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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon, everyone, and welcome to MTG's interim report presentation for the third quarter. My name is Lars Torstensson, and I'm the CFO and EVP, Communication and Investor Relations at MTG. And joining me, I have our Group President and CEO, Maria Redin.As usual, we will begin the presentation by presenting the quarter and then take your questions in the Q&A session for dial-in participants only.With that said, I'm now handing over to you, Maria to take us through the quarter.
Thank you, Lars. Good afternoon, everyone, and thank you for taking the time to join our Q3 results call. Let me jump directly into the presentation.First of all, we delivered a record quarter that was a result of our successful execution in the last year on our buy-and-build strategy. The new MTG is a much more diversified company, and as a result, a stronger and a more resilient organization than we were a year ago.Our net sales increased by 61% at constant currency with double-digit growth in both verticals. Equally impressive, our pro forma net sales growth amounted to 16%. That is an important metric, showing the strength of the group as we move forward.As a part of our strategy, we have executed on a series of ambitious M&A transaction, building the foundation for a truly competitive gaming vertical, defined by category mastery, diversity of genres, high-quality IPs and of course, amazing talent.The gaming vertical results validated our strategy to create a more diversified portfolio. While the performance across the group were mixed, we're pleased to see that we are on a pro forma basis grew 8%. We're on a strong trajectory to become the gaming group that we envisage.The natural step following the intense past 10 months of M&A is to focus on synergies and operational excellence. And we have now formed a relevant mobile gaming group. We're also ready to take it to the next step and up our game by building a central gaming organization to drive synergies through central excellence across the gaming vertical.For that reason, I'm very happy that Markus Lipp, the CEO of Kongregate and InnoGames CMO, Christian Pern agreed to step up and gradually transition to become the CFO and CMO, respectively, in our central gaming organization. These changes reflect the growth of the vertical as a whole, and we are positive examples also how we're starting to work on group-wide initiatives. It is also an example to see how we promote talent within the group and create opportunities for our people being a part of a bigger gaming company.The esports vertical had its second consecutive quarter of revenue growth, and that is the result from an intense event schedule. We've become increasingly confident also that 2022 brings us normal circumstances for our esports vertical. And our focus is now to ensure that we are as prepared as possible for the opportunity to once again operate live audience events.We continue to make investments in our strategic initiatives, such as competitive mobile gaming, B2C platforms and geographic expansion. This in order to diversify our esports vertical. Additionally, we're exploring new strategic partnerships to help us reinforce our leading position in the esports industry.Moving to the next slide. With that high-level overview as a backdrop, let's review the performance of our gaming vertical in the third quarter more closely. This is the first quarter for the new gaming group, including all our acquired companies, and I'm very proud of the group that we're building. Because of our strong buy-and-build strategy execution, net sales for gaming vertical increased by 59% or 63% on a constant currency basis, and pro forma growth was 8%. EBITDA amounted to a record SEK 364 million in the quarter.We have been selective in our M&A strategy, looking for assets with great IPs, strong founders, management and culture, along with companies that wants to be part of our growth journey. Therefore, it's great to see the strong performance of our recently acquired companies and the contribution they made to our group.In particular, in the Kiwi's Bloons BTD6, we had achieved significant success by pouring the game to both Steam and browser, showed very strong results in the quarter, and we believe that the ever green IPs such Bloons TD6, has the potential to develop into a larger franchise platform over time. The strength of its evergreen franchise and how it can drive organic traffic and user engagement is impressive.Moreover, PlaySimple anagram franchise, especially the game Word Trip performed very strong, managing multiple complementary platforms to maximize operational performance despite a more challenging marketing environment and growing, in particular, on Android platform.Our older portfolio comprised by InnoGames and Kongregate have had a strong track record of impressive operational performance over the years. However, in the quarter, they both faced tough comparison year-over-year as well as challenges from lower marketing efficiency, resulting in negative growth. This was also unfortunately combined with a less successful in-game campaigns. However, as a group, we've taken steps to adapt to the new marketing landscape, and we have also increased ambition for our in-game events, and we can see early but promising signs of this negative impact easily going into the Q4.New game launches are key to drive long-term sustainable growth, and we are happy to see that our new games pipeline continues to perform well with 10 titles underway across all our gaming companies.In September, Kongregate launched the anticipated title, SpongeBob's Idle Adventure on mobile platforms. And in the coming months, InnoGames and PlaySimple are expected to fully launch several new titles. It is worth mentioning that InnoGames will in Q4 scale up marketing for 3 soft launch games in anticipation for a full commercial launch in Q1 next year.Additionally, Ninja Kiwi is expected to launch Bloons Battle 2 in late in this quarter, and the thousands of different franchises has long been awaiting for this game launch.Following the lower than the expected performance from Hutch title Puzzle Heist, the company has decided to further pause the development of this title, rather shifting the team's focus towards existing successful titles in the company portfolio, such as Formula One Clash as well as upcoming and still to be released titles.Moving on to the next page. As said, we are well underway to build a relevant gaming vertical, which, in a positive way, will change our financial profile of the group. With the inclusion of our latest acquisition, PlaySimple, we have pro forma net sales amounted to more than SEK 3.5 billion year-to-date with a 31% adjusted EBITDA margin. What excited me on this is that we have demonstrated an accelerated growth profile whilst maintained or even actually slightly improved profitability margins.Isolate for the quarter, we delivered almost SEK 1.2 billion net sales pro forma, representing an 8% growth rate. Hence, we are both year-to-date and for the quarter, outgrowing the mobile gaming market, which is forecasted to grow 4% for the year. This shows the strength and the quality of the gaming companies that we have recently acquired.Equally important, we now have an even stronger growth capability and skills, which we will leverage across the gaming vertical going forward, and I will come back to that later.Moving on to the next slide. As I mentioned, one of the main drivers behind building a stronger mobile gaming group is relevance and diversification to create an even stronger focus for future growth. Over the course of the last year, we have step-by-step executed on this ambition. As a result, we no longer have a single type of dependency, and we've also increased the spread of grades across our gaming verticals. Additionally, we also increased our exposure to mobile, which is the gaming segment that is expected to have the fastest growth, which now also represents 73% of our total revenues. I do not want to downplay the importance of browser, which still represents an important part of our gaming success, but I want to increase our exposure to mobile as that is where we can meet the most fans and gamers.Diversification is also revenue generation related and through the addition of Ninja Kiwi and PlaySimple, we have now also more relevant revenue streams coming from ads and from premium games, making our gaming vertical more resilient to a shift in the market landscape circumstances and also in user behavior. And as to our geographic exposure, we still continue to have a predominant focus to U.S. and Europe.Finally, we have also increased our focus and exposure to female gamers through PlaySimple, seeing that, that has a play base made up to over 70% of female gamers. All in all, diversification will lead to a more sustainable and a more resilient revenue growth going forward.To conclude on the gaming part, we are well underway to build the leading mobile game group. With the great companies we have acquired over the years and the excellent talent within those companies, we have a solid foundation to build upon to create synergy and economies of scale and above and beyond as the single stand-alone entity.The way we will approach this is still according to our family model. Hence, it's important that all our gaming companies retain the local mandate and ownership as they understand the community's best and what will resonate with us. But we strongly believe that there are group capabilities that will help us accelerate growth and share best practice. And this is especially in the field of UA, LiveOps, ad mon, cross-promotion and HR. Therefore, the next important step that we're now taking is the promotion of new talent to step up into group responsibilities to realize these group common initiatives in a collaborative format. And as another benefit, this will also help us to promote talent within and drive performance.Shifting the focus to our esports vertical. We saw a strong recovery in combination with a rich event scheduled in the third quarter, driving organic net sales growth of 55% and reduced losses, with an adjusted EBITDA amounted to negative SEK 33 million.ESL Gaming successfully delivered and produced 5 master properties as scheduled, 4 being produced as online and 1 as a studio event. IEM Cologne was the first event with teams present on site, which was an important testament for us as a company to deliver a safe and successful tournament despite an ongoing pandemic.As gaming convergence continues with esports being enjoyed over multiple platforms, we are excited on what's to come from mobile, both on the cash and competitive gaming as well as the professional esports side. Therefore, it's great to see that ESL Mobile Open continued to develop in a positive direction, and we kicked off the second season of ESL mobile challenge, including games such as PUBG Mobile and the League of Legends: Wild Rift. We had close 900,000 participants in these events, demonstrating the strong demand from fans for this product.DreamHack Sports Games further produced the NHL annual gaming tournaments remotely and The European eTour also concluded during the quarter.Looking then into Q4 '21, it should be underlined that our esports business is still being impacted by the ongoing pandemic and that we in the quarter have a lighter schedule this year compared to the same period last year. With that said, we remain confident regarding a return to normalcy for esports in '22.We continue to make investments into exciting strategic initiatives such as competitive mobile gaming, B2C platforms and geographic expansion to diversify our esports vertical. These investments have already started to yield early results. For example, in the third quarter, ESL gaming invested into DreamHack Beyond, an all-digital festival concept developed for the gaming lifestyle community, created to both complement and showcase the best of the classic LAN experience of DreamHack in an all-new or digital way. Through these investments, we are preparing our esports vertical for a mixed model of live events and an enhanced online product proposition in a normalized business environment.We expect that this emerging hybrid model to lead to build faster growth and increase revenues, but also to a richer, more resilient commercial operation.We have also continued to invest through our VC fund. In the quarter, MTG made an additional investment into BITKRAFT's new token fund. The fund is focused on investment at the intersection of cryptocurrency, blockchain, NFTs and gaming. We believe that this has the potential to become an important part of both esports and gaming. And together with our partners at BITKRAFT, we want to support emerging companies in this space. And of course, also to learn more on our side about these emerging businesses.Additionally, we're exploring new strategic partnership within our ecosystem as we want to continue to strengthen our leading position within the broader concept of competitive gaming.With that said, we will continue to carry on the operational efficiencies within the core esports business segment, and we're seeking our new commercial and sponsorship agreements.So with that said, I will hand over to you, Lars, and walk you through the financials.
Thanks, Maria. As said, the third quarter delivered record results on the back of our more diversified strategy, showcasing the strength of our buy-and-build strategy. Net sales amounted to SEK 1.438 billion, growing by 58% or 61%, excluding exchange rate changes, with both verticals growing double digits in constant currencies. This was a result of us consolidating Hutch, Ninja Kiwi and PlaySimple.Organic growth was flat, but pro forma net sales was 16% on the back of strong performance of our acquired companies. The gaming vertical grew by 59%, equaling a pro forma net sales growth of a solid 8%. Net sales for our esports vertical was up by 53% or 55% in constant currency, positively impacted by a more intensive schedule compared to last year.Our own and operated properties grew by 44% and esports services at 70%, sequentially, reflecting a gradual movement back to a proportionally higher share of owned and operator sales as brand partners and media sentiment improves, although from a low base.Adjusted EBITDA amounted to SEK 306 million, of which SEK 364 million from gaming. The margin remained stable year-over-year at 21%. The newly added game companies was the drive behind our record EBITDA contribution.The gaming vertical had an adjusted EBITDA margin of 34%, driven by solid performance at Ninja Kiwi and PlaySimple. Worth mentioning is Ninja Kiwi's successful work with Steam to distribute its Bloons franchise that has been good, both from a reach and efficiency perspective.I believe it's also worth mentioning that we have been able to maintain our gaming adjusted EBITDA margin despite us growing the business so significantly.Moving on to esports that delivered reduced losses of SEK 33 million, supported by a more intensive event schedule, but still affected by the ongoing pandemic and accelerated operational investments into new strategic initiatives such as competitive mobile gaming, B2C platforms and potential geographic expansion. As we flagged already in the beginning of the year, these elevated investments will continue throughout the year.With that said, the overall EBITDA adjustment in the quarter amounted to SEK 70 million to be compared to SEK 72 million last year. Management incentive programs amounted to SEK 28 million. Also, M&A costs amounted to SEK 41 million because of the activity in both the gaming and esport vertical.As we said already in Q2, most of the M&A cost in the quarter is related to the acquisition of PlaySimple. Depreciation and amortization in the first quarter amounted to SEK 142 million and included amortization of PPA of SEK 87 million.Amortization of PPA was higher compared to last year, mainly related to the Hutch, Ninja Kiwi and PlaySimple acquisition. Excluding PPA, depreciation and amortization was slightly higher year-over-year at SEK 55 million, mainly due to more investments into new games to be launched.Net financial items amounted to a negative SEK 22 million. There are several items to keep track of here. We have seen a gain from financial assets of SEK 112 million, mainly due to an esports investment into Nazara Technologies of SEK 96 million. The revaluation of the asset value is the result of the company going public in India. To give you some background on the company, Nazara Technologies is a leading Indian-based diversified gaming and esport media platform.Additionally, we have discounting interest for earn-out debt related to acquired companies amounting to negative SEK 77 million and exchange rate differences of negative SEK 52 million.Finally, the group tax was a negative SEK 27 million, predominantly reflecting the increased result in the gaming vertical, but also a result of timing effects.Let's move on to the cash flow statement. Cash flow from operations before changes in working capital improved to SEK 164 million. Management incentive program amounting to SEK 57 million was paid out by the gaming vertical during the quarter. The cost of the 4-year program has been provisioned on a quarterly basis, and this was the second payment this year.Operationally, the cash flow was positively impacted by continued strong performance by the gaming vertical and negatively affected by maintained investments into the esport vertical.We saw a large swing in working capital of SEK 173 million, being predominantly related to the gaming vertical and the inclusion of the new companies acquired.Within the gaming vertical, PlaySimple have had payouts of SEK 70 million, mainly coming from canceled employee share ownership program, also known as ESOP and withholding taxes on dividends and accounts payable. The PlaySimple ESOP as was paid in August and September and is netted against cash received in the transaction closed in July.Cash flow in investing activities contained the net cash payment of the acquisition of 77% of PlaySimple of SEK 2.161 billion. Furthermore, we invested SEK 7 million in the VC fund and BITKRAFT new token fund, another one.CapEx amounted to SEK 73 million in the quarter, mainly consisting of capitalized development costs for games and esport platforms that have not yet been released. Cash flow from financing activities mainly consists of a bridge facility and RCF taken up as part of the PlaySimple transaction. The bridge facility amounts to SEK 1 billion. The RCF amounts to also SEK 1 billion, of which SEK 900 million has been drawn. Additionally, a capital injection from the minority owners of the gaming co of SEK 160 million has happened as they partly participated pro rata in the PlaySimple transaction. As a result, the net change in cash and cash equivalents for continuing operations amounted to a negative SEK 196 million.The group had a net cash position of around SEK 1 billion as of end of Q3 2020. Net debt amounted to SEK 950 million or 1.1x last 12 months pro forma EBITDA. Gaming continues to be the cash flow contributing entity.Looking into the fourth quarter, I would like to remind everyone that gaming will face more normalized comps, while esport will have more tough comps due to a very intense event scheduled in the fourth quarter of 2020.That concludes the financial presentation of the quarter. And now back to you, Maria.
Thank you, Lars. I will then try to summarize our complement in the third quarter and the outlook going forward. We are successfully executing our strategy with record results for both esports and gaming, resulting in 60% pro forma growth for the group combined. We will continue to grow the gaming vertical with an increased diversification and potential of the synergies and greater scale going forward. As a part of that, we're also setting up a central gaming organization, which we'll put in place to accelerate collaboration between the gaming companies and also gives us an opportunity to promote key talents.And when it comes to the esports, we're preparing for return to normal operations in 2022 with maintained investments into strategic initiatives. And as I mentioned, we are also exploring new strategic partnerships. But if you look overall as a group, we want to continue to execute on the buy-and-build strategy within both verticals, and we do believe we have strong growth projections within the 2 segments, and we are extremely excited about the position we hold.So with that said, I think we're ready for your questions. Over to you, Lars.
Thank you, Maria. That concludes the formal presentation of our third quarter interim financial results. We are now ready to take any questions that you might have on the report or the conference call presentation. So operator, if you can help us, we would like to take the first question.
[Operator Instructions] We have your first question from the line of Oscar Erixon of Carnegie.
So a couple of questions on gaming and one question on esports. Let's start with gaming, then. First of all, you mentioned you're seeing headwinds here in the gaming segment into Q4, along with comps, of course. But with that, you mean Apple's iOS 14 changes mainly, was there anything else? And in addition, what are the positive signs you are seeing? Is it lower marketing prices or better conversion or targeting? That's my first question.
Oscar, I will take that one. And I think the impact we see in Q3 comes for multiple sort of factors. I mean, you see, of course, what we said last year is that there will be tough comps because the user engagement was extremely high during the lockdown. Of course, we see that easening (sic) [ easing ] now as we're seeing an easening (sic) [ easing ] of the opening up of society. So that's one part. And then I think IDFA has, of course, impacted the marketing side. On a good note, we were ready, but it still required us to reset all our models and calculations. And I would say -- I mean the interesting part being in group, I mean, we saw the impact quite differently between our different gaming companies. So I think on the mid-core side, we saw the biggest impact, because you need to target the customers a bit more. And I think we're getting better there. We're getting more visibility. And I think that Facebook is probably one of the campaigns, where we saw the biggest challenges. And whilst we're still not where we want to be long term, we're seeing improvement.And the last part, which you could argue is in our home course, which we control ourselves is that we're simply not happy with the events calendar and how the strength of it and especially that on Forge of Empires in InnoGames. And I think that is something we can fix 100% on our own. And I think that's where we've been revisiting now in Q4 to make sure that we are making that much more exciting for our customers to make sure that they enjoy the game better, and also spend more time in it.So I think that's where we're seeing the sort of improvement, both when it comes to, of course, learning more and more as we move forward, how to adapt to IDFA and also to make sure that we basically improve our games updates and create more exciting events and content for our customers.
Great. So I mean, just to be clear, are you seeing tangible evidence of improvement? And also, we've seen some other companies, including ads revenue-based companies talk about supply chain issues and macro. Do you see any signs of that leading to lower marketing prices than normally in Q4?
Yes, I think I'll take the first part. When you look at the results, what we see is that we start to see improvements of that. And I mean, we measure everything on a daily basis. So of course, we see both our daily sales, our daily conversions and our daily rural level on our different campaigns. So of course, that is moving in the right direction, and that's what we also put in the report, but there's still work to be done.
Yes. And Oscar, just to build on the general marketing environment as well. As you said or alluded to at least, Q3, of course, saw a slightly higher competition from other industries and looking into Q4 now and current trading, it seems like the average competition is coming down around marketing campaigns and so on and so. What that is directly related to is maybe hard to judge. It could be, as you say, supply chain issues and so on, but that's, of course, opening up an opportunity for us as a gaming company to also be more visible in the market.
Excellent. And then on a more positive note related to Ninja Kiwi, which seems so far to be a really nice addition to the group with strong ratings and strong trends. So can you share some details on the performance in Kiwi and what you see ahead there in terms of retention and continuing to deliver for Ninja Kiwi.
Yes. No, we are -- as you said, we're extremely excited about our acquisitions of both Ninja Kiwi and PlaySimple to be fair end. As you can see, though, I mean, InnoGames in this quarter had a tougher quarter as a group. We still grew 8% on a pro forma basis and year-to-date, 12%. And of course, that demonstrates the strength on our new portfolio that we've been acquiring. And also, it shows the strength of being diversified.If you look at Ninja Kiwi, specific, I think that what is amazing is when you actually establish that evergreen IP, what you can do with that as you continue to build on it because even though it's the same IP that has been around now for quite some time, they continue to build and evolve the game as a franchise and a platform. And I think that is what is so amazing. And if you look at how much of organic traffic you can have in the streamer engagement around it, it's simply amazing. If you haven't done it, I would encourage you to Google BTD6 and get the streamers and watch the engagement that they have around that game. It is quite amusing actually. So we're very, very happy. And therefore, we are also equally excited about the upcoming Battles 2 launch that is coming out hopefully towards the end of the year, which is a sequel then on Battles 1 that is out, that's been around for quite some time, and it has been highly demanded by the community that we will do sequel on that, so that is to become. So it's a great start, and we would like to see the great continuation on that.
Your next question comes from the line of Tom Singlehurst of Citi.
Tom here from Citi. I'm just interested in some of the challenges that you've highlighted around marketing. And I apologize, I was a little late for the call, so if you mentioned this earlier, I apologize. But yes, to what extent are the sort of marketing efficiency challenges down to just simple higher pricing because there's more advertising dollars chasing the same amount of inventory? To what extent is it a function of problems with tracking post IDFA? And I'm interested in whether you view this as a sort of permanent shift in efficiency or whether it's something that can be remedied over time? So that was the first question, and then I'll come back with a follow-up if that's okay.
Yes. Let me try to elaborate on the marketing. I mean, as always, it's difficult to iron out exactly what is what. And so also to put into context, it's not the first time that we see challenges in marketing. I mean rural levels usually sort of go up and down, and then we scale down and up marketing as we see the opportunity. And we also move between the different platforms. And I think on a good note, I mean we do have several sort of different marketing platforms that we utilize, which means that we can then also shift the advertising dollar.What we've seen, of course, now in Q3 is sort of a tougher than normal situation, and I think that comes from 2 different parts. Of course, IDFA impacts us, but we have also -- I mean been good in adapting to it. We've been shifting marketing between platforms. And I think we're also upping and improving our model, so we can actually properly calculate, even though we don't have any specific data points to work on. So that is something that will continue to become better. And of course, that means that over time, we believe that we'll come back to the same efficiency.And I think the same goes on the sort of demand on the marketing dollar. I mean, I think over time, there's just supply and demand in the market. If the demand is high, there should, over time, also be more supply. So therefore, I do believe over time, we will come to a better position, and that's what we're working hard on. And I think that's also one of the reasons that we see UA as one of the first opportunities where we also want to launch group-wide initiatives. As you saw that we will, over time, also have Christian Pern, the current CMO of InnoGames stepping up to the group. And that is also one of the first initiatives we're building up the systems for the group because we do believe there are great opportunities for us here as a group to become better.
And just building a little bit of what Maria is saying is that, of course, we're sitting on a lot of expertise here, InnoGames, of course, but also PlaySimple and need to be mentioned Ninja Kiwi, when it comes to community-based marketing as well. So we have a lot of expertise in house, and that's helping us navigate much better in this sort of environment.
Yes. I then had a question still in gaming on NFT. You mentioned some investments that you're doing in that space, but it does feel like it could be potentially a game-changing development in mobile game development. I was just wondering whether you think there's a significant organic opportunity within the existing sort of set of franchises and operations that you have? Or is this something that you will naturally just exploit by strategic investment?
No. I think you're absolutely right. I think that NFTs could open up very exciting opportunities for us, both in esports and gaming, to be fair. We are already trying to see opportunities but in small-scale within Kongregate.io, where we are exploiting on back of our own sort of IPs, NFTs, but it's also to learn. And then we want to use that knowledge to share across our portfolio.One of the reasons why we're investing in the BITKRAFT token fund, it is, of course, to support the new companies, but to learn them to convert that learnings onto our own properties. So very exciting. It's still early days, but we want, of course, get our fair share of that potential.
And also, should we said that over time, also esports could potential be a very strong market for NFTs as well then as you have similar logic that you have for other sports. I mean, if basketball and football can do it, then, of course, esports can do it.
Actually, that brings us on to esports, which is going to be the final question. You talked about 2022 being sort of back to normality. I'm just interested in whether you're actually -- by that, you mean you're going to get back to 2019 levels of financial performance or whether you've just been at some point during 2022, we should expect full stadiums, again, and it's more of a sort of progression? And I suppose the follow-on question is, if not 2022, should we get back to 2019 levels of activity by 2023?
Yes. No, I think when we referenced 2022 being a normality, it is the full stadium that we are looking for and to bring that engagement to the fans and the communities and the players. But with that, of course, we do expect that we will get more significant revenues to come on back of that. So we don't guide specifically, if that means that we come back to 2019 or what the levels are. But on a good note, of course, we are now in the final stages with discussions with brand sponsors and partners and media rights holders on back of next year. And there's a lot of excitement about it. So of course, we look forward for many reasons into 2022.
[Operator Instructions] The next one is from the line of Rasmus Engberg of Handelsbanken.
Just had 3 questions. Firstly, with these changes, IDFA and that, was it your sort of -- did you spend more or less than you had hoped for in this quarter in terms of marketing? That's the first question. And the second question, just some housekeeping. The SEK 77 million this quarter in net financials from the earn outs, that's going to be in every quarter going forward, right, but it's noncash? And then finally, just wanted to ask you for some clarity on what you mean with regards to your comments regarding esports, where you're talking about additionally, we're exploring new strategic partnerships. Is there something new going on here? Or is that something that is business as usual? That's it.
Yes, maybe I can start just with the SEK 77 million, Rasmus. It's something that is, of course, us going to continue to discount that every quarter. So you could expect that as a run rate going forward. And then I hand over to you, Maria.
Yes, perfect. And then on your marketing, of course, IDFA impacted, to your point, how we spend the dollar. I mean, predominantly, it impacted how we shifted in our portfolio that we moved it maybe away from some social media more into performance network and also moving more into TV. I would say on the margin on it, we probably spent a little bit less than what we had wanted to. But it was probably equally not just only because of IDFA, it was more so that we didn't scale the new games in line that we wanted to scale it up as the full commercial launch is little bit delayed. So we are looking at now for the new games in Inno for commercial launch in Q1, which means that now we will scale up marketing a little bit more in Q4 and back on the new games.So that is on the marketing side. And I think that, that implicitly, of course, drove the margins. And I would say, just for the clarity, I mean, the main part of the strength of the margin also comes from the new company portfolio that came with both great growth but also really strong underlying margins.Then on back on the strategic part on the esports side, I think that we have been saying all along that we want to explore the buy-and-build strategy in both our gaming and esports vertical. I think we've been executing in a very high pace on the gaming side. There has been a lot of opportunities we've been exploring and are exploring on the esports side. And our main focus is to continue to be the leading player and stay relevant. And as a part of that, we want to drive organic initiatives that we've been talking about, but also look at what are the inorganic initiatives that we can look to accelerate our growth profile even more going forward and also especially as we look into more competitive gaming, which is internally broader concept than just esport.So I mean, nothing specific I want to touch upon, but I think for us, it's important that we improve our position as we believe this is a highly interesting market going forward.
And just for clarity also, I know you know this, but the SEK 77 million is the non-cash, of course. Operator, can we have the next question, please?
It's from the line of Tom Singlehurst of Citi.
Sorry, sorry. I thought I'll come back with another one. I just wanted to go back and just properly understand the issues around the weaker performance from in-game events again. I mean, obviously, can we just sort of disaggregate how much of this was just not happening relative to the not landing as you would like? And then in terms of the not happening, was there any sort of ongoing disruption from sort of working from home and sort of COVID disruptions? I know we're seeing more broadly in the video game space, a higher propensity to miss original launch calendars and things like that. I'm just wondering whether you're still impacted by that and whether that's set to get better in the short term?
Tom, I think that, I mean, the main part where we didn't see the strength and the results that we wanted to is InnoGames. And I think it's fair to say they actually delivered on all their content releases in time. They are very good on that. But where we were simply too weak was to make them exciting. And I think it's a combination. I mean, A, we always do great events. These were not as great. And then, B, the fact that with the easening (sic) [ easing ] of restrictions and the opening of societies, I think that our customers also were a little bit picky on where they wanted to spend their time, which means that if you need to create a great event on a normal basis, you need to create a really great event because now you're also competing to, for the first time, goes back to communities and so forth. And I think that was also impacting a little bit our event schedule. We saw that our biggest events performed, but the smaller events in between had much less strength behind them, and we did not see the uplift as anticipated.So that's lesson learned. And on a good note that sits within our merit. We can work on that, and that's the work that is being done.
And is that something -- just to follow-up, is that something that requires -- I mean I can completely see how one falls into that trap, because you've now got maybe a slightly less captive audience and captive probably being the right word, but the -- does that require more money, more time? Or is it just a question of more focus? I talk about whether it's the margin implication for this as a company?
No, the team is there. So you're not going to hire more developers and programmers to create a more exciting event schedule. So it's about focusing creativity. And I do believe, to be honest, that also coming back to the office would spur some of that creativity. I may be old-fashioned, but I do believe that seeing people in person, you add another dimension on that creativity. And we are seeing across our offices that we are gradually bringing people back to the office. And hopefully, that will also positively influence that. But we are not hiring any more people, but we are making sure that all the way up to CEO level, there is a full focus on that sort of event schedule and making sure that it holds the quality and the level that we want it to have.
Operator, do we have any more questions?
There are no further questions at this time, sir.
Okay. Thank you, operator. In that case, that concludes the conference call for MTG's third quarter interim financial results. We appreciate that you took the time to join the call today, and we look forward to stay in touch until we release the next quarter report, which will be on the 10th of February.With that said, thank you very much, and have a great day. Bye-bye.
Thank you very much. That does conclude our conference for today. Thank you for participating. You may all disconnect.