Good morning!
Good morning.
[Foreign language]
We're back.
Yes, indeed. Welcome to our Q1 webcast.
It's us, Antti.
Jussi. We're the co-founders of Nitro Games.
By the way, it was awesome trailer, the trailer that we had in the start.
Indeed, indeed.
Haven't seen that before.
It's fantastic how technology develops, and we're able to do all these crazy new things. Here at Nitro, as you maybe saw from the quick video clip, we do action and shooter games. We've been best known for our mobile games in the recent years, but over the last, say, two-ish years, we-
More and more-
Yeah, yeah
games are speeding-
More and more
towards the cross-platform and cross-play.
Indeed, indeed. And, even though we look young, we're actually quite old, and we've been doing this for a while. We started Nitro Games back in 2007, and back then we focused first on PC games, then we did a little bit of white label work on consoles and stuff. And-
Then mobile.
Yes.
So-
Now we're coming back again to more and more cross-platform world and, and so on. These things tend to go in circles.
Yeah.
But in any way, we are your powerhouse when it comes to action and shooter games. We do high production value stuff, and we want to be really good, especially when it comes to technological performance of our games. So we do pretty challenging projects. That's something that defines Nitro pretty well. And we work a lot with different IP, both in terms of IP and brands that we develop ourselves, but also IP and brands that somebody else has developed. So-
It seems that it's our offering and how it's forming out, it's a very good fit what the market is looking for.
Yeah
... at the moment. Just last week we were in one industry event, and it seems and feels that everything that we have done past years are now coming together, and-
Yeah
... market need and our offering is matching very well.
Yeah.
Better and better-
Better every year. Cool. And, we will talk more about our projects, our portfolio, our strategy, and all that stuff, as we go forward in the webcast today. And, but first, let's have a quick look in terms of what did we deliver during the first quarter. So again, we delivered growth. Like we said, that's one of the big targets for us this year. And we also delivered stability in terms of our bottom line growth. Of course, compared to the first quarter last year, it was, like, pretty, pretty hefty growth. But as a reminder, we reached break even during the fourth quarter last year, so this is now our second quarter delivering profits.
This is basically our plan for the year ahead, that we want to continue by working our way through increasing the top line revenues while making sure that we also deliver on the bottom line. How we do that is a combination of growing our business and staying very careful with our cost structure, and that's something that also dictates how we do business here in Nitro, that we have a flexible, scalable cost structure where we combine our in-house team with our outsourcing partner network. We've spoken about that a lot in the past.
Exactly.
And, during the first quarter, we again, we signed some follow-ups in our B2B service business. We made some progress with our games portfolio, and those are the things that we're gonna discuss today and what it means moving forward. Good. Then, our strategy. We have a portfolio strategy, and, where we're going with all of this is that we started in 2017 with this new strategy. We listed in First North in Stockholm. I still have that picture framed-
Yeah, yeah.
Where we're ringing the bell. Basically, the purpose of our strategy is to build two lines of business. We build our game portfolio, where we invest, and then we build our B2B service business, where our partners invest, and we provide the capabilities.
That's also where we create kind of safety and stability for our-
Yes
... our business. And now I feel that the portfolio strategy with the two business units, it's starting to maturing into the position where, as mentioned already, the market is looking for this-
Mm-hmm
... such services that we have. Having those two leg business units and maturity with the development skills and technical skills and, and even the publishing skills is kind of starting to play together-
Yeah
... very well in our favor.
Yeah.
We are getting exposed to bigger and bigger projects, more and more challenging projects, where then again, competition is going to be less and less, 'cause there ain't-
Exactly.
... that many-
Yeah
... that many companies even in the global scale, who can jump into those kind of cross-play, cross-platform, complicated, synchronized, or shooters or what-
Mm
... not.
One thing that's sort of, also sort of signature for another way of doing things is that because we have a portfolio strategy and because we operate in a very hit-driven business, we have this mindset of having several shots on goal. So the way we work is that at some points, we expand the sort of funnel that we have. We start a lot of new game projects, for example, and then as time goes forward, we step by step, through data mostly, validate our games and pick up the winners.
Mm, mm, mm.
And then we narrow down the funnel, and that's what we mean when we say that our portfolio is matured. We're looking at the-
Yeah
...narrowed down funnel, and that's what we have on this slide right now, are the winners that we have identified earlier and that we are focusing on right now. For this year, with these four projects specifically, our focus is on the commercial side of things. That's why we're more and more engaging in working with different partners with our own game portfolio as well, because that's the way how we're commercializing things so that we reach those financial improvements as well.
At the same time, we have small initiatives where we do not risk-
Yeah
... the kind of current year and, close, close future finances, but we have a small initiatives here and there and looking for the next things, when we then again widening the funnel and, going into the kind of up-
Yes.
... the lead stage.
Exactly.
Evaluating those, mostly with the data and looking for which kind of those new things might be the ones that ending up into the bottom of the funnel then again-
Yeah.
Someday. So it's kind of interesting period when we have identified the current kind of winners from-
Mm.
... from the big pool of the initiatives that we have, and now slowly and easily and very risk aware, starting the small initiatives.
Yeah.
to build new ones.
That's something that we also get quite a lot of questions, like usually through email or stuff. People reach out to us and ask that, you know, "Should we expect more games from Nitro moving forward? Should we expect new, you know, B2B process from Nitro moving forward?" The answer is yes. Then, should we expect Nitro to take all their cash and put it into one investment in terms of a new game? No. We want to be super careful when it comes to how we invest the cash and profits that we make, but you should definitely expect more and more of new stuff moving forward, but we're just going to be careful with that, how we manage those things moving forward.
But like you said, there's tons of things brewing, and again, we will talk more about those as things progress and when the time is right. If we then look at what actually has happened with the game portfolio, one of the big things now is, of course, Autogun Heroes. We just recently announced that we are now done with the launch phase.
We are live now.
Yes, yes. We're right now in the live phase. The game has been transferred to our new publishing partner, Supersonic, who are part of this global, big, huge Unity group. And, of course, we recognize that we're still very early. What we're hoping is that, it's gonna be, you know, years and years of partnership and growth and fantastic things happening, but we're still very early. But we couldn't be happier with where we stand now. Everything has gone smoothly, and so far it seems like all the, you know, usual hassle that goes into starting a new partnership, a lot of people need to get to know each other and sort of put ways of working together. That has gone surprisingly smoothly, so-
It is.
... I'm happy with that.
Definitely, definitely professionals on our-
Yeah.
... on their side, and definitely have a kind of interest to common success with the-
Yeah.
... with the game, and I think also the selection process of the partner for the Autogun Heroes was a good example of the final thinking.
Yeah.
And we had a lot of discussions with the various parties and, then finally them into the best one that we think from the industry-
Yeah.
... at the moment for the game, like, Autogun Heroes and a company like Nitro Games.
Yeah.
I think there is a really, really nice and good fit.
Yeah, yeah. And what you should expect moving forward from this one is that we in Nitro, we continue to do our side of the coin, which is essentially, you know, the team keeps developing the game forward. There will be plenty of updates coming. I think you might have already seen something recently, and more of that good stuff is gonna come. We're gonna be working together on the live side with Supersonic, making sure that we read and assess the data in the same way, and we figure out how we run the live operations to the game. And the marketing and user acquisition, as we often call it, is more on their plate. And together we have this plan where we deliver something, they do marketing, and we go forward with the game step by step.
That's something that this year we envision that we're gonna scale up the game step by step and then continue growing it for years to come. That's, of course, the long-term vision. Then if we look at the other game in our game portfolio, NERF Superb last, that's something that we have discussed earlier, that we have limited our investments in the game. That's still very much the case, so we haven't actively invested too much into the game during the first quarter either. We put out some updates and kept the game alive and serve the players that are enjoying it. But now, as we are more clear with our plans with Autogun Heroes, everything is set up in terms of that. Now we're shifting our focus more and more towards NERF Superb last and the other stuff in our game portfolio.
How can we commercialize those, and how to best take advantage of that?
And innovative ways to commercial-
Yeah.
... commercialize those without risking too much of the-
Yeah.
... of the current business, and I think there is a very clever ideas already on the table that we've been discussing-
Yeah
... how we can, in an innovative way, boost the game and find-
Yeah.
... some new channels and partners.
Yeah, and like we said when we spoke about our portfolio, we definitely have a plan of, again, going into the mode where step by step, again, we build the early part of the funnel when it comes to our games portfolio and keep putting things there. And, then if we look at the B2B service business, during the first quarter, obviously Warframe went live on iOS. That was a big milestone, for us and for the team. We also did the follow-up-
Considering the time that we worked with it, it was like a very, very big milestone for the team.
Yeah, yeah.
... huge, huge leap of faith also from the client side, that they gave the whole responsibility for us.
Yeah.
Common effort with our team and partners' team, and it's been really, really nice to see how well those two teams-
Yeah.
... even in the two different time zones and the cultures are working together-
Yeah.
... towards the one common goal.
Indeed. Indeed, and, something that, makes me super proud is that, it's a game that's I think as prime example as it gets in terms of like, how can the life cycle of a free-to-play, game look like when it's done really well and when you make sure that you service your players the right way? And Warframe, I think, is a game that sort of represents all that.
Yeah.
It's been always sort of players first and years after years after years, and it's great to see, you know, how, you know, you keep sort of putting more effort into the game as time goes by instead of the reverse.
Yeah.
That's the beauty of free to play and game as a service over the long run.
Also, it's like a very good example on one new trend that is coming on the mobile where true triple-A, double-A experiences from the big screens are coming.
Mm-hmm.
One way or another, their way into the mobile, and, and naturally, we're in a good, good position on, on, on that kind of-
Yeah.
that kind of projects, as we have a expertise on the older platforms and traditional platforms, and also the mobile platform.
Yeah.
That's like a prime example where the existing well-received and huge user base having games can make a difference in a-
Yeah.
in a mobile market.
Indeed, indeed. Then we, of course, have our project with Netflix. Since that hasn't been announced yet, we can't really talk about that too much, other than, you know, we've been doing our usual, which is to make sure that we deliver quality milestones, we stick to the plan, what is our role, and make sure that we get the project started, really smoothly.
I think it's safe to say that, we on the team, we are very, very excited-
Yes
-about it.
Yes, yes.
It's going to be something that makes the team proud, makes us proud-
Yeah, yeah.
... makes company look nice and having such an excellent partner on that one, and a client-
Yeah
-being Netflix, and everybody's very excited.
Yeah, and this is something that makes me super proud, that because where we come from is that, in our B2B service business, we work with so many great companies out there, so many great projects. We've also sometimes done what we call this white label service work for others. All the different things, but now, in line with our strategy and our vision of being the household name in action and shooter games, we managed to make sure that our also B2B service business project portfolio is a fantastic match to that.
It seems that moving forward, we can expect so much more from that category, and that makes me super proud, because we're able to work not just on good-looking projects in terms of, like, what they mean for Nitro financially, but also cool projects that are fun to work on and super good match for what we want to be as a company. Speaking of numbers, next up are the financials from the first quarter. As discussed in the beginning, we managed to deliver a profitable quarter again. We managed to deliver top-line growth again, and this is a result of two things: us being persistent, working with our business, increasing the top line, both in terms of our games business and our B2B service business, while being careful with the cost structure that we have.
And this is well in line with what our plan is for this year, which is to make sure that we deliver stability, and we don't take excessive risks when it comes to investments in new products, but we try to be more clever in terms of how we commercialize existing things, while we build new stuff for the future as well. And, if we summarize everything, from the first quarter and what we do here in Nitro, action and shooter games, yes, more and more of that.
We are very happy that,
Yeah.
... our current projects and, current new initiatives and, current BD sales funnel, and all of them are coming together with the action and action and shooter.
Yeah.
We are actually living through our vision, and that is kind of really, really good thing and reason to be proud of the everybody on the company.
Yeah, definitely. In terms of categories, mobile and cross-platform, yes, both of those. I think something that we're also looking into with our own IP is that, okay, how can we leverage more platforms with our own IP moving forward as well?
Yeah.
That's something-
How can we leverage the-
Keep in mind.
... How can we leverage the IPs?
Yeah.
also, so that the same IP might be, in the future, found in the different platforms.
Yeah.
-and a little bit different version of the original. And, I think also what comes with the cross-platform and cross-play is that, recently, we've been kind of mobile first-
Mm-hmm.
...and then some platforms have been coming later, but it can be, in the future, also other way around.
Exactly, yeah.
It can be something first and then mobile also.
Yeah, yeah.
Not always kind of mobile first or mobile only.
Yeah, yeah, and maybe, maybe something to note on that front as well, is that, we didn't go too much into talking about the games market now, but that's also something that we've seen during the first quarter, is that the mobile free-to-play market on its own has also continued to be more and more exciting. Like, last year, everybody talked about the changes in the marketing landscape and all that stuff, but, but what's been really cool to see is that we've had game after game breaking new records-
Yeah.
... and making comebacks. And, you know, this is something that I love about this games business, is that it's always changing, always evolving. There's always something, you know, negative around the corner-
Yeah.
... that will basically kill the market. And then it doesn't take too long for winners to figure out how to adapt to the new environment-
Yeah.
... and, how to make even bigger wins than-
Yeah.
... what was possible before.
It's like the PC gaming market that has been predicted to be dying for past 20 years.
Yeah, yeah.
... as we have been in the industry, and it seems to be doing well.
Doing pretty well. Yes.
Yeah.
Cool. All right, so, I think we're done with the updates on our end, and, next up, let's check out the questions that we have. And there's two ways to ask questions. One is to put something in the chat, activity feed, and then also email. Let's start with the email, where we do have at least some. So let's see. "Can we elaborate on how our developer role has changed, if at all, now that Supersonic has become the publisher with Autogun Heroes, obviously?
Mm-hmm.
What has happened is that something we did towards the end of the launch phase is that, we were more and more mature with the game in a way, so we streamlined the team a little bit, focused on the essentials. That's what we've done. Now, moving forward, we will of course maintain that, and, we will keep developing new features, new elements to the game.
Mm-hmm.
And then over the longer period of time, looking at, you know, next year and the years after that, I can easily see us starting to grow the team again.
Yeah.
But that will, of course, you know, required that the game grows and all that stuff, so.
I'm reading the question-
Yeah
... a little differently, but the developer role, at least historically it has been the publisher and developer-
Yeah
... and now it seems that we are like this.
Yeah, yeah. Yeah.
It's more like an equal, equal role within the publisher and developer, and both are contributing to the same success-
Yeah, yeah
... and I think that has been changing in the market, and especially on the mobile publishing, the publishing side of the business, that it's more of an equal partnership rather than kind of-
Yeah, yeah.
... we are mastering and you are developing.
It's more fair in a way, because the way that the competition has changed in, especially in free-to-play mobile, is that you can't dictate things anymore.
Yeah.
You need to scratch each other's back-
Yeah.
... to get the thing working, and that's beautiful, but it just makes finding the right partner so much more challenging.
Yeah.
But when you find it, then it can work beautifully.
Yeah.
Yeah.
There are other factors on finding the right partner than-
Yeah
... financial factors. There are kind of cultural fit and all kind of things coming into play when you are actually-
Yeah
... in a partnership.
Definitely. Sort of follow-up question to the same, that can we expect lower development costs now that the game has entered the live phase? Well, yes and no. What I mean with yes, that you can expect us to be careful with our cost structure, like we have demonstrated during this quarter, during the previous, and so on and so on. But also at the same time, we are seeking to continue actively developing the game, continue pushing out actively new content to the game, and perhaps even increasing that moving forward. But that's a little bit longer down the line. Then there's a question: What do we mean with our quote from our, our report where we say that the Autogun Heroes roadmap is clear, and we can now continue exploring other new ways of commercializing our game portfolio?
Then there's questions that, is it too early to consider adding another titles in our games business, and so on. That's exactly what we're doing at the moment, but we're doing it the way that we want to be super careful with not over-investing until we have reached a certain maturity with the games and the opportunities that we have. While at the same time, we're seeking to also commercialize things that we have in our game portfolio and finding ways to make more money with the things that we already have. So-
We are exploring also not only the commercializing the games, but also commercializing the IP.
Yeah, definitely. Yes. So long story short, yes, you can expect new games. We will take our time until we come out of the closet with those one, until we have reached a certain level of maturity, like we always do. And then, can we provide some perspective on the overall competition in the market? Have we observed any easing of competition after two challenging years?
I was following the-
Yeah.
... Mr. Tähtinen last week in one industry event when he and a couple of other experts were giving a panel discussion regarding-
Yeah
... this topic, and I think there was quite a few good points, and I think the overall feeling within the industry executives is that the marketing is easing up.
Yeah.
But maybe you can summarize the things that you and your colleagues there have-
Yeah
... had a chat.
Yeah. I think what we're seeing now very much is that a lot of the companies unfortunately already have faded away. So in that sense, there is less competition, especially for us in the B2B market, but also when it comes to the free-to-play mobile games market. What we are also seeing more and more is that companies that are still there are being more clever. Not just us, but so many others as well. People are more clever in terms of what can we do without taking excessive risks, because everybody hates excessive risks at the moment, but everybody still wants to make excessive profits down the line. So maybe everybody's a little bit careful and a little bit smarter how they approach those things.
And, something that we think that we're gonna see more and more moving forward is that smaller indie labels are gonna deliver a lot of great stuff. And why that is, is because many of the big AAA houses, they have canceled so many projects. They're focusing on the safe bets, so to speak, you know, sequel of this and that famous IP, which for us consumers who are playing the games, what we're gonna see is, you know, awesome things like GTA VI-
Yeah
... and sequels for our loved games, but maybe less innovation.
Yeah. And I think-
Innovation always comes in games.
Yeah.
And now its turn for indies to-
Yeah
... get in there and be with us.
The next big things are brewing within the indies-
Yes
... where we calculate ourselves also. So smaller-
Yeah
... smaller, smaller companies, and, then soon as those innovations have found, then the big guys might act or follow.
Definitely, definitely. And something that we-
We've seen something like that in Finland also with the...
Yeah
... one small company from north-
Yeah
... northeast.
Definitely. And I think for us, down the line, it means two things. One, we have opportunities to choose from, like where we invest our monies and how we collaborate with other games and studios out there, but also in terms of these big boys, so to speak. They will need games moving forward, and now they don't have so much growing organically, so there will be a day when everybody goes shopping and buying-
Yeah
... stuff because people want to release things, so. So long story short, the market is developing in the right direction, if you ask me and us, and probably so many others. When exactly will the floodgates open? Nobody knows. Then let's see, what else? Nothing in here. Then let's see the activity feed. Any new games in the plan, question mark, and is there a chance to strike a deal for NERF game, question mark? New stuff brewing? Yes. Chances to strike deals with anything in our portfolio? Yes. Will we go into specifics on this call? No. How is Netflix game going, and will we get to know what it is soon?
Depending what is soon.
Yes, yes. We will know when the time is right.
Yeah.
I don't think we even have a date for that, so even we don't know.
Yeah.
Yeah. We have previously had a community manager for our games. How come you haven't had that for the last few years, and how will you address this in the near future? That's a very good question, and that's something that,
We do with the community-
Yeah
... management, even though we don't have, we haven't had a dedicated community manager.
Yeah, yeah, and that's something that's one of the classical chicken and eggs things, and that's something that, how to say it? You always need to be super mindful about when you think about how you optimize the cost structure that you have, because there's so many other things like this very topic when it comes to the whole game development and the game publishing process. Like, how are you supposed to grow your game if you're not investing in your community management? And the flip side of that question being, why are you investing so heavily in your community if you don't even have it yet? And, you know, these type of chicken and eggs-
Mm.
... game development and game publishing as well.
I think the key thing is that having a community management-
Yeah
... is more relevant than having a community manager.
Yeah, yeah, true that. But I think it's safe to say that moving forward, probably on that front, we have reasons to be better.
Yeah.
Let's put it that way. Then, have you started receiving income from the Netflix deal yet? The answer is yes. We usually structure our B2B deals in a way that we get paid somewhat frequently. We try to avoid these type of classic deals where we first take big upfront risk and work a lot, and then we deliver something, and once that something is approved somewhere down the line, then we might get paid. We wanna avoid that. So we often demand structures where we start to get paid from the very get-go, and we get paid with pretty short intervals as we deliver milestones. These things vary a little bit from one project to another and are, of course, always, you know, industry trade secrets.
Mm.
We can't go into project-specific details, but usually we want to say no to the type of opportunities where we need to take too big of a risk-
Yeah
... in our B2B business. Then there's question that, is there any new partners coming our way, like Blizzard? Well, of course, we're not gonna comment on any single, single entity out there because we are subject to super tight NDAs and stuff in this business. But how to say it? Any company that has been around in this business for quite some time now, of course, you're all the time talking with pretty much everyone.
Everyone.
That's normal course of business, which means that we are, of course, constantly in the mode where we try to seek new things to Nitro. Something that I think is good to recognize is that we are, at the moment, trying to seek bigger opportunities. We're more and more selective and picky when it comes to what it is that we want to work on. But is it safe to expect us to continue down that road and do something with somebody moving forward? Yes. That was super vague politician answer.
That answer was-
Yeah, but we will tell when the time is right. Looks like that's it, 29 minutes and 30 seconds. We set a 30 minutes timeline for each other before we started this call, so I think we succeeded with that.
We succeeded.
We will meet again August-
August
... when we put our report for the first half of the year, so-
Have a great summer, everybody.
Exactly. Exactly.
Spring is already here in Finland, and soon it's summertime.
Yes, yes, very much looking forward to that.
We will, we will be busy, and you will hear us-
Yeah
... as we-
There's still a lot of things to do before we can even dream about going to summer holidays. So thank you for your support.
Thank you so much!
... thanks for tuning in, and see you the latest in August.
Bye now.
Bye-bye.