Enad Global 7 AB (publ)

Five, four, three, two, one. Good morning. Welcome, everyone, to ED7's first quarter earnings release. My name is Fredrik Rutén, Deputy CEO and CFO. And with me, I have my colleague and the company CEO, Ji Ham. We will start with a presentation and then end with a Q&A session. And if you have any questions, please email our investor relation email address. By that, I hand it over to Yuji.

Thanks, Frederick. Good morning, everyone. Thank you for joining us this morning. Let's go to the first slide. We'll start off with our first quarter key performance figures here. For the first quarter, we came in with 345 million SEC of net revenues. That's down 24% in SEC year over year, 13% organic in local currencies. Adjusted EBITDA came in at 51 million SEC, down 31% compared to last year. And EBITDA margin came in at 14.8%. That's 140 basis points lower than last year's numbers. Net profit-wise, we're returning to profitability with 21 million SEC of net profit compared to loss of 18.5 million SEC last year. And operating cash flow strong with five times the multiple compared to last year, coming in at close to 90 million SEC. and EPS on a diluted basis of 0.24 sec. Next slide, please. So here we showcase the net revenue bridge from last year to this year. So we wanted to demonstrate some of the key components that contributed to that decline. Underlying business is stable, but there's two major components that reduced our revenue for year over year. The first part of it being a significant FX impact. We had 50 million SEC of impact, about 11% of our net revenue contributing to our decline. And also Fireshine. So Fireshine, one of our publishing businesses last year in Q1 2025 had three physical titles that it released, which contributed 96 million SEC. That revenue is not present for this quarter as their revenue pipeline is more backloaded this quarter as well as this year. As a result, this missing revenue is also contributing to a revenue decline for this year, but that's timing related, not structural related. Otherwise, the organic growth for the other business units, including Daybreak, Big Blue Bubble, as well as Piranha, all show positive growth. resulting in about 40 million stack of growth year over year. When you account for all that, we end up at 345 million stack of net revenue for Q1. But once again, two major components, one's FX, the other one is the back-loaded revenue for Fireshine with timing that contributed to this decline versus any kind of structural issues with their business. Next slide, please. Some of the key strategic actions that we took this quarter, The first one is cost discipline. We continue to look at our business that may be underperforming and we're actively looking to optimize in order to sustain our profitability in the long term. So we had restructuring with petrol where we reduced about 13 million yen sack of annual costs. Piranha the same, we reduced about 15 million sec of additional costs given their revenue level in order to get the sustainable profitability. Also contributing to a lower cost going forward would be reducing board remuneration by about 4 million sec. In total, about 32 million of annualized run rate savings going forward. Additionally, we had a reduction in a liability to daybreak burnout. About 11 million US dollars that was paid in first quarter. We had this tax receivables obligation that daybreak earn out to the sellers that's been on the balance sheet for some time. We wanted to clean up our balance sheet. This should be resulting in about one to three million of annual cashflow retention going forward for the next 12 years or so. And this generated about $16 million of profit, one-time gain for RP&L as what was booked on the balance sheet versus the purchase price resulted in this positive gain. And thirdly, we have the proposed cold iron acquisition M&A. This is restructuring of the existing deal largely. We have a publishing deal in place where Daybreak is investing and publishing the new title that we disclosed Earlier today, Aliens fired Team Elite, set to release third quarter of this year. So we have this structuring change, namely where we're shifting the publishing deal into an acquisition to really clean up this related party issue. So with that said, the structure remains largely the same where Daybreak would be fully recouping all the investment that it made, including any expenses that are going in for publishing prior to any kind of profit shift that happens. There is a upfront payment that's going to be made along with this transaction, and that is tied primarily to the back catalog revenue that Coldiron receives for the first title, Aliens 510 Elite, and we expect that investment, upfront purchase price to generate a positive yield with the remaining term for that particular title and continuing performance from that back catalog revenue going forward. Next slide, please. On the live service side, we have continuing momentum here. We have 91% of our group net revenues coming from what we consider to be more predictable service revenues. So you have live service revenue as well as back catalog revenue that contribute about $314 million stack of net revenue for first quarter. And this decline only about 1.5%. So we have continuing very good sustainability of this revenue base and contributing to that with Daybreak, where we actually saw very strong growth year over year, 16.8% local currency growth from last year. And Daybreak represents 55% of net revenues, which is significant. And this particular growth was driven largely by EverQuest, DC Universe Online, as well as Paylia from Daybreak's portfolio. Paylia, once again, doing well in terms of revenue growth. We saw 160% growth year over year, local currency. And then just celebrated 10 million lifetime players just last month. And we have a significant update coming up. And next week, Royal Highlands expansion that's happening. on May 12th, which we expect to see another step up in terms of user engagement growth going forward. BigBlueBubble returned to growth again. So it's been about seven quarters since we saw year-over-year growth with BigBlueBubble, with My Singing Monster's strong performance in Q4 with the viral uptick again, with their new influencer strategy, Clubbox, which has been doing really well. And they're continuing to see that sustained momentum around their business and the game. And then we saw 3.6% increase in their net revenue year over year for BigBlueBubble. Piranha also had a nice quarter, about 26% of local currency based net revenue growth year over year. MacWarrior 5, Mercenaries, DLC8 is also coming up later this month. And EBITDA margin at 39% for Q1, which was a nice profitability for them. Next slide, please. So 2026 is shaping up to be one of our most robust pipeline in terms of our product slate in our history. You know, we have Far, Far West from Fireshine that just released last week on April 28th as early access. 96% overwhelmingly positive rating on Steam as an early access title, which is amazing. Together with that, they've shipped 700,000 units in the first week. We're seeing a nice momentum with this title. It's early access. It's only on PC, but we expect this game to continue to grow and sustain not only the sales, but being able to eventually bring this product out to multiple platforms, including consoles. We're very excited for that prospect going forward. So in Q2, we additionally have Palia Royal Highlands, as we talked about from Daybreak, that's coming out next week. And we have MechWarrior 5 Mercenaries DLC 8 coming out later in May. And additionally, going forward, we have Fireshine, another title, Densha Attacked, you know, mid-June timeframe, which has a nice following on the wishlist as well on Steam. We're excited for that title also. Q3, the biggest release will be Aliens 5 Premier League 2, which we disclosed earlier today, and then we have an announcement with the reveal of the trailer that's going to be happening in about eight hours tomorrow morning or tomorrow morning, California time. So we're very excited to finally bring this game, reveal gameplay and the trailer, et cetera. We're partnering with IGN who have an exclusive announcement relating to this title for the first 24 hours before we take it global. And in July, we have EverQuest Legends. That's coming out from Daybreak as a more casual, more approachable type of gameplay that EverQuest, the team, is being able to bring, which we're very excited about. And we're targeting that release for July. And we have My Singing Monsters Anniversary. more collaborations with influencers, Clubbox strategy that we're going to be leveraging there as well to continue to drive engagement, user growth as well. And Fireshine has a couple additional products that are coming out in Q3. And for the remainder of 2026, we have Fireshine with unannounced titles, six of them. And we have live service updates, expansion packs, and et cetera that we're very excited about that we continue to do year after year. So when you look at this overall slate for 2026, it is our biggest slate in EG7's history. We're very excited to be executing against this for the remainder of the year. Next slide, please.

Frederick, over to you. Thank you, Yi. In the first quarter, NetRev... Sorry, next slide, please. In the first quarter, net revenue was 345 million, down from 455 million, representing 13% FX neutral decline. As Yi already mentioned, Daybreak, BigBlueBubble, Piranha delivered growth in local currencies, but the unfavorable comparison is attributable to product release timing differences in Fireshine. The headwind currency effect in the quarter was 50 million Swedish kronor. LTM net revenue was 1.5 billion and adjusted EBITDA margin was 15%. Both these KPIs are lower than historic average. Given our exciting release pipeline and cost optimization measures, the company is well positioned for solid potential growth in both top and bottom lines for the remainder of the year. Next slide, please. More predictable revenue comes from the live service and back catalog titles. Revenue from this portfolio was 314 million. Over the last 12 months, net revenue amounted to 1.5 billion, of which 1.3 billion derives from the more predictable revenue base. This portfolio has delivered a stable, highly predictable cash generation for many years. In 2025, 69% of this portfolio was Big Blue Bubble and Daybreak, excluding Pelia, the two most cash-generative businesses who generated 22% EBITDA margin in the full year 2025. And you can assume that to have grown a little bit in local currencies, given the organic growth that we have in those businesses. Next slide, please. Daybreak is the largest contributor to the net revenue, generating 190 million. This is flat in Swedish kronor compared with last year, but the strong 17% organic growth in local currencies. The underlying operational growth in Q1 comes from 122% growth in Palia. And as Yi mentioned, the growth in local currencies was 160%, which is an increase from the 70% that we had second half of 2025 compared to 2024, which was the first period after we consolidated Singularity VI, where Palia is included. And it was also a strong performance from both DC Universe and EverQuest. The adjusted EBITDA came in at 30 million, corresponding to 16% EBITDA margin. BigBlueBubble delivered net revenue of 61, corresponding to 4% organic growth in local currency. After implementing a new influencer strategy, we had an activity peak in December and a more stable performance throughout Q1. This gave an adjusted EBITDA at 30 million, which means first time in the past 12 months back at Daybreak's level of contribution. Next slide, please. As already mentioned, Faishan had a soft quarter and challenging comparable figures, which is explained by release timing effects. Net revenue was 45 million. and the comparable figure last year was 145 million, of which 96 million came from three specific physical releases, Sniper Elite, the first Berserker and Atom Fall. Given the low level of revenue, Fireshine did not reach profitability this quarter, but the start of Q2 is promising following the successful digital release of Far Far West. which over the first weekend reached over 500,000 units and now is up at 700,000. Petrol generated 28 million in net revenue with yet another negative EBITDA. Based on this, we have executed a cost optimization restructuring in that business unit with the aim to deliver profitability from Q2 and on. Next slide, please. Pirana delivered a net revenue of 21 million, corresponding to 12% growth, or 12.5%. Adjusted EBITDA was 8 million, corresponding to a 39% margin, up from 17% Q1 last year. And to strengthen Pirana's long term profitability further, cost saving measures were executed in the beginning of the year, aiming to save approximately 50 million on an annual basis with start Q2 2026. Next slide, please. Our financial situation remains solid. Operational cash flow increased to 89 million from 18 million last year. And the main difference is attributable to the increase. It's attributable to timing effects of collecting sales money from quarters with high sales. And Faishan had good sales in Q1 2025, as mentioned, but the cash did not flow through until Q2. We see an adverse similar effect but smaller this year following the release of Jurassic in December 2025. We invested 174 million, where 101 million is the accelerated settlement of the urn to the seller of debris, and 48 million represent investments in paleo and cold iron. The level of investment in the more predictable revenue base remained low. By accelerating the settlement of the earner to the sellers of Daybreak to improve the next 12 years cash generation by 1 to 3 million USD per year, we also drained the cash to the level where we reached a net debt of 55 million. The cash box was 293 million, and together with the unutilized rolling credit facility of 100 million Swedish kronor and the bond frame of 1 billion, ED7 has plenty of financial strength going forward. And that's all from the financial discussions.