Hello, and welcome to the presentation of MAG's Q2 report. Here to talk to you today is myself, Daniel Hasselberg. I'm the CEO of MAG.
And me Magnus Wiklander, CFO of MAG.
As usual, we're going to talk you through some of the highlights of the report. At the end, if there are any live questions, we take them here in the stream. Otherwise, throughout the day, we answer questions online on our X account. If we go into to talk about the highlights here, our Q2 is December, January, and February. December started out really strong. It was the best revenue month of 2024. It was followed up by a weaker January, February in terms of revenues, but we had some other positive momentum in those months. We increased the UA toward Crozzle. We also got another game out in market testing. That game was developed really fast thanks to our new platform for building games. That's a very positive sign for the future.
Of course, if we look at today, we are also announcing that Crozzle is leaving soft launch and is now an officially launched MAG game. That is, of course, incredibly good news thanks to the great work done by the Crozzle team. It has been quite a long soft launch. I thought I would mention a bit what's happened during this. Basically, all of 2024, the game was in soft launch. First of all, of course, we worked with optimizing the game's performance in terms of content and feel of gameplay and so on. Also, on a kind of KPI level, the ARPDA roughly doubled during this period. That is super important for the long-term performance of the product. We also tested two different types of presentations or metagames for this crossword puzzle.
We started out with a single-player decoration metagame, and then we tested it in parallel with a more classic PvP kind of wrapping, similar to kind of Wordzee, Ruzzle, Word Domination type of packaging. In the end, that's where we landed with this testing. Now we kind of decided this is the format of the game, and we're very happy with the performance. We see about an hour of average daily playtime and the highest ARPDA of all games we have at MAG Interactive. Yeah, really great to get that out there. Also want to mention what a launch means for us. We're going to start out scaling up in the US market and English-speaking markets. Gradually, when we localize the game to more languages, we roll it out to more countries.
That is partly because a crossword game is much more fun to play in your own language. Even if we could obviously make this available, for example, in Sweden, I think the Swedish audience would not react so well to an English crossword as they will when we have localized it to Swedish, for example. It is a process. I think also for context, like when we launch a game, like historically over the last 10 years, it has always been this kind of scaling up and peak for a game in terms of revenues. It is usually after two to three years. Expectation levels for us for a new game is for that peak to be SEK 100 million a year and the lifetime revenues of a game to get to at least SEK 500 million. That is kind of expectation setting for a new product.
Super exciting to be out there with Crozzle and thanks to the amazing work from the Crozzle team.
Yes. For our portfolio overview, we have two main things to note. One is the sale of Primet ime, with the icon being taken out, and that was in January. It is affecting the January and February financials and this overview, of course. The second one is the move of Crozzle from new games to growth, reflecting the status of that game. We put an asterisk on the revenue number in the other box here because it is affected by these two moves. It was SEK 5 million in Q1, and it is SEK 3 million here, and the effect is those two. We have stability in the revenue of the older games.
Yeah. Of course, it's great to see this picture now. We have three games in the growth department, and that's also why we talk about that in the report. Our kind of that we feel more confident in being able to scale up UA. We now have three games where we can push UA and expect to see future growth. Also in the new game side, even though we moved up Crozzle to the growth segment, we still have three games in market testing, and we see more stuff coming in the pipeline. This is again, we develop games based on our new platform, which makes it much faster to go from idea to testing in the market. Hopefully going to see a lot more coming in that part of the product segment over time.
For audience KPIs, we see user acquisition is up by 50% year- over- year from a low level, and we can trace that back partially to Crozzle, where we have confidence in game performance and metrics, as well as our prediction models allowing us to expand our spend there. DAU is down by 10% year- over- year, and it is flat quarter- over- quarter. We have stability in the audience part there. ARPDA has had a similar performance flatness over a couple of quarters now. Overall, good stability in the portfolio quarter- over- quarter. In our financial KPIs, we have net sales down by 5%. That would be 3% adjusted for the Primet ime sale. We also note a tailwind with help from the U.S. dollar compared to last year.
Contribution is affected by the higher spend in UA, and our EBITDA comes in at 27%, which is a level we're used to at this sort of business volume we have. During the quarter, we also paid out the dividend, so the cash balance at the end of the quarter now is just under SEK 100 million. To that, we have a healthy underlying cash flow generation coming in each quarter.
Yeah. If we look at kind of longer term, a few years, looking at the revenues and the adjusted EBITDA margin, we see this, as you described, a very stable situation. Revenues of this kind of SEK 65 million-SEK 70 million quarterly in revenues and the margin around the 25%-28% mark. As we see, if we go back a couple of years here where we had a much higher UA volume behind Wordzee, that pushes profit margins down. If we can accelerate a lot on UA now, that's kind of a pattern we expect going forward to see that revenue growth, but a short-term pressure on profit margins. That's, of course, for a good reason, because we invest when we see that we get a good return on that money in.
Our growth engine, as always, we have an expanding portfolio, which is now boosted by technology to get games out faster and a strong cash position for M&A activities. An important aspect of cash allocation, of course, is UA, where we see cross-sell activities at the moment, but also continuously efforts in all of our growth games every month. Lastly, improving the LTV and ARPDA of our games is critical for unlocking UA volume and short-term growth through higher ARPDA.
Exactly. If we look ahead here, of course, Crozzle is in focus here in terms of when we talk about taking a game from soft launch to a launched game, that unlocks also a lot of activities internally in terms of how much focus the marketing department will put on this game. Now we can add more networks. We run UA, obviously go to both operating systems and invest much more in ad creatives and so on. All this stuff we do to kind of find scale for a new product starts now when we kind of are officially launched. The more markets getting to market test, obviously, that should increase the likelihood of getting more games into soft launch and eventually global launch in the future.
As you mentioned, like QuizDuel and Wordzee are still the most important games in the portfolio and super important for kind of the profitability and growth in the shorter term. Longer term, it's kind of UA investment, and that has a kind of a lagging effect in terms of profit generation, of course. I think that's it for kind of talking about the content of the report. Let's see if we have any questions coming in right now in the stream. As I mentioned at the beginning of this presentation, we'll take questions online throughout the day on MAG Interactive's X account. Okay, we have a question here. Elaborate on the strategy around Crozzle. Does that mean that in theory you already have KPIs that would support more UA, but you're not going all in just yet?
It is also another question around talking about UA increasing. Roughly what levels are we talking about? The strategy here is basically we need to find a good set of KPIs for a product to feel that it is marketable at all. During the soft launch period, also continuously run marketing. Now we can see what the performance is like when you have a kind of longer time span. I think we mentioned the last report that we saw UA we started doing at some volumes in the fall actually coming back showing profitability. We do know that it works. I think what happens now, kind of the step change here is to add more networks, more campaign types, more creatives, and that is kind of unknown the volume that unlocks.
Since we have kind of prediction models, all data-driven, if we get a good response to the increased UA, it's going to continue to increase and go in a higher pace up if we get really good response at higher volumes. This is basically starting now on a kind of iterative basis, trying to put in as much UA as possible as long as we see profitability. In that way, it's similar to what we already do with Wordzee and QuizDuel. It's just it's a new fresh game, new markets, partly new audience, and of course, it's a product people haven't seen in the market before.
All in in the sense that we do not put any caps on how much UA we invest, but do not expect this to be like $50,000 a day in marketing from zero to that point because you cannot get data in that way. For us, it is always gradual, but there are no kind of budget caps or anything like that. It is more about kind of finding out how we can scale. Roughly what levels are we talking about? I guess that addresses that question as well. In theory, there is no limit. We do not work with kind of budget limits for the UA team. It is all about if we see the returns, we double down, and then we see how far it takes us.
Given the kind of the payback profiles of our games, we usually do not get into problems with cash flow, for example, because you get a decent amount of cash back in the first 30, 60, 90 days. We do not think we will be constrained by cash. It is more about how well it works when we scale up in new channels and campaign types and markets and so on. Good. Thanks. We take questions online, and thanks for viewing this stream.