Q1 2020 Earnings Call

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[noise], ladies and gentlemen, the since the conference operator.

Conferences schedule to begin.

<unk> 510, eastern standard time until that time ignore lines will again be placed on them you say cold we thank you for patients.

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[noise], ladies and gentlemen, thank you.

[noise] for standing by and welcome to the Q1 2020 glue Mobile earnings conference call.

This time opera expense lines aren't to listen only men after the speakers presentation.

Yeah, we'll be a question and answer session to ASCII question. During the session you will need to press star one on your telephone if you require any further assistance. Please press start zero, Oh and now like to hand, the conference over to your Speaker today Harman thing Vice President of Finance, an Investor Relations. Please go ahead Sir.

Thank you operator, good afternoon, everyone and thank you for joining us on grip.

[noise] for Mobiles first quarter 2020, Utterance conference call on the call today are Nick Earl President and Chief Executive Officer, and Eric <unk>, like you know and Chief Financial Officer.

During this call we won't be making forward looking statements regarding creature, Ben and the teacher financial performance on the company.

And he forward looking statements.

Can you make today are based on assumptions that the company believes could be reasonable as of the state. We undertake no obligation to update these statements as a result, a preacher bad.

Caution unit consider the important factors that could cause actual adult adept for materially can go it's going to forward looking statements in the press release during this conference.

[laughter] call.

Based factors are described more fully in our documents filed with the S.P.C. typically the most recent reports on forms 10, k. and tend to.

During this call we hope that both gap and non got financial measures. The non got financial managers are not intended to be considered in isolation from you substitute for or superior to gap results and we.

The current bastards to consider all measures before making an investment decision.

Complete information regarding our non got financially.

Nation, most directly comparable gap measures and they quantitative reconciliation of those figures.

[laughter] a dog Gee, we've used in park quarters were also providing a supplementary excel file on our website <unk>.

The aid in this reconciliation both the Powerpoint and excel file are now accessible on the website.

Encourage you to follow along with the slide during this audience conference call and now with that I would like to turn the call over to Nick.

<unk> Hello, everyone. It take you for joining US today published first quarter 2020 earnings call on today's call I would write some overall thoughts on the.

Impact of covert 19 pandemic.

Discuss first quarter highlights and provide an update on our game development progress after that I will turn it over.

Erica, we'll discuss our financial results and guidance in more detail.

First off I hope you on your families are well during this difficult an unprecedented time, we appreciate the commitment of the people and organizations that have come together to address this global health emergency.

<unk> with all those impact.

<unk> our primary focus during the pandemic is the health and safety of our employees their families in the gaming community.

The business continuity planning pre covered put isn't position to quickly implement a remote work policy, providing our employees the resources and support needed to productively operate in a safe environment. It's allowed us to successfully launched tap sports baseball 2020, and Dizzy sources arena, reflecting are.

Preparation.

And have driven sizeable D.A. you grow up for four of our key titles design home, probably fashion diner Dash adventures in camper Dash in Hollywood you cohort cohorts. So far have had similar retention demonetization to our existing players providing us with the competence. They will continue to enjoy or games in the months and years ahead.

And the first quarter, we continued are stronger mansion from last year sport.

Porter, we meaningfully beat our top wind expectations with 15 per cent bookings growth. Your every year to 106.5 million.

He also met our bottom line expectations, even while increasing or you wait.

And that's meant to expand our user base for future growth.

He's strong results were given bike celebrated bookings increases in our growth games and an improvement in the rate of decline in our catalog games.

Maintained a liquid in debt free doubt balance sheet with 150 million in cash at the end of the quarter, providing sport to actually get our growth plans.

Design home experiences third consecutive <unk>.

I could courted with buttons at 46.8 million driven by an impressive monthly series performance in a larger player base, but you had the <unk>.

Same continues to execute a robust my bump Reagan's bland well continue to fine tune in the new user flow and further deep in the elder experience.

Covered fashion deliberated strongest Q1 ever with bookings up 17.1 million as record performance was driven by you.

Being based advance paired with the strong content line up from Propshop, including hair accessories and cover collection pieces.

<unk> has a strong content pipeline through the year and continues to focus on new systems and meaningful enhancements towards social gameplay.

Passports baseball 2020 had the franchise the strongest first quarter ever and drove record total franchise bookings of 16.2 million.

Versions include does yours version includes authentic M.L.B. stadiums faster performance and you'd features including target Bash.

Which has become an instant community favorite eat improvements that led to a higher engagement.

Monetizations bookings currently cracking head of last year. Despite the delay to start the M.L.B. season is is a testament to the teams phenomenal lie Bob's expertise and the ability to generate content that drives consumer engagement.

[noise] diner Dash adventures bookings were 7.5 million driven by a recently launched updated late March that included fresh content. Several new chapters in events. This title is transitioning to being systems based.

Adding scale ability that to the title and putting it in a better position to realize its growth game potential. We're very encouraged by the progress we have seen in diner dash adventure since last year's launch.

Oh with Cam through 2023, which airport cover in more detail.

Finally, we successfully launched her newest tidal Disney sources Arena worldwide. The game is resonated with both core R.P.G. players and fans of Disney Pixar like the title is exhibiting strong monetizations based on a bench speech rate characters from iconic Disney and Pixar franchises, including the Lion King the incredible toy story Aladdin.

The newly released them onward, and more experienced team is equipped to maintain a robust live operations and events calendar.

Will continue to roll out new characters in game features over the coming quarters and years, while we have seen a solid organic trends today, we look forward to participating in additional marketing in this initiatives. After a shelter in place mandates have been lifted we're extremely impressed by the talent. The disease first raised arenas team and will continue to invest in this title given our but.

We have the makings of a successful growth game.

[noise] moving toward pipeline originals are interactive story platform continues development Toronto studio at the team continues to add refined content.

While we're pleased with the short term retention an early monetization, we still need to significantly increase the d. 30 retention elder monetizations.

We are pleased with deer Hunter worlds progress on stability in early retention, it's like better territories. The team will now focus on implementing social pagers and enhancing matter with new modes in advance to drive longer term attention monetizations.

Deer Hunter World will also so.

<unk> inspired player versus player for the first time, while maintaining the traditional core lupron progression, but as field is franchises in during success.

Continued to be excited about this titles potential in on track for a global launch in the second half of the year.

[noise] or glue sports studio in Orlando continues to make progress on our social fish and game, including game disability and you use or flown hands enhancements.

Focused on further developing social and met a features and fine tuning the form mechanic 'cause title is currently in beta early beta stage and we believe is on track for a global launch in 2021.

Your turn growth opportunities on the emanate front, we continued to assess additional studios that will complement our existing portfolio and grew up close game strategy. We was a proven track record of finding talented teams in studios and then nurturing you'd.

Titles with the critical resources and expertise necessary to achieve accelerated growth and profitability.

And we were focus on opportunities that will broaden our our audience in deep and connections with our players to cross platform connected play this opportunity includes extending two ugly blue key.

Franchises design home and test sports baseball to the P.C. web browser, which we'll expand our audience increased accessibility.

We have made strong progress with this initiative and expect to have both soft launched by this summer.

Are better than expected first quarter results very strong start to the current quarter and they're successful launch about Disney title. It gives us give us competence insignificantly raising or pull your outlook sheltering place mandates have helped drive higher engagement and do you use across our key titles paired with significantly lower Cpis. We believe these <unk>.

<unk> amplify are continually improving lie bob's as well as our ability to increase retention and monetizations all the second half of the year brings an unusually high level uncertainty. We are confident that we are in a position to meet our raised for natural outlook lose in a great position to continue stacking abroad games, but gangs and now with the addition of disease.

Versus arena any improvements of diner Dash adventures and Kim Dash in Hollywood, we upgraded momentum moving into 2021 it beyond.

Closing I'd like to thank our employees in our community for their fortitude in these unprecedented times I'll now turn it up there could provide details on our financial then outlook great. Thanks, snack and good asking everyone. The call I will provide a closer look at our financial results for the first quarter make high level comments and how we're managing the business to the current a virus pandemic I'm also highlight.

Are you a investment strategy and then we'll walk to guidance to the second quarter in full year 2020.

Before I discuss our financial results for the first quarter I Wonder provide general comments and how we were operating and made the pandemic in a shelter in place.

Blue as a robust business continuity plan in place due to the fact that are headquarters is located in the earthquakes zone in February as the first cases of the current a virus reported in the United States. We started preparing for a potential work from home scenario at the end of February and in early March most of our teams initiated working from home test for one to two days the goal was to.

Assess employee productivity and instrument bottlenecks on internet whole might apply V.T.N. access and other I.T. impediments, just help isolate specific issues and based on those test we ordered equipment to solve this challenges on March 10th Oliver North American employees begin to work from home, our India location to the same on March 25th.

Virtually all of our infrastructure and tools bought and built our cloud based and we have leverage June for video conferencing for over a year.

We have managed our live operations for all of our games and launched two new titles type of sports Baseball 2020, and Disney sources Arena with 100% of our employees that work from home mode.

All of this has been done without any just sort of.

Loss of employee or business operations productivity for.

Both are alive games and new games in development.

<unk>.

Weekly town halls, other employees and continue to interview higher and on.

Board New employees virtually our primary focus right now is the health and safety of our employee base. Although there is very limited testing of our 740 employees worldwide. We do not have any reported cases of the current a virus or eventually turned to an office environment will be in coordination with our local state governments Mandy.

Some guidelines.

Given our ability to effectively work from home, we will be cautious to.

Not initiate every turn to the office prematurely.

This year's first quarter, we deliver better than expected top y. results led by accelerated performances in our growth games had improved performance and Kim <unk>.

She in Hollywood.

You get the first quarter revenue was 100, a $7.3 million.

Bookings reached 106.5 million a 15% increase over last just first quarter royalty free glue I.P. titles generated 72% of bookings.

Add bookings, where $11.3 million or 11% of total bookings normally cpis, an AD revenue per impression or C.P.M. move in the same direction. This correlation started to change in March despite cpis declining our AD revenues were flat as a percentage of bookings quarter over a quarter.

We believe this was dude.

The the advertisers we work with a crossover aborted video and other AD formats, they're largely performance space and not <unk>.

75% of total bookings on a Europe or your basis design home grew 11% to 46.8 million a new all time record and the third consecutive quarter with a new bookings record.

Passports baseball franchise increased 21% of 16.2 million, including 3.7 million from the 2020 version, which launched in March 16th.

<unk> National is up 2% of 17.1 million Disney's horses Arena launch on March 24th in generated at 1.4 million for the quarter.

<unk> deliver 7.5 million, a bookings and Kim card out in Hollywood generated another strong quarter with bookings up 25 per cent at 10.4 million.

On the expense side adjusted planning commissions were 28, and a half million dollars adjusted royalties for 6.4 million and hosting costs for 1.9 million.

In mid March as North America began sheltering in place we saw pronounced reductions C.B.I.'s as many industries curtailed or you may spend on mobile AD networks, we leaned into this favorable C.P.I. environment and invested an additional 4.7 million above our guidance, while still beating or just leave it target for the quarter.

<unk> marketing spend was 35.6 million or 33.5% of bookings can.

Air, but 23 million last year was first quarter.

Operating expenses, excluding you Ain't marketing or 36.9 billion compared to 30.5 million last year on a gap basis that loss was 8.3 million.

I would point out that we have not seen any material foreign exchange impact through the end of April as 84% of her bookings are in North America, and virtually all of our off axis as well.

Looking at a second quarter guidance I want to provide some additional commentary on the U.A. environment and how we have ran started dustmen since mid March we have seen very favorable cpis and has increased our you wait budget for the second quarter by double digit millions of dollars to further investment portfolio broke the incremental you a span coupled with lower C.B.I.'s.

Continues to drive higher over all paid installs. Additionally, we have seen a sizable increase in organic downloads across our titles due to consumer sheltering in place and seeking a social outlive with digital entertainment.

In the month of April we prioritize top line growth over marginal flow through due to this favorable buying window.

I would like to walk through our three growth games in a three other key titles to write an update on what we saw in March and April to write context to second quarter full your guidance.

Or too recent wants you to perform very well out of the gates. Despite the lack of a professional baseball season tap Sports Baseball 2020 is up 23% as compared to tap Sports Baseball 2018 for the April 1st to May 5th comparable period in the absence of any lives sports across the globe we.

I believe that type of sports baseball is provided an outlet for sports start fans. The up proponents over last year was version has been driven by P.L.P. spenders, while organic downloads are down on a year over year basis. The new countries. We have launched in conjunction with the 2020 version have contributed immaterial amount to this total.

Disney sources Arena is off to a great start we've seen a lower cpis in the United States. During the worldwide launch that we saw in Canada during beta resulting in an increase in are you a investment for the full year on a standalone product basis, just resources arena will be at a high single digit million dollar loss inclusive of team cost anyway. This is.

That's that's in the way, we were making to drive usually during phase one with expected break even performance in the second half of 2020, which is phase two of her path with his scaled title profitability. This pattern is identical to diner dashed adventures results in last year's third and fourth quarters.

<unk>, which launched last June has gone to a positive evolution in the first quarter.

A recent object to the game transition the title from a linear content <unk> to a balance of lie Bob's elder systems and content updates. This has helped increase ARPDAU meaningfully starting in February combined with lower Cpis, we have increased our <unk> and <unk>, Oh, very favorable our ally and bookings growth in a month of April.

It is too early to call diner Dash adventures of growth game, but it appears to have positive momentum towards being one.

Are two other growth games I've seen great performance in Q1, and the second quarter to date design home at a record Q1 at our Dallas increase a double digit percentage from the fourth quarter to the end of April.

The April Bohemian Wanderlust series was our largest ever and wasn't a 27 consecutive monthly series that as seen year over year grow.

Covet fashion had a strong first quarter and a record month in April two the Dow growth in a robust spring season launch.

Oh catalog games have historically consisted of titles that have minimal so no headcount and you a investment historically, our catalog is decline year over year at a 30% plus right.

That's.

The first quarter saw Kim card Ashey in Hollywood grow 25% on your your basis, which in turn redo start you remember your catalog declined it 13%.

This was driven by an influx of reactivations of last players as well as increase monetization engagements as well as you laid investment for new for new users and all this.

Drove higher L.T.V.'s, we recently signed eat three and a half year extension with Kim car dashing, which allows us to continue investing in the game through the ended 2023. This new contract was effective may 1st and continues to be exclusive we're now able to recoup our user acquisition spend before paying royalties.

Providing us with the opportunities. We're further profitably invest in girl that user base. We believe that came crashing Hollywood is on path to becoming a growth came in 2020 and beyond.

I would point out that we now have six key titles that we are all investing and all of which are the active life operations modes. These six titles are across spores honors the lifestyle genre with design home and Kevin Stashing. The casual genre features Kim Kardashian, Hollywood and diner Daschle ventures, Disney's horses Arena isn't a strategy R.P.G. on.

Huh and tap sports baseball's or the outdoor in sports John.

This diverse portfolio is well balanced and allows to hedge against C.P.I. pressure.

The future of C.P.I. increase in any one John right, we should be able to lean are you a investment into Sean wasn't titles that are not under pressure. We did not have this diversity last year.

We're in in unprecedented times and realize that the various shelter and place mandates across the globe the uplifted engagement and the favorable U.A. environment are temporary.

Well, we have competition the performance of the new cards. We have acquired the date, we are cautious on how long cpis will remain low and whether the height use your engagement persist as such we were taking a conservative approach and assuming the following in our second quarter and for your guidance for modeling purposes, we're assuming that the favorable C.P.I. environment.

Does not continue all of our title ever <unk> title level forecasts assume that Cpis <unk> 19 levels in mid May and remain at those levels to the end of the year.

We have spent aggressively on you lay in March and April and we're forecasting it pulled back through the C.P.I. guidance I just mentioned.

We'll have an immediate impact on the booking starting in May and will continue to the second half of 2020 and our guidance reflects this reducing the <unk> one of the <unk> pull back we'll be unexpected reduction in our titles top grossing rankings as we shift focus to driving scaled profitability.

We assume that non paying players that have download or games during the north American shelter in place, we'll have lower engagement and thus far down from these players will decline wants to shelter in place mandates are lifted.

As of today. It is unclear whether there will be a major league baseball season, given as high level of uncertainty. We're assuming task Force baseball 2020 will be flat from now until the end of the year as compared to type of sports Baseball 2019. This would imply a gradual pulled that can chew chew from the current quarter to eight levels with accelerated pullback.

The second half of the year, if major league baseball does have a season. We believe it is possible that new working like downloads could increase and cpis perpetuate could drop that that occurred we would ramp are you a spend to capture that opportunity.

Nick mentioned that we'll we'll be launching into beta over the summer P.C. web based browser versions of town Sports Baseball 2020, and design home, we have nothing in that in our guidance for either.

Now for spenders it of download or a games since mid March whether if you get paid you way organic discovery for now we believe that they will remain as paying players after the shell from places lifted and it and say that they will spend in quite the same way as other monetizing cohorts we basis assumption on our analysis that are mid March and April paying players.

Are behaving very similarly, as compared to pre coping 19 monetizing player colors.

Now are hooking guidance philosophy is to exclude any contribution from new titles until the quarter. After such title was launched.

Disney's horses arena when worldwide live in late March we will now include bookings from that game in our guidance for about the second quarter full year 2020.

This obviously implies that our guidance will exclude any book comes from originals deer Hunter Rural our new crowd started titled Codenamed P., three cats sports fishing and any other titles, we have not spoken about.

For the second quarter based on the assumptions I just discussed we start looking into the range of $150 million to $155 million on the expense I'd never been pointed out bookings guidance. We spent adjusted plot from commissions of 40.9 million adjusted royalties of 10.7 million and hosting costs of 2.3 million you may cost will be up approximate.

$56.5 million up significantly Julie favorable C.P.I. environment I just spoke about all other just operating expenses are expected to be $37.7 million.

The first quarter actual results combined with our cutesy guidance implies that adjusted even top profitability for the first happened 2020 will be in the mid single digit millions versus our prior implied guidance of a loss of mid single digit millions. This is due to the upside we are seeing it a second quarter, if C.T.I.'s remain low for.

The entirety of the second quarter, we may have higher bookings and we will balance flowing that upside through to adjust to <unk> versus continuing to spend on the way. We were very focused on showing adjusted to even out leverage in the second half of 2020.

For the full year 2020, we spent bookings in the range of 490 million to $500 million. Just revise range includes the 11 and a half million dollar first quarter beads.

An increase of 15.5 million on our core business and the addition of $40 million from Disney sources Arena.

The beaten raised on the core business, excluding Dizzy is $27 million. It includes increases from design home and Kevin fashion based on the record performance. We are seeing increases from diner dash dentures and came crashing Hollywood based on the renewed momentum from both of these titles. These uplus or partially offset from an approximately 10 million dollar reading.

Option from our prior internal forecast for task Force Baseball 2020, due to our assumption that <unk> being flat you every year with the assumption that there was not a professional baseball season.

We used to that Q3 bookings to be down sequentially from the expected mid point of to to as a result of the flow through from our lower <unk> span higher C.P.I. assumptions and lower Dal queue for bookings are expected to be roughly flap with Q3 bookings levels are second half of 2020 bookings guidance assumes no uplift from the shelter.

In place mandates and low C.P.I. environments, we couldn't see potential upside to our third and fourth quarter guidance. If there was that major league baseball season, if cpis remains favorable organic downwards continue at elevated levels.

Taken at cautious you in setting second half of 2020 guidance due to the uncertainty about consumer behavior.

<unk> expense I for the full year 2020, it at the mid pointed at Brookings guidance, we stuck adjusted plot from conditions of 133.1 million adjusted royalties or 32.2 million and hosting costs of 7.5 million.

<unk> cost will be approximately 130 million, reflecting 26.3% of bookings all other adjusted operating expenses are forecast it'd be 152 million.

In terms of second half of 2020 profitability you. We spend is expected to decline quarter to quarter in both the third and fourth quarter is very similar to last year. This will lead to adjusted EBITDA increases from cute acute three and again from Q3 to four.

Anticipate exiting 2020 with an adjustment you, but top margin of at least 15% of the fourth quarter.

From a liquidity in capital resources perspective, glue remains debt free and we expect to end 2020 with at least 155 million of cash our cat that's requirements for approximately two to 3 million a year and thus generally last quarter's adjusting to you, but dock becomes this quarter's free free cash flow.

In summary, we were very encouraged by the recent improvements in diner Dash adventures, the extension and resurgence of Kim Kardashian Hollywood and a successful launch of Disney Sourcers Arena, we've been possibly impacted by lower Cpis and higher organic installs over the last two months. This is also serve as an accelerants on top of it.

Executing or strategy of stacking bookings from our three growth games and now we are further stacking increasing bookings from these three potential growth games new titles later this year and next year, what well ads into stacking effects.

I look forward to updating our progress in August and with that will open the call for questions operator.

[noise] [noise] Michelle operator.

[noise], ladies and gentlemen, as a reminder.

To ASCII question pressed star one on your telephone keypad.

Till the try your question press the pound key please stand by <unk> piles of Q. and a roster again that's star one.

[noise] [noise].

[noise] [noise] [noise] [noise] [noise] I'm Caroline is open.

[noise] Franco Rhonda.

Hi, Yeah, Hi, guys, Hi, good afternoon I've congratulations.

Houston and.

Letting asked if your question.

And do as talk a little bit about the deal with that can hurt asked and.

<unk>, you'll be kinda recouping to you Ain't before paying royalties.

You mean or or sort of the percentage of the only thing out.

Yeah. So franco's thanks for the question. So we've got specifically said when I came as royalty rate was in the past when I can't say is the real to rate remains the same though we get to recoup our user acquisition dollars that we spend at any given quarter and then then we apply that royalty range of the net revenue minus the U.A. and.

That that becomes the effect of royalty payments to Kim whereas in the past for the last six years. It has done net revenue times the royalty rates. So this is a real opportunity for for both glue and Kim to share the upside of growing the user base and keeping her very relevant in these guys for the next three and a half years, which will.

Allow us in today's day and age to to invest anyway, and and frankly, you know six years ago. When we signed the original deal there was not the need for use rack, but just shouldn't because there is just a lot of organic discovery and so this is really reflecting the reality of of the business model today, and we are really appreciative of being able to invest with her.

Real her user base and grow that opportunity.

Okay Ah okay.

I guess you.

Well, that's how do you expect concerned I <unk>.

Or two added to your girls cataloging or instance, that's sort of like momentarily.

Yeah, Hi, Hi, Franco its neck, you know that that's certainly intention and and I would even say given the the tremendous momentum we started to C.N.Q. for Kerry into Q1, we feel that this is certainly a candidate pro game, we we can't officially call at one until next year.

When we see what the revenue it and at the end of 20 versus 19, but it's got the signals and the signs of of being one and Furthermore, we are really dabbling down in our investment from a resourcing perspective, given that factor with close this deal. It's a it's a really strong deal for about about us and Kim and you know we've.

Field is is this is worthy of a doubling down on on the investments going into the game. So given you know the extra content. You systems features you know continue to fine tune the experience we feel like this as a as a strong candidates. So we'll be able to officially answer that question next year, but we're certainly treating it as such and.

We we will definitely be on top of trying to grow this game even further.

<unk> this name obviously.

Launched a it was <unk> art and but I guess, what are you, saying, it's and stuff like pension you know the three d. five P. 30, now next year to watch that.

Yeah. This is what we're saying so you know did he is still in its early phase you know the the phase one where we're investing in the game, but the the tape you guys that were saying engagement retention monetizations conversion right across the board are arcade guys, we're really happy with and you know many or above.

Originally expectation summer at our expectations.

So for the most part we're we're feeling like this has got the component tree of of being I really saw the game for us going for it but it's still in the early meetings, but we've got a lot of investment and it's going to go through its natural are that are games like diner. Dash is is is gone through it is just to add a disney in that respect. So yeah. We're we're very happy with where we are right now.

<unk>, it's a very talented experience team has done this before we believe that they're going to improve the K.B.I.'s improve the you know the about top and bottom line and we'll take it into through phase wanted to face to win interface. Three next year, we think it's going to be a very saw the game and again like him it's got signals and.

Signs of of being a growth game again, it's early but you know we feel that this is certainly on the path.

Hi, that's the right okay.

Thanks.

And your next question comes from the line, Michael Thornton from Sun Trust.

I'm sorry.

Yeah, I'm I'm at Hey, Hey, Hey, guys. So thick by favorite question.

Couple of I guess, when we think about where where revenue can land for the year avert versus the guy that you call that a couple of things obviously, the guy does not include original or deer Hunter.

Which was expected we've got the P.C. Web initiative, which you have to get some some steam could could be helpful.

A major league baseball baseball season, you know kicking off <unk> would be helpful.

Anything else I I Miss there and go get one together is user acquisition, obviously, you're taking up spend here.

One q. into two Q. given this you know extremely unusual window, which is which is obviously great to take advantage of but my question is how does that flowed through to the numbers in in in the back half year, I guess, what assumptions already making on how that span converts and lands in the in the in the back I figured as any any call. There would be would be helpful that I've got one follow up.

Yeah sure man so yeah. So it's not for a guy was very conservative I would say for the second half of the year I think the implied guidance is about 120 ish for Q3 in Q. for each on the back half of your and we're at 150 to 155 for Q3 really based on a lot of what we've seen in the in the month of April as well as a tail off in May.

In June that channel up in May and June as as I mentioned about prepared remarks is really largely under the expectations that are you way, we'll dial back because we've seen this great C.B.I. environments in March April, but we know that that's not going to last forever Oh, that's kind of point number one number two we've seen who really great organic downloads.

In mid March and April as well, we're also assuming that dials back as well. So I think just on the face of it if if C.P.I. environment stays favorable if organic download state favorable due to the summer months or maybe you sheltering in place continuing that could be an upside it both in cute U.M. beyond.

Secondly, you did rightly pointed out that the baseball season. So I've got a my assumption is that baseball, which I think surprise most people on this call was up 22% on eight year over your bases from April 1st It made sense, whereas I think most people thought of as down you know we are taking a very cautious outlook that for the balance of the year. It's.

It'd be on par with last year, just we don't we don't know what's going to have the consumer behavior and baseball fans in behavior in the absence of the season, we do believe that if a season does occur that should drive down the C.P.I. costs, because right now we're seeing pretty elevated C.B.I. costs for baseball in the absence of the season. So a season would be helpful. On C.B.I.'s, we certainly believe.

That a season would be helpful. On organics and then obviously it would be helpful. In the top one it might prepared remarks, you talked about we kind of kind of on $10 million on them or guidance from last time to this time, Florida baseball she's not happening so that that was a downdraft. We <unk>. We are overall increase the guide up to $500 million, but I took out $10 million because.

The lack of a baseball season.

And then lastly, you rightly pointed out as well we have nothing from originals into your Hunter, which are both slated for this year as well. So I I'd say those are probably the the five or six key items that could prove that our guidance as conservative for the year, Yeah, I I will say that we're sitting here today looking at this guidance at 150 to 155, feeling very competent not given.

Of the very very strong April that we had to date.

The very very strong seven days of of May so far today as well so that that's kind of how we do disguise.

And then maybe a maybe a two part follow up there on on taps worse baseball's or anything that you're seeing to dig in the data that get that informs that decision to take a 10 million out are you seeing that kind of kind of slowing as the would be season.

<unk> Progressive and then Ah secondarily I know use debate the baseball analogy around a lot of the new new titles I'm, just wondering if you'd be willing to talk about how you're thinking about you know Disney as well as died or dash in the realm of what do you think that's a single a a double we're approaching a double it can be willing to provide any color. There. Thanks again gosh.

Sure sure Yeah, Yeah, Tex Mex about yeah. So <unk> no we've not seen any any degradation and problems it'd be performance in a month of April to to be cautious. However, we just do not know what's gonna happen in rather than having guidance and we have to walk backwards. We wanted to be cautious in conservative in this guidance, but no we.

We've seen record Fridays I think several days several weeks in a row wishing record Fridays Friday on Friday, and Friday as we've had big events in the game. You know we will have one tomorrow I I would expect that to be maybe not a record, but certainly very very elevated but no nothing we've seen so far to give us support to not not show.

Baseball being up but it's just more more the abundance of caution given we just don't know what's happening in the environments and then in terms of baseball part I. So yeah. So maybe for those those aren't informed on some of the conversations I've had in the past. We we we've talked about her games being singles doubles or triples home runs Grand slams Yeah. We've got one one triple with design home in the 200.

A million dollar range. We've got baseball is a double in the you know 90, you do 100 million dollar range covered fashion is a high single and $78 million and then you kind of low income in other singles about $25 million to $75 million you know I I would say that we don't believe that again hits the its potential in your one.

So I I would say out of the game right now my guidance of Dizzy at $40 million for three quarters of a year that is a very solid single you know I I would I would like to believe that it in a year for now and this is a forward looking statements with just Guesstimation you know with a full year under our belts along with modernization improvements in life operations and events.

You know hopefully based hopefully Disney a year from now is on on a track of you know maybe it's very high single it could be approaching doubled category you know diner dash. Your last year, just about 25 million for half a year you know this year's in the probably you know 30, plus we did seven 7.5, and Q1 and I mentioned to spend you know <unk>.

Improving in in a month of April so that that's kinda right. There at the low end of a single, but starting to migrate towards mid single. So it became card ashey interested in $10 million. This last quarter 10.5 million I said that that'd be firmly in the in the a single category and came crashing as in the past and even higher than that four or five six years ago.

So I I see <unk> when I was really say is our strategy has been to stack are bookings from or three growth games that had been growing you're on your on your and now we believe we have three potential additional titles, you'll many that people had written off frankly last quarter and last year that we believe very well could be additional stackings on top of Empire.

Little girls games, when we're sitting here six months or years from now.

Great. Thanks, guys I'll jump back in a <unk>.

Thanks, Matt.

And your next question comes from the line up there and after <unk> after hey from raw capital.

Partner, Hey, they aren't.

Hey, Hey, it's still going on for Dan I think same way, though and.

First one.

Sort of on top of sports baseball with with the strength that you've seen so far on the news game year over year, even without that I'll be season.

You, you got and sort of like a favorable tailwind for your fishing game given that.

You know fishing doesn't necessarily have that such as big of a season per se aspect to it.

Yeah, I I think so I think there are a lot of reasons why we like fishing that data certainly one of them, it's not hard to tie currencies and and and you know secondly, it's just got such a massive and broad following not only in the U.S., but but worldwide. So we like that we like for that reason, we love it for the fact that.

Not paying royalties. That's another reason why we like it we also love. The fact that it's really following the playbook that has been set up Bioglue sports studio. There's a lot that goes into the design in the structure of the game that has a simple, but you know, but really enjoyable and engaging core mechanic with a very very deep elder game that is built.

Around an R.P.G. style structure. So there's a lot of reasons why we like it it's still incredibly early for that game. We're out testing. It as you know, but you know we're still in <unk>, let's make sure that it is stable, let's make sure that then you use or flow works, let's make sure. The can't it works, it's still in that state.

Really built out the social and elder features yet so say June what level lots to talk about over the coming earnings calls on on fishing, but we we like where it is right now we like the trajectory.

Got and then sort of.

When you talk about some of the new players that you've gained during these sort of stay at home mandates.

Behaving similarly too.

You're older players, but are they are they <unk>.

Monetizing at similar rates as well or were you talking more towards engagement.

Yeah, Yeah. So <unk>, yeah, so I kinda fight for cutting players that are non spenders that we've acquired players that are spenders on the players will be required either organically or my via paid use requisition. They are paying in playing their behavior, they're they're retention their engagement their modernization I'll look.

Very similar to prying pair prying playing prior playing co words, we have seen several of our titles diner dash in particular design home in particular over the last month and a half we've seen actually increased modernization, we'd shocks some of that up to maybe sheltering in place staying at home, but other parts of it like diner Dash Adventures.

We did a big update in in late January and February we saw a a significant increase an average bookies per day lack of user. So this is well before any sheltering in place to cold. So some some of them <unk> improvements due to features at events. We've done some has happened just naturally but just generally the people that we were acquiring in there.

Sheltering at home you know, they're they're behaving <unk>, a very much like prior works and so that gives us confidence that even you know somebody who's a design won't play you're paying player that we downloaded in the past month, we don't believe that you know when they go back from sheltering in place to doing their day to day life that they're not going to play two or three events a day for five min.

Each each event, that's not going to be a huge difference for them and we think that once or they're paying that they're already now engage in like in that game.

Thank you out and plus one for me on a potential soft launched this summer of the cross platform games, what exactly does that and inhale like what Jean Marc and then at all or would it just be released to your.

Existing players and sort of push towards I'm, just curious clock.

Yeah, Yeah, I did just that the terms off lunch certainly implies that we're not marketing, we're going to be putting out there, making sure that it it fits and and and it's it's a complimentary to the mobile version, even though it has a you know different audience potential Oh, we want to make sure that is fully complimentary to the mobile games and that it.

It is fully stable and it's enhancing the the ecosystem that we've created print for those two audiences in in those two games, we will not really be marking them until later in the year to be determined. This is really a test for us because we've not done it before so what we'll we'll take is very cautiously and carefully but we do believe there.

You know tremendous opportunity to be able to get these games on the P.C. in front of even larger audiences.

Okay. That's it for me thinking alright, thanks, Thanks Ellen.

That's our next question comes from the line of true <unk> from people.

Okay. Thanks, guys good afternoon.

So Eric the the second half adjust to do but Ah Marge it's implied in 17, 82% range, if my math right.

Understanding that doesn't include the lawn serve two new games as part of your bookings guys and.

Assuming there in your one of their life hosted the how should we think about how the profitability moves around.

Yeah. So obviously drew you you know your math. So my my guidance was that queue for would be at least 15% plus and yes, you're right. When you back into the map. It. It is a higher number that 15% yeah. So I mean, obviously, we we've talked about two titles watching the back half the year, our our guidance is.

Already included the the launch budgets for those titles. So my even dog guidance reflects that.

Yeah, Okay, and then separately with pots above the the organic downloads for business or services being style. It couldn't talk about your plans for investment wait for that game.

Yeah, So I mean pretty much like I thought I think it looks a lot like diner dash last year diner Nash last year, you know I've I've used the term escape velocity is like the first quarter first month or two at launch we we spend more on your way than we do any other time, usually 'cause cpis or or lower we had the the benefit of launching to new games.

The the lowest C.B.I. environment, we've seen in probably two years or so I think that was very helpful for us to them because of that we leaned even further into the U.A. investment on on on a disease horses Arena and then you know as we get into phase two were really manage your not title to be break even on an overall basis, so revenue bookings minus.

D.'s minus team costs minus your way and so you know we'll be getting into that phase for Disney starting in two three and that's kind of how will be manage the missiles. Okay, Hey, drew its neck I'll just add a couple of things on Disney. The the game is really all about lie box and live events it responds incredibly well to what the.

Team's doing from a live operations perspective, we we see tremendous left demonetization, when it's paired with a Disney or Pixar movie of which you know there. There are many that are coming out you know for the remainder of the year, and obviously, well well well beyond that but yeah. This is all about that events and and challenges and getting a guilt.

Verse guilds and things like that to to engage and we're we're really starting to see that build so that's one of the reasons why we're excited about what the future looks like we we know this is the you know and expensive audience to tracks and we do know that.

No that organics are always hard to come by in today's environment that Disney seems to be helping his brand as well as Pixar and most importantly, we we have a we have strong comarketing that is coming once shelter and place less than we can you know be can really start to execute.

Okay.

One last one for me what is implied in your bookings guidance with respect to add bookings and two two and are you assuming.

Some recovery in the second half.

Thanks, Yeah, I mean, we're running around 11% for the rest of the year, we were in 13% Q. wanting to do it last year, 11% right now and coupon and you know get given some of the strength that you're not purchases that we've seen in in cute you. We don't want I get over our <unk> in guiding that growing but I'm very pleased that we're able to be able to guide it flat.

You have and what other folks in the industry, you're seeing on on their more interstitial and banner ad situation.

Okay. Okay. Thanks, guys.

Alright, Thanks drew.

[noise]. Thank you and your next question comes from the line Matthew costs to from Morgan Stanley.

Hey, guys expert thanks for taking the question. So if you're well so you mentioned and prepared remarks about and I just came up a moment ago as well about payers that you had in March and April sort of behaving in a similar way to <unk> prior cohorts of pay or that kind of imply people I guess that they've gotten into the ecosystem and then sort.

Moved up to the point the spending money are you seeing any difference in the behavior of people who've come in farther down into the locked down maybe late April and early may where they're coming in and and they're behaving in a way to to lead you to believe they probably won't retained into the back half or or Monotype as well as the maybe some of these earlier players have.

And then just secondly can just to give a little bit more detail about what what exactly you're changing in terms of going through a system based you know version for diner Dash and and you know just and layman's terms, how we should think about how about should impact the way the people yeah right away the game and spend money.

Perfect Yeah, great Great. Two questions are all take the first one at a nickel a follow up on the second one of <unk>. You know so in terms of are they paying players playing and paying differently, whether early we download them earlier in the filter in place for Slater, we've not seen any differences in terms of the behaviour you know our our our play pain.

<unk>, if you become a paying player you reveal yourself within the first 24 hours is not like you wait seven days to start spending money in the game.

Start to play and pay was in the first session are too often so I I would say that we were still seeing folks that were organically getting down to the game or books that we're paying for in this week looking a lot like the ones from 345 weeks ago.

Yeah, Hey, Matt and this is neck all I'll take the second question. So diner Dash adventures his movie to what we call system base elder elder game and what we mean by that is if you think about at a very high level and elder game or what you do when the game days weeks months years and do the experience really can be a delineated in.

Into heavily content based in other words, a lot of content has got to be released and come out and and consumers will consume that content and then waiting for more or it can be very systems based and you know a good analogy would be the you know game of basketball, you've got to hoops and and a ball, but you can just play a game over and over and over for years and.

<unk>, we we are trying to move to systems base for all of our games one because it's just way more productive for our teams to not have to create content every single day, but but to it just creates a much deeper and more engaging experience for players in the experience to to be able to engage with system.

<unk> as opposed to just consume to consume this new content, that's coming out which is also way more economical for us in terms of driving a revenue and most more importantly, driving you <unk>. So diner dashes is really building out Oh systems that allow allow for.

Or you know competitive play and and and all sorts of play that revolves around the system as opposed to just consuming consuming features and as we go through this transition we're starting to see you get a tremendous improvements to escape you guys in the game and we've seen this with other games like design home and and plenty about.

As as they transition from pure constant to a mixture of content and a and systems.

[laughter] excess.

Alright. Thanks.

And your next question comes from the line.

Mike Hickey from benchmark company.

[noise] in North America, you guys are.

<unk>, a little bit more calm for that on <unk>.

<unk> Julius Yep.

Diplomat correctly or nine yes, you could just sort of.

To the current environment.

<unk> that is sort of maybe.

Celebrating your call for them to think yeah.

Which is to build a creative culture that can build these growth games I think where we have now proven that out. It is you know I think it's definitely time for us to expand a horizons and look out there. So part of is that you know, we're structurally and culturally in in in a better place to be looking and then I'd say the second part would be.

We just believe the market is in terms of supply a really strong candidates. We just think it's in in a a stronger place for us to go and acquire ACLA higher.

A a studios to bring into the mix. We think we're a very friendly platform. We've got the right culture were good fit for for a a studio that is building growth games.

As we see you know games that really going to grow over a year over the years that that you really nurture we've got strong umbrella brand in the lifestyle. We've got a strong umbrella branded sports we've got a strong a casual a set of games now, especially with the resurgence of Cam.

And now we've got an R.P.G. as well. So we've got you know we've got good coverage across the broad spectrum of categories. So I think it's you know it's it's both the the structure for the company and the position for where we are in our life. You know the that really kind of start at three and a half years ago as well is just too far greater supply of studios out.

There that we would we would love to have as part of the glue family.

Seems like historically.

It's it's sort of thing value buyers.

Definitely price assets extremely optimistic great.

My view.

Ooh Ah valuations.

In line with that philosophy.

Distressed assets or are you just willing to sort of.

Pool for something yeah, <unk> competence can be a cooking.

Yeah, I mean, it's a very good point <unk>, we are seeing everything out there we were saying valuations all over some very high evaluations, but we we do tend to want to comb through and find the assets that we think not only are good structural and cultural fit that are really really a creative you know the we had to.

Tremendous Ah result, and and a partnership with Crowdstar, you know, we'd we'd love to get another one of those but we we we do think they're out there you you just have to look high and low Fortunately, we we've got a strong corp. Dev team that we think and really a ascertain the you know the right candidates, but yeah I mean <unk>.

Question. It is it's just there's a lot of variability evaluations right now we have not seen signs.

That there was a massive deterioration given the environment, but well obviously be watching that as we get deeper into this into this pandemic and see if there's some you know recessionary factors that that come into play and turns evaluations.

Last question.

I, just <unk> clean up the king married or a little bit when you.

Chrome on <unk> or or or was it sort of business.

Upper and selected.

Sort of got real motivated.

Signs or.

Sort of curious you could just walk through that.

Also wondering how motivated sheila's to be a part of that success. Because you know originally when she came on board. She was very very active in of course over time that went down a lot of maybe nothing I I don't know, but how motivated.

She wanted just sort of a couple of A.B.C. news comes in terms of where you got with her on the new contract.

Yeah. Yeah. This was something that we have been talking about for the last few years. When we've been very focused on the three growth games. So I think there was a period, where we weren't quite as focused on what the future look like we we we knew we had a strong business. There we have a great partnership with Cam, she's terrific and and and and.

Part of her health and grow this game for this last five six years, but about a year ago. We started to really think it was a really good candidate for do an extension and as we saw queue for and then we saw the results and Q1, we we had a you know you're in tremendous energy and a conviction.

And to go and extend the deal and you spend a lot of time working through.

It would make sense for both of us and and the story arrived we think it it does that and more.

And in terms of her motivation I, but we'll we'll we'll see how it all plays out, but but certainly that's the intention going in and certainly by the tone and tenor of our discussions we feel like she's going to be a big part of this and it said you know tremendous opportunity to continue to expand a game, where frankly a amazed.

How well, it's doing and given that we've got this extension now in place, we're really going to double down on the content. The feature sad systems in anything we can do to create a more engaging and enjoyable experience for the players because they just love it and it's just one of those brands that attracts.

Organics, just incredibly well so we feel like we're on to something strong and we're very excited about the next three and a half years.

Constant specialist.

Alright, thanks, good to talk to him.

And your next question comes from the line of Democrats from <unk>.

[noise] Hey, Thanks. It's currently your portfolio is trying to very much to the U.S. as you mentioned in the call <unk>. What do you see we're Disney have you been able to break out of out of it and get get more geographic penetration in other regions are there other opportunities. There you see any any color you'd given that would be great.

Yeah sure. It on your this is Eric Yeah, so aren't historical mixes, but 84% of revenue coming from North America I can't say that Dizzy is more diversified than that I I'd say right now it's the probably the biggest country outside of North America that we're seeing as Japan, Oh. So that's very encouraging were very very pleased that we're seeing in Japan.

Korea is in the top 10 as well so it definitely what we were expecting that happened with Disney is happening and we're now leading into that dot by doing not pages recreation in Japan, and Korea as as well as other countries. So yeah, we like the out from so far I still get along the way to go.

Okay. Thanks.

Thanks to.

I'm sure last question comes from the line of Chess, calling from Stevens, Inc.

Nick Eric Thanks, taking question hope U.S. doing well I don't need the Nit pick here you know she's had a great quarter, Great guide, but it looks like your calculated costs were installed doubled year over year gross arc down we increased by 2%. So I might be doing the quick math wrong, but can you maybe.

Reconcile that with your commentary that cpis of trend it down an interest in light of all that it'd be could you just talk about how L.P.B. to seep guys trendy more broadly the portfolio.

Yeah sure district that yeah. So are they ought a year over year basis, you're probably looking ads are lower spend last year, because we were in a higher sleepy eye environment for design home and kind of fashion and we possibly pause around that time horizon. So there's some of that noise that's into the cafe.

<unk> on a year over year basis, <unk> couple of with you know what what we're seeing right now in terms of downloads and an overall span is a combination of both organic and paid so.

A little bit of apples and oranges on a year over year basis, and then the second question I didn't quite to account for the second question.

Just around know how that you know L.T.V.C.P.I.S. trend did in the portfolio.

Yeah, Yeah, I mean, <unk> certainly in the last 50 to 55 days, we've seen a phenomenal combination of cpis coming down and L.T.V.'s going up and then they are alive in phenomenal, which is why we leaned in in the month of March we added $5 million or you Waistbands why in the month of April you know April may.

June we've added double digit millions of incremental you on a quarter of a quarter basis, I think we're adding $20 million anyway. So it really take advantage of this favorable spend opportunity and you know some of that modernization improvement. The L.T.V. side. It is probably for shelter in place. However, I said it was an excel utterance as opposed to the.

Only reason why it's happening we also had other titles like design home with the April series of all the Bohemian Wanderlust series couple of fashion with the spring season launch coupled with a diner dash going to a systems based approach all of those components added monetization and the the the lower <unk> higher engagement.

Of the shelter in place really wasn't accelerants boosting others are favorable items for us and then lastly, the third like the the school is really one that you know the to to try to launches that's worth baseball, which I mentioned was I'm, 23% year over year, so far to date this quarter and just.

Got it I really impressive on the baseball numbers and then are you squeeze one more in quickly yeah. I think you mentioned that you'd be stepping up spend on Disney ones shelter in place and I guess is there any reason why it would make sense to wait given you know cpis, but obviously, presumably be worse than yeah.

Yeah actually what I was talking about Jeff was was not necessarily use or acquisition bit more round. The comarketing that we're going to be a executing with Disney that a lot of the vehicles that we'd use in partnership with them are real rely on having a consumer is physically back and and you know various.

Various places where they are not right now so we just had to postpone some of these are many of these comarketing <unk> until you know we we are out of shell from place and at least someone back to normal where you know the traffic is going to be in places that they're just are are are not allowed right. Now so what we're just talking about comarketing, we're not talking about.

Acquisition, it's it's a smaller portion of the marketing pie, but we do think it's one that's going to drive or or a drive ah players coming into the game.

Understood Yeah that makes sense. Thanks, I was yeah, alright, you have to talk to you.

Well, ladies and gentlemen, this concludes news conference call. Thank you for participating you mean now disconnect.

Jump right now goodbye.

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Yeah.

Yeah.

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