Fractal Gaming Group AB (publ)

Welcome to the Fractal Gaming Group Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to speakers CEO Jonas Holst and CFO Karen and Jim Arson. Please go ahead.

Hi everyone and welcome to today's presentation of the Q3 2025 report for Fractal Gaming Group. In this call today we will walk you through the key highlights from the quarter. We'll focus on our business status, the financial performance and the strategic progress that we have made so far this year. In summary, we are pleased to report that Fractal has maintained strong momentum throughout the third quarter, resulting in the strongest nine month period in our history. We're particularly proud of this development as we, at the same time, continue to navigate uncertainty in the macroeconomic environment, not the least as we look ahead to the final quarter of 2025. Today, we'll discuss both our achievements and the opportunities and challenges that we see on the horizon. And as always, we're happy to answer your questions at the end of the call or individually afterwards. Let's dive directly into the highlights from the third quarter. It's a period that again demonstrates our ability to deliver growth, resilience and innovation, even as the market landscape continues to evolve. We saw continued strong growth in Q3, driven by our strategic initiatives and a sustained increase in end consumer demand. Our team's focus and agility have enabled us to capture opportunities across all regions. Net sales for the quarter reached 181 million SEK, representing a 16% increase year on year with a strong organic growth in US dollars of 27%. The growth was especially strong in EMEA and in general fueled by the successful launch of our Scape gaming headset, which has quickly become a customer favorite. Sales out revenue, our best indicator of true consumer demand, rose by 34%. We maintained balanced inventory in our sales channels and we proactively increased internal stock to ensure that we can meet demand and manage supply chain risks as we head into year end. Profitability remains a core focus for Fractal. An EBITDA increased to 14 million SEK with a margin of 7.6% up from 7.4% last year. Our product margin also improved from 37.8% to 39%. This margin expansion was achieved despite ongoing headwinds from tariffs, currency fluctuations and higher freight costs in the quarter. We managed to offset these pressures through favorable product mix and lower sales discounts, demonstrating our ability to adapt and protect profitability even in a volatile environment. We closed the quarter with a strong net cash position of 36 million SEK, up from 30 million last year. This financial strength continues to give us the flexibility to invest in future growth, pursue strategic initiatives and continue to deliver value to our customers and shareholders. Q3 was a quarter where Fractal not only delivered strong financial results, but also took important steps forward in innovation and operational agility. We launched the Epoch computer case with great reviews and our team has excelled in navigating uncertainty, seize new opportunities and lay the groundwork for continued profitable growth. Turning to product and brand development. As mentioned in Q3, we continue to expand our portfolio with the launch of Epoch, a computer case that blends minimalist Scandinavian design with performance engineering. Epoch features mesh front and top panels and our new Momentum fans that is delivering exceptional cooling and quiet operations. Early reviews have praised the design, thermals and flexible layouts, reinforcing our reputation to drive elegant performance-driven products to the market. We also saw strong momentum from our other recent launches, especially the Scape gaming headset that reached a top three revenue contribution position for us in the quarter. Just as the refined gaming share, Scape has been very well received in the market, and both launches allow us to establish a strong presence in these new product categories. These launches, combined with our ongoing focus on innovation and design, ensure that Fractal remains the brand of choice for gamers who value both performance and aesthetics. Now let's also take a look at the broader market development. The global PC market continues to show positive momentum, with shipments projected to rise by about 4% in 2024, surpassing the previous peak we saw in 2021. This growth is driven by the ongoing migration to Windows 11, the need to upgrade aging systems, and the launch of new, more affordable graphic cards from NVIDIA and AMD. These developments have made advanced features accessible to a wider group of gamers, fueling the upgrade cycle to continue across the industry into 2026. Major new game releases such as Borderlands 4 and Stellar Blade are also driving demand for next-generation hardware. We also continue to see evidence of the shift in consumer preferences. Today's gamer is older and more design conscious. It's a trend that aligns perfectly with our long standing strategy. These market trends reinforce our confidence that Fractal is well positioned to capture the growing demand for premium design driven gaming gear. And with that, I'm handing over to Karin to take us through the specifics and the details of the Q3 financials.

Thank you, Jonas. Let's take a closer look at our third quarter performance, starting with net sales. In the third quarter of 2025, we delivered another strong performance with net sales of 181.4 million, an increase of 15.8% compared to the same period last year. In US dollar terms, we delivered strong organic growth of 26.7% year on year, with net sales reaching 19.1 million US dollar. Because all our sales are denominated in US dollar, currency movements have a notable impact when results are translated into our reporting currency, SEC. The weaker US dollar explains the difference between our strong organic growth in US dollar terms of 26.7% and the growth rate reported in SEC of 15.8%. All three quarters this year have shown higher sales compared to last year, making January-September period the strongest in Fractals history in terms of organic net sales. The strong Q3 performance was supported by continued robust demand for our PC cases, which remain our largest and strongest product category We have a solid product portfolio and we continue to develop and launch successful cases to sustain growth and strengthen our core position in the market. Our new categories, including the Scape Gaming Headset and the Refined Gaming Share, performed in line with expectations and contributed positively to growth. Over time, these new categories are expected to become an equally important contributor to total sales, complementing our core products and further broadening Fractal's position as a premium gaming brand. Another important driver that impacted net sales in the quarter was the continued strong momentum in the gaming and PC segments supported by this year's graphics cards launches and several major game releases confirming that the upgrade cycle within the segment remained strong. As we entered Q3, inventory levels across sales channels had normalized and are now at healthy levels or in some regions slightly low, providing a solid foundation for sustained momentum ahead. Sales out remains at a high level, increasing 33.9% year on year, based on data from our tracked partners, covering approximately 80 to 85% of total sales. We have now delivered yet another quarter of strong growth in sales out to end consumers, a clear sign that our products continue to be well received in the market and that underlying demand remains healthy. Let's continue with our segment and regional performance for the third quarter, starting with the other product category. As I mentioned earlier, our new product categories are becoming an increasingly important part of Fractal's business. In Q3, the other category grew nearly 92% year-on-year to 27.7 million, driven primarily by the Scape gaming headset and the refined gaming chair. Both products performed in line with expectations and made a solid contribution to growth, showing that our expansion beyond cases continues to gain traction. The other category also includes supporting PC components such as fans, power supplies and water cooling. In total, the category accounted for 15.3% of Fractals net sales in the quarter. Up 6.1 percentage points year on year and 4.7 percentage points compared to the last quarter. Turning to cases, sales of cases reached 153.7 million, an increase of 8.1% year on year. Cases still represent the largest share of our total sales accounting for 84.7%, slightly down from last year as new categories continue to grow. Our cases remain the backbone of Fractal's business and we continue to develop and launch successful models to strengthen our position and drive long-term growth in this segment. Looking at the regional performance, EMEA delivered the strongest growth this quarter, up 35% year-on-year, driven by continued demand for our core PC cases and by strong sales of new categories. As a result, EMEA's share of total revenue increased to 59.2%, up 8.4% from last year. Sales out in EMEA grew an impressive 56% year-on-year, confirming that underlying demand remains very strong and that our products continue to perform well in the market. In the Americas, net sales totaled 50.3 million, down 11.9% year-on-year, Sales were affected by higher import tariffs and currency effects, which led to price adjustments during the quarter. These measures helped offset part of the cost impact, but also softened sales temporarily. At the same time, lower discounts compared to last year supported margins, while slightly weighing on sales volumes. The region's share of total revenue declined to 27.7%. But important to notice is that sales out in Americas grew by 14% year on year, confirming continued healthy demand in the region. Finally, APAC grew 18.8% year on year and remains a stable contributor with good momentum across our core channels. Let's move on to product margin. Our product profit increased to 70.7 million, corresponding to a margin of 39%, up 1.2 percentage points from 37.8% last year. The margin improved despite tariff headwinds, mainly supported by lower sales discounts, which contributed about 3.5 percentage points and a favorable product mix within the case category, adding 0.9 percentage points. Tariffs had a negative impact of around 2 percentage points, while freight and FX were minor at minus 0.5 and minus 0.6 percentage points, respectively. Overall, we saw solid margin improvement and continued stability in pricing and mix, reflecting strong operational discipline in a more challenging market environment. EBITDA increased to 13.7 million, corresponding to a margin of 7.6%, up slightly from last year. The improvement was mainly driven by higher sales and stronger product profitability. Operating expenses were temporarily elevated mainly due to strategic inventory buildup in the US ahead of potential tariff increase, which led to higher warehouse costs. These effects are temporary and are expected to normalize as inventory levels decline and tariff conditions stabilize. External factors had a material impact on profitability during the quarter, primarily related to tariff-driven costs and unfavorable currency movements. Adjusted for these effects, the underlying EBITDA margin would have been around 12% instead of 7.6%, reflecting solid operational performance despite the external headwinds. Operating cash flow amounted to minus 28 million compared to a positive 14.8 last year. The decline mainly reflects the inventory purchases made in Q2 with long payment terms and we expect cash flow to improve as inventories decline during the coming quarters. Net cash strengthened to 36.4 million up from last year's level. The position could have been even stronger if not for the temporary capital tied up in inventory, which is expected to be released as stock levels normalize. Despite this, Fractal maintains a solid financial position with strong liquidity and flexibility to support continued growth. As we have already seen across the previous slides, the result in the income statement reflect the solid business performance in the quarter. Total revenue increased by 15% year on year, reaching 183 million. The improved product mix supported margins while higher import tariffs had a negative impact. External expenses were higher than last year, mainly due to warehouse and logistics costs related to the strategic inventory build-up in the US. As previously said, these are temporary effects that will ease as inventory levels normalize. Personnel expenses increased as we continue to invest in our organization. through strategic hires, but also annual salary adjustments to support future growth. Finally, net financials were positively affected by the US dollar SEC exchange rate, while interest expenses remained low, thanks to our net cash position. With that, I hand over to Jonas again.