Asmodee Group AB (publ)

Welcome to Asmodee Q1 Report 2025-26. For the first part of the conference call, the participants will be in listen-only mode. 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 and welcome to our Q1-25-26 results presentation. As many of you are joining us during the summer break, thank you for taking the time. I'm speaking to you today from our offices in sunny Paris. I will begin with a brief overview of the key highlights from the quarter, then Andrea will take you through the financials in more detail before I return with a few closing remarks and we open the floor for your questions. The activity in games published by Asmodee Studios in the quarter was driven by sales of Star Wars Unlimited, including continued demand for the Jump to Light speed set and early selling of the Legends of the Force ahead of its public release in July, with most board game sales driven by long-selling games. Notable board game releases in the quarter included the sixth edition of Catan, Toy Battle, and Double Spotted Stitch, which sold out at launch. During the quarter, we saw strong performance in games published by partners, driven by even stronger new releases than in Q1 last year, such as Scarlet and Violet, Glory of the Team Rocket, in the latest set of the Pokémon trading card game, Sales of this set were further boosted by official complementary Pokémon SKUs, including special boxes and gift items containing cards. The quarter also saw solid performance from other trading card games, including the continued success of One Piece, which Asmodee distributes in English and French across several territories. Additionally, the launch of the Magic the Gathering Final Fantasy set in June, also distributed by Asmodee in several geographies, was met with strong player demand. During the quarter, we reignited our value-creative M&A strategy with the acquisition of the iconic Zombicide IP While near-term financial impact is limited, this acquisition represents a strategic addition with long-term potential to drive innovation and growth. Following the successful launch of our new brand identity in June, with a preview at UK Games Expo, we are looking closely with retail and manufacturing partners to strengthen Asmodee's consumer visibility. With this brand evolution, we aim to make Asmodee a name that is recognized, trusted, loved, and sought out by players around the world. The Asmodee brand will, over time, become more and more visible to players in-store and at events, on game boxes, and on-site. During the quarter, we were honored to receive notable awards from leading industry website BoardGameGeek, with the Lord of the Rings Duel for Middle-Earth winning Best Two-Player Game, The Fellowship of the Ring trick-taking game awarded Best Cooperative Game, and Harmonies receiving the Medium Game of the Year award. We look forward in the next quarter to continued sales of our existing lines, sustained, for example, by the refresh of the original Ticket to Ride and the Galactic Championship Finals, which just closed for Star Wars Unlimited. This tournament of over 3,500 competitors started in October 2024 and saw over 350 organized play competitions until the finals. We also look forward to the highly anticipated releases of the new games, such as LEGO Brick Like This and Star Wars Battle of Hope. Moving on to the highlights of the first quarter, I'm happy to report a solid start of the fiscal year, where we delivered strong growth in sales and EBITDA. Net sales reached €349 million, representing an organic year-on-year growth of 34.4%. The number came in stronger than our expectations, thanks to our team's delivering, primarily driven by several distributed trading card games, in games published by partners, who increased by 50% in a continued very active market. The activity in games published by Asmodee was driven by both the new releases, such as Star Wars Unlimited Set 5, as just mentioned, and the continued performance of core titles. The adjusted EBDA margin increased by 20 basis points from 11.2 to 11.4%, positively impacted by lower relative personal costs, partly offset by less favorable seismics. The free cash flow increased from 15 million euros to 25 million euros due to higher adjusted EBITDA, with a free cash flow conversion of 62% compared to 50% last year. We ended the quarter with a net debt on adjusted EBITDA of 2.1 times after M&E commitments, down from 4.6 times last year. The direct impact of tariffs on margins in the first quarter was limited as we continued to sell inventory purchase prior to the new measures. That said, US sales, mostly composed of published games, were down partly due to softer consumer sentiment, some distribution friction linked to retail uncertainty and impact from foreign exchange. As part of our tariffs preparedness, we have adjusted pricing on selected titles, optimize supply chains, and postpone certain imports, which also contributed to the timing shift of several new releases only for the US. We continue to monitor the situation closely with tariff-related effects as well as the countermeasures we took expected to unfold in the coming quarters. I will now hand over to Andrea.

Thank you. Thank you, Thomas. Let's now turn to sales for the quarter, where net sales reached 349 million, year-on-year increase of 32%. On an organic basis, sales grew by 34.4%, structural changes relating to the divestment of twin sales interactive had an effect of minus 0.5%, and the impact of changes in exchange rates was minus 1.9%. Breaking down sales by publisher, reported sales of Asmodee published gain fell by 1% year over year, gains published by partners increased by 49.9%, and the other category declined by 12.4%, impacted by the disposal of twin sales interactive. Games published by Asmodee were impacted by foreign exchange, reflecting the high single digit appreciation of euro against US dollar during the quarter. Excluding this currency effect absent in the prior year, underlying sales were broadly in line with the prior year. In addition to this, games published by Asmodee were impacted by fluctuating customer sentiment in the US and high inventory levels at online retailers who maintained sell-out but placed fewer replenishment orders. The activity in this segment was, as already mentioned by Thomas, driven by both new releases such as Star Wars and the continuous strong performance from core titles. The strong performance in games published by partners was driven by continued momentum in major TCGs. Pokémon continues to benefit from strong demand, with the successful release of Scarlet and Violent, Glory of Team Rocket. Sales of this set were further boosted by official complementary Pokémon SKUs, including special boxes and gift items. We were also benefiting from the reprinting of older releases from the Pokémon Company. It is worth noting that we are now comparing to the period last year during which the franchise experienced a slowdown. Comparables for games published by partners remain favorable through the first half of the Q2 and then become more demanding. Looking forward, we are heading towards the end of Scarlet and Violet period, but will also compare to a more normative Pokémon performance in the second half of the fiscal year. The quarter also saw solid performance from other TCGs, including the continuous success of One Piece and the launch of Magic the Gathering Final Fantasy. we saw solid double-digit growth in the category TCGs, mainly driven by Star Wars and Pokemon, while board games were down by 5% in a seasonally softer board game quarter. Both game sales were negatively impacted by the same factors affecting Asmodee published games, namely the foreign exchange, the US consumer sentiment, and the high inventory levels among online retailers. In the first quarter adjusted EBDA increased by 35% from 29.6 million to 39.9 million quarter over quarter. This increase reflects the combination of factors adjusted EBDA was positively impacted by higher volumes driven by the strong sales development. The increase in personal cost was mainly due to volume-driven needs in our route-to-market operation, as well as in publishing activities and, to a lesser extent, in corporate functions. Other operating expenses have grown in absolute value due to short-term volume-driven costs, such as shipping, royalties and variable bank increase. as well as higher investment in marketing to support long-term growth, including attending major retailer events across the UK, the Nordics and Italy. From a margin perspective, the adjusted EBITDA increased by 20 basis points, positively impacted by the lower relative personnel cost, due to both the timing of recruitment where due to uncertain macro environment that we have decided to postpone some hiring decision resulting in lower personal costs in the short term and the top line growth this was partly upset by a sales mix which is less favorable on margin given the strong performance in game published by partners in the quarter Items affecting comparability below EBITDA amounted to 2.4 million and related to the disposal of twin sales interactive. In terms of free cash flow, the free cash flow after tax and capitalized lease payment amounted to 24.7 million compared to 14.9 last year. This resulted in a free cash flow conversion relative to adjusted EBITDA of 62% compared to 50% last year. The increase observed in this quarter was driven by cash flow from operation activities as a result of higher EBITDA. Looking closer to the working capital development, we saw some large movement offsetting each other. We saw a significant increase in payables, which was largely driven by strong sales, particularly in product line with the favorable cash cycle, where the sell-through velocity, thanks to our route to market operations and terms, tend to support the positive working capital dynamics. We also saw an increase in inventory levels due to the higher sales activity and in line with our seasonality of building inventories during the first half of the fiscal year. Capital expenditure for the quarter were at 6.7 million, representing 1.9 of the sales. In terms of balance sheet, net debt before and after M&A commitment at the end of the quarter amounted to respectively 404 million and 509 million, resulting in a net debt before and after M&A commitment ratio of respectively 1.7 and 2.1 times. Cash and cash equivalent at the end of the quarter amounted to $286.6 million. The increase in cash is due to the capital injection of $400 million from Embracer, out of which $300 million was used to repay gross debt, as well as the continued cash flow generation as described on the previous page. In addition to that, there is still the untapped RCF of $100 available in our balance sheet. And with that, I will hand back to Thomas.

Thank you, Andrea. Before we open up for questions, I have a few concluding remarks. Whilst the first quarter is a seasonally small one, its performance reflects the strength of our portfolio and the dedication and ability of our teams to seize commercial opportunities. We saw solid trading card games performance in the soft board game quarter. The adjusted EBDA increased both in absolute and relative terms, which also contributed to the increased free cash flow in the quarter. Net debt on adjusted EBDA after M&A commitments of 2.1 times is now closing in on our medium term target. During the quarter, we reignited our M&A agenda through the acquisition of the Zombicide IP, and we are ready to seize additional value-creative opportunities. Now, looking forward, we have a strong lineup of new releases and our new consumer-facing identity that will continue to deploy. As a reminder, for games published by partners, especially trading card games, comparables remain favorable throughout the first half of the upcoming quarter, but will become more demanding when we anniversary the end of last year's headwinds, and we will compare to a more normative distributed TCG's performance in the second half of the fiscal year. As for games published by Asmodee, the modest decline seen in this quarter mainly reflects foreign exchange impacts fluctuating consumer sentiment in the US. We expect positive dynamics for the future, whilst the future evolution of the U.S. consumer demand in this uncertain context leads us to look for the short-term future with caution, but we do remain confident in the long-term perspective of our products. Capitalizing on the strong performance of trading card games, we will continue to invest in marketing and strengthen the organization to support long-term growth. While the Q1 tariff direct impact on margins was limited, we expect tariff-related effects as well as our countermeasures taken to unfold in the upcoming quarters. We do remain attentive to a more uncertain external environment that we are navigating with agility and a focus on long-term opportunities. And with that, I am now opening the floor for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Jacob Edler from Danske Bank. Please go ahead.

Hi Thomas and Andrea, and thanks for taking my questions and congrats on a strong quarter. I have a couple of questions. To start with on the TCG side, I just want to address a few things on the Pokémon side. I think on the 27th of March, so the end of last quarter, the Pokémon company was out saying at least to fans that they were intending to increase supply on coming releases, so to speak. I just want to get some flavor, was volumes on the expansion in this quarter in the primary market higher than in Q4, so to speak?

Volumes have been adjusted by the Pokemon company. We obviously do not comment on that. But they are also sometimes still below what consumers want. But it's the important part of trading card games is that you want to have just the right number of products available on the market.

Yeah, yeah. Cool. And just a question, I mean, just following up on Pokemon, this quarter we had, for example, Destined Rivals, and in the last quarter we had both Prismatic Evolutions and Journey Together. But specifically on Journey Together, can you say anything on, you know, was the volume impact from Journey Together higher in Q1 relative to Q4, given its, you know, late release window, so to speak?

Well, we do not comment on specific sets' performance. However, I would say that the dynamic is increasingly strong quarter after quarter on the Pokemon TCG. That's what we see currently. Great.

And I don't know if you can answer it, but I guess it would be a similar question that on Magic, because also that's released mid-June. So can we expect Magic momentum also to continue throughout at least the first half of Q2, would you say?

I can effectively not comment on the current quarter.

Okay, great. Well, heading into games published by Asmodee then, I guess it's a tad on the weak side and you addressed some of the reasons behind it, but it's down, you know, 1% year over year. I just want to get maybe a bit more, some more flavor on it. What do you think kind of weighs the most year over year? Is it the release schedule or is it the weaker consumer? I know that, you know, both your comments on the US, but also I can see that Germany is down a bit. year-over-year, are those two geographies that are, you know, are those sticking out, the geomix sticking out the most, or weak consumers in some geographies, or what's sticking out the most in that minus one figure year-over-year?

It's mainly the U.S., both FX and the restocking of some retailers that did anticipate potential tariffs impact by purchasing in the previous quarter.

Yeah. Yeah, great. And then I was just wondering, on the comment you made during the call here on personnel costs and headcount, you said that, you know, owing to the macro environment and the terrorist chaos we had during the quarter, you kind of paused a bit when it comes to new hirings. Have you picked up that pace towards the end of the quarter, or how should we see it, or are you still remaining a bit cautious on new hirings?

So we are always adapting to I would say the evolutions in that. However, we have extremely, we have very high sales. We have strong sales growth. So we are ramping up some of the logistics and sales teams. So we're catching on towards the end of the quarter and are gradually implementing our recruitment agenda. Great.

I think I'll end it there. Thank you so much for those answers.

Thank you very much, Jacob.

The next question comes from Simon Johnson from ABG Sundahl Collier. Please go ahead.

Good morning, guys, and thanks for taking my question. So first, a follow-up on the board game growth, taking U.S. performance aside, you know, which was down, looking at Europe as a whole instead. Would you say it's more stable or would you say it's even growing a bit? And how do you think that compares to the underlying market in Europe currently?

If we exclude the U.S. and notably the FX effect that we experience for the rest of the world, sales are broadly in line with previous year. So there are not big differences excluding this FX effect in the U.S. indeed.

All right. Thank you for that. Do you have any sort of view on the market, how it's developing?

The market, as we did say, in the US there is a bit of uncertainty. Some sell-out is down, our sell-out is growing in certain retail. So I would say that the long sellers will continue to benefit from the market. Now the idea is to constantly adapt. And I would say it's not just our will, there is also the strategies that retailers take that come into consideration.

Alright, I see. Turning to trading cards and mainly focusing on the external trading cards. Pokemon is doing well of course, also Magic here. You have talked about One Piece as well. There have also come other new trading card games in recent years, so it seems like there's generally more interest for that kind of game. So what I wonder is, if you look at your portfolio of external trading cards, would you say it remains as concentrated to the big IPs as before, or have you seen any sort of meaningful overall diversification? in the trading card portfolio here in the last year or so from your games, excluding Star Wars Unlimited, of course.

As you did note, the largest trading card games, or the strongest trading card games, meaning Pokémon and Magic, are performing quite well currently. But it's true that thanks to our distribution capabilities, we are also preferred partners for some of the new TCGs, including One Piece, Riftbound will be coming out from League of Legends in the future, and Gundam is also out, so I would say Our ability to capture opportunities because we can distribute everybody is a real strength.

All right. So it's fair to assume then that given the strong Pokemon and Magic performance, you have not really seen any meaningful at least diversification in that part of the business currently. Maybe in the future, but maybe not right now.

Yes, they are.

Thanks. That's all for me.

Thank you very much, Simon.

The next question comes from Will Packer from BNPP Exane. Please go ahead.

Hi. Thanks for taking my questions. A couple for me, please. Firstly, as has been well covered on the call already, Pokemon and other major DCG had a big impact on the financials and drove a big outperformance versus your medium term guidance. Can you share with us any notable commentary on the kind of release schedule for some of these areas, Pokemon Magic the Gathering, for the TCG pipeline for us to have in mind? I think we got the switch to Pokemon game in October and obviously the 30th anniversary. Is there any sort of TCG specific dates we can have in our mind to help us think through the modeling? And then secondly, you mentioned in Q1 that tariffs didn't really impact your businesses at this stage. Is it fair to think therefore there was no pull forward of demand for your customers ahead of such tariffs? And then as we look beyond, how are you thinking around the impact on your business from a margin perspective? Is this something you think with about 20% of revenue from North America you can digest and leave your medium-term outlook untouched, or is this something that will require more close management? Thank you.

Thanks, Will, for those excellent questions. On the TCG release schedule, so on the Pokemon side, this year and actually this fiscal year is the end of the Scarlet and Violet cycle. As you duly noted, the new video game from Pokemon Legends Z2A is coming out in October on the Switch, which will kick off the new Pokemon Legends Z2A cycle that will, in the trading card games, start in 2026 in combination with the 30th anniversary. On the Magic side, they will continue their regular releases and there is a quite highly anticipated set coming out with Spider-Man in partnership with Marvel in the upcoming months. So the market is quite dynamic there. You did also ask about tariffs impact. So as we did say, there was no direct impact on the margins. However, we do see some impact both on consumer demand, where there is a bit of uncertainty from consumers of what the tariffs impact on their daily lives will be. And so some maintain their purchases, some wait to see. But we did also mention that some retailers did anticipate some purchases towards the end of Q4 last year in anticipation of some potential tariffs impacting our sales in this quarter. So we did have, I would say, a sales impact, but no margin impact. And looking forward, we have taken some measures. As we did say, the countermeasures taken have been working with partners on the manufacturing side and also some selected price increases that are being currently implemented. The impact on margin will come from, I would say, the timing of all of those. However, I would rather say that our margins are more impacted by the current product mix than by the direct impact of tariffs right now.

Thanks for the call.

Thank you very much.

The next question comes from Martin Arnold from DNB Carnegie. Please go ahead.

Hi, Martin. Good morning, guys. I just have a question, firstly, on a follow-up on Pokemon. You mentioned that official complementary goods and gifts support that segment. How... Could you quantify or could you comment a little bit more on the impact from that? Is that normal or is it sort of one of character or how do you view that?

So obviously we do not comment on the exact impact of this. It's normal to have some specific SKUs being released throughout the year. It's the ordinary course of business. What we did benefit from is some reprints of past sets that would probably not be seen in the future.

Okay, thanks. And then you also commented that you expect more normal Pokémon performance in the second half. Was that mainly a comment on the year-on-year comparable or anything else?

Exactly. Last year, in the last fiscal year, we had some headwinds on some TCGs, including the Pokémon franchise. that did last up until late August, early to mid September. So what we are just saying is that second half of Q2, Q3 and Q4 year on year comparison will be more normative.

Okay, thanks. And then I have a follow up on the margin performance, just a little bit on margin year on year. You mentioned that the lower personnel share was sort of balanced by the negative mix with the higher share from published by partners. And any views on the medium term, if that would continue, you know, is that sustainable? Do you see what I'm asking here?

Well, we do not provide forward-looking statements, but I would say that effectively one of the main drivers will be on the product mix.

Yeah, okay. So I guess we should expect sort of this trend that you see now is sort of reversing a little bit going forward. I cannot be specific. okay thank you and then i just have a final question on the cash flow and the now it's a low season period for the board games and how do you view the current inventory build up approaching the more this year's seasonal period are you satisfied where you are and with the plan

Yes, and it's really linked to this sales mix momentum with the TCGs which build up inventories based on the various sets which are released and board games which tend to be building up progressively towards the end of the year. So the underlying drivers are still there. And we have also looked at how to optimize some flows of goods coming in into some selected countries, thinking notably to the US. in the broader framework of the changes in tariffs, etc. So we are building up stock according to plan indeed, and we are also monitoring carefully the situation in the US. Perfect. Thank you, guys.

That's all for me.

Thanks, Martin.

The next question comes from Rasmus Engberg from Kepler Shoebrew. Please go ahead.

Thank you. Good morning, guys. Can I come back to what you said about Star Wars Unlimited? I'm just trying to understand the momentum in that business. Was that up year on year despite presumably a very strong... last year where you sold out in March and so on. So is that momentum or was there sort of a bump in the road this quarter? Did you say it was up or not? That's the question.

No, the dynamics on Star Wars Unlimited are quite strong. I take on that the great success of the Galactic Championships that we had. It was in July, but that we had in Las Vegas a few weeks ago, and that I had the chance to attend. We had a slightly different phasing of sales on Star Wars Unlimited, obviously, because last year The Set 1 had completely sold out in Q4 of 23-24. And so, sorry, 24-25, 23-24. And so in this quarter, we have a bit of Set 4, Jump to Lightspeed, and some early selling of Set 5, Legends of the Force.

Hmm. And a question on, I guess it's more like a general question really with regards to the acquisition that you have announced like Zombicide. It's a game that already have four different settings or variants or what do you want to call it? What do you think you can add to that? Is it based on connecting it to your big IP partners or what are you looking for in a game like that?

So I will obviously not unveil what we are actually working on. I will ask everybody to be patient on the announcement of products. However, it's a great IP, both on the pure IP side, but also on the game mechanics side. So yes, one can think that it's a universe and it's a game mechanic that we can leverage in different ways. We have demonstrated in the past on other very strong game mechanics. If you look at the pandemic system that has been deployed throughout several IPs, if you look at other ones. So there are opportunities both for the zombie side pure IP, but also for the game mechanic. I will not unveil more. Let us work. Thank you. Let us deliver.

Thank you. Thank you so much. I just have to ask you one thing. I've never seen a quarter like this. Is it all timing, or is there something else in this quarter? Were you surprised by the spectacular organic growth?

Well, so I would say it's a tribute to how strongly our teams were able to deliver and to seize opportunities. As I did say, yes, the growth is I take your words spectacularly, I quote you. It's slightly above what we expected at the beginning of the quarter. But we also need to remember that the comparables in the same quarter last year are quite favorable. So it's a catch up and it's coming to Exceeding normative, yes, there is some very strong performance. But I have to say that it's the strength of our business to always capture business opportunities when they arise.

Thank you.

All right. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. All right, so we have... There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Right, so we have a few written questions. First one is from Eric. Could you walk us through the drivers behind the increase in other external expenses, such as shipping, royalties, marketing, etc.? Andrea, you want to take this one?

Yes, sure, Eric. So... With respect to the increase of 12 million of other OPECs, about 50% of that growth relates to goods and volume activity, so royalties, shipping and banking fees. So this represents almost 50% of that increase. about 25 percent is on is on marketing and the remaining is other costs such as fees including legal or i.t fees and ethics ethics impacts then we have a second question from gregor can you please provide more details on how much impact tariffs within

impact revenue and EBITDA in the coming quarters. We do not provide forward-looking statements, but as we did say, there is some negative impact on purchasing and import duties, but at the same time, we have put in place some countermeasures. It will just be a question of synchronization of all of those.

Could you be looking at resetting the margin of the floating part of our bond this year, next year? Yes, we are, of course, looking at all the various options. So we are assessing this opportunity in the context of the current interest rate situation in the market.

And then we have a last question from Victor. Could you elaborate around the pricing differences across regions and geographies? I would say that the only notable pricing difference currently is happening in the US due to the tariffs, where some of our studios, including Fantasy Flight Games and Atomic Mass, our miniatures game studios, have announced price increases of 10% to 15% on selected products. for goods that are being imported from China. So I would say that the pricing evolution is always tailored to each market and it's at the hands of our local distribution units to work with the publishers on setting the right prices. I think we've come to the end of the written questions. So unless we give it a minute or 30 seconds if someone wants to type in a last question. Otherwise, I will conclude. Okay. Oh, right, we had an incoming one. Can you say anything about the funnel of M&A opportunities? You have reignited your M&A strategy, but what's the activity on that level and are there many dialogues ongoing? So we do have dialogues ongoing. Obviously, M&A being highly strategic, I will not comment on the pipe, but it is... active discussions on shows, direct relationships that we have, etc. So we're continuing to work very hard on this and quite actively. And yes, we will keep you updated once deals transform. As I like to remind everybody, M&A are projects that we should not talk about unless they are fully closed. All right. So before I close, I would like to sincerely thank our teams, the gamers, the players, and our partners across retail, publishing, and licensing for their continuing support in keeping Asmodee inspired and growing. Looking ahead, we are well positioned to capture profitable growth and deliver long-term shareholder value through the strength of our portfolio and partnerships. as well as mna as the last question highlighted so thank you for joining us today and i will i wish all of you an enjoyable summer period thank you very much thank you very much