Thunderful Group AB

Hello, everyone. We would like to welcome you to our existing shareholders, potential new shareholders, and the general public to sunny, beautiful Stockholm and this presentation of the third quarter of 2021 in Sunnifil Group. Go to slide two, please.

So today's presenters are these two guys.

It's me, Brian Seargeson. I'm the CEO of Sunnifil Group. And it's Anders Mikvits, the CFO of Sunnifil Group. Go to slide three, please. And we'll start by looking at the key highlights for the quarter. So please go to slide four.

So the games segment of Thunderbird Group shows continued strong growth and profitability.

We'll see later in the presentation that the segment has shown very strong and steady growth for the past four quarters. Now, expanding the game segment has been our main focus throughout, and it feels like we're certainly on the right path. In other news, we've had 12 game releases in the quarter, and we've also acquired two game studios. We bought To The Sky, which is a studio with industry veterans based in Gothenburg, Sweden. They're a startup, which is unusual for us, but when they pitched their game idea, To us, we felt we needed to be a part of their exciting journey. And we also bought StageClear Studios, who are based in Madrid. They're an excellent courting house, meaning that they will help us create versions of our games to all platforms. But they also have some quite interesting game ideas that we want to cultivate. So in short, it's been a very good quarter for our game segment. That's where we invest and that's where we intend to grow. If we go to slide five, please.

So in more detail on the key highlights, it's been a fairly stable quarter overall.

We've had fantastic operating income growth in the game at almost 200%. Distribution has faced challenges in this flight chain when compared to the strong third quarter 2020. So overall, our operating income is down 1.6%. Our EBITDA is up around 7%, and EBITDA is down 3% year-on-year. And CFO Anders, he will go through the figures in more detail in the financial portion of this presentation. So let's go to slide 60. Yeah, let's have a quick look at... uh the front of the group and our key strategies so let's go to slide 17. um we operate in two segments that we call games and distribution and while the distribution business covers the nordics the game business is global we sell our games all over the world at the end of the third quarter we reached another milestone we're now more than 400 colleagues across europe We've got 13 internal games in development at this moment, and we've got an additional 26 games from external developers in our pipeline. So across the segment, we manage a portfolio of around 100 brands, and we've kept our famous Nintendo partnership for 40 unbroken years now. And let's go to slide eight, please. Yeah, so our business rests on three main strategies. For starters, we accelerate investments. We want to constantly increase investments in game development and publishing. We want to acquire complementary businesses and IPs. And we also want to acquire gaming companies that continue to operate with a great deal of independence. Second, we want to keep our IPs and we want to maintain them. We want to use our IP rights and brands to also reach outside of gaming into new mediums. We make sure that our products are available on relevant platforms and in proper channels. In gaming, we prefer to work with our own IPs, first and foremost. And in distribution, we work to increase our share of our own brands. And finally, quality is really at the core at Thunderbolt Group. Not only in our products, but also in how we do things. We maintain a can-do culture. We make sure to keep and develop our staff, and we make sure to keep and develop our collaboration and partnership. Let's go to slide nine, please. Here, let's have a look at the two business segments, games and distribution. So let's go to slide 10, please. So our two business segments, they complement each other. We have a GAINS segment that's growing rapidly, both in terms of financial results and share of the total, but also in terms of organization. GAINS' share of our net sales is now about 13%, so it's climbing steadily. And again, GAINS has a majority share of the adjusted EBITDA in the group. Let's go to slide 11. So as you can see, both the net sales and adjusted EBITDA of the gains segment has more than quadrupled compared to the third quarter last year. Net sales have gone from 27 million to just short of 100 million sacks a day. If you look on the right side, you can see that the adjusted EBITDA of the gains segment has gone from 11 to over 50 million sacks. And as mentioned, this quarter gains is at 58% of the total of the EBITDA. And let's go to the next slide, slide 12. Just a quick overview of the game segment. So within games, we do a few things. We develop games mainly based on our own IPs. And as mentioned, we're convinced that quality is vital to success. Our recent Metacritic scores have simply definitely clapped among our peers. And we're now more than 260 game developers across Europe. We publish our internally developed games, but we also publish games developed by others. As a part of our publishing business, we also invest in externally developed games. And investment in external games is an area that we want to expand in the future. After the quarter, we started a third division games that we call Fundable Investments. so that we can both invest directly into game projects, which is a more hands-off approach than both development and publishing. At the end of the quarter, we have committed 145 million sets in our pipeline of externally developed games. Now, with a new initiative, Fundable Investment, we believe that we can vastly increase the number of tickets we hold, and we believe there will be strong synergies with the divisions we already have, development and publishing. That takes an important box for the game segment. That means that we're now a 360-degree game company that offers development, publishing, investment, and M&A. Let's go to slide 13, please. We look at the pipeline here over the next few slides. Next few slides. So on this slide, slide 13, we're showing the titles that we released in the third quarter. We've released 11 titles in the quarter and we added a title for our acquisition after the period that we announced today, early morning. Among the games that we listed here is Lost in Random that was developed internally in Gothenburg and published by EA and that was released in mid-September. By the end of September, it hasn't recouped investment. The game has had great reviews when it came out across the board and maintains the Metacritic level that we want to attain. Other games that have attracted a lot of attention in the quarter are Islanders, Cultal Edition and Industrious. I think if you look at this lineup, you can see that we have a great width among our game genres, and that's something that we certainly want to keep up. Let's go to slide 14, please. These are games that we have released after the end of the quarter and until today. We've released five games after the end of the quarter. One of these is Wastetail, which we developed in-house for the Stadia platform. and that we showed during our highly appreciated digital event in November called Thunderful World. Wavetail is coming to additional platforms next year, and the fishing game Moon Glow Bay has also been received really, really well. Let's go to slide 15. During the Thunderful World event, we also teased an upcoming SteamWorld game called SteamWorld Headhunter, and that was highly appreciated. We also showed The Gunk, which is coming exclusively to Xbox. And Microsoft are, I would say that Microsoft are promoting The Gunk out of the ordinary. Let's go to slide 16, please. At Thunderbolt World, we also showcase some of the 26 external games that we have in our release pipeline for the next two years. It should be noted that these 26 titles are in addition to the games that we are developing internally. We can fit all of the upcoming titles on one slide, so here's the first half. Let's go to the next slide, please. Slide 17. And here's the other half. Among the already announced ones, in 2022 and 2023, we have anticipated releases like Replay, Super Meat Boy Forever, and Planet of Lana. Let's go to slide 18. Quickly about the distribution segment that consists of three companies. First, there's Bergsala that has held the license to sell all Nintendo products in the Nordic and Baltic states for a very long time. We've held this agreement for more than 40 years. Then there's Omotoys, our toy distributor that holds the MGA license, the product. That's a surprise. And finally, there's Nordic Games Supply that distributes consoles, games, and gaming accessories when we hold the licenses for Razer, HyperX, a SteelSeries product, and others. Let's go to slide 19, please. That marks the end of the business segment. Our CFO Anders will go through the next portion, so let's go to slide 20. Thank you, Brian. Good morning, everyone. In the third quarter, we've seen a negative growth in net sales with minus 3% year over year, reaching 739 million SEK in this quarter. The gains segment has a growth of 267%, while the distribution segment is minus 13% year over year. For adjusted EBITDA, we have negative growth with minus 3%, reaching 85 million SEK in this quarter. The game segment contributes with a growth of 40 million SEK, while distribution is down with minus 49 million SEK. The operating cash flow in the third quarter is minus 206 million SEK, and this is caused both by inventory buildup in distribution, but also some mixed effects within the distribution companies. I will present that in the last slide of the financial section. So move on to slide 21, please. For the game segment, the growth in net sales year-over-year is 267%, reaching 99 ms in this quarter. The organic growth is negative, and all the growth in this quarter is from companies that we've acquired in the recent 12 months. For organic growth, we have released the first of the three AA titles being developed by the Swedish organic game development companies, now in the third quarter. We haven't booked any revenues from the release of Lost in Random yet, as the external publisher hasn't recouped their investments in the third quarter. Looking at the profitability, adjusted EBITDA is up more than 350%, reaching an all-time high of 51 million SEK. The EBITDA margin in relation to operating income in this table reaches 45%, And if we should put adjusted EBITDA in relation to net sales, it is actually as high as 52% in this quarter. The margin is higher compared to the previous quarter Q2, mainly based on higher EBITDA margin in coaching, but also from better profitability in the publishing division. Move to slide 22, please. For the games investments in this quarter, we've reached an all-time high in the development aspects as two non-capitalized game development projects were finalized in the third quarter. It was both Lost in Random released in the third quarter, but it was actually also Wavetail that we released and announced at the Thunderfall World event on the 10th of November. So as a consequence of the finalized non-capitalized projects, a larger portion of the Swedish dev team is working on game development projects that are not being capitalized. And in this quarter, we've made two smaller acquisitions. So the net cash portion of those acquisitions is pretty similar to the investments that we do in our game publishing pipeline, both of them being about $8 million a quarter. Move to slide 23, please. For the segment distribution, we have a negative growth of minus 13% year-over-year, and we are once again seeing high levels of diversity among the subsidiaries. For Burgsala, the decrease is minus 31%. It's primarily driven by the challenges in the supply chain, and we do have higher customer demand on internal hardware than what we can fulfill. For Nordic Games Supply, we are up almost 40% year-over-year, and it's still so that the brand Razer is the top contributor to the growth, even though we now have a full distribution of Razer also in the comparison quarter. But Razer is still growing year-over-year as the top contributor in Nordic Games Supply. Automotor is down minus 18%. This is primarily driven by some late inbound shipments. They were scheduled for arrival in September, but haven't arrived at the warehouse until the first half of the fourth quarter. Looking at proof stability measured in EBITDA in distribution, The negative growth is minus 53%. This decrease is mainly driven by Bergsala with minus 27 million SEK in EBITDA year-over-year. This is all related to the negative growth in Netflix, and it's actually so that both cross-margin and OPEX are very similar in Bergsala year-over-year. For both Nordic Game Supply and Armatoys, we see a pressure on EBITDA margins this quarter. In Nordic Game Supply, this is caused by a mix of lower gross margin and increased logistics costs from the inventory build-up in Q2 and Q3. In Armatoys, the lower profitability is mostly related to increased logistics costs. So we did see a significant inventory build up in the previous quarter, the second quarter 2021. And by the end of this quarter, Nordic Games Supply has significantly higher inventory levels compared to the last year, while MercSolar actually has lower inventory levels compared to previous year. And almost always have higher inventory levels, but not in the same magnitude as Nordic Games Supply. Move on to slide 24, please. For the consolidated group, organic net sales is down minus 104 million SEK, but the distribution segment makes up 95% of it. And net sales from the companies acquired within the last 12 months is growing with 78 million SEK. Move to slide 25, please. As for the development of the adjusted EBITDA, nearly all growth is related to the games companies acquired during the last 12 months, while we see a decrease in both organic games and distribution. Organic EBITDA development in games is caused by negative net sales development and also reduced margins, since we have a bigger portion of publishing sales compared to the previous quarter. uh as mentioned before we haven't booked any revenues yet for the double a game lost in random that we released in the in the third quarter speaking about organic development it's It's worth to mention that CodeSync, if we should compare CodeSync's growth compared to the third quarter 2020 before we bought the company, the organic growth compared to management accounts is around 350% year-over-year. Move on to slide 26. For the operating cash flow, that's an acquisition adjustment of about 8 million SEK in this quarter, which is the difference between the two graphs showing operating cash flow. The operating cash flow is minus 206 million SEK, a reduction of minus 275 million SEK, and the net debt position is minus 23 million SEK. That gives a net debt versus LPM EBITDA of 0.1. The operating cash flow is negatively affected by the LTM development in change in networking capital. And if we move to the next slide, 27, we see that the inventory buildup causes almost 120 million SEK of the total development of 267 million SEK. But it's also so that the net effect from accounts receivables and accounts payables is accounting for minus 187 million SEK. So this is primarily caused by the effect in accounts payables being a consequence of the fact that Bergsalot's inventories levels are lower year over year, while the other two distribution companies make up the inventory build up. So Bergsala has significantly higher DPO than the other two distribution companies, which are mainly sourcing from the Far East with prepayments as the most common payment method.

Thank you. Should we go to the next slide? Slide number 29. Yeah.

So, yeah, sorry, I've jumped now to slide 29, talking about what we've done after the quarter. After the quarter, we've done a number of things. Among that, we've acquired two gaming companies. The first one was Robot City, the company that does business development and strategy work for particularly successful developers in games, such as Among Us and Gangbiz. but they also know quite a bit about investing in game, which is very interesting to us. They're 11 employees right now, and they've got healthy sales in a bit. Their headquarters is in Newcastle, England, but they're distributed all over the world. Let's go to slide 30 to give a little bit more flavor on Robot Teddy. And so I mentioned our new division, Fundable Investment, earlier. So the team at Robot Teddy they have their ears very close to the ground and they have very important connection in the gaming community they basically have the trust from the trust of certain developers that most of them don't and robot teddy therefore they will lead the work with talking to studios that have exciting game projects that we want to invest in both regular games and vr games Anders, could you talk a little bit about the transaction structure on this slide? Sure. For RoboTeddy, we paid an upfront consideration of £10 million, of which £7 million was in cash and £3 million in shares. We have an earn-up structure up until the end of 2025 with both financial and operational targets. The maximum earn-up consideration is £12 million, of which a maximum of £4 million can be paid in Thunderbolt shares. So as a consequence, the total maximum consideration is 22 million pounds, and we have an upfront EBIT multiple of 3.7 times EBIT for the 12-month period ending in August 2021. So move to slide 31, please. Thanks. Yeah, I can talk a little bit. So yes, so on slide 31, we also acquired early morning studio. a free-to-play mobile games developer in Stockholm, Sweden, that we announced today. Early Morning Studio also have a healthy sale, Sabibe, and they paved the way for us into games as a service. Let's go to the next slide to dive into a little bit more in detail. So we feel that Early Morning Studio, they're joining us at the perfect time. They have their own IPs and they've carved out a good niche for themselves in the free-to-play space. They've released two titles so far and they're about to release their third. They're on an upward curve and we're really excited to be a part of them too. So, Early Morning Theater released primarily on mobile platforms and their expertise there will help support us as we continue to grow mobile alongside our console and PC business. Our aim and rationale is to expand into games as a service, but we want to do so with care and one step at a time. The knowledge of Early Morning Studios on how to make engaging free-to-play titles that'll serve as a good inroad for us into the mobile segment that's obviously gigantic and still growing. And in addition to that, I think we have a good setup. It's a good model. We have a good ratio between the upfront payment and the earn-up model. Perhaps, Andreas, if you want to talk about that on the next slide, 33. Yes, for early morning studios we're paying an upfront consideration of 80 million SEK, of which 45 million SEK is in cash and 35 million SEK in newly issued fundable shares. The maximum earn-out consideration is 270 million SEK being payable in up to 50% in shares and the remainder in cash. I will give some details about the earn up structure in the next slide. But first, looking at the financial performance this year, Early Morning Studio is expected to deliver 17 to 19 million SEK in net sales with an adjusted EBIT of 12 to 13 million SEK this year. So this gives a mid-range EV EBIT multiple of 6.4 for the upfront consideration. And this is somewhat higher than what Sunflow Group has been paying historically. But that should be seen in the light of the recent growth and also the structure of the future earn out. So if we move to slide 34. In the earn-out model being capped to 270 million SEK, the recent initial earn-out payment in 2022 for the potential overperformance in 2021, the first earn-out is capped to 60 million SEK. And if any portion of it is being paid, it will decrease the upfront multiple from 6.4 to a lower multiple. And secondly, the sellers of early morning studio will only receive earn-outs if they meet certain future EBIT thresholds. The earnout is one times EBIT up until 2026. But in the light of the financial performance in 2021, where early morning studio is expected to reach 12 to 13 million SEK in EBIT, the sellers will only receive earnouts for the first earnout period, that is 2022 plus 2023, if the accumulated EBIT for those two years exceeds 58 million SEK. So that gives an average EBITDA of 29 million SEK a year, which is significantly higher than this year's performance of 12 to 13 million SEK. And the table on this slide is also presenting the future thresholds for the remaining years.

That concludes our presentation for now. Thank you, Anders. Mr. Moderator, where do we go from here?

We can move on to some questions from the teleconference. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. We will take a brief pause while questions are being registered. Our first question comes from Oscar Eriksson from Carnegie. Please go ahead.

Good morning, guys. A couple of questions from me, starting with the gaming segment and the impressive profitability here in Q3. Can you talk a little bit about what drove the higher profitability in the full segment and also in publishing? Was it related to Industria, the release, or is there anything else in the game segment except the Facebook Oculus deal that is worth mentioning here. Thank you.

There was a little bit of a disturbance. Could you repeat, Oskar? Sorry about that.

Yeah, sure. Just asked about the profitability in the gaming segment. Is there anything worth mentioning here except for the Facebook Oculus deal, industrial title, a key driver? Is there anything else? Thank you. Yeah, sure, Oskar. Thank you. Industria has had good performance, but it was also released on the last day of the third quarter. Apart from that, we've also seen some good performance from Codesync's title, Islanders, released in mid-August. And also Source of Madness, from Thunderbolt, released in the latter half of September. I think those three games are the main contributors to the game segment of the releases in the third quarter. Great, and then a question on Q4 releases here after the interesting event here, the exciting event last week. First of all, Wavetail is the name of the Google Stadia title that's been unannounced previously. Could you talk a little bit about the revenue potential in Q4? Should we expect anything from Google Stadia? What's the structure of the deal? If you could remind us And also what's your take on the initial reception of the release and the potential on console in 2022? Thank you. First, a couple of sentences about the model and the structure with the Stadia, and then Brian can tell you a little bit about the reception. But the game has been released at the day of the Thunderfall event. That was 10th of November, but that was for Stadia only. But in the agreement with Google, we can also release it to other console platforms and PC platforms. But as stated in the event, that will be in 2022. So in the fourth quarter, it's only being released to Stadia and the other consoles and PCs scheduled for 2022. Very good. Wavesail has been received very well. It's hard to gauge Stadia release on Metacritic scores due to the state of the Stadia platform. We've had a great relationship or collaboration with Google on the title. They've been They've been very keen to keep Wavetail as the title for Stadia. The release is quite unusual, of course, that you release it without a notion ahead of time. But it was a cool way to do it together with Google. They thought this would be a very smart way to reach out with the game. And so did we. And people who have played the game are, I'm almost resorting to puns here, but they are diving into the game head on. It's a quite immersive game. And it's a zen-like gameplay where you ride the waves in search to resolve the mystery of what has happened to your sister. So the game has, the reception has been very nice. In terms of reviews, it's very hard to find reviews since Stadia games are not being reviewed as extensively as PC or console releases. But as Anders mentioned, we are bringing the game to other platforms as well in early 2022. And we're very much looking forward to that. Perfect, thank you. And then moving on to distribution. Just one question there. You mentioned in the report here that gross margins will be somewhat lower ahead here due to transportation costs. Is it correct that Amatois is expected to see the most impact on EBIT? I would have sort of guessed that perhaps Nordic Gains Supply customers in general are a little bit larger and tougher to negotiate with. Any favour here would be appreciated. Thank you. Yeah, sure. I'd say that already in the third quarter, we've seen a gross margin trending down in Nordic Game Supply. Not as much in Amatois as in Nordic Game Supply, but basically Amatois is sourcing all of their products from Far East, being hit by more expensive containers. So it's more expensive to bring them to the warehouse. But it's actually also so that Nordic Games Supply has a rather big portion of their suppliers being in Far East. So that means that a lot of goods is coming with containers also in Nordic Games Supply. And we've seen margins trending down in Nordic Games Supply in the third quarter. I wouldn't say that we expect a major difference between the third and the fourth quarter in Nordic Games Supply. But in all motorists, there is... There is a risk that the cost margins will be somewhat affected in the fourth quarter compared to the third quarter. And that is basically due to the fact that we are selling more products that we've received now recently in the fourth quarter. Understood, and I will leave it for now, but just one last question there. Is it possible to quantify for distribution in Q4 here on what to expect? Obviously, you have very easy comparisons year on year in OMOTOIS, but what is reasonable to expect in terms of either plan margins in Q4 and the guidance, I think, or indications would be helpful there. Yeah, sure. I'd say that we've seen that net sales is down in the third quarter compared to last year. For the fourth quarter, I mean, the natural effect similar to what we had in the first and second quarter this year, it's naturally so that A big reason why the net sales is going down in the third quarter is the fact that shipments are being delayed to our warehouse. So that sale will be generated in the fourth quarter instead. The net sale shouldn't be very bad compared to our sort of Then, as you say, the comparison quarter isn't good at all, but that was also based on the COVID situation. So from an EBITDA margin level, we are expecting somewhat lower EBITDA margins than what we typically have at the same level of net sales as we are expecting for the fourth quarter based on the G6 costs. It's not significantly lower, so to speak. It's only generated by logistics costs. Understood. Thank you very much. That's it for me.

Thank you, Oskar. Our next question comes from Victor Lindström with Redeye. Please go ahead.

Hi, Victor.

Hi. Good morning, guys. Two questions on today's acquisition. First of all, Early Morning seems to have one release scheduled for next year, but how many games do they have under development? That's a great question. Currently, they are only doing one game at a time. So, in our report, they released the Champions of Avon early August 2021. And after that, there are some team members maintaining, doing maintenance and services for the Champions of Avon. But then all of the others have moved to Vendor, which is the game being scheduled for next year. And there is no other game currently being in development. That sums it up. Obviously, Early Morning Studio is a game as a service company, so when they release the game, they will have to, like Anders said, there's maintenance and creating new content, et cetera, for the games continuously being made. So that means that as long as a game is successful that they release, then that becomes a new long tail revenue stream for them, which is really interesting. I think also Early Morning Studio, they've hit on something that is really good. Not only do you work with games as a service in that way, but you also sort of tap into the same fan base with every new game. So they're making old-school RPG games where the gameplay differs from game to game, where the vibe is the same, and you get this... ecosystem of games that sort of feeds off each other. And so I think this is really interesting to us to do the inroads into the mobile space in this way. We've obviously released mobile games before, but then in a premium title. This is really interesting and it'll be a lot of fun to to walk alongside early morning studio and make sure to grow the team so that the games can be supported in the best possible way. And early morning studio has a lot of great ideas going forward as well. Right, understood. I'm sorry, I couldn't just leave there with a long answer, please. Yeah. And how is the revenue split between the two titles? on the current year's fiscal guidance? You mean between the two titles that they have already released? Yeah, the last game was released in August 2021, so up until then there's only been one game released, but the new game has been trending very well, it has a strong momentum and And, yeah, we've kind of included that in our forecast for this year, for 2021. But, yeah, both games are still doing well. But, of course, the recent release, Champions of Avon, is trending upwards and has been doing that since August. All right, great. That was all for me.

Thanks. Thanks a lot, Victor. As a reminder, if you do wish to ask a question, please press 01 on your telephone keypad. Our next question comes from Oskar Eriksson with Carnegie. Please go ahead.

Thanks. I'll jump in with one or two more here. I wanted to ask on the Gantt as well, now announced for mid-December. You mentioned a lot of marketing behind the title. What can you say about the initial take on interests, trailer reviews, early tests of the game? Anything that you can share would be interesting. Thank you. So the gunk is being made by the Image and Phone team that I know intimately of course. Well, I know all of our game developers, but those are the guys that I've worked most closely with, of course, over the years. So games being tested, I mean, the development process is that the game is tested every two weeks. At the end of a spring, the game is tested and bugs are eradicated. So it's typically a process where the game... Bugs are not allowed to exist for more than two weeks. And to answer another facet of testing, people who are testing the game or playing it are liking it a lot. I was mentioning Zen Mode when I was talking about Wavetail just now. The Gunk is another type of Zen Mode game where you um wave with a team that has arrived at this surprisingly enough planet you need to get rid of the gun that is that covers that is just an alien goo that needs to that needs to go and it it has all the the zen elements that in real life uh house cleaning should have but never happened so uh You walk around and clean up this planet and while you're doing it, you're sort of unraveling what has happened to the planet and then get a chance to make a difference for it. So when people are testing it, when they're asked afterwards, typically when they get asked how long they think they have been playing, they haven't realized how much time has passed. It's a game that you sort of really get sucked into. So I would say that it's what we expect from the game and also what we expect from the team. This is typically how testing proceeds with games from the image and form team. Testers are happy and want to play more. Sounds good, thank you. Another question for Anders again. First of all, some gross margin pressure here in Q4, as we discussed. When you see that pressure from freight costs disappearing or being much less of an impact, the Q1 next year, Q2, and also could you say something about what you see for Q4 in terms of cash flows, given the working capital build-up here in Q3? Thank you. Yeah, thank you. I'd say we're starting with a cash flow question. it's it's really so that we have a we have a double up effect here from from the fact that bergsola's inventory level is lower based on the the lack of purchased hardware so we we don't receive the the number of consoles that we would like to and and the customer demand is higher than what we can the one we can fulfill. So that means that Bergsala having the highest DPO and being the distribution company with a decent credit line to the supplier is then causing a negative cash flow effect, both in accounts payables, but also in inventory levels. And then the other two companies are building up inventory value, especially Nordic Games Supply then. But it's also so that mean nordic game supply has been outperforming its comparison quarter every quarter this year and we have now sort of secured product availability for the for the fourth quarter but again you can i mean i would expect that the bergsala looks basically the same um by the end of the fourth quarter as it did last quarter since since we didn't have much much hardware in stock by the end of last year as well. So it's likely that we won't have inventory build up in Bergsala in the fourth quarter either. And then for Nordic Game Supply, I mean, we now have the product available. We will hopefully sell as much as possible in the fourth quarter. And then it's more or less a question of whether we are whether we have time to convert the accounts receivables to cash or not. But ideally, that should happen in the fourth quarter or in the first quarter, based on the fact that accounts receivables will convert to net cash going forward. Great. And then the question on gross margin pressure, do you expect that to ease into Q1 and Q2? Yeah, good. It's difficult to say from what we see right now. I mean, in Nordic Games Supply, most of the purchases have been made in this year for the peak season. The first quarter is typically not a quarter where we have a lot of inbound deliveries in Nordic Games Supply. For Amatois, it's kind of a different situation where we do receive our spring-summer products already in the first quarter. But when we talk to our suppliers in terms of container handling and taking care of the shipments or warehouse, we don't really see that container prices going back to a normal level anytime soon. So I would not expect that to happen in the first or the second quarter next year. Okay, thank you.

There are no further questions. I hand back over to our speakers.

Okay, so then we would like to thank you very much for interest shown and for having patience with us.

during this presentation. We look forward to talking to all of you at given occasions. Thank you very much.