G5 Entertainment AB (publ)

STO:G5EN

Earnings Call Transcript 2022-Q3

[Stefan Wikstrand, executive]

Good morning, everyone. We get started the Earnings Call for our Q3 Report. I can see the attendee list is now filling up here. [Operator Instructions]

With those administrative things out of the way, I will hand over to Vlad to start the presentation.

[Vladislav Suglobov, executive]

Thank you, Stefan. And just as a reminder, my name is Vlad Suglobov. I'm the CEO of G5 Entertainment. And Stefan Wikstrand is our CFO, who began the presentation. We'll take about 15 minutes to go through the slides and then we can move on to questions and answers and we will open the line for questions. So I'll start by giving you some of the highlights from this morning's report. If we can move on to the next slide. Revenue was SEK 360 million, which is up 10% year-over-year. But if we look at it in USD terms, it's down 10% and it was essentially flat in constant currency exchange rates of 2021. And so this puts our top line performance in line with the overall mobile gaming market, which we see as broadly flat for the year. Our own games stood for 73% of revenue compared to 66% the same period last year. The revenue highlight in the quarter was Sherlock again, up a strong 104% year-over-year year and 13% quarter-on-quarter and that's in USD terms and the game is continuing to grow.

Our New Generation games generated SEK 216 million of revenue and they grew 8% year-over-year and 3% quarter-to-quarter in USD terms and stood for 60% of revenue, a new record. The Jewels family of games stood for 31% of the group's total net revenue. Again Sherlock, the star of the portfolio now, reached 23% of total net revenue and it was only 10% a year-ago. As you can see in this chart on the right side of the slide, the game continued to perform and grow its share of our business over many quarters. We expect the game to continue to do so. So to-date we have released 5 of the 6 new games that we were aiming for in 2022. So we should be on track to deliver on this goal. The gross margin was an all-time high 68% driven by own games and the revenue they generate and store diversification. And G5 Store combined with advertising revenue stood for well over 5% of total revenue, which is very encouraging for the continued expansion of advertising G5 Store and the gross margin expansion.

As communicated previously, we invested in UA boost during spring and part of the summer. But in August UA spend normalized to the previously communicated range of 17% to 22% and so the total UA spend for the quarter was at 22%. And from there, we kept UA spend consistent with the level before the boost and we intend to continue with that level of spending. So basically back to 17% to 22% and historically what we had prior to the UA boost for Sherlock. During the quarter, we repurchased 160,000 shares for about SEK 28 million and this brought down the number of shares in the market to 8.280 million and this number has been trending down over several years now. All in all, we continue to have a strong position in terms of fundamental parameters of the business and financially as well. We remain profitable, we remain cash flow positive and we are debt free.

And before I go into further slides that we always have in our calls, I'd like to spend time on the major news in this quarterly report and that is our new games funnel and the changes we have made in the process there. So despite many disruptions this year, we have been working on changing the process of how we select and develop new game ideas. And if we look back during the last 10 years we have developed tens of games, but only a few became major hits. Other games took time, money and effort, but didn't make a big difference. And we would like to find a way to avoid making games that don't make a difference so we can save time and money and have a leaner organization. Accordingly, we have adopted a new development funnel. And so from now on before investing in a new game idea, we will extensively test this idea in the market to make sure there's great potential. Many ideas would be rejected already at this point.

And if the market tells us there's potential for the idea, only then we will form a lean game development team and proceed to develop a version for soft launch with a limited amount of content. And during soft launch, we will iterate and test the game against benchmarks to confirm the scalability of the game in the market. And every year we expect that 5 to 6 new game ideas will actually make it to the soft launch development stage and into the soft launch stage and only 1 or 2 games will pass the checks and will be released globally. So this is based on our basically historic numbers so this is based on the data that we have and how we performed before looking back over the years and the success rate over time. And so the games that don't pass the checks will be discontinued and the teams will move on to the next idea. So this should really speed up our going through the ideas of the games in search of those where we can really deliver a product that scales to meaningful revenue while also kind of streamlining the organization and making it leaner.

So this new testing and selection process is closer to what our peers are doing and closer I would say to the best practice in the industry. Because of the uncertainty whether the game is going to be globally released before it passes checks and release globally, we cannot capitalize development expenses on a new game until it is released globally. And accordingly, starting with the 1st September this year, we no longer capitalize development expenses on new games and we actually had to take this large write-off of capitalized development expenses on games that have not yet been released globally. This write-off is on paper only. It is essentially an accounting change. It won't affect our operational cash flow or decision on dividends and it won't even affect how we continue to work on these games. And while this change is going to have temporary negative effect on our EBIT margin, this effect will gradually go away as amortization declines over time.

And this new approach will also bring, as I said, some optimization in our organization structure as the teams working on new games tend to be leaner. And we expect, so to speak, less waste and more shots on goal and more going faster through ideas in the search of the next big hit and arriving there earlier. So to be clear, this change only affects 2 stages of the game development cycle that you see on your screen so the 2 left ones. Now let's look at the financials in the third quarter. So as before, our New Generation of games continued to fuel growth. Revenue, as I said, of SEK 360 million, which was up 10% year-over-year. Our own games again stood for over 73% of revenue compared to 66% a year-ago. New Generation games is now the biggest segment of our portfolio at 60% of revenue and that's up from 50% last year. Sherlock, our main growth driver, is responsible for 23% of our revenue and was up 104% year-over-year in USD.

And finally, monthly average gross revenue per paying user was a strong USD61.2. And we can note that this metric remains strong despite substantial dollar strength and the fact that close to 40% of our revenue is derived outside of U.S.A. So this underlines I think the resilience of the consumer, if you will, at least during the third quarter and we haven't seen really changes in that regard at least not yet. So let's look at the earnings and margins. Our own games continue to drive strong gross margin and it reached a new high of 68% in the quarter mainly thanks to higher share of revenue coming from own games, G5 Store and advertising revenue. However, EBIT was a negative SEK 22.8 million and the EBIT margin was a negative 6.3% adjusted for FX. So the decline is fully related to 2 things. To the UA boost, which was still happening in 1 month of the quarter, but mostly to a onetime write-off related to the change in company's development form of process.

Adjusted for write-offs, EBIT was SEK 49.7 million and the EBIT margin was 14%. If we make -- if we try to adjust for a higher than normal UA boost expenses in July, EBIT margin would have been 16%, very close to last year's. So again fundamentally, the business is doing well. So now let's turn to the cash flow and our cash position. So we finished the quarter with the highest cash position ever for the third quarter thanks to our stable cash conversion. Capitalized development expense has impacted cash flow negatively by SEK 45.2 million. And during the quarter, cash flow from financing activities was negatively impacted by buybacks of SEK 28.2 million so some more capital returned to the shareholders and furthermore, we made noncash write-offs related to changes in the publishing process of SEK 72.5 million. Total cash flow in the quarter was negative SEK 50.9 million. But total cash at the end of the period was SEK 182 million, which is again the highest end position for the third quarter ever.

And let's turn to an update on our operating locations. We have continued our relocation efforts with regard to our employees and now we have new development offices in Armenia, Bulgaria, Cyprus, Georgia, Kazakhstan, Montenegro and Poland. Kazakhstan is in the process of being opened. Other offices already have employees on the ground. In total we have had over 300 relocation applications, which we are trying to accommodate as swiftly as possible and we're quite busy doing that. But despite the ongoing relocations, we are working at full capacity. Now let's turn to a brief outlook. So we expect the revenue for Sherlock and for our New Generation of games to continue to grow. We also expect our gross margin to continue to expand as our games become a higher percentage of revenue -- as our own games become a higher percentage of revenue and as G5 Store continues to grow.

We expect our new development funnel to drive 1 or 2 new global game releases every year. And in connection with this change in the development process, we will no longer be announcing soft launches of new games. So we will only be announcing global releases from now on. As of September 1, we no longer capitalize development expenses on new games until they are launched globally so you can expect less capitalization on the balance sheet and amortization declining over time. You can also expect that EBIT will be more reflective of our operational cash flow because of this. We have lowered UA spend back to the communicated range of 17% to 22% and we intend to remain in this range of UA spending. So there are many components actually in Q3. In addition to the change in the development funnel, we're getting some IT incentives in some locations. We are moving employees, which affects our expense currency mix and so forth.

So then there's the changes in how much of the development expenses we can capitalize. So it's quite a few things happening in the matter of 1 quarter. So as an exception rather, we are giving the indication of the EBIT in the fourth quarter taking into account all these things that are happening in Q3 and we expect Q4 EBIT margin to be between 13% to 15%. So anyway after buying back shares, we finished the quarter with a strong cash position, once again the highest we've ever had in the third quarter. We remain profitable, cash flow positive and debt free. We continue to follow our strategy and we see positive momentum going into seasonally strong Q4 and Q1. I am grateful to all our employees for their hard work under such challenging circumstances and I'm very proud of the strong accomplishments by the whole G5 team.

This concludes my presentation and I'd like to open the call for questions.

[Stefan Wikstrand, executive]

[Operator Instructions] We have Simon Jonsson.

[Simon Jönsson, analyst]

Can you hear me?

[Stefan Wikstrand, executive]

Yes, we can hear you, Simon.

[Simon Jönsson, analyst]

So you gave your motives for adopting this new development formula and to me it makes sense, feels reasonable and as you said, others work this way. I was just wondering did you decide to cancel any projects doing this?

[Vladislav Suglobov, executive]

We were going through kind of a normal work process and we did cancel I think 1 game for sure during the third quarter. However, we have many more during the soft launch period. And this change has been really going on -- I mean it was pending for a rather long period of time, but we got distracted during the first half of the year quite a bit. So yes, that's what we did.

[Simon Jönsson, analyst]

All right. And given that the UA was only 22% of sales here in Q3, it must have been much lower towards the end of Q3, right, because it was still high for Sherlock in July. Was that a tactical decision from you to hold back later in Q3?

[Vladislav Suglobov, executive]

Well, we did -- as we communicated in advance of this UA boost, we said we're going to do it for 3 months. It's going to be 2 months of Q2 and 1 month of Q3 which is July. And so we did exactly what we said we will do. And so that's why 1 month of July was still above the normal range that we have communicated before. And that's why the whole quarter is on the higher side of the range because if you look at the quarters before the UA boost, I don't think we were ever at 22%. We were closer to 20%. So that's why. And so Q3 is still on the higher side and then I mean reasonably, you'd expect Q4 to be more in line with what we had before the UA boost, which would be closer to 20%.

[Simon Jönsson, analyst]

Okay. Because it felt to me that maybe September or September and August was quite a bit closer to the lower end of the range?

[Vladislav Suglobov, executive]

No, maybe we -- let's say I think we didn't spend as much as we wanted in July. That's kind of closer to the truth that then the other 2 months were below normal.

[Simon Jönsson, analyst]

All right, makes sense. And then last from me, what can you say about the visibility to Q4 in terms of sales? And could you also comment on the current patterns for Hidden City and Sherlock? I think you said here at the end that you see positive momentum into Q4. Is that mainly seasonality or is there something else you see in the market?

[Vladislav Suglobov, executive]

First of all, I see the resilience of our paying users. If you look at our monthly average gross revenue per paying user, which is a big number of letters to pronounce. But essentially this is how much we get on average from a paying user in a month, it's still a very solid number. Considering the changes that we had in the currency exchange rates and that a large chunk of our revenue comes in euro and pound and Japanese yen, if you were just trying to apply that, it should have been much lower. So I think the fact that it's such a solid number just underlines that the underlying trend really is for continuously growing number. And so if we were in constant exchange rates, this number would continue growing. So now it's kind of trending slightly down from the previous few quarters. but again that's natural considering just the currency exchange rates.

So I don't see red flags in there. I think that we certainly see lower engagement and lower active audience of users. And as we said before, this seems to be the reopening year like the reopening has arrived big time, right? Their traffic in the U.S. is above 2019 levels for the first time and so forth. So like we have fully reopened in all markets so we're back to some sort of baseline and perhaps we're even overcompensating because maybe people feel like they have to spend a lot more time away from games to compensate for the 2 years of the pandemic.

But again I think that going into Q4, we're going to see engagement increase again maybe not strongly, but I don't think it's going to go down. I think it's more probable that it's going to go up. That's why I'm cautiously optimistic about Q4 because I'm saying that historically back in the normal situation prior to the pandemic, Q4 and Q1 were more active quarters for the players to spend time playing mobile games for natural reasons.

And so I expect to see that happen after a weaker Q2 and Q3. So that is my logic. I haven't seen anything contrary to this logic yet. There are different reports from different companies out in the market and some are doing worse, some are doing better. So I don't think that -- again I'm still fairly optimistic about why I don't see anything terrible happening at least not yet. And again just applying logic, free games is something that is difficult to give up, right? It's always an alternative to all the other more expensive ways to entertain yourself whether it's going out or enjoying entertainment on expensive subscription or a onetime purchase. And then Internet purchases are optional. But when people spend a lot of time, we always see them kind of spend money proportionately in the games. And so this is the basis for my optimism.

[Simon Jönsson, analyst]

All right. And just a follow-up. It seems like you're saying that organically the average revenue per user is still up.

[Vladislav Suglobov, executive]

It's what I'm trying -- there's a bit of a confusion about organically. So I've seen some analysts say organic growth referring to U.S. expressing everything in USD terms and saying it's organic. But to me organic, the more accurate way of looking at it is saying that if the currency exchange rates were constant, what would we see, right? What kind of dynamic would we see? And what I'm saying if the currency exchange rates were constant from 2021, I think we will continue seeing the increase of the monthly average gross revenue per paying user, but we're not seeing that because of the currency exchange rates. So yes, that's what I'm saying.

[Stefan Wikstrand, executive]

And then we have Rasmus Engberg from Handelsbanken.

[Rasmus Engberg, analyst]

I had problems joining the presentation so sorry for being late and if I ask a question that you've already answered, just tell me and I'll listen to the replay. Just on the previous question, would it be possible for you going forward or maybe help us sort out the FX effects like what was the FX on your top line so that we could sort of take this question away? Is that something you can do or is it too complex?

[Vladislav Suglobov, executive]

The reason why I made in the report the description of our dynamic so complex is because it really depends on which currency you look at it. So in Swedish krona because of the strength of the dollar or weakness of the krona towards the dollar, we're up 10%. And then if we try to look at our figures expressed in USD, then obviously in USD we are down 10% just because close to 40% of our revenue expressed in USD compressed quite a lot because all currencies went down and most of these 40% or close to 40% of our revenue is derived in euro, in Japanese yen and in British pound, which have lost tremendously against USD. So that's why it's kind of natural that our revenue in USD was affected negatively. And then looking at the constant exchange rates, we did this exercise within the company, we tried to analyze it.

If the exchange rates didn't change at the end of 2021, how will our revenue look like and that makes our revenue development pretty much flat compared to last year. So that's the situation with regard to the top line. And I think in this situation when you look at the reports for the whole market, you have to keep in mind how exchange rates affected it. So if you look at the USD figures for the whole market and they're saying the market declined year-over-year, does it mean that fewer people paid less money? Well, not necessarily because maybe they were still paying in the British pounds, euros and Japanese yen or in yuan; but then expressed in USD you've got a smaller number. That's why everything went down. So it's kind of a bit of a minefield this year and that's why we tried to approach it from both sides in the report.

[Rasmus Engberg, analyst]

No. I was just wondering whether you would be able going forward to specify what the impact was and sort of given there's 10% growth here, what is FX and what is not FX there? That was my question, but we can get back to that. It's not a major thing. It will surely fluctuate back and forth also in the future.

[Vladislav Suglobov, executive]

I'm sorry, I think we're saying exactly that. We're saying it's plus 10% if you look at USD and these are 10% from FX -- sorry in SEK and it's minus 10% if we look at USD and this is also from FX. So underneath it all, we see more or less stable performance.

[Rasmus Engberg, analyst]

Great. Just on the comments that you gave about the cash flow, which does it mean that you expect your CapEx to be more similar to your depreciation in the fourth quarter?

[Vladislav Suglobov, executive]

Exactly, yes.

[Rasmus Engberg, analyst]

And given the write-down now, is there any change in the depreciation in the fourth quarter or is it roughly the same?

[Vladislav Suglobov, executive]

I think it's going to -- because our depreciation cycle is 2 years, it's going to start roughly the same. But over the next 2 years, it's supposed -- is it supposed to go down because we took it -- we wrote it off so it's no longer -- yes, maybe it's just pretty much. Yes, I think we're getting very close to the situation where our...

[Stefan Wikstrand, executive]

The capitalization and amortization, yes, they will be -- you can see that especially the last year we have had a wider gap between capitalization and amortization, which is what we sometimes refer to as net capitalization. Given that we don't capitalize on new games, they will be closer and thereby, EBIT will be a better approximation for cash flow or even better approximation for cash flow going forward compared to what it has been in the last years.

[Rasmus Engberg, analyst]

Got it. I was just wondering if I should guess about Q4, would depreciation be broadly the same as in Q3 excluding the write-down obviously?

[Stefan Wikstrand, executive]

It would be broadly the same because it is still games that -- it is primarily related to games that are in production and released. Whilst the new games, they would not -- the amortization on the new games wouldn't start until maybe as we did before 6 months after release so that would come later. So it's going to kind of roll over in coming quarters and you will see the effect, but Q4 should be roughly in line with Q3. That would be my -- yes.

[Rasmus Engberg, analyst]

And then just a final question. When you look back on the investment in UA that you did in particular in Sherlock, what are your takes now that we've had a couple of months without the push? You seem to be doing fine anyway or how do you sort of interpret it?

[Vladislav Suglobov, executive]

Well, we certainly saw some kind of increased dynamic and again it wasn't as much as we were hoping for so the organic uplift wasn't as big as we were hoping for. So we decided it's probably not the optimal way of doing it, but we're still certain we're getting this money back and that we kind of helped Sherlock to continue on its growth trajectory and because of this push, it's going to be growing a little faster. With regard to the dynamic, it's going to be spread out because when we buy users, we expect them to generate revenue over time. So it's not like it's going to be concentrated and then it's not going to be there. The effect of this UA boost is going to be spread out over many months. So I think it's going to help us and with a little bit of luck and a little bit more attention from mobile players at the end of this year, we're going to see Sherlock reach new highs and, as I said before, hopefully exceed revenue for Hidden City and they're pretty close right now.

[Stefan Wikstrand, executive]

We don't have anyone raise their hands, but we have quite a few questions in the Q&A box. So the first one is regarding the other operating income, which is about 20% of adjusted EBIT. Detailed comments?

Well, as we write in the report the other operating income and expense, they are reported net on each one of the rows is related primarily to revaluations. So specifically the parent company has a large chunk of its balance sheet denominated in USD so it is heavily impacted by the revaluation of the USD, which is what you primarily see in the other operating income. There are of course more FX going in there and some other items, but primarily it is USD exposure in the parent company balance sheet that you will see pop out there.

We then have from Ula. If ad revenue is growing quarter-on-quarter in USD?

[Vladislav Suglobov, executive]

I can say that, yes, I'm tracking that number. It is growing quarter-on-quarter in USD. Can we move on to the next one?

[Stefan Wikstrand, executive]

That was a quick one. Does the leaner organization of fewer games that reach global launch that we can expect fewer employees a year from now?

[Vladislav Suglobov, executive]

Well, a year from now is difficult to say because within the next year, we theoretically can find a game that scales so well that we would actually need to create a large team to support it and therefore, the number of employees will increase. But I would say for the next, in the absence of big new breakthrough games let's say, over the next few months you can expect the number of employees in the company to gradually decrease. And yes, that's what it means for our current state of the company working on as many new ideas as we do work on now will require fewer employees. But then the purpose of this organization and the new funnel is to find games that are so successful that they bring the organization to the new level and in that case, we will certainly continue strengthening the team to make sure we are fully staffed to support our games.

[Stefan Wikstrand, executive]

Next question is, is it still possible to relocate Russian employees to new locations?

[Vladislav Suglobov, executive]

Yes, it is. We are doing that, yes.

[Stefan Wikstrand, executive]

From an anonymous attendee. The utilization how you develop games, is competition affecting G5 more than you expected?

[Vladislav Suglobov, executive]

No, I wouldn't really say that. I think we were just looking at again the historical success rate and we were certainly working on some games and thinking like is this the one, right? Is this the 1 of the 5 or is it the 1 of 35? And we've been also -- overall over the last couple of years, we've been really thinking about the way the processes and the formalization of the process of working on new games and unfortunately, the events of this year kind of distracted us from doing that earlier. But we have finally put ourselves together, looked at it and we said basically we don't want to waste time and effort on building these 35 or 30 games that we wish we didn't really do, which didn't really change anything. I mean we've learned something and that's great. But in the end, you spend.

On some games we spent several years a lot of time and a lot of effort, a lot of money and it's good if these games recoup the investment and they become slightly profitable. But over so many years, this really doesn't matter. And so we're trying to avoid these games and we're trying to make more games like Sherlock, Hidden City or Jewels of Rome; games that really drive progress in the company in terms of profitability and the top line development. So I don't think the competitive situation has changed. It's just that we are maybe growing older and trying to be smarter about how we spend the time and effort and the organization is also larger. So it's becoming kind of more difficult basically to manage and we were thinking how do we kind of narrow our focus on the right kind of games and develop less games that in retrospect we wish we didn't spend as much time on.

[Stefan Wikstrand, executive]

All right. The next one. Have you noticed that the cost of advertising for user acquisition has decreased since actors such as Facebook had a significant drop in cost per ad in their Q3 financial report?

[Vladislav Suglobov, executive]

It's a thing that I always say it's so difficult to comment on whatever average price of acquiring a user in the market because the way that our user acquisition works is not really based on that. I mean theoretically, you can have a channel which sells you users for $0.10 and you expect to make $0.15 on average or it can be a channel which charges you $100 a user, but you expect to make $200 back. Like what's the average there? Do prices go up or down? It's a bit of a meaningless question at least to me. Maybe I look at this wrong. So it's hard to say. I understand what you are saying since these companies are saying that there's less demand for advertising that perhaps there's more space in the market for us and maybe it is, but the way our algorithms work is that it would basically make it possible for us to spend more in line with our strategy.

And maybe if the situation would have been more competitive, we would be able to only spend less in Q3 and we wouldn't be able to spend as much as we wanted to spend and maybe that will be the situation in Q4. Usually Q4 is an expensive time to advertise on one hand. On the other hand, with a lot of new devices, this is also when players who are engaged exhibit patterns that indicate that they're going to be spending a lot of money. But again for game developers like us, it's usually difficult to compete with advertisers in Q4 so our advertising spend in Q4 usually is below what we are aiming for. And maybe this quarter the situation is going to be better. But maybe on the other hand, the ability to pay the users is lower and that's why advertisers are decreasing their budgets. And then maybe these 2 factors will even out and we will end up spending.

The market is going to find its balance and we'll just be able to spend whatever we planned on spending. Unfortunately, there's just too many moving pieces here. But if we look at the unit economics when we are acquiring a user, we are basically looking at the user's behavior and we are expecting to pay for the user money that we can recoup over the next number of months. And then we have an idea of how much of the total revenue of the game we're willing to reinvest in user acquisition and that's how we do it. So if there's going to be more opportunity in the market, then we should be able to invest better and we should be able to invest more. And as you're saying, maybe the dynamic in the market with the absence of main advertisers and the reduction of spend, maybe it will create an opportunity for us but we'll see.

[Stefan Wikstrand, executive]

I will combine 2 of the questions here. One is do you have room for more buybacks?

And I think the simple answer is yes, we do.

And then we have a question do you consider buybacks a stable process?

I don't really know how to interpret that question.

[Vladislav Suglobov, executive]

Well, I think we can say that we are not committed to doing buybacks over in some form of a regular pattern. We can be a little bit more opportunistic about it than we are trying to be. Our goal is to deploy capital in an efficient way and I think the way we did it this year was rather good. We were able to acquire a lot of shares for a fraction of what we've paid for these shares a year before. We've averaged down the average buyback price substantially. And given the opportunity considering that we are a cash generative business, we're going to use it to bring benefit to shareholders.

[Stefan Wikstrand, executive]

A multilayered question. Jewels of Rome seems to be doing better in the last months. Is it due to an update or is it user acquisition?

[Vladislav Suglobov, executive]

I can try to answer that. So it's hard to say. But we certainly rolled out new important features in Jewels of Rome. There are unions now, which are kind of like clams but they're not about competing, but more like cooperating or like competing in cooperation. And it's just a basic functionality at this point, but we have a lot of plans for the unions feature. We see higher engagement of players that participate in unions and we will bring a lot more exciting things and features and events based on unions. So we certainly attribute some of that increase to the new functionality. Overall, we have a really interesting road map for new features in Jewels of Rome. And user acquisition team is always working hard to continue to promote Jewels of Rome. So I don't want to say it's not due to them, but it's certainly due to the great cooperation between the development and user acquisition on this project. But there were new features for sure, major new feature.

[Stefan Wikstrand, executive]

Next question in that is, is Windows store growing in general and it is hard to find data on that store?

[Vladislav Suglobov, executive]

It is hard from what I know, but it's not like I have any insight into this. But generally I would say it is growing and yes, let's leave it at that.

[Stefan Wikstrand, executive]

Are you seeing any other behavior on the player, which is playing on G5 Store or downloaded from G5 Store?

[Vladislav Suglobov, executive]

We generally see higher revenue per user so it's difficult to say why. I mean we can speculate about it and we can attribute it to a larger screen size, but then again in Windows and Mac, screen size is larger. So it must be due to the fact that maybe our most loyal players are comfortable downloading games directly from us and paying directly to us and that sort of preselection of people willing to go to G5 Store ensures that we have better payers. But we are -- every metric engagement or payment metric that we see on G5 Store is better than we see overall. But also maybe it's because of the scale like when it comes to our user acquisition efforts into G5 Store or the overall player numbers, they're still small relative to other stores. But it's interesting I think. I hope that in a relatively short period of time we can report that G5 Store is now larger than some other stores from big companies for us in our revenue mix. It hasn't happened yet, but we're going there.

[Stefan Wikstrand, executive]

The final one. Is M&A still possible?

[Vladislav Suglobov, executive]

Technically I guess it is possible. I don't know how to answer this one. We're still -- for us, we are -- I don't know. For the better or worse, our operational cycle seems to be very long so to speak. Like before we start thinking about something, a pandemic happens and then before we start getting used to pandemic, something else happens. And then the big quantitative easing happens and before we start thinking that we should be doing something, then the great qualitative tapering happens and we're glad that we didn't do anything that positions us the wrong way for the other phase. And I think everything is kind of moving faster and faster in economy. And at this point, I think it feels really good to have a very stable business without the burden of debt and cash flow generating and no regrets with regard to that.

And that said, we will continue looking for potential interesting companies and reaching out and chatting with them as we do. But considering the events of this year, we are understandably very busy with other things and I think it's going to keep us occupied for some time as well. And so between our own business, our fundamental business and taking care of things; we're not going to have a lot of time to seriously pursue M&A or even look that way, but we're still going to be -- I mean we're still looking at the market and we're talking to some companies sometimes. So that's where we are at. A very vague nonanswer and it's the last one on our list.

[Stefan Wikstrand, executive]

And if we don't have any further questions, which we don't seem to have, I will hand over back to you, Vlad, for closing remarks.

[Vladislav Suglobov, executive]

Well, thank you for attending our call and for following G5. Thank you for your questions. This concludes our presentation. Have a good day.

[Stefan Wikstrand, executive]

Good day.