Modern Times Group MTG AB

STO:MTG B

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, everyone. Thank you for joining MTG's live stream and teleconference for our Results for the First Quarter of 2024. This event is hosted by our Group President and CEO, Maria Redin; and CFO, Nils Mosko. [Operator Instructions]

I will now hand over to our CEO, Maria.

[Maria Redin, executive]

Hello, everyone. Today, we delivered a strong set of results. Our net revenues were up 11% year-over-year, including a 1% currency effect to amount to SEK 1.4 billion. Our revenues reflected a focus on the quality of our portfolio and were driven by PlaySimple, InnoGames and Snowprint.

We also continue to execute actively on our M&A agenda to optimize our portfolio in the quarter. First, we divested Kongregate in early Q1 through the merger of the studio with Monumental and that benefited, of course, our growth trajectory.

And then after the end of the quarter, we also [indiscernible] TD 2 completed a roll-up deal to buy AutoAttack games. AutoAttack is a small game studio responsible for Legion TD 2, a successful Tower Defense game available on Steam.

We also reported strong adjusted EBITDA of SEK 396 million in Q1, which represents a 51% increase year-over-year and enabled us to deliver a 27% operating margin in the quarter. Our strong profits reflected the increased scale within our operations, and PlaySimple in particular, and that was combined with an active focus on managing our cost base and a prudent UA philosophy focused on healthy returns.

When we look at our studios, we have a strong pipeline of new games and localization ahead of us, which also gives us the ability to push more UA as we are ready. We further also had very strong profits in InnoGames, and that is thanks to the lower cost base following the restructuring last year, but also the growing browser revenues that we have once again by strong events, engaging our established players in Forge of Empires.

We continue to generate strong cash flow and generated SEK 293 million in cash flow from operations, and that enabled us to deliver a 62% cash conversion for the 12 months period that ended on 31st March 2024. This again highlights the strength and the health of our assets.

And as you may have seen, we also announced a new share buyback program this morning, and we have started to buy back shares already today. Our intention is also to then launch a new share buyback program following our AGM in May, assuming, of course, we receive the necessary approvals from our shareholders.

If we then look forward for the year, our outlook for the full year 2024 is based on our operational expectations as well as what we are seeing on the In App Purchase and In App Advertising markets. At this stage, we have not observed any significant changes to the trends that we previously observed in our In App Purchase environment.

Market analysis firm Newzoo also continues to expect similar like us, the market to grow by low to mid-single-digit percentage points in 2024. As I said, our own expectations are pretty much in line with these assumptions.

At the same time, the casual segment has been outgrowing the mid-core parts of the market for quite some time. And we do expect the broader dynamics of this to continue, but there are some factors, however, that makes us adapt a bit more cautious view for 2024 in isolation.

These include, amongst other things, the reason moved to real-time bidding, along with some upcoming new privacy changes to consume that Google is putting into place and we, therefore, feel that the visibility of the digital ad market is currently somewhat reduced for us.

At the same time, when we look at our companies, we do have a strong core of live games, and we have an encouraging numbers on new games in the pipeline. The new games are, however, slightly delayed and the timing of these new game launches and new features will affect when and how much we can accelerate the user acquisition investment to help also accelerate our growth.

That means that we will have the ability to scale our UA when we see the right opportunities, but we will only do so when we can generate the right levels of returns on our spending and have better visibility on the market.

Growth remains our main priority and focus, but you can also expect us to maintain discipline approach to marketing, focus on reasonable returns on the marketing levels. That means that when we will continue to deliver high operating markets -- operating margins, while we continue to work towards the next growth phase.

Our outlook for this year reflects this thinking, and we therefore expect our reported revenues adjusted for FX, to be up between 1% and 5%, and an adjusted EBITDA margin to 26% and 29% for the full year of 2024.

So if we then look forward and we look at our sales, which were up 10% year-over-year at constant exchange rate in Q1 that was driven by our established portfolio of 37 live games. Sales were further up 7% if you look on a pro forma basis, which is when we exclude Kongregate for last year, and we include Snowprint in the calculations instead.

Our sales in the quarter was driven by our PlaySimple, InnoGames and Snowprint. And I'm really proud to add that we also had an all-time high revenues if we look on the last 12 months basis.

If we then look into our sales in more detail and we look at our different franchises. Our organic growth in the quarter was driven by the word games and strategy simulation games. Sales for the word game franchise were up 11% year-over-year in constant currencies and PlaySimple continued to optimize the portfolio and added new features to our established word game titles.

Word search, which we now consider being an established title after a fantastic growth journey in the last year, remained a strong performer and it actually now represents just over 15% on the franchise revenues in Q1.

PlaySimple is working on several new games and is also working on localized versions of our established titles, which we are expecting to be released further down the line this year, and that will enable them to scale further.

The sales for Strategy Simulation franchise were up nearly 40% year-over-year, which mainly reflected the recent inclusion of Warhammer 40,000: Tacticus in the franchise. If you look on the InnoGames side, Forge of Empires reported a strong quarter driven by in-game events, which once again successfully engaged our established player and driving a particular the browser revenues.

And what is also exciting when we look at the older games, Tribal Wars had a really strong quarter. And again, thanks to the engaged and well-established players community. And Snowprint, which is the new player in the group, continued to add features and countered the tacticals during the quarter, which includes updates on Guild Wars features, which has been very well received by players and also the introduction of a new in-game factor, which made the game perform really strong.

Sales for the Tower Defense franchise were down 8% year-over-year, reflecting the lower levels of new incoming players. And that is coming particularly from Q4, but also Q1 as we didn't have a Q4 Steam sale.

The team at Kiwi has a very active pipeline of content for Bloons TD 6 and we delivered 2 major updates now in Q1. Following the quarter, we also had an April update, which was followed by a Steam sale in sale -- follow the sale on Steam, and that included brand new features designed to offer players a new share of the revenues from content that they create within the game.

Sales for the Racing franchise were down 10% year-over-year in constant currencies. The team at Hutch is making really good headway on the upcoming season launch on the Formula 1 Clash and is exploring options also for top drives.

The team has further continued to work on Forza Customs, which they launched in Q4 last year. Hutch particularly launched its new titles in an early stage of development and the team is there after scaling marketing up and down. And as they learn more about the game and the performance, they also work on adding new features and content. And the Hutch team is in the middle of this process.

They further launched NASCAR Manager and that was launched in February, and that is showing early promising numbers, which is really exciting. But again, UA scale very modestly on this one, and we're following its progress very closely.

We continue to be excited by the pipeline of our new key content and new games. And as you can see, we have new initiatives across our whole portfolio, which is really exciting, even though launches and scaling of some of these titles has been delayed, as I discussed.

If we look at our existing titles, we expect Bloons TD 6 to shortly launch on PlayStation and we do expect to also expand it to Nintendo Switch later in the year. We further expect to revamp to Rise of Culture that InnoGames has been working on to come back later to the market in a new shape and form.

And we also expect PlaySimple to launch localized version of several of their established word game franchises and titles during the year, which also could provide us new growth opportunities in new markets.

Snowprint's, which we acquired in the end of last year, we continued to scale Warhammer 40,000: Tacticus, and they will continue, like in the quarter to add more content to the game and scale UA accordingly. And further, as I mentioned, Hutch is evolving Forza Customs to implement their learnings from the early launch before they begin to scale the game further, and they will continue to test the potential of NASCAR Manager to determine when the time is right to begin scaling the game more aggressively.

And then when it comes to new titles, PlaySimple continued to work on Tile Match, 2048 and Word Trip Search, the 3 games are all available on Android, and they will gradually be introduced on iOS later this year. PlaySimple is evaluating the early performance and iterating based on the learning and development and will move to commercial launch as they feel the games are ready.

Ninja Kiwi making good progress on the Bloons Card Storm, which is now we expect to launch in H2, they also have yet another title yet to be announced to be launched in the second half of the year.

So if we then move forward and we look at some of our performance indicator in Q1. We generate some 59% of our revenues from In App purchases in Q1 and 35% from advertising. The slight decline in revenues from third-party platforms mainly reflect the Warhammer 40,000: Tacticus being added to our portfolio and the continued scaling of our advertising revenues.

Our daily active usage was stable sequentially, which reflected higher down in our Racing franchise, driven by the new games Forza Customs and NASCAR Manager and the addition of tacticals to our portfolio. This growth partially were offset by the lower down levels in our Word Game franchise, whilst PlaySimple continue to work on the new games and some key content launches.

Our average revenue per daily active users, or ARPDAU, was down sequentially in the seasonally weaker first quarter. ARPDAU level, however, were up year-over-year, which mainly reflected the higher spending in new games driven by Forge of Empire and the successful events, together with the addition of Tacticus to our portfolio.

This was somewhat offset by the lower ARPDAU level that we saw in our Racing franchise, while Hutch is working on the season reset on the Formula 1 Clash and involving of the new game titles.

Now I will hand over to Nils, so he will walk through our UA spend and our financial performance.

[Nils Mosko, executive]

Thank you, Maria. Looking at our UA, you can see that we continue to maintain our disciplined approach to return on advertising spend. In total, we spent SEK 527 million on UA this quarter, which represented 36% of our revenues, and which was down from 41% in Q1 last year.

In absolute terms, UA spend was only down SEK 10 million year-over-year. And this reflected the fact that we are awaiting key features and new games before we start scaling UA again. If we look at UA on a rolling 12-month basis, however, we have spent 38% of revenues on UA, and these levels were stable, if you compare it on a year-over-year basis.

Going forward, we will scale up UA for our games where we see the right opportunities. And as you know, our UA spend is not evenly distributed throughout our portfolio. Ninja Kiwi, on the one hand, has almost no UA spending as they are focused on organic growth through their community and while PlaySimple, on the other hand, spend most of all of our studios.

PlaySimple UA spend in this quarter was also lower year-on-year as the studio focused on healthy [ as ] levels from its established portfolio while they evaluate the potential impact from the changes to the digital ad market that Maria just went through.

Let's look at the EBITDA then. Our adjusted EBITDA grew by over 50% year-over-year to SEK 396 million with a good operating margin of 27%. And we had an all-time high adjusted EBITDA on a rolling 12-month basis with a margin of 28%.

So the main drivers of our strong results were, firstly, the strong growth and operational leverage at PlaySimple. Secondly, the lower cost base at InnoGames following the reorganization in April last year and the ongoing trend of successful events in Forge of Empires, driving browser revenues from established users, as Maria mentioned before.

And thirdly, we spent less UA, but also, we kept our overall costs flat. And the good result flows through to our cash flow. We had good cash flows in the quarter, as you can see in the last 12 months as well, driven by the strong underlying operational results. We saw also positive working capital effects and a lower CapEx year-over-year. This enabled us to deliver 69% cash conversion rate in the quarter, but more importantly, on a rolling 12-month a 62% cash conversion rate, which is slightly above our guidance between 50% to 60%.

As you can see, we continue to have a good flow-through from the operating result and the positive working capital effects both from [ LTA area ] on last 12 months but also in the quarter, there's always some timing effects, as I mentioned, and they can go fluctuate around zero sometimes minus sometimes plus.

A word on CapEx, our CapEx is expected to be lower going forward, in particular because Kongregate has left the group. Historically, as we mentioned before, there have been a major driver of our CapEx and represented slightly less than half of our CapEx for 2023.

So by that, back to Maria.

[Maria Redin, executive]

Thank you, Nils. So before we move on to Q&A, I would like to summarize where we are today. We have delivered a strong Q1, and our focused portfolio performed well, and that enabled us to deliver strong margins in the quarter. We also reported an all-time high adjusted EBITDA and high cash conversion levels of 12 months basis, which Nils just talked about.

While we believe that the gaming continued to be on a recovering basis, we have become a little bit more cautious in the short-term when it comes to the digital advertising landscape. And we believe that the visibility on the ad market has gone down.

And that is also being reflected in our full year outlook on our expectations of our established performance of our portfolio and the timing also of key features and new releases and how much we will be able to scale our UA and when we can start to accelerate.

And because of this, when we look at our current games portfolio, the new game launches, scaling UA, we do expect our growth rates to be between 1% to 5% when we adjust for currency, and we do expect us to believe and deliver an adjusted EBITDA margin between 26% and 29% for the full year.

When we feel, however, that we have better visibility and as our new games are ready, we will scale UA. And you should expect them to accelerate growth and reduce our margins. M&A continues to be an important part of our overall strategy, and we continue to explore opportunities as and when they appear.

But at the same time, we want to continue to deliver on our commitment to create shareholder value, and that is why we launched a new SEK 100 million share buyback program this morning, and we've already started to begin buying back the shares. And we further intend to launch the next program after the AGM in May, assuming that we receive the necessary shareholder approval.

So with that, I want to thank you for following our progress and for tuning in for our call, and we are now ready for your questions.

[Operator]

[Operator Instructions] The next question comes from Simon Jönsson from ABG Sundal Collier.

[Simon Jönsson, analyst]

So first, a question on the growth guidance. I mean, even to reach the top end of the guidance or the range there seems to be an implied deceleration in the organic growth at least if I count correctly. So could you maybe elaborate a bit about the swing factors in that guidance, please?

[Maria Redin, executive]

Simon, no, we are providing a range. And the reason for the range is the different factors that I talked about. We, as you may know, Google launched their changes to the bidding platform in the beginning of the year. We do know in the beginning how that was going to impact purposes being rolled out during the year.

And then we also have the new game launches that are slightly delayed force looked really promising at the beginning sort of our last -- probably more end of last year, beginning of this year. I think now we take a little bit more prudent approach short-term and some of the other launches are delayed.

So you can argue those are the moving factors. We do have the core games that are performing really well. You can see that in the quarter. But in order for us to ramp up, we want to continue to scale on the sort of PlaySimple side on UA and the ad markets, but also having the new games. And you can argue those are the levers. As soon as we can get visibility there, we will scale up UA that will accelerate top line growth and also organic growth, but that will also come at the cost of the margins. So that's a swing effect as you will see this year.

[Simon Jönsson, analyst]

All right. Got it. And in terms of the lower UA here in the quarter, should we view that as more of a potential one-off decline then?

[Maria Redin, executive]

Sorry, I couldn't get the full question.

[Simon Jönsson, analyst]

How should we view the lower UA in Q1? And should we see it as potentially being more of a temporary decline and further down the line this year, you could see an increase again or a multi-quarter low level?

[Maria Redin, executive]

No, I mean, I think that based on what we're seeing today, we will continue to that level, but I think we hope that gradually this year, we will be able to scale it up. But what needs to take place is; a, we're getting a better visibility on the ad market following the changes and the privacy that is coming; and b, we need to get the new game scaling as well.

I think if you take back -- take us back and you look at last year and you see the margins we have that, that was a year when we didn't launch any games, and then you can see what are the margins we can deliver as a group. Of course, we have Snowprint coming into the group this year. But still, I think that Q1 shows a substance in the robustness of our portfolio.

We would love as we see the opportunity to scale up UA and we're hoping to be able to do that throughout the year. But it's just right now difficult for us to tell exactly when that will happen and hence, the range.

[Simon Jönsson, analyst]

Okay. Got it. Could you mention or talk a bit more about the specific factors driving increased or the decreasing visibility rather in the UA margins?

[Maria Redin, executive]

It is predominantly the change from how you actually bid for your or how you monetize your inventory. We moved from auctions to real-time bidding. And that also impacts how we can leverage the tech and tools that we have built in-house and how we can monetize our audience and our content.

And that is what we're working ourselves through and then you also have the upcoming Google privacy that is going to be rolled out this year. I think those are the 2 main factors, and that we have seen taking an impact on our operations.

[Simon Jönsson, analyst]

Okay. Got it. And in terms of the growth guidance, you talked about total growth. So does that mean that it could include also new M&A? Or could that be added on top if you would do any more acquisitions here?

[Maria Redin, executive]

No. No. No, definitely. If you -- if we do any M&A that will come above and beyond the guidance. So the guidance is based on the portfolio we're having today. But to try to simplify the world since we divested Kong's, so that is in last year's number, and we acquired PlaySimple.

We felt the cleanest way to actually provide the guidance was on the baseline that everyone knows, which is a starting point for full year 2023 revenues, and then the growth from that. But if we would do further M&A, that would, of course, change upwards the guidance range.

[Simon Jönsson, analyst]

All right. Makes sense. And on InnoGames, could you talk about some of the events during the quarter and how those compare to the events in Q4 and also say something about events during April?

[Maria Redin, executive]

I mean I think it's always difficult to compare Q1 events with Q4, especially say December is such an active month where they have the Christmas calendar, but in principle, you can argue that InnoGames had 1 failed event in Q4, which where they tried new game mechanics that underperformed.

And I would say that in Q1, we actually saw a strong performance on the 3 events, which, of course, is great to see, and it's a testament to the team on how they work with LiveOps.

And also, we can see that the players are even more engaged on the browser side, which is exciting to see where InnoGames do have really good skills and also where we have the payment wallet on our own end, which, of course, also helps the margin. So that is good.

Q2, I don't want to go too much into it, but I mean we have exciting events planned for the -- for all quarter. So we're hoping that the strong execution continues on those events as well.

[Simon Jönsson, analyst]

All right. And on Hutch, the interest for F1 more broadly or in general, seem to be -- seemed to decrease quite significantly last year. And what is you're feeling about this year for the F1 season in general and on F1 Clash specifically?

[Maria Redin, executive]

Yes. No, you're absolutely right. And it seems like there's continues to win everything. So something stays the same. We're still excited about the season reset. I think that when you look at last year and the performance within Hutch, I think there were 2 different reasons impacting. I think one was a general interest to your point. And then the other part was that we also did some mistakes on our end when we did the season reset because then we update the game, we add new features, we tweak some of the game economy.

I think some of those were not sort of operating the way we had anticipated. We've done the lessons learned. So we have a new chance this year, and that's where we're excited to see you. It's coming out now in the beginning of May, so we will know pretty shortly. But when it comes to the general interest, you're absolutely right, that hasn't changed, but hopefully, our game will be more fun. So that's what we're working on.

And I think the other part, which we should remember as well, which is exciting is that the NASCAR game and is actually built on back of the Formula 1 game. So when we launched NASCAR, even though, we haven't started to scale UA completely that is a full-fledged game with all the game mechanics and LiveOps because that's built on the same game engine as we already have but, of course, modified to fit the NASCAR arena, which is slightly different.

[Simon Jönsson, analyst]

Okay. And just one last from me. Regarding the buyback program, SEK 100 million here until the AGM, but you also said that you expect a new program after -- potentially a new program after AGM. How should we think about the scope for that new program potentially? And broadly speaking, in terms of how you view allocating the free cash flow between use acquisition and the potential for buybacks here more broadly.

[Maria Redin, executive]

Yes. I think that the size of the current program is sort of based on that. It's a program that's going to run for approximately 15 days. So it's a quite short program until we have our AGM, and that's when the mandate falls.

I think at the AGM that we will hopefully get a new mandate. And as a part of that, we're having an updated conversation with our Board to your point, how do we look at capital allocation, what is the direct return to shareholders in the form of a share buyback program versus our M&A and the other investments that we have in our pipeline.

That decision has not yet been taken, but that is a conversation that we will have. And that is a Board and our job to take the prudent balance there between direct return, but also making sure we have the adequate capital for us to invest in the long-term optimization of MTG as well.

[Operator]

The next question comes from Jacob Edler from Danske Bank.

[Jacob Edler, analyst]

I just have a couple of one on the pipeline shifts to start with. Outside of force that you described, I think Bloons Card Storm moved into -- moving to H2 from H1. Is that a correct observation?

And then secondly, on the pipeline shifts. Sunrise Village was mentioned that a scaling game in Q4, I believe, but it's now kind of removed from pipeline. Can you just add some flavor there as well? Those were the ones to start with.

[Maria Redin, executive]

Jacob, and good observations. So you're absolutely right. The card games, we're really excited about that but in order to make sure that we also read it for launch and optimize that launch, we moved it into Q3. It was either before or after summer, so it's not a dramatic move as such. But the game is almost ready and it's a game in my alley, so I like it, so I think it looks great.

The other game Sunrise village, also again, fair observation. We have seen the early -- sorry, the early bit of retention numbers. And when we scale UA and the monetization, we are not going to see that as a potential growth game anymore. So we still continue to run it, but we're not going to deploy a lot of UA behind it.

[Jacob Edler, analyst]

Okay. Perfect. Yes, and hopping on to UA again, just to add some more flavor. Should we expect this year to be more back-end loaded would you say in terms of UA. Last year, we had a situation where UA was more kind of evenly spread out throughout the year, partly driven by PlaySimple kind of leveling out their UA schedule. Would you say it's fair to assume that, for example, Q4 would contain more UA this year relative to how it looked last year?

[Maria Redin, executive]

Yes. I think that's a fair assumption, and that's what we are working towards. So if all else work -- if everything works out according to our plans and we get the visibility that we're hoping, that is a very correct assumption.

[Jacob Edler, analyst]

Okay. Perfect. And then just a last question on CapEx. Obviously, I understand the Kongregate effect here. But last year, you had SEK 60 million-ish of CapEx. And then during H2, it was SEK 40 million per quarter. Now you've done a 20-ish or right above, is this an extraordinary low level? Or should we -- what should we assume here ahead in terms of CapEx?

[Nils Mosko, executive]

I think for CapEx, in general, I would look at a rolling 12-month or full year basis, we have swings between the quarters depending on the stage where we are in game development.

I would say it's going to be a bit lower than the 3% to 4%. I would rather say what we can expect going forward is 2% to 3% as Kongregate is no longer part of the group. But that will then -- yes, probably around 2% to 3% on a 12-month basis, I would say.

[Jacob Edler, analyst]

Yes. Perfect. Very clear.

[Operator]

The next question comes from Rasmus Engberg from Handelsbanken.

[Rasmus Engberg, analyst]

I wanted to ask you first with regards to the changes in the bidding system for ads that you referred to, are you uncertain where this leaves the revenues of PlaySimple? Or does this relate to UA, you actually wasn't quite clear there.

[Maria Redin, executive]

Okay. Sorry for being clear. Rasmus. It's more on how we monetize our inventory, so it's on the revenue side. I mean we've had systems built up for the old way of the waterfalls, but now it's going to real-time bidding.

[Rasmus Engberg, analyst]

And have you seen any impact on that in this quarter or...?

[Maria Redin, executive]

Yes. So I think that's what we have observed and monitored. We still performed really strong versus last year, but also remember that Word Search start to scale last year, and now it's a scale game. So that helps us still grow very strongly year-over-year.

[Rasmus Engberg, analyst]

So that's mainly the kind of the main takeaway in that. That's what I thought, okay. And just if you could explain to us because a lot of people in the market have been wondering, why did you not resume buybacks of the year? And has it now been like a 4-month hiatus and then you're back again. It seems to take a bit back and forth.

[Maria Redin, executive]

It's a decision that we have, and we take with the Board on a regular basis, and you always try to take the best decision at any given time. There was a decision at the end of last year and beginning of this year on the capital allocation, and we opted to not do it. And then we want to close payer which meant that we couldn't do it. And I think now it's the right decision to come back and do share buyback.

It's always easy to go back and say you should have done differently. But I think we try to take the best decision at any given time. We also plan then to launch a new share buyback program following the AGM as well. So we wanted to be transparent on that.

[Rasmus Engberg, analyst]

Yes. But you're not that far away from the 10% hurdle and that you get rid of the C shares, right? So you would need to cancel shares more or less.

[Maria Redin, executive]

Yes. We would cancel the shares, so not the C shares because we still want to deliver that to the PlaySimple founders, but the other shares, we will cancel at the AGM, which then will free up opportunities to buy more shares throughout the year.

[Rasmus Engberg, analyst]

And just based on -- back on that matter, I assume that the raised value of the earnouts relate to PlaySimple, right? Or does it relate to anything else?

[Maria Redin, executive]

No, that's a fair assumption.

[Nils Mosko, executive]

That's correct.

[Operator]

The next question comes from Viktor Lindström from Nordea.

[Viktor Lindström, analyst]

So you mentioned that you've seen multiple factors that could -- that impact the market here. So if you rank this sort of between, I mean, the bidding changes, the privacy settings and the more cautious outlook, how would you rank those items?

[Maria Redin, executive]

Yes. I think the more cautious outcome comes from those changes, you just mentioned in the first 2 ones. And I mean we're already seeing the impact from the move to real-time bidding. So there, we are sort of well underway to understand it. We are still to see the impact from the privacy, but we do expect that the impact from the real-time bidding will be the bigger one. But that, again, we're just mindful that we want to also see the new previously changes coming through.

[Viktor Lindström, analyst]

Okay. And then a follow-up on the growth outlook here. So that's basically is on a like-for-like basis, so that excludes Snowprint in Q2 and Q3. Have I understand it correctly then?

[Maria Redin, executive]

No. The growth outlook is based if you take last year's reported revenues. That means that you include Kongregate for the full year, and you include Snowprint for Q4. and that adds up to 5.8 something. And then you have a range of 1% to 5% growth, excluding currency on back of that baseline. So of course, and you will include Snowprint for the full year this year, and you have pretty much zero impact from Kongregate this year as we divested it early in Q1.

[Operator]

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

[Unknown Executive]

Thank you very much, operator. So we have 3 additional questions. And if we start from -- in order -- so 3 quarters in a row, you have had a reduced capitalization of costs for new games. So is this a plan change or just natural variations and what is the normal level going forward?

[Nils Mosko, executive]

It's normal variations. It depends on where we are in the game -- game development cycle, and you will always see these fluctuations and the way we think about it if we look around CapEx ratios, as I mentioned, 2% to 3% over the year. I think that's a good rule.

[Maria Redin, executive]

And just to add to that, I think it's also important to remember that as soon as we put a game into soft launch, we actually stopped capitalize and that is what Nils saying that you will always see a little bit deviation. So we have quite a prudent approach on capitalization, have in general, quite low levels.

[Unknown Executive]

The next question is, does the SEK 101 million in other franchises revenue completely exclude all congregate already in Q1 or otherwise from what point? And then could you comment again on the drop in revenues year-on-year both in Q4 and Q1 for Ninja Kiwi?

[Maria Redin, executive]

Do you want to take the franchise one.

[Nils Mosko, executive]

So the -- on Kongregate, as Maria said, we deconsolidated them early Q1. So that is a very, very, very small part of that franchise part, which we are seeing on the [ 108 ].

[Maria Redin, executive]

Yes. And then if you look at the Ninja Kiwi performance, as you may recall, we also mentioned at the Q4 call, we didn't have the Steam sale as we normally do in Q4. We normally have a very good inflow of new users at that point in time, which meant that we entered Q1 on a lower basis. And even though we added a Steam sale, it wasn't as big as the Q4 normally is because it was an extraordinary event.

So we were in short running on a lower baseline on customers and which also meant that we had a lower monetization on the In App side on our customer base. And I think the other part is also we are exploring new opportunities on how to attract customers. As you know, Ninja Kiwi doesn't do any marketing. That means that it is dependent on the community streamers and influencers, where they've done a great job.

Now we are exploring new avenues on how can we actually get more customers in through different channels. And then we have something exciting to look forward now in Q2 that we can hopefully talk about then in the Q2 results call.

[Unknown Executive]

Thank you, Maria. The last question we have at the moment has to do with Google's privacy. So is there anything you want to comment on the fact that does the last-minute change in the direction regarding cookie duplication from Google. So this is about end-user policy, have any impact on your expectations for the ad market and ad-related growth or your plans for effectiveness of UA in 2024?

[Maria Redin, executive]

No. I mean we don't know exactly what to fully expect actually, and the whole rollout has been delayed several times around. It's starting now on a better basis. So that's why we want to grow explored as it's being gradually being rolled out and tested. So that's all we can say right now.

[Unknown Executive]

Thank you very much. So at this stage, we have no further questions. So I would like to thank -- to thank everyone who has joined us today for your time. Thank you very much for the speakers, and we will be back with more news when the time is right. Thank you.

[Nils Mosko, executive]

Thank you.

[Maria Redin, executive]

Thank you.