled out for example to only have in-app purchases so it is a positive effect in Extreme Makeover even if the conversion rate for buyers decreases, ARPDAW has increased by 16% which is the primary key we look at. And now we go over to New Games so I thought I would leave the word here to Daniel.

Thank you Erik, like Marcus I can not get the camera but I hope you can hear me too. My name is Daniel Svensson and I lead the work in the new games unit in Kiwi. During the first quarter, the New Games team has been focused on exploring a new prototype in the development we follow our work process, what we call the MEP 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 make adjustments and that is based on feedback from players from our focus group. The prototype is in the Trivia genre and it is in line with our new vision and strategy that we presented earlier this year and it is also a genre where we earlier have experience from the titles Quizme and Backpacker. The main focus with our tests has been to find synergies between Trivia and today's popular game mechanics. We want to find these combinations to be able to stick out and take market shares. Right now the team is working on the game reaching an alpha stage and in the alpha stage the market is being created in a small scale to be able to get insights and evaluate key statements. In addition, Trivia prototype has been working on another title in an early stage in our MEP process. It is a title called Word.me and it worked with me in the beginning of 2023 but paused due to the development of Extreme. But Word.me has reached what we call an alpha stage and the plan is to resume work during the second quarter of 2024 to continue to evaluate the potential in the game title. I will also tell you a little more about our MVP process if you want to swipe down Erik there. MVP process stands for Minimum Viable Product and a working method we follow can be translated into a lowest life-power product and it is that we work on a version that is just enough with functions to be used by customers who can then give feedback for future development. We want to get game ideas out to players as early as possible to be able to get early indications if the ideas have potential if there is something we need to adjust. In every stage in the MVP process we see that the game title passes 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 we need for functions to be able to give answers to these questions. As you can see here we have the two titles and we have a Trivia game that is in market research but we are working on an alpha prototype and we have Word.me in an alpha prototype and there we have the threshold we want to reach out to all these stages and work towards completing to be able to continue the process to the next stage. So that was from New Games if you want to take over Erik.

Yes, thank you so much. And to sum up the quarter this strategic reorganization that we have worked with has now really started to give results it has been a challenging quarter with many tough decisions especially linked to downscaling of staff but we are convinced that this is the way we can build the company strong in the long run we see the clear signs that we will get a better team work we will get a better effectiveness and a faster decision making which is a key to be able to make good games in the future we believe. We have a really big desire for revenge extremely big both within the management group staff, management and it is a very good drive so we are working very hard to reach the goals we have for 2024 and and I also want to mention that there are slides in the report for Live Operations and New Games that you want to read more about the equipment we have given I think we will move on to Q&A and Q&A and see if we have received some questions here otherwise you can also send in but there has been a question about how is your UA marketing going and as we mentioned in the report we see an improved result on UA work where we reach our short-term ROAS goals, significantly better than before compared to what we did in the fourth and this is a good indication that we will soon reach our year-end goal 365 days ROI goals for the game titles it's not just about extreme makeover we also see good results on Midsummer Murders and Wordington but it is mainly Extreme Makeover and Midsummer that contains most of our UA investments and we are actively working with the majority 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 with Facebook and Unity Ads primarily I have a question do you manage to manage your live operations with so much less staff and I don't know if you can answer Marcus, you are the person responsible for the live operations part how do you feel about the first quarter?

Yes, absolutely it feels good it is of course a hindrance to not have as many resources but it is also about focusing the resources we have in the right way and I think we have taken significant steps during the first quarter we have shown this through improved ArpDow in the games we have fought on we developed the function in a reusable way such as the Teams function that we have developed in Midsummer that was developed from the beginning of Extreme the Collected Cards functionality that was developed from the beginning of New Wordington we work in a smarter way and we work more focused so that the reduced amount of resources should not affect in the same way

We had a very clear vision and vision for ourselves when we did this downscale of staff that we with our new way of working would be able to work more effectively with a smaller capacity of staff I think it is something that is very clear that with a smaller team and smaller decision-making paths it is easier to get more updates more features and faster to get out with functions The answer is that we can definitely manage to drive all of the operations with fewer staff Then we have some other questions How come Extreme Makeover Home Edition is not downloaded more and time marketing is not helped More of the download to Mobile Games is now available through user acquisition Ty Pennington's marketing has helped mainly through the fact that we have him in the ad and that he is in the game as a person Then he markets the game at a number of occasions per year on his social media Then it is very difficult for influencers and also for giant influencers to affect download of games through posters on their social media platforms However, his mix with marketing and his mix in the game has been A and O to get good results on the UI That is why Ty Pennington's collaboration has a big effect in this game To get more download to Extreme we would need more marketing in the game but there are obstacles that make us have to invest smart where we see that we can get back the capital that we invest and there we see improvements during the first quarter compared to the previous quarter so Extreme Makeover develops positively and hopefully we can turn the download trend to be more and more installations and get more and more players active in Extreme Makeover Home Edition Then we have a question The capital is enough for the year will you not need to take more capital under Q4 to have 12 months capital supply Our goal is to reach a positive cash flow towards the end of the year and with this download of personal we have come to significantly reduce our cost-node space and we do not see any such needs at this time I think that was the questions we had here now This presentation will be posted on our website under Reports & Presentations and we will be able to take part in the after hand Since we are done with the presentation and we do not have any more questions we will end the presentation here and wish you all a nice day and thank you for taking the time to listen to our presentation and for following our journey