Hello. Good afternoon. Welcome to Q1 2021 Results Presentation of Tensquare Games. Amatj Zuzajak, CEO of Tensquare Games.
Hello. I'm Wojcie Gartner, Chief of Product Strategy.
Hello. Marcin Khosrinsky, CFO.
Andrey Zhikowska, Chief Growth Officer.
Hello. Andrew Ilchuk, Chief Production Officer.
Okay. So if we can start with a few highlights for Q1. I think there's 3 key areas we've been focusing on in the business. First of all, is the performance of our on in the business. First of all, it's the performance of our games and also getting them ready for the next phase of development.
Had a very good Q1, we think, especially given the fact that the year of 2020 was a year of excellent growth. We think that during that year, the business has grown probably faster by about 18 months, we think versus what they would have done normally if there was no COVID. That's been all great news for us. We scaled up, but we have a very high base for the future growth. But despite that, we have a lot of faith in the future of our products.
A year ago, we had one product that was pulling the entire company, that was fishing clash. If you look at the performance of Q1, hunting clash or a second clash title is already 20% of fishing clash in itself. And We've been focusing a lot during Q1 on thinking, discussing and working actually on scaling up the teams and thinking about how we can grow in the future. The fishing clouds, the way we see it is that the product is coming from a high growth, and it will have a stable, maybe slightly declining performance over the next few months, but we don't believe it will stabilize and then go back to growth over the longer term. And hunting flash is at early stage.
We've invested a lot in marketing in Q1, and this product will continue to grow the slots to go for in terms of production feature. The second area of work was some serious drug decisions we've been preparing for. Very important thing is we came up with a new game. Fishing Clash has been already for us not for us, but for the players, one of the top 3 sports games worldwide. And we've been iterating with moving to sports with other products.
And Football Elite is our new sports product, and Wojtek will talk more about this product. The second product decision we've taken recently, and we were debating it during Q1. It's the decision to discontinue Golf Royal. It's a highly competitive segment of Golf today. We have lots to go for within TSG, and we decided to stop this development and to relocate teams to to places where we believe there's more value to be created for TSG.
And the 3rd pillar is an ongoing work at ESG in preparing for the next phase of development. There's a great opportunity ahead of us. We've increased the team by about 50%, and that's something that we've been working on across the organization to be able to further scale up the business. So We'll talk more about it, and I hand over to my colleagues to talk about Wojtek to talk about our new product.
Okay. So our new game that was technically launched a few weeks ago. It's called Football Elite. It's a beginning of our, let's say, further sports journey. We want to create a game that joins strong social mechanics with a lot of competitiveness and a lot of and slot mechanics as well.
We believe that American Football It's a great team. We did a lot of research on that. And we will have a random roughly target of $150,000,000 that plays or watches this sport. And for us, it's a very huge potential, and it opens up us a bright strategy for developing further into the sports genre. I will just talk about a little bit about the production of this title.
So basically, in the incubation period, We did a lot of research. We did a lot of internal pitching and discussions. We created a few prototypes. And those prototypes that scored the highest in our ratings were moved forward to the next stages. And based on that, we decided to do the American football.
And once we started the production, it took on the 7 months to create this product, which was like the fastest in Ten Square Games history. In May, we launched the title in the United States. Right now, we are gathering a lot of data. We are, of course, polishing the game. It's still the early stage.
But we want to really create a strong franchise. And we plan to soft launch the title on broader markets in second half of this year. I can maybe add a little bit more about the mechanics that we'll add there. So we want to use all the know how that we gained in fishing clash and hunting clash and combine it with the slot mechanics. And we really believe that there will be a lot of synergies in that genre.
And In this very moment, there is not too much competition. The other news is that we decided to discontinue the Golf Royale. The competitive landscape changed a lot in the recent months with new titles arriving every month, we found ourselves, I would say, cornered with our feature set. And we decided that pursuing something new in this gold journey is almost impossible. And we were around 12 months behind the curve.
So we decided that we can spend the resources much better in different projects, especially where we want to grow the teams of fishing clash and hunting clash. And that spare capacity will help us grow in more efficient way. And this slide, as Maciek said before, with the COVID situation, we accelerated our growth in our estimations by around 18 to 24 months' time. So it was an exceptional year. We reacted quickly to the market situation and to the market opportunity.
And we can see that right now we have the stable with a small decline of revenue in fishing clash that should come back to growth in the upcoming in 6 to 9 months' time. And if I may just reiterate on what happened with fishing clash and what happened with the road map. We had a strong future offensive in 2019, 2020 that we could capitalize on with the extra marketing spend. And right now we are in the phase where we want to boost up our technology when we want to boost up the production capacity. And we have basically a very big bag of ideas and the features.
And this capacity will help us create those features to the highest standards, to the highest quality and in the fastest pace.
Let me continue now the summary of Fishing Clash with more detailed information and data related to bookings and marketing in the 1st months of 2021. So as you can see in the slide, we were increasing the marketing spend for fishing clash in the last 2 months in March April. Actually, the marketing in April was the highest since October 2020. To summarize the Q1 of 2021 versus the Q1 of 2020, we went up by 55% with our bookings. When we compare it to the Q4 of 2020, we decreased by 15%.
Regarding the marketing spend, we went 25% 23% versus Q1 2020, so before COVID. And we were on a stable level of marketing spend. So when comparing Q1 2021 to Q4 2020, it was a slight decrease of 2.5%. But as I said, we started increasing the budget starting from February again. Yes.
And we feel that we have very strong high quality cohort performance. Yes. Thank you for this one. Let's continue with numbers for Hunting Clash, the 2nd biggest title in our portfolio that is already contributing to profits. To 10 square game profit is just 8 months after its global launch.
The story for Fish for Hunting Clash is that So we increased the bookings in Q1 2021 versus Q4 2020 by 118%, while we increased the marketing spend in the similar period of time by 100%. So we have a good traction. The curve is optimizing, and we are increasing our involvement into the title. We see that the growth of bookings is dynamic. It's supported by significant marketing budgets that went up significantly, as I said, between the Q1 of 2021 versus the Q4 of 2020.
And I think the big message here is that the game is already contributing to the profit of 10 Square Games. And here, I would just like to confirm and repeat what Maciek already So we see the increase of hunting clash is very stable, very solid. And when it comes to bookings, it's already 20 like in Q1 2021, it was already 20% of what was achieved in terms of bookings in Fishing Clash in Q1 2021. And when it comes to marketing spend, it's already around 75% of what we've been spending in Fishing Clash in 2021 in Q1. So we are investing a lot into this title, and we are planning to keep on investing into the title in the next months.
Yes. And from the product perspective, Hunting Clash is still early on in the growth path, yes? We have a lot of features to add in the upcoming months. It's still a lot of low hanging fruits that we want to pick up. There are still a few sure bet features that will be taken from Fishing Clash that will help the product grow.
We want to optimize on the live ops. We want to optimize the game on the UI, UX. We will do a lot of matchmaking, improve the matchmaking system. And other features that are on the road map are like battle pass, seasons, new power ups, new gameplay modes. And to put also a different perspective, As I said before, as we see fishing is not a fishing game.
It's a sport game. Hunting we don't see that our target group is only hunters. This is like if we look at the charts, right now in the United States, it's the 4th largest first person shooters. And our aim is to grow even further.
And as we are growing, we really believe in long term. So currently, we are focusing a lot on growing our teams. Right now, we are focusing on the technical improvements, but also on scaling up the teams. And as of right now, when we look at Fishing Clash as an example, we are combining golf team with fishing team and adding extra 20% to 25% of capacity to the team, making sure that the features and the content is going to be produced in a quicker manner. This is also very important for us if we look at the future of our products that the teams are delivering more content and more features to our players, that the games are interesting for them.
And we are creating another forever franchise in Times Square games. What is also very important, and it's And I have to add it. Our road map is very packed, and we see that for the next 12 months, There is a lot of things we need to deliver to our players and make our games even better. If we look at our legacy portfolio, we see a very big Sorry, not very big. We see a very nice trajectory.
The games are still making historical records. We see that the teams are doing a great job, and we increased the revenue year over year by over 27%. And we see that these games are going to hopefully last forever. And when we see the diversification of our products, we can see an increase. And currently, fishing clash is less than 80% of our bookings, which is again a very good news and hopefully our other products are going to be growing even more, but we make sure that we don't forget about fishing clash.
Okay. Now it's time for a quick recap on the financials. So to summarize what has already been said regarding the specific titles, this slide summarizes bookings in total, consolidated bookings in total per month. In all months of 2021, the Monthly bookings were at the level of slightly below or around €60,000,000 PLN with the exception of February when they were significantly lower, but that's mostly due to the 28 months at this or 28 days in that particular month. As for geographical breakdown, we can see a gradual increase in the importance of the North American market, with North America accounting now for 45% of total bookings in Q1 this year comparing to slightly over 40% similar quarter previous year.
Major reason for that is the growing importance of hunting clash. And in Hunting Clash, we have we had 62% of players coming from North America in Q1 2021. So considering the trends that we can see in our products, we can imagine that the market share of North America might be still increasing in the future. As for the cost analysis, we have seen gradual increase in the operating expenses over the past couple of quarters, which obviously due to the fact that our team has been growing strongly throughout 2020 as well as in 2021. This increase mostly is visible within production teams, has the increase of cost of services sold, is the largest one, as well as the marketing team, which we can see in the same costs, while the increase in the supporting functions is slower than in the production related functions.
As for the selling costs, we can see an increase in the selling costs as a percentage of bookings, especially in Q1 2021. And there's one major reason for that, namely the increase of importance in Hunting Clash. Hunting Clash is a game at an early stage. So obviously, it's the margin the margins we get on Hunting Clash are significantly lower Then on, for example, on fishing clash. So to give you the numbers, in Q1, we had 1,500,000 of the gross margin on hunting clash on 27,000,000 of bookings, while the margin on Fishing Clash was €70,000,000 as water on €131,500,000 of bookings.
So obviously, while we while the importance of hunting clash grows and in the initial stage of the game is it only generates small margins than the percentage of selling costs as a percentage of booking goes up. Regarding the our profitability in terms of adjusted EBITDA and net profit, We see the adjusted EBITDA as a percentage of bookings as slightly deteriorating from Approximately 40% from 40.5% in similar quarter last year, 33% in Q4 2020 to 38.5% in Q1 2021. So the two major reasons for that have already been mentioned. So the first one being hunting clash and it's growing importance in our product pie. And the other one that Tanjei was also talking about that is the investment of growth that we've done over the past quarters, that is the increase of the TSG team.
As for the net profit because of these non cash items that we have that is the share based program as well as deferral of revenue, This KPI is a bit, let's say, detached from our actual performance. So you see the decline in Q4 last year and the increase in Q1 this year. Yet, we see the net profit going up by 50% as compared to similar quarter last year. The high profitability, we have mentioned that we had in Q1, obviously, it translates strongly into the operating cash flows. So we had £50,000,000 PLN net after tax operating cash flow this year comparing to slightly below €30,000,000 in Q1, the previous year.
And the percentage of the percentage how EBITDA translates into cash flow remains on the similar level over or roughly 77%. As for the balance sheet structure, no surprises or no new items here. The balance sheet structure has been reflecting our performance over the last couple of quarters. And the major item on the balance sheet remains the cash that makes up roughly 75% of our total assets, similarly to the previous quarter. And here, I would like to say a few words about the share based scheme that has been approved.
It was approved in April this year by our advisory board. So this motivational scheme This or has been set for 2 years, 20212022, with the adjusted and the supervisor board approved the adjusted EBITDA, which is the target that has to be met in order for the scheme to be effective. So this for this year, the target EBITDA is NOK 249,000,000 and the next year, roughly more slightly more, that is NOK 251,000,000. In this scheme, we the management or the company can issue up to 100,000 of new shares, which over this 2 year period can result in a maximum dilution of 1.37%. What's important to say or to add is that the shares are locked up, so they cannot be sold by the employees to which they are granted, and the lockup is until January 2024 and 25, respectively, for those 2 years.
The number of employees that is to be covered by the 2021 programme and 2022 is 6% is 6% people, sorry. Obviously, for 2021, there can be some additions of employees to the program. And one thing that is not on this slide is that the total Non cash cost of this program in Q1 that we booked in our P and L is for PLN 5,700,000 of which $3,000,000 is charged to cost of sales, dollars 1,400,000 is charged to selling costs and $1,300,000 to G and A. And the last slide covering the financial part is the management board proposal regarding dividend and also share buyback. So management board has proposed to the Annual General Meeting, and this proposal has been backed by our supervisor board that the company pays roughly €73,000,000 of dividend that is to PLN10 per share.
We're having a payout ratio of 48%. Obviously, we had some discussions regarding the dividend amount because on one hand, we've generated lots of cash, including the €50,000,000 in Q1 2021 that I mentioned before. On the other hand, we are still it is still possible that we would perform some M and A transactions later this year for which we would obviously need cash. So the right choice that we think we've made is to propose the TENS water or $73,000,000 in total of the dividend, with the dividend date to be proposed of 5th July this year. Another proposal that we had on the same day actually was to allow the management to exercise a share buyback option.
So we as a management, we see that If we had the opportunity to buy back some shares on the markets, that might help us impossible M and A transactions, future M and A transactions. We might be able to use option, especially if there are bizarre or unjustified downwards trends on the in our share price. Obviously, the focus of the management remains on creating, developing and enhancing the mobile games. That is the primary objective of what we do. But we propose to our shareholders to open such option to enable the buyback whenever it would be needed.
Thank you. Thank you, Martin.
Okay. So coming back, the summary of Q1 from management perspective. The number one is performance of Q1 in itself. I think the way to look at it and the way we feel about it is if you compare it with Q1 last year, the business has grown about 70 percent. And that's a very good progress.
We have the base of 2020 exceptional year. And from that point, we're very much focused in Q1 on actually working on further building up the business. So kind of At the core of our interests are to our core games, Fishing Clash and Hunting Clash. We're working on both. We've taken the view that there's so much to go for in these games that we decided to increase teams in both cases.
So if you compare fishing clash and hunting clash, we are actually we'll see if we can get as far as 90 people per team from currently 55 people in hunting clash. So fishing clash is done at the back of the road map that we have. So is hunting clash. We think both have good potential to develop in the future. And these are our core engines, and we will work on them to get the kind of maximum that we can get out of these 2 products in sense of enjoyment for our players, but also the kind of revenue and profit for the company.
The second topic was new development. So we obviously are looking into the future. The football elite is a great move in for 10 square games. I think we're stepping outside of kind of fishing, moving into sports category. That's this is very early days, but we have a lot of hopes for that.
But not forgetting about our other products that are being developed in Wroclaw and in Warsaw currently. So there's been lots of work undergoing. Wojtek will talk a little bit more about it, but we are very busy with new development. And the third element is We think we've built a lot, test square, and there's lots to go for. I mean if I was to use the sports analogy, free to play mobile space is 10 years old now, but it still feels like it's we're playing at the end of quarter 1.
There's 3 quarters to go for. We're kind of gearing up for the next quarter, and we know we need to strengthen it. It's a highly competitive market. There's a few companies, several companies fighting for top positions in the gaming rankings. We want to stay among them, and that means also investment.
We found fantastic people that joined DSG over the last months, and there's a lot of interesting candidates that we believe we can bring to the company and help develop it further. So that's been a focus of Q1 for us.
And as of right now, we are seeing that Up until the end of the year, we will be probably 500 people plus. We are highly focusing on making sure that our flagship teams, both fishing class and hunting class, are going to strengthen their teams. But we will increase the production capacities, both feature and content wise. And this is our goal up to end of the year. And That's about it.
Okay. And I wanted to present a show recap of what's our new production pipeline in this very moment. So we are all on the same page. So basically, our biggest, let's say, title in studio is undead clash. The production is accelerating.
I would call it on full steam. Everything so far goes as planned. We are very happy with the production progress and with the feature pipeline and already the features that we already developed. We test a lot of builds with our test players. But the soft launch is planned on the verge of 2021, 2022.
It all depends on some details. It's going to be, as we mentioned on the last conference, a zombie shooter with a Clash meta game. The other title, the football elite, we just technically launched it. But there's still a lot of work in front of us. We want to really invest in this project and we want to gather as much data as possible.
We want to use all our skills in BI and machine learning and game design to develop this game to the highest market standards. And we plan to soft launch this title later this year. Another project in is Project Verne. It's still very early phase. We create a lot of prototypes.
We tried different clash meta we tried to clash meta but with different variations. We test those builds with some focus groups. We do a lot of market research. And basically, the soft launch will depend on some of the results of those research, also on our, let's say, capacity as we want to boost up the fishing clash and hunting clash teams first. In Warsaw, we have 2 projects, Project Tokyo and Project Osaka.
The one is in production phase. We plan to soft launch it by the end of this year. And Project Osaka is a product in the preproduction. We also carry out extended market research, player insight. And once we are happy with those results, we will start the production phase.
But the soft launch, I believe, will be not this year. It's going to be 2022.
Okay. So just a summary on where are we strategically. This is is the summary of our strategy pillars. So it's about Frodswaff Harp, Spokes and M and A. We've announced the strategy about a year ago.
And just looking at the progress we've made, we are very focused in Bratsof on doing and building portfolio of games that are deeply rooted in the DNA of the rostwhile team. So we have we now have 2 clashes year on. We work in the 3rd one, and that's very, very important, super exciting for us to be able to actually work on building a family, which is at the back of the core know how of DSG. We moved outside of Hobbination sports because Fishing Clash is a sports game. We understand the competitiveness that is required for sports games.
We have one more very interesting title in any stage of production. So that's for Wroclaw. We've taken a lot of we're increasing teams. We're building that capacity in our hub. As for the spokes, Warsaw is working at full speed on 2 titles.
That's just several months after we started, which is great news. We're planning for Berlin to go strong. I think we said on previous slides that by the year end, we'll have about 60 people between these 2 studios, which again is a very interesting development for us. And then as for M and A, we've been working. We gave you of a thorough feedback 6 weeks ago or a month or 2 months ago.
I think M and A in gaming industry and free to play especially, it's a very interesting adventure. There's a lot of transactions that are going. Price expectations are pretty high, and we've learned our way, and we know what is that we like. And I think the promise of DSG will be we'll only do the things where we believe we can value between our platform and potential company joining our family. We're working on that.
We're very, very selective. And we have strong conviction that in time, it will bear fruit. There's nothing that we can tell more about M and A. That's unfortunate. But we are operating under NDA, and we're talking to different very interesting companies.
Okay. So I guess that's it for now. There's an investor calendar for DSG. And I guess we can open up for questions. Okay.
Just like I've written on the chat, please ask questions on the chat, and we will Okay. So let's start with English chat. First, you would. Did I get it right that you expect fishing clutch sales to deteriorate for the next 6, 9 months? What's the reason for such a conservative outlook?
I think it's not that we expect the revenue deteriorate for 6 to 9 months. All we're saying is we have a program to develop Fishing Clash. And it's going to take 6 to 9 months for us to bring all the things that we want to. So that means reconfiguration of the team, also kind of rate 2019, the feature production, fixing some of the technical topics. So that is the period of 6 to 9 months.
We can see if you when we look at our cohorts, the natural trends following COVID, we can see the decline over the next few months. But then obviously, we will be working on trying to reverse some of these trends. And it's a life organic game. So it's a function of feature production, the kind of eagerity of players to play and our ability to scale up marketing. And we're working on all these levers.
Okay. Thank you. Maciej Kielynskiy. Can we get any details about plant acquisition transaction?
Planned acquisition transactions.
Yes.
Yes. It's very hard to talk about plans for acquisitions. So I'd say I'll just repeat what we said. There's dozens of companies which are on our map. We're speaking with several, and we have some advanced dialogues.
That's all I can say. And I said it before, I think we're expecting that to continue. So we keep our pipeline alive. And naturally, we'll be engaged in discussion. We have our team M and A team scaled up a little bit, so we now have 3 people on the team.
We started with 1 person. So we have higher capacity to review more potential opportunities. Thank
you. Why was Hunting Clash revenue in April flat versus March. Shall we expect some rebound in May already? Or are there some long term factors causing the top line deceleration?
From the product perspective, the product is improving. And there is always a on how many new players joined the game. And basically in the midterm, the growth is going to be super stable, providing not providing. I want to say that the growth will be stable and also might be boosted by improved game itself. We are very early.
The cohorts are building up. So, let's say if we buy more players, if we get more players in January than in February, it fluctuates, but the midterm trend is going to be visible.
Yes. So let me add from a marketing perspective, I think we have already shared that information before that the effect of increased marketing spend is kind of point in time. So we were increasing our marketing spend starting from November when it was the lowest during the months. So now we are building a bigger user base and the effects of increased user acquisition, for example, from February March, will be visible in the upcoming weeks. So that will be the additional part to as an answer to this question.
Thank you. Could you please comment on iOS 14 changes impact on 10 Square Games customer acquisition process?
Sure. I was expecting that question today, even though we are not ready yet to answer it fully because the adoption rate of IAS 14.5, because that's the rate of Ios 14.5 because that's the one that is lacking IDFA, not 14 in general. The adoption rate is not high yet. So for global markets, it differs between geos. There are markets with higher adoption rate and lower adoption rate, but in general, it's between 15% 20% for now.
Looking at our titles, Fishing Clash and Hunting Clash, the adoption rate for new players, what we see in our game, players who installed the game introduction of Ios 14.5 is even lower. That is between 10% 14%. So it's Like when we look into the active players from the last weeks, it's also between 10%, 12%, 13%. So there is not much we can do with this traffic because, in general, there is not like the world didn't become 14.5 percent yet. So we started our campaigns.
We are well prepared. We have everything in place. But to get more data, to go through More data coming from campaigns. We need to wait until probably June at least because we need to gather some data because it's not that we can work with the total number of players. We are just working with some small share of the market that is available for us when it comes to iOS 14.5 campaigns.
So I will ask you to wait for more news coming in the upcoming weeks.
Thank you. Could you please comment on online advertisement prices trends in last couple of months? Do you see strong growth in ad prices?
So as always, the answer will be yes and no. We are comparing quarters to quarters, months to months, weeks to weeks, platforms to platforms, geos to geos, marketing partners to marketing partners. So to be able to compare apples to apples, we would have to go very deep with data, and we cannot offer it today. But in general, we are looking in different KPIs. So we are not looking into CPIs only.
Of course, we do. But we also look at CPPOs, for example, the cost of paying user joining our games. And we obviously compare between the games. So the answer will be different different games. They are in different stages of development.
But in general, what we've seen were that CPIs were going up slightly, but what we are focusing more are different KPIs. It's because of the loop of our game. It's because of the structure of our game and our players. And what we've seen regarding CPPUs is that actually, the prices here during the Q1 of 2021 were smaller when were lower than in Q4 2020, and it was both for hunting lash and fixing lash. What we started observing also because we are following the changes in the market that are a result of iOS 14 changes that are not only for iOS, right?
But they can also be for Android because we've seen and we know that from our partners that there are more and more players in the market that they are buying more and more traffic on Android. But in general, what we've seen during April was that the prices went up slightly on both iOS and Android, but it didn't really have a big impact on our activity. But what we are seeing during the last few weeks, I would say, is rather the prices, they started going down. And we are observing mostly CPPOs, not CPI. So that's the answer this question.
We will probably know more in a couple of weeks because all of these things, they are interrelated.
Thank you. And when would you like to go back to spending more on Hunting Clash user acquisition?
So as always, I'm sorry for saying it again. It's strictly connected to our smart growing strategy. So I may be boring, but it actually works for us, and we want to follow this strategy. So once we see the market opportunity, the product being ready to increase the budgets and marketing team in general being also able to increase the budgets, we do that. So what we did in the last few months, we were increasing pretty aggressively the budget for hunting class since November 2020.
Then we went down in April, as you have seen in the presentation. Now we are working on looking for a new space to spend more in hunting clash, but we don't want to go for any risky moves. We want to follow the data. We want to follow our experience. What I can say, though, is that we start introducing new marketing partners tested and proven in fishing glass.
We are looking for new marketing channels as an opportunity to grow. So we expect to have more chances to increase budgets for hunting clash in the upcoming weeks.
Yes. And I think just if we may start here because I think it's important to reiterate that the way we work is there's a lot of companies working with marketing budgets being said, per month, per quarter, we don't do it. Yes, we follow the market. We look at LTV curves. We look at the potential of individual campaigns.
And on that basis, with certain thresholds, we're investing money in user acquisition. That's how we've been operating for many, many years now, that's been bringing great results. And it also brings a little bit frustration because we could have kept the pace of and provide guidance with that. We just don't do it. We do it in a very open way and transparent for ourselves at the back of our knowledge of how much is it worth to invest.
So that's how we've been operating. And then also 2020 was a result of that. Yes, the fact that we've grown 2.5 times was only possible because we've reacted to the market opportunity.
I think the results of hunting clash, repeating what we did with Fishing Clash are also proving that this strategy works for us and for our titles. So we would like to keep on doing that in the future.
Thank you. And another question. I would like to ask for an update on M and A processes. Stocks? Are you performing any due diligence?
What is the reason of no success here, valuations or lack of good enough companies?
I think so the first part, I've answered to the extent we feel we can in terms of availability of interesting companies to invest in. I think there is from our perspective, in particular, there is a scarcity value. So we believe that there's particular companies that we can invest in. We will not invest in there's vast majority of companies we're not interested in investing because we don't believe we can create value between the platforms. And that's a kind of fundamental reason to invest.
Whenever we can help with our systems, whenever we can help with our growth competencies, if we can share our infrastructure to help these companies to grow, is the reasons to invest. And if we cannot deliver on these levers, then it's hard for us it's harder for us to imagine we can create value and then match the market expectations in terms of pricing. And yes, the market is quite expensive, the M and A market.
Thank you. And now about the product. Do you plan to soft launch Football Elite before the NFL season starts. Could you comment on competing games within that category? And especially considering Golf Royal was behind the curve, mentioned?
Okay. So answering the first question, I think we will be looking to soft launch the title when we feel it's ready to be soft launched, yes. So we are always looking in the long term, not in the short term. So if we are ready and if if it's the NFL season, that's perfect. But we will be looking on from our side on the data to see if it's ready.
It doesn't mean it won't be ready, but I just wanted to reiterate that we are always looking in the long term perspective. There's always a competition in the marketing everywhere. But from the typical product perspective, I don't think there's anything similar in the market. The games with the NFL teams are there. They are different types of the games.
We have Madden from EA, which is pretty realistic simulation that is taken from the consoles and PC platforms. I want to say it fits perfectly into the free to play journey because it's a very nice game, but we are tackling this topic from the different angle. So direct competition, I don't think we have there. Definitely the team competition the team by genre, I mean, yes, there is some competition. But it's not like in the case of golf where there were a lot of titles that basically they had a pretty similar feature set.
We tried to pivot the game a few times during our production when we saw new titles coming to the market. And from the strategic perspective and from the product perspective, I think our feature sets were pretty unique. But in the recent months, in the recent three to 6 months' time, we saw new newcomers that basically filled those gaps that we were aiming at. So we got a little cornered and that was the reason why we decided not to continue on Gulf Rail.
Thank you. And another one about Football Elite. Do you think that the launch of this game might be more affected by new iOS policy, considering iOS has a high share of market in U. S?
I might add something. I think from that perspective, I don't think it's going to affect it as Google Android is growing in U. S. Market as well, It's not disproportionate.
And we've seen that in other games from our portfolio that the Android share of our players, and our revenue in the United States is growing bigger. There are new devices, high end devices coming from the Android angle. But I also think the other part of the answer is needed. So we still don't know what's the what are the exact reasons of Ios 14.5 being introduced. So we will be following the market.
We will know more probably during the next few weeks. But in general, the target audience in the United States and in the whole world for this type of games is really big. We've seen that already delivered some fast traffic to the game during the technical launch. So I don't think we are afraid of that. And we will be looking for players on both iOS and Android and not only in the United States but also outside the United States.
It's not that American football is just for American players.
Thank you. Now on the Polish chat, we have question about M and As that we've already answered. There is a new one. What does May look like when it comes to bookings and user acquisition for Fishing Clash and Hunting Clash? I'm not sure we can answer that.
May is not over, so maybe it's not good to comment it yet.
It's not a public data yet. And also about iOS 14, we've already answered that. Okay. Could you give any update regarding fishing clash in China? There are no updates.
There were no additional batches of foreign games approvals coming from the Chinese regulators since the beginning of February 2021. So we will have to wait for more official news to come and share with you guys.
Exactly. Thank you. Now we have some questions in the mail as well. When do you plan to finish technical changes in Fishing Clash? When new and updated version of Fishing Clash will be ready for gamers?
I mean, we are working on the technical improvements in Fishing Club. So it's not like it will be ever over. The game is going to be updated regularly. With increased capacity of the team, we hope to deliver more and more content and more and more features to the players. So you can expect more to come in the future also for also the biggest the bigger updates.
And yes, we will be constantly working on the improving technical quality of our games.
Thank you.
Yes. Maybe I can Bartekat that we will be adding features in upcoming updates. But if we want to release a very nice super quality feature, the bigger one that should strongly improve the KPIs. Then we will require some more time and more capacity. But it's coming soon.
Thank you. How long do you plan to keep high marketing expenses in Hunting Clash? When can we expect hunting pledge to become more profitable gain?
I think I will repeat our strategy. It's smart growing, right? So we keep the expenses high when we see The curve is promising, and we bring value to the game. And we will go down when we see we have to wait. We will be waiting for new features to be added to the game.
So I don't know if I can elaborate more on this question because it's like already repeating the same
thing or We're going a little bit in circles here. But again, investment in marketing, we're doing at the back of our forecast for the monetization potential. That's how we do it. And then we're looking at LTV curves. And on that basis, we take a decision on how much we invest.
And then we're doing it for future for lifetime profits in the game rather than looking at month to month. So there is no direct correlation between that. So for instance, Marcin talked about it. We had invested a lot in Q1, a significant marketing spend in Hunting Clush. And if you look at the result of Hunting Clush, it's we haven't done it for Q1.
We've done it for the following quarters, yes. So this will bring effects in the future. That's how we always operate it.
Thank you. Yes.
As we said, there was a question about the profitability. Hunting Clash is bringing profits to 10 square games already. So think it's important to underline that part as well.
Thank you. We have another question about China. That's already answered. Now does the decision to pay dividend and buyback of shares mean you currently do not see attractive acquisition targets? Or do you treat buyback shares as your currency for potential acquisitions?
We decided to try and open up that buyback share option for the company just to have another instrument to be able to respond to the needs. One element is if there were acquisitions where we could pay with shares or the other party would expect that. That would give us possibility to offer these shares from the buyback. The other thing is it just gives another lever to create value if needs be. So we can respond and do the buybacks.
But to be frank, this is not our business. Core business of TSG is to produce games, not to trade with own shares. So if we have to use it, that's open that option is open for several months going forward, and that's a good thing to have in volatile environment as we've seen recently.
Thank you. When do you plan to start booking deferred revenues for durables in Hunting Clash?
Okay. That's quite a good question. We have not decided on it yet. We definitely will discuss it of our auditors during the half year review. What is important to say is that in order to book this adjustment, There must be reliable data regarding the expected lifetime expected life of a paying user For a game that are on the market that have been on the market for a few months, you do not have such data yet.
So it's obviously just a matter of decision when the game is mature enough to be able to determine that. Hasn't been mature enough yet whether it will be, the half year or later, that remains to be seen. I don't have an answer yet for that.
Thank you. How do you currently see your stock option motivation scheme EBITDA target for 2021 conservative, neutral or challenging?
Yes. I think we've communicated on that. This is the tool, has 2 elements in it. One is to motivate people to be around in the business and retain them. I mean, if you look at the ESG and what is that we want to achieve is a long term growth and the perspective to be to be significant player in free to play space for years to come.
And that's how this program was set up. The targets are not our ambition. This is not the targets for the company financial targets. This is the these are targets for the share scheme option program only.
Thank you. Now this question I believe was partly answered, but a bit different. Why are you spending relatively little on marketing for Hunting Clash. Is this connected with new Apple policy?
No, it's not connected to Apple policy. So I think that's the answer to the question that is missing here. The rest has been discussed. What I may add is that we were discussing the forecast for hunting clash here, but it's also that we are looking for more space, also working with the forecast. So forecast cannot be updated every 2 weeks.
That's how the forecast works, but we are working on it. So we are trying to find more space to increase budgets for hunting clash. But I think the history of hunting clash is showing that we've been already increasing it a lot during the last months. And I think the information like the change, the difference between Q1 'twenty one and Q4 'twenty shows that we increased both the bookings and marketing spend significantly for this title. So it's not that we are increasing week by week, But when you compare quarter to quarter, the increase was already significant.
Yes. And also to add maybe because there were several questions on that and there's these thoughts around it, we can hear it. I mean if you look at history of Fishing Clash, which is the best reference point we have over the last three years. There's been periods where we where the game was growing. The most pronounced period was in 20, there were periods where the game stabilized, so was the marketing spend.
And we always follow the Smart Growing strategy, and we'll continue do it. So there might be periods where it slowdowns. And when the opportunity is there with the game readiness plus the market opportunity in terms of market pricing, then we'll be using it. So we're not that concerned, and there's been a concern about April revenue. I mean that's still early in the game for Handiclass.
Thank you. One more question from Konrad Ksenczypolski from Haitong Bank, quite a long one. You doubled employment since IPO, while your game portfolio remains pretty much the same. You added Hunting Clash, but you skipped a few other projects like Game Factory, Games For Women. Now you plan further increase, pretty much doubling from 2020 while your game portfolio does not look to be doubled.
If your current employment is not able to produce more highly successful games, what is the reason to double the team right now?
Okay. It's a long question. I'll start with the beginning. I think the answer to that is a lot has changed since the IPO. As far as I can remember, we had Lads Fish and White Hunt as core portfolio plus Game Factory, which were small products, which we still have at the similar level, actually bigger than they were before, and Fishing Clash was coming upstream.
And today, we have Fishing Clash at full maturity. The stock price has grown, I don't know, 13x, so the company has grown significantly. And One pillar for the future is to increase our production capacity, also to work with current portfolio, but also to be able to strengthen across different areas to stay highly competitive, and that's required. This is not just a linear function of number of people and to produce certain number of titles. We have to become stronger.
We have to be stronger on BI. We need to have better systems. We need to strengthen our growth function, also our support services, and that's what we need to do. And I think part of the answer you've seen through the presentation today, we Fishing Clash and Hunting Clash in current environment, these are the games that can achieve much more by creating teams that have higher production capacity. That's what we're doing.
The best examples you'll find in the presentation.
Thank you. One more question from Generali Investments. How many developers are working on Zombie Clash and Football Elite. How come Football Elite will have a soft launch sooner given you announced it later? Are you prioritizing this project hoping on claiming this niche?
So when you look at Football Elite, Yes, we were definitely working very for a very long time in the background on making sure that we really spec out the best possible game, the best performing game. As you can see, it took us a while. But when it went to the production process, we noticed that it was actually maybe not easier, but it was with our experienced team, It was a very, very quick process. When you look at the hunting clash, this team is a mix of newcomers and a mix of very experienced sorry, zombie clash. It's a mix of newcomers and very experienced people, yes?
So And also on the top of that, this is going to be a bit different game than just, for example, a hunting clash or fishing class, yes? So there is slight difference to the approach in development. So to not spoil too many informations, we cannot really compare these 2 games as apples to apples. And yes, I might just leave you there. I'm sorry for that.
Thank you very much. These are all the questions. We've answered everything from both chats and e mail. Thank you very much. You can in the future always find contact to Investor Relations on our webpage and our presentations everywhere.
Okay. Thank you very much. I guess