Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- G5 Store's revenue contribution increased significantly, making up 15.2% of total net revenue compared to 9.4% a year ago.
- The G5 Store experienced a 42% growth year-over-year in Swedish kroner and 40% in USD terms.
- Gross margin improved slightly to 67.8% from 67.4% last year, aided by the growth of G5 Store.
- The company maintained a strong cash position with SEK193 million, up from SEK173 million last year, despite paying a substantial annual dividend.
- G5 Entertainment AB (LTS:0QUS, Financial) continues to have zero debt and a solid cash flow, indicating strong financial health.
Negative Points
- Revenue in the second quarter was SEK287 million, which was 13% lower than the previous year in Swedish kroner and 14% lower in USD terms.
- Earnings per share decreased to SEK3.02 from SEK4.96 in the same quarter last year.
- Operating profit (EBIT) dropped to SEK21.8 million from SEK38.9 million a year before, resulting in a lower EBIT margin of 7.6%.
- User acquisition spend decreased to 17% of revenue from 19% last year, indicating potential challenges in acquiring new users.
- The company faced a negative impact from FX revaluations, affecting the EBIT margin negatively.
Q & A Highlights
Q: Can you discuss the current trajectory for the big games, Sherlock and Hidden City?
A: These games are more stable than others in our portfolio. We allocate substantial resources to evolve and improve them, as they are main drivers of our revenue and profitability. (Vlad Suglobov, CEO)
Q: You mentioned four games in soft launch. Do you still expect at least one global launch this year?
A: We aim for a global launch this year, depending on finding a scalable game. We have promising ideas in our pipeline, and while it's challenging, we hope to qualify one for a global launch. (Vlad Suglobov, CEO)
Q: How do you see the share of G5 Store revenues developing with new game releases?
A: Successful games on mobile are also successful on G5 Store. A new scalable game could increase revenue from both channels, but the trend in revenue share might not change significantly unless the game is exceptionally successful on mobile. (Vlad Suglobov, CEO)
Q: How have changes in marketing rules by Google and Apple affected G5?
A: These changes have made user acquisition more probabilistic, affecting the entire industry negatively. It has become more of a guesswork than an exact science, but we are adapting by going directly to consumers. (Vlad Suglobov, CEO)
Q: How many of your current games in preproduction or soft launch are externally developed?
A: Three games are licensed and developed by external developers. We aim to improve the pace of evaluating and testing new ideas internally, while leveraging partnerships with external developers for independent thinking. (Vlad Suglobov, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
