Good morning, ladies and gentlemen, and thank you for holding. Welcome to MTG's Q1 Earnings Call. At this time, all participants are in a listen only mode. After the presentation, participants will have the opportunity to ask questions. At this time, instructions for the question and answer session will be given.
Presentation slides that accompany the call are available via the link on the homepage of mtg.com. I will now hand the call over to your host, President and CEO, Mr. Jorgen Madsen Lindeman, who is joined on today's call by CFO, Maria Redden. Please go ahead.
Thank you, operator, and good morning, everyone. Before we get into the numbers, let's take a step back and look at the MGG strategy. So please click through to Slide 2. As you can see, we are transforming NGG from a traditional ballpark into a global digital entertainer while growing sales and profits and returning cash to shareholders at the same time. If I can ask you to turn to Slide 3, you can see we're delivering 8% organic sales growth in Q1.
The rolling 12 month organic growth rate has accelerated to 7%, which clearly demonstrates the momentum generated by the investments that we have made in our streaming services, our content portfolio and our MTG X business. Profits were up 15% at the same time as we have continued to invest in MBGX and accelerated our investments into original content. The organic sales growth and cost transformation savings have enabled us to reinvest into our products and expanding into new areas, and this is the foundation for our future growth and profitability. We have also continued to realign our portfolio and have now announced the sale of the Czech Republic and Baltic operations. The proceeds will be used to increase our stake in online games developer InnoGames from 21% to 51% in the coming weeks, and we are also stepping up our investments into original TV drama series.
Moving to Slide 4. You can see the group reported sales were up 11% with higher sales in all segments except MTV Studios. Our increased profitability was again driven by the performance of the Nordic and Internet and Entertainment businesses with healthy sales growth and positive effects from our cost transformation program. The transactional headwind for the U. S.
Dollar in the quarter amounted to SEK30 1,000,000, most of which impacted the Nord Entertainment segment. If we move on to Slide 5, our Nordic Entertainment sales were up 11% on an organic basis. This was the 3rd consecutive quarter with robust organic growth for our Nordic operation, and the rolling 12 month organic growth rate has now accelerated to 8%. I think it's safe to say that this is a second to none performance in the European broadcasting industry, and that has been achieved despite foreign interviewing and subscription levels on all traditional Pay TV platforms. Our free TV and radio operations grew in all three countries in Q1.
Linear viewing levels have continued to decline in all three markets, but this was more than offset by higher advertising prices, increased carriage fees and the development of buyer free. The high demand that drives the pricing reflect the fact that TV continues to offer superior reach and return on investment when compared to other media. And our MGG X sales packages offers an integrated on and off line tailored and problematic solution that includes our own and third party content. Nordic Pay TV sales were up double digit percentage points at constant exchange rates following another record quarter for ViaPlay with further subscriber and ARPU growth. Participants distribution platforms continue to see subscriber erosion, while Viasat benefited from the distribution agreements for our new premium sports channels in Sweden and the price increases put through last year.
Viaplay is the primary growth driver in the Nordics. Viaplay had its 2nd highest ever quarterly net intake of movie and TV series subscribers with record low churn levels, and the gross intake is supported by the ViaPlay original series. Nord entertainment profits were up 22% on the back of this organic growth and cost transformation. Turning to Slide 6, you can see that sales for our international entertainment business were up 4% on a mechanic basis and operating profits were up 82%. International free TV and radio sales were up 7% on an organic basis with double digit sales growth in Bulgaria.
The national pay TV sales were lower at constant exchange rates following a weaker performance by TRACE due to the termination of some events and carriage agreements. Trace has, however, recently soft launched Trace Play, which is a global subscription based video and radio streaming service dedicated to global urban entertainment. Turning to Slide 7, you can see that HD studio sales were down 5% on an organic basis. The demand for scripted drama and planned entertainment continues to be high, but was offset by timing differences in production schedules and the lower demand from non scripted productions. Q1 is a seasonally weak sales quarter and therefore typical loss making, which was the case again this year, and the operating loss did slightly increase compared to last year.
Last week, we announced that for the first time ever, we have created a churn, produced it, added, sold the format and now secured a U. S. Network deal. This illustrates the potential of creating our home IP and Swedish detectives will now be broadcasted on U. S.
Cable network, PopTV, which reaches over 80,000,000 households. This deal includes both the first and the upcoming second season, which will be filmed in L. A. In the summer 2017. NTT Studio store gallery continues to be best in class and our Midnight Sun and Nobel series have both been nominated for the Golden Nev award in June in Monte Carlo for the best drama TV series.
We also launched Atrium TV, which is a commissioning club for streaming platforms around the world. Focus will be on big budget lineup productions that each player will have exclusive access to for their territories, including via play for the Nordics. Turning to Slide 8, you can see that NTT sales were up 24% on an organic basis. The reported growth was impacted by our decision to change the way we present ESL figures and no longer include price money in ESL sales, where ESL acts as subcontractor for e sports events. So Q1 'sixteen and full year 'sixteen sales would have been DKK 36,000,000 and E82 million lower if presented on this basis.
This change has no impact to operating income or cash flow. Total revenues were up 37% on a like for like basis. The key event of the quarter was the Intel Extreme Masters in Katowice, which this year attracted 173,000 visitors, making it the world's largest e sports event. The event also attracted over 46,000,000 unique online euros. It was up 35% compared to last year.
This was also the most broadcasted event in Turris' history with 70 TV and online partners who produced and distributed the event in 19 languages. Q1 is a small quarter for Dreamhack, but the high growth rate continued in Q1 with the DreamHack Master taking place in Las Vegas and becoming the most viewed DreamHack Master event ever. SLEI continues to perform well driven by strong demand for influencer marketing campaigns. Zooming sales continue to be impacted by the lower ad advertising prices and is refocusing on lower volume but higher value brand entertainment sales. As you know, we currently own 21 percent of InnoGames, but will increase our ownership to 51% in the coming weeks and then fully consolidate this fast growing and profitable business.
Inogen's revenue grew by 30% in Q1, which makes an acceleration from the 25% in 2016. ELDX EBITDA also increased significantly compared to last year, but the end result of €3,500,000 was impacted by a €5,000,000 charge related to capitalized development cost for one of its games, which is yet to deliver on its projected sales. So this is not unusual situation in the games industry as not every game succeeds, but this is a larger than usual charge. Our 21% share of Inu Games net income, therefore, amounted to DKK3 1,000,000 in Q1. NTGX reported a total operating loss of DKK88 1,000,000 in Q1, and this reflects the significant stepping up our strategic investment in the Eastbourne area during the second half of twenty sixteen.
And this, of course, affects the comps for the first half of this year too. So Q2 losses this year will be higher than the SEK48 1,000,000 of Q2 losses last year. There's no change to our overall outlook though, so we expect full year losses to be lower in 'seventeen than in 'sixteen, and quarterly losses will gradually decline quarter on quarter this year. The investment that we have made will enable ESL to continue to grow at a high rate moving forward, and we will also soon benefit from the consolidation of InnoGames, which is performing well above expectations. So that concludes my comments.
So I will now hand the call over to Maria for her comments.
Thank you, Jorgen, and good morning, everyone. If you please return to Slide 9. Reported sales were up 11%. This included 8% organic growth and a positive 2% driven from FX. This is due to the appreciation of the euro and the Norwegian and Danish kroner.
The impact from acquisitions and divestments in the quarter was negligible. Operating income was up 15% compared to last year and this is a function of the combined impact of organic growth and cost transformation. The transactional headwinds from the U. S. Dollars amounted to DKK30 1,000,000 in the quarter, which was largely offset by the translation of gains.
We continue to expect a negative transaction impact of approximately DKK75 1,000,000 from the U. S. Dollars in 20 17. We are anticipated to move up to 51 percent ownership in Innogames from the beginning of May, at which point we'll start to fully consolidate the company. InnoGames generated sales of €130,000,000 in 20 16 with an EBITDA margin of approximately 20% and EBIT margin of approximately 16%.
The company is performing above expectations, but bear in mind that we will have an annual amortization charge of approximately €8,000,000 per year relating to this acquisition, which will impact the MTGX segment. We have now also announced the sale of our Czech and Baltic operations. As these two businesses will be reported as 6 continued operations in Entergy's Q2 results. If you then turn to Slide 10, our cost transformation is on track and we generated incremental savings of $25,000,000 in Q1, taking the run rate to 525,000,000 We continue to expect annual savings of approximately $600,000,000 from the program. The cash flow impact from the restructuring was approximately $20,000,000 in the quarter, taking the total so far to $470,000,000 Looking forward, there is a round 15% on our cash still to be paid out, which would take the total cash cost to approximately $520,000,000 That is slightly lower than our original forecast of $550,000,000 dollars If you then turn to Slide 11, net cash flow from operations was up in the quarter, reflecting higher profits and lower payments relating to the restructuring program and some timing differences on key rights payments.
We ended the quarter with a net debt of DKK2.4 billion, equivalent to 1.5 times trailing 12 month EBITDA before items affecting comparability. That is it for my comments. So back to you now, Jorgen.
Thank you, Maria. And if I can ask you to turn to Slide 13. So in summary, we have again grown our sales to record new levels, which clearly demonstrates that we have more relevant and more available products than ever before. Properties were up 15% despite content and digital investments and is again driven by a combination of volume and value growth as well as the benefits of the cost transformation process. As a result, we can continue to reinvest into our products as well as expanding into new areas, while at the same time returning money to shareholders.
So that concludes our commentary on the results. Over to you now then operator to start the Q and A session, please.
Thank you, sir. Ladies and gentlemen, we are now ready to register questions. Our first question comes from the line of Edgien Dessin Hille from Morgan Stanley. Your line is open. Please go ahead.
Yes, good morning, everyone. Thanks for the presentation and taking those questions. So firstly, I know you're not big fans of divisional guidance, but I'm just curious whether the margin improvements in the Nordics, given all the investments you've made in the ports, etcetera, yet you've seen margin improvement. Does that give you confidence that margin in the Nordic business should grow in 2017? That would be the first question.
Second question, Jorgen, can you give us a bit of an idea on what you expect around the Champions League auction in Scandinavia? Maybe any sense of timing and the expected inflation? And lastly, you repeated the outlook for lower losses at MCGX, sorry, but can you be
a bit more
specific of the magnitude of that improvement in the losses? Thank you.
Yes. On the first question, when it comes to, as you said yourself, we don't give guidance. I think what we have talked about is the profitable growth in the Nordics, which we do expect to continue to have for the full year. And of course, we are very happy with the results that we have seen now in Q1. When it comes to the Chermasik auction, it's taking place and bid due the 8th May.
We have had the Chairman's League for, yes, I think 25 years now and we have invested a lot into the product and we have a lot of customers, of course, who are very happy about the product as well. So we do hope that we will be able to continue to show Champions League when this auction is over. As always, what we do in these cases is that we understand and we analyze what we believe that the product is worth for us, and that is, of course, what we are looking at when we go into these options. And then on the last question, when it comes to FTGX, yes, we are saying that we are expecting lower losses for the full year in EPGX and also we expect higher revenue to come in. And we do expect to continue to see the very strong growth, of course, that we're having in particularly in e sport.
As you can see now, we have signed up a range of new interesting deals, which we have invested in so far, and that is the deal with Facebook, that is the deal with Twitter now, that is the deal with YouTube, that is the deal with Sony. So of course, the investments right now is, of course, to create the product and then we are upselling to global partners. And I think the interest from Katowice with 70 international partners in 19 languages shows the interest. I think if you are a bit harsh, you can compare that with 1 of the Champions League matches just taking place. I don't think there were 70 international ball cards of present at the Champions League messages, but they were very good.
Jurgen, if I may, just follow-up on this and thank you for your answers. Given the fact that H1 losses will be bigger than last year, is it fair to assume that the improvement shouldn't be so meaningful?
Yes. If I understood your question correctly, yes, H2 losses would be lower.
Our next question comes from the line of Mittal Lassin from Carnegie. Your line is open. Please go ahead.
Yes. Good morning. Thank you. Can you comment and say something about the number and size of the large events that you are planning for 2017 for MTD X or I mean the Esports side compared with 2016? And how you are monetizing them and the difference between this year and last year, if you can talk about how you work there?
Yes. I think when you talk about the events, there's a range of events taking place. Of course, the big events that we are having are we have a schedule global schedule now and they will take place around the globe. And what you see with these events is, of course, that we have more and more data. So if you are increasing the Spectator by 50%, which we did in Katowice, of course, there's a documentation for future sponsorship sale that we have many more people there, many more high falls, and therefore, you should be able to capitalize better on these people coming into the event.
When it comes to the all the tournaments and the partners as well, as I said, we have 70 participating in the Katowice event. That of course means that we have more content sold. We have more partnerships where we make money on advertisement and so forth. So the more data, the more we can continue to demonstrate that we see more and more millennials going to these Esports events or participating in our tournament, of course, we will be able to document stronger products and therefore should be able to document stronger revenue. And that is what you have seen as well with the big guys like Twitter and Facebook and YouTube and so forth entering this space as well, global distribution of our products, which of course should result in even more participants in our tournament and of course, therefore, should render more revenue.
So that is the way we see that the revenue we are very the revenue streams, we are very familiar with it. So it is advertisement, as I said. It is sponsorship. It is event marketing. It is content production or creation, which we then afterwards selling them to global partners.
So it is something that we have done for many years. And I think it is very safe to say that with the data and KPIs that we see right now around these events, of course, you should be able to get even stronger traction from advertisers and partners. And that is what we see right now.
Okay. Thank you. And these new recent agreements that you mentioned, will they change the growth rates? Or is that sort of needed to continue to grow by 35%?
Yes. We expect this right now, of course, to grow at least in line with the market, and that is what we see. Of course, the more successful that Twitter or whatever would be with those products, of course, the better it is for us.
Okay. And can you also comment on zoom in and the performance in the quarter and results for that part of the MTX segment?
Yes. I think what we're seeing, of course, or witnessing is that the big discussion that is around YouTube advertising right now. And of course, as we said earlier, that has an impact on Zoom in since it has historically or is an enormous big global NPN platform. So it is impacting Sumin. So we are changing the strategy for Sumin and growing towards a more branded content, professional content model, we have 4,000 video journalists who every day creates more than 400 news stories.
And that's, of course, something we want to invest more into to make sure that global media around the world can document their written stories with video stories as well. So there are multiple revenue streams going into Tsume, which of course is great that it is not just dependent on YouTube advertisement. And these are the revenue streams we are investing in now. So branded content, you will see more of you will see more of this video network, of course, which we will capitalize on. But at all, it goes without saying that we, like everybody else, is hurt by the falling YouTube ads and prices, of course, that goes without saying.
Okay. Do you think it will be stable in the coming quarters, sequentially?
Yes. We have and again, we are not deviating from giving any guidance this matter either. Of course, what you see right now is that it is going down. And I think you will see April as well will be lower when it comes to the YouTube money. And that is something that they are probably very much aware of as well, the YouTube guys.
Okay. Just a quick question on Studio. How much is more scripted versus scripted productions?
Yes. We don't have we haven't split that up, but it is more and more scripted. That is what we see. And that is also we see the demand for global OTT players. It is much more scripted than it is non scripted, as I said in the call as well.
So we are having a very strong traction on scripted. We see the same effect in all fans from buyer play, as I said. So the scripted series that we have on buyer play, we see up to 2, 3 times the traction for our bioplait originals than we see from American acquired content. So of course, that is a trend that probably other OTT players globally see as well. That's why we will see more sectors going forward.
We'll take our question from Lisa Young from Goldman Sachs.
Good morning. A few questions, please. On MTGX, can I confirm that when you say 17 losses will be lower than 16, does that include the consolidation in part of InnoGames at all or does it exclude that? And if you exclude games as well, do you still expect breakeven for MTGX in 2018? The second question is on Esports.
What proportion of your business is basically a white label business where you basically act as a subcontractor? Just to understand potential business associated with increasing price money in the other parts of your business. And the last one is on your performance in Nautic Entertainment. Just wondering why Odion share was down quite significantly in Sweden nowhere in Q1. And is this is there any risk on your advertising share or need for reinvestment in the future?
Thank you.
Yes. Let me try to take it from the top. I when you talk about the losses for full year NTTX is going to be lower, and that is excluding Immogates. And we can confirm that as well the ambition is for 2018 to have the segment breakeven. We have not split when it comes to the e sports, when it comes to white label and the revenue streams that we are having.
But of course, what we're looking at right now is to ensure that we also direct the business very much into our own producers and our own IPs, of course. That is something we are looking at right now. And when you look at the share of during in Sweden and Norway, yes, I think last year we had some shows like handball and other stuff, which we didn't have this year, of course. But on the other hand, it is also a fact that we are not happy with all the products that we have. I think dental is increasing.
That's also very good news. But in all fairness, that happens now and then that you have a quarter where you're not that happy. But obviously, it is also an effect that we had strong product last year, which we didn't have this year.
Can I ask another question on the e sports business as well? In general, what trends are you seeing in terms of publishers doing their own events? And what kind of growth are you seeing
in the number
of events being produced in general by you and in the marketing by you and competitors? And how much can actually the market really absorb in terms of those events?
Yes. No, we have increased the amount of tournaments that we are doing and doing together with the publishers. So we have and their products and this is, of course, broadening the product range as well. So into different new games as well, which we will try as well in e sports and not the traditional ones only. So we are getting more and more partnerships on board, and that is, of course, what you will see going forward.
And what was your last question? Sorry, what was that? You had another.
I was just wondering how many events can the market really absorb? It just looks like there's a big increase from Yes.
But I think it's like everything else, it's about relevance in all planets. And we have the big event, as you can see, from Kautovic and the one we did in Rio and New York and so forth. So there might be and that is what we have thought are experiencing a lot of people who would like to enter this very interesting space and then to fully understand. And I think as we have our eyes very focused on making sure that we can continue to create the right events with the right teams. And that is the focus area that we're having.
So we will produce the biggest tournaments. And as long as you can do that, then of course, there's a space for us and we can continue to grow. And we recently, as you again, the Katowice has said, it caught a new record and we saw more and more people and more broadcasters and OTT and online players attending our events. So it is about relevance and but you will see that more and more people will try to enter the space, which is actually good news for us because it then also increases the interest for e sports as such and increases the interest also from the advertisers. And that's also something we can then benefit on since we are one of the biggest.
Great. Thank you.
We'll take our next question from Victor Hockenian from SEB. Your line is open. Please go ahead.
Yes, good morning. Sorry for maybe repeating your question here, but my line broke up a bit. Can you just say again when you expect the Champions League to be announced or renegotiated? And also could you repeat the numbers you said for games in 2016 and the extra amortization that we should take into account? And then maybe, I mean, you answered this a lot already now, but on MTGX, putting Innogance aside and also the YouTube related assets, that is strictly looking then at EZL and Premack instead, why is why did you say that the losses should come up in Q2?
And why should we expect you to reach breakeven in 2018? Just the larger building blocks here, if you can point them out. And again, then in 2018, is it by a quarterly basis you expect to reach breakeven on those businesses? Or is it on the full year 2018 number excluding InnoGames and excluding yes, well, mainly excluding InnoGames? And then if I may, just two more questions.
You mentioned in the report that you plan to invest more in your own production. Just the reasoning around that then, the levels and if that's more cash flow things or P and L things we should take into account? And great via play here. Could you say anything if that's Norway or Denmark or broadly speaking? And then the IPTV subscription base is coming down whereas it was up in Q3 and Q4.
Is that some kind of new trend maybe? Or is it seasonal effects? Or how should we look on it? Sorry for the many questions.
Yes. I will try to take some of them. The Chemours League auction is due and the I think the first pitch goes in the 8th May. So that is the 1st round of offers coming in. So I think that was on the Champions League.
When it comes to bioplay and more local productions, I think what we're looking at right now is, of course, to understand how to allocate our content budgets and to understand where we see the biggest value for the customers. And we do see that these bioplay origins, which we have produced, meaning the Black Widows, the Swedish Sticks and also then recently, Vinovilovici, and we have a range of new coming up, we see very strong traction from the customers. So obviously, that an impact on the net intake of customers and that also has an impact, of course, on the churn levels, which were record low now in this quarter as well from TV movie, Bancassonne, Bioplay and thus the 2nd best also net intake quarter for that product. So it is now with all the data we have and we understand that the impact of these biopay originals might be 2x to 3x better than you have impact and the satisfaction from the customers on acquired content. Wireplay gained customers around Nordic.
It was not any country specific, which was the outstanding. I think the products that we're having are traveling very well around the Nordics. When it comes to the IPTV decline or our DTH decline, I think that we have seen the DTH decline for some time now. It was lower amount of decline DTH subs by, I think, some couple of 1,000 than in Q1 2016. And the IPTV is, of course, an effect on marketing campaigns with partners and so forth, which are probably not as aggressive in Q1 as it has been last year.
So I think that is how we see it. We see great opportunities in IPTV going forward and of course fiber rollouts and other things in our own IP only rollout as well, we see fiber with IP only. We see great opportunities there as well.
On your question on Innogames, we had last year €130,000,000 of sales, 12% EBITDA margin and 16% EBIT margin. And what we said now is we are looking at approximately €8,000,000 of annual amortization charges as a consequence of the acquisition And that will then start as we consolidate.
Okay, great. Thank you very much. With €8,000,000
We'll take our next question from the line of Martin Arnell from BNB Markets. Your line is open. Please go ahead.
Hi and good morning. My first question is on esports. What do you see and what are your ambitions when it comes to partners in the U. S. And China?
Yes. We have nothing new to say there. I think what we're looking at is, of course, how to accelerate eSport even faster. And that you can do yourself or you can do it with partners. And that's why we are constantly hunting, of course, companies in the markets that we are in who can help us get this sport out even faster.
Also, therefore, it deals with the big international companies like Facebook and Twitter and YouTube and so forth. But we have nothing new. When it comes to partnership, we will let you know once we have decided who we would see as an appropriate partner. But we would like to find strategic partners in the markets that we aim as a general rule.
Okay. And I mean given that you're seeing such strong growth in this area, in MTX, I mean, could you consider a spinoff of this business in the upcoming future?
I think right now, we are very excited about the development of the business as such. I think that is the focus that we're having right now. And whatever we do in terms of structure with the companies, I think it is for this call.
Okay. And second question is on the sports rights negotiations. It's not only Champions League. There will be more upcoming, and we don't know really what the price is going to be on that. What initiatives could you take in order to secure superior content portfolio also in the future here?
Could you repeat the program, I mean, you did in 'fifteen? What how flexible are you?
Yes. So we I think, 1st of all, the assumption is that we have products which our customers like and that has made us get we have gotten more and more customers on board. That of course helps when you are going out and you want to acquire these rides. I think it is fair to assume that these very important stories like sport or like the drama shares, whatever, the best movies will always increase in cost. I think that is just a fact.
And the idea is, of course, to ensure that you have multiple revenue streams so you can capitalize on these different stories on these different concepts. And that is what we have developed over the years now. So we have a strong SVOD platform. We have strong AVOD platforms. We have strong Pay TV platforms.
We have strong Free TV platforms. You can see that the Nordic is doing very well, and we have a strong satellite platform as well. So we have multiple revenue streams to the content that we would like to acquire going forward. There's a range of opportunities. It might be so you want to change some content in portfolio in order to finance something else.
It does not need to be incremental everything we do. So this is the flexibility, of course, that we're having and something we're constantly looking at to research and other measures what do we believe that the customers in the Nordic would treasure the most and how could we secure these rides, these movies, these drama series. So it is there's no magic bullet. It is you need to create a position where you can continue to be able to tell the best story to your customers. And that is what I believe that we at least are trying to position ourselves to do.
Okay, great. Thanks for that. And finally on MTGX, I remember at the Capital Markets Day, you mentioned you had the ambition to be profitable in MTGX in 2018, excluding InnoGames? Do you still have that ambition?
Yes. That is still ambition that we're having, yes.
Thank you.
Our next question comes from the line of Rasmus Engebrecht from Handelsbanken.
I wanted to ask you about the deal with your production being sold in the U. S. Is that for 2 seasons, is that a significant deal for MDG Studios that sort of means that the relatively soft Q1 is can be disregarded? Or how does that how does the monetization work on that contract really? Can you explain that to us?
I would say, strategically, it's a very important deal for us. It's the first time we had our own produced show in the U. S. Financially, I would say short term, you will see where the impact of it because this is a joint investment, both by BioPlay and NTT Studios. So the basic what we're doing is monetizing it on our own platform, the Viaplay subscribers And then we're getting the 4th ton production costs from the U.
S. Network then.
But it's already been produced for Via Play. I mean, if you do sell it now, wouldn't that mean that you sort of sold it twice? Or how should I think about that?
The first season has been produced. The second season is currently being produced. It's starting production this summer. What we do is we balance it on the balance sheet item on bioplane, the part that bioplane takes. So that's why you saw also partially working capital increase last year on back on the original Sweden.
So you will see a recuperate of that balance sheet item.
So it's
not going to be financial sort of revenue right now.
All right. Okay. Great. Thank you for that. And then the second thing, I was just wondering, there's been in the Esports industry during last year, I think the number of events decreased around 25%, but the price money continued to grow at least 50%.
Are you seeing people sort of pull out during last year and say this is too big for us? Or how does that work? I don't really understand why that happened because it's been historically going hand in hand, the number of tournaments and so on. But last year was a rather big decrease. Would you agree with that picture at all?
Yes. I think we have at least from our side, Radha, we have launched more own tournaments. So it might be so that the big events, again, I don't know, it's not related to us. But I again, it's about relevance. It is also about that these big events, which we are producing, we see strong traction from people there even in Las Vegas, how we had dream hack where they certainly popped up with a fantastic event, one of the best ever.
So we continue to produce events, which we believe is relevant and in areas we believe are relevant. And then we will continue to do many more tournaments now also in the countries and on many new products as well. So but it may be so that some events, I've not seen that, but maybe so that some other events from some other competitors that they have scaled down because it was not that good teams or whatever. I don't know.
Right. And then the second question, just given that we have missed M2GX development so many times now, compared to Q1, do you think that the losses will decrease in Q2 in MGG
X? Yes, it would. All
right. Thank you.
We will take a follow-up question from Victor Houghtonen from SEB. Your line is open. Please go ahead.
Yes. Hello again. Sorry, could you just confirm Erasmus' question again that you said losses should come down in FTX in Q2? And then given the current USD rate, what would the theoretic FX look FX effect look like in 2018? Thank you.
Yes. We can confirm that, look, right now, the ex losses will be lower in Q2 than they were in Q1. And for 2018 currencies, yes, I think that's a bit premature. We can talk about 'seventeen right now. Let me know about 'eighteen.
I don't know, Maria, if you have anything.
No. What we can say is, I mean, right now, of course, 'seventeen, where I'm good out of 'seventeen, where I'm good out of 'seventeen, where I'm good out of 'seventeen, 5,000,000. I mean, the majority is hedged, so that is locked in for 'eighteen. Of course, that is a moving target. But based on the current spot rate, you should anticipate that you will have additional charges in 'eighteen.
It should not exceed to what we're seeing in 'seventeen, I don't think. But then again, it's quite premature, as Jurgen is saying. There's a lot of movement still to be made.
Great. Thank you very much.
That concludes the question and answer session. I will now hand the call back to Jorgen Mattson for his concluding remarks. Please go ahead, sir.
Thank you all for your time today. We will announce our Q2 results on July 18 and hope to see many of you at our AGM on May 9. Thank you for your time today and your interest in our story. We look forward to keeping you up to date with our further progress, and goodbye for now.
That concludes today's conference call.