Daniel O’Quinn: Thanks for the question, Drew. Yes. In the guidance that we give — yes, like I said before Q2 and Q3 is when we had kind of the most of our marketing innovation. We’ve learned a lot after we started those campaigns in 2022. And that’s the reason we kind of went into 2023 with the Jerry O’Connell campaign. We’re going to have some ongoing spin throughout 2023, but just from a guided standpoint, we wanted to make sure that we have everybody informed that Q1 margins will come down from Q4 to Q1, and then scale as we move throughout the year.
Josh Wilson: Yes. Thanks, Daniel. And I’m going to piggyback on, a lot of this is, we’re really back into what seasonality looks like for mobile video games. For a couple years, COVID kind of threw us off a little bit. But really what traditionally it always looked like is kind of there again. UA returns are the highest and the cost — most cost effective in the first quarter, as Daniel said. So we’re also spending a little bit more in UA and then also the innovation campaign, which Daniel talked about. We would expect Q2 and Q3 to come down slightly. And then we all know that in Q4 marketing costs just become a little bit more expensive. So to Daniel’s point, Q1 we will step down, but we will continue stepping up as a whole in order to get to where we end up for the full-year margin.
For paying users, it’s interesting because in the past, I would say Q4 has always been the year where we ramp them up, but we ramp them up consistently all year. And the reason we were able to ramp them up consistently all year is once we created a payer, we were able to maintain them and keep them in the game continuing to spend over time. So the reason we didn’t have as large of a step-up as far as individual payers in Q4 was not because the games didn’t run well, it’s because we had already been converting at such a high percentage all year. The one thing that did happen in Q4 is we were able to really focus on the wallets of the individuals continuing to build. And so we had the payers, we were able to grow the payers, but at the same time, the payers as a whole became more valuable as individuals.
Now to your point, yes, Q1 ends up with more payers. Most of the time because of the increased UA, we see more people coming into the game. The more people that are coming in are very valuable users and this is why we increase the UA. Normally, what we will see is a little come down in the average monthly revenue per payer. This is just because it’s compared to fourth quarter, which is very, very seasonality, all of the holidays that are in there. But I’m extremely pleased that if we went back and look at February of this year, we’re actually at a very similar daily run rate to that we were in December of 2022. This ends up being really, really encouraging for us because as you know December is basically, our seasonality month of the year because about a half of the month ends up being holidays.
So could not be more proud of how our games and how our teams are performing right now.
Operator: Thank you. Next question will be from Matthew Thornton, Truist. Please go ahead.
Matthew Thornton: Hey, good morning, Josh. Good morning, Daniel. Thanks for taking the questions. I guess first one, building off the prior question around UA, I guess, Josh, any just broader commentary about how UA — the UA environment is trending 4Q into 1Q, any green shoots or is it still kind of touch and go here. And relatedly, I guess how do you think about the time in which you start to maybe shift focus from payer conversion and monetize — monetization for ARPDAU to dipping your toe back into again maybe widening the top of funnel widening MAUs, widening DAUs, and kind of thinking about how you think about that from a timing perspective, when that might happen, how that might happen. And then I’ve got one follow-up.
