G5 Entertainment AB (LTS:0QUS) Q3 2024 Earnings Call Highlights: Navigating Revenue Decline …

• Revenue: SEK270 million, 17% lower YoY in SEK, 14% lower in USD terms.

• Gross Margin: Increased to 68.8% from 68.1% last year.

• Earnings Per Share (EPS): SEK3.14 compared to SEK3.83 last year.

• Cash Position: Record high SEK246 million, up from SEK184 million last year.

• Operating Profit (EBIT): SEK22.9 million, up from SEK22.3 million last year.

• EBIT Margin: 8.5% for Q3.

• G5 Store Revenue Contribution: 17.1% of total net revenue, up from 12.1% last year.

• G5 Store Growth: 22% YoY in SEK, 27% in USD terms.

• Monthly Average Gross Revenue Per Paying User: USD64.9, up from USD63.2 last year.

• Total Cash Flow: SEK53.3 million compared to SEK9.7 million last year.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• G5 Store continues to show strong growth, now making up 17.1% of total net revenue, up from 12.1% a year ago.

• Gross margin reached an all-time high of 68.8%, driven by the growth of G5 Store and lower processing fees.

• The company maintains a strong cash position with a record high of SEK246 million and zero debt.

• Monthly average gross revenue per paying user increased to USD64.9 from USD63.2 a year ago.

• The company has a robust pipeline with 30 game ideas in preproduction and early development stages.

• Revenue decreased by 17% in Swedish Krona and 14% in USD terms compared to last year.

• Active games revenue fell by about 14% in USD terms.

• Earnings per share dropped to SEK3.14 from SEK3.83 last year.

• The company stopped the development of one game during the quarter.

• The overall audience has been declining, impacting the company’s revenue.

Q: Can you provide more details on the substantial revenue growth in October? Was it driven by a specific game or region? A: The growth in October was broad-based across most games, with a slight emphasis on our own games. It wasn’t due to any specific game or region, and September wasn’t unusually low, making the October growth noteworthy.

Q: Are there any improvements in user acquisition (UA) returns that are contributing to growth? A: Not necessarily. We are seeing a divergence in UA, with more budget allocated to the G5 Store, which is growing. The mobile UA situation remains stable, with no significant changes in day-to-day performance.

Q: Is the growth in G5 Store driven by new players or existing players moving to this channel? A: It’s a mix. G5 Store attracts players who prefer playing on PCs and have experience with casual games. We also acquire new players through cross-promotion and organic search, alongside a loyal audience that prefers direct play from the store.

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