Embracer Group AB (publ)

Hello and very warm welcome to Karlstad and Embracer Group's fiscal Q2 report. We have a very interesting discussion ahead of us today after I think a solid Q2 report and also some news on the pipeline and the guidance for the coming years. So a lot to talk about as always. With me here today I have CEO and founder Lars Vingerfors and CFO Johan Ekström. I will come back for a Q&A later. Before that, we'll go through a presentation of the quarter and some discussion around that. So without further ado, I will leave it over to you, Lars and Johan. Please go ahead.

Thank you, Oskar. Hello and good morning, everyone, and welcome to Värmland, Sweden. I'm happy to report another stable quarter. Our net sales grow to close to 3.3 billion in the quarter, which were 38% growth year over year. And the sales in business area games grow to just about 2.8 billion, which were 89% growth year over year. The profitability came in in line with the management expectation at close to a billion, which were a 49% growth year over year. The organic growth on the constant currency basis was in line with expectations, but minus 9%. mainly due to a tough comparison period last year with the record performance in that year of quarter of THQ Nordic. But looking at the overall business, the performer growth in the quarter, including the acquired companies, were 11%. And the acquired companies on the performer basis grow close to 30% in the quarter. Strong performance of titles in the quarter were a wide range as usual. On the premium side we had a very strong performance from our friends in Milano that released Hot Wheels Unleashed. Saber also released World War Z Aftermath and Insurgency on console We could also see that we are having a more diverse revenue stream than a year ago and the mobile titles are climbing in our charts So we have three mobile titles in the top six chart here And finally we had a successful release from Gearbox Publishing with Tribes of Midgard Overall, we're reporting to have closer 200 games under development end of the quarter. As of today, we have 86 internal game studios and are engaging more than 9,000 people on a daily basis. We continue to invest as much as we can into the future. The investment into the games development were 881 million in the quarter. And you can relate that to that is just about three times as much as the value of the releases we had in the quarter. And we will talk more about the pipeline soon. Also really happy to see that our internal headcount grow 25% organically. So a lot of, or most of our studios across the world are hiring as much as they can. The mobile games business again had a excellent performance with a 26% growth. We now engaging 32 million players on a daily basis. And on a monthly active users, we have 271 million players. And in total, our companies on a performer basis had 350 million installs of the games. This morning we announced, we opened up a bit more details about our very wide range of games coming in the coming years, and we gave more color on the AAA pipeline. And I will come back to that in a minute in a separate slide. But we are planning to release 25 AAA premium games products until the financial year ending March 2026. We also announced this morning the decision to postpone Saints Row, one of those AAA titles that we previously have scheduled for release in the fourth quarter in the current year, as well as another unannounced but earlier expected AAA title in the fourth quarter. We are changing the forecasting number from the forecast of completed games in quarters to a forecast on our profitability. And this morning we announced the forecast of operation EBIT for the upcoming years. This financial year ending March we are expecting to earn between 4.3 to 4.7 billion krona. The next financial year, we are expecting to earn between 7 and 8.5 billion. And in the year ending March 2024, we are expecting to earn between 7.5 to 10 billion krona. This forecast do not include any new M&A. And this morning, we gave the last forecast of completed games in this financial year. So in the year ending now in December, we expect to complete games between 350 to 400 million, the same as the previous forecast. And in the fourth quarter, we're expecting to release games for the value of 400 to 600 million kronor. So looking at the AAA games in pipeline. So currently we have a pipeline that consists of 25 AAA games for premium PC console. They all have notable or significant marketing budgets and are expected to become multi-million unit sellers. Each game we'll have at least 100 games developer at peak in development, but normally a lot more and up to 250. Again, all games are scheduled to be released during the upcoming years, but no later than the financial year ending March 2026. all except two games are developed at internal studios so looking at these 25 games the development status as of november this month we have 11 of them under full production six of them are under pre-production that still could be a quite sizable team and could run for a notable period of time and we have eight that we define as concept phase that normally is a smaller team that are planning more for the future Looking at how many of them are based on own IPs versus licensed or external IPs. So of the 25, 15 of them are based on group owned IPs. 10 of them is based on either licensed IPs that we control or external IPs that other companies owning. And looking at the publishing, as we see the publishing of the products today, 19 of them will be published by the group companies. And as you know, we have 17 publishers across the group, either fully or partly. And six of them will be published by external publishers. So with that said, I'll hand over to our CFO. Thank you, Lars. Thank you.

So yes, let's start by having a look at our P&L for the quarter and trading 12-month period ending September. Net sales amounted to approximately 3.3 billion in the quarter, which is up 38% versus the same period last year. The growth is driven by business area games, where we have a solid growth of 89% in the quarter, reaching 2.8 billion. If you look at partner publishing film, we had a slower performance in the quarter, so sales are down to 465 million in the quarter. But here it's also important to bear in mind that we last year had two larger releases in the segment and we do not have that this year. The profitability in terms of gross profit increased to 2.5 billion, which is up 85% versus last year. The growth in gross profit is driven by our growth in top line, but also improved profitability in terms of gross margin moving from 57% to 76% in the quarter. This is driven by a positive product mix shift thanks to the increased sales portion going into business area games. Operational EBIT increased 49% over last year, resulting in 973 million operational EBIT in the quarter, yielding a 30% operational EBIT margin. Looking at our adjusted EPS for the quarter it was 0.65 SEC per share. This is down if you compare to the same period last year and it's mainly explained by differences in unrealized and unrealized currency gains and losses as well as discount interest on related to provisions for conditional purchase prices. Adjusting for that, adjusted EPS is up from 0.8 to 0.81 in the quarter. Looking at the full year or 12 months figures, we reach 11.3 billion in net sales. yielding an operational EBIT of close to 3.8 billion with an operational EBIT margin of 33% and an adjusted EPS of 3.36 SEC per share. If you look at our amortizations and depreciations in the quarter and also the bridge between our reported EBITDA and operation EBIT as well as EBIT, we start with the reported EBITDA of 1.6 billion. Then we have operational amortizations of 277 million in the quarter where the majority is related to our business area games and finalized game development amortizations amounting to 221 in the quarter. We have other adjustments of 390 million in the quarter. The majority of this is related to a re-measurement of participations in associated companies. It's an accounting profit that you will see when you move from a majority holding state to a majority holding stake. This amounts to 417 in the quarter and is related to the acquisition of Goldship Games and we exclude that from our operational EBIT. And the other part is a rematchment of a contingent consideration for Milestone where the performance of Milestone has exceeded the expectations that are part of the purchase price analysis and as the purchase price analysis is finalized this flows through the P&L and needs to be excluded from our operational EBIT. Looking at the acquisition related amortizations in the period, they amounted to 2.8 billion SEK. The majority of this is related to Goodwill. And then also to arrive at our reported EBIT, you need to add back the other adjustments that we went through of 390. If we look at the cash flow statement for the quarter, we have a positive free cash flow in the quarter despite the record high investments into our game development portfolio. In total, the investment in intangible assets is 917 million in the quarter. Out of this, 881 is related to investments into our games development portfolio. The increase is mainly related to the addition of Aspire and Gearbox as well as increased organic growth investments into new game development projects where we also see an effect of a shift from co-publishing projects to internal development projects mainly in Saber. We paid 213 million in taxes during the quarter, which is, if you compare it to the full year, it's close to 50% of a full year's cash tax payments.

And it's something we should be proud of. That's a record tax payment back to the society. Yes.

Very good. And then we also can comment on changing working capital. It was very small in the quarter. When looking at our working capital, we should also bear in mind that the releases that was made during this quarter was made late in the quarter. So the cash flow effect of those will be seen in the next quarter as they are part of our operating receivables as per the end of September. 2.7 billion in the quarter was invested into M&A activities. Looking at the capital expenditures, it was 917 for Intangible CapEx in the quarter. Out of this, 881 is with East Investments into our game development portfolio. The vast majority is with internal development studios. 558 out of the 881. We are up versus last year with 98% from 445 to 881 for the quarter. Completed games amounted to 281 in the quarter. The investments into our pipeline also shows in the business related KPIs, where we can see that the number of developers working on projects has increased with more than 100% since last year, reaching 7,500 people at the end of this quarter. and the majority 6141 are engaged through our internal development studios. Number of studios are up 48% or from 102 to 151 at the end of September. and pipeline projects up from 135 to 197, close to 200, up 46% versus last year. Looking at our balance sheet, total asset amounted to 53 billion SEK at the end of September. The majority of this is related to internible assets, which was close to 39 billion in the We're at the end of September. The majority of the intangible assets are related to acquisition related intangible assets where the majority is goodwill. with a straight line amortization period of five years. And if you look at our operational internable assets, they mainly consist of the investments into ongoing game development, as well as the book value of finalized game development at the end of the period. Net cash end of September amounted to 7.7 billion. Today, it's approximately 7.1 billion. Looking at the available funds, it's 16.8 end of September. Today, it's 16.2 billion. As usual, we also provide a non-operational amortization forecast. So the non-operational amortizations are estimated to be 7.6 billion for this fiscal year with amortizations of 2 billion in the quarter ending December. Also important to note that the forecast is based on the average exchange rate for the quarter ending September and the purchase price allocations that we have as per today, which is both containing preliminary and finalized PPAs. IFRS conversion. We have made solid progress during the quarter in our IFRS conversion project. And we are very happy to announce that we will issue our first quarterly report according to IFRS standards next year. Looking forward to it, Johan.

Yes.

You spent a lot of time on that. It will be great. and it will be for the period our first quarter index fiscal which is to be published in August next year. We are also steaming ahead on the project for changing listing venue to regulated market. The board of directors decided at the end of September that we should proceed with NASDAQ Stockholm as the venue. The listing change will of course take place after we have published our first reporting under IFRS and it should be done no later than June 2020.

23 we haven't given up the thoughts about in the future post this to list somewhere else even though that is not on your table today step by step step by step Yeah, business areas. Thank you, Juan.

Thank you.

So net sales breakdowns on the games business area. So looking at the net sales on the trailing 12-month basis, we are up 88% to 9.1 billion. And on the quarterly basis, 2.8 billion. Looking at the share of new releases in the quarter, we are down to 17%, meaning the rest is back catalog. Defined including mobile games. And the digital share of the revenues is 93% in the games business area. Own titles is at 69% in the quarter and 67% on the trailing 12 months basis. We continue to increase our diversification of revenues. but also we have more and more what you could class as recurring revenues. And today we are providing some color on this. So starting on the left hand here, you can see the first quarter in the last financial year. We had 63% of the revenues coming out from games you can define as premium classic. Basically a lot of single player games and games you basically sell once and that's it. and 29% coming out from premium games that you can define as live ops, meaning games that you continue building content for. You could give away the content for free as you do, or you can engage the player, or you could sell things in the game. We started our journey on mobile August last year. We also with the acquisition of Saver Interactive started getting revenues that you can define as development revenue. And those are either work for hire or development co-publishing revenues. Meaning you're getting revenues from someone else before you're releasing the product. So looking at the quarter now ending in September, only 22% of the revenues were what you can define as premium classic. 33% premium games that have live ops or that we're building more content for. 33% of the revenues came from mobile and 12% in development revenues So adding premium LiveOps games and mobile games together two-thirds of our revenues you could define as recurring This is based on 94% of the data of a share of the sales Also another slide, you can look at our diverse revenue streams. Here you can see a slide with our top 40 titles and revenues of them in the quarter ending now in September. So the best selling title had revenues just about 120 million in the quarter. And then you can see title number 40 had just below 20 million in revenues. So the top 40 had a coverage in the games business area of 64%. No title amounts to more than 10% of total game sales. Johan?

Yeah so if you look at our project ROI scatter chart we have updated that as per the end of September and this is where we look at the contribution from a specific title from release up until today and we relate that to the investment or making that title and the contribution is defined as gross profit and less marketing expenses related to the specific title and the sample that we have here is for material projects so it's either projects where we have sales above 40 million SEK or where the cost of making the project is more than 40 million SEK currently there are 42 projects in the sample we added five this quarter and we can say that we had one title that did not meet the expectations so far and we are happy to see that we have four titles or three out of the five are driving our weighted average and we have one title at break even although of course we expect it to continue to generate or increase contribution over time 3.3 in weighted average return okay so going into the business areas

THQ Nordic had a quarter. My dear, first business I was part of funding in Vienna had compared to last year a quarter without any major releases. They had revenues of 364 million in the quarter. And the quarter was mainly driven by back catalog titles such as the SpongeBob, Kingdom of Amalur, Re-Reckoning and Biomutant. They celebrated the 10th anniversary in September. And they also announced by then that they had 42 games under development, which 28 are yet to be announced. The number of internal developers within THQ Nordic increased 57% since the previous quarter last year to 811. Looking at the pipeline, they're having, again, a wide pipeline of 42 games. And here you can see a selected number of titles that will come out from in the coming periods, such as Elex 2 in the fourth quarter, Expeditions Rome, the add-on from Kingdoms of Amalur, re-reckoning in the current quarter coming in December. They have a full new SpongeBob game. They have a new MX versus ATV game. MX versus ATV Legends. They're having a new Jagged Alliance 3 coming out. And they're doing a remake. extensive remake of Destroy All Humans 2 and Destroy All Humans first one was very successful for them last year They're also doing a sequel of a very iconic Europe game called Outcast Koch Media Publishing, which is the business area name for the publishing businesses of Milestone, Vertigo Games, Prime Matters, Deep Silver and Ravenscourt had a stable quarter with 585 million in revenues. Net sales drivers in the quarter were the successful release of Hot Wheels Unleashed developed by our internal studio in Milano. Milano just recently celebrated the 25th anniversary and now up to over 250 employees. Also really happy to see yesterday that Hot Wheels Unleashed is nominated for the best traditional and non-traditional sports and racing game by the Game Awards coming up Also the VR Studio Vertigo Games was selected best studio 2021 at the Dutch Game Awards Other net sales drivers were the recently acquired studio behind Road 96 and that did perform very well and also Kings Bounty 2 that did not really meet up to the expectations so far Main back catalogue drivers are well-known names such as the Metro Exodus, Kingdom Come Deliverance and the Saints Row Looking ahead again, we are expecting a number of very big titles such as Saints Row Chorus in the current quarter Gun Grave from our friends in Korea. Payday Tree from our friends in Stockholm at Starbreeze. Scarsabow from our internal studio within Sabre Interactive. MXGP 2021. and most likely the first full multiplayer zombie shooter on VR, a true metaverse title coming now in December from Vertigo Games Moving to our friends at Coffee Stain in Skövde and Ghost Jeep Games in Denmark They had a quiet quarter as well. The revenues were at 120 million. They continue to having a solid performance of their key titles. Valheim leading that in the quarter. However, the revenues of Valheim is on a bit lower level than it were earlier in the year, obviously. However, it increased in the end of the quarter when they announced or when they released the content update of Hearth and Home. That was well received from players and once again reached more than 100,000 concurrent players. Deep Rock Galactic had a major update with full modding support for Steam version of the game that was not driving a lot of revenues when that was released in September however a few weeks ago they released the first season pass that has been very well received and I was really happy to see that performance and the feedback from players well done also Ghost Ship Games having a very ambitious agenda of not only their own studio but also to be part of the ecosystem partly in Denmark for like-minded companies and happens to see they made a minority investment into the Danish startup Ugly Duckling Games Also, our friends yesterday got a nominee for, at Iron Gate, Coffee Stain for Best Debut Indie Game and Best Multiplayer Game at the Game Awards. Moving to our friends in Stockholm at Amplifier Game Invest. They continue to build Amplifier Game Invest and Amplifier is really, I wouldn't say a startup, but we are really investing into the future and it's the only operating group that doesn't have a positive cash flow yet. They released two products in the quarter, Dice Legacy and Fishing North Atlantic. They also set up two new studios, Zapper Games in the States and Ghostbite Studios in Canada. Also really glad to see the performance of the Little Nightmares from Tarsier that contributed very nicely to the profitability of Amplifier. So our dear friends at Sabre Sabre is growing and they had the best quarter since joining the Embracer group Revenues were at the record 463 million in the quarter Driven by a number of factors The releases of World War Z Aftermath in the last day or days in the quarter The release of Insurgency Sandstorm on console and the civilization on mobile from Aspire or published by Aspire Also a strong continued back catalogue performance of SnowRunner again and World War Z Sabre was able to achieve the highest operational event margin in Bracer Group during the quarter, well done and they have a record number of games under development, currently 33 games. They continue to have the business line also of work for hire and working with industry leading companies to develop for development. The internal headcount has increased with 563 persons, whereof 139 persons came from organic growth compared to last quarter. And during the quarter, Sabre completed a number of acquisitions, Slipgate, 3D Realms, Smartphone Labs, Bitex, and Demiurge. And looking ahead, they're having a very interesting pipeline. Here you can see the three titles, the Evil Dead, Star Wars Knights of Old Republic remake, and the first announced publishing title, A Quiet Place. Moving to Berlin and Tel Aviv, our friends at DECA and Crazy Labs had a strong performance. In total, they had 249 million in revenues in the quarter. We were able to close Crazy Labs a bit earlier in the first week of September. So Crazy Labs were contributing in the quarter of 104 million. Looking at the performer basis of the overall business they have 20 million daily active users across their games and they have more than 200 million monthly active users and total installs were 273 million DECA also acquired a studio in China, in Beijing, Jufeng Studio, including six live-operated mobile titles published for the West. Moving to our friends in Cyprus and Belarus, Easy Brain, they're having a very strong quarter, I would say, especially on the net sales with 607 million in the quarter. That is a strong performer growth. Titles contributed was Sudoku, Jigsaw Puzzles, Blockudoku and many others. On a daily basis, they are now actually close to 14 million users on a daily basis and monthly active use is 64 million and total installs in a quarter of 78 million They just also announced recently that they now achieved more than 1 billion downloads of their games The IDFA changes negative impact was lower than management initially expected and the overall performance of EasyBrain business was significantly higher Improving performance and monetization of existing games and successfully launching the new game Number Match And Easy Brain had three of the top five revenue titles of the group in the quarter and four of the top five performance in the first half year. Moving over to Frisco, Dallas with Gearbox. They continue to have a stable performance, a solid performance of 434 million in revenues in the quarter. They released tribes of Midgard and also had a stable performance of catalog royalties sales with Borderlands 3 and Risk of Rain 2. They had a big announcement announcing a new AAA studio in Montreal in Canada with ambition to employ over time 250 individuals. The new development team in Gearbox Studio Montreal will work on internal franchises and create new IPs. Steve Jones will take on the role as the president of Gearbox Software. Randy will remain to serve as a group CEO of Gearbox. But he will also be spending some more time on the very ambitious transmedia work in film and television. Looking at the selected pipeline, together we take two. They have Tiny Fina Wonderlands coming in the end of the fourth quarter. And in the future, they will have Homeworld 3 and many, many other titles that is not announced yet. The business area of partner publishing and film had a quiet quarter because they didn't have any significant AAA titles that they were distributing in the quarter. Revenues were 465,000. Net sales drivers were titles from Sega and Square Enix, Sonic Colors, Ultimate, Life is Strange and Lost Judgment. Koch Media has been expanding the capacity of its shared service and European Logistics Center in Austria They're just finishing off that investment and building and actually had a record shipment for them from an American publisher during October After a quarter, CoachMedia UK announced the acquisition of the marketing and live events company SplatterConnect Provides a multiple of field marketing services spanning retail, source, attendance, experiment, marketing and live event staffing and management The film continues to have a very stable performance with a very nice profitability The theoretical market remains weak even though it has recovered compared to the same period last year. Also in the Business Aeroport and Publishing film, There is other companies that is not part of Koch Media, but we are reporting the revenues in this business area. So it's the original company I was part of funding in 1994, a game outlet here in Karlstad. They had a solid quarter driven by the distribution of T-screw Nordic new releases, as well as a very wide range of back catalog titles. And they're also a strong distributor of retro hardware across Europe with retro bit and 8-bit too. Quantic Labs and more than 300 people doing QA services through Romania had a solid quarter above the management expectations. also happy to see the organic or perform organic growth of grim frost our first e-commerce business with wanking merchandise had more than 30 percent growth year over year so with all this said we are looking into the future not only doing AAA titles and a lot of other pipelines or other games titles but we're also looking to grow the business inorganically we will continue the same strategy and As you've been hearing Johan here, we currently have approximately 7.1 billion available in net cash and 16.2 billion available, including credit facilities. Most of our contemplated transactions relates to talent and IP acquisitions with the purpose of strengthening our existing eight operating groups. We are seeing increasing benefits from adding new studios to our growing ecosystem. And to mention again, Sabre Interactive, for example, have done an amazing job to find synergies both within Sabre as well as within the rest of the group. We continue to having lots of active dialogues with entrepreneurs, management teams and owners across gaming and entertainment. This includes a handful of larger, more transformative or very sizable transactions, which could create new operating groups. But we also having a lot of, I would say, mid and late stage discussions with companies that we will welcome to the group sooner rather than later. Our policy remains unchanged. We will never force a deal for the sake of making a deal, even though I love making deals, but rather let it take the time to find the right structures. There is no rush. And as you make games, it's no different in M&A. Quality comes first. The past 12 months, we have made 37 acquisitions. And we are expecting to do a similar amount of transaction over the coming year. Also announcing this morning, we made an acquisition that has not been press released with Ionic Labs from its founders. And Ionic Labs is a technology and business development company. as well as the parent company has the past year been working on the ambition to create an independent operational group in retro gaming with a lot of passion, with entrepreneurs and creators. During the startup phase of this, the parent company has made two not previously communicated minor acquisitions in Sweden and Japan. but without any financial significance as of today. And the reason for not disclosing this is for communication and commercial reasons but we are expecting to announce this when we are ready. And talking about the M&A outlook, Johan, perhaps you can give us an update on the leverage.

Yes. So as we see that, or as we see expected improvements in profit levels, but also free cash flows from our leverage, core business area games when we look ahead for the coming years the board of directors has initiated the review of our long-term financial leverage target and this will also include not only the net cash or net debt definition that we have in our quarterly report but of course we will also look wider to see to take into consideration any cash payments related to conditional purchase prices. We will announce this as soon as the review has been done but it will not be later than in connection with our Q3 report in February. yes we can also say that the current leverage target that we have communicated previously is one times management's expected operational EBIT for the coming 12 months that being said for the right inorganic growth opportunity we are allowed to go a bit above that but in the midterm we should come down to

not more than one times our expected 12-month operational EBIT but this is what we will review and we will get back no later than the February release of our Q3 report yeah and worth mentioning in connection to this is that we have dialogues that are exceeding regarding M&A exceeding our available cash which I also previously stated in the previous quarterly. That doesn't mean that we necessarily will do everything, but it's always interesting to talk. So, leaving over the sustainability to you, Johan.

Yes, thank you. so if you look at our sustainability and the quarterly update as you all know our sustainability framework is called smarter business this is where we want to be smart about business to create great games and great entertainment but also be a great place to work at or and try to do better for the communities in which we operate. And at the local level, of course, where we act, we're also stimulating this from a global perspective. During this Q2, we have continued to develop our smart business framework in general. We're also very happy to announce that we have recruited a head of sustainability. Emma Ire, she will join us in January next year, heading up the sustainability team in Karlstad. And Emma will bring a lot of expertise and seniority knowledge from the field of sustainability. She has currently been for the past seven years with the leading Swedish law firm. And as usual, there are several ESG initiatives and projects ongoing. If we look at the initiatives and projects that are running, we said at AGM in September that this year we will have a spotlight on pillar of great people and if you look at that we have launched a pilot project for diversity and inclusion locally at the studio level and this will include training and mentorship programs and be evaluated to see if there are inspirations also at the global level we have updated our annual compliance code training program in the quarter Looking at the governance part of ESG, of course the project for changing a listing venue to a regulated market will have benefits in this area. We have had great progress in the quarter for the project. and through the realization of the project we will have valuable governance and control structures which will further increase our existing structures within governance. We have worked on our climate strategy for the quarter and we are in planning mode for our emission reduction and climate offset compensations. We have also planned ESG sessions and training sessions for the wider management or the operative group CEOs. We're also happy to see that an initiative from Koch Media and their work of becoming climate neutral. They have been certified as a climate neutral company and they have ongoing projects to minimize their carbon footprint.

Thank you Johan. And now a bit of culture. So as always I would love to do just a short update what's happening with the Embracer games archive. So as you know we having this ambition to build this archive currently holds about 50,000 different games consoles and accessories including some archives. And it's led by the CEO we hired this year, David Bostrom, that has a deep knowledge in the retro gaming world. And happy to see that he recruited a colleague, Natalia, that will join very soon. That's also an expert in also building not only retro gaming, but also building an archive. And I'm always excited when they could complete this or continue to build this archive. And happy to see they bought an amazing new CD archive or collection, actually. So well done. But this is just the starting process of this archive. So stay tuned. One day, I hope to invite shareholders and other stakeholders to see this.

If you look at the parent company, we continue to build scalable resources and corporate capabilities as we grow. Looking at the headcount development since the time of the IPO, which was done in the fall of 2016, we have increased our headcount from three people to 30 people now, end of September. And the corporate capabilities that we are strengthening and developing are within legal, M&A, communication, ESG, finance. Also happy to highlight some of the recent key recruitments. Emma Ide, Head of Sustainability. Anna Bokström, Head of Tax. Caroline Andersson, Vice President of M&A. Anna Ålander, Head of M&A Legal. And last but not least, Jan Gulan, General Counsel. So we are adding capabilities and it's a fantastic team.

Thank you, Johan. So with that said, I would leave over to Oscar.

Thank you Lars and welcome back for the Q&A session. So definitely a lot to talk about today and let's start with the Q2 report as such. I mean it's a slower quarter from a release perspective and a lot of the more important titles very late in the quarter. So firstly what was the most notable contributors here in Q2?

Well, I think Hot Wheels again did very well. Hot Wheels is also a title that were launched on all platforms and it have had a notable physical revenue. It's a title that target that mass market audience that also buy a lot of physical goods, but did also perform well on digital. So, but with the physical component, obviously there was a big shipping and sell through. Then moving to World War Z Aftermath and Insurgency that had a similar performance in terms of millions and was very well received even though I think it just had like one day or a few days of revenues in the quarter but premium games that are in demand they do have could have a notable revenue the first day

Yeah, and I mean, strong reception for Hot Wheels and nominated us with quite notable company, I would say, among the best racing games of this year. So congrats to Luisa and to you as well. What do you see ahead for that game in terms of long-term monetization and potentially new content? Is that an option as well?

yeah I think they're having a content plan for the game I know and obviously now with the performance I think they have a lot of fantastic plans now we're looking forward to hopefully a strong holiday season with the product I know they're having a a long-standing relationship and agreement with the license holder of the IP. So I'm sure they will bring out a lot of fantastic Hot Wheels contents with years to come.

Great. And then further going through the segments a bit, and I think EasyBrain, interesting to talk about, continues to grow sequentially despite some market issues here in fiscal Q2. What can you say about the development here of the return on ad spend, the user acquisition spending as such, and the momentum sort of here into Q3 and Q4?

Yeah, so I think the performance came in a bit higher than our expectations Even the expectations for us were high already at the last quarterly As I stated, the last quarterly they decided to invest even more into user acquisitions in this quarter So the actual net profitability EBIT contribution was a bit lower than in the first quarter But that investments are taken through the P&L in this quarter, but obviously the payoff will be during the coming year or years. And that's basically how they build their business. They are reinvesting as much as they, I wouldn't say can, but they are reinvesting when they see the opportunity to have a long-term return of investment. And obviously their business model is more than 90% driven by by monetizing the titles by ads and then so that the revenues of displaying ads to the 14 million users on a daily basis and they are one of the leading companies in the world or big largest companies in these categories so I think they are very successful of monetizing this and they've been successful also to find new organically there are successful building new products such as number match but also finding by user acquisition driving new consumers if you look at the charts in their categories they're normally the leading player in the category globally And the margin they make is the difference between, you know, how much they can get for the ads and how much they spend in user acquisitions. So I'm super impressed with the team, how they are able to optimize their business, their games, their performance, very process driven. And I know they're having a long list of business development they can do just on their existing games, how they can improve them. So excellence in operating is a key word, I think, for EasyBrain.

Yep, great. And then Sabre, I would say another standout performer on the positive side in Q2. What was the reception, would you say, of World War Z aftermath? Are you happy with that release? And also, if you could discuss the contribution from acquisitions here in Q2 compared to in Q1.

Yes, obviously Sabre, when we acquired them 18 months ago, they were 600 people, and now they are close to 2,500 people. And Sabre is very integrated. They work together. They put projects and IPs all across the group. and and it's it's a fantastic formula if you know how to do that and if you get fantastic developers to work on other leading ips or licenses you can get a fantastic return of investment and they are executing on that and world war said the performance well i think it's in line or better than than the budget i noticed there is a mixed bag of reviews for it but you know i think there's a tons of fans loving it and and i think the financial performance is really good so i'm happy and if i'm not mistaken you have a game of the year edition coming out as well uh in q3 is that right or am i mixing it up a bit I can't confirm that, Oskar. I think you have better control of that one, actually, than I do.

Okay, understood.

I normally know most titles and release lists, but that one, I know they brought it out on Switch here recently.

Great. And then I would say CoffeeStain as well have to discuss. At least I was a bit surprised. Only, I think, 120 million in top line despite new content for Valheim. But you mentioned also a successful release here of an expansion pass in Q3. So if you could talk a little bit about that and how the expansion performed.

The business model of Satisfactory and Valheim is driven by selling more units. They continue to build a greater game and update it with more content that are engaging more players and then they are selling more units. But they don't charge for content. So when you have a content update like Valheim, you need to find new buyers of the products to generate more revenues. So it's a very customer-friendly business model that has been very successful, a bit like Minecraft in the beginning. And the second quarter was a quarter without any update for Deep Rock Galactic or Satisfactory. and now in the current quarter ending December there has been an update for DeepRock and there is an updated experimental version as well for Satisfactory But they are building for the long term. You know, I think you need to look at the long term view here. 120 million is a fantastic performance. They are a very small team. The profitability is great and they are very happy and I know they're having some amazing things in the pipeline. So I have no doubt that they over time will grow their revenues substantially.

Great. And I mean, we've all seen Amazon's release of New World, a big MMO with a huge marketing budget. Is that a competing title as you and Coffee Stain sees it? Has it had an impact, would you say?

No, I'm happy for Amazon. You know, they've been investing into games for a long time and I think it's great if you are and you're having a successful thing. And then I noticed a promise from the owner and that they will continue doing games. So that's fantastic for the industry and for us. So, you know, there is always new products coming to the market and normally you don't look at them as competition.

Understood. And then I think, interestingly, and I might need some help from Johan here as well, but you did disclose a mix between premium mobile and development and two kinds of premium as well. Could you discuss the mix here a little bit? What to expect going forward? I suppose mobile now 33% in Q2, but I suppose that will vary with releases of premium games as well. But here are your thoughts on how to look at it going forward, both you Lars and Johan perhaps.

Well, that's basically answering how much revenues we would have from different verticals. So it's nice trials. So I don't know how much color we can provide on that really. I think mobile in general is a stable growing business.

Yeah. And then one specific question on that. I was curious, royalty payments, is that included in developments? or in premium?

That's included in the premium respective section, the royalty payments. until the game is released is development.

Okay, understood. I think we'll have reason to get back to that for sure. And then, obviously you will have, at least I think you'll have a larger quarter for partner publishing and film in Q3 now. You have Activision Blizzard as a big client there, of course, with Call of Duty Vanguard now. in Q4. Could you discuss that release a little bit and perhaps Johan can add in with some working capital comments as well if that's a big impact.

I think, you know, I don't want to comment our business partner titles in that business area. I think in the respect of them, I'm just super proud of the teams at Koch Media and our companies that they are able to provide that service for leading companies. And what I could see from the performance KPIs, they've been delivering a fantastic service. So that's, sorry, Oskar.

Understood, no problem at all. So I think turning before we get through questions from the web here and the audience as well, the physical audience. I do have some questions on the announcements today regarding delayed titles and also the new guidance. So first of all, what was the key reason for delaying the two AAA titles and perhaps specifically also on Saints Row given trailers coming out, marketing and announcing the title quite recently?

Yes, I think in general I preferably have the publishers and developers talking more in deep about their products and rationale for decisions. In general I'm entrusting my management and key people to make these decisions but in general if you invested years and a lot of money into premium games and if you have people you trust fully if they tell you they need some more time there is no alternative than to give them more time And it's unfortunate if you have put a release date and start doing marketing. But that is always happening, unfortunately, across the premium games industry. And Saints Row is a hugely complex game to make, an open-world game with a very sizable team. And... They just realized they needed more time to maximize the potential. And I'm certain they will deliver a fantastic game. But now they're having the opportunity to deliver an even better game. And I think I noticed this morning that Deep Silver... put the release date end of the summer and I think it's a wise decision and I think it's a good release window potentially even better in a way than February were so from that perspective you know I'm backing them so I'm looking forward to August

Great, me too. And then just to break it down a bit, I mean, you delayed Saints Row and then unannounced AAA title from Q4 into next fiscal year. And I presume the other title is Dead Island 2, which you've also announced that you are developing. But are there any other titles except for those two baked into this new guidance for Q4?

Well, whether it's Dead Island 2 or not, that's something for you to speculate on, Oskar. I can't confirm that. But there is a number of other titles that we have been, or my teams have been deciding to move for, to postpone until next year. You know, you always have releases and that's kind of planned in a way. Well, planned, but that's... you're always expecting that to happen but I think there has been obviously potentially a few more this end of this financial year and obviously driven now by the two AAA titles the just share amount of investment moving into next year is obviously notable but in general I feel very confident about the pipeline and I think we showed some confidence this morning by initiating a new guidance or forecast of our profitability the coming years And we spent a lot of time from the bottom up analyzing the business and the revenues and profitability in order to give this. So, yeah, some interesting years ahead of us.

most certainly and I will come back I have a lot of questions on the pipeline for the coming years and the guidance but first I think actually very happy to have a physical audience here today for the first time in a long time so do we have any questions from the audience Otherwise, we'll turn to questions from the web, and I have quite a few here. So a question from Matti Littgren at Bernstein on the pipeline. With 25 AAA games in the pipeline, Do you expect increased product risk due to higher average development and marketing budgets? If you could give a bit of color on which operating units are generating the most live ops revenue outside mobile as well.

Well, that's kind of two questions, if I hear them right. Do we expect more business risk in the development? Well, there is always a high business risk of doing big projects. but at the same time if you're building the projects with established team and established IPs and that have done the same or very similar products before you can mitigate that risk and if they're building the games on established technology for example you can always mitigate that risk so And also, obviously, if you're having a wider pipeline of products, sizable, the risk per title is lowered. So I think when, you know, now when we have reached a new level of revenues and the number of investments and games we have I feel more confident about having more sizable projects in the pipeline because obviously we're not only having this 25 AAA we're having hundreds of other titles coming out in this period so so in general I feel very confident about the pipeline and we spent now a lot of time to analyzing the pipeline on the AAA and you know with some headroom and with some planning when they well you know what kind of resources we will use what studios and No, so I think there's a good plan.

Great. And then the second question here was, could you give us a bit of color on which operating units are generating the most LiveOps revenue outside of mobile?

Well, in percentage, I would say Kofferstein, because we do define Titus. They continue building on DeepRock, Satisfactory, and Valheim as LiveOps. So I think that's quite clear. I suspect Gearbox as well with... Well, in percentage I would say CoffeeShame is leading. Obviously, yes, Gearbox. They mainly do LiveOps games and very successfully so. But I think all operating units now having a good... fair share of live ops games so it's an increasing number because obviously As running a business, you can appreciate having recurring revenues and a stable profitability.

Yeah, absolutely. Then a few questions from Nick Dempsey at Barclays regarding the guidance. First of all, and this is referring to consensus estimates, so operational EBIT guidance for the current year is around 20% below consensus estimates. Could you try to break that down a bit into the impact of the two AAA games being delayed and the other smaller delays, consensus not matching your own expectations and any other sort of impacts?

No, I was perhaps not the absolute majority, but a very good majority is driven by the postponed releases of the two AAA titles.

Okay, great. And then a question on your more long-term guidance from Nick Dempsey again here. Will you show us how you're progressing versus your financial year 23 and 24 guidance for operational EBIT on the current basis as you go through those years? since your numbers will of course include M&A most likely from this level when we come to those years. Hope you understood the question.

Meaning if we will guide or forecast the current guidance and then put M&A on top over the coming three years? Well, exactly how we will communicate and I think now we started with the communication this morning with that forecast and I'm sure we will develop the communication and transparency of that. But exactly the details of that I don't want to sit here and promise.

understood and then a question from martin annel at the mb markets what what's the most important factors in order to reach the midpoint of the 2023-2024 operational ebit guidance the guidance is relatively large for this specific year yes oh how should i phrase that without

So I think a stable performance of what we could see in the pipeline in addition with a continued performance of back catalog and the mobile business I don't think we are expecting any outliers performance at least not in the midpoint but At the same time, you don't plan for absolute failures either. So I think there's the midpoint on all titles. But in reality, you have titles overperforming and you have titles underperforming. And that's the beauty of having 200 games in pipeline. Because normally you're delivering according to the expectations.

And I mean, just an overall question on the guidance here. There is a range, of course, of outcomes in the guidance. How have you used the bottom-up approach, you said, during the presentation here, and put a lot of time and effort into it, of course?

It's a bottom-up, but it's also an adjustment from... from me and Johan and key people here with the experience of the certainty of the bottom-up approach from the businesses. because over time you learn how the data or the budgets or what you're getting, if that's high or low, if there's lots of delays or not in numbers. And obviously there is a bit of adjustment to mitigate and manage that. So sort of a haircut to the mid-range. It could be a haircut, but it could also be an increase. Some data is always sandbagged and some is always very optimistic.

Understood. So is it fair to say that mid-range of guidance is sort of your... key expectation or sort of baseline expectation? Or should we view the low part of it?

Phrase that again, Oskar.

If the mid-range of the guidance for the respective years, is that what one should look at as the sort of base outcome? Well, I don't want to use that...

specifically or obviously but I wouldn't say it's well I would say that could be a reasonable approach to look at things yeah Okay, that's helpful.

Thank you. So going into, I think this is obviously a key topic today and going into the mix here of the 25 AAA titles in the pipeline. 11 are in full production, 8 are in pre-production and another couple of titles are in concert stage. So Do you expect all of these titles to be released before March 2026, or could some fall away? Great. And then you presented some slides here on the mix. I think there are a couple of factors which are interesting. Of course, the mix between in-house developed titles and publishing, but also what share of titles you're financing yourself. So I think 16 were financed in-house. What would you say are the implications in terms of CAPEX requirements in the coming years? Is that something that you might provide guidance on going forward as well?

Yeah, I'm sure you and other equity analysts in the market will have lots of questions. You know, now we decided on the profitability, which I think we think is the most important metrics. But obviously, there's a lot of other things here. Cash flow, top line. investments so we haven't planned to give any further guidance but let's see obviously it's important for us that you and others kind of understand and shareholders understand what we are doing and what we are building and what you can kind of in the range expect from the business you and other analysts have done a fantastic work during the past years doing that but because our growth and our now size and our complexity in business models and it's also a lot of feedback from international investors it's just too much information so why can't you tell us in a way I wouldn't say they are pushing for the guidance itself but I think there's a need for simplify the communication and that's why we decided to do this forecasting this morning But we are expecting to grow our investments. You can see our investments into the pipeline are growing. We are adding more and more people into our companies, 25% organic growth in headcounts. So I would expect that to continue. I would not necessarily say at the same pace always, but it will continue.

And 11 projects, AAA projects in full production mode. Can you talk a little bit about what you expect, how you expect that to develop? And by that I mean some will obviously fall out from full production when they are released and some will be added from pre-production. So you expect the number of projects in full development to increase increase a lot or will it be relatively stable? How should we view that?

Interesting question. I would say at the get-go I would expect it to increase Obviously not to the full amount, but I would expect it to increase from the 11.

Maybe 20 projects could reach potentially 20 full development projects.

I think I need to come back to that specific number, but I would definitely expect it to increase.

Yeah, great. And then, I mean, in terms of operating units, there are not many operating units that could develop and publish and market a AAA title. So is it fair to assume that it's only related to Kors Media, Sabre, and Gearbox? Or are there any other operating units in the mix here?

I would say it's a fair assumption that the absolute bulk of them would be in those business areas. But I would leave that collar with that.

So you can't rule out satisfactory on steroids here going forward?

I don't think CoffeeStain have any planned AAA releases that I could. Okay. It's not really their business.

understood then we have had another question from the web these 25 titles again if we can relate to somehow to Saints Row which is a major major project for you of course are most of them smaller than Saints Row or any bigger in terms of development personnel and budgets

Yes, I would say. There is potentially something that... It's hard to give color on that. I could say there's potentially titles that has more head counts, at least. And perhaps not 250 is enough, to be honest. It could be slightly, but we cut the 250. Yeah. so in terms of investments on our own balance sheets well things are always big so if not that will be the biggest but that's definitely a big one

big and getting bigger in the coming six months. And better. And then I saw in the presentation that Gearbox had a TBC title. Is that in full development? They're having a lot of titles.

And they have more titles. I would say Gearboxes have a very ambitious plan. So they're having... I wouldn't say unusual, but a good number of titles in this pre-production and concept phase as well.

Okay. Actually, Saber, I meant Saber. Actually, they had a TPC title I noticed among the key highlights there. Is that in full production?

Hard to give... I don't know really what title you're referring to, Oskar, but they have so many titles. Okay, and a lot of development capacity as well over there. I think just the St. Petersburg studio has grown from 550 to 750 in 18 months.

And then a question from Benjamin May at Berenberg. You disclose use acquisition costs for your mobile businesses now. As it currently stands, this cost is higher relative to mobile peers, I guess in percent of sales, and equally growth has been stronger too. Is the company's ambition to continue to deploy more capital to take market share in this area? And also, do you see mobile growing as a share of the mix versus premium PC and console over the coming years?

Well, I think for Easy Brain, they are the leading leader and they want to continue being the leader. So there's no question about that. And they are expanding with more products. What should we say about, you know, would they continue investing as much as they did in this quarter in user acquisition? I think it will vary over the quarters depending on the price and the return of investment, obviously. But... They're having, I would say, I'm impressed with, they're having a very solid forecasting process and are always delivering. And the profitability looks strong.

Good. Then back to the pipeline a little bit, getting a lot of questions on that and the guidance, of course. So, of the AAA releases in the next financial year, 2022-23, how will they be skewed H1 versus H2? Well,

Well, Saints Row, you probably know now. The rest of them is, I guess, not announced. But I don't have any more color on that. I will let the publishers and developers talk when they're ready.

Understood. So Saints Row is August, so H1. And then we'll have to see about the other titles. Great. Then question on Dead Island 2. Do you expect Dead Island 2 to be released in the next fiscal year?

I can't comment on Dead Island 2 specifically. I will let the developer and publisher talk about that. However, the unannounced AAA title that we postponed in the fourth quarter, I'm very certain about will be released in the next financial year.

Great. We'll have to do our own assumptions there regarding the title. Then on the guidance for the next two financial years, so 22 and 23, is there room within the range for more games to be delayed in both years? Or is this all based on your existing planned slates?

Well, first of all, there is range, depending if you ask the mid-range or not. But the range is, well, obviously a lot of room for things, including delays and notable delays, I would say. but yeah there is there is there is room for delays depending where you are in the I would say in the high range as it looks now there is less room for delays than in the low range so But I don't forecast myself to be standing here every quarter and lowering the forecast. That is not my ambition. But let's see. We are a games company. At the end of the day, we are not running this for a short-term profit. We are running this to build a long-term sustainable business, to make quality products, to manage fantastic entrepreneurs and creators to just realizing their ambitions and visions so we will make the decisions needed and Johan and his team and myself is trying to understand the output in terms of profitability out from that and we will tell the market

understood and then we are getting quite a lot of questions on crypto games play to earn nfts are you considering these business models or functionalities actively and the way to utilize it Interesting to hear your thoughts there on how you view this trend and this very active debate.

yeah well you know obviously you you're trying to learn and and and there is people within the group that are very interested um you know i think good similarities uh we are you know i was very skeptical skeptical the first years and then but after a while it actually became something And then we're going and investing into it. But it's a bit of a lottery to be first out. And to run a lottery is not really the business model of Embracer. But if you can manage the business without having a lottery business model, we are interested. But to be honest, it's not a key focus area for us, at least not at the parent company level. I would be happy to support the operating groups if they feel they can make safe investments into that area. But anything where there is a lot of potential fraud and gambling-like things and high valuations, it's not really our thing.

That makes sense. Then again, back to the guidance a little bit here. Looking at 2023, 2024, so roughly two years out here, is that in any way an exceptional year? Or do you expect to grow from that level in the years after that? We're expecting growth.

I would say we are expecting to grow much faster than the industry also in the years thereafter.

Great. And then... turning to to Johan a bit for some questions so IFRS expected from the 1st of April your Q1 report next year how has the work progressed and to sort of reiterate a little bit what do you expect to be the main effects in your financial statements next year

Yeah, so we're still progressing in the project, so it's not final. But I think that looking at the expectations of changes, they are similar to what we have stated earlier in terms of what we already knew. Goodwill amortization is one point. ios 16 with the treatment of leases is another and that i would say is it so no this is a very thorough process so what you do is that you do questionnaires and then you really go through every details and so far in everything we haven't seen anything that would add to the adjustments that I just described. So it's moving along very well. Of course, disclosures and the documentation process for quarterly reports will increase in terms of the financial section of it.

It's the biggest ever conversion project in Sweden, I heard. I don't know if that's true.

Yeah.

So you've been busy Johan, and perhaps you as well Lars. And then related to that, you also write a report that you expect to transition to the main list in Stockholm, if I understand it correctly. after the IFRS transition is completed but not later than June 2023 so I mean that's quite a long time until June 2023 it's in my book so should we expect it sooner than that or do you expect it sort of in over a year's time

Johan is... They have a plan and... Yeah.

No, that's also, I mean, changing listing value is not only about converting to RFRS. There are other work streams in that project. And we want to definitely, and I would say that you will have a governance part where there will be internal controls and IT. And we want to do a great project. We want to take the time to do it very good and to have it aligned with the decentralized model of Embracer and that takes time as well I think we all have seen a lot of companies getting destroyed by central policies and governance

issues and it's just getting out of control and it will alienate entrepreneurs, companies and people out there if you don't think this through and yeah and I think lots of American companies I know have been struggling in the past at least with lot of this kind of compliance so and obviously we need to follow everything we want to do is good yeah but you need to think not just execute i think that timetable that we have disclosed gives us that balance in terms of the project

Makes sense. And then a question from the web again here. Will the Saints Row team be at peak numbers of developers from now and until the summer next year, or are we past the peak?

I can't really give any color on that, I think. I will let them talk if they want to talk about it. in the respect of them, I would say.

Yeah, of course. And we've seen a lot of interesting news here recently regarding name changes of large listed US social media companies. And I mean, you have this regards to the metaverse, which is an exciting sort of future opportunity that a lot of companies see now. How do you view your role in a future metaverse? I mean, you own a couple of very high quality VR development studios, for example, but in a broader sense, what is your sort of ambitions?

No, I think I know that Vertigo, for example, have one of the most metaverse games you can find coming up for the VR social multiplayer game where you can interact with your friends and others now in December. So it's a perfect good example of something we could bring to that metaverse. I wouldn't say we are the... arm dealer but perhaps we're selling the spades to the ones that want to build their platform and metaverses that's our position and strategy you know we're providing the content we're providing the the ips people and we're happy to to help them to to do that yep

And then on the guidance, a question from Rasmus Engberg at Handelsbanken. Why did you guide all the way to 2023, 2024, given how uncertain release dates can be?

Yeah, we were actually discussing whether we should give a guidance even further out in a way. Because I think it makes sense for us to give a more long-term perspective. There is two things. There is an issue of the long-termness of shareholding. and for shareholders to understand Embracer in the future because the market is very short-term especially internationally so it helps us in that communication but it also helps us to to and also avoid these short-term discussions uh and and i'm just super keen to have you know great long-term shareholders that's super important for us and i think it makes sense for us to communicate more about how we see the business more long term than just a year ahead especially considering we are investing so much into the future. I think it would be different if we were running just a mobile business or a business with a handful of IPs that is kind of the same every year and just grow them a little bit. But we are not like others and we are different and I think we just need to communicate that better.

Makes sense. Then a few questions from Nicola Longley at the BNP Exane. First question is, is the 881 million game capex a good base for coming quarters or should we expect a further increase to support the pipeline? And looking in the mid-term, what sort of game capex increase are you expecting on organic basis? We've discussed that a little bit, but any more color there?

I think we're expecting the investment to grow. And currently we don't see a slowdown in that. So I think we could expect growth in investment into the pipeline to grow quarter of a quarter, the same levels roughly. on the long term obviously it's not sustainable to grow 25% a year and with the addition of adding M&A on that but at more of the short term like the coming quarters and year I think we will have a significant growth

And then another separate question here. There's been various discussions regarding wage inflation in the industry. Are you seeing this tension in your key studios? Have you reflected that headwind, that assumed headwind, into next year's guidance?

I think in general we are able to recruit great people and we have a I'm certain my companies have a fair package for people and that's including the salary, but also the culture and the IPs and the project and the people they get to work with. There's many factors, I guess. Yes, we have noticed there is increased competition in the industry. I would say it's sometimes more relating to specific cities sometimes. Montreal won, for example. Could be. But also the changed landscape post-pandemic or during pandemic in terms of work from home has, I think, increased possibilities for people to work on remote with more companies. And that's changing a bit of the dynamics for all companies, not only Embracer. In general, I think we're well-positioned. I think we always assume... you know cost increase when forecasting to a certain degree but we have not seen anything going wild in the numbers so far even though there could be local things happening but in general I think over time you need to be competitive not only on the compensation but also on the culture you have in the company and the long-termness and the IPs and the workplace.

Great. And then actually a question on the pipeline again here. 25 projects in the pipeline. How many of those projects are involving multiple studios in the group collaborating on projects?

Hard to give color, I would say. But to a certain degree, everyone, because you're always using partners and outsourcing and especially post-release for live ops sometimes and more content. But during development, during main development, in general, it's linked to the studio. perhaps we can come back to that questions in the future but you know I'd love to see more of it if it's efficient and working and I know Sabre is doing for example a bit of that and there is a bit of that elsewhere as well

Yeah, I guess I'm thinking specifically about the Metro franchise and you have a lot of employees in Malta and in Russia. So I guess there could be projects with a lot of collaboration on certain titles involving multiplayer features and so on. Could be many things, Oskar. Great. So just finally, I guess time to wrap this up. Looking at the remainder of this year here, what are you most excited about in terms of releases, in terms of announcements and so on? What to expect here for the remainder? Excited, you know.

I was excited to see Aspire coming out with the Star Wars Knights of the Republic on Nintendo Switch last week that made me glad and great reviews happy fans really nice collector's edition physical as well so I think such things makes me glad

That and the games archive, I suspect as well. You bet. Great. Thank you very much, Lars. Thank you, Johan. Thank you, everybody, for listening in and to the fiscal audience. That's it for today. Bye-bye.