Wordzee creator MAG Interactive has seen massive EBITDA growth, yet suffered a 21% decline in net sales year-on-year, as per its newly released Q1 interim report covering September 2023 to November 2023.
In this period sales fell to SEK 76.75 million ($7.33 million), down from SEK 97.33 million ($9.3 million) in the previous Q1. It marks just one of many year-on-year falls for the company.
Harsh numbers
Net sales came from in-app purchase revenues and in-app advertising, with the latter generating more money for MAG Interactive. In fact, where in-app purchases generated SEK 36.41 million ($3.48 million), ads made MAG SEK 40.33 million ($3.85 million) this Q1. Compared to last year, both were down from SEK 44.18 million ($4.22 million) and SEK 53.18 million ($5.08 million) respectively.
MAG Interactive CEO Daniel Hasselberg has attributed the sales slump to “fewer investment opportunities for UA”, naturally leading to a greater challenge in acquiring new users, and having the knock-on effect of less revenue.
The decline in daily active users was the smallest, down to 1.1 million from 1.2 million last Q1. But the impact on monthly active users was much larger at 2.9 million compared to last Q1’s 3.5 million. Furthermore, the total number of unique monthly players decreased from 52,000 to only 41,000.
Average revenue per daily active user decreased from $0.078 to $0.068, while the total cost of user acquisition in Q1 was SEK 11.19 million ($1.07 million).
Meanwhile, fees from Apple’s App Store and Google’s Play Store were “primarily” responsible for SEK 18.15 million ($1.73 million) in MAG’s costs this Q1. The fees these app stores take continue to be contentious across the industry, with Apple now even looking to charge a 27% fee on external platform payments.
An optimistic note
While revenues were down in Q1, MAG’s new game Crozzle has seen a successful soft launch with promising development and “strong enough” KPIs. And with Crozzle going well so far, MAG has ambitions to soft launch “several” more games this year too.
QuizDuel is expected to carry on growing, having surpassed 100 million downloads and still increasing its revenues after over a decade. 2019 title Wordzee, meanwhile, is continuing to focus on player engagement and a sense of progression to drive revenue growth and player loyalty.
Returning to the financial side, EBITDA saw gargantuan growth this Q1, up 671,033% to SEK 20.13 million ($1.92 million) compared to a mere SEK 3,000 ($287) last Q1. MAG’s operating profit (EBIT) has also increased to 5,892 KSEK, “a much more profitable situation than last year”.
“While quarterly fluctuations can be significant, we continue to build on our long-term plan to achieve 500 MSEK of yearly revenues with a 20% EBIT margin,” Hasselberg shared on LinkedIn.
“Our game teams continue to improve the experience of playing our games, and we see that reflected in both time and money spent by the players. QuizDuel in particular – with the introduction of Question Streak Leagues in Q4 and the 10 year anniversary events in Germany, the game’s largest market – has improved significantly.
“We believe that 2024 will be an exciting year for MAG and hope to be able to share news on several new games as well as boost engagement in our live games. I would like to thank the amazing people at MAG for your hard work and commitment to creating top quality entertainment for millions of people around the world.”
MAG’s US audience comprised 42% of its market revenue last year, pushing MAG to its biggest year yet.
