Enad Global 7 AB (publ)

Welcome to this presentation of EG7's quarterly report and our latest acquisition of Piranha Games. My name is Robin Floden. I am the CEO and co-founder of EG7. EG7 is aiming to become the world's greatest ecosystem for games companies in the world. We are all about acquiring companies, improving companies, actively finding synergies and making these game companies even greater than they were before we acquired them. The way we do this is through our service platform. With Petrol, the world's greatest marketing agency, who already to date work with some of the biggest companies in this industry, from Activision, Embracer, Ubisoft, Sony, Nintendo, to name a few. With Soldout, a publisher that is already to date delivering titles around the globe for Team17, Rebellion, and Frontier, but also, of course, on all digital platforms. With a world-class developer network, with proprietary technology, with a great amount of data, with already to date having 2 million active monthly users, we have a great platform for developers to come into to join in the group with their games, their already revenue-generating IPs, so that we can make them even greater. By adding all of these companies, we today control the entire value chain from concept to the hand of the consumer. We think that this is not only a fact that it is key to become a great gaming group overall and has many strong benefits. It is also one of our greatest pitch to those companies that we acquire to bring into the group because they can see that if they plug into our ecosystem, they are going to be even more successful than they were before. With all of these companies added into the group, we now have a great track record of over 160 game releases, 25 plus games in our pipeline and over 40 marketing campaigns. With a year so far behind us of great success, but even more to come. Already in 2020, we've had some great releases through our partners, games like Zombie Army 4 moving out. But not only that, of course, great marketing and also no straight roads delivered on the digital side and profitable even before launch. I'm super excited because we have a great amount of first-party releases coming out. Everything from IGI, the IP that we acquired, and then put into the studio that we acquire, Antimatter Games, really merging together some of the values and synergies that we see. With Block & Load, a very exciting sequel to the first great game of 4 million plus downloads. We have some super exciting things coming out and I cannot wait to get both investors to have a chance to play it and gamers. From a company of 11 million in yearly revenue to today over 800 million. We've added some great companies into our group, but also seen some amazing organic growth. We're really excited about continuing this journey of adding companies into the group and continuing to build the growth of these already growing companies. At the heart of EG7 is our M&A strategy. We are a buy and build story. We acquire companies, adding them into the group and finding synergies, helping the entrepreneurs scale and improve their business from where they sit today as already successful companies. We think that we've already proven that we have a great track record in some great prices and adding some amazing companies into the group. And this is what we're going to keep doing going into the future as we keep adding new companies into the group, finding synergies and improving the greater and broader business. We see that this really adds a lot of shareholder value, diversifies our revenue and produces a stable and constantly growing group with new IP, with more games and with more entrepreneurs with great knowledge. And we are super happy and lucky that we've had so many great entrepreneurs wanting to join our group. those who truly take in about half of all of the upfront in shares. And this because they truly believe in our story and our vision about why we have a unique way of approaching this market. Now, the latest acquisition, Piranha Games. We're going to listen to a few words from the CEO, Russ Bullock.

Hi, I'm Russ Bullock, CEO of Piranha Games. I started running Ames in January of 2000, which makes it almost 21 years ago, right here in Vancouver, British Columbia. Our brand came in about 2011. I was really fortunate to establish a license for a MechWarrior, which was really a childhood dream of mine to work on that brand. We started to work with that in 2011, and then that led to us developing MechWarrior Online. So Chronic Games really was on the forefront, especially in North America, of developers working on big premium-sized and premium-featured free-to-play titles. So that gives our studio over nine years of games-to-service, live services, free-to-play game development experiences, but also what makes a game great, what makes a game niche, what are the strengths and weaknesses, what makes a hit game. So we're excited to be working on a new original IP. No announcements yet on release dates, but we're going to be balancing, finding that great balance between, you know, working and servicing, you know, NetWarrior and developing this new IP. And this is really where it comes in and why we're so excited to be partnering with someone like AG7. After being independent for 21 years, more clear that it was really going to be important for us to partner with somebody that could provide more support. Nowadays, it takes more and more resources than ever to develop a great product and get it to market and have it stand out. So, in particular, with the marketing and publishing support that we can receive, I really feel like that'll give us a good chance of making the next big hit live services product.

Thank you for that great presentation, Russ. Now let's get into the details. We are doing this transaction at an upfront multiple of less than four times EBTA. A big part of the rationale for this acquisition is, I think, to anyone following this industry, quite obvious. Great company. They have games today that are running and generating revenue. They're a profitable business with a team that has 20 years of experience. to us adding in both the games that are running today and adding to our portfolio and being able to work with this team to further improve both the revenue today and also the new launches as this is another company known for the pc brand that are now transitioning into console where we can add a lot of value through our service platform sold out in the publishing side and petrol and the marketing side and we believe that this is really going to create a lot of shareholder value MechWarrior is a franchise that has stood the test of time. It's been popular with fans for decades. And now we have two games, one that is already live and one that is getting its full release shortly. first is the mech warrior online a free to play game that gives a great team that is already operating a profitable game that we can take the experiences from when we look at things like evil versus evil then we have mech warrior 5 a single player co-op game that you can play as a mech warrior that many of the fans have been waiting on for a very long time it's had its early release and epic game store but now with the full updates and everything ready to launch on pc and console globally. We think it's important to highlight the fact that we keep adding great IP into the group. You can see this from everything from new games like Evil and 83 or solid IP that is today generating revenue like MechWarrior Online and My Singing Monsters or potential in the portfolio like MechWarrior 5, IGI and others. With a team of 20 years of experience and 70 million plus in revenue, I think the 10,000 daily active user in Dask Game and the many synergies truly show why this is a great acquisition. Here at Digi7, we always think that 1 plus 1 should equal 3. I think that Piranha Games truly show this philosophy in action. It's a company that has all the trademarks that we are looking for to bring into the group and add value. with the core philosophies of seeing that they have a community that's super responsive to the products and IP that they have, but also with many ways that we can increase the profitability and see synergies between the different elements of our group. Me as a CEO and our team is super excited to welcome Piranha Games into EG7. At AG7, we're dividing our business into two divisions. The service division, who's there really to create diversified and stable revenue that we can plug into our games and IP, but also to have that support platform that we've been talking about. And as you can see, we're constantly growing our games and IP part, and this is really our goal through our latest acquisition focus. This is something even more exciting and this really makes the service platform even more useful as more games and IP is added onto our games and IP division side and the revenue creeps growing and the margins will get higher. Games are sold all around the world, and so we are constantly adding offices from games companies that are successful globally all around the world. We have our headquarters in Stockholm, but we really see that we are a global company. We think that it is super important to learn from these territories and regions what people like in these specific places of the world, and we think that this makes us stronger as a group. But it also reaches more companies that would want to come and be part of the group as we enter more locations. During the quarter we've had a healthy net revenue growth but more importantly we raised 429 million SEK to give us a lot of dry powder to do exciting acquisitions like Big Blue Bubble and Piranha Games. We really worked on our efficiency internally. For example, in our M&A team, we now can both integrate and do M&A deals at the same time with great efficiency. We also have opened even more talks on the M&A side than ever before. And we see that something like Piranha Games is just the beginning of some exciting conversation that we're having. So what can you expect next from EG7? We're going to do more M&A of great companies and entrepreneurs coming into the group. We're going to release our portfolio of games, really showing how these services and platform is working to improve the quality of these releases and the profitability of these releases, but also add more games into our portfolio and completing our ecosystem step by step every day, making it more and better. We really believe that aligning incentives is a key driver of success. Management and board owns 53% of the share, so we truly win together with all of those who invest. We've also seen some great institutions believing and supporting our story, and we are truly grateful. I really hope that this presentation has given you some great reasons to invest in EG7. At least I'm super excited about bringing all of the news to the market, bringing these games to market, adding new entrepreneurs and seeing how this company can be even larger, even better and even stronger going forward. To everyone out there, thank you very much.

Good morning ladies and gentlemen and very welcome to this live Q&A session with EG7. I am Fredrik Olsson, analyst from Handelsbanken and I'm here to moderate today's session I'd like to remind everyone listening in that if you have a question, you can email it to ir.enadglobal7.com and I'll ask it for you. I'm standing here with no other than the CEO and co-founder of Enad Global 7, Robin Flodin. After just reporting the third quarter, how are you doing?

I'm doing great. Good morning to you and good morning to everyone who is listening in today.

Today's report is surely an interesting one, both operationally as well as the acquisition of Piranha Games. So there is much to discuss, surely. So let's kick off with a couple of general questions. The ongoing pandemic has surely impacted the industry as a whole on many levels. But you know, I get the sense that per company, it looks rather differently. Could you give some indication on where you as a company is at within the work from home model? Has it impacted your creativity, your productivity and what's your view of this going forward?

Yeah, so I think in many ways, you know, we can see that this has impacted the entire world. And I want to start by stressing we're very happy about the vaccines. You know, our families and developers also need to, you know, live in society that is doing well for it to work. And I actually feel very positive, even though, you know, people will maybe be less at home during this pandemic. I think what we're going to see is that we have moved forward in time in terms of people coming into games. So a lot more people have tried games now, and we can see that in the data that there is a lot of new users. And those, I think, will stick with gaming because they've tried it for the first time and see how amazing it is. But on a general scale, I'm very bullish on the future of gaming. Courts are growing as people who play games are getting older and so on. For us personally as a company, we have had both a little bit down, a little bit up, and it's been quite neutral. And that's because physicality is slightly down, marketing has been pushed because many big projects have been pushed, and then digital has been up. So for us, it's sort of out in the wash.

Yeah, and you touched upon the consumer behavior here during COVID-19 within gaming. Can I ask you, in terms of the data gathered during the quarter, have you seen any differences sequentially in terms of engagement from the clients?

Yeah, so for sure, I think we definitely see that gamers are playing more. But like I said, on the other side, people are buying less in stores a little bit, right? Still buying in stores, which is amazing. And then, of course, we're also seeing that because of projects pushed, there wasn't that many launches this year, as usually as many developers are just managing all of the incoming into the live games. But clearly, there's been a lot more playing. That's true.

All right, so Q3 is over. If you were to only pick one thing to highlight, what would it be?

Only one thing to highlight, then I would say the acquisition of Big Blue Bubble. If I would forget two, it would be raising 429 million SEC and really building our war chest for acquisitions like Prana.

Fantastic. And looking year-to-date, which has been your most important game release as a group?

Year to date, I would say that Northridge Roads has been the one in terms of quarter three. In years, it would be in Zombie Army.

And going into next year now, I mean, it's time for your pipeline to blow, so to say. Is there any title in particular that you would like to highlight here, saying which titles are you most excited about?

Yeah, so I think it's very important to us to understand that we have a portfolio. And in this portfolio, we really see that the different games have different purposes. You know, some like 83 or Block and Load, which are basically spiritual successors to previous games in the franchise or direct successors are more safe bets in our opinion. And then we have Evil vs. Evil, which has a very high potential. So I'm very excited about all our games, I have to say, but for different reasons.

And as mentioned, these are busy years in terms of game releases. How do you feel about the development as it is right now? And what do you consider to be the key risks in the coming two years?

I think if we look at our development, we've been very lucky in the way that we, from the beginning, we've always had an approach of having people be able to work from home. So we had a very strong system set up. So on the development, we haven't been very much affected. You know, everything is progressing really well and we're very happy about, you know, how things are looking on the development side. Of course, I think the key risks are always the game's launches, right? It's always hard. The game launching is hard, and that's always the biggest risk, I think, for us. The good side, though, is when we add more companies like BigBlueBubble, we're adding revenue that are constant, you know, back catalog that are growing with users and consumers that are more like a SaaS model and so on with the MechWarrior Online that is from Piranha Games. So the more we add that into the portfolio, the lower the risks are.

And, you know, touching upon the risks in that sense, let's talk about exclusivity launches as it is a way to minimize the risk of release. Yes, yet it can kind of strangle the full potential of a game in the sense. So looking at the more major releases such as IGI and 83, maybe not Evil vs. Evil as it is a free-to-play game, but is this something we should expect from you going forward?

So we always try to balance the different options that we have and try to make us as reasonable with the current situation. And what I mean, it might seem a little bit, you know, that I'm not giving an answer. And that's because we don't know yet. You know, we're looking at the products, we're looking at the opportunities, and then we're seeing how the rest of cash flows and profits are looking. And, you know, and that really determines if we're de-risking projects or are we going to go, you know, and look at only the upside. And I think that any reasonable person would do that too. First make sure that the risk is not too big, but then also make sure you're not losing upside.

And the mix between PC console and mobile going forward, how do you see that evolve into the future with your pipeline releasing now?

So I think from our perspective, we are looking to have increased amount of titles in both PC, console and mobile. What I think is very exciting is that now there's a new console generation that's going to push more consumers into that. Of course, people have been proclaiming that the PC has been dead for 15 years. Still not dead, still growing. So I think generally all areas are growing and what we're focused on is companies who have great consumer demand in different areas, and then what platform isn't so important to me.

And if we dig deeper into M&A, I'm going to come back to Piranha Games, but your journey so far has surely been impressive, and there's no assumption of you slowing down just yet. So could we touch upon what the M&A pipeline looks like, any specific segment to enter that can align the group better, or support the group given the sort of ongoing changes we're seeing in the overall market?

Yes, so of course, I think what we're looking at is always what are the things that fit into the group. And I always say, you know, in our view, when we think about what kind of acquisition it is, I mean, right now, games and IP, you know, profitable companies is something we're specifically looking at, but also games that fit well into in some way adding or enhancing the rest of the parts of the group. It's everything from, like I said, can we add more constantly generating games so that we can lower the risk and have the cash flow even better for investment into releases, of new releases, because you have to be between both having a back catalogue of games that are generating profits and then, of course, also have new releases that can drive further upside and even greater potential while you're still growing the games. If you look at something like My Single Monster, you still have a 30% growth year over year. So we're still gaining on those titles as well. And then we can add that incredible upside of at least if something like Evil would be super successful, right? Then it's even better. So we're looking at what companies, in this case, touching a little bit on Piranha, but with a free-to-play experience. Now we're adding both free-to-play experience from the mobile, but now also free-to-play experience on the PC. All of that combining into the group is just adding more experience within this very important segment that are growing in the gaming space. And then also we're getting releases, you know, with the full release of MechWarrior 5 coming out, you know, next year on console and PC.

Yeah, and well, coming back to Piranha Games then, you touched upon the rationale, but are there any synergies to be found within, you know, the already announced pipeline from you guys? Can they support with Evil vs. Evil in some sense?

Yes, and that's a great question. And that's, of course, what we are aiming to do. I mean, Piranha Games, I can't stress, I'm super excited. You know, the team, one of the oldest teams in Canada when it comes to independent companies, you know, great track record of AAA, been working, you know, very long time and really knows a lot of things. And then the success of MechWarrior Online, which has generated 60 million in use, you know, use the revenue, you know, bringing them on and their experiences to something like evil versus evil. I mean, it's a given, I think.

Could you perhaps dig a little bit more into the structure of the deal, cash share base, etc.? ?

Yeah, so the deal is divided between cash and shares. And in the upfront multiple, as you might know from the morning, it's 3.7%, which we're very happy about. This has left us with a 5% dilution for shareholders and adding 60% EBITDA. So, I mean, it's an amazing deal. And the reason we've been able to do such an amazing deal is because this team truly believes in the upside, what they can do with the group, seeing the potential of something like Petrol. and sold out because that's stuff that they've been missing as they've been independent for a while. And then, like I said, then part of it is paid in shares. So even so, you know, on the upfront, we still have 300 million in cash left from the race, even after a big blue bubble ends. So, you know, generally very exciting. And then we have an earn-out structure over five years. That's 60 million Canadian dollars that will be divided over the years, basically, if they have a great performance. And we really like this because this, you know, this gives a lot of incentive to grow the company.

Thank you for that. And given that M&A is surely a part of your DNA going forward, could you dig a bit? I mean, I want to know, what does your M&A team look like? How involved are you in the processes of screening these companies and finding these companies? If you could elaborate a bit on that.

Yeah, so part of our M&A is, of course, very secret to us because it's our trade secret. But we divide between financial people in M&A and then also, of course, with the gaming people with very long track record in the game industry and big networks. And simply we source, there's a big, huge pipeline coming in. And of course, I look at everything that goes through the first stages of that sort of pipeline. And I'm with the process, talking to the people that potentially will come into the group, always, everyone, every single one of them. So I'm very involved, and I think that's very important because they're going to be part of the group. If I don't know them, if they don't feel that they have confidence in me as part of the CEO of the group, that's not going to work. And I think that this has been an edge for us. We've seen that in the market. It'll be a very good response that I always show up and talk to everyone we intend to acquire.

And touching upon the integration, I mean, how do you integrate an acquired company successfully? And could we touch upon the integration process of BigBlueBubble perhaps? How has that gone? Any surprises on the negative or any possible hidden values found?

Yes, so I think what's really excited about Big Blue Bubble is really, I would say, to be honest, when we did our first integration or something like petrol, it wasn't as clean and as perfect as I would have liked it. It went really well eventually, but initially it wasn't really that. But at this point, we've really perfected a lot of our integration strategy. We have an integration team. We have a very strong team. and you know planning on that and that has worked extremely well with blue bubble and we talked to the team and they're very excited and we feel that we created all of the connections and all the things we wanted very early instead of you know you know just from the announcement we we prepared everything and was very much ready for the for the closing but already integrated and worked through everything so I have to say that now with Brana, we're very excited that we're going to be able to bring that even further and be even tighter this time. And that's always how we work.

I really want to know, how do you pitch the EG7 group to potential M&A targets? I mean, why do companies want to join you, in a sense?

I think a big part of the positive side that we have when we do our M&A is my background as a developer. I really understand developers. I can really get to the heart of how they think. And that's why we've also won processes where we've not been the highest bidder. I take a lot of care into our team, into understanding the company, understanding the future they want to build, and making sure that that's the focus of how can we help you become better and more successful in the way where we're not going in and destroying the company in any way. We're not going to change, you know, just go and destroy the value. But we're also not the kind of company that just adds a lot of businesses into the group and then moves on. We're very much taking care to everyone we add to work with them, to improve their business models, to help using experience, to share with the founders. And this has really worked with both for the fact that we can have all of the founders that are in the group that are very excited to be part of this, has really been excited when they come in, that they can talk together, that we created a founders club. And this has really also been an ability for us to push forward founders that has joined the group to also talk to potential targets. And that has been very good.

Other compounders in the fragmented market have recently acquired many targets at the same time. What is your plan here? Are you looking to scale across the entire sphere, the entire gaming sphere? Are you looking to be more selective with specific genres, platforms or others in terms of deepening into specific niches?

Yeah, so we're definitely, I don't think we will ever do a set of multiples of too many transactional ones. It seems very tough to manage. But I think our view is really, you know, strategically picking. And that doesn't mean we won't do several in the period. But it has to be focused and it has to be because those companies are actually the ones we want to fill our purpose. So I would say we're definitely more directed and more selective in our process. And we say no to a lot of different possible acquisitions we've had on the table because we don't think it fits our strategy. So I think that that's... What you should expect from us is several more, but more targeted, directed, and maybe not a huge amount at once, because we just don't see that value, at least not how we look at it today.

Yeah, I want to continue on that track, as you said, you were stepping away from a couple of discussions. So just briefly touching upon the general price tag in the market in terms of M&A, you know, the positive impact from COVID-19 must have affected it, at least I think. Has it become increasingly difficult to deal directly with entrepreneurs, you know, with the hiking interest of the overall market, meaning that the number of discussions that EG7 is stepping away from, has that gone up dramatically? what I'm trying to get at is, you know, we know that the market is fragmented, but is it as M&A fertile as it once was?

Yes, I would say definitely it's, it is very fertile, there's a lot of companies, but I mean, we say that to the people that come into the group, if we think that they have been majorly impacted by COVID, we say, I mean, this is a, you know, short term effect, this is what we think your baseline business is. And then we'll do the deal there. Because at the end of the day, you know, we are also looking very much at the earn out structures and you know, that's going to be after COVID. So, you know, at that point, we have to make a deal where they see great upside in the future. On the question of if we see that, you know, prices are, I wouldn't say that there's a crazy amount of price bidding. What we have seen on the other hand, but this was before as well, is that there's some, I just call them in and outers. So there are some companies that seems to run in and out of M&A for like a short while, and they just do crazy prices, run in, and then they disappear from the scene. Generally, the ones that are there all the time are very reasonable. They understand that I think that there's no value to just keep bidding up prices endlessly. So some changes in prices, sure, but on the broader whole, A lot of opportunities. We really don't see that our ability to tell the companies that what we can do is any limitations. And we usually set our price based on what we think they're valued at.

Very interesting. And, you know, the last couple of years are characterized by high growth and it seems like the coming ones will be as well. How do you prepare the company internally to becoming even larger? Because scaling, it all sounds fun and games, but sure, there are preparations that needs to be done.

Yes, for sure. But generally, on one side, we're growing our management team with experienced people, and that's helped a lot. But then on the other side, we're also getting a lot of positive effects. We can do deals throughout the group towards license holders and so on to get much better deals. And that, I would say, we will see a positive effect going forward on that. on the broader scale and then getting experienced people in, we don't really see a problem of integration.

Right. I have a couple of questions coming in here through the email. Where will EG7 stand in three years time?

That's a great question. And I think, in my view, I hope that we will be one of the greater gaming companies in the world. I mean, that's what we're aiming for. We're striving for every day. We've launched these titles that we have in 21, 22. We have several new great companies that have joined the group. And together, we stand as hopefully an example of the way you can do it right, both integrating companies and then enhancing their values.

And another question, Antimatter Games was acquired at a multiple of 0.3 times. How likely is it to find another such opportunity? Was it a once in a lifetime opportunity?

Yeah, so I think that's a very good question. I think that the opportunity to do really good deals, that is always there. There are always in the gaming space, there are companies that exist in that sort of, I would say, in the strange vacuum. But if it's going to be exactly 0.3, I mean, that's impossible to say.

All right, coming back to some general question, I wanted to discuss the AAA development in general and what your current view is. I mean, price points and the opportunities you see from it, it's becoming more challenging in terms of development. Price elasticity has not really kept up, but now we're seeing price hikes in the market. So what has that meant for you as a company and your pricing strategy in terms of single A, double A, and indie titles? Has that changed somewhat going forward? Surely per hour, this is still very cheap entertainment, but still.

I really don't see that it's at least currently changing our pricing strategy at a broader scale. We'll follow the market and see what's going on but I think that what we see is that we really see that there's a lot more consumers and reaching a lot of consumers and then adding DLC and content above and then of course our free-to-play games is a much more interesting model than to take high upfront costs With some specific games, we might do that and follow what is the current market and what the stores are expecting, if it's in the stores and so on. But on the general whole, I think we see the potential of keeping prices that are very good to get a lot of consumers in. So I would say it's positive for us that AAA is choosing to move up in the scale again from a pricing perspective.

All right. And looking at, you know, the coming evil versus evil game, I'm really looking forward to it. Why have you chosen to monetize from the game in a free-to-play manner? What characteristics are needed for a free-to-play game? You know, yeah, that's...

Yes, I think, you know, this is in many ways, this is a huge and emerging, especially in PC console. There haven't been that many yet. And I think one thing that we've seen is that there's been sort of a mismatch sometimes between the experience of AAA developers and what you need for something like a free to play game. You need to be able to produce content very quickly. And if you're, you know, if you're, you know, imagine the destiny or something like that, it takes too long time generally to produce that content because it's so high quality. And it's about finding that balance. And we think that we've found a really good way to produce content faster than anyone else. We'll see when it launches. But some of the things that we've really been working on is actually our pipeline so that we can deliver content into this game on a weekly basis. And that's quite unique. And the technology for that is proprietary to us. So that's something we're super excited about. And with that, I think we can really produce content to create a lot of retention. And retention is the key driver for monetization in free-to-play.

We have another question from the audience. How do you see the mix between physical and digital for your publishing division in the future?

So we are, as we've stated already this year, we've been improving our digital side in the publishing division, and we will keep doing so. So we're looking at next year, we're going to see even more revenue coming in on the digital side. But that doesn't mean we don't see a lot of potential physical. And what I always say is, let's say the year we had Jurassic World, for example, that was a huge spike because of the great sales. So that might change it a little bit if we get some to date unknown titles coming in, but on a trend, we're going to see more digital in the growth, maybe 40%, 50%, and so on.

All right. Touching a bit upon the big blue bubble, can we talk about the strategy of moving away from iOS and Android back into console? What are the advantages of that move, the rationale behind it?

I think for the team at BigBlueBubble, they had a history in console, they also have in mobile, and they're driven by what they can also move, IP and stuff that they're doing between the different platforms. And I think that there are some great opportunities in there. I mean, it was a little bit of an early try with something like Forgone that is sort of the first sort of feeling out of the market after being a very long time in the mobile space. There are more to come, and at least what we know about it, we're very excited about the opportunities and how that also can grow into the group and we can help them with that.

All right. And given the focus of internal game development, which is set to give you significant margin expansion ahead, how does that change the consultancy business? Are you looking to use more of that internally, or will we continue to see consultancy as a large share of the service segment going forward?

So, I mean, today, of course, with something like petrol, you know, we're going to keep doing a lot of services, but it also depends. It depends on if we add more companies in that segment and also depends on, you know, if we see that the value is pushing more into our own games, we will. And I think it makes a lot of sense, because let's say we can get a $1 million contract for petrol from some publisher, or we can invest some money and get out $5 million from our own games in profit. I mean, why wouldn't we do that? So it's going to be on a, you know, slowly basis, depending on the success and the trajectory, I think we're going to see that we are investing more on the game side. But we also see a lot of opportunities growing and we see growing in the work for hire and that side as well. So and that's I think it also keeps us on our game and has a lot of other benefits. So that's super great.

As you touched upon one of the hot topics in the quarter, you recently raised $429 million, I assume the majority of which will be used for M&A. You have the mandate. Do you see the need for additional capital raises in the near future?

So, I mean, if we find a great acquisition or some reason to use that mandate, I mean, I think there's also something in the market. We do it all the time. When we fill the mandate, we create a new mandate so that we can fill it. And one reason is, for example, now we're paying shares to Big Blue Bubble and Prana. So we needed to have, you know, as we tapped all of our mandate for the race, we wouldn't be able to do the deals. So it's very good that we have this mandate, not only for raising capital, but very much for giving shares as well. So we have both cash and shares and, you know, that adds you know, double the amount of potential. So if there's 300 million cash left from the raise, there's also, you know, a lot of now potential in shares to do even bigger transactions on the, you know, I mean, you can count yourself much of it.

Yeah. And, you know, another hot topic is the K3 accounting standard. How high are depreciations due to goodwill each quarter? What would the effect be if you were to change to IFRS? And is that the plan perhaps?

So I can't comment on whether it's planned or not, but I can say that we have some great experts recently hired in IFRS into the company. So we have the knowledge in-house to do it if you would like to. But the effect is 22 million sec each quarter. Historically, of course, they will change as Piranha and the Big Blue Bubble start adding into our goodwill. So that's how it looks right now. All right.

Another question from the audience. Which game releases should we look out for during Q4 2020?

So something that's two really big titles for us is Planet Coast and Overcooked. And we are very much looking forward to Q4. So let's just end with that.

That's a good answer. And to follow up a bit on the M&A side, but more service related, during 2019, you built a strong base within the service segment with the addition of petrol and sold out, adding a marketing and distribution business to the group. Are there any other service segments that you would like to add to the group going forward? Is there room for more? And could they actually boost group margins through better alignment, so to speak, and synergies?

Yeah, so we definitely see that there's potential to add more. We feel that we've added the pieces that are required for our platform, but that doesn't mean we don't see a lot of improvement opportunities. So I would expect that we add things in that segment as well over time, but our focus right now is really adding more games and revenue from those and IP. So that's what I would see in the future.

Excellent. Could I ask you just a short question? What is the advantage of, so you can explain to the audience, what is the advantage of owning the entire value chain from development to publishing?

I think there are many things. One side is that it's all aligned under one incentive structure. Everyone wins together. I think that that's very important. But then it's also the resources and the knowledge internally to actually push through and understand the market in a way that otherwise you're sitting with no knowledge. Let's say you use a publisher externally. You can do that, and that can be great sometimes. I'm not saying we will never do that for any of our businesses if we think it makes sense. But you can be one out of ten games that they're publishing. You have no idea what they're going to do with that game. If you own it, you have much more control over the ability to generate profits, the way to work with it, and you also have the control over the consumer in the end because that's going to be on the publisher's side. So having all of these elements go together, not only do we get a much broader view into the market, but we also have the ability to own the consumer. And I think that have them together with us and with our games and our publisher unit and our communities. So I think it just creates a much stronger group in the video game space.

All right. We have one final question here. What can an investor expect from EG7 going forward?

I think what you should expect is that we look at doing more M&A transactions in the future. We will keep adding to the performance of the group, and you will also expect us to release a bunch of really great games, 21 and 22, that, in my opinion, make the year extremely exciting.

Fantastic. Very well. Thank you very much for the presentation, as well as answering all of my questions, as well as the audience. You've given me a lot of work to do today, and I'm really looking forward to it. Perhaps you would like to leave us with some final remarks before we end for the day.

Yeah, I just want to actually, I just want to thank everyone, all of the investors and our team for all the great work. I mean, especially something like Piranha that we announced this morning, the deal making, I mean, 5% dilution, 60% EBITDA. It's such a great deal with such a great team. And I'm just stunned about the hard work that the team has put in. Thank you very much, everyone, for listening.