Good afternoon, welcome back to Introduce Investor Day at ABG. My name is Jesper Birch-Jensen, and I work as an equity research analyst here at ABG. The next company that we have for you today is G5 Entertainment, where we have the CFO of the company, Stefan Wikstrand here, to present. I think with that said, please go ahead, Stefan. Thank you very much, Jesper. Thanks for having us. Again, it's a fantastic tradition to come back to this event. We can skip to the next slide I think. This doesn't tell you that much, this does. To start from the beginning, G5, we're a developer and publisher of casual free-to-play games, usually puzzle games. They are targeted to a wide range of kind of family-friendly players. The target audience that we focus on is females over 35, which is a target audience that we've been working with since, well, essentially going into this type of gaming in 2009. A core focus for the company over the years. We operate in the mobile gaming space primarily, and that is a quite large market today. It's a $70-plus billion market and continuously growing. We operate through 7 offices worldwide, and so I'm based in Stockholm, and our CEO is based in San Francisco, and we have an office in Malta, and then we have 4 offices in Ukraine and Russia, so 2 in each country, where we have the majority of the staff, and that is where our development is done. We have roughly 750 people in Russia and Ukraine. You have the revenue chart there on the right-hand side, which shows the development we've had since doing kind of moving into the mobile gaming space and doing these casual games. In 2013, just to point out some highlights, we pivoted over the business totally to the free-to-play games. Today we're a pure free-to-play game company. 2013 was also the year when Secret Society, our first biggest hit, was exited soft launch and started growing. Secret Society has since then made over $130 million in lifetime revenue and 30 million downloads. In 2016, we had Hidden City started growing after it was released in 2014, that game grew very aggressively up until 2018. Currently it has generated over $330 million and 70 million downloads, it continues to be our biggest game in the portfolio as well. The company's been around for 20 years, we celebrate our 20th anniversary today or this year. We've been listed in Sweden since 2006, that is 15 years, we moved up to the regulated market in 2014. We can move to the next slide just to look at the market that we primarily target. As I said, mobile gaming market has been a fast-growing market over the years. Obviously, given that it's a fairly new market, it continues to be the fastest growing segment of the gaming market. The growth rates have come down a bit, we still look at 10% growth over the coming years. We also see an increase in users and gamers that play on mobile devices, so that is expected to grow as well. Even though that growth is quite heavy, you can see that Asia is now the biggest market for mobile gaming. It is more than 50% of the revenue. You have a lot of players there, but maybe they spend a bit less. Our focus is, well, the entire globe, essentially, but our core market is North America, where we have always been the strongest. North America is 60% of our revenue currently, Europe is 22%. Asia has dropped off a bit and is 12%, and here it is primarily Japan and South Korea. Where China, being a very regulated market, we don't have any business of significance currently. We have the rest of the world as well, constituting 6% of revenue. I think we can skip to the next slide. We target our market, as I said, primarily females over 35, and that is also, it is the target audience, it is the audience that we have. We have, roughly speaking, 70% of our users being over 35 and 70% being female. It is a growing demographic that has served us really well. It might not be as underserved as it was historically, so more and more companies realize that this is a very good target audience to work towards, so that is slowly fading out. We have amassed a lot of knowledge in targeting this audience, and we see that there's still things to do there, obviously. The audience is good, it's a very loyal audience, so when they start playing the games, you know, they tend to stay for months and quarters and not, you know, well, fairly often as well, years. They stay with the game for a long period of time, and they also are a very strong paying audience. We focus on the audience with five categories of games. It is the three top ones that, well, matter, so to speak, or are the main ones. Our biggest genre is the hidden object games. hidden object games is a bit of a distinct genre, in the sense that it's not super big, and we are a few players, so it's not super competitive either. We are four or five companies that essentially make up the hidden object market, but a very good market to be in. People that likes playing hidden object games, you know, they come back to this type of game. There's definitely room to grow in this subset of the market as well. If you have a successful title, you're usually finding a new audience, and that comes in and plays the games. Here it is represented by our game Sherlock, which is our latest hidden object release, which is doing quite well currently. It was released in Q4, or late Q3, to be totally accurate. Our biggest game in hidden object is still Hidden City, which is also our biggest game, so it kind of falls naturally. The second category here is the match-three games. Match-three games is a much bigger segment of the market, likely one of the biggest in mobile gaming. It is here represented by Jewels of Rome. Being a bigger market, it's a lot more competitive, but also, people know what a match-three game is, so it's easier to attract in some aspects, it's easier to attract an audience that really likes match-three games, and just taking a smaller part of the match-three segment would mean a lot for the company as well. We've had some really good success in the last years, primarily with Jewels of Rome, but also other of our match-three games. Thirdly, we have the Mahjong, or the match-two, category of games, which has been with the company for... Well, for many years. Well, longer than mobile gaming. You know, it's what we consider an evergreen genre. People that like playing Mahjong games, they continue playing them for, well, forever. It's very casual, soothing gaming experience. Once again, the people that start playing Mahjong games, usually play them for years. Very good, and has a bit of a difference in terms of KPIs. If you look between three genres, where Mahjong might be the weakest, but still, you know, it's a very good genre to be in. As I said, we've operated this for many, many years as well. We have two categories in the bottom. We have the word games and the Blast games, which both are kind of more early entrants in the genre mix for us. The word game was released late in 2019, and the blast game was released in Q1. Still doing tests on these and figuring out the mechanics and working on the genre, so to speak. Only one game in each of these categories and fairly new to the company. All of the games that we have are tied together with a social network called G5 Friends Network. The G5 Friends Network gives the players the opportunity to store their progress, and they can play on cross device, so they can play on multiple devices. They can play on an iPhone on the way home, an Android tablet, and you can switch to web or PC when you get home. It's very, very good for the users. Obviously, as I said, storing their progress as well, if they lose their device. They also build friends in the social network and kind of help each other forward in the game. That gives us as well some, you know, it increases loyalty from the users. You know, they also get prompted, for example, when one of their friends start playing another game of ours, they will be prompted that their friends start playing other games. It helps us with cross-selling. The social network also gives us further tools to kind of work with cross-selling and kind of maintaining and working with the audience, because it is... In the end, it is the audience that makes up what we do, and serving them with good content and retaining them over time. We can skip to the next slide. Well, G5 operates with a portfolio approach of games, so we always have plenty of games and release quite a few every year. As you can see here on the right-hand side, on the chart there, you can see the development since 2016. From the top, you have the dark blue bar, which is the licensed games, so primarily Hidden City. Today, you have the yellow, which is our own games, so games developed and published by G5, but are a bit older. We have the orange bars that is the New Generation of games, which is defined as games that are released from 2019, Q2 and onwards. I will take a few minutes to describe why we make that distinction. In 2016, and especially from 17, up until, well, you could say 19, we worked really hard with changing the. Well, not changing the development teams, but enhancing. We expanded the teams, we hired more teams, so we can run more games simultaneously, and did a lot of work taking home games that were where we had outsourced development, for example. These were very busy years, setting new structures in place and processes. In 2018, we only had one release, and usually before that, we usually had 2-4 games per year that we released. 2000 was a bit of a gap year due to the investments and all the work done in development. In 2019, we started to release games on the back of the investments made. We got a bit of a catch-up effect there as well. From 19 in Q2, that's why we distinguish them as New Gen, as they're based on the investments made. We also released quite a few games since then. In 19, we released 5 games, which is then starting to build up the revenue that you can see there. Then in 2020, we released an additional 8 games, so in total, 13 games that belong to this kind of new generation of games. Then we also have released already 2 games this year. The pace has definitely increased on the back on the investments made as well. The gray line you can see on the chart is the share of revenue coming from own games, which is an important KPI to look at as a higher share of revenue from own games will improve the gross margin for the business, and thereby also the margin potential that we can achieve. That number has gone up drastically over the last two years and now is 63% of revenue, and is continuing to growing based on the successes of the new generation of games. In the bottom, you can see the constitution of the portfolio a bit as well. Harvest mode games are games that we don't retain development teams, so they're older games that collect money in the stores. We have active games, and we have in-development. Numbers are a bit skewed just because in development also includes games in soft launch, it should actually be a bit more games in active, but it at least gives you a bit of a feeling of how it looks. Let's skip to the next slide then, please. Coming back to the kind of life cycle of a free-to-play game, it's important to understand. The life cycle of a game, you know, if we take Hidden City, for example, that is represented in the long-tail revenue category there. Hidden City was initially released 2014. In the long-tail revenue, we also have Secret Society, that was initially released in 2012. The time frame that we're looking here is quite long. It isn't highlighted here, but, you know, it's because it's hard to say how for how much many years a game can live. The long-tail revenue or the longevity of the lifetime of a mobile game is probably underestimated a bit in the market. If we start from the beginning, you know, we take an idea to the market. It takes usually 9 to 18 months to get the game in production and getting it to the market. You release it, you see how it works with the audience, you collect KPIs, you make changes to the game. In this kind of soft launch period, eventually, hopefully, you will figure it out, and the KPIs look good, and you can start to market the game, which is then the scaling process that you can see where the kind of red line starts moving upwards. Eventually, at some point, the game will reach a peak where it's tough to market a game, either because there are other games in the market, so competition-wise, or, you have served so many ads that you have a tough time finding an audience or whatever reason it would be. It reaches a peak. Usually, you see a churn in revenue after that, as you adjust the marketing strategy on the game. You can see the dotted line here, which is the user acquisition, which is then, you know, taking a smaller share of revenue when you reach kind of peak revenue and also in the long-tail revenue phase. You see a churn of users based on the change in strategy for user acquisition. The revenue stabilizes and is usually, you know, very stable and very healthy, and in this part of the life cycle of the game as well, you see the majority of the profits from the game as user acquisition or marketing is optimized and on a lower level, kind of optimizing the user base, keeping as much revenue as possible, and just maintaining that revenue level. After long-tail revenue, you also have some games that, you know, the revenue stream that we get from the games doesn't justify the fact that we have development team attached to the game, because in long tail, we still have a development team. They send out monthly releases to kind of, you know, give as much content and stuff to play for the users. When it comes to the harvest mode games, the revenue stream that we get from the game doesn't justify having either marketing or very limited marketing or a development team. Then it's, you know, it's very profitable, but usually on a lower revenue level, the games essentially sit on the stores and just collect long-tail revenue. Okay, let's move on to the next. A bit of the last quarter highlights that we achieved. We've had a very good, strong year in 2020, and we continued that in Q1. In Q1, we saw a top-line growth in USD terms of 22% year-over-year. Why we measured this in USD is because of what I said before, North America is our biggest market, it's 60% of revenue. I think Sweden is roughly 0.4% of our revenue, and but we have to report in SEK, so the numbers get a bit distorted. You know, we the report, the SEK growth is 5%, which is still okay, but underlying the growth momentum was much better. EBIT was almost SEK 60 million, and the EBIT margin was over 18%, which is very strong, and we've seen a, you know, a shift here during the last year where we, the EBIT margins have come up quite significantly on the back of the revenue from own games, both the fact that the business that we operate is very scalable. If you add on revenue, you don't need to add on cost. So very scalable business. We've done a lot of work with the user acquisition and optimizing that. over the years, That has really shown through in the EBIT margins. User acquisition as a percentage of revenue has come down quite significantly from earlier years. From the start of 2020. Well, Q1 last year, we had 22% of revenue in user acquisition. Q1 this year was 70%, so on the lower end. Still, you know, all of these numbers from Q1 last year up until Q1 this year and the quarters in between show that we were much more effective in the user acquisition. You know, if you break down the revenue growth a bit, I said 22% in USD terms, the own games grew 68, and the new generation of games almost grew 200% in Q1. We are growing where, growing the business and, you know, growing with these new generation of games that we have, that we have released. Also, the audience metrics have had a positive development, where the monthly active users have gone up and also the average spend per user has gone up 25% year-over-year, which is a lot. It's now the average spend per paying user is now $63.5, which is a very strong number. Let's skip to the next one. I see that time is my enemy today. I think we've covered a lot on the, on the revenue side during the presentation. Also, EBIT, once again, reinforcing that, you know, the scalability of the business, getting growth in the own games expands the gross margin, but also all the work that we put into the user acquisition has really shifted the scales in our favor in terms of profitability. You can see the red in the middle chart there, the red bar, which indicates EBIT, has been very consistent and growing over 2020 and into 2021. We also have a very strong cash position, which has grown over 2020 and 2021 as we convert cash really well from the EBIT that we generate. Even though we have added cash here, as you can see, but we've also repurchased a lot of shares and paid dividend to our shareholders, so without those, it would look even better. In Q1 specifically, we bought shares for SEK 34 million, but over the last year, we've almost bought shares for SEK 100 million, so that impacts that quite drastically. We still end on a record cash position of SEK 214 million. Yes, let's move on to the last slide. Just a quick few words on 2021. You know, we expect the growth of the New Gen of games to continue and continue the trend that we've seen. We will continue to release more games, so we released two, as I said. One is a licensed game that was just released one or two weeks ago. But we have four more games to release during the year. We will continue to optimize the user acquisition efforts and the tools that we use for that. The G5 Store, together with advertising, which is, we're quite proud of, exceeded 1% of net sales in the quarter and continues to grow month-on-month. Very positive there, because, we don't pay any store fees on those revenues, so the profitability is much higher. Also, finally, we have that little thing that Microsoft has reduced their store fees, so effective, August 1st, they will lower their store fees from the customary 30% to only 12% going forward. That will have a significant effect on the company's profitability. That went quick, but now I think I'm done, Jesper. Almost 20 minutes. Thank you, Stefan. Couple of questions from me. First off, I'd like to pick your brain on the, you know, user engagement and spending levels here in April and May of this year compared to last year, which, as everyone knows, had quite strong tailwinds from the COVID-19 lockdowns. How are your games performing this year compared to last year, in terms of spending and engagement? Yeah, as you know, as you rightly point out, you know, we had a very distinct COVID effect, which was limited to April and half of May when it comes to revenue. We started seeing downloads from mid-March, but revenue kind of kicked in from April, mid-May. Since then, it's been very normal, so very normal seasonality. We see very limited effects of lockdowns. Of course, then April, May then, tougher comps, we've also. Since then, you know, the new generation of games have continued to grow. Hidden City, as we communicated in Q1, has stabilized and shows a bit of signs that it could potentially grow a bit, but, you know, that's very slow and steady, but, you know, more stabilizing, which is very positive. I think we're, you know, we're kinda comfortable where we, where what we perform currently. Q1, as we looked at, you can see we had quite a significant FX impact. That is still with us as well in Q2. When it comes to the SEK reported numbers in Q2, it's really tough comps in that sense, but that will ease up in Q3 and Q4. Thank you. Makes sense. I'd like to move on to the Microsoft Store fees, which you mentioned. I don't know, I think people are well aware that they chose to lower their revenue split here a couple of weeks ago. You mentioned you have 17 games out of the top 90 games on the store. What does that mean in terms of revenue percentage? Number one. Number two, how does the, you know, dynamics of the store differ from perhaps Android and iOS? I'm thinking in terms of user acquisition spending, and so on. Thank you. Well, as we've said before, Microsoft is a very, very good platform for us. It has been strong for years. We don't disclose the exact split, but it is a big platform for us. That is definite, and you can see that we've had true success there, given that we have so many games on there. This will have a significant impact on the company, the lowering of the fees. We're obviously super happy about their decision. I think it was a bold and interesting move from Microsoft. When it comes to user acquisition, well, you know, the mechanics are the same, so to speak. You know, it is about chasing ROI. You know, we allocate budgets to where it makes the most sense. You know, it's not like we're only doing Microsoft. We do all platforms. All games are growing on all platforms, you know, when they're growing, and, you know, so we have a very healthy mix. If it would stand out, you know, to be much, much better than anything else, we would naturally allocate even more capital. It, you know, it's still a competitive market. It is the same. You know, channeling might be a bit different, you know, other stuff might be a bit different, but it's not, it's not hugely different than other platforms. In that case, we would, as I said, likely be even more successful. It was just an open field that we could play around in. The ROIs levels are similar as to the other platforms? Yeah, I would say so. Yeah. Mm-hmm. Yes, I would say so, yeah. Okay. Thank you. I think we're unfortunately out of time, but I'd like to thank you, Stefan, for joining us today and telling us more about G5, and also to the audience for tuning in. Yes. Thank you. Thank you, all, and thank you, Jesper. Goodbye. Bye.