Embracer Group AB

Hello and a very, very warm welcome to the presentation of Embracer Group's fiscal Q4 results. We have a lot to talk about today, including the successful release of Tiny Tina's Wonderlands, a pipeline of over 30 AAA titles, as well as the consolidation and strong growth for Asmodee here in Q4. We also have quite some familiar faces with us here today and some distinguished guests from France and the US. We'll start with the presentation of the Q4 results. Then we'll have a presentation by Asmodee's management. and I will come back for a Q&A after that. But without further ado, I'll leave it over to Group CEO and Founder Lars Wingefors and CFO Johan Ekström. Please go ahead, guys.

Thank you, Oskar, and good morning, everyone, and very welcome to Karlstad Värmland. To start, it's not possible to talk about the quarter without mentioning the darkest chapter of the European history in modern times. I'm deeply saddened of the inhumane and aggressive war in Ukraine. It's an inconceivable act of cruelty that overshadowed our everyday progress in the quarter. All of our employees are part of our family. And our first priority has been and it still is to provide the safety of our staff and their families in the affected regions. We are stand firm in support of our employees wherever they are located. By the end of 2021, we engage approximately 250 people in Ukraine, a thousand in Russia and about 250 in Belarus. Our priority has been and still is to support our employees in the affected regions. We have been working hard to support the relocation and safety of many of our employees and family members who are willing to leave and has as of today been relocated. And today we have been relocating hundreds of people. So back to the quarter and the financials. Yes, we are pleased to announce another stable quarter. with net sales exceeding five billion in a back catalog driven quarter with only a few new releases and the continued organic growth in our mobile business. Our operational EBIT for the reporting quarter increased 17 percent to one billion fifty two million, concluding a financial year within our forecasted range. The operation EBIT in the quarter includes 50 million in costs relating to the situation in Ukraine, as well as 74 million in operation EBIT contribution from Asmodee and Dark Horse. The organic growth came in at minus 34 percent and seven percent on the full year. And we are we have been in the quarter been facing the breakaway success of Valheim in the previous quarter last year. But looking at the organic numbers just makes up about one third of our combined business. So we believe to measure the actual business performance of all businesses we owned as of end of March, we need to look at the performer growth and the performer growth in the fourth quarter were 3% and on the full year basis, 18%. The mobile performer growth for 43% in the quarter. The free cash flow came in at 430 million. We have been reiterating our operational EBIT forecast this morning. So we are expecting an operational EBIT in the current financial year ending March 2023 in the range of 9.2 to 11.3 billion. And we're expecting that this year to be driven by a great pipeline of new games to be released. We're expecting the value of the completed games to be more than three times the games we released the past year. This forecast is not including any minor impact from the acquisition of Beamdog, Lost Boys, Crystal Dynamics, Eidos, and Square Enix Montreal. But that takes into account the possible indirect impacts from the war in Ukraine. Looking at the operational highlights in the quarter, we currently have 223 game development projects in pipeline, whereof 159 projects are unannounced. We are reiterating that we are expecting to release more than 25 AAA games up until March 2026. In the quarter, we invested a record of 950 million into the pipeline, and that is more than 3.6 times the value of the game we released in the fourth quarter. That's worth 262 million. Looking at the mobile KPIs, even with having the first quarter in the calendar year being, in general, less good for mobile games, because normally the holiday season is the strongest, we saw growth. And mobile monthly active users were more than 300 million, and we are now at daily active use of 35 million players. We ended quarter having 118 studios across the group, and including the announced acquisitions that is yet not closed, we have 124 games development studios within the group. The quarter was driven by a strong back catalog performance. Risk of Rain 2, Deep Rock Galactic, Borderlands 3, Insurgency Sandstorm, Valheim, and many, many other titles. On the new release segment, we had a very strong release from Gearbox with Tiny Tina Wonderlands through our publishing partner, 2K. We also had the release of LX2 that financially did not meet the management expectations. However, we believe we will make a reasonable return of investment over time. We also had King of Fighters releasing through Koch Media. So let's jump into the business areas. So looking at the THQ Nordic, they had a stable performance of the back catalog. Again, SpongeBob, Battle of Bikini Bottom, Wreckfest, Biomutants, or Evergreen titles continuing to perform. Again, in the quarter, they released LX2, but also Expedition Storm and a number of other titles through Handy Games. We believe both LX2 and Expeditions Rome will have a positive return of investment over time. However, in the quarter, it did not really achieve the expectations. Currently, there are 21 studios across THQ Nordic and are close to 1000 people in headcounts. During the quarter, they announced the acquisition of the Frankfurt-based Metric Mines, a renowned service provider of animated content. They also announced the opening of an office in THQ Nordic Singapore. Looking ahead, they have a very busy schedule of new games, including Way of the Hunter, a new SpongeBob game, MX vs. ATV in the end of the quarter, Outcast 2, Jagged Alliance 3, and an amazing remake of Destroy All Humans 2. Our friends at Koch Media Publishing had, as usual, a strong quarter driven by the back catalog. They received 543 million in sales. And again, the main back catalog drivers were Metro Exodus. But also we see a strong continued performance of Hot Wheels and Arizona Sunshine. New releases in the quarter were After the Fall, Supercross 5 from Milestone, and King of Fighters. Currently, they are 13 studios and are engaging closer to 2,300 people. Chorus won the Best German Game Award. Congratulations to the team in Hamburg. Dixart in France won five awards. and looking into the future just looking into this quarter we we had a number of releases so far let's get fit for voxler we have moto gp22 from milestone trek to jumani from flying wild hogs and more content coming for hot wheels hot wheels unleashed So looking ahead through all the publishing businesses at Koch Media, they're having a very interesting pipeline, including Saints Row, Dead Island, Gungrave, Evil West, System Shock, Dolmen, Crossfire Legion, and Payday 3. And I would like to give a warm welcome to Brian and Rob from Deep Silver Volition, who will tell us more about the much anticipated game Saints Row. So welcome.

Thank you, Lars. It is good to be here. And we couldn't be more excited to talk about Saints Row and our upcoming release. Right now, we're putting the finishing touches on what we believe will be the biggest and best Saints Row game yet. We're rebooting the franchise, and that means a new cast of characters and an all new city to explore. This is an amazing opportunity to welcome a brand new audience to the IP, and we're happy to preview it here for you all. Let's roll the trailer.