Thunderful Group AB

Hi and welcome to today's Q1 report presentation with Thunderfall Group, represented by CEO Anders Markqvist and CFO Lennart Sparud. My name is Dennis Bergin. I'm an analyst from Carnegie and I will host the Q&A session that will be held after the presentation. I would like to remind our viewers of the opportunities to submit questions and I'll make sure to read them during the Q&A session. With that said, feel free to kick off your presentation.

Thank you, Dennis. Good morning, everyone, and welcome to today's presentation of Thunderfall Group's financial results for Q1 2023. My name is Anders Meyerqvist, and with me today is Thunderfall Group's CFO, Lennart Sparud. Today's beautiful background is from the game Planet Atlanta. We are releasing Planet Alana exactly one week from today on the 23rd of May. So Planet Alana is the first significant release from Thunderfugames here in 2023. But there is more coming up and I will give you an update of our release pipeline later on in this presentation. In today's agenda, I will start with the key highlights in Q1, some background on Thunderfall Group and our two segments. And lastly, CFO Lennart will guide you through the financial section. Thunderfall Games delivered net sales of 107 million SEK with EBITDA of 44 million SEK. We reached organic growth of not less than 28%. 28% is even higher than in the last quarter when we had 23% organic growth in Thunderfall Games. Throughout the year 2022, net sales from new releases kept growing and growing each quarter. The first quarter here in 23 has been a silent quarter in terms of releases, where Thunderful Games had not more than 4 million SEK in net sales from new releases. So despite the limited contribution from new releases in this quarter, Thunderful Games delivers a solid 44 million SEK in EBITDA, and that is 110% higher than in the comparison quarter. In Thunderfall distribution, both Bergsala and Amatoys had good performance here in Q1, delivering all of the segments EBITDA in this quarter. For the two companies where we suffered from challenges last year, that's Amatoys and Nordic Game Supply, both of those companies experienced better profitability year over year here in the first quarter. And this is a result of the cost initiatives last year and the warehouse move for Amatoys here in the first quarter. The end result for the distribution segment is a minor negative growth in net sales of minus 3%, but improved EBITDA reaching 19 million SEK this quarter, and that is a 32% growth year-over-year. Cashflow from operating activities in Q1 was positive at 64 million SEK. It's been negatively impacted by a short-term inventory buildup in Burgsala of as much as 100 million SEK. Bergsala was building up inventory at the end of Q1 to be ready for the release of the new Zelda game, Tears of the Kingdom. The Legend of Zelda Tears of the Kingdom was released Friday last week, and it has been the biggest day one release ever in Bergsala's history. And there will surely be a little something to be looking out for in the next quarterly update in August. An overview of the entire group's financial performance in Q1 showed that we had net sales growth of 2%, games was plus 30%, while distribution was negative with minus 3%. Adjusted EBITDA was plus 63% and adjusted EBITDA was plus 87%. Both profitability metrics saw significant positive impact from games, but also around 30% growth from the distribution segment. In the recent quarters, our distribution segment has been struggling. Year-over-year EBITDA development has been negative for several quarters. Turning this trend here in the first quarter is the start of a new era for Thunderfall distribution segment. We achieved significant profitability improvement, even though net sales growth is negative. And again, this is the result from the cost initiatives implemented last year and the fact that we've now moved the last of the three distribution companies to our own warehouse in Jönköping. The graph to the right shows that the group's EBITDA here in the first quarter is significantly higher than what we achieved in both Q1 and Q2 last year. And it's actually not far from what we achieved in Q3 2022. Q3 is typically a seasonally much stronger quarter in distribution. Development of net sales and adjusted EBITDA per quarter in the last 12 months show in the red bars our game segment, where this quarter's net sales is 30% stronger than in the comparison quarters, but not as strong as in the last three quarters. In relation to this, the achieved EBITDA of 44 million SEK is strong and is driven by our stable revenue streams co-development and partners. Our IP building revenue stream does not deliver positive EBITDA this quarter, mainly driven by the limited contribution of new releases and a seasonal slow quarter for back catalog sales. Black bars for distribution visualizes the improved profitability where sales has been lower than in all of the other four quarters, but adjusted EBITDA is just as high as in the seasonal strong quarter Q3 and higher than both Q1 and Q2 last year. So let's have a look at Thunderful Group and our two segments. Thunderful Group operates in two segments, games and distribution. While the distribution business covers the Nordics, the games business is global. We are now 490 employees. We have 15 internal games in development and 14 games from external developers in our pipeline. Across the segments, we manage a portfolio of around 100 brands, and we've kept our famous Nintendo partnership for more than 40 years. Thunderfall Distribution consists of three company groups. BergSolar is selling Nintendo products in the Nordics and in the Baltic states. Berg Sala's business has been stable in the last years and has a clear seasonalization towards the end of the year. And Berg Sala also has a clear margin mix where software sales have higher margins than hardware sales. Armo Toys is our Nordic toy distribution group and is currently distributing around 70 brands, including some of the most popular toys on the market. Armo Toys business has had a stable top line over the last four years. Nordic Game Supply is a Nordic distributor of gaming accessories, gaming merchandise, and boxed video games. Nordic Game Supply's business saw revenues growing fast during the pandemic, but the company has seen significant negative growth post the pandemic. Over time, this company group has had the lowest margins of the three distribution companies. So breaking down our distribution companies and comparing financial performance in Q1 this year to Q1 in the previous years. Berkshire is having stable net sales in the last three years. Profitability is a little lower this year since we've sold a higher share of consoles compared to previous year's first quarters. This quarter marks the first quarter in three years where we have not experienced supply chain issues for inbound consoles. For Amatois, the achieved EBITDA is back to levels we saw two, three years ago. Those years gave us around 30 million SEK in full year EBITDA. With the warehouse move completed here in the first quarter, we are on track to reach these historical EBITDA levels again. In Nordic Games Supply, net sales continues to decline, this time with minus 21%. It's not as much as the minus 41% we saw in the previous quarter, but market demand is still significantly lower than in the comparison quarter. On the positive side, the cost initiatives implemented last year gave us a neutral EBITDA in this quarter, which is perfectly in line with the comparison quarter, even though sales is down with minus 21%. So that being said, we've now managed to gear the organization and the fixed costs to better match the new market conditions. As for our inventory levels, Bergsala has increased inventory levels with as much as 100 million SEK here in Q1, but this is a positive sign ahead of the Zelda release in Q2. As I said before, the Legend of Zelda, Tears of the Kingdom, has been the biggest day one release ever in Bergsala's history. The inventory reduction has continued in both of the other two distribution companies here in Q1. The combined inventory reduction is minus 77 million SEK in Armo Toys and Nordic Game Supply. We are very pleased with this performance in relation to the combined net sales of 244 million SEK in these two companies. Thunder for Games is structured around our four revenue pillars. Our co-development pillar currently includes two other studios, primarily developing games based on IPs from external licensees. This revenue stream contributes with predictable revenues with solid and high margins, but it also contributes with rev shares from the developed games. And there is no need for investments in this revenue stream. Our partners activities is where we are helping external game development studios to self-publish their games. As with co-development, this pillar contributes with predictable revenues and with revenue shares from games that our partners self-publish. Also for partners, there is no need for investments in this revenue stream. The IP building pillar is represented by all studios focusing on our own IPs. And this is also where we do publishing, both of our own IPs, but also when we publish external games and help external studios building up their IPs. This revenue stream is dependent on a high rate of investments, but can generate high profitability levels when published games reach commercial success. The investment pillar ranges from investments in early prototype game projects to acquisition of larger companies. This revenue stream is naturally dependent on investments, but for game projects, we benefit from revenue shares from the games in which we have invested. For these game projects, we always try in to sell our partners activities. So here in the first quarter, co-development and partners have together delivered higher EBITDA than all of the games segments EBITDA. That means that IP building has been loss making in this quarter, but it's marginal. And with more significant releases coming up in the next quarters, our IP building revenue stream is on good track to start delivering profits and cash flows in the three coming quarters this year. So before we are looking at the pipeline in IP building, let's start by showing what we have released in and after this first quarter. So we released two games from our internal studios in this quarter. The mobile game Vendir, Plague of Lies from Early Morning Studio and two ports of Jurassic World Aftermath Collection for VR. This time released on PlayStation VR 2 and Pico. The released games have contributed with 4 million SEK in net sales, which is slightly higher than the comparison quarter, but lower than all other quarters in 2022. After the end of the quarter, we have released two more mobile games, both coming from our publishing activities and developed by external studios. Super Meat Boy Forever is a mobile port of the old Indie Darling and has been released on mobile here in April. And LEGO Brick Tales, originally released on PC consoles in Q4, was released also on mobile platforms in April. As for the games we currently have in development, we start with this list of games from internal studios. We currently have 15 titles in development, of which five are planned to be released in 2023. Some key highlights from this internal tracker are, of course, SteamWorld Build. The announcement back in January was the most successful announcement in Thunderful's history. We have continued to see increased wish lists and demo downloads, and the release planning progresses just as expected. HeadUp's internal dev team is releasing two indie games on June 22. Tinkertown is leaving Early Access for a full PC release, and for everyone who loves the Super Meat Boy IP, you are going to love the hardcore puzzle game Dr. Fetus Mean Meat Machine. It's genuinely fun and will push your skills to the limit. HeadUp has also been involved in a number of prototype projects for some months, both using the internal dev team, but also in cooperation with existing studio partners. The first of those prototypes, the up to eight-player co-op game Torn Apart, is being released on Monday next week. So check it out if you enjoy really fun co-op gameplay with your friends. For our externally developed games, we now have a pipeline of 14 games. Eight of those games are currently planned to be released in 2023. On top of this, we are also porting some of the games released last year to additional platforms in this year, but none of those ports are visible in this list. So key highlights from the external pipeline includes Planet of Lana, We are releasing the game exactly one week from today, May 23, and this marks the first significant release from Thunderfall here in 2023. But there are more releases to come. I mentioned the progress going all according to plan for Steam World Build in the internal pipeline. And in addition to Planet Alana, the next game in this pipeline, Viewfinder, has seen a demo published here in April. I mentioned in the last quarterly update that the original announcement in December last year went very well and the reception now has been amazing and the game won even more awards at the game conference reboot here in April in Croatia. And now I'm handing over to CFO Lennart Sparud who will guide you through the financial section.

Thank you, Anders, and hello, everyone. I will now guide you through some more detailed financial slides. The first quarter was a stable financial quarter for both segments, from a sales and profitability perspective. To guide you through the details, starting with net sales development, where we have seen a growth of... Sorry, net sales are up 2% quarter over quarter, reaching 555 million SEC in the quarter. The game segment has a growth of 30%, and the distribution segment is in line with the comparison quarter, though minus 3%. For adjusted EBITDA, the growth is 24 million SEC, or 87%, reaching 53 million SEC in the quarter. Adjusted EBITDA in the game segment amounted to 44 million SEC, which is 110% above the comparison quarter. The distribution segment showed an adjusted EBITDA growth of 3 million SEC, or 28%. and we reached a positive cash flow from operating activities of 64 million SEK compared to 203 million SEK in the comparison quarter. And I will come back to this part later on in this presentation. Looking on segment level for Thunderfall Games, we have seen a growth in net sales quarter of quarter of 30%, reaching 107 million SEK in this quarter. Organic growth in games is 28% and growth from companies acquired in the last 12 months is 2%. Breaking down the organic growth, it's mainly CoSync, Thunderfall Development and Robot Teddy driving the positive net sales and EBITDA contribution in the quarter. The acquisition driven growth in net sales and EBITDA is related to the acquisitions of Jump Ship acquired in November 22 and Fitspin Studio acquired in February 23. For investments in games, we have reached total investments of 124 million SEK in the quarter. For development CapEx, we reached 47 million SEK. And this is mainly because we have more developers employed compared to the year before. We are now approximately 340 developers in the group compared to 280 developers at the same time last year. In the distribution segment, we see an overall net sales growth of minus 3%, quarter over quarter. Breaking it down in the subgroups, we see that BergSolar is up with 12%, and this was the first quarter in three years with no disruptions in hardware deliveries. NGS is decreasing with 21%, or 34 million sec, due to a continued general overmarket demand for game accessories. ArmoToys is decreasing with 2%, quarter over quarter. For profitability measured in EBTA in distribution, it's pleasing to see that the segment has an overall growth of 5 million SEC or 32%, which actually is a trend break against all quarters in 2022. Even though net sales in Bergshala are up 22 million SEC, the EBTA is only up 1.3 million SEC. The unlimited access to hardware with lower gross margin affects the gross profit negatively in relation to the comparison quarter. The demand for Nintendo products remains strong, driven by the successful release of the game The Legend of Zelda, Tears of the Kingdom, and a strong underlying demand from Nintendo's successful release of the Super Mario Bros. movie. In NGS, EBITDA is in line with Q1 2022, despite the 34 million SEK decrease in net sales, and this is, as Anders mentioned before, due to the cost initiatives implemented last year. Demand for the company's distributed products remains low, and our assessment is that the future demand will remain low in the short term. Omotoys EBITDA is up 4 million SEK. This is due to positive sales mix, FX effects and also reduced logistics overhead after the move of the warehouse to the group wide distribution center in Torsvik. Tuto net sales in the quarter are up almost 2% compared to the comparison quarter. Thunderfall game segment, as I mentioned before, has an organic growth of 28% and an acquisition-driven growth of 2%. CodeSync Robotech and Thunderfall Development is the main driving factor to the organic net sales growth in the quarter. And the distribution segment has a net sales growth of minus 50 million SEC or minus 3%. As mentioned earlier in this financial section, we reached a positive cash flow from operating activities of 64 million SEK compared to 203 million SEK in the comparison quarter. During the first quarter, the cash flow has been negatively affected by strong inventory build-up in Burgsala, ahead of the company's biggest game release of all time in May. At the same time, we are very satisfied that the other distribution companies have continued to reduce inventory value by 77 million SEK when the combined net sales of the two companies amounted to 244 million SEK. By the end of March, we had 643 million SEK tied up in net working capital compared to 877 million SEK by the end of March 22. By the end of the quarter, we had almost 330 million SEK in total available cash if we include our unused utilized credit facilities compared to 410 million SEK by the end of March 22. Net debt by the end of the quarter is 291 million SEK compared to a net debt of 158 million SEK by the end of March 22. The net debt over EBITDA ratio for the last 12 months was 0.7 times. And that was the end of the financial section. And we now hand over to Dennis Berggren from Carnegie for the Q&A.

Perfect. Thank you very much. Okay, so from my perspective, it seems like you have sort of delivered a solid quarter within games despite no larger releases or given no larger releases in the quarter. And then also some profitability improvements within distribution segment. What would you say are sort of the most important? What would you say is the real highlights in the quarter? What are you most proud of?

Yeah, but I think as you said, I mean, this is now the fourth consecutive quarter where the two revenue streams, co-development and partners have delivered solid, stable EBITDA quarter over quarter over quarter for four consecutive quarters. And then IP building naturally has been very dependent on game releases based on Thunderfall's history and the capacity of our back catalog. In this quarter, as I mentioned, the losses in IP building are very limited. And so it kind of proves that our back catalog sales has really improved based on the 22 releases we had last year and 20 releases two years ago. So I think now we are on good track in IP building to show that we can generate good cash flows and nice profits when the releases are coming here in Q2 and the next quarters. in distribution i'd say that we are most proud over you know the improved profitability and especially in in armatoys caused by the logistics the the inventory reduction last year and also now that we managed to move to our own warehouse the team's done a tremendous job and we're now delivering all of the orders since early february from our new site And then also, I mean, the fact that Nord Game Supply has net sales being 21% lower than in the comparison quarter, but still we reach the same neutral EBITDA. That really proves that we've reduced the costs quite a lot in the company.

And if we look to the few releases during the quarter, has those titles performed according to your expectations or is there anything specific to say about the performance so far?

We ported Jurassic World Aftermath, originally released in December 2020, on one of the other VR platforms. We ported it to Pico and PSVR 2. It's not much to be said about that. It's difficult to generate a lot of revenues on those platforms. But for the mobile game, mobile releases are a bit different compared to PC consoles. So we're hoping that that will continue to improve over time. But it's not as day one release related as the typical PC console releases.

So far still according to expectations on mobile? uh could have been better but i guess the the average mobile climate hasn't really been been in our favor here in the first quarter either you mentioned that the release activity from last year has sort of paved the way for for stronger catalog sales um where is the market currently at do you see that are like any any larger changes with the con i mean to the conditions for for catalog sales within the the um area where you're mostly active

I think most actors experienced lower back catalog sales in Q4. I think for us, that was compensated by all the releases we had in Q4. But I'd say that here in the first quarter, we kind of see that back catalog sales could have been higher if the market would be somewhere else. But we're still... We're still pretty pleased with our performance in relation to the fact that the market isn't as positive as it was a year or two ago.

Where do you think that is? Like in normalization, following the higher activity seen during the pandemic or any potential concerns regarding macro development? What's your take?

Yeah, that is difficult, right. But I guess, you know, post the pandemic, of course, it's, you know, we saw the market report coming for the full year 2022. And of course, there's kind of some negative growth to be expected in one or maybe two years post the pandemic. I guess the overall long term trend will continue to be positive as it's been for many, many years. But then, I mean, again, for us, our games are typically double A, triple I games. The individual performance of each game when we release them is more up to the quality and the reception of that specific game. Overall, our back catalog sales haven't been very high historically. The fact that we've released quite many games and also some really good games in the second half of last year is improving our back catalog sales.

We received a question on the title Replace that seemed to have been postponed to 2024. Are there any problems in the development or do you just need more time for polishing?

It's one of our externally developed games. So I think we had it last time we had it in the pipeline for second half of this year. But we've chosen to move it to 2024, basically in discussions with the developer and to make sure that they keep the timelines and they deliver a high quality game.

Got it. And could you perhaps provide any more color on how long Planet of Lana will be exclusive on Xbox on the console side?

That is a challenging question.

Without going into details, could you perhaps give a sort of general answer to what the dynamics generally are like?

I think we show that a couple of times now when we release games in collaboration with different platforms. We've done a few of these day one Game Pass releases and also corporations with PlayStation for platform releases. There's typically some type of exclusivity tied to that specifically for console platforms. But that can last for different time periods. It can be three months, it can be six months, it can be nine months, it can be probably lifetime as well. So, yeah, it depends.

Okay. And on the distribution agreement with, or I should say exclusive distribution agreement with Nintendo, when is that being renegotiated? Should one expect an announcement of a...

renewal at the beginning of 2024 yeah last time we announced it was in february 2022 i think and then we announced that that you know we we have a new contract valid for two years so that means that the contract we have now you know is up for renewal after the first quarter next year

Okay. Then again, back to games. I mean, you gave a number of reasons for the sort of stronger performance versus the Q1 results last year. But back then, you also had a lack of external financing for certain projects, I remember. How's that developed? I mean, how's that looking today? What's your sort of visibility and what's your sort of comfort in seeing solid development on the development side throughout the year and into next year as well?

Yeah, I think that goes into two different categories here for us. In co-development, I think in the last quarterly update, we gave some details that we signed a couple of new contracts, we have good visibility throughout this year and also visibility a good time into next year as well. Then when it comes to platform deals, I mean, now obviously Planet Alana is released in cooperation with one other platform. Also Viewfinder has been announced in collaboration with one of the platforms. So there we try to do some kind of risk-mitigated solution here where we self-publish a few of the games, not being in cooperation with any other platforms, but then for some of the games, we kind of have a de-risk philosophy where we get some revenues from specific platforms and then also additional digital game sales revenues.

Got it. And then I noted that you had in the cash flow statement quite a large investment related to game project investment. Could you remind us of sort of the nature of that investment, what it is?

In the last quarterly update, we gave an update that Robot Teddy had onboarded a new client, which is GSC, a game developer famous for the Stalker series of AAA games. So Robot Teddy is helping them with the business consultancy services going forward for the new game that they have in development, Stalker 2. So we made an investment into that game. And typically when we do game project investments, as I said before, there's different type of recoup mechanics and also some optionality when it comes to revenues from the games, actual net sales in the future. So I'd say that this is one of the safest items that we have in the balance sheet.

Good to hear. Should we expect any investments of similar size? Not in the near term, no. And then again, I think you answered the question on mobile. But could you please remind us, because we have some sort of moving parts in the balance sheet with regards to the working capital movements. You partly have the sort of positive build-up again in Bergsala related to the upcoming Zelda game or the... recently released Zelda game, and then you have continued reductions in Amatoys and NGS. Where are we currently at in Amatoys and NGS? How much more room for improvement is there? And also, how quickly should we expect sort of a reversal on the working capital side in Barisala?

Yes, I think when we updated Q4, we had 650 million SEK in inventory levels at the end of last quarter. And then when we did the update for Q4, we kind of showed historical inventory levels compared to historical net sales. should have been able to maybe come down as far as 500 million SEK based on historical net sales in 2022 and 2020. So that means that we kind of guided for that there is room for another 150 million SEK inventory reduction in the combined Armo toys and Nordic Games supply. And now, as I mentioned here in the presentation, we've already reached 77 million SEK here in Q1. Q1 is a special quarter in Armatoys where we do first deliveries of spring-summer items. But continuing working the way we do now, I'd say that we are on good track to reach that target where we were in 2020. And for Bergsola, I mean, as I said, the release we had last Friday, Friday last week, is the biggest release ever in Bergsola's history. We built up inventory before that. When we sell a lot of games, we typically sell a decent number of consoles as well, so... So the inventory levels in Bergsala is really on a snapshot level. It was much slower, only a couple of weeks before we ended the quarter. So it's changing several times during one quarter. The turnaround times in that inventory is very high. Got it.

And on the Zelda title, would it be possible to add some color or provide some sort of metric on how sales developed with the previous Zelda title for you? I mean, how much did it push hardware sales from the previous quarter? Or could you give some sort of indication of the potential from such a large release?

Yeah, that is an interesting comparison, because when Nintendo Switch was launched in March 2017, Zelda Breath of the Wild, the previous title, was the only game available. So, of course, you can argue whether the console pushed the game sales, whether the game pushed the console sales. But, I mean, the previous game, Breath of the Wild, I think Metacritic open critic score is somewhere around 96, 97. It's one of the best games ever made. Now, six years later, Nintendo has developed Tears of the Kingdom, and without having a sequel to one of the best games ever made is challenging, I guess, from a Nintendo perspective. But so far, the reception up until day one has been fantastic for us. The review scores, like Metacritic, OpenCritic, seems to be perfectly in line with Breath of the Wild, and of course, The Zelda game here in the Nordics is so popular, even if you compare it to other regions in Nintendo's world. So we are very bullish that this will be driving sales for us in the future as well. And Breath of the Wild has been selling very, very good ever since it was released six years ago.

So from that perspective, obviously Zelda is a bigger title, but also distribution-wise, the popularity is higher here in the Nordics. So if you would compare it to the successes we saw with Pokemon in the end of last year, that would provide additional upside for you specifically, given your agreement there.

Specifically comparing title to title, then yes, Zelda has more impact than Pokemon, even though the Pokemon titles are also extremely popular. But then comparing, I mean, the fourth quarter was a quarter where we, you know, fourth quarter is typically the quarter where we sell on other consoles, where we have a lot of evergreen titles selling in, you know, Christmas gifts and so on. So Q2 is a different quarter, but specifically comparing Zelda to any of the other games we've ever played.

released this is the biggest release ever very clear um and if we look to your games pipeline um you obviously have the new steam world title coming um i find you to be quite bullish still on on sort of your wording regarding expectations any comments with regards to sort of quantitative increases in demo downloads or wish lists?

The game is progressing well. The team is doing a fantastic job. Everyone is preparing for this release. So far, the reception when we announced the game back in January was fantastic. That has been driving back catalog sales for the other SteamWorld titles here in the first quarter. There's so many positive effects from having this type of positive announcement for us. It's difficult to get any numbers, but we are still very much looking forward to the release of the game. Got it.

And within games, I know this is quite a difficult question, but given that we have co-development partners doing very well, we have an exciting pipeline of games upcoming that should drive profitability within IP building. How do you think about the earnings split when we close 2023 between the four pillars within games? I mean, could you give some sort of indication, and I know that there is a wide range of outcomes depending on the successes of each specific game, but some sort of idea of how you think regarding the split for this year?

Of course, it's based on the pipeline of games and the releases and their performance. But I think last year we released north of 20 games. This year it's not as many, but there are a few of those that have higher market attention, so to speak, before release date. As I said before, two of the games, Planet Atlanta and Viewfinder, are being released in collaboration with platforms. So that is giving us some revenues that we know already before we release the game. And then in addition to this, We have the release of Steam World Build, which we are looking forward to very much. And last time there was some optionality in the pipeline as well. I think last time I talked about Astronimo from CodeSync and this Raspberry is still an ice cream flavored game. But those are two other games that could make an impact for us. So yeah, we are quite bullish about the releases this year still.

Within distribution, you have covered the development for the quarter for Nordic Game Supply. Where are we currently at in terms of cost reductions? Is everything fully implemented now? We have these two effects matching each other. We have a lower demand than previously, but at the same time, you are operating with a lower cost base.

yeah where we're currently at are we sort of have we seen all the effects we can see on the cost side or should we expect further reductions going forward yeah you haven't seen everything yet but i'd say the the majority of the of the cost initiatives we did see full effect of those here in q1 but there are still some some some spill off to to the second quarter yeah and perhaps not the the biggest acquisition of yours but tech team um any any effects from the acquisition so far is it fully integrated yeah it's a fully integrated part it's been you know we've been operating it since i think it took you know less than a week to to move everything to to all my toys kind of core operations so now all of our customers can can buy it and you know we have it in in our own warehouse I'd say it will be a nice addition to Amatoi's business this year.

Again, perhaps a bit tricky question given that you weren't that specific on the nature of the deals, but I was going to ask you if you would look back to the platform deals, or the deals I should say, that you talked about in Q1 last year, how much of those deals do you believe that you have signed by today?

Oh, that is some time ago, but I think we got it in February when we updated for Q4. We said that we had signed new deals within co-development and within partners. Those were signed primarily in Q4. We've seen revenues from some of those in Q1. Some of those will be coming in the future. Basically, we have two platform deals with two other games coming up this year. We've signed some of them, but then we are not measuring our daily operations based on that number anymore.

I fully understand. um so no further questions from the audience and my final question for you guys is um i mean given what we're currently stand where what what is the the top of the agenda for for the reminder of 2023 obviously we have a quite loaded pipeline of releases um where do you sort of spend most of your time

Yeah, I think me and Lennart, we work with a lot of different things, but for this year within games, it's a high focus on delivering high quality releases. As I said before, we have a de-risk approach where some of them are in cooperation with platforms and some of them we are doing fully on our own. But it's important to do a really good job and all the lessons learned we had from back in 2021 when the commercial success for releases wasn't as high as we had hoped for. And then in distribution, I'd say that most of these cost initiatives have now been implemented and we are still focusing on reducing the inventory levels. And there are some really tough metrics on the teams when it comes to that to the end of this year. So I hope we will be able to show that profitability and those stable cash flows from distribution this year. And we are on very good track to be doing that.

All right. So thank you very much. With that, I would like to conclude the presentation and also thanks to the audience for tuning in today. Thank you.