It looks like it's slowing down. Welcome everyone to the G5 Entertainment, Q1 earnings call. You will all be in listen and view mode only for the duration of the presentation, then we'll open up for a Q&A session when we wrap up. If you think of any questions along the way, you can also type them in the Q&A box. I think that was the admin part of this. I will hand over to Vlad to start the presentation. Thank you, Stefan. It's me, Vlad Suglobov, the CEO of G5, and obviously we have Stefan Wikstrand with us today, our CFO. We'll welcome everyone to the first quarter results presentation of G5, which will take about 15 minutes to go through the presentation, and then we will open the line for questions. I'll start by giving you the highlights of this morning's report. Overall, we have delivered a quarter in line with the new normal that we talked about in the fourth quarter report, and we see the development along stable development along all the established trends. Revenue was SEK 345 million, which is 4% more than last year in Swedish krona, but 7% less in USD terms. This performance is in line with the overall mobile market performance year-over-year, which is about down 7%-8%. Our own games stood for 71% of revenue compared to 70% and the same percent last year. There's still improvement there. Our new generation games, which are the games we released in 2019 and later, generated SEK 204 million and stood for 59% of our revenue. Sherlock continued to be our revenue highlight. As you can see in the chart on the right side of the slide, the game has been gaining share of the group's total revenue. The game stood for 24% of total net revenue in the quarter compared to 17% a year ago. The Jewels family of games continues to be a stable performer and money maker for us, and it stood for 30% of the group's total net revenue in the quarter. G5 Store is growing fast, and it now stands for 8% of revenue, up from 3.6% a year ago. Year-over-year growth of G5 Store was 130% in SEK, and measured in USD growth was 106%. Quarter-over-quarter, G5 Store grew 30% in SEK terms and 26% in USD. Also the growth in G5 Store seems to be accelerating in the last few months, which is a very positive development. Higher G5 Store revenue helped raise the gross margin to a strong 67.4% higher than last year. The gross margin was also helped by a higher share from own games, obviously. UA spend in the quarter was in the communicated range, about 18% of revenue down from 20% a year ago. Increased R&D was driven by a lower capitalization due to the new development funnel and process that we have adopted in the third quarter and increased amortization. Earnings per share in the quarter were SEK 5.85. That's almost the same as last year. All in all, we had a strong start to the year, and we continued to have a strong balance sheet. Even after the buybacks, we ended the quarter with SEK 205 million cash. It's more than we had a year ago. We remain profitable and cash flow positive, and we are debt-free. During the quarter, we used some of the positive cash flow to repurchase 69,000 shares for almost SEK 14 million at the average price of SEK 202 per share, and we brought down the total number of shares in the market to 8,105,000. Let's move on to the next slide and have a closer look at G5 Store, which is our direct-to-consumer or D2C distribution channel, and it is the most profitable channel for us. Payment processing fees in G5 Store are low single digits compared to the 12%-30% third-party application store fees. We are glad to see G5 Store growing consistently year-over-year and reaching much higher revenue levels than before. We are well-positioned to grow our direct-to-consumer revenue even further. Some peers report that up to 25% of their net revenue comes from their direct-to-consumer channels. We can see why G5 Store cannot achieve that over time. For us, this would be very good for our gross margin. As you can see from the graph, quarterly net revenue for G5 Store has been increasing steadily, in Q1, revenue was up 130% year-over-year in SEK. In USD, it was up 106%, and quarter-to-quarter was 20-30%, depending on the currency you measure it in. In other words, it's growing really fast year-over-year and sequentially, as you can see also on the chart. It is exciting to see that the growth in G5 Store is also accelerating. With that now, let's turn to overall sales figures. All in all, revenue in this quarter is consistent with the new normal we referred to when we reported fourth quarter results three months ago. Revenue of SEK 345 million was up 4% year-over-year. Own games stood for 71% of revenue, slight increase from 70% a year ago. Our main growth drivers continue to be our new generation of games, which is now our biggest segment of the portfolio at 59% of revenue, up from 56% last year. Sherlock was over 24% of our revenue and was up 42% year-over-year in SEK. It continues to grow. Finally, monthly average gross revenue per paying user was a stable 61.8%, almost exactly the same that we had a year ago. Let's look at earnings and margins on the next slide. We are maintaining a strong gross margin thanks to our own games and the growing share of distribution through our own platform, G5 Store. For the quarter, the gross margin increased to 67.4% from 66.7% a year ago. EBIT was SEK 40 million. The EBIT margin was 12%. That's down from last year, this decrease is due to the changes in the accounting for the new game development we made in Q3 2022, this quarter it's almost entirely explained by the difference in accounting compared to Q1 last year. There's no fundamental change. It's an accounting difference. UA was 18% of revenue, a decrease from 20% last year. Let's turn to the cash flow and our cash position. We continued to generate cash thanks to stable cash conversion, we have a strong cash position. Again, I'd like to underline that as you can see, our cash flow was not affected by the accounting change we made in Q3 last year, because it was merely an accounting change. We had strong operational cash flow and despite buybacks of almost SEK 14 million, cash at the end of the period was SEK 205 million, more than this time last year. Turning to our outlook for the remainder of the year. We've started the year with good momentum, and we expect to continue to deliver stable results in 2023, as we have promised in Q4 report. G5 has a disciplined approach to cost structure and staff optimization, and we have actually reduced the headcount in the company from the end of 2022 to the end of the first quarter. There's increased revenue from G5 Store that will fuel growth and further improve our gross margin and profitability. We also remain on track with the execution of our new game development process. We have seven ideas in prototyping and soft launch iterations and 26 new ideas in the pipeline. As we said before, we aim to soft launch five to six games per year, and out of these, develop one or two per year that we can release globally and scale. We intend to maintain a stable UA spend in the range of 17%-22% of the revenue for the rest of the year. Our cash position at the end of Q1 was strong and higher than last year, and we generated some SEK 30 million in cash after buybacks. We expect to remain profitable, cash flow positive, to have zero debt and maintain a strong balance sheet and cash position. We expect to continue to drive solid cash flow in the coming quarters. I would like to end by thanking you for following G5 and also thanking the whole G5 team for their outstanding efforts. This concludes my presentation, and I'd like to open the call for questions. You can either raise your hand in the call or ask a question in the Q&A box, as we talked about before. We have Simon Jönsson from ABG. Now we should hear you, Simon. Hi, guys. Can you hear me? We can hear you, Simon. Hi. Good morning. Great. Good morning. I have a couple of questions. First, the first one is on UA. It's still within your guided range, but typically, you know, Q1 is a quarter with higher UA spending, seasonally. I'm just curious what you have seen in the market and, in the portfolio that still makes you seemingly be a bit more cautious on UA here. I would say that our UA decisions are, you know, in absence of initiatives like boosting a game on purpose. In absence of these things, our UA initiatives are driven by tactical situation in the market and what user acquisition managers see. If they've ended up spending slightly less, then it means that they didn't see as much opportunity to deploy capital efficiently. You, you can probably perceive it as some weakness in the either the market or the approach or the, you know, creative materials that we're using or maybe something with the channels. I haven't really tried to analyze that. To me, the deviation is small enough that it's a tactical thing, and that's why we communicate a range, and I think anything within that range should be deemed normal. I mean, that said, you can see that the market is weaker than it was a year ago. For us, the situation is on the revenue, it looks in line with the market. If you look in the audience metrics, they look weaker, certainly. I think these two go together, right? If the market falls down by 7%-8%, it means there are fewer people there, and they're less willing to spend. Then maybe that also affects your ability to acquire users. This is just my speculation, but I think it kind of fits the overall feeling from the market for now. All right. Thank you. On the G5 Store, can you say something more about the sequential growth in G5 Store? In Q4, you ended the quarter on a much higher level compared to the beginning. I wonder if that trend has continued to be positive through Q1 or if you have seen more of a flattening out. We haven't seen flattening out yet. The amazing thing is that G5 Store seems to be accelerating its growth. The year-over-year growth, expressed as percentage in whichever currency is actually going up. I don't know how long this trend is going to be sustained, but G5 Store had sort of a weak spot of growth over the last summer. It slowed down. With this new growth momentum in G5 Store as we approach summer, I think comparables can be even more impressive. It is really very nice to see the strong growth in G5 Store. We see that we are able to acquire customers into our games through G5 Store from the larger web ecosystem. It is really exciting. I think that, you know, this development can be very important for us. Peers report up to 25% from their direct-to-consumer channels. I don't see why G5 Store cannot achieve that over time. You know, you can do the math if we are able to, even without the top-line growth, if we are able to achieve that and that way sort of convert part of our revenue, on which we pay 12%-30% of store fees to G5 Store where fees are in single-digit percentage points. You can actually calculate what kind of difference it's going to make for the gross margin, and it's pretty good. It's like from 25% could be 2 to 3 percentage points improvement in profitability. We're very excited, but we'll have to see. There's no flattening out, at least not yet. not in April, which by the way ended, we see that this dynamic continued into April. That's very exciting. All right. I had to follow up on your statement there on potentially having 25% of sales through G5 Store in the future. Just looking at peers, I think, you know, one big difference is that many peers have a legacy from browser sales. I think that is one of the most important reasons why they have so much higher shares of revenue outside iOS and Android. Could you maybe explain a bit more what needs to happen for you to reach those kind of levels because you don't have the same kind of legacy browser sales, if you understand what I mean. I understand what you mean, and I understand you and I may be referring to different peers. I'm referring to the company which I do not believe has this legacy from acquiring older companies with web browser presence. I am not entirely sure, but I will actually double-check afterwards. I think what will need to happen is that we will just have to run the way it's running for some months, and if the trend continues, we will be there. Now the question is where is the upper limit, right? G5 Store was developing sort of slowly and then faster, and then we figured out how to acquire users in it, and now it's developing rather quickly. Depending on how fast it's going to happen, how fast it's going to continue to grow in the future and where it's flattening out, I'm just trying to extrapolate. You know, we're at 8% and it's accelerating, I think it's not unreasonable to say, you know, I don't see anything falling out of balance if eventually it's 20%-25% of our revenue, right? If I said it's going to be 50%, that sounds a little crazy. Like, how would other stores look like then? Are we web-only company at that point, or what is it going to be? Is the top line growing at that point? How would we displace the mobile revenue realistically? I don't have answers to these questions, but I can certainly see how G5 Store can go to 20%-25% and then nothing strange happens. We're still doing our work on mobile, and under that scenario, we don't have to assume that everything is bad on mobile or it shrinks or, you know, or that the top line suddenly starts growing dramatically. It's just, from my point of view, it's a safe assumption that we should be able to get there because we'll get somewhere if it's growing this fast. That's just common sense. We'll see. All right. Yeah, I agree that this is a very good opportunity, of course. I also wonder, you know, may it be that you have, you know, giving some special discounts or deals that make the players, you know, right now want to use the G5 Store much more than what could be reasonable to expect in the future or anything like that? Is it more purely organic? What's interesting, we're not doing anything like that at the moment. Or whatever we are doing with this type of solicitations, it's aimed at users who play on mobile, and we are trying to make them pay to mobile through the web, through G5 Store, right? We would send them an email, for example, telling them about their ability to purchase in the web and then use it on mobile. However, we've just started doing it. There's a lot of friction in this process, as you can imagine, and there were very few transactions there. 100% of revenue of G5 Store for now is without any discounts or any more advantages offerings. It's people downloading games directly from G5 Store from G5E.com. Most of them are using Windows computers, but there are people using Mac computers doing the same thing, and there's increasing, gradually increasing number of people using Android phones, and they're going to G5E.com and sideloading games to their phones, and then they're playing them and paying. Windows is the biggest, Mac is number two, and then Android, it's very slowly from very low base, but it's gradually growing. If other platforms will allow sideloading, maybe in some regions of the world, we'll be happy to expand G5 Store to support these platforms as well. There's the whole other area, considering that we have this monetization in the web of whether or not we can get mobile users to monetize through our web interface. Maybe in that case, some incentives would be reasonable because it's a little bit more hassle than paying through the mobile providers with their high fees. Then maybe we can give something to our users in exchange for a little bit more hassle in making a purchase. I think a lot of developers are thinking this way and in this direction. They're different, you know. I know, I know other companies are doing that as well, so it's like an overall movement in that direction. We'll see. We've just started our experiments there. If we are able to get kind of a sizable revenue there, that will be another part of G5 Store revenue in addition to the growth that we're seeing now because that's not part of G5 revenue right now. All right. G5 Store revenue. Yeah. Interesting. A last question from me, about Sherlock and the growth for Sherlock, which has been, you know, slowing down. It was down, sequentially, if I got it right, this quarter. Mm-hmm. Is that mainly, you know? I don't think it was down this quarter sequentially, though. Okay. Maybe I missed that, but. I think it was up but slightly. All right. That would be the right way of putting it. Yeah. What do you say about the momentum for the game? Do you think it will plateau here, or do you expect that you could do some push to make it continue growing here, or how should we view the game coming quarters? It's certainly slowing down in its growth, right? It's hard to say. We certainly had when Hidden City was growing, for example, and The Secret Society before that, we certainly had periods of faster growth and periods of slowing down and then growing again. Truth is we'll have to see. I have a feeling that Sherlock is going to be a very stable game. We certainly continue improving the game, and we have a number of initiatives internally to continue to iterate on the game to fix it for the better performance in terms of user acquisition and scaling the audience. Also the slowdown in Sherlock sort of coincides with the weaker performance of the market, so maybe it's a reflection of the overall situation in the market and the economic situation. We have, we just have a slowdown. It's hard to continue growing fast when the overall market is not feeling that well. We will see, basically. I don't have a very specific answer for you. I think the game's parameters look healthy enough for the game to be at worst stable and at best continue to grow, although at a slower pace. All right. Got it. Thank you. That's all for me. I'll get back into the queue. Thank you. Thank you. We have a caller. Let's see who is on the call here. There we go. Let's see. Yeah, we should hear you now, whoever raised their hand on the, that is dialing in. All right. Nothing Well, in the meantime, we can answer. We got some questions, a question from Rasmus at Handelsbanken in the Q&A box. If we see any improvements or worsenings during the quarter, so sequential improvement or worsenings during the quarter. Yeah, I can take this. You know, it's actually very stable. I'm looking at it all the time, as you can imagine. Even, you know, even the fluctuations are more like reflection of the length of the month and days. You know, February is shorter, and then there's 31 days, and then there's 30 days in April. So far, it looks like we have a very stable platform of revenue. Of course, Q2 and Q3 usually are weaker, and there was a weakness last year in Q2 and Q3 compared to Q1 last year. We'll see how the revenue develops this year. You know, on one hand, there's probably another or a continuation of reopening, maybe. On the other hand, if anyone had any travel experiences from last summer like I did, I'm not sure I want to repeat that, so maybe I'm not gonna be spending as much time vacationing over the summer. Maybe, or maybe people don't have as much money as they did for that last year, so maybe we're gonna see more people go back to games. We'll see. There is that, but so far in Q1 and the beginning of Q2, it looks very stable really. Right. Okay, I can take the next one. There's a question from Dennis. I was wondering whether you can provide any comments with regard to the sales trends during the quarter, year-over-year in USD terms in line with Q4, and you said this is in line with the underlying market development. Do you see any signals of a shifting environment? If, you know, we have the data that we have from the market, intelligence providers, what we see is that year-over-year, the market is still down 7%-8% in Q1. These analysts, they're saying that the market was slightly up Q1 to Q4. We were sort of flat Q1 to Q4 in USD, adjusted for the number of days in the quarter. The market was slightly up by like 1% or 2%. Usually, they also revise these figures over time. It looks like Q1 was better sequentially, and that is a good sign for the market. That's the environment that we see, but it's still down year-over-year. When we compare our figures year-over-year, it makes sense to look at the year-over-year market performance, obviously. R&D costs. Another question from Dennis. R&D costs up a bit sequentially, and obviously, we have the changed capitalization policies impacting. Any comments with regard to the underlying R&D costs and any impact from currency changes, such as the ruble? I think overall we have a very good alignment between the currencies of income and the currencies of expenses. We have a lot of revenue in USD. We have a lot of expense in USD because we pay Ukrainian employees pretty much in USD at this point. It's just pegged to USD, and it's a big chunk of our expenses. All the user acquisition expenses are in USD. Then we have a lot of revenue, 25% of our revenue is in EUR, and we have a growing amount of of expenses in EUR because we have an office in Malta. We have like 80 people in Montenegro. We have people in Bulgaria. We have people choosing to be paid in EUR who live all over the European Union. And, and as we said, we have like 41% now in EU and some other countries. Then we have exposure to some expenses and some kind of more exotic local currencies like in Kazakhstan or Armenia, Georgia, and of course, some in Russia. There's been some positive and negative development over time, but I think it's not very significant at this point. It doesn't affect our bottom line that much, and considering this big alignment, that we have between the currencies of income and expenses. So yeah, it's not. I don't even kind of remember the specific numbers there. Then the volatility that we had last year that we went through when it comes to currency exchanges, especially with the exposure that we had, which was much bigger, it doesn't worry me that much because we went through that and now it's much less and it's not, it's not really. The current volatility, it's not even as dramatic as it was a year ago. Another question was to underlying R&D costs. We've optimized our staff count. We went from 960 people at the end of the year, to 930 at the end of the first quarter. We are doing that, as we have promised because of the new approach to new game development. We're also paying attention to the generative AI and the tools that are available, and we've already found some ways to optimize work that we are doing on existing projects and on new games. I think we're gonna discover more ways to improve our efficiency and to lower our costs, using these tools during this year. I think this optimization will. My hope is that this optimization will compensate or hopefully more than compensate the raises that we have to give people because of the inflationary environment. In the end, it's gonna be stable. That's why we say, you know, new normal stable development through the next few quarters of the year, because we expect to keep our cost base at around the same level or better. You know, we don't see dramatic developments on the top line, but underneath it, we will try to shift more revenue towards more profitable channels so that we can keep and improve our profitability and continue to have good cash flow to finance all the new games that we're working on. Sorry, it was a long answer to a short question. All right. Any further questions? We have no one raising their hands on the in the call, and we have none in the QA box. Yeah, last call. Then, I'm going from the last. Oh, there we go. Robin. Yes. The question from Robin- Yeah. Go ahead. Please go ahead. Teamwork. Okay. Last quarter you mentioned the new game from Happy Star Games. Can you please give an update here? First of all, it's not from Happy Star Games, it's from a team that was part of Happy Star Games at the inception of Happy Star Games. They kind of spun off. They have a separate studio now for some time. They have a different name, and they're no longer affiliated with Happy Star Games, and they're developing a completely separate game, which we have licensed. This game is currently being getting ready for the soft launch, and it's gonna be released in the soft launch within a few days, maybe a week, something like that. That's the latest that I know. It's coming into the market, but in a limited, geography, in a matter of days. It's gonna take us. Usually it takes us some months to thoroughly test it and fine-tune the game and see if it's appropriate for the global release and if it can be scaled. We'll find out soon enough. Okay. It seems like we have no more questions. No. Okay. Vlad, any final remarks? I would just like to thank everyone for attending to the call, and thank you for your questions and for following the company. Okay. Thanks very much, everyone. We'll see you again in next quarter at least. Thank you, Stefan.