Asmodee Group AB (publ)

Welcome to ASMODE Q4 Report 2024-25. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Thomas Kogler and CFO Andrea Gasparini. Please go ahead.

Good morning, everybody. I'm excited to present us with this Q4 report, our second interim report following our listing on Nasdaq Stockholm earlier this year. It's great to be back in Stockholm today together with Andrea Gasparini, our CFO. I will start with an overview of some highlights from the full year and fourth quarter, after which Andrea will walk you through the financials. I'll then return with a few concluding remarks before we open up for questions. Fiscal year 24-25 was a year of strong growth, novelties and collaborations. From a financial perspective, we reached close to 1.4 billion euros in sales, corresponding to an organic growth of 7.7% above our expectations, as well as above our medium-term target. The adjusted EBITDA margin improved from 16.4% to 16.7%, and our cash conversion was very strong at 86%, in line with previous year, despite last year being already very strong. It was also a year of novelties with more than 150 new releases and several key releases building for the future, such as Duel for Middle-Earth, LEGO Monkey Palace, Azul Duel, or the Arkham Horror role-playing games, or even Forest Shuffle. In fiscal year 24-25, we continued our strong collaboration with distributed partners, notably on trading card games with the Pokemon Trading Card Game, Magic the Gathering, and One Piece Card Game, of which we were honored to release the first ever localized version in French this year. We also further leveraged our strong relationships with major IP owners, continuing our extensive Star Wars, Disney, Marvel, and Middle Earth ranges with Star Wars Unlimited, Marvel Crisis Protocol, The Fellowship of the Ring, Trick-Caking Game, amongst others. Our collaboration with LEGO Group saw its first product coming out this year with the successful launch of LEGO Monkey Palace. Looking at Q4, it was a milestone quarter in itself, including our successful listing on Nasdaq Stockholm on February 7th. As part of our ongoing strategy to promote playing games, we participated in the Cannes International Games Festival, Festival International des Jeux de Cannes, where Asmodee launched the first ever Trading Card Game Village, a successful showcase of the strength of our distributed and published Trading Card Games portfolio. We also presented our products at major trade events like Nuremberg and New York Toy Fairs, engaging national and international industry partners. Finally, recognizing our ESG commitment, Catan Studio was named one of the top 10 most innovative companies in CSR for 2025 by Fast Company, highlighting the launch of Catan New Energies, which engages players with climate challenges in a thoughtful and educational way. Q4 was also a quarter of strong releases. This includes the Fellowship of the Ring trick-taking game, Azul Duel, a new two-player version of our evergreen game Azul, launched in February. Within games published by partners, we had new releases like Scarlet and Violet Prismatic Evolutions in the Pokémon Trading Card game, We had the European wide retail events for Pokémon Day on February 27th and the initial selling of Scarlet and Violet Journey together within this quarter. The quarter also saw strong performance on other TCGs including, as mentioned earlier, One Piece distributed by Asmodee in English in several territories that was successfully launched in French in its first foreign language outside of English and Japanese with the release of the Emperors in the New World. In March, we also launched Star Wars Unlimited Jump to Lightspeed. It's the set four that also included the exclusive and time-limited Carbonite boosters and cards. Moving on to the highlights of the fourth quarter, we recorded net sales exceeding 340 million euros, representing an organic year-on-year growth of 23.6%. The number came in stronger than the expectations that we had at the spin-off, primarily thanks to some tailwinds in TCGs performing much better than anticipated in a very active market. This exceptional performance was primarily driven by games published by partners and the development for Pokemon and One Piece, as just mentioned. The growth in Asmodee published games was fueled by both new releases, such as prior quoted Star Wars Unlimited Jump to Lightspeed, and the continued strong performance from core titers like Catan, Ticket to Ride, and Azur. The adjusted EBITDA margin declined by 3.3 percentage points impacted by a less favorable sales mix and higher operating expenses. And we have to say that we had a tough comparable last year at the same quarter with an exceptionally high EBITDA margin. We delivered strong cash flow of nearly 100 million euros in the quarter, corresponding to a cash conversion rate of approximately 233%. It's our highest conversion quarter, which is very normal following the end of your season in quarter three. Following the 400 million capital injection from Embracer Group during the quarter, of which 300 million was used to repay gross debt, our net debt on adjusted EBITDA ratio after M&A commitments finished the year at 2.3 times in line with our ambition. While tariffs had a limited impact in the fourth quarter, their long-term implication remains uncertain. With 17% of group net sales generated in the US, our geographic diversification helps mitigate overall exposure. And although we prioritize proximity to market, part of our board game sales in the US are sourced from China, representing around 12% of our total group net sales. In response, we have reviewed our supply chain strategy, including the selective delay of certain imports. With the most recent reduction of tariffs to 30%, we have also taken the opportunity to accelerate shipping significant amount of goods from China to secure future releases and end of year season. I have to say I'm extremely proud of the reactivity of our teams on that topic. We are also implementing price increases, reinforcing cost control measures and further diversifying sourcing around the globe. Our outsourced and flexible manufacturing really allows us to adapt swiftly and we continue to closely monitor the evolving situation. At the end of the quarter, worth noting that we also divested our video games publishing studio, TwinSales, to focus on our core business. TwinSales Interactive was acquired by its current management team, ensuring continuity and a seamless transition. The divestment will have no material impact on our financial performance. And I now very happily hand over to you, Andrea.

Thank you. Thank you, Thomas. And good morning, everybody. Let's now turn to sales for the fourth quarter, where the net sales reached 341 million, a year-on-year increase of 23%. On an organic basis, sales grew by 23.6% with the disposal of miniature market last year, which had a negative impact of minus 1.3, reflected in the other category, while currency exchange rate fluctuations contributed a positive effect of 0.7%. Breaking down sales by publisher, games published by Asmodee Studios grew by 10.2%. games published by partners increased by 32.5% and the other category declined by around 20%. Double digit growth in games published by Asmodee was split heavily between the successful launch of Star Wars Unlimited Set 4 and the solid performance of our core franchises, such as Catan, Ticket to Ride, Double Spotted, Exploding Kittens, and Azul. The strong performance in games published by partners was driven by favorable momentum in major TCG. Pokemon contributes to benefit from strong demand driven in part by the launch of the limited edition Prismatic Evolution set. It's also worth noting that we are now comparing to the period from January to September last year, during which the franchise experienced a slight slowdown. One piece is rapidly gaining market share since its launch through the sustained success of Emperors in the New World. We saw solid double-digit growth in the trading card games category, namely driven by Star Wars and Pokemon performance, while board games were up by 2%. This strong performance in Q4 brings us to a yearly net sales of close to €1.4 billion, a yearly growth of 6.3% or 7.7% on an organic basis. In the fourth quarter, adjusted EBITDA decreased by around 3.5% from 42.3 million to 40.8 million compared to the same period last year. And this decline reflects a combination of several factors. Adjusted EBITDA was positively impacted by higher volumes driven by stronger sales development. However, this was offset by increased personal and operating expenses, partly due to the transition to a standalone list and company, and partly due to support the sales growth. We also made the higher investment in marketing to support the long-term growth, including promotional campaigns and participation in major industry events, such as Cannes, Nuremberg, and the New York toy fairs, as well as higher shipping costs. From a margin perspective, the adjusted EBDA was negatively impacted by less favourable sales mix and thought comparison with last year low level of goods for resales in the context of the stocking plan, as well as increasing adropex. Items affecting comparability on the adjusted EBDA were very limited this quarter, less than 1 million euro. And it was noting that below the adjusted BDA, we recorded 6 million in fees related to the early repayment of 300 million in gross debt, which impacted the financial result for the quarter. Looking at the full year performance, the adjusted BDM margin reaches 16.7%, up 0.3% from the performance of the last year. And this margin improvement was driven by higher volumes, a favourable tax mix, partly offset by increased royalty payments to licensors, higher marketing spend and other operating expenses. Moving on to cash flow, the free cash flow after tax and capitalized lease payment amounted to €95 million in the fourth quarter, corresponding to a free cash flow conversion of more than 200% as compared to adjusted EBITDA. As you know, the Q4 is typically a strong cash flow quarter for Asmod.D due to seasonality. This quarter was exceptionally strong, reflecting both our ongoing focus on working capital management and strong end of quarter sales, particularly in product line with the favorable cash cycles. This is especially true in the TCG category, including titles like Star Wars, Pokemon and Bandai. Year-to-date free cash flow after tax and capitalized lease payment amounted to 197 million, corresponding to a free cash flow of 86%, broadly in line with the previous year. And this performance solidifies a second consecutive year of robust free cash flow, demonstrating the resilience and efficiency of our business model, even in the context of strong growth, increased investment and operating expenses. Looking at working capital evolution throughout the year, we saw a healthy increase in inventories, although decreasing as a percentage of net sales, reflecting strong TCG performance and efficient stock management. Trade receivables decreased due to seasonality and focus on cash collection, while the payables remains stable, supported by the favorable cash cycle of TCG products. CAPEX for the year amounted to 17.4 million, representing 1.3% of net sales, slightly below our guidance range of 2-3% on average per year. With respect to net debt and balance sheet, the change in net debt was primarily driven by the 400 million capital injection from Embracer Group received in Q4, of which 300 million euro was used to repay the gross debt, as well as by strong cash flow generation as just described. As a result, the net debt stood at 1.8 times... The net debt on EBITDA stood at 1.8 times before M&A commitment and 2.3 times after M&A commitment. We maintain our access to a revolving credit facility of 150 million, which as of today remains untapped, ensuring financial flexibility going forward. And finally, the Board of Directors proposes that no dividend will be paid for the fiscal year up to March 2025, and that all the return earnings should be carried forward to support the future investment and strategic initiatives. And with that, I'll hand back to Thomas.