Starbreeze AB (publ)

Good morning, everybody, and welcome to our presentation of the second quarter. And thank you all for listening in. There will be time for questions after the presentation. So please bear with me. My name is Mathieu. I'm the acting CEO and CFO of Starbase. So second quarter, key takeaways. Let's get into it. We have had a very good quarter with several updates for Payday 3. We also had an AGM where we appointed our new chairman of the board, Jörgen Goldner, and we have gone into full production of our next game, Dungeons & Dragons. Third-party publishing with RoboQuest as our biggest title continues to perform better than expected. And we ended the quarter with a strong cash position of about 335 million, which enables us to continue to develop Payday 3 at a high pace and at the same time develop and release Dungeons & Dragons in 2026, among other initiatives. So all in all, a very good quarter. Just to recap a little bit about Starbeast and our strategy. We usually talk about this in the presentations where we also highlight part of what we already have done and looking into what we're going to do going forward. So we have talked about this over the past years and I'm very glad to say that we continue to deliver on our goals we have set for 2024. If we're looking into the years to come, our strategy is to build Starbreeze stronger and better through self-publishing of our own games based on our own IPs. That's a core foundation of our company. We will have several games on the market, driving revenue and at the same time increasing stability. We will continue to monetize on all the titles we have published already or will publish in the future. And we have the ambitions to expand our franchises beyond games through, as an example, movie or TV series or other initiatives. I'm certain that we will see our games on different platforms going forward as well. So the statement we usually make regarding our strategy, where we are as a company, where we want to be, is that we say that we make cooperative multiplayer games with a focus on our community for a long time ahead. That's what we call games as a service internally here. So that's the core foundation of Starbiz, and we continue to have that as our key in Starbiz going forward as well. If we look a little bit more on what we have done when it comes to Payday 3, which is our biggest product and the core focus of the company. It's our top priority since September last year when we released the game. And the priority is to make the game better and more attractive for community as at the same time attract new players. We have up until now released three DLCs, including heists, weapons and cosmetics. We have also released two, three heists, two of the most popular ones from Payday 2. Really great feedback on that. So it feels good to actually bring also old content to the game. The latest release was actually done yesterday and we saw a very good improvement in CCU compared to previous months. Actually, one of the highest and best month since the game was released. It's fantastic to see the community loving what we're doing. On top of that, we have our Operation Medic Bag. It's a feature and quality of life range of improvements to the game. It's been released through various patches over the months, and we will continue to release more updates to the game for the coming months as well. Based on a response for our community, we feel confident that we are doing the right thing, developing the game, expanding it with more functionality and content, And simply making the game a better game. Some say where it should have been when we released the game, but now we are 100% focused on actually delivering on all the promises that we have made both to the community and to the market when it comes to Payday. Some of the features that's on the way is VoIP and server browser and current map and so on, and that will be released over the year. And the plan is to have some of those out in October already. We are not finished or happy with the current state of the game, even though we see huge improvements. We do have higher ambitions and we will continue to make improvements and release more DLCs over the months and years to come. So there is a release plan that we communicate to the community as well with when we are going to release content and what kind of content. Our other big project that's in the works is Project Baxter. It's based on a fantastic IP called Dungeons and Dragons that we have the benefit of developing a great game based on that one. And it's now in full production and it looks fantastic. So I'm really looking forward to be able to show more and talk more about this game going forward and hopefully closer to year end this year. The game is planned for release in 2026 and we are currently working on the release plan as well as evaluating different partnerships for the game to make the most of the game and make it as good as possible. If we go in a little bit to the financials. For a quarter. Net sales for the quarter amounted to 40.2 million, a slight decrease compared to the same quarter last year. Our EBITDA amounted to 8.1 million. Our second quarter is traditionally a little bit weaker quarter sales-wise, and we see that this year as well. The DLC we released in the quarter was released late in June at the same time as Steam Summer Sale. Unfortunately, that didn't impact the quarter that much. We saw most of the sales after the quarter. So we'll have an impacting third quarter instead. The depreciation plan for period three is quite aggressive. So we depreciate two thirds during the first 12 months of the release. So for the first 12 month period since September last year. So our depreciations for the quarter amounted to 78.9 million. We continue to invest heavily into our games, both Payday and Baxter and other projects, and we report the loss of the tax for 70.6 million. Our cash flow, though, was positive for the quarter with 2.1 million, and that took us to a healthy cash position at the end of the quarter of 334.6 million. If we look on the first six months of the year, the first half year, so to say, our net sales amounted to 96.8 million and our EBITDA amounted to 56.6 million. So a strong result and a good revenue for the first six months. And our cash flow for the first half year was positive with 81.1 million from operating activities. If we look at our cash flow development since year end, we closed the books in 2023 with a cash position of 348 million. And during the first six months of this year, we have a positive cash flow from operating activities related to our games done for 81 million, as I said. And we continue to invest in both Payday and Baxter and other projects. And we have invested so far 117 million in game development. Part of our revenue is related to Payday 3, is recognized as financing, and that's because it's related content that's not been released yet. And that together with some IFRS adjustments sums up to 23 million for the quarter. And as mentioned, a good cash position in the end of the quarter with 335 million. On the expense side, we feel that our underlying expenses are decreasing to a more long-term healthy level. We are continuously reviewing them and also our priorities, of course, to be as effective as possible when it comes to the expense side. During the quarter, we had some restructuring expenses related to changes in personnel, impacting our expenses on the total level with about 3.5 million. Direct cost amounted to 82.8 million. It's a very big increase compared to last year, but that relates to depreciations of intangible assets. In other words, payday three depreciations. And if you look on the actual amount recognized for depreciation for payday three was 74.1 million. Recognized under direct cost, we also have the revenue share related to row request and payday of about 4 million. Selling and marketing adjusted for reduction cost was pretty much in line with previous year. The expenses recognized there is mainly related to cost for personnel working with marketing and PR activities for fire games and at the moment mostly payday 3 then of course. Our admin expenses amounted to 16.7 million, which is a decrease compared to previous year of 4.1 million. So that's a good signal. We are focused on our expenses and keeping them at a decent level going forward. We had 192 employees at the end of the period, which is an increase with 13 employees compared to the same period last year. The ambition isn't to continue to grow the company significantly in number of employees, but we are recruiting key personnel and key competence, both for Baxter and Payday 3, of course, and for other initiatives. Finally, if we look at our balance sheet, our intangible assets of 497 million consists mainly of capitalized expenses for game development and goodwill. Property, plant and equipment amounts to 170 million, of which right of use assets for office lease, the Stockholm office, amounts to 111 million. Our current assets amount to 106 million and mainly relates to prepaid expenses and trade receivables. And cash then, as mentioned, 335 million. Furthermore, on the debt side, our external non-current liabilities has been amortized and the remaining part mainly relates to lease liabilities for the office. And our current liabilities of 173 million mainly relates to accrued expenses and trade payables. So to sum it up and the quarter that we just left, we had a good split of sales between our different games. Payday 3, still not fully recovered, but we see a very strong positive trend both in player activity and in sentiment and also in sales. And we look forward to releasing more content. And on top of that, that we have a solid cash position to further invest it both into Payday, but also Baxter and other parties going forward. That enables us to continue to deliver on our strategy. And I feel that we are in a very good position going forward. And by that we open up for questions.

Yes, so we have quite a few questions here in the chat. Let's begin with when will you show some form of gameplay or early trailer for Project Baxter?

As I mentioned, Project Baxter has gone into full production, so we are fully focused on that as well. We have a team in place that really delivers great content. And the ambition is to be able to show more and talk more about the game closer to the end. But it's really up to the marketing department to decide when we actually disclose more both content and information about the game. But I will definitely come back to that.