Welcome to the Fractal Gaming Group audio cast with teleconference Q1 2022. For the first part of the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. Today, I am pleased to present CEO Hannes Wallin and CFO Karin Ingemarson. Speakers, please begin. Hello, and good morning, everyone, and welcome to today's presentation of our quarter report. We can move to the next slide, please. We will start with some highlights from our Q1 report. Our net sales in Q1 was decreasing by 31% year-over-year to SEK 117.5 million and by 38% measured in US dollars. We were facing extraordinary difficult comparables, where we increased by 29% in Q1 2021. EBITDA increased slightly year-over-year and EBITDA margin as well. The high prices of graphics cards that we have now seen in the last 12 months has continued to hamper the demand for PC components that are usually purchased at the same time, such as PC gaming cases, our main product. The high prices of graphics cards have caused gamers to wait and postpone their upgrades of their PCs, which have had a negative effect on our product categories, as well as the whole PC component industry in the last 12 months. The graphics card prices have started to decline in the first couple of months of 2022, and this trend is expected to continue during the year. Due to many gamers waiting with their upgrades, it is believed that there is a strong and pent-up demand for upgrades among gamers, which can lead to a strong sales comeback in the second half of 2022. While the current market situation is challenging, it is important to understand that this is something that affects the whole market, and is not specific to Fractal. During the first quarter, we have increased our market shares in our key markets, which we're very happy about. In the first quarter, we have improved our margins by more than five percentage points year-over-year, which we're especially happy about considering the ongoing and challenging situation with extremely high freight prices, which continue to negatively affect our margins compared to a more normalized situation. The margin improvement in Q1 is driven by implemented price increases, a favorable product mix, the reinstated tariff exemption, as well as a positive currency effect. On the twenty fourth of March, we received the very positive news that our main product category, cases, had its tariff exemption for the U.S. market reinstated. The exemption is valid throughout 2022, and we have good hopes to have it extended going into 2023. The tariff exemption had a positive effect in Q1 of about three percentage points and is expected to have a positive EBITDA effect in 2022 for approximately SEK 15 million-SEK 20 million. Next slide, please. We see an increasing number of PC gamers worldwide, even post the COVID reopenings. The biggest gaming platform for PC, which is Steam, increased by three million users in Q1 this year compared to Q1 last year. In Q1, we also saw several interesting new PC game releases. In terms of new hardware, Intel is expected to get back into the graphics card market in Q2 with the new Arc series, which will be adding healthy competition into the graphics cards market. The viewership hours on the streaming platform Twitch, remains on a very high level, which indicates and proves the ongoing high interest, and demand for gaming and with levels that are much higher than the pre-pandemic levels. Next slide, please. In the first quarter, we have launched new models, the Compact and the Nano, in the successful and award-winning Torrent series. Both models received very positive reviews and won several awards. We remain committed to continue to release award-winning products, and we have many exciting launches in the remainder of this year. Next slide, please. Yes. Moving on to the financials. The graph at the top shows the development in net sales. Net sales in the quarter decreased by 31% to SEK 118 million compared to Q1 2021. We also measure our sales in US dollars, as we sell exclusively in dollars regardless of the end market, and the organic decrease in dollars in Q1 was 38%. We faced high comparable figures with 29% organic growth in Q1 2021. The growth in Q1 last year was related to low inventory levels in the sales channels as a result of an all-time high sales out to end customers during Q4 2020. The decrease can also be explained by continued high prices of graphics cards, which impact demand of cases in the market and affect our sales, but also sales for the entire industry and our competitors. However, what's important to say is that we see a continued strong underlying demand for our products, which will drive strong sales development when the prices of graphics cards normalize. Another factor is Russia's invasion of Ukraine, which has impacted consumer confidence and dampened demand, particularly in Europe, but it's hard to quantify the negative effect in Q1. In Q1, the logistical situation in sea freight from China remained challenging with long lead times, and January was particularly difficult due to Chinese New Year. However, the situation has improved somewhat in the beginning of Q2, and we believe the improvement will continue during 2022, but at a slow pace and with continued uncertainty. We had a reasonably good inventory situation, in the sales channels in Q1, which means that sales to end customers were not materially affected by the logistical situation. In the graph at the bottom, you can see our quarterly development in sales out to end customers that our distributors and resellers report to us measured in dollars. Sales out is an important measure that shows the underlying commercial development. In Q1, sales out decreased by 19% organically compared to Q1 last year. As said before, high prices of graphics cards mainly explains the decrease in sales out. As mentioned, we believe there is a pent-up demand in the market, which will have a positive effect in our sales when the graphics card situation normalize. Moving on to next slide and segment development. We can see that we have the strongest sales in Americas with 46% of total net sales, followed by EU with 41% and APAC and other with 13%. Q1 last year was particularly strong in EU due to replenishment of inventory in the sales channels and high sales of other products, mainly power supplies. We can see that the Russian invasion of Ukraine has contributed to lower sales in Q1 2022, especially in Europe. Sales of cases decreased 18% in total. Americas decreased by 22%, EU by 37%, and APAC and other by 38% compared to Q1 2021. Sales of other products decreased by 68% in total. The main decrease came from EU because of tough comparables, due to increased sales to fill up the inventory at the sales channels in Q1 last year. Cases accounts for 89% of the total net sales in Q1 and was 76% last year. The change in product mix affect the product margin positively in Q1 2022. As Hannes mentioned before, it is very positive news that our market share is increasing year-over-year. This indicates that we are doing a great job with product development and marketing. We will continue to strengthen our position, and have several new product launches coming up. Moving on to the next slide and product margin development. In Q1, product margin was 40.2%, which is 5.4 percentage points higher than last year. The improvement of 5.4 percentage points versus last year is mainly driven by favorable product mix, a strong US dollar SEK rate, US tariff exemption, but on the negative side, continued high freight costs. Product mix improved the product margin by approximately eight percentage points, which is related to a higher proportion of cases sold compared to other products. Even the mix within the case category was beneficial, with increased sales of cases with higher margins, like the Torrent case. The product mix and margin structure indicate that Fractal continues to develop products with good margins. U.S. tariff exemption improved the product margin by approximately one percentage point compared to last year. As Hannes said before, it was decided that Fractal received a renewed tariff exemption for computer cases. The exemption applies retroactively from 12th of October 2021 through December 31st, 2022. The tariffs paid for from 12th of October 2021 will be refunded. Non-recurring effects from the tariff exemption had a positive effect on the product result in the quarter of SEK 3.7 million. As I just said, tariffs improved the product margin by about one percentage point compared to the first quarter of 2021. Positive currency effect increased product margin by approximately two percentage points. As said before, we sell exclusively in US dollars, and our product purchases are also in US dollars. The currency effect comes mainly from sales out of stock with higher FX rate than we bought the stock for in 2021. Freight cost continues to be at a high level in Q1 and affected the product margin negatively by approximately six percentage points. In the beginning of Q1, freight costs were extraordinarily high, which to some extent is connected to the Chinese New Year and high pressure on deliveries from China. Prices have since then decreased, but is still at a high level, and it is uncertain how the rest of 2022 will look like. Fractal's P&L is only affected by freight cost to the US, and our regional inventory, and freight to the rest of the world is handled by resellers and distributors. I can also mention that increased cost for freight affect our P&L when we sell the goods, which means some time lag before impacting the margin. Let's have a look at the next slide and earnings. Q1 EBITDA was SEK 11 million and the margin was nearly 10%, which is 3.3 percentage points higher year-over-year. However, we need to consider items affecting comparability of SEK 21.1 million in Q1 last year, which was costs related to the IPO. Adjusted for that, the EBITDA margin was approximately nine percentage points lower. Even though we have lower sales volumes in the quarter, we have higher product margins despite high freight costs which contributes to EBITDA. Tariff exclusion increased EBITDA by approximately SEK 4 million in the quarter, and we expect the total effect to be around SEK 15 million-SEK 20 million in 2022. During 2022, we will continue to execute our strategic growth agenda to create profitable growth in the coming years. We have chosen to pursue our growth promoting initiatives, even during a turbulent period when external factors damp demand, to take advantage of the great opportunities we see in the market in the near future. Moving on to the next slide. Operating cash flow was affected by higher EBITDA. The change in net working capital is related to decreased inventory. However, inventory is still at a slightly too high level. Investing activities was SEK 9.6 million and is related to development of new products. The overdraft facility was SEK 123 million in Q1 and is mainly related to purchase of products in stock. This will have a positive effect on our cash flow, because much of the inventory was paid for in 2021, which means that we get a positive net effect on cash when we sell out from stock. We will have cash in but no cash out. Moving on to the next slide and the income statement. As previously presented, we had a net sales decrease of 31% related to a soft market and tough comparables. We only sell in US dollars regardless the end market and the same goes for purchases of products that is also 100% in dollars, which gives a certain currency hedging. Fractal is in many ways a dollar company with 100% in dollars down to product margin. OPEX and personnel costs are approximately amounted to 42% in dollars. Fractal's reporting currency is in SEK, and the numbers are affected by fluctuating exchange rates in currencies other than SEK. However, Q1 had an average US dollar/SEK rate of 9.3 compared to 8.4 last year, which is positive on our results. The product margin is very strong due to product mix, strong currency, and exemption from tariffs. Other external expenses are affected by higher warehouse costs, and also costs related to more employees. Personnel cost is according to plan, but higher than last year due to investments in more people. Worth mentioning again, is the one-time cost for the IPO in Q1 last year, which affect the numbers negatively by SEK 21 million. The financial net is affected by interest expenses related to the overdraft facility and FX translation effects. With that, we move to the next slide, and I hand over to Hannes again. Thank you, Karin. As mentioned before, we launched new models in the Torrent series in the quarter, and this new series has been a big success for us and the sales have exceeded our estimates and forecasts and have also contributed to a higher product margin. We have planned many more launches for 2022, and we're excited about our very strong pipeline and roadmap of new products for the coming quarters. We are continuing to work hard to manage the cost impact from the temporarily very high freight prices. They still remain on a very high level, although we have seen a positive and downwards trend in the last couple of months, and we are hopeful that that trend can continue during the year. It's important also to highlight here that while we try to keep the costs in line in this weak market, we still are keeping the focus on and continue to invest in our mid- to long-term growth initiatives. In order to mitigate the cost of freight costs, and tariffs and increases in raw materials and FX impact, we have raised the prices on most of our products during Q2 and Q3 in 2021. We currently don't foresee any additional cost increases in the near term as the main raw materials for our products, which are steel and plastic, are now relatively stable in China. As for the more long-term and strategic initiatives, we are working with several very exciting ways to continue our growth journey. We want to continue doing what we do today, what we have done since inception, which is to deliver best-in-class products and be one of the leading brands in our current categories. We will continue to grow in these categories, and we will launch a lot of new products in the coming year. Expand our product portfolio into new categories. We have identified several adjacent product categories that are interesting for us, to expand into and which fits well with our brand and with strong margin profiles. We're currently in the process of developing two new categories. We also want to diversify and improve our marketing efforts, primarily with more visibility in streaming, where we recently have introduced partnerships with streamers on Twitch. Last but not least, we aim to make geographic expansion in Asia, primarily succeeding in China, but also Southeast Asia is an interesting market in coming years for gaming. Next slide, please. A brief summary of the quarterly report and outlook. Our net sales is continuing to be negatively impacted by the high prices of graphics cards, leading to a soft demand in the market. We have, though, seen graphics card prices starting to drop in Q1, and we expect an improved demand from the second half in 2022. Our market shares in key markets have improved during the quarter, which we're very happy about. We're also happy about our product margin, which was very strong in the quarter despite continued headwinds from freight costs. The reinstated tariff exclusion in the U.S. was positively impacting our margins, both in the quarter and for the rest of the year. We want to repeat again that we believe that the current headwinds and weak market that we've seen in the last twelve months is short-term, and we remain positive regarding our mid to long-term outlooks. Next slide, please. With this, we have reached the end of our presentation, and we'll open up for questions. Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name's announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. We currently have two people in the queue. The first is Oscar Erixon of Carnegie. Please go ahead. Your line is open. Thank you and good morning, Hannes and Karin. First question is on the resilient top line performance in Q1, given the market conditions. You mention or you write in the report, the outlook statement or comments, that one should expect low demand in the first half of the year. Should we expect a similar performance in Q2, as in Q1? Would be great if you could just discuss seasonality and other factors, dynamics dictating Q2, the Q2 outlook. Thank you. Yes. Hello, Oscar. We have in general seen that the first half of 2022 will be relatively weak, while we see a resurgence in the second half following the return of a more normalized graphics card prices. Typically for Fractal, Q2 is seasonally our weakest quarter. We see that the weakness that we had in Q1 relative to a normal market is continuing into Q2. That is largely in line with what we have communicated earlier. Great. On the very strong gross margin here of about 40%. I mean, tariff exemption effects should persist throughout the year. Mm. FX has been strengthened further for you. Seems a sort of positive component on raw material costs. Could you discuss the product pipeline, which I guess is of essence, and the different dynamics impacting the gross margin outlook here this year? As we said in the earnings call here, we're very happy about the strong product margin performance, which is contributed to several different factors. We have the general product mix, where we have sold more cases as a share of our total sales, and cases are a higher margin product for us. There's also been a positive product mix within cases, where we sold more high margin cases such as the Torrent. We are expecting to launch more cases during this year. All of them will not be as high margin as the premium-oriented Torrent series. We expect that product mix to not be as strong effect as in Q1. We have the tariffs, as you mentioned. We have the FX effect of having large parts of our inventory booked into a lower currency rate in 2021 and now being sold out to higher currency rates. That is expected to somewhat continue during this year, but taper off slowly. As also shown on one of the slides there on product margin, we have the freight costs, which is negatively impacting our margin by six percentage points. We see that the freight costs have slightly gone down, and we hope that that trend will continue. There is also lag effects in terms of that we realize this freight cost when we sell out our inventory. Even if the freight costs would be normal by tomorrow, it would still have some effect in a couple of quarters. Great. Just final question, and similar to the previous one on the full year top line outlook. I mean, clearly you still believe in pent-up demand. We are seeing lower graphics card prices and have a new generation coming out in the second half of the year. Mm Further improving supply. On the other hand, I mean, quite uncertain consumer and macro outlook. Could you discuss the sort of full year growth, organic growth outlook? You reiterated the midterm, long-term targets this morning. Thank you. Yeah. We still believe in that the second half of the year will be a period where we return to growth. We still believe that the return to more normal graphics card prices and this new graphics card generation will be very helpful for the demand. Since it has been our weak demand in the last 12 months, and we believe and have seen in service that a lot of gamers have waited with upgrades, that factor and force will be quite strong. On the other hand, which makes it very hard to predict and forecast at the moment, we see the general possibility for lower consumer demand because of higher inflation and macro uncertainties, and that is hard to gauge how strong that is. Again, we still believe that we will return to growth in the second half of this year and that force of gamers wanting to upgrade where they haven't done that so much in the last year is quite strong. Okay. Perfect. That's it for me, for now at least. Thank you. Thank you. We have one further question in the queue. That's from the line of Simon Granath of ABG. Please go ahead. Your line is open. Thank you, operator. Good morning, Hannes and Karin. Initially, you mentioned that demand for gaming remains strong. Have you seen any impact on the underlying demand after COVID-19-related lockdowns have now been lifted? Perhaps any comments on this could be connected to the sales out metric of -19% year-over-year. Do you view that as a solid metric given comparable figures? It's a solid and important metric. However, since we have had these very high graphics card prices in the last 12 months, we also like to look at the gaming activity since we know that many gamers are holding off with upgrades. The gaming activity has continued to remain on a very high level. It has increased almost quarter by quarter, until now. Now it's starting to level off, if you look at the viewership hours from Twitch, for example. But they still remain on a very elevated level compared to the pre-pandemic levels. So we believe that the gaming activity is still continuing even in post the reopenings, and that gaming remains a strong form of entertainment that is competitive even when people are starting to travel again and do other forms of entertainment. Personally, I agree. Another question, and I know this is a recurring topic, but I must continue to ask on any potential price hikes ahead. Do you see further potential of hiking prices or have most such activities already been taken in the short run? We're not planning at the moment any more price increases of our products. We already executed price increases last year, and we are not seeing that our competitors are raising the prices any further, and we're also not seeing any pressure on the cost side from our suppliers, since the raw material price increases in China have been very modest lately. Also, the currency, US dollar to Chinese renminbi, has been in our favor in the last couple of weeks or month. We see a quite low risk of getting cost increase pressure from our suppliers. No, we're not planning any further price increases. It's also worth mentioning that our products have also been increased in price due to the very high freight costs, which is something that our customers are largely paying and are adding to the prices. The end user prices have been increased more than the roughly five to ten percent that we have increased our prices. For that reason, we believe that the possibility to further increase is relatively limited and also perhaps not required at this point for us. Could it even be that you are looking to reduce prices in the coming quarters? No, we're not planning that either. We think that the price level that has been now established will be quite stable. Even though we're not seeing any cost increases from our suppliers, there are other cost increases such as, you know, salary inflation pressures and similar, so no, we're not expecting prices to drop. Okay. Thank you. That's very clear. Could you talk a little bit on the pipeline for other products outside the cases? Do you anticipate to launch margin-accretive products or similar to the current family? The new categories are expected to have similar margins as cases, which is our product category with the highest margin profile, whereas power supplies and cooling products have a bit lower margin. Overall, the new categories should be helpful to our average margin profile. Thank you. As my final question, I know that in previous reports, you have made a comment on your performance in relation to the market and in relation to competitors. How would you say that you are currently performing regarding that topic? We think we're performing well. We increased our market shares in the first quarter in our key markets, which we're very happy about. We're performing well. We have not discounted a lot on our products. Our discounts have been low, so the actual market share increase is solely due to our strong product lineup. We're very happy about our current market performance. Thank you so much. That's all for me. Thank you, Simon. Thank you. As there are no further questions at this time, I'll hand back to our speakers for the closing comments. Thank you everyone for attending this presentation, and I wish you a nice day.