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.