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Good morning to everyone. We're back.
Yes, indeed. Welcome to our Q1 webcast.
This was Antti.
And Jussi. We're the co-founders of Nitro Games.
By the way, it was an awesome trailer that we had in our start.
Indeed. Indeed.
I haven't seen that before.
It's fantastic how technology develops and we're able to do all these crazy new things.
Here in Nitro, as you maybe saw from the quick video clip, we do action and shooter games. We've been best known for our mobile games in the recent years. But over the last say 2-ish years, we've been actually more...
More towards cross platform and cross play.
Indeed. Indeed. And even though we look young, we are actually quite older. We've been doing this for a while. We've started Nitro Games back in 2007. And back then, we focused first on PC games, and with little bit of quite a label work on console stuff.
With mobile.
Yes. And now we're coming back again to more and more cross-platform world and so on. So these things that we go with circles. But in any way, we are a powerhouse when it comes to action and shooting games, we do high production value stuff, and we want to be pretty good especially when it comes to technological performance of our games. So we do pretty challenging projects. That's something that defines Nitro really well. And we work a lot of with different IP both in terms of IP and brands that we develop ourselves, but there are also IP and brands that somebody else has developed.
So it says that it's -- how we are offering and how it's falling out, it's a very good fit for the market, it's moving forward at the moment. Just last week we were in a one industry evident, it seems -- it feels that everything that we have done past years are now coming together and market need and our offering is matching very well every year.
We will talk more about our projects, our portfolio, our strategy and all that stuff as we go forward in the webcast today. And -- but first, let's have a quick look in terms of what did we deliver during the first quarter.
So again, we delivered growth, like we said that, that's one of the big targets for us this year. And we also delivered stability in terms of our bottom line growth, of course, compared to the first quarter last year, it was like pretty hefty growth. But as a reminder, we reached breakeven during the fourth quarter last year. So this is our second quarter, delivering profits.
And this is basically our plan for the year ahead, that we want to continue by working our way through increasing the top line revenues while making sure that we also deliver on the bottom line. And how we do that is a combination of growing our business and staying very careful with our cost structure. And that's something that also details how we do business here in Nitro, that we have a flexible, scalable cost structure where we combine our in-house team with our outsourcing partner network. We've spoken about that a lot in the past.
And during the first quarter, we again were having some follow-ups in our B2B service business. We made some progress with our games portfolio. And those are the things that we're going to discuss today and what it means moving forward. Good end, and then, our strategy. We have a portfolio of strategy and where we're going with all of this is that we started in 2017 with this new strategy, we listed in our First North in Stockholm. I still have that picture framed where we're ringing the bell.
And basically, the purpose of our strategy is to build two lines of business. We build our game portfolio where we invest and then we will our B2B service business where our partners invest and we provide the capabilities.
But that's also where we create kind of safety and stability for our business.
Yes.
Now I feel that the portfolio strategy with the two business units, it started to maturing into the position where, as mentioned already, the market is looking for such services that we have, having those two like business units and maturity with the development skills and technical skills and even the public skills is going -- starting to play together very well in our favor.
And we are getting exposed bigger and bigger projects, more and more challenging projects where then again, competition is going to be less and less because there are many -- that many companies, even in a global scale, who can jump into those kind of cross-play, cross platform, complicated synchronous super server.
And one thing that's sort of also -- sort of signature for another way of doing things is that because we have a portfolio strategy and because we operate in a very driven business, we have this mindset of having several shots on goal. So the way we work is that at some points, we expand the sort of funnel that we have. We start a lot of new game but also this is for example. And then as time goes forward, we step-by-step through data mostly validate our games and pick up the winners and then we narrow down the funnel. And that's what we mean when we say that our portfolio is matured. We're looking at the narrow down funnel. And that's what we have on this slide right now. The winners that we have identified earlier and that we are focusing on right now.
And for this year, with these four process specifically, our focus is on the commercial side of things. So that's why we are more and more engaged in working with different partners with our own game portfolio as well, because that's the way how we're commercializing things so to reach those financial improvements as well.
And at the same time, we have small initiatives where we do not risk in our current year and then close future finances, but we have a small initiatives here and there and looking for the next things when we then again widening the funnel and going into the kind of up, to leave staging, they have already those most limited data and looking for, which kind of those new things might be the ones that are ending up into the bottom of the funnel, then again up someday.
So it's kind of interesting period when we have identified a current kind of winners from the big pool of the initiatives that we have and now slowly and easily and whether it's the way of starting the small initiatives to get new ones.
And that's something that we also get quite a lot of questions like usually through e-mail or some people reach out and ask that should we expect more gains from Nitro moving forward, should we expect new B2B cross from Nitro moving forward? And the answer is, yes.
Then should we expect Nitro to take all their cash and put it into one investment in terms of a new game? No, we want to be super careful when it comes to how we invest the cash and profits that we make. But you should definitely expect more and more of new stuff moving forward, but we're just going to be careful with that, how we manage those things moving forward. But we, like you said, there are tons of things brewing. And again, we will talk more about those as things progress and when the time is right.
If we then look at what actually has happened with again portfolio, one of the big things now is, of course, Autogun Heroes, we just recently announced that we are now done with the launch base. Yes. Yes. We're right now in the live phase. The game has been transferred to our new publishing partners Supersonic, who are part of this global big, huge Unity group.
And of course, we recognize that we're still very early. What we're hoping is that it's going to be years and years of partnership and growth and fantastic things happening. But we're still very early, but we couldn't be happier with where we stand now. Everything has gone smoothly. And so far, it seems like all that usual hassle that goes into starting a new partnership, a lot of people need to get to know each other and sort of put ways of working together. That's how surprisingly smoothly. So obviously, I'm happy with that.
Definitely professionals on their side and definitely have a kind of interest to, come on, success with the game and I think also to select -- selection process of the partner for the other country, was also a good example of the funnel thinking. And we had a lots of discussions with the various parties and then finally then into the business that we think, from the industry at the moment for the game like Autogun Heroes and company like Nitro Games. I think there's really, really nice and good fit.
Yes. And what you should expect moving forward from this one is that we, in Nitro, we continue to do our side of the call, which is essentially the team keeps developing the game forward. There will be plenty of updates coming. I think, you might have already seen something recently and more of that good stuff is going to come. We're going to be working together on the live side with Supersonic, making sure that we begin an assessment the data in the same way and we figure out how we run the live operations to the game.
And the marketing and user acquisition as we often call it, is more on their play. And together, we have this plan where we deliver something they do marketing, and we go forward with the games step-by-step. And that's something that this year, we envision that we're going to scale up the game step-by-step and then continue growing in for years to come that, of course, the long-term wish.
And then, if we look at the other game in our same portfolio, NERF: Superblast. That's something that we have discussed earlier that we have limited our investments in the game. That's still very much the case. So we haven't actively invested too much into the game during the first quarter either. We put out some updates and get the game alive and our certain players that are enjoying it. But now as we are more clear with our plans with Autogun Heroes, everything is set up in terms of that.
Now we're shifting our focus more and more towards Superblast and the other stuff in our game portfolio. How can we commercialize those and how to best take advice from that.
And when you think about the ways to [indiscernible] criminals, those without risk increments of the current business. And I think they are clever as already on our table that we've been discussing that, how we're going in looking way both the game and if they have some new channels and what are those.
Yes. And like we said, when we spoke about our portfolio, we definitely have a plan of, again, going into the mode where step-by-step again, we feel that early part of the funnel when it comes to our games portfolio and keep putting things there. And then, if we look at the B2B service business, during the first quarter, obviously, war frame went live on iOS. That was a big milestone for us and for the team. We also did the...
Considering the time that we work with the people, are going to go very, very big milestone for the team. Huge leap of faith also from the client side that they gave the whole responsibility for us. Common effort with our team and partners even it's been really, really nice to see how well those two teams, given in the two different times also and the cultures are working together, they are after towards the one common goal.
Indeed. And something that makes me so proud is that it's a game that's I think a -- as prime example as it gets in terms of like how can the life cycle of a free-to-play are going to look like when it's done really well. And when you make sure that you service your players the right way. And Warframe, I think is, again, that sort of represents all that. It's been always sort of players first and years after years after years. And it's great to see how you keep sort of putting more effort into the game as time goes by instead of the reversion. That's the beauty of free-to-play and game-as-a-service over the long run.
Also, it's a very good example on one new trend that is coming on a mobile where through AAA, AA experiencing from the big screens are coming one way or another, their way into the mobile and naturally, we in a good position on all that kind of -- that kind of project as we have our expertise on the older platforms and traditional platforms and also the mobile platform. That's like a prime example where the existing, well received and huge user base having to having games can make a difference in the whole market.
Indeed. Then we, of course, have our project with Netflix since that hasn't been announced yet, but we can't really talk about that too much other than we've been doing our usual, which is to make sure that we do quality milestones. We stick to the plan, what is our role and make sure that we get the progress started really smoothly.
And I think it's safe to say that we and the team, we are very, very excited to be a part of that. It's going to be something that makes me proud, makes us proud. It makes us wanting to grow and having such an excellent, excellent partner of that one other client, now being Netflix. Everybody is very excited.
Yes. And this is something that makes me super proud that because where we come from is that in our B2B service business, we work with so many great companies out there, so many great projects with also sometimes on what we call this white label service work for others are all the different things. But now in line with our strategy and our vision of being the household name in action and shooter games, we managed to make sure that our also B2B service business project portfolio is a fantastic match to that.
And it seems that moving forward, we can expect so much more from that category. And that makes me super proud because we're able to work not just on good looking process in terms of like what they mean for financially, but also cool process that are fun to work on and super good match for what we want to be as a company.
And speaking of numbers next up are the financials from the first quarter. So as discussed in the beginning, we managed to deliver a profitable quarter again. We managed to deliver top line growth again. And this a result of two things, us been persistent working with our business, increasing the top line, both in terms of our games business and our B2B service business, while being careful with the cost structure that we have.
And this is well in line with what our plans for this year, which is to make sure that we deliver stability and we don't take excessive risks when it comes to investments in new products. But we've had to be more clever in terms of how we commercialize existing things while we build new staff for the future as well. And our -- if we summarize everything from the first quarter and what we do here in Nitro action and shooter games, yes, more and more of that.
And we're very happy that they are our current projects and kind of new initiatives and current period sales funnel and all of them are coming together with the action and shooter. We actually limit through our vision, and that, that is going to really good thing and reason to be proud of, everybody on the company.
Yes, definitely. In terms of categories, mobile and cross-platform yes, both of those. And I think something that we're also looking into with our own IPs, that okay, how can we leverage more platforms with our own IP moving forward as well.
How can we leverage the IPs and so that the same IP might be in the future, founding a different platforms, that a little bit different version of the original and, but because of what comes with the cross platform and cross play is that reasonably we've been kind of mobile first and then some platforms have been coming later, but it can be in the future also other way around. Something first and then mobile also not always kind of mobile first or mobile only.
Yes. Yes. And maybe, it's maybe something to note on that room as well is that we didn't go too much into talking about the games market now, but that's also something that we've seen during the first quarter is that the mobile free-to-play market on its own has also continued to be more and more exciting like last year, everybody talking about the changes in the marketing landscape and all that stuff.
But what's been really cool to see is that we've had game-after-game breaking new records and making comebacks. This is something that I love about the scales business is that it's always changing, always evolving. There's always something negative around the corner where we basically killed the market. And then it doesn't take too long for winners to figure out how to adapt to the new environment and how to make even bigger wins than what was possible before.
It's like a PC gaming market that has been predicting to be dying for the past years whereas, we have been in the industry and it seem to be doing pretty well.
Yes. Cool. All right. I think, we're done with the updates on our end and next up, let's check out the questions that we have. And there's two ways to ask questions. One is to put something in the chat activity field and then also e-mail. Let's start with the e-mail, where we do have at least some, so let's see.
Can we elaborate on how our developer role has changed, if at all, now that Supersonic has become the publisher with Autogun Heroes, obviously?
What has happened is that something we did towards the end of the launch phase is that we were more and more mature with the game in a way. So we streamlined the team a little bit focused on the essentials. So that's what we've done. Now moving forward, we will, of course, maintain that and that we will keep developing new features, new elements to the game. And then, over the longer period of time, looking at next year and the years after that, I can easily see us starting to grow the team again. But that will, of course, require that the game growth and all that stuff. So...
I'm reading that question a little differently, but developer role at least if the historically it has been the publisher developer. And now it seems that we are like this. So it's more like a equal role within the publisher and developer and [ Polka ] contributing to the same success. And I think that has been changing in the market and especially on a mobile publishing side of the business that it's more of an equal partnership rather than kind of we are mastering and you are developing.
And it's more fair in a way because the way that the competition has changing, especially in free-to-play mobile is that you can't dictate things anymore. You need to scratch each other's back to get the thing working and that's beautiful. But it just makes finding the right partner so much more challenge here. But when you find it, then you can work beautifully.
And there are other factors sort of finding the right partner. Financial factors, there are kind of culture of it and all countries coming into play when you wanted them to play.
Sort of a follow-up question to the same that can we expect lower development costs now that the game has entered the live phase?
Well, yes and no. What I mean with yes, that you can expect us to be careful with our cost structure like we have demonstrated during this quarter, during the previous and so on and so on. But also at the same time, we are seeking to continue actively developing the game, continue pushing out actively new content to the game and perhaps even increasing that moving forward. But that's a little bit longer down the line.
Then there's a question, what do we mean with quote from our report where we say that the Autogun Heroes road map is clear, and we can now continue exploring other new ways of commercializing our game portfolio. And then, there's a question that is it too early to consider adding another titles in our games business and so on?
That's exactly what we're doing at the moment, but we're doing it a way that we want to be super careful with not over investing until we have reached a certain maturity with the games and the opportunities that we have. While at the same time, we're seeking to also commercialize things that we have in our game portfolio and finding ways to make more money with the things that we already have.
And we are exploring also not only commercializing that games but also commercializing the IP, definitely.
Yes. So long story short, yes, you can expect new games. We will take our time, they would come out of the closet with those one until we have reached certain level of maturity like we always do.
And then, can we provide some perspective on the overall competition in the market? Have we observed an easing of competition after 2 challenging years?
I was following that. We start that in the last week in one industry, and what he has done -- he and a couple of other experts who are giving a final discussion regarding this topic. And I think there was quite a few good points. And I think overall, feeling in, within the industry executives is that marketing is easing up. But maybe you can summarize the things that you and your colleagues there had a chat.
Yes. I think what we're seeing now very much is that a lot of the companies, unfortunately, already have faded away. So in that sense, there is less competition, especially for us in the B2B market, but also when it comes to the free-to-play mobile game smart. What we are also being more clever not just us, but so many others as well. People are more clever in terms of what can we do without taking excessive risks because everybody takes excessive risks at the moment, but everybody still wants to make excessive profits down the line.
So maybe everybody is a little bit careful and a little bit smarter how they approach those things. And something that we think that we're going to see more and more moving forward is that smaller in the labels are going to deliver a lot of great stuff. And why that is, is because many of the big three player houses, they have canceled so many projects that are focusing on the safe bets, so to speak, sequel of this famous IP, which for us consumers who are playing the games, what we're going to see is awesome things like GTA 6 and sequels for our logins, but maybe less innovation. Innovation always comes in games. And now it's turn for Indies to [indiscernible]
These explanation of things are proving within the Indies, yes we calculate ourselves also. So smaller, smaller companies and then as soon as those innovations have filed, then the big cars might act all-in-all.
Definitely. And something that we...
And we see something like that. We see a lot also with one small company from Northeast.
Definitely. And I think for us down the line, it means two things. One, we have opportunities to choose from like where we invest our monies and how we collaborate with other games and studios out there, but also in terms of these big boys, so to speak, they will need games moving forward. And now they don't have so much growing organically. So there will be a day when everybody calls shopping and the buying stuff because people want the realistic.
So long story short, the market is developing in the right direction, if you ask me and us and probably so many others, when exactly will the floodgates open, nobody knows.
Then let's see what else. Nothing in here. Then let's see the activity feed. Any new games in the plan? And is there a chance to strike a deal for NERF game?
New stuff brewing. Yes, chances to strike deals with anything in our portfolio. Yes. Will we go into specifics on this call? No.
How is Netflix can go? And will we get to know what it is soon?
Depending what is soon. We will know when the time is right.
I don't think we even have a date for that. So even we don't have, yes.
We have previously had a community manager for our games, how come you haven't had for the last few years and how will you address this in the near future? That's a very good question, and that's something that...
We will do with the community management, even though we don't have -- we haven't had a dedicated, but we have to manage.
And that's something that's one of the classical chicken and eggs things. And that's something that how to say it, you always need to be super mindful about when you think about how you optimize the cost structure that you have, because there's so many other things like this very topic when it comes to the whole game, development and the game publishing process that how are you supposed to grow your game if you're not investing in your community management.
And the flip side of that question being why are you investing so heavily in your community, if you don't even have it yet. And this type of chicken and eggs in game development again offers new things.
New thing is that having a community management is more relevant than having the community manager.
Yes. Yes, sure. But I think it's safe to say that moving forward, probably on that front, we have reasons to be there. Let's put it that way.
Then have you started receiving income from the Netflix deal yet? The answer is yes, we usually structure our B2B deals in a way that we get paid somewhat frequently. We try to avoid this and then we deliver something and once that something is approved somewhere we're down the line, then we might get paid. We want to avoid that. So we often demand structures where we start to get paid from the fair get go and we have paid with pretty short intervals as we deliver milestones. This is very little bit from one project to another. And now, of course, always industry trade secret. So we can't go into projects specific details. But usually, we want to say no to the type of opportunities where we need to take too big of a reserve in our B2B business.
Then there's a question that, is there any other partners coming our way, like Blizzard? Well, of course, we're not going to comment on any single entity out there, because we are subject to super type NDAs and stuff in this business. But say, any company that has been around in this business for while some time now, of course, you are all the time talking with really most everyone, that's normal course of business. Which means that we are, of course, constantly in the mode where we try to see new things to Nitro. Something that I think is good to recognize is that we are, at the moment, trying to seek bigger opportunities, we're more and more selective and picky when it comes to what it is that we want to work on.
But is it safe to expect us to continue down that road and do something with somebody moving forward? Yes. That's a super way, quality [indiscernible] Yes. But we will tell when the time is right.
Looks like that's it. 29 minutes and 30 seconds. We set a 30 minutes timeline for each other before we started this call. So I think [indiscernible]
We will meet again, August when we put our report for the first half of the year.
So have a great summer, everybody.
Exactly.
Me and Jussi are already here in London, so this summer time.
Yes, yes, very much...
We will be presumably here.
Yes, a lot of things to do. We can't even dream about going to summer holidays. So thank you for your support as well as following in and see you at the latest in August. Bye-bye.