Good morning!
Good morning.
Huomenta, welcome to our webcast.
I'm back.
Yes, yes.
Last time you had, you had a great guest here.
Actually, last time I was alone.
Yeah.
That was in July. Yeah.
Yeah, before that, you had a Mr. Rimonen talking about the exciting game loads that we had, on our hands.
Yeah
... on a springtime, and now we are seeing the first initial results of.
Yes, yes, yes.
of the launch period.
Today we're gonna talk a lot about Autogun Heroes, because based on the questions we have received, that seems to be the thing that's most interesting. But of course, we're gonna go through everything else as well. So without further ado, I'm Jussi Tähtinen, the CEO and co-founder of Nitro Games, and joining me today, we have-
Antti Villanen, Co-founder, together with Jussi, and partner in crime.
Yes. For those of you who might not be familiar with Nitro, if this is your first time joining our webcast, we are a Finnish mobile gaming powerhouse, one of the oldest game companies coming from Finland. Our background, when we started, we used to be a PC games company, then we expanded a little bit to console. In roughly 2013 to 2015, we started to focus exclusively on mobile, and now during the last, I would say 2 years, maybe, we've been again expanding to other platforms in addition to mobile.
In the old, old world.
Yeah.
Following the trend of the... on, on the market, that-
Yeah
... more and more games and companies are steering towards the cross-play and cross-platform, and.
Yeah
More and more games are serving the customers in all of the platforms.
Indeed, indeed. We focus on the category of action and shooter games, so we do games where things go boom. We specifically do games for mid-core audience.
Yeah, for real players.
Yeah
... and people who are, who are really committed to playing the games and spending in the games.
Exactly, exactly. Our business is twofold. We have our games business, where we focus on investing in our own games and are seeking those hockey sticks. Since we do Free-to-play, everybody understands that it's all about finding the winners and the big hockey stick curve.
We have a service business where we are serving, selling the services.
Yeah
... to tier one companies from the industry, learning from those projects, gaining the gaining the reputation, and getting lots of expertise and experience by working with the best ones.
Yeah
... from the industry.
And-
While we are, while we are claiming ourselves amongst those.
Yeah, that's something that we've been doing for a long, long, long time.
15 years, I think now.
Yeah.
It's a quite steady and reliable business, good about tackling the hockey stick risk that you.
Indeed
you mentioned.
Indeed. Okay, since this is the webcast for the H1 results, let's go through some of the recent highlights. In terms of our revenues and EBITDA, those are the 2 key KPIs for us on a company level. Now, during the first half, we again saw growth in revenues and improvement in EBITDA, but we also want to underline that that's not where we want to stand at the end of the day. The big thing for this year is that we're focusing on steering our business towards profitability step by step. This first half so far has been laying down a solid foundation for that, and especially towards the end of the year and the years to come after that.
Other notable events that kind of like started during the first half but that we concluded just recently, includes the fundraise. At this point, we would like to thank all the shareholders who showed their support in the fundraise. The results were moderate. That's how we label them. We raised roughly EUR 3.9 million in connection with the fundraise, and that is what we need for our most important needs now, to continue our work step by step towards profitability. Obviously, the funds will be mostly steered towards the ongoing launch phase of Autogun Heroes, and within that launch phase, most of the funds will go in the user acquisition-
Exactly
... where we invest in acquiring new users, new paying customers to the game, so that we can get the revenues, growing and ongoing.
Other significant events from the period and second quarter, definitely the most exciting event from the game business was the launch of the Autogun Heroes.
Yeah, yeah.
We started slowly, test launch, soft launch, and then ended into the so-called launch period.
Yeah
... where we are now testing and validating and measuring all the marketing funnel activities, KPIs, return on advertising spend, and looking for what is the level of the scale that we can drive the game in which time frame.
Yeah, and this launch phase is roughly six months in length. We haven't set a specific length, but roughly six months is what we have said. Even though we're nowhere near the end, as of today, we're still happy to share some of the initial findings we have seen so far.
Yeah.
Then we also signed.
Yeah
... after the period.
Yeah, yeah.
... in our B2B service business.
From the service business, we are very happy to deepening our cooperation with the.
Yeah
... with the Digital Extremes, and we, we signed an expansion with the unannounced title that we've been-
Yeah
... working for quite a while, and I'm hopeful that someday we will announce the title also.
Yep.
That's a good sign of client trusting our expertise and deepening the collaboration, and we are steadily going through the step by step towards the hopefully, some fruitful long-term.
Yeah
... long-term live operation collaboration with the, with the client and the game. I think a good sign of the trust between the partners in this partnership is, is that we also signed another deal with the-
Yeah
Digital Extremes, we were capable of entering to work with the one of the most famous title on their portfolio. Warframe as a game has been there for, I think more than 10 years.
Several years, yeah.
Yeah, and, now we are happy that we are part of the Warframe Mobile, mobile team, and, seeing also how this kind of evergreen franchise is coming on the, on the small screens...
Yeah
-being part of, part of that journey is, is very good for the company and, especially the team is very excited about-
Yeah
-the opportunity.
It's a good fit for our vision because this is something that we have seen coming for quite some time now. A lot of these big IPs from other platforms-
Yeah
PC and console, expanding the mobile one way or another, introducing the mobile component in the middle platforms.
Yeah.
That's where our expertise is a good match, because like I said in the beginning, even though we've been focusing on mobile, mobile games with our own titles for last few years, we still have the background and knowledge from working with the other platforms.
Exactly.
We can technically pull it off. Okay, then, let's see, where do we actually stand this year? As a reminder, this is our ongoing strategy, which we started back in 2017. One of the first steps in our current strategy period was to get the company listed in the Nasdaq First North Growth Market in Sweden, and start to build the team and technology and the portfolio re-required to build our game portfolio. Not just the game development, but the-
The publishing and marketing.
Publishing, marketing, all the analytics.
Final state, everything.
Yeah. During the last few years in our strategy, we've been building our first few games and launching those, getting all the learnings and, and, and so on. The first one was called Heroes of Warland, which we launched towards the end of 2018. That game never made it commercially, so we gained a lot of good learnings. We made some money with it.
Lots of expertise, yeah.
it wasn't sustainable business case in the long run. we approached last year, when towards the end of the year, we launched NERF: Superblast, which then again, with that game, we have already gained some very good commercial results as well, and tons of visibility and good boost for Nitro. Now, this year, we're busy going through the launch phase with Autogun Heroes, which by any measurable means, seems to be definitely the winner that we have been seeking through all these years when we've been going through 10s and 10s of MVP in our process and trying out different games.
We've been evaluating.
Yeah
... tens of games from the other studios, now, now it's time to focus for the winners.
Yeah
... and, and carve out the best possible outcome from, from the winning horses.
Yeah.
The focus is focus on those, put the resources on those, and build the best possible business from, from the winners that we have definitely finally in our hands.
Yeah. Therefore, this year is super special for us inside here in Nitro because the previous years in our strategy, we've been seeking the best possible avenues with our own games, trying to figure out what works, what doesn't, gaining learnings, and finding those winners. Now we have that, so we can focus on that. Also in the service business, we've been trying out a lot of different things throughout the last few years that what works and what type of deal combinations, what type of projects we are good at and, and, and what provides the best results. Also on that front.
On that front.
... we're getting closer and closer to our vision of working-
Yeah
... with mostly larger scale action and shooter games than we could maybe pull off on our own.
Yeah, and focusing on our technical delivery on those and.
Yeah
... providing the customer the critical needs that they have and the resources and expertise that we have. It's a really good match.
Yeah
... what market and, our, our clients are looking at exactly now.
Yeah. This now means that, on a very high level, we're now able to continue step by step towards profitability, because we no longer need to invest in seeking those winners, but actually making the most out of the ones that we now have. How we are structured here in Nitro is that we're based here in Finland. We have 2 studios in Finland and, quite a few people working remotely from different locations. In addition to that, we have our global network of not just developers, but people working in business development and in other areas. Most of those are either studios we worked with for many years, who we contracted with, or then hand-selected.
Mm
... individuals working on a contracting basis.
We've been building this, this network and this model of working more than, more than 10 years now.
Yeah.
It's giving us long-term, long-term, sustainable way of scaling up, even scaling down, and, and picking the best parts from the different expertise areas that there are around the globe. Also giving benefit of serving our clients in different time zones.
Yeah
... and, and be present where our client is, even, even we are in the field.
Yeah, yeah. As of right now, out of the roughly 150 heads that we have in the pool that we've used in the recent years, in total, we are currently staffing close to 85 people, out of which 55-ish is here in Finland, and the rest are.
Yeah
... international talents. That's how we, you know, go up and down, depending on the amount of needs that we have in the different projects. A little bit about the mobile games market positioning that we have, and how that kind of like combines our games business and also the B2B service business, where we operate on other, other platforms as well. We focus very heavily on the category of action and shooter games, which is within the mid-core. We have a very specific segment, and that segment is characterized by shooter games, tend to be evergreen-
in all the platforms.
Yeah, yeah.
It's been evolving so that it's, they've become first evergreens in the PC.
Yeah.
They came on the consoles, evergreens, and now it seems that the...
Yeah
shooters are becoming a evergreen on the mobile also.
Definitely. Then another aspect that characterizes that category is that it's very technically heavy, both in terms of the production value, like high-end graphics and all that side of things, but also, technically, because they tend to squeeze the juice out of the devices, whether we're talking about a console or a mobile, these are typically the category of games that are used-
Quite often they are, they are, they are also promoting the kind of capabilities.
Yeah
... of the devices. Device manufacturer also tend to like the shooter games on their, on the...
Yeah
... devices, since they are giving the best out of the device for the customers.
For example, NERF: Superblast, this weekend we learned that we're again Game of the Day.
Exactly
... in the App Store in U.S.
Yeah.
Which is a good signal of that type of thing, because it's a very high-end.
Yeah
... very good-looking, runs super smoothly, so it's very-
Promoting the.
Yeah
... promoting the platform and the, and the devices, as well as our game.
Yeah, yeah. What we can see from the pie chart is that overall in the shooter category, if we look at how the revenue comes from different platforms, mobile games are already there very firmly in the pie. Not just as mobile standalone, but also IPs that have expanded to mobile one way or another. Everybody is aware of, you know, Fortnites.
PUBG.
What have you... Call of Duties, all those games.
Yeah.
What we're seeing is more and more other IPs seeking to have a mobile-
Yeah
... component as well.
kind of change on the market is also serving our strategy and our offering quite well, since we are now in a growing trend.
Yeah.
Even we saw some decline in the, in the, in the industry a few, few years back.
Yeah.
Now it seems that, pretty much all of the big players in the industry are preparing for the new growth phase.
Yeah
... and, on our business development and B2B efforts, there are more and more signals that now everything is starting to-
Yeah
... starting to grow again, and, more and more requests coming, coming towards us, and, we are in very good position.
Yeah
... on this high trend and also in the momentum that is happening on the market.
Yeah. It's very, things are not returning to how they were, but kind of into the next evolution-
Yeah, exactly.
... where how we are seeing things is that our track record on delivering data-driven games and the whole mobile games marketing and the free-to-play analytics side, that's becoming more and more relevant.
Yeah
... other platforms as well. It looks like, moving forward, we can expect maybe more and more of these bigger players having the mobile game component in the platform mix.
Yeah
to help promote and bring awareness, because mobile games marketing is so much ahead of the more traditional ways of marketing.
Yeah
... often seen on PC and console.
Yeah. It's not only the gaming IPs, but it's also kind of IPs and brands outside of the, outside of, outside of the gaming, gaming sector, and, NERF being a very good example of our expertise.
Yeah
... of being capable of working with a world-class, world-class IP with the one of the biggest toy manufacturer in the, in the, in the world. And
Yeah
... that's also creating a trust and a credibility on the market towards us.
Yeah. How we're now going about this both ongoing and future opportunities on the market is our project portfolio. We have a portfolio strategy, and what that has meant for us so far is that obviously, during the last few years, we've in some cases expanded the portfolio and some cases then focused more and so on. Right now, we're at a point where we have definitely a focus moment ongoing, when we focus on the winners that we have, while at the same time, especially in the B2B service business, we are looking on building the next phase of the project portfolio and how we expand from where we stand today.
Right now, for this year, in our games business, we definitely focus very heavily on the ongoing launch phase of Autogun Heroes, to monetize on the opportunity that we have. As a result, we're also reducing our investments on the NERF: Superblast, where despite some of the great results we have seen so far, it's not up to the par of what we have seen with Autogun Heroes, so it definitely makes sense to steer our efforts towards that.
focus on the winners.
Yeah
... think is always good way of-
Yeah
... building, building the business.
In the longer run, within our games business, we still definitely plan to keep the portfolio mindset. Like we have discussed sometimes earlier, we're still scanning out for new titles and, looking into the opportunities that, how will the portfolio look like when Autogun Heroes is, you know, steadily climbing for years to come? What, what are the next things? As of now, we're not investing that heavily...
Yeah
... in building those new things. There are some-
There are something brewing, something brewing within the team.
Yeah
... but those are normally something that takes some time.
Yeah
forms out to be a next, next candidate.
Yeah. Then on the service business side-
On the service business, as said, we.
Yeah
We signed a new project with Digital Extremes and with the one of the best IPs available in the world.
Yeah.
The, the company and the team is very, very excited about the opportunity and be working with such an evergreen, evergreen IP and such a, such a good company. The collaboration with the, with the Supermassive Games is approaching in the-
Yeah
... conclusion point.
Yeah
... so to speak. We are in a going towards the momentum where we see how the game is performing on the market.
Yeah
... how much we are and they are willing to invest into the-
Yeah
into the game. That is, that is something that we are going closer to the conclusion of the current agreement.
Yeah
stage.
Yes. In addition to these things that we have at the moment, like we said earlier, we have a very strong outlook in our business development funnel, which means things for, you know, the coming years. That's something where, like we discussed earlier, we're very happy to see more and more of these opportunities, which are exactly the action and shooter games. Larger projects are bigger opportunities for Nitro, so we see nothing but good things ahead of us when it comes to growing our B2B service business moving forward. This week we're going to Germany.
We are going to the Gamescom. That is one of the biggest, biggest industry event. Days full of meetings with the partners.
Yeah.
Lots of, lots of B2B discussions, and lots of discussions around Autogun Heroes and-
Yeah
Naturally, meeting and greeting all the industry friends. I think you see people are eager to hear about Autogun Heroes.
Yes, yes. Let's have a look-see in Autogun Heroes. Firstly, let's recap, where, where we come from. This is a, slide that you have, all who have been following us already seen earlier. What Autogun Heroes is, it is the game that we believe now is the winner that we have been seeking, during the strategy phase all this previous year. We believe that we have found a winner in our validation process. We will again, in the coming slides, go through the roadmap that we have for the game, what has happened, what are we doing now, what's happening next? We will go through some initial findings, but the key thing is that what we believe that we have in our hands here is definitely a winning game.
Often you can put free-to-play mobile games in three different type of categories. This is a rough, simplifying of things.
Mm.
The first category is, is games which typically don't make it. Well, what are the reason most of the games in this business fail?
They are making some EUR 100,000 or something like that.
Yeah, yeah.
... in a lifetime.
Yeah.
Pretty much failure on anybody's scale.
Yeah. Doesn't return the-
Yeah
... investments and things like this. This is what happened, for example, with Heroes of Warland. Even though we made more money than them-
Yeah
... but still-
Still.
commercially-
Yeah
it's not a success by any stretch.
Yeah.
That said, we are still using a lot of the technology and tools that we developed when doing that game. A lot of, in many ways, the investment is still kind of.
Yeah, yeah, no, NERF, has been utilizing-
Yeah
a lot of that.
Yeah. Which is a game that pretty much belongs to the second category of games that are games where, for one reason or another, we have had struggles in scaling up the game. And with NERF, what we have seen is a great game, great reviews. It's also, you know, retaining players, we're able to monetize, but it's also at the same time, very complex game.
Yeah
... where it's a real-time, synchronous, multiplayer game, where the user acquisition pushes needed to get the impact that we want are beyond what we have been able to do so far. Which conveniently gives us a segue to Autogun Heroes.
Yeah
... which is a single-player game, which means that we can have a very different looking user acquisition strategy when we don't need to worry about concurrent users.
Yeah
... and things like this that much. With Autogun, then again, what we have seen is definitely again, that's in the third category, where, you know.
Where, where it starts from some tens of millions and going...
Yeah, yeah.
then high.
Yeah.
Defending bit of a game. That's how high.
Yeah.
Those game,
With Autogun, we don't yet know-
Right
how high we will get.
Yeah
We definitely know that, we're on our way there.
Yeah.
That's something that, it's a game that we will play, so to speak, for years to come now, and step by step, going through first the launch phase, then moving to live operations phase, and then.
Yeah
... keep operating and growing the game.
naturally, these categories are, there are some grayscale on.
Yeah
... in between and, these are the kind of three main categories where the free-to-play mobile games tend to be following, if you're looking the bigger maps.
Yeah, yeah. Where we stand now with the game and on our way towards the bright future with the game is displayed on this slide. Again, an old slide, little bit updated, long story short, last year we acquired the game pretty much 1 year ago from this Danish developer, Doomsday. Before that, we had been testing the game for quite some time. We had seen super great retention curves for the initial-
Mm
... one month-ish because the game didn't have too much of content. We acquired the game, we developed the meta game layer, the monetization mechanics, the-
Analytics data.
Yeah, the whole back end.
Yeah.
assembled a team inside Nitro to work on the game, in addition to the core team.
Yeah
... from Denmark that we still have. We took the game to soft launch earlier this year. We saw great results that exceeded our expectations. We saw that based on the initial data we gathered, we can see the return on ad spend window between 60 and 90 days. We saw that this looks strong enough to take to the actual launch phase.
The first, first signals of scalability was already visible at that time.
Yeah
... even though that the data set and user cohorts were limited. Still we saw that that there, there is a scalability within this game.
Yeah, definitely.
That, that naturally created a kind of trust and credibility towards the investing more into the game.
Yeah. Therefore, we went into the launch phase, which is now ongoing. We started the launch with the game at the beginning of June. During the first month, we grew the game very moderately, but still in a much, much, much larger scale than what we saw in soft launch, and validated that everything works. In soft launch, we focused mostly into the United States.
Mm
...because that's our, one of the biggest target markets we have. Now we expanded the game globally, excluding China and Russia. We made sure that everything works in line with our expectations, and we were happy to see that that was definitely the case. Then in the month of July, we started expanding the user acquisition. We started to roll out with bigger budgets and so on, to validate that the game actually can take that user acquisition. This is something that is usually the biggest concerns during the soft launch, that, okay, these are my results in a limited scale. What happens when we start to throw money? Do the numbers hold up or, or are they diminishing and for one reason or another, not holding up? What we saw was quite the opposite.
Yeah.
The numbers have actually improved, like we're about to see on the following slide, so we have been very happy with that. What we're now going through in the launch phase is exactly what it says there. We continue the game scale up, we continue to see the revenues growing moving forward, and we continue the further development of the game.
Yeah. On top of that, I think, the platforms have been welcoming us very well.
Yeah
... into the game. Apple and Google have been generously giving us some, some featuring slot, slots, and also the industry have been, have been kind of-
Yeah
Noticing this, this, this game and us alongside that.
Yeah.
We are in a very good position with the, with the game, and naturally, all the success we have in our game business is reflecting into our, our service business as...
Yeah
as still we are one company when it comes to the outside world.
Yeah. Even though we are only going through the launch phase so far, we are already very happy with what we have seen and, and also what we have heard from...
Yeah
... others. The whole point of this launch phase is to make sure that we go through all these things and expand the game and, map out different type of UA campaigns, different type of, ROAS windows, and, identify that what's the best way to operate the game, moving forward, taking into consideration that as a company, we want to reach profitability.
Yeah
... step by step.
It's good to remember.
Yeah
... that on a, on a launch phase, game is not ready. Naturally, the Free-to-play game as a service is never ready.
Mm-hmm. Yep.
still there are lots of social features and monetization features that we are-
Yeah
... including in the game during the launch phase, and then seeing the effect of, of those.
Yeah
...just later stages of the, of the launch phase.
Yeah. Speaking of which, we have two slides coming up about Autogun Heroes. First one, we will briefly summarize some highlights we have seen so far. Then we focus about focus talking about what happens next. What we have seen so far is improvement compared to what we have seen earlier. Both in terms of comparing against what we saw during the soft launch, but also what we saw at the beginning of the launch phase. This is something that's super important for us when we look at the things and evaluate what we have seen so far, how does that reflect not just for this year, but for years to come, and the ability to keep improving the game is always one of the most important things to pay attention to.
Along with the velocity, velocity and improvement.
Yeah
... KPIs, those are the kind of two critical things, and this far it seems that.
Yeah
... we've been succeeding on both.
Yeah, definitely. The best performing countries seem to be United States, South Korea, Japan, Germany, Canada. Again, these are initial findings, and things are subject to change moving forward. That's what we have seen now after the sort of first push, and now, of course, we are further exploring those best countries and best performing campaigns and cohorts, while then again, decreasing investment on the ones that are not performing as well. This is part of the activities in the launch phase.
Bit of a surprise even for ourselves was the Japan and South Korea.
Yeah
... how well they are, how well they are performing, and, cohort sizes are big enough that the.
Yeah
data is reliable.
Yeah. On the retention side, which is displayed on this slide on the right side, what we have seen is that, as expected, iOS is obviously performing better, but Android is not far behind. On both platforms, as we start to measure towards the day 28 or day 30, so the one-month retention, and of course, more and more beyond that as we speak, it seems that that's where things stabilize.
Stabilize, yeah.
The beginning of the retention funnel, that's where we see little bit.
Little difference. Yeah.
... difference, but towards the end of the retention funnel, things look pretty stable regardless of the platform, because that's your players who you want them to-
Yeah
get and stay in the game.
In the long game anyway, those who are stuck in the game for the long time.
Yeah
... those are the ones that really matter, matter and turns into the paying customers also.
Indeed, indeed. Obviously, in different countries, there's quite a lot of volatility with the retention curves, and this is something that's part of the whole thing. It's completely natural and something that sometimes explained by the type of audience that is in that country, but sometimes there's something that we haven't yet really figured out that why the numbers are-
Yeah
... so good or so bad, and these are things that we keep learning.
Well, to be honest, there ain't bad countries on the-
Yeah, yeah. Yeah, like we can see the number-
There are good-
From the numbers
... good and yeah, good and excellent.
Yeah. Yeah. On the monetization side, something that we are extremely happy with is that the strong monetization performance has not just continued, but continued to improve. What we usually have seen is that when we soft launch the game.
You have those golden cohorts.
Yes. You, you tend to get the best-
Best
... best users, and then the quality metrics start to decrease step by step as you expand. What we have seen is actually, the opposite, in many ways. We are looking at very strong IAP monetization, good conversions happening still very early, which is good for us because we start to see a Return on Ad Spend quickly. We have also seen very considerable-
Very strong.
... improvement on the Ad monetization.
Yeah.
This is super good because it means that also those players who are not purchasing any IAPs, which are always gonna be a minority.
Mm-hmm
... are generating revenues for us. and ad revenues are good for Nitro because there is no store fee associated with that. So this is a development that we have been very happy seeing with the game. As a result, the ROAS curves have been developing pretty damn well in line with our expectations, even though now we're more and more continuing to expand and explore different type of campaigns with different type of ROAS targets and so on. What we see so far-
I think ROAS is maybe not so familiar to everybody, but what do you mean by saying ROAS?
Okay. Yeah, let's bring that up. ROAS stands for Return on Ad Spend. I invest today in user acquisition, and then I invest tomorrow and the day after, and so on. Let's say this one week I invest now in user acquisition, and this builds my weekly cohort. Out of this investment I've done today and during this week, how much of the money am I getting back in seven days? In our case, that's roughly 20%. Then, how much of this money am I getting back after 30 days? That's, in our case, roughly 50%. We get half of the investment back during the first 30 days of the player's life cycle.
Basically, it means.
Yeah
... how quickly you can circulate the cash...
Yes. Yeah.
... inside of the game.
Yeah. Which for Autogun Heroes is, compared to any industry standards, it seems that it's returning very fast.
Yeah.
Yes. Oftentimes when you expand the game for, you know, years to come, and you start to get, you know, closer and closer to the top grossing positions and stuff.
Yeah
companies might operate the games with, you know, beyond one year return on investment.
Yeah, I think I have seen that.
We're still looking at very short-
Public, public companies-
Yeah
referring to 12-18 months payback time.
Yeah, yeah. This is something that we don't expect to last for a lifetime, of course, but as of now, we're doing the launch phase and getting the game lifted up. It's very important for us because it allows us to have a, a relatively quick sort of circulation in cash as we keep exploring the opportunities to expand beyond these ROAS windows in the long run, to continue exploring and expanding the game. Long story short, what we have seen so far looks very promising, but still, the launch phase is not done yet. We're still looking at initial findings, but we are very happy with what we are seeing so far. In terms of what we can expect to see happening next, is that we will continue the launch phase as planned.
There will be new features, there will be new content based on what we're seeing in the data, but also based on the existing roadmap that we have.
I think we are focusing on serving the long-term players more.
Yeah.
Bringing more content, more activities, events for those who are sticking in the game.
Yeah
... 1 month and 2-3 months, or even, even longer.
Yeah. Parallel to that, we are continuing to grow the game, both with user acquisition, but also this organic growth.
Yeah
... which somewhat goes hand in hand with what we do on the user acquisition side, but is also dependent on how the store placement and things like these happen. The whole beef is, of course, the long term.
Yeah, it seems that.
Yeah
... findings that we now have, that we have a third category game.
Yeah
... with our hands, with the, with the long-term scaling potential to be several years of.
Yeah
... solid, solid, solid and growing business. The how high, that is still unknown.
Yeah.
Still, it looks very, very good.
Yeah. During this remaining part of the launch phase, we're not doing things so that we invest the same amount every day.
No, it's...
It, it goes up and down, depending on what we're measuring at any given time. Then sometimes we do a push, and then we let the cohorts mature.
Yeah, yeah.
... so to speak, to collect data and make sure that we're actually seeing what we wanted to see, and then again, investing more.
Yeah.
You can expect a little bit of volatility during this launch phase, but that's exactly as planned.
Yeah.
Out of Autogun Heroes, let's move on to the financials part. This is the webcast for the report that we just released this morning, so the first half of the year. What we're seeing in the numbers is nothing to brag about, but again, we're seeing growth in revenues, step-by-step improvements in EBITDA. Something that characterizes, especially the second quarter, is definitely the increasing investments in the ongoing launch phase of the game, which we are, of course, continuing after the period. That goes without saying. That's how we then, through the Return on Ad Spend, seek to start returning the revenues. Of course, we're already seeing returning revenues as we speak, but that's how things will go from here moving forward.
Parallel to this, we're basically focusing our investments into the winners, so to speak. We're decreasing investment on areas where we're not seeing return and focusing those to areas where we do see return. We are carefully going through our other operating expenses and everything as we streamline our business towards profitability, step by step, to make sure that we get there in the best possible fashion. As we can see from the next slide, if we switch to the 12 trailing months view, is that basically the EBITDA improvements we've been doing before we now started this launch phase in the background. Now, as we go to the beginning of this year, this year, we were still pretty good on the EBITDA levels.
Now, during the second quarter and moving forward, we keep investing in the launch phase, which obviously has an impact short term. Then again, the whole point is that moving forward, we can expect to see larger revenue growth.
Exactly
... and again, step by step, getting to the, towards profitability.
Exactly.
Now, let's go forward to the next slide, which is about questions, because this time we have received quite a lot of those, which is something that we are very happy to see. Let's start to take questions from the chat first. The first one is that, "Even though it's great continuing with Digital Extremes and Supermassive from a risk point of view, wouldn't it be good to get products from new customers too? Anything on the horizon?
Well, yeah, PD, PD is busy, busy.
Yeah.
There are always lots of those in the horizon. What we have seen, the trend from the market is that if, if there has been a bit of a, bit of a slowdown on the market for, for a year or 2 back, now it seems that the market is picking up. The companies are evaluating the new investments towards the future, and, and market outlook is much brighter than.
Yeah
... one year ago or even two years ago. It seems that there are lots of, lots of activities on the, on the market. Definitely there are.
Yeah
... lots of things on the horizon, and, then it's just a question how far the horizon is.
Yes, yes. Overall, from the big picture point of view, our focus is not on what happens right now, right now, but how do we build this in a sustainable fashion in the long run? Like I said, earlier on this call, sometimes that means that we are, sort of, focusing the amount approaches more and sometimes then again, expanding. Now we've been doing the focusing on the best performing ones, we are preparing obviously, to expanding that mix moving forward. What stage and timeline with all of these, those things you can never predict. We will let you know when there's news to share.
Then there's a question that, "When will you be cash flow positive?" This is something that we don't give an answer to directly because we don't give any financial guidance moving forward. We will report how we have delivered so far, but we don't give any forward-looking guidance, at least not as of now. "Any chance of launching the game in China?" This most likely referring to Autogun Heroes. I guess the short answer is yes, of course.
Yes. Yeah.
China is a very unique market in so many ways. The way that we approach China and many other markets, outside of the so-called Western markets, is that we seek opportunities with different partners. It's heavily a timing question. It's also a question about...
Scale. Scale question.
Scale question.
When is the right, right time to going into the some specific, far out market?
Yeah.
China is definitely possible, and there has been some initial discussions.
Yeah, yeah.
... around the topic, but I wouldn't, I wouldn't hold my breath. It, it, it will anyway take some time even to negotiate.
Yeah, yeah. We still need to remember that with Autogun Heroes, we're still very early.
Yeah.
We're busy going through the launch phase and so on. Making the most out of the game is our strategy for many years.
Yeah
... not something that we're seeking to do right now, right now.
Especially China being such, such, such a special market, that it's not just going into China.
Yeah
... but there are governmental approvals and.
Yeah
much.
There's a question which is more critical by nature, which we love. "You've been doing this for many years with core results. Why should people invest in Nitro now?" Of course, we don't give any investment advice here, but what we can say is that our strategy and way of working is all about learning and constant improvement. If anybody would consider investing in Nitro, I would encourage them to check through our past track record. Check what we said one year ago, what we said two years ago, three years ago.
3 years ago.
Have we delivered that? Have we shown ability to improve? Which, if the answer is yes, it should reflect in our financials.
Mm
... it should reflect in our, you know, process that we saw in the games becoming better and better. If you come to the conclusion that we have actually improved, taken those learnings, and step by step, made our way towards the big success, then you can make the conclusions...
Mm
... based on that. We are big believers and optimistic that we, of course, have taken tons of learnings and improvements.
Yeah, the whole setup that we have, it, it hasn't been grown over one night.
Yeah.
We've been building the.
Yeah
... development capabilities and publishing capabilities, marketing capabilities, and those tend to take some time, sometimes more than we want and anticipate.
Yeah. Let's see. There was some questions in email. Question is about the U.S. spending during the launch phase for Autogun Heroes. Are we gradually going throughout the period, or are we tilting more towards the end and the fourth quarter? Are we considering leveraging likely decreased ad prices in seasonality, softer period, and things like this? The main focus in the user acquisition spending now during the launch phase is basically validating and exploring that what we're seeing is actually materializing. That's why there is this volatile nature-
Volatile, yeah.
... and pushes in the spending. In addition to that, we're of course, operating the game with the long-term mindset, so steadily increasing the player base, which we have done and we have seen so far, and increasing the revenues of the game step by step, which is also what we have done.
Yeah.
In the grand scheme of things, you can expect things to increase. Actually, it's this direction for the camera to go like this.
Yeah.
The smaller scale might look.
Yeah
... something like this as we do things and try out different things. "Please give some color on the Autogun Heroes metrics. What metrics are the most important in your view? More about the retention or monetization?" This, I believe we already went through.
We already covered.
Yeah, yeah.
I, I think at the moment, the ROAS is the now the key metric.
Yeah.
It, it's, it's not going to be forever.
Yeah.
At the moment, what we are measuring is how quickly the spend will return.
Yeah. When we estimate that, until we actually get the results is, of course, based on the retention and-
Yeah
... monetization that we're seeing. There's a question about the B2B service business that with some of our previous projects, we have seen that the projects tend to be expanded during the project phase. Is this also likely with the new project with Digital Extremes? This must refer to the fact that when we have signed deals in our B2B service business.
Yeah.
We've usually then expanded.
Yeah
... and expanded, sometimes in very many-
Yeah
expansion agreements, which tends to be the direction we like to do things.
Yeah
... in the B2B service business, because it means that we always focus on a specific timeframe and have that agreed, and then we deliver. If both parties are happy-
Yeah
We discuss about the next one.
It's good to remember that all of the, all of the mobile games have some sort of gate in the very, very end of the, of the production.
Yeah
whether to launch the game or not.
Yeah.
Those are naturally also, also important and interesting points for us, that whether the final conclusion from the development and testing as of launch will result the real launch.
Yeah.
As it happened now with the Autogun Heroes.
Yeah.
We went all the way into the launch.
There's a, I guess, a follow-up question to the previous one about the new B2B project, which refers to the Warframe Mobile with Digital Extremes. How is that different? Well, I guess the one obvious thing is that it is a game that is already live.
It's already live.
It has been at that point for many years.
Evergreen IP, been there, millions of fans and followers already with the franchise.
Yeah.
It's, it's more than a game, it's already like a franchise.
Yeah, yeah.
They are organizing big events around it, and there is a kind of. It's small phenomenon already.
Yeah, yeah.
That's the biggest difference. I think, we are part of the team.
Yeah.
We are not solely developing the game, but we are part of the-
Yeah
... part of the group. I think other than that, it's quite traditional-
Yeah
... on our side.
Yeah, every project is of course, always-
Yeah, yeah.
We have worked on some live games in the past.
Yeah, with different techniques.
Yeah
... technologies or techniques.
Yeah, yeah. On a grand scheme of things, everything in the service business tends to be pretty much the same. That's why we call them industry standard agreements.
Yeah
in our press release, for example.
Yeah
... because they tend to be-
Yeah
... pretty much the same on a high level. There's a question about the how the overall weaker economy has impacted the B2B business in general, and some follow-ups on that. I think overall, what everybody has seen who has been looking into this industry is that a lot of projects over the recent, let's say, 12 to 18 months, have been canceled.
Postponed or-
Postponed.
Pause
... These things.
Yeah.
How that has reflected in Nitro, for example, last year, we completely throw down the whole, instant game side-
Mm
... of things, because Snap-
Yeah
... Chat decided not to continue and things like this. We've had impacts. Nothing too major-
Yeah
...considering our strategy, there's been impacts. I would say that the biggest impacts have probably been all sorts of delays in discussing about new project opportunities. We've seen cases where we have been pretty far in discussing something, and then for financial reasons on the other end, they have decided to put the project on hold, for example.
Yeah.
These type of things happen, which mean that.
I think quite a few.
Yeah
... companies have, are kind of, have been on a waiting stage, how the market-
Yeah
... is evolving. Now it seems during this summer, already in the spring, that there started to be a signals that market is...
Yeah
... started to open again, so to speak. More and more companies are activating with their post or-
Yeah
...projects.
Yeah. As we like to say in-house, like, predicting future has always been impossible. Now it's maybe a little bit more difficult than that.
Yeah.
It's, you know, that's the way it is. But for us, still, the outlook looks very strong, so we, we want to highlight that. Question about the financials that, aside from the cost of goods sold related to user acquisition spending, how should we think regarding underlying OPEX? Other operating expenses are short to mid-term. Well, I think short-term, you can expect us to focus our investments more and more into user acquisition of Autogun Heroes, which on the flip side of the coin, means decreasing our OPEX from everything else. Then, mid-term, I would say that you can expect us to be very careful with the overall cost control in Nitro, because we want to make sure that we get to our goal, which is to reach profitability step by step.
While at the same time we're increasing spending on one end on the user acquisition, we are very careful about spending on somewhere, something where we're not seeing the returns. It's going to be a mix of both. Then, what I believe is the last question is that: Could you refresh our memory on the usual user acquisition pattern when it comes to the live operations phase?
Yeah.
That's, usually a phase when we, are not doing that much testing and exploring, but it's based on-
What we found.
what we've already done during.
Found those patterns.
Yeah.
What kind of user cohorts and what kind of channels...
Yeah
... and what kind of medias and what kind of advertising setups, and,
Yeah
... those are all that we are now testing and finding the best possible combination of all the moving parts.
Yeah
... parts that there are in.
Yeah
... performance-based, mm, marketing-
Yeah
... on mobile.
The biggest thing that defines the characteristics in the upcoming live operations phases, of course, are sort of strategic level guidance between growth and profits.
Yeah.
How much we want to drive growth versus how much we want to drive profits, and what's the best balance there. That's, of course, something that we haven't decided yet. It doesn't make any sense to decide that yet, but, overall, what we have said is that we're seeking to take Nitro as a whole step by step towards profitability. Obviously, that will play a heavy mix-
Yeah
... in there. What we're now doing during the launch phase, of course, building tons of estimations about how it could go and what makes the most, most sense.
We will, during that time-
Yeah
... all the data predictions towards the future on the live operation stage, they are much more, much credible.
Yeah, yeah.
... than still in this stage.
Yeah, yeah. Because of, of course, every day we are seeing more and more cohorts mature first to-
Yeah
... you know, day 30, day 60, day 90, and beyond. Let me just double-check there's nothing more. That seems to be it. There's one more. Somebody says: "I want a T-shirt.
Okay.
I guess they must be referring to-
Mine, because you are hoodie.
Yeah, I have a hoodie. You don't want-
I guess, I guess that is our.
Yeah
XS, slim fit.
Yeah. I think you should be bugging our social media channels, because I think-
Yeah
... that they might have something ongoing when it comes to the swag. We've been receiving quite a lot of compliments about the swag.
Yeah.
Thank you. What we do want to make sure is that we don't want to spread these things too far, because these are supposed to be unique. If you ever get one, it's gonna be a unique experience.
Precious.
Yeah, precious. That's all for this time. Thank you all for tuning in.
Thank you very much. We are heading to Gamescom.
Yes.
Hope, hope to bring some news to you.
Yep. We will tune in again in October when we deliver the results from the third quarter. Between now and then, thank you for your support. Take care, and have a good one. Bye-bye.
Bye-bye.