everplay group plc (EVPL) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Team17 Group plc Interim Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However the company can review all questions submitted today and publish responses where it is appropriate to do so. And before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention. I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Team17 Group PLC. Steve. Good afternoon, sir.

Good afternoon, Jake, thanks ever so much for the introduction, and welcome, everybody, to our interim results presentation. As Jake has already said, my name is Steve Bell. I'm the group CEO of Team17, and presenting with myself today is Mark Crawford, our CFO. We've got three parts of the presentation that we'll be talking you through over the next 30, 35 minutes or so, and then we'll obviously open up for questions at the end. I'm going to start off the presentation. I'm going to give a very brief introduction and talk about an operating overview of the businesses. And when I say the business, I'm talking about Team17 games label, astragon and StoryToys. I'll then hand over to Mark, and Mark will go through the financials for the first 6 months of the year. And then I will talk about the strategic priorities and the progress that we're making against those strategic priorities and also how we feel as though we're going to deliver for the rest of this year and also in the midterm. So how we performed in the first 6 months of the year, we've had a really strong first 6 months of the year. Market beating organic revenues, up 11% from where we were last year. Adjusted EBITDA is up 18%, it had been really strong progress against all of the strategic priorities. I laid out in the [ presentation ] that I had within April. So again, I'll go through that later on because it's really important you understand the progress that's being made against all of those strategic priorities. And more importantly, we're on track to meet full year market expectations. If we look at the operational highlights within the business, stellar back-catalog performance, our back catalog is up 30%, and that's driven by life cycle management. And you'll hear me talk a lot about life cycle management and the importance of life cycle management. But very strong performance when it comes to back catalog. Also strong performance when it comes to first-party IPs. So that's the IP that we own and obviously, we don't share the revenue when it comes to outside sort of developers. So up 25% and our first-party IP is now 42% of group sales. We launched six new games, three new apps, 20 DLCs and 242 app updates through StoryToys. So again, we're putting really sort of higher quantity and high quality of content in the marketplace. But it's important that we understand that it's a challenging new release market. There's more games being launched in 2024 than any other year in history, but we feel really positive because the game review scores that we're getting against a number of the launches that we've made this year are extremely positive. The group and the role of the group is a really important thing. So we're beginning to see the benefits of the whole being greater than the sum of the parts across StoryToys, astragon and Team17 games label. So there's real benefits in terms of increased focus, increased discipline and strengthen processes across the entire business. And I'll go on as to talk about that in a bit more detail later on. And our adjusted EBITDA is up 18% with elevated margins, and Mark will go through this in more detail within the financial section. I just want to spend a minute or 2 going through the individual businesses now, just so everybody's got the right level of detail and color around what's going on within those businesses. So if I start with games label, where our organic revenues are up 9%. Exceptional back-catalog performance, up 54%. And there's new additions to the back catalog, including Dredge, it was a fantastic success story for us last year as well as Blasphemous 2 and Trepang 2. So they've delivered really strong performances for -- and just so everybody is clear, the way that, that catalog works, any title that's launched in a calendar year, the next year, that title will be classified as back catalog. So it's just an important classification for everybody. Overcooked!, which is a title that we know and we love and has been part of our group for a number of years. enjoyed very, very strong sales performance in the first half of the year, and that was driven by very strong marketing activity. And I'll go on to talk about that in more detail because I think it's one of the strategic pillars that I chatted about in April. I just want to show the type of thing that we're doing with existing back catalog titles as well as new titles, new launches. First-party IP was up 33%, very strong performances from Hell Let Loose, Golf With Your Friends and Worms W.M.D. We had a hugely successful publisher sale on steam and that run really nicely into the Steam summer sale. So some really strong performances when it comes to our PC titles on steam. We launched four new titles. On existing title was released on a new platform and 15 new DLCs launched in the first half of the year. And the refocused strategy that I spent a lot of time talking about in April around tighter cost controls lower expense development costs and lower marketing costs are very, very clear for everybody to see. New signed games in Half 1 were all within the traditional indie sweet spot that we chatted about. And what I mean by that is around about GBP 1 million to GBP 1.5 million worth of spend for the business. Actually, a number of titles that we signed in the first half of the year have been under the GBP 1 million mark. So just because that's our sweet spot. It doesn't mean that every title has to be within those financial parameters. And Half 2 releases in terms of the games label, three new titles have been launched already, and we've got Worms Armageddon that's being launched on console and also an enhanced version Autopsy Simulator, which will launch on console on the back of the actual Autopsy game that launched in the first half of the year. So again, good strong performance. the strategic overview that we chatted about and that we've implemented within the business is very clear to see, and there's really good progress when it comes to games label. If we look at astragon, organic revenue is up 13%, and that's a really strong performance when you look that no first-party IP was [indiscernible] we got in the first half of the year. First party IP sales have increased 17%, and that's been driven mainly by Construction Simulator and Police Simulator that continue to do really, really well and both titles are within our top 5 titles across the entire group. Two new titles were launched. Construction Simulator 4 was launched on Switch and mobile and Lawn Mowing Simulator was launched on Switch, and we continue to third-party IP out in the marketplace, with ABRISS and Tram Simulator launched on console and how that was launched for mobile and console. For new DLC packages were launched on one Year 2 season pass well recieved across Police Simulator and Construction Simulator. And again, we're really excited in terms of the Half 2 releases for astragon with Police Simulator launching on Switch and Farming Simulator, which is much anticipated, where we delivered the actual physical box product for giants. And Farming Simulator is one of the highest revenue titles in the world when it comes to simulation games. So we're working with them, and we're actually going to be launching the physical or the box product around Farming Simulator later on this year. And then if we talk about StoryToys, an incredible performance, organic revenues up 23%, and that's against a relatively flat market, if you look at entertainment, mobile entertainment. So really, really sort of outperforming the market in quite a considerable way. StoryToys has launched three new license apps in the first half of the year. So Sesame Street Mecha Builders, Thomas & Friends, which is obviously around the Thomas Tank and LEGO DUPLO Peppa Pig and Peppa Pig has done really, really well, as most of us know, the actual sales trajectory of the apps within StoryToys is slightly different to astragon and Games Label, where it builds over time. But what we can say is Peppa Pig is -- comes straight out of the gates and is doing really, really well for us pretty much from Day 1. 242 apps were updated across the existing app base within StoryToys. And if you compare that to 327 apps that were launched throughout the whole of 2023 you can see the quantity, but more importantly, the quality of apps that we're actually putting to the market because what we know is the best way to keep the subscription levels very high within StoryToys apps is to continually feed the market with updates to those well-loved apps that we've got. Active subscribers continue to grow, and it's now over 350,000 and something I'm particularly proud of is the fact that StoryToys are in the Sunday Times Best Places to Work. It's a fantastically strong culture, where people just love doing what they do, working on the licensed products that we work on. So that's something that is a fantastic performance for us. The focus in Half 2 is around continued high-quality app updates. So there are no new apps that we're launching in Half 2. The work that the team will be putting in is around making sure we continually update the existing apps that we've got in the marketplace. So hopefully, that gives you all the flavor of what's been going on across StoryToys, astragon and Team17, Games Label. I'm now going to hand over to Mark, who's going to go through the financial performance in the first 6 months in more detail.

Thanks, Steve. As Steve mentioned, we've had a very good first half. And in terms of revenue top line, 100% organic revenue growth of 11%. And year-on-year. So delivers nearly just over GBP 80 million in terms of total revenue. As Steve mentioned, I think, Team17 continues to outpace the market in terms of growth. And actually, if you track back to the IPO year 2018, our organic growth has outstrip the market growth some 4x. And it's a consistent message of delivery that we're really proud of. Importantly, the splits across the group demonstrate the diversification and strength of the whole portfolio within the business, within the overall group. With all divisions showing growth at equally above market levels growth. So Games Label was grew 9% and that represents just under 64% of the group's revenues today. Astragon has grown double-digit growth and remains at 23% of the group. The StoryToys is a standout driver of growth in the period is up 13% -- sorry, is up 23% and now represents 13% of the group's total revenues. And when we acquired that business, in the sort of high single digits as a percent of the group. So it is a standout performer in its marketplace. I think the high level of growth, particularly of astragon and StoryToys highlights for us the success of those acquisitions we made in 2021 and 2022. And as mentioned, that has really strengthened a deepened portfolio across the group. So thinking a bit more about how those revenues are split, new releases were a much smaller part of the revenues this year. They're around GBP 6 million, and that reflects 2023, we saw a very big uplift in new releases benefiting from, amongst others, standout performance from Dredge. So a very tough comparator. But also it reflects very tough marketplace that we've seen in terms of ongoing competition, but also difficult market conditions for new releases that we're not alone when we've seen those. So those new releases are below what we expected. But actually, as Steve mentioned, there's some titles with some very strong review scores. And we're very confident that if you take those quality games with good review scores and you apply the life cycle management skills and expertise within the games label, particularly we see longer-term value for those titles. And we're expecting to see those remembering that digital titles have a lifecycle period of 5 to 10 years and some even more beyond 10 years. So we're confident of the future value from those titles. Clearly, the back catalog was the strong performer in the first half, underpinning the overall group's results. As Steve mentioned, has delivered 30% growth. I think reflects that quality of life cycle management, but also as a bit of, we think, shift in some consumer behavior looking to favor some of the more established titles and actually, from our point of view, the back catalog isn't all about the latest titles that have been launched. We've maintained ever since the games level was set up back in 2015, it's about portfolio business, and it's not hit-driven. And actually, contributions to that catalog come from all ages of titles. So it's a very balanced back catalog with titles that are 2, 3, 4, 5 years plus all making valuable contributions. We're very pleased with the first-party performance and the contribution to the sales this year, and they're up 25% to just under GBP 50 million. And I think that demonstrates the kind of focus we've got in longer term trying to build own IP, first-party IP as a part of the mix within our sales across the group. And it really is a reflection of the strength of titles that we've got within the first party, and that's both across Games Label, we talked about like Hell Let Loose also Worms and Golf With Your Friends and [indiscernible], but also astragon. And in particular, two of their titles are very strong performance within the group, and that led by Police Simulator and Construction Simulator. Also, Worms W.M.D did well, in the first half is in the top 10 title sales for Games Label. So it shows the strength of even those older titles within our back catalog. Third-party sales grow at 4%. Yes, StoryToys is a key part of third party. They are licensed apps, but so they appear as third-party titles for us. But they include key titles from games label in a third party, which will include Dredge launched last year and also Trepang 2 and Blasphemous 2 both launched last year where we're seeing some really strong performers, plus as well, some of our old favorites, which would include Overcooked. Turning to gross margins, gross profit. These group reported level 9% up to GBP 33 million. So as noted, though, in our RNS, we have seen another impairment of GBP 4.6 million that's across a number of titles, a select number of titles and it includes 2 titles from 2024, but the rest are 2024 release titles. And they are reflecting sort of the historic titles that we took on over the last few years. But actually, and it also reflects a revised view of where we see the marketplace at the moment in terms of those new releases. So if you exclude those impairments, the underlying gross margin would increase to 46.5% up from just under 42%. There were some key drivers in the cost of sales. So there was a reduction in the underlying debt cost amortization. But that was mostly to do with the reclassification that we did at the end of last year. So it hadn't been adjusted into the first half of last year. And that's where we took astrogon acquired amortization that used to appear in cost of sales, and it's now moved and reclassified and appears as brand amortization, which you'll see in the admin line. So moved out of gross margin, improving the percentage here. Royalties remained flat as a percentage of sales compared to last year. I guess, despite the OIP growth, and that is because it reflects the mix, both the mix within own IP of Games Labels IP and then astragons our first-party titles, which we do pay royalties to their dedicated development partners alongside the mix of third-party titles with their associated royalty rates. I think really pleasingly, is that we've made -- seen a significant reduction in the expense development costs lower, considerably lower than last year. And that's linked to both all the restructuring work we did last year, but in particular, kind of being very smart and efficient about use of outsourced partners driving down the costs within the business. And also those internal costs that Steve has talked about outlined in the strategic -- the pillars within the group. The results of the strength in the revenue line, the cost of sales focused on improving margins, plus some actions within the admin costs, which I'll come on to in a second. We've seen adjusted EBITDA increase to up 18% year-on-year to just under GBP 20 million to GBP 19.4 million and a 140 basis points improvement in margin percentage up to 24.1%. So it's good driving of the business and delivering those improvements from the top revenue all the way through to adjusted EBITDA. So we mentioned the admin costs. And for me, that's a continued area of focus managing the costs. They fell overall by GBP 1 million versus the prior year. But that does underline a larger savings that were offset by some increases. So I mentioned earlier on gross margin we shifted and had to reclassify astragon acquired amortization from cost of sales into brand amortization that now sits in here in admin costs. And there are some final third year of management incentive plans that we put in place for the two acquired companies that are flowing through this year reflects the strength of their performance in the current year. So the savings are greater. The savings within the business but within games label, we have reduced the marketing spend. And it's more about applying the marketing spend in a right way that fits the Indie model and we talked about this at the beginning of the year, and I'm sure Steve will come on to it a little bit later on about how we focus, and I think there's some demonstration of some of the activities that are applying the marketing spend in a better way and more appropriate way and that has led to a reduction in those marketing costs. In addition, there were some reductions in staff costs and Games Label linked to that reorganization we saw at the end of the year. So as a result, overall adjusted EPS has increased 17% up to just above GBP 10 and that has benefited in part from the lower effective tax rate, which we'll continue to look at in terms of driving some VGTR and other benefits on the tax line. But also, we've applied more focus on investing the funds appropriately of our growing cash reserves and the interest has increased on those cash reserves by just over GBP 0.5 million this half. So all contributing to better bottom line performance for the business and for shareholders. So final kind of key slide for me is talking about some of the key parts of the balance sheet. So as outlined in April, we've refocused Games Label onto the sweet spot of Indie investment. So we've seen a reduction in spend associated with in terms of those new titles. But equally, there's some phasing of development spend because we've now got a number of very important first-party development projects are now underway across both the games label and Astragon. And that's completely linked with our strategic drive to ultimately improve the percentage of first-party titles within our mix. But that's going to drive a slightly -- higher increase in capitalized element spend in the second half. But we are now in a different place in terms of managing that spend going forward. So the overall net book value has reduced on the balance sheet slightly and that reflects the reduced capital spend, those amortization charges and also those accelerated amortization charges of the impairment that we took in the first half. I think importantly, we continue to be highly cash generative, well above 100% cash conversion. And that delivered GBP 32 million worth of net cash from operations in the first half. And given, as I mentioned at the beginning of the year, we've had our last earnout payment made in the first half of this year. We are now back to the position, post those acquisitions and all the earn-outs over the last 2, 2.5 years, where our cash reserves are generated out from operations are now growing as a result of that. And so cash grew at the end of the first half, 20% is up to GBP 54.3 million. So it puts us into an extremely strong position in the current climate with such good reserves of cash and then the ongoing future addition to cash from the profits that we generate. And I think that's overall giving us that strength and position on our balance sheet with those cash reserves to be applied both internally and as we see fit going forward. And I'm going to now hand back to Steve.

Thanks very much, Mark. So I'm now just going to talk through the strategic priorities and then touch on the outlook for this year and also midterm. And for those of you that were able to join the call in April earlier on in the year, it was very important to actually lay down the areas of focus for the business moving forward because I think without that, it's very difficult to track progress as far as what we're actually doing and how we're going about doing it. So I just want to spend a little bit of time now just touching on these. We've already covered some of them in a bit of detail already. So I'm not going to label the point, but I think it's important everybody understands what's happening and just as importantly, why it's happening. So if we look at the strategic priorities, and there were nine in total that I set out in April. A number of them were around revenue growth and a number were around margin improvement. So the five that we have here around revenue growth. The first one is around doubling down on Indie focus, and we're talking specifically about games label here. There was almost a case that we didn't really know what we were in Games Label anymore, were we AA, were we III, are we drifting into bigger titles. Yes, we were doing all of those things. So what we needed to do was actually double down. We're proudly indeed. That is what the business is all about, and that is what it should be for us in the midterm. So it's very much a focus for the business. And that's down to the size of games that we actually sign and also how we go about bringing those games to market in terms of marketing and sales. The next point was around prioritization of evergreen franchises to drive the back catalog. The numbers are very, very clear around the strength of that catalog. And I think that's really important to understand that we've got some incredible titles. We're not a hit-driven business. We are a business that has fantastic foundations within the back catalog and an ability to look, find and launch new titles as well. So that's been really, really successful. We touched on M&A, and we were very clear in the presentation that we gave earlier on in the year, and we're very clear now that Mark and my focus is very much on the delivery of the business, day-to-day. It's not running around trying to find those of M&A opportunities that they may be out in the marketplace. It is around the absolute focus of the restructuring that went on in games label and bringing the businesses together so they can operate as one as a group. There may well be opportunities further down the line around M&A. And we've obviously got a very good track record when it comes to the acquisitions of StoryToys and astragon and also a number of first-party IP titles as well in Hell Let Loose and Golf With Your Friends. So let's not say that we're not interested in M&A, but our focus is around making sure we deliver for the business. Innovative publishing models so making sure that we are a publisher that is leading the market rather than following the market, making sure that we're delivering and offering things to developers that they really find of high added value. And that's really, really exciting. And there's a lot of work that's going on at the moment. I can't share that with you in this meeting because we're not ready to actually launch that. But there's going to be some really exciting models that are going on when it comes to how we work with debt and how we look at first-party IP. And the final point that I spoke about before was around progressive participation marketing, and that sounds a bit of a mouthful. But what that means is we need to make sure that we're delivering marketing campaigns and spending our marketing budgets in the right way. And to be honest with you, we weren't historically because we had this strategy creep or shift in terms of being a bit more like a AA publisher. We started thinking and acting like a AA publisher. We started spending too much on trailers. We started spending too much on standard advertising and paid social activity. And that's not what the indie market was all about. So what we need to do is we need to make sure we're delivering the right type of marketing activity that feels like culture. And what I mean by that is gamers are really, really savvy. The minute they start feeling as though they're being marketed to, they switch off. So we need to make sure that we're delivering real cultural relevant activity that's going to create talkability and also allow them to share it on their own behalf. I completely understand that, that sounds great. It sounds like a great theory, but what does it mean in reality? So what we've decided to do is pull together a very short video that brings this to life. So there's two elements to this [ report ] that we pulled together. The first is around Overcooked. So back catalog title, a title that we felt was really important to inject some life into that title, so we can create excitement and create revenue from that. So there were two things that we did. The first that we'll show you is an influencer, a podcaster, a YouTuber called QT Cinderella. So she has a huge following. She also has a number of influencer friends who also have a huge following. So we joined forces with QT Cinderella. And the interesting thing about QT Cinderella, one of the areas of interest for is around cookery. So cookery and gaming and fashion. So we joined forces with her. And we said, what if we took Overcooked the game and had overcooked IRL, so overcooked in real life, so she was really excited about it. We were really excited about it. And what we did is we took over a burger bar in Los Angeles, we had QT and her friends and her partners actually to come along and almost act the characters that are in Overcooked. And Overcooked, if you guys haven't played it, is a game, which is a mad cap chef-based game where you're chopping up things and passing it to your friends and they're making things and passing over. So it's all around making food, sharing and laughing. So we did this. We created this experience in Los Angeles. It was over 3 or 4 hours. It's absolutely crazy. But it generated 54 million views around Overcooked. That sort of thing is incredible. And the beauty of it is it feels like culture. It doesn't feel like marketing. So that's the first thing that you'll see on the video. The second thing that you'll see is a country singer who posted something on TikTok about the fact he loves playing Overcooked with his wife. So we jumped on that straight away. We found out about it. We worked with him, we sent him things for the rest of it. And again, 33 million views in a very short period of time with a very small marketing budget associated with it. So you can see how that sort of participative experience is far better for a brand than spending a huge amount on a trailer, for example, which is the type of marketing that we were doing historically. So they are the two things that I'm going to show you on Overcooked. And then the third part of the video, and it's only about [ 1 minute and ] 15 seconds of video, is a launch for a title called Classified. So we've got a number of influencers together. And again, what most publishers do, they just get influences together, they get them to play the game and then they disappear off. We took them to a World War 2 bunker and then we got them involved in escape rooms, and we've got historians to talk to them about the title. So again, a really clever use of marketing spend to make influences feel they're engaged in the game rather than just being paid to attend an event. So if we could play the video now, and that description will probably make a bit more sense than me sort of verbalizing it. [Presentation]

thanks very much. So hopefully, that gives you a flavor for how the importance of marketing within the mix within Team17 games label. The next thing I just wanted to touch on was the strategic priorities around improving profitability and ROI. And we've touched on this in quite a lot of detail already. So I'm not going to go through it in huge amounts of detail again, increase the sales mix of first-party IP. And again, really, really excited about all of our first-party IP and the road map that we've got over '25, '26 and '27 when it comes to our first-party IP across Games Label and astragon. The investment limits within Games Label making sure that we don't suddenly start drifting into bigger titles where you're carrying more risk within the business. So that has been firmly implemented, linked to that type of cost controls and also a far sort of tighter and sharpened green light process, where we can make sure that we're making quick decisions that are born from commercial and product due diligence around certain titles so we can make sure that new releases moving forward are as good as they possibly can be and we can have the runaway successes that we've had historically. So in terms of the outlook, the outlook for 2024, Half 2 trading is in line with expectations. We've launched three titles already, and we've got further launches expected. It's a far more balanced adjusted EBITDA split between Half 1 and Half 2 than in recent years and the cost and the capital allocation discipline that we spent quite a lot of time talking about in this session is firmly there within the business. When it comes to midterm, we're obviously looking at the strong pipeline of third-party games, making sure that we've got the right third-party games to ensure that our back catalog continue to be fed moving forward. But also ongoing focus on the first-party IPs, I've already touched on. So we've now got 10 first-party IP projects in flight at the moment. As I said, they will be launching '25, '26 and '27, but all of the ones that you would expect, all the Astragon's titles as well as two new titles within astrogon as well as The Escapist and Worms and Golf With Your Friends and Hell Let Loose. Solid catalog performance borne from the life cycle management skills that we have. Centralized group services that, again, I touched on around profitability and synergies so making sure we've got that centralized team that can enable the leadership teams across the three lines of business to really deliver the success that they can, further increasing cash generation and then select M&A within defocus, but we're confident of delivering full year 2024 results in line with market expectations. And the final slide is basically a summary and a summary talking about why we feel as though we're a really attractive investment case. First point is around IP and talent. We've got the IP, and we've got the talent in place to really deliver that accelerated growth. When you look at 42% of our revenue in the first 6 months of the year has been from first-party IP, it shows how strong that IP actually is. The next point is around a diversified portfolio. We've always said over the last however many years that we're not a hit-driven business. We're a business that has a great benefit of having some incredible titles that work across our business. And we've got over 140 active titles that deliver revenue for us on a day-to-day basis. Proven franchise creation and life cycle management skills. The interesting thing is we've got over 12 titles now, 12 franchises that have delivered lifetime sales north of $20 million and we've actually got some that are over $100 million. So when we're talking about indie, we're not talking about small games that generate hundreds of thousands of pounds worth of revenue. We're talking about big franchises with huge opportunity moving forward. A dependable back catalog provided in the midterm visibility. So if you take from 2018 to the end of 2023, 74% of our group sales has come from back catalog. And again, it's that point about not being hit driven. Yes, obviously, everybody wants hit, everybody wants to have great runway successes, but our business is formed on foundations far more solidified than that. A consistent track record of market beating revenue growth. So if you look at the market as a whole from 2018, it's generated 6% organic revenue growth. We've operated at 23% growth. So you can see how we're outperforming the market in quite a considerable way. And the final point is around cash, GBP 54 million worth of cash and equivalents. And that's a really strong balance sheet and cash generation, which will support the midterm M&A optionality. So that's all, Mark and I have to say in terms of the presentation. What we'll do now, I'm sure there are questions that have been coming in as we've been presenting. So we will show our faces again, and James was join as well, he's our IR Director, and then we will go through those questions and answer people's points.

Absolutely Steve, Mark, if I may, just to jump back in there. Thank you very much indeed for your presentation this afternoon. [Operator Instructions] I would just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your invested dashboard. Guys, we have received a number of questions throughout your presentation this afternoon, and thank you to all of those on the call for taking the time to submit their questions. But James, at this point, sir, I may hand over to you to chair the Q&A with the team. And if I pick up from you at the end, that would be great.

Great. Thank you. And thank you all for submitting your questions. So the first question, probably for you, Steve, it's about the -- in terms -- regarding the restructuring of the games label and the refocus on the indie business model. How do you foresee the foresee shift impacting the number and type of new titles released in the coming months? And how will this align with consumer demand in the evolving gaming landscape.

Yes. It's a really good question and sort of it almost touches on the two elements. I think one element of this is around the macro gaming market at the moment. And the second part of it is around the restructure and the indie focus that we have within the business. So I'll take the internal micro point to start off with. So you're absolutely right. The indie focus within games label, we're obviously talking about here. But the indie focus is very clear to be seen. And prior to really getting our head around this. The business was sort of drifting and I didn't really know what it was. It almost had what I would say was almost like an identity crisis as far as are we AA, are we III? Are we indie, we are sort of all of these things. And from what I have seen from my time within the world of gaming. If you don't have focus on what you are but then you really, really lose sight of the potential that you have within the marketplace because I think there are so many businesses that zigzag around or let's do that because that looks exciting at the moment. Let's do that because that looks exciting. We are now firmly indie. We have limits as far as the scale and the size of the games that we actually sign, and they are proudly indie. And we have marketing teams, and we have sales teams. And we have all of those people who want to and feel there is huge opportunity within the world of indie. And that's been really, really powerful for the business as a whole. So the business does feel as though it has an identity now, and it knows what it wants to be moving forward. So that's the internal side of what's going on and the fact that we are proudly indie. I guess when you look at the marketplace as a whole, it's a really interesting market. And there's a number of things that are happening within the gaming world. The first is around the number of releases this year. So last year, 14,500 games were launched on steam. This year, it's going to be about 25% higher than that. And I think a lot of that is almost like the hangover of money that was invested and injected into the gaming world during the COVID period. So I'm not expecting that to continue. The other thing macro dynamic that's happening within the gaming world is that a number of people are now buying and feel far more comfortable buying titles that are older. So if you look at steam and if you look at the number of titles that were brought on stream in the first half of the year or a period of the first half of the year, over 90% of the sales were actually on titles that were a year or older. So that's quite interesting, the fact that players are really comfortable and very accepting of buying games that are older games because they've got communities, they've got reviews, they feel confident. They've been spoken about for a number of years. They will be being discounted as well. So suddenly, you've got far more interest in older titles. And that's one of the reasons if you look at the back catalog performance that we've had, that's very clear to see. The other thing about indie and AAA because of the dynamic between indie and AAA, and I think it's important that we all understand this is the fact that indie performs a slightly different role, indie games perform a different role to AAA titles. AAA titles, most of them will never ever get finished because it takes hundreds and hundreds of hours to actually complete those games. And what people that buy those AAA games, they want to do something and buy something that might be cheaper, might be more fulfilling in the short term because you can actually complete that game because if you look at most indie games, they'll probably take 10, 15, 20 hours to complete. So suddenly, you've got this harmonious relationship between AAA and indie. And if I look at steam sales again in the first 6 months of the year, the amount of indie titles that are performing really well, makes us feel really confident that our strategy around indie focus will be key for the business moving forward.

Thanks, Steve. So I've got a few questions coming through on sort of cost and cost control. So I'll bring them together and ask Mark. So firstly, following the restructuring last year, are you happy with where we are in terms of cost control? Are there any particular areas of further focus and opportunities for synergies at the group level?

Yes. Thanks, James. Look, we've been through an extensive review at the end of last year. We had some tough lessons to learn. I think we've -- and that's all the way through the whole process of the Games Label because it was for the Games Labels, in particular. And that leads from, Steve maybe talked about in proper doubling down on the indie focus of games that we signed and as Steve said GBP 1 million to GBP 1.5 million. We have signed gains in the recent months actually that are below GBP 1 million. So it's not that we only sign in that level. So it starts there. There's a renewed focus on the processing controls all the way through the milestone delivery process on the development side. And that's tightened up. We had process in place, but we've got much more focus on it and much clearer review steps all the way through that process. And also then through sort of the nondevelopment side. So on the commercial piece, very tight controls. We've now fully implemented onto the NetSuite finance system within the Games Label. And we've got tighter controls on spend levels. But it's also not just about the spend level controls. It's about redirecting spend in the right place, as Steve talked about in terms of marketing. So we don't have to spend on areas where it's not appropriate for the ED level, and that's seen some pretty important savings in marketing as an example, in the first half. What I would say is that focus on managing costs and making sure that our infrastructure and our cost base is appropriate for the indie business model will always continue. It's not a one-off I think where we have got to is we've got the business into the right place, and we're in a good position, but we will continue to monitor and track those costs and track our business model and how that works and how that matches the needs of the marketplace. So it's something that will continue going forward. But we are in a really strong place and we have done, I think we've delivered on the areas that we outlined that we wanted to focus on in this time right now, and we're in a good place.

Thanks, Mark. Next question is on kind of mobile strategy. Are there any plans to expand games label titles to mobile?

Yes, we've got an open mind when it comes to this, but it goes back to what I said earlier on. The mobile market is hugely challenging and a number of us on the call will know that, that has been the case for the last 3 or 4 years. Focus is the most important thing. And the minute we start chasing [ IP ], we could do this on mobile or we could do this in another area. I think we lose sight of what we are as a publisher and a developer. So for example, do we have any plans in the short term to really focus and double down on mobile within Games label? No, we don't. Will there be opportunities moving forward when you look at our first-party or third-party titles when it comes from mobile, possibly. But it's not something that we're distracting ourselves at the moment because the minute we do that, you'll fall into the mistakes that we made in '22 and '23 and we're definitely not going to do that.

Thanks, Steve. Mark, maybe one for you. We got a question on StoryToys and how it sort of the business model and the life cycle revenue stream, the end market, how they vary from astragon and Game label.

Yes. Okay. It's quite a big question, but I'll try and cover it succinctly. So I think the point of the question was the life cycle is quite different from an indie game. And it is different, their model is around a licensed business. So they will license with globally well-known and respected brands because children are playing these apps, and it's a development and play -- learning through play app. And so the parents are very focused on those really strong brands. So one, they work with the best strongest brands in the world. They develop apps. They are a combination of some in-app purchases, but quite a large proportion of their sales are subscription, and they can be monthly subscription sales or annual subscription sales. So, I think that's where parents prefer and that's where the likes of the license partners, LEGO as well would prefer Disney to have a subscription-based business. And what that means is you apply updates to those apps constantly. And that's why you've heard Steve talk about the number of app updates has grown. We've extended the license partners since we acquired them. They really had two main license partners, and we've now added multiple new license partners, including as Steve talked about, Thomas and Friends, Sesame, Mecha Builders and most recently, Peppa Pig, but also MARVEL as well. So that's building the base. And then those apps will grow over time. So they don't follow the typical profile of you launch a title in a games world, and it grows fast then you try and manage it over its life cycle. Actually, StoryToys are all about building profile of those apps over time. So we'll launch them. There will be relatively soft launches and then they'll grow as the profile of those apps grows and more awareness in the population that play them and the parents that play them, see those games on the App Store. And that's where these -- the team in StoryToys have done a tremendous job. They are expert at profiling these kind of games, there's a lot of crossover for parents accepting and understanding and valuing the titles like Disney Coloring World and then seeing that there's a new title about Peppa Pig that's being produced or Barbie Coloring World that's from the same company called StoryToys. So there's a lot of inherent kind of knowledge in the parent base. And so their apps will grow, and that's why we're seeing that tremendous growth in the marketplace. So if you look at it as a mobile business, mobile has been in decline in recent years and is flat pretty much. Actually, StoryToys, as I mentioned, has grown 23%. So they are demonstrating their world-class nature. I did see another question that came up about intentions to grow the license partners. They have added a lot of license partners in the last couple of years. And now the focus is on building those apps and growing them over time. The if there's another great license partner, they are likely to come to StoryToys. They've got such a good and strong reputation in this field, but there's no immediate kind of drive to sort of secure more in the short term. But I could see it growing over time, but the focus now is on building the apps that they've got.

Thanks, Mark. I've got a question here on IP and the succeeding IP into the back catalog. Is there any scope to require the IP of any third-party titles in your back catalog? Or is the focus more on developing new titles to feed the back catalog.

Yes, it's a good question. And the truth is we've always got an open mind when it comes to IP. Obviously, we've got a very good track record if you look at Golf With Your Friends, if you look at Hell Let Loose in terms of acquiring titles that are third-party titles within the business already. I think I think IP is a really interesting area of growth. And obviously, one of the strategic priorities is about growing the percentage of IP that we have as our revenue base within the business for obvious reasons because you have complete control and you don't have to be sharing the revenues with the developers moving forward. So the short answer to that question is we've got very open mind when it comes to IP, whether that be IP that's in the market currently. Or whether it's IP that's already part of the Team17 group because I think it's a great opportunity for the business. It's exciting. We've proven that we can add real value. And that said, Hell Let Loose and Golf with your friends. If you look at them today compared to where they were when we acquired them. It's a phenomenal success story. So yes, it's something that we're always looking at.

Thanks, Steve. Mark, maybe one for you. Can you explain -- maybe contextualize the Team17 share price performance in recent months, which does seem [ at odds ] with our recent results and the wider equity markets.

I would love to say I understand the vagaries of the stock market and the share price movements. But firstly, the Board would share every investor's frustration with the share price and what's happened. We've I think we've done everything that we know internally that we set out to do this year. I believe -- there's a lot of uncertainty in the market. And so that leads to cautiousness and that's around external macro things around government pressures, cost pressures. Look, I also think the market was kind of anticipating cautiousness around where we come from at the back end of last year. And so until they actually saw our results, there was a bit of hesitancy and nervousness. I think if you'll have watched the share price this week since we announced the results, and we're pleased to see some improvement in that share price. Although we always say we don't watch the share price on a daily basis at the time of results, you can't help it, but it's pleasing to see some positive reaction to the results we've got. Our job, as Steve has said at the start of this call is to focus on delivery through the rest of this year and going forward and getting back to that consistent delivery message. And then -- we always believe that the results will talk for themselves and what will do the speaking for us. But yes, frustrations, but hopefully, some sight of some positive movement post the results we had this week.

Absolutely. Thanks, Mark. Right, that's all the questions we have. So I'll hand back to Steve, if you have any closing remarks.

Yes. Thanks very much, James, and thank you to all of you for attending the last 50, 55 minutes and hopefully, you'll walk away with a far better understanding of our business, how we're performing and just as importantly, the plans moving forward. From my perspective, from Mark's perspective and the businesses perspective, we are pleased with our first 6 months performance. But we're not taking it for granted. We're not sitting back thinking that we've cracked it. We are working and continuing to work to make sure we deliver the numbers in 2024. The strategic priorities are our priorities because every single one of them will make our business that much better, that much stronger moving forward. So although we're pleased, we want to continue to get head down to focus on the business and to make sure that we are in the business that I know that we can be moving forward. The final thing I'd like to say is just like to thank all of the shareholders who will be on the call, a number of you will be current shareholders for your support over that time, and we'll continue to do what we've been doing. So thanks ever so much. Appreciate you giving up the time to listen. And hopefully, we'll catch up in the not too distant future.

Perfect. Steve, that's great. And Mark and James as well. Thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order of the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it be greatly valued by the company. On behalf of management team, with Team17 Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.