Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong profitability and cash flow generation in Q2 2024.
- Adjusted EBITDA increased by 7% year over year to SEK426 million.
- Operating margin improved to 30% in the quarter.
- Successful localization of games leading to revenue growth in June.
- High cash conversion rate of 66% for the rolling 12-month period.
Negative Points
- Sales declined by 1% year over year in constant currencies.
- Challenging market environment due to Google's transition to real-time bidding affecting ECPM levels.
- In-app purchase trends remain highly competitive.
- Daily active users (DAUs) decreased year over year and sequentially.
- Tough comparisons for InnoGames due to exceptional performance in the previous year.
Q & A Highlights
Q: Should we expect the second half to be a mirror of the first half, meaning mid-single digit negative growth in Q3 and positive in Q4?
A: We aim for the second half of the year to be much stronger than the first half. Sequentially, we aim to grow Q3 versus Q2, and then grow Q4 versus Q3. (Maria Redin, CEO)
Q: How dependent will you be on new game releases for sequential improvements in Q3 and Q4?
A: This year, new game releases will be quite marginal. The main foundation for improved performance will be live ops and events with existing games, and localization of existing games. (Maria Redin, CEO)
Q: Can you elaborate on what PlaySimple has done to mitigate the impact of Google's changes?
A: PlaySimple focused on engaging customers more and reaching new audiences through localization. They also added new features to existing games using AI. (Maria Redin, CEO)
Q: Should we expect other costs to remain stable or increase slightly?
A: Other costs should remain stable. (Nils Mosko, CFO)
Q: Can you talk about the actions InnoGames is taking to return to growth despite tough comps?
A: InnoGames is focusing on improving key events and adding new features to drive engagement between events. They have also added new growth teams. (Maria Redin, CEO)
Q: Are you currently involved in any M&A discussions?
A: We are always discussing with potential partners, but we only proceed with acquisitions that make operational, strategic, and financial sense. (Maria Redin, CEO)
Q: Can you comment on the development of daily active users (DAUs)?
A: The main driver for the decline in DAUs was the divestment of Kongregate. Excluding Kongregate, there was a slight net negative change. (Maria Redin, CEO)
Q: What are the growth and profitability prospects for Warhammer 40,000?
A: Warhammer 40,000 has grown to become our third-largest title. It is growth accretive but margin dilutive. (Maria Redin, CEO)
Q: What were the learnings from the Mr. Beast campaign?
A: The campaign drove strong engagement and reactivation of existing customers, but did not significantly attract new customers. (Maria Redin, CEO)
Q: How will the user acquisition (UA) allocation be between existing and new games in the second half of the year?
A: The biggest UA allocation will be to our existing core games, but we aim to scale up UA for new games based on their performance. (Maria Redin, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
