The plan for today is that we will present the presentation of the Q2 results, and then we will go through all the questions that we have already received in advance. Many thanks to everyone sending over questions already. After that, we also will answer further questions which arise during the session. There is that Q&A functionality module. Please be so kind to use that Q&A functionality, because that's more structured and transparent as the normal chat functionality.
Whenever there are questions, just type them into the Q&A session and we will try to answer them after the presentation and the questions we have already received. That's as a small introduction for Jumpgate. Harald, obviously as a CEO, is participating and attending today. Me, Florian, COO, CFO, and Alex will be so kind to share the screen so that we can see the presentation. I would right away jump into the presentation. Alex, maybe you can share your screen.
Give me two seconds.
Also, warm welcome from me. I'm really excited about doing this the first time. Should hopefully be very interesting.
The presentation that we have already published yesterday. Alex?
Coming.
First time hiccups.
Here we go. Maybe we can do full screen. Yeah. It looks good. The presentation with some comments on our Q2 result. Maybe we start with slide three. We have seen an increasing net turnover, 37% higher compared to last year. Obviously, that is mainly driven by the Star Trek: Voyager – Across the Unknown project game. And of course, we are happy to see that increase. Unfortunately, we have seen a small dip in the EBIT. It is similar compared to last year, but of course, slightly worse than last quarter. We will get back to that topic. Compared to last year, the Tivola EBIT was slightly overcompensating for the weaker EBIT in gameXcite and Funatics, meaning compared to last year, we have slightly been better.
The loss after financial items, so the result that has also seen a slight improvement compared to last year, and the repayment of debt at the end of the last quarter will also help that because the interest expenses will go down this and upcoming quarters. Very positive, of course, is that we have seen a positive cash flow, which is significantly improved compared to last year. As we have received a question on that topic, I would love to take the opportunity to already answer that question. The question was how we expect the cash flow to develop during the second half of the year. We have set a very solid base now, a lean structure, constantly having reduced cost base, and therefore future cash flows. For the second quarter will, yeah, definitely mainly depend on the projects that we can sign.
As you have seen, we have published the news yesterday that we were able to secure another public funding for gameXcite, which is a major and super important step forward to sign another project for gameXcite. Very positive news. Cash flow, as I said, solid base on cost side, depending on the signings where we have good news already, and also depending on the success of the upcoming Star Trek DLCs, which will be launched in the second quarter. Yeah, very good, positive that we have seen such a strong cash flow in the second quarter. We come to the next slide, Alex, I guess. The profit and loss.
Yeah, as I said, we have seen improved net sales also compared to the last quarter, to the first quarter, which is resulting in a total operating income of nearly SEK 18 million in the second quarter. Purchase of services is super constant and stable. Other external services, that is an interesting item. That is mainly driven by the license royalty payments concerning Star Trek, and we have had that special effect of a minimum guarantee payment the last quarter, which has affected the cost and also therefore the result, the EBIT. We will say a bit more about Star Trek and those special effects later on. As we have also received a question on that, I want to take one more minute on the other external services. So that is really driven by those royalty license payments.
Just to give some insight to that structure, we receive from the publisher the royalty payments that stay with us, and we also receive from the publisher the royalty payments to the IP holder. Obviously we are talking about Star Trek here, so the publisher pays the license royalties to us, and we pay it to the IP holder, and that drives our cost item here. That is more than 80% of that cost item. The question was if there is a small breakdown. So besides those license royalty payments, we have in there auditor accounting services, consulting fees but way back, and really, in comparison, much smaller, as you can imagine, if the royalty payments are already 80% of that cost item. Then there is really tiny stuff in there like travel, IT, rent, et cetera. Yeah.
So really important to understand that there are those royalty payments in there, and there has been a special effect in Q2 due to that minimum guarantee payment. So we are confident that we are on a very good way there. Personnel expenses, yeah, we are really diligently managing that cost item. We have a few new hires in Tivola for the new mobile project, which those employees were just needed for the project, but in total, very constant. In total, that leads to, yeah, unfortunately, a small negative EBIT. As I said, there was that special effect with the minimum guarantee payment, and we are very confident that this will improve again. Also interesting one more, the other interest expenses, very constant as you can see, but the good news is that it will not be constant anymore in the future, but it will decrease.
As you know, we have done a significant down payment, amortization payment on our debt, and therefore that cost item will be reduced in the upcoming quarters as well, also helping our result. In total, in the second quarter, we saw a net loss of SEK 3.3 million. Next page, next slide. What does that mean in the development over the quarters? As we have said, the net turnover has increased compared to last year and compared to last quarter, mainly driven by the Star Trek launch, very positive and also increase in Tivola caused by our new mobile game project. The result, one or the other might have wondered that there was a dip. As I have already stressed, there was that one-time minimum guarantee payment.
We have also kept the team on the product to really make sure we have good quality, really invested in product quality as we are absolutely convinced that this is a very strong long-term seller and it was super important for us to really polish and work on the product. We have published a few updates there, and that additional cost for the team will also be decreasing in the next quarter. That is really good news, and we are really confident that we are on a good path there. Next slide. Our balance sheet, I guess there is not too much to say about the balance sheet. We see a cash conversion from receivables, of course. Besides that, the really main topic on that slide is that we see the decrease in liabilities, in debt.
We have paid down our biggest single interest-bearing debt position completely, so that will also help our cost in the upcoming quarters, as I had already mentioned, because interest payments will go down. Remaining on the liability side are mainly the convertible loans from our investors, and those in total are the largest remaining debt position. As we have said, of course, deleveraging the company and bringing that position further down is one of our biggest goals, and we are also confident in achieving that. On the next slide, we have the highlights of the quarter. To be honest, I would jump over that one. If you are interested in more detail on those things, they are of course all published on the website. I guess the next slide is the more interesting one. The key takeaways.
I have already stressed that we are really happy about the successful Star Trek launch, that we have had a unique constellation in the second quarter with that additional minimum guarantee payment. One super important thing to understand, and I want to be transparent on that, from the first euro of, or crown of revenue from Star Trek, we have received a royalty payment. But with the publisher recouping its investment, and that has been the case now, we will more than double our share. So we will really significantly benefit in the future from higher royalty payments, because after the recoupment of the investment by the publisher, we will get that higher revenue share. So two positive effects, and even a third one is that, as I mentioned, the cost will go down on our end for the project.
Long-term royalties will materialize in positive EBIT, and that is really key for us. Strong project pipeline, that is one of the side effects of our successful project that we see increased inbound requests for proposals. We really want to focus on growing the business by working on multiple fully funded projects. As we can see with the Star Trek, that is really providing an interesting upside potential. Then, as we published, we have secured nearly EUR 12 million in public funding in Germany for the gaming side, and that is a crucial and very important step towards assigning the next project in gameXcite . As soon as this is done, we will of course let you know.
Deleveraging the company, of course, we have seen already that positive development in the second quarter, but that stays a goal for us and is also one of the key takeaways that we are successfully managing that at the moment. The goals are pretty much in line with what you already know and are the key takeaways. On the next slide, we see the goals, which are benefiting, materializing on our successful Star Trek launch. As stressed, this is something we are really confident on, capitalize on the improved business development dynamics, which I have already mentioned, and to deleverage the company. I guess that's it from my end for the moment, and I want to hand over to Harald, who wants to say something more about the big picture and also what he has already written in the CEO comment.
Yeah. Thanks, Florian. The idea is here to give a bit more context about what's happening in the business, and I think the key takeaway here is that, and Flo has already said it, but Star Trek has really been a great success for us. It proved that we could deliver a really high-quality product with strong reviews and sales. I think what also became clear here is that because we're all fans ourselves of the franchise, I think players really felt how much we cared about the game and the universe. But what maybe isn't so obvious is also all the other work that went into kind of delivering this experience to players, which is the technology and development side. I think the team did an excellent job in just creating the tech pipeline, making sure the launch was very smooth with very little technical issues.
Also I think everybody kept their ear very closely to the ground in terms of what players said and thought and told us, and where everybody reacted very quickly to anything that came up from the player side. This is something that I'm really proud of, and it's like particularly when you're a smaller company like we are, the quality of the team and the culture and how everybody works together is really critical. I think one of the achievements or key achievements over the last years has been the kind of team and culture that we have built.
They're different studios and they do have their different culture, but they are capable to work across these studio borders really well, which gives us the possibility and the flexibility to react to needs in the projects, maybe on a different level than just a single studio or a group of companies where this kind of coherence isn't happening in the same way. I think that's one of the key advantages that we've created internally and a report maybe doesn't give the right form to this, so this form is maybe a good place to talk about something like that. Yeah, I want to use this opportunity actually to say thanks to all the people in the team.
The amount of effort that went into that launch and also post-launch, and now working on the DLCs and everything else has been quite intense and everybody really stuck in there, so thank you to all of you. Florian has already talked a bit about the finance aspects of the launch. In Q2, this maybe looked a bit weaker on the surface, but as Flo said, one reason for it was the dynamics of how the deal is structured with the publisher having a higher revenue share initially. But the other one was really also our own dedication to invest into the future of the game with all the DLC, but also with quite a few substantial free updates that have already been deployed, signaling to players that we care about this long-term, and more is upcoming in that regard.
We have now a complete pipeline of DLCs coming out in the next months, some of which are paid DLCs, some of which are completely free updates to the game that substantially expand the scope of the game. I think this is also an important investment into turning the game into almost like a platform that you can build on. Our expectation is definitely that this will create long-term revenue for the company. We also feel really positive about the things that we're currently building for the game. Preliminary feedback from players has been very encouraging. We're looking forward to the next releases for the game. Another key effect of reaping the rewards for all the hard work of the last two, three years has been that now based on this success, our business development pipeline has been greatly expanded.
We have much more conversations these days about new projects in the same kind of structure as we had with Star Trek than we had in the past. The industry has been a very challenging place to operate in, and that hasn't really changed, but what has changed is our position in it and how the industry perceives us and our ability to deliver high-quality products with licensed IP that really resonate with players and generate sales, most importantly. We are working intensely to expand the pipeline of projects that we're working on. We will also be making organizational changes to address this increased need of business development bandwidth, so that we can then scale the operation across multiple projects.
In this regard, I think in terms of our business model and our goals, I also want to direct the limelight a bit onto Tivola's new project with Trophy Games. This follows a similar model as we've done with Star Trek, where the game is fully funded, partially by our partner, Trophy Games, and partially through government fundings, which come through, in this case, Tivola. This means that once the game releases next year, we also have a substantial participation in the upside of the game, and I think everybody in the company feels very excited about the progress there, and I think some really good work is being done. That's the next thing that we are looking forward to, which is the release of that in 2027.
It's a good example of how we want to grow the company going forward, because that's also been part of the questions that we've been asked, how are we going to grow this? The strategy of the company is to increase the number of projects that follow this model, where games are fully funded, either by our partners or by government subsidies, a combination of these, which allow us to participate in the upside without actually taking any substantial funding risk in the projects. I think this model is really a good one, and I think we've reached this critical quality and execution ability in the teams to really deliver these high-quality projects that then make the revenue come as a reward from this investment.
The goal is to stack these projects on top of each other, grow the business that way, and we feel really positive about that. Next week, we're going to Gamescom, which is the biggest games show in the year, and our calendars are completely packed with interesting meetings. Obviously, as soon as we're ready to talk more about new projects, we will be doing so. I would like to wrap up with the sense that we have that all the work that we've done in the last couple of years have transformed the business. Jumpgate today is something completely different than it was actually not too far ago, and we're really proud of that result. I think with that, we would move forward to Q&A.
Cool. Thanks, Harald. As Harald said, we have done the presentation, and we would like to dive into those questions you have delivered in advance at first. There was one question about the market interest in Jumpgate, which is still pretty low, and what our thinking of that is. We strongly believe in working on the fundamentals, really growing the business, make it a profitable business, and control the fundamentals. It's really about strategy execution, as Harald already said, where we have proven that we are able to deliver a strong and high-quality project. Of course, sometimes we wished we could have achieved one or the other thing even quicker, but I feel that we have built a really strong and sustainable base, and that's for us the main thing to attract interest.
Besides that, we are really focusing on being transparent, to be open. That's why, as I said, we have introduced the presentations that we provide on a quarterly base. That session is the next step that we want to give you another format to give it a chance to raise questions. That's our approach, working on the fundamentals as hard as we can and be transparent and open to you, to everyone. Therefore, I'm sure we will also raise more interest in the future.
I think the next question is also for you, Flo.
The next one is on you. It is the DLC sales. I can say something about the DLC sales, sure. The question was if we want to say something about the DLC sales of Star Trek. On a general note, that obviously helps our revenues, that helps our Star Trek project, and the DLC sales will definitely positively affect the revenues. To really talk about the details of the DLC sales, it is difficult, to be honest, as it is after the period. But I am confident that we will keep you posted with news on the DLCs and general sales of the main game. As soon as we can say more about that, we will let you know and publish some more news. That is it on the DLC sales, I guess. Harald?
Yeah. There was another question about how discussions are progressing about other potential projects, and we have previously talked about Battle Castles, for example. Regarding other potential projects, and I will bulk some of the questions because there were some other ones coming in here that touch about the same things here. One obvious thing that we have communicated now is that we have received the public funding for a new project in gameXcite. This project is building on the technical foundation and platform that gameXcite has built for Star Trek: Voyager – Across the Unknown. We cannot really say anything more about what the game is and what IP is involved and like that. Still have to wait for that. And there was a question here about the total development budget and the commercial deal structure.
I can take that one if you want to.
Yeah, it's fine. I'm already on it, so it's okay. We aren't in a position to say what the total budget is at this very moment yet. But as an order of magnitude, because that's public information for anybody to read, is that the German government typically funds 45% of a project, whereas 55% is required in match funding from other sources. That doesn't necessarily mean that this is the complete budget that is needed because the public funding also means that some parts of making a game aren't actually subsidized. One of those would be marketing expenditures or things like that as an example. But it will give you an indication of where this roughly sits.
Because the game is based on the existing technology stack, this scope gives us the possibility to develop a substantial game that improves on a lot of the things that we had. For the first game, we can just build on top of that. Battle Castles, we have some public funding also in Funatics. We have talked about this in the past. This is still an ongoing thing that I can't talk too much about right now.
There have been a whole bunch of discussions back and forth, but this project is still ongoing. There's what I alluded to before, there's quite a big pipeline these days. Obviously, it doesn't mean that every project that you have in the business development pipeline actually closes, but I can only communicate that the amount of leads that we have for new projects and interesting discussions is on a different level than it was before.
Yep.
Yeah.
Maybe I go over to the next question.
Yeah.
We have received in advance. The question, I just check out my notes, is about the current overall utilization level. As we mentioned, Tivola is completely busy with a new project that Harald has already mentioned. Also, gameXcite obviously is busy with Star Trek and the upcoming DLCs. Funatics, as the third studio, is also super busy working on our work-for-hire deal and also internally supporting Tivola with the project that we do together with Trophy Games. Maybe interesting to mention, and Harald has already striked the topic, is that one of our big strength is that teams really cooperate very well with each other. As I said, Funatics is helping Tivola, and everyone is flexible to help together. In a nutshell, those three studios are completely busy, optimal utilization.
As Nukklear is explicitly mentioned in the question, just very briefly on Nukklear as well. Also, Nukklear, with its core team, is supporting with the other projects, but also working on some really exciting pitches, which are part of the pipeline that Harald has mentioned. Overall, I can say that utilization rate is really good and high, and maybe also, flipping back to Robin's question that you have posted here in the chat, how does the smaller team size impact your operational bandwidth?
I guess we have a structure now where we have really a lean structure, but on the other hand, we are really flexible, and if new projects are coming in, one thing is that everyone helps together. Secondly, one effect of the industry being in a more difficult situation as it has been before, we have seen that if needed, based on our good network, we are really able to bring in more talent very quickly, and that's really good and really important for us. To jump on the second part of that question-
Yeah, Flo, I have an important comment also about the smaller team size. Did you want to say more about the smaller team size, or would you-
Yeah.
Okay. Well, then finish what you're saying, and I will add to that.
Yeah. One thing that I really believe very strongly in is that small team sizes, and I guess maybe, Harald, that's what you want to mention as well, is really the model of the future in my opinion because we see such tremendous progress in possibilities using AI and new technical options, so that small teams those days can really achieve great results. On top of that, we really have those very skilled veteran core teams and are able to bring in the special skills that we need on a project level. So that's the setup we are really confident with. Maybe you wanted to add something else.
Yeah. It's basically that. I think the industry overall is heading to a place where the quality of the tools that you use when you make, not just games, but any kind of software these days, is increasing so fast that the productivity of small teams that know what they're doing is going up really fast. As hard as it has been for us, like in the last two, three years, to reduce the size of the company substantially, this has set us up, I think, really well for what's coming in our industry. I think you continue to keep seeing layoffs and shutterings of really big studios and teams that are inefficient and where the cost of production are really high. The way we are working is really like a different model to that.
That doesn't necessarily mean because when we are working with licensed IP, we are not able and also don't want to and cannot even use any kind of AI in the content creation. All of this has to have a very clear chain of rights. Also, I think the fans of the IP they're demanding this kind of human artistry in the games. As someone who appreciates video games, I think that's important.
Even though there will be a place for pure AI-generated games in the future, but these types of games are not it. But the tools and the pipeline and how you work with each other, that's where a lot of great tools are available and we have invested quite heavily into using this in a very good way, I think. And yeah, so that's something Flo and I have really doubled down on is to make sure that our production process is as efficient as possible and, like Flo said, with all the layoffs, and the availability of excellent talent in the industry, when we need extra talent, we are able to find it very quickly.
Yeah. Maybe one more aspect of Robin's question. You mentioned about work-for-hire and how that fits in. I guess it's clear that our main focus, our main strategy is on fully funded projects with an upside potential, as we have talked about with Star Trek, with the new Tivola project and more to come. But we have seen that work-for-hire is always a valuable addition, another puzzle piece where we can earn money, and have constant revenue streams. So that's a very valuable addition. But the real strategical focus is on those fully funded projects with additional upside potential. So I guess that's the part of the question that was-
Yeah.
Still open to be answered.
Yeah.
Besides that, to be honest, I guess we have answered all the questions that we have received.
Florian, there's one aspect of can we provide more color and margin on the net revenue bit?
Oh, yeah. Robin's question, right?
There's only so much detail that we can or want to go into this. But I think the bottom line of the messaging here is that when a game is launched, the effort of the team to keep it up with free updates and everything is the highest obviously right after launch. And then that effort, like Florian said, it decreases over time. And of course, we keep the game alive with updates. But of course, over time, that is reduced. And at the same time, we've now hit that point in time where the portion of the revenue that we get is much higher.
The margin for us or the profitability or the portion of the revenues that we receive, that actually our profit increases over time and this threshold that we just crossed is a big step into the ongoing profitability of the revenue stream coming from the game. I think that's as far as I would be able to go on that question. And-
Yeah. I guess Robin is asking a lot of questions.
Okay.
Okay. Thanks, Robin. If you have other questions, feel free to message, to post them here. I guess we have answered so far the questions that we have received. Maybe in the meantime, to give you some more time to type if you want to, I can say that we want to really do those sessions on a regular base. I guess it is really good format, and we really want to give you the opportunity to ask questions also spontaneously and we will always do that very near to publishing the quarterly results. So on the same day or the next day, sometimes depending on the days, but we really want to do that constantly now. But I feel that we have really answered the questions. I guess to be honest, I am always fan of not extending meetings just for the sake of it.
Yes, you are.
I guess I would love to take the opportunity to really thank you again for taking the time, for your commitment. We really appreciate. I guess past has not always been super easy for us, everyone knows, but we are really confident about the future. Really appreciate your patience, your commitment and thanks for taking the time today. We really want to thank you and wish you a wonderful weekend. Thank you so much.
Yeah. Likewise. The same for me. I think it's going to be an exciting future.
Thank you. Bye.
Thank you all.
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Bye bye.