Morning, everyone. I can see that now the attendee list is filling up as we have opened the earnings call for the Q1 report 2022. You see some basic information here on the screen. You will be in listen and view-only mode, and we will open up for questions when we end the presentation. You can either write a question in the Q&A box, or you can raise your hand and I will open up for you to ask them by voice. It's not harder than that. With that said, I will hand it over to Vlad.
Hello, everyone. Welcome to our Earnings Call for the Q1 . We have of course been through a very special quarter, and I'll start by commenting on how Russia's invasion of Ukraine has affected us. The first few weeks after the invasion were volatile. The safety and wellbeing of our employees was and remains our utmost priority, so we have paid extra compensation to our employees in Ukraine, and we provided them with a paid time off for two and a half weeks so they could put themselves into safety. During this time, of course, our operations were affected as many employees were moving and were unable to contribute. This has created some delays in the delivery of the updates in the beginning of March. This did not have substantial effect on business.
As the invasion developed, we have focused our efforts on the following areas. Financial support. We supported all affected employees and made extra salary payments and advanced future salary payments. Compensation for relocation. Employees were compensated for relocation and housing for at least a month and, you know, more for many. We ran campaigns in our games. We ran offers to solicit donations for humanitarian aid to Ukraine and specifically to our employees. We are very grateful to our players who have decided to help. From the company funds and donations of our employees that the company has doubled. Through our management team in Ukraine, we also helped provide different kind of local relief in Kharkiv and other communities in need, and these efforts are ongoing.
All in all, we report the one-time extraordinary expense that we attributed to the war of SEK 15 million, and this covers such expenses and our commitments through the end of the year. There's more detailed breakdown of actual expenses in the report if you are interested. We also have decided to remove our games from distribution in Russia and Belarus, and it has either been done already or games are being gradually removed as we speak. We have many games. We are also facilitating the relocation of those who choose to leave Russia or Ukraine and join teams in other countries. As mentioned in the report, about 100 people signed up to relocate long-term, and we are already onboarding employees in new offices.
Under the circumstances, we anticipate that our office in Russia will decrease in staff count, over time, probably substantially. After the first month following the invasion, as our employees were relocating and settling in safety, we came back to normal levels of hours worked among our staff. Currently the hours worked are almost at pre-war levels, and I would say the work of the company is normal. Let's look at how we've changed our operations during this time and move on to the next slide. Yeah. We've established new entities in Armenia, Georgia, Montenegro, and Poland. Those are the blue boxes on the map where new entities are already formed. We are planning also for new locations in Bulgaria and Turkey. Those are the yellow ones.
Obviously the white boxes are the ones that we had from before the war. Our goal is to provide G5 with access to new pools of development talent, and also to provide options to those willing to relocate. We aim to maintain the same level of costs for the company as we relocate staff to new offices, but there may be slight increases over time, like adjustment in taxes and cost of living. This shouldn't be dramatic though. Now, let's take a look at the financials in the Q1 . Revenue was SEK 333 million. That is up 2% year-over-year. If we look at USD terms, it's down about 8%, and this puts our top line performance in line with the overall market.
At least the same dynamic was reported by Sensor Tower for the mobile app stores for the Q1 this year. Sherlock was a growth highlight of our portfolio. It's up more than 200% year-over-year in USD terms, and it's up 25% sequentially. Our own games now account for 71% of revenue, and our main growth driver continues to be our new generation of games. Revenue for our new generation of games was up 19% year-over-year to SEK 186 million, and new generation games stood for 56% of revenue. That's compared to 43% last year. Now this is our biggest segment of revenue. More specifically, Jewels family of games was responsible for 31% of the group's total revenue.
Sherlock made up 17% of total revenue, and as I mentioned, grew 25% quarter-over-quarter. We made one global release during the quarter, a game called Hidden City. We have also released one new game out of six that we have planned for 2022, and so we still have five new games that we are on track to release in 2022. As mentioned, expenses were impacted by extraordinary costs related to the war of SEK 15 million, and including once again expenses through the rest of the year. Adjusted for these extraordinary expenses, our EBIT was actually SEK 68 million almost, and that's an increase of 13%, and EBIT margin was 20.5%.
If not for the effect of the war, this would have been the highest quarterly EBIT margin and the highest EPS ever for G5, which I think is an exceptional achievement under the circumstance. G5 Store grew sequentially about 10% and advertising revenue reduced slightly from the previous quarter. UA spend was about 20% of revenue, which is consistently in the middle of communicated range, 17%-22%. With that, let's look at our revenue in some more detail. Once again, our own games now stood for over 71% of revenue, and that's just continuing the trend. Sherlock did a sharp uptick to over 17% of revenue, compared to 6% last year.
Our new generation games are now responsible for 56% of revenue, and this is our biggest segment of revenue now, up from 43% of revenue in the Q1 last year. Let's turn to more detail on our earnings. Unadjusted for the war effect, the operating profit was SEK 53.6 million, corresponding to an EBIT margin of 16%. You know, it's still quite a strong result, I believe. But again, if we adjust for these extraordinary one-time expenses that cover you know, our expenses in this regard through the end of the year, we're looking at even higher EBIT margin of more than 20%, which is first time in the history of the company, and 68 million SEK earnings, corresponding to a growth 15% year-over-year.
Going all the way down to EPS, that was SEK 7.5, which is also the highest we've ever had in a single quarter. EBIT was so strong due to continuation of our long-term trend of expanding margins as a larger share of revenue is coming from own games and as G5 Store, which has virtually no store fee, is bringing in more revenue. You can see that this effect continues to be very visible with the gross margin in the chart in the bottom right corner. Now let's turn to the cash flow and our cash position. We have a strong cash position thanks to our stable cash conversion.
Taxes impacted the cash flow negatively with SEK 11.2 million, and it was a reversal of the positive tax payments as communicated in previous period. Capitalized development expenses also impacted cash flow negatively by SEK 43.2 million. All in all, total cash at the end of the period was SEK 187 million. Once again, strong cash position, despite the situation. We remain at zero debt, and we continue and intend to continue to be cash flow positive every month, deploying cash in the best way possible in accordance with the opportunities that we see. Let's turn to the brief outlook for the rest of the year.
One thing that is different this quarter on when it comes to the plans for the next few months is that we plan to temporarily increase our user acquisition spend in order to boost growth of some of our best-performing games. This boost is planned for May, June, and July for three months. This will affect the Q2 . In the Q2 , we expect that UA spend will reach about 35% of revenue. Why we are doing this? The goal here is to bring the group's revenue to a new higher platform where we can deliver even higher profit margins due to inherent leverage of our business model. The reason we are doing this now is because we see real strength in our new generation portfolio performance.
You can look at the chart on the right, and we see the opportunity for even faster growth, pretty much like we did in 2016, you know, when we doubled down on user acquisition for Hidden City. We see higher EBIT margin potential at scale, and we want to achieve that scale. As we mentioned before, you know, multiple times in communication, G5 exists to create opportunities to scale, and when we see such opportunities, we will attempt to run with them as far as we can and take the business to a new level. We will communicate about this like we do now. Pretty much it is such moment, again like in 2016 when we recognized the potential of Hidden City and doubled down on user acquisition for it.
You know, Hidden City was then a consistently growing game, and a new game, just like Sherlock is today. As we have said before, we believe that we are looking at a very big opportunity with Sherlock. It may be our next big hidden object hit. The data that we see tells us that this is a very good moment to boost and attempt to take our revenue to the next level. Needless to say, we are going to be tracking our progress every day and every week to make sure we see the results that we anticipate to see, and we expect to make back the earnings that we displace in Q2 in the next few quarters, maybe even before the end of the year.
As a result of this boost, we should have higher revenue platform and even higher EBIT margins eventually. To sum things up, despite the uncertainties during this quarter, despite the war and the invasion, and thanks to our great teams, most of our employees are working. You know, the work on our games is ongoing. The work is ongoing as planned on the new games and, you know, the company's basically back to business as usual in that regard with regard to business. We have five more new game releases before the end of 2022. One game recently released. At this point, we don't foresee any significant delays due to the war. We are excited about the potential of our new generation games and how much bigger they can get in the next few quarters.
We are very grateful to all our employees for their hard work under such challenging circumstances, and we will, of course, continue to support them. All in all, I'm very proud of the strong accomplishments by the whole G5 team, which just keeps delivering on the strategy. I think it's a again very strong quarter under the very challenging circumstance. This concludes my presentation, and I'd like to start with the questions. Stefan, do we have any questions?
No, we have no questions so far, and no one has raised their hand, but maybe they're just, you know, digesting all the information. Now we have Jesper that wants to ask a question. Jesper, I think you can speak now.
Thank you. Good morning, Vlad. Can you hear me?
Yes. Hello, Jesper. Good morning.
Hi. Just a lot of new information here. Firstly on the UA spend, you know, going as high as 35% and, you know, you're saying you expect this to be recouped within 12 months or sooner. Is this similar to, you know, recoupment levels you've seen in the past or this, you know, levels improving or how are you seeing this?
Yeah. We did what we are going to do, we have done with the smaller game about a year ago. Our calculations are also based on that experience, and that's why we're also convinced it's the good thing to do. We did that previously with a game called Sheriff of Mahjong, and we've been launching several mahjongs, and we attempted different strategies of different kind of aggression, so to speak, in terms of user acquisition, and we had the ability to compare and analyze the results.
We are actually being very cautious about this because we've quite in advance we've attempted this at smaller scale, and there's also a lot of thinking and a lot of modeling that went into what we're going to do. That's how it is.
Also, I guess as a follow-up on that, I mean, which platforms are you, like, seeing as the most attractive ones to use for UA now? We've seen some report about, you know, Facebook kind of returning. They're kind of fixing their algorithms. It's getting better and better. But are you still allocating more towards platforms outside of Facebook?
It's across the board, including G5 Store.
Okay. Yes, I think that's the questions I had for now. Let me get back to you if I have any more. Thank you.
Thank you.
Thank you, Jesper. We have Rasmus Engberg from Handelsbanken. Rasmus, you're on the call.
Thank you. Hope you can hear me.
We can hear you.
Oh, great. Excellent. I mean, considering you are still in the process of relocating, and you know, can you elaborate a little bit on how you thought about, you know, making this big push now because it, you know, it will short-term weigh on your cash balances and so on. Do you think that you will still be slightly cash positive? I mean, you are. You have a dividend to pay as well, I suppose. I mean, the timing is a bit sort of odd to me just from the outside.
Right. Well, the timing was certainly affected by what happened in the Q1 . Maybe given a choice, maybe we would have done it a bit earlier. In terms of relocation, first of all, relocation by itself is not a big expense item. Most of the expenses that we have incurred, they were very early on in the invasion, and that was like immediate reaction to help people. Right now, when we talk about relocation, it's more about you know gradual process where which will probably begin fairly quickly, but then will probably be gradual because people obviously have to you know kind of prepare for relocation. To be honest, I don't expect substantial expenses in connection to relocation. You know, the in a way, how do I put it?
We are very proficient at working from home, right? To us, it really doesn't matter where the person is. These entities, in a way, it's just a way to route the money to pay the salary to the people, and to allow them to move into some other place. But wherever there is a desk and a computer, they can fully participate in work. I mean, relocation does not disrupt our work more than scheduled vacations of people. It's just something you prepare for and then incorporate in your work schedule. It's not an issue. When it comes to cash flow, we have a sizable cash position. We have very strong margins, as you can see.
As we said, this 15 million SEK, that covers it through the rest of the year. Most of this expense is already incurred. Despite this, we still had 16% EBIT margin in the Q1 . Our financial position is very strong. We have zero debt. We certainly take into account the fact that, yeah, we have to pay dividend, but we also keep making money every month. When we go to 35%, if you know, just let's do basic math. We spent 20% in Q1, and we had, if not for the war, 20% EBIT margin. We're going up by 15%, so that leaves us with 5% EBIT margin. We're not talking about necessarily even going cash flow negative on monthly operations.
A dividend is a one-time thing, and we have enough money to pay dividends. I wouldn't be concerned.
That's very clear. There was no. It's not so easy to see from the outside, these things. The second question, obviously, May, June, July, just before the vacation, is there a thought in that or is it just that it should have been earlier and you decided to do it anyway?
Could've been earlier. Didn't work out earlier.
Mm-hmm. Yep.
Again, we have a very strong performing game on our hands. That's what matters. Is it ideal timing? In the perfect world, would we like to do it in a different time? Yeah, maybe. But also, you play the cards that you have, right? You can't just move the calendar or wait until, whatever, next year, or wait another X months because you will be losing an opportunity. You know, we've considered all this, obviously. We believe we should do it. We wanted to do it, and that's the reason we exist. That's the reason we use our portfolio approach, to find titles that we can scale and then confidently scale them.
Of course, we're gonna keep our, you know, finger on the eject button just in case we don't see things developing as they are supposed to be developing. We will, you know, basically stop in that case, and we'll let everyone know, obviously.
When you say that your OpEx is gonna be very little change, is that through a kind of a reduction in staff? Because expenses or salaries are slightly higher, so you're trading maybe numbers for wages. Or is it actually the same wage cost? It should be a bit higher.
If you look at the countries where we set up new entities, we were aiming at countries with about the same cost of living and more or less the same income level as well. You know, for example, we still have employees in Moscow, right? It's not a cheap place to be. We've carefully chosen countries in a way that aims to maintain our level of expenses. The difference is obviously in some adjustments and tax situation. But even there, you know, we not necessarily end up spending more on tax by relocating people from Ukraine, for example. It can be actually an adjustment, a downward adjustment.
Another thing to consider is that costs for developers, including our staff, for higher-level personnel, were quite high in this market in Eastern Europe already, and that is a very, you know, a substantial number of employees, of our employees have very competitive salaries, no matter where they would be relocated to. Based on that, I think there's possibility for a little of, you know, a small decrease, but there's also possibility for a small increase, right? You know, knowing how costs develop, they usually go up rather than down. That's why I'm saying a slight increase may be possible, but it's not like we are, you know, dramatically changing our cost base or anything.
We're aiming to relocate people without into the countries where they would be comfortable with their salaries, basically.
Just a final question. Sherlock, which then is gonna be the big investment, how did that grow sequentially in this quarter? Do you have that figure roughly?
25%.
Sequentially?
Yes. 200% year-over-year.
That's very impressive.
We are trying not to miss the possibility that this game can be much, much bigger in comparison to even to Hidden City's scale of success.
Very clear. Thanks.
Thank you.
We have Oskar Eriksson from Carnegie. Let me see. There we go. Oskar, I think you should be on the call. All right, now you are. Sorry.
Okay, now. Can you hear me now?
Yeah, we hear you now, Oskar. Fine.
Excellent. Good morning, Vlad. Good morning, Stefan. Couple of questions. I mean, first of all, really exciting with Sherlock. Just on that topic, you compare this to Hidden City in 2016. Obviously, that grew quite a bit from that level. Can you talk a little bit about the very strong return on marketing on Sherlock that I assume that you see now? How much of the marketing went to Sherlock, for example, here in Q1? Just to be very clear, this has nothing to do with sort of more expensive growth in the market, sort of post-COVID, post-IDFA, but rather an excellent growth opportunity. Is that right?
It is connected to the fact that Sherlock is growing consistently and strongly over more than a year now, that is why. It raises a question, how far can it go? Are we making it a slower process than it could be by being conservative as we are, or, you know, reasonably conservative as we are with user acquisition expenses? The level of reinvestment into user acquisition of Sherlock was such that the game was profitable and cash flow generative every month. It was a reasonable level, nothing extraordinary. It was a very reasonable, and it is a very reasonable organic development with, you know, sort of a higher level user acquisition spend, but nothing exorbitant.
At the same time, we do have experience of doing these bursts of user acquisition, and our analysis shows that if done right, this can have a very beneficial effect in the long run. This is a better strategy than not doing it for certain games. In our opinion, this would be the case with Sherlock. That's why we're doing it.
Very clear. I mean, you guided on user acquisition cost to sales, which, I mean, it's helpful to an extent. I mean, I think it's really important to also shine a light on what you expect in terms of growth and revenue and, you know, what will come in Q2, Q3, and what will, you know, come in Q4 and in 2023. Could you help us there a bit just to gauge the dynamics here?
Well, we would like to see. You know, I would say we'd like to see it double, right? Sooner than otherwise we would, we would expect this to happen. Then we'll see. Because if it does, then question is, can it double again, and so forth. It is really. You know, if you look at other. Let's say, let's put it this way. If you look at other companies in our sector, when they have a good, consistent success, they tend to really focus on that and invest a lot in marketing. That is what we are trying to do here, because we don't see, you know, so far at least, we don't see any red flags with Sherlock.
All we see is that maybe we are a little bit more conservative than we should be. That's why, again, we are trying this to find out. The downside is that, well, we're gonna spend a little bit more money than we wanted. It doesn't even say anything. I mean, it doesn't change our operational profitability, right? It's just, well, we tried. The worst thing that can happen is we spend some money. Okay. The best thing that can happen is that we will find out that we can accelerate growth of Sherlock, and we may find out that this can be scaled to, you know, level of Hidden City at its best, or maybe more.
Because you have, since Hidden City was the highest hidden object game in the market, other prominent hidden object games in the market have actually exceeded that result. We know if you have the right kind of hidden object game in the market, you can go even higher than what we did with Hidden City. Back then, basically, we were setting the bar for how high a hidden object game could go in monthly revenue. It will be interesting to find out, right? That's what we're looking for, these asymmetric outcomes where we can certainly afford, if it doesn't work out, then we'll just go back to more gradual growth, and we'll just continue going like that. Yeah, maybe we spend some money.
On the other hand, if we are right in our understanding that this can be much bigger and better and faster, then we have discovered something very valuable.
Understood. Just to be clear there, when you speak of doubling, and doubling happening sooner or later, most likely, that is for Sherlock, specifically, I assume. Can you say something about the timeframe that would be reasonable, given the spending here in Q2 and Q3?
Well, we have our internal model for how things can develop. Let's say it shows that it can double much faster than it otherwise would, you know, within this year. I just hope that when we start this and in three months, you know, we can update you with more information, where it is exactly and how does it look like and what's the next stop there.
Understood. Then final question, perhaps, for Stefan and Vlad as well. Margin side and OpEx, I think you wrote, and I mean it should be clear that you had some positive effects on margins from weaker currencies in Russia and Ukraine in Q1. Is that quantifiable? What should we expect ahead here? I mean, I think the ruble is up some 25% plus now, the current rate versus the Q1 average.
Yeah. Yeah, go ahead.
No, we certainly saw that, specifically for March then the ruble was quite weak. The average rate there gives an impact. Yeah, it impacts the cost positively also for the hryvnia as well, and that you have a bit of positive effects on both of those. That will of course, you know, now the ruble has strengthened currently at least, and we'll see how that develops. Of course it impacts the cost. It has impacted the cost positively. We didn't quantify in the report. Yeah, there's certainly a positive effect there from that.
Can I just add that we were not during the Q1 kind of intentionally trying. I mean, we were just busy with continuity of the business rather than trying to benefit from the exchange rates, which were also extremely unpredictable. In that sense, in retrospect, we could have done probably much better. I understand we don't have a lot of positive impact from, you know, the, from FX, so to speak. There was not a lot of luck, so to speak, in the timing of currency exchanges that we've had in my understanding. Going forward, first of all, the relocation is in progress, right? We will certainly see how the exchange rates develop from here.
We keep it in mind, you know, we maintain reserves. We facilitate relocation, which kind of reduces those risks. That is the situation. That will probably remain a little bit of an unknown in the next few months at least. That's just what it is, right?
Yeah. Got it. Perhaps I missed it in the presentation here, Vlad, but like, could you give an update on sort of what share of employees has relocated from Ukraine and Russia respectively, and what you expect perhaps as well?
We have about 100 people who have said they will relocate with the long-term relocation intentions. I would say the process of adding more people there is rather gradual. If we extrapolate the pace of people willing to relocate then within the next year we will see very substantial movement. That is the situation. Obviously you know the political situation is changing every day, and it could be that we would have to do it even faster. We could be forced to do it even faster.
I think we have really over the last couple of months understood our options and, you know, and we more or less have solutions for different kinds of difficulties that we may encounter. That's the situation.
Understood. Thank you very much. That's it from me.
Thank you. We have Simon Jönsson from ABG. Let me see. Simon, now you're. Now we can talk.
All right. Hi, and thank you, Vlad and Stefan. I think I have a follow-up here on the UA investments. I think it's clear that the higher UA investments that you guide for is related to Sherlock. Are you also increasing the investments in other games or is it mainly Sherlock that is a driver here?
It is mainly Sherlock. We're considering other games as well, but it's smaller scale.
All right. Yeah, that would. Yeah. Thanks.
Thank you.
Thank you. We have some questions in the Q&A box. The first one is from Hjalmar Ahlberg. I think the first section of that question is already answered with regards to where the UA investments are going to go. The second leg of that question was, do you see any risk with Sherlock becoming a too large part of the portfolio?
It's a bit too early to talk about this, right? That's the answer. I can keep going. I've opened it. From Hjalmar, we have a question, where do you see most profitability improvement going forward, continued gross margin expansion or from lower UA percentage of revenue? First of all, gross margin expansion will continue. It is unlikely that a Hidden City trend is going to change. The game is in a very gradual decline, so that naturally reduces royalties. Plus, we have a growing revenue share coming from G5 Store. These two factors will continue affect gross margins positively. Then through the scale, basically, we have this leverage in the business model, right? That the more revenue we generate, the higher the profitability.
Our costs are. They don't have to be, you know, proportional. I mean, part of our cost is proportional, like user acquisition to the game's revenue, but then we have certain more or less fixed costs. If the higher we can scale, the higher the profitability is going to be. That's more margin expansion will come from scale, and that's also the reason why we want to do it. All right. Then we have a question about the U.S., the USD-SEK FX. Okay. You say in the report that this would have been a record quarter if it would not been for the war, but at the same time, the war contributed to better FX as USD-SEK went up. What are your comments about that?
It is difficult for me to quantify the effect of the war in Ukraine on USD-SEK pair. I would have to not quantify it. Our calculations were based on not trying to quantify that effect, which could have anything else to do with, for example, changes in the interest rate of the Federal Reserve also more likely to do probably.
If I might just chip in here as well. I think, you know, we also have a lot of expenses in USD, right? Royalties, the majority part of user acquisition, you know, we have other costs as well, external developers, whatever and whatnot. Internally, we tend to measure in USD as we go on a monthly basis because it's a better representation of the business, given that we have the majority of revenue coming from the U.S., and we have these large contracts in the USD. The EBIT margin when we measure this in USD usually tends to be the same as it is in SEK. It's just that the P&L is expanding or contracting with the USD-SEK rate.
You know, if it would have been flat, well, then as we show in the report, we would have had -8% in year-over-year growth in USD terms. Also a large part of our cost base would be smaller, and the margin would be more or less the same, of course, with deviations. Once again, we're not quantifying this, but, you know, roughly speaking. It wouldn't be a huge difference that I think is the message I want to convey.
Yeah. We don't have a lot of expenses in SEK also. That is why. Yeah. All right. Next question. How is rising inflation and Fed's rate hikes affecting G5's activities in revenue in 2022? Well, we again have no interest-bearing debt or any debt really, so we're not as a company financially affected when it comes to the activities of our players. Generally, in previous recessions, games, especially free-to-play, were very resilient because these are, you know, impulse purchases. They're not subscriptions that people tend to terminate in order to save money. Essentially, our entertainment is free, so it's one of the cheapest forms of entertainment. People know that it's free, so they get into games, and then they play them.
When they make these purchases, they, you know, it's an impulse buy, and they know that they can afford this little amount, and they're basically paying for the time spent. If you think about the roots of free-to-play model, it's, it actually originated in Asia among people with very little income to spend, so to speak, and people who didn't want to afford or to commit to expensive subscriptions, which was a prevalent business model in the West. Free-to-play games originated as a very affordable form of gaming originally, and I think its resilience through recessions has to do with that. We haven't seen anything yet that would say, you know, that the behavior of players is affected by the interest rate.
At the same time, you know, considering inflation and increase in salaries, in our main markets, it could be that our games and the purchases within our games are automatically more affordable to the players. I hope I answered. Question from Take-A-Peek. More like several questions from Take-A-Peek. Have this increased UA spending already began or is it to come? It's beginning as we speak, basically. Next question. Looking at the players' KPIs, we see that MAU, MUP, and MUU are all decreasing. Do you believe this UA investment will change the trend? Yes, of course. If we are any good in attracting new users, with the money, then we should see the increase in the number of monthly active users and monthly unique payers and unique players as well.
One thing that can happen is that because of the inflow of new users going forward, the monetization metric, the monthly average gross revenue per paying user can be the one that is diluted and reduced as a result. That's more like a statistical average thing because, in connection with the inflow of new users. These are likely to be the trends. Audience metrics are certainly going to go up. There's just no way around this if we are bringing more, substantially more users into the game. Next question. There are ongoing talks to exclude Russia's largest bank from SWIFT. How does this affect you, and how you will keep paying salaries to employees in Russia? We are not serviced by the largest bank of Russia from SWIFT.
You know, the financial landscape obviously has been changing and moving around quite a bit during the past few months, and this has been an ongoing work of our financial department and Stefan and you know, make no mistake, there is. It's a you know, it's work in progress. Things are changing, right? This creates certain risks with regard to Russian office, obviously, and that is why we are being so active in establishing all these other entities and creating all these opportunities to relocate people with a reasonable timeline or, if needed, you know, even more urgent timeline. You know, we. It's the right thing to do.
It's the good thing to do, on so many levels, take care of people, solve the problems, and to also, you know, for other reasons as well, because, you know, presence in Russia has its certain political risks. That's what we're doing. Again, we're gonna see a lot of movement this year when it comes to personnel, and this will be an ongoing intensive work which you are not going to see other than in the numbers that we report in that regard. Maybe Stefan has something to add to this.
No, I would just second that. It's, you know, it's an evolving landscape, certainly with some challenges, but so far so good. No, it's just ongoing work and as Vlad said, it will continue for sure throughout this year in all areas. Yeah, we'll come back and report how it's going. So far so good.
Yeah. In the long run, obviously, our intention is to reduce the dependency of our operations on having you know in the office in Russia and on having people in Russia. We will be working towards that, obviously. Again, anticipating that it may become more and more difficult basically to sustain an office in Russia over time unless we see a change in the situation, which you know we're kind of growing more and more not optimistic on that over time. The last question is, can you elaborate around the Moscow office? Is this office still in play as essential G5 business as more people are relocating? The people are relocating. Also, the office is able to continue work.
It was critical during especially the first weeks after the invasion when the Ukrainian office could not really do anything. These people kinda made it possible for the operations to continue, and we have some very good and great employees in that office. We want to make it possible for them to relocate to other locations and continue their work from there uninterrupted. As we said, we've, you know, taken measures to be able to maintain the work of the office. We're not enjoying it because it is an evolving landscape, which means there's a lot of work going into being able to continue to operate that office.
Ideally, you know, we wouldn't be in a situation we have to do this, so that's why we're certainly considering relocation and we are facilitating relocation, we're advocating relocation, to our employees because we don't know when the situation becomes too difficult to manage, in terms of maintaining operations there. No more questions. All right. If there are no more questions, thank you so much for joining us today, and see you next time.