Qiiwi Games AB (publ)

Då hälsar vi er som är här välkomna till Kiwi Games webcast och presentation för det tredje kvartalet 2024. På agendan har vi genomgång av kvartalet och perioden som har varit och efter det en frågestund, Q&A, där det är som möjligt att ställa frågor to ATKV Games and the management group that is in this webcast. The webcast is represented by myself, Erik Dahl-Rundberg, CEO, and then we have Marcus Dahle who works as CTO and will talk about live operations parts, and Daniel Svensson who works as Head of New Games and will talk about New Games parts. So let's get started. So the first part, or rather the third part, is now finished and during the period we have had a big focus on our new game title, Backpacker Go, which is starting to take shape at the global launch stage. We gave the game title during the third quarter a financial approval and it is the first game title that we give a financial approval according to our new MVP process that we now use in the New Games unit. And I really think that Backpacker Go is a game title that falls very well within our vision The strategy is to be nuanced, to create unique mobile games in the future and something that falls well within our Where Minds Thrive slogan and the feeling we want to have according to our new strategy that we established at the beginning of this year in our reorganization and strategy change. So cool to be able to give a game a financial approval. And financial approval is when we see that the game with A very high probability is that we will have to pay the lowest amount of development costs that the game has had and will have. Of course, we want a lot more than that, but that's the least we think is required to be able to give a game title in New Games a financial approval instead of being put down. So it's great that Backpacker Go has shown Somba's promising keys during the soft launch and tests. During this period, we reached a negative cash flow of about minus 1.1 million SEK. Given that we are working towards achieving a positive cash flow during the year, it is worth highlighting that we are in the third quarter at minus 1.1 million SEK in cash flow. We will talk more about that later in the presentation. We see a challenge in our Live Operations portfolio, that it has reduced revenues a bit faster than we initially expected during the year. But we believe that we will be able to move up this stage with successful launches of upcoming games in the future. Backpacker Go is the closest. We have created a much lower cost base. We see a clear way to profitability if we succeed in these external income flows from new game titles. That is of course very important. And if we look at EBITDA results are significantly improved, landing at about minus 0.3 million SEK compared to minus 4.6 million SEK in the same period the previous year. This is mainly due to lower costs related to UA marketing, but also related to OMA and the lower cost base, of course. We see that our turnover is decreasing while waiting for new titles. That's what I'm talking about, that the turnover of the gaming industry is decreasing. No new title has been released globally during this period, so it is an expectation. Under samma period föregående år så hade vi ju Extreme Makeover som gick ut i lanseringen i augusti som påverkade omsättningen positivt. Och som sagt ingen ny speltitel lanserat under denna perioden det här året. If we look at our games titles, Midsommar Murders is the one that contributes the most, but it is quite evenly distributed between the three biggest, and that is Midsommar Murders, Worthington and Extreme Makeover. If we take a closer look at marketing and user acquisition, we have seen in recent years that it has become a much more difficult UA landscape. It has become more difficult with traceability and analysis. And of course, it has also affected us, like all other mobile game players. During this period, we have chosen to strictly reduce our goal of reaching 100% ROI on the campaign to 180 days instead of 365 that we have worked with for a number of years earlier. This is mainly because we want to focus on achieving significantly better profitability. and further improve the control of UA campaigns in the long run. The stricter goals that we have implemented during the period have given the effect that we have significantly lower UA investments which is an effect of the fact that the games we market, especially live operations, we have not been able to market in the same way as we could before when we worked towards 365-day goals. So now we have much tighter ROI goals and we require a faster release if we are going to market our games. And that's to achieve better profitability within the company. The UAE investment fell on a total of about SEK 1.7 million compared to SEK 4.7 million that was made last year. It is good to keep in mind that last year XG Makeover was also launched during that period. So that drove up the UAE investments a bit then. A positive part of the UA results during the period is that we see that Backpacker Go has exceeded expectations around ROI on campaigns and where we see an improvement all the time when we do updates around monetization and features that are added. So positive results from Backpacker Go's campaigns during the soft launch. Our revenue distribution during the period is 41% through in-app purchases, purchases in the game, and 59% through announcement revenues. We are quite stable around the same level as the previous quarter. What we see is a big difference compared to the same period. Last year we had significantly more in-app purchases And a big reason for that was that Extreme Makeover was launched completely without announcements and no announcement revenue generation in August. We have worked with that during the year or later part of 2023 and into 2024 and implemented an announcement generation also in that game, which has made the distribution more even again. So if we look at the financial results in terms of figures, we have a turnover of about 4.4 million SEK. We reach an EBITDA of about minus 300,000 SEK. An EBITDA result of about minus 1 million SEK. We reach a result after tax Yes, it says wrong here, but the result per share we see here is minus 0.11 SEK compared to minus 0.66 SEK. We have liquid funds of about 18 million SEK at the start of the third quarter. So we now jump on to New Games and I'll leave the floor to you, Daniel.

Thank you, Erik. My name is Daniel Svensson. I'm a co-founder and head of the New Games team at Kivi. I'm working on finding the next growth driver for the company. The main focus of the New Games team during this quarter is to continue working with Backpacker Go. Backpacker Go is a game concept that combines question sport, curiosity about the world and with a training-based game engine in a board game environment. So the player learns and proves their knowledge of cities and places in the world. The game is currently in a new release and as Erik mentioned, it has We have received a financial approval, so we are currently working on a global launch. The key words show potential. Right now, the team is working on setting up the game according to a roadmap. It actually involves three parts of the game. It is the content that involves the game mechanics, The goal is to improve the keyphrase, and that is ArpDAO, but more. And it's actually features, events in the game for the player to do, offers, and a general improvement and balancing of the game is constantly ongoing, where we get a change in the game, take in data, analyze, and see how we should act in the future, as well as a roadmap with We want to have the game at a certain point in time. We also work a lot with the localization of content. Our goal is to have 10 languages ​​for global management. English, French, Italian, German, Spanish and Nordic countries such as Danish, Norwegian and Swedish, Portuguese and Dutch. A trivia game worth having it localized to the language and the effects it gives. At the same time, we also work with scaling up content in the game to support a longer lifespan. And the content in this case is cities with all the relevant content for the cities. And we currently have 39 cities active in the game. and aim to successfully work up the city base where we have a target of 80 cities in the game and then be able to ensure that we have a certain lifespan on the players and content to do. And we have found a very good cost-effective way to create cities for the game. So we feel safe to be able to meet the needs of the city. As I said, we are working towards a global launch. We estimate that this will happen at the end of December, or early Q1 2025, depending on the last pieces we work with in the game Falle på plats. We also have during the period, as you can see in our MBP flow here, where we see that BPGO is in a new release, we also have a game that is post-mortem. It's another DICE game we tested during the period. It was under an internal prototype, where we tested it internally and drew the conclusion that there was nothing to work on further, so we did a post-mortem, analyzed varför det här spelkonceptet inte fungerar och tagit lärdomar av det. Men det är en naturlig process i vår MVP-process att testa, identifiera eventuell potential eller inte. Funkar det inte, jag tror inte att det funkar, så jobbar vi med något annat. Det var från New Game, så jag gjorde tillbaka till dig Erik.

Thank you Daniel.

Exciting things in new games, definitely. We move on to Live Operations and to Marcus.

Thank you very much. My name is Marcus Dahl, CTO and founder of Kiwi Games. If we start with Midsommar Mergers, we reached an exciting milestone with one million installations during the quarter. Most of the players are based in the USA, in the UK. And during the quarter we have continued to keep our events that we run in the game on a weekly schedule active. So that the players who are in the game and the new ones who come in are kept active and engaged in both teams and events that you can play in the game. In Worthington, during the second quarter, we started a big technical update of the platform that the game was played on, and it was rolled out to all players during the third quarter. Under det tredje kvartalet så fortsatte vi att bygga på det här med nya funktioner och flera nya event som lagevent och förbättrad lagfunktionalitet i spelet. Vi har även nu i början av det fjärde kvartalet rullat ut några nya lagevenemang som ökar engagemanget för de spelarna som spelar tillsammans med andra spelare. Under the fourth quarter now, we will also do a UA test together with an external partner for Worthington to evaluate the growth opportunities that exist in Worthington. So it will be very exciting to follow up. For Extreme Makeover, we have continued to launch new levels. We do this on a recurring basis. We release a bunch of new levels every or every other week. And we're now up in over 5,000 levels. And there's a bunch of players who have managed all of them. And for them, there's Extreme League, for example, where they can compete for who's the best among the best. We also started, during the third quarter, the development of several new events in the game for Extreme Makeover. An event we call Butterfly Madness, where you get extra opportunities to clear levels even faster. And this has been released to the players at the beginning of the fourth quarter. And it is active during the weekends in Extreme Makeover. In addition to this, we have, with a reduced number of resources, continued to try to work as effectively as we can. Where we see that we can get the most output for the hours we spend. And we continue to update our other live-op games as well. when we see a need to either reactivate players when you see that there are updates and to keep ad revenue at as good a level as possible with updated partner tools and ad placements. But that was what we had from Live Operations today, so I'll hand it back to Erik.

Thank you for this.

Vi går vidare till nästa slide. Bara för att avsluta, genom den rapporten för det tredje kvartalet så arbetar vi hårt för att få ett starkt avslut på året. Vi har ju Very cool with Backpacker Go, where we see another possible supply catalyst from New Games now. Very cool to release a game that shows promising keys on multiple markets and even on markets that we didn't initially think that the game would perform well on, and with the help of new types of services, there are also great opportunities for trivia games to be able to to hit a bigger global stage. Trivia games often require a lot of localization and adapted questions for the audience in different markets and countries to think that it is fun. So yes, fun with Backpack & Go. We continue to work actively towards our goal of a positive cash flow by the end of the year. Se det fortfarande som rimligt. Det är huvudfokus fortsatt. Yes, vi jobbar på. Vi tar oss vidare till Q&A och frågestund.

Let's see. I'll stop sharing my screen. Let's see.

Vi har en fråga här gällande... Hur ser intjäningsmodellen ut för Backpacker Go? Vi har ju vårt tidigare spel som vi benämner som enbart Backpacker som vi släppte 2017 ungefär. Men i Backpacker Go, vad gör ni annorlunda mot övriga spel? And yes, I can answer it if not Marcus or Daniel feels that you want to step in and give some answers. But we do a lot of different things in Backpacker Go. Partly it is a training mechanism, which makes it It is relatively easy to balance players so that they end up in a stop position. You can no longer play because either you have to look at video ads to get rewarded ads, as it is called, which for example can be extra throw or you have to buy in a purchase to buy more throws or wait, of course. Then we have also worked a lot with When we show an announcement, we let the player get a reward, which is something we haven't had in our other games, when we show so-called interstitial announcements, which are announcements that pop up without the player having chosen to do it themselves. It's a way of mitigating For the player to say, oh no, now I need to see an announcement. Instead, you get a feeling that it's okay to see an announcement, I also get something to see it. And in Backpacker Ghosts we have so far had a reward for seeing ads that are forced on players, which has been a success. So the income model right now in the game is a pretty good mix between ad revenues and in-app purchases. Trivia has generally been a genre that has been to get to in-app purchase and get high ARPDAO levels within. I would say that within Backpacker Go we have found many ways to get players to convert to buyers. We are also working on several other features that will be released in the coming weeks. We hope to be able to increase the number of new features and get players to do more play-ons. and so on, as you often see in match 3 games, but we definitely think that it is possible to get into trivia games as well. So yes, there is a good mix of different things you can do with Backpack & Go, both with the board game, dice mechanics, the play-on mechanics on trivia challenges and so on. So yes, That's probably one of the things that makes it different.

It's just this, with the dice, the dice mechanism, to have the dice as a hard currency, a hard currency, and have the throw button, the roll button, as one single call to action thing in the game, that you press there, then you progress the game, act on what you get in front of you, and that's all you have to do. I think this mechanism is very interesting and something we haven't had before. And we're trying to find ways to monetize as well as possible. But I think there's a big difference from before. One clear call to action, you press it, you play the game, you have a currency linked to it, it can end. Then you can react. Do you want to see a commercial or do you want to buy or wait? It's a very straightforward, simple model that is exciting to explore.

We have a question here. How long can the company continue if you don't find a game that delivers when the money runs out? What I can say is that we believe in our newly established process, our new strategy we have implemented. We have made large cost savings within the business. We have a low operating cost for the company we are in now. We don't see any risk that our current cash position, that the money will run out. We don't see any such danger at all right now, so there is no such concern. Then it is clear that things can happen if we find a game that performs extremely well, so we want to market really a lot. There are always situations that can occur that make you You have to look at how to make such a push, but there is no risk in the long run that we see with the money that they would run out or that we see a need to take in capital. I have a question here. Are you happy with Extreme Makeover Home Edition? What have you learned since you've invested way too much in the game and at the same time you've gotten enough revenue from the game? And... Well... To be honest, we are disappointed and not satisfied with the big investment we made with Extreme Makeover and the outcome. We didn't manage to scale up the game to those levels and with the return on investment we wanted at UA. And that is also a lesson that we have taken with us when we have established our new strategy Now we have no focus on Branded Games. We focus on our own game ideas. This uplift from Branded Games and... in marketing and so on, has not really given the uplift that we expected in marketing in order to reach lower costs for installations and better retention of games. It gives a minimal effect that unfortunately does not reach what we thought from the beginning with Extreme Makeover. Extreme Makeover is still a really good game. And we will be able to run smaller UA-campaigns for the game that gives very good feedback, but this scalability in the game is unfortunately not there. And unfortunately, that is due to the fact that the cost-per-installation becomes too high. It's a match-three game, it's a very competitive market. So a lot of the lessons are mainly focused on unique games within one of your strategies where you might thrive, are working within New Games now as well, with significantly more tools to see risks within game projects. I'm not going to go into the details of exactly how we do everything, but there are significantly more control points, which makes us better at taking risks and how much we invest in different game projects. And one lesson is that Which also makes it a lot easier with our own games under our own brands. We can very easily decide that we won't continue with this game because we simply don't believe in it anymore. But when you're in a Branded Games agreement, it will be finalized, launched and released to the market. So we have a much greater freedom now in our business on new game projects we also start and decide entirely on our own how we choose to do with the project. I hope that gives a good enough answer to this question. We have a question here. Vad händer mer inom New Games? Kan vi nämna någonting där, Daniel?

Ja, vi såg ju, jag visade i min slide, livscykeln för ett spel där och då intern prototyp. Den första fasen som vi visar här, vi har ju även en fas innan som är idéfasen och vi är ju en kreativ miljö, vi har ju mycket idéer, saker som vi vill göra But we also want to work systematically, and now we have Backpacker Go in our pipeline, which is in soft launch, and which we want to focus on. But there is always a processing of ideas, and there is an idea bank that we have. Vi väljer våra tillfällen när vi lyfter ur dem där för att ta in dem i processen och börja med intern prototyp och utvärdera. Men vi har aktivitet i våran idébank. Men det är Backpack Ago som är fokuset och vi hade en avslutad idé som vi gjort en postmortem på också som vi nämnde.

Tack för det. Vi har en fråga här. Om ni inte uppnår positivt kassaflöde 2024, vad innebär det för bolagsfinanser? Kan det bli aktuellt med en nyemission under 2025? And the short answer is that it is not current with any new emissions under 2025. It is not something that we need to worry about. If we do not achieve a positive cash flow towards the end of this year, then we see that it will probably happen in the near future, 2025 or in the future. Then it is in that case the effect that new games have not contributed enough as fast as we thought, but it will come. And we have cash to continue the company's growth and how we perform right now for a long time to come. So not currently with new emissions by 2025. We have a question here from Olle, is the organization much smaller than before? How many employees do you have who work with UA marketing, publishing and back-up and go, and play for an increased UA budget? And you can say that UA-wise, we have two people who work with that, campaign management, and then we have two people within creative creation marketing som skapar annonsmaterial. Så totalt sett så är vi omkring fyra personer som arbetar inom UA och marknadsföringsområdet inom bolaget. Sen har de personerna inte heltidsroller inom de, för alla de fyra, men det är fyra stycken personer som jobbar aktivt sedan. Om vi har ett spel som that can be scaled up significantly, then it is an area that we definitely need to look over and strengthen in order to be able to handle more announcement networks, more simultaneous campaigns and so on. We have a question here. Are you going to be a publisher for Backpacker Go, or do you also publish the game for Revshare? Right now, we are the ones who will publish the game and market it. Is there anyone who is interested? We feel that this is a partnership that is worth it. We have been in the publishing industry before. And it can be difficult to make both parties feel satisfied with rev share splits and the margins that a mobile game can actually create, so then it needs to perform really well. But we don't close any doors, but our focus is to do this ourselves and publish it ourselves and handle it on our own to reach the absolute best margins. Vi har en fråga här som jag kanske kan tycka är vår sista. Vad innebär externa partner som nämndes i Wordington? Jag kan svara på den lite mer. I'm not going to go into the details of which partner it is, but it means that we get to and from other companies that have contacted us about games in our portfolio. And Worthington has been a game that we have had a lot of interest in through the years. And now that Worthington is at the level it is, and we ourselves feel that We also have a lot of focus on New Games, and Worthington is still a game where we have a unique wordplay, there is a lot of content and content. Are there any other partners out there who can grow this game in new ways that we ourselves have not succeeded with? And from there we have then taken up contact with a partner who we know has a very large network, has also its own advertising network that can reach and market their games broadly. So the test that has now started for Worthington, if it goes well, then it can of course be that this partner gets more opportunity to market the game and and make it possible to use your own budget to invest and grow the game and get a kind of discount, as we also see a turnover growth in Worthington and greater profitability from the game. So we'll see how the test falls out. Men det är väldigt intressant att få lite andra ögon och insikter från en större partner som arbetar med betydligt fler spel och har betydligt större budget där och se vad de också säger om Worthington. Bra. Jag tror vi avslutar Q&A här. Vi har fått in en hel del bra frågor som vi har svarat på. Detta var det vi hade för denna gång. Vi kommer göra tillgängligt webcasten på vår hemsida inom kort, så den kommer finnas i efterhand. Tack för alla ni som var här inne och tog er tid att lyssna lite närmare på vår rapport för det tredje kvartalet. Hoppas ni följer med på resan.