Modern Times Group MTG AB

STO:MTG B

Earnings Call Transcript 2023-Q2

[Anton Gourman, executive]

Good afternoon, everyone, and thank you for joining MTG's livestream and teleconference for our second quarter results. This event is hosted by our Group President and CEO, Maria Redin; and CFO, Lasse Pilgaard. At the end of the presentation there will be an opportunity to ask questions. If you're watching the live stream, please, as usual, use the questionnaire feature in the video stream to submit your questions. If you're dialing in by phone, please follow the operator's instructions.I now hand the word over to our CEO, Maria.

[Maria Redin, executive]

Thank you, Anton, and hello, everyone, and thank you for listening into our Q2 call. We are really happy to report another strong quarter where we saw continued operational momentum, driving strong sequential performance in Q2. We remain, therefore, on track to deliver on our outlook for the full year, and of course, while we have lots more to do, the dynamics that we see across our studios are highly encouraging.When we look at the second quarter, PlaySimple continued to deliver consistent standard results, thanks to the combined strength on the new and established Word Games. We now generate around 10% of the Word Games franchise revenues from the new games, and we have scaled up the marketing for these games significantly to capitalize on the rapid growth.Ninja Kiwi also continued to deliver strong results on a sequential basis, and this really demonstrates yet again the strength and the longevity of the Bloons TD6 and the whole Bloons IP.In addition, we're very happy to see the continued healthy momentum from InnoGames, where our Strategy and Simulation franchise revenues were up 10% on sequential basis in the quarter, and they were also up year-over-year in June, thanks to very successful events in Forge of Empires during the month.InnoGames have now completed the reorganization and is operating according to the new plan and structure. The focus is on driving the continued long-term performance in Forge of Empires and to implement the ambitious roadmap we have to bring the new games back to growth.We also continue to work on the Flow Platform during the quarter. I think one of the most exciting developments that we saw in the quarter was a new collaboration between Hutch and the Business Intelligence team. This has resulted in a project for a new BI platform for Hutch and this is specifically then tailored to their needs, and based on the group best practice. This platform is now being developed that will provide Hutch with more advanced marketing analytics and insight once it's launched, which is planned for Q3.We have also continued to do the work on our ad monetization and the cross promotion pillars on the Flow Platform during the quarter, and that is being built out from our PlaySimple team.Looking at our adjusted EBITDA, we're reporting adjusted EBITDA SEK 397 million with a margin of 27% in the quarter, and this was up year-over-year and with a significant improvement from the 20% we had in Q1.If you look at the key drivers versus last quarter, they're really threefold. Proportionally we spent lower UA spend in the quarter. We had a one-off reversal of an incentive program in one of our studios. And we also saw improve operational efficiency, especially coming from the cost optimization program we are running in InnoGames and also from PlaySimple who is starting to benefit from the larger scale.So let's move [ then ] forward and look closer at our revenues. Our net sales were up 6% year-over-year, that is driven by positive currency effects. So our organic growth sales, they were down 2% year-over-year, and we saw positive currency exchange that added 7 percentage point growth, and that is a result of the weak Swedish krona that we're seeing. And yes, I am aware that the math doesn't perfectly add up, but that is basically due to rounding errors.Year-over-year our organic sales decline in Q2 was mainly driven by InnoGames, and we still had elevated comps last year because of the post-pandemic marketing environment we saw for the Midcore games.It continues to be difficult to attract new Strategy and Simulation players and we've not seen any changes to the marketing environment here. So the growth that we report in the quarter therefore reflected the initiatives that InnoGames have put in place to drive higher monetization from their existing players, and particularly in Forge of Empires where throughout the quarter our live-ops worked really well in the period.So let's move then and look at our franchises. Overall, we're really happy to see that all our franchises grew on a sequential basis. The Word Game franchise continued to deliver fantastic results. It has been one of the biggest franchise for the last 6 quarters in a row and has generated strong growth during every quarter since our acquisition.Franchise revenues grew by 14% year-over-year in Q2, and by 12% on a sequential basis in constant currencies. This reflected the fact that we had strong performance across the franchise. Both established games, like Word Trip and Crossword Jam, as well as the new games performed well, and PlaySimple, really strong live-ops in the quarter. That was what drove both monetization and retention of players.The successor had also allowed us to scale up the marketing across our games. And then moving into the new games, both -- Word Search and Crossword Explorer both continued to grow in Q2 and Word Search was by far the best performing title in the quarter.PlaySimple invested around 20% of total UA spend in these new games in the quarter, and the new games therefore represent the amount 10% on the franchise revenues, which of course is something that makes us very happy to see.The Tower Defense franchise continued to showcase the strength of global growth gaming IP. Bloons TD6 again delivered strong sequential growth for the franchise. And a lot of that goes back to the update we did in April, which was immediately followed by a successful Steam Sale. The Bloons team then further released [ an edition ], updating the game in June to continue to drive the game momentum and engagements.We're also really proud to report that the Bloons TD6 was launched on the Netflix platform in the quarter. That is something we've worked for a while and that -- the initial performance that we see is very positive. The team also continues to work on Bloons TD Battles 2, but we're not investing in a marketing yet for this game because we still want to see the improved metrics on back of the updates.Strategy and Simulation franchise sales were down 13% year-over-year, but they were up by 10% from the first quarter in constant currencies. The strong sequential performance came from Forge of Empire, which continued to show positive momentum in the quarter, and that's really thanks to 3 successful events and strong live-ops.The Forge of Empire team has really worked hard to improve monetization from existing customers and this was really the main driver that we saw in the quarter. Unfortunately, we have really not seen any improvement in the marketing environment and our ability to bring in new player, hence the live-ops becomes even more important.Our Racing franchise revenues were down 10% year-over-year, but we were up 13% from Q1 in constant currencies. The year-over-year drop in sales was caused by the slowest start on the Formula 1 season compared to last year.The team has really been focused on improving the player experience and is still evaluating the longer term effects on the update we did at the season reset. And the Hutch team has already made some tweaks to the game economy to drive monetization going forward. And so far we've seen encouraging KPIs following the updates.Top Drive did not grow this quarter, as our live-op did not perform as we had hoped. The team is however working on a new roadmap for the game and they're also working to hire the new creative directors, who's joining after the summer. This sequential growth in revenues however, we saw still from the franchise, reflected in the fact that Q1 is typically seasonally weaker quarter for our Racing games.If we then look at Kongregate, sales were down both year-over-year and also versus Q1. Kongregate continued to invest in the development of its Web 3 and NFT gaming portfolio, as well as the Kongregate.com games portal.We added 4 new games to the Kongregate games, to the platform during the fourth quarter -- third quarter as well as 26 new third-party games.And if you then go to the new games, we are really happy to see the revenues from the new games growing, and these titles reported 30% increase in sales on a sequential basis. The main growth is coming from the 2 new titles from PlaySimple, who is investing in marketing and scaling both Crossword Explorer and Word Search. We are very excited to see how these games are developing and their importance to the portfolio.In addition to these 2 games, PlaySimple is also working on several new titles which are currently going through testing and that we would look forward to actually bring to the market in the future.Hutch has continued to invest in their 2 new games. The first one will be mobile title, focused on the core customization, and Hutch announced the partnership with Turn 10, the Microsoft-owned studio famous for the Forza franchise, in June.The [ early ] metric for the new game has been very promising and we hope to be able to tell you more about this game later this year.Ninja Kiwi, on their side they're working on 3 new titles, which we had mentioned before. It's still too early for me to really share any details on the game. There we expect the first of the [ suite ] to be launched in 2024.Last but not least, Kongregate is also making progress on their new game, which is more for the traditional portfolio. The game is based on a major global IP. InnoGames on their hand, they continue to work on improving the 2 games that we've had on a [ semi live ] for quite some time, Sunrise Village and Rise of Culture.For Sunrise Village the team has pursued an active content pipeline and a range of retention initiatives to push the game's growth. The team is really focused on increasing both monetization and improving the player experience. And they also just now launched a beta version of the game in Q2.For Rise of Culture, which is the second game, we're actually working on a larger rebound. So it will not be until the year end where we actually see any major results coming out of that game.In addition to the new games, InnoGames is also focused on evolving how they work and how they're experimenting with the Generative AI to both improve their production process and development process, which is something that we're looking also across our other studios.Looking at [ now ] the KPIs, the total number of daily and monthly active users were up slightly in Q2 versus Q1. Our Word Games continue to be the main driver of our active user base, which again testifies the strength and the momentum of this part of our portfolio.At the same time, I'm also happy to be able to report that while we saw a small decline in DAU and MAU for InnoGames, all the 4 other studios that we're having actually showed an increase slightly from Q1 on both metrics.Our average revenue per daily active user were up slightly both year-over-year and quarter-on-quarter. This continued to primarily reflect the fact that we are doing well at monetization, at our existing player base and especially the Strategy and Simulation franchise.And I will now hand over to Lasse, who will take us through our profitability, user acquisition investments and financial performance.

[Lasse Pilgaard, executive]

Thank you, Maria. So turning to profitability. I'll try to provide you with some of the drivers of the quarter. And I think as Maria already mentioned, we landed at 27% adjusted EBITDA margin, which for us was a really satisfactory quarter.So all in all, we reported SEK 397 million, which again is equal to a profit margin of 27%. After deducting capital [indiscernible] to labor, we delivered a simple free cash flow margin of 24% for the quarter. This was a significant improvement versus last quarter, where we delivered SEK 263 million and a profit of -- profit margin of 20%. So on a sequential basis, we grew our absolute adjusted EBITDA by 50%.The improvement was driven by 3 key factors, which I will say had almost equal weight. So first is that UA spend declined on a relative basis. So as a percentage of revenue, although it actually did increase on an absolute basis, which I'll show you on the next page.Our operating expenditure levels were down, which were especially driven by the restructuring program in InnoGames where we saw 2 or 3 months of effect in Q2, given that it was executed towards the end of April.And then lastly, we reversed a LTIP bonus cost in one of our studios, which created a one-off positive contribution in the quarter.I think lastly also worth mentioning that we are continuing to see higher degree of skewness from mobile to browser in InnoGames, which is also supporting improved margins. This is especially significant on a year-over-year basis, less significant on a sequential basis.So as a result of this strong quarter, we basically also reverse the trend in our 12-month trading numbers, as you can see in this slide, which of course, we are very happy to see.Talking about the adjustments for the quarter, we booked a relatively small transaction cost of SEK 4 million. The nonrecurring bonus structure in PlaySimple that we have had for the previous now 6 quarters, we also booked here SEK 8 million, which is slightly less than we had in previous quarters due to a revaluation of the program, which is something we do twice yearly.And then lastly, we adjusted for the restructuring costs of the reorganization program in InnoGames which accounted for SEK 40 million.So turning to user acquisition investments. As I just mentioned, we managed to increase our total absolute spend to a total of SEK 463 million for the quarter. This is both up sequentially from Q1. It's also up versus the same period last year, as you can see.The high investment level here is really driven by PlaySimple, who are able to scale the marketing significantly, while keeping very healthy return levels. And again, as Maria also mentioned, it is especially the new games and the scaling of those that is enabling this higher spend to go in.Further, it should also be noted that PlaySimple has actually changed the marketing, I would say strategy and investment plan for the year, where we historically spent more in Q4 than any other quarter. We're now trying to balance the spend more over the full year so that we spend less in Q4 that typically has very high CPM levels, meaning that you would actually rather invest less and monetize more.That also means if you look at the investment levels outside PlaySimple, our total spend was actually flat between Q1 and Q2 and slightly down versus the same period last year. Again, stressing the fact that the increase is really driven by PlaySimple because we do see, as Maria mentioned, that especially InnoGames have continued difficulty scaling the user acquisition in the part of the market that they are relevant in, i.e., Midcore, which unfortunately is not a unique thing for InnoGames, but more of a -- was a market issue that they have.However, the large exposure to browser is benefiting InnoGames, as they are able to deploy relatively more marketing there versus mobile.So lastly, from my side, we'll turn to cash generation from our profits. So all in all, we landed at 53% cash conversion for the quarter. The cash conversion was positively impacted by interest rate that we accrued on our deposits, while negatively impacted by the relative high UA investment levels and the redundancy program that we had in InnoGames.I would say given again, these 2 relative significant effects, I'm really happy to see that we are able to deliver so high cash conversions, i.e., 50%, despite these things, which basically as we see it as a strong testament to the quality of the earnings that we have in the studios.So with this cash generated, and the final earn out payment to Ninja Kiwi executed in Q2, which was the SEK 365 million, we ended the call with almost SEK 4 billion of cash on the balance sheet, which is including a long-term deposit sitting in PlaySimple.With that, I'll turn it back to Maria for the final words.

[Maria Redin, executive]

Thank you, Lasse. If we then wrap it up, all in all, we're very happy to report a strong quarter where our businesses have demonstrated a clear and healthy operational momentum.PlaySimple and Ninja Kiwi both continue to be our growth engines. And it's really encouraging to see the positive sequential dynamics and strong events in Forge of Empires. And this is clearly just one step on a longer journey that we are having. But it's really important to see and note that we are delivering on our expectation that we set out in Q1 and our trajectory remains very sound when we look forward.And as a result taking this [ equally ] into account, we're very optimistic for the rest of the year and we reiterate our full year outlook. We continue to expect full year sales with a range of minus 3% to plus 2%. And we also expect an adjusted EBITDA margin between the 23% and 25%, which is in line with our long-term outlook that remains unchanged.When it then comes to our markets, it is clearly encouraging to see that the market also performed slightly better than what we initially expected going into the quarter. As we then look out for the rest of the year, it's really difficult to say for now. There's not been any updated public forecast to lean on.But as I mentioned previously, we saw the same challenging environment in the Midcore market that we've seen before, was a -- cash [ renewal ] by gaming market was more positive in the quarter, and we are optimistic as we look into the second half of the year.If you then look into our long-term vision and the strategy, nothing has changed. We have a really strong portfolio of evergreen IPs and we have amazing studios. We have a clear strategy in place to build on the Flow Platform as a common layer to help our game companies to accelerate and our industry is above that supported by the positive dynamics that we see long-term both when it comes to demographic, technological and social trends.We have on top of that also strong balance sheet to support us when we look to future M&A ambitions, which will help us to grow our relevant scale and bring more companies into our gaming village.Also equally important, before we move on to questions, I really would like to take a moment to say thank you to Lasse. This is his last set of quarter results with us and before he hands over to our new CFO, Nils Mosko, coming in now in August. And I really want to say thank you to Lasse because you've been an amazing partner and I think -- I speak for the whole of MTG that we truly value your contribution and your passion, and we will miss you deeply.So with that, I will hand over to Anton, and we're ready for questions.

[Lasse Pilgaard, executive]

Thank you very much, Maria. So we will start by questions from our guests calling in via phone. Operator, over to you please.

[Operator]

[Operator Instructions] The next question comes from Simon Jonsson from ABG.

[Simon Jonsson, analyst]

Couple of questions from me. First on the growth outlook. The organic growth in Q2 was higher than expected. And I wonder how you view the outlook for the rest of the year? Forge was supported by strong live-ops. Should we expect that to persist? Or can we see a bit of a mean reversion there?And last quarter, you said you expect sequentially higher sales every quarter. Is that still your view?

[Maria Redin, executive]

Yes. I think in Q2 what we were really excited to see is that our live-ops worked really in all our companies almost. So that is, of course, a really nice thing to see.I think you're absolutely right. We were quite clear when we reported Q1 that, we believe that we will grow sequentially quarter-on-quarter to deliver our outlook. I think -- when we're now closing Q2, I think we came in better than what we anticipated, which, of course, we're really happy.I think as we look forward, we're still keeping the outlook, which means that you should expect that the change in Q2 going into Q3 may be slightly softer than what we previously envisaged. But Q4 is always our strongest quarter, which means that we still expect a good uplift going from Q3 to Q4.As much as we would love to see that we have 110% execution in our events. That's basically what we saw in Q2 for InnoGames and Forge of Empires. We don't forecast on that. So there's still an opportunity, but I think we balance our forecast a bit more than that.

[Simon Jonsson, analyst]

And it seems like it's very tough to attract new players in InnoGames in the Midcore segment, as you touched on. So what is the main difference for PlaySimple, you would say, or scale up of the new games goes much better? Is it because of successful cross-selling? Or is it the genre doing better right now in general or...?

[Lasse Pilgaard, executive]

So I think it's -- they are following the same market trends as I would say the market is in terms of house developing. Remember, when you have the casual game like PlaySimple has, it has a very broad appeal to audience. When it has a broad appeal, it also means that your need to tailor very specifically the marketing or you could say, target the marketing to a narrow audience becomes less important. And it was that tailoring and targeting that disappeared with the regulation that Apple put in on especially, of course, Apple.So while I would say InnoGames is searching for then 1 play out of a 100 that's interested in the Midcore strategy games, PlaySimple searching for those, I don't know, 20 out of a 100. And that just means that the impact on PlaySimple and generally the casual genre has been less from the IDFA regulation that was implemented.

[Simon Jonsson, analyst]

But have you seen any, like positive impact from having a broader portfolio of games in PlaySimple, doing successful cross-selling or its mainly a genre thing?

[Maria Redin, executive]

No. I think, actually, we haven't started yet to do the cross promotion to the new games. So I think that is an opportunity that we can see as we go forward. I think in general, you're absolutely right. I mean, bringing a richer sort of games portfolio in the casual side is something that will benefit us and that you can exponentially grow going forward because that's when you will add the overall cross promotion engine on top of that.So that is something we're excited about. And that they have -- on top of these 2 new games they are scaling, they have 3 more in the pipeline, which we look forward to hopefully be able to bring to the market. So over time you will also then get the benefit of the cross promotion engine you're referring to.

[Simon Jonsson, analyst]

And then last one for me. If we adjust the organic growth for the platform incentive revenue PlaySimple got last year, the growth should be positive, correct, around 2%?

[Lasse Pilgaard, executive]

Correct. If you would do the simple math, you add about 5 points, so you go from minus 2 to plus 3. Whether that is fully fair given that they also had slightly worse performance last year from the migration, I don't want to comment on, but you're right. That's how the math will stack up.

[Operator]

The next question comes from Rasmus Engberg from SHB.

[Rasmus Engberg, analyst]

I had a couple of questions. Maybe if I take them one at a time. Just on your comments regarding UA spend, are you sort of implying that we should see a more stable EBITDA margin over the year as the UA spend is more flattish, all things -- all other things considered? Is that what you're sort of indicating here?

[Lasse Pilgaard, executive]

Short answer, yes. There's -- if you look out at least the last 2 years, the seasonality created in Q4 was largely due to the higher investment levels from PlaySimple, also some extent, InnoGames, but especially PlaySimple. So the seasonality driven by that, you could say, higher spend on the UA margin should become lower.Of course, remember, in Q2 we do have a one-off payment that creates a little bit of a higher level. So when you do your seasonal modeling, you need to take that into account.

[Rasmus Engberg, analyst]

Question number two, actually. The other income of SEK 35 million, could we sort of assume that, that's roughly the reversal of the LTIP program?

[Lasse Pilgaard, executive]

That's correct.

[Rasmus Engberg, analyst]

And then on the -- sort of the other incentives that are -- that were somewhat low in this quarter, SEK 8 million. Is that -- what should we anticipate kind of at the level going forward? I think you've historically said it was going to be around SEK 25 million, now we had SEK 13 million and SEK 8 million?

[Lasse Pilgaard, executive]

I think we've said that it should be around [ SEK 15 million ] per quarter. And then you should expect that also to continue when we have one quarter where we are, you can say, balancing out a bit. It's just to clear the -- you can say, the discrepancy between new estimated value and book value. So we still believe it's around that level, which should accumulate over 3 years to SEK 200 million approximately.

[Rasmus Engberg, analyst]

And just on the other one, the M&A transaction costs, they seem to be running at SEK 5 million to SEK 10 million per quarter, yet there are no acquisitions. Is that your -- the cost of your M&A team that you have done, or what do you think about that?

[Lasse Pilgaard, executive]

I would say we only take and adjust for M&A cost when there is an actual transaction and typically, it's the external fees and not the internal ones that we adjust for. So it's because it's a broad category. It also includes -- for example, when we are doing our earn-out payments with a Ninja Kiwi, we, of course, do that based on financially audited numbers according to the SPA that was agreed with them.So there we get an [ advisor ] in to make sure that the right definitions are used, that translates into whatever payment that is, and the cost of that we call a M&A. You could call it a transaction cost as well, but this is due to previous M&A.So again, the last couple of quarters, given that you haven't seen us announce a lot of M&A has predominantly been based on that.

[Rasmus Engberg, analyst]

And then just a final question. I guess we've gone into the more quiet period, at least in Europe, where we're getting there now. What did the market look like during this quarter? And what have you -- have you seen anything now in July? Or how does the market [ seems ]?

[Maria Redin, executive]

You mean the gaming markets in general?

[Rasmus Engberg, analyst]

Yes.

[Maria Redin, executive]

No. But I think we normally say -- I mean, Q2, as we said, was actually slightly stronger than what we had envisaged. You have Q4, there is always the strongest season of the year, which means that as we move into Q3, that is normally a seasonally weaker quarter, to your point. I mean, most countries actually go on holiday. This tends to be sunshine in Europe. People are outside more. So we do expect sort of sequentially in general the market to slow down a little bit.But I think our performance, as we've seen throughout Q2, I mean, we're really excited about it. We're really happy about it as we look to all our companies. I think if there's 2 things that stands out for us, it's our live-ops that we see across the vast majority of our games and also our ability to scale the new games.And you can argue that of course, the live-ops and engagement to some extent has something to do with the market, but a lot of it comes down to the operation, execution, also on our team and their ability to launch new games such as Word Search, which is truly exciting. We said before, we believe the better market in H2 versus H1, and we still believe in that.

[Operator]

The next question comes from Thomas Singlehurst from Citi.

[Thomas Singlehurst, analyst]

I wonder if you partially answered one of the questions I had, but I just want to -- just be sort of clear about it. You're talking about seasonality. And obviously, last year was a bit unusual because we didn't necessarily get that big seasonal spike in the fourth quarter. You mentioned user acquisition cost, sort of seasonality unwinding a little bit, [ albeit ] driven by PlaySimple.I suppose the question is, do you think there will be just an evening out of seasonality in the market more broadly at the revenue line? I mean, it obviously will be more of a [ skew ] to the fourth quarter, but over time, do you think seasonality becomes less pronounced as the mobile game market [indiscernible]?

[Maria Redin, executive]

I think to be honest, in -- I don't know what to call normalized market. There are many drivers that actually points to that Q4 should be a very strong market when you look at CPM levels. You're also looking at the way we actually drive our live-ops calendar, Christmas calendar and so forth.So in theory, Q4 should remain, I think, the strongest quarter of the year and also especially if you live in the Nordics, it's dark pretty much 24X7. So I do believe, to some extent, the seasonality will persist.We didn't see it last year very much at all, but I don't know if that is abnormality than actually more the new normality. I would still believe in a seasonality.

[Thomas Singlehurst, analyst]

I suppose the question is how much of the -- I mean, if UA in general is spreading out within the year, how much of the sort of mobile game ad market is sort of the mobile game sector advertising to itself? I suppose that be...

[Maria Redin, executive]

Yes. No, it's a fair point. The fact that from our end in PlaySimple, we actually -- look in to actually balance the marketing investments more on a sort of annualized level and not so heavily skewed in Q4. I don't know if that is a general marketing theme across all companies or not.I think the CPM levels are not just driven on that. They're also driven about Black Friday, Christmas sort of shopping. So there's a lot of things that drives the general CPM levels than purely how sort of we allocate our marketing budget.So again, time will tell. We're still optimistic as we look to Q4. I think the market drivers in the CPM levels are much higher than what we should expect from shifting a little bit on marketing budgets because it's not that we are moving a big degree. We are more proportionally allocating marketing between the quarters.

[Thomas Singlehurst, analyst]

And then I mean, obviously, the cash balance is a big feature of the -- sort of the MTG [ investment ] case. Could you just talk about how the sort of landscape is evolving in particular with regards to M&A? Do you -- are we seeing more sort of companies sort of under pressure to sell? Are we seeing that reflected in valuations? What are the sort of major sort of factors sort of preventing sort of a midterm sort of cash usage?

[Maria Redin, executive]

Yes. I think the one important thing to remember about gaming companies, and also if you look at the gaming companies we have acquired, they're all been very successful. They're all been sort of a high-margin business with a strong cash conversion, which means that very few of these companies are sort of distressed to sell.There are, however, other reasons why you would like to partner up. You want to be part of a gaming village. You want to get the synergetic approach of working with other game makers. You want to get access to our Flow Platform. I think some of those drivers as a sort of pull effect, those we are seeing. And I think that when we have discussions, I think being able to discuss sort of the Flow Platform, being able to discuss how we can work around marketing, how we can work around live-ops, how we can work around sort of cross promotion, I think that is exciting to many game entrepreneurs, and I think that's something we see very positive.I still believe that everyone wants to get paid a fair multiple in these times. And I think I would lie if I would say that, that multiple gap between public and private companies has disappeared. It's still there.So I mean, our job is to figure out how can we bridge that and how can we still make deals because we would like to be acquisitive. We have many interesting conversations, but we're not going to make a deal unless we can make it both operationally, strategically and financially viable for us.

[Thomas Singlehurst, analyst]

And then I know you did mention it in your sort of prepared remarks. But can you just sort of give a little bit of a round the houses on sort of the impact of Generative AI within the mobile gaming landscape more broadly and then MTG in particular, how you're using it? And how you see it impacting? Is it just going to be a productivity tool? Or is there an opportunity for it to drive revenue growth [ medium term ]?

[Maria Redin, executive]

No. But I think -- more broadly, I think everyone is trying everything from actually making games from scratch through AI on how to improve the graphics, how to improve live-ops, how to improve prototyping, idea creation.So I think the ability to use it is quite broad. And then you need to understand the legal framework around it, the do's and don'ts and how to stay on the right side of that. I think when you look into how we are utilizing it so far, it's -- we do a lot on the graphic side. There's a lot where you can accelerate the work that we're doing. That doesn't mean that we don't need our talented people. You still need them because the finishing is always done by one of our designers or producers.And I think it's more to help them accelerate their work, increase their output and productivity. We're looking into different live-ops initiatives. So I think we do see a wide range on areas where it can help -- basically help us to become more productive, to be faster and develop more content.

[Thomas Singlehurst, analyst]

And finally, Lasse, thank you very much for your hard work and support. Best of luck with the next adventure.

[Lasse Pilgaard, executive]

Thanks, Tom. I appreciate it.

[Operator]

There are no more questions on the teleconference. So I hand the conference back to Anton for any written questions.

[Anton Gourman, executive]

Thank you, operator. We have -- had 3 questions, 2 of which we have covered specifically that we're not going to repeat. So moving on to the next question which from Martin Arnell at DNB Markets. So can you give an indication of how organic revenue growth target for the full year 2023 split between growth in ARPDAU and volumes?

[Lasse Pilgaard, executive]

Yes. So we can't, and I think for 2 reasons. One is that it's not necessarily how the business works because we might see that live-ops, for example, is an ARPDAU improvement that could happen. That's where UA would drive off the installs of course.This will differ very much across the different studios. So for example, if you take a PlaySimple, we do expect an increase to continue in DAUs to the successful scaling of the new games. However, they are actually also having a higher ARPDAU on those new games and hence, it's coming from both.Where InnoGames, as we have discussed, we have seen for quite a while that we've actually been able to increase the ARPDAU due to successful live-ops, but unfortunately, see decreasing DAUs, which we also do expect to continue.So I don't think you should expect any change in those trends, but we cannot give you the breakdown on how the outlook will be delivered based on those trends.

[Anton Gourman, executive]

So then moving on to a question from Jacob Edler at Danske Bank. There are a number of questions here, so we will start with the first one.So you mentioned that InnoGames grew slightly year-on-year in the month of June, in line with the -- in the purchase market, which also appeared to have grown slightly in June. Do you have any data yet on how the market has progressed at the start of July?

[Lasse Pilgaard, executive]

Yes. So I think just to be correct on the market growth in June versus InnoGames, if you look at the total market, you're right, Jacob, that, that looked like they grew. However, if you chop this up to Midcore versus casual, Midcore did not grow. That actually declined in July and has unfortunately done that for the month leading up to that as well in 2023.So it's clear right now that the market is not just the market anymore. There's definitely different segments in the market. And again, it comes back to how these 2 different segments were impacted by the marketing regulation from Apple.So we are not really seeing to your question on July, and it changed in those trends. It looks like still that the casual part of the market is doing very well in July as it's been doing in the first half of the year, and there's no change in Midcore either in terms of the marketing environment, still continues to look [ difficult ].

[Anton Gourman, executive]

The next question also from Jacob. So how should we look at adjustments, restructuring costs in InnoGames, which was about SEK 40 million in Q2? Should we still expect 1/3 to be taken in Q3 and adjusted for roughly?

[Lasse Pilgaard, executive]

Yes. No. So we took the cost in Q2. There is some of the cash outflow that will happen still in Q3, which is the approximately 1/3 that you're referring to.

[Anton Gourman, executive]

The next question is, non-PPA amortizations have been quite low in Q1 and Q2. Should we expect this to pick up in H2?

[Lasse Pilgaard, executive]

No. I would say the level we had now reflects the normalized level when there's no accelerated depreciation of any assets. And then, of course, your subsequent question should be whether we expect any acceleration. And I would say, given what happened last year, the acceleration mostly happened within InnoGames and some of the titles.We also, of course, did a larger review of that together with the restructuring, whether there was any acceleration to be done, which did not lead to it. So again, we don't believe right now we are at an artificially low level.Remember, we only invest in terms of capitalization 4% of our revenue. And if you look at what does that become at a annualized level, it's not far away from supporting a run rate of SEK 50 million [ per quarter ].

[Anton Gourman, executive]

And lastly, on a slightly different topic, are you able to provide any color on what you classify as near term when it comes to Bloons TD6 being launched on consoles? And can the people expect that launch already during H2? What can we say there?

[Maria Redin, executive]

That's definitely our ambition. It's always difficult when we work with some of the bigger players, but our ambition is to get it out there in the second half of the year.

[Anton Gourman, executive]

Thank you very much, Maria.

[Maria Redin, executive]

Thank you. And thank you, everyone, for listening in.

[Anton Gourman, executive]

With that, we have no further questions. [ Obviously ], we jump the gun. Thank you very much, everyone, and we will speak to you again in October.