Good afternoon, everyone. Thank you for joining MTG's live stream and teleconference for our results for the first quarter of 2024. This event is hosted by our Group President and CEO, Maria Redin, and CFO, Nils Mösko. At the end of the presentation, there will be an opportunity to ask questions. If you're watching the live stream, please use the questionnaire feature in the video stream to submit your questions. If you're dialing in by phone, please follow the operator's instructions. I will now hand over to our CEO, Maria.
Hello, everyone. Today we deliver a strong set of results. Our net revenues were up 11% year-over-year, including a 1% currency effect to amount to SEK 1.4 billion. Our revenues reflected the focus and the quality of our portfolio, and they were driven by PlaySimple, InnoGames, and Snowprint. We also continued to execute actively on our M&A agenda to optimize our portfolio in the quarter. First, we divested Kongregate in early Q1 through the merger of the studio with Monumental, and that benefited, of course, our growth trajectory. And then after the end of the quarter, we also, Ninja Kiwi completed a roll-up deal, to buy AutoAttack Games. AutoAttack is a small game studio responsible for Legion TD 2, a successful tower defense game available on Steam.
We also reported strong adjusted EBITDA of SEK 396 million in Q1, which represented a 51% increase year-over-year and enabled us to deliver a 27% operating margin in the quarter. Our strong profits reflected the increased scale within our operations and PlaySimple in particular, and that was combined with an active focus on managing our cost base and a prudent UA philosophy focused on healthy returns. When we look at our studios, we have a strong pipeline on new games and localization ahead of us, which also gives us the ability to push more UA as we are ready.
We further also had very strong profits in InnoGames, and that is thanks to the lower cost base, following the restructure last year, but also the growing browser revenues that we have once again by strong events engaging our established players in Forge of Empires. We continue to generate strong cash flow and generate SEK 293 million in cash flow from operations, and that enabled us to deliver a 62% cash conversion for the twelve-month period that ended on 31st March 2024. This again highlights the strength and the health of our assets. And as you may have seen, we also announced a new share buyback program this morning, and we have started to buy back shares already today.
Our intention is also to then launch a new share buyback program following our AGM in May, assuming, of course, we receive the necessary approvals from our shareholders. If we then look forward for the year, our outlook for the full year 2024 is based on our operational expectations as well as what we are seeing on the in-app purchase and the in-app advertising markets. At this stage, we have not observed any significant changes to the trends that we previously observed in the in-app purchase environment. Market analysis firm Newzoo also continues to expect, similar like us, the market to grow by low- to mid-single-digit percentage points in 2024. As I said, our own expectations are pretty much in line with these assumptions.
At the same time, the casual segment has been outgrowing the mid-core parts of the market for quite some time, and we do expect the broader dynamics of this to continue. But there are some factors, however, that makes us adopt a bit more cautious view for 2024 in isolation. These include, among other things, the recent move to real-time bidding, along with some upcoming new privacy changes to come that Google is putting into place, and we therefore feel that the visibility of the digital ad market is currently somewhat reduced for us. At the same time, when we look at our companies, we do have a strong core of live games, and we have an encouraging numbers of new games in the pipeline.
The new games are, however, slightly delayed, and the timing of these new game launches and new features will affect when and how much we can accelerate user acquisition investment to help also accelerate our growth. That means that we will have the ability to scale our UA when we see the right opportunities, but we will only do so when we can generate the right levels of returns on our spending and have better visibility on the market. Growth remains our main priority and focus, but you can also expect us to maintain our disciplined approach to marketing, focused on reasonable returns on the marketing levels. That means that when we will continue to deliver high operating markets, operating margins, while we continue to work towards the next growth phase.
Our outlook for this year reflect this thinking, and we therefore expect our reported revenues, adjusted for FX, to be up between 1% and 5% and an adjusted EBITDA margin to 26%-29% for the full year of 2024. So if we then look forward and we look at our sales, which were up 10% year-over-year at constant exchange rate in Q1, that was driven by our established portfolio of 37 live games. Sales were further up 7% if you look on a pro forma basis, which is when we exclude Kongregate for last year, and we include Snowprint in the calculations instead. Our sales in the quarter was driven by our PlaySimple, InnoGames, and Snowprint, and I'm really proud to add that we also had an all-time high revenues if we look on the last twelve months basis.
If you then look into our sales in more detail, and we look at our different franchises, our organic growth in the quarter was driven by the word games and strategy simulation games. Sales for the Word Game franchise were up 11% year-over-year in constant currencies, and PlaySimple continued to optimize the portfolio and added new features to our established word game titles. Word Search, which we now consider being an established title after a fantastic growth journey in the last year, remained a strong performer, and it actually now represents just over 15% on the franchise revenues in Q1. PlaySimple is working on several new games and is also working on localized versions of our established titles, which we are expect to be released further down the line this year, and that will enable them to scale further.
The sales for the Strategy and Simulation franchise were up nearly 40% year-over-year, which mainly reflected the recent inclusion of Warhammer 40,000: Tacticus in the franchise. If you look on the in-game side, Forge of Empires reported a strong quarter, driven by in-game events, which once again successfully engaged our established players and driving, in particular, the browser revenues. What is also exciting when we look at the older games, Tribal Wars had a really strong quarter, and again, thanks to the engaged and well-established players community. Snowprint, which is the new player in the group, continued to add features and content to Tacticus during the quarter, which includes updates like Guild War features, which has been very well received by players, and also the introduction of a new in-game faction, which made the game perform really strong.
Sales for the Tower Defense franchise were down 8% year-over-year, reflecting the lower levels of new incoming players. That is coming particularly from Q4, but also Q1, as we didn't have a Q4 Steam sale. The team at Ninja Kiwi has a very active pipeline of content for Bloons TD 6, and we delivered 2 major updates now in Q1. Following the quarter, we also had an April update, which was followed by a Steam sale, following a sale on Steam, and that included brand new features designed to offer players a new share of the revenues from content that they create within the game. Sales for the Racing franchise were down 10% year-over-year in constant currencies.
The team at Hutch is making really good headway on the upcoming season launch on the Formula One Clash, and is exploring options also for Top Drives. The team is further and continued to work on Forza Customs, which they launched in Q4 last year. Hutch typically launches new titles in an early stage of development, and the team is thereafter to scale the marketing up and down, and as they learn more about the game and the performance, they also work on adding new features and content, and the Hutch team is in the middle of this process. They further launched NASCAR Manager, and that was launched in February, and that is showing early promising numbers, which is really exciting. But again, UA's scale very moderately on this one, and we're following its progress very closely.
We continue to be excited by the pipeline of our new key content and new games. And as you can see, we have new initiatives across our whole portfolio, which is really exciting, even though launches and scaling of some of these titles has been delayed, as I discussed. If we look at our existing titles, we expect Bloons TD 6 to shortly launch on PlayStation, and we do expect to also expand it to Nintendo Switch later in the year. We further expect to revamp Rise of Cultures, that InnoGames has been working on to come back later to the market in a new shape and form. And we also expect PlaySimple to launch localized version of several of their established word game franchises and titles during the year, which also could provide us new growth opportunities in new markets.
Snowprint, which we acquired in the end of last year, will continue to scale Warhammer 40,000: Tacticus, and they will continue, like in the quarter, to add more content to the game and scale UA accordingly. Further, as I mentioned, Hutch is evolving Forza Customs to implement their learnings from the early launch before they begin to scale the game further, and they will continue to test the potential of NASCAR Manager to determine when the time is right to begin scaling the game more aggressively. Then when it comes to new titles, PlaySimple continue to work on Tile Match, 2048 , and Word Trip Search. The three games are all available on Android, and they will gradually be introduced on iOS later this year.
PlaySimple is evaluating their early performance and iterating based on the learning and development, and will move to commercial launch as they feel the games are ready. In Ninja Kiwi, we're making good progress on the Bloons Card Storm, which is now we expect to launch in H2, and they also have yet another title yet to be announced to be launched in the second half of the year. So if we then move forward, and we look at some of our performance indicator in Q1, we generate some 59% of our revenues from in-app purchases in Q1 and 35% from advertising. The slight decline in revenue from third-party platforms mainly reflect the Warhammer 40K: Tacticus being added to our portfolio and the continuous scaling of our advertising revenues.
Our daily active users were stable sequentially, which reflected higher DAU in our Racing franchise, driven by the new games, Forza Customs and NASCAR Manager, and the addition of Tacticus to our portfolio. This growth partially were offsets by the lower DAU levels in our Word Game franchise, while PlaySimple continued to work on the new games and some key content launches. Our average revenue per daily active users, or ARPDAU, was down sequentially in the seasonally weaker first quarter. ARPDAU level, however, up year over year, which mainly reflected the higher spending in InnoGames, driven by Forge of Empires and the successful events, together with the addition of Tacticus to our portfolio.
This was somewhat offset by the lower ARPDAU level that we saw in our Racing franchise, while Hutch is working on the season reset on the Formula One Clash and on evolving of the new games titles. Now I will hand over to Nils, so he will walk through our UA spend and our financial performance.
Thank you, Maria. Looking at our UA, you can see that we continue to maintain our disciplined approach to return on advertising spend. In total, we spent SEK 527 million on UA this quarter, which represented 36% of our revenues, and which was down from 41% in Q1 last year. In absolute terms, UA spend was only down SEK 10 million year-over-year, and this reflected the fact that we are awaiting key features and new games before we start scaling UA again. If we look at UA on a rolling twelve-month basis, however, we have spent 38% of revenues on UA, and these levels were stable if you compare it on a year-over-year basis.
Going forward, we will scale up UA for our games where we see the right opportunities, and as you know, our UA spend is not evenly distributed throughout our portfolio. Ninja Kiwi, on the one hand, has almost no UA spending, as they are focused on organic growth through their community, and while PlaySimple, on the other hand, spends most of all of our studios. PlaySimple's UA spend in this quarter was also lower year-on-year, as the studio focused on healthier ROAS levels from its established portfolio while they evaluate the potential impact from the changes to the digital ad market that Maria just went through. Let's look at the EBITDA then. Our adjusted EBITDA grew by over 50% year-over-year to SEK 396 million, with a good operating margin of 27%.
We had an all-time high adjusted EBITDA on a rolling twelve-month basis, with a margin of 28%. So the main drivers of our strong results were, firstly, the strong growth and operational leverage at PlaySimple; secondly, the lower cost base at InnoGames, following the reorganization in April last year; and the ongoing trend of successful events in Forge of Empires, driving browser revenues from established users, as Maria mentioned before. And thirdly, we spent less UA, but also we kept our overall costs flat. And the good result flows through to our cash flow. We had good cash flows in the quarter, as you can see, and last twelve month as well, driven by the strong underlying operational result. We saw also positive working capital effects and a lower CapEx year-over-year.
This enabled us to deliver 69% cash conversion rate in the quarter, but more importantly, on a rolling twelve-month, 62% cash conversion rate, which is slightly above our guidance between 50%-60%. As you can see, we continue to have a good flow-through from the operating result and, the, positive working capital effects, both from LTM area on, on, last twelve months, but also in the quarter. There's always some, timing effects, as I mentioned, and they can go, fluctuate around zero, sometimes minus, sometimes plus. A word on CapEx. Our CapEx is, expected to be lower going forward, in particular, because Kongregate has left the group. Historically, as we mentioned before, they have been a major driver of our CapEx and represented slightly less than half of our CapEx, for 2023.
So by that, back to Maria.
Thank you, Nils. So before we move on to Q&A, I would like to summarize where we are today. We have delivered a strong Q1, and our focused portfolio performed well, and that enabled us to deliver strong margins in the quarter. We also report an all-time high adjusted EBITDA and high cash conversion levels on a 12-month basis, which Nils just talked about. While we believe that the gaming continued to be on a recovering basis, we have become a little bit more cautious in the short term when it comes to the digital advertising landscape, and we believe that the visibility on the ad market has gone down.
That is also being reflected in our full-year outlook on our expectations of our established performance of our portfolio, and the timing also of key features and new releases, and how much we will be able to scale our UA, and when we can start to accelerate. Because of this, when we look at our current games portfolio, the new game launches, scaling UA, we do expect our growth rates to be between 1%-5% when we adjust for currency, and we do expect us to believe and deliver an adjusted EBITDA margin between 26% and 29% for the full year. When we feel, however, that we have better visibility, and as our new games are ready, we will scale UA, and you should expect then to accelerate growth and reduce our margins.
M&A continues to be an important part of our overall strategy, and we continue to explore opportunities as and when they appear. But at the same time, we want to continue to deliver on our commitment to create shareholder value, and that is why we launched a new SEK 100 million share buyback program this morning, and we've already started to begin buying back the shares. We further intend to launch the next program after the AGM in May, assuming that we receive the necessary shareholder approval. So with that, I want to thank you for following our progress and for tuning in for our call, and we are now ready for your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Simon Jönsson from ABG Sundal Collier. Please go ahead.
Hello, everyone, and thanks for taking my questions. So first, a question on the growth guidance. I mean, even to reach the top end of the guidance or the range, there seem to be implied deceleration in the organic growth, at least if I count correctly. So could you maybe elaborate a bit about the swing factors in that guidance, please?
Yep. Hi, Simon. Now that we are providing a, a range, and the reason for the range is, is the different factors that I talked about. We, as you may know, Google launched their change to the, the bidding platform at the beginning of the year. We didn't know in the beginning how that was going to impact the privacy being rolled out during the year. And then we also have the new game launches that are slightly delayed. Forza looked really promising in the beginning, sort of our last, probably more end of last year, beginning of this year. I think now we take a little bit more prudent approach short term, and some of the other launches are delayed. So, so you can argue those are the moving factors. We do have the core games. They are performing really well.
You can see that in the quarter, but in order for us to ramp up, we want to continue to scale on the sort of the PlaySimple side on the UA, and add more markets, but also having the new games. And, and you could argue those are the levers. As soon as we can get visibility there, we will scale up UA. That will accelerate top line growth and also organic growth, but that will also come at the cost of the margins. So, so that's a swing effect, as you will see this year.
All right, got it. And, in terms of the lower UA here in the quarter, should we view that as more of a potential one-off decline, then?
Sorry, I couldn't get the full question.
How should we view the lower UA in Q1, then? Should we see it as potentially being more of a temporary decline, and further down the line this year, you could see an increase again?
Yeah.
Or it's more of a multi-quarter low-
Yeah. No, I mean, I think that as, based on what we're seeing today, we will continue to that level, but I think, and we hope that gradually this year, we will be able to scale it up. But what needs to take place is, A, we're getting a better visibility on the ad market following the changes and the privacy that is coming, and B, we need to get the new game scaling as well. I think if you take it back, take a step back and you look at last year, and you see the margins we had, that was a year when we didn't launch any games, and then you can see what are the margins we can deliver as a group.
Of course, we have Snowprint coming into the group this year, but still, I think that Q1 shows the substance, and the robustness of our portfolio. We would love, as we see the opportunity, to scale up UA, and we are hoping to be able to do that throughout the year. But it's just right now difficult for us to tell exactly when that will happen, and hence the range.
Okay, got it. Could you mention or talk a bit more about the specific factors driving increased or, rather, the decreasing visibility in the UA market?
It is predominantly the change from how you actually bid for your or how you monetize your inventory. We moved from auctions to real-time bidding, and that also impacts how we can leverage the tech and tools that we have built in-house and how we can monetize our audience and our content. That is what we're working ourselves through, and then you also have the upcoming Google privacy that is going to be rolled out this year. I think those are the two main factors and that we have seen taking an impact on our operations.
Okay, got it. In terms of the growth guidance, you talk about total growth. So does that mean that it could include also new M&A, or could that be added on top if you would do any more acquisitions here?
No. No, no, definitely, if you, if we do any M&A, that will come above and beyond the guidance. So the guidance is based on the portfolio we're having today. But to try to simplify the world, since we divested Kong, so that is in last year's number, and we acquired Play Simple, we felt the cleanest way to actually provide the guidance was on the baseline that everyone knows, which is a starting point for full year 2023 revenues, and then the growth from that. But if we would do further M&A, that would of course change upwards the guidance range.
All right. Makes sense. And, on InnoGames, could you talk about some of the events during the quarter and how those compare to the events in Q4? And also say something about events here in April.
Yeah. I mean, I think it's always difficult to compare Q1 events with Q4, especially since December is such an active month, where they have the Christmas calendar. But in principle, you can argue that InnoGames had one failed event in Q4, where they tried new game mechanics that underperformed. And I would say that in Q1, we actually saw a strong performance on the three events, which of course is great to see, and it's a testament to the team on how they work with Live Ops. And also, we can see that the players are even more engaged on the browser side, which is exciting to see, where InnoGames do have really good skills and also where we have the payment wallet on our own, and which of course also helps the margin.
So that is good. Q2, I don't want to go too much into it, but, I mean, we have exciting events planned for the whole quarter, so we're hoping that the strong execution continues on those events as well.
All right. Thank you. And on Hutch, the interest for F1 more broadly or in general seem to decrease quite significantly last year. And, you know, what is your feeling about this year for the F1 season in general and F1 Clash specifically?
... Yeah, no, you're, you're absolutely right, and it, it seems like Verstappen continues to win everything, so something stays the same. We're still excited about the season reset. I think that when you look at last year and the performance within Hutch, I think there were two different reasons impacting. I think one was a general interest, to your point, and then the other part was that we also did some mistakes on our end when we did the season reset, because then we update the game, we add new features, we tweak some of the game economy. I think some of those were not sort of operating the way we had anticipated. We've done the lessons learned, so we have a new chance this year, and that's why we're excited to see.
It's coming out now in the beginning of May, so, so we will know pretty shortly. But when it comes to the general interest, you're absolutely right, that hasn't changed, but hopefully our game will be more fun. So, so that's what we're working on. And I think the other part, which we should remember as well, which is exciting, is that the NASCAR game and is actually built on back of the Formula One game. So, so when we launch NASCAR, even though we haven't started to scale UA completely, that is a full-fledged game with, with all the game mechanics and live ops, 'cause that's built on the same game engine as we already have, but of course, modified to fit the NASCAR arena, which is slightly different.
Okay. Thank you. And just one last from me. Regarding the buyback program. SEK 100 million here until the AGM, but you also said that you expect a new program after, potentially a new program after the AGM. So how should we think about the scope for that new program, potentially? And broadly speaking, in terms of how you view allocating the free cash flow between user acquisition and the potential for buybacks here, more broadly?
Yeah, no, I think that the size of the current program is sort of fitted based on that. It's a program that's gonna run for approximately 15 days, so it's a quite short program until we have our AGM, and that's when the mandate falls. I think at the AGM, then we will hopefully get a new mandate, and as a part of that, we're having an updated conversation with our board, to your point, how do we look at capital allocation? What is the direct return to shareholders in the form of a share buyback program versus our M&A and the other investments that we have in our pipeline?
That decision has not yet been taken, but that is a conversation that we will have, and that is the board and our job to take the prudent balance there between direct return, but also making sure we have the adequate capital for us to invest in the long-term optimization of MTG as well.
Okay, thank you. That's all from me. I'll get back into the queue.
Thank you.
Thanks, Simon.
The next question comes from Jacob Edler from Danske Bank. Please go ahead.
Hi, everyone. Thank you for taking my question. I just have a couple of one on the pipeline shift to start with. Outside of Forza that you described, I think Bloons Card Storm moved into H2 from H1. Is that a correct observation? And then secondly, on the pipeline shifts, Sunrise Village was mentioned as a scaling game in Q4, I believe, but is now kind of removed from the pipeline. Can you just add some flavor there as well? Those were the ones to start with. Thank you.
Yep. No, hi, Jacob, and, good observations. So you're absolutely right. The Bloons card games, we're really excited about that, but in order to make sure that we also ready it for, for launch and optimize that launch, we moved it into, Q3. It was-
Yep
...either before or after summer, so it's not a dramatic move as such. But the game is almost ready, and it's a game in my alley, so I like it, so I think it looks great. The other game, Sunrise Village, also, again, fair observation. We have seen the early. Sorry, not the early, but the retention term numbers and when we scale UA and the monetization, we are not gonna see that as a potential growth game anymore. So-
Yep
... we'll still continue to run it, but we're not gonna deploy a lot of UA behind it.
Okay, perfect. Yeah, and hopping on to UA again, just to add some more flavor, should we expect this year to be more back-loaded, would you say, in terms of UA? Last year, we had a situation where UA was more kind of evenly spread out throughout the year, partly driven by PlaySimple, kind of, you know, leveling out their UA schedule. Would you say it's fair to assume that, for example, Q4 would contain more UA this year relative to how it looked last year?
Yeah. I think that's a fair assumption, and that's what we are working towards, so, so if everything works out according to our plans and we get the visibility that we're hoping, that is a very correct assumption.
Okay, perfect. And then just a last question on CapEx. Obviously, I understand the Kongregate effect here, but last year, you had SEK 60 million-ish of CapEx, and then during H2, it was SEK 40 million per quarter. Now, you're down to SEK 20 million-ish or right above. Is this an extraordinary low level, or should we—what should we assume here ahead in terms of CapEx?
I think for CapEx, in general, I would look at the rolling twelve-month or full year basis. We have swings between the quarters, depending on the stage where we are in the game development. I would say it's gonna be a bit lower than the 3%-4%. I would rather say what we can expect and going forward is 2%-3%, as Kongregate is not longer part of the group. But that will then probably around 2%-3% on a twelve-month basis, I would say.
Yep. Perfect. Very clear. I think those were all my questions at the moment, so thank you. I'll hop into the line.
Thank you.
Thank you.
The next question comes from Rasmus Engberg, from Handelsbanken. Please go ahead.
Yes. Hi. Hi, good afternoon.
Hi, Rasmus.
I wanted to ask you first with regards to the changes in the bidding system for ads that you referred to. Are you uncertain where this leaves the revenues of PlaySimple, or does this relate to UA, actually? Wasn't quite clear there.
Okay. Sorry for being not clear, and hi, Rasmus. It's more on how we monetize our inventory, so it's on the revenue side. I mean, we've had systems built up for the old way of the waterfall, but now it's going to real-time bidding.
Mm-hmm. And have you seen any impact on that in this quarter or, or...?
Yes, so I think that's what we have observed and monitored. We still performed really strong versus last year, but also remember that Word Search started to scale last year, which, and now it's a scale game. So that helps us still grow very strongly year-over-year.
So that's mainly the kind of the main takeaway in that. That's what I thought. Okay. And just if you could explain to us, because a lot of people in the market have been wondering, why did you not resume buybacks after year, and is it now been, like, a four-month hiatus, and then you're back again? It seems a little bit back and forth.
No, it's a decision that we have, and we take with the board on a regular basis, and you always try to take the best decision at every given time there was a decision at the end of last year and beginning of this year on the CapEx allocation, and we opted to not do it, and then we went to closed period, which meant that we couldn't do it, and I think now is the right decision to, to come back and do share buyback. It's always easy to go back and say, "You should have done differently," but I think we try to take the best decision at any given time. We also plan then to launch a new share buyback program following the AGM as well, so we wanted to be transparent on that.
Yeah. But you are not that far away from the 10% hurdle unless you get rid of the C shares, right? So you would need to cancel shares more or less.
Yes. We would cancel the shares, so not the C shares, because we still want to deliver that to the PlaySimple founders, but the other shares, we will cancel at the AGM, which then will free up opportunities to buy more shares throughout the year.
Just based on that matter, I assume that the raised value of the earn-outs relate to PlaySimple, right? Or does it relate to anything else?
No, that's a fair assumption.
It's correct.
Oh, okay. Thanks.
Thank you.
The next question comes from Viktor Lindström from Nordea. Please go ahead.
Hi, and thank you for taking my question. You mentioned that you've seen multiple factors that could, that impact the market here. If you rank this sort of between, I mean, the bidding changes, the privacy settings, and a more cautious outlook, how would you rank those items?
Yeah, no, I think the more cautious outcome comes from those changes you just mentioned, the first two ones, and, I mean, we're already seeing the impact from the move to real-time bidding. So, so there we are sort of well underway to understand it. We are still to see the impact from the privacy, but we, we do expect that the impact from the real-time bidding will be the bigger one. But then again, we're just mindful that we want to also see the new privacy changes coming through.
Okay, and then a follow-up on the growth outlook here. So that basically is on a like-for-like basis, so that excludes Snowprint in Q2 and Q3. Have I understood it correctly then?
No, the growth outlook is based if you take last year's reported revenues, that means that you include Kongregate for the full year, and you include Snowprint for Q4, and that adds up to SEK 5.8 something. And then you have a range to 1%-5% growth, excluding currency on back of that baseline. So of course, then you will include Snowprint for the full year this year, and you have pretty much zero impact from Kongregate this year, as we divested it early in Q1.
Okay, thanks.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you very much, operator. So we have three additional questions, and if we start from in order. So three quarters in a row, you have had a reduced capitalization of costs for new games. So is this a plan change or just natural variations, and what is a normal level going forward?
It's a normal variation. It depends on where we are in the game development cycle, and you will always see this fluctuation, and the way we think about it, if you look around, CapEx ratios, as I mentioned, 2%-3% over the year, I think that's a good rule.
And just to add to that, I think it's also important to remember that as soon as we put a game into soft launch, we actually stop to capitalize, and that is what Nils is saying, that you will always see a little bit deviation. So we have quite a prudent approach on capitalization, have, in general, quite low levels.
Thank you. The next question is, does the SEK 101 million in other franchises revenue completely exclude all Kongregate already in Q1, or otherwise, from what point? And then could you comment, again, on the drop in revenues year-on-year?... both in Q4 and Q1 for Ninja Kiwi?
Do you want to take the franchise, or?
So the one on Kongregate, as Maria said, we deconsolidated them early Q1, so that is a very, very, very small part of that franchise part, which you're seeing on the 108.
Yep, and then, if you look at the Ninja Kiwi performance, as you may recall, we also mentioned it at the Q4 call, we didn't have the Steam sale as we normally do in Q4. We normally have a very good inflow on new users at that point in time, which meant that we entered Q1 on a lower basis, and even though we added a Steam sale, it wasn't as big as the Q4 one normally is, 'cause it was an extraordinary event. So we were, in short, running on a lower baseline on customers, and which also meant that we had a lower monetization on the in-app side on our customer base. And I think the other part is also we are exploring new opportunities on how to attract customers. As you know, Ninja Kiwi doesn't do any marketing.
That means that it is dependent on the community streamers and influencers, where they've done a great job. Now we are exploring new avenues on how can we actually get more customers in through different channels. And then we have something exciting to look forward now in Q2, that we can hopefully talk about then in the Q2 results call.
Thank you, Maria. The last question we have at the moment has to do with Google's privacy. So, is there anything you want to comment on the fact that does the last-minute change in the direction regarding cookie deprecation from Google, so this is about end-user policy, have any impact on your expectations for the ad market and ad-related growth, or your plans for effectiveness of UA in 2024?
No, I mean, we don't know exactly what to fully expect, actually, and the whole rollout's been delayed several times around. It's starting now on a beta basis, so that's why we want to gradually explore it as it's being gradually rolled out and tested. So that's all we can say right now.
Thank you very much. So at this stage, we have no further questions, so I would like to thank everyone who has joined us today for your time. Thank you very much for the speakers, and we will be back with more news when the time is right. Thank you.
Thank you.
Thank you.