Asmodee Group AB (publ)

Welcome to ASMODE Q2 Report 2025-26. 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 Q2 2025-26 results presentation. 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 second 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. Sales in games published by Asmodee Studios were driven by long-selling lines, such as Kitan with its sixth edition, Ticket to Ride, with a new refresh, Double Spotted, and a notably strong performance from Exploding Kitten's product lines. It was further supported by successful new releases, including Lego Brick Like This, Exploding Kitten's The Board Game, The Lord of the Rings Fellowship of the Ring, and Star Wars Battle of Hop, Sales of Star Wars Unlimited were also sustained by the release of the Legends of the Force set and took center stage at our highly successful international tournament in Las Vegas, the Galactic Championship, which welcomed over 3,500 players from around the world. The strong growth in games published by partners was mainly driven by successful trading card game releases, including Scarlet and Violet Black Bolt and Scarlet and Violet White Flare, the latest Pokemon TCG expansions. Sales were further supported by pre-selling of the Pokemon TCG Mega Evolution. We also saw strong performance in trading card games published by Bandai, including the continued success of One Piece and its latest set, Royal Blood, as well as the launch of the Gundam trading card game, driven by the accompanying TV series on Netflix. Additionally, the launch of Magic the Gathering Marvel's Spider-Man this quarter was made with high player demand. During the quarter, we announced a new strategic licensing agreement between Hasbro and our Game Genic studio specialized in premium gaming accessories. Game Genic. The agreement begins with a complete product line distributed globally by Asmodee and dedicated to Magic the Gathering's Marvel's Spider-Man set. We also launched our 30th anniversary campaign showcasing three decades of success rooted into our new brand identity. The campaign will run from September through March 2026, both digitally and at retail. After the end of the quarter, we continued to execute our M&A strategy with the bolt-on acquisition of Cthulhu Death May Die IPs and games. We also announced several media deals on our IPs with BunnyJ and Netflix, respectively on Werewolves of Minas Hollow and Catam. And we have now entered our most active and dynamic period of the year. Moving on to the highlights of the second quarter, where I am pleased to report healthy sales and EBITDA growth, driven by the continued success of our novelties and long-sellers across both board games and trading card games. Net sales reached 403 million euros, representing organic year-on-year growth of 23%. The performance was driven by continued strong performance within games published by partners, growing 30% in the quarter in a continued very active market. Sales of games published by Asmodee increased by 5% year over year and was driven by both long selling lines as well as new releases I mentioned earlier. The adjusted EBDA increased by 11%, mainly thanks to higher sales volumes. Free cash flow decreased in the quarter and amounted to minus 23 million euros as the higher EBDA was offset by working capital effects. We ended the quarter at a net debt on adjusted EBDA ratio of 2.4 times to be compared to 4.5 times a year ago after M&A commitments. US sales increased slightly in the quarter with positive dynamics on social games despite being impacted by both softer consumer sentiment overall and unfavorable foreign exchange. The direct impact of tariffs was partly offset by selectively applying price increases that took effect during the quarter and will continue to unfold in the upcoming quarters. We obviously continue to monitor closely the situation and optimize our supply chain as tariff-related effects and the impact of our measures will continue to unfold in the upcoming quarters. With these words, I will now hand over to Andrea.

Thank you, Thomas, and good morning, everybody. Let's now turn to sales for the second quarter, where net sales reached 403 million, year-on-year increase of 20.8%. On an organic basis, sales grew by 23.4%. Structural changes relating to the divestment of twin sales interactive had an effect of minus 0.5% and the impact of exchange rates was minus 2.1%. Breaking down sales by publisher, Asmoday published games increased by 5.1% year over year and published by partners increased by 30.2%. The other category declined by 4.3%, impacted by twin sales interactive. Sales in games published by Asmodee increased mid-single digit, despite being impacted by the weakening US dollar impact, as well as softer consumer sentiment in the US. Sales growth was primarily driven by both long sellers, as explained by Thomas before, as well as successful new releases. We also saw strong performance from Exploding Kitten product line that boosted sales in the United States, where net sales were back to growth in this second quarter. Star Wars Unlimited is resilient in a highly demanding and competitive market. Our goal is to preserve its positioning in the TCG segment during the second year of its lifecycle with continued investment in customer engagement through the Galactic Championship and organized plays. During the H1, the game reached a stabilizing phase that we intend to solidify in the current and upcoming months. The strong performance in games published by partners was driven by continued momentum on major TCGs, primarily from Pokemon, One Piece and Magic. This performance came despite a small negative timing effect between Q2 and Q3 related to Pokemon Mega Evolution Launch, which occurred in October this year versus the corresponding one in September last year, The majority of sell-in was, however, completed in Q2, limiting the overall cut-off impact to the P&L and the free cash flow. It's worth remembering that we are now comparing to a more normative Pokemon performance in the second half of the current fiscal year. From a category point of view, we saw solid double-digit growth in the TCG category, as well as growth within the board game category. The strong momentum in TCG category is influencing the performance of the board games, as both mass retailers and hobby stores, who have limited shelf space and resources, are currently giving more prominence to the TCG products. Looking at year-to-date development, net sales reached 752 million, a year-on-year increase of 25.7%, and on an organic basis, sales grew by 28.2% as a result of the strong sales momentum seen this year. Adjusted EBITDA grew by 11% in the second quarter, reaching 76.1 million compared to 68.5 million last year. This 8 million increase builds on the strong 10 million growth already achieved in Q1, confirming the continued momentum and resilience of our operating model. The increase reflects a combination of factors, higher ABDA volumes supported by solid sales momentum, which positively contributed to ABDA, and disciplined cost management with the personal costs increasing by only 4.5 million, a rise three times lower than top line. This demonstrates tight cost control over volume-driven needs and highlights the scalability and efficiency of our structure in a high-demand environment. Other operating expenses increased by 14.3 million, reflecting both strategic investment and volume-related growth. Roughly one third of the increase stems from higher marketing investment to support long-term growth. including major industry events such as GenCon in the US, GamesCon in Germany, and our highly successful Galactic Championship in Las Vegas. Around one quarter relates to variable costs such as shipping and royalties linked to the strong sales development, and the remaining portion reflects structural and transitional effects, including costs associated with becoming a standalone listed company, expanded store capacity, and the current performance of minority investment. From a margin perspective, adjusted BDA reached 18.9 in the quarter, decreasing by 160 basis points from last year. About 140 basis points of this decline were due to a less favorable sex mix that we have already discussed about in the previous quarter. reflecting the strong performance of published partner games in this fiscal year. Importantly, this mixed effect highlighted the success of our partnerships, which continue to broaden our portfolio and strengthen our market position. The remaining 20 basis points were attributable to the increase in other operating expenses. Below the BDA line, we recorded an impact of minus 33.8 million in net financial due to the change in fair value of contingent consideration and put and call on non-controlled interest. This primarily relates to the improved performance, operational performance and positive outlook for exploding kittens. This effect is non-cash for the quarter and the final value and cash out flows will be determined upon the exercising of the call option expected during the first half of the calendar year 2026. Looking at the year to date performance, the first half clearly demonstrated the scalability and efficiency of our business model and the strong operational leverage achieved through discipline cost management. The adjusted BDA increased by 18 million year-to-date, already exceeding the 16.5 million full-year growth recorded in fiscal year 2024-25, meaning that we have already delivered 9% more growth in just half a year than in the entire prior year. Moving on to cash flow, the free cash flow after income tax and capitalized lease payment amounted to minus 23.3 million in the second quarter compared to 15.4 million in the same period last year. The free cash flow benefited from the higher EBITDA in the quarter, but this was absorbed or invested in working capital effect, which mainly reflect the timing factors and the strong commercial momentum we are currently experiencing. Looking at the working capital more closely, inventories increased by 58 million. Last year it was 36 million in line with the normal seasonal partner as we'll build up stock within the board game category ahead of a high activity period in Q3. And compared to last year, inventories were also higher due to the stronger sales, notably on the TCGs, and timing effect between Q2 and Q3, particularly into the TCG releases I was mentioning earlier. Receivable increased by 43 million compared to 51 million last year. Despite the higher sales, the impact was smaller than prior year, demonstrating our working capital management and improved cash collection discipline. Payable increased by 14 million compared to 43 million last year. This less favorable movement primarily reflects the strong growth in the TCG category, which at current sales level leads to a different cash flow pattern than historically. In other words, this is a direct consequence of the strong sales performance and timing of releases. CapEx for the quarter totaled 4.6 million, representing 1.1% of sales. And the year-to-date free cash flow after tax and capitalized list payment amounted to 1.5 million. so the year-to-date evolution primarily reflects a temporary working capital movement driven by strong commercial activity and the phasing of product releases we expected the inventory effect to unwind over the coming months consistent with our normal seasonal pattern primarily reflecting the reduction of board game inventories toward the end of the fiscal year Moving on to balance sheet and capital structure, net debt before M&A commitment at the end of Q2 stood at 439 million, resulting in a net debt on EBITDA ratio of 1.8 times compared to 4.1 times last year and to 1.7 times in Q1. Net debt after M&A commitment at the end of the quarter amounted to 579 million, resulting in a leverage ratio of 2.4 times compared to 4.5 times last year and 2.1 times in Q1. The evolution of the ratio compared to Q1 is fairly limited before M&A commitment and is due to the seasonality of the free cash flow development. The increase of the ratio by 0.3 times after the M&A commitment is a temporary increase due to the increase of the put-and-call of EK, primarily related to the improvement in the current and expected operational performance of exploding kittens. Cash and cash equivalent at the end of the period amounted to 258 million compared to 88 million last year and 287 million in Q1. In addition, we still have access to the unutilized RCF of 150 million. And with that, I hand back to Thomas.

Thank you, Andrea. And before we open up for questions, I would like to make some concluding remarks. During the second quarter, we reported growth across both TCGs and board games and increased our adjusted EBDA by 11% year over year. The free cash flow decreased in the quarter as the higher EBDA was offset by working capital effects, and we end the quarter with a strong balance sheet. Looking forward, we have now entered our most active and dynamic period of the year. We continue to focus on executing on our M&A agenda with the acquisition of Cthulhu Death May Die IP and games after the end of the quarter. And as Andrea said, our call option to acquire the remaining minority stake in Exploding Kittens is expected to be exercised during the first half of calendar year 2026. We will continue to invest in marketing and strengthen the organization to support long-term growth. The direct impact of tariffs was partly upset by selectively applied price increases that took effect during the quarter. The tariff-related effect and the impact of our measures will continue to unfold in the coming quarters, and we obviously continue to remain attentive to an uncertain external environment. And with that, I am now opening up 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 Andrea and hi Thomas, and thanks for taking my questions. My first question is on games published by Asmodee. It grew 5% year over year. Are you able to add any more flavor on how much the long selling titles represented of that growth relative to the new releases you had here in Q2?

So what we see in the games published by Asmodee is a strong continued performance of the long sellers. that is currently boosted by very successful new releases.

Okay, perfect. And on a point there, you stated that Star Wars Unlimited was sustained year over year. Should we read that as kind of flat year over year? And did I understand it correctly that you thought that you could accelerate activity here ahead of the coming quarters, or did I misunderstand that?

So what we are saying, and that's the most important part, is we want to make Star Wars Unlimited as a long seller and installed in the long run as a TCG. And to do that, as Andrea pointed out, we are investing in organized play, in the Galactics, and in all those events that engage with the community. Today, if you look at the past sets or the most recent sets, we are stabilizing and I would say strengthening the current position of Star Wars Unlimited. So I would say that for the future, we prefer to work on stabilizing and managing expectations in order for it to be a continued success for the upcoming years. Perfect.

Very clear. Then just a question on the US situation. You've been flagging it since, I think, the Q4 report. With the US and China now having kind of postponed further tariff talks by at least one year, would you say that the impact on how retailers kind of place orders, has that situation improved or is it relatively unchanged from what you saw in Q1?

So what we see is that the retailers, they have to compose like we do between two things, one which is the tariffs and the second one which is the consumer sentiment. So on the tariff side, I think that for Asmodis products, we've done the job between adjusting our supply chain, announcing some selective price increases. Those have been understood and were, to be fair, expected by consumers and by retailers. uh looking forward the real driver of the performance in the in the us will first be on the local market driven by consumer sentiment and the volatility of this one or the uncertainty of uh of american consumers right now and the second part consolidated wise at asmodee level is also the impact of the foreign exchange yeah

Good. One other question is on just you've done two smaller M&As this year of the Zombicide IP and I can't pronounce it but death may die at least strengthening your exposure within crowdfunded games. Can you maybe just elaborate a bit more about the opportunity you see in crowdfunding and also secondly on that does the timing kind of come down to that the tariff situation during the year has cash strapped some of these crowdfunded studios and hence created a timing opportunity for you guys to acquire your crowdfunded IPs and studios.

The reasons behind the crowdfunding strategy is that some products, in the way they are structured, could probably not exist only through retail. That's both linked to their margin structure, but also because crowdfunding is actually a very strong consumer engagement way of launching the product. It drives demand, it creates excitement, and it's really a way of interacting with the consumers in a digital way that is quite different from traditional product launches. So for us, it's complementary to the other product lines that are launched in a more traditional way. It's true that with games with a lot of miniatures, board games with a lot of miniatures, this model has been seen in the past as quite successful. Talking about the opportunities, I will not comment on the performance or the struggles that some partners are are facing. What is clear is that Asmodee, and we have demonstrated over the past decades, can be home to many more studios and intellectual property. And if the timing is right, it's a good moment to join the Asmodee family.

Perfect. Then my last question is just on gross margins, because I mean, yeah, given the mix, I think the gross margin was quite strong. I mean, at least compared to the Q1. Do you have anything to say on kind of the gross margin year over year within games published by partners? Has that kind of improved or is there something else driving the gross margin here? Because I think it was down like three percentage points year over year in Q1 and now it's only down 1.4 or something. So just some more flavor there would be helpful.

We have not experienced any change in rate effect by partner, meaning that the consolidated outcome of what you call the gross margin is a consequence of the mix first between published and distributed and then of course within distributed the various the different commercial conditions that we have with those with those partners perfect those were all my questions thank you so much thank you very much the next question comes from simon johnson from abg sundal collier please go ahead

Good morning and thanks for taking my questions. First a few on the trading cards. I know that you don't really give us any kind of split between the different kind of games here, but I wonder if you can give us something regarding how much the other or newer trading cards games outside of the two big ones are growing. or contributing to growth at least currently, if you understand my question.

Yeah, so thank you, Simon, for your question. So what we see in the contribution to the growth is coming across the board. However, I would say those benefiting from stronger tailwinds are on the sides of Pokémon and One Piece. So One Piece is one of the clear winners of that period. okay so is it fair to assume then that one piece you know it's sort of at least it's moving the needle it is it is significantly contributing to our growth alongside the others uh but yes it's one of those in the distributed tcgs that uh that has become of a relevant size all right thank you and then on um

timing effects with Pokemon. You talked about pre-selling of Mega Evolution and I wonder how we should think about that into Q3 because if I remember correctly last year we had the comparable set Stellar Crown was released earlier in September and now you have this in early October I think. The full launch of Mega Evolution. So should we expect that You can have a boost from Mega Evolution in Q3 because it was delayed a bit or did you take most of the total sales volume in the pre-selling volumes already here this quarter?

um well this year is uh is a pretty dynamic uh in terms of uh uh that uh that franchise uh as you know uh yes scarlet and violet uh is uh uh the key the key set uh and this is uh Also a very special one because it has the black and white version. So it's a bit different than the reference set last year. And then on top of it, there is the Mega Evolution, which is a transitional cycle. So we had the Mega Evolution 1 and 2 release in Q3. There will be the Mega Evolution 3 in Q4. uh potentially also maybe some expansion in in q4 so it's a it's a very dynamic lineup that they are they are actually releasing uh consistent with the end of the three-year cycle that we have explained uh several times so there has been a small uh cut-off effect uh that uh has impacted the uh the the pnl We have measured it at around 10 to 15 million sales because we've been able to ship some type of client, but not all of our clients. So that's potentially some movement between the quarter, but the underlying lineup of product is what counts most for us and is still very dynamic.

So the cutoff effect, the 10 to 15 million you mentioned, are you talking about the pre-selling volumes affecting this quarter?

Yes, exactly. The one that have been made this quarter and that are not comparable to the last year.

Yeah. All right. Thanks for that. And just to follow up on the board game growth as well, you talked earlier here about new releases. The US was also slightly better this quarter. But I wonder what your view is of the broader market growth currently heading into the holiday season.

Complex questions in the sense that there are different dynamics happening depending on where you look at in the world. In the US, we are mainly working on board games. We do have unlimited on TCGs, but we're not distributing third-party TCGs. And there on the board game side, the market is challenging, has been declining in Q2 from around 8% in the sellout. In that quarter, Asmodee, thanks to the breadth of our portfolio, has been able to capture some good momentum in lower-priced products, especially from exporting kittens, which enabled us to limit the sell-out decrease to only 2%. So we've been also able to grow because we are not just in the mass market. The figures I provided are just for the mass market. And we also have the hobby market and we measure ourselves in selling to retail, especially on the new releases. So the US is a tough market where I would say consumers currently favor more lower price point products. And so we will have contribution at Asmoday that will come from a different product mix within board games than we used to have in previous years. And then in Europe, the market is growing, is growing in both categories in TCGs and also in board games. Obviously, stronger growth in TCGs year on year currently, also because up until somewhere around September. We did have up until September 24, some headwinds. And since September, we're back in the in the period of having had tailwinds last year and tailwinds this year. So hard to say where the market will be. But that's the two the two big areas.

And when you refer to that now meeting tougher comps in Europe, do you mean both segments, both categories or more specifically to TCG?

No, more specifically to distributed TCGs and especially Pokemon.

Yeah, then sort of comparable dynamics for board games in Europe. Is that more similar into next quarter or still growing or what's your view?

We do not provide forward-looking expectations.

But do you think there's a big shift in the comparable growth numbers, looking back?

The comparison to the same quarter, to the upcoming quarters last year, lies mainly on the TCG side, yes.

Yeah, all right. Thanks for that. Just lastly from me on the cost side, you have talked about increasing costs for a while since before and now after the spin-off. I'm just wondering where you think that you are now in terms of the leveling up of costs. If you think you are more of a good new normal here or do you think that there's still more increases to be made?

um when you look at operating cost and the cost to be what we refer to cost to be for listed company these are ramping ramping up during the first half of the year this is a new cost which were not present in the first half of the last fiscal year so it will be also progressively becoming more comparable towards the end of the fiscal year. The organization is indeed structuring itself on notably on some back office department so we are monitoring those costs and I think that we are in pretty good shape to then reach a more stabilized level, which I cannot commit on any date, but this is something that we are trying to get to.

All right. Thank you so much. That's all for me.

Thank you, Simon.

The next question comes from Eric Larson from Seb. Please go ahead.

Good morning. Thanks for taking my questions. I have a couple. First off, on the comparisons, it's been a discussion already, but I'll try as well here. So looking into Q3, you did really well last year with internal games. It grew 29% back then. And you said here this morning that you aim to stabilize Star Wars Unlimited. So I guess that's not really going to grow near term here. So how do you think we should view this comparison for internal games? Can you grow on it? Is it more fair to expect a stable development or should it decline? Any flavor there would be good.

So a few elements of context on Star Wars Unlimited. Last year in Q3, we did have the release of Set 3, but we also had some reprints of Set 1 and Set 2 to fulfill the consumer demand. The current sets are interestingly stabilizing since the beginning of the year. So you might have some stable to slightly lower performance on unlimited again in the upcoming quarter versus last year. As we said, it's absolutely not an issue for us. Then on the board game side, we have fewer launches than last year. In Q3, we had a pretty strong lineup for Q2. Those will also continue to sell in Q3. But since the main shows and the main announcements are the main releases for the end of your season, including Break Like This, Battle of Hoth, Fellowship, and Take Time more recently will be hitting the markets.

All right, thank you for that. And then my final question is on Riftbound. You commented on the report, I think, but any early comments here in terms of consumer reception? Have you been able to handle the demand on your end and

is it fair to see it as a notable contributor to growth going forward so what we've been able is to fulfill the demand based on the products that were allocated to us or given to us by the by the publisher so we've done uh we've done our job i would say successfully um and then the the the real topic for rip down will will be everything around it uh leading to uh the product itself in the long run, but that's more in the hands of the publisher rather than us. So, as I said, we will be capturing the opportunity.

Okay, sounds good. That's all from me. Thank you.

Thanks, Eric.

The next question comes from Nicholas Langlet from BNP Paribas. Please go ahead.

Hello, good morning. I've got three questions. The first one is the new deal with Lord of the Rings. Can you explain us exactly what are the key changes compared to what you were doing before and how long do you think it will take to see the full benefit of this collaboration? Secondly, on the working capital move, considering the underlying momentum and the business mix we expect at the end of the year, what sort of working capital do you expect for the full year and any indication would be appreciated? And finally, there was this 16 million euro taxes in Q2. Andrea, if you can give us a bit more color on that and what we should expect in terms of adjusted tax rate for the quarter. That would be great. Thank you.

Okay, so on the first question, which is related to the deal with Middle Earth. So it's a category management deal. Some pre-existing relationships with largest partners of Middle Earth Enterprise remain managed by Middle Earth Enterprise. The objective is to work together in order to have, I would say globally, a stronger lineup of products or a stronger range of games that celebrate and engage consumers around Lord of the Rings. As you've noticed in the past year, at Asmodee level, we've been quite active in releasing new products. If you remember well, We had the Seven Wonders duel from Middle-earth. We had the first chapter of the trick-taking game with the second chapter coming in Q4. We had Fate of the Fellowship. We were quite active at Asmodee level. Now, the idea behind this is to continue at Asmodee, continue developing games in that universe, but also find partners to create exciting games that will not be coming from our studios, but that will benefit to the IP and to the license. And Middle Earth Enterprise has... is working with Asmodee because we have a clear view across the board on what games could be the best lineup possible for that IP. So once we've said this, obviously, we have some products in development. And then the new deals will take roughly two to three years to come to life once we open up the new partnerships.

On the working capital movement, so what we can say that the end of first half of the year is really a period where we are right in the middle of the building up of the stock for board games, which we expect to unfold during the second half of the year. And then the working capital evolution on the TCGs is more set driven. So this is a shorter cash cycle. As you know, we do not provide the guidance on free cash flow nor on networking capital, but what we can say that as of now is that the P&L is stronger and this is a good underlying factor to then create cash in the coming months. And we are now into Q3 and Q3 is very important for us because there are key consumer moments like Black Friday weeks and Christmas period that we are monitoring carefully. because if they turn into a good P&L position, then the free cash flow should follow, subject to a close and tight inventory management, which we are on top of it, of course, since it's one of our key priorities. So far the underlying fundamentals are good and we're looking forward on unwinding those networking capital positions progressively in the coming months. Could you please repeat the third question because the line was a bit blurred on our side.

Sure, so the last question was on the taxes, tax expenses in Q2, the 16 million euro, if you can give us any color on what happened there and what we should expect in terms of adjusted tax rate for the full year. Don't need a very precise figure but at least a range would be useful.

Yes, so the effective tax rate as of September 2025 is significantly driven by the non-recognized deferred tax assets on the parent company and some acquisition costs, so the exploding debt reevaluation, which are not resulting in any tax deduction. So that's why the apparent tax rate is extremely high. If we exclude this effect, the group effective tax rate goes down to more normative level, double digit normative level, still higher than last year. And this is based on the geographical distribution of the profit this fiscal year.

OK, perfect. And maybe if I can add one on Star Wars Unlimited. Looking at the next 12 months, do you expect to enlarge the distribution at some point? And what's your view on the distribution of ECGs like Star Wars Unlimited right now?

So obviously, the product development is already done for the upcoming year. Manufacturing is ongoing for most of the sets. We have just launched mass market products for Star Wars Unlimited with a specific set called Battle of Hoth. I would say it's early days. Going from hobby to mass is always one of the tricky points for gameplay-driven trading card games, which Star Wars Unlimited is. So I would say maybe we can talk about it a bit later. We are still on the learning curve there. The idea, again, for us is that On a trading card, it's the engagement of existing players and player recruitment. And so we are exploring, thanks to that kind of product, if and how additional recruitment can be done in the mass market or for broader audiences.

Okay, perfect. Thank you, Thomas.

Thank you, Nicolas.

The next question comes from Adrian Elmlin from Nordia. Please go ahead.

Hi, guys. Good morning. A couple of questions from me. I'll take them one by one. So sorry for bringing this up again, but could you give us some more details here regarding the increase in inventory levels, kind of the strategy to manage it going forward? You mentioned in the CEO where there's what has happened is basically that you've seen a different cash flow pattern than historically right and I'm wondering if this is more systematic in any sense or if you expect this to be completely reversed in the second half of the year as you kind of alluded to here in the call

So the increase in inventory level is pretty consistent with what we have experienced in the past. It is amplified by the volumes that we are benefiting from this year. And when we look at the inventory component, we have the TCGs, which are more set driven. So the inventories goes in and out faster. And on the board games, it's more building up towards the end of the year. It has also increased so far, so up to end of H1, because as you remember, the first half of the year was a bit softer in terms of board games compared to the TCGs. So it's not a big problem because so far we have very successful new releases. uh so on this one the rotation is is pretty good and on the long sellers these are games that basically face you know no obsolescence or slow moving risks because of their nature as as long seller when it comes to uh when it comes to uh the last part of your question so we are This is mainly something that you can see on the payable side. The strong growth in TCGs is impacting a little bit the payable up to end of September. But we have made a strategic decision to secure product allocation to support this growth, which has led to different purchasing and payment patterns. and consequently the free cash flow uh for and as of end of september uh is uh is a bit tricky to compare compared to uh historical levels so we are uh we are really uh leveraging on the strength of our balance sheet working with our partners uh to secure on our side a healthy free cash flow generation and also to invest on those relationship so that asmodee can be considered even more a partner of choice for those key franchises.

Right, that makes sense. Just a quick follow-up on that. Is there something that has changed with you perhaps offering more favorable payment terms to your customers or is there anything in that regard that has changed?

um we do not comment on specific condition by by vendors but short term we can as i said always strategically moves inventories in and out and be more strategic or opportunistic with some of those vendors so yes there could be those those changes affecting quarter over quarter networking capital okay thanks for that clarification i have two short questions if that's fine

You mentioned also here that the overall board game market saw a downturn in the quarter, right? Could you perhaps elaborate on what drove this decline in the market? Is there anything that you can say on why it drove the market and perhaps where you're gaining market shares?

So what we did say is that there was some decline in the sellout on the US market. The European market is growing year over year. And in the US, it's mainly driven by the fact that consumers are delaying their purchases ahead of Christmas. I think what we see is that it's later and later in the year. Some retailers also have postponed putting in place their Christmas aisles. that did impact Q2. And then lastly, consumers currently, again, it's in a period where it's not yet the gifting period or the Christmas period, have favored in Q2 more lower price point products given, I would say, the economical uncertainty on the American market, employment market and everything else.

Okay, final question here. Is there anything that you can say regarding the pre-order volume here of Mega Evolution compared to previously, like historically? Is there anything that has changed in the pattern historically?

No, it's just that it fell in the week that in weeks that are across Q2 and Q3. But the pattern of purchasing from stores is the same. It doesn't change.

Okay, perfect. That was all from me, guys. Have a good day.

Thank you, Adrian.

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

Hi, and good morning, guys. My first question is on your regional breakdown. You did well in most of the markets, but can you elaborate a little bit on the softness in Germany, please?

Yes, so in Germany we have several different businesses. We have a board games business with Asmodee Germany. We have a trading card, mainly trading card and collectible business with Blackfire. And then we have our game genic accessories. Strong performance on board games and coming from game genic accessories. And then we have at Blackfire level a softer performance because they are subject to product allocation from the partners and especially on Magic where they saw lower product allocation than in the past. Nothing to worry about, just answering the market.

And do you see weaker consumer sentiment in any other market than the US?

We see, I wouldn't say weaker consumer sentiment. I think that there is currently a bit more arbitration, both from consumers and retailers, towards trading card games. They are a very hot category right now. That makes the life of selling board games slightly tougher. But again, Asmodee being on all categories, if we do not capture opportunity on one side, we capture it on the other side.

And final follow-up on the working capital management in this critical period before the high season. Are you satisfied with the inventory build-up now? Or, I mean, what's the risk that you could have done even more here ahead of this very active period? It must be difficult to assess the risks here.

Our inventory levels enable us to go into the end of year period with sufficient inventory to fulfill the demand. As Andrea said, I think we expected a bit more performance from games rather than from TCGs, hence the way we built our inventory. But those inventories are of quality products and mainly of long-selling products. uh because the the novelties are selling extremely well uh so for those there is no there is no topic and the inventories should unwind uh in the upcoming quarters okay so you're satisfied with the level now okay you're satisfied with the levels now then i guess but uh and and uh when you look forward in in the in the high season period what what

what you look forward to the most in your games pipeline in terms of new games and have you seen any shift of consumer demand presence between your different products would be interesting to hear.

So what we've seen in Q2 and is always a good indication of what will work at the end of the later in the year is the very strong performance of the IP driven novelties so Star Wars Battle of Hearts, Fate of the Fellowship. Then we have original games like Lego Brick Like This that had a very strong sell-in. And then lastly, on the long sellers, we had two refreshers on Catan and on Ticket to Ride. There are no major releases in Q3, apart from set six of Star Wars Unlimited. um and so on the game side i would say it would be in continuity of the of the releases of q2 that will sell throughout the end of your period okay perfect that was all for me thanks martin thank you the next question comes from rasmus engberg from kepler shuvru please go ahead

Hi Thomas, I apologize for the pronunciation of Chevreux, but besides that, the M&A market, how is that looking? I can't help but notice that both your two small acquisitions have the same seller. How's the broader market looking?

Well, I would say there is a context that enabled us to do the deals with those first two IPs, and they are IP deals. So they are, by essence, a bit faster to execute than when we're looking at buying full studios. On the rest, I would say that there are product categories that are quite successful. And when there are successful categories, you have some studio owners that are thinking about what are their ways of growing faster? What's the next step in their evolution? So we have active discussions. But as we said in the past, we're not commenting individually. But there is a healthy pipeline of opportunities we're actively working on.

Is there a situation here where some of your partners are, you know, coming under pressure? I'm thinking with the weak U.S. market or sort of questionable U.S. market at least.

I mean as a general comment on the context, yes it's true that some smaller publishers or publishers that have more limited financial means than us have seen some struggle, maybe less from the market and more from the tariff impact that they faced given their exposure to the US market. So will there be opportunities linked to that? Probably. But in the end, as we always said, the way we conduct M&A is project timing and evaluation. And so there has to be a project, not just being opportunistic I mean, snatching distressed assets, that's not the way we operate. We acquire because we see potential.

Yeah, fair enough. Are there any effect of media deals either that we should be aware of that might impact earnings in the coming 12 months or deals that you had last year that might?

So not in a material way in terms of royalties perceived. However, and the media deals we do, we do them less for the revenue that they provide, although it's still always interesting, but more for the exposure that it provides to the brand. Just an element of comparison, what we communicated on a year ago when the first season of the Werewolves TV show on Canal Plus aired, we saw a very significant increase in sell-out for the brand in the mass market. So that's what we're striving for. It's more the impact on sales of physical products rather than at the level of the deals that we have today, the royalties.

And then just one final financial question. There seems to be something called other in financials, which is sort of 7 million euros, which is a fairly large figure. What is that?

In the context of the re-evaluation of put and call of expert in kittens, we have also made some other technical adjustments, notably on discount rate and things like this. Okay.

All right. So it's a one-off sort of.

Yes.

Thank you.

Thank you, Rasmussen.

Thanks, Rasmussen. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

There is one question in the queue, but this was already answered. It relates to networking capital forecasts. Otherwise, no other new questions.

All right, so before we close, I would like to sincerely thank our teams because they are working very heavily right now in delivering the over-performance, the players, and obviously our partners across retail publishing and licensing. The passion and commitment that is demonstrated day after day is shaping what Asmodee is today. uh as we look ahead with strong activity across all lines of our business we are in a solid position to continue capturing profitable growth and creating long-term shareholder value now thank you very much for joining us today and we look forward to seeing you in various meetings in the upcoming days