PlaySide Studios Limited (PLY.AX) Earnings Call Transcript & Summary

Good morning, and welcome to PlaySide Studios Financial Year 2025 Results Presentation as released to the ASX this morning. From the company today, we have the CEO, Benn Skender, who will be presenting. [Operator Instructions] so with that, Benn, I'll hand it over to you. Thanks.

Thanks, Simon, and thanks, everyone, for joining the call. It's coming up on 3 years now that I've been at PlaySide and 6 months in the CEO seat. And while 2025 has been a challenging year from a financial and operating perspective, we're seeing some tangible green shoots in the industry, and a lot of positive changes have happened in the business that I think sets us up really nicely for better execution than we've ever had before. For some of you, this will be the first time that we've really engaged since the restructure. Our share price has had a horrible run given the disruption that we've had in the business and a lack of confidence in our revenue line and our balance sheet, and I'm keen to help you understand where we're at. So let's jump into the slides. Looking at our financial highlights, revenue was down 25% for the year. As a business, we're typically going to be generating revenue through a mix of original IP and completing development work under contract. FY '24 was a breakout year for original IP revenues as we monetized our Dumb Ways to Die brand really well with games launched on the Meta Quest and Netflix games platforms. We've been developing and investing in 3 very meaningful new titles since then, but none of them launched during FY '25, and that explains why original IP revenues fell off this year. Work for Hire revenues were still down slightly. We were expecting it to continue to grow from record levels, and it certainly started that way in the first half. But unfortunately, sales cycles on new work just kept getting pushed out from October 2024 all the way through to the end of the financial year. That's a dynamic we've not experienced before in more than a decade of doing work for the major studios. And it not only made providing guidance during the year very challenging, as you can imagine, but it also created difficulties internally in managing latent staff capacity, which is ultimately one of the reasons why we had to do the restructure in April. So Work for Hire revenues were still pretty close to FY '24 levels, but we were set up for them to be a lot higher and the fact that they weren't has really hurt our EBITDA line. We've also been very ambitious in working on 3 new original IP titles, as I said, in Game of Thrones, MOUSE and the Dumb Ways console title. And not only are we wearing the cost of development and investment in those titles prelaunch, but there's also been a considerable marketing commitment that is made in the lead up. And that not only impacts our EBITDA because marketing is expensed, but the work on all of those titles weighs on our cash balance until we start to see the benefits of those launches in the current financial year and beyond. So we finished the year with around $13.5 million in cash, and that has been topped up by a small capital raising we conducted in the last couple of weeks. Here's the P&L in more detail. You can see that in the first half of FY '25, we delivered record levels of Work for Hire and perhaps appreciate the optimism we would have had of that dynamic continuing when we initially gave guidance and had active negotiations on several major contracts. And then from an EBITDA perspective, we've tapped the brakes very hard on operating costs and discretionary costs as soon as there were signs of a slowdown. So while the numbers aren't where we thought they'd be, and we're certainly not satisfied with the financial performance that we're reporting today, when it comes to our operational and financial discipline, the way that we're running the business is much more robust than it was. And as we enter FY '26, it's something that I'm very confident we can maintain as our revenue line bounces back. The only other thing to point out there is that our EBITDA loss of $7.5 million includes fully costing the restructure that we conducted in April this year. So it's a clean number from that perspective. Visually, this slide puts our FY '25 performance into context from a historical perspective. We've been a little bit of a victim of our own success in FY '24, where original IP revenues really took a leap, as I said. But we've then embarked on a bunch of bigger, higher-quality investments in original IP that wouldn't generate revenue until at least FY '26. And so what was a strongly growing work-for-hire revenue line really hasn't been able to maintain that momentum and deliver us a flat to maybe slightly up revenue result that we were expecting this time last year. Looking at our cash flow, there's really 2 parts to this. We're always going to be capitalizing development and investment on new original IP projects, but we need that top line to remain strong from both Work for Hire and new game launches in order to deliver positive operating cash flow. As I said, we didn't really have any new major game launches. And as the Work for Hire run rate declined in the second half, that's meant we've eaten into our cash balance more than we would have liked to. You might spot there that capitalized development expenses were also lower in the second half. I just want to point out that when it comes to the internal development teams on Game of Thrones, MOUSE and our Dumb Ways console title, they didn't really change through the restructure in terms of size. In fact, some of them probably gone up a little bit. The drop from half-to-half is really just a function of timing when it comes to other things that we capitalize like our milestone payments for our investment in MOUSE and our license fee obligations to Warner Bros. for using the Game of Thrones brand. I've also made the point there that while our cash balance is around $24 million lower than last year, around $22 million of those cash costs relate to supporting the launch of future titles across marketing and development spend. So our revenue, while it's lower than FY '24, we're still largely covering the overheads of the business if you exclude new original IP. It's just the quantum of future investment that's been out of step with our balance sheet. And on a positive note, that operating cash flow line includes $1.7 million in restructuring expenses. And I think we've identified at least $5 million in operating cost savings going forward. And that's a critical step towards building a business that is a lot more cash generative as our revenue line improves. So we're not just aiming to get back to where we were. I think we can do better over time. As I mentioned, we raised $6.6 million last month. That puts our pro forma cash balance at around $16 million. We've got an SPP that continues until next week as well. The purpose of the raise is really to provide comfortable levels of balance sheet funding to support the launch of MOUSE, which we see as the major revenue event in FY '26 and something that will translate strongly into bringing cash back into the balance sheet relatively quickly after its launch. Turning to our operating highlights. I think the most important thing to call out there is that our investment in future titles are showing very promising signs. MOUSE has now exceeded 1 million wish list and is sitting just outside the top 20 most wish-listed titles on Steam, which is the main platform for purchasing games on PC. Keeping in mind, it will also launch on PlayStation, Xbox and the Nintendo Switch. We announced Game of Thrones: War for Westeros in June with a cinematic Reveal trailer at Summer Game Fest in L.A. That was nerve racking for our marketing team. It's the biggest marketing initiative that we've ever done. A lot of time and money went into it, but ultimately, it was a great success and reflected really well on the team. It was the second most viewed out of all the trailers released at the event. It's sitting behind Resident Evil with just over 2 million views on IGN. The follow-on coverage from games industry media and streamers was significant, which further drives up exposure for our game. Civilization launched in February. That's a really good example of what we do best in Work for Hire. We take highly regarded IPs owned by AAA studios, and we provide end-to-end development on a title for them. 2K is part of the same company that owns Grand Theft Auto. Its civilization game is a 30-year franchise, bringing it to VR was a technical challenge that we tackled head on, and we're proud of being the studio that was entrusted to do that work for them. Shattered launched in December. That's an idea that we came out with for Meta, something we were funded to develop for the Meta Quest with an emphasis on showcasing the mixed reality features of the headset. The game launched to extremely positive reviews across all mediums and socials, which was very rewarding for the development team and a positive data point for our relationship with Meta. Its rating in the Quest store is 4.6 out of 5, which is awesome. Dumb Ways: Free for All also launched on Meta Quest in November. We were paid development and license fees for that, which was a big driver of our original IP revenues in FY '24, and it also supported our first extension into VR for the brand. Thrive was the first publishing title that we've launched since we established the division, and that also came out in November. At the moment, the game has got a mixed review score on steam and the developer, Zungulu, is working on bug fixes. I caught up with the founder of Zungulu in Germany last week when I was at Gamescom. He's obviously disappointed in its performance given it was a passion project for him and their team, but very complementary of our involvement as a publisher. As you might be aware, in publishing arrangements, we're effectively an investor in the project, even though it comes out under our brand. We can and we do provide support, marketing and distribution for the game, but we're not the developer, so we do have less control over the process. We recoup our investment first from the revenue generated from the title, and that's been happening. But obviously, it's in everyone's best interest for the title to be successful commercially. And in this case, that's unlikely to occur, but we'll see how it goes. The main thing I'd say is that sales are usually run rating a lot lower when you're still working on bug fixes post launch, but the gaming community is also very receptive to engagement from developers. So it doesn't mean that sales can't pick up as the game is ironed out. We spoke at length about Kill Knight at the half year. What we've achieved on this title is extremely important to us in light of the major projects that we have underway at the moment. It's the first time we've ever simultaneously shipped the game across half a dozen platforms. It was in the top 20 best reviewed PC games of 2024 based on its Metacritic score when it came out. It's got a very positive review score on Steam and the highest for any title that we've released. And even though it didn't have the initial sales that we were hoping that it might, that review score means it continues to do well, not just during sales periods, but also when people search for games in the Twin Stick shooter genre because it stands out as a standout title. Turning to our company restructure. Guy Costantini was appointed as a Director in February. He's got considerable marketing experience and AAA studio experience, and he's been consulting to PlaySide for some months prior. So we were very fortunate to have Guy join the Board, but also very confident in what he brings to the table. Marketing was actually one part of the business that continued to grow through the restructure, which Guy advocated for and has already worked out very well for us. What our marketing team has been able to achieve on our titles has been a big contributor, not just to how staff are feeling about our prospects, but also the reception that me and the BD team get when we're out talking to potential clients at conferences. Our headcount peaked at 363 in October 2024. And by the time we've gotten to the stage of announcing a formal consultancy process in April, we were down to about 330. From there, 62 staff were made redundant. And today, we have around 260 people at the studio. The other aspect to the restructure was project closures. We've canceled all of the post-launch work on Wedding Planner, which was a mobile title that we launched earlier in the year. We ceased development on Bean Land, which was a legacy project from the days of NFTs, and we canceled several mobile projects in the catalog that were not generating meaningful revenue, but in aggregate, they were an unnecessary distraction for the business. We also made the decision not to continue investment in Dynasty of the Sands, which was the very first publishing project we signed, and we returned ownership of that project back to the developer who I caught up with at Gamescom last week. While these decisions were all made on their commercial merits, they were also made in acknowledgment that all we really need to do to set the company on an improved path going forward is execute successfully on 3 things: one, our original IP project in Game of Thrones; two, our major publishing investment in MOUSE and then our investment in the development of the Dumb Ways to Die brand. One of the secondary benefits to streamlining the project slate is being able to continually enhance the quality of people working on those projects because we're not spreading our senior staff across as many titles. The restructure also pushes us as a company to take stock of what's happened and assess how the business can be set up better going forward. So the first real takeaway is the need to match original IP development time lines with cash flow visibility. While we've enjoyed strong growth in Work for Hire revenues over the last 5 years, we've rarely had more than 18 months visibility over the contract book. And so it's challenging to commit to several projects with development time lines that were beyond that line of sight. We're here today with 3 really high-quality opportunities in front of us, but having a period of time where our revenue visibility is lower than usual has put more pressure on the balance sheet than we would like, which leads to the second point, the need to retain higher levels of cash on the balance sheet. Our original IP business is hit driven and revenue and launch dates are difficult to predict. And so it's easier for us to navigate periods where visibility is lower with confidence if we've got higher base levels of cash. And that's just not confidence for me and the Board. It's also for you as investors and for our staff. The third one is really an acknowledgment that we have a highly talented and highly experienced leadership team working well in a decentralized structure. I'd like to think that improvements in morale and processes are huge leading indicators for our success as a business, and I feel very confident about what is taking place internally at PlaySide. Our project leaders feel like they have an appropriate amount of input into what we're making. They're more empowered and engaged on projects. They know what they're expected to deliver on milestones. They know how they're going to receive feedback, and there is clear accountability at every step in the chain. Finally, we have ample rocks to pick up in terms of monetization opportunities. And what I mean by that is we've created things in our portfolio where the value hasn't been fully exploited. Dumb Ways to Die is an excellent example of this, which we'll talk later about, but also in the Unreal Engine 5 demo that we built and talked about earlier this year. We've built a demo that looks great and the team is really proud of it. Obviously, the ideal scenario for us would be to get a publisher to come and fund and help bring that project to life, which we spent plenty of time at Gamescom discussing with major publishers and had great feedback on. But doing that work is also excellent -- an excellent testament to our capabilities in delivering world-class content that our business development team can show to potential Work for Hire clients and expand the funnel of opportunities on that front. Turning to our major projects. MOUSE is going to be a significant revenue event this financial year and potentially beyond that, depending on the reception to the game and noting that we've got a first rider refusal to work on a sequel. Really can't be understated how successful our marketing campaign has been for this title and really how much of an opportunity it is to be one of a handful of titles with more than 1 million wish list on steam. I've shared some recent data that puts that into context. there was about 300 titles or 6% of games on Steam that reached 100,000 wish list last year. And I see that as sort of the starting bar for what our comp set is on Steam. The headline figures will tell you there's something like 20,000 titles launched a year on Steam, but it's really only that 300 titles that matter to us because they typically reflect titles with a reasonable level of polish, some level of marketing effort and interest from gamers. And given it represents about a new game launching every day of the week, they're likely to get some level of coverage and review by the gaming media and streamers if they're good. So of those 300 titles, around 22 reached 1 million wish list. And you can cross-check that figure with the fact that we've got just over 1 million wish list for MOUSE, and we're sitting around #20 in the wish list chart. I've started talking to you about wish list because it's an important industry metric, and I want to bring you on the journey of understanding our business better. But then I always get the question of, will tell us what wish list mean in terms of sales. And that's not an easy thing to answer, which is why we're not providing explicit revenue guidance until MOUSE launches, but I will try and tackle it a bit here. What we do know is that there's a real power law when it comes to conversions that start to kick in from about 100,000 wish list and make a lot of difference once you go over 1 million. To give you some industry stats from last year, if you've only got 10,000 wish lists on a game, a really good conversion rate of sales on day 1 of launch might be 10% of those. If you've got 100,000 wish list, a great conversion rate might be 15%. And if you've got 1 million or more wish list, you could convert even more than that on day 1. We've tracked games with numbers higher and lower than those figures. And the reason it's volatile is because someone's decision to purchase a game once they've confirmed an interest in doing so is driven by stuff like how well our marketing efforts were right before launch to keep that game front of mind. And the most obvious one, is it a well-reviewed title that gamers enjoy. And if you do nail the launch of a good game, your sales beyond day 1 are going to be excellent. I was speaking with an executive at one of the Japanese AAA studios last week at Gamescom about MOUSE. And one of the things he said is when you're dealing with that level of wish list and exposure, the traditional approaches to marketing only get you so far, and it's really going to be the reception from all of those wish listers that determines the extent of follow-on demand after that launch, which is what makes it difficult to predict. But what we do know is that through our investment in publishing the title that Fumi Games are developing, we've got an opportunity that is far greater than anything we've done at PlaySide before. We're planning one final marketing push for the title, and we'll have an official release date for the game announced in conjunction with that, and we're obviously very excited to see how that lands. Game of Thrones is the next title building up in the background. That's just had its first marketing campaign launch. And as I said earlier, we were super happy with that. From a wish listing perspective, it's already in that top 6% of wish list on Steam, which is exactly what we'd have hoped for given the caliber of the IP and our investment in the campaign. And what we're really trying to do with that investment in the Game of Thrones license is take the experience and successes that we've had with other real-time strategy games like Age of Darkness, the work that we did for Activision Blizzard on Warcraft III: Reforged, as well as our deep understanding of what fans of the genre want and then give that to them in a polished branded product. Dumb Ways to Die is the third piece of our original IP strategy. We bought the franchise across from free-to-play mobile to premium mobile when we developed Dumb Ways to Survive for Netflix games. We've been successful with tabletop card games through our licensing partnership with Spin Master, and we've got products in VR through our licensing and development partnership with Meta. All 3 of those products permit a new generation of fans to interact with the brand, and we've got a console title for Dumb Ways in development, which is our latest crossover initiative to tap into its audience. I believe this calendar year, you'll see that title announced publicly, which will see the name of the game revealed and the launch date. We've also got a collaboration with a global gaming platform during the current half, which I can't say anything about at this time other than that it is a high-reach marketing initiative that will land right on our target audience for the console title. Two of the major themes that have defined our industry recently are layoffs and reduced levels of investment. 2025 has seen a continuation of layoffs from the prior 3 years. And that's been led by the AAA studios that drove most of the incremental hiring activity through the COVID period. Those major studios are also the ones that have been canceling titles that they've poured hundreds of millions of dollars into over the last few years. A lot of AAA games take 5, 6, 7 years to make. And so canceling them or closing them down shortly after launch is a big deal. And that's seen significant amounts of human and financial capital wiped from the industry and at least temporarily, a reduced risk appetite for making big titles. It's counterintuitive that you can have a scenario where major players are tearing up capital and closing games, and it's the small and midsized studios that have been able to step into the void and create nearly half of the best new games this year. The main takeaway there is that good execution is far more important than the size of the development budget. The smaller studios making these hit titles are doing so for much less money. They're agile. They don't have bloated overheads. And if they've got enough resources, they can use cutting-edge development tools like Unreal Engine to create competitive content and invest in a proper marketing campaign to get cut through. PlaySide is absolutely capable of being a part of that group of successful midsized studios. Despite the volatility in the industry, the one thing that hasn't changed is the need for new content. You've got over 3 billion active video gamers globally, over 80% of Internet users play games. U.S. teenagers are spending over an hour a day and the 30s-plus audience is not only heavily involved in gaming, but also the demographic with the disposable income to regularly purchase new games. Products like Sony's PlayStation and Microsoft's Xbox have platform subscription models that rely on exciting new content, just like the TV streaming services do. The other driver for new content is the new console cycle, which has to be very close. PlayStation 4 came out in 2013. The PlayStation 5 came out in 2020, which was the same year as the Xbox Series S. So we have 5 years into the current console cycle. And as the next consoles are announced, they need games available to sell that new hardware. Making new games has significant lead times, which means content investment needs to happen now. When you consider that and acknowledge that the majors have all laid off significant amounts of developers, the natural dynamic that's going to occur is an increase in co-development and Work for Hire contracts, which I think we are extremely well placed to benefit from. I'll summarize some of the industry themes here. The first one is that people want to play games wherever they happen to be. Nintendo Switch 2 Handheld was the fastest game console sold ever. It came out 2 months ago. It sold 6 million or 7 million units already. In Japan, you still have to enter a ballot system in order to get your hands on one. It's going to sell a lot of units. Microsoft have just announced a new handheld and their Game Pass subscription is designed to let you play anywhere. You can even play your Xbox games in a Meta Quest headset if you want to. So the big players are trying to meet that demand for gaming on the go. And you'll see a lot of our titles come out on the new Switch and handhelds generally. MOUSE in particular, will be a really important one for that. Transmedia is the other theme, which is the use of entertainment franchises to sell games. That's been a tried and tested way of getting cut through with audiences. And you can see it frequently with the major players like Warner Bros., Hasbro and Disney focusing on monetizing their IPs in games. We're obviously working with Warner Bros. to do that with Game of Thrones. And a lot of our meetings at Gamescom were focused on how we can help other IP owners create games that can expand their audience reach. But even for our own IPs like Dumb Ways and anything else we create, we know we need to be making things with franchise potential in mind. We need to really commit to building things with replayability that can keep an audience engaged. and keep investing in those titles post launch. If we want commitment from gamers, we need to commit to them. And there's some challenges. There's so much in terms of demands on people's entertainment time. And success is not just about making something that's going to justify them stopping playing another game that they already like playing, but also pulling them away from social media and TV. The average American spends an hour a day on TikTok, half an hour on Instagram. And even though that doesn't offer the depth and quality of entertainment that games do, it's still more competition for their time. It's also a reason why you see us pumping out Dumb Ways content on social media. In terms of PlaySide-specific stuff, where are we at today? Well, we're a better business post restructure. We've pulled meaningful permanent cost savings out of our overheads. We've stripped back our development slate to the things that really matter and can generate meaningful returns if we execute well, and we've improved our processes where it's going to make a real difference, idea generation, development and pitching for contract work. And contract work is finally showing some green shoots. I've just come back from Gamescom and the one thing that I'd say is that the CFOs are having more influence at the moment when it comes to development spend at the major studios. Sure, a lot of titles have been canceled, but there are still dozens of titles underway at each of the major studios. And in many instances, the only obvious solution to getting all the games they have in development completed against the backdrop of large layoffs internally is to outsource the work. So we're seeing that in the number of RFPs we're engaged in at the moment, and it's happening on platforms like PC and mobile. So I'm very hopeful of building a much broader diversified work for Highbook over time. We've also been doing a bunch of prototyping work where our clients know they need to invest in content, but are also adding a bit more rigor in terms of wanting to see a prototype before committing funds to a full project. I see that as a temporary dynamic as their risk appetite progressively improves, which would be a step in the right direction. We were frequently told at Gamescom that PlaySide stands out as a company that can build games from soup to nuts, which is not a term I'd drop in the slide deck for an Australian audience, but hopefully, you get the idea that we present as a valuable partner with a good track record. And then we've got our 3 pillars in original IP. MOUSE is the major opportunity in the short term. Game of Thrones has kicked off strongly, and we'll keep building on that. And Dumb Ways to Die still has plenty ahead of it. And I think we can invest in comparatively smaller ways in the Dumb Ways brand that will still have high impact. With the tracks of our restructure now laid out, what I'm focused in is returning -- or what I'm focused on, sorry, is returning to a self-sustaining business model. That means rebuilding our Work for Hire pipeline, which is going to remain a valuable cash-generative part of our business. We've got a great business development team. We've got some real points of difference we can talk to as an outsourced partner or a co-development partner for clients that really need it. And I'm putting in the effort to get out there and help raise our profile in the industry. As our slate of games launch, it's going to give us even more to talk about with clients, nothing more compelling than having your products speak for themselves. And that means executing well in original IP. The games we make need to have budgets that are appropriate for the level of revenue visibility that we have in the business. They need to be the best expression of our collective talents, and that requires engagement from our teams when it comes to what games we make as well as validated research and really getting out there and understanding what our audiences want. And we need a product strategy that includes committing funds to ongoing development post launch, so we can hope to keep our audiences engaged and interested. Dumb Ways is a real gem for us in that respect. It's got an immediate opportunity on PC console and potentially a medium-term opportunity as a bigger entertainment product. And we're going to be consistent and deliberate about how we attempt to build that out. Our outlook for the year is to do better than last year. Revenue up with costs down. MOUSE is obviously the big driver of the revenue piece, and it's uncharted territory for us in terms of its profile and the steps we need to take to get the launch lined up in a way that maximizes that potential. So I can't give any clearer guidance until around the launch. As I said, we've got one final marketing push planned, and there will be a release date in conjunction with that, too. We've talked about our Work for Hire opportunities. I can say there are green shoots, but you want to see actual signings as much as I do. What I'll say is twofold. Firstly, our outward-facing efforts in both engaging with as many potential clients, pitching strongly and widening the funnel has never been better. Secondly, we are definitely winning a lot of smaller work in the current half that we've been able to resource internally. And so the revenue from that adds up and will convert strongly into cash over the next couple of quarters. So the elements we can control, I believe we're doing exceptionally well at. There's some really cool stuff coming for Dumb Ways in the next couple of months, which will set anticipation nicely for the console title, and you're going to see more on the Game of Thrones front through the year as well. I said it in the shareholder letter that I wrote earlier this year, but I'll say it again in closing, we know you've had a rough run as a PlaySide investor this year. The least we can help you do is understand what we're doing to turn it around. And I'm committed to communicating with you about our progress as often as I can. We've got many of our staff on the call today. It's exactly what I try to do for them as well because it's with their motivation and engagement that we're going to make some great games and work on some great projects in the coming years. Thanks. I'll leave it there for questions.

[Operator Instructions] First question is from Jasper at Canaccord Genuity.

I just wanted to say you've done an incredible job steering the business through this really tough time. And I think the setup going into FY '26 looks really positive in my view. Just to sort of maybe get a bit of a technical question out of the way. So you obviously finished FY '25 with around $13.5 million of cash, and there's a pro forma balance there of around $16 million, call it. Could you maybe sort of comment on the current run rate of cash burns? Because I guess we're only sort of 2 months into FY '26, and it sort of almost looks like you've already burned about $3 million to $4 million. So any detail there would be appreciated.

Yes, sure. Look, obviously, in terms of our cash balance of $13.5 million at 30 June, we manage our cash flows into 30 June, like most companies. So there are some timing things that have sort of spilled into July that impact that. We don't really -- I guess we don't really describe it as cash burn on a monthly basis because even though our revenue isn't completely covering our overheads at the moment, the numbers that you're describing aren't really reflective of our underlying cash burn. So there's a lot of payments on the other side of June that we've now paid and there are sort of lumpy bits around marketing and then lead up to launches that sort of go up in 1 month and then down the next. The other thing is that we're frequently winning small work now that's being resourced internally. So that's constantly shrinking the gap. So our cash burn is actually falling each month. I guess the real question you're asking is have we got ourselves set up to get MOUSE launched from a funding perspective, and that's what the placement and the SPP have been designed to achieve. So I think we're good.

Understood. And then just, I guess, touching again on MOUSE. It sort of sounds like you're still pretty much expecting the launch date to sort of come over November, December. And can you sort of maybe touch on the current wish listing cadence? I appreciate it's obviously last to that 1 million wish list target, but it would be good to sort of understand what the wish listing cadence is at the moment and whether you're still on track to sort of hit that peak wish listing velocity going into launch.

Yes. So in terms of velocity, I mean, that really answers the question because we're probably -- I think since we announced the 1 million target, I think we're probably 3% or 4% above that. So the velocity has sort of slowed at the moment, but that's actually deliberate. What we've said is we're effectively planning one more final marketing push right into the launch, and that's where we'd expect to see the velocity accelerate, and that that's effectively what we're aiming for.

Right. And then just moving on. So I appreciate the actual magnitude of revenue around MOUSE is obviously incredibly uncertain. But could you maybe comment on sort of the revenue profile expectations from sort of a half-on-half basis? I'd imagine most of it will probably drop, say, in the first half closer to the actual launch, but it would be good to sort of get your views on that.

Yes. I guess I can't say too much about that without sort of leaning into guidance on MOUSE. But effectively, our revenues will be weighted to post the launch of MOUSE, if I could say that. And that's obviously not assuming that we win any Work for Hire, which we're obviously actively negotiating a bunch of stuff.

Yes. Fair enough. And then just final one for me. In the guidance statement, you did mention that you sort of -- I guess, you've got a bunch of new AAA opportunities under negotiation. Could you maybe comment on how new these opportunities are? And what sort of magnitude are we potentially talking here?

Yes. So there's a mix. And some of them are relatively new as in the last sort of 3 or 4 months, and some of them are still things that we're kicking around from last year. And I mean, maybe I can unpack that a little bit for you just to give you some color because I guess a lot of people on the call have probably seen we've had active things in negotiation for a while and then things get pushed out. And I guess I can give you some color for the reasons for that to start with before we talk about the active pipeline. Gamescom last week was the first time I've been to an international gaming conference and met exec at peer companies and the AAA companies. And one of the most obvious things that stood out to me is how dynamic strategy is in the industry. They're all competing against each other, which constantly drives tweaks to their strategy. But then also every time they do a massive round of layoffs, there's a huge organizational restructure, strategy goes on pause for a bit and then they get going again. So the wider that we open the Work for Hire funnel of opportunities, which we're absolutely doing, we're meeting people with new strategies that are effectively moving around all the time. So the best thing we can do is effectively build a massive stack of stuff that we can hope to sign. So on that point, a lot of the stuff that we're looking at is as large as any of the other previous contracts that we've ever announced. So they're all quite sizable. I think the main difference is twofold. One is client spread. So we're dealing with a lot of clients that we either haven't worked with before or we haven't worked with for many years. And the other one is the platform. So a lot of our work historically or at least in recent years has been in VR and MR, but we're actively pitching on projects on all platforms at the moment.

Next question is from Chris Lawson at Canaccord.

Just with the slowdown in Work for Hire that we've seen over really the last 12 months, have you changed your criteria at all for what you accept for Work for Hire? Or are you sticking to your guidance that you want it to be $10 million plus revenue? I know you probably haven't said that, but that's the view we have. And can you remind us how the revenue drops in from memory, a lot of it is front-ended for these work-for-hire contracts. Has that changed at all?

So a couple of things. We've definitely changed our approach to Work for Hire. I mean we have to move with what the clients want. So as I mentioned on the call, there's been a bunch of layoffs and the CFOs are running -- having a much louder voice on strategy, which means they're demonstrating more rigor or more caution when it comes to signing new stuff. So the demand for new content is like holding a ball underwater. You can only do it for so long. But the way that their demands are currently expressing themselves, at least in some instances, is in prototyping work. So yes, we've signed work that is low 7 figures, short -- even high 6 figures on very short runs because they want to see prototypes before they commit funds to a bigger project. That's what the clients want. That's what we'll do. In terms of the weighting of work, I mean, there's not that much of a front-end weighting to the work. I think what I'd probably say is that the payments are usually more even through the milestones, but the ramp-up of staff happens through a project. So you're probably getting more cash flow in early than what the revenue line would suggest. But that's probably the only real dynamic of note in the contracts.

And have the margins changed at all?

No. So our margins haven't changed for any existing work. But yes, I think margins have reduced slightly when you're just widening the funnel. So as soon as you're widening the funnel, you're opening yourself up to competitive RFPs. So yes, margins are lower. They're still extremely attractive. But I just think that's a natural dynamic. The more that you are widening the funnel and competing for work, the more that you're going to have to look at your margin in some instances. I think the other thing to really speak of there is if you're doing shorter-run work and you're usually set up to run bigger contracts, your margins are always going to be a little bit smaller on that kind of work for 2 reasons. One, just because of the scale of the business doesn't line up as easily. Also when you're building prototypes, your team on average is going to be more senior because you're trying to demonstrate what you can build. But the flip side of that is then you go -- you're increasing your confidence of winning the bigger job at the back of it and then margins would improve off the back of that. Actually, the other thing I'd probably say on that, too, when it comes to margins is a lot of the work -- in fact, all of the incremental work that we've won in the last -- well, pretty much 6 months since the restructure has been resourced internally. So the other way to look at margins would be to say all of the incremental money that we are getting or is coming in, in the next quarter from incremental Work for Hire is being done off the same cost base. So in that sense, it's 100% margin because we've got the people available to do it.