Fractal Gaming Group AB (publ)

Hi everyone and welcome to today's presentation of Fractal Gaming Group's Q4 2025 report. During this call, we'll walk you through the key developments from the quarter and the year, covering our financial performance, market dynamics and the strategic progress that we have made. In summary, we closed 2025 with continued organic growth in the fourth quarter and a record year for Fractal. Measured in dollars, organic growth for the full year reached 25% while reported net sales in SIEC increased 16% to the highest level in the company's history. At the same time, we have operated in a challenging external environment with tariffs, currency movements, and increased volatility that has impacted our profitability to unsatisfactory levels, particularly in the second half of the year. We will therefore focus today not only on what we have delivered, but also on how we are managing these headwinds and how we are positioning Fractal for long-term profitable growth. As always, we look forward to answering your questions at the end of the call or in follow-up discussions later. Moving directly into the highlights of the fourth quarter, Q4 was characterized by a combination of continued underlying demand and challenging external environment with continued tariff effects and strong currency movements. Despite very strong comparables from Q4 2024, we delivered continued organic growth also in the last quarter of the year. Measured in dollars, the organic growth was 4.5%, reflecting stable and resilient demand across our markets. Reported net sales amounted to 187 million SEK, down 9 percentage points year on year. This decline is primarily explained by currency translation effects and tough comparables rather than weakening of underlying demand. Our expansion into new product categories continue to be an important growth driver. These categories deliver strong organic growth during the quarter and now represent 17% of total net sales. This is a clear indication that our strategy to broaden Fractal's presence across the full gaming setup is gaining traction and it is contributing meaningfully to our business. Sales out increased by 9% and reached the highest level ever reported for one quarter. Successful end-year sales campaigns and especially our new product categories contributed strongly, pointing to the strength and relevance of an expanded product portfolio. It also confirms that consumer demand for our products remained throughout the year. Looking at inventory levels in our sales channels, we ended the quarter at balance levels that were slightly lower than earlier in the year. It reflects healthy channel dynamics and good alignment between supply and end market demand through Q4. Now, turning to profitability. The quarter was clearly impacted by external factors. Currency movements and tariff-related costs in the US weighed on margins. EBITDA therefore amounted to 7 million SEK, corresponding to a margin of 3.8%. The margin is at a disappointing level, and improving profitability is a clear priority for the management team. At the same time, it is important to highlight that our internal initiatives with pricing discipline, product cost optimization and operational efficiency are delivering results. Excluding tariffs and especially currency movements, the underlying EVTA margin in the quarter was above 10%, which gives us confidence in the underlying health of the business. Finally, we closed the quarter with a solid financial position and low net debt, providing us with the flexibility to continue executing on our strategy while navigating a complex operating environment where the tariff situation has stabilized somewhat while an emerging memory shortage is creating new dynamics in the market. Now turning to product launches, because during the quarter and shortly after year end, we continue to strengthen our portfolio with several important products. Epoch XL expands the newly launched Epoch K-series into the large format segment, addressing demand from gamers and enthusiasts looking for strong airflow performance and compelling value. ION3 Gold further expands our power supply portfolio with next-generation platform built for the modern high-performance systems and customers that value premium quality and reliability. In January, we also launched Pop2Air, updating the popular Pop series with improved airflow performance and refreshed design, targeting entry-level and value-focused gamers. Together, these launches highlight the breadth of our portfolio and our ability to execute across multiple segments. With a strong product roadmap ahead, there is more to come, and we encourage you to keep an eye out for upcoming announcements, potentially already later today. Now, let's take a look at the broader market environment. Overall, consumer interest in PC gaming and enthusiast builds remained solid. GPU availability was generally stable during most of the quarter, supporting upgrades around the holiday season. Demand for PC gaming hardware was also continuously supported by game releases and continued high activity on community platforms such as Steam. However, toward the end of the year, we began to see some tightening of supply in the global memory market, driven by increased demand from the AI sector. This has started to impact availability and pricing of memory components and could influence the broader electronics and do-it-yourself market. We are monitoring this development closely and we are assessing implications it could have on market dynamics and customer behavior. Finally, I also want to mention that Q4 was a very strong quarter for Fractal in terms of brand recognition and visibility, supporting our position as a gaming station leader. Throughout the year, Fractal's products received broad media recognition across multiple categories, including cases, cooling, power supplies, shares, and headsets. New launches was featured prominently in Best of 2025 lists, editor picks, and buying guides, with peak visibility during the fourth quarter's key sales period. A key highlight was Meshify 3, which was named Case of the Year by Gamers Nexus, one of the most respected awards in the do-it-yourself space. This continues Fractal's strong leadership track record following earlier wins for Torrent and North. We also saw breakout visibility for Scape, our gaming headset, which gained strong traction throughout the year and peaked during the holiday season. Scape was featured in multiple Best of 2025 and Editor's Choice elections, demonstrating our ability to build credibility quickly in new, highly competitive categories. Overall, this kind of recognition reinforces the strength of our brand and supports both near-term demand and our long-term growth ambitions. With that, I'm handing over to Karin to take us through the specifics and the details of the Q4 financials.

Thank you, Jonas. Let me walk you through our net sales performance for the fourth quarter. In Q4 2025, we reported continued organic growth in US dollar of approximately 4.5%, with net sales reaching $19.8 million. Reported net sales in SEC declined due to currency effects amounting to 186.7 million compared to 205.2 in the same quarter last year. As all our sales are denominated in US dollar, movements in the exchange rate have a material impact when results are translated into SEC. The weaker US dollar during the quarter was the main reason why reported net sales declined in SEK, despite underlying demand and organic growth. Looking at the underlying drivers, organic growth was supported by strong demand for our core products, with new product categories contributing meaningfully during the quarter, especially strong sales of our Scape gaming headset. Demand in the PC segment remained solid, supported by the continued effects of the upgrade cycle, including graphics card launches during the year. An important highlight in the quarter was sales out to end consumers, which reached the highest quarterly level to date. This strong development was supported by our broad and highly competitive product portfolio, as well as successful Black Friday campaigns, and confirms that demand at the consumer level remained healthy. At the same time, inventory levels across our sales channels remained balanced, and in some regions were slightly below normal levels, indicating a healthy channel stock situation. To summarize, while currency effects waited on reported SEC net sales in the quarter, underlying demand, sales outperformance and channel stock levels remained strong. So let's continue with our segment and regional performance for the fourth quarter, starting with the other product category. Our new product categories continue to grow in importance. In Q4, the other category delivered around 20% organic growth in US dollar, driven primarily by the Scape gaming headset and the refined gaming chair. As a result, the category accounted for 16.5% of total net sales, further broadening and diversifying our product portfolio alongside our core case business. More broadly, the continued growth of our new product categories support our long-term ambition to reduce volatility in net sales over time. By complementing our core case business with additional revenue streams driven by different purchasing patterns, we are building a more resilient and diversified business. Turning to cases, cases remained our largest product category, accounting for around 84% of total net sales. During the year, cases continue to benefit from the PC upgrade cycle, supported by new graphics card launches, although demand across the PC market remains selective and influenced by external factors. Moving on to the regional performance, EMEA remained our largest region in the quarter, accounting for 54% of total net sales. Sales out in the region increased strongly year on year reflecting continued consumer interest across both core products and new categories. In the Americas, the region accounted for 33% of total net sales consistent with prior periods. Sales out was slightly lower year on year reflecting tough comparison figures following a record strong sales out performance last year and a more normalized market environment. Finally, APAC continued to show strong momentum during the quarter, supported by increased demand and successful product launches, and remains an important growth contributor. Let's turn to product margin. Product profit amounted to 66.6 million SEK in the quarter, corresponding to a product margin of 35.7% compared to 39.1% in the same period last year. The year-on-year decline in product margin was primarily driven by external factors. US tariffs had a negative impact of approximately 3.3 percentage points, while transaction currency effects reduced the margin by around 2.5 percentage points. In addition, higher sales discounts had a negative impact of roughly 1.5 percentage points, mainly reflecting the timing of planned campaign activity during the quarter, rather than a higher discount level for the full year. These effects were partly offset by targeted internal initiatives. An improved product mix contributed positively by approximately 3.5 percentage points, supported by pricing adjustments in the US markets, a higher share of higher margin cases sold, and renegotiated supplier terms. Lower freight costs added a further positive contribution of around 0.4 percentage points. Overall, while external factors continue to weigh on product margins during the quarter, the underlying development reflects improvements driven by pricing actions, purchasing disciplined and an improved product mix. EBITDA for the quarter amounted to SEK 7 million corresponding to an EBITDA margin of 3.8% compared to 14.2% in the same quarter last year. As described on the previous slide, we have already explained the main drivers behind development in product margins. Turning to the factors below product margin, EBITDA in the quarter was primarily impacted by currency effects, but also by higher cost levels. Currency translation effect had a negative impact on EBITDA, mainly due to a weaker US dollar compared to the same quarter last year. To clarify how currency affects profitability, there are two main effects to be aware of. Transaction effects impact product margins and are reflected in gross margin, while translation effects impact EBTA through the conversion of US dollar denominated revenues and costs into SEK. In addition, higher personnel expenses weighted on EBTA reflecting continued investments in organizational capabilities to support future growth. Operating expenses also increased mainly due to temporary inventory build-up in the US ahead of potential tariff changes, as well as higher logistics costs linked to the product roadmap. Excluding currency effects and tariffs, the EBITDA margin would have been above 10%, which illustrates the underlying profitability of the business. Let's now turn to our financial position and cash flow. Operating cash flow for the quarter amounted to minus 34.2 million SEK compared to positive 17.2 million in the same period last year. The development was mainly driven by working capital effects with a negative change in net working capital of 33.4 million. This primarily reflects payments to suppliers during the quarter related to inventory purchases made earlier in the year, mainly in connection with US tariff planning. Importantly, this represents a timing effect rather than a change in the underlying cash generating capability of the business. As a result, we ended the quarter with a net debt position of 3.3 million SEK compared to a net cash position of 50.6 million at year end at 2024. Despite the temporary working capital impact, our financial position remains solid, supported by good liquidity and financial flexibility to support our operations and strategic priorities going forward. Turning to the income statement, this slide summarizes both the fourth quarter and the full year. In the fourth quarter, as already discussed, reported net sales declined in SEC due to currency effects, while organic growth in US dollar remained positive. Operating profit was close to break even, primarily reflecting lower product margins and temporary external cost effects related to tariffs and inventory actions in the US. For the full year 2025, net sales increased by 16% in SEAC and 25% in US dollars, reaching 809.5 million SEAC, marking the strongest year in Fractal's history. EBITDA amounted to 77.8 million, corresponding to a margin of 9.6% compared to 12% last year. Profitability was impacted by external factors, primarily currency effects and US tariffs introduced during the year. Excluding these effects, the EBITDA margin would have been around 14%, illustrating the underlying earnings capacity of the business. Operating profit for the year amounted to 50.2 million, corresponding to a margin of 6.2%. With that, I hand over to Jonas again.

Thank you, Karin. So to summarize the quarter and the full year of 2025, we delivered continued growth in organic terms in Q4 and closed 2025 with record net sales and strong underlying consumer demand. For the full year, organic growth reached 25% supported by successful expansion into new product categories and record high sales out. However, profitability was negatively impacted by external factors such as tariffs and currency movements, reaching 9.6% for the full year, down from 12% last year. This is significantly below our ambition, and increasing our margin is a key priority. Here, our internal initiatives, including pricing and product cost optimization, are delivering results. And excluding tariffs and currency effects, the underlying EBITDA margin for the year was increasing compared to 2024, demonstrating progress in our operational performance. Our financial position remains strong, providing flexibility to continue driving our strategic initiatives and invest in future growth. Looking ahead, we enter 2026 facing strong comparables, particularly in the first half of the year, and this is expected to impact growth rates initially. We therefore assess that growth will be more weighted towards the second half of the year. While the tariff-related uncertainty has stabilized somewhat in the quarter, uncertainty in the global memory market is a factor we now monitor closely. At the same time, we have built increased flexibility into our business through an expanded portfolio, pricing, inventory management and production structure. So with a strong product portfolio, a clear strategic direction and a stable financial foundation, we are well positioned to continue developing Fractal and to take further steps towards our long-term financial goals. And with that, we walk you through Q4 and the 2025 results of Fractal Gaming Group and we open up for your questions.