Enad Global 7 AB (publ)

Welcome everyone to EG7's third quarter earnings release. My name is Fredrik Rudén. I'm deputy CEO and CFO and with me in this call I have my colleague and the company CEO Yi Han. We will start with the presentation and then end with the Q&A session. I hand it over to you Yi.

Thanks Fredrik. Thank you for all joining us. Let's go to the first slide. For Q3, net revenue came in at $355 million a sec, with adjusted EBITDA coming in at $63 million, representing 18% margin. Year-over-year net revenue declined by 24%. Without the adverse FX effect, year-over-year decline was lower at 16%. Currency movement has been exaggerating the decline throughout this year, unfortunately, because of the significant volatility with the exchange rate over the last 12 months. Next slide, please. Some notable business unit updates here, starting with BigBlueBubble. Results came in below expectations, a tough quarter for them. Net revenue declined by 27% in local currency and 34% in SEC. Reasons for the decline was primarily driven by anniversary content for this year performing worse than last year. Active player base declined with lower user engagement and acquisition for the quarter, with the anniversary content underperforming. Core in-game KPIs continue to remain steady and healthy. However, the underperformance appears to be limited to the user acquisition funnel. The team is actively working to improve user acquisition to return to prior higher levels. As for Daybreak, net revenue declined by 7% in local currency and 15% in sector. For accounting and reporting, net revenue shows a decline, but sales actually demonstrated growth. We tracked another KPI called gross revenue in local currency, which actually increased year over year. Gross revenue is before platform fees and excluding revenue deferral counting. It is more of a cash basis number for sales, but that number at the top line demonstrated growth for the quarter. The main growth drivers for the period for Daybreak included, Palea, Lord of the Rings Online, Dungeons & Dragons Online, and DC Universe Online, all of which are performing nicely with revenue increases and strong profitability. Titles that are performing softer than expected include EverQuest and EverQuest 2, down from the big anniversary year in 2024, where EverQuest turned 25 and EverQuest 2 turned 20 years old. Also, EverQuest was negatively impacted by the Hero's Journey, and unauthorized title that was out for a number of months, which for now has been successfully closed down. So that's no longer an issue, but nonetheless, it did impact EverQuest negatively throughout the year until it's closing down. Match the Gathering Online card sets this year have been generally underperforming, contributing to low results there. Overall, on a consolidated basis, Daybreak is demonstrating growth at the top-line gross revenue level, which we are happy with. Piranha also delivered a solid quarter. Net revenue grew by 112% in local currency and 93% in SAC. MacWarrior 5 Mercenaries DLC7 performed better than we expected. It's on trend to be the best performing DLC out of the seven. A nice outcome for a DLC for a six-year-old title. Next up now is DLC 2 for Clans in December. Overall, Piranha is performing at a steady and profitable level, and we expect them to continue at that level for the foreseeable future. Next slide, please. Now on the product front, a couple updates starting with Palia. Palia was one of the main highlights for Q3. Fall seasonal content release went out with a nice success. Animal husbandry feature, which is a major system and feature for the title, shipped with the update and reached peak engagement levels along with that update seen back in May along with the console release, which was nice. Game is trending well with improvements across all the core KPIs. MAU increased by 77% when comparing September number to April right before console release. Monthly average revenue per user also increased 141%, and payer conversion rate increasing 99%. We're quite happy with the performance today, excited for its long-term future. We believe it has a real shot at becoming one of the leading cozy life sim games in the industry, with the key differentiation being it's the only large multiplayer online game that's serviced as a live service title in the cozy life sim genre. We expect it to continue to perform nicely going forward. Now for Coldiron, we have decided to delay this title. New target release window now is Q3, 2026. Team has made good progress but requires more time to finalize content as well as to achieve higher quality. Ultimately, decision here is to prioritize quality and invest the additional time and resources accordingly. Additional investment is expected to be approximately 7.7 million total. Daybreak plans to invest 6.5 billion of this. and cold iron shareholders coin vesting 1.2 million. We continue to remain bullish in the project potential and expect returns in excess of our minimum target returns. Next slide, please. Redrick, over to you.

Thank you, Ji. Next slide, please. Third quarter was compared with last year relatively quiet and with few smaller content releases generating a net revenue of 355 million representing 16% FX neutral decline. The lower net revenue is mainly explained by 35% negative FX movements. One successful title release in Q3 last year from Fireshine generating 54 million Big blue bubble trending down, as she mentioned. Strong anniversary campaign in every quest in Q3 last year, including a fairly strong revenue recognition rollover effect from Q2 2024. Adjusted EBITDA was 63 million, which gave an 18% adjusted EBITDA margin. LTM net revenue was 1 billion 702 million with the LTM adjusted EBITDA margin at 18% which is in line with a historic average. Next slide please. As earlier pointed out we have a foundation of more predictable revenues and cash flows. More predictable revenue comes from the live service and back catalog titles Net revenue from this portfolio was 311 million in the quarter, corresponding to 88% of net revenue for the group in the quarter. Of the last 12 months, net revenue amounted to 1,702,000,000, of which 1,258,000,000 derives from the more predictable revenue base. LTM more predictable net revenue has varied less than plus minus two percent in the past five quarters following that stability the portion of revenue that portion of revenue has been stable at 70 to 74 percent next slide please Daybreak is the largest contributor to the net revenue generating 180 million This corresponds to a decline from Q3 last year. The decline is attributable to challenging comparable figures following the successful anniversary campaign in EverQuest last year and 18 million in unfavorable currency movements. And as he already pointed out, the underlying gross revenue or total bookings, what the customer actually bought from us, has increased Q3 to Q3. But we do recognize net revenue over the period when the customer is using what is acquired from us, which means that we now and then have this rollover effect between quarters. The adjusted EBITDA came in at 35 million, corresponding to 19% EBITDA margin. Big Blue Bubble delivered net revenue of 55 million, corresponding to a 34% decline. Currency fluctuations negatively impacted net revenue by 6 million and adjusted EBITDA amounted to 25, representing a 45.6% margin. And Big Blue Bubble had lower than expected new customer intake, We are evaluating various mitigating actions to increase that KPI going forward. Next slide, please. Faishan had, as expected, a fairly quiet third quarter, specifically compared to the third quarter last year when the company successfully published one digital title generating 53 million. And net revenue in Faishan was 59 million in the quarter and adjusted EBITDA was 1 million. Petrol has been stable following the reach out to new business areas and the cost optimization from the beginning of the year. Petrol generated 30 million with a 5% adjusted EBITDA margin. Next slide, please. Piranha delivered a net revenue of 30 million with an adjusted EBITDA of 10 million, corresponding to 33% margin. The cost savings measures executed in the beginning of the year together with the successful launch of the seventh DLC for Macquarie Merchants are the two major contributors to the strong performance. The 7th DLC is, as Yi mentioned, is becoming one of the best-selling DLCs for mercenaries. Next slide, please. Our financial situation remains solid. We invested 91 million, of which 51 million in Palia and Choliron. And that is what we could define as new growth initiatives going forward. The level of investments in the more predictable revenue base remain low. Operational cash flow increased to 51 million. This figure was negatively impacted by a non-recurring payment of 8 million. So if we would adjust for that, the operational cash would have been similar to 60 million. And by end of the quarter, we had a net cash position and 396 million in cash. We also successfully signed a new revolving credit facility of 100 million, which is unutilized by end of the quarter. I hand it back to you, Eugene.