Enad Global 7 AB (publ)

Okay, hello everyone and a warm welcome to this Q2 presentation with EG7. With us today we have CEO and co-founder Robin Flodin and we're very eager to hear about today's result and also a bit on the transaction today. So with those words I will hand it over to you.

Thank you very much. So for everyone who don't know EG7 at this time, EG7 is a video games company listed here in Swedish stock market, make marketing, developing, publishing and distributing video games for console, for PC and now also for MOBA. This group also has one big feature to it, and that is that we have a buy and build strategy, which we think is a very important part of the company. And our specific approach to this is that we also try to really create strong synergies between the different companies and add a platform to those companies. We have a service branch that are not that common in the game industry combined with our game IP and development. This leads us to our latest acquisition that we did today, Big Blue Bubble. And with that, our 12 months up until Q2 on a pro forma basis would have been 681 million Swedish crowns in revenue and 95 million Swedish crowns in EBTA. So that's something we're super happy about being able to announce today. Jumping into the Q2, so we've had over 1,000% of net revenue growth from last year's Q2. Super exciting. We've also spent this time during Q2 to consolidate, sold out on petrol and all of the new businesses that have joined the company. and been ramping up our M&A strategy. We now have even more projects in the pipeline. We've signed new projects and we've also released some big projects together with Soldat, for example, No Straight Roads, which has already been profitable for the company. So that's something we're also quite happy about. And then petrol, who we were afraid would not perform as well as we expected due to some projects moving out with the COVID effect, has performed really well. And we're super proud of the team for working so hard on delivering that against expectations. And then we have... Also a stronger pipeline of M&A than we've ever had in the past. The pro forma numbers for Q2 is 189 million in revenue and 26.6 million in EBTA. And we also now have 270 employees, so quite a big jump. More developers, really exciting for the future of what we can do as a developer. So let's jump into the transaction and the company that we announced this morning. Big Blue Bubble. So Big Blue Bubble is a mainstay in the Canadian games industry. They have offices in London, in Canada, not in our other London office, and then also in San Francisco. This company has been around since 2004 and been starting out very much like Toadman, a consultancy studio that has eventually been able to grow their own IP but worked on over 100 plus titles. Some really major titles and work with Disney, Activision, Dreamworks and many other companies that you might have heard of before. This company is really good at free-to-play, but have their heart and soul also in console development. And this is one of the things that we really liked about this company. They have own IP that is generating profits, 2 million active users every month, and good revenue and reoccurring revenue and profits that are growing. And today, the company on a trailing 12 months would be a 12 million CAD and on the revenue basis and 3.5 million CAD on an EBITDA level. So for us, this was really a company that could have several really good fits for us. One was that we got IP that are generating profit, something we have promised to look for as an acquisition strategy since we acquired or raised capital, 119 million. This also improves and secures our other titles through experience. So free-to-play experience is something we really wanted to get into the company for titles like Evo, but also makes big blue bubbles launch where they don't really have a publishing unit or marketing unit in the way we do, and they have foregone this coming out as a premium title. we hope that these things really push together creates a super strong synergy situation especially as we have this very experienced team that we can help make sure that our games are better but also get this window now into mobile where we could probably move other ips into mobile and that's something people have asked us for and we always said that the only way we would do that is if we have something like this, where we have a company that gives us that experience, not trying to build that up from scratch, but have something that already works. So the transaction itself, 16 million Canadian dollars upfront, which represents 4.6 multiple on EBITDA, which we think is a very good price. And also, of course, an earn out that if they get it, we are very happy. And I think all shared holders should be, even though it is quite big. It also means they have delivered amazing results. And as you know, this is also active, reoccurring revenue, so that will be very, very good for the company. And we think that it's also very important to see that adding these 2 million active users also gives us an ability to cross-market and do many other things that will help the rest of the business. And the experience of those 100 titles, we think, also will secure even more with the Looking at things like Antimatter, here we have another studio that has many times delivered very high, critically acclaimed games to make sure that our titles internally are the best they can be. So let's jump back into EG7. So one big thing that happened in the second quarter was that we divided the company into two divisions. Traditionally we would have three. And why did we do this? Well, one was structurally. We wanted internally to be very clear about the different parts of the company, who is working for what. but also to make it more clear for investors, looking at the company, what is part of what. So you can see something like games, for example, where maybe we have heavy investment into games, then that lands in the games revenue segment, and then also profits from those games will land in the game segment. while services represents our services in the companies for example our consultancy or marketing which is quite a different form of business and that's why we thought it was very important for people to see this is how we've seen it for a while internally and now we've chosen to start talking about in these terms both internally and for investors and this has been part of our consolidation efforts And in this case, Big Blue Bubble ends up in the game segment, while some companies like Toadman or Soldout exist within both segments, depending on what part of the company we're talking about. Something else that I think is super important to understand with something like Big Blue Bubble, why would they be super interested in joining parts with us? It's not only because they have a charming personality, I'm sure. But I think that it's very important to look at our platform that we've been talking about. They saw the value in this, and this is our long-term goal, is that we want to be the biggest, smallest company in the world. This is about taking efficient companies and letting them take the scale of a bigger business, but remaining agile. That has always been the goal of the company, and it's something that many of these businesses love. We keep the culture, we let them run the business the way they are very successful at doing, but we add this scale that something like an Activision or a big company could give to them, and this is something we're scaling up to be even better at. And therefore, it's not only to them a view that, of course, they're transacting, they're getting shares, they're being part of the company, but they also have this vision feeling that they together with us will be very successful in the future. That's also very important to understand when we do this acquisition. We talk to them. If this is not what you're interested in, this is not the company to work with. But they were super excited about it. And then this is also in future transactions seen more and more as something that is unique if we compare us to some other parties that also do buy and build. So if you jump into M&A and so our company is really formed on the holding company level. The EG7 is really about this. So we support the businesses. We work really hard with that, integrating between them, finding ways that their knowledge can scale each other. But then also we are running faster than ever on new M&A targets. And we've added M&A team in the Q2. It's become more efficient and now we have more opportunities than we've ever seen before. So it's very exciting time for us. And we feel that as things are becoming more and more clear, I think investors will see that our platform is very efficient, both in excitement over adding these new companies, IP that we can generate profit from, but also increasing those profits with the help of our service platform. If we jump then to the next slide, we're going to see what is the result of this. And this is, of course, a massive revenue increase. Just in this quarter, like I said, 1,000% from last year's second quarter. The first quarter, 1,000% in revenue increase. We're hoping to keep this trend of being able to really push. And we've also added 30% EBITDA through this acquisition, which we're also very happy about, which I think should be mentioned. Then jumping into global view, I think it's very important in a business that is global where people play globally to understand a global business in a global way. And that's how we also feel about it. So we don't care so much where a company is, but that it fits with us. But we do like expanding into new territories because it teaches us a lot about the gaming space and opens up new doors into those spaces where there might be new interesting companies that gets the eye up for us as a business as well. and also understanding that local market in a better way. And this time it's Canada, of course, opening a new office in the US as well, in San Francisco, and then also getting two really great names, Damir and Claudette, who's the founders of the company, on board to help us become even more successful in the future. And this also, we can see, have now an even bigger track record than ever before, adding 100 titles and a track record plus our 50 that we had before, 150 titles. So this should be telling a story, I'm hoping, to investors that we are getting more and more experience and we're using as much of that experience to be more successful in the future. But it's not only about what happened in the past, right? So we also see that it's super exciting that we are getting more and more titles because this is an industry where even a talented team can have hardships, but portfolio play means that it's getting greater and greater option value for a big success. Before this call, we were talking about something like Fall Guys, and that's a great example. That can happen, and then all of a sudden, let's say one of these games that we have in this pipeline of 25 projects can multiply our revenues by more than we have today. And then we jump into 2020 so far, six months of the year. We've done some really good releases, which has resulted in this revenue. But also very recently, we released No Sweat Roads and it's been received quite well and both on a sales basis. And then also, of course, we've been profitable already, which we are very happy about. But like I said before, not only the past, but 2020 as it's ending and then 2021 and 2022. And, you know, in our view, 2021 and 2022, when, you know, Todman and Antimatter are getting out with their game, most of their games, we find even more exciting. That's going to be very big for us. And we are getting more and more projects signed out for sold out as well. And now also Big Blue Bubble, who's adding something like For Gone, which is a console title at the end of the year. If we look at DG7 as an investment, I think one thing that's really great right now is that we feel we have a great market position. We are not too big to be slow in the way we move ourselves, but big enough to really start getting that benefit of scale and getting more and more interest. We see that we have better than ever potential for M&A. There are a lot of IPs that we're looking at. And also, of course, we see a lot of opportunity for further digital investment through sold-out like-nose rich roads, both acquiring titles or investing internally in titles. Another part of investment into this company is that we, at least me, I find this as the biggest shareholder to date. I find it very important that this isn't a story about a management team that takes huge bonuses and walks away. This is a story about a team that really care about creating shareholder value. And that's everywhere from me to all of the management team and all of these companies that we have acquired. They have a strong vested interest in us being successful into the future and and 65% is held by management, these people and the board. So that's a very big part of the company today. So investing in this company, taking part of the gaming industry, growing trend, we have a lot to go. There's a lot of growth potential for us as a business. And I think that's super interesting. We have an M&A team that's shown over and over again that we're able to do deals like this and attract more and more talent into the company. And I think that this is going to prove over time to be some of the strongest reasons to invest in this company.

We have a bunch of questions here to ask you, both from us at Carnegie, but also from our previous conference call. So I guess we'll just get right into it. Yeah, jump in. You stop me if you ever get tired. So starting with, I think, on the M&A side, I guess that's the most interesting news flash of today, the acquisition of Big Blue Bubble. If we start with... the considerable earn out tied to this deal. And it's all, of course, conditional based if they succeed. Can you talk a bit on what kind of milestones do they have here? What kind of timeline are we looking at?