Nitro Games Oyj
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Good morning.
[Foreign Language]
it's Jussi Tahtinen here again from Nitro Games delivering you guys our Q1 interim report.
That is this morning agenda.
Yes, yes. And in general, it's getting pretty good. Summer is coming and so on, and we've had a great run so far this year. So lots of good stuff coming up today.
Exactly, it was indeed best start of the year.
[indiscernible] In almost 15 years of our history, so...
Good times and good start for this exciting yes, despite all the things happening around.
Indeed, indeed. So let's deep dive into Nitro and what we've been up to. So as a reminder, we are your global powerhouse for action and shooter games on mobile headquartered here in Finland. And what we mean with that is that our vision is to become the household name in the category of shooter games. And basically, we do all things that go boom on mobile phones, whether it's smartphones and tablets as well. And that's one of our big focus areas this year. The other one is growing our service business where we offer our services and expertise to our partners.
We did. In general, we've been seeing -- we are seeing a lot of growth in a category where we are focusing on our offering and the story is resonating better and better all the time on the market and especially when the market is, market is growing, there are new opportunities in the market. There are new platforms, social media channels are entered into the field. There are even movement in so-called emerging markets to suit our offering strategy on a store.
And a lot of this we saw earlier this year in March, when we finally got to the Game Developers Conference in March in San Francisco, which is this annual event, which for us is typically pretty much the largest industry when it comes to business development and meeting with partners. And it was so clearly visible there that shooter games have definitely made their way on mobile, and now there's more and more parties seeking to get that share of the pipe. All right. Then if we look at the first quarter in terms of some highlights. So obviously, the first thing that catches the attention is the pretty notable revenue growth compared to first quarter last year.
And this is directly a result of a lot of the good things we did both last year and also earlier this year and where we managed to sign several new agreements in our service business and then also deliver on those agreements. And our EBITDA decreased slightly year-on-year, but that's well in line with our roadmap on [indiscernible] for this year because our #1 focus point for the year is lot of game launches and those obviously take a lot of our preparations in terms of marketing and testing and everything related to that. So this is something that we are seeking to do moving forward as well, investing in to both ongoing and upcoming game launches.
In our service business side, it was like a record high order value. Actually, the orders were more than last year revenue in the first quarter. We are very happy and proud of our team on that front and also our capabilities to find good projects and design good projects and build also kind of continuous deals with the clients that we already served last year and now expanding those cooperations.
So for example, with the Supermassive games, where we signed unannounced mobile game development that was -- we already had like a pre-production concept in deal with the [indiscernible], also with the Metacore, we signed a roughly EUR 1 million deal for the mobile development. And then also, as already said, that there are more and more interest towards our offering also in new platforms and instant gaming and social media platforms. We signed our partnership agreement with leading social media channel and that is very exciting to see what kind of games and business opportunities those new platforms will bring us.
Yes. Yes, definitely, there seems to be more and more movement when it comes to instant gaming or then web3 or HTML5, There are so many different names. But like what we're seeing overall is that several of the leading social media platforms are looking into games, some from a little bit different angles. And while it's still...
Not only the social media, but the streaming platforms and the...
Definitely yes. Yes. And it's obviously something where there's a lot of unexplored territory still remaining, but we are, as a company, in a good position because we can take advantage of that and be well positioned by offering our services there. And obviously, we've already accumulated experience because if we look at the games now, we released Blast Heroes on Snapchat at the end of the quarter. That's our first instant game we've ever done. We still have 3 more games that we signed with Snap and with this another leading social media platform, there's 2 things in production.
We still can't talk too much about those. But we see soon we can. And then there's, of course, the other end of the spectrum, like bigger productions where we have the NERF: Battle Arena, which has been very much a focus point for us here in Nitro earlier this year. And I'm sure you guys have already seen the game because it's been now in soft launch. And with that game, we still have some work to be done before we can actually release it globally, but it just keeps looking better and better all the time. We'll talk more about that later today, but the amount of opportunities we see in connection with the title makes feel really good for...
Also proves our multi-project model. Yes. So we can run several parallel projects simultaneously and we have find a way so-called hybrid model where we combine our internal teams and our partnered networks and scale of the operations and still keep those productions and projects like separately and in control.
Yes, gives us the flexibility that we need to...
Flexibility and scalability.
And given that game launches are very much a focus item for us in Nitro this year, we have more coming up. So, we have Lootland and then yet unannounced game, which we will likely announce moving forward. sooner than later, I hope. And those are in the pipeline. We'll get the soft launch, obviously, first so that we can really measure what's happening with them. And then like I said, we have 3 more games coming with Snap, 2 games with this another leading social media platform. And of course, we continue servicing our valued customers correctly. So we've been delivering for Digital Extremes all of the milestones and gotten those approved and so on. So overall, beginning of this year has been a lot larger in many ways. We've been doing more things, but without sacrificing the quality. So that's something I'm personally really proud that we've been able to really stay focused on delivering quality with everything that we do.
And I think one quick point for the multi-project model is that there are either also the small and big projects and total balancing is also the risk for us. So yes, we are not so dependent on 1 or 2 projects, but there are always fall back plans if something doesn't go as planned.
Which is super important in this [indiscernible] business. So then when we are look at the other things, the real magic behind all of these successes that we've accumulated so far this year, that's obviously thanks to our team and we often like to say that our teams are most valuable assets because projects come and projects go and games, come and games go. But the team is really the fundamentals that make everything happen. And these days, we talk about Nitro as global team because even though we're headquartered here in Finland, where we have 50 people. So we've been strengthening our team also here in Finland. Parallel to that, we've been also strengthening outside of Finland through our network of partner studios.
And that is something that we constantly do and takes like a continuous process of evaluating -- finding and evaluating new partners with the partners that we then agree to go in some products and we are doing kind of continuous due diligence for the partners evaluating their capabilities. And that is also paving the road for us in the future potential nonorganic growth [indiscernible] so forth. So we know those people, especially people and processes and the companies really well as we're working with them. Currently, we have roughly 200 professionals in our network and all around the world and model seems to be working really well.
Yes, yes. And I'm really happy about how our people have been delivering on that collaboration. So happy to hear feedback from the CEOs and so on from these partner studios and so on that they really like working with Nitro and they've been happy about the partnership, and we've been able to find [indiscernible] that's benefiting both parties. And that means that we feel very good about that we're building something that's sustainable and scalable in the long run as well.
As for our customers since we have always transparent with our customers. team composition and it has been working very well towards the customers also.
Yes, definitely. Then if we look at the bigger picture in terms of the owners and our strategy. So we've been talking about our strong foundation already in previous webcast, and that, obviously, is very much still there. So as a quick recap, we were founded in 2007. So this year, we're going to be celebrating our 15 years. So that's quite an achievement on its own already. And we've been a public listed company since 2017 when we listed in NASDAQ First North growth market in Stockholm in June. And biggest events on that front of our foundation and owners, recent years have been in 2020 when Nordisk Games joined us as a leading investor. And as we learned end of last year, they just increased their ownership and became a major owner.
And overall, we feel really good about the support that we're getting from all our shareholders across the Board, even from the say, small owners, although it's the biggest, and it seems like everyone seems to be really well aligned with what our goals are and we get a lot of love feedback and support from everyone. So we're really grateful of that because it really helped and resonates also to the team in-house because we know that we have a large following with more than 5,000 shareholders.
I think we have quite a unique kind of foundation or set up on a high level, as we are a founder-driven company, yet we are public. And then we have a very strong kind of industrial owner, and we've been able to take benefits of the founder-driven kind of enthusiasm being a public company taking the benefits from there and then benefiting also from the strong owner. And I think that's quite unique what we've been able to create on our setup.
And also not to forget the part of the Nordisk Games family, there are several other game companies there. there's a lot of expertise about some of the things that are relevant for us. And some of these companies are larger than Nitros or perhaps a little bit smaller. There's a lot of synergies that we get -- and the learnings of course.
Even collaborating on the project.
Yes, definitely, Definitely, yes. And the strategy then again is straightforward. This is what we've been pursuing since 2017. So our strategy has basically 2 legs. And this year is a very special year for us when it comes to our strategy because our when it comes to the first leg, the game portfolio of action and shooter games this year is the year when we do a lot of launches. So very exciting times because last year was a lot about development and production and starting new things and this year is all about seeing how those play out. And so far, the year has progressed well in line with them. Then again, the second...
Leg. What we've already seen in the first quarter, better than ever in our service business for partners, we are seeing more and more bigger and bigger projects and at the same time, smaller projects to the new channels and new platforms, where we balance the risk of the big projects. And so I think the model in that side also started to work really, really well and bringing the long-term scalable opportunity for us.
Yes, yes, definitely. And it helps us to read some of the volatility that we've seen in the service business in the previous year because we have been able to acquire a project from different sources and in different scales, like you said. So overall, so far, first quarter this year, when it comes to both our strategy and our focus points has been the best quarter we've ever seen at the beginning of the year. So in that sense, a good start.
Then if we look a little bit deeper into the project portfolio as we call it, where we have the things that we have going on at the moment here in Nitro then there's actually quite a lot to talk about. So let's begin with NERF: Battle Arena. That's something that we've been developing for some time. We have the exclusive license to the Nerf Blasters by Hasbro. And this game is currently in soft launch. We are preparing the actual big rollout of the game, and there's a lot of buzz around this game on all the fronts.
[indiscernible] Passing about and distribution channels. And there are lots of attention towards the game.
And that's obviously very positive for us. And now we have a lot to navigate and figure out the best possible setup for the, for the upcoming loans and -- but the thing that I'm most proud of is the persistent focus on quality by the team that actually worked on this. So it already now has gained so much attention more than we expected and acts as a very good sort of proof of quality of what we can deliver here in Nitro Games when it comes to experience [indiscernible] very excited about the upcoming stuff with NERF: Battle Arena this year. Stay patient, good stuff is on its way.
Then we have Lootland, which is in development in one of our external partner studios and this game is something that's getting ready for the upcoming soft launch. Now during the second quarter, we are going to pursue through some technical testing and make sure that everything is in order and the publishing team has been preparing everything for the soft launch and the data pipelines. There's so many practicalities that need to need to take place. So that was going forward, so you can expect to see and hear more about that moving forward this year.
Then we have our first ever instant game, Blast Heroes, which is a top-down cooperative social shooter on the Snapchat platform. This has been a very interesting journey for us overall because everything on the game is so different.
Like on all the marketing dynamics are how the broad users of the game are different and but very, very good learning for the team and for the company.
And while we are busy going through the initial launch phase with Blast Heroes, we've been happy to see, first, it was featured by Snap on their platform in connection with the launch and just now during the [ yesterday ]...
A lot of feature.
And parallel to that, the teams have been busy working with Snap on the upcoming free games we have and getting all the learnings, whether they are technical or data driven from how the advertising works and so lot of excitement towards how things are going to play out with Snapchat in general this year.
Then we have the new game, which we haven't announced yet like said earlier today, we're looking to announce that hopefully, sooner than later. And that game is also something that's getting close to the end of the production phase now, and we are preparing holdings related to launch.
And following the normal process that we have, what we use for and what we also sell to our customers.
Yes, yes. And what we can say about this game is that we are very excited about how it's yet another take on the shooter category, it's not jeopardizing NERF: Battle Arena or Lootland for that matter in any way, but it's something like yet another different take. So it's well in line with our vision and our goals for this year to have different type of takes on the topic. And then we have this mysterious leading social media platform, where we signed an agreement actually in GDC. That's yet another record, by the way, because I don't think we've ever signed...
[indiscernible]
So, was a reason to celebrate. So we have 2 games in production, but do you know what that confidentiality clauses and all that, we can talk too much about that at this point. But then again, moving forward, let's just say that this is again, well in line with our goals this year by getting new launches happen. Then we have on our partner process side, Digital Extremes.
Very, very excited to position the project and started to see a screen something that we have never seen in our mobile games and very high-quality fidelity stuff for a screen heading into very interesting point.
Yes. Yes. I'm super excited about how everything has gone so far, not just with the project, but with the partnership overall. We've had really good people on our end, but also on their and working on the things and...
And our partners are performing really well.
And this is definitely something that you can't wait for the day to come when we can actually show it in more detail. Then we have something that's a little bit more new Supermassive Games, they're a fantastic bunch of people. We have a great project in our hands [indiscernible] IP, and this is a collaboration that has started very well. And what is really good for Nitro is that this has followed pretty much exactly the same [indiscernible]
[indiscernible] process. We had a first deal last year and now expand it into the production.
And this is also quite a sizable production to begin with. So it's already not looking also. So -- and then we have a service process with [ Pim Holfve's ] Metacore, obviously, in these type of things, we don't talk about all what it is and, but that's a process where we have our team assisting Metacore team with stuff related to a game. And that's something that we just reasonably signed and started and we are very much looking forward to deliver fantastic quality on that project as well. And then we already discussed the most coming with Snap and we're looking forward to be able to announce more about those things moving forward.
As you can see from the broad portfolio, many of our colleagues when they are speaking about multi-project model. It means 2 games or 3 games. But for us, the multi-project model is really the multiprocess.
You end up with 12 [indiscernible]
[Foreign Language] Really many projects at the same time and keeping in control and finding those success cases amongst the many.
And I think if you put what we just went through, again into the context of not just our strategy, but our goals this year, we have a pretty healthy balance between the amount of game releases we have coming up versus the service business projects. but it's safe to say that we're definitely not done yet. So we are going to stay very active in the business development and we are exploring new opportunities as we speak. So we're definitely not done yet when it comes to the amount of stock we have cooking. Then and then this would not be an interim report without financials.
So if we look at first the income statement for the first quarter, what we can see here is that we increased our revenues a lot compared to the Q1 last year. So in that sense, it was a good start. And then as you can see from the income statement, we made some controlled investments into materials and services, which includes all that launch preparation costs and stuff that we are paying for third parties also the development fees and things like that. So overall...
Maintaining fixed cost quite stable.
And this is how we navigate throughout the year to begin with. So obviously, as we've discussed earlier, where we are headed to and what's an ultimate calls to get to the breakeven and profitability and so on. but to launch the games, it obviously takes resources and money. And this is what we meant with in the previous webcast, when we went through the last year results where we concluded that we were able to protect our strong cash position because now this year, we need it with the game launches.
And we're really happy with how things are playing out so far. And if you book this into the context of some previous quarters and how things have developed from the beginning of last year both in terms of revenue and EBITDA, we're very much continuing on the path where we're seeking to obviously increase on the revenue we generate while making sure that the we keep our EBITDA and cost level overall at bay so that we can seek for the profitability. And it goes without saying we're nowhere we're done yet would [indiscernible] And as you can see from the cash position, we've been able to measure that we control that side of things as well. And moving forward, we are seeking to continue our step-by-step improvements as we have done this far.
Then the last part of our webcast is usually to look at the road map like how did we get here and where are we headed next? So there's actually no changes in here. So we've been steadily exploring our strategy since listing year 2017. Last year, we made a big success when it comes to expanding our project portfolio. So we signed new games. We signed new customer projects. We started new games of our own and everything in between. And as a result of that, the beginning of this year has been like we've already said better than ever.
Better than ever. We started to see the fruits of those past years.
Exactly. And this year is all about game launches and then again, the B2B project both existing ones and obviously seeking for new ones, and we are well on our way towards ambition to become a household name in the category of shooter and action games. Games where things go boom and that's how we are seeing to deliver shareholder value long term.
I think that concludes our update today, thank you for joining and let's quickly see if we've received any questions during the webcast, via e-mail. Actually no, we're improving. Yes. Actually, by the way, previous time, I don't remember the numbers anyway, but we had record attendance on the report webcast. So thank you for that as well. Is there any questions for us on the phone line?
[Operator Instructions] We haven't received any questions via phone.
Okay. Fantastic. Thank you so much. Then it's time to wrap up.
We'll see you soon.
Watch this space from Nitro Games and wishing a fantastic week. Thank you. Bye-bye.
Bye.