Dear ladies and gentlemen, welcome to the Thunderful Group audio cast with teleconference Q4 2021. For the first part of this call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Speakers, please begin. Well, good morning. We'd like to welcome our existing shareholders, potential new shareholders, and the general public to sunny, beautiful Stockholm and this presentation of Thunderful Group's fourth quarter of 2021. Go to slide two, please. Here are the guys presenting to you today. I'm Brjann Sigurgeirsson, the CEO of Thunderful Group, and also with me is Anders Maiqvist, the CFO of Thunderful Group. Go to slide three, please. Let's start by looking at the key highlights for the quarter. Go to slide four, please. The fourth quarter of 2021 is Thunderful Group's strongest consolidated quarter so far, both in terms of net sales and EBITDA. We'll go into the financials shortly. In this quarter, Thunderful acquired two exciting gaming companies, Robot Teddy, which is a business development and strategy partner to very successful game developers. They're going to drive a lot of business and investments for us going forward. Early Morning Studio, who are our first acquisition in the mobile space and games as a service. Their next title, Vendir, is due out this spring. The unit sales of our Q4 game releases came in under expectations. Now, in a year, our distribution segment typically have their best quarter in the fourth quarter. At the same time, our games releases face the stiffest competition from AAA releases in Q4. I believe that future gaming revenues for developers and publishers like ourselves will be less dependent on transactions and unit sales and will revolve around deals with platforms and subscription services like we see for movies, TV series, and music. I think we're well-positioned for that shift. In the quarter, we started a new gaming division, Thunderful Investment, that will be headed by the Robot Teddy team. There is a lot of good business to be had from investing in game projects in addition to our internal development and publishing business. Speaking of publishing, we announced several new games in November via Thunderful World, a global and very successful digital broadcast where we highlighted our lineup. Among the games we showed are SteamWorld Headhunter and Planet of Lana, games that the world is excited about. Finally, we have strengthened the leadership within the game segment, which means that our relations to platforms and subscription services are much stronger than before. Going forward, I believe those kinds of relations will be more important than ever. Go to slide five, please. Looking at high level numbers, our distribution segment has had a good fourth quarter, showing both growth and increased profitability. Now, as you remember, 2021 has been a difficult year, both in terms of global logistics and semiconductor shortages, so a lot of hard work has gone into the positive results. As mentioned, due to quiet game releases, the game segment showed lower profitability than we saw in the third quarter. Yet, our game segment has grown organically by 13% in the fourth quarter, and we see very healthy year-on-year growth in adjusted EBITDA. Overall, the operating income for the group grew about 8%. Games grew by 74% and distribution by 3.5%. Adjusted EBITDA is up by 38%, adjusted EBITDA is up 22%, and our margins have improved. Anders will go through the figures in more detail in the financial portion of this presentation, but in short, it's been a solid quarter for our distribution segment despite tough conditions. Our games business also performs despite soft unit sales, and we've strengthened the games segment for the future. That's where we invest, and that's where we intend to grow. Let's go to slide six, please. Yeah, let's have a quick look at the Thunderful Group and our strategies. Let's go to slide seven, please. We operate in two segments that we call Games and Distribution. While the Distribution business covers the Nordic and to some extent the Baltic states, the Games business is global. That means that we sell our games all over the world. We're now more than 400 coworkers across Europe. We have 17 internal games in development at this moment, and we've got over 30 games from external developers in our pipeline. These numbers keep growing. Across the segments, we manage a portfolio of around 100 brands, and we've kept our famous Nintendo partnership for 40 unbroken years. Yesterday, we announced that we've extended our partnership with Nintendo for another 2 years, which is business as usual for this agreement. Let's go to slide eight, please. Let's talk about business strategy. Our business rests on three main strategies. For starters, we accelerate investments. We want to increase our investments in game development and publishing, both internal game projects and external. We want to acquire complementary businesses and IPs. We also want to acquire gaming companies that continue to operate with a great deal of independence. Second, we make sure to keep our IP rights. There's so much you can do when you own your own content. We also want to use our IPs and brands to reach outside gaming into new mediums, and we're working on that. We make sure our games are available on relevant platforms and that the products that we distribute appear in the right channels. In gaming, we maintain our own IPs. In distribution, we work to increase our share of own brand. Finally, quality is at the core, 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 collaborations and partnerships. Let's go to slide nine, please. Let's have a look at our two segments, games and distribution. Let's go to slide ten, please. Now, our two business segments, they complement each other. We have a Games segment that is growing, both in terms of financial results and share of the total, but also in terms of organization. All earnings from both Distribution and Games are reinvested in the Games segment. In terms of net sales and adjusted EBITDA, the Distribution segment is having its best quarter to date. The net sales of the Games segment keeps growing, and the EBITDA of the fourth quarter is the second highest ever. For the whole year, Games now accounts for almost half of the profit. Let's go to slide 11, please. To touch on Distribution, our Distribution segment consists of three companies. First, there's Bergsala that held the license to sell all Nintendo products in the Nordic and Baltic for 40 years. It evolves from having been an agreement for Sweden, then for the Nordics, and now the Nordics and the Baltic states. There's AMO Toys, our toy distributor that holds the MGA license with products such as L.O.L. Surprise, which is one of the most popular toys in the world. Finally, there's Nordic Game Supply that distributes consoles, games, and gaming accessories, where we hold the licenses for brands like Razer, HyperX, SteelSeries, and others. Let's go to slide 12, please. Here, let's have a look, an overview of the Games segment. Within Games, we do a few things. We develop games mainly based on our own IPs. As mentioned, we're convinced that quality is vital to earning success. Our recent Metacritic scores are best in class among our peers, and we are now around 270 game developers across Europe. We can only work on so many games at any given time in development. That's why we publish our internally developed games, but we also publish games developed by others. Publishing is more hands-off than development. That means that we can publish more games than we can develop. As part of the publishing process, we often invest in the externally developed games that we publish. At the end of the quarter, we have committed SEK 155 million in our pipeline of externally developed games. We want to be involved in even more games. Investing in games is even more hands-off than publishing, and that's why we started the Thunderful Investment division that I mentioned earlier. Thunderful Investment can vastly increase the number of tickets we hold, and we believe there can be strong synergies with development and publishing. That ticks an important box for the games segment, and we're now a 360-degree games company that offers development, publishing, investments, and M&A. Let's go to slide 13, please. We released eight titles in the fourth quarter. The fourth quarter is typically crowded with big releases, and none of the titles had a standout performance at launch. There are also positives. A game like The Gunk engaged hundreds of thousands of players on Xbox, and we're now releasing the game to Steam and other PC platforms. Wavetale, which we developed in-house as a Stadia exclusive, is coming to additional platforms later this year. Let's go to slide 14, please. Here are the 17 titles that we have in internal development, and we are starting to get a good spread. Early Morning Studio is releasing Vendir this spring, and the internal dev team at Headup is wrapping up Tinkertown. Let's go to slide 15, please. At the event Thunderful World, we also showcased some of the thirty-ish external games in our release pipeline for the next two years. Now, these titles are in addition to the 17 games we are developing internally. We couldn't fit all of the coming titles on one slide, so here's the first half. Let's go to slide 16, please. Here's the other half. Among the already announced ones in 2022 and 2023, we have such anticipated releases like REPLACED, Togges, and Planet of Lana. That's it for the business segment. Let's go to slide 17, please, where CFO Anders Maiqvist will go through the financial section. Thank you, Brjann, and good morning, everyone. Move on to slide 18, please. In the last quarter of 2021, we've seen a growth in net sales with 4% year-over-year, reaching SEK 1,323 million. The Game segment has a growth of 57%, and the D istribution segment has a growth of 1%. For adjusted EBITDA, the growth is SEK 21 million, reaching SEK 118 million this quarter. The Game segment contributes with a growth of SEK 13 million and Distribution with a growth of SEK 16 million. The cash flow from operating activities has a growth of SEK 184 million, reaching SEK 19 million in Q4 2021. For the full year 2021, the cash flow from operating activities is SEK -65 million, which is better than full year 2020 at SEK -89 million, but still it has been negatively affected by inventory buildup in distribution over the year. Move to slide 19, please. For Thunderful Games, we've seen a growth in net sales year over year of 57%, reaching SEK 102 million in this quarter. Organic growth in Games is 13%, and growth from the companies acquired in the last twelve months is 44%. Breaking down the organic growth, Coatsink is contributing with around 50% of the total organic growth in this quarter for the Game segment. For profitability within games, adjusted EBITDA is up 64% year-over-year, reaching SEK 33 million in the fourth quarter and with an adjusted EBITDA margin at 25%. This EBITDA margin is lower than in previous quarters, and the main driver behind this is the quiet reception for both internal and external game releases in the fourth quarter. For several game releases within Thunderful Publishing, we've seen negative EBITDA contribution from the releases due to the depreciation of one-third of the total investment in the first quarter of the release and pretty low sales numbers for some of these releases from Thunderful Publishing. Move to slide 20, please. Looking at investment in Thunderful Games, we continue to deliver on our long-term business plan, which is to accelerate investments in the Games segment. In 2021, we've invested SEK 295 million, of which SEK 190 million was invested in the fourth quarter. We see an acceleration not only in acquisitions, but also in publishing licenses and development CapEx. For acquisitions, we closed two larger acquisitions in the fourth quarter, Robot Teddy and Early Morning Studio. To continue the acceleration in 2022, we have today announced that we have signed a new secured revolving credit facility with the Danske Bank of EUR 55 million. Move to slide 21, please. For the segment distribution, we see an overall growth year-over-year of 1%. Breaking it down, among the subsidiaries, we can see that Bergsala is decreasing with -14%. This is driven by lower availability of hardware versus the comparison quarter. In Nordic Game Supply, the growth this quarter is 20%. This is driven by the newest distribution contract, Razer, but it's also driven by a higher sale from private labels. AMO Toys has a growth of 37%. As you might remember from the last conference call, we had many delayed inbound shipments in Q3, meaning that we have received more products in Q4, which basically moved net sales from Q3 - Q4. For profitability measured in EBITDA in distribution, the segment has an overall growth of 25%. Bergsala had a good sell-through of Nintendo games, even though the limited availability of hardware was limiting the net sales growth. We couldn't fulfill all customers' demand for Nintendo Switch consoles. In Nordic Game Supply, the higher sales of private labels and cost efficiencies in the new Thunderful distribution center raised the EBITDA margin. For AMO Toys, EBITDA was negatively affected by increased logistics costs, both to the 3PL warehouse for working overtime since many containers scheduled for Q3 arrive in Q4, but also for higher express distribution freight costs to meet customers' slot times and campaigns when inbound goods were delayed to our warehouse. Move to slide 22, please. Thunderful Group saw 43% organic growth in the fourth quarter of 2021. Out of the total organic growth of SEK 21.2 million, SEK 8.6 million is from games and SEK 12.6 million is from distribution. In addition to this, we had SEK 28.4 million growth from the companies acquired in the last 12 months. Move to slide 23, and we can see the development of adjusted EBITDA, where Thunderful Group has 65.1% organic growth in Q4 2021. Organic games companies contribute with SEK 5.3 million, organic distribution companies with SEK 16.6 million, and companies acquired within the last 12 months with SEK 7.4 million. The three most recent acquisitions, that was Stage Clear Studios back in Q3 and Robot Teddy and Early Morning Studio now in the fourth quarter, all together contributed with SEK 10 million in EBITDA. Some of the other acquisitions in 2021 have negative EBITDA contribution in this fourth quarter. Okay, slide 24, please. For the operating cash flow, there are two big acquisitions made in the fourth quarter, and the difference between the two graphs to the left is SEK 132 million in cash for acquisitions. The operating cash flow in the fourth quarter, adjusted for acquisitions, is minus SEK 263 million. Apart from CapEx for acquisitions, we've also invested another SEK 62 million, as presented earlier. The remaining part stems from the development of net working capital, which is around SEK 340 million higher by the end of 2021 compared to the end of 2020. As we mentioned in previous quarters in 2021, there has been a significant inventory build-up in 2021, primarily related to all these supply chain challenges. In this quarter specifically, we also had higher than usual sales around Black Week and throughout December, which has basically resulted in a record high amount of accounts receivables by the end of this year. Net debt by the end of this quarter is SEK 210 million, resulting in a net debt over LTM EBITDA ratio of 0.6. That was the last slide of the financial section. Move to slide 25, please. Thank you, Anders. Let's just have a look at events after the end of the quarter. Let's go to slide 26, please. After the quarter, we have done a number of things. For one, we, as I mentioned, we have extended the distribution agreement with Nintendo. Just as always, it's Bergsala that extends with Nintendo of Europe. The new contract will run from April this year until the end of March 2024, and it's basically the same as the contract that runs out next month. It's, well, you could just call it a regular extension. Let's go to slide 27, please. Yes. Earlier today, we announced a new secured revolving credit facility of EUR 55 million with Danske Bank. The initial term is three years, and we have improved terms and conditions compared to the old SEK credit facility. We will use this new RCF for M&A deals, continue to accelerate the investments in Thunderful Games, refinance the existing SEK credit facility, as well as other corporate purposes. Move to slide 28, please. Yes. For this last slide, we have signed a new agreement with Meta for additional development projects. As you may recall, last year, we signed a large contract with them worth over $20 million for VR and tech development projects. Those projects are going great, and so we have deepened the relationship. We also have a launch title in the works for PSVR2, which is PlayStation's next generation VR console. It's of course both an honor to be included and also very exciting. Also we have multiple ongoing negotiations with platforms regarding upcoming games. I mentioned at the beginning that I'm convinced that direct deals with subscription services and platforms will become increasingly important. We cannot talk about details, of course, but I think we have good reason to feel optimistic about this. That brings about the end of this presentation. Thank you very much for listening. We're now ready for any and all questions. Please go ahead. Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero and one on your telephone keypad. The first question is from Simon Jönsson, ABG. The line is now open. Please go ahead. Good morning, guys. A couple of questions from me. Starting with the Distribution segment. The main difference between our prediction seems to be NGS, which reported higher sales, but significantly higher margins. You basically had the same margins in Q4 this year as last year, despite the supply chain issues. What is the explanation behind this? I know you mentioned private labels, but can that account for everything, or could you elaborate on that? Yes. Thank you for the question, Simon. Yeah, well, I mean, we mentioned two things in the call, and it's the fact that we presented in the Q3 report that we have moved all goods from the old 3PL warehouse to our new Thunderful Distribution center. For the entire fourth quarter, Nordic Game Supply has been running from our own distribution center, and we see some cost efficiencies based on that. Then also we see some higher gross margin based on the higher share of sales from private labels. All right. Thank you. On the distribution part, what can you say about the inventory levels in AMO at year-end and the implications for Q1 sales from that? AMO Toys is basically the only of the three distribution companies that have two very distinct seasons. They have the spring-summer season and then the autumn-winter season. One of the problems that we had in the first half of 2021 was basically that we weren't able to sell all of the spring-summer items, this yeah last year's spring-summer season. We do have some stock of spring-summer items already in stock, you know, well before the season starts. Now by the end of February or mid-February, we start to ship out spring-summer items, and we have, of course, bought some more to fulfill the demand from the customers. It, you know, for this spring-summer season, the availability of goods looks really good based on the fact that we kept some from last year and also that the arrivals for Q1 and Q2 seems to be on a good timing. All right. Can you say anything about the kind of growth levels we can expect from AMO Toys? That is difficult to sort of guide on. I wouldn't, you know, I wouldn't say that there is a risk in either the first quarter or the second quarter that we will have any negative net sales effect based on, you know, lack of availability of products. We have the products that we should ship to the customers. Now it's all about, you know, doing that and making sure that the customers can come in with their replenishment orders at as high grade as possible this season. Okay. Thank you. Turning to Games then. Excluding Coatsink in the organic growth numbers, what can you say about the organic growth contribution from other units here in Q4? Yes, I would say that the primary driver for this, excluding Coatsink, is definitely Thunderful Development. We released The Gunk, as you know, in the fourth quarter. Together with that, there was a significant release milestone that Thunderful Development could account for in the fourth quarter. Thunderful Development and Coatsink are the two main reasons why we have organic growth in Thunderful Games. Excluding Coatsink and The Gunk, what can you say about the organic growth of the rest of the gaming segment? Was it in line with previous quarters or any pickup? Now I would say that the, you know, the reason why we have a bit lower EBITDA margin in the fourth quarter is basically because we I think we had eight game releases in the fourth quarter, and especially the smaller ones from the publishing teams. The low sales numbers and the high depreciation attached to it in the first quarter of the release made some of those games, you know, they contribute to a negative EBITDA. That means that Thunderful Publishing, the organic part of Thunderful Publishing, wasn't especially successful this quarter. It was a negative organic development for Thunderful Publishing. Thank you. Let's move on here, and I'm thinking more in broader terms. Could you maybe talk a bit about the importance of building relationships with the large platform providers, which is an important part of your strategy? Certainly. We are convinced that forming strong partnerships with platform owners and also with subscription services in the future is going to be increasingly important. I think that there is more of the business in the future is going to revolve around that. There are certain players that will continue to revolve around unit sales and strong releases. I mean, Steam is such one such player. We have other players that are betting heavily on their subscription services. Being in a good position or having an organization that is primed for these types of negotiations and so on is I think it's going to be key going forward. We have, as we mentioned in the report as well, we have strengthened the leadership team within Games quite significantly over the past six months in general and in the last three months in particular. I think, it's a ball that is not going to stop rolling. Like, subscription services is here to stay when it comes to movies and TV series and music. I think we are in a good position when it comes to negotiating places for our content going forward. Okay, thanks. With the recent large acquisitions in the sector, we have Microsoft buying Activision, for example. What does it mean for the market, would you say? Especially for both larger and smaller game developers. Well, it's that specific acquisition is of course strategic so that they can get even more strong content to their subscription service, Game Pass. I think we have seen other acquisitions that are similar to it. Sony acquired Bungie, and we also see Tencent working tirelessly at the acquisitions. There's certainly a consolidation wave sweeping over the gaming industry. We've seen acquisitions for a long time now, and it's getting more and more consolidated. It has to do eventually with who is going to be left standing and what services we will be subscribing to in the future. I think both Microsoft and Sony are in a very interesting spot. They're in interesting spots. They have players like Netflix that are quietly moving into the gaming scene as well. These acquisitions are not surprising, let's put it that way. These consolidations will continue. I mean, you can look at it and say, "Well, isn't everyone being acquired now? What's left to acquire?" There are, like, in the space, like under all of these very big companies that are being acquired now, there is a multitude of super interesting development companies. That is the space where we are operating and looking. Okay, interesting. When the market is consolidating, how do you stay relevant as a small developer? I mean, Microsoft with Xbox, for example, should get a lot of leverage by owning and producing more original content, so to say. What do you say about that? Well, I would say that what we can bring to development studios. I mean, let's use acquisitions as an example then. Is we can bring a family structure for companies that are typically younger than we are. We have been around longer, and we can definitely support them to build their business. That is how we are operating with the companies that we have acquired so far. We see that it's working. I mean, we are together with the targets that we acquire. We can help them grow and turn them into. We can do things or they can do things together with us that they couldn't do on their own. Rather than being an enormous player, we are someone who is really relatable, and we take it one step at a time. Every acquisition is part of our strategy, and we make sure that our targets understand that they are very, very important to us. Like, with that said, I mean, there are many big acquisitions being made. We are making acquisitions that suit us and our strategy going forward, being a 360-degree company, meaning that we are going to continue to work with game development, game publishing, investment in game projects, and then also acquisition. All right. Thank you for that. Just a last question here on M&A. With the RCF you announced today, what are your near-term ambitions in terms of M&A, and what is the general outlook on M&A landscape currently? We feel that there are still a lot of interesting companies that are looking to be acquired and that are at a scale that suits us. I mean, obviously we cannot go out and acquire Activision or Bungie. We need to look at companies that are smaller, obviously. We will continue to work with M&A. I think when we went public, the target that we set ourselves and that we communicated at the time before IPO and also in the time around that was to make the round figure that we used was to make one acquisition per quarter. I think we have exceeded that number since we made our IPO. We are going to do acquisitions at our pace and with companies and studios that fit us. I mean, take a company like Robot Teddy, for example. We acquired them because we had the same views on game investments or game project investments. They suited us perfectly because they have their ear so close to the ground, and they have the ability to see around corners that not many in the industry have. That was a perfect match for us to team up with Robot Teddy. Early Morning Studio was our first step into the game as a service market or business. We feel that game as a service doesn't necessarily have to be mobile only. There are a lot of interesting things happening in game as a service, also, on the PC and console side. We will do acquisitions that are in line with where we think the market is going forward. All right. Thank you for that. Thank you for taking my questions. I will head back into the queue. Thank you very much, Simon. There are no further questions at this time, so as a reminder, to ask a question, please press zero and one on your telephone keypad. The next question is from Victor Ning, Redeye. Your line is now open. Please go ahead. Hi. Good morning. Good morning. Hi. The first question is regarding the release of the game on PC. I expect that in the end of this quarter or in the second quarter. I think we have indicated first half of 2022. Yeah. Super. That's an answer without answering, I understand that, but that is what we have communicated so far. Yeah. Right. No, good. Assume that last year in Nordic Game Supply saw a somewhat positive pandemic effect. Have you seen any changes this year compared to last year? Overall in this year, I'd say that we have had a very stable growth quarter by quarter. This quarter, we actually see a little bit lower growth versus the comparison quarter that we've had in the previous three quarters in 2021. I mean, overall the growth quarter-over-quarter is fantastic. I'd say that you know, we've added distribution contracts. We've added and sort of made sure that the private label set up is even better this year than last year. I think it's a mix of both customer demand but also that we are continuously taking new market shares on the Nordic distribution market. Super. One final financial question for you on this. The personnel costs increased quarter-over-quarter, while the full-time employees remain the same. Is there any specific reason for this uptick? Yes. We have a short explanation about that in the report. It's actually so that the split in this quarter between the two segments, it's almost all of the personnel cost increase comes from the Game segment. Very little comes from Thunderful Distribution. Within Thunderful Games, I mean, we've made some acquisitions over the year. There's different, you know, personnel cost structure in the acquired companies, but then a key driver is also that we have strengthened the management team in this Game segment. It's basically a combination of higher personnel costs in some of the acquired companies and the strengthened leadership team in Thunderful Games. Okay. Thank you very much for taking my questions. Thank you, Victor. Thank you. There are no further questions. I hand back to you. All right. We just take the opportunity to thank you very much for listening in on the presentation. We wish you a continued wonderful Thursday, Thunderful Thursday, and speak soon. Have a good one. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect.