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Hello, everyone. Welcome to Q3 quarter results conference. As you all know, the company is in the sensitive period of strategic options review, therefore, we will start with a short [ retail ] introduction by Yehoshua Gurtler and then proceed with the presentation.
Thank you, Magda. Good morning, everyone, and welcome to the Huuuge Games earnings call for the third quarter of 2022. Thank you for taking the time to join us today for this earnings call. Those who took part in our previous call may recall the disclaimer I made at that time regarding the constraints resulting from our ongoing strategic options review. As that process continues today, those constraints remain equally valid.
In brief, due to the ongoing review and to avoid prejudicing or influencing its outcome, we will continue to focus our public comments on the company's results for the reporting period, and with few exceptions, refrain from discussing in detail our future plans, strategy and outlook other than as will be elaborated on in the presentation today.
For obvious reasons, we will also not be answering questions on the review process itself or on our future plans and strategy. Once any decisions are made with respect to the outcome of the review, we will announce those to the market immediately through the usual channels.
If you have any questions or concerns on this approach, please feel free to send them to our IR team, and we will address them individually.
And with that, I'd like to hand over to our Co-CEO, Mr. Rod Cousens, who will take today's substantive presentation forward and present my colleagues in today's call.
Thank you, Yehoshua, and good morning, and welcome to our call. In addition to Yehoshua's welcome to you, it's a pleasure for me to have you join us today. I'm Rod Cousens, the Co-Chief Executive Officer of Huuuge alongside Anton Gauffin, who is the Founder and Chief Executive Officer of Huuuge. I'm joined today by Jon Bellamy, who's our Chief Commercial Officer, and Marek Chwalek, who is our EVP of Finance, and they will be presenting their respective departments as we go through this.
If I move into an update on our third quarter, I'm delighted to say that Q3 2022 is the second consecutive quarter of record highs for Huuuge. Despite the market backdrop of a 12.7% year-on-year decline for Sensor Tower, [ again ] the company has also been impacted by this. We're not immune, but we have responded and got ahead of ourselves by focusing on financial fundamentals and cash generation. As such, we've delivered a record high sales margin of 51%. This converts into $24.5 million of adjusted EBITDA, a record high margin of 32% versus 19% in Q3 of last year. This equates to a record high net result for the quarter of $15.3 million.
So what does that mean for the 9 months, if we can move on, let me give you an update on the 9 months fiscal year '22 at a glance, and the results tell a similar story of strong operating cash flow generation. $42.1 million in the first 9 months of the year and $52.6 million of adjusted EBITDA over the same period, up 21% year-on-year. This 52%-- this $52.6 million of adjusted EBITDA represents a margin of 21.9% against our first 9 months revenue of $241 million.
Our cash generation ability has significantly improved versus 2021. And we closed the period with a cash balance of $193 million following the successful buyback of 5 million shares at an average price of PLN 17.8 for a total of PLN 90 million. The company will continue to prioritize EBITDA growth through the year-end, and we expect adjusted EBITDA growth for the full year that is broadly in line with the year-on-year dynamics through September.
And with that, I'll hand over to Jon Bellamy to give you a business update.
Thanks, Rod. Hi. Good morning, everybody. I'll begin, as usual, with a review of our core franchise performance. As a reminder, our core franchises are Huuuge Casino and Billionaire Casino, our 2 social casino products that make up the vast majority of the company's revenue, and they are most established games as of today.
I'm pleased to say that our harvesting strategy continues to yield good results, and we continue to exhibit the best-in-class monetization metrics versus our peers, which again is driven by our social features and our excellent monetization skills. This harvesting strategy has delivered approximately $40 million in sales margin contribution in the third quarter of 2022, which is the highest in 2 years. And this comes alongside marginal revenue growth, which I think exemplifies our harvesting strategy in action. 3Q saw what we understand to be the highest convert to payer rate of 10.7% per month in the industry segment's history. It's also naturally the highest that the company has ever seen. We plan to continue doubling down on profitability and longevity of these 2 games for the foreseeable future and expect similarly impressive results in the future.
Let's move forward. Turning our heads towards the how we've delivered. I'm very pleased to say that this monthly conversion record of 10.7% was largely driven by an economic upgrade within our 2 games. This economy update really guarantees long-term revenue stability and sustainability by giving our users more bespoke and tailored economic experiences and giving them more reasons to play, stay and pay.
We're taking this a step further towards the end of this year. In December, we will see the first soft launched experience that is an economic model driven exclusively by machine learning algorithms that make it not a cluster of economic models within our game, but a fully personalized, fully bespoke economic experience for every one of our hundreds of thousands of active users. This will be successfully rolled out over the next year or so beginning in December, as mentioned, and we'll expect to see significant economic performance increases as a result.
Exceeding our expectations with direct-to-consumer revenue will be a new item for our quarterly update. We have been running a proof-of-concept test of a web shop for Huuuge Casino and Billionaire Casino since early in 2022. This is a new revenue channel that is delivering more margin additive dollars for every dollar of in-app purchase made. By this, I mean, instead of paying the 30% transaction fee common on Apple and Google app stores, we pay effectively a [ 4% to 5% ] payment processing fee, meaning that every dollar that we generate via our Web shop is much more additive to our bottom line. We're about 20% over our internal expectations at this point in the year, and we expect to see significant further contributions next year from this revenue channel.
Lastly, we're expanding our VIP program. For those who don't know, our VIP program is a highly successful and yet small in reach initiative that affects only the very top players from a spend perspective of our games. We have VIP agents or concierge services that make a sort of tailored experience from our most valuable players, and we're expanding the coverage of this service provision quite substantially by the end of this year by multiple thousands of players.
Okay. Let's move forward. So turning towards Traffic Puzzle for a moment. In Q3 of 2022, TP accounted for around 7% of our total revenue. And I'm very pleased to say that technical testing for our first successive product within the Traffic Puzzle universe will commence in December of 2022. We previously noted that soft launch was slated for mid-Q2 2023 for this new product. However, I'm pleased to say that we're ahead of schedule and therefore, we're now expecting this in late Q1 or potentially early Q2. As a result of this impending release, we've reduced our UA spend quite significantly. This is a temporary adjustment while we make architectural changes to our code base that allow for 2 or 3 products constrained and built by a small team.
Furthermore, we plan to release new retention and monetization features alongside an incoming social layer, which is what Huuuge does best as a business to both Traffic Puzzle and what is currently casually known as Traffic Puzzle 2 within our internal ranks, and they, again, are coming in the near future. We expect as a result of this reduced UA spend, the Traffic Puzzle studio to remain profitable on a studio level through the release of this new product in early 2023. We have a plan to evaluate further growth potential based on what we see from those early engagement KPIs upon the release of the new product.
Maybe with that, I can pass the mic to Marek to cover the financial section.
Great. Thank you, J.B. Hello, everyone. Good morning. It's a pleasure to join you all on today's earnings call. I'll cover the finance section of the presentation starting from the income statement.
So next slide, please, thank you. Well, as Rob mentioned, we are after another challenging quarter on the global gaming market. Sensor Tower suggests that the global mobile games market declined by 12.7% in the third quarter of 2022, and this slowdown is a major challenge for all game operators and developers. However, for Huuuge, Q3 was a consecutive quarter of rising margins and positive cash flow generation despite a revenue decline, which mostly follows the gaming market trends. Our revenue for the third quarter is down 15.7% year-on-year, and this decline in absolute terms is mostly attributable to our core franchises. There are 2 key reasons for that. A high base for comparison given that in 2021, we were still observing COVID-19-related uplift in monetization metrics; and secondly, a decline in DAU and DPU driven by the lower marketing spend.
Looking at the third quarter revenue in comparison to the previous quarter, the decrease amounted to 2.4% only and was mostly attributable to Traffic Puzzle where we decided to reduce marketing spend while implementing architectural changes to the codebase as discussed by JB earlier in his presentation.
At the end -- at the same time, our core franchise's revenue in the third quarter of this year increased by about 1% quarter-over-quarter, which well reflects our excellent monetization skills, successful economic update and our focus on everlasting player relationships.
A slight decrease in gross profit margin, which amounted to 69.6% in the first 9 months of 2022 versus 70.1% a year ago, results mainly from amortization of Traffic Puzzle game, which started in May 2021 when the game was acquired, partially offset by an improved margin, thanks to the Web shop expansion, as discussed earlier.
Moving on to the operating results section, it's worth noting that our user acquisition marketing campaigns expenses were moderated in the first 9 months of 2022. And in the third quarter of this year alone, respectively, by 38.7% and 52.4%. As mentioned before, the decrease reflects our post-IDFA user acquisition strategy for core franchises where we shorten paybacks by focusing on the most profitable channels and the temporary reduction of the marketing spend for Traffic Puzzle related to architectural changes to the codebase.
As we have already mentioned on the previous earnings call, we have initiated a cost optimization across the entire business, and it is well reflected in all PLN lines of the OpEx section, especially while looking at the third quarter of this year as compared to the prior year.
The decrease in general sales and marketing expenses was 11.7% for the 9 months of this year and 16.9% for the third quarter of this year compared to the corresponding periods of 2021, and it can be attributed primarily to a decrease in stock option program related expenses, salaries and employee-related costs; and finally, external services.
Research and development expenses for the first 9 months of 2022 declined by 9.2% compared to the corresponding period of 2021. In the third quarter, the decline year-on-year was even more apparent and amounted to 34.5%. In both annualized time periods, the decrease was mainly driven by the lower headcount and lower stock option program-related costs.
Regarding general and administrative expenses increased slightly for the first 9 months of this year by about $500,000 year-on-year and by $1.7 million in the third quarter versus year before. However, if we excluded $2 million of one-off costs attributable to the strategic options review initiated in the third quarter of this year, we would also see a decrease of $1.5 million compared to 9 months of 2021 and of $300,000 compared to the third quarter of last year. As a result, our operating results for the first 9 months of 2022 was $40.4 million, representing a margin of 16.7%. This compares to $29 million, representing a margin of 10.2% in the first 9 months of 2021.
Finance expense net in the first 9 months of this year was negative $1.5 million, driven mostly by the negative x-rate differences partially offset by the financial revenue from short-term cash deposits, whereas in the corresponding period of 2021, the finance expense net was negative $44.6 million and resulted primarily from valuation of preference shares Series C and foreign exchange losses. Our effective tax rate for the first 9 months of this year was 16.4%.
To sum up, in the first 9 months of this year, despite a revenue decline, we managed to maintain a cost discipline and focus on profitability, which allowed us to improve our adjusted EBITDA year-on-year by over $9 million, and adjusted EBITDA margin by 6.5 percentage points. Looking in the third quarter of this year versus a year ago, the adjusted EBITDA and adjusted EBITDA margin improvement is even more evident and amounted to respectively, $6.8 million and 12.4 percentage points.
With this, if I can move to another slide. Okay. Thank you. So let's have a quick look on our balance sheet. As you can see, the structure of assets has not changed much between the end of September 2022 and end of the last calendar year. At the end of both periods, noncurrent assets consisted mainly of Traffic Puzzle game, which net book value amounted to 36.7% at the end of December last year and $33.4 million at the end of September this year as the game assets are subject to amortization.
At the end of both reporting periods, current assets in about 88% to 89% consisted of cash and cash equivalents. The decrease in current asset value is that mostly attributable to cash and cash equivalents, which I will cover on the cash flow slide.
The structure of equity and liabilities has changed mostly due to payment of the second and third tranches of the $29.4 million in aggregate for Traffic Puzzle, which Huuuge acquired in April 2021. This payment decreased the value of accounts payable, which at the end of September this year, amounted to $30.7 million compared to $60.9 million at the end of the last year.
Turning to the next slide, we can expand a bit on our cash flow position and cash flow generation. So on this slide, you can see a simplified cash flow statement for the first 9 months and the third quarter of this year as compared to the corresponding period of the last year. Cash generation is among our top priorities, and it is well reflected in our net operating cash flow of $42.1 million in the first 9 months of this year compared to $18.9 million versus a year ago.
Strong operating cash flow generation for the first half of this year continues in the third quarter. The difference between net operating cash flow and EBITDA for the first 9 months of 2022 is mostly attributable to $4.8 million of income tax paid in this period.
With regards to the investing cash flow in the first 9 months of this year, it amounted to negative $32 million, and it was mostly impacted by the payment of the second and third tranches for Traffic Puzzle of $29.4 million in total.
Our financial cash flow for the first 9 months of 2022 was mostly driven by a share buyback on which we spent $20.1 million, out of which $4 million was spent in the third quarter. What I'd like to point out on this slide is that despite cash outflows associated with the Traffic Puzzle purchase and the share buyback program, the company's cash position at the end of September 2022 amounted to $193 million and remained almost at the same level as at the end of September last year.
Next slide, please. Thank you. So the positive EBITDA to cash flow conversion is not just an incident. This has been repetitively delivered since at least fourth quarter of 2019 with the exception of the first quarter of 2021. Other than, in this one quarter, we repetitively delivered positive operating cash flow and our EBITDA is constantly converted into fairly high cash flows. It's worth stressing here that the ratio of the last 12 months net operating cash flow to adjusted EBITDA amounted to 72%. Thanks to that, we look confident into market condition going forward.
It's also worth looking at our profitability development in the longer time perspective, as you can see on this slide. Our adjusted EBITDA margin has changed from negative 3% in 2017 to positive 17% in 2020 and 2021 and increased even to over 22% in difficult market conditions over the last 12 months. This will reflect our focus on profitability of our products, continuous optimization of cost base, positive ROI projects and thus creating positive free cash flow, which will be our focus in the coming months.
With this, I'm handing over to Rod for the closing remarks.
Thank you, Marek. What I'd like to do in summary is give you some Q3 highlights. And by way of concluding today's presentation, I would refer to the fact that we remain the #1 social casino operator globally for monetization metrics. We will continue to optimize our user acquisition efficiency and we remain focused on exhibiting OpEx disciplines company-wide. And as a result, the company has generated more cash in this quarter than at any other point in the company's history.
Furthermore, the business is positioned for strong year-on-year adjusted EBITDA growth by year-end, further strengthening our balance sheet for the future. So with that, I appreciate your time and attention today. We hope you found it informative and the group are open to questions as you may wish to make. Thank you.
Okay. We see already some questions asked via Q&A section. Question from [ Emil Poplawski ]. Do you see a need to increase UA budget in Q4 due to stronger seasonal e-commerce competition?
JB, do you want to take that one?
Yes, happy to. So we won't be guiding on specific dynamics for Q4. However, we have no plans as of today to materially change our harvesting strategy approach for core franchises, and we expect Traffic Puzzle, as we mentioned, to remain sales margin positive until a soft launch of [ TP2 ] in early 2023. That's about as close as we can get to discussing UA in Q4.
Next question from [ Emil Poplawski ]. Should we expect UA revenue ratio in 2023 to what we saw in 3Q 2022?
So perhaps, I will take this one. So, well...
No, Marek, go ahead.
Okay. Thank you. So as you know, we don't provide 2023 guidance. But we have reiterated a number of times that the profitability and optimization of -- well, user acquisition expenses are our strategic priorities.
The question from [ Thomas Peter ]. What are the rationale of investors to contact M&A transaction in FTP segment today? Have you observed any transactions in Q3? Could you comment on them?
JB, do you want to cover that?
Yes, happy to. So yes, there remains activity in the free-to-play segment on mobile and beyond. In terms of where we see kind of opportunity on M&A, valuations continue to soften across the segment and beyond. And of course, that -- that's difficult to deal with from a market cap perspective of the company. But from a business that's holding the cash balance that we do of $193 million at the end of September of this year, that leaves us in quite a strong position to exploit the opportunity that's growing. We remain opportunistic on M&A, and I think constraining ourselves to exclusively free-to-play mobile games, maybe a limiting factor. And so the team remains quite broad-minded on the approach.
Question from Kacper Kopron. Can you comment on CPI trends outlook from -- for Q4 and 2023, that's the first question. Second question regarding quick Traffic Puzzle performance, do you see the risk of write-offs of intangible assets, IP rights?
JB this one remains with you on camera.
Very good. I'll start and then I'll pass the back to Marek. So on CPI trends outlooks, we have seen a recent suffering in CPIs, but we also do know that Q4 tends to represent the highest CPI period of a year, thanks to seasonal trends, greater consumer spending at the end of the year and larger activity in the kind of digital advertising [ sphere ]. I wouldn't want to speculate, as I've learned in the past, that's a risky thing to do on CPIs. It's subject to many inputs in the media buying environment of hundreds of billions of dollars. However, generally speaking, we expect seasonality to remain true this year and we'll react accordingly.
Marek, do you want to cover the second half of the question?
Sure. Gladly. So what I can say that, well, as a part of our standard quarterly closing procedure, we conduct impairment indicator -- well, analyzes. We did it also at the end of September. And the management concluded that as of end of September, neither -- subsequently, there has been an -- well, practically no direct indicators that the Traffic Puzzle carrying value of $33.4 million may be impaired.
Question from [indiscernible]. How many people currently work in company? What level of improvement does the company want to achieve at the end of 2022 and 2023?
So at the end of September, we -- the group -- the entire group employed 592 people, well, currently, that's perhaps slightly less and we don't expect much changes before until the end of the year. And as mentioned before, we don't -- we can't comment on our plans for the next year.
Question from [indiscernible]. I would like to know what influenced the change in the position of financial income and expenses this year?
Marek?
Sure. Well, so I guess there are a few factors here to consider. So well, let's perhaps split it into financial income and expenses for this year. So starting perhaps from financial income. So practically starting from second or third quarter of this year, we see much more opportunity for generating, well, financial revenue from short-term deposits. Just to mention that at the end of third quarter over $153 million or equivalent of this amount was located on short-term deposits, allowing us to maintain a balance between flexibility in terms of using our cash reserves for an investment opportunity, which is particularly important during the strategic option review and generation of interest income, which amounted to about $750,000 in the third quarter of this year.
And perhaps worth mentioning here that we keep most of our cash reserves in the U.S. dollar, which reduces our inflation exposure but at the same time limits the opportunity for high interest yield, especially in the first half of this year. So what I can say that our current average yield is around 2.5% per annum.
And perhaps with regards to the second part of the question. Well, so our finance expense is mainly affected by the foreign exchange losses mainly driven by the unfavorable trends in the Euro to USD exchange rate, some of our revenue is denominated or paid in Euro, which, of course, creates such exposures. We are trying to minimize it by keeping most of our cash reserves in the U.S. dollar.
And perhaps as a reminder, in the prior year, the finance expense included the valuation of the preference share Series C and the loss of FX forward contract, but it was one-off transaction related specifically to IPO.
Question from [ Thomas Peter ]. Do you see increasing DAU in coming quarters? How can this be achieved?
JB?
Yes, happy to. So from the perspective of core franchises, we're not obviously [ not diving ] on forward-looking DAU. We generally don't do so. Broadly speaking, we see flat to declining DAU numbers across the entire social casino category of the industry for us and many of our peers.
That said, our team believes that focusing on value creation on its existing cohorts represents the most advantaged way of creating value for the wider business. We're expecting to execute against the product road map that is oriented around doing exactly this. When we talk about our harvesting strategy, it's about being more efficient on UA and much more focused on the existing cohorts of users who continue to play after years of successful engagement.
And question also from [indiscernible]. What is the current road map for Huuuge Casino and Billionaire Casino?
I guess this covers -- this touches on the same point. So the road map is active, well established and is being executed against. We don't comment on specific features or expected launch dates of said features, accepting rare occasions, such as the economy upgrade, which is soft launching in December of this year. However, generally speaking, the product road map at HC and BC focused on our most loyal, most valuable, most engaged users as we view these as the largest source of significant uplift in monetization and engagement KPIs for the future. Alongside that comes a very strong value creation curve for the product.
And how much would we be able to add only on organic users without any marketing.
Okay. Rod, if you're happy for me to cover this as well.
I am. You're in full flow. Continue.
I was. So we're obviously not guiding on specifics for Traffic Puzzle, but we have said and we'll continue to say that the studio is quite profitable on a stand-alone basis today, and it is expected to be so all the way through the period until which we launch the second product within the TP universe, which, as a reminder, is slated for late Q1, early Q2. So that's as much as we can give on TP future focus.
Question from [ Thomas Peter ]. How are you going to spend your cash distribution to shareholders [ in ] option?
We consider every aspect of it, but it's not something that we're looking at in the short term, and we will sit down after a strategic review and obviously consider all options. Our main purpose is to look at content. And so that will be the main focus. But all options will be considered going forward.
Another question from [indiscernible]. Should we expect in Q4, the cost of reviewing strategic options at a similar level to Q3?
Marek, you answer that.
Yes. Thanks, Rod. So well, the eventual cost of the strategic option review will really depend on the future development within that process as well as we mentioned before, we can and we won't be discussing the details of that process on today's call.
Question from [ Philip Iheanacho ]. How long can you rely [ on long ] UA strategy on core games? After which level of DAU, 354,000 users in Q3 2020 from 750,000 in 2019. So after which lever you can keep social aspects in customer games?
Some time. But I'll let JB expand on that, but we're confident for some time.
Yes. So with respect to the social aspects of the game, the critical mass of users required to keep our clubs features running and our lead boat effective is a very small fraction of the current DAU base. It's actually very, very far from being a risk for us as of today. That said, how far do we think we can take this game from a value creation perspective without relying on overinvesting in user acquisition? I think the answer to that is quite clear. ARPDAU growth, our monetization growth per user has grown substantially, and it's far outpaced over the last 2 quarters, the decline in new money revenue from new DAU. So as a reminder, in Q3, we managed to increase our sales margin contribution from HC and BC quite substantially, while also exhibiting quarter-on-quarter revenue growth dynamics.
In essence, this is exactly the principle that we look to employ when we're pursuing the road map for HC and BC. So we remain committed to this strategy. We think it's the right one and the social features as of today are far from being impeded by low critical [ math ].
Question from Emil Poplawski. What is the minimum number of DPU in casino games which you have to maintain?
JB?
That's almost a philosophical question. It very much depends on how much those DPU are spending, right? And so we need to find a balance between maintaining or growing a daily paying user base through this conversion metric and also increasing our average revenue per paying user, such that they're spending increasing amounts over time but maintaining a healthy balance between the two.
Historically, the company has grown Huuuge Casino and Billionaire Casino average revenue per daily active user by primarily growing this conversion rate. This 10.7% monthly paying user proportion, as we mentioned, is unprecedented for Huuuge, and we also believe to be within the social casino [ source ]. And our view fundamentally is that broadening the percentage of the user base that are making payments is a slightly healthier approach to only growing the amount that they spend when they do spend.
A question from [indiscernible]. What percentage share of your cost base [indiscernible]?
Sure. Well, it really depends which item of our cost base we are talking about. So for instance, our well -- cost of sales is mostly dependent, mostly denominated in USD -- euro for user acquisition marketing campaigns is almost entirely U.S. dollar. But with regards to the remaining part of the OpEx, which is mostly driven by salaries, 2 key currencies is Polish zloty and Israeli shekel. And given that -- well, that's still a prevailing part of our headcount. So well, close to 500 people is based in Poland, then of course, well, a significant part of this cost depends on Polish zloty.
A question from [ Michal Wojciechowski ]. Is [indiscernible] flat to weak performance of the wholesale share casino sector related to online gambling that is gaining traction in the U.S. If not, what's the reason behind it? The whole sector was quite strong for the last, let's say, 5 to 8 years.
Yes. JB, do you want to have a crack at that?
Yes, happy to. So you're right. There has been quite a privileged position in which to exist for the last 5 to 8 years. Our industry as with any industry is impacted by a variety of both industry-specific and industry-agnostic market conditions, such as inflation and post-pandemic consumer trends. They really are the key drivers in our minds. Our consumer demographic also doesn't really overlap with real money gambling consumer base. And therefore, the growth of real money gaming is not likely to be a major contributor to social gaming performance in our eyes.
This is particularly true given that the growth of real money gambling in the U.S. is primarily focused on sports betting rather than eye gaming, and equally, you can see the directional trends for the social casino category that we operate in predate some of the most recent legislation changes on real money gaming.
The question from [ Thomas Peter ]. Valuation of the company on the stock market seems depressed. What are your thoughts about it? Any risk market participants not seeing?
No. I mean we recognize that. We share that view, and we believe the outlook and the performance of the company, hopefully, we'll see an improvement in that going forward. Marek, do you want to add anything to it or JB?
Well, I guess, Rod, that given that -- well, the strategic option review process is still in progress. We won't comment too much on our valuation at the moment.
Question from me [ Michal Wojciechowski ]. Could you comment on inflation of wages across the industry? Is it a risk for your profitability?
We monitor this very closely and we're conscious of it, particularly with the cost of living challenges that are impacting people, et cetera. But we don't -- we believe we've managed it. We believe we're competitive and we don't see it as a further risk to our profitability.
Any more questions? [Operator Instructions]. We have one more question. How are you feeling with high inflation?
Not good. Rod, would you like to comment?
Well, I don't think it's -- I mean, in terms of how we're feeling about it, it would be something that we'd rather not face, but is a reality that exists out there. And when I talked earlier about the management of our OpEx and our ability to ride the bits and trusts of an industry through variable cost expense management, we think we're well placed to do it, but would we rather it not be there, absolutely.
I will perhaps add to that fortunately, a significant part of our revenue is dependent from U.S. dollar, which in this crazy times remains relatively stable currency with relatively low inflation comparing to what we can see observed on the other markets.
Just explanation from [ Piotr Bogusz ]. Actually, what I meant was how your players dealing with it.
Yes, that's a good question actually. I haven't asked any of them how they're feeling about it specifically, but I can speak to their behavior and the rates of engagement and conversion that we're seeing have only gone up, as you heard in the beginning of this presentation. So we're not seeing in the numbers any fear, financially-related fear in the likelihood of a player to transact. In fact, that's only increasing over time.
Do we have any more questions?
Okay. Well, I think we can draw to a close. And again, I would reiterate our thanks. The team's thanks to you for taking an interest in our company, and we hope you share our enthusiasm on the performance, and we're looking forward to the future. So thank you very much.