GDEV Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 28, 2024

Key Takeaways

  • Bookings Growth Resumed: Q1 bookings reached $109 M, up 4% year-over-year and 3% quarter-over-quarter, despite revenue of $107 M being down 10% year-over-year due to deferred revenue timing.
  • Profitability and Cash Flow Improved: Net loss narrowed to $1 M versus $8 M a year ago, adjusted EBITDA loss shrank by $10 M to –$3 M, and operating cash flow turned positive to $0.4 M.
  • Operational Metrics Strengthened: Monthly active users grew 17% year-over-year to 14 M, daily active users rose 8% to 1.6 M, monthly paying users increased 6%, and average bookings per user climbed 4% to $88.
  • Franchise Highlights: Hero Wars continued strong performance, Pixel Gun 3D saw MAUs +33% and a top-selling PC launch on Steam, and Island Hoppers delivered 56% year-over-year booking growth.
  • Share Repurchase: Completed a tender offer to buy back 16.5 M ordinary shares to enhance market liquidity and shareholder value.
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Earnings Conference Call
GDEV Q1 2024
00:00 / 00:00

There are 3 speakers on the call.

Operator

Hello, everyone, and thank you for joining us today for the Q1 20 24 Earnings Results Presentation for Gidev Inc. Today on the call, we'll present Andrey Padayev, Founder and Chief Executive Officer Alexander Karavaev, Chief Financial Officer and Roman Safiunin, Chief Corporate Development Officer. Before we get started, I would like to remind you that today's discussion may contain forward looking statements, which may not develop as we currently expect. We have posted a supplementary slide deck to the Investor Relations section of our website at gdeaf. Inc, which contains information and precautionary warnings on forward looking statements as well as our non IFRS financial measures.

Operator

And we will also pause our prepared remarks. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC. With that, I am turning it over to Andre.

Speaker 1

Hello, everyone. Today, I am delighted to present to you the GDEV preliminary Q1 2024 earnings results. We will share the progress we've made during the Q1 of 2024, discuss our initiatives to increase shareholder value, and highlight recent developments in our gaming franchise portfolio. The past 2 years have been challenging for the world, the global gaming industry, and our company. However, I believe we have navigated these turbulent times most competently.

Speaker 1

We returned to year over year bookings growth in the Q4 2023, and we are happy to see that trend continuing into the Q1 of this year. We adopted a new product development strategy for our portfolio studios, which strive to be on top of their genre, delivering fun and engaging experiences for our players worldwide. Our flagship IP, Hero Wars, continues to perform strongly across various platforms. Moreover, Pixel Gun 3 d is showing great numbers in terms of user activity. We are also excited about promising new titles like Island Hoppers, which we believe will follow in their successful footsteps.

Speaker 1

Apart from the operating business, we have also made steps towards improving the corporate profile to enhance shareholder value. In January, we completed a tender offer to repurchase 16, 500, 000 of our ordinary shares with the intention to reintroduce them to the open market to enhance market liquidity. Thank you for joining us today. I will now turn it over to Alexander Karavaev, our CFO, who will provide more details on our business and financial results.

Speaker 2

Thank you, Andrey. I'm turning to our financial results. For the quarter, we generated $107, 000, 000 of revenue, down 2% sequentially and down 10% year on year. The main reason for revenue decrease is the increase in the change in deferred revenue in the Q1 of 2024 in the amount of $17, 000, 000 versus the same period in 2023, partially offset by an increase of $5, 000, 000 in bookings in the Q1 of 2024 versus the same our games during the our games during the period before taking into account the deferred revenue that is required for financial accounting purposes. Our bookings amounted to $109, 000, 000 in the Q1, representing a 4% increase year on year and a 3% increase quarter on quarter.

Speaker 2

Our selling and marketing expenses in the period were $63, 000, 000 that is a 16% increase quarter on quarter, but a 19% decline year on year. These changes are attributed to a shift in our user acquisition strategy focused on increasing the return on our investments in user acquisition. They were also amplified by substantial initial investments in marketing during the Q1 of last year. Platform commissions decreased by $6, 000, 000 or 19% in the Q1 of 2024 compared to the same period last year, driven by the decrease in revenues amplified by growth of bookings through PC platforms, which are associated with lower commissions. Game operation costs decreased by $2, 000, 000 and amounted to $13, 000, 000 in the Q1 of 2024, driven mostly by a decrease in the employee benefits expenses, partially offset by an increase in technical support services.

Speaker 2

General and administrative expenses remained relatively stable, decreasing by only $700, 000 in the Q1 of 2024 versus the same quarter of the last year. As a result of the factors above, we recorded a loss for the period net of tax of $1, 000, 000 compared with a loss of $8, 000, 000 in the respective period of 2023. Adjusted EBITDA in Q1 20 24 amounted to negative $3, 000, 000 an increase of approximately $10, 000, 000 compared to the respective period last year. Cash flows generated from operating activities amounted to $400, 000 in the Q1 of 2024, an increase from negative $12, 000, 000 in the same period of the prior year. I would also like to mention that just like last year, we aggressively invested in growth during the winter holiday period, but our results are better due to improved efficiency.

Speaker 2

That means that we achieved overall better return on our investments in user acquisition in Q1 2024 versus the same period of prior year. The share of advertisement sales as a percentage of total bookings increased in the Q1 2024 to reach 7.7% compared to 7.0% in the respective period of 2023. The increase was driven by the successful implementation of advertisement functionality in Allen Hoppers from the start of Q2 of the prior year. Regarding other metrics, JDF's monthly paying users reached 381, 000 in Q1, representing a 6% growth quarter on quarter and remaining relatively flat year on year. Our average booking per paying user reached $88 a 4% increase year on year.

Speaker 2

And now our Chief Corporate Development Officer, Roman Safiulian, will continue on operating metrics and product update.

Operator

Thank you, Alexander. I will now provide some details on the operating performance of the group and share some insights on the key franchises. As Alexander mentioned, the Q1 of the year is usually a hot season for the user acquisition investments when you can acquire users at very attractive returns. This year was no exception. We have seen growth in the Q1 2024 across all key operating metrics such as downloads, monthly active users, daily active users, etcetera, across all our key products, thanks to our marketing efforts.

Operator

Overall, our monthly active users increased by 17% year over year, reaching approximately 14, 000, 000 in the Q1 2024, while the daily active users also saw an 8% year over year increase with 1, 600, 000 players engaging with our games daily. While our core franchise 2 titles, Hero Wars Dominion Era and Hero Wars Alliance continues to account for the greater majority of our bookings, we also remained well diversified by other products as well as platforms and geographies, which provide us with more flexibility in our operations as we can allocate resources in a more efficient way. Here was the Minyan era, our PC RPG title, showed solid performance in Q1 2024. The team managed to attract a record high of 7, 500, 000 new registration, which led to 6% growth in monthly paying users year over year. As a result, the game now accounts for 38% of total bookings, Given we pay much lower commission on our own proprietary PC platform, the development helped us to decrease the blended platform commission from revenue to a historically low level of 21.9%.

Operator

Hero Wars Alliance, our mobile RPG title, also saw a massive influx of new players during the Q1, taking the game to top 5 among all RPG games by download on mobile and top 1 in its team Butler subgenre in the Q1 according to App Magic. Now let's move on to our Pixel Gun 3 d franchise. While bookings in the Q1 experienced a year over year decline, the team managed to improve monthly active users metrics by 33% year over year. Moreover, Pixel Gun 3 d is no longer just a mobile game. The PC version was released on Steam on 2nd April and immediately entered the top 20 best selling and top 50 most played games upon debut.

Operator

Without significant marketing investments purely due to the brand power of the title. Talking about Island Hoppers, our mobile farming title, the team is constantly working on adding new content and features and improving the game metrics. This resulted in a 56% year over year booking growth amounting to over $7, 500, 000 Going forward, this year, we are fully focused on further enhancement of our key franchises. Teams are constantly working on improving the players to grow retention, engagement, monetization metrics in order to boost the forecasted lifetime value. And the benefits received from the lifetime value improvements we plan to use in more intense user acquisition investments, which is expected to provide us with cohorts supporting growth in the future periods.

Operator

With that, we conclude our Q1 2024 earning results presentation for Jadev Inc. We look forward to speaking with you again next quarter. Goodbye.

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