Starbreeze AB (publ)

Hello, everybody. Welcome to this presentation of Starbreeze fourth quarter and full year 2024. Today's presenter is Mats Hjul, acting CEO and CFO. And with that introduction, I leave it over to you, Mats.

Thank you, Martin. And welcome to everybody. And thank you for listening in to our presentation of our fourth quarter and full year numbers for 2024. Let me run through some slides and then there will be time to answer questions after the presentation. And please keep in mind that you can also send in questions during the presentation and we will try to answer as many as we can before closing now. So let's get into it. Our fourth quarter key takeaways. We have had a great quarter when it comes to Payday franchise and both leveraging our IP but also Payday 3 as a game. um regarding our ip we announced our fantastic collaboration with crafton and we are making a payday game in the pubg battlegrounds platform and that's going to be an amazing opportunity for us and that we can explore that large platform of players and also introduce so many new players to payday so really looking forward to to see that game out live and the project is a work for hire as we communicated earlier and i can talk a little bit more about that later we also announced that we are letting payday make a reappearance on roblox it's a payday experience done by notoriety and he's created made a great version of payday on that platform and we see great attention on that as well it's already out there available for everybody to play We also released the new content and functionality to Payday 3, for instance, VoIP and Server Browser in October, and lately the popular highest, First World Bank, that we released in December, specifically for Payday 3. Our next game, Backstub, we are in full production, progressing according to plan, and with the ambition to release the game during 2026. We also have a playable demo that we're actually showcasing now and letting potential partners play. And we are getting great feedback and a lot of laughs during those sessions. It seems like it's not only us that like that game, how it looks and how it's coming together. So the team has made really great progress with the game and it comes together as a true G&G experience as we interpreted it within Starbase. So I'm looking forward to show more about Baxter going forward but at the moment we focus on showcasing it to potential partners before announcing more details out of the game to the market. But bear with me, it will come. As you know then, we have three games on the market. So that includes RoboQuest that we publish. And as you see, RoboQuest continues to perform really well. And we are looking forward to see the game on PlayStation in a couple of months. So that's also a good expansion for that game. It remains very popular and we see good revenue from that game to start with as well. do also continuously review our organization our investments and our efficiency and have during and after the quarter made several changes to make improvements both financially and operationally i will mention a little bit more about that later in the presentation as well and last but not least we have to continuously have a good cash position and limited depth and so those two ensures that we can continue to deliver on our strategic plan and So and by that, let's go into our strategy and where we are today and looking forward a little bit. So looking into the years to come, our strategy remains intact as we communicated before. We aim to build Starbiz both stronger and better through self-publishing of our own games based on our own IPs. So as I said, we have several games on the market driving revenue and at the same time increasing stability and reducing risk. We will continue to monetize on all the titles we have published and will publish going forward. And we have the ambition to expand our franchises both to more platforms as well to other entertainment areas and beyond games. So this is something we really intensify now going forward and we'll communicate more about that in the coming quarters. Our core ambition as a company, as we've mentioned before as well, it is to make cooperative multiplayer games with focus on our community for a long time ahead. The model for doing so differs depending on market demands and type of game, but it remains our foundation of the company. So we still have the strategic platform that we work according. So if you're looking on a payday franchise, then it'll be a little bit beyond that during the quarter. As I partly mentioned already, there's been a lot of activity on the payday franchise. We launched our first year edition with multiple new features and also the well-received heist and first quarter bank. And now lately also the very popular character jacket with over 90% in Steam ratings. So a fantastic achievement. to get that out on on payday 3 a fun character and you should try it on top of that we also see that payday 3 is one out of three games that's actually the game of the month on playstation plus a good opportunity for us to increase our player base long term. And we see great attention from players on PlayStation, but also on other platforms at the moment. We see CSU numbers and down numbers at levels that we haven't seen since the launch of the game. We will communicate more about that in a Q1 presentation as well. But this as well is a great achievement by the team to actually get the game out there. And based on all the improvements that we've done over the last year to make the game a better playing experience, but also more content, has really improved the game over time. that will continue so we will continue to make improvements and release more dlcs and content for pd3 both over the month to come but also over the years to come so the ambition is to continue to grow the game experience as well as making it more profitable I already mentioned a little bit about the collaboration with Krafton and Notoriety, which is an expansion of our franchise and payday as an experience. So now we reach a lot more players compared to what we did before. So that will be a huge expansion of the franchise when Krafton decides to release the PUBG experience. Also worth mentioning is that we have a cooperation with the Swedish developer The Gang. We will publish a game together with them called Unseen and continuously monetize also on RoboQuest as I mentioned. As I also said, looking into our efficiency and cost structure in the company, this is something that we always need to monitor and do our best with. Even if it's an ongoing activity continuously over the last couple of months we pay some extra attention to the matter and we actually made a strategic overview looking into our current and future projects in order to strengthen the company long term. So we have initiated a process to build a start data VR tech team based in Sweden. We also review the organization in terms of needs and competences. Unfortunately, that involves some reductions in workforce to meet the needs we see going forward. This is primarily impacting our marketing organization and publishing organization. To further reduce cost and complexity within the company, we're also evaluating the possibilities to close down part of our foreign entities in line with... That's part of our strategy to build Starvi stronger in Sweden with the head office here and having Stockholm as a base for the company. We will still have, of course, employees and great developers around the world as we do, because we recruit based on competence and not location. That's the most important for us to have the best team that we can. All this together, of course, will strengthen us both financially and operationally and ensure that we continue to deliver the great gaming experience that our players expect. So the impacts of the changes we do will be visible going forward in the coming quarters. If we go into the financials then for the quarter and for the full year, net sales for the quarter amounted to about 46.4 million, a slight increase from previous quarter, but a decrease compared to last year. And obviously we released PD3 late in Q3 last year. So we saw an impact of that also in Q4 last year. Our EBTA for the quarter amounted to 19.7 million, a great improvement compared to last year where we saw high cost. Based on our depreciation plan for Payday 3, we depreciated 71.6 million during the quarter, so it's decreasing slightly quarter by quarter. We do continue to invest into our game, both Payday and Baxter, as I mentioned, and we report a loss of the tax of 49.2 million in the quarter, driven by these investments, of course, as well. our cash flow for the quarter was flat which is an improvement from previous quarter with about 50 million all in all this gave us a healthy cash position in the end of the quarter of about 192 million um and also worth mentioning about the cash position and and our burn rate going forward of course that's always a concern if we have enough cash to continue to develop the projects that we do and we we definitely do so and the Since we're reducing cost and also have a work for hire contract going on currently, that generates revenue going forward, which we haven't seen the full impact of in Q4, but we see the full impact of in Q1. Our burn rate will go down during 2025. If we look at the full year numbers, net sales amounted to 185.9 million and our EBITDA amounted to 97.6 million. Our cash flow for the year was positive with 64.9 million from operating activities. If we look at our cash flow over time, we closed the year 2023 with the cash position of 348 million. Due in 2024, we have a positive cash flow for operating activities of almost 65 million then. And as I mentioned, we continue to do gaming investments. And we invested into our games about 228 million out of the total investment of 245 million. Part of our revenue related to Payday 3 is recognized as financing related to development of content not currently released. That together with IFRS adjustment sums up to 25 million in positive effect. And as I mentioned, we closed the year with a cash position of nearly 192 million. And even though we continue to invest into our games in 2025 and up until the release of Baxter and onwards after that as well, of course, we also see that the cash generated both from the games that we have out on the market and also the work for hire that we have with Kraft generates a positive cash injection into the company every month going forward. So as mentioned, the cash position we have remains enough to actually deliver on the ambitions we have. If we look into our expenses, our underlying expenses are decreasing, as mentioned, to a more long-term healthy level. We are continuously monitoring and reviewing the expenses and priorities to make sure that we as a company are as efficient as possible. Direct cost amounted to 80.4 million and the decrease compared to last year mainly relates to lower depreciation of intangible assets. The depreciation recognized as the direct cost in the quarter amounted to 65.4 million. um recognized under direct cost we also have the revenue share related to request and payday of about 7.6 million and selling and marketing amounted to 6.7 million which is uh which is in line with previous quarter expenses mainly relates to cost for personnel working with marketing and PR activities for our games administrative expenses amounted to 9.8 million which is a decrease compared to previous year of about 12 million We had about 186 employees at the end of the period, end of year, which is a decrease with about seven people compared to the same period last year. And if we're looking into our balance sheet, which is very clean at the moment and have been for quite some time now. So our integrable assets amount to 491 million, consists mainly of capitalized expenses for game development and IP rights. PPE, which is property, plant and equipment, amounts to 26 million, of which right to use assets for office lease amounts to 18 million. Our current assets amounts to 117 million, mainly relates to prepaid expenses and trade receivables. As mentioned, our cash positions are 192 million, and furthermore, our external non-current liabilities have been amortized previously, and the remaining part mainly relates to lease liabilities for office and tax. And our current liabilities of 122 million mainly relates to accrued expenses and trade payables. So, all in all, a very clean and healthy balance sheet as well. um yeah so um back to the key takeaways and to sum up the quarter um i think we have a good split of sales between our different games payday 3 still not where we want it to be and but we see a strong positive trend and looking forward to releasing more content content going forward and on top of that we see the full impact of the work for hire in q1 We do have the solid cash position, as mentioned, to further invest into PD3 and Baxter and also other projects going forward. And we also see the expansion on the franchise that will impact us positively going forward as well. So looking forward to presenting the next quarter as well. But we're leaving 2024 strong and very confident and with full energy to make the best of 2025. And by that, I think we open up for questions.

Yes. And let's see here. We have quite a few questions to go through. The first one here is you communicated that you hoped to be able to show more from Baxter before year end. What is the current status there?