Thank you very much. Welcome to our Q1 presentation. We start at slide number two, which is a brief overview of our company as we stand, our group. Just for those of you who are not that updated on our company, very brief, we are a global group of gaming studios throughout the world. We have in total 11 studios operating in a number of different countries displayed on this slide. We have approximately 5.9 million users that play our games every month. We will go deeper into those data. Important to recognize is that we focus on a particular part of the gaming business. That is our main focus, online strategy games. We have loyal users. We have games that last for a long time.
What could be noted on this first slide is also that on the upper right corner, we have the geographical distribution of our revenues. We can see that Europe is up to 53% from 51%. We have 17% in Asia. North America represents 27% of our revenues. A big increase in Europe compared to Q4. If we go to next slide number three. It's the highlights for the third quarter. We think we had a very strong start to the year with a revenue growth of 33% in revenues. Also, that represents or underlies with 40% growth in deposits. We will go deeper into that, of course. We combine that with a solid profitability, with a EBIT margin of 27%. We have increased the marketing spend during the quarter.
We increased it up to 108 million SEK, which represents 26% in relation to our net revenue. That is some 32 million SEK higher than in Q4. Going to the operational side of that, it ties into that we really are pleased with the high profitability of those marketing campaigns and the marketing spend. That is one of the key things that we will elaborate on during this call. Further, we can see that we have very strong momentum in our product area, core product, especially that Nida Harb 3 reaches completely new levels. We are obviously very happy with that. Also, the new members in the group, Imperia Online, and Shakes & Fidget, are contributing with very high margins. Also with our new launches, Strike of Nations and SIEGE: World War II, they are developing well and according to our plan.
If we go to next slide number four. We should go a bit deeper into our portfolio, which is a very important thing for us. We think we have further improved the good balance in our portfolio. With that I mean primarily the balance between more mature products and products that are quite new in the portfolio. Of course, driven from the fact that we have two launches that have been successful in Q1, also when it comes to larger products and more niche products. Also, as you can see now, we have core products that have overtaken Empire as the largest product area with 43% of the revenues. Empire second largest with 38%. Big Farm 19%. This is combined with the fact that all three product areas are growing also this quarter as they did in Q4.
We are very pleased with the balance in the portfolio and also that all product areas are growing. If we go into the Empire brand, which consists of four different products, we had deposits in Q1 of SEK 161 million, which is on year-on-year 10% lower than last year. Also important in that aspect is to see that we have a much lower UAC. We have half of the UAC that we had last year, Q1. It amounts to SEK 17 million, which is approximately 10% in relation to the net revenues, also the deposits. Very important is that even though we are spending not more than 10% in UAC, we do see a sequential growth for the second quarter in a row.
This is 3.5% growth from Q4, which is a very strong quarter, to Q1, which on a compounded level represents 15% on an annual basis. We are very happy with that, and that combination shows the strength in the product category that we will come back to later as well. Moving over to Big Farm, which consists of three products, has deposits of SEK 79 million, which is a 17% year-on-year growth. With a UAC of SEK 37 million, which is a growth of 4% compared to last year. We can show a sequential growth of 14% compared to Q4, which represents a compounded annual growth rate of 70%. It's a good pace from Q4 into Q1.
The main reason why we can achieve that is also that we can see that as Big Farm: Mobile Harvest is maturing, the engagement increases, and the monetization increases as well. That is what we hope for and what we have worked hard for, and we also therefore are pleased that we can see that those results are in place. Moving over to core products, which in total now are 24 products. We have deposits of SEK 183 million, which represents a 172% growth year-on-year, which is obviously very pleasing to see. We have a UAC of SEK 53 million, which is a significant increase, which is natural since we have enjoyed good return on that marketing. As you can see, the total UAC that we have spent during the quarter, approximately half of that spending is within the core area.
Looking at the largest product for the quarter, Nida Harb, is up to SEK 66 million, which is a sequential growth from Q4 of 33%, which is very strong, and we're extremely happy with that being a product that has been out for one and a half years approximately. That is very pleasing to see that we've taken to a new level. Second largest is Shakes & Fidget with SEK 28 million, and Call of War is third largest with SEK 17 million. The key strength as mentioned or touched upon is the return on marketing during Q1. We are very pleased to conclude that we had a recouped marketing spend, and that is net money back recouped within 90 days. That I think is a very strong number. That is basically what explains that we can achieve a deposit growth of 17% from Q4 to Q1.
That is not possible without very successful marketing. We have the long pay product in others. I don't comment that any further. In total, we think our portfolio is in better shape than ever, basically. Turning to slide five, look into our user data. We can see that we have all-time high, both in daily active as well as monthly active. We can see that the strongest growth is within core product. A very strong growth, both from, of course, from the consolidation of Playa Games, the full quarter, but also from the fact that we had good traction in the launches of Strike of Nations and SIEGE: World War II.
We can also see that we have a decline in some of the products on a yearly basis, also you can see on the Empire that even though it's a much lower number on the year-on-year number of monthly active, it is a 7% sequential growth in monthly active. Also, as mentioned previously, the monetization is stronger in Empire, which makes it possible to grow even though the total user base is going down, which is a natural pattern as we have not spent that much user acquisition on those areas. It follows basically the expected pattern. Turning to slide six, looking at the monetization side or the paying user base and what kind of results we have there. You can see that looking at both monthly paying users and the average revenue per monthly paying users are also on all-time high.
All four key user data metric are on all-time high, which is of course pleasing. We have a very strong monthly paying user growth in core product coming both from, again, consolidation of Playa and the new launch product. We can also see that when it comes to the number of paying users, also the Big Farm has grown by 16% quarter-over-quarter, even though it's a lower number compared to when it was launched one year ago. Still it's a sequential growth, which we are happy with. Looking at the monthly paying user, you can note that it's flat compared to Q3 over Q4. That proves that it's a stable core of users playing Empire.
Also you can see on the revenue side that we are reaching a new record level when it comes to the spending in Empire, which explains that we have growth for the second sequential quarter on Empire. We're up to SEK 801 on average per month. We have a slightly lower average revenue per monthly paying users on Big Farm or Big Farm. That is due to that we have a slightly different pattern, and we have increased the number of paying users as well. You can see that on core, we are increasing significantly from Q4, and the reason why it goes down from Q3 to Q4 is, of course, that we added the two new products, Shakes & Fidget and Imperia Online, which have lower numbers. That is slide six.
Moving over to slide seven, which is an important slide because it captures, and I will elaborate a bit more about the numbers here, but it captures very much what we think in the company is the strong parts of this report. If you look on the right upper side, you can see that we have the growth mentioned previously of 33% in revenues. Also it's important to see that the 418 million SEK is then a growth of 14% from Q4, and that represents the compounded growth rate of 17%. We are very happy with that. Also it's important to note that the deposits in total were 431 million SEK in Q1 2019. Looking at the rolling 12 months, I think that captures the stability and the predictability that we have in our business, and that we work very hard to maintain and improve constantly.
You can see that the rolling 12-month top line is growing steadily, with a stable pace and even increasing pace, actually. It grows the rolling 12 months by approximately 8% from Q4 to Q1, and that represents a compounded rate of 35%. I think it goes definitely in the right direction. Looking at the EBIT development, you can see that the EBIT development is growing in the rolling 12 months graph on the lower right side among the graph. It's up to 402 million SEK, which is 10% higher than Q4. That's a compounded growth rate of nearly 60%. EBIT is growing faster than our top line and having a high top-line growth that is, of course, pleasing and shows the scalability in our business model. Also notable is that we, during the quarter, had 65% mobile share of revenues, up from 51%.
That is hurting a bit our margins, but still we deliver on a rolling 12 months, 28%, and sorry, for the quarter, 27%. Last comment on this slide is that we, again, on the rolling 12 months, EBIT, you can see how we are step by step improving our EBIT margin. From 22%, 20%, and then 21%, 27%, 28% on the rolling 12 months. As you might have recalled from previous calls, we have a long-term objective financial target of reaching 30%. I think that we have a very good trend on reaching those levels. All right, we move over to slide number eight, and I let Sten continue from there.
All right. Good morning, everyone, and welcome to the call. Turning to slide eight, I'm going to elaborate a little bit on the income statement. As you can see, we have revenues of 418 million SEK in the first quarter 2019, which is a 33% increase as compared to the first quarter 2018. It's a 14% increase as compared to the fourth quarter 2018. We're super happy with that, obviously. As Jörgen has mentioned, this is driven by strong growth in several products, especially in the Heart product family and also in the recently acquired studios of Imperia Online and Playrix. We have capitalized product development items of 38 million SEK, totaling our gross revenues to 458 million SEK. As Jörgen mentioned also, we have a 55% share of mobile revenues, which costs us a little bit more than browser-based products in the distribution cost.
Nevertheless, we managed to keep the gross margin at 75%, and the cost of sales, besides the distribution costs and platform fees, it's also royalties in the case of that. Otherwise, we own all the intellectual property and don't pay any royalties to any external developers. Another huge cost item is obviously the UAC of SEK 108 million compared with SEK 76 million in the fourth quarter. The share of UAC as compared to net revenues has increased from 21% in the fourth quarter to 26% in the first quarter. This corresponds to an EBIT margin of 8%. The EBIT margin in the first quarter was 27% and 35% in the fourth quarter. There's a difference in eight percentage units there, which is closely related to the increased cost in UAC. Moving on, we have the EBITDA of SEK 154 million, which is a 50% increase.
This has been marginally affected by the implementation of IFRS 16, which means that we increase the EBITDA a little bit. The effect of IFRS 16 is approximately SEK 4 million for the quarter, and the effect on EBIT is less than SEK 1 million, a couple of hundred thousand SEK on it. There is no big impact on the EBIT numbers. Moving on to slide nine, the balance sheet. Obviously, since we are in the strategy of acquiring studios, we have some goodwill, the goodwill now amounts to SEK 1.7 billion. We have that divided into three different goodwill items. Where Stillfront, as it was before the acquisition of Goodgame Studios, amounts to SEK 1.1 billion, Imperia and Dire Wolf, the other SEK 600 million.
Also, we have capitalized the product development expenses and the products and rights and other intellectual property that has been acquired in conjunction with the acquisition of the studios in our portfolio, amounting to SEK 545 million. We have on the debt side, we obviously have the bond with a nominal amount of SEK 600 million, which is recorded in the book to SEK 597, since we have some present value calculation of that. We have also the liabilities related to the earn-out components from our acquisition deals. As I'm sure you're familiar with, in the acquisitions we make, we normally have quite a substantial earn-out component, which is based on the financial performance at low EBIT multiples, which are repaid in a combination of cash and equity. Moving on to slide 10, cash flow statement.
We're quite satisfied with the cash flow, even though it's been negatively impacted from changes in working capital during the first quarter. Obviously, there's an increased need for working capital as we grow, especially in the mobile segment, since there's a slower conversion from sales to cash when we do our sales with the Apple App Store and the Google Play. Whereas in the browser world, our funds are more or less available within a few days. That does need some more working capital. There's also an effect that Apple does not comply to the normal calendar. Apple applies a pattern of five or four weeks per quarter, which does not always match the actual calendar quarters.
Specifically for the first quarter, for some of our studios, we only received two settlements from Apple, whereas it obviously should be three, and over the full year, we have obviously 12 settlements. For this specific quarter, that has been a negative impact on working capital cash. Jörgen, I'd like to turn over to you and have the future.
Thank you, Sten. We have a high ambition with our group, I think that we have started off well, our aim and target is much further away to build the leading group of independent game developers and publishers. We are making hard efforts to become a significantly larger company over the next coming years, both through organic development and through value-adding acquisitions, we have a strong pipeline for that. That is what we aim for, I think we, through this report and the previous ones, we have taken significant steps, I would like to highlight a couple of those steps that are important, that have been important, will be even more important to reach our vision. One is that we focus a lot on leveraging on our scale and on the organization model we have with a high degree of decentralization.
That is very important for several reasons. One being that we, through this way of organizing the group, become very agile. We can act swiftly on shifts in the market, adopt and adjust the marketing campaigns for every region, every of our 31 products or 29 online products in a very rapid manner. That is what's explaining how we can recoup marketing spend in the core example of less than 90 days, which is an extremely strong number in our view. We are also very agile in product development. What we do is that every single day we have adjustments in marketing and product plans throughout the group which proves my point there that we can adapt rapidly.
For instance, on the product side, if we see that with new feature updates to existing products, we really can improve monetization, we can replan from taking resources from new products and put them on feature development for existing ones or vice versa. It's a really agile way we have of operating group, which is one of the explanations why we can act so fast and be stable and follow the market changes in a good way. Further, we have built and put a lot of effort into this quarter, just like the previous quarters in M&A. We have a stronger pipeline than we've ever had before, both in terms of quality, quantity, and also the size of the companies are a bit in general larger. We're never in a hurry.
We keep our model of making M&A, which means that we follow a number of companies for quite some time. We scan very high amounts of companies. The ones that we follow and find interesting, we are in talks with and discussions to see that we really can add value if they would be a part of the group. I think that model for M&A is lowering risk with M&A, but also finding the right companies at the right moment. We're continuing those efforts as we go along. Further, the third part I would like to emphasize is synergies. One thing that, to be honest, has exceeded my own expectations is the number of projects and how fast we can find collaboration projects between the different studios. Currently, we run approximately 15 different collaboration projects between our studios and several on the marketing side.
The Goodgame Center of Excellence for marketing and distribution has really delivered, and you can see that as they are performing the marketing for Nida Harb, it's really an amazing job that they are doing together with the Babil Games team, of course. But also on the tech side, cross-platform, HTML5, and a lot of other areas. We are really drawing some hard synergies out of that. Of course, the top of all priorities at all time, I would say, is to further expand our portfolio in the right balance with the right profitability and the right high-quality product with loyal users and with long lifecycle products that enables us to continue to grow with high profitability and still combine it with stability and predictability. Thank you very much for that. I think we now move over to the Q&A session.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad, and if you wish to withdraw your question, you may do so by pressing 02 to cancel. There is going to be a brief pause while questions are being registered. Okay, our first question comes from the line of Predrag Stojadinovic from NVIDIA. Please go ahead. Your line is now open.
Hi. Thank you very much. Can we start by talking about the earn-outs you recorded, an earn-out of SEK a couple of million, which acquisition is that tied to, and does that mean that the acquired units have performed, the organic units, so to speak?
Yes. The earn-outs are related to the following studios, Babil Games, Imperia Online, and PLAYA Games. Yes, the earn-out amounts that we record on the books are based on our best estimate of the financial performance of the studios in the times to come. I don't know if that answers your question.
No, that's fine. Could you say what the level of organic growth is, maybe split it even further with FX as well, if possible?
We don't present separate organic and non-organic growth for the simple reason that we very easily come into reporting each product, that is what we try to avoid because that will be a very hard-to-grasp format, I think, with steadily increasing number of products. Having said that, what we can say is that we are in the 20s again in organic growth have been so for all the five quarters that we have now since the merger with Goodgame Studios. We're continuing with a much higher organic growth rate compared to our financial targets, which is 10%. I'm very pleased to see that we on the rolling 12-month down can have a 20%-plus organic growth, which is more than double than our targets. We are steadily going up in EBIT, which is the other financial target of 30%, but we are at 28%.
I think that we are quite close to reaching our long-term financial targets.
Super. What about foreign exchange? Do you have any number for us on that one, how much that contributes to growth?
No, we have not. One of the reasons is that it's a very complex thing because it's not as easy as looking at each of the subsidiary and their currency in relation to the sector currency or currency level. What really matters is how our end users, how they are distributed. We collect revenues from 250 countries every single month, and all those currencies that they represent is obviously moving in a quite interesting pattern. It's a quite massive piece of information to try to describe that in a good way. Having said that, we can also repeat what we have said previously, is that on EBIT level because we have costs also mainly in EUR, in SEK, but also in USD. On a high level, our message is that we don't have, on the EBIT, a large FX effect.
Of course, on top line, it could be effects that are moving according to that complex pattern I mentioned.
Okay. Thank you. On the User Acquisition Costs, the level comes down in relation to sales, also grows year-over-year below what you perform in terms of sales. Just wondering if the development here at all kind of looks like as it's going to be less costly for you, so to speak, to acquire users. Has anything happened with traffic prices in the market? If yes, why is that the case?
I think that it fluctuates naturally from one quarter to another quarter. We have been between just over. Like in Q4, it was 21%, now it's 26%, and we have been in those ranges, I think more or less every quarter. I think that's representative. The key question is, however, what kind of growth do we achieve with that spending? Because obviously if we recoup the spending in 90 days like we did in this quarter, less than 90 days, and we are always targeting to have net money back shorter than 180 days, and we are well within that target. Of course, higher spending is suffering margins for that single quarter, but it's building top line for years to come, and we get in users that are very loyal. You have to put the growth in relation to how much you spend, of course.
We think we are quite EBIT-oriented as communicated many times, and I think that it's a good balance to grow more than double that our target, and we are very close anyway to reach the financial target of 30% EBIT margin. That could only be the case if we are very good at spending marketing or combat marketing and return that spend in a very short time.
Super. On the margin, how much does Imperia Online and Shakes & Fidget contribute to the margin improvement? Is there any way to quantify that? Because it is quite a big increase year-over-year.
Again, we choose not to communicate individual products for the reason that then we have 31 columns in your Excel sheets, Pedrag, and I don't think you would like that. Anyway, that's why we don't go out with that specific number. In Q4, it was a part of the communication because it was there when we made the PPA, and it was the first quarter in. What you can see then is that they have, and also the history we presented as we made the acquisition, and they have been solidly performing on approximately 50% EBIT margin for quite some time. We think that there is no reason to expect that we will not be able to be on that level now and going forward.
Super. To what extent can one expect recurring sales? It is not like for a traditional PC gaming company where you buy a license and then you need to monetize it further, buy bigger updates. The question is really, what is the revenue retention and the degree of return revenue, for example, from Q4 into Q1? Are you able to see that and mention anything on that?
We are an extremely data-driven company. We have more than half a billion registered users through the years of these products. The amount of data we have, and also to use that data to understand how the pattern and how our user behaves, that is one of the key assets and the key capabilities of Stillfront in general. We do not present all that data. Again, it will be a massive piece of work for you to compile that. We have a very good view on how much is recurring revenue in the sense that how much comes from the existing users.
We do not present that per product or per the total either because it is a quite complex piece of communication because some users play for three, four months, and then they do not play for a couple of months, and they come back and play for six months again. What is then recurrent revenue? You have to be very diligent about the definition. I must say that what is one of the absolute key strengths of Stillfront and the portfolio we have is the loyal user base we have. It will always be the majority of our users also were paying users last quarter.
Right. Finally, if you can maybe just give some flavor on the performance of new launches, Strike of Nations, Call of War, are you happy with the performance there?
The new launch is not "Call of War." It's "Strike of Nations" and "SIEGE: World War II." We are pleased, we think they're performing well, according to our plans, and we have high expectations. As you can explicitly see, "Strike of Nations" did not reach over 17 million sectors. It's not one of the three largest during this quarter, one should also remember that it was launched during January, so it hasn't a full quarter yet in the books, so to speak. They are contributing significantly, as our product usually are long lifecycle products, we are expecting that "Strike of Nations" in particular, but also "SIEGE: World War II" will be part of our core portfolio for quite some time. We are very happy with those launches.
Super. Many thanks.
Thank you.
Thank you. Our next question comes from the line of Oskar Eriksson from Carnegie. Please go ahead. Your line is now open.
Thank you. Good morning, guys. A couple of questions from me. First of all, Big Farm question. See a quite nice trend and also higher user acquisition spending now two quarters in a row. Are you seeing an improved metrics in general for Big Farm? Does this have anything to do with the HTML5 transition? Thank you.
Hi, Oskar. Yes, it's well-spotted. We see effects from the fact that we are increasing the updates and the feature updates in our product, and that those updates are appreciated amongst the users. We are also pleased that we can increase the number of paying users during the quarter. As we have conducted, as you pointed out, the high user acquisition, we only do that when we see that we get the money back in, again, net 180 days. The average spending mechanically, so to speak, becomes lower for a single quarter. All in all, we are very happy with the development of Big Farm: Mobile Harvest, and we are optimistic that it will continue both in increased monetization and engagement level, which is, of course, what builds loyalty over time.
Great. Thank you. On a similar note, do you expect something in line with that for Empire which also has now transitioned into HTML5, or do you see that more as a mature game that should be on these very low, I'd say, user acquisition levels? An add-on question there, have you released more content already in Q1 now that you have more resources? Will that come now gradually during the year? Thank you.
We have, during Q1, increased the pace of the feature updates in Empire. We definitely see that it's a product that there is no reason why it couldn't continue to grow just as it has done now for two quarters in a row. We think it's a solid product with a very loyal user base. The question whether we should spend 10%, 12% or 15% or something else in marketing is completely data-driven, and there is no reason at all to say that it's not possible to market. Of course, we don't treat Empire in a different way compared to other products. It's just data-driven how much user acquisition we spend on each product. It's of course an important thing that we can conclude that the loyal user base really appreciates the new content that we have offered.
Otherwise, we will not be able to get up the average spending to over SEK 800 during the quarter.
Great. My next question is for Sten, I think. A question on other operating costs, if we exclude user acquisition costs. As you noted in presentation, it was very high compared to Q4, driven partly by higher mobile share of revenues. I'm a bit surprised by how high it was. There's a positive IFRS 16 effect, and also your growth margins seem to be on a similar level to Q4. If you could elaborate on that a little bit, please.
Well, as you recall, we had a reclassification of operating expenses in Q4, that might skew the picture a little bit. Otherwise, the operating expenses, they do include also the platform fees and royalties. That is pretty much the level of expenses we have. As you can see, the increase in UAC is considerable.
Yeah. Okay. Also, to your financial targets, thinking about marketing levels, user acquisition costs, you have a target of 30% EBIT margins. What do you see this year? Do you expect to go for 30% this year? I know it's a long-term target, given the high-margin acquisitions, and then the margin to stay now in Q4 and also partly in Q1, do you think that's reasonable to reach in 2019?
I think there's two parts of answering that question. I think that it clearly shows that now we have in four quarters in a row increased the rolling 12 months EBIT up to 28%, which is not far from 30%. Yes, it's reachable, definitely. Again, we have 28% rolling 12 months EBIT combined with a growth rate which is more than double than our financial target. If that would be the top priority number one to prove that we can combine 10% growth with 30% EBIT, which is our financial target, that could have been reached easily in Q1. That math is easy to do. The other part of answering that question is, do we prioritize that?
We don't prioritize that prior to a higher growth, which is obviously what we have done also all these quarters, the last five quarters since the merger, where we have this higher growth. We do prioritize that with a bit lower EBIT margin, I expect that we will continue that path during 2019. It comes down to how much marketing can we conduct with the EBIT-oriented return on marketing spend requirements that we have. That is, again, that we should reach over all products, all regions, all time periods, not every single, but all of them as a whole, we should reach net money back in 180 days, and we are far stronger than that in Q1. That is the other part of answering that question.
If the board would say to me, the team here, and Sten and everyone to fulfill the combination of 10% growth and 30% EBIT, we would have done that in Q1, and I think also last year as well. That is second priority compared to reaching a higher growth at this point.
Got it. Very clear. Thank you. May have a few more questions, but I'll leave it for now.
Thank you. Our next question comes from the line of Lars-Ola Hellström from Pareto Securities. Please go ahead. Your line is now open.
Hi, guys. Really strong growth. I will also focus on the user acquisition. Fantastic results. If we start with Stillfront Core, do you see that you have the same opportunities in Q2 as you had in Q1, or will we go in more to a refinement phase for the two new products that you launched in the beginning of the year?
We don't give forecasts, you know that. We are data-driven, so I can just be completely transparent. We don't guess. We look at the numbers and see how much we can adjust them up or down our marketing as we go along. As I mentioned and elaborated on previously, that is one of our core strengths in the group and the way that we operate with the decentralization, that we are very good at capturing the data and immediately act upon that. It depends on the data, I would say, very much. There are some structural components usually, or sometimes I should say. The weather is very good. We remember that from last year already from June throughout in Europe, which had some effect on us.
Seasonality could change that pattern, but it mustn't, and it hasn't, if we look back most of the Q2s, but that is one factor to look into. If your question is, are we expecting a refinement phase for the new products already after a few months? That is usually not the case. Usually, the refinement phase is later than after the four months. It's usually after six months or nine months or something like that. I don't expect that we will see a refinement phase as such, but then, of course, marketing has to be profitable. I don't expect that.
Have the ROIs on User Acquisition Costs been as high in April as it was in Q1 within Stillfront Core?
That we cannot answer. We are reporting Q1 here, not Q2.
On Goodgame, Oskar touched up on it. Would it be fair to assume that on User Acquisition Cost, that similar trends will remain. It's mature games now. If you're not releasing new products, similar User Acquisition Costs will remain.
In which area, then?
In Goodgame.
Goodgame are two different product areas, and they also have some other products. We don't view it per studio. We view how we should allocate marketing spend over the 29 online products and new product as well, of course. I cannot really answer whether we should see the same pattern at Goodgame Studios. Goodgame Studios are actually conducting most of the marketing in the group since they are performing the marketing for Nida Harb and Strike of Nations. If you mean by that Goodgame, I don't know.
If you mean the product area of Empire and Big Farm, again, it's data-driven, and like I touched upon previously, for the existing Empire products, of course, it's less likely that they will have the same spending as we have seen in core products, because core products are basically higher and have been higher for quite some time in return on marketing spend, and then we allocate the capital there, and the knowledge and experience from the Goodgame marketing team. I also would like to emphasize that we have good growth, both in Empire with low spending, but also with higher spending in Big Farm: Mobile Harvest. We are actually growing all core areas. It's more elaborating on that answer rather than giving a short one.
Yeah. You're saying always that data is the one that decides. Given that you had so extremely high ROI in the Stillfront Core, have you been holding back on the UAC for the Big and Empire brands on a relatively basis, even though they might have achieved the 180 days payback since it was even better within Stillfront Core? You sort of say you allocated the money to Stillfront Core instead.
Yeah, you can say that. It's much more complex than that since we're running hundreds of campaigns in parallel. In general, that is correct. Obviously we can spend between SEK 15 million and SEK 20 million on Goodgame Empire, for instance, with 3%, 4%, 5% return on marketing measured over 180 days. If we have a couple of 100% ROI in core, it's of course there we should allocate the vast amounts of marketing, but also very good return on Big Farm: Mobile Harvest.
That's the way we reason about that.
For the full year on user acquisition cost, do you think it would be fair to assume it would be in the range of 21%-26%, slightly below 25% for the full year?
Again,
Very data dependent, yeah.
It is data dependent. Good. You're learning fast, Lars-Ola, we appreciate that. Yeah, so it's impossible to answer that question. But in general, I think that the years that we have been delivering and presenting results, you can see that the levels are moving between 20% and up to 27%, I think, was our peak or something like that. But the good news for every shareholder and in Stillfront is that we stand with recouping the money within 180 days, but it does shift over time.
Yes.
I think that pattern, there is no reason to think that we should completely deviate from that pattern, that I should add.
Hmm. Perfect. On game releases, you have released two new games. How many games can we expect to be launched in 2019?
This year we don't communicate a number that we should expect, the reason is we did that, I think you recall, a couple of years ago, two years ago, the reason is that we don't want to do that because one thing that becomes more and more clear, that is one of our strengths, again, is that we should really adopt where we put our development resources between existing ones and new ones. I think that we have improved our capability of being really fast in replanning our products in our product pipeline in a way that we were not able to do, well, one and a half, two years ago. That means that we, as mentioned earlier, we do plan and move resources between feature updates on existing products versus releasing new products.
It goes both ways. It's again our focus to put more clearly, we measure return on investment on new feature sets or new larger updates. We can see whether it pays off or not. If we get good traction, we increase investment product-wise, and then of course.
That could take resources from new products. I think it's a strength that we should allow us to leverage from, and if we will communicate that we shall, whatever happens, release 10 new products or whatever number, that flexibility would suffer from that.
Hmm. One product that has been saying coming soon ever since you bought Flyai Games is Clash of Empires. Will that product be released in 2019, or is it also dependent?
Ever since. You mean Flyai that we acquired in November?
Yeah.
You leap fast if that's a long time ago. Anyway, we expect that that product will reach the market quite soon. Again, if it's better that we update Shakes & Fidget with new features that return money for the shareholders quicker than we expect to do on finalizing Clash of Empires, we do that.
Having said that once more, we expect that that product will be out this year.
Okay, a question for Sten here before I back down. On the earn-out, SEK 129 million expected to be paid in 2019. Historically, there has been a 50/50 split between shares and cash. You write in the report that about 70% will be in cash, and the remaining part in shares. Has there been any renegotiation of the earn-outs, how to be settled, and what earn-outs does the SEK 129 million relate to?
The SEK 129 million relates to Babil Games, Imperia, and the Flyai Games.
Okay.
eRepublik, sorry. Too many studios, too many acquisitions. Yes, you're right. Normally we have a 50/50 split equity versus shares. In this case, particularly in 2019, there is one exception.
Okay, perfect.
Thank you, ladies and gentlemen. Just to remind you that if you wish to ask a question, please press 01 on your telephone keypad now. There'll be a further pause while questions are being registered. It looks like there are no more questions registered at this time, I'll hand the call back to you speakers for your closing comments.
Thank you very much for all you calling in and asking relevant questions. We are very pleased with this quarter. We are looking forward to an exciting 2019 for Stillfront Group. Hope to present to you again in one quarter's time. Thank you all.
This now concludes our conference call. Thank you all for attending. You may now disconnect.