STLFF - Stillfront Group AB (STLFF) Q4 2022 Earnings Call Transcript

Stillfront Group AB (STLFF)

Q4 2022 Earnings Conference Call

February 15, 2023 04:00 AM ET

Company Participants

Jorgen Larsson - President & CEO

Andreas Uddman - CFO

Conference Call Participants

Simon Jonsson - ABG Sundal Collier

Nick Dempsey - Barclays

Rasmus Engberg - SHB

Marlon Varnik - Nordea Markets

Edward James - Berenberg Bank

Presentation

Jorgen Larsson

Good morning, everyone, to the presentation of Stillfront's Full Year Report and Q4 Report. It will be myself and Andreas Uddman, CFO presenting today. And we will have open up for questions at the end.

So if we go to this next slide, we can see an overview is that we have been outperforming a weak market in the quarter and also for the full year, we have in Q4, 24% total growth. We will go into -- look a bit further into how that is divided before -- between organic growth and FX and acquired growth later.

What is important now, we can see that our -- many of our key franchises has been very strongly performing, which is one of the explanations why we can outperform a weak market to such an extent and also where we have deployed most of our live ops efforts is to our -- into our key franchises.

We also have been enjoying continuous efficient user acquisition, not compromising with our 180 days robust levels, so that we are happy with. We have further also a strong cash flow generation and a good balance sheet. You can see on the right-side how our revenues were distributed in Q4, 45% North America; 26% Europe and 23% Asia as being our largest markets.

So again, looking to our key franchises. So the three that I would like to highlight here is BitLife that continues with a very good organic growth with major content updates that has been driving revenues and engagement from our players in the fourth quarter and also continue its significant organic growth.

Further also, Albion Online have had a strong second half of the year, also gearing up for its Asian expansion in late Q1 this year. Further, we also have Jawaker, which is now part of our organic, so-called organic studio, which grew -- continued to grow in the fourth quarter despite they had a very clear negative impact from the FIFA World Cup, which were as we probably know in the region as well, in the MENA region. So that was a very clear impact.

We are expanding our active portfolio, however, we felt in the quarter that it was weaker than expected performance from several of the soft launches. We have increased our ROI requirements, which has led to a one-off amortization of SEK176 million related to business -- part of our businesses where we don't see that they meet our requirements. And we have also, as I said, increased our ROI requirements.

And we have, in the quarter, added one game to our active portfolio. So we now have 78 different games, which is important from a diversification perspective, and that is, to a large extent, driving and explaining why we can continue with high return on ad spend despite the tough market.

Going into some of the numbers, I will not read all of them, but we had for the full year SEK7.1 billion in revenues with an EBIT of close to SEK1.8 billion. What is important here is that, as I said, we have a total growth of 24% year-over-year in Q4. And you can see on the upper right corner where -- how these are composed. So organic growth is slightly down 0.7%, which we think we're never happy when we're not growing organically. But considering that the market in Q4 were down with some 11%.

We think in relation to that and without increasing our UA that was 25% only in Q4 and the last 12 months, we are incredibly stable, as you can see, 26% last 12 months, four, five quarters now. So without increasing UA to try to compensate, we are still significantly better organically than the weak market. Then we had acquired growth of 11%, which is 6waves. We have an FX effect of 14% and we have other effects, which is mainly then the effect from Ulka, our paused business in Bangladesh of 1.1%.

So we can also see that we have lower margins, looking at EBIT margin year-over-year, due to higher amortizations, which in turn, is a consequence of that, we increased our product investments 18 months ago. But it's also important to mention that our EBITDA margins are very stable for quite some time at 38%. So we have been between 37% and 39% for quite some time on EBITDA. Also, looking at the full year, we were 1.4% negative organic growth, whereas the market were approximately minus 8% organically.

Next slide, please. Also a lot of numbers here, but as said, we are now up to seven to eight games in our active portfolio. Again, this is a very important metric from the diversification perspective because the number of games combined with the number of territories that we are actively market these games in and the number of channels that we use is what -- and how we can optimize our marketing over a number of games, number of markets, number of channels, is the explanation why we can continuously be spending high and very profitable on marketing.

We had 76% in mobile bookings during the quarter. We increased our ad bookings in the quarter compared to -- sequentially compared to Q3 from 14% to 16%. So we think we can do better than 16%, but it's also, to a large extent, driven from the fact that we have a different product mix compared to one year ago looking at Q4. But I think that we can improve that number going forward. We communicated back in '19 that our ambition is that we should be at high-teens, so we should be a couple of 10 (ph) points higher than that.

Also, you can see that our average revenue per daily active user is significantly up year-over-year. It's, of course, driven by positive FX, but also that we have had very strong traction with our franchises within the Strategy games area and hence, with a larger weight and the higher average revenue per DAU that comes into play. Our largest area, as you can see, is still Casual & Mash-up 43% of the total revenues and then Strategy is up to 35% and the rest 23% is Simulation, RPG.

So looking into the total portfolio, you can see that we have a strong growth in bookings for Strategy 77%, which is both acquired, but also that we have had a very strong organic development. And that is, of course, something that we are pleased with. And one of the explanations why we have been so resilient when the market has been slower, whereas Strategy is very stable compared to especially Mash-up and Casual games, but we need both of them in the portfolio in order to optimize the performance totally.

Simulation, RPG, slightly down 3%, but we also lowered the UA significantly. So I think we are quite pleased with the stability there. We improved the monetization year-over-year across the portfolio driven by positive FX and also the product mix. But we're also on a more fine granular level.

We have optimized and worked with optimizing the hybrid model, where we have -- especially in Casual where we can work both with ad monetization as well as in-app purchases. So we can see that we can optimize on product levels or product area levels, which we have done in the fourth quarter and will continue to do during next year.

Finally, you can see a drop in both MAU, DAU and MPU in Casual, and that is driven by almost entirely by the post operations in Bangladesh, which had a large audience. So otherwise, it is quite stable.

Next slide, please. And that is over to Andreas.

Andreas Uddman

Thank you, Jorgen. Looking at, we have, in the quarter, a continuous strong cash flow generation. This is something that we have seen grown during the year. We generated SEK474 million, a 17% increase from cash flow from operation prior to net working capital, in that as well, we have higher tax payments in the fourth quarter of SEK113 million. So strong cash flow generation, which grew 17%.

When a negative net working -- a positive net working capital effect of SEK10 million, the underlying cash flow from operations was SEK484 million for the quarter. We continue to spend -- invest in our portfolio. So we spend in total, SEK480 million in terms of investments, out of that, SEK235 million is related to product investments, that's a 13.2% of net revenues for the quarter.

So it's a bit of a decline versus the full year where we spend just above 14%. So we're seeing a bit of a lower investment level, even if it continues to deploy quite a significant amount of our cash flow into new products. We also settled would held upfront consideration for Jawaker of SEK206 million, which also is in that line for the quarter.

In terms of financing activities, we have a negative of SEK301 million, mainly driven by -- that we repaid some of our debt, so we optimize how much cash we actually hold and reduced our debt position in the quarter and including as well there are some IFRS 16, so leases have been that of SEK15 million. The cash flow from the period was negative, but the majority of that is, of course, driven by the fact that we amortize on our debt.

But looking at the 12 months, it's always more in the last 12 months period comparing those. We have cash flow from operations almost at SEK2.1 billion before net working capital has a 29% increase. In terms of the cash flow from operations, deducting in IFRS 16 and net working capital that grew 26% to just below SEK2 billion in terms of free cash flow.

We have, as we talked about previously, spent a larger portion of our net revenues in the last 12 months in our product development. So we spent almost SEK1 billion in new products, which is 14.1% of the net revenues in total. But we saw a bit of a cooling off in the fourth quarter. So we generated almost SEK1 billion of free cash flow for 2022 after increasing our investment base. And our cash conversion rate was 0.38 in Q4 LTM.

Next slide, please. We continue to have a conservative leverage, came down slightly versus the last quarter due to our cash flow generation of 1.46. We still have SEK3.8 billion of gross debt, but we also have some cash of SEK1 billion on our balance sheet. I think the main things that actually happened in Q4 is that we significantly -- we doubled our time to maturity in our debt portfolio.

You can see on the right hand side, even if we announced the loan to the Swedish Export Credit Corporation in Q3 that was now -- that was used to repay the loan -- the bond loan that we have outstanding. So we moved that with a four year maturity. And as well, we increased the length or extended the revolving credit facility with another two years, so that now has a maturity of three years.

So we more than doubled our time to maturity, which give us a good balance on our maturity profile. And we still have about SEK2.2 billion of undrawn credit facilities from our credit -- from our balance sheet tax. So we end the year with a good balance sheet structure and that serve us well, even if it's been a more difficult year also on the debt market, we have performed well and have been able to tactically work with our financing during 2022.

And next slide, please. So we also announced today that we are launching a repurchase of shares. This is driven by -- partially that we have a strong balance sheet position. We have a cash generative business. So the Board has announced that they will use the mandate under the AGM and purchase up to SEK270 million of shares. The majority of this will go -- this will go to cover the majority of the equity component for the earnouts that we are due to pay in Q2 this year. And this would happen from the February 16, so from tomorrow, up until the AGM on the May 11.

And with that said, I'm handing back to you, Jorgen.

Jorgen Larsson

Thank you, Andreas. So we are entering a new phase with building Stillfront, we call the Phase 4, where we more focus on leveraging the size that we have built so far and to be the most efficiently operated games company that exists. So hence, there are a number of other priorities, we refine our strategies and we should continue to outgrow our market with high profitability and strong cash flow.

That's the financial outcome from our new phase that we will hopefully show you for many years to come. So our financial targets, there also, we think, better reflect both our priorities, but also the value generation potential in the business going forward. So we have -- the first growth target is that we should grow consistently organically better than our addressed market, and we define our addressed market as being the global mobile games business, excluding China.

And when we measure this yearly, annually, we will look at the three main institutes that communicate how they view the market. So we can compare with something neutral, so to speak. We will not, I think, this year, but over time, we think M&A is absolutely something that is important to us for obvious reasons, when the market is, as it is now.

We're being, we think, fairly low valued and the market -- the private market is higher or on par and the financing is more expensive. It is not very likely that we do conduct some M&A this year, but I think that it's important to mention that we see still some interesting targets that could fit -- will fit if we come to a transaction into our structure so that we can get even more leverage out of our capabilities.

The second target is that we change our profitability target to cash EBITDA. So EBITDA reduced with our CapEx. And the reason why we do that again is that we think it's reflecting the value generation in a better way and also what we prioritize in the fourth phase of building this company. We will elaborate more on this in our Capital Markets Day later on.

And finally, we changed slightly the leverage ratio target from now also including the short-term earnout cash payments that we see. So the next 12 months cash is included and then we should be below 2.0. So basically, it's unchanged if you take away the earnouts, but now we include the earnouts in the definition and then we should be below two. And again, this will be followed up on annually and they are valued until further notice.

And that was basically our last slide and we open up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] The next question comes from Simon Jonsson from ABG Sundal Collier. Please go ahead.

Simon Jonsson

Hi, Jorgen and Andreas, and congrats on a solid report. Couple of questions from me. First, on the new profitability target, you gave a range of 26% to 29%. Is it fair to assume that the most important factor in the range is CapEx? And how fast can you get it down to 10%, which is stated as your target? Yes, that's my first question.

Jorgen Larsson

Yeah. So, when we went public already in '15, we said that we think that our business and the way that we conduct our business at around 10% is what you could expect in CapEx product investments in relation to net revenues. Then we took -- and we have been there. Then we took a deliberate decision 1.5 to two years ago that we would like to increase our investment because we saw interesting opportunities and that has served us well, I should say. That is one of the reasons why we can outgrow the market this year.

But we will, again, according to our plan that we've had step-wise go back to at around 10%. It will not change in the week or a month or even a quarter. But -- and it's hard to say precisely since obviously, we will take tactical decisions into consideration. If we have good traction and good ROI, we will not be too fast on lowering it, but I think it's a fair assumption to say that we, during the year, will be closed -- at the end of the year, will be closer to 10% than the approximately 14% that we had in 2022.

Andreas Uddman

And maybe to add to that as well, it's not just CapEx to go back to the question, there are other positions as well. We will deep dive a bit more in that in the capital markets. But one thing that Jorgen was talking about in the presentation today is that we want our ad revenues to be high-teens in terms of our revenues and that, of course, will drive down our direct costs. So this is not just CapEx, that's a part of it, but there's so much else we can do. But if you join us for the Capital Markets Day, you will get much more insights into that.

Simon Jonsson

All right. I guess you also will mention which areas you may be cutting down on. But could you just tell us anything about that right now, what kind of areas that you cut it down on investments and how could that affect growth, you think?

Jorgen Larsson

Yeah. So we are not necessarily in absolute numbers cutting down on investment, but we are taking it in relative terms to step-wise lowering it. But I think that -- how that plays out exactly is hard to say. But important is that, we will focus to a larger extent our investments to our key franchises. We have 12 franchises whereof five had revenues over SEK500 million last year, and the others had over SEK200 million.

We have seen clearly when we measure, which we do diligently how our return on product investments are that they are returning better when we invest in our key franchises. So that is the main thing that you will see change rather than a brute force cut on the investments.

Andreas Uddman

And also to add, even if you would say that we will go down to 10%, which will not happen overnight. If we would have done that in 2022, we will still have invested more in terms of absolute cash than in 2021. So it's not an absolute deployment, it wouldn't have gone down.

Simon Jonsson

All right. Is it also fair to assume then that the acceleration you did in '21 and '22 in terms of CapEx wasn't more broader? Now when you say now that you want to focus more on the key franchises, is it fair to assume that the investments in the last years were broader?

Jorgen Larsson

That is correct. And that is -- I think that is one thing -- one of the things that we can do better, the ad revenues is another. So we had clearly, as Andreas alluded to, we will [Technical Difficulty] think about or plan to do. One of them is this movement to not invest as broad as we have done, but more focused, but continue to invest at least in levels indeed.

But that is -- has returned and yield better and if we can improve the capital allocation and the ROI capital allocation for product investment, just as we have for quite some time and several years have been very good at capital allocation for UA. If we can improve the other axis of that, so to speak, I think we are operational wise improving our performance even more. So that's why this is important to get that context.

Simon Jonsson

Got it. And also, could you share any details on what franchises you have seen higher returns on recent years that you want to focus more on line?

Jorgen Larsson

I mentioned some of them here. So we have seen investments in the supremacy, which I didn't mention now, but as we have mentioned in the last couple of quarters, our grand Strategy fee franchise, which is -- has been tremendously successful for us. But also when we look at the BitLife franchise, Albion is growing, has been growing nicely and Jawaker as well. So we have several of them that has a growth potential further and hence, we think it's a good decision. But we will again describe that our CPO on the presentation on the Capital Markets Day will go further into that -- to that topic.

Simon Jonsson

All right. So it's basically kind of a double down on what has been working. Last one for me here is about the growth target. You target above market organic growth. So the question is, what kind of market growth do you expect in coming years?

Jorgen Larsson

So the tricky thing is, at the beginning of this year just as we underestimated how negative growth it were in the second half of last year and the full year as well. So that is -- the visibility is lower in the beginning of this year. But we, and I think most of our peers and analysts in general in the market expect that we will be back on organic growth.

The growth trajectory expected, we think it's 3% to 5%, some are even higher. It was 9% actually CAGR, including 2022, if you compare it to 2018. I don't think it will be on that level. But we will be 3% to 5% organic growth, the market, exactly when it's up on that number is incredibly hard to say, to be honest. So that visibility is lower.

But the structural growth in this market is underpinned by several factors that are very convincing such as new demographics, starting to consume game. Younger consumers have since years seen mobile gaming as their main entertainment area, and they will, of course, not stop playing games just because they become 20, 30, 40 and so on. And also, there are games [indiscernible] that are poorly developed. So there are many things that supports this structural growth for many years to come, exactly when we're up there, it's a bit harder to say.

Simon Jonsson

All right. Thank you. I’ll get back into the queue.

Operator

The next question comes from Nick Dempsey from Barclays. Please go ahead.

Nick Dempsey

Yes. Good morning, guys. I've got three questions. So digging down a bit more into organic growth for 2023, I've got a few questions. So firstly, you note that you expect the market and Stillfront to return to organic growth during second half '23, you're not specifically saying that you expect growth for all of second half '23. So could you hit a return to positive growth in December and that would still be consistent with what you're saying or are you really hoping for positive organic revenue growth for all of the second half '23?

And then you're saying that you expect to outperform the market over time, and you did throughout 2022, you haven't exactly said that you expect that in '23 or is that implied? And the last thing on organic is data.ai's expectation of minus 3% for the mobile market in '23 is the only one you actually mentioned in the release, is that something that we should use as a benchmark or is that just the only number that's available we shouldn't take it too seriously? That's just on organic growth.

And then the other question was specifically on Jawaker. You know the engagement did during the World Cup. Can you give us a bit more color on why did it disrupt people coming together? Were they watching the games instead? What exactly caused that disruption? And can you give us a bit of a sense of that rate of growth that Jawaker achieved in the last couple of weeks of December? Thank you.

Jorgen Larsson

Yeah. Thank you. So first, organic growth. The minus 3% is the only data point that is available at this point in time. I think many are struggling with the visibility that is a bit low as we have alluded to. So that is the reason why that is the only one mentioned. I think that again, the visibility is low, it's hard to say. Of course, we are aiming for not reaching that on the New Year's Eve only positive organic growth. But we -- but obviously, we are not immune towards how the market develops.

So I think that we will reach that during the second half, but it's very, very hard to say, to be honest. Yes, we are expecting that we should be able to outgrow the market for 2023 unregarding if it's minus 3 or some other has said that it will be plus 1 percentage to 2 percentage points, unregarding where that is. We will work very hard to outperform it, but it's hard to say when the -- when it's up on the positive territory again.

On Jawaker, it was ridiculously -- the correlation was ridiculously clear. So the very day when Saudi Arabia did beat Argentina from that first game and onwards, since also Morocco in the region were extremely successful, which was fantastic to see in many aspects. It was exactly what you said. People that play Jawaker's game, they are casual games, they are socializing when they're playing.

And instead, they're socializing looking at the World Cup, which was held in the region. And since that was in the peak season when for the first and, I hope, only time going forward, it's better when it's in the summer period for us. It was extremely clear the day that the World Cup after the final, it picked up again. So then to pick an exact number, but it's -- I can say that it's not far from that is the only difference from being positive in organic growth, just to give you some flavor on it. So that growth it was.

Nick Dempsey

Okay. Thank you.

Operator

The next question comes from Rasmus Engberg from SHB. Please go ahead.

Rasmus Engberg

Hi. Good morning. Thank you for answering my questions. I had basically two questions. Firstly, with regards to your targets, is it like a medium-term target or is it something that you hope to reach already in '23 or '24, how should we think about when we evaluate the targets?

Jorgen Larsson

Yeah. So, since we are at for the full year EBITDA -- our cash to EBITDA for 2022, it was 22.7%. So we have some mileage to do until we are in the interval. But in Q4 already, it was over 24%. So I think that it will not be -- it will not be obvious that we will reach it for the full year '23, it will be up for us. But I think that we have a good chance to be in that range at the latter part of the -- of this year. It's definitely valid from now and onwards, but it will be a bit more challenging to reach that one during this year. But for 2024, definitely so.

Rasmus Engberg

Thank you so much. And then just on the -- on this very low visibility of the market. Can you say if you are tracking roughly as you did in the fourth quarter, in the beginning of this year or is it in any way significantly worse or so?

Jorgen Larsson

We don't comment the actual quarter that we're in, as I think you know. But what is -- I've been in this industry for quite some time. What was an interesting, and again, we will discuss it also a bit more in depth during our Capital Markets Day. But one thing that was unique in Q4 and -- or in the fall was that it was very uneven the performance, especially when you were scaling up new products because then you have to have traction for a certain time in soft launch running a product with a deficit until you get a certain level of new existing users, which you can have more or less the current revenues from. So that has been very uneven.

So you can have two weeks of momentum. And then all of a sudden, you lose that momentum despite the fact that you're using similar or the same channel in the same territory for the same product. So it has been very up and down and that's why we are happy that we have developed our capability on rapidly reallocate new way. Otherwise, we -- it hasn't -- it wouldn't have been possible to outperform the market as we did. But the visibility is low. It's many factors coming in. So we don't have -- it requires half an hour to explain what we think we see, we will do that in the Capital Markets Day. But it's hard to say, but I don't give any forecasts or guidance for Q1.

Rasmus Engberg

All right. Thank you so much.

Operator

Please state your name and company. Please go ahead.

Marlon Varnik

Marlon Varnik here. Can you hear me well?

Jorgen Larsson

Yes.

Marlon Varnik

Perfect. Thank you. So firstly a question on unexpected earnouts. You make negative adjustments here, almost 20% for this year, and almost 30% for next year. Can you give some more comments here on '23 and '24 on those revisions and what acquisitions it is related to and also what has triggered this? Thank you.

Andreas Uddman

Yeah I mean, you are correct. I mean, the balance sheet position is almost SEK600 million, some of that is driven by FX as well, so approximately SEK180 million as we write in the report. And some of them are driven by the revaluations of some of our earnouts. We do the revaluations twice a year, usually Q2 and Q4. And we don't go into specifics of which studios is related to in the report. But there are ups and downs, but that's sort of where we stand at the moment.

Jorgen Larsson

Maybe we can add that this shows clearly that our acquisition model with -- and the earnout model works the way it should be. When the performance hasn't been what we hope for in each and every of the acquired studios under earnout, the earnout will go down. So that is how the model is supposed to work. So -- and it's good to see -- we had many questions after Q3, but we don't do, as Andrea said, revaluations each quarter it's 2 times per year. So that is basically what you see. It reflects the performance to a large extent.

Marlon Varnik

Yeah. Okay. Thank you. And another question here, just to clarify. So when you're referring to above market growth, is it solidly the mobile gaming market you're referring to or do you also include a component of the browser market there?

Jorgen Larsson

So we take the global mobile market, excluding China, and we take the average of data.ai, sensor tower and -- so we take the average and compare to that. And now as commented from the previous question -- in your previous question, looking forward, it's only data.ai that has come out with a number -- because the visibility is low, but that is what we should beat. So we are not considering the fact that we have between 21%, 25% browser business, which is a declining business, we should beat that number, anyway, we hope, I think.

Marlon Varnik

Okay. Thank you.

Operator

The next question comes from Edward James from Berenberg Bank. Please go ahead.

Edward James

Hi. Thank you for taking my question. I just have one quick question on the user acquisition environment. And excluding the impacts that you saw around the World Cup, could you just comment on whether the user acquisition environment is improving stable or becoming more difficult over the last three months and how you expect that to change in the year to come?

I mainly asking the question because I've seen a couple of other mobile gaming companies mentioned that the user acquisition environment is getting slightly better with Apple making some substantial improvements to its ad network and they are hopeful that this aids the user acquisition environment going forward. I'd just like to get your opinion on that. Thank you.

Jorgen Larsson

Yeah. So that's a very relevant question. And again, looking at our numbers, we have been able to deploy more in UA this year than previously, and we have been, in relative terms, very stable at 26% in relation to net revenues without compromising on the very strict robust target of 180 days net that we have. So we have seen the differences. And again, this will be discussed in the Capital Markets Day how these differences are, but it's several factors playing in.

So it's actually quite complex to analyze the pattern for user acquisition and how IDFA plays in on iOS, but -- and then volumes are moved to Android and the prices goes up there and you have to balance there, different for different channels, how well their algorithms are working, but we come from a position where we have been coping well with all the changes. And the reason is that we have developed this dynamic capital allocation capability over five to seven years or so. So we are really benefiting from that.

So I think that we will continue to benefit from that and we keep our strict target of 180 days. And I have no reason to believe that it will be harder to reach that. I don't -- there are definitely things that could suggest that it will be easier on iOS with SKAD (ph) and so on. But our going in position is that would be unchanged -- and hence, we will be able to deploy new way without compromising which we will not do on our ROAS (ph). So our going in position is that there is no change and we definitely not -- we don't see that being worse at least.

Edward James

Thank you. And just one quick follow-up. The European regulators released the EU Digital Markets Act, or I think it came into effect in November and I think expire at early 2024, Apple and Google will essentially have to allow third-party payment mechanisms within the App Store. Can you just remind us how Stillfront is set up to possibly take advantage of that?

And what that could mean for how you monetize games and how you try and retain players? And is that actually a meaningful opportunity or do you believe that the sort of conversion of players to actually purchase to make in-app purchases outside on sort of web stores, et cetera, is going to be difficult or not? I just like to get your thoughts on that. Thank you.

Jorgen Larsson

Yeah. So that's a very interesting topic. We have learned through the last couple of years when this has been a topic for quite some time that it's very hard to really see that the change will happen early 2024 in the way that you described from the EU Act. But of course, the pressure is increasing on app stores to allow for other payment methods. We have already, since we have cross-platform products, we have products that are using our payment solutions instead of the ones in App Store. So we are already improving our gross margin and work systematically. But of course, under certain limitations, obviously, but to some extent, we do that today.

And I think that there is a very high likeness that, that will open up even more. I'm not sure that will be early 2024. But over time, it will be more an open environment, which obviously, since we have all the payment solution with underlying -- the average advanced payment solution actually since will come from browser games. So we have our sophisticated payment engine fully fledged in place already. So it will be good for us when it happens. But it's hard to say exactly when.

Edward James

Great. Thank you. Appreciate it, Jorgen.

Operator

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Jorgen Larsson

Thank you all for dialing in this morning and for good questions. And we hope that you will tune into the Capital Markets Day that starts at 03:00 P.M. Central European Time today. I think and hope that, that will be an opportunity for you to understand more about where we are heading with Stillfront, but also not only looking forward, but going more in depth of what had happened last year and how our financial model looks like, how we work with our product portfolio and ESG and a lot of other interesting areas. So tune in and enjoy the Capital Markets Day. Thank you, all.

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Stillfront Group AB (STLFF) Q4 2022 Earnings Call Transcript