Starbreeze AB (publ)

Good morning. My name is Jürgen Goldner and I'm the interim CEO of Starbreeze. We're here to present you the first quarter 2024. So as you can see from our publishing this morning, it was a pretty good quarter with a good numbers and we worked a lot on the payday three problems we had in the past. We launched the Operation Medic back And we can already see the sentiment turning. So we're getting more and more positive reviews now. So we also have a product out called Robocrest, which is part of the third party publishing, and it has performed very well. So we are happy with those numbers. And last but not least on this part for the new project, Baxter, which is based on the license from Dungeon and Dragon. We presented it at the Game Developer Conference in San Francisco in March. And we have quite some strong and known parties interested in taking this forward with us. So let me go back a little bit to Payday 3. We are going to have a roadmap out. And some changes will come, and it's all for the better, obviously, because all eyes are on payday three in this company. Just make it happen before in 2026 we may see the BEXA coming out. And what you have also seen is that we are looking for a new CEO, and that one is coming to an end very soon. Look for the announcement. With the last one saying cash is available, I hand over to the CFO.

Yes, hello, my name is Mats Hul, CFO of the company. As Jørgen said, we had a strong quarter, which is great. So I started to dig into the numbers then for the quarter and the financial update. We saw net sales amounting to 56.6 million in the quarter. Our EBITDA amounted to 48.5 million. partly impacted by adjustments related to our long-term incentive program. Adjusted for that, EVTA was 28.6 million, still a strong number for the quarter. Based on our depreciation plan for period three, we depreciate two-thirds during the first 12 months after release. Our depreciations amounted to 71.8 million during the quarter. We do continue to invest into our games, both Payday and of course Baxter for the release in 2026. And we report a loss of the tax due to the investments we do of 21 million in the quarter. But our cash flow for the quarter was positive and we had 78.4 million from operating activities. And this gave us a healthy cash position in the end of the quarter of about 387 million. Furthermore, our net revenue development over time, as you can see in the third quarter last year, we released Payday 3 and we recognized a big part of our revenue related to Payday 3. This quarter, as mentioned, we had 56.6 million in net sales. Payday 2 continued to deliver good sales and generated 10.9 million in the quarter. Payday 3 amounted to 23.3 million. And our third-party games, mainly RoboQuest, amounted to 17.4 million in the quarter. So to sum it up then, Payday generated about 60% of our net sales. And as you know, Payday 3 is not performing at levels that we expected, but we do see positive trends and we believe that continuously launching new and more content going forward, we believe that this will have a positive effect, mostly in the second half of this year. Other revenue recognized is 9.2 million, that mainly consists of exchange rates effects. If we look on EBITDA over time, of course, the release of PD3 impacted heavily in third quarter last year. Rolling 12 months then up until first quarter this year is 483.8 million in the EVTA. And as I mentioned, we had a positive cash flow in the third quarter. We closed the books last year with a cash position of 348 million. In the first quarter, we had a positive cash flow of 78 million, just about. We do continue to invest into our games, mainly Payday 3 and Baxter, but also a little bit into other projects that we're running. And in total, we invested 49 million in game development during the quarter. Under finance and activities, we recognize part of our revenue related to payday three, and that is the part that is related to game development for products not released yet. For instance, DLC that's going to be released later in coming quarters, then we will recognize that as revenue. at the moment is recognized as finance activities. And that sums up to 10 million together with some IFRS adjustments as well. And as I mentioned, we closed the quarter with a cash position of 387 million, so actually an increase in cash position during the quarter. If you look into our expenses, we we see that our expenses have come down to a more healthy level after we saw some higher expenses in the fourth quarter last year mainly related to the technical difficulties we had when launching payday 3. so now we're stabilizing and we are coming down to a more healthy level Direct cost amounted to 86.5 million, a very high number compared to last year, but that's mainly driven by the higher depreciation of integrable assets. So depreciation recognized as direct cost amounts to about 68 million of the 86 million. Under direct cost, we also recognize the rev share related to row request and payday too. And that's about 10 million in the quarter. Selling and marketing slightly higher in this quarter compared to last year. And of course, we continue to do more marketing activities compared to what we've done before. And the increase mainly relates to more people working with marketing and PR during the quarter. And if we look into the administrative expenses, so admin expenses was impacted by an adjustment we made through the long-term incentive program that I mentioned when talking about the EBTA. This gave a positive effect on the admin expenses because all the full effect of the LTI program, long-term incentive program is recognized under that. So the positive effect of 19.9 million during the quarter adjusted for that admin expenses was 15.1 million compared to 18.5 million last year. So actually in a decrease in admin expenses with about 3.4 million, which is a positive thing. and we continue to grow our staff hiring more co-workers so we're up to 192 people now closing the quarter and that is pretty much in line where we will be going forward as well given the two projects that we're running now moving further into our balance sheet Our intangible assets of 504 million mainly consists of capitalized expenses for game development and goodwill. Property, plant, and equipment amounts to about 222 million. The absolute evasion of that is related to right to use assets for office lease. It's 115 million out of the 122. Our current assets amounts to 124 million, and that mainly relates to prepaid expenses and trade receivables. And as I mentioned before, our cash position, 387 million. And then furthermore, our external non-current liabilities has been amortized. We amortized the last part when doing the rights issue last year. So the remaining part that's in non-current liabilities, that's IFR's office lease of 98 million in that part. Our current liabilities on the other hand is 176 million, and that mainly relates to accrued expenses and trade payables. So all in all, we have a very slim balance sheet and virtually no debt remaining in the company or external debt in that sense, which is great. So in completing the rights issue last year, we gave us a very solid financial position with the cash to continue to invest into Backstep going forward. So we had, to summarize the quarter then, we had a very good split on NetSafe between our different games. Payday 3, as I mentioned, still not performing as good as we want, but we do see positive trends. And we do have a solid cash position and we continue to invest into Baxter and looking forward to talking a bit more about that going forward. And all our focus at the moment is on Payday 3 to make sure that we get the operating medic bag out and the release plan for that further disclosed as well. And by that, we open up for questions. So we've been getting questions text wise here and during the call now. So we read them up loud. So the first one, when will you release the next DLC, Boys in Blue? It was scheduled for spring, which is only two weeks left. The release plan for Boys in Blue is planned for this summer. So we will disclose more about that exact timing going forward. But there are more content and more releases coming during the summer. How strong is Starbreeze's economy right now? i mentioned we have a very strong solid cash position of almost 400 million and we also have more coming in when it comes to pd3 which is very good so we are fully funded for for development of baxter going forward so i would say that we are in a very good financial position at the moment When will you add offline mode to Payday 3? When will it arrive? As I mentioned, the release plan for Payday 3 will be communicated going forward. But what is said so far is that we will continue to release content and functionality during the summer up until the first year anniversary in September. So we will disclose more about the exact timing of that, but it's on the way. And we follow the time plan and the development plan that we have. And we don't see any issues with that. So it will come shortly. How many resources is Starbreeze allocating to each project currently in development? Payday 3, DLCs, Baxter and third life services. We are about 150 slightly over developers in the company at the moment. And the easy way to describe that is that we split that basically in two between Baxter and PD3 at the moment. But that will vary over time depending on what we do in the projects. So, of course, Baxter will continue to grow as a development team over time. The closer to release we get, PD3, of course, will be a smaller team once we finalize the operation medic bag and getting the game up and running as where it should be. Is Payday 2 still going to be updated? We talked about this before and we said that we keep the game alive and it will be out on the market and we will make sure that it works so that everybody who wants to play Payday 2 can play Payday 2. But we will not continue to add new content or new DLCs going forward. At least that's the plan right now. All our focus is on Payday 3 and we want to get all the content out for Payday 3 first. Do you anticipate a substantial increase in marketing expenditure for the second half of the year, given the forthcoming enhancement and new DLC launches? We still have a very good relationship with PlayOn, being our co-publisher, and they are doing the external marketing for Payday 3. And of course, when doing new updates and releases when it comes to DLCs, but also new functionality in the game, we will increase marketing activities. But that is handled by PlayOn mostly. Of course, we have a publishing team here as well, but the majority of the work is done by PlayOn, and the external marketing is handled by them. But we will see a slight increase in marketing when we do the releases, and of course, for the one-year anniversary as well. Could you provide a rough percentage breakdown of your player base across available platforms regarding Payday 3? Now, we haven't disclosed that in detail. But what we could say is that we see a very positive thing when it comes to Game Pass, of course, where the game is available. Of course, that's a very good thing for us. But we also see that PlayStation has done better than expected. So the amount of players that we see on console in total is actually better than we anticipated from the beginning. So that's a positive thing. At present, what portion of your internal resources and investments is allocated to Project Baxter compared to Payday 3? We basically answered that before. So at the moment of the development team of about 150 people, that's split between two. So half of the team is working on Baxter and half of the team is working on Payday. Yes, that was the questions. And if there's no more questions coming in, if you have questions, please feel free to email us and we try to answer them going forward. We are available for that and we will continue to keep you updated on what the plan is for the future when it comes to new content for Payday 3.

Okay, so let me close the session here. And thank you all for listening in. And as I mentioned in the beginning, I'm just the interim CEO. So that job will end tomorrow. And everything else we will announce along at the AGM. You have a great day. Thank you.

Thank you.