Stillfront Group AB (publ) (STO:SF)

CMD 2020

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Sep 22, 2020

Hi, everyone. Welcome to Stilfron's Capital Markets Update 2020. My name is Sofia Brietmann. I work with Communications and Investor Relations with Stilfron. A lot has happened with SteelFront and the industry at large since we met for the Capital Markets Day in November last year. Since then, we have made 3 larger acquisitions. And we're very happy today to be able to present 2 of those in person. We have Nadir Khan, our Co Founder and COO of CandiWriter with us. And we will also have Perri Tam, co founder and CEO of Storm 8 later on. But first, we will listen to Larsen and Alexis Bond, who will provide us with an update on the group strategy. If you would like to ask questions during this seminar, please don't hesitate to send them via the webcast and do it quite early during the presentation so that we will be able to include them in the Q and A sessions that we will have directly after the presentations. Thank you, Sofia. So good afternoon. I would like to talk about our ambitions and our strategies, how we should achieve, what we aim to achieve and a few other things. We have a high ambition building still front, but we think it's time for us to gear up our ambition even further. And that is what we should talk about today, how we gear up our ambition and what we should do and how we should do it in order to achieve the results that we aim to achieve. We are building a free to play powerhouse by assembling and leveraging the best game industry talent there is out there. And we would like to find the best people that we don't already have to take further steps in our ambition to gear up our business. Before going into our strategies and what we have done and what we should do going forward, I would like to put where we stand today into some perspective. What you see now is our timeline. We actually now have become 10 years. So we are a very young company. We have the best in front of us and we have the most to do ahead of us. And you can see also in the slide what we've done so far. Basically, we have built Steelfront in 3 different phases. 1st, we had the entrepreneurial phase where we put a lot of time and energy into understanding the depth of this business and this industry, what you should focus on, what are the value drivers, what you should not do. So we made many errors, but we also figured out 1 or 2 keys to what we then have used to achieve the results so far. Very important period in the history of this young company's life so far. So that was up until we went public in 2015. Then we entered into the structure phase, very important phase because that was when we took all the learnings that we had added and implemented processes and components and refined what we have figured out in the entrepreneur phase so that we built a platform. This platform should carry us to reach our new objectives, carry us to be this leading free to play powerhouse for the next many years, 10, 20, 30 years to come. We use this platform as we just recently at the Capital Markets Day or in the beginning of this year entered into the scale phase. Now the time has come for us to really scale our business. We should have leverage from the platform that we have built and we should try to explain for you how we think about what is in the platform, what we are trying to refine further because we will always try to refine our business and make it even sharper and be more competitive for every day, for every month, for every year that passes by. But now it's time to scale our business. We think that any successful gaming company in the future need to have a certain set of capabilities, need to master a number of things and have a number of things in its possession and be able to use that to leverage what they already have to be competitive for the next decade to come. We have, for instance, we believe that some of them are games as a service, which is very close to what free to play is all about, that repeatedly be able to serve your community of customers of customers and the people that actually enjoy your entertainment and the ones that have not yet discovered your entertainment. But you must be able to constantly work with them so that they are really enjoying what you're offering them on a constant basis. It will not be enough to offer something once and then maybe come back to visit your customer once or twice per year. That is one area. We think that in order to be successful in that and a number of other critical areas, you need to be data driven. If you're not data driven, you will not be able to take the decisions with the quality that is needed to be competitive the next decade. You will not understand the depth and the nuances in your consumers preferences if you're not data driven. To be data driven, you need lots of data in your possession. We have collected data for 10 years and in total 2,000,000,000 lifetime installs come into our game. We have a significant amount of data. Further, we think that you need to be diversified when you build a business. If you're not diversified, your risk increases and you will be forced to take decisions which might not be optimal for the development of your business. You need to be decentralized. Otherwise, you will become monolithic. If you're monolithic, you become slow. And you're slow, well, in this very fast industry, we don't believe that you will be competitive. We also think that you need to master multichannel performance marketing, a very complex blend of different channels, different way of reaching out to your audience and in a very rapid pace and with high precision. We also think that you need to master live ops. So you can hear it's a number of things. You need to be value driven. Further, I cannot imagine any successful gaming company that do not master small master small screen, aka mobile as a component, a part in the blend of how you reach out to consumers, maybe not today, maybe not tomorrow, but definitely in 3 to 5 years for sure. It's these insights and what we have done and what we have refined for 9 years that have winded up in 3 pillars, the 3 pillars on which our platform and our company stands. And it's our business model, It is our organization and operational model and it's our value creation model. We will go a bit deeper into these during this afternoon. And I will start a bit with our the business model. I will not go through the different components deeper than I already done and what we also elaborated on in that Capital Markets Day on the 27th November. But I would like to emphasize 2 things, which is key, which are key to understand our company, but also how we think on taking steps forward. What we will, amongst several things, but 2 key things that we will focus on with the higher ambition that we have in our company. 1 is what I call the optimized universe. 1 of the key things that we have been refining over and over and over again is how we should allocate our resources. We believe the ones that of So that is why we talk so much about the width of our portfolio. So for instance, think the following. If we have 40 products which we have now, we work with approximately 40 markets very actively. And we work with approximately 40 channels very actively. And on these channels, we run, say, 4 campaigns in parallel. So this make a total universe that we're optimizing our resource allocation to 40x40x40x4, which is 256 1,000 combinations. We take the top 1% and optimize how we should market over this universe. So the top 100 or 200. When we reach 50 games, 50 market, 50 channels that we know about and run 4 campaigns in them, we will have half a 1000000 of combinations to optimize our resource allocation over. This is difficult to achieve, but it's absolutely a key competitive advantage if you should be successful in the market. And this is how we work with capital and resource allocation, both for marketing, but also for LiveOps. We think also in the future, not so much today, but at a point in the future within the next coming 3 to 5 years, 33,000,000 mouse, but we also have the 38,000,000 or 33,000,000 mouse, but we also have the 38 or 40 games. That in itself will contribute to a stepwise and larger competitive advantage because then you could market and act within your own system. That is not a vital part and a vital volume today, but it will be in the future. That is one of the key reasons why we focus so much building a wide and a well diversified portfolio. So that is one area that I think is very important to understand our company, how we work today, how we have been working, but also how we work the next coming years that we see ahead of us. Another key area, which we will go deeper into as Alexis presents how we work operationally with our organization is how we create synergies. Because if we, as we grow the number of studio, would not bring any more value to just adding the different studio on each other and the games on each other without drawing any synergies, we will not be very, very strong on value creation because that is not adding so much value. It's just putting what is already there without getting the synergies. So synergy is a key. We now have more than 50 collaboration projects. We now have 6 center of excellences, which we didn't have half a year ago, on a year ago, that are creating cost and revenue allocation that explains that we have been able to achieve something that we set up as a target several years ago called the 2020 vision, which is than We have achieved that now. We will continue to refine and do better going forward. But now we have achieved that very important milestone. As a matter of fact, we have actually grown by more than 20% since 2018, organically that is, of course. I also would like to reconnect to one other statement that we made in the Capital Markets Day on the 27th November last year. And that was we saw, as we then spoke about that we would like to build a 3 times larger company the next coming up to 5 years, we saw that during that path, as we are taking all the steps that is needed to take to get there, if we're not broadening our addressable market, we will lack in diversity. So we told you that, listen, at that point in time, less than 1 year ago, that we would like to go into mashups. We think mashups is a very exciting area. And we also would like to add other genres, which we will come back to. And I think both Peri as well as Nadir could talk walk you through different details of that. But we have done that. So actually, mashup is now in Q2. It represented 38% of our total revenue. So I think that we have in a much shorter time than I'd expected, to be honest, we have been able to represent a good we are mirroring basically the industry composition in a quite balanced way with the exception of Social Casino, which is a smaller part. Otherwise, we have a very good balance. And that again is important for diversification, stability in our business and revenue streams and predictability not the least. We also spoke about and been working on increasing our ad revenues because they add another dimension of diversification, which is very important for us. I couldn't say I'm completely happy with what we have achieved so far, but at least we have taken some steps since November last year. We're now up to in Q2 to 5% and not the least through Kevin and Nadir at CandyRite and also Perry and his colleagues at Storm8, we have increased our capability, but we have several initiatives going there. Further, another very important area for us was that broaden basically our addressable market. We had approximately some 80%, 85% being male audience. And obviously, since then, less than 40%, now 42% or something are represented by a female audience, it would not be a very clever thing. We thought not to have something to offer to that growing audience. So we have now a good balance between male audience and female audience. And it's very good also from the perspective that it's an imbalance in the market between supply and demand when it comes to games for the female audience. And that is also from the perspective you should view our latest acquisition that we announced last week and that will be closed at the end of this month, Nanobit that has focused on exactly filling that gap, take that business opportunity for the last 9 years. I would like to also spend some time on describing maybe the last component, not the last, but the latest component that we have added into our platform. As I said, we will constantly try to identify how can we be more competitive tomorrow than we are today and even more the day after tomorrow. So we will identify, refine, but also add components that are strategically important to the growth of Steel Front and this higher ambition that I mentioned. I should do that by start with the big picture. What we do, what our platform what the purpose of our platform is, is in the big picture the following. We have great game designers. The creativity in our studios is really impressive. 800 people building games, 900 people very soon building games every day that are better and better and better, more refined, higher production value and so on. That is on one side. On the other side, we have the great community of gamers out there that would like to be enjoyed, that would like to be entertained, that would like socialize in our game and do lots of other things. We should meet their needs in the best possible way. So the Steelfront platform you can say is how we take our collective capabilities, our collective knowledge to make that connection as good, as efficient, as profitable and as good as possible at every possible aspect. With that role, being the publisher and the ones that connects the gaming community with our developer community, that comes with a significant responsibility. We have a significant responsibility and to make that gaming experience when the creativity from our studios comes out to the individual gamer to be a very positive gaming experience. And that is something that you might think is very simple, but you come in to several quite difficult things that you need to consider and balance. That is why we now have added what is called the still front fare model. This is a key tool for us as we start to be that now and we should refine and further invest into our fare model. But that ensure that our gamers out there, the millions of people playing our games have a very positive in every possible dimension gaming experience consuming our games. In a balanced way to the creativity that I mentioned are in our gaming studios. This model consists of 4 different areas. But we also think that in order to get it to really work in practice, we need to be very clear about responsibility and accountability. We are driven by the entrepreneur of value. One of the key things there is accountability. So we need to be accountable on individual levels. I need to be that, we as a management team, but also we need someone in group management that really follows up to see to that this is really achieving the results that we think it should be as it is a key thing for us going forward. So our Chief Product Officer, Philipp Nuss, will take on a group responsibility to see that our studios work with us centrally and jointly that we see to that we follow this model to achieve a better gaming experience for the many gamers that we have. What is Danfaire? Well, F stands for our forums and communities. We need chat filters. We have many chat filters in place. We need to see to that we don't have abusive behavior or any other behavior that does not fit our values in our communities affecting the total game experience. The communities becomes even more important as we go along in our offering our games to our consumers. So that is one area. Another area is age protection. It might sound obvious, but we have our entertainment targeting young adults and adults. What is an adult? Well, in some what we think is the right. It depends on region, religion and lots of other things. That is the second area. The third area is inclusion and diversity. These are key values that we bring through everything we do. And of course, we need to focus on that our content and the way that we market our content follows our values in the code of conduct that we have in the group. Last but not least, this should be responsible gaming. We have the responsibility. We should see to that this all comes together as a significant component in our platform. So we provide a good experience and entertainment for our consumers. A few words about organization. Alexis will go further into this, but we have as we also spoke about on the Capital Markets Day, we have increased and scaled up our central organization, not the least within how we support and manage and govern our businesses. So Armin Bussen had joined us and me and Alexis in parallel work primarily with that. We've also geared up our M and A teams, whereas M and A is absolutely key for our further growth. Also we have, as I mentioned, touched upon that our center of excellence is really creating significant value that Alexis will go further into. So these are two things that we have delivered on since we met in November last year. Here you can see our value creation model. We focus a lot on risk weight, creating risk weighted value. You can see here on the slide some new information on our LTM curves, both acquired and organic growth. And you can see how we have been able to transform acquired growth into organic growth. That is a key element to achieve our new growth targets. It's a key and vital thing also that we excel and that we are very disciplined and can accelerate our M and A going forward. And there is a lot of great opportunities out there that we would like to grasp, but also they need to come in and to be go into a good organic growth going forward. On this slide, you see our financial performance up until Q2. As you can see here, we have actually reached what we thought we should have 3 years to reach, we actually reached in 6 months. That is, my friends, why we now have today decided to upgrade and increase our ambition when it comes to growth. So our new ambition is that we should have revenues exceeding or at least amounting to SEK10 1,000,000,000 by 2023. We should pair that with an unchanged high margin of at around 35%. And we like to work with conservative financial leverage, but still work with that because we think it's value accretive. And we don't change that target. It should still be less than 1.5x. So to summarize, think that we have many components in place. We have really refined our platform. We add new components that we industry. We have a diverse portfolio, but it should be even more diverse. And we should leverage our platform that Alexis will talk more about in a minute. So I've spoke about our philosophy, our strategies, our platform, everything that we've done and prepared ourselves to go into scale up. But nothing of this would ever happen if it wouldn't be for the very hard work that all our nearly 1,000 people put in every day at work. And that is why we often say wake up, kick ass and repeat. Thank you. Thank you, Jorgen. We have a couple of questions from the audience. Unfortunately, won't be able to answer them all. But I've tried to compile some of them. What's your view on the organic growth up to 2023? Do you expect any product areas to grow faster than the others? I think that we have a very well balanced portfolio now. We have built and take the 3 verticals that we aim to take. And I think that we have growth opportunities over the whole array of these verticals. We're also adding genres within these verticals that I think is very attractive, not the least the narrative RPG games that Nanobits now brings in has a proven growth opportunity. But we're not trying to say it a priori. We are optimizing on this universe of opportunities, 256,000 growth opportunities that we have to always pick the one that delivers the best results. So we'll see in 2023 which one that grew the fastest. That's a good answer. As you become larger, you're making larger acquisitions. Do you see a risk that the multiples start to increase and that you, to a larger extent, need to rely on organic growth? I think that there are some different forces that comes into play here. One is that, I mean, you can see the last transaction we did is more or less on the same multiples that we've had, the last 4, 5, 6 deals or something. But also I think that at some point in time, it might increase slightly. But also the whole sector has been valued higher. So we are traded at a higher multiple. So I think that very much suggests that we will still have an arbitrage. That will never be the reason why we do a deal. But of course, it's value accretive. But the reason we do a deal is that we believe that it will contribute for growing Stifelant over time. And the key thing is to be able to transform acquired growth into organic over time through synergies and so on. Which is the largest threat to reach the new growth target? Will you be able to keep the high margins as you have now? We wouldn't put that into the targets if we didn't believe in it. We believe in targets that we can achieve and we'll work as hard as we ever can to do that. So obviously, we believe that it's possible to combine. What is the biggest threat? Well, now the markets are strong, but if the markets will not be that strong and we need of course, we think that we will need financing, debt financing not the least. If the markets are not strong, so get the right financing at the right cost at the right point in time is of course key for us. But then I think there are things that's very hard to control. You can mitigate it. But if I mean, if the 3rd World War is a cyber war, maybe that could be a bit challenging. But we're doing what we can to protect ourselves. Okay. What types of individual assets or products would you be interested in going forward? Are you interested in underperforming with an upside or already with the products with already a strong momentum? And could there be no personnel at all included in the acquisitions? And what is the rationale behind that? So we very much believe in that good companies and good talent are even better when you start to interact and work with them. So that is why we have we are so proud with Nadir and Peri being also here, perfect examples of good companies that have been successful for years. And now we think mutually that we can elevate and achieve greater results together. So we focus on things that already works. And we identify how we think it could be even better. But we don't go into distressed situations. Can we acquire only assets? Yes, we think we should do that. And look, we are looking into that. Of course, then that comes with some different attributes than acquiring a full studio. But I think that's another opportunity that we so far haven't really taken on. Thank you. Thank you, Jorgen. Thanks for the questions. We're happy also to come back to you with answers on other questions. Our next speaker is Alexis Bond. Alexis is the founder of 1 of our studios, iRepublic Labs, that joined the group 2.5 years ago. Last year, he stepped up as our group COO. Please go ahead, Alexis. Thank you very much, Sofia. Thank you, Jorgen, for your presentation. I'm going to focus, as Jorgen was saying, more on how our operations at SteelFront are functioning. Of course, we still have our key values of entrepreneurship, of course we still have our key values of entrepreneurship, scale and structure. And I will basically take you through how we're basically really using this and driving this within the still front model and how that is going to help us execute on the vision of getting to SEK10 1,000,000,000 by 2023 in terms of revenues. So first of all, I think if we look at the market, it's important to look that this is Steelfront is an hypergrowth company in what is already a strong growth industry. If you look at the mobile games market, it was basically just 5 years ago, it was a $30,000,000,000 industry. It had 1,500,000,000 players. Now in 2020, we're looking at 2,500,000,000 players and $77,000,000,000 industry is actually about half of the total games industry. The games industry is growing by about 9.3% in 2020, whereas the mobile market or the mobile industry is growing at 13.3%. So faster growth there. During the same 5 year period, SteelFront has grown its market cap by more than 190 times. But more importantly for us, I work here every day at Steel Front, is that in the past 12 month period, Steel Front has grown both revenues and EBITDA by more than 100%. And that's from strong organic growth and also successful acquisitions. So what are we seeing here? So if you look at the strong growth and how much the industry has changed in the past 5 years, it is difficult for anyone to predict exactly what the industry will look like in the future. But we do see a number of key trends on which we're going to be able to serve to basically achieve the revised targets that are really driving the industry in the short to medium term. So the first thing that we're looking at that we're seeing is really a continued convergence. We're seeing the large AAA players that were mostly focusing on premium games, that start working on games as a service and they're trying and they're trying to and they're trying and starting to move to free to play. And we're seeing also the large free to play players that are increasing production values, increasing investments and needing more and more scale to succeed in the market. But what is clear as Jorgen was saying, is that the data driven free to play model is taking market share and is an important hedge here. Another thing, another trend that we're seeing and that has greatly increased during the lockdown period due to the COVID issues is the social in game experience. If you look at the games, the whole industry has grown during this period. But if you look at the games that have grown the most, that have had higher levels of engagement, it's the games that have a social component in them. And as you know, the long term free to play games have very strong social components in them. So obviously mobile gaming, we believe that that's going to continue to be leading the growth in the industry. It's going to continue to grow faster than PC and console. This is why it is still our main focus. And if you think about it, it is totally logical. Console game and PC games are great industries but they're what I would call rendezvous gaming. It's almost you make it you take a meeting with yourself to find 2 or 3 hours on a Saturday or an evening to play a game, whereas, you know, a mobile game, that device, that mobile phone will always be in your pocket. So for obvious reasons, it's always easier to access. We're also seeing increased decentralization And that's not just about, you know, people not working from home due to the COVID epidemic. It's actually more than that. If you think about, long time ago, I used to be in the tech background and that was part of a company that that was Internet startup. And we would say you cannot build $1,000,000,000 business if you're not in the Silicon Valley in tech. Well, now that's not true anymore in tech, and that's definitely not true in the games business. You can really start multi $1,000,000,000 businesses, not basically in many locations. And whoever is the organization to be able to leverage these multiple talents in these multiple locations in a decentralized way will benefit the most. Another thing obviously and you've seen this just very recently just with the Microsoft deal and some of our also acquisition of Nanobit last week, there's a continued consolidation in the market. And very clearly, there will be less and larger players that will take a bigger piece of the pie, not only just in the general games market but also in the mobile games market, which takes me to the last point, which is growing modes. So you will be familiar with the fact that in the AAA industry, premium industry, yes, there are big barriers to entry, big moats in that industry because you will say, well, you know, it's you have the big franchises, you know, the very large kind of games, the huge marketing budgets to launch a game, the years of development, the large teams. And you might think that for mobile games that's not true. Yes, it is true that 5, 6, 7, 10 people team can build a game in mobile games. You can still do that. But the challenge is how do you scale that game? What you need to scale games right now in the mobile industry is very different to what you needed just a few years ago. You basically need to have access to successful engines and frameworks. You need an intimate knowledge of a particular game vertical. You need to understand what that audience needs not just with your hunch or what you think they need but with data. You need the live operations experience. You need to be able to operate the game over multiple and multiple years. You basically have to have scaling know how. And then you need to be able to do performance marketing not across 1 or 2 or 3 channels but across 20, 30 or 40 channels as Jurgen was mentioning before. So this makes it extremely hard for small and medium sized studios right now to grow and scale. Actually, if you look at the data from App Annie or other providers, you will see that on the Google Play Store on the Apple iOS store, the number of new games that are launched every year is declining constantly for the past 3 years. So that's a clear sign of the increasing and growing moats in the industry. Now we think that Softfront is at the forefront of this converging games industry. We think that we're very well positioned to stay at the forefront and to accelerate our advantage for simple reasons. I mean the first thing is we come from free to play. That's our background. That's really our DNA. We understand free to play. And basically by leveraging and continuing to leveraging free to play expertise, we really think that we can build a strong position. Then we have a unique organization that is particularly attractive to the best game talent. The best way to explain this is this inverted pyramid that we use to basically describe how our operations work. And basically this is all based on one thing is you need to take the decisions at least all of the product decisions as close as possible to where to your players basically to your gamers population. So that's why really in our structure, the people who really take the decisions day to day about what a product should be and where it should go are the game teams. And then the studio heads are there to support the game teams and then the HQ is there to support the studio heads. So one thing I often say when I meet other people is and myself are probably the least powerful CEO and COO combination in the games industry because most of the decisions, almost all the decisions, at least all of the product decisions are taken as close as possible to the players and therefore they're taken by the game teams. Of course, another thing that we're doing that really kind of helps our model is this is very attractive for entrepreneurial talent. And also as we expand through M and A, our portfolio and expertise, this really scales in a positive way. Another thing that this helps to do is by having a lot of the decision making as close to the product as possible is it allows us to basically stay fast, stay nimble, and also leverage what we're calling centers of excellence. And that's our things that are helping us stay ahead of the fast growing mobile market. So at the last Capital Markets Day, we explained a little bit this unique model. And now I'd like to explain how the fact that we are unique in doing this, we are able to successfully scale our business while keeping our entrepreneurial DNA. And if you look at our we really are a group of studios that are built for decentralization. What we're building a platform for the best game talent. And to build a free to play powerhouse, it is very important to have an organizational structure and DNA that establishes the correct foundations for a platform to really kind of scale. So this is why we're making sure that we keep our highly efficient model that is built for decentralization. This approach secures key things. It secures speed, it secures market proximity as we're explaining before and it gives us agility. And if you look at group resources, they're really centered around providing support and governance to the studios and freeing time at the studio level so they can focus on what they really love which is creating great games and running those great games for the long term. So yes, of course, there is structure in our organization, but only where needed and when needed or wanted. As a former studio founder and CEO, I know exactly what kind of support is needed when you don't really need support. What is something that is truly helpful and what is something that is maybe not that helpful. So that's why if you look at our basically our structure, there is no forced integration that allows us to have a scalable organization. We really focus on the entrepreneurial DNA that basically then gives us a real sense of ownership at all levels that basically Jorgen was talking about. And also that allows us to have to work with autonomy and trust, which is very empowering for the game teams. And that allows us to have basically free to play power hours where the base game talent can truly thrive. And it is very attractive for our future acquisitions. Whenever I talk to other founders from companies that we'd like to see and join the family and I explain to them how our model, our organization works, they are very, very attracted to the concept. But let's look a little bit at how are we making sure that our model accelerates in a positive way. Because the beauty about this model is it just naturally creates synergies. In particular, are basically really having a scaling network of expertise that we can leverage and by basically through several collaborations. So if you kind of look at our synergy and collaborations flow, it all starts with, at the base, shared data and tools, which is extremely helpful. And then the next level will be basically what we call still base, which is a tool that we've developed in house where there's multiple ways of sharing knowledge within stillbase and also other things. But one simple example of what where still base can be quite powerful is if you think about the fact that we're now soon to be over 900 game talent people. If you are in one single studio and you're one of 2 game designers in the studio and you have a very specific live operations problem that you're trying to think about your own game and all that and you want to get further knowledge, you want want to get further input, you can simply search in our skill based search in skill based who are the people who have skills in type of feature that you're trying to build, find the experts and talk to them. Or you could simply go to one of our Slack channels about live operations and just, you know, blast the message that you need help and you will see tons and tons of help all the time. And that basically continues in the flow with our centers of excellence of which we have 6. 5 are studio based and one is group based and I will go over 2 of those centers of excellence in more detail. One center of excellence that particularly find very interesting as well is the fact that we now have a center of excellence that's able to take games and operate the live operations for those games to allow the other studio to focus on new games when they don't have the resources to do the live operations there. But there's multiple other live other sensitive accents. We also have what we call certified experts or expert nodes, which also drive potential strong benefits to our infrastructure and then also shared services mostly from group to the studios but not only. But the really the secret sauce here is really happening in the hundreds of collaborations that happen every day between our studios, leveraging some of these tools or sometimes simply leveraging the communication tools that we have at our disposal of our talent. So if we move on to specific centers of excellence, A good example of a center of excellence that is driving both cost savings, speed to market, leveraging expertise and significant positive revenue impact. That's the one from the Bytro and Dorado grand strategy game engine framework. So this center of excellence started back in 2016 already with a browser version of Conflict of Nations, but it has now scaled further with a successful release this month of the mobile version of Conflict of Nations whose progress you can monitor on App Annie or other such services. But let's say that we're very happy with how that title is performing during launch. And we are working on other engine sharing opportunities across the group inspired by this framework. It's something that we can show to daughter studios other Another center of excellence that you will be more familiar with some of you is our performance marketing center of excellence at Goodgame Studios. We've used it successfully for Babble initially for Babel another Bible titles called Strike of Nations that is an international title that has been scaling also very nicely. And it's also being being used constantly to test new potential titles that Babbel is considering to publish. Also the Center of Excellence is used by Kixai and all of our studios notably for War Commander, War Assault and to scale that game. And many other of our studios have been using occasionally that center of excellence. And then if we look at other collaborations that we have that maybe are smaller but have a large impact in terms of cost savings or potentially in terms of reach. That's our Goodgame Studios web shop. That is for our browser games, a business that is very profitable, a very profitable part of our product mix. And basically the web shop is used by GGS but also by BITRO and more recently by Playa. And it has helped our studio Playa reach and leverage new markets for their hit title shake and fidgets. So this is the Silfron organizational foundation to build the leading free to play powerhouse by assembling the world best game talents and entrepreneurs. Again, there's lots of other collaborations and shared services that happen spontaneously. For example, last week we actually had the Nanobit introduction call to the other studio. So basically the founders of Nanobit presented the Nanobit business to all the other studio heads across the storefront group. And what I loved about it is right away the people that you're going to hear after me among others, but you know, the Storemate founders and the Candywriter founders started talking about potential collaborations that they could do together with that new studio that just came on board. And what I loved about it is some of these collaborations are collaborations that neither Jurgen, Philippa Philippe, our CPO or Marina, Head of M and A or even myself had thought about when we're doing the due diligence with Nanobit. So that kind of shows you just the bench of talent that there is beyond the people that you're seeing today is really another part of the secret sauce that makes Steel Front what it is. And so as we scale positively with every new studio, I think it's always worth having a reminder of our criteria to add new studios to the family. We have a very clear set of 5 criteria when we consider an acquisition. So the first thing that we look at is we want to make sure that it's a stable and well managed gaming studio. We look at we want to make sure that there is proven experience in developing and scaling successful games. We look for profitable studios. As was saying, we don't look for turnaround situations. A third very important criteria is we look for studios that revenues and have a lower player base. It's the evergreen games component. A new phenomenon disappeared in the games market as I'm sure you know is the upper casuals games that have grown in importance. That's an interesting model. That's a good model but it's also a very risky model because you're in a constant treadmill, content treadmill where you have to launch a new game after new game after new game after new game to stay on top and continue growing. Whereas in our case, if you think about it, one of our games that is now 30 years old recently had its best month ever. Very different model, very different approach. We 4th thing that we look at is for a strong management team, that are motivated to stay and that bring new expertise to our platform. And I'm sure that when you listen to Perry and to Nadir present, you'll understand exactly what we mean about this. And then the final point which is extremely important is the cultural fit with Steel Front's core values of responsibility, competence, trust and humility as well as with our decentralized business model. Quite often we've seen companies that were potentially a good fit from a deal and finance point of view but we were not sure about the culture. We were not sure that these were teams that had experienced success and failure and that the humility to basically embrace a model where you learn from others. And if they don't have that, if they don't have that cultural fit, we simply walk away. And we've done that multiple times. So that's basically what I have for you. But now I think we have time for some questions before we have Nadir and Peri talking to us. Yes. Thank you, Alexis. Yes, some questions from the audience. First one, on group synergies. We understand that you have a large amount of projects running right now, which are the areas that will contribute most to the group's growth and profitability in the coming years? So So basically, I think the areas that in terms of synergies that will contribute the most, some I've mentioned already. I think there's a lot of potential, further potential in terms of engine sharing across the different studios. That gives us so many advantages in terms of speed, understanding, using proving models. And then very often, if you have a different team from a different studio that gives its own little touch, we say sometimes it's the most successful games, if you look at them, it's like 80% is almost a reuse of existing formula and then 20% is kind of something new, something inspirational. And I think there's a lot of potential in terms of this engine sharing that we're doing right now. I see that'd be the first one. The second thing, of course, we think there's a lot of further potential with basically using our performance UA Center of Excellence with Goodgame Studios. I think there's a lot of other studios that can benefit from it. We never force it either way. But I think there's a lot of potential there. Good game studios is accumulating so much knowledge, so much data, so many relationships with different channels that I see a lot of potential there. And then, you know, I also see a lot of potential with the localization, not just with Dabble, you know, bringing some of our titles or external titles to the MENA region, but also, you know, some of our studios that have a lot of experience in terms of localizing their titles in multiple regions. We have newcomers, other studios that maybe are smaller that don't have as much experience that don't know that a specific market can actually drive massive revenue if you do it in a certain way. Sharing that knowledge, I think, can can bring many, many benefits. To be honest, to answer that question, the difficulty is actually to focus on the top ones because there are so many opportunities. And talking about localization, I got one here. When growing geographically with an existing game, does the company outsource the localization? So it depends on the studio. Again, we don't impose any special formula in terms of doing that. Goodgame Studios has a very strong localization team that works very well that is partially in sourced and partially outsourced. So really, it's a mix, and it depends on the specific challenge. So some questions here. What are the main challenges in running a free to play studio today? What would you say coming from that experience? I think it's always about experience, talent. And I think really, I think the main challenge is getting that first profitable working game that you're operating in live operations. We're very, very lucky. In a former life, I was a venture capitalist. And so I understand a little bit about portfolio theory. And the problem when you're venture capital or the good thing is you're looking for great teams that have a great track record and have a game of really good KPIs that you like to invest in. But then the challenge is, are they going to be able to scale? Is that really going to work when it hits the public? You don't know. You really don't know. The beauty with our model with storefront is we basically are only we're finding great teams with a great track record that have interesting games in the pipeline with good KPIs, but more importantly that have shown and proven that they have games that are profitable, that have been operating for years and that are stable. And that's really the challenging thing is to reach that level. Once you have that level, then it becomes a lot easier. And then it's about getting access to special expertise so you can really scale it further and further and further. And that's what we can bring with SteelFront. Good. Let's take one here. Which is the most frequent questions that entrepreneurs ask you before entering into a tighter dialogue with storefront? What is the most yes. So the most frequent question I personally get asked actually is, why did you do it? Why did you sell your studio to storefront? You had a profitable studio. It was growing fast. Everybody knew you in the industry. Why did you do it? And the real answer to that is I just fell in love with the model that Jorgen presented to me. It just made so much sense to me. I just saw the power of it. And I'm seeing every day as we grow, as we have more talent that joins the family, I'm just seeing how powerful the model is. And so that's what that's my answer to that question. Good. Yes. One final one that is a little bit tricky to answer, of course, says IR. What are the average multiples that you pay for acquisitions? I think that's a better question for and for Marina, to be honest. I focus more during the acquisitions on making sure there's a good cultural fit, making sure that the teams are really, really strong. And quite honestly, the multiples that we pay are fair. Good. Thank you so much, Alexis. Thank you. Thank you. Okay. So after the update now on group strategy with and Alexis, let's enter the core of Steel Front, our studios. We have a very interesting speaker calling in from Miami, Nadir Khan, for co founder and COO of CandyRighter. I'm just waiting for a final call to see if we have Nadir with us. Hi, Sofia. How are you doing today? Good morning, Nadir. Welcome. Thank you very much. Good morning to you as well. So thank you for having me. First, I want to say again, thank you for the wonderful and warm introduction. My name is Nadir Khan. I'm one of the co founders of CandyRider. Before I tell you about who we are and what we do, I wanted to take a moment to thank the Steel Front leadership for giving us the opportunity to introduce ourselves and thank the investor community for their time as well. We're really excited to tell you more about ourselves and why we're thrilled to have joined the Steel Front family earlier this year. You know, hearing Alexis speak about the need to find a cultural fit with with the new members of the family. It really resonated with me having gone through that process ourselves most recently. There was definitely a focus on you know kind of a two way relationship to understand whether we fit together as a as 2 companies. And, you know, we're very happy. And luckily for us, we were able to find that path together and super excited and super thrilled to tell you more about how we got here and what we're planning to do with this opportunity in the future. A little bit about ourselves. KandiRider was founded in 2006, predating the App Store. We're 100% founder owned, completely bootstrapped. And in our first 10 years as a company, we kind of grew organically 100%. When we first started in this business, user acquisition wasn't really a thing. All users had to come via either app store optimization or through the use of virality or leveraging virality. And I'm excited to tell you a little bit more about how we look at virality and how that's played into the growth of Candy Rider. We've been a profitable company since day 1. Luckily for us, we've been able to find opportunities that provided good return on value since the beginning. We're a highly motivated team based in Miami, Florida. Alexis touched on this during his segment where he talked about the idea of decentralization in the industry. And I think we're a really good example of that. We have been based in Miami since essentially our founding and have been able to not only compete but thrive in the industry from this location. And I think that part of our success is due to the fact that we're one of the bigger and more successful game companies in the Southeast United States. It gives us the ability to find talent and retain talent. And as talent joins our team, they can identify and realize that they're part of something bigger. And that trickles into their work ethic. It trickles into the product at the end of the day, that love and that enjoyment of being part of the industry. And I think a lot of that comes from, our decentralized nature and being here in Miami. We focus on evergreen casual titles in midcore games. But we like to look at our specialty as really pioneering new niches and trends. And as I move through some of these slides, I'll be happy to kind of expand on what I mean about that. Our company kind of motivation ethos is all about achieving maximum results with minimal resources. When BitLife became the number one app on iOS and Android, we were just a team of 6. Since then, we've scaled up considerably, but it really speaks to our drive to see how much we could do with as very little resources as possible really to keep costs down and keep profit up. BitLife achieved number 1 overall on iOS and Google Play. It wasn't our first foray into the top 5. I'll get into that in just a second. But it is definitely our most recent success and a long living success at that. The senior management team includes myself and my partner, Kevin O'Neil. Both of us come from a business background but with a technology focus. We studied information systems while we were in college and it really gave us the ability to kind of look at business opportunity first and try to understand where we could use technology to drive or drive business forward. And that resulted in us being one of the very early adopters of the App Store in the app ecosystem. Kevin himself has a very deep engineering background that facilitates the implementation of code with a business focus first. And that's evident with things like how we approach users to leave reviews on the App Store. We combine a business kind of strategy with when to approach that user with very intelligently designed code to make sure that we're engaging in those opportunities at the best moment for the consumer and for us. Kevin himself is a former security consultant, and his main focus day to day is really driving the engineering team forward and making sure that we're getting the most out of our team on that front. Myself, I have a business background from the University of Miami, an MBA. I was, in the stock market in a previous life, but very, very happily moved over to the game industry more than a decade ago. My main role is to make sure that the Miami headquarters is moving in the direction that meets the business objectives of ourselves and the Storefront Group as a whole. Going into our company history, you'll see that in 2,008, we were invited by Apple to participate in the original iPhone SDK beta program. We had that opportunity because we've had written high quality software for Mac computers for several years prior. Apple identified that and gave us the opportunity to join join in on the App Store essentially before it opened. Our game, Imagine Poker, was one of the first 552 apps on the store. So as Alexis was speaking about how the industry has changed, At Candidwriter, we've had a front row seat for that for the past 12 years, seeing the advent of everything from user acquisition to in app purchases and adapting our business with each of those changes as they were presented to us. In 2013, we had one of our really early successes, What's the Pick? And this was noteworthy because it really showed us the the fact that virality could be engineered. You know, it's not something that you essentially stumble on, but it is something that you could consciously go after, consciously attain if gone about in an intelligent way. The lessons we learned from that app stayed with us all the way up until 2020 today, where we a lot of the work that we do is focused on viral engineering that allows us to grow our apps organically, keeping UA costs down. We could see this in BitLife, and I'll be getting into that in just a few minutes. Moving on, we had a game called What's the Difference? Another opportunity for us to break into the top five. It was the number one overall free app in the U. K, number 2 overall app in the United States. Moving on, 2015, we came out with an app called Adult Coloring Book. This app really showed us that growth is all around you. You just have to seize it. We noticed that at that time physical adult coloring books were very popular. So Kevin and I said, you know what, we could bring this to the App Store. We could bring this digitally. We came out with adult coloring book which dominated the niche for quite a while because we were bringing something new to the market, something that people already wanted but wasn't on digital. Again, a lesson that we took with us in creating into creating the life. Fast forward to 2016, we revolutionized the word category with this game, Letter Soup. If everybody on this call is very familiar with the gaming industry and and knows that, right now the the popular game mechanic in word games is letters arranged in a circle swipe in between them to create words. Letter Soup was the first game to leverage this game mechanic. We enjoyed 1st mover advantage on that for quite a while, but eventually many competitors came in and saturated the market. Going back to what was saying at the beginning of his presentation and Alexis touched on as well, the the importance of learning from your errors or missteps or things that you could have done better historically. Letter soup taught us a wealth of valuable lessons. And in 2016, we became committed to finding synergies with a bigger company that would allow us to take our next hit to the next level and not let competitors come in, saturate the market and, you know, basically take take our own game idea and make it make it too competitive. 2017, we were honored with the game of the day feature from Apple, which is one of the highest level features, that a shifted away from word games to develop BitLife. BitLife again achieved number 1 overall in the U. S, UK, Canada. And what's important to note is and tying back to what I was saying about viral engineering is BitLife Achieve this number one status without any user acquisition spend on our end. It was all viral engineering inside the app that caused people to share it with each other and, rocket to number 1 on both platforms. Since then, we've supplemented the virality with user acquisition to keep the game on top and really make the most of the opportunity. So that was the road behind us. And now we look at the road ahead. And on the road ahead is where we're most excited to leverage the synergies that being part of the Stilfron family offers, whether it's the localization expertise of Goodgame Studios or the MENA publishing experience of Babbel. Each of these 14 other studios have a unique area of skill that we could tap into to really help drive our own products forward and drive the family forward as a whole. Our road ahead includes continuing to develop this open world narrative that we created with BetLife by adding further layers of life simulation. We want to create additional IAP that leverages the bit life simulation engine bringing new themes in gameplay mechanics. Our experience in the App Store has shown us that the App Store itself or the industry itself is capable of sustaining many games of the same kind of theme, the same type of mechanic. We want to be the company that brings multiple titles in this narrative experience, this text based narrative that we help pioneer on iOS. We want to be the studio that brings multiple titles to this front on this front to the App Store, and therefore reap the rewards that come with being the 1st mover on this type of new niche. One of the key factors of success in the future we feel will be leveraging Still Front's expertise via the individual game studios in localization to bring a number of language options, to BetLife. Right now, it's only available in English. That's a text based game. It's highly leveraged in language, but the appeal extends beyond English to many other many other languages, and we're excited to bring that to the future. Ultimately, we want to test these new we want to test all new game concepts and leverage our millions of social media followers to launch all new titles. Again, I'm going to mention our focus and our belief that viral engineering is key to success, at least for our company. And part of that is storing the success essentially into a battery of our social media accounts, which have millions of users. And I'll get into that in a few minutes as well. BitLife was launched in 2008 on 2018 on Ios, 2019 on Android. Its real key innovation was an all new type style of simulation for mobile. By no means was it was it new to the world. Text based simulation has existed for many, many years, on older computers, even in the form of print books, choose your own adventure, for instance. We identified that this type of game was not brought to mobile, and we saw the opportunity to deliver something to the population, which they've already indicated many, many times before that they wanted. The text based life simulator niche that we created really shook up the interactive genre for young adults. People were surprised to see that a game that was essentially text based, with little reliance on graphics, could get to number 1 and stay up there. It it remains a top 100 game right now because of its strength in this new niche that people have already indicated that they wanted, but it was never brought to them. Back in November of 2018, it climbed to number 1 on iOS. In February of 2019, it got to number 1 on Android as we developed and released that, the Android version specifically in 2019. At the end of 19, we were ecstatic to learn that the life was the number 5 most downloaded free game on iOS, an accolade that is definitely something that we're going to remember from years to come and a validation of our efforts and our belief that text based life simulators were here to stay. The beauty of BitLife and its engine that drives it forward is it's extremely vocal in contributing social media base. We're very active on social media connecting with our users to make sure that we're delivering the content that they want to that that they want, that they're requesting and not delivering content that we feel that they want and may fall flat. When we release an update, we know it's going to be successful because we're delivering what the user community has asked from us. BitLife is a very deceivingly complex app. Its simulation engine is difficult to clone and we can see in the industry that fast followers are often the bane of the existence of many developers. They come out with the including ourselves, they they come out with a great idea, like we came out with letter soup. And based on the ease of replicating the mechanic, you're going to have a lot of competitors come in and, you know, try to essentially take your lunch. And that's really when, you know, synergies and aligning yourself with a company like Stillfront come, you know, is very important to help help yourself defend against that. But we look to the App Store and we could see that the game has been out for quite some time now, but there is no viable clone. There is no viable fat follower to come and compete with their title. And really that's due to its, deceivingly complex nature To weave this web of narrative as we did in BetLife is no easy feat. I'm sure many competitors have tried and failed to bring those products to market. As we make our engine more mature, we're looking forward to taking the opportunity to be the only name in this particular sub niche of narrative and really take advantage of the opportunities that are provided for us there. The phenomenon of BitLife can be really seen with the user reviews. The iOS version has over 1,100,000 reviews and maintains a nearly 5 star rating, speaks to how much love the user community has for the game. The Android version, 4.5 stars over 700,000 ratings. Hopefully, we're going to break that 1,000,000 mark soon. As I mentioned before, the social media is a huge component of the success of BitLife. And we can see here where we're storing that potential energy that comes with social. We have, nearly half a 1000000 followers on Twitter, nearly a 1000000 followers on Instagram, 100,000 followers or members of our Reddit subgroup. And then finally, nearly a quarter 1000000 TikTok followers, TikTok being the youngest account among this group. Tying back to the same concept of social media being such an important part of their life, all one has to do is look to YouTube to see why people are so attracted to this game. All of the names that you see here on this list have created at least 4 bit life videos, and they're completely unsolicited from us. We do not interact with these influencers. We don't pay them. We don't incentivize them to create content for their YouTube channels, but yet they choose to return to Bell Life time after time, including some of the biggest names on YouTube, including Jacksepticeye with over 24,000,000 followers, subscribers, nearly 25,000,000. Why is this? Like, why are YouTube influencers so attracted to this game? And really, it's because of the open world nature of it, the endless possibilities that one could find themselves in BetLife make for an entertaining video for not just the creator but the subscriber as well. When they play the game, they know that the reactions that they're gonna get are natural. They don't know what's around the corner. It's completely unexpected. The subscriber likes to capture that essence when they're making a video for themselves. And the follower, the watcher just is so entertained by that that they feel compelled to continue making bed light videos time and again. This all ties back to what I was saying about viral engineering and how that is a core component of our strategy here at CandyRugger, figuring out ways that we could add users to our user base without having to essentially pay for them. Here we could see the concept that I was referring to earlier with the community driven aspect of CandyRider and BitLife. You could see here that essentially when we create a new aspect or a new feature in BitLife, we asked the user community what it is that you want. A great example is the current update that we're working on bringing in pro sports into BetLife. This is something that the user community has told us time and again that they wanted. When we come out with this update in the very near future, we're going to be delivering that content that they hyped up themselves. They were excited about what they told us they want. And essentially, it ensures that the that the update or the new content that we put in is going to be received well by the user community. This is what really drives, BetLife and our company as a whole is listening to the user community and bringing them what they want. Future strategy and vision, We want to extend build life into derivative products. We want to solidify and build on our position as a market leader in a hot new text based narrative genre. We've established ourselves as essentially the only name in text based. We're going to continue to build on that and make sure that we stay there. We want to compound learnings from each new narrative game and incorporate that into the next tying back to what you're getting and Alexis were saying earlier. It's important to learn from both your successes and your failures. Through our Steelfront family, we want to enhance our UA, our live ops, our monetization and our language availability. We've already had we've only been part of the Stilfron family for about 4 to 5 months now. And we've already had a number of great conversations with partner studios that have told us their experiences, shared with us their successes and failures to help us drive our own decision making going forward. We want to continue this conversation with our storefront family members to identify these synergies and extract new growth and efficiency opportunities for us. What's amazing is how Stillfront and the leadership have essentially created colleagues out of competitors. We at one point would have considered Storm 8 a competitor or we would have considered Nanovit who is very active in the narrative space a competitor. But through this, mutual group that we're in, we've transcended above that and have become colleagues where we could share information with each other, where we could identify what the other partner studios are doing correctly and replicate that behavior ourselves. We are particularly really excited about our future with companies like Nanobit who are operating in the same space as us and trying to identify how we can help each other out, how we can move together forward together. So that's essentially, Keanji Ryder and our experience with Still Front. Right now, we're really excited about, the months ahead, the years ahead, with Still Front and everything that is available to us now with all of the knowledge that comes from 15 studios working together. With that being said, I'll turn it back over to you, Sofia. Thank you so much, Nadir. Thank you. A couple of questions. Speaking about localization of a bit life to new geographies. I have questions on how would you say that this work has progressed so far? We have heard before that it might be interesting to reach out to Spanish speaking populations, for example. And what sort of potential you say that these new populations would have? Well, I definitely think there's a huge potential in language options. I think that the availability of their life in English has shown the marketplace that text based narratives are something that they want. This desire probably transcends, the English language into many other languages and Spanish being such a huge opportunity, the Spanish language being such a huge opportunity for us, we're really excited about getting into that. Furthermore, as a company being based in Miami, Florida, we're very well connected with the Latin American community. Most of the members on our team are fluent Spanish speakers. We're looking we're hoping to tap into this as we develop the foreign language versions. The kind of secret sauce of Bill Life is its ability to take individual story elements and link them together to create a continuous story. So if you look at it almost like a train, 2 train cars coupling together, it's important that we engineer that couple, that coupling component very thoughtfully very with consideration for the future. So right now, we're in the process of retooling aspects of the app to make sure that these couples, this coupling will happen with any language that we so decide to bring to bed light. So we've added resources to the team that are dedicated to this process and it's moving along very well. Really excited about the future and bringing that to market. Thank you. And just two brief questions more. There has been a larger focus on in app purchases lately within BitLife. How would you view the revenue mix going forward? I think we because of COVID, we kind of accelerated a plan to bring in more IAP availability or price points to the app, to the user community. And that's worked out very well for us. Nobody could have seen the pandemic coming. Furthermore, the effect that that would have had on on Abby CPMs. But I think as a team, we took that systemic risk and we were able to mitigate that very well. In the first few months of the pandemic, very early on, we pivoted into focusing on in app purchases and that's paid off for us pretty well. It speaks to our ability to move quickly and to adapt. We saw the difficulty that the ad industry was going to have over the course of the next few months as lockdowns and people tightening their budgets related to COVID would have an impact on advertising. And we shifted our strategy away from being more ad focused to being more of a mix. So right now, we've achieved essentially a fifty-fifty mix and we're really comfortable with that and want to keep that mix but rise raise the tide, move IAP and ad revenue together in lockstep but keep that even mix between revenue streams. Okay. Thank you so much, Nadir. Just very brief. There's one question. Do you see a potential to increase the ARPDAU levels for BitLife, the average revenue per daily active users? I definitely believe that there's a lot of opportunity for that. We've without getting into too much detail, we've discussed many, many different strategies to do exactly that, including bringing in more price points, being more aggressive with our ad delivery, using data to identify non paying users to ensure that we're monetizing that nonpaying user appropriately through advertisements. You know, there's many opportunities on that front. And it's a consistent drive for us to do exactly that, is raised at ARPDAU. And we're very optimistic and hopeful that we'll do exactly that. Thank you so much, Nadir. We could go on with many questions for you. But unfortunately, we have to say thank you so much. We have our final speaker with us. We have Perry Tam, our CEO from Storm 8 calling in from San Francisco. So let's see here if we can see get Hi, Sofia. Hi, Peri. Great to be here. Hi, good to have you. Welcome. Please go ahead. Thank you very much. Sure. Hi, everyone. My name is Perry Tam. I'm the Founder and CEO of Storm 8. First of all, thank you very much to everyone who is joining us today at the webcast event. I would be super happy to tell you more about Starmate. Let's get started. Starmate was founded in 2,009. This is our 11th year in business. We have always been a profitable company since the beginning, similar to Candy Rider. While there are some really big numbers here on this slide, such as the 1,000,000,000 download and 1,000,000,000 revenue, The numbers that I'm most proud of is actually a small one. It's the 70 people that we have at Stockmate. Our small team has been working very closely together for a long period of time. The median employee tenure at Stormlight is more than 6 years, and we deem this as the key ingredient for our success and you will understand more why this is the key ingredient as I discuss more about Stormade with you. Having a long tenure allow us to invest into our employees and train the team to succeed in the ever changing mobile gaming development company. So I'd like to give you a little bit more history of how Storming came about. Along with the 3 other co founders, we bootstrapped the company out of my different room back in 2,009. We launched our first games in early 2009 when Apple just opened up the App Store for developers. At that time, there was no in app purchase. We had to make some in order to collect money from our users, we actually have to make multiple pay apps and put it into the app store so that our users can keep purchasing the different pay app in order to pay us, which is a very different world than today. Out of the 4 founders, 3 of us joined from Facebook. I still remember that when we told our friends that we were going to leave Facebook to start a gaming company, they were offering surprise. We kept on telling our friends that we believe mobile gaming market is going to be a huge market when the iPhone was just in its infancy. We also believe that we can quickly learn how to make great games even though we didn't have any background in gaming. So apparently we were right about the mobile gaming market being huge, but man, we cannot be more wrong about us learning game making quickly. Over the last 11 years, we have made more than 50 games across 3 different genres and we have collected over 1,000,000,000 downloads. And today, we are still learning about game making. However, through all those exercises, we have built expertise in live operations, user acquisition, ad monetization, and analytics. Another lesson that we learned about mobile game ecosystem is that change is the only constant. Stormi has observed and lived through many platform and market changes in the last 11 years. We find that the only solution to cope with the constant change is to be adaptive and nimble. For example, in around 2016, we noticed that our game development process was outdated and it was no longer effective in coming up with heat games. So we invested a lot of time and resources into coming up with a new R and D process that will work for us. With the tremendous amount of hard work from the team, we arrived at this small team prototyping process which eventually led us to creating Home Design Makeover and Property Brothers. At this moment, we continue to double down on Property Brothers and Home Design Makeover, which are very early in their game life cycle. So before I tell you more about home design, my girlfriend, property products, let me tell you more about our rapid prototyping process first. While the rapid prototyping process seems relatively simple, as you can see on the right hand side of this slide, and it is certainly not a proprietary formula to store make. Anyone can easily copy and do the same thing as we do. However, it is very hard for teams to internalize this concept and this process and continuously apply it. It. Every time when I show this slide to a group of game executives, they always ask me how do we get the development team to queue their own games. That seems to be a really difficult thing to do among a gaming studio. In our opinion, the key success for Stormade is that we have trained our team such that they cannot be afraid to kill its own idea if the greatness is not achieved. It requires a long history of the team, a lot of experience in the team of the game makers, and it shows maturity and confidence in the team to really embrace this idea. That is again why I'm so proud of the team we have at StormMaker. The strong team really makes the process of rapid prototyping works. Now that we have gained the insight of storm making development process, let me tell you the output of what this process get us, which are the great games. The first game I would like to show you is called Home Design Makeover. It is a mastery puzzle game. In case you have not played before, I have prepared a video to showcase some gameplay and give you a sense of how the game works. And here's the video. Right. So very similar to Nadir at CandyRider, at Stormade, we see game development as a continuous process of improving game making. And then for Game Maker at Saw Me and Candy Rider, you just never know where the inspiration comes from and when it will come to you when it comes to making a great game. Home Design Makeover actually was inspired by 1 of the Stormade's earliest game called Home Design Story, which was launched in 20 truck. While Home Design Story was not a commercially successful game, although it was beautiful game, but it just never really gained any commercial traction for us to continue supporting it, that game provided so much learning to our team and the learning that we have garnered from Home Design Story resurfaced itself after 6 years when we started embarking on the creation of Home Design Makeover. Home Design Makeover was released in 2018. The successful launch is the culmination of Stormade's 10 plus years of experience in launching 50 plus casual games and building 1,000 and 1,000 of casual puzzle game levels. People often ask me what made this game so special and successful. While it is really hard to have a definitive answer for such a difficult question, I think by looking at our design philosophy, it might shed some light for finding the answers to this question. The first design philosophy is that our artists make sure all the rooms would look absolutely stunning. The games allow players to choose from many different design options. We took extra care in crafting the options such that all combinations, any combinations, would look beautiful and enjoyable to our players. And here are some screenshots that you are seeing on the screen that just speak loudly about the quality of the room design that we put into it put into place. The next design philosophy is about storytelling. On top of enjoying the beautiful design and the fun puzzles, the players are also immersed into many fun and relatable storylines. We like our players to feel the emotion that are embedded in the story. They are not just here to look at pretty pictures or play the fun games. It really, they are here to feel something and we believe that the storytelling is the way to deliver their feelings to them. The last design philosophy is around keeping the game fresh for our players. And we do that by keep adding new features and extending the gameplay. Our team released regular bit of game features to drive consistent player engagement and monetization. This goes back to the strength of our live operation the team has fine tuned over the years so that they can consistently deliver on feature development as well as content pipeline. Next up, we're going to switch gear to talk about Property Brothers. Property Brothers is a follow-up hit to Home Design Makeover. As a matter of fact, both Property Brothers and Home Design Makeover were built based on the same engine that we have built in house to create us to power and create us 2 games. In case you're not familiar with Drew and Jonathan Scott, they are the 2 TV stars behind the hit series called Property Brothers and several spin off shows. Their shows are aired in over 150 countries and they have over 18,000,000 monthly viewers. The brother is incredibly active in social media. In total, they have over 10,000,000 digital followers. Not only that, they also have their own furniture line, their own children books, and they have a podcast as well. Now you have a little bit more background about the brothers. Let me show you the videos of the gameplay. As you can see, we have added a lot more new details to this game comparing to Home Design Makeover. For example, in order to match the show, we invest a brand new 3 d fly through of space with blueprint of before and after to show the contrast. Another thing to note here is that Property Brother has a different puzzle mechanics, it's called the blast mechanic, as opposed to the home design makeover which has a match three puzzle game mechanics. In terms of design philosophy for this game, the first principle is to integrate Property Brothers into the game. We try to make the player feel like they are creating an interactive bond with the brothers through this game. So here is an example where the brothers will interact with the players and enhance their experience inside the game. Let me show you the video. You are a rock star of the Design world. If you text me right now, I'm going to give you 2 hours of infinite energy to help you design. This type of interaction really enhance the user, the player experience with the game because they feel like they're talking directly to the brothers. Another example is that the brothers would make special videos to celebrate important milestones or achievements for our players. Let me show you a video of that too. Level 2,000? No way. You did it. You're amazing. Holy moly. Wow. Yeah. I knew you could do it. Champion. Yeah. Exactly. Thank you very much. Really? You're the best. Seriously. I think we're overcomplicated. No. No. You are so cool. Yeah. Cooler than a cucumber. Cool. Cooler than a polar bear. That was too much. Yeah. You're cool. So this is yet another example of the brothers really working closely with us to create a special video just to celebrate some milestone for our players. The next design philosophy that I would like to talk about is the design aesthetic. In order to be true to the Brothers brand, we work very closely with the brothers to deliver on that design sense. The broader work with our team on each and every single room. The broader actually personally approve the design of every single room before we launch it to the user to ensure that the design is true to their brand and would be embraced by their fans. It is a true collaboration between the brothers and Stormade on this game. And you can see the pictures that I posted here on this slide, they are all looking very stunning and it is not just the work of Storm 8, it is the the brothers has a lot of input into this so that we can create such an amazing looking groups. Last but not least, since we have the superpower of the Property Brothers personality and characters. We certainly would love to leverage that, and one of the ways to leverage that is to create marketing materials that really showcase their fun personalities and integrate that into our marketing. By doing this, it lead to a lower user acquisition cost for us, but also it created higher value players from those user acquisition. So let me show you a sample video of the advertisement that we made for this game. What did the 0 say to the 8? Nice belt. What did the strawberry say to the peach? If you weren't so fresh, we would be in this jam or something like that. You know, I should just stick to design. Yeah. I need to do more levels of Property Brothers home design. Yeah. Absolutely. They could stick to design and then leave us to make the game a Storm 8. So with that, that will be all the content I have for today to share with all of you. Thank you again for your time and thank you for tuning in. I would love to get into the Q and A section of this presentation. Hi, Sofia. Hi, Peri. Thank you so much. Great to see all the videos as well. Okay. Let's shoot. With the Property Brothers home design being a big success, what do you see as the key driver behind it? Can you say anything about your games pipeline? And are you looking to release similar games in the future? Yes, sure. So I think we cover a lot in this slide, in this presentation about what makes Property Brothers Home Design a huge success. To reiterate those points, I think it's about leveraging the fan base of the Property Brothers, being true to their brand and entertain and embrace their fan base. Also leveraging their personality and characters to improve our marketing so that we can deliver a lower cost marketing but generate higher value users. So that, in my opinion, is the reason why probably broader home design being a huge success. In terms of our game pipeline and what we are looking forward to, as I mentioned earlier, both Home Design Makeover and Proper Brothers are still pretty early in their life cycle. Our current focus is to continue to improve those 2 games by adding more features, creating more content for it, because we still see there's a huge opportunity for us to continue to push for this 2 game and improve the 2 games. Beyond that, obviously, the team being in a gaming company, being a creative team, our team constantly have very exciting ideas about new games and new game pipelines that we constantly discuss within the company. Unfortunately, I'm not prepared to share anything today, but please look out for future new games like this coming out from our Stormy studio. Thank you. Will do. Competition seems to increase within the genre. How will you continue to stand out in the crowd? Yeah, that's a really good question. And like I said earlier, we have been around over 11 years, pretty much since the beginning of the App Store get started. Not as early as CandyRider because they were actually the they're cooler because they are the launch partner of the of the app store. But we joined very shortly after that. And having seen the whole thing evolve in the last 11 years, I think there are, again, 2 main things that we really remember. It is to 1 is be nimble and the second one is be adaptive. So those two things continuously help us stating ahead of the game in the App Store. So I would say that in order to continuously compete with other people, we just need to continue to stay nimble and stay adaptive. It is also important to be humble in this space. So we are constantly learning from the market and learning from our competitor, which is yet another really main reason why we could grow and continuously stay ahead is by observing what happened in the marketplace and observing what our competitors are doing and then try to do something a little bit better, a little bit faster than the rest of the peers. Thank you. Would you say that competition in home design categories of games are increasing in various regions? Noted. I think that would happen just naturally, just like what we always see. You know, there are lots of information about our game that is, it's just not proprietary that everyone can see, people can see the success of our games and start trying to imitate and and and and create their own version of a home design game. But again, it it just it just come with the territory of their mobile gaming market, and we have seen it play out many, many times. I think the true gem or true value of our game is really rely on the fact that we have a really strong team, which can continuously improve and push the game to a higher ground. Okay. What are the Storm 8's long term key competitive advantages? And what does joining Steelfront do for you? Yeah, that's a really, really great question. I think in the last 11 years, we have seen a lot and particularly in 2019, I think we are seeing a lot of consolidation in the marketplace. So being an independent company become a harder and harder challenge as opposed to the early days of the App Store being independent, give you a lot of flexibility, allows you to do a lot of things. But nowadays, being independent, would be a little bit challenging to in terms of buying user acquisition, scale does matter. It helps you in a lot of ways, such as going to the platform, asking for featuring and also just looking at the market, buying user acquisition, buying user acquisition, buying users. So I would say by joining Steelfront, we certainly gained that scale as a bigger company. The secret sauce of Steelfront really is the fact that even with the biggest scale, each studio has its own autonomy, and we could make decision just like we were independent as a single studio. So it allows us to move fast but yet maintain that scale, which is kind of a really great combo in this marketplace. And I would say that that really is what defined going forward for Stormy and lots of other studios who have joined Steelfront. And I would say having the capability to go into the market and nowadays figuring out the user acquisition is yet another competitive advantage that Stormy along with Steelfront can bring to the table to be competitive here because the mobile game market has changed in such a way that, you know, from a lot of, you know, so called creativity, a lot of a lot of new apps, new people trying out different things, trying to climb the App Store and get users to nowadays, as Alexis was saying, we see less and less new apps every year. So it become a much more formulated game where you just have to meet your KPI and be able to spend your money effectively to attract new players using user acquisition dollars. So by having the strong scale that we have as a Steel Fund family and the strong capability that we have built up so far in the last 11 years on the user acquisition. Those 2 really help us to stay competitive in this new landscape. Thank you. Just one final one before we're wrapping up. Are there Perry, are there any plans to grow the long tail series of games that you have? Or is the plan to slowly phase them out? Yeah. The plan is definitely continuously maintain those games and get as much revenue and EBIT from those games as possible. Our current focus is really a lot about development resources do go into the 2 new games that I just talked about, Home Design Makeover and Property Brothers home design. So I would say that would continue to be the main focus that you're seeing from our students.

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